SOURCE: Centennial Communications Corp.

March 28, 2008 07:00 ET

Centennial Communications Announces Fiscal Third-Quarter Results; All Business Segments Support Solid Cash Flow Growth

Fiscal Third-Quarter Income From Continuing Operations of $0.06 per Diluted Share, Compared to Income of $0.00 per Diluted Share From Continuing Operations in the Prior-Year Quarter

Fiscal Third-Quarter Consolidated Adjusted Operating Income From Continuing Operations of $99.1 Million, up 11 Percent Year-Over-Year From $89.0 Million

Fiscal Third-Quarter Consolidated Revenue From Continuing Operations of $251.2 Million, up 8 Percent Year-Over-Year From $233.5 Million

WALL, NJ--(Marketwire - March 28, 2008) - Centennial Communications Corp. (NASDAQ: CYCL) ("Centennial") today reported income from continuing operations of $6.6 million, or $0.06 per diluted share, for the fiscal third quarter of 2008 as compared to income from continuing operations of $0.3 million, or $0.00 per diluted share, in the fiscal third quarter of 2007. Consolidated adjusted operating income (AOI)(1) from continuing operations for the fiscal third quarter was $99.1 million, as compared to $89.0 million for the adjusted prior-year quarter. For comparison, the Company's fiscal 2007 financial results have been adjusted to reflect the Universal Service Fund (USF) charge (2) in the period to which it relates.

"In the U.S., we continue to invest heavily in training our front-line Associates to engender a competitive spirit that keeps everyone focused on the bottom line," said Michael J. Small, Centennial's chief executive officer. "We've improved upon our long successful local market strategy by delighting customers at every touch-point with innovative new features, improving an already superior network and targeting our advertising within our footprint to showcase our strengths against the most relevant competitors."

Small continued, "In Puerto Rico, we're capitalizing on our leading position to consistently grow customers, improve customer retention and sustain a robust ARPU. Our Puerto Rico wireless business grew cash flow 13 percent during the fiscal third quarter, our best effort in more than two years. We're also leveraging our assets to attack new revenue streams in the residential market, and are seeing meaningful growth from our cable partnerships."

Centennial reported fiscal third-quarter consolidated revenue from continuing operations of $251.2 million, which included $137.8 million from U.S. wireless and $113.4 million from Puerto Rico operations. Consolidated revenue from continuing operations grew 8 percent versus the adjusted fiscal third quarter of 2007. The Company ended the quarter with 1,086,300 total wireless subscribers, which compares to 1,034,200 for the year-ago quarter and 1,068,300 for the previous quarter ended November 30, 2007(3). The Company reported 474,500 total access lines and equivalents at the end of the fiscal third quarter, which compares to 397,800 for the year-ago quarter.

OTHER HIGHLIGHTS

--  On February 7, 2008, Centennial announced that Thomas E. McInerney, a
    general partner of Welsh, Carson, Anderson & Stowe, stepped down as the
    Company's non-executive chairman.  Mr. McInerney will continue to serve as
    a director of Centennial.  The Company further stated that J. Stephen
    Vanderwoude, who has been a director of the Company since 1999, was
    unanimously appointed by the board of directors to serve as Centennial's
    non-executive chairman.
    

CENTENNIAL SEGMENT HIGHLIGHTS

U.S. Wireless Operations

--  Revenue was $137.8 million, a 9 percent increase from last year's
    third quarter.  Retail revenue (total revenue excluding roaming revenue)
    increased 12 percent from the year-ago period primarily driven by a 4
    percent increase in total subscribers, and supported by strong data,
    feature and access revenue.  Roaming revenue decreased 12 percent from the
    year-ago quarter primarily due to a 20 percent decline in the rate per
    minute for roaming traffic.
    
--  Average revenue per user (ARPU) was $70 during the fiscal third
    quarter, a 4 percent year-over-year increase.  ARPU included approximately
    $5.45 of data revenue per user, which grew 64 percent from the year-ago
    period.
    
--  AOI was $50.5 million, a 13 percent year-over-year increase,
    representing an AOI margin of 37 percent.  AOI benefited from strong growth
    in retail revenue, partially offset by a decline in roaming revenue.
    
--  U.S. wireless ended the quarter with 662,700 total subscribers, which
    compares to 634,800 for the prior-year quarter and to 650,100 for the
    previous quarter ended November 30, 2007.  Postpaid subscribers increased
    14,900 from the fiscal second quarter of 2008, supported by stable postpaid
    churn of 2.0 percent.
    
--  Capital expenditures were $16.2 million for the fiscal third quarter.
    

Puerto Rico Wireless Operations

--  Revenue was $82.7 million, an increase of 5 percent from the adjusted
    prior-year third quarter, primarily driven by a 6 percent increase in total
    subscribers.
    
--  ARPU was $65, which decreased from $66 when compared to the adjusted
    year-ago period.  ARPU slipped largely due to a decline in airtime revenue,
    partially offset by an increase in data revenue.  ARPU included
    approximately $7.06 of data revenue per user, which increased 31 percent
    from the year-ago period.
    
--  AOI totaled $31.0 million, an adjusted 13 percent year-over-year
    increase, representing an AOI margin of 37 percent.  AOI was favorably
    impacted by consistent subscriber growth during the last twelve months.
    
--  Puerto Rico wireless ended the quarter with 423,600 subscribers, which
    compares to 399,400 for the prior-year quarter and to 418,200 for the
    previous quarter ended November 30, 2007.  Postpaid subscribers increased
    5,400 from the fiscal second quarter of 2008, aided by lower postpaid churn
    of 2.4 percent.
    
--  Capital expenditures were $10.3 million for the fiscal third quarter.
    

Puerto Rico Broadband Operations

--  Revenue was $33.9 million, an adjusted 10 percent year-over-year
    increase.  Revenue increased primarily due to strong access line and data
    growth from cable television operators in Puerto Rico.
    
--  AOI was $17.7 million, a 4 percent increase from the adjusted year-ago
    period, representing an AOI margin of 52 percent.  AOI increased due to
    robust access line growth, partially offset by increased expense related to
    the deployment of network capacity in consideration of customer contracts
    for future service.
    
--  Switched access lines totaled approximately 91,600 at the end of the
    fiscal third quarter, an increase of 19,100 lines, or 26 percent from the
    prior-year quarter.  Dedicated access line equivalents were 382,900 at the
    end of the fiscal third quarter, an 18 percent year-over-year increase.
    
--  Capital expenditures were $3.8 million for the fiscal third quarter.
    

DEFINITIONS AND RECONCILIATION

(1) Adjusted operating income is defined as net income (loss) before loss from discontinued operations, income from equity investments, minority interest in income of subsidiaries, income tax expense, gain on sale of equity investments, interest expense, net, (loss) gain on disposition of assets, litigation settlement expense, strategic alternatives/recapitalization costs, stock-based compensation expense and depreciation and amortization. Please refer to the schedule below for a reconciliation of adjusted operating income to consolidated net income (loss) and the Investor Relations website at www.ir.centennialwireless.com for a discussion and reconciliation of this and other non-GAAP financial measures.

Reconciliation of adjusted operating income to consolidated net income
(loss):

                                  Three Months Ended   Nine Months Ended
                                  February  February  February   February
                                  29, 2008  28, 2007  29, 2008   28, 2007
                                  --------  --------  ---------  ---------
Adjusted operating income         $ 99,108  $ 84,599  $ 295,128  $ 264,987
Depreciation and amortization      (35,262)  (32,624)  (102,873)   (97,537)
Stock-based compensation expense    (2,112)   (1,851)    (8,548)    (6,669)
Strategic alternatives/
 recapitalization costs                 --        --         --       (285)
Litigation settlement expense           --        --     (2,950)        --
(Loss) gain on disposition of
 assets                               (120)      265     (1,731)       (28)
                                ---------  ---------  ---------  ---------
Operating income                    61,614    50,389    179,026    160,468
Interest expense, net              (47,508)  (50,540)  (143,901)  (152,943)
Gain on sale of equity
 investments                            --     4,730         --      4,730
Income tax expense                  (7,302)   (4,252)   (20,270)   (11,285)
Minority interest in income of
 subsidiaries                         (171)     (264)      (492)      (705)
Income from equity investments          --       258         --        804
                                 --------- ---------  ---------  ---------
Income from continuing operations    6,633       321     14,363      1,069
Loss from discontinued operations   (1,218)   (1,669)    (2,257)   (37,928)
                                 =========  ========  =========  =========
Net income (loss)                $   5,415  $ (1,348) $  12,106  $ (36,859)
                                 =========  ========  =========  =========

(2) Please refer to the Company's Form 10-K for the year ending May 31, 2007 and the fiscal fourth-quarter 2007 earnings press release for information regarding prior-period USF charges.

(3) During the quarter ending February 29, 2008, our U.S. wireless wholesale reseller terminated approximately 35,000 of Centennial's 50,200 wholesale subscribers. As a result, the Company has determined that revenues received from wholesale subscribers are immaterial and has removed these subscribers from all reported periods.

CONFERENCE CALL INFORMATION

As previously announced, the Company will host a conference call to discuss results at 8:30 a.m. ET on Friday, March 28, 2008. Callers should dial (800) 823-4842 to access the call. The conference call will also be simultaneously webcast on Centennial's Investor Relations website at www.ir.centennialwireless.com. A replay of the conference call will also be available beginning Friday, March 28 through Friday, April 11 at both Centennial's Investor Relations website and www.streetevents.com. Callers can also dial (888) 203-1112, Access Code 9948488 to access an audio replay of the conference call.

ABOUT CENTENNIAL

Centennial Communications (NASDAQ: CYCL), based in Wall, NJ, is a leading provider of regional wireless and integrated communications services in the United States and Puerto Rico with approximately 1.1 million wireless subscribers and 474,500 access lines and equivalents. The U.S. business owns and operates wireless networks in the Midwest and Southeast covering parts of six states. Centennial's Puerto Rico business owns and operates wireless networks in Puerto Rico and the U.S. Virgin Islands and provides facilities-based integrated voice, data and Internet solutions. Welsh, Carson, Anderson & Stowe is a significant shareholder of Centennial. For more information regarding Centennial, please visit our websites http://www.centennialwireless.com/ and http://www.centennialpr.com/.

SAFE HARBOR PROVISION

Cautionary statement for purposes of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995: Information in this release that involves Centennial's expectations, beliefs, hopes, plans, projections, estimates, intentions or strategies regarding the future are forward-looking statements. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the Company's actual results to differ materially from those projected in such forward-looking statements. These risks, assumptions and uncertainties include, but are not limited to: 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; 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; 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; the effect of changes in the level of support provided to us by the Universal Service Fund; the effects of a decline in the market for our CDMA-based technology; 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 world events, terrorism, hurricanes, tornadoes, wind storms and other natural disasters; our access to the latest technology handsets in a timeframe and at a cost similar to our competitors; our ability to successfully deploy and deliver wireless data services to our customers, including next generation 3G and 4G technology; our ability to generate cash and the availability and cost of additional capital to fund our operations and our significant planned capital expenditures, including the need to refinance or amend existing indebtedness; 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 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; our ability to attract and retain qualified personnel; the effects of governmental regulation of the telecommunications industry; our ability to acquire, and the cost of acquiring, additional spectrum in our markets to support growth and advanced technologies; 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, including litigation relating to wireless billing, using wireless telephones while operating an automobile or possible health effects of radio frequency transmission; the relative liquidity and corresponding volatility of our common stock and our ability to raise future equity capital: the influence on us by our significant stockholder and anti-takeover provisions and other risks referenced from time to time in the Company's filings with the Securities and Exchange Commission. All forward-looking statements included in this release are based upon information available to Centennial as of the date of the release, and we assume no obligation to update or revise any such forward-looking statements.

                      CENTENNIAL COMMUNICATIONS CORP.
                  FINANCIAL DATA AND OPERATING STATISTICS
                            February 29, 2008
                   ($000's, except per subscriber data)



                           Three Months Ended         Nine Months Ended
                        ------------------------  ------------------------
                          Feb-08       Feb-07       Feb-08       Feb-07
                        -----------  -----------  -----------  -----------

CONSOLIDATED
Total Wireless
 Subscribers              1,086,300    1,034,200    1,086,300    1,034,200
Net Gain - Total
 Subscribers                 18,000       26,800       36,700       53,800
Revenue per Average
 Wireless Customer (1)  $        68  $        66  $        68  $        67
Penetration - Wireless
 (4)                            8.4%         8.2%         8.4%         8.2%
Prepaid & Postpaid
 Churn - Wireless (5)           2.3%         2.4%         2.4%         2.4%
Monthly MOU's per
 Wireless Customer            1,334        1,185        1,322        1,150

U.S. WIRELESS

Postpaid Wireless
 Subscribers                641,000      612,000      641,000      612,000
Prepaid Wireless
 Subscribers                 21,700       22,800       21,700       22,800
                        -----------  -----------  -----------  -----------
Total Wireless
 Subscribers                662,700      634,800      662,700      634,800
Total Wireless Gross
 Adds                        58,200       60,900      154,800      156,800
Net Gain - Wireless
 Subscribers                 12,600       19,700       19,600       37,900
GSM as a % of Wireless
 Subscribers                   97.1%        90.2%        97.1%        90.2%
Revenue per Average
 Wireless Customer (1)  $        70  $        67  $        70  $        67
Retail Revenue per
 Average Wireless
 Customer (2)           $        64  $        60  $        62  $        58
Data Revenue per
 Average Wireless
 Customer (3)           $      5.45  $      3.33  $      4.81  $      2.78
Retail Revenue          $   125,276  $   112,292  $   363,502  $   317,912
Roaming Revenue         $    12,526  $    14,195  $    44,711  $    50,510
Penetration - Wireless
 (4)                            7.4%         7.4%         7.4%         7.4%
Postpaid Churn -
 Wireless (5)                   2.0%         1.8%         2.0%         1.9%
Prepaid & Postpaid
 Churn - Wireless (5)           2.3%         2.2%         2.3%         2.2%
Monthly MOU's per
 Wireless Customer            1,067          944        1,052          901
Cost to Acquire (6)     $       288  $       254  $       314  $       295
Capital Expenditures    $    16,156  $    17,898  $    34,974  $    34,443

PUERTO RICO

Postpaid Wireless
 Subscribers                420,900      395,000      420,900      395,000
Prepaid Wireless
 Subscribers                  2,700        4,400        2,700        4,400
                        -----------  -----------  -----------  -----------
Total Wireless
 Subscribers                423,600      399,400      423,600      399,400
Total Wireless Gross
 Adds                        35,400       38,900      108,300      112,100
Net Gain  - Wireless
 Subscribers                  5,400        7,100       17,100       15,900
Revenue per Average
 Wireless Customer (1)  $        65  $        63  $        66  $        66
Data Revenue per
 Average Wireless
 Customer (3)           $      7.06  $      5.40  $      6.53  $      4.42
Penetration - Wireless
 (4)                           10.6%        10.0%        10.6%        10.0%
Postpaid Churn -
 Wireless (5)                   2.4%         2.5%         2.4%         2.6%
Prepaid & Postpaid
 Churn - Wireless (5)           2.4%         2.7%         2.5%         2.8%
Monthly MOU's per
 Wireless Customer            1,750        1,574        1,744        1,543
Fiber Route Miles             1,333        1,283        1,333        1,283
Switched Access Lines        91,600       72,500       91,600       72,500
Dedicated Access Line
 Equivalents (7)            382,900      325,300      382,900      325,300
On-Net Buildings              2,146        1,920        2,146        1,920
Capital Expenditures -
 Wireless               $    10,264  $    10,558  $    27,022  $    25,354
Capital Expenditures -
 Broadband              $     3,753  $     6,355  $    13,599  $    14,847
                        -----------  -----------  -----------  -----------
Capital Expenditures -
 Total Puerto Rico      $    14,017  $    16,913  $    40,621  $    40,201
                        ===========  ===========  ===========  ===========

REVENUES

U.S. Wireless           $   137,802  $   126,487  $   408,213  $   368,422
                        -----------  -----------  -----------  -----------
Puerto Rico - Wireless  $    82,681  $    75,209  $   244,818  $   231,642
Puerto Rico - Broadband $    33,919  $    30,336  $    98,929  $    92,478
Puerto Rico -
 Intercompany           $    (3,249) $    (2,920) $    (9,269) $    (8,827)
                        -----------  -----------  -----------  -----------
Total Puerto Rico       $   113,351  $   102,625  $   334,478  $   315,293
                        -----------  -----------  -----------  -----------
Consolidated            $   251,153  $   229,112  $   742,691  $   683,715
                        ===========  ===========  ===========  ===========

ADJUSTED OPERATING
 INCOME (8)

U.S. Wireless           $    50,497  $    44,713  $   155,008  $   130,453
                        -----------  -----------  -----------  -----------
Puerto Rico - Wireless  $    30,958  $    23,600  $    86,846  $    83,462
Puerto Rico - Broadband $    17,653  $    16,286  $    53,274  $    51,072
                        -----------  -----------  -----------  -----------
Total Puerto Rico       $    48,611  $    39,886  $   140,120  $   134,534
                        -----------  -----------  -----------  -----------
Consolidated            $    99,108  $    84,599  $   295,128  $   264,987
                        ===========  ===========  ===========  ===========

NET DEBT

Total Debt Less Cash
 and Cash Equivalents   $ 1,924,100  $ 2,038,600  $ 1,924,100  $ 2,038,600

(1) Revenue per Average Wireless Customer is determined for each period by
    dividing total monthly revenue per wireless subscriber including
    roaming revenue by the average customers for such period.
(2) Retail Revenue per Average Wireless Customer is determined for each
    period by dividing retail revenue (total revenue excluding roaming
    revenue) by the average customers for such period.
(3) Data Revenue per Average Wireless Customer is determined for each
    period by dividing data revenue by the average customers for such
    period.
(4) The penetration rate equals the percentage of total population in our
    service areas who are subscribers to our wireless service as of
    period-end.
(5) Churn is calculated by dividing the aggregate number of subscribers
    who cancel service during each month in a period by the total number
    of subscribers as of the beginning of the month.  Churn is stated as
    the average monthly churn rate for the period.
(6) Cost to Acquire a new customer is calculated by dividing the sum of
    the cost of phones and marketing expenses less the related
    equipment sales by the gross activations for the period.  Cost to
    acquire excludes costs relating to phones used for customer
    retention.
(7) February 2008 and 2007 exclude 84,700 and 82,700, respectively,
    dedicated access line equivalents related to short term contracts.
(8) Adjusted operating income is defined as net income (loss) before loss
    from discontinued operations, income from equity investments, minority
    interest in income of subsidiaries, income tax expense, gain on sale
    of equity investments, interest expense, net,  (loss) gain on
    disposition of assets, litigation settlement expense, strategic
    alternatives/recapitalization costs, stock-based compensation expense
    and depreciation and amortization.



            CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS
             (Amounts in thousands, except per share data)


                                 Three Months Ended     Nine Months Ended
                                --------------------  --------------------
                                February   February   February   February
                                29, 2008   28, 2007   29, 2008   28, 2007
                                ---------  ---------  ---------  ---------

REVENUE:
  Service revenue               $ 233,361  $ 212,434  $ 698,457  $ 642,213
  Equipment sales                  17,792     16,678     44,234     41,502
                                ---------  ---------  ---------  ---------
                                  251,153    229,112    742,691    683,715
                                ---------  ---------  ---------  ---------

COSTS AND EXPENSES:
  Cost of services (exclusive
   of depreciation and
   amortization shown below)       45,034     42,388    135,975    129,129
  Cost of equipment sold           34,047     34,852     95,831     95,947
  Sales and marketing              25,503     24,643     77,817     71,436
  General and administrative       49,573     44,481    149,438    129,170
  Depreciation and amortization    35,262     32,624    102,873     97,537
  Loss (gain) on disposition of
   assets                             120       (265)     1,731         28
                                ---------  ---------  ---------  ---------
                                  189,539    178,723    563,665    523,247
                                ---------  ---------  ---------  ---------

OPERATING INCOME                   61,614     50,389    179,026    160,468
                                ---------  ---------  ---------  ---------

INTEREST EXPENSE, NET             (47,508)   (50,540)  (143,901)  (152,943)

GAIN ON SALE OF EQUITY
 INVESTMENT                             -      4,730          -      4,730
                                ---------  ---------  ---------  ---------

INCOME FROM CONTINUING
 OPERATIONS BEFORE INCOME TAX
 EXPENSE, MINORITY INTEREST
 IN INCOME OF SUBSIDIARIES AND
 INCOME FROM EQUITY INVESTMENTS    14,106      4,579     35,125     12,255

INCOME TAX EXPENSE                 (7,302)    (4,252)   (20,270)   (11,285)
                                ---------  ---------  ---------  ---------

INCOME FROM CONTINUING
 OPERATIONS BEFORE MINORITY
 INTEREST IN INCOME
 OF SUBSIDIARIES AND INCOME
 FROM EQUITY INVESTMENTS            6,804        327     14,855        970

MINORITY INTEREST IN INCOME OF
 SUBSIDIARIES                        (171)      (264)      (492)      (705)
INCOME FROM EQUITY INVESTMENTS          -        258          -        804
                                ---------  ---------  ---------  ---------

INCOME FROM CONTINUING
 OPERATIONS                         6,633        321     14,363      1,069

Discontinued operations:
   Gain (loss)                          -      2,170          -       (659)
   Loss on disposition             (1,218)      (266)    (2,257)   (32,261)
   Income tax expense                   -     (3,573)         -     (5,008)
                                ---------  ---------  ---------  ---------
Net loss from discontinued
 operations                        (1,218)    (1,669)    (2,257)   (37,928)
                                =========  =========  =========  =========

NET INCOME (LOSS)               $   5,415  $  (1,348) $  12,106  $ (36,859)
                                =========  =========  =========  =========

EARNINGS (LOSS) PER SHARE:
   BASIC
      EARNINGS PER SHARE FROM
       CONTINUING OPERATIONS    $    0.06  $    0.00  $    0.13  $    0.01
      LOSS PER SHARE FROM
       DISCONTINUED OPERATIONS  $   (0.01) $   (0.01) $   (0.02) $   (0.36)
                                ---------  ---------  ---------  ---------
      NET INCOME (LOSS) PER
       SHARE                    $    0.05  $   (0.01) $    0.11  $   (0.35)
                                =========  =========  =========  =========

   DILUTED
      EARNINGS PER SHARE FROM
       CONTINUING OPERATIONS    $    0.06  $    0.00  $    0.13  $    0.01
      LOSS PER SHARE FROM
       DISCONTINUED OPERATIONS  $   (0.01) $   (0.01) $   (0.02) $   (0.35)
                                ---------  ---------  ---------  ---------
      NET  INCOME (LOSS) PER
       SHARE                    $    0.05  $   (0.01) $    0.11  $   (0.34)
                                =========  =========  =========  =========

WEIGHTED-AVERAGE SHARES
 OUTSTANDING DURING THE PERIOD:
      BASIC                       107,755    105,698    107,457    105,437
                                =========  =========  =========  =========
      DILUTED                     109,987    108,637    110,240    107,786
                                =========  =========  =========  =========

Contact Information

  • For investor and media inquiries please contact:
    Steve E. Kunszabo
    Executive Director, Investor Relations
    732-556-2220