##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
 For the quarterly period ended August 31, 2008
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from          to
 Commission file number 0-19603
 CENTENNIAL
COMMUNICATIONS CORP.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    06-1242753(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification No.)
 3349 Route 138
Wall, NJ 07719  (Address of principal executive offices,
including zip code)
 (732) 556-2200  (Registrants telephone number,
including area code)
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



TABLE OF CONTENTS
 Part I  Financial InformationItem 1. Financial Statements
    
    3Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    23Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    37Item 4. Controls and Procedures
    
    38Part II  Other InformationItem 1. Legal Proceedings
    
    39Item 1A. Risk Factors
    
    39Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    39Item 3. Defaults Upon Senior Securities
    
    39Item 4. Submission of Matters to a Vote of Security Holders
    
    39Item 5. Other Information
    
    39Item 6. Exhibits
    
    39Ex-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands, except share data)
 August 31,
    
    
    May 31,2008
    
    
    2008ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    123,843
    
    
    $
    105,161Accounts receivable, less allowance for doubtful accounts of $6,242 and $7,105, respectively
    
    
    98,678
    
    
    
    93,998Inventory  phones and accessories, net
    
    
    40,321
    
    
    
    43,242Prepaid expenses and other current assets
    
    
    35,540
    
    
    
    33,298Total Current Assets
    
    
    298,382
    
    
    
    275,699Property, plant and equipment, net
    
    
    573,808
    
    
    
    578,533Debt issuance costs, less accumulated amortization of $32,912 and $30,939, respectively
    
    
    32,635
    
    
    
    34,608Restricted cash
    
    
    6,454
    
    
    
    6,466U.S. wireless licenses
    
    
    402,395
    
    
    
    402,393Puerto Rico wireless licenses, net
    
    
    54,159
    
    
    
    54,159Goodwill
    
    
    4,187
    
    
    
    4,187Customer lists, net
    
    
    11,498
    
    
    
    9,449Cable facility, net
    
    
    3,190
    
    
    
    3,250Other assets
    
    
    7,226
    
    
    
    6,721TOTAL ASSETS
    
    $
    1,393,934
    
    
    $
    1,375,465LIABILITIES AND STOCKHOLDERS DEFICITCURRENT LIABILITIES:Accounts payable
    
    
    34,725
    
    
    
    25,447Accrued expenses and other current liabilities
    
    
    177,581
    
    
    
    193,527Payable to affiliates
    
    
    75
    
    
    
    75Total Current Liabilities
    
    
    212,381
    
    
    
    219,049Long-term debt
    
    
    2,012,701
    
    
    
    2,010,647Deferred income taxes
    
    
    162,793
    
    
    
    151,408Other liabilities
    
    
    31,833
    
    
    
    33,950Minority interest in subsidiaries
    
    
    5,065
    
    
    
    4,898Commitments and contingencies (see Note 8)STOCKHOLDERS DEFICIT:Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value per share, 240,000,000 shares authorized; issued 108,272,004 and
107,892,406 shares, respectively; and outstanding 108,201,501 and 107,821,903 shares, respectively
    
    
    1,083
    
    
    
    1,079Additional paid-in capital
    
    
    41,374
    
    
    
    36,787Accumulated deficit
    
    
    (1,070,644
    )
    
    
    (1,078,130
    )Accumulated other comprehensive loss
    
    
    (1,575
    )
    
    
    (3,146
    )(1,029,762
    )
    
    
    (1,043,410
    )Less: cost of 70,503 common shares in treasury
    
    
    (1,077
    )
    
    
    (1,077
    )Total Stockholders Deficit
    
    
    (1,030,839
    )
    
    
    (1,044,487
    )TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT
    
    $
    1,393,934
    
    
    $
    1,375,465
  3




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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollar amounts in thousands, except per share data)
 Three Months EndedAugust 31,
    
    
    August 31,2008
    
    
    2007REVENUE:Service revenue
    
    $
    249,003
    
    
    $
    234,359Equipment sales
    
    
    16,210
    
    
    
    13,611265,213
    
    
    
    247,970COSTS AND EXPENSES:Cost of services (exclusive of depreciation and amortization shown below)
    
    
    50,676
    
    
    
    46,574Cost of equipment sold
    
    
    42,149
    
    
    
    31,522Sales and marketing
    
    
    25,869
    
    
    
    25,586General and administrative
    
    
    48,096
    
    
    
    47,306Depreciation and amortization
    
    
    35,544
    
    
    
    33,356(Gain) loss on disposition of assets
    
    
    (47
    )
    
    
    349202,287
    
    
    
    184,693Operating income
    
    
    62,926
    
    
    
    63,277Interest expense, net
    
    
    (44,880
    )
    
    
    (48,584
    )Income from continuing operations before income tax expense and minority interest
in income of subsidiaries
    
    
    18,046
    
    
    
    14,693Income tax expense
    
    
    (10,056
    )
    
    
    (8,261
    )Income from continuing operations before minority interest in income of subsidiaries
    
    
    7,990
    
    
    
    6,432Minority interest in income of subsidiaries
    
    
    (167
    )
    
    
    (152
    )Income from continuing operations
    
    
    7,823
    
    
    
    6,280Net loss from discontinued operations
    
    
    (337
    )
    
    
    (514
    )Net income
    
    $
    7,486
    
    
    $
    5,766Earnings per share:BasicEarnings per share from continuing operations
    
    $
    0.07
    
    
    $
    0.06Loss per share from discontinued operations
    
    
    0.00
    
    
    
    0.00Net income per share
    
    $
    0.07
    
    
    $
    0.06DilutedEarnings per share from continuing operations
    
    $
    0.07
    
    
    $
    0.06Loss per share from discontinued operations
    
    
    0.00
    
    
    
    0.00Net income per share
    
    $
    0.07
    
    
    $
    0.06Weighted-average number of shares outstanding:Basic
    
    
    108,038
    
    
    
    107,062Diluted
    
    
    110,200
    
    
    
    110,011
  4




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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollar amounts in thousands)
 Three Months EndedAugust 31,
    
    
    August 31,2008
    
    
    2007OPERATING ACTIVITIES:Net income
    
    $
    7,486
    
    
    $
    5,766Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    35,544
    
    
    
    33,356Stock-based compensation
    
    
    2,870
    
    
    
    3,055Excess tax benefits from stock-based compensation
    
    
    (102
    )
    
    
    (526
    )Minority interest in income of subsidiaries
    
    
    167
    
    
    
    152(Gain) loss on disposition of assets
    
    
    (47
    )
    
    
    349Changes in assets and liabilities
    
    
    (7,130
    )
    
    
    (7,382
    )Net cash provided by operating activities
    
    
    38,788
    
    
    
    34,770INVESTING ACTIVITIES:Proceeds from disposition of assets, net of cash expenses
    
    
    21
    
    
    
    7Payments for purchase of wireless spectrum
    
    
    (2
    )
    
    
    Capital expenditures
    
    
    (20,664
    )
    
    
    (19,996
    )Net cash used in investing activities
    
    
    (20,645
    )
    
    
    (19,989
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    (724
    )
    
    
    (467
    )Proceeds from the exercise of stock options
    
    
    1,161
    
    
    
    1,805Proceeds from issuance of common stock under employee stock purchase plan
    
    
    
    
    
    
    296Excess tax benefits from stock-based compensation
    
    
    102
    
    
    
    526Net cash provided by financing activities
    
    
    539
    
    
    
    2,160Net increase in cash and cash equivalents
    
    
    18,682
    
    
    
    16,941Cash and cash equivalents, beginning of period
    
    
    105,161
    
    
    
    94,740Cash and cash equivalents, end of period
    
    $
    123,843
    
    
    $
    111,681SUPPLEMENTAL CASH FLOW DISCLOSURE:Cash paid during the period for:Interest
    
    $
    58,556
    
    
    $
    62,568Income taxes
    
    $
    384
    
    
    $
    357NON-CASH TRANSACTION:Fixed assets acquired under capital leases
    
    $
    1,938
    
    
    $
    989
  5




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
(Dollar amounts in thousands, except per share amounts)
 NOTE 1. INTERIM FINANCIAL STATEMENTS
  NOTE 2. OTHER INTANGIBLE ASSETS AND GOODWILL
 Other Intangible Assets
  As of
    
    
    As ofAugust 31, 2008
    
    
    May 31, 2008U.S. wireless licenses
    
    $
    402,395
    
    
    $
    402,393Puerto Rico wireless licenses
    
    
    54,159
    
    
    
    54,159Total
    
    $
    456,554
    
    
    $
    456,552
 Goodwill and Other Intangible Assets
  Disclosures about Segments of an Enterprise and Related Information
 6




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As of August 31, 2008
    
    As of May 31, 2008Estimated
    
    Gross
    
    
    
    
    
    GrossUseful
    
    Carrying
    
    Accumulated
    
    Carrying
    
    AccumulatedLife
    
    Amount
    
    Amortization
    
    Amount
    
    AmortizationCable facility
    
    25 years
    
    
    6,000
    
    
    
    2,810
    
    
    
    6,000
    
    
    
    2,750Customer lists
    
    10 years
    
    
    12,646
    
    
    
    1,148
    
    
    
    10,295
    
    
    
    846
  Goodwill
  NOTE 3. DEBT
  As of
    
    
    As ofAugust 31, 2008
    
    
    May 31, 2008Senior Secured Credit Facility  Term Loans
    
    $
    550,000
    
    
    $
    550,0008 1/8% Senior Unsecured Notes due 2014 (the 2014 Senior Notes)
    
    
    325,000
    
    
    
    325,00010 1/8% Senior Unsecured Notes due 2013 (the 2013 Senior Notes)
    
    
    500,000
    
    
    
    500,000Senior Unsecured Holdco Floating Rate Notes due 2013 (the 2013
Holdco Floating Rate Notes), net of unamortized discount of
$2,162 and $2,287, respectively
    
    
    347,838
    
    
    
    347,71310% Senior Unsecured Holdco Fixed Rate Notes due 2013 (the 2013
Holdco Fixed Rate Notes)
    
    
    200,000
    
    
    
    200,000Capital Lease Obligations
    
    
    78,195
    
    
    
    76,146Financing Obligation  Tower Sale
    
    
    11,668
    
    
    
    11,788Total Long-Term Debt
    
    
    2,012,701
    
    
    
    2,010,647Current Portion of Long-Term Debt
    
    
    
    
    
    
    Net Long-Term Debt
    
    $
    2,012,701
    
    
    $
    2,010,647
 Senior Secured Credit Facility
   7




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High-Yield Notes
    Derivative Financial Instruments
  All-In
    
    Collar
    
    CollarSwap
    
    Fixed
    
    FixedFixed
    
    Interest
    
    InterestVariable Interest Rate Loan
    
    Amount
    
    Interest
    
    Rate
    
    Rate
    
    Trade
    
    Effective
    
    ExpirationBeing Hedged
    
    Hedged
    
    Rate
    
    Floor
    
    Cap
    
    Date
    
    Date
    
    dateMay 2007 CCOC Collar
    
    Senior Secured Credit Facility
    
    $
    200,000
    
    
    
    
    
    
    
    4.24
    %
    
    
    5.35
    %
    
    
    5/1/2007
    
    
    
    12/31/2007
    
    
    
    12/31/20082008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    250,000
    
    
    
    6.45
    %
    
    
    
    
    
    
    
    
    
    
    9/18/2007
    
    
    
    3/31/2008
    
    
    
    9/30/2008CPROC Collar
    
    Senior Secured Credit Facility
    
    $
    35,500
    
    
    
    
    
    
    
    4.66
    %
    
    
    5.50
    %
    
    
    10/31/2006
    
    
    
    12/29/2006
    
    
    
    6/30/2008June 2008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    35,500
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008CCOC Collar
    
    Senior Secured Credit Facility
    
    $
    25,000
    
    
    
    
    
    
    
    4.66
    %
    
    
    5.50
    %
    
    
    10/31/2006
    
    
    
    12/29/2006
    
    
    
    6/30/2008June 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    25,000
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008May 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    39,500
    
    
    
    4.54
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    5/31/2008
    
    
    
    11/30/2008Holdco Swap
    
    2013 Holdco Floating Rate Notes
    
    $
    200,000
    
    
    
    10.46
    %
    
    
    
    
    
    
    
    
    
    
    10/31/2007
    
    
    
    12/31/2007
    
    
    
    6/30/20082008 Holdco Swap
    
    2013 Holdco Floating Rate Notes
    
    $
    200,000
    
    
    
    8.60
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    7/1/2008
    
    
    
    4/1/2009
 8




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August 31, 2009
    
    $
    August 31, 2010
    
    
    275,000August 31, 2011
    
    
    275,000August 31, 2012
    
    
    August 31, 2013
    
    
    128August 31, 2014 and thereafter
    
    
    1,464,7352,014,863Less: unamortized discount
    
    
    (2,162
    )$
    2,012,701
  NOTE 4. TAXES
 Accounting for Income Taxes Interim Financial Reporting Accounting for Income Taxes in Interim
Periods  An Interpretation of APB Opinion No. 28
  Accounting
for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
  9




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NOTE 5. DISCONTINUED OPERATIONS
 Accounting for the Impairment or Disposal of Long-Lived Assets
 NOTE 6. RECENT ACCOUNTING PRONOUNCEMENTS
 Determination of the
Useful Life of Intangible Assets
 Disclosures about Derivative Instruments and
Hedging Activities
 Noncontrolling Interests in Consolidated
Financial Statements  an amendment of ARB No. 51
 Business Combinations
 Accounting
for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary
for an End-Customer to Receive Service from the Service Provider
 10




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Fair Value Measurement
     Effective Date of FASB Statement No. 157
 NOTE 7. ACQUISITIONS AND DISPOSITIONS
  Preliminary Purchase Price Allocation
   Current assets
    
    $
    561Property, plant and equipment, net
    
    
    1,663Customer lists
    
    
    12,646Deferred tax asset
    
    
    4,054
 11




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Other assets
    
    
    1,768Total Assets Acquired
    
    
    20,692Current liabilities assumed
    
    
    3,054Deferred tax liability
    
    
    4,425Net assets acquired
    
    $
    13,213
  NOTE 8. COMMITMENTS AND CONTINGENCIES
 Legal Proceedings:
   Guarantees:
  Lease Commitments:
   12




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Other Commitments and Contingencies:
  NOTE 9. SEGMENT INFORMATION
    13




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Three Months EndedAugust 31,2008
    
    
    2007U.S. WIRELESSService revenue
    
    $
    120,249
    
    
    $
    109,340Roaming revenue
    
    
    15,789
    
    
    
    17,952Equipment sales
    
    
    11,769
    
    
    
    10,312Total revenue
    
    
    147,807
    
    
    
    137,604Adjusted operating income
    
    
    58,588
    
    
    
    53,139Total assets
    
    
    1,848,983
    
    
    
    1,817,248Capital expenditures
    
    
    8,706
    
    
    
    7,051PUERTO RICO WIRELESSService revenue
    
    $
    77,696
    
    
    $
    76,904Roaming revenue
    
    
    2,694
    
    
    
    1,136Equipment sales
    
    
    4,442
    
    
    
    3,298Total revenue
    
    
    84,832
    
    
    
    81,338Adjusted operating income
    
    
    22,952
    
    
    
    28,693Total assets
    
    
    284,833
    
    
    
    275,567Capital expenditures
    
    
    6,730
    
    
    
    7,473PUERTO RICO BROADBANDSwitched revenue
    
    $
    13,935
    
    
    $
    13,602Dedicated revenue
    
    
    19,402
    
    
    
    16,274Other revenue
    
    
    2,330
    
    
    
    2,128Total revenue
    
    
    35,667
    
    
    
    32,004Adjusted operating income
    
    
    19,753
    
    
    
    18,205Total assets
    
    
    266,910
    
    
    
    195,019Capital expenditures
    
    
    5,228
    
    
    
    5,472ELIMINATIONS/ADJUSTMENTSTotal revenue(1)
    
    $
    (3,093
    )
    
    $
    (2,976
    )Total assets(2)
    
    
    (1,006,792
    )
    
    
    (955,981
    )CONSOLIDATEDTotal revenue
    
    $
    265,213
    
    
    $
    247,970Adjusted operating income
    
    
    101,293
    
    
    
    100,037Total assets
    
    
    1,393,934
    
    
    
    1,331,853Capital expenditures
    
    
    20,664
    
    
    
    19,996
 
 (1)
    
    Elimination of intercompany revenue, primarily from Puerto Rico broadband to Puerto Rico wireless.(2)
    
    Elimination of intercompany investments.  Three Months EndedAugust 31,2008
    
    
    2007Adjusted operating income
    
    $
    101,293
    
    
    $
    100,037Depreciation and amortization
    
    
    (35,544
    )
    
    
    (33,356
    )Stock-based compensation expense
    
    
    (2,870
    )
    
    
    (3,055
    )Gain (loss) on disposition of assets
    
    
    47
    
    
    
    (349
    )Operating income
    
    
    62,926
    
    
    
    63,277Interest expense, net
    
    
    (44,880
    )
    
    
    (48,584
    )Income tax expense
    
    
    (10,056
    )
    
    
    (8,261
    )Minority interest in income of subsidiaries
    
    
    (167
    )
    
    
    (152
    )Income from continuing operations
    
    
    7,823
    
    
    
    6,280Loss from discontinued operations
    
    
    (337
    )
    
    
    (514
    )Net income
    
    $
    7,486
    
    
    $
    5,766
 14




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NOTE 10. CONDENSED CONSOLIDATING FINANCIAL DATA
  15




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CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of August 31, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    47,595
    
    
    $
    
    
    
    $
    76,248
    
    
    $
    
    
    
    $
    
    
    
    $
    123,843Accounts receivable, net
    
    
    46,407
    
    
    
    
    
    
    
    52,271
    
    
    
    
    
    
    
    
    
    
    
    98,678Inventory  phones and accessories,
net
    
    
    16,822
    
    
    
    
    
    
    
    23,499
    
    
    
    
    
    
    
    
    
    
    
    40,321Prepaid expenses and other current
assets
    
    
    17,246
    
    
    
    
    
    
    
    18,294
    
    
    
    
    
    
    
    
    
    
    
    35,540Total current assets
    
    
    128,070
    
    
    
    
    
    
    
    170,312
    
    
    
    
    
    
    
    
    
    
    
    298,382Property, plant & equipment, net
    
    
    252,263
    
    
    
    
    
    
    
    321,545
    
    
    
    
    
    
    
    
    
    
    
    573,808Debt issuance costs
    
    
    11,732
    
    
    
    
    
    
    
    20,903
    
    
    
    
    
    
    
    
    
    
    
    32,635Restricted Cash
    
    
    6,454
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,454U.S. wireless licenses
    
    
    
    
    
    
    
    
    
    
    402,395
    
    
    
    
    
    
    
    
    
    
    
    402,395Puerto Rico wireless licenses, net
    
    
    
    
    
    
    
    
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Goodwill
    
    
    4,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,187Investment in subsidiaries
    
    
    
    
    
    
    967,023
    
    
    
    574,556
    
    
    
    (730,616
    )
    
    
    (810,963
    )
    
    
    Other assets
    
    
    19,997
    
    
    
    
    
    
    
    1,917
    
    
    
    
    
    
    
    
    
    
    
    21,914Total
    
    $
    422,703
    
    
    $
    967,023
    
    
    $
    1,545,787
    
    
    $
    (730,616
    )
    
    $
    (810,963
    )
    
    $
    1,393,934LIABILITIES AND
STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable
    
    $
    15,338
    
    
    $
    
    
    
    $
    19,387
    
    
    $
    
    
    
    $
    
    
    
    $
    34,725Accrued expenses and other current
liabilities
    
    
    121,513
    
    
    
    
    
    
    
    56,068
    
    
    
    
    
    
    
    
    
    
    
    177,581Payable to affiliates
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Total current liabilities
    
    
    136,851
    
    
    
    
    
    
    
    75,530
    
    
    
    
    
    
    
    
    
    
    
    212,381Long-term debt
    
    
    793,103
    
    
    
    591,395
    
    
    
    80,365
    
    
    
    547,838
    
    
    
    
    
    
    
    2,012,701Deferred income taxes
    
    
    8,421
    
    
    
    
    
    
    
    154,372
    
    
    
    
    
    
    
    
    
    
    
    162,793Other liabilities
    
    
    7,156
    
    
    
    
    
    
    
    24,677
    
    
    
    
    
    
    
    
    
    
    
    31,833Intercompany
    
    
    35,430
    
    
    
    1,088,067
    
    
    
    1,064,475
    
    
    
    (249,190
    )
    
    
    (1,938,782
    )
    
    
    Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    5,065
    
    
    
    
    
    
    
    
    
    
    
    5,065Redeemable preferred stock
    
    
    615,838
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (615,838
    )
    
    
    Stockholders (deficit) equity:Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,083
    
    
    
    
    
    
    
    1,083Additional paid-in capital
    
    
    (818,496
    )
    
    
    
    
    
    
    818,496
    
    
    
    41,374
    
    
    
    
    
    
    
    41,374Accumulated (deficit) equity
    
    
    (354,908
    )
    
    
    (711,556
    )
    
    
    (677,193
    )
    
    
    (1,070,644
    )
    
    
    1,743,657
    
    
    
    (1,070,644
    )Accumulated other comprehensive loss
    
    
    (692
    )
    
    
    (883
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,575
    )(1,174,096
    )
    
    
    (712,439
    )
    
    
    141,303
    
    
    
    (1,028,187
    )
    
    
    1,743,657
    
    
    
    (1,029,762
    )Less: treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,077
    )
    
    
    
    
    
    
    (1,077
    )Total stockholders (deficit) equity
    
    
    (1,174,096
    )
    
    
    (712,439
    )
    
    
    141,303
    
    
    
    (1,029,264
    )
    
    
    1,743,657
    
    
    
    (1,030,839
    )Total
    
    $
    422,703
    
    
    $
    967,023
    
    
    $
    1,545,787
    
    
    $
    (730,616
    )
    
    $
    (810,963
    )
    
    $
    1,393,934
 16




---



##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Three Months Ended August 31, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    110,496
    
    
    $
    
    
    
    $
    157,809
    
    
    $
    
    
    
    $
    (3,092
    )
    
    $
    265,213Costs and expenses:Cost of services (exclusive of depreciation
and amortization shown below)
    
    
    22,601
    
    
    
    
    
    
    
    30,999
    
    
    
    
    
    
    
    (2,924
    )
    
    
    50,676Cost of equipment sold
    
    
    16,470
    
    
    
    
    
    
    
    25,679
    
    
    
    
    
    
    
    
    
    
    
    42,149Sales and marketing
    
    
    11,481
    
    
    
    
    
    
    
    14,388
    
    
    
    
    
    
    
    
    
    
    
    25,869General and administrative
    
    
    22,810
    
    
    
    
    
    
    
    25,454
    
    
    
    
    
    
    
    (168
    )
    
    
    48,096Depreciation and amortization
    
    
    17,649
    
    
    
    
    
    
    
    17,895
    
    
    
    
    
    
    
    
    
    
    
    35,544Loss (gain) on disposition of assets
    
    
    12
    
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    
    
    
    
    (47
    )91,023
    
    
    
    
    
    
    
    114,356
    
    
    
    
    
    
    
    (3,092
    )
    
    
    202,287Operating income
    
    
    19,473
    
    
    
    
    
    
    
    43,453
    
    
    
    
    
    
    
    
    
    
    
    62,926Income (loss) from investments in subsidiaries
    
    
    
    
    
    
    7,486
    
    
    
    (11,987
    )
    
    
    7,486
    
    
    
    (2,985
    )
    
    
    Interest expense, net
    
    
    (25,738
    )
    
    
    (11,443
    )
    
    
    (4,261
    )
    
    
    (12,738
    )
    
    
    9,300
    
    
    
    (44,880
    )Intercompany interest allocation
    
    
    
    
    
    
    11,443
    
    
    
    (14,881
    )
    
    
    12,738
    
    
    
    (9,300
    )
    
    
    (Loss) income from continuing operations
before income tax expense and minority
interest in income of subsidiaries
    
    
    (6,265
    )
    
    
    7,486
    
    
    
    12,324
    
    
    
    7,486
    
    
    
    (2,985
    )
    
    
    18,046Income tax expense
    
    
    (5,722
    )
    
    
    
    
    
    
    (4,334
    )
    
    
    
    
    
    
    
    
    
    
    (10,056
    )(Loss) income from continuing operations
before minority interest in income of
subsidiaries
    
    
    (11,987
    )
    
    
    7,486
    
    
    
    7,990
    
    
    
    7,486
    
    
    
    (2,985
    )
    
    
    7,990Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    (167
    )
    
    
    
    
    
    
    
    
    
    
    (167
    )(Loss) income from continuing operations
    
    
    (11,987
    )
    
    
    7,486
    
    
    
    7,823
    
    
    
    7,486
    
    
    
    (2,985
    )
    
    
    7,823Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (337
    )
    
    
    
    
    
    
    
    
    
    
    (337
    )Net (loss) income
    
    $
    (11,987
    )
    
    $
    7,486
    
    
    $
    7,486
    
    
    $
    7,486
    
    
    $
    (2,985
    )
    
    $
    7,486
 17




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Three Months Ended August 31, 2008
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)OPERATING ACTIVITIES:Net (loss) income
    
    
    (11,987
    )
    
    
    7,486
    
    
    
    7,486
    
    
    
    7,486
    
    
    
    (2,985
    )
    
    
    7,486Adjustments
to reconcile net (loss) income to
net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    17,649
    
    
    
    
    
    
    
    17,895
    
    
    
    
    
    
    
    
    
    
    
    35,544Stock-based compensation expense
    
    
    1,451
    
    
    
    
    
    
    
    1,419
    
    
    
    
    
    
    
    
    
    
    
    2,870Excess tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (102
    )
    
    
    
    
    
    
    
    
    
    
    (102
    )Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    167
    
    
    
    
    
    
    
    
    
    
    
    167Distributions paid to minority interest
    
    
    
    
    
    
    
    
    
    
    (47
    )
    
    
    
    
    
    
    
    
    
    
    (47
    )Equity in undistributed earnings (loss) of
subsidiaries
    
    
    
    
    
    
    7,486
    
    
    
    (11,987
    )
    
    
    7,486
    
    
    
    (2,985
    )
    
    
    Loss (gain) on disposition of assets
    
    
    12
    
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    Changes in assets and liabilities, net of
effects of acquisitions and dispositions and
other
    
    
    24,458
    
    
    
    (14,089
    )
    
    
    (11,818
    )
    
    
    (20,951
    )
    
    
    15,270
    
    
    
    (7,130
    )NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
    
    
    31,583
    
    
    
    883
    
    
    
    3,001
    
    
    
    (5,979
    )
    
    
    9,300
    
    
    
    38,788INVESTING ACTIVITIES:Proceeds from disposition of assets, net of
cash expenses
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    21Payments for purchase of wireless spectrum
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Capital expenditures
    
    
    (11,958
    )
    
    
    
    
    
    
    (8,706
    )
    
    
    
    
    
    
    
    
    
    
    (20,664
    )NET CASH USED IN INVESTING ACTIVITIES
    
    
    (11,958
    )
    
    
    
    
    
    
    (8,687
    )
    
    
    
    
    
    
    
    
    
    
    (20,645
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    
    
    
    
    (724
    )
    
    
    
    
    
    
    
    
    
    
    (724
    )Proceeds from the exercise of employee stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,161
    
    
    
    
    
    
    
    1,161Excess tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    
    
    
    
    102Cash (paid to) received from affiliates
    
    
    (8,660
    )
    
    
    (883
    )
    
    
    14,127
    
    
    
    4,716
    
    
    
    (9,300
    )
    
    
    NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES
    
    
    (8,660
    )
    
    
    (883
    )
    
    
    13,403
    
    
    
    5,979
    
    
    
    (9,300
    )
    
    
    539NET INCREASE IN CASH AND CASH
EQUIVALENTS
    
    
    10,965
    
    
    
    
    
    
    
    7,717
    
    
    
    
    
    
    
    
    
    
    
    18,682CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    36,630
    
    
    
    
    
    
    
    68,531
    
    
    
    
    
    
    
    
    
    
    
    105,161CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    
    47,595
    
    
    
    
    
    
    
    76,248
    
    
    
    
    
    
    
    
    
    
    
    123,843
 18




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##### Table of Contents



CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of May 31, 2008
(Amounts in thousands)
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    SubsidiariesASSETSCurrent assets:Cash and cash equivalents
    
    $
    36,630
    
    
    $
    
    
    
    $
    68,531
    
    
    $
    
    
    
    $
    
    
    
    $
    105,161Accounts receivable, net
    
    
    44,768
    
    
    
    
    
    
    
    49,230
    
    
    
    
    
    
    
    
    
    
    
    93,998Inventory  phones and accessories,
net
    
    
    19,633
    
    
    
    
    
    
    
    23,609
    
    
    
    
    
    
    
    
    
    
    
    43,242Prepaid expenses and other current
assets
    
    
    15,251
    
    
    
    
    
    
    
    18,047
    
    
    
    
    
    
    
    
    
    
    
    33,298Total current assets
    
    
    116,282
    
    
    
    
    
    
    
    159,417
    
    
    
    
    
    
    
    
    
    
    
    275,699Property, plant & equipment, net
    
    
    253,509
    
    
    
    
    
    
    
    325,024
    
    
    
    
    
    
    
    
    
    
    
    578,533Debt issuance costs
    
    
    12,444
    
    
    
    
    
    
    
    22,164
    
    
    
    
    
    
    
    
    
    
    
    34,608Restricted cash
    
    
    6,466
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,466U.S. wireless licenses
    
    
    
    
    
    
    
    
    
    
    402,393
    
    
    
    
    
    
    
    
    
    
    
    402,393Puerto Rico wireless licenses, net
    
    
    
    
    
    
    
    
    
    
    54,159
    
    
    
    
    
    
    
    
    
    
    
    54,159Goodwill
    
    
    4,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,187Investment in subsidiaries
    
    
    
    
    
    
    959,537
    
    
    
    586,543
    
    
    
    (738,102
    )
    
    
    (807,978
    )
    
    
    Other assets
    
    
    17,521
    
    
    
    
    
    
    
    1,899
    
    
    
    
    
    
    
    
    
    
    
    19,420Total
    
    $
    410,409
    
    
    $
    959,537
    
    
    $
    1,551,599
    
    
    $
    (738,102
    )
    
    $
    (807,978
    )
    
    $
    1,375,465LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable
    
    $
    15,332
    
    
    $
    
    
    
    $
    10,115
    
    
    $
    
    
    
    $
    
    
    
    $
    25,447Accrued expenses and other current
liabilities
    
    
    121,555
    
    
    
    
    
    
    
    71,972
    
    
    
    
    
    
    
    
    
    
    
    193,527Payable to affiliates
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Total current liabilities
    
    
    136,887
    
    
    
    
    
    
    
    82,162
    
    
    
    
    
    
    
    
    
    
    
    219,049Long-term debt
    
    
    793,161
    
    
    
    591,395
    
    
    
    78,378
    
    
    
    547,713
    
    
    
    
    
    
    
    2,010,647Deferred income taxes
    
    
    1,478
    
    
    
    
    
    
    
    149,930
    
    
    
    
    
    
    
    
    
    
    
    151,408Other liabilities
    
    
    8,111
    
    
    
    
    
    
    
    25,839
    
    
    
    
    
    
    
    
    
    
    
    33,950Intercompany
    
    
    26,770
    
    
    
    1,087,184
    
    
    
    1,078,602
    
    
    
    (244,474
    )
    
    
    (1,948,082
    )
    
    
    Minority interest in subsidiaries
    
    
    
    
    
    
    
    
    
    
    4,898
    
    
    
    
    
    
    
    
    
    
    
    4,898Redeemable preferred stock
    
    
    606,538
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (606,538
    )
    
    
    Stockholders (deficit) equity:Common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,079
    
    
    
    
    
    
    
    1,079Additional paid-in capital
    
    
    (818,497
    )
    
    
    
    
    
    
    818,497
    
    
    
    36,787
    
    
    
    
    
    
    
    36,787Accumulated (deficit) equity
    
    
    (342,921
    )
    
    
    (719,042
    )
    
    
    (684,679
    )
    
    
    (1,078,130
    )
    
    
    1,746,642
    
    
    
    (1,078,130
    )Accumulated other comprehensive loss
    
    
    (1,118
    )
    
    
    
    
    
    
    (2,028
    )
    
    
    
    
    
    
    
    
    
    
    (3,146
    )(1,162,536
    )
    
    
    (719,042
    )
    
    
    131,790
    
    
    
    (1,040,264
    )
    
    
    1,746,642
    
    
    
    (1,043,410
    )Less: treasury shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,077
    )
    
    
    
    
    
    
    (1,077
    )Total stockholders (deficit) equity
    
    
    (1,162,536
    )
    
    
    (719,042
    )
    
    
    131,790
    
    
    
    (1,041,341
    )
    
    
    1,746,642
    
    
    
    (1,044,487
    )Total
    
    $
    410,409
    
    
    $
    959,537
    
    
    $
    1,551,599
    
    
    $
    (738,102
    )
    
    $
    (807,978
    )
    
    $
    1,375,465
 19




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Three Months Ended August 31, 2007
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)Revenue
    
    $
    103,165
    
    
    $
    
    
    
    $
    178,678
    
    
    $
    
    
    
    $
    (33,873
    )
    
    $
    247,970Costs and expenses:Cost of services (exclusive of depreciation
and amortization shown below)
    
    
    18,807
    
    
    
    
    
    
    
    28,511
    
    
    
    
    
    
    
    (744
    )
    
    
    46,574Cost of equipment sold
    
    
    8,242
    
    
    
    
    
    
    
    23,280
    
    
    
    
    
    
    
    
    
    
    
    31,522Sales and marketing
    
    
    10,459
    
    
    
    
    
    
    
    15,127
    
    
    
    
    
    
    
    
    
    
    
    25,586General and administrative
    
    
    23,922
    
    
    
    
    
    
    
    56,513
    
    
    
    
    
    
    
    (33,129
    )
    
    
    47,306Depreciation and amortization
    
    
    16,386
    
    
    
    
    
    
    
    16,970
    
    
    
    
    
    
    
    
    
    
    
    33,356Loss (gain) on disposition of assets
    
    
    438
    
    
    
    
    
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    34978,254
    
    
    
    
    
    
    
    140,312
    
    
    
    
    
    
    
    (33,873
    )
    
    
    184,693Operating income
    
    
    24,911
    
    
    
    
    
    
    
    38,366
    
    
    
    
    
    
    
    
    
    
    
    63,277Income (loss) from investments in subsidiaries
    
    
    
    
    
    
    5,766
    
    
    
    (1,139
    )
    
    
    5,766
    
    
    
    (10,393
    )
    
    
    Interest expense, net
    
    
    (26,161
    )
    
    
    14,446
    
    
    
    (21,716
    )
    
    
    (15,153
    )
    
    
    
    
    
    
    (48,584
    )Intercompany interest allocation
    
    
    
    
    
    
    (14,446
    )
    
    
    (707
    )
    
    
    15,153
    
    
    
    
    
    
    
    (Loss) income from continuing operations
before income tax expense and minority
interest in income of subsidiaries
    
    
    (1,250
    )
    
    
    5,766
    
    
    
    14,804
    
    
    
    5,766
    
    
    
    (10,393
    )
    
    
    14,693Income tax benefit (expense)
    
    
    111
    
    
    
    
    
    
    
    (8,372
    )
    
    
    
    
    
    
    
    
    
    
    (8,261
    )(Loss) income from continuing operations
before minority interest in income of
subsidiaries
    
    
    (1,139
    )
    
    
    5,766
    
    
    
    6,432
    
    
    
    5,766
    
    
    
    (10,393
    )
    
    
    6,432Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    (152
    )
    
    
    
    
    
    
    
    
    
    
    (152
    )(Loss) income from continuing operations
    
    
    (1,139
    )
    
    
    5,766
    
    
    
    6,280
    
    
    
    5,766
    
    
    
    (10,393
    )
    
    
    6,280Loss from discontinued operations
    
    
    
    
    
    
    
    
    
    
    (514
    )
    
    
    
    
    
    
    
    
    
    
    (514
    )Net (loss) income
    
    $
    (1,139
    )
    
    $
    5,766
    
    
    $
    5,766
    
    
    $
    5,766
    
    
    $
    (10,393
    )
    
    $
    5,766
 20




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##### Table of Contents



CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Three Months Ended August 31, 2007
 Centennial
    
    
    Centennial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    CentennialPuerto Rico
    
    
    Cellular
    
    
    
    
    
    
    Centennial
    
    
    
    
    
    
    CommunicationsOperations
    
    
    Operating
    
    
    Non-
    
    
    Communications
    
    
    
    
    
    
    Corp. andCorp.
    
    
    Co. LLC
    
    
    Guarantors
    
    
    Corp.
    
    
    Eliminations
    
    
    Subsidiaries(Amounts in thousands)OPERATING ACTIVITIES:Net (loss) income
    
    
    (1,139
    )
    
    
    5,766
    
    
    
    5,766
    
    
    
    5,766
    
    
    
    (10,393
    )
    
    
    5,766Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:Depreciation and amortization
    
    
    16,386
    
    
    
    
    
    
    
    16,970
    
    
    
    
    
    
    
    
    
    
    
    33,356Stock-based compensation expense
    
    
    1,599
    
    
    
    
    
    
    
    1,456
    
    
    
    
    
    
    
    
    
    
    
    3,055Excess tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    (526
    )
    
    
    
    
    
    
    
    
    
    
    (526
    )Minority interest in income of subsidiaries
    
    
    
    
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    
    
    
    
    152Equity in undistributed earnings (loss) of
subsidiaries
    
    
    
    
    
    
    5,766
    
    
    
    (1,139
    )
    
    
    5,766
    
    
    
    (10,393
    )
    
    
    Loss (gain) on disposition of assets
    
    
    438
    
    
    
    
    
    
    
    (89
    )
    
    
    
    
    
    
    
    
    
    
    349Changes in assets and liabilities, net of
effects of acquisitions and dispositions and
other
    
    
    (18,068
    )
    
    
    (11,182
    )
    
    
    1,167
    
    
    
    (18,685
    )
    
    
    39,386
    
    
    
    (7,382
    )NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES
    
    
    (784
    )
    
    
    350
    
    
    
    23,757
    
    
    
    (7,153
    )
    
    
    18,600
    
    
    
    34,770INVESTING ACTIVITIES:Proceeds from disposition of assets, net of
cash expenses
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    
    
    
    
    7Capital expenditures
    
    
    11,347
    
    
    
    
    
    
    
    (31,343
    )
    
    
    
    
    
    
    
    
    
    
    (19,996
    )NET CASH PROVIDED (USED IN) BY INVESTING
ACTIVITIES
    
    
    11,347
    
    
    
    
    
    
    
    (31,336
    )
    
    
    
    
    
    
    
    
    
    
    (19,989
    )FINANCING ACTIVITIES:Repayment of debt
    
    
    
    
    
    
    
    
    
    
    (467
    )
    
    
    
    
    
    
    
    
    
    
    (467
    )Proceeds from the exercise of employee stock
options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,805
    
    
    
    
    
    
    
    1,805Excess tax benefit from stock-based compensation
    
    
    
    
    
    
    
    
    
    
    526
    
    
    
    
    
    
    
    
    
    
    
    526Proceeds from issuance of common stock under
employee stock purchase plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    296
    
    
    
    
    
    
    
    296Cash (paid to) received from affiliates
    
    
    (5,564
    )
    
    
    (350
    )
    
    
    19,462
    
    
    
    5,052
    
    
    
    (18,600
    )
    
    
    NET CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES
    
    
    (5,564
    )
    
    
    (350
    )
    
    
    19,521
    
    
    
    7,153
    
    
    
    (18,600
    )
    
    
    2,160NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    4,999
    
    
    
    
    
    
    
    11,942
    
    
    
    
    
    
    
    
    
    
    
    16,941CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    31,157
    
    
    
    
    
    
    
    63,583
    
    
    
    
    
    
    
    
    
    
    
    94,740CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    
    36,156
    
    
    
    
    
    
    
    75,525
    
    
    
    
    
    
    
    
    
    
    
    111,681
 21




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##### Table of Contents



NOTE 11. SUBSEQUENT EVENTS
    22




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##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 EXECUTIVE OVERVIEW
 Company Overview
    Managements Summary
       23




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##### Table of Contents




    
    Gross postpaid and prepaid wireless additions
    
    Net additions  wireless subscribers
    
    ARPU
    
    Roaming revenue
    
    Penetration  wireless
    
    Postpaid churn  wireless
    
    Average monthly minutes of use per wireless subscriber
    
    Data revenue per average wireless subscriber
    
    Fiber route miles  Puerto Rico broadband
    
    Switched access lines  Puerto Rico broadband
    
    Dedicated access line equivalents  Puerto Rico broadband
    
    On-net buildings  Puerto Rico broadband
    
    Capital expenditures
    24




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##### Table of Contents



Instant Internet
      CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  25




---



##### Table of Contents




    
    it requires us to make assumptions because information was not available at the time or
it included matters that were highly uncertain at the time we were making the estimate, and
    
    changes in the estimate or different estimates that we could have selected may have had a
material effect on our consolidated financial condition or consolidated results of
operations.
 Allowance for Doubtful Accounts
  Property, Plant and Equipment  Depreciation
  Valuation of Long-Lived Assets
  Goodwill and Wireless Licenses  Valuation of Goodwill and Indefinite-Lived Intangible Assets
 Goodwill and Other
Intangible Assets
   26




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##### Table of Contents



Disclosures about Segments of an Enterprise and Related Information
  Stock-Based Compensation
 Share-Based Payment
   Income Taxes
    27




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##### Table of Contents



RESULTS OF OPERATIONS
 U.S. Wireless Operations
 Three Months EndedAugust 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Service revenue
    
    $
    120,249
    
    
    $
    109,340
    
    
    $
    10,909
    
    
    
    10
    %Roaming revenue
    
    
    15,789
    
    
    
    17,952
    
    
    
    (2,163
    )
    
    
    (12
    )Equipment sales
    
    
    11,769
    
    
    
    10,312
    
    
    
    1,457
    
    
    
    14Total revenue
    
    
    147,807
    
    
    
    137,604
    
    
    
    10,203
    
    
    
    7Costs and expenses:Cost of services
    
    
    28,765
    
    
    
    28,367
    
    
    
    398
    
    
    
    1Cost of equipment sold
    
    
    21,946
    
    
    
    18,779
    
    
    
    3,167
    
    
    
    17Sales and marketing
    
    
    14,154
    
    
    
    14,964
    
    
    
    (810
    )
    
    
    (5
    )General and administrative
    
    
    24,354
    
    
    
    22,355
    
    
    
    1,999
    
    
    
    9Total costs and expenses
    
    
    89,219
    
    
    
    84,465
    
    
    
    4,754
    
    
    
    6Adjusted operating income(1)
    
    $
    58,588
    
    
    $
    53,139
    
    
    $
    5,449
    
    
    
    10
    %
 
 (1)
    
    Adjusted operating income represents the profitability measure of the
segment  see Note 9 to the unaudited Condensed Consolidated
Financial Statements for a reconciliation of consolidated adjusted
operating income to the appropriate GAAP measure. 28




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##### Table of Contents



Revenue.
     Costs and expenses.
    Puerto Rico Wireless Operations
 Three Months EndedAugust 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Service revenue
    
    $
    77,696
    
    
    $
    76,904
    
    
    $
    792
    
    
    
    1
    %Roaming revenue
    
    
    2,694
    
    
    
    1,136
    
    
    
    1,558
    
    
    
    *Equipment sales
    
    
    4,442
    
    
    
    3,298
    
    
    
    1,144
    
    
    
    35Total revenue
    
    
    84,832
    
    
    
    81,338
    
    
    
    3,494
    
    
    
    4Costs and expenses:Cost of services
    
    
    14,767
    
    
    
    13,091
    
    
    
    1,676
    
    
    
    13Cost of equipment sold
    
    
    19,939
    
    
    
    12,678
    
    
    
    7,261
    
    
    
    57Sales and marketing
    
    
    9,614
    
    
    
    9,000
    
    
    
    614
    
    
    
    7General and administrative
    
    
    17,560
    
    
    
    17,876
    
    
    
    (316
    )
    
    
    (2
    )Total costs and expenses
    
    
    61,880
    
    
    
    52,645
    
    
    
    9,235
    
    
    
    18Adjusted operating income(1)
    
    $
    22,952
    
    
    $
    28,693
    
    
    $
    (5,741
    )
    
    
    (20
    )%
 
 (1)
    
    Adjusted operating income represents the profitability measure of the
segment  see Note 9 to the unaudited Condensed Consolidated
Financial Statements for a reconciliation of consolidated adjusted
operating income to the appropriate GAAP measure.*
    
    Percentage not meaningful 29




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##### Table of Contents



Revenue.
    Instant Internet
 Costs and expenses.
    30




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##### Table of Contents



Puerto Rico Broadband Operations
 Three Months EndedAugust 31,2008
    
    
    2007
    
    
    $ Change
    
    
    % Change(In thousands)Revenue:Switched revenue
    
    $
    13,935
    
    
    $
    13,602
    
    
    $
    333
    
    
    
    2
    %Dedicated revenue
    
    
    19,402
    
    
    
    16,274
    
    
    
    3,128
    
    
    
    19Other revenue
    
    
    2,330
    
    
    
    2,128
    
    
    
    202
    
    
    
    9Total revenue
    
    
    35,667
    
    
    
    32,004
    
    
    
    3,663
    
    
    
    11Costs and expenses:Cost of services
    
    
    9,754
    
    
    
    7,599
    
    
    
    2,155
    
    
    
    28Cost of equipment sold
    
    
    265
    
    
    
    65
    
    
    
    200
    
    
    
    *Sales and marketing
    
    
    1,934
    
    
    
    1,425
    
    
    
    509
    
    
    
    36General and administrative
    
    
    3,961
    
    
    
    4,710
    
    
    
    (749
    )
    
    
    (16
    )Total costs and expenses
    
    
    15,914
    
    
    
    13,799
    
    
    
    2,115
    
    
    
    15Adjusted operating income(1)
    
    $
    19,753
    
    
    $
    18,205
    
    
    $
    1,548
    
    
    
    9
    %
 
 (1)
    
    Adjusted operating income represents the profitability measure of the
segment  see Note 9 to the unaudited Condensed Consolidated
Financial Statements for a reconciliation of consolidated adjusted
operating income to the appropriate GAAP measure.*
    
    Percentage not meaningful Revenue.
    Costs and expenses.
   31




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
 Weighted Average Debt Outstanding and Interest Expense
 Three Months EndedAugust 31,2008
    
    
    2007
    
    
    Change(In millions)Weighted Average Debt Outstanding
    
    $
    2,011.3
    
    
    $
    2,046.8
    
    
    $
    (35.5
    )Weighted Average Gross Interest Rate(1)
    
    
    9.0
    %
    
    
    9.7
    %
    
    
    (0.7
    )%Weighted Average Gross Interest Rate(2)
    
    
    8.6
    %
    
    
    9.3
    %
    
    
    (0.7
    )%Gross Interest Expense(1)
    
    $
    45.36
    
    
    $
    49.74
    
    
    $
    (4.38
    )Interest Income
    
    $
    .48
    
    
    $
    1.16
    
    
    $
    (0.68
    )Net Interest Expense
    
    $
    44.88
    
    
    $
    48.58
    
    
    $
    (3.70
    )
 
 (1)
    
    Including amortization of debt issuance costs of $2.0 million for the
three months ended August 31, 2008 and 2007, respectively.(2)
    
    Excluding amortization of debt issuance costs of $2.0 million for the
three months ended August 31, 2008 and 2007, respectively.   Senior Secured Credit Facility
   High-Yield Notes
  32




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##### Table of Contents



Derivative Financial Instruments
   All-In
    
    Collar
    
    CollarSwap
    
    Fixed
    
    FixedFixed
    
    Interest
    
    InterestVariable Interest Rate Loan
    
    Amount
    
    Interest
    
    Rate
    
    Rate
    
    Trade
    
    Effective
    
    ExpirationBeing Hedged
    
    Hedged
    
    Rate
    
    Floor
    
    Cap
    
    Date
    
    Date
    
    DateMay 2007 CCOC Collar
    
    Senior Secured Credit Facility
    
    $
    200.0
    
    
    
    
    
    
    
    4.24
    %
    
    
    5.35
    %
    
    
    5/1/2007
    
    
    
    12/31/2007
    
    
    
    12/31/20082008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    250.0
    
    
    
    6.45
    %
    
    
    
    
    
    
    
    
    
    
    9/18/2007
    
    
    
    3/31/2008
    
    
    
    9/30/2008CPROC Collar
    
    Senior Secured Credit Facility
    
    $
    35.5
    
    
    
    
    
    
    
    4.66
    %
    
    
    5.50
    %
    
    
    10/31/2006
    
    
    
    12/29/2006
    
    
    
    6/30/2008June 2008 CPROC Swap
    
    Senior Secured Credit Facility
    
    $
    35.5
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008CCOC Collar
    
    Senior Secured Credit Facility
    
    $
    25.0
    
    
    
    
    
    
    
    4.66
    %
    
    
    5.50
    %
    
    
    10/31/2006
    
    
    
    12/29/2006
    
    
    
    6/30/2008June 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    25.0
    
    
    
    4.61
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    6/30/2008
    
    
    
    12/31/2008May 2008 CCOC Swap
    
    Senior Secured Credit Facility
    
    $
    39.5
    
    
    
    4.54
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    5/31/2008
    
    
    
    11/30/2008Holdco Swap
    
    2013 Holdco Floating Rate Notes
    
    $
    200.0
    
    
    
    10.46
    %
    
    
    
    
    
    
    
    
    
    
    10/31/2007
    
    
    
    12/31/2007
    
    
    
    6/30/20082008 Holdco Swap
    
    2013 Holdco Floating Rate Notes
    
    $
    200.0
    
    
    
    8.60
    %
    
    
    
    
    
    
    
    
    
    
    5/23/2008
    
    
    
    7/1/2008
    
    
    
    4/1/2009
      33




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##### Table of Contents



Three Months Ended
    
    
    % of Total CapitalAugust 31, 2008
    
    
    Expenditures(dollar amounts in thousands)U.S. Wireless
    
    $
    8,706
    
    
    
    42.1
    %Puerto Rico Wireless
    
    
    6,730
    
    
    
    32.6Puerto Rico Broadband
    
    
    5,228
    
    
    
    25.3Total capital expenditures
    
    $
    20,664
    
    
    
    100.0
    %Property, plant and equipment, net at August 31, 2008
    
    $
    573,808
      ACQUISITIONS AND DISPOSITIONS
   COMMITMENTS AND CONTINGENCIES
  34




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##### Table of Contents



Less than
    
    
    1-3
    
    
    
    
    
    
    AfterContractual Obligations
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    3-5 Years
    
    
    5 YearsLong-term debt obligations (net of unamortized discount)
    
    $
    1,925,000
    
    
    $
    
    
    
    $
    550,000
    
    
    $
    
    
    
    $
    1,375,000Interest on long-term debt obligations(1)
    
    
    762,541
    
    
    
    160,339
    
    
    
    310,234
    
    
    
    259,403
    
    
    
    32,565Operating lease obligations
    
    
    273,471
    
    
    
    31,645
    
    
    
    52,485
    
    
    
    37,040
    
    
    
    152,301Capital lease obligations
    
    
    241,581
    
    
    
    7,888
    
    
    
    16,389
    
    
    
    17,384
    
    
    
    199,920Purchase obligations
    
    
    121,081
    
    
    
    11,911
    
    
    
    23,511
    
    
    
    36,069
    
    
    
    49,590Total contractual cash obligations
    
    
    3,323,674
    
    
    
    211,783
    
    
    
    952,619
    
    
    
    349,896
    
    
    
    1,809,376Sublessor agreements
    
    
    (3,204
    )
    
    
    (1,212
    )
    
    
    (1,660
    )
    
    
    (329
    )
    
    
    (3
    )Net
    
    $
    3,320,470
    
    
    $
    210,571
    
    
    $
    950,959
    
    
    $
    349,567
    
    
    $
    1,809,373
 
 (1)
    
    Interest payments are based on the Companys projected interest rates
and estimated principle amounts outstanding for the periods presented.The liability for income taxes under FIN 48 as of August 31, 2008 of
$17,570 is excluded from the contractual obligations table as the
Company is unable to make reasonably reliable estimates of the period
of cash settlement, if any with the respective taxing authority. SUBSEQUENT EVENTS
    35




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##### Table of Contents



CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR
 PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   
    
    the effects of vigorous competition in our markets, which may make it difficult for us to
attract and retain customers and to grow our customer base and revenue and which may
increase churn, which could reduce our revenue and increase our costs;
    
    the fact that many of our competitors are larger than we are, have greater financial
resources than we do, are less leveraged than we are, have more extensive coverage areas
than we do, and may offer less expensive and more technologically advanced products and
services than we do;
    
    our ability to gain access to the latest technology handsets in a timeframe and at a cost
similar to our competitors;
    
    our ability to acquire, and the cost of acquiring, additional spectrum in our markets to
support growth and deployment of advanced technologies, including 3G and 4G services;
    
    our ability to successfully deploy and deliver wireless data services to our customers,
including next generation 3G and 4G technology;
    
    the effect of changes in the level of support provided to us by the Universal Service
Fund, or USF;
    
    our ability to grow our subscriber base at a reasonable cost to acquire;
    
    our dependence on roaming agreements for a significant portion of our wireless revenue
and the expected decline in roaming revenue over the long term;
    
    our ability to successfully integrate any acquired markets or businesses;
    
    the effects of higher than anticipated handset subsidy costs;
    
    our dependence on roaming agreements for our ability to offer our wireless customers
competitively priced regional and nationwide rate plans that include areas for which we do
not own wireless licenses;
    
    the effects of adding new subscribers with lower credit ratings;
    
    our substantial debt obligations, including restrictive covenants, which place
limitations on how we conduct business;
    
    market prices for the products and services we offer may decline in the future;
    
    changes and developments in technology, including our ability to upgrade our networks to
remain competitive and our ability to anticipate and react to frequent and significant
technological changes which may render certain technologies used by us obsolete;
    
    the effects of a decline in the market for our Code Division Multiple Access (CDMA)
-based technology;
 36




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##### Table of Contents




    
    the effects of consolidation in the telecommunications industry;
    
    general economic, business, political and social conditions in the areas in which we
operate, including the effects of downturns in the economy, world events, terrorism,
hurricanes, tornadoes, wind storms and other natural disasters;
    
    our ability to generate cash and the availability and cost of additional capital to fund
our operations and our significant planned capital expenditures;
    
    our need to refinance or amend existing indebtedness prior to its stated maturity;
    
    the effects of governmental regulation of the telecommunications industry;
    
    our ability to attract and retain qualified personnel;
    
    the effects of network disruptions and system failures;
    
    our ability to manage, implement and monitor billing and operational support systems;
    
    the results of litigation filed or which may be filed against us or our vendors,
including litigation relating to wireless billing, using wireless telephones while operating
an automobile and litigation relating to infringement of patents;
    
    the effects of scientific reports that may demonstrate possible health effects of radio
frequency transmission from use of wireless telephones; and
    
    the influence on us by our significant stockholder and anti-takeover provisions.
  
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   37




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##### Table of Contents



Fiscal Year Ended August 31,2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    Total
    
    Fair Value(In thousands)Long-term debt:Fixed rate
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    128
    
    
    $
    1,114,735
    
    
    $
    1,114,863
    
    
    $
    1,149,238Average fixed Interest rate
    
    
    
    
    
    
    
    
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    10.0
    %
    
    
    9.5
    %
    
    
    9.6
    %
    
    
    Variable rate
    
    $
    
    
    
    $
    275,000
    
    
    $
    275,000
    
    
    $
    
    
    
    $
    
    
    
    $
    350,000
    
    
    $
    900,000
    
    
    $
    898,250Average variable Interest rate(1)
    
    
    
    
    
    
    4.4
    %
    
    
    4.6
    %
    
    
    4.7
    %
    
    
    4.9
    %
    
    
    5.1
    %
    
    
    4.8
    %
    
    
    Interest rate swap (pay fixed, receive variable):Notional amount
    
    $
    489,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,050
    )Average pay rate
    
    
    7.70
    %Average receive rate
    
    
    7.24
    %Interest rate collar:Notional amount
    
    $
    260,500
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (1,448
    )Cap
    
    
    5.35  5.50
    %Floor
    
    
    4.24 
4.66
    %
 
 (1)
    
    Represents the average interest rate before applicable margin on the Senior Secured Credit Facility debt.  
 ITEM 4. CONTROLS AND PROCEDURES
   38




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
   
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
  ExhibitNo.
    
    Description10.1
    
    Centennial Communications 2008 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Appendix
A to the Companys definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on
August 13, 2008).31.1
    
    Certification of Michael J. Small, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Thomas J. Fitzpatrick, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification of Michael J. Small, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Thomas J. Fitzpatrick, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
 39




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##### Table of Contents



SIGNATURES
   CENTENNIAL COMMUNICATIONS CORP./s/  Thomas J. FitzpatrickThomas J. FitzpatrickExecutive Vice President,
Chief Financial Officer
(Chief Financial Officer)/s/  Francis P. HuntFrancis P. HuntSenior Vice President  Controller
(Chief Accounting Officer) 40