EXHIBIT 99.2 CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS On September 6, 2004, Centennial Communications Corp. ("Centennial") entered into a definitive agreement to sell its wholly...
EXHIBIT 99.2
CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On September 6, 2004, Centennial Communications Corp. ("Centennial")
entered into a definitive agreement to sell its wholly owned subsidiary,
Centennial Puerto Rico Cable TV Corp. ("Centennial Cable"), to an affiliate of
Hicks, Muse, Xxxx & Xxxxx Incorporated for approximately $155 million in cash.
The transaction closed on December 28, 2004. The disposition has been accounted
for by Centennial as a discontinued operation in accordance with Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets."
Pro Forma Financial Statements
The following unaudited pro forma condensed consolidated financial
statements have been prepared based on the historical financial statements of
Centennial after giving effect to the sale of its wholly owned subsidiary,
Centennial Cable, and the assumptions and adjustments described in the
accompanying notes to these unaudited pro forma condensed consolidated financial
statements. The unaudited pro forma condensed consolidated statements of
operations give effect to the disposal of Centennial Cable by Centennial as if
it had occurred on June 1, 2001 and the unaudited pro forma condensed
consolidated balance sheet gives effect to the disposal of Centennial Cable by
Centennial as if it had occurred on August 31, 2004. The unaudited pro forma
condensed consolidated financial statements were derived by adjusting the
historical financial statements of Centennial for the removal of assets,
liabilities, revenues and expenses associated with Centennial Cable and the pro
forma adjustments described in the footnotes. Centennial will treat the sale of
Centennial Cable as a discontinued operation of its cable television operations
and record a gain upon completion of the transaction.
The unaudited pro forma condensed consolidated financial statements,
including the notes thereto, are qualified in their entirety by reference to,
and should be read in conjunction with, the audited historical consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K/A for the fiscal year ended May 31, 2004, filed on October 1, 2004.
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the consolidated financial position or consolidated results of operations that
would have actually been reported had the disposition occurred on June 1, 2001
for consolidated statement of operation purposes and as of August 31, 2004 for
consolidated balance sheet purposes, nor is it necessarily indicative of
Centennial's future consolidated financial position or consolidated results of
operations. The unaudited pro forma condensed consolidated financial statements
are based upon estimates and assumptions. These estimates and assumptions are
preliminary and have been made solely for the purposes of developing this pro
forma information.
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(Dollar amounts in thousands)
As of August 31, 2004
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Centennial
Communications Centennial Pro Forma
Corp. Cable Adjustments Pro Forma
------------------ -------------- -------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 97,212 $ (7,585) $ 155,000 (a) $ 241,512
(3,115)(b)
Accounts receivable, net 106,859 (4,860) 101,999
Inventory -- phones and accessories, net 11,746 11,746
Prepaid expenses and other current assets 35,461 (639) 34,822
--------- -------- ------- ----------
TOTAL CURRENT ASSETS 251,278 (13,084) 151,885 390,079
PROPERTY, PLANT AND EQUIPMENT, net 688,919 (58,683) 630,236
EQUITY INVESTMENTS, net 2,272 2,272
DEBT ISSUANCE COSTS, less accumulated amortization of
$14,559 53,131 53,131
U.S. WIRELESS LICENSES 371,766 371,766
CARIBBEAN WIRELESS LICENSES, net 70,242 70,242
CABLE FRANCHISE COSTS 52,139 (52,139) -
GOODWILL 26,704 26,704
CUSTOMER LISTS, net 6,820 (6,820) -
TRANSMISSION AND CONNECTING RIGHTS, net 818 818
CABLE FACILITY, net 4,150 4,150
OTHER ASSETS, net 3,894 693 (726)(d) 3,861
--------- -------- ------- ----------
TOTAL ASSETS $1,532,133 $(130,033) $ 151,159 $1,553,259
--------- -------- ------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current portion of long-term debt $ 5,856 $ 5,586
Accounts payable 24,737 (675) 24,062
Accrued expenses and other current liabilities 179,705 (11,251) 168,454
Payable to affiliates 125 125
--------- -------- ------- ----------
TOTAL CURRENT LIABILITIES 210,423 (11,926) 198,497
LONG-TERM DEBT 1,761,934 1,761,934
DEFERRED FEDERAL INCOME TAXES 86,936 (5,733) 13,829 (c) 95,016
OTHER LIABILITIES 10,627 10,627
MINORITY INTEREST IN SUBSIDIARIES 1,769 1,769
STOCKHOLDERS' DEFICIT:
Common stock 1,034 1,034
Additional paid-in capital 475,534 (271,389) 271,389 (f) 475,534
Accumulated deficit (1,015,04) 159,015 (159,015)(f) (990,091)
(726)(d)
(13,829)(c)
39,511 (g)
--------- -------- ------- ----------
(538,479) (112,374) 137,330 (513,523)
Less: Cost of 70,503 common shares in treasury (1,077) (1,077)
--------- -------- ------- ----------
TOTAL STOCKHOLDERS' DEFICIT (539,556) (112,374) 137,330 (514,600)
--------- -------- ------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $1,523,133 $(130,033) $ 151,159 $1,553,259
--------- -------- ------- ----------
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollar amounts in thousands, except per share amounts)
Three Months Ended August 31, 2004
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Centennial
Communications Centennial Pro Forma
Corp. Cable Adjustments Pro Forma
------------------ -------------- -------------- ----------------
REVENUE:
Service revenue $ 222,916 $(12,778) 218 (e) $ 210,356
Equipment sales 6,426 6,426
--------- -------- ------- ----------
229,342 (12,778) 218 216,782
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation and
amortization shown below) 47,127 (5,855) 218 (e) 41,490
Cost of equipment sold 21,326 21,326
Sales and marketing 25,554 (930) 24,624
General and administrative 40,030 (3,293) $ 1,004(e) 37,741
Depreciation and amortization 35,057 (5,899) 29,158
Loss on disposition of assets 679 (247) 432
--------- -------- ------- ----------
169,773 (16,224) 1,222 154,771
OPERATING INCOME (LOSS) 59,569 3,446 (1,004) 62,011
INCOME FROM EQUITY INVESTMENTS 145 145
INTEREST EXPENSE, NET (36,462) (17) (36,479)
OTHER (EXPENSE) INCOME (878) 57 (57) (878)
--------- -------- ------- ---------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND MINORITY
INTEREST IN INCOME OF SUBSIDIARIES 22,374 3,486 (1,061) 24,799
INCOME TAX (EXPENSE) BENEFIT (13,681) (800) 371(h) (14,110)
--------- -------- ------- ----------
INCOME (LOSS) BEFORE MINORITY INTEREST IN INCOME OF
SUBSIDIARIES 8,693 2,686 (690) 10,689
MINORITY INTEREST IN INCOME OF SUBSIDIARIES (226) (226)
--------- -------- ------- ----------
NET INCOME (LOSS) $ 8,467 $ 2,686 $ (690) $ 10,463
--------- -------- ------- ----------
EARNINGS PER SHARE:
BASIC $ 0.08 $ 0.10
---- ----
DILUTED 0.08 0.10
---- ----
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE
THREE MONTHS (in thousands):
BASIC 103,213 103,213
------- -------
DILUTED 104,281 104,281
--------- ----------
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollar amounts in thousands, except per share amounts)
Fiscal Year Ended May 31, 2004
--------------------------------------------------------------------------
Centennial
Communications Centennial Pro Forma
Corp. Cable Adjustments Pro Forma
------------------ -------------- -------------- ----------------
REVENUE:
Service revenue $ 797,863 $(48,692) $ 749,171
Equipment sales 30,978 30,978
--------- -------- ------- ----------
828,841 (48,692) 780,149
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation and
amortization shown below) 164,589 (22,019) 142,570
Cost of equipment sold 86,071 86,071
Sales and marketing 92,241 (3,280) 88,961
General and administrative 156,937 (12,001) $ 3,610(e) 148,546
Depreciation and amortization 140,991 (22,867) 118,124
Loss on disposition of assets 1,500 (859) 641
--------- -------- ------- ----------
642,329 (61,026) 3,610 584,913
OPERATING INCOME (LOSS) 186,512 12,334 (3,610) 195,236
INCOME FROM EQUITY INVESTMENTS 143 143
INTEREST EXPENSE, NET (163,228) 306 (162,922)
LOSS ON EXTINGUISHMENT OF DEBT (39,176) (39,176)
OTHER INCOME 36 36
--------- -------- ------- ----------
LOSS BEFORE INCOME TAX EXPENSE AND MINORITY INTEREST IN
INCOME OF SUBSIDIARIES (15,713) 12,640 (3,610) (6,683)
INCOME TAX EXPENSE (BENEFIT) (6,452) (4,611) 1,264(h) (9,799)
--------- -------- ------- ----------
LOSS BEFORE MINORITY INTEREST IN INCOME OF SUBSIDIARIES (22,165) 8,029 (2,346) (16,482)
MINORITY INTEREST IN INCOME OF SUBSIDIARIES (627) (627)
--------- -------- ------- ----------
NET LOSS $ (22,792) $ 8,029 $ (2,346) $ (17,109)
--------- -------- ------- ----------
LOSS PER SHARE:
BASIC AND DILUTED $ (0.23) $ (0.17)
--------- ----------
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE
YEAR (in thousands):
BASIC AND DILUTED 99,937 99,937
--------- ----------
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollar amounts in thousands, except per share amounts)
Fiscal Year Ended May 31, 2003
--------------------------------------------------------------------------
Centennial
Communications Centennial Pro Forma
Corp. Cable Adjustments Pro Forma
------------------ -------------- -------------- ----------------
REVENUE:
Service revenue $ 721,974 $(48,017) $ 673,957
Equipment sales 27,462 27,462
--------- -------- ------- ----------
749,436 (48,017) -- 701,419
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation and
amortization shown below) 157,840 (22,522) 135,318
Cost of equipment sold 70,876 70,876
Sales and marketing 93,013 (3,700) $ 19(e) 89,332
General and administrative 134,722 (12,709) 2,974(e) 124,987
Depreciation and amortization 139,065 (22,896) 116,169
Loss on impairment of assets 189,492 (165,15) 24,338
Gain on disposition of assets (1,451) 10 (1,441)
--------- -------- ------- ----------
783,557 (226,97) 2,993 559,579
OPERATING (LOSS) INCOME (34,121) 178,954 (2,993) 141,840
INCOME FROM EQUITY INVESTMENTS 192 192
INTEREST EXPENSE, NET (146,087) 575 (145,512)
OTHER EXPENSE (1,045) (1,045)
--------- -------- ------- ----------
LOSS BEFORE INCOME TAX BENEFIT AND MINORITY INTEREST IN
INCOME OF SUBSIDIARIES (181,061) 179,529 (2,993) (4,525)
INCOME TAX BENEFIT 69,904 (50,405) 1,048(h) 20,547
--------- -------- ------- ----------
LOSS BEFORE MINORITY INTEREST IN INCOME OF SUBSIDIARIES (111,157) 129,124 (1,945) 16,022
MINORITY INTEREST IN INCOME OF SUBSIDIARIES (489) (489)
--------- -------- ------- ----------
NET (LOSS) INCOME $(111,646) $129,124 $ (1,945) $ 15,533
--------- -------- ------- ----------
(LOSS) INCOME PER SHARE:
BASIC AND DILUTED $ (1.17) $ 0.16
--------- ----------
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE
YEAR (in thousands):
BASIC AND DILUTED 95,577 95,577
--------- ----------
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(Dollar amounts in thousands, except per share amounts)
Fiscal Year Ended May 31, 2002
--------------------------------------------------------------------------
Centennial
Communications Centennial Pro Forma
Corp. Cable Adjustments Pro Forma
------------------ -------------- -------------- ----------------
REVENUE:
Service revenue $ 695,476 $(47,841) $ 647,635
Equipment sales 23,101 23,101
--------- -------- ------- ----------
718,577 (47,841) -- 670,736
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation and
amortization shown below) 171,441 (20,335) 151,106
Cost of equipment sold 56,760 56,760
Sales and marketing 105,367 (2,862) 102,505
General and administrative 136,124 (10,269) $ 3,069(e) 128,924
Depreciation and amortization 157,403 (30,441) 126,962
Loss on impairment of assets 33,985 33,985
Loss on disposition of assets 621 (502) 119
--------- -------- ------- ----------
661,701 (64,409) 3,069 600,361
OPERATING INCOME (LOSS) 56,876 16,568 (3,069) 70,375
INCOME FROM EQUITY INVESTMENTS 564 564
INTEREST EXPENSE, NET (150,734) (30) (150,764)
OTHER INCOME 96 96
--------- -------- ------- ----------
LOSS BEFORE INCOME TAX BENEFIT AND MINORITY INTEREST IN
LOSS OF SUBSIDIARIES (93,198) 16,538 (3,069) (79,729)
INCOME TAX BENEFIT 12,780 (4,972) 1,074(h) 8,882
--------- -------- ------- ----------
LOSS BEFORE MINORITY INTEREST IN LOSS OF SUBSIDIARIES (80,418) 11,566 (1,995) (70,847)
MINORITY INTEREST IN LOSS OF SUBSIDIARIES 780 780
--------- -------- ------- ----------
NET LOSS $ (79,638) $ 11,566 $ (1,995) $ (70,067)
--------- -------- ------- ----------
LOSS PER SHARE:
BASIC AND DILUTED $ (0.84) $ (0.74)
--------- ----------
WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE
YEAR (in thousands):
BASIC AND DILUTED 95,221 95,221
--------- ----------
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Note 1. Basis of Pro Forma Presentation
The pro forma condensed consolidated financial statements included herein
have been prepared pursuant to the rules and regulations of the United States
Securities and Exchange Commission.
The unaudited pro forma condensed financial statements of Centennial and
Centennial Cable have been prepared based on the historical consolidated balance
sheets of Centennial and Centennial Cable as of August 31, 2004 and the
historical consolidated statements of operations for Centennial and Centennial
Cable for the three months ended August 31, 2004 and for the fiscal years ended
May 31, 2004, 2003 and 2002, after giving effect to the adjustments and
assumptions described below.
Centennial and Centennial Cable employ accounting policies that are in
accordance with accounting principles generally accepted in the United States of
America. In management's opinion, all material adjustments necessary to reflect
fairly the pro forma financial position and pro forma results of operations of
Centennial and Centennial Cable have been made.
The ongoing activity presented in these pro forma condensed consolidated
financial statements represents Centennial's assets, liabilities and expenses
that will not be divested of in the sale of Centennial Cable. This pro forma
financial information is presented for illustrative purposes only, and is not
necessarily indicative of the consolidated operating results and consolidated
financial position that might have been achieved had the transaction described
above occurred on the dates indicated, nor are they necessarily indicative of
the operating results and financial position that may occur in the future.
Note 2. Pro Forma Assumptions
Pro forma adjustments:
The accompanying unaudited pro forma condensed consolidated
financial statements have been prepared as if the divestiture was
completed on August 31, 2004 for consolidated balance sheet purposes
and as of June 1, 2001 for consolidated statement of operations
purposes and reflect the following pro forma adjustments:
(a) To reflect sale consideration of $155 million cash.
(b) To reflect the $3.1 million in estimated direct expenses of
the transaction including legal, accounting, financial advisory and
other professional fees.
(c) To record the tax effect of pro forma adjustments considering
management's current expectations of available net operating losses
and credits, as well as Centennial's statutory tax rate.
(d) To write off inter-company amounts that will not be
realizable as a result of the disposition.
(e) To adjust for inter-company revenue and expenses, and
expenses that were allocated to Centennial Cable, which would have
been incurred by Centennial whether or not Centennial Cable was a
subsidiary of Centennial and are expected to continue to be incurred.
(f) To eliminate Centennial Cable's equity from consolidated
equity as a result of the disposition.
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CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS -- (Continued)
(g) To record the net gain before income tax expense as a result
of the disposition.
Total consideration $155,000
Transaction costs 3,115
-------
Net total proceeds 151,885
Net assets sold 112,374
-------
Pro forma net gain before income tax expense $ 39,511
-------
Income tax expense 13,829
Pro forma net gain $ 25,682
-------
(h) To record the tax effect on the adjustment of allocated
corporate overhead that will remain subsequent to the disposition of
Centennial Cable at the appropriate statutory tax rate.
Note 3. Unaudited Pro Forma Earnings Per Share Data
Basic and diluted pro forma earnings per share were calculated using the
weighted average shares outstanding of Centennial for the three months ended
August 31, 2004 and for the fiscal years ended May 31, 2004, 2003 and 2002. As
the pro forma condensed consolidated statements of operations for the fiscal
years ended May 31, 2004 and 2002 show a net loss, weighted average basic and
diluted shares are the same.
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