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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


(Mark One)
þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the fiscal year ended May 31, 2009
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)		(I.R.S. Employer Identification No.)

3349 Route 138

Wall, NJ 07719

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (732) 556-2200

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered
Common Stock, par value $.01 per share		Nasdaq Stock Market Inc.

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes þ No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceeding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No þ

The aggregate market value of the common stock held by non-affiliates of the Company, based upon the last reported sale price on the Nasdaq Global Select Market on November 30, 2008 of $7.73 per share, was $645,219,637. As of July 23, 2009, there were 111,139,503 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The information contained in Part III, Items 10-14 of this Annual Report on Form 10-K will either be included in the Company’s Proxy Statement to be filed with the U.S. Securities and Exchange Commission, or SEC, pursuant to Rule 14a-6 under the Securities Exchange Act of 1934, as amended, which is incorporated herein by reference or will be provided in an amendment to this form 10-K, to be filed no later than September 28, 2009.

CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR”
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Statements in this report that are not historical facts are hereby identified as “forward-looking statements.” Where, in any forward-looking statement, we or our management expresses an expectation or belief as to future results or actions, there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished. Our actual results may differ materially from our expectations, plans or projections. Forward-looking statements can be identified by the use of the words “believe,” “expect,” “predict,” “estimate,” “anticipate,” “project,” “should,” “intend,” “may,” “will” and similar expressions, or by discussion of competitive strengths or strategy that involve risks and uncertainties. We warn you that these forward-looking statements are only predictions and estimates, which are inherently subject to risks and uncertainties.

Important factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, us include, but are not limited to:


	•	the occurrence of any event, change or other circumstance that could give rise to the termination of our agreement to be acquired by AT&T Inc. (the “AT&T Transaction”) or the failure of the AT&T Transaction to close for any other reason;

	•	the outcome of any legal proceeding that has been or may be instituted against Centennial and others relating to the AT&T Transaction;

	•	the inability to complete the AT&T Transaction due to the failure to satisfy conditions to consummate the AT&T Transaction;

	•	risks that the AT&T Transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the AT&T Transaction;

	•	business uncertainty and contractual restrictions during the pendency of the AT&T Transaction, which may adversely affect our relationships with our employees, customers and suppliers;

	•	the diversion of management’s attention to the AT&T Transaction from ongoing business concerns;

	•	the effect of the announcement and pendency of the AT&T Transaction on our customer and supplier relationships, operating results and business generally;

	•	the amount of the costs, fees, expenses and charges related to the AT&T Transaction;

	•	the timing of the completion of the AT&T Transaction or the impact of the AT&T Transaction on our capital resources, cash requirements, profitability, management resources and liquidity;

	•	the effects of the current recession in the United States and general downturn in the economy, including the effects on unemployment, consumer confidence, consumer debt levels, consumer spending and other macroeconomic conditions that could impact the demand for the products and services we provide and our customers’ ability to pay for them;

	•	our need to refinance or amend existing indebtedness on or prior to its stated maturity and the difficulties and illiquidity experienced by the debt/capital markets;

	•	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;

(ii)


	•	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;

	•	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;

	•	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.

We undertake no obligation, other than as may be required under the federal securities laws, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We do not assume responsibility for the accuracy and completeness of the forward-looking statements. Although we believe that the expectations reflected in these forward-looking statements are reasonable, any or all of the forward-looking statements contained in this report and in any other public statements that are made may prove to be

(iii)

incorrect. This may occur as a result of inaccurate assumptions as a consequence of known or unknown risks and uncertainties. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under the caption “Risk Factors” under Item 1A of this report. We caution that these risk factors may not be exhaustive. We operate in a continually changing business environment, and new risk factors emerge from time to time. We cannot predict these new risk factors, nor can we assess the impact, if any, of the new risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those expressed or implied by any forward-looking statement. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur. You should carefully read this report in its entirety. It contains information that you should consider in making any investment decision in any of our securities.

CERTAIN DEFINITIONS

The terms “Centennial,” the “Company,” “our” and “we” as used in this report refer to Centennial Communications Corp. and its subsidiaries on a consolidated basis. The term “CCOC” refers to Centennial Cellular Operating Co. LLC, a direct, wholly owned subsidiary of Centennial. The term “CPROC”, or “Centennial de Puerto Rico”, refers to Centennial Puerto Rico Operations Corp., one of our subsidiaries.

When we say “fiscal 2005,” we mean our fiscal year which began June 1, 2004, and ended May 31, 2005. When we say “fiscal 2006,” we mean our fiscal year which began June 1, 2005, and ended May 31, 2006. When we say “fiscal 2007,” we mean our fiscal year which began June 1, 2006, and ended May 31, 2007. When we say “fiscal 2008,” we mean our fiscal year which began June 1, 2007, and ended May 31, 2008. When we say “fiscal 2009,” we mean our fiscal year which began June 1, 2008, and ended May 31, 2009. When we say “fiscal 2010”, we mean our fiscal year which began June 1, 2009, and will end May 31, 2010.

The term “churn” refers to the aggregate number of wireless retail subscribers who cancel service during each month in a period divided by the total number of wireless retail subscribers as of the beginning of the month. Churn is stated as the average monthly churn rate for the applicable period.

The term “Pops” refers to the population of a market derived from the 2004 Claritas, Inc. database for our United States (“U.S.”) service areas and the United States Census Bureau for our Puerto Rico and the United States Virgin Island service areas. The term “Net Pops” refers to a market’s Pops multiplied by the percentage interest that we own in an entity licensed to construct or operate a wireless telephone system in that market.

MARKET DATA AND FORECASTS

Industry and market data throughout this report were obtained through our proprietary research, surveys and studies conducted by third parties and from industry and general publications. We have not independently verified market and industry data from third-party sources. While we believe our internal surveys are reliable and market definitions are appropriate, neither these surveys nor these definitions have been verified by any independent sources. We have not sought the consent of any of these sources to refer to their data in this report.

Centennial Wireless^tm, Centennial de Puerto Rico^tm, Centennial Business Solutions^tm , Trusted Advisor^tm, Blue Shirt Promises^tm and Aptus^tm are some of our primary trademarks. All other trademarks, service marks or other trade names referred to in this report are the property of their respective owners.

(iv)

PART I


Item 1.	*Business*

Overview

We are a leading regional wireless and broadband telecommunications service provider serving approximately 1.1 million wireless customers and approximately 694,900 access line equivalents in markets covering over 13 million Net Pops in the United States and Puerto Rico. In the United States, we are a regional wireless service provider in small cities and rural areas in two geographic clusters covering parts of six states in the Midwest and Southeast. In our Puerto Rico-based service area, we own and operate wireless networks in Puerto Rico and the U.S. Virgin Islands, and in Puerto Rico, we are also a facilities-based, fully integrated communications service provider offering broadband communications services to business and, to a lesser extent, residential customers. During fiscal 2009, we reported consolidated revenue of $1.1 billion, an increase of 5.0% from fiscal 2008. Our vision is to be the premier regional telecommunications service provider, by tailoring the ultimate customer experience, in the markets we serve. We deliver our tailored approach by serving local markets with high quality networks, company-owned stores and well-trained sales and service associates.

AT&T Transaction

On November 7, 2008, we entered into an Agreement and Plan of Merger with AT&T Inc. (“AT&T”) providing for the acquisition of Centennial by AT&T (the “AT&T Transaction”). Under the terms of the AT&T Transaction, our stockholders will receive $8.50 per share in cash. The AT&T Transaction was approved by our stockholders in February 2009. Completion of the AT&T Transaction is not subject to a financing condition but remains subject to (i) approval by the Federal Communications Commission (“FCC”) and (ii) other customary conditions. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired; however, the parties are still discussing the transaction with the Department of Justice. The parties anticipate that the AT&T Transaction will be completed during the third quarter of calendar year 2009, assuming timely satisfaction or waiver of all remaining closing conditions.

We were organized in 1988. Our principal corporate office is located at 3349 Route 138, Wall, New Jersey 07719. Our phone number is (732) 556-2200 and our websites are www.centennialwireless.com and www.centennialpr.com.

We make available free of charge on or through our investor relations website at www.ir.centennialwireless.com our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) of the Exchange Act as soon as reasonably practicable after we electronically file such materials with, or furnish them to the Securities and Exchange Commission (“SEC”).

Our Operations

U.S. Wireless

In the United States, we provide wireless voice and data services in two geographic clusters, covering approximately 9.0 million Net Pops. Our Midwest cluster includes parts of Indiana, Michigan and Ohio, and our Southeast cluster includes parts of Louisiana, Mississippi and Texas. At May 31, 2009, we had approximately 652,000 wireless subscribers. Our clusters are comprised of small cities and rural areas. Through clustering, we believe we are able to achieve critical mass and operating efficiencies, while developing a respected brand and strong local market presence. Furthermore, these clusters are near major metropolitan markets, and we benefit from the traffic generated by subscribers of other wireless service providers who roam into our coverage areas. We market our services in the United States under the name Centennial Wireless.

We use roaming agreements with other wireless carriers to provide service to our customers when they travel to areas not covered by our network. We have long-term roaming agreements with many wireless carriers. These roaming agreements enable us to offer regional and nationwide plans at attractive rates. Our U.S. wireless roaming revenue for fiscal 2009 was $59.6 million, or 5.7% of our consolidated revenue. Our network operates primarily using 850 MHz spectrum. We hold licenses for 25 MHz of spectrum in the 850 MHz frequency band in 30

U.S. wireless markets covering approximately 6.1 million Pops. We believe our 850 MHz cellular spectrum, which has favorable transmission characteristics for deploying wireless networks in non-urban areas, provides us with a strategic advantage over the wireless carriers in our markets that utilize 1900 MHz Personnel Communications Services (“PCS”) spectrum and 1700-2100 Advanced Wireless Services (“AWS”) spectrum.

Our network currently employs GSM (Global System for Mobile Communications) technology that supports EDGE (Enhanced Data Rates for Global Evolution) and GPRS (General Packet Radio Service) advanced data technology. GSM aligns our technology with our largest roaming partners. We launched GSM service in our Midwest cluster in November 2003 and in our Southeast cluster in November 2004. GSM service is currently available at 100% of our U.S. wireless cell sites and allows for greater functionality of phones and greater network efficiency as compared to our legacy TDMA (Time Division Multiple Access) network. In July 2008, we shut down our analog and TDMA networks and migrated our remaining TDMA customers to our GSM network. . We had expected to deploy a 3G UMTS network in parts of our U.S. wireless footprint during fiscal 2009, however, this deployment was postponed due to a number of factors.

Puerto Rico

In Puerto Rico, we offer wireless and broadband communications services. We also offer wireless services in the U.S. Virgin Islands. The FCC licenses we own in Puerto Rico also cover the U.S. Virgin Islands. Puerto Rico is a U.S. dollar-denominated and FCC-regulated commonwealth of the United States. San Juan, the capital of Puerto Rico, is currently one of the 25 largest and 5 most dense U.S. wireless markets in terms of population.

Puerto Rico Wireless. Our Puerto Rico wireless operations cover a population of approximately 4.0 million and serves Puerto Rico and the U.S. Virgin Islands using CDMA technology, which supports EV-DO (evolution, data-optimized) technology. We launched wireless services in Puerto Rico in December 1996 and in the U.S. Virgin Islands in June 2001.

We provide wireless services in Puerto Rico and the U.S. Virgin Islands using a 30 MHz license in the 1900 MHz frequency band. Our wireless network is supported by our high-capacity terrestrial and undersea fiber-optic network, which links our markets to the United States and decreases our network costs. In Puerto Rico and the U.S. Virgin Islands we have deployed a 100% 3G technology network using EV-DO Revision A (Rev. A) technology. EV-DO services provide a broadband-like wireless data experience with peak speeds of up to 3.1 Mbps and provide faster downloading when accessing the Internet and retrieving e-mail, including large attachments and other bandwidth-intensive applications. We also offer a fixed broadband wireless service in Puerto Rico under the name Instant Internet which enables customers to connect their home computers or laptops to the Internet using an easy to install AC powered device that utilizes our EV-DO network. We market our services in Puerto Rico under the name Centennial de Puerto Rico. Our Instant Internet customers have become an increasingly larger portion of our Puerto Rico wireless business.

Puerto Rico Broadband. In Puerto Rico, we have built a fully integrated communications company since our launch in 1997. We have a 1,400-route mile fiber network connected to approximately 2,500 buildings. Puerto Rico has high business density and approximately one-third of the Fortune 500 maintains a local presence. We provide a broad range of services, including switched voice, private line services, voice over Internet protocol (“VoIP”), international long distance, data, toll-free and Internet-related services, to business and, to a lesser extent, residential customers over our own fiber-optic (terrestrial and undersea) and microwave networks. In our retail business, we provide switched voice and high capacity data and IP solutions to large and medium enterprise customers. In our wholesale business, we provide connectivity between the cell sites and switching equipment for most of our wireless competitors in Puerto Rico, backhaul capacity for the long distance carriers, various voice and data services for the cable television operators and services to Internet Service Providers (“ISPs”). We focus on large and medium businesses and deliver a full suite of connectivity solutions to enterprise and telecommunications carrier customers, including AT&T Mobility, Sprint Nextel, the three cable television operators in Puerto Rico (One-Link Communications, Choice Cable and Liberty Cable), Cisco Systems, Hewlett-Packard, Lucent Technologies, Pfizer, Procter & Gamble, the University of Puerto Rico, Wal-Mart, Net2Phone (IDT), Schering-Plough, Oracle, Telefonica, Direct TV, Verizon Business, Level 3 and Banco Popular.

To complement our terrestrial fiber-optic networks, we own significant undersea fiber-optic capacity connecting Puerto Rico with our international gateway switch in Miami, Florida. In July 2008, we lit a new undersea fiber-optic cable named GCN-1, which runs from Puerto Rico to St. Croix, where it interconnects with our existing capacity that connects St. Croix to Miami. This extensive fiber network allows us to offer customers with operations in our Puerto Rico service area low-cost, high-quality, end-to-end broadband solutions. Our extensive terrestrial fiber-optic network supports all of our services and, when coupled with our undersea fiber-optic capacity, allows us to offer our customers a single-vendor solution for broadband connectivity to the United States. We believe this fiber network offers a competitive advantage over the incumbent, The Puerto Rico Telephone Company (“PRTC”), which in many areas operates a legacy copper network, in terms of cost, reliability, bandwidth speeds and variety of services offered.

Wireless Telephone Markets

The chart below sets forth information regarding our wireless operations as of May 31, 2009, based on data obtained from 2004 Claritas, Inc. estimates with respect to our U.S. service areas and the United States Census Bureau for Puerto Rico and the United States Virgin Islands service areas. Those U.S. wireless cellular telephone systems which are in Metropolitan Statistical Areas, or MSAs, are asterisked; the remainder are in Rural Service Areas, or RSAs.

As of May 31, 2009, we had 1,078,200 wireless subscribers in the markets listed below.


Markets	Ownership			Pops		Net Pops		Spectrum (MHz)		Band (MHz)

U.S. Wireless Telephone Systems
Midwest Cluster
Kalamazoo, MI*		100.0	%		321,500		321,500		25		850
Cass, MI		100.0	%		308,100		308,100		25		850
Newaygo, MI		100.0	%		262,500		262,500		25		850
Battle Creek, MI*		100.0	%		197,100		197,100		25		850
Benton Harbor, MI*		100.0	%		162,200		162,200		25		850
Jackson, MI*		100.0	%		162,500		162,500		25		850
Roscommon, MI		100.0	%		150,700		150,700		25		850
Allegan, MI		100.0	%		111,600		111,600		25		850
Grand Rapids, MI		100.0	%		846,000		846,000		10		1900
									20		1700-2100
Lansing, MI		100.0	%		521,200		521,200		10		1900
									20		1700-2100
Muskegan, MI		100.0	%		230,100		230,100		10		1900
Saginaw-Bay City, MI		100.0	%		404,000		404,000		10		1900
South Bend, IN*		100.0	%		314,900		314,900		25		850
Richmond, IN		100.0	%		218,500		218,500		25		850
Newton, IN		100.0	%		217,500		217,500		25		850
Elkhart-Goshen, IN*		92.0	%		188,800		173,700		25		850
Fort Wayne, IN*		100.0	%		476,100		476,100		25		850
									10		1900
Miami, IN		100.0	%		186,500		186,500		25		850
Kosciusko, IN		100.0	%		192,100		192,100		25		850
Huntington, IN		100.0	%		145,300		145,300		25		850
Kokomo, IN*		100.0	%		101,400		101,400		25		850
Muncie, IN		100.0	%		117,700		117,700		10		1900


Markets	Ownership			Pops		Net Pops		Spectrum (MHz)		Band (MHz)

Anderson, IN		100.0	%		131,500		131,500		10		1900
Lafayette, IN(1)		100.0	%		280,800		280,800		10		1900
Williams, OH		100.0	%		127,200		127,200		25		850
Lima, OH		100.0	%		249,300		249,300		20		1900
Findlay-Tifflin, OH		100.0	%		153,400		153,400		30		1900

Midwest Cluster Subtotal					6,778,500		6,763,400

Southeast Cluster
Beauregard, LA		100.0	%		401,300		401,300		25		850
Lafayette, LA*		95.0	%		246,100		233,800		25		850
West Feliciana, LA		100.0	%		194,700		194,700		25		850
Alexandria, LA*		100.0	%		146,400		146,400		25		850
Iberville, LA		100.0	%		159,100		159,100		25		850
DeSoto, LA		100.0	%		112,700		112,700		25		850
Bastrop, LA		100.0	%		80,800		80,800		25		850
Caldwell, LA		100.0	%		72,200		72,200		25		850
Lake Charles, LA*		100.0	%		183,900		183,900		25		850
Beaumont-Port Arthur, TX*		100.0	%		384,700		384,700		25		850
Claiborne, MS		100.0	%		158,900		158,900		25		850
Copiah, MS		100.0	%		123,600		123,600		25		850

Southeast Cluster Subtotal					2,264,400		2,252,100

Total U.S. Wireless Telephone Systems					9,042,900		9,015,500

Puerto Rico Wireless Telephone Systems
Puerto Rico Wireless Telephone System (including the U.S. Virgin Islands)		100.0	%		4,003,500		4,003,500		30		1900

Total U.S. Wireless Telephone Systems and Puerto Rico Wireless Telephone Systems					13,046,400		13,019,000


(1)		Approximately 75,000 of the Pops in the Lafayette, Indiana market overlap other Pops owned by us.

Products and Services

Wireless. The nature of the products and services we offer varies depending on the market. Our principal source of revenue is derived from providing network access to wireless telephone subscribers. We offer primarily postpaid and, to a significantly lesser extent, prepaid wireless services. Other services available to wireless telephone subscribers are similar to those provided by conventional landline telephone systems, including custom calling features such as voice mail, caller ID, call forwarding, call waiting and conference calling. We also offer our customers email services on their wireless devices and various messaging services, including text, picture and multimedia messaging services. In addition, our customers can access the Internet directly from their handsets and we offer our customers the ability to download games, ring tones and other applications. In Puerto Rico, we have deployed EV-DO technology, which provides peak speeds of up to 3.1 Mbps for faster downloading when accessing the Internet and retrieving e-mail. We also offer a fixed broadband wireless service in Puerto Rico under the name Instant Internet which enables customers to connect their home computers or laptops to the Internet using an easy to install plug-in device that utilizes our EV-DO network. We also offer hosted wireless e-mail services in the United States and Puerto Rico. During fiscal 2008, we re-launched a wireless home phone product that allows customers to replace their existing landline telephones. The easy-to-install telephone plugs directly into an AC wall outlet and uses our wireless network to transmit calls.

We offer our wireless customers a variety of handsets employing GSM technology in the United States and CDMA technology in Puerto Rico. We offer for sale a variety of handsets primarily from Motorola, Nokia, Blackberry, HTC, Sony Ericsson and UTStarcom and laptop cards that enable customers to connect their laptop computers to the Internet using a wireless connection. We frequently discount wireless handset devices sold to new and current customers in response to competition, to attract new customers and to retain existing customers. We also sell a variety of accessories including batteries, hands-free devices, chargers and other items.

We offer a variety of rate plans (both national and regional) designed to meet the varied needs of our customers, including Lifeline/Link-Up plans to qualifying low-income customers. Our rate plans in the United States consist of a fixed monthly charge (with varying allotments of included minutes), plus variable charges for additional minutes of use. We also recently introduced an unlimited rate plan in the U.S. In Puerto Rico, we offer principally unlimited voice and data usage for a flat monthly fee.

Broadband. In our Puerto Rico service area, we offer a broad range of communications services including basic local and long distance voice services, ATM (asynchronous transfer mode), frame relay, Wi-Fi (wireless fidelity), gigabit ethernet dedicated access, dedicated Internet ports, international long distance, switched access, high speed Internet access, and private line services. All services are provided over our own fiber-optic and microwave networks. We also offer our customers multiple types of data center services, including server and storage collocation, web hosting and managed services. Most of these services are an extension of our core network and transport products. We also offer a converged service, our Aptus(tm) service suite, allowing business customers the ability to manage all their voice communications needs through a single, integrated VoIP platform.

Roaming

We have negotiated agreements with our roaming partners that allow both companies’ customers to make and receive calls outside of their home calling areas. During the last several years, we significantly lowered our prices to our roaming partners and also significantly reduced the cost per minute we pay our roaming partners when our subscribers are roaming on their networks. Our roaming revenue in fiscal 2009 was $69.7 million, or 6.6% of our consolidated revenue, of which $59.6 million was generated from our U.S. wireless operations. While roaming has been an important part of our revenue, we have placed more emphasis on building our wireless retail business and believe that roaming revenues will decline over the long term.

Sales and Marketing; Distribution; Training

In the United States we market our services and products under the name Centennial Wireless. In Puerto Rico, we market our wireless services and products under the name Centennial de Puerto Rico, and our broadband business under the name Centennial Business Solutions. Our vision is to be the premier regional

telecommunications service provider by tailoring the ultimate customer experience in the markets we serve. Our sales and marketing strategy embodies this vision. We manage our businesses at the local level and tailor our strategies to meet and respond to local needs. We have enhanced our Trusted Advisor brand message in the United States to differentiate and communicate value based on our customer service advantage. We communicate this value through the services we provide customers in the United States, which we have branded our Blue Shirt Promises. In Puerto Rico we utilize a branding campaign named “Journey to Success”. Each of these branding initiatives is designed to convey our strategy based on delivering superior customer service.

Our marketing objective is to increase our customer base, increase revenue and reduce subscriber cancellations. Our current marketing strategy is to establish a strong local presence in each of our markets. In general, we seek to acquire profitable customers at a reasonable cost to acquire. In marketing our services, we stress our superior sales and customer care, our quality wireless network, competitive prices, and the local presence of our sales and customer service representatives and technical staff. In both the United States and Puerto Rico, we focus on marketing our services to postpaid customers. In the United States, we focus on customers who live and work in our licensed service areas, which keeps a significant portion of the minutes of use on our own network. We also offer nationwide calling plans for customers who are attracted to one flat wireless rate. The nationwide calling area offered in the United States includes our licensed area plus the roaming areas of AT&T Mobility, T-Mobile and various other national and regional carriers. In the United States we also offer unlimited incoming calls. Wireless data services have become a more important component of our service offerings.

We distribute our products and services primarily through company-owned retail stores and kiosks and, to a lesser extent, third party dealers and agents. We also distribute products using direct fulfillment to customers who purchase items through our website. As of May 31, 2009, we operated 136 retail outlets in the United States and 73 retail outlets in Puerto Rico, consisting of retail stores and kiosks. We use a variety of television, billboard, radio and newspaper advertising to stimulate interest in our services, increase our customer base, increase usage and reduce subscriber cancellations.

In both our U.S. and Puerto Rico wireless operations, we use our own internal sales force and, to a lesser extent, independent agents and dealers to sell our services. We believe we rely less on outside agents and dealers than larger, nationwide or global carriers. We believe this distribution strategy enables us to provide a superior sales and customer service experience to our customers. Our employees are generally paid a base salary plus commissions. Our dealers are independent contractors paid on a commission basis.

In the U.S. and Puerto Rico, we have established full-time training facilities for our Associates. We refer to these training centers as “Centennial University” and believe that the robust training we provide our sales and service Associates at Centennial University creates a competitive advantage. Each of our new sales and service Associates receives significant training prior to direct contact with customers. This initial training is supplemented periodically throughout the year as new products and rate plans are introduced.

Customer Service

We are committed to assuring consistently high-quality customer service. We have established local customer support facilities in our U.S. and Puerto Rico markets. We believe that by having local offices and customer support facilities, we are better able to service customers and monitor the technical quality of our telecommunications services. We have company-owned, centralized customer service centers located in Fort Wayne, Indiana, and Carolina, Puerto Rico, serving our U.S. and Puerto Rico customers, respectively. We also outsource certain call center functions in Puerto Rico.

Network Construction, Operation and Development

In general, wireless systems transmit voice and data through the transmission of radio signals using radio spectrum licensed by the FCC. The wireless industry has undergone significant technological advancement since its inception in the 1980’s. The first generation of wireless technology was analog. In February 2008, the FCC began to permit carriers to shut down their analog networks. The second generation of wireless technology was digital signal transmission technology and included GSM, TDMA and CDMA networks. The third generation technologies enable greater speeds for transmitting data and include UMTS/HSPA (High-Speed Packet Access) and CDMA

2000/EV-DO. Many carriers are now beginning to plan for fourth generation wireless technologies, which include Long Term Evolution (“LTE”) and Wi-Max.

We use GSM technology in our U.S. wireless markets. AT&T Mobility and T-Mobile USA currently use GSM technology. GSM is a digital wireless technology originally developed by the European telecommunications operators. It has since been adopted by wireless carriers around the world and is currently the most widely used wireless technology in the world. In July 2008, we shut down our 1G analog and 2G TDMA networks in our U.S. business and migrated our remaining TDMA customers to our GSM network. We have deployed soft switch technology which we expect will provide cost reductions and operating flexibility as we continue to roll out new services. As of May 31, 2009, our U.S. wireless operations had 1,171 cell sites. We are currently evaluating an upgrade of our U.S. wireless networks to 3G technology. We generally use equipment manufactured by Ericsson in our U.S. wireless markets.

As of May 31, 2009 our Puerto Rico Wireless operations had 469 cell sites. In Puerto Rico, we have deployed CDMA 2000/EV-DO technology, which is also used by Verizon Wireless and Sprint Nextel. We continue to deploy our EV-DO network throughout Puerto Rico and have now deployed EV-DO Rev. A, which covers approximately 90% of the island and which provides additional enhancements in data speeds and multimedia features. Our Puerto Rico wireless network uses CDMA technology supplied by Nortel Networks. The latest generation of this technology is capable of carrying voice and data traffic at speeds significantly higher than the previous wireless technology and faster than dial-up landline Internet connections.

As of May 31, 2009, our Puerto Rico broadband business had 1,400 route miles of fiber. We use Lucent switching equipment, and have installed a Nortel soft switch, which enables us to offer new and customized services and features to our customers.

Billing and Operational Support Systems

We operate management information systems to handle customer care, billing, network management, financial and administrative services. In July 2008, we switched our primary vendor for outsourced billing and related services from Convergys Information Management Group, Inc. (“Convergys”) to Fidelity Information Services. In connection with this transition, we entered into agreements with Convergys to license from Convergys the software that is utilized for our billing-related services (including customer care, billing processing and other billing related services). Our Puerto Rico broadband billing and customer support services are supported by Intec SingleView systems.

Competition

Wireless. The wireless telecommunications industry is highly competitive. We compete on the basis of, among others, quality, price, handset selection, area served, network coverage, services offered, and responsiveness of customer service. The telecommunications industry continues to experience rapid technological change. With the development of new technologies, products and services, competition for wireless subscribers has intensified.

In general, in each of our U.S. wireless markets we have four or five competitors. PCS operators have continued to build out their networks in our service areas and we expect this trend to continue. Our primary competitors in our U.S. wireless markets are ALLTEL (now part of Verizon), AT&T Mobility, Sprint Nextel, T-Mobile USA, U.S. Cellular, Verizon Wireless and mobile virtual network operators, or MVNOs, such as Virgin Mobile and Tracfone Wireless. In addition, Leap Wireless and MetroPCS, which offer unlimited rate plans for a fixed monthly fee with no contracts, have entered certain of our markets.

The Puerto Rico wireless market is also highly competitive. In Puerto Rico, we compete with five other wireless carriers: America Movil, AT&T Mobility, Open Mobile, Sprint Nextel, and T-Mobile.

We also compete to a lesser extent with paging, dispatch services and resellers. As wireless service is becoming a viable alternative to traditional landline phone service, we are increasingly competing directly with the traditional landline telephone companies and other landline telephone providers for customers.

Many new companies purchased licenses in the FCC’s auction of AWS spectrum in 2006, including a consortium of cable television operators, and may begin offering wireless services. In addition, the FCC auctioned off 62 MHz of spectrum in the 700 MHz band in January 2008. Given the favorable transmission characteristics of 700 MHz frequencies for deployment of wireless networks in rural areas, it is possible that additional competitors will emerge in our markets. In addition, because the FCC has recently permitted the offering of broadband services over power lines, it is possible that utility companies will begin competing against us. In the future, we may also face increasing competition from entities providing similar services using different technologies, including Wi-Fi, Wi-Max, satellite services and VoIP.

Broadband. Our Puerto Rico operations hold an authorization to provide broadband services in Puerto Rico, and an authorization to provide facilities-based international long distance service in the United States. Our main competitors for our broadband services in Puerto Rico are the PRTC, Worldnet and Prepa.Net. Over the last couple of years, Worldnet and Prepa.Net have increased their presence in the wireline market and constructed their own facilities. Prepa.Net is a subsidiary of the government owned electric utility in Puerto Rico. In addition, we cannot be sure that other broadband operators will not construct facilities in the future. For example, Sprint Nextel owns significant spectrum in the 2.5 GHz band capable of deploying Wi-Max technology. Due to the continuing technological advances in telecommunications, it is impossible to predict the extent of future competition.

Regulation

The following is a summary of the regulatory environment in which we operate and does not describe all present and proposed federal, state and local legislation and regulations affecting the communications industry. Certain regulatory requirements applicable to us are subject to judicial, legislative and administrative review that could alter the rules applicable to us. We cannot predict the outcome of any of these matters or their potential impact on our business.

Our operations in the United States, Puerto Rico, and the U.S. Virgin Islands are governed by, among other regulations, the Communications Act of 1934, or the Communications Act, which was substantially amended by the Telecommunications Act of 1996, or the 1996 Act. The Communications Act has provisions dealing specifically with our wireless services as well as provisions applicable to both our wireless and landline services.

Matters Specific to Wireless Carriers. The cellular and PCS systems we operate, known as CMRS (“Commercial Mobile Radio Services”) systems, are licensed and regulated by the FCC under the Communications Act. The FCC regulates the licensing, construction, operation, acquisition and sale of CMRS systems. CMRS providers operate within a specified geographic market area. For cellular systems, those market areas are typically MSAs or RSAs. PCS systems are normally licensed within market areas that are Basic Trading Areas (“BTAs”), which are component parts of Metro Trading Areas (“MTAs”). It is also possible to obtain, and we currently hold, some PCS licenses that are for market areas smaller than an entire MTA or BTA. These are known as partitioned areas.

The AWS licenses that were auctioned by the FCC in August 2006 cover 90 MHz of spectrum in the 1710-1755 and 2110-2155 MHz frequency bands and are divided into six different frequency blocks that cover geographic markets of varying sizes. The FCC requires AWS licensees to demonstrate that they provide substantial service by the end of their 10 or 15 year license terms, and any licensee that fails to meet this requirement will forfeit its license and will be ineligible to regain it. We acquired 20 MHz licenses in Grand Rapids and Lansing, Michigan, in the AWS auction. The AWS frequency bands contain a variety of incumbent government and non-government operations that may require relocation before the AWS licensee can commence operations that would interfere with the incumbent’s operations. We did not participate in the 700 MHz auction in 2008.

The FCC generally issues CMRS licenses for a term of ten years, after which they must be renewed. CMRS licenses may be revoked and license renewal applications denied by the FCC for cause. Under present rules, there may be competition for a CMRS license upon the expiration of its initial license term. While there can be no assurance that any license will be renewed, the FCC’s rules provide for a significant renewal preference to cellular and PCS licensees that have used their spectrum for its intended purpose, have built a network and have complied with FCC regulations and federal communication statutes. If a CMRS licensee is awarded a renewal expectancy, its renewal will be granted without further consideration of any competing applications. While our licenses have been

renewed regularly by the FCC in the past, and we believe that we have used our spectrum for its intended purpose and within applicable requirements and have built an extensive network, there can be no assurance that all of our licenses will be renewed in the future. Our wireless licenses expire in various years from 2009 to 2019.

The FCC also regulates other aspects of the operation and ownership of CMRS systems. Operational regulations include the cellular rules requiring coordination of proposed frequency usage with adjacent cellular licensees to avoid electrical interference between adjacent systems. In addition, the height and power of base station transmitting facilities and the type of signals they emit must fall within specified parameters. The FCC also imposes radio frequency radiation limitation requirements on CMRS licensees. There can be no assurance that any FCC requirements currently applicable to our CMRS system will not be changed in the future.

Ownership regulations include the requirement to obtain prior FCC approval before completing most types of acquisitions and assignments of FCC licenses, including our pending acquisition by AT&T. The FCC has not yet approved the AT&T Transaction. Acquisitions of minority interests generally do not require FCC approval. Whenever FCC approval is required, any interested party may file a petition to dismiss or deny the application for approval of the proposed transfer or assignment.

In addition to regulation by the FCC, wireless systems are also subject to Federal Aviation Administration, or FAA, regulations regarding the siting and construction of wireless transmitter towers and antennas, as well as local zoning requirements. The FCC also requires that all licensees register and obtain FCC registration numbers for all of their antennas or towers that require prior FAA clearance. All new towers must be registered at the time of construction. Failure to properly register a tower could lead to enforcement action, such as the imposition of a penalty. Wireless systems are also subject to the requirements of the National Environmental Policy Act, or NEPA. The FCC is responsible for enforcing its licensees’ compliance with the NEPA requirements.

Matters Relevant to Both Wireless and Landline Telephone Operations. Amendments to the Communications Act made by the 1996 Act were aimed at opening local telecommunications markets to competition. The provisions of the Communications Act added by the 1996 Act govern, among other things, the removal of barriers to market entry and impose on incumbent local exchange carriers (“ILECs”), duties to negotiate reasonable and nondiscriminatory interconnection agreements and access to unbundled elements of the ILEC’s network at any technically feasible point. The law encourages competition through these provisions and others governing resale, number portability, dialing parity, access to rights-of-way and numbering administration.

The FCC has issued numerous rules and regulations to implement the 1996 Act and all significant FCC rulings have been appealed to the courts, with several important reversals and FCC orders being reconsidered on remand. We have benefited from reduced costs in acquiring required communication services, such as ILEC interconnection, and we have benefited from the right to receive compensation for the termination of traffic as discussed below. In orders adopted in 2003 and 2004, the FCC eliminated or eased a number of requirements for unbundled offerings of ILECs’ network elements. However, provisions relating to interconnection, telephone number portability, equal access and resale could subject us to increased competition and additional economic and regulatory burdens.

Reciprocal compensation refers to payments that one carrier makes when it sends traffic to another carrier for completion. Reciprocal compensation applies to calls between landline networks and between a landline and a CMRS network. FCC rules provide that a local exchange carrier, or LEC, must supply CMRS providers interconnection within a reasonable time after it is requested, unless such interconnection is not technically feasible or economically reasonable, and that CMRS providers are entitled to compensation from LECs for terminating wireline-to-wireless traffic that originates and terminates within the same MTA. The FCC’s rules also allow LECs to request interconnection agreements with CMRS providers that operate within the same MTA. The FCC has a rulemaking proceeding in progress to consider whether, and possibly how, to replace the current system of reciprocal compensation for termination of local telecommunications traffic, and access charges for inter-MTA traffic, with a uniform intercarrier compensation plan.

The FCC currently is considering changes to the entire system of intercarrier compensation, of which wireless-wireline interconnection is a part. It is not possible to predict the results of that proceeding or how any FCC action would specifically affect us. However, the FCC may require increased emphasis on cost-based intercarrier charges and, thus, there could be fewer implicit subsidies for LECs in intercarrier rates, including those contained in

interstate “access charges,” which wireless carriers pay on certain calls to wireline carriers under the FCC’s rules. Such a result would be generally favorable to wireless carriers. Additionally, although the courts have affirmed key provisions of FCC orders implementing the Communications Act’s interconnection requirements, court challenges to certain of the FCC rules remain pending.

Among other recent actions, the FCC determined that high-speed Internet access services delivered by cable television, wireless, powerline, or ILEC facilities constitute “information services,” not subject to common carrier regulations. Also, the FCC decided that certain VoIP offerings are interstate services that are not subject to state certification and other regulations. The FCC has also ruled that both high-speed Internet access services and many VoIP offerings are subject to the Communications Assistance for Law Enforcement Act (“CALEA”) regulations. In addition, the FCC has ruled that many VoIP offerings are required to offer basic and enhanced 911 (“E911”) emergency calling services and are subject to USF and customer proprietary network information (“CPNI”) rules.

There have been indications that Congress may substantially revise the 1996 Act in the next few years, which may include substantial changes to the amount of money we pay into, and receive from, the USF. We cannot predict what effect any new legislation will have on our business. See “Item 1A — Risk Factors”. Regulatory changes may impose restrictions that adversely affect us or cause us to incur significant unplanned costs in modifying our business plans or operations.

State and Local Regulation. Under federal laws, no state may regulate the entry of CMRS providers or the rates charged for CMRS service. However, states can regulate some other terms and conditions of service. The location and construction of CMRS facilities, including transmission towers, antennas and equipment shelters, may be subject to state or local zoning, land use and other local regulations. Before a system can be put into commercial operation, the holder of a CMRS license must obtain all necessary zoning and building permit approvals for the transmitter sites and switching locations. Local jurisdictions control access to the rights-of-way and state governments (often public utility commissions) have the right to set rules relating to customer service. For example, many states and local communities have enacted laws restricting the use of wireless phones while driving a motor vehicle. Several other state and local legislative bodies have proposed legislation to adopt similar laws. These laws could reduce subscriber usage and lead to potential litigation against wireless carriers. See “Item 1A — Risk Factors”.

911 Service Requirements. The FCC has adopted requirements for CMRS providers to implement E911, which is being rolled out in phases. E911 capabilities enable CMRS systems to determine the location of persons making emergency calls. The FCC’s rules require CMRS carriers to work with local public safety officials to process the 911 calls, including those made from mobile telephones that are not registered with the carrier’s cellular system. Since April 1998, CMRS carriers have been required to be able to identify the cell from which the call has been made as well as the identification of the calling party number. The rules also require CMRS systems to continue to improve their ability to locate wireless 911 callers within a specific area.

FCC rules generally required that, by October 1, 2001, nationwide CMRS carriers be able to provide location information with a greater degree of accuracy in accordance with standards set by the FCC. For regional CMRS providers such as ourselves, the FCC extended the compliance deadline to March 1, 2003, or to a mutually acceptable date agreed to by the wireless provider and local governmental authorities responsible for 911 services. In some cases, the local governmental authorities in our service areas have not yet asked us to meet these requirements; in other cases, we have negotiated mutually acceptable compliance dates.

In Puerto Rico, following a change in vendors for our network, we elected to switch from a network-based system of locating emergency calls to one that is handset based. The FCC’s regulations required carriers using a handset-based solution to have provided 95% of their customer base with compliant phones by December 31, 2005. Although we did not meet this 95% requirement by such date, we are currently above the 95% requirement and in compliance. In May 2005, the FCC determined that VoIP providers, like us in Puerto Rico, must also implement 911 notification and location capabilities.

In September 2007, the FCC adopted an order that requires CMRS carriers to meet interim, annual E911 Phase II location accuracy benchmarks at the Public Safety Answering Point (“PSAP”) service-area on progressively smaller geographic levels over the next five years in order to ensure that carriers achieve PSAP-level

compliance no later than September 11, 2012. Compliance with this order may require significant expenditures. Several carriers have filed challenges to, or appeals of, the FCC’s order. In August 2008, the FCC agreed to voluntarily withdraw the new regulations, citing the public safety community’s agreement that less onerous regulations would meet their needs. The FCC is currently considering a new compromise proposal to modify those requirements. Under the new proposal, in 2012, instead of measuring the accuracy at the PSAP level, carriers would be required to measure accuracy at the county level, an easier standard to meet. These E911 requirements could require additional capital investment in our infrastructure, and these expenditures may be material. The FCC also has left open the possibility of future E911 requirements. Failure to meet or maintain compliance with the FCC’s E911 requirements can subject us to significant penalties.

Electronic Surveillance Standards. In 1994, Congress passed the CALEA, which requires all telecommunications carriers, including us and other CMRS licensees, to implement equipment changes necessary to assist law enforcement authorities in achieving enhanced ability to conduct electronic surveillance of those suspected of criminal activity. Over the ensuing decade, the FCC established varying deadlines for implementing different aspects of this complicated legislation. We are in compliance with the “assistance capability” and “punchlist” requirements of CALEA. In August 2005, the FCC determined that broadband Internet access service and VoIP services fall within the purview of CALEA. The FCC established a deadline of May 14, 2007 for broadband Internet access and VoIP service providers to come into compliance with CALEA for these services, but has yet to specify what specific compliance measures are required. Parties have sought reconsideration of some aspects of this ruling, but appeals of the FCC’s order were rejected. The resolution of these issues may cause us to incur additional expense in upgrading our networks to meet new CALEA requirements.

Universal Service. We are required to contribute to the federal USF, and to equivalent state funds. In general, these funds are created to subsidize telecommunications services in rural and high-cost areas of the United States. During fiscal 2009, we recorded approximately $51.7 million in payments from the federal USF in connection with our operations in Indiana, Louisiana, Michigan, Mississippi, Puerto Rico and the U.S. Virgin Islands, based on FCC rules that make such funding available to competitive carriers, including wireless carriers, operating in areas where the established landline carrier also receives such funding.

On May 1, 2008, the FCC imposed an interim cap on high-cost USF support to competitive ETCs like us, which limits total annual support for competitive ETCs at the level of support that they were eligible to receive in each state during March 2008. The FCC is also considering other significant changes to the way USF is disbursed to program recipients and in January 2008, the FCC issued three separate Notices of Proposed Rulemaking (“NPRMs”) seeking comment on (i) the use of reverse auctions to determine the amount of USF support to provide to ETCs and the level of support to be given to a particular service area; (ii) the elimination of the identical support rule, thereby requiring wireless carriers to receive support based on their own costs rather than the per line costs of the incumbent wireline company and (iii) the creation of separate funds for wireless, landline and broadband with caps on such funds. As part of the proposal to eliminate the identical support rule, the FCC has tentatively concluded to eliminate all Interstate Access Support and Interstate Common Line Support. If this rule is implemented, a substantial portion of our USF funding could be eliminated, including all the support we receive in Puerto Rico. During fiscal 2009, we recorded $22.9 million in payments from the USF relating to our Puerto Rico operations. It is not possible to predict whether or when any of the NPRMs will be adopted or whether or when other reform to USF may take place. However, implementation of some of the proposals could significantly decrease the amount of USF support we receive.

Number Pooling. The telecommunications industry has been faced with an apparent shortage of available telephone numbers, arising from many different factors within the industry. As a consequence, the FCC and state regulators have promoted the efficient use of available numbers. The FCC has imposed what is referred to as “thousand block pooling.” Since 2002, carriers may only request and will only be assigned numbers in blocks of one thousand numbers rather than the previous blocks of ten thousand numbers. To request additional blocks, carriers must meet utilization thresholds set by the FCC with respect to the numbers they have already been assigned. This more restrictive pooling requirement has forced carriers to more closely track their number utilization, imposing greater administrative burdens and increased pressure to implement number portability, which may require possible equipment upgrades.

Wireless Number Portability. Wireless number portability allows a CMRS carrier’s customer who moves to another carrier to take along, or “port,” his or her phone number. The original CMRS carrier must be able to transmit calls to the ported number. Wireless carriers who provided services in any of the 100 markets specifically designated by the FCC have been required to provide for wireless number portability in these markets since November 24, 2003 and in all other markets since May 2004. The implementation of wireless number portability has increased competition and required equipment and network upgrades.

Hearing Aid Compatibility (HAC). The FCC requires wireless carriers and handset manufacturers to make available to customers handsets that meet certain technical requirements allowing hearing aid users to have access to digital wireless services. These rules recently have been revised, and the revised rules require that, over a period of several years, progressively increasing percentages of wireless handsets offered by wireless carriers meet the required air interface standards for radio frequency interference. All of these requirements impose obligations that will require wireless providers like us to invest in handsets that meet the required criteria and as such may increase the cost of the wireless phones we offer our customers. We believe we are currently in compliance with these rules. However, in September 2006, we requested a temporary waiver of one of the compliance deadlines. In February 2008, the FCC denied our waiver request, and in June 2008, the FCC proposed a $40,000 fine for failing to meet the September 2006 deadline. We have appealed the FCC fine and a decision is pending.

Back-up Power. In June 2007, the FCC adopted an order implementing certain recommendations of an independent panel reviewing the impact of Hurricane Katrina on communications networks. This order requires wireless carriers to provide emergency back-up power sources for their equipment and facilities, including up to 24 hours of emergency power for mobile switch offices and up to eight hours for cell site locations. The order was expected to become effective sometime in 2008. However, on February 28, 2008, the United States Court of Appeals for the District of Columbia Circuit stayed the effective date of the order pending resolution of an appeal of the FCC’s order. We are currently evaluating our compliance with this order should it become effective, but we would likely need to purchase additional equipment, obtain additional state and local permits, authorizations and approvals and incur additional operating expenses. The potential costs that may be incurred to achieve compliance could be significant.

Truth in Billing and Consumer Protection. On March 18, 2005, in response to a petition from the National Association of State Utility Consumer Advocates (“NASUCA”), the FCC released a declaratory ruling (the “Second Report and Order”) regarding CMRS billing. In its declaratory ruling, the FCC removed the existing exemption for CMRS carriers from the requirement that billing descriptions be brief, clear, non-misleading and in plain language; reiterated that non-misleading line items are permissible under the FCC’s rules; reiterated that it is misleading to represent discretionary line item charges in any manner that suggests such line items are taxes or charges required by the government; and clarified that the burden rests upon the carrier to demonstrate that any line item that purports to recover a specific governmental or regulatory program fee conforms to the amount authorized by the government to be collected. The Second Report and Order also preempted the states from requiring or prohibiting the use of line items in CMRS billing.

NASUCA and the National Association of State Regulatory Commissioners appealed the Second Report and Order to the 11th Circuit Court of Appeals. In its opinion, the court rejected the FCC’s reasoning and unanimously vacated the Second Report and Order. On rehearing, the court clarified that it had vacated only that portion of the FCC’s order that preempted state regulation of line items, leaving intact the rest of the FCC’s order, including the decision to apply Truth in Billing to wireless carriers. Unless Congress enacts legislation to preempt the states from prohibiting or requiring line items in CMRS billing, the wireless industry may face increased costs in complying with new state billing requirements.

Early Termination Fees. The FCC has initiated proceedings to consider a request for a declaratory ruling on whether states can regulate a wireless carrier’s imposition of early termination fees upon customers that prematurely terminate long-term service agreements that include such fees. An adverse ruling in this proceeding could lead to increased regulation of such fees, or restrictions on the use of such fees, by the states, which could negatively affect our ability to assess such fees in the areas where we operate. The FCC was expected to take some type of action in this proceeding before the end of 2008 but took no formal action in 2008 and thus far in 2009. However, the FCC did conduct a public hearing concerning wireless carriers’ early termination fee practices and legislation has

been introduced in Congress which would regulate wireless carriers’ ability to charge early termination fees to customers.

Roaming. The FCC requires all CMRS carriers to provide manual roaming capability to the services of another carrier while such customer is located within any portion of the carrier’s licensed service area if such customer is using mobile equipment that is technically compatible with the carrier’s service offering. In 2007, the FCC expanded this rule by requiring wireless carriers to allow other wireless carriers’ customers to roam on their systems “automatically,” that is, by prior agreement between carriers and ruled that automatic roaming is a common carrier obligation. The FCC ruling applies only to “real-time, two way switched voice or data services that are interconnected with the public switched network” and text messaging services. The ruling, however, does not extend the obligation to markets in which the carrier seeking to roam holds an FCC license even if such carrier has yet to build out its network in such market, and does not extend the obligation to wireless data services. The FCC has sought additional comment on the possibility of extending this requirement to data roaming which is not connected to the public switched network, such as wireless broadband internet access.

Customer Proprietary Network Information; Privacy. FCC rules restrict a telecommunications carrier’s use of CPNI for marketing and other purposes without prior customer approval. In 2007, the FCC adopted additional requirements for the handling, safeguarding and use of CPNI that will increase our regulatory obligations and the costs of providing service to our customers. In addition, we are obligated to comply with a variety of other federal and state privacy and consumer protection requirements. State legislatures and regulators are considering imposing additional requirements on telecommunications carriers to further protect the privacy of wireless customers. If we fail to comply with these rules and regulations, we could be subject to substantial fines and penalties. In addition, the failure to adequately safeguard our customers’ personal information could severely damage our reputation.

WARN Act. In October 2006, President Bush signed into law the Warning, Alert, and Response Network Act, or the WARN Act. The WARN Act seeks to modernize the national emergency alert system, or EAS, by using wireless communications devices to disseminate alerts in response to natural or man-made disasters and terrorist attacks. The WARN Act gives CMRS carriers the option to participate voluntarily in the emergency system or to elect not to participate (with appropriate notice to consumers). We have tentatively elected to participate in the EAS program pending the release of more specific information concerning network requirements. We will monitor the development of standards, protocols and procedures for the delivery of emergency alerts to users of CMRS and may reconsider our participation in EAS. Participation may entail capital expenditures and increased regulatory obligations and operating costs. The FCC separately has a rulemaking proceeding pending that was initiated prior to the WARN Act’s enactment to consider rules for the expansion of EAS to CMRS providers.

Analog Sunset. As of February 18, 2008, cellular licensees are no longer required to offer analog wireless services. In July 2008, we shut down our analog and TDMA networks and migrated our remaining TDMA customers to our GSM network and believe we have complied with the FCC’s customer and FCC analog service termination notification requirements.

Outage Reporting. In August 2004, the FCC adopted regulations that require all telecommunications carriers, including us, to report outages to the FCC. This requirement affects the manner in which we track and gather data regarding system outages and repair outages.

Broadband Economic Stimulus. Congress recently enacted the American Recovery and Reinvestment Act of 2009 ( the “Recovery Act”), which provides, among other things, for an aggregate appropriation of $7.2 billion to fund grants to provide access to broadband service to consumers residing in rural, unserved or underserved areas of the United States. Carriers like us are eligible to receive funding grants and we may apply for funding. Applications for the first round of funding are due by August 14, 2009. If our competitors or new entrants receive grants, such funds could provide them with a competitive advantage.

Matters Specific to Our Puerto Rico Operations. Comprehensive telecommunications reform legislation was enacted in 1996 by the Commonwealth of Puerto Rico. This legislation, titled the Puerto Rico Telecommunications Act of 1996, or the Puerto Rico Act, was intended to coordinate Puerto Rico telecommunications regulatory law with the federal 1996 Act. Both laws were intended to open telecommunications markets to competition, and both establish, among other things, procedures by which competing telecommunications carriers

can obtain the right to interconnect their networks and exchange traffic with their competitors. Among other things, the Puerto Rico Act established the Telecommunications Regulatory Board of Puerto Rico, or TRB, which was given primary regulatory jurisdiction in Puerto Rico over all telecommunications services, all service providers, and all persons with a direct or indirect interest in such services or providers. Under these laws, competing telecommunications carriers like us may demand contract negotiations with established firms such as PRTC, with the TRB acting as an arbitrator to decide issues the parties cannot successfully negotiate. A party unhappy with the TRB’s rulings may appeal them to federal court. Under these procedures, we established interconnection agreements with PRTC in 1997, 2002, 2005 and most recently in 2008. With the exception of the original agreement in 1997, either we, PRTC, or both have sought federal court review of some aspects of the TRB’s rulings regarding these agreements.

A continuing area of dispute between us and PRTC is the amount that each must pay when exchanging traffic with the other. Different rates apply to the exchange of different classes of traffic. We generally favor treating as much traffic as possible as local in nature, which generally results in the lowest intercarrier payments. The TRB has broadly agreed with us and has ordered PRTC and us generally to classify traffic as local as long as it begins and ends within our Puerto-Rico-wide local calling area. In the most recent proceeding before the TRB, the TRB rejected our proposals to include within that rule certain on-island traffic that we bill to end users as toll traffic, and VoIP traffic that is carried to or from Puerto Rico as Internet data rather than as a traditional telephone call. We are seeking review of those determinations in court. At the same time, the TRB granted our request to require PRTC to facilitate the establishment and expansion of efficient direct interconnection between our landline and wireless networks and PRTC’s “Claro” wireless network, and also clarified and limited the circumstances in which our wireless operations might have to pay PRTC for receiving landline calls from PRTC subscribers. PRTC is seeking review of those determinations. We cannot predict the outcome of these court proceedings.

U.S. Virgin Islands

Our FCC license for Puerto Rico also covers the U.S. Virgin Islands. As stated above, the U.S. Virgin Islands are part of the United States, so our operations there are subject to the Communications Act and the 1996 Act and, for purposes of regulating our operations, the government of the U.S. Virgin Islands is the equivalent of a state. In March 2008, the U.S. VIPSC designated us an ETC, making us eligible to receive USF support in the U.S. Virgin Islands.

Employees

We had approximately 2,900 employees as of May 31, 2009. Our employees are not represented by a labor organization. We consider our relationship with our employees to be good.

Other information

Financial information concerning our business segments, including geographical information, appears in the Notes to the Consolidated Financial Statements.


Item 1A.	*Risk Factors*

Investors in our securities should carefully consider the risks described below and other information included in this report. Our business, financial condition or consolidated results of operations could be materially adversely affected by any of these risks, and the trading price of our securities could decline due to any of these risks. Investors in our securities could lose all or part of their investment as a result of any such decline. This report also contains forward-looking statements that involve risks and uncertainties; please see “Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995.” Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below.

Risks Relating to Our Business and Our Industry

There are risks and uncertainties associated with our proposed acquisition by AT&T.

There are risks and uncertainties associated with our proposed acquisition by AT&T. For example, the acquisition may not be consummated, or may not be consummated as currently anticipated. The AT&T Transaction was approved by our stockholders in February 2009. Completion of the AT&T Transaction is not subject to a financing condition but remains subject to (i) approval by the FCC and (ii) other customary conditions. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired; however, the parties are still discussing the transaction with the Department of Justice. The parties anticipate that the AT&T Transaction will be completed during the third quarter of calendar year 2009, assuming timely satisfaction or waiver of all remaining closing conditions. However, there is no assurance that the conditions to the completion of the AT&T Transaction will be satisfied or waived, taking into account the current regulatory environment. Failure to consummate the AT&T Transaction for any reason, or an extended delay before consummation, could have a material adverse effect on our business, results of operations and financial condition and result in a significant decline in the market price of our common stock. If the AT&T Transaction is not completed, there is no assurance that a comparable transaction will occur. Under certain circumstances, if the AT&T Transaction is terminated, we may be required to pay AT&T a termination fee of $28.5 million and reimbursement of out-of-pocket fees and expenses not exceeding $7.0 million.

The merger agreement with AT&T restricts us from engaging in certain activities and taking certain actions without AT&T’s approval, which could prevent us from pursuing opportunities that may arise prior to the closing of the acquisition.

The pendency of the AT&T Transaction could have a negative impact on our business, including making it more difficult to attract and retain customers.

Our business could be adversely impacted as a result of uncertainty related to the proposed acquisition by AT&T.

The proposed acquisition by AT&T could cause disruptions in our business, which could have an adverse effect on our business, results of operations and financial condition, whether or not the AT&T Transaction is consummated. For example:


	•	our employees may experience uncertainty about their future roles at the Company, which might adversely affect our ability to retain and hire key managers and other employees;

	•	customers and suppliers may experience uncertainty about the Company’s future and may seek alternative business relationships with third parties or seek to alter their business relationships with the Company; and

	•	the attention of our management may be directed to transaction-related considerations and may be diverted from the day-to-day operations of our business.

In addition, we have incurred, and will continue to incur, significant fees for professional services and other transaction costs in connection with the proposed acquisition by AT&T, and many of these fees and costs are payable by us regardless of whether we consummate the transaction.

The effects of a recession in the United States and general downturn in the global economy, including the illiquidity in the credit markets could have a material adverse effect on our business and consolidated results of operations.

The U.S. economy is currently in a recession and may be depressed for the foreseeable future. A continuation of the global economic downturn could adversely affect consumer spending patterns which could result in decreased demand for the products and services we sell, increased price competition, slower adoption of new technologies and an increase in bad debt expense. In addition, the current economic conditions could negatively impact our vendors, suppliers and third-party dealers, which could negatively impact our ability to distribute, market and sell our products and services. Furthermore, general economic conditions and the tightening credit markets have significantly affected the ability of many companies to raise new capital or refinance existing indebtedness. Due to the lack of access to the capital markets, should we need additional funds or to refinance our existing indebtedness, we may not be able to obtain such additional funds.

We operate in a very competitive business environment, which may result in the loss of existing customers and our inability to attract new customers.

Our principal business, wireless telephone service, is highly competitive. In the United States, we usually compete against four or five other wireless carriers in the markets we serve. Additional operators have continued to build out their networks in our service areas and we expect this trend to continue. In Puerto Rico, we compete against five other wireless carriers. Additional competitors may enter any of our markets in the future, including competitors using unlicensed spectrum. Many of our existing competitors are larger than we are, hold licenses for more spectrum than we do, have greater financial, technical, marketing and other resources than we do, are less leveraged than we are and have more extensive coverage areas than we do. In addition, because of their size and purchasing power, many of our competitors may be able to purchase equipment, handsets, supplies and services at lower prices than we can. In addition, the size of many of our competitors has enabled them to create nationwide highly recognizable brands. Consolidation in the wireless industry has created and may continue to create even stronger competitors. Competition for customers is based principally upon services and features offered, handset selection and pricing, system coverage, technical quality of the wireless system, price, customer service and network capacity. Some competitors may market services and equipment we do not offer, including technologically advanced phones such as the iPhone, “push-to-talk” services, proprietary data content, each of which may make their services more attractive to customers. We expect competition to intensify as a result of the development of new technologies, products and services and as the rate of subscriber growth for the industry continues to slow. In addition, certain wireless carriers we compete against, or may compete against in the future, offer services we do not offer in all our markets, such as wireline phone service and video services. These companies are able to bundle those services with their wireless offerings to create a compelling offering to consumers that we may not be able to match.

In addition, consolidation among wireless carriers as well as the entry of mobile virtual network operators, such as Virgin Mobile, have intensified the competitive environment in our markets. New communications technologies such as Wi-Fi, Wi-Max, satellite services and VoIP are being developed and deployed which will increase competition. The FCC continues to auction new spectrum which will only serve to increase competition in the future. For example, the FCC auctioned off 90 MHz of new wireless spectrum in 2006 in the 1700-2100 bands and 62 MHz of additional spectrum in the 700 MHz band in 2008, which may lead to additional competition from new entrants, including non-traditional telecommunications carriers such as cable television companies. Indeed, the telecommunications industry has seen a blurring of traditional dividing lines between wireline, wireless, data, Internet and video providers. Many of our competitors are able to offer bundles of these services that we cannot match. With so many companies targeting many of the same customers, the pressure to offer free or heavily-subsidized handsets has and may continue to increase. We may not be able to successfully retain our existing customers and attract new customers and as a result grow our customer base and revenue. In addition, the intense competition we face from larger, more technologically advanced carriers, may force us to spend significantly more on capital expenditures than we currently anticipate to remain competitive.

Our broadband business in Puerto Rico also faces increased competition. Our broadband business in Puerto Rico currently competes against many companies, including local exchange carriers such as PRTC and Worldnet, ISPs such as PRTC, Caribe.net and AOL, interexchange carriers such as AT&T, PRTC, Sprint, Primus and Worldnet and several emerging VoIP providers. In addition, our broadband business competes against Prepa.Net, an affiliate of the local power company. We expect competition for customers’ share of their telecommunications revenues to continue to be extremely competitive. This has, and may continue to, cause prices to decline.

Our inability to gain access to the latest technology handsets in a timeframe and at a cost similar to our competitors could have an adverse effect on our business, financial condition and consolidated results of operations.

We believe that customers are increasingly choosing their wireless carriers based on handset selection and pricing of handsets. Many of the handset vendors have begun selling their latest handset models exclusively to a single wireless carrier, thereby preventing us from offering these high-demand handsets to our customers. As a result, as a smaller, regional carrier, we may not have access to the most technologically advanced handsets (such as the iPhone) as quickly as the national wireless carriers, thereby putting us at a significant competitive disadvantage. Similarly, we believe that, on average, we pay more for our handsets than do the national carriers with whom we

compete. This may allow our competitors to offer handsets to potential customers that we cannot offer or at more attractive prices than we can, making it more difficult for us to attract and retain our customers.

Our failure to successfully develop and incorporate wireless data services into our service offerings may have a material adverse effect on our financial and operational results.

Wireless data services have become a meaningful component of many wireless carriers’ strategies and financial results. Many of the national wireless carriers have invested (and will continue to invest) significant resources to develop and deliver these new data services to their customers. As market prices for wireless voice services continue to decline, revenue from new data services helps offset some of the ARPU decline caused by lower prices for voice service. Similarly, as customers increasingly demand wireless data services as part of the core feature set for their phones, the failure to offer such services could reduce sales and increase churn. Currently, in some of our markets, our wireless data offerings are not as robust as those offered by some of our competitors and may never be. Often times, we cannot gain access to certain of the proprietary data content available to national operators. If we are unable to successfully incorporate the most advanced wireless data services, including certain 3G and 4G technologies, into our service offerings, our customer additions and ARPU could decrease and our churn could increase. In addition, there can be no assurance that we can provide wireless data services on a profitable basis or that vendors will develop and make available to companies our size popular applications and handsets with features, functionality and pricing desired by customers. Furthermore, we rely on third parties to provide us access to such data, music and video services and access to new handsets to deliver these advanced services. If we are unable to obtain access to such services or handsets at a reasonable cost and on a timely basis our business could be adversely affected.

Roaming revenue represented 6.6% of fiscal 2009 consolidated revenue and is likely to decline in the future. Significant declines in roaming revenue could have a material adverse effect on our consolidated results of operations.

We earn a portion of our revenue from agreements with other wireless communications providers whose customers enter our service areas and use their wireless phones, commonly referred to as roaming. Roaming rates per minute have declined over the last several years and we expect that such declines will continue for the foreseeable future. For fiscal 2009, we recorded $69.7 million of roaming revenue, including $59.6 million for our U.S. wireless segment and $10.1 million for our Puerto Rico wireless segment. Roaming revenue accounted for approximately 6.6% of our consolidated revenue for fiscal 2009. Additionally, our roaming agreements do not prevent our roaming partners from competing directly against us in our markets. As our roaming partners continue to build out their networks in our service areas, we would expect them to limit the ability of their subscribers to roam on our network. The loss of this roaming traffic could have a material adverse effect on our consolidated results of operations. In addition, our roaming partners may terminate their roaming agreements with us under certain circumstances. Accordingly, our roaming agreements may be terminated or renegotiated on less favorable terms. Furthermore, our roaming revenue is highly dependent on the pricing decisions made by our roaming partners and our roaming agreements do not require that our roaming partners use our network. If our markets are not included in our roaming partners’ home calling areas and are instead subject to the imposition of additional roaming charges, we could see a loss of roaming minutes and revenue. We continue to expect roaming revenues to decline and significant declines in roaming revenue could have a material adverse effect on our consolidated results of operations.

Our failure to maintain roaming arrangements could have a material adverse effect on our ability to provide service to our customers who travel outside our coverage area.

In our U.S. wireless operations, we control licenses that cover approximately 9 million people — a small percentage of the total population in the United States. Most of our competitors have networks that cover substantially all of the population in the United States and have roaming agreements with international operators that provide international roaming to more countries and at lower prices than we offer. To supplement our limited on-network coverage, we have entered into roaming agreements with national carriers which enable our customers to use the wireless networks of other wireless carriers when they travel outside of our licensed service area. This

enables us to offer our customers regional and national rate plans that include areas for which we do not own wireless licenses. In 2007, the FCC adopted a report and order that clarified that CMRS providers are required to provide automatic roaming for voice and SMS text-messaging services on just, reasonable and non-discriminatory terms. However, the FCC order does not address roaming for data services or the mechanism for determining the reasonableness of roaming rates for voice services. Although we have entered into multi-year roaming agreements with different national carriers, these agreements are subject to renewal and termination under certain circumstances. If we are not able to maintain roaming agreements with other wireless carriers on favorable terms or at all, we may no longer be able to offer these regional and national rate plans and the coverage area and pricing we offer to our customers may not be as attractive relative to the offers from our competitors. This could have a material adverse effect on our future operations and financial condition. In addition, while certain of our roaming agreements require other carriers’ customers to use our network when roaming, our roaming agreements do not prevent our roaming partners from competing directly against us in our markets. When our roaming agreements expire or are terminated, our roaming partners could choose not to renegotiate such agreements, could insist on materially less favorable terms and could enter into roaming agreements with other carriers serving our markets or choose not to include our markets in their service offerings altogether, which could have a material adverse effect on our consolidated results of operations.

If the roaming rates we pay third parties increase or our subscribers significantly increase their off-network usage, our financial results could be negatively affected.

Most of our competitors have national networks which allow them to more economically offer nationwide rate plans. We do not have a national network but offer our customers nationwide rate plans that do not include an incremental charge for roaming. While we have entered into long-term agreements with other wireless carriers with attractive roaming rates, those agreements are subject to renewal and termination under certain circumstances and there is no assurance that we could obtain similar rates from other companies. In addition, our aggregate roaming costs are highly susceptible to the geographic calling patterns of our customers. As we continue to sell more rate plans that do not include any incremental charge for roaming, we expect that our roaming expense will increase. If our roaming rates were to increase or the amount of minutes used by our customers not on our network were to increase, our consolidated financial results could be negatively affected.

We may be unable to obtain additional spectrum in the future at a reasonable cost.

To keep pace with increased customer demands, roll out next generation technologies and improve the quality of our existing networks, we will need to obtain additional spectrum in our service areas. Spectrum may be acquired through a variety of means, including acquisition, swaps or leasing arrangements or from the FCC in an auction. Certain spectrum recently auctioned off may not be compatible with our existing spectrum and vendors may not manufacture suitable equipment and handsets to use such spectrum with our existing spectrum. There can be no assurance that additional spectrum will be available to us or whether we will have the capital needed to acquire such spectrum. Failure to obtain the necessary spectrum could prevent us from offering new advanced services and could result in increased churn and our inability to attract new customers who increasingly expect and demand these new services.

We may expand our business by acquiring new markets or businesses and may be unable to successfully integrate these new markets or businesses which could have an adverse effect on our financial results.

We may seek to expand our footprint and acquire additional wireless markets or other properties. These transactions involve many risks, both operational and financial in nature. Any acquisition of new markets will require integrating the acquired markets with our existing markets, including integrating the billing, customer care, network, personnel and other systems, many of which may be very different than our existing systems. In addition, we may experience delays or fail to realize the benefits that we had anticipated from any acquisition. Acquisitions also divert management attention away from the existing business and can be a disruption to the ongoing business. Integrating new markets is often very difficult and time consuming and has the potential to negatively impact customer service and churn levels. In addition, it is possible that we would need to provide the customers of the acquired business with new handsets at a subsidized price, which could have a negative impact on our financial

results. If we undertake an acquisition and are not successful in our integration efforts, our business and consolidated results of operations could be adversely affected.

We may incur significantly higher wireless handset subsidy costs than we anticipate which could have a material adverse effect on our financial results.

As the functionality of handsets continues to expand, the price of handsets has generally increased. In addition, our customers are increasingly demanding that we provide them with new handsets more frequently than in the past. We believe that, on average, we pay more for our handsets than do the national carriers with whom we compete. We generally subsidize a portion of the price of the handset to our customers. As a result, at the time we provide a handset to a customer, we incur an expense equal to the difference between the price we pay for the handset and the price we receive from our customer. Many of our competitors maintain aggressive handset promotions, including giving away free handsets. To remain competitive, we may be forced to give away or more heavily subsidize our handsets at unanticipated levels. Similarly, as we roll out new technologies, customers may need new handsets to take advantage of these new services, forcing us to provide our customers with a significant number of new, expensive handsets with heavy subsidies. As a result, we may incur significantly higher wireless handset subsidy costs than we anticipate which could have a material adverse effect on our consolidated financial results.

Our failure to attract new subscribers and the lower credit ratings of some of our new customers could have a material adverse effect on our financial performance.

As penetration levels for wireless services continue to increase, it will become increasingly more difficult to continue to grow our subscriber base at a reasonable cost to acquire. As a result, we must increasingly seek to attract customers from competitors and from first time wireless customers who, oftentimes, have a lower credit rating, than existing wireless customers. On average, these lower credit rating customers have a higher rate of involuntary churn and bad debt expense than our historical postpaid subscriber base. Our failure to attract new subscribers at a reasonable cost to acquire could have a material adverse effect on our business. In addition, if we are unable to effectively manage this new segment of lower credit quality customers, our churn and bad debt expense could increase which could have a material adverse effect on our consolidated financial condition and consolidated results of operations.

If we are unable to effectively manage churn, our business may be adversely affected.

The wireless industry is extremely competitive. Among other things, the wireless industry is characterized by a high rate of churn. Churn can be the result of several competitive factors, including price, service offerings, network coverage, reliability issues and customer care concerns. Efforts to reduce churn often increase costs as we offer incentives to customers to remain users of our wireless services. A high rate of churn could adversely affect our consolidated results of operations because we would lose revenue and because the cost of adding a new subscriber, which generally includes a handset subsidy and/or a commission expense, is a significant factor in our profitability. As a result, churn may reduce our revenue and increase our costs.

Our USF may be reduced or eliminated.

During fiscal 2009, we recorded approximately $51.7 million in payments from the federal USF in connection with our operations in Indiana, Louisiana, Michigan, Mississippi, Puerto Rico and the U.S. Virgin Islands based on FCC rules that make such funding available to competitive carriers, including wireless carriers, operating in areas where the established landline carrier also receives such funding. However, these FCC rules are currently under review and may be changed in a way that materially reduces or eliminates our right to obtain such funding. As part of this review, the FCC has proposed, among other things, eliminating the “identical support rule”. Elimination of such rule would cause wireless carriers to receive support based on their own costs rather than the costs of the incumbent telephone company. As part of this proposal, the FCC has tentatively concluded to eliminate all Interstate Access Support and Interstate Common Line Support. If this rule is implemented, a substantial portion of our USF funding could be eliminated, including all the support we receive in Puerto Rico. During fiscal 2009, we recorded $22.9 million in payments from the USF relating to our Puerto Rico operations. Also, in May 2008, the FCC implemented a “cap” on USF support to wireless carriers, which will likely reduce our support in the future. As

a result of the FCC’s implementation of the “cap” and the potential reform of the USF system, we may receive substantially lower USF revenues in the future, which could adversely affect our consolidated results of operations.

Market prices for wireless and wireline services may decline in the future at an accelerating rate.

Market prices for wireless services have declined over the last several years and may continue to decline in the future at an accelerating rate due to increased competition. As a result, we may be unable to maintain or improve our ARPU or our margins. We expect significant competition among wireless providers which has been intensified by wireless number portability, to continue to drive service and equipment prices lower, and to potentially lead to increased churn. We cannot control the pricing decisions of our competitors and many carriers may choose to offer substantially reduced pricing. Competition continues to intensify as wireless carriers include more equipment discounts and bundled services in their offerings, including offering more minutes and free long distance and roaming services. In addition, our broadband business in Puerto Rico has also experienced a decline in pricing for traditional voice minutes and other services. A continued decline in market prices could adversely affect our revenues, which would have a material adverse effect on our financial condition and consolidated results of operations.

Regulatory changes may impose restrictions that adversely affect us or cause us to incur significant unplanned costs in modifying our business plans or operations.

The U.S. telecommunications industry is subject to federal, state and other regulations that are continually evolving. As new telecommunications laws and regulations are issued, we may be required to modify our business plans or operations. We may not be able to do so in a cost-effective manner. In addition, the failure by us to comply with applicable governmental regulations could result in the loss of our licenses or the assessment of penalties or fines or otherwise have a material adverse effect on our business and results of our operations. Also, there have been indications that Congress and/or the FCC may substantially revise parts of the 1996 Act and rules there under in the next few years, including, without limitation, with respect to the amounts we pay into, and receive from, the USF, intercarrier compensation and special access regulation. We cannot predict what effect any new legislation will have on our businesses.

The FCC, which has jurisdiction over our operations in the United States, Puerto Rico and the U.S. Virgin Islands, and state regulatory agencies continue to issue rules implementing the requirements of the 1996 Act. These rules include the obligation of incumbent telephone companies to allow other carriers to connect to their network by reasonable means at rates based on cost. The interpretation and implementation of these and other provisions of the 1996 Act and the FCC rules implementing the 1996 Act continue to be subject to regulatory proceedings and litigation and may have a material adverse effect on our business.

Our Puerto Rico operations are also subject to the jurisdiction of the TRB. The TRB could determine that the rates for our wireline services are not cost based. The TRB could also revoke our Local Exchange Certification if we fail to comply with applicable regulations. This determination could have a material adverse effect on our business.

Furthermore, the rapid growth and penetration of wireless services has prompted the interest of the FCC, state legislatures and state Public Utility Commissions to attempt to more closely regulate certain practices by the wireless industry, including in areas such as customer billing, early termination fees, sales practices, handling of customer call records, privacy, advertising and filing of “informational” tariffs. In addition, many states and local governments have imposed and are considering imposing additional regulations and taxes on wireless services. These regulations and taxes have imposed and will continue to impose increased costs on us and may adversely affect our business. Further, federal or state governments and the government of the Commonwealth of Puerto Rico could adopt regulations or take other actions that might have a material adverse effect on our business. We are subject to location and zoning regulations that could materially affect our ability to build new cell sites and expand our coverage. The FCC has also required wireless carriers to transmit 911 calls and provide the location of the 911 callers with an increasingly narrow geographic tolerance, and has proposed a rule change to further narrow the geographic area. These and other changes could materially and adversely affect our business prospects, operating results and ability to service our indebtedness.

The loss of our licenses would adversely affect our ability to provide wireless and broadband services.

In the United States, our wireless licenses are valid for ten years from the effective date of the license. Licensees may renew their licenses for additional ten-year periods by filing renewal applications with the FCC. Our wireless licenses expire in various years from 2009 to 2019. The renewal applications are subject to FCC review and are put out for public comment to ensure that the licensees meet their licensing requirements and comply with other applicable FCC mandates. Failure to file for renewal of these licenses or failure to meet any licensing requirements could lead to a denial of the renewal application and thus adversely affect our ability to continue to provide service in that license area. Furthermore, our compliance with regulatory requirements such as enhanced 911 and wireless number portability may depend on the availability of necessary equipment or software. Failure to comply with these regulatory requirements may have an adverse effect on our licenses or operations and could result in sanctions, fines or other penalties.

Rapid and significant technological changes in the telecommunications industry may adversely affect us.

We face rapid and significant changes in technology. In particular, the wireless telecommunications industry is experiencing significant technological changes, including:


	•	migration to 3G and 4G services, which will require significant expenditures, including the purchase of licenses for additional spectrum and upgrades to network infrastructure;

	•	evolving industry standards;

	•	the allocation of new radio frequency spectrum in which to license and operate advanced wireless services;

	•	ongoing improvements in the capacity and quality of digital technology and shorter development cycles for new products and enhancements;

	•	changes in end-user requirements and preferences; and

	•	development of data and broadband capabilities.

For us to keep up with these technological changes and remain competitive, we will be required to continue to make significant capital expenditures. Customer acceptance of the services that we offer will continually be affected by technology-based differences in our product and service offerings. For example, many of our competitors offer “push-to-talk” technology, video services, location-based and mapping services and other popular services that we do not currently offer.

In our United States wireless markets, we use GSM technology and in our Puerto Rico market we use CDMA technology. GSM is currently the most widely adopted technology in the world with significantly more subscribers than CDMA technology. If the market for CDMA-based technology declines, it may lead to higher prices on, or reduced availability of infrastructure equipment and handsets supporting CDMA-based systems. In such event, we could be forced to migrate our CDMA networks to GSM or other technologies, which would require significant capital investments and could have a material adverse impact on our business.

We cannot predict the effect of technological changes on our business. Technological changes may result in increases in our capital expenditures. New technologies may be protected by patents or other intellectual property laws and therefore may not be available to us. Also, alternative technologies may be developed that provide wireless communications service or alternative service superior to that available from us. If we cannot keep pace with technological changes in the telecommunications industry, our business may be adversely affected.

We rely on a limited number of key suppliers and vendors for timely supply of equipment, handsets and services. If these suppliers or vendors experience problems or favor our competitors, we could fail to obtain sufficient quantities of the products and services we require to operate our businesses successfully.

We depend on a limited number of suppliers and vendors for equipment, handsets and services. If these suppliers and vendors experience interruptions or other problems delivering these network components and handsets on a timely basis, our subscriber growth and operating results could suffer significantly. Our initial choice of a network infrastructure supplier can, where proprietary technology of the supplier is an integral component of

the network, cause us to be effectively locked into one or a few suppliers for key network components. As a result, we have become reliant upon a limited number of network equipment manufacturers, including Nortel Networks, Ericsson, Inc. and Alcatel Lucent. In January 2009, Nortel Networks, our primary vendor for network infrastructure in Puerto Rico, filed for bankruptcy protection. It is unclear what impact Nortel’s bankruptcy will have on our business operations. If it becomes necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory replacement suppliers or vendors on economically attractive terms, on a timely basis or at all. In addition, if key suppliers or contractors fail to comply with their contracts, fail to meet performance expectations or refuse or are unable to supply us in the future, our business could be severely disrupted.

If we lose our key personnel, our business may be adversely affected.

The success of our business is largely dependent on our senior management, as well as on our ability to attract and retain other highly qualified technical and management personnel. We believe that there is, and will continue to be, intense competition for qualified personnel in the telecommunications industry, and we may be unable to attract and retain the personnel necessary for the development of our business, including as a result of our pending transaction with AT&T. The loss of key personnel or the failure to attract additional personnel as required could have a material adverse effect on our business, financial condition and consolidated results of operations. We do not currently maintain “key person” life insurance on any of our key employees.

We and our suppliers may be subject to claims of infringement regarding telecommunications technologies that are protected by patents and other intellectual property rights.

In general, we do not manufacture any of the equipment or software used in our telecommunications businesses and do not own any patents. Accordingly, we purchase the infrastructure equipment, handsets and software used in our business from third parties and obtain licenses to use the associated intellectual property. Telecommunications technologies are protected by a wide variety of patents and other intellectual property rights. As a result, third parties may assert infringement claims from time to time against us (or our suppliers) based on the way we use these technologies in our business. To protect us against possible infringement claims, we may have indemnification agreements with the manufacturers and suppliers that provide us with the equipment and technology we use in our business. However, we do not always have such agreements in place and, even if we have such agreements in place, we may not be fully protected against all losses associated with infringement claims. Whether or not an infringement claim was valid or successful, it could adversely affect our business by diverting management attention, involving us in costly and time-consuming litigation, requiring us to enter into royalty or licensing agreements (which may not be available on acceptable terms, or at all), or requiring us to redesign our business operations or systems to avoid claims of infringement. In addition, if a claim is found to be valid and we or our suppliers fail to successfully negotiate a required royalty or license agreement, we could be forced to pay substantial damages and could be subject to an injunction that could significantly disrupt our business and prevent us from offering certain products or services.

Business, political, regulatory and economic factors may significantly affect our operations and hurt our overall performance.

Our business is dependent on the business and economic conditions as well as consumer spending in the areas in which we operate, particularly in Puerto Rico. These factors are outside of our control. In particular, the economy in Puerto Rico has been in a significant downturn for several years. As economic conditions in Puerto Rico deteriorate, the market for wireless or other communications services in Puerto Rico may be disproportionately and adversely affected due to the generally lower per capita income in Puerto Rico as compared to the United States. This deterioration would also have an adverse effect on our business in Puerto Rico and, because our Puerto Rico operations contribute significantly to our consolidated financial performance, on our overall financial condition and consolidated results of operations. In addition, our markets in our Midwest cluster in Michigan, Indiana and Ohio have been negatively impacted by the difficulties encountered by the U.S. auto industry and related industries. More generally, adverse changes in the economy are likely to negatively affect our customers’ ability to pay for existing services and to decrease their interest in purchasing new services.

Any change in Puerto Rico’s political status with the United States, or the ongoing debate about such status, could affect the economy of Puerto Rico. The ultimate effect of possible changes in Puerto Rico’s governmental and political status is uncertain and, accordingly, we cannot assure you that such changes will not materially adversely affect our business and consolidated results of operations. In addition, the economy of Puerto Rico is highly dependent on tourism. If the tourism industry declines, in particular as a result of the threat of terrorism, it could have a material adverse effect on our business.

Our business may be negatively impacted by severe weather, labor strikes, terrorism and other natural disasters.

Our business may be materially adversely affected by events such as hurricanes, earthquakes, labor strikes, terrorism and other factors that may generally affect the regions in which we operate. For instance, hurricanes and labor strikes significantly slow down the provision of services by third parties and needed repair of our network, which could adversely affect our ability to deliver telecommunications services. More specifically, a significant portion of our revenue is derived from our operations in Puerto Rico and Louisiana which have a history of severe weather, including hurricanes that have caused significant damage to telecommunications infrastructure. Although we maintain insurance to cover potential damages, including business interruption insurance, we cannot assure that such insurance will cover all losses we may experience or that the insurance carriers will pay our claims.

Our failure to obtain access to rights-of-way, pole attachments and other governmental authorizations and permits on reasonable terms and conditions could have a negative effect on our business.

Our ability to operate our networks is dependent on, among other things, our ability to obtain rights-of-way, pole attachments and other governmental authorizations and permits. To remain competitive, it is important that we obtain such rights-of-way, pole attachments and governmental authorizations and permits in a timely manner, at a reasonable cost and otherwise on satisfactory terms and conditions. If we cannot obtain these rights on satisfactory terms, it could have a material adverse effect on our consolidated results of operations and financial condition.

Our wireless licenses may decrease in value, reducing the asset base that supports our debt.

A substantial portion of our assets consists of intangible assets, principally our interests in wireless licenses held by our subsidiaries. The market for the purchase and sale of wireless licenses may not exist in the future or the values of our licenses in that market may fall. The future value of our interests in our wireless licenses will depend significantly upon the success of our business. In addition, the FCC continues to auction off new spectrum, including spectrum in the 700 MHz band that has favorable transmission propagation characteristics similar to our 850 MHz spectrum. This increase in spectrum supply could cause our wireless licenses to decrease in value. If the market value of our wireless licenses decreases significantly, we could realize a material loss upon the sale of any of our licenses and our ability to sell assets to repay debt would be significantly affected. We could also be forced to record a non-cash impairment charge on our financial statements. Moreover, the transfer of interests in these licenses is prohibited without FCC approval. We may not be able to obtain FCC approval to transfer interests in our licenses if such a transfer became necessary.

Wireless devices may pose health and safety risks, and driving while using a wireless phone may be prohibited; as a result, we may be subject to new regulations, and demand for our services may decrease.

The perceived safety risk associated with the use of a wireless device while driving may adversely affect our consolidated results of operations. Studies have indicated that using wireless devices while driving may impair a driver’s attention. Many state and local legislative bodies have passed or proposed legislation to restrict the use of wireless telephones while driving motor vehicles. Concerns over safety risks and the effect of future legislation, if adopted and enforced in the areas we serve, could limit our ability to market and sell our wireless services. In addition, these concerns and this legislation may discourage use of our wireless devices and decrease our revenue from customers who now use their wireless telephones while driving. Further, litigation relating to accidents, deaths or serious bodily injuries allegedly incurred as a result of wireless telephone use while driving could result in damage awards against telecommunications providers, adverse publicity and further governmental regulation. Any

or all of these results, if they occur, could have a material adverse effect on our consolidated results of operations and financial condition.

Media reports have suggested that, and studies have been undertaken to determine whether, certain radio frequency emissions from wireless handsets and cell sites may be linked to various health concerns, including cancer, and may interfere with various electronic medical devices, including hearing aids and pacemakers. In addition, lawsuits have been filed against other participants in the wireless industry alleging various adverse health consequences as a result of wireless phone usage. Defending these lawsuits can be time consuming and expensive. If consumers’ health concerns over radio frequency emissions increase, they may be discouraged from using wireless handsets and regulators may impose restrictions on the location and operation of cell sites. These concerns could have an adverse effect on the wireless communications industry and expose wireless providers to litigation, which, even if not successful, can be costly to defend.

Government authorities might increase regulation of wireless handsets and cell sites as a result of these health concerns and wireless companies might be held liable for costs or damages associated with these concerns. The actual or perceived risk of radio frequency emissions could also adversely affect us through a reduced subscriber growth rate, a reduction in our subscribers, reduced network usage per subscriber or reduced financing available to the wireless communications industry.

Our network capacity and customer service and billing system may not be adequate and may not expand quickly enough to support our anticipated customer growth.

Our financial and operational success depends on assuring that we have adequate network capacity and a sufficient customer support and billing system to accommodate anticipated new customers and the related increase in usage of our network. Our wireless minutes of use continue to grow and, as a result, our networks will need to expand to meet this growth. Our failure to expand and upgrade our networks to meet the increased usage could have a material adverse effect on our business. It is also critical that we continue to add undersea capacity connecting our operations in Puerto Rico with the U.S. mainland to ensure we can meet the growing bandwidth demands of our customers.

The network capacity plan relies on:


	•	the availability of wireless handsets of the appropriate model and type to meet the demands and preferences of our customers;

	•	the ability to obtain and construct additional cell sites and other infrastructure equipment;

	•	the ability to obtain additional spectrum, and

	•	the ability to obtain the capital to expand and upgrade our network.

In addition, we must implement, manage and monitor effective procedures for customer activation, customer service, billing and other support services. Reliance on our customer service functions will increase as we add new customers. Our failure to timely and efficiently meet the demands for these services could decrease or slow subscriber growth or delay or otherwise impede billing and collection of amounts owed, which would adversely affect our revenue. In addition, in July 2008, we switched our primary vendor for outsourced billing and related services from Convergys Information Management Group, Inc. to Fidelity Information Services, Inc. While we will continue to use our existing Virtuoso billing platform, the transition to a new billing vendor involves operational risks that could cause a disruption in our business that could negatively impact our consolidated results of operations and overall customer experience. Furthermore, a failure to expand our customer service systems and network capacity quickly enough to keep up with customer growth, would impair our ability to compete, which would adversely affect our results and financial operations.

Network disruptions, system failures and loss of informational databases may adversely affect our operations.

We rely heavily on our networks and the networks of other telecommunications providers to support all of our services. We are able to deliver services only to the extent that we can protect our network systems against damage

from power or telecommunications failures, computer viruses, natural disasters, hackers, terrorism, unauthorized access and other disruptions. Should we experience a prolonged or severe system failure, our customers may choose a different provider, our reputation may be damaged and our consolidated results of operations may be adversely affected. In addition, maintaining the privacy of our customers’ and employees’ information is of critical importance to us. If we were to lose some of this information, whether through theft, hacking or other means, we could incur significant costs and our reputation could be damaged.

If we lose the right to install our network equipment on wireless cell sites, our business could be adversely affected.

In general, we do not own the cell sites on which we place our radio antennas and equipment, but rather lease space on such towers from third parties. A significant portion of our cell site leases are with a small number of tower companies pursuant to master agreements. If we were to lose access to these cell sites, we could be forced to find new sites which could require significant capital expenditures and could have an adverse effect on our network.

Risks Related to Our Capital Structure

We will need to refinance our indebtedness on or before maturity and may be unable to do so.

We will need to refinance all or a portion of our indebtedness on or before maturity. Recent disruptions in the financial markets could make it more difficult to obtain debt or equity financing on reasonable terms or at all. The term loan portion of the Senior Secured Credit Facility, which at May 31, 2009 had $550.0 million outstanding, matures with two equal installments of $275.0 million owing in August 2010 and February 2011. In addition, our revolving credit facility under the Senior Secured Credit Facility, which had $0 outstanding at May 31, 2009, matures in February 2010. Accordingly, we will need to begin refinancing discussions with our lenders in the near future. Our 101/8% senior unsecured notes due 2013 (the “2013 Senior Notes”) require repayment of $500.0 million of principal in 2013, our senior notes due 2013 (the “2013 Holdco Notes”) require repayment of $550.0 million of principal in 2013, and our 81/8% senior unsecured notes due 2014 (the “2014 Senior Notes”) require repayment of $325.0 million of principal in 2014. We do not expect our business to generate cash flow from operations in an amount sufficient to enable us to repay all of this indebtedness when it comes due. As a result, we believe we will need to refinance all or a portion of our remaining existing indebtedness on or prior to its maturity. However, we may not be able to refinance any or all of our indebtedness on favorable terms or at all.

Our substantial debt obligations could impair our liquidity and financial condition.

We are a highly leveraged company. At May 31, 2009, we had approximately $2.0 billion of consolidated long-term debt. Our ability to make payments on our debt and to fund operations and significant planned capital expenditures will depend on our ability to generate cash in the future. Net cash provided by operations for fiscal 2009 was $224.6 million and capital expenditures were approximately $121.2 million.

Our substantial debt service obligations could have important consequences to you, including the following:


	•	limiting our ability to borrow money or sell stock to fund working capital, capital expenditures, debt service requirements or other purposes;

	•	limiting our ability to engage in certain strategic transactions;

	•	making it more difficult for us to make payments on our indebtedness;

	•	increasing our vulnerability to general economic and industry conditions;

	•	limiting our flexibility in planning for, or reacting to, changes in our business or the industry;

	•	limiting our ability to increase our capital expenditures to roll out new services;

	•	reducing the amount of cash available for other purposes by requiring us to dedicate a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness;


	•	increasing our vulnerability to interest rate increases as a portion of the borrowings under our $750.0 million senior secured credit facility (the “Senior Secured Credit Facility”) and certain of our other indebtedness are at variable interest rates; and

	•	placing us at a competitive disadvantage to many of our competitors who are less leveraged than we are.

Despite current indebtedness levels, Centennial and its subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial indebtedness.

Despite our substantial indebtedness, we may still be able to incur significantly more debt, which would further reduce the cash we have available to invest in our operations, as a result of our increased debt service obligations. The terms of the agreements governing our long-term indebtedness, limit, but do not prohibit, the incurrence of additional indebtedness by us and our subsidiaries. In addition to the approximately $147.5 million available under the revolving credit facility portion of the Senior Secured Credit Facility, in certain circumstances, the terms of the Senior Secured Credit Facility provide that available borrowings may be increased by up to $250.0 million through one or more additional term loan or revolving credit facilities. The more leveraged we become, the more we, and in turn the holders of our securities, become exposed to the risks described above. If we do not generate sufficient cash flow to meet our debt service obligations and to fund our working capital requirements, we may need to seek additional financing or sell certain of our assets.

To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.

Gross interest expense for fiscal 2009 was approximately $174.0 million. Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control.

Accordingly, it is possible that our business will not generate sufficient cash flow from operations, or that future borrowings will not be available to us under the Senior Secured Credit Facility to enable us to pay our indebtedness or to fund other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness, including the Senior Secured Credit Facility and our outstanding notes, on commercially reasonable terms or at all.

Without such refinancing, we could be forced to sell assets to make up for any shortfall in our payment obligations under unfavorable circumstances. Furthermore, in many cases, the fair market value of our assets is substantially higher than our tax basis in such assets and therefore any sale of assets may result in significant taxes being owed and less cash available to service our indebtedness and for general corporate purposes. The Senior Secured Credit Facility and the indentures governing our other outstanding indebtedness limit our and our subsidiaries’ ability to sell assets and also restrict the use of proceeds from any such sale. Furthermore, the Senior Secured Credit Facility is secured by substantially all of our assets. Therefore, we may not be able to sell assets quickly enough or for sufficient amounts to enable us to meet our debt service obligations.

Our debt instruments include restrictive and financial covenants that limit our operating flexibility.

The Senior Secured Credit Facility requires us to maintain certain financial ratios, and the Senior Secured Credit Facility and the indentures governing our other outstanding indebtedness contain covenants that, among other things, restrict our and our subsidiaries’ ability to take specific actions, even if we believe such actions are in our best interest. These include restrictions on our ability to:


	•	incur additional debt;

	•	create liens or negative pledges with respect to our assets;

	•	pay dividends or distributions on, or redeem or repurchase, our capital stock, including distributions from subsidiaries to Centennial;

	•	make investments, loans or advances or other forms of payments;


	•	prepay or defease specified indebtedness;

	•	enter into transactions with affiliates; or

	•	merge, consolidate or sell our assets.

Any failure to comply with the restrictions of the Senior Secured Credit Facility or the indentures governing our other outstanding indebtedness, or certain current and any subsequent financing agreements may result in an event of default under the Senior Secured Credit Facility or the indentures governing our other outstanding indebtedness. Such default may allow our creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, these creditors may be able to terminate any commitments they had made to provide us with further funds.

We have a substantial amount of secured indebtedness and our secured creditors would have a prior secured claim to any collateral securing the debt owed to them.

In connection with the incurrence of indebtedness under the Senior Secured Credit Facility, the lenders received a pledge of all of the equity of CCOC, our wholly owned subsidiary through which we hold the assets of all of our subsidiaries, including CPROC, and that of its existing and future direct and indirect subsidiaries. Additionally, the lenders under our Senior Secured Credit Facility generally have a lien on all of the assets of CCOC and these subsidiaries, including CPROC. As a result of these pledges and liens, if we fail to meet our payment or other obligations under the Senior Secured Credit Facility, the lenders would be entitled to foreclose on and liquidate substantially all of our assets, to the extent required to pay our obligations under the Senior Secured Credit Facility. Under those circumstances, we may not have sufficient funds to service our other indebtedness.

Future sales of our common stock may depress the market price of our common stock.

As of July 23, 2009, affiliates of Welsh, Carson, Anderson and Stowe (“Welsh Carson”) collectively owned approximately 21 million shares of our common stock. If Welsh Carson sells or distributes substantial amounts of our common stock, or if it is perceived that such sales or distributions could occur, the market price of our common stock could fall. This also might make it more difficult for us to sell equity securities in the future at times and prices that we deem appropriate.

The price of our common stock may be volatile and will depend on a variety of factors, some of which are beyond our control.

The market price of our common stock has historically experienced and may continue to experience significant volatility. If our transaction with AT&T is not consummated, the market price of our common stock could significantly decline. During the twelve months ended May 31, 2009, the market price of our common stock ranged from $1.80 to $8.74 per share. In January 2006, we paid a special cash dividend of $5.52 per share, and the market price for our common stock was adjusted accordingly. The market price of our common stock may continue to fluctuate significantly due to a number of factors, some of which are beyond our control. These factors include, but are not limited to, our historical and anticipated operating results, technological or regulatory changes in our industry, announcements or actions by our competitors, low trading volume in our common stock and general market and economic conditions. These factors could cause our common stock to trade at prices below the prices which holders of our common stock paid for their shares, which could prevent investors in our common stock from selling their common stock at or above the prices at which they purchased their shares. In addition, the stock market has from time to time experienced significant price and volume fluctuations that have affected the market prices of securities. These fluctuations often have been unrelated or disproportionate to the operating performance of publicly traded companies. In the past, following periods of volatility in the market price of a particular company’s securities, securities class-action litigation has often been brought against that company. If similar litigation were instituted against us, it could result in substantial costs and divert management’s attention and resources from our operations.

Affiliates of Welsh Carson have significant voting power and influence on our Board of Directors and may have interests adverse to the interests of the other holders of our common stock.

Welsh Carson and certain of its affiliates collectively hold approximately 19% of our outstanding shares of common stock. Accordingly, these equity investors have significant influence on our company. These equity investors may make decisions that are adverse to the interests of the other holders of our securities.

Provisions of our amended and restated certificate of incorporation and Delaware law may make it more difficult for investors in our common stock to receive a change in control premium on our common stock.

Our board of directors’ ability to designate and issue up to 10,000,000 shares of preferred stock and issue approximately 135,000,000 additional shares of common stock could materially and adversely affect the voting power of the holders of common stock, and could have the effect of making it more difficult for a person to acquire, or could discourage a person from seeking to acquire, control of our company. If this occurred, investors in our common stock could lose the opportunity to receive a premium on the sale of their shares in a change of control transaction.

In addition, the Delaware General Corporation Law contains provisions that would have the effect of restricting, delaying or preventing altogether certain business combinations with an interested stockholder. Interested stockholders include, among others, any person who, together with affiliates and Associates, becomes the owner, or within three years became the owner, of 15% or more of a corporation’s voting stock. These provisions could also limit an investor’s ability to receive a premium in a change of control transaction.


Item 1B.	*Unresolved Staff Comments*

None.


Item 2.	*Properties*

Our corporate headquarters is located at 3349 Route 138, Wall, New Jersey 07719, where we lease approximately 34,000 square feet of office space. In addition, our U.S. wireless headquarters is based in Ft. Wayne, Indiana, where we lease approximately 51,000 square feet of office space. Our Puerto Rico operations are headquartered in the greater San Juan, Puerto Rico area, where we lease an office building with approximately 95,000 square feet of office space. In addition, we lease and own locations for customer call centers, switching offices, retail stores, local administrative offices, microwave sites and cell sites. We consider our owned and leased properties to be suitable and adequate for our business operations.


Item 3.	*Legal Proceedings*

In 2001, our previously sold Dominican Republic subsidiary, All American Cables and Radio Inc. (“Centennial Dominicana”), commenced litigation against International Telcom, Inc. (“ITI”) to collect an approximate $1.8 million receivable owing under a traffic termination agreement between the parties relating to international long distance traffic terminated by Centennial Dominicana in the Dominican Republic. Subsequently, ITI counterclaimed against Centennial Dominicana claiming that Centennial Dominicana breached the traffic termination agreement and is claiming damages in excess of $40.0 million. The matter is subject to arbitration in Miami, Florida and a decision of the arbitration panel is expected shortly. In connection with the sale of Centennial Dominicana, we have agreed to indemnify Trilogy International Partners with respect to liabilities arising as a result of the ITI litigation. We do not believe that any damage payments by us would have a material adverse effect on our consolidated results of operations, consolidated financial position or consolidated cash flows.

We are subject to other claims and legal actions that arise in the ordinary course of business. We do not believe that any of these other pending claims or legal actions will have a material adverse effect on our consolidated results of operations, consolidated financial position or consolidated cash flows.


Item 4.	*Submission of Matters to a Vote of Security Holders*

There were no matters submitted to a vote of our stockholders during the last quarter of fiscal 2009.

Directors and Executive Officers of Centennial

Executive officers of Centennial are elected annually by the board of directors and serve until their successors are duly elected and qualified. Centennial has eleven directors. Each director is elected annually and serves until his or her successor is duly elected and qualified.

There are no arrangements or understandings between any officer and any other person pursuant to which the officer was selected, and there are no family relationships between any executive officers or any directors of Centennial. The names, ages and positions of the executive officers and directors of Centennial are listed below along with their business experience during at least the past five years.


Name	Age		Position

Michael J. Small		51	Chief Executive Officer and Director
Thomas J. Fitzpatrick		51	Executive Vice President, Chief Financial Officer
Phillip H. Mayberry		56	President, U.S. Wireless Operations
Carlos T. Blanco		53	President, Puerto Rico Operations
Francis P. Hunt		45	Senior Vice President, Controller
Tony L. Wolk		42	Senior Vice President, General Counsel and Secretary
J. Stephen Vanderwoude		65	Chairman, Board of Directors
Darren C. Battistoni		29	Director
Michael R. Coltrane		62	Director
Anthony J. de Nicola		45	Director
Thomas E. McInerney		67	Director
John J. Mueller		53	Director
James P. Pellow		47	Director
Raymond A. Ranelli		61	Director
Scott N. Schneider		51	Director
Paul H. Sunu		53	Director

Michael J. Small has served as Chief Executive Officer and a director of Centennial since January 1999. Prior to joining Centennial, Mr. Small served as Executive Vice President and Chief Financial Officer of 360 degrees Communications Company (now a subsidiary of ALLTEL Corporation) from 1995 to 1998. Prior to 1995, he served as President of Lynch Corporation, a diversified acquisition-oriented company with operations in telecommunications, manufacturing and transportation services.

Thomas J. Fitzpatrick has served as Executive Vice President, Chief Financial Officer of Centennial since August 2002. Prior to joining Centennial, from 2001 to 2002, Mr. Fitzpatrick was Senior Vice President and Chief Financial Officer of ICG Commerce, a privately held Internet procurement services provider. From 2000 until 2001, he was Chief Financial Officer of Digital Access Inc., a broadband services provider. Prior to 2000, Mr. Fitzpatrick was Chief Financial Officer of publicly-traded companies in the information technology industry and Vice President with Bell Atlantic Corporation (now Verizon).

Phillip H. Mayberry has served as President, U.S. Wireless Operations of Centennial since January 1999 and was Senior Vice President — Operations since December 1994. He served as Vice President, Operations of Centennial from April 1990 to December 1994. From March 1989 to April 1990, Mr. Mayberry was a Vice President and General Manager of Metro Mobile CTS, Inc., a cellular telephone company.

Carlos T. Blanco has served as President, Puerto Rico Operations since September 2005. Prior to joining Centennial, from 2003 to 2005 Mr. Blanco was Chief Operating Officer for Telefonica Moviles de Venezuela, an operation with over 5 million customers. Prior to his tenure at Telefonica, from 1997 to 2003, Mr. Blanco was Chief Executive Officer, Bellsouth Ecuador.

Francis P. Hunt has served as Senior Vice President, Controller of Centennial since February 2005. Prior to that, he served as Vice President, Caribbean Controller since 2001 and has been with Centennial since 1997. Prior to joining Centennial, Mr. Hunt was employed by Investors Daily Digest, a Dow Jones company.

Tony L. Wolk has served as Senior Vice President, General Counsel and Secretary of Centennial since September 1999. Prior to joining Centennial, Mr. Wolk was an attorney in private practice with the law firms of Gibson, Dunn & Crutcher LLP and Weil, Gotshal & Manges. Mr. Wolk earned his law degree from New York University.

J. Stephen Vanderwoude has served as a director of Centennial since October 1999 and was appointed Chairman of the Board of Directors of Centennial in January 2008. He is currently a private investor. From 1996 until April 2007, he was Chairman and Chief Executive Officer of Madison River Telephone Company LLC, a company that acquired and operated rural telephone companies. Previously he was President, Chief Executive Officer and a director of Powerhouse Technologies, Inc., and a director of V-Band Corporation. He is currently a director of First Midwest Bancorp. He was formerly President and Chief Operating Officer and a director of Centel Corporation, and president of the local telecommunications division of Sprint Nextel Corp.

Darren C. Battistoni has served as a director since March 2007. He is currently a Vice President with Welsh Carson. Prior to joining Welsh Carson in 2004, he was an investment-banking analyst at Credit Suisse for two years.

Michael R. Coltrane has served as a director of Centennial since November 2007. He was formerly the Chairman, President and Chief Executive Officer for CT Communications, Inc., an integrated telecommunications provider in North Carolina that was acquired in 2007 by Windstream Corporation. Prior to joining CT Communications in 1988, he was the Executive Vice President of First Charter Corporation, a regional banking and financial services company. Mr. Coltrane previously served as the Chairman, Vice Chairman and Secretary of the United States Telecom Association.

Anthony J. de Nicola has served as a director of Centennial since January 1999. He joined Welsh Carson in 1994 and was named Co-President in 2007. He is also a managing member or general partner of the respective sole general partners of Welsh Carson and other associated investment partnerships. Previously, he worked for William Blair & Co. for four years in the merchant banking area. He is a director of several private companies.

Thomas E. McInerney has served as a director since January 1999 and was Chairman of the board of directors of Centennial from January 1999 to January 2008. He joined Welsh Carson in 1986 and is a managing member or general partner of the respective sole general partners of Welsh Carson and other associated investment partnerships. He is a director of Savvis, Inc., along with Dr. Pellow, and he is also a director of ITC DeltaCom Inc., Broadridge Financial Solutions, Inc., and several private companies. Mr. McInerney is also Chairman of the Board of Trustees of St. John’s University.

John J. Mueller has served as a director of Centennial since September 2007. He is currently an independent business consultant and was formerly the Chairman of Idearc, Inc., a directory publishing and information services business from 2006 to 2008. Mr. Mueller was previously the President, Chief Executive Officer and a member of the board of directors of Valor Communications Group, Inc. from 2004 to 2006 and was President, Chief Operating Officer and Executive Vice President of Valor from 2002 to 2004. He was formerly with Cincinnati Bell Inc. in various executive, operating and sales roles from 1979 to 2001.

James P. Pellow Ed. D., has served as a director of Centennial since September 2003. Dr. Pellow has served as the Executive Vice President and Chief Operating Officer of St. John’s University since 1999. Dr. Pellow has served at St. John’s University in various capacities since 1991. Prior to 1991, Dr. Pellow worked at the accounting firm of Coopers & Lybrand and at Chapdelaine & Co., a New York City municipal bond brokerage firm. He, along with Mr. McInerney, is also a director of Savvis, Inc.

Raymond A. Ranelli has served as a director of Centennial since September 2004. Mr. Ranelli retired from PricewaterhouseCoopers in 2003 where he was a partner for over 20 years. Mr. Ranelli held several positions at PricewaterhouseCoopers including Vice Chairman and Global Leader of the Financial Advisory Services practice. Mr. Ranelli is also a director of United Surgical Partners, Inc. and United Components, Inc.

Scott N. Schneider has served as a director of Centennial since January 2005. He is currently an Operating Partner and Chairman of Media and Communications for Diamond Castle Holdings, LP, a private equity firm. He was previously President and Chief Operating Officer of Citizens Communications Company from 2002 to 2004 and held various executive positions at Citizens since 2000. Prior to joining Citizens, Mr. Schneider was Chief Financial Officer and a member of the Board of Directors of Century Communications, where he worked from 1991 to 1999. Mr. Schneider also served as Chief Financial Officer, Senior Vice President and Treasurer and a member of the Board of Directors of Centennial from 1991 to 1999, which was partially owned by Century Communications during such period. He is also a director of National CineMedia, Inc.

Paul H. Sunu has served as a director of Centennial since September 2007. He is currently the Chief Financial Officer of Hargray Communications Group and was Chief Financial Officer of Hawaiian Telcom from 2007 to 2008. He was previously a member of the board of directors and Chief Financial Officer for Madison River Telephone Company LLC from 1996 to 2007.

Audit Committee

The current members of our Audit Committee are James P. Pellow (chairman), Michael R. Coltrane, Raymond Ranelli and Paul H. Sunu.

Compensation Committee

The current members of the Compensation Committee are John J. Mueller (chairman), Anthony J. de Nicola, Thomas E. McInerney and J. Stephen Vanderwoude.

Corporate Governance and Nominating Committee

The current members of the Corporate Governance and Nominating Committee are Scott N. Schneider (chairman), Thomas E. McInerney, James P. Pellow and J. Stephen Vanderwoude.

Code of Conduct

We have adopted a written code of conduct applicable to directors, officers and employees. Our code of conduct is available on our investor relations website at www.ir.centennialwireless.com. If we make any substantive changes to our code of conduct, or grant any waiver from a provision of the code of conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, we intend to disclose such events on our website.

PART II


Item 5.	*Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities*

Market Information and Holders

Our common stock has been traded on the Nasdaq Global Select Market (previously known as the Nasdaq National Market) under the symbol “CYCL” since December 3, 1991. The following table sets forth the daily high and low sales prices for our common stock as reported by the Nasdaq Global Select Market during each quarter for the periods indicated.


Year Ended May 31, 2008	High		Low

First Quarter	$	10.66	$	8.12
Second Quarter		10.44		8.68
Third Quarter		9.65		4.95
Fourth Quarter		7.57		4.19


Year Ended May 31, 2009	High		Low

First Quarter	$	8.74	$	5.50
Second Quarter		8.50		1.80
Third Quarter		8.30		7.63
Fourth Quarter		8.41		8.12


Year Ended May 31, 2010	High		Low

First Quarter (through July 23, 2009)	$	8.41	$	6.94

As of July 23, 2009 there were 111,210,006 shares issued and 111,139,503 shares outstanding and 95 registered holders of our common shares. Such number does not include persons whose shares are held of record by a bank, brokerage house or clearing agency, but does include such banks, brokerage houses and clearing agencies.

Dividend Policy

Other than the special dividend paid on January 5, 2006, we have not paid any cash dividends on our common stock and we have no current intention to pay any cash dividends on our common stock in the foreseeable future. The terms of the agreements governing our long-term indebtedness generally restrict our ability to declare or pay dividends on our common stock. We intend to retain any future earnings to fund our operations, to service our debt, and for general corporate purposes. Because Centennial Communications Corp. is a holding company, our ability to declare dividends is effectively limited to the amount of dividends, if any, our subsidiaries and other equity holdings may distribute to us.


Item 6.	*Selected Consolidated Financial Data*

The selected consolidated statements of operations and cash flows data set forth below for the three years in the period ended May 31, 2009 and the selected balance sheet data as of May 31, 2009 and 2008 have been derived from our audited Consolidated Financial Statements included elsewhere herein.

The selected consolidated financial data as of May 31, 2007, 2006 and 2005 and for the years ended May 31, 2006 and 2005 have been derived from audited Consolidated Financial Statements not included herein, but which were previously filed with the SEC, adjusted to present the classification of Centennial Dominicana, our previously held wireless and broadband business in the Dominican Republic, as discontinued operations as discussed in Note 2 to the Consolidated Financial Statements.

The following information should be read in conjunction with Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations and the Consolidated Financial Statements and notes thereto included elsewhere herein.

See Note 3 of the Consolidated Financial Statements contained in this report regarding acquisitions and dispositions and the effect of such acquisitions and dispositions on the comparability of our historical Consolidated Financial Statements.


	Fiscal Year Ended May 31,
	2009			2008			2007			2006			2005
	(dollar amounts in thousands
				except per share and per customer data)

Consolidated Statement of Operations Data
Revenue:
Service revenue	$	991,739		$	942,038		$	856,451		$	826,249		$	778,272
Equipment sales		59,851			59,337			55,445			38,832			28,164

Total revenue		1,051,590			1,001,375			911,896			865,081			806,436

Costs and Expenses:
Cost of services (exclusive of depreciation and amortization shown below)		193,427			182,181			172,396			159,994			129,946
Cost of equipment sold		150,043			129,905			124,957			106,584			89,695
Sales and marketing		97,635			101,842			94,974			90,241			83,726
General and administrative		206,324			200,288			174,211			176,620			148,340
Depreciation and amortization		136,170			139,719			130,389			120,529			192,180
Loss (gain) on disposition of assets		473			3,050			1,344			320			(14,467	)

Total costs and expenses		784,072			756,985			698,271			654,288			629,420

Operating income		267,518			244,390			213,625			210,793			177,016
Interest expense — net		(173,274	)		(190,209	)		(201,646	)		(163,680	)		(145,065	)
Loss on extinguishment of debt		—			(307	)		(990	)		(750	)		(9,052	)
Gain on sale of equity investments		—			—			4,730			652			—

Income from continuing operations before income tax expense, minority interest in income of subsidiaries and income from equity investments		94,244			53,874			15,719			47,015			22,899
Income tax (expense) benefit		(25,145	)		(25,193	)		(8,022	)		(20,197	)		1,096


	Fiscal Year Ended May 31,
	2009			2008			2007			2006			2005
	(dollar amounts in thousands
				except per share and per customer data)

Income from continuing operations before minority interest in income of subsidiaries and income from equity investments		69,099			28,681			7,697			26,818			23,995
Minority interest in income of subsidiaries(1)		(784	)		(704	)		(1,542	)		(784	)		(934	)
Income from equity investments(2)		—			—			804			1,083			540

Income from continuing operations		68,315			27,977			6,959			27,117			23,601

Discontinued operations:
Income (loss)		—			—			461			(3,617	)		2,045
(Loss) gain on disposition		(1,020	)		(2,924	)		(33,132	)		100			62,573
Tax expense		—			—			(5,907	)		(3,356	)		(62,598	)

Net (loss) income from discontinued operations		(1,020	)		(2,924	)		(38,578	)		(6,873	)		2,020

Net income (loss)	$	67,295		$	25,053		$	(31,619	)	$	20,244		$	25,621

Other Consolidated Data
Net cash provided by operating activities	$	224,573		$	200,995		$	141,142		$	191,568		$	193,501
Net cash (used in) investing activities	$	(121,039	)	$	(149,488	)	$	(45,899	)	$	(144,471	)	$	(14,429	)
Net cash provided by (used in) financing activities	$	8,799		$	(41,086	)	$	(95,387	)	$	(85,033	)	$	(158,356	)
Capital expenditures from continuing operations	$	121,216		$	133,507		$	115,209		$	134,420		$	161,900
Total debt less cash and cash equivalents(3)	$	1,803,686		$	1,905,486		$	1,951,825		$	2,041,315		$	1,488,070
Earnings (Loss) Per Share Data
Basic
Earnings per share from continuing operations	$	0.62		$	0.26		$	0.07		$	0.26		$	0.23
(Loss) earnings per share from discontinued operations		(0.01	)		(0.03	)		(0.37	)		(0.07	)		0.02

Net income (loss) per share	$	0.61		$	0.23		$	(0.30	)	$	0.19		$	0.25

Diluted
Earnings per share from continuing operations	$	0.61		$	0.25		$	0.06		$	0.25		$	0.22
(Loss) earnings per share from discontinued operations		(0.01	)		(0.03	)		(0.36	)		(0.06	)		0.02

Net income (loss) per share	$	0.60		$	0.22		$	(0.30	)	$	0.19		$	0.24

Basic weighted-average shares outstanding		109,055			107,544			105,673			104,644			103,477
Diluted weighted-average shares outstanding		110,697			110,120			108,182			107,318			105,217


	Fiscal Year Ended May 31,
	2009			2008			2007			2006			2005
	(dollar amounts in thousands
				except per share and per customer data)

Segment Data U.S. Wireless
Revenue	$	583,354		$	550,684		$	498,571		$	444,359		$	399,030
Adjusted operating income(4)	$	235,809		$	212,768		$	184,658		$	160,634		$	167,713
Subscribers(3)		652,000			665,300			643,100			596,900			546,700
Postpaid churn(5)		2.3	%		2.0	%		1.8	%		1.9	%		2.1	%
Penetration(6)		7.3	%		7.4	%		7.5	%		7.0	%		6.3	%
Monthly revenue per average wireless customer(7)	$	74		$	70		$	67		$	65		$	61
Roaming revenue	$	59,631		$	58,299		$	65,480		$	79,424		$	56,810
Capital expenditures	$	58,551		$	61,935		$	56,641		$	58,375		$	74,720
Puerto Rico Operations
Wireless revenue	$	337,681		$	328,241		$	302,138		$	314,119		$	306,366
Broadband revenue	$	142,203		$	134,877		$	122,841		$	116,955		$	110,910
Wireless adjusted operating income(4)	$	107,774		$	118,065		$	101,659		$	127,031		$	128,710
Broadband adjusted operating income(4)	$	82,241		$	73,291		$	67,763		$	63,313		$	58,306
Wireless subscribers(3)		426,200			427,300			406,500			383,500			372,100
Postpaid churn(5)		2.8	%		2.4	%		2.5	%		2.8	%		2.3	%
Penetration(6)		10.6	%		10.7	%		10.2	%		9.6	%		9.3	%
Monthly revenue per average wireless customer(7)	$	66		$	66		$	64		$	69		$	73
Fiber route miles(3)		1,400			1,347			1,309			1,246			1,156
Capital expenditures	$	62,665		$	71,572		$	58,568		$	76,045		$	87,180
Balance Sheet Data
Intangible assets, net	$	475,449		$	475,231		$	460,619		$	445,934		$	446,174
Total assets	$	1,455,504		$	1,375,465		$	1,321,981		$	1,435,893		$	1,446,740
Long-term debt and capital lease obligations	$	2,021,180		$	2,010,647		$	2,046,565		$	2,135,053		$	1,619,109
Stockholders’ deficit	$	(949,835	)	$	(1,044,487	)	$	(1,082,671	)	$	(1,064,859	)	$	(518,432	)


(1)		Represents the percentage share of income or losses of our consolidated subsidiaries that is allocable to unaffiliated holders of minority interests.

(2)		Represents our proportionate share of profits and losses from our interest in earnings of limited partnerships controlled and managed by other cellular operators and accounted for using the equity method.

(3)		As of year-end.

(4)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements.

(5)		Postpaid churn is calculated by dividing the aggregate number of postpaid wireless subscribers who cancel service during each month in a period by the total number of postpaid wireless subscribers as of the beginning of the month. Churn is stated as the average monthly churn rate for the period.

(6)		The penetration rate equals the percentage of total population in our service areas who are subscribers to our wireless service as of a period-end.

(7)		Revenue per average wireless customer is defined as total monthly revenue per wireless subscriber including roaming revenue, which we refer to as ARPU in this report.


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*

Executive Overview

Company Overview

On November 7, 2008, we entered into an Agreement and Plan of Merger with AT&T Inc. (“AT&T”) providing for the acquisition of Centennial by AT&T (the “AT&T Transaction”). Under the terms of the AT&T Transaction Agreement, our stockholders will receive $8.50 per share in cash. The AT&T Transaction was approved by our stockholders in February 2009. Completion of the AT&T Transaction is not subject to a financing condition but remains subject to (i) approval by the Federal Communications Commission (“FCC”) and (ii) other customary conditions. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired; however, the parties are still discussing the transaction with the Department of Justice. The parties anticipate that the AT&T Transaction will be completed during the third quarter of calendar year 2009, assuming timely satisfaction or waiver of all remaining closing conditions. We believe that the pendency of the AT&T Transaction has had and may continue to have a negative impact on our business, including making it more difficult to attract and retain customers.

As discussed in Note 2 to the consolidated financial statements, the results of operations presented below exclude our Dominican Republic operations (“Centennial Dominicana”).

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Item 6 — Selected Consolidated Financial Data and our Consolidated Financial Statements and the related notes included in this report. Those statements in the following discussion that are not historical in nature should be considered to be forward-looking statements that are inherently uncertain. Please see “Cautionary Statement for Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation Reform Act of 1995.”

Management’s Summary

Our vision is to be the premier regional telecommunications service provider, by tailoring the ultimate customer experience in the markets we serve. We deliver our tailored approach by serving local markets with high quality networks, company-owned stores and well-trained sales and service associates. Our local scale and knowledge have led to a strong track record of success.

In Puerto Rico, we offer wireless and broadband communications services. We also offer wireless services in the U.S. Virgin Islands. Puerto Rico is a U.S. dollar-denominated and FCC regulated commonwealth of the United States. San Juan, the capital of Puerto Rico, is currently one of the 25 largest and 5 most dense U.S. wireless markets based on population.

We tailor the ultimate customer experience by focusing on attractive local markets with growth opportunities and customizing our sales, marketing and customer support functions to customer needs in these markets. For the fiscal year ended May 31, 2009, approximately 86% of our postpaid wireless sales in the United States and Puerto Rico were made through our own employees, which allows us to have a high degree of control over the customer experience. We invest significantly in training for our customer-facing employees and believe this extensive training and controlled distribution allows us to deliver an experience that we believe is unique and valued by the

customers in our various markets. We target high quality postpaid wireless subscribers which generate high ARPU (revenue per average wireless subscriber, including roaming revenue) in our U.S. and Puerto Rico operations.

Our business strategy also requires that our networks are of the highest quality in all our locations. Capital expenditures for our U.S. wireless operations were used to expand our coverage areas and upgrade our cell sites and call switching equipment in existing wireless markets. In Puerto Rico, these investments were used to add capacity and services, to continue the development and expansion of our Puerto Rico wireless systems and to continue the expansion of our Puerto Rico broadband network infrastructure.

In our Puerto Rico wireless operations during fiscal 2008, we sold and loaned phones to our customers. When we sell a phone to a customer, the cost of the phone sold is charged to cost of equipment sold, whereas the cost of a phone we loaned to a customer was recorded as an asset within property, plant and equipment and was charged to depreciation expense over the life of the phone. As of June 1, 2008, we no longer offered loaned phones to customers.

We believe that the success of our business is a function of our performance relative to a number of key drivers. The drivers can be summarized in our ability to attract and retain customers by profitably providing superior service at competitive rates. We continually monitor our performance against these key drivers by evaluating several metrics. In addition to adjusted operating income (adjusted operating income represents the profitability measure of our segments — see Note 12 to the Consolidated Financial Statements for reconciliation to the appropriate measure under accounting principles generally accepted in the United States of America, or “GAAP” measure), the following key metrics, among other factors, are monitored by management in assessing the performance of our business:


	•	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 voice 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

Gross postpaid and prepaid wireless additions represent the number of new subscribers we are able to add during the period. Growing our subscriber base by adding new subscribers is a fundamental element of our long-term growth strategy. We must maintain a competitive offering of products and services to sustain our subscriber growth. We focus on postpaid customers in our U.S. and Puerto Rico operations.

Net additions — wireless subscribers represents the number of subscribers we were able to add to our service during the period after deducting the number of disconnected or terminated subscribers. By monitoring our growth against our forecast, we believe we are better able to anticipate our future operating performance.

ARPU represents the average monthly subscriber revenue generated by a typical subscriber (determined as subscriber revenues divided by average number of retail subscribers). We monitor trends in ARPU to ensure that our rate plans and promotional offerings are attractive to customers and profitable. The majority of our revenues are

derived from subscriber revenues. Subscriber revenues include, among other things: monthly access charges; charges for airtime used in excess of plan minutes; Universal Service Fund (“USF”) support payment revenues; long distance revenues derived from calls placed by our customers; roaming revenue; handset insurance; messaging and other data; and other charges such as activation, voice mail, call waiting, call forwarding and regulatory charges.

Roaming revenue represents the amount of revenue we receive from other wireless carriers for providing service to their subscribers who “roam” into our markets and use our systems to carry their calls. The per minute rate paid to us is established by an agreement between the roamer’s wireless provider and us. The amount of roaming revenue we generate is often dependent upon usage patterns of our roaming partners’ subscribers and the rate plan mix and technology mix of our roaming partners. We closely monitor trends in roaming revenues because usage patterns by our roaming partners’ subscribers can be difficult to predict.

Penetration — wireless represents a percentage, which is calculated by dividing the number of our subscribers by the total population of potential subscribers available in the markets that we serve.

Postpaid churn represents the number of postpaid subscribers that disconnect or are terminated from our service. Churn is calculated by dividing the aggregate number of wireless retail subscribers who cancel service during each month in a period by the total number of wireless retail subscribers as of the beginning of the month. Churn is stated as the average monthly churn rate for the applicable period. We monitor and seek to control churn so that we can grow our business without incurring significant sales and marketing costs needed to replace disconnected subscribers. We must continue to ensure that we offer excellent network quality and customer service so that our churn rates remain low.

Average monthly minutes of use per wireless voice customer represents the average number of minutes (“MOUs”) used by our voice customers during a period. We monitor growth in MOUs to ensure that the access and overage charges we are collecting are consistent with that growth. In addition, growth in subscriber usage may indicate a need to invest in additional network capacity.

Data revenue per average wireless subscriber represents the portion of ARPU generated by our retail subscribers using data services such as text, picture, and multi-media messaging, wireless Internet browsing, wireless e-mail, Instant Internet, data cards and downloading content and applications.

Fiber route miles are the number of miles of fiber cable that we have laid. Fiber is installed to connect our equipment to our customer premises equipment. As a facilities-based carrier, the number of fiber route miles is an indicator of the strength of our network, our coverage and our potential market opportunity.

Switched access lines represent the number of lines connected to our switching center and serving customers for incoming and outgoing calls. Growing our switched access lines is a fundamental element of our strategy. We monitor the trends in our switched access line growth against our forecast to be able to anticipate future operating performance. In addition, this measurement allows us to compute our current market penetration in the markets we serve.

Dedicated access line equivalents represents the amount of Voice Grade Equivalent (“VGE”) lines used to connect two end points. We monitor the trends in our dedicated service using VGE against our forecast to anticipate future operating performance, network capacity requirements and overall growth of our business.

On-net buildings are locations where we have established a point of presence to serve one or more customers. Tracking the number of on-net buildings allows us to size our addressable market and determine the appropriate level of capital expenditures. As a facilities-based broadband operator, it is a critical performance measurement of our growth and a clear indication of our increased footprint.

Capital expenditures represent the amount spent on upgrades, additions and improvements to our telecommunications network and back office infrastructure. We monitor our capital expenditures as part of our overall financing plan and to ensure that we receive an appropriate rate of return on our capital investments. This statistic is also used to ensure that capital investments are in line with network usage trends and consistent with our objective of offering a high quality network to our customers.

Critical Accounting Policies and Estimates

The preparation of our Consolidated Financial Statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities as of the date of the financial statements and revenues and expenses during the periods reported. We base our estimates on historical experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under different assumptions or conditions.

There are certain critical estimates that we believe require significant judgment in the preparation of our Consolidated Financial Statements. We consider an accounting estimate to be critical if:


	•	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

We maintain an allowance for doubtful accounts for estimated losses, which result from our customers not making required payments. We base our allowance on the likelihood of recoverability of our subscriber accounts receivable based on past experience and by reviewing current collection trends. A worsening of economic or industry trends beyond our estimates could result in an increase in our allowance for doubtful accounts by recording additional expense.

Property, Plant and Equipment — Depreciation

The telecommunications industry is capital intensive. Depreciation of property, plant and equipment constitutes a substantial operating cost for us. The cost of our property, plant and equipment, principally telecommunications equipment, is charged to depreciation expense over estimated useful lives. We depreciate our telecommunications equipment using the straight-line method over its estimated useful lives. We periodically review changes in our technology and industry conditions, asset retirement activity and salvage values, as conditions warrant, to determine adjustments to the estimated remaining useful lives and depreciation rates. Actual economic lives may differ from our estimated useful lives as a result of changes in technology, market conditions and other factors. Such changes could result in a change in our depreciable lives and therefore our depreciation expense in future periods.

Valuation of Long-Lived Assets

Long-lived assets such as property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. In our estimation of fair value, we consider current market values of properties similar to our own, competition, prevailing economic conditions, government policy, including taxation, and the historical and current growth patterns of both our business and the industry. We also consider the recoverability of the cost of our long-lived assets based on a comparison of estimated undiscounted operating cash flows for the related businesses with the carrying value of the long-lived assets. Considerable management judgment is required to estimate the fair value of an impairment, if any, of our assets. These estimates are very subjective in nature; we believe that our estimates are consistent with assumptions that marketplace participants would use in their estimates of fair value. Estimates related to recoverability of assets are critical accounting policies as management must make assumptions about future revenue and related expenses over the life of an asset, and the effect of recognizing impairment could be material to our consolidated financial position as well as our consolidated results of operations. Actual revenue and costs could vary significantly from such estimates.

Goodwill and Wireless Licenses — Valuation of Goodwill and Indefinite-Lived Intangible Assets

A significant portion of our intangible assets are licenses that provide the Company’s wireless operations with the exclusive right to utilize radio frequency spectrum designated on the license to provide wireless communication services. The wireless licenses are treated as indefinite-lived intangible assets under the provisions of SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”) and are not amortized, but rather are tested for impairment.

We test our wireless licenses for impairment annually, and more frequently if indications of impairment exist. We use a direct value approach in performing our annual impairment test on our wireless licenses, in accordance with a September 29, 2004 Staff Announcement from the staff of the Securities and Exchange Commission (“SEC”), “Use of the Residual Method to Value Acquired Assets Other Than Goodwill.” The direct value approach determines fair value using estimates of future cash flows associated specifically with the licenses. If the fair value of the wireless licenses is less than the carrying amount of the licenses, an impairment is recognized.

In addition, we test goodwill for impairment pursuant to SFAS 142. We currently test goodwill for impairment using a residual value approach on an annual basis or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit (calculated using a discounted cash flow method) with its carrying amount, including goodwill. We determined that our reporting units for SFAS 142 are our operating segments determined under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”). If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares implied fair value (i.e., fair value of reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets) of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment.

In analyzing goodwill and wireless licenses for potential impairment, we use projections of future cash flows from each reporting unit to determine whether its estimated value exceeds its carrying value. These projections of cash flows are based on our views of growth rates, time horizons of cash flow forecasts, assumed terminal value, estimates of our future cost structures and anticipated future economic conditions and the appropriate discount rates relative to risk and estimates of residual values. These projections are very subjective in nature. We believe that our estimates are consistent with assumptions that marketplace participants would use in their estimates of fair value. The use of different estimates or assumptions within our discounted cash flow model (e.g., growth rates, future economic conditions or discount rates and estimates of terminal values) when determining the fair value of the reporting unit and wireless licenses are subjective and could result in different values and may affect any related goodwill or wireless licenses impairment charge.

Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), Share-Based Payment (“SFAS 123(R)”), which establishes accounting for share-based awards exchanged for employee services and requires companies to expense the estimated fair value of these awards over the requisite employee service period. We recognize compensation expense for such awards based on the estimated grant date fair value method using the Black-Scholes valuation model. Compensation expense is recognized on a straight-line basis over their respective vesting periods, net of estimated forfeitures.

In the process of implementing SFAS 123(R) we analyzed certain key variables, such as expected volatility and expected life to determine an accurate estimate of these variables. For the fiscal year ended May 31, 2009, we utilized an expected volatility with a range of 62.11%-63.53% and an expected life of 6.25 years. The expected life of the option is calculated using the simplified method set out in SEC Staff Accounting Bulletin No. 107 (as amended by Staff Accounting Bulletin No. 110) using the vesting term of 3 or 4 years and the contractual term of 7 or 10 years, depending on the option tranche. The simplified method defines the expected life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. SFAS 123(R)

requires that we calculate stock-based compensation expense based on awards that are ultimately expected to vest. Accordingly, stock-based compensation expense for the fiscal year ended May 31, 2009 has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of actual option forfeitures.

Income Taxes

The computation of income taxes is subject to estimation due to the significant judgment required with respect to the tax positions we have taken that have been or could be challenged by taxing authorities.

Our income tax provision is based on our income, statutory tax rates and tax planning opportunities available to us in the various jurisdictions in which we operate.

Tax law requires items to be included in the tax return at different times than when these items are reflected in the Consolidated Financial Statements. As a result, our annual tax rate reflected in our Consolidated Financial Statements is different than that reported in our tax return (our cash tax rate). Some of these differences are permanent, such as expenses that are not deductible in our tax return, while other differences reverse over time, such as depreciation expense. These temporary differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities. The tax rates used to determine deferred tax assets or liabilities are the enacted tax rates in effect for the year in which the differences are expected to reverse. Based on the evaluation of all available information, we recognize future tax benefits, such as net operating loss carryforwards, to the extent that realizing these benefits is considered more likely than not.

We evaluate our ability to realize the tax benefits associated with deferred tax assets by analyzing our forecasted taxable income using both historical and projected future operating results, the reversal of existing temporary differences, taxable income in prior carry-back years (if permitted) and the availability of tax planning strategies. A valuation allowance is required to be established unless management determines that it is more likely than not that we will ultimately realize the tax benefit associated with a deferred tax asset.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. In the first quarter of fiscal 2007, we adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of SFAS No. 109 (“FIN 48”) (see Note 8 to the Consolidated Financial Statements). As a result of the implementation of FIN 48, we recognize liabilities for uncertain tax positions based on the two-step process prescribed in the interpretation. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we have to determine the probability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.

We adjust our income tax provision in the period it is determined that actual results will differ from our estimates. The income tax provision reflects tax law and rate changes in the period such changes are enacted.

Year Ended May 31, 2009 Compared to Year Ended May 31, 2008

U.S. Wireless Operations


	Fiscal Year Ended
	May 31,
	2009		2008		$ Change			% Change
	(in thousands)

Revenue:
Service revenue	$	479,417	$	447,011	$	32,406			7	%
Roaming revenue		59,631		58,299		1,332			2
Equipment sales		44,306		45,374		(1,068	)		(2	)

Total revenue		583,354		550,684		32,670			6

Costs and expenses:
Cost of services		112,757		107,677		5,080			5
Cost of equipment sold		81,320		78,240		3,080			4
Sales and marketing		55,842		58,227		(2,385	)		(4	)
General and administrative		97,626		93,772		3,854			4

Total costs and expenses		347,545		337,916		9,629			3

Adjusted operating income(1)	$	235,809	$	212,768	$	23,041			11	%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. U.S. wireless service revenue increased for the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. The increase was primarily due to higher sales of value-added features (predominantly data services) and rate plans with higher recurring charges as described in the ARPU section below, partially offset by a decrease in the number of subscribers.

U.S. wireless roaming revenue increased for the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008 primarily due to an increase in data roaming revenue partially offset by a decrease in voice roaming revenue. The decrease in voice roaming revenue was due to a decrease in the average roaming rate per minute of use, partially offset by an increase in the voice roaming MOUs.

Equipment sales decreased during the fiscal year ended May 31, 2009, as compared to the fiscal ended May 31, 2008. The decrease was related to a decrease in the number of phones sold due to a decrease in gross additions, partially offset by an increase in revenue associated with our phone insurance program.

Our U.S. wireless operations had approximately 652,000 and 665,300 subscribers at May 31, 2009 and 2008, respectively. Postpaid subscribers account for 98% of total U.S. wireless subscribers as of May 31, 2009. During the twelve months ended May 31, 2009, increases in subscribers from new activations of 178,300 were offset by subscriber cancellations of 191,600. The monthly postpaid churn rate was 2.3% for the fiscal year ended May 31, 2009, as compared to 2.0% for the fiscal year ended May 31, 2008. The cancellations experienced by our U.S. wireless operations and aggregate reduction in the number of subscribers during the year were primarily related to non-payment, competition and the pending AT&T Transaction.

U.S. wireless ARPU was $74 for the fiscal year ended May 31, 2009, as compared to $70 for the same period a year ago. The increase in U.S. wireless ARPU was primarily due to an increase in sales of value-added features, including data services (such as short message services, multi-media services and downloads) and higher access fees per subscriber due to an increase in the number of subscribers on our Blue Nation (nationwide) rate plans, which generally have a higher monthly recurring charge than other rate plans. Average MOUs per subscriber were 1,091 per month for the fiscal year ended May 31, 2009, as compared to 1,062 for the same period the prior year.

Costs and expenses. Cost of services increased during the fiscal year ended May 31, 2009, as compared to the same period the prior year, primarily due to an increase in telephone service costs and an increase in expenses related to providing data services, partially offset by decreases in property taxes.

Cost of equipment sold increased for the fiscal year ended May 31, 2009, as compared to the same period last year, primarily due to a higher average cost per phone, partially offset by fewer activations and fewer phones used for customer retention.

Sales and marketing expenses decreased for the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008, primarily due to a decrease in advertising expenses.

General and administrative expenses increased for the fiscal year ended May 31, 2009, as compared to the same period in the prior year, due primarily to an increase in bad debt and rent expense, partially offset by reductions in billing costs.

Puerto Rico Wireless Operations


	Fiscal Year Ended
	May 31,
	2009		2008		$ Change			% Change
	(in thousands)

Revenue:
Service revenue	$	312,073	$	307,596	$	4,477			1	%
Roaming revenue		10,064		6,682		3,382			51
Equipment sales		15,544		13,963		1,581			11

Total revenue		337,681		328,241		9,440			3

Costs and expenses:
Cost of services		57,168		51,069		6,099			12
Cost of equipment sold		67,973		51,021		16,952			33
Sales and marketing		33,957		36,132		(2,175	)		(6	)
General and administrative		70,809		71,954		(1,145	)		(2	)

Total costs and expenses		229,907		210,176		19,731			9

Adjusted operating income(1)	$	107,774	$	118,065	$	(10,291	)		(9	)%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. Puerto Rico wireless service revenue increased for the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. The increase primarily relates to an increase in USF support received in Puerto Rico, partially offset by a slight decrease in the number of subscribers, as continued declines in traditional voice customers more than offset an increase in EV-DO (evolution, data optimized)-based Instant Internet broadband data customers.

Roaming revenue increased during the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008, primarily due to an increase in certain of our competitors’ customers using data services while roaming on our network.

Equipment sales increased during the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008, primarily due to an increase in phones sold to customers (due in part to the discontinuation of the loaner phone program described below), partially offset by a decrease in revenue per unit.

Our Puerto Rico wireless operations had approximately 426,200 and 427,300 subscribers at May 31, 2009 and 2008, respectively. Postpaid subscribers represented approximately 99% of our total Puerto Rico wireless subscribers at May 31, 2009 and May 31, 2008. During the twelve months ended May 31, 2009, increases from new activations of 143,400 were offset by subscriber cancellations of 144,500. The monthly postpaid churn rate

increased to 2.8% for the fiscal year ended May 31, 2009, from 2.4% for the same period last year. The cancellations experienced by our Puerto Rico wireless operations and aggregate reduction in the number of subscribers during the year were primarily due to non-payment, competition, and the pending AT&T Transaction.

Puerto Rico wireless ARPU was $66 for the fiscal years ended May 31, 2009 and May 31, 2008. The stability in ARPU was primarily due to higher data service revenue (including EV-DO, short message services, multimedia services and downloads), USF revenue, and roaming revenue per subscriber, offset by lower voice access, usage related, and feature revenue per subscriber. Our voice subscribers used an average of 1,886 MOUs during the fiscal year ended May 31, 2009, compared to 1,847 MOUs during the fiscal year ended May 31, 2008.

Costs and expenses. Cost of services increased during the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. The increase was primarily due to increases in roamer service costs (amounts that we pay other wireless carriers when our subscribers use their networks), tower-site related costs, and telephone service costs. These increases were partially offset by decreases in expenses related to providing data services and long distance costs.

Cost of equipment sold increased during the fiscal year ended May 31, 2009, as compared to the same period last year. The increase was primarily due to the discontinuation of our loaner phone program as of June 1, 2008. Under the program, in which we retained title to the customer handsets, phones were capitalized and depreciated over 18 months and accordingly not charged to cost of equipment sold. With the discontinuation of this program, we exclusively sell phones to customers, and accordingly, all phones are charged to cost of equipment sold. For the fiscal year ended May 31, 2008, the amount of loaner phones that were capitalized totaled $18,408. The increase in cost of equipment sold was also due to a higher average cost per phone and a greater number of phones sold to customers as compared to the same period last year.

Sales and marketing expenses decreased during the fiscal year ended May 31, 2009, as compared to the same period last year. The decrease was primarily due to decreases in advertising costs and commission expenses, partially offset by increases in compensation and store-related costs.

General and administrative expenses decreased during the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. The decrease was primarily due to decreases in bad debt expense, subscriber billing costs, and fees associated with our handset insurance program, partially offset by increases in compensation costs and bank service fees.

Puerto Rico Broadband Operations


	Fiscal Year Ended
	May 31,
	2009		2008		$ Change			% Change
	(in thousands)

Revenue:
Switched revenue	$	54,353	$	55,332	$	(979	)		(2	)%
Dedicated revenue		77,438		71,227		6,211			9
Other revenue		10,412		8,318		2,094			25

Total revenue		142,203		134,877		7,326			5

Costs and expenses:
Cost of services		33,499		33,914		(415	)		(1	)
Cost of equipment sold		750		643		107			17
Sales and marketing		7,277		6,865		412			6
General and administrative		18,436		20,164		(1,728	)		(9	)

Total costs and expenses		59,962		61,586		(1,624	)		(3	)

Adjusted operating income(1)	$	82,241	$	73,291	$	8,950			12	%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. Total Puerto Rico broadband revenue increased for the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. This increase was primarily due to a 19% increase in total access lines and equivalents to 694,900, partially offset by a decrease in recurring revenue per line.

Switched revenue decreased for the fiscal year ended May 31, 2009, as compared to the same period last year. The decrease was primarily due to a decrease in recurring revenue per line, partially offset by a 9% increase in switched access lines to 104,200 as of May 31, 2009. The increase in switched access lines has primarily come from VoIP (Voice Over Internet Protocol) lines added through our agreements with certain cable television operators in Puerto Rico, which generally have a lower recurring revenue per line.

Dedicated revenue increased for the fiscal year ended May 31, 2009, as compared to the same period last year. The increase was primarily the result of a 21% increase in voice grade equivalent dedicated lines to 590,700 as of May 31, 2009, partially offset by a decrease in recurring revenue per line.

Other revenue increased for the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. The increase primarily relates to a $2.2 million settlement of an inter-carrier compensation dispute in the fourth quarter of fiscal 2009, as well as increases in USF support received in Puerto Rico, and installation and new construction charges.

Costs and expenses. Cost of services decreased during the fiscal year ended May 31, 2009, as compared to the fiscal year ended May 31, 2008. The decrease was primarily due to a decrease in subscriber termination expense due to settlements related to intercarrier compensation, partially offset by increases in compensation costs, installation and new construction costs, network costs, and maintenance contract costs.

Sales and marketing expenses increased during the fiscal year ended May 31, 2009, as compared to the same period last year. The increase was primarily due to increases in compensation costs, and commissions.

General and administrative expenses decreased during the fiscal year ended May 31, 2009, as compared to the same period in the prior year. The decrease was primarily due to a decrease in bad debt expense.

Year Ended May 31, 2008 Compared to Year Ended May 31, 2007

Consolidated Results of Operations

The table below summarizes the consolidated results of operations for each period:


	Fiscal Year Ended
	May 31,
	2008		2007		$ Change		% Change
	(In thousands, except per share data)

Revenue	$	1,001,375	$	911,896	$	89,479		10	%
Costs and expenses		756,985		698,271		58,714		8

Operating income		244,390		213,625		30,765		14
Income from continuing operations		27,977		6,959		21,018		*
Earnings per share from continuing operations:
Basic	$	0.26	$	0.07	$	0.19		*
Diluted	$	0.25	$	0.06	$	0.19		*


*		Percentage not meaningful

We had approximately 1,092,600 wireless subscribers at May 31, 2008, as compared to 1,049,600 subscribers at May 31, 2007, an increase of 5%.

Operating income for the fiscal year ended May 31, 2008 includes (i) $2.0 million of costs related to our evaluation of a separation of our Puerto Rico and U.S. businesses and (ii) $2.95 million of litigation settlement costs related to our settlement, of a subscriber billing-related class action lawsuit (see Note 10 to the Consolidated Financial Statements). Operating income for the fiscal year ended May 31, 2007 includes the effect of a total of $11.0 million of USF charges for Puerto Rico, which related to prior periods.

We, like all eligible telecommunications carriers (“ETCs”), receive our USF support payments based on projections filed by the incumbent local exchange carriers (the “ILEC”). We receive such support for providing wireless telecommunications service in “high cost” areas as defined by the FCC. In the ordinary course of business, the Universal Service Administrative Company (“USAC”), the company that administers the payment of USF funds, performs semi-annual reconciliations of the ILEC’s projections against the ILEC’s actual results and makes adjustments (both upwards and downwards) to the support previously paid to USF recipients based on such reconciliations. Based on historical experience and all available information, we previously estimated that there would be no adjustments required. However, during fiscal 2007, USAC notified all the ETCs in Puerto Rico, including us, of negative adjustments to the USF support received by the ETCs relating to calendar years 2004 and 2005 based on the actual results filed by the ILEC in Puerto Rico. Although we disagree with and have disputed certain of these adjustments, during fiscal 2007 we nevertheless recorded the entire known amounts relating to calendar years 2004 and 2005. In addition, based on these historical adjustments and additional information, we have recorded our best estimates of future adjustments related to actual USF support received in Puerto Rico.

U.S. Wireless Operations


	Fiscal Year Ended
	May 31,
	2008		2007		$ Change			% Change
	(in thousands)

Revenue:
Service revenue	$	447,011	$	392,048	$	54,963			14	%
Roaming revenue		58,299		65,480		(7,181	)		(11	)
Equipment sales		45,374		41,043		4,331			11

Total revenue		550,684		498,571		52,113			10

Costs and expenses:
Cost of services		107,677		104,641		3,036			3
Cost of equipment sold		78,240		76,748		1,492			2
Sales and marketing		58,227		54,393		3,834			7
General and administrative		93,772		78,131		15,641			20

Total costs and expenses		337,916		313,913		24,003			8

Adjusted operating income(1)	$	212,768	$	184,658	$	28,110			15	%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. U.S. wireless service revenue increased for the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The increase was primarily due to an increase in the number of subscribers and sales of value-added features, such as data services (including short message services, multimedia services and downloads), and an increase in recurring access fees primarily due to increased subscribers on our Blue Nation (nationwide) rate plans, which generally have a higher ARPU than older plans.

U.S. wireless roaming revenue decreased for the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The decrease was primarily due to a decrease in the average roaming rate per minute, partially offset by increases in roaming MOUs and data roaming. We expect U.S. wireless roaming revenue to decline approximately $10-15 million during fiscal 2009.

Equipment sales increased during the fiscal year ended May 31, 2008, as compared to the fiscal ended May 31, 2007. The increase was primarily due to an increase in revenue associated with new activations and an increase in revenue from deductibles associated with our phone insurance program.

Our U.S. wireless operations had approximately 665,300 and 643,100 subscribers at May 31, 2008 and 2007, respectively. Postpaid subscribers account for 97% of total U.S. wireless subscribers as of May 31, 2008. During the twelve months ended May 31, 2008, increases in subscribers from new activations of 199,300 were offset by subscriber cancellations of 177,100. The monthly postpaid churn rate was 2.0% for the fiscal year ended May 31, 2008, as compared to 1.8% for the fiscal year ended May 31, 2007. The cancellations experienced by our U.S. wireless operations were primarily due to non-payment and competition.

U.S. wireless ARPU was $70 for the fiscal year ended May 31, 2008, as compared to $67 for the same period a year ago. The increase in U.S. wireless ARPU was primarily due to the aforementioned increases in service revenue and equipment sales driven by increased subscribers on our Blue Nation plans, which generally have a higher ARPU than older plans, partially offset by lower roaming revenue. Average MOUs per subscriber were 1,062 per month for the fiscal year ended May 31, 2008, as compared to 923 for the same period the prior year.

Costs and expenses. Cost of services increased during the fiscal year ended May 31, 2008, as compared to the same period the prior year, primarily due to increases in tower site rent associated with additional cell sites, expenses associated with providing data services and compensation costs. These increases were partially offset by a decrease in roamer service costs (amounts that we pay other wireless carriers when our subscribers use their networks) due to reduced rates.

Cost of equipment sold increased for the fiscal year ended May 31, 2008, as compared to the same period last year, primarily due to a greater number of phones used for customer retention as compared to the same period last year, partially offset by a lower average cost per phone.

Sales and marketing expenses increased for the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007, primarily due to increases in advertising associated with the launch of our new Blue Nation rate plans and compensation costs. These increases were partially offset by a decrease in commissions expense.

General and administrative expenses increased for the fiscal year ended May 31, 2008, as compared to the same period in the prior year, due primarily to increases in bad debt expense, compensation costs, store related expenses, other taxes and licenses, costs related to employee benefits and training, and subscriber billing costs.

Puerto Rico Wireless Operations


	Fiscal Year Ended
	May 31,
	2008		2007		$ Change			% Change
	(in thousands)

Revenue:
Service revenue	$	307,596	$	283,135	$	24,461			9	%
Roaming revenue		6,682		4,602		2,080			45
Equipment sales		13,963		14,401		(438	)		(3	)

Total revenue		328,241		302,138		26,103			9

Costs and expenses:
Cost of services		51,069		49,497		1,572			3
Cost of equipment sold		51,021		47,510		3,511			7
Sales and marketing		36,132		33,392		2,740			8
General and administrative		71,954		70,080		1,874			3

Total costs and expenses		210,176		200,479		9,697			5

Adjusted operating income(1)	$	118,065	$	101,659	$	16,406			16	%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. Puerto Rico wireless service revenue increased for the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The increase was primarily related to a $9.5 million charge relating to USF support we received with respect to our Puerto Rico operations recorded during fiscal 2007 discussed above, which related to prior periods, as well as an increase in subscribers. Our Puerto Rico wireless operations had approximately 427,300 subscribers at May 31, 2008, an increase of 5% from approximately 406,500 subscribers at May 31, 2007. During the twelve months ended May 31, 2008, increases from new activations of 144,100 were offset by subscriber cancellations of 123,300. The cancellations experienced by our Puerto Rico wireless operations were primarily due to non-payment and competition.

The monthly postpaid churn rate decreased to 2.4% for the fiscal year ended May 31, 2008, from 2.5% for the same period last year. The decrease in churn was primarily due to the success of our “Unlimited Plan,” which is more appealing to subscribers than our previous offering, causing fewer cancellations by subscribers choosing competitive offerings. Our postpaid subscribers represented approximately 99% of our total Puerto Rico wireless subscribers at May 31, 2008 and May 31, 2007.

Puerto Rico wireless ARPU was $66 for the fiscal year ended May 31, 2008, as compared to $64 for the fiscal year ended May 31, 2007. The increase in ARPU in the fiscal year ended May 31, 2008, as compared to the same period last year, was primarily due to the USF charge recorded during fiscal 2007.

Our subscribers used an average of 1,744 MOUs during the fiscal year ended May 31, 2008, compared to 1,570 MOUs during the fiscal year ended May 31, 2007. We believe the increase in MOUs is due to our Unlimited Plan which provides customers in Puerto Rico with unlimited local MOUs for a flat fee.

Roaming revenue increased during the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007, primarily due to an increase in our competitors’ customers roaming on our network.

Equipment sales decreased during the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007, primarily due to competitive market pressure to more heavily subsidize expensive, higher-end handsets to attract and retain customers.

Costs and expenses. Cost of services increased during the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The increase was primarily due to increases in property taxes, telephone service cost, and tower site rent.

Cost of equipment sold increased during the fiscal year ended May 31, 2008, as compared to the same period last year. The increase was primarily due to an increase in the number of phones provided to new subscribers, as well as a slight increase in the average cost per phone.

Sales and marketing expenses increased during the fiscal year ended May 31, 2008, as compared to the same period last year. The increase was due to an increase in advertising expenses, partially offset by a decrease in commissions expense.

General and administrative expenses increased during the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The increase was due to increases in compensation costs, bank fees, and other taxes and licenses.

Puerto Rico Broadband Operations


	Fiscal Year Ended
	May 31,
	2008		2007		$ Change			% Change
	(in thousands)

Revenue:
Switched revenue	$	55,332	$	54,267	$	1,065			2	%
Dedicated revenue		71,227		61,389		9,838			16
Other revenue		8,318		7,185		1,133			16

Total revenue		134,877		122,841		12,036			10

Costs and expenses:
Cost of services		33,914		28,273		5,641			20
Cost of equipment sold		643		699		(56	)		(8	)
Sales and marketing		6,865		6,578		287			4
General and administrative		20,164		19,528		636			3

Total costs and expenses		61,586		55,078		6,508			12

Adjusted operating income(1)	$	73,291	$	67,763	$	5,528			8	%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 12 to the Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. Total Puerto Rico broadband revenue increased for the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. This increase was primarily due to a 16% increase in total access lines and equivalents to 582,200, partially offset by a decrease in recurring revenue per line. This increase was also due in part to a $1.5 million charge relating to USF support we received with respect to our Puerto Rico operations recorded during fiscal 2007 discussed above, which related to prior periods.

Switched revenue increased for the fiscal year ended May 31, 2008, as compared to the same period last year. The increase was primarily due to a 25% increase in switched access lines to 95,200 as of May 31, 2008, partially offset by a decrease in recurring revenue per line. The increase in switched access lines has primarily come from VoIP lines added through our agreements with certain cable television operators in Puerto Rico, which generally have a lower recurring revenue per line.

Dedicated revenue increased for the fiscal year ended May 31, 2008, as compared to the same period last year. The increase was primarily the result of a 14% increase in voice grade equivalent dedicated lines to 487,000 as of May 31, 2008, partially offset by a decrease in recurring revenue per line.

Other revenue increased for the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The increase was primarily related to the USF charge, related to prior periods, recorded during fiscal 2007.

Costs and expenses. Cost of services increased during the fiscal year ended May 31, 2008, as compared to the fiscal year ended May 31, 2007. The increase was primarily due to increases in network costs, maintenance contract costs, and compensation costs.

Sales and marketing expenses increased during the fiscal year ended May 31, 2008, as compared to the same period last year. The increase was primarily due to an increase in advertising expenses, partially offset by a decrease in compensation costs.

General and administrative expenses increased during the fiscal year ended May 31, 2008, as compared to the same period in the prior year. The increase was primarily due to increases in bad debt expense, maintenance contract costs, and compensation costs.

Liquidity and Capital Resources

Weighted Average Debt Outstanding and Interest Expense


	Fiscal Year Ended									Fiscal Year Ended
	May 31,									May 31,
	2009			2008			Change			2008			2007			Change
	(in millions)

Weighted Average Debt Outstanding	$	2,014.99		$	2,020.63		$	(5.64	)	$	2,020.63		$	2,120.15		$	(99.52	)
Weighted Average Gross Interest Rate(1)		8.6	%		9.6	%		(1.0	)%		9.6	%		9.7	%		(0.1	)%
Weighted Average Gross Interest Rate(2)		8.2	%		9.2	%		(1.0	)%		9.2	%		9.3	%		(0.1	)%
Gross Interest Expense(1)	$	174.00		$	193.32		$	(19.32	)	$	193.32		$	206.30		$	(12.98	)
Interest Income	$	0.72		$	3.11		$	(2.39	)	$	3.11		$	4.66		$	(1.55	)

Net Interest Expense	$	173.28		$	190.21		$	(16.93	)	$	190.21		$	201.64		$	(11.43	)


(1)		Including amortization of debt issuance costs of $7.9 million and $8.3 million in fiscal 2009 and 2008, respectively.

(2)		Excluding amortization of debt issuance costs of $7.9 million and $8.3 million in fiscal 2009 and 2008, respectively.

The decrease in net interest expense for the fiscal year ended May 31, 2009 as compared to fiscal 2008 resulted from lower variable interest rates as well as lower weighted average debt outstanding. The decrease in interest income resulted from significantly lower interest rates.

At May 31, 2009, we had total liquidity of $365.0 million, consisting of cash and cash equivalents totaling $217.5 million and approximately $147.5 million available under our revolving credit facility.

Senior Secured Credit Facility

On February 9, 2004, our wholly-owned subsidiaries, Centennial Cellular Operating Co. LLC (“CCOC”) and Centennial Puerto Rico Operations Corp. (“CPROC”), as co-borrowers entered into a $750.0 million senior secured credit facility (the “Senior Secured Credit Facility”). We and each of our direct and indirect domestic subsidiaries, including CCOC and CPROC are guarantors under the Senior Secured Credit Facility. The Senior Secured Credit Facility consists of a seven-year term loan, maturing in February 2011, with an original aggregate principal amount of $600.0 million, of which $550.0 million remained outstanding at May 31, 2009. The Senior Secured Credit Facility requires amortization payments in an aggregate principal amount of $550.0 million in two equal installments of $275.0 million in August 2010 and February 2011. The Senior Secured Credit Facility also includes a six-year revolving credit facility, maturing in February 2010, with an aggregate principal amount of up to $150.0 million; however, $2.5 million of this commitment was from a subsidiary of Lehman Brothers Holdings Inc. (“Lehman Brothers”). Due to the Chapter 11 bankruptcy filing by Lehman Brothers in September 2008, we believe it is unlikely that this $2.5 million commitment will be honored by Lehman Brothers. Accordingly, we believe our useable commitments under the revolving credit facility may be $147.5 million. We do not expect this change to have a material impact on our liquidity or consolidated financial statements. At May 31, 2009, we had not borrowed any amounts under the revolving credit facility.

On February 5, 2007, we amended our Senior Secured Credit Facility to, among other things, lower the interest rate on term loan borrowings by 0.25% through a reduction in the London Inter-Bank Offering Rate (“LIBOR”) spread from 2.25% to 2.00%. Under the terms of the Senior Secured Credit Facility, as amended, term and revolving loan borrowings bear interest at LIBOR (a weighted average rate of 1.73% as of May 31, 2009) plus 2.00% and LIBOR plus 3.25%, respectively. Our obligations under the Senior Secured Credit Facility are collateralized by liens on substantially all of our assets.

High-Yield Notes

On December 21, 2005, we issued $550.0 million in aggregate principal amount of senior notes due 2013 (the “2013 Holdco Notes”). The 2013 Holdco Notes were issued in two series consisting of (i) $350.0 million of floating rate notes that bear interest at three-month LIBOR (1.21% as of May 31, 2009) plus 5.75% and mature in January 2013 (the “2013 Holdco Floating Rate Notes”) and (ii) $200.0 million of fixed rate notes that bear interest at 10% and mature in January 2013 (the “2013 Holdco Fixed Rate Notes”). The 2013 Holdco Floating Rate Notes were issued at a 1% discount and we received net proceeds of $346.5 million. We used the net proceeds from the offering, together with a portion of our available cash, to pay a special cash dividend of $5.52 per share to our common stockholders and prepay $39.5 million of term loans under the Senior Secured Credit Facility. In connection with the completion of the 2013 Holdco Notes offering, we amended our Senior Secured Credit Facility to permit, among other things, the issuance of the 2013 Holdco Notes and payment of the special cash dividend. Additionally, we capitalized $15.4 million of debt issuance costs in connection with the issuance of the 2013 Holdco Notes.

On February 9, 2004, concurrent with our entering into the Senior Secured Credit Facility, we and our wholly-owned subsidiaries, CCOC and CPROC, as co-issuers, issued $325.0 million aggregate principal amount of 81/8% senior unsecured notes due 2014 (the “2014 Senior Notes”). We used the net proceeds from the 2014 Senior Notes offering to refinance outstanding indebtedness.

On June 20, 2003, we and CCOC, as co-issuers, issued $500.0 million aggregate principal amount of 101/8% senior unsecured notes due 2013 (the “2013 Senior Notes”). CPROC is a guarantor of the 2013 Senior Notes.

Derivative Financial Instruments

We, either directly or through one of our wholly-owned subsidiaries, CCOC or CPROC, use financial derivatives as part of our overall risk management strategy. These instruments are used to manage risk related to changes in interest rates. The portfolio of derivative financial instruments consists of interest rate swap and collar agreements. Interest rate swap agreements are used to modify variable rate obligations to fixed rate obligations, thereby reducing the exposure to higher interest rates. Interest rate collar agreements are used to lock in a maximum rate if interest rates rise, but allow us to otherwise pay lower market rates, subject to a floor. We formally document all relationships between hedging instruments and hedged items and the risk management objective and strategy for each hedge transaction. All of our derivative transactions are entered into for non-trading purposes.

Our derivative financial instruments effective or entered into in fiscal 2009 consist of the following:


							Collar			Collar
				Swap			Fixed			Fixed
				Fixed			Interest			Interest
	Variable Interest Rate Loan	Amount		Interest			Rate			Rate			Trade		Effective		Expiration
	Being Hedged	Hedged		Rate			Floor			Cap			Date		Date		Date

May 2007 CCOC Collar	Senior Secured Credit Facility	$	200.0		—			4.24	%		5.35	%		5/1/2007		12/31/2007		12/31/2008
November 2008 CCOC Collar 1	Senior Secured Credit Facility	$	200.0		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
2008 CPROC Swap	Senior Secured Credit Facility	$	250.0		4.45	%		—			—			9/18/2007		3/31/2008		9/30/2008
CPROC Collar	Senior Secured Credit Facility	$	35.5		—			4.66	%		5.50	%		10/31/2006		12/29/2006		6/30/2008
2008 CPROC Collar	Senior Secured Credit Facility	$	250.0		—			2.43	%		4.00	%		9/26/2008		9/30/2008		6/30/2009
June 2008 CPROC Swap	Senior Secured Credit Facility	$	35.5		2.61	%		—			—			5/23/2008		6/30/2008		12/31/2008
November 2008 CPROC Collar	Senior Secured Credit Facility	$	35.5		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
CCOC Collar	Senior Secured Credit Facility	$	25.0		—			4.66	%		5.50	%		10/31/2006		12/29/2006		6/30/2008
June 2008 CCOC Swap	Senior Secured Credit Facility	$	25.0		2.61	%		—			—			5/23/2008		6/30/2008		12/31/2008
November 2008 CCOC Collar 2	Senior Secured Credit Facility	$	25.0		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
May 2008 CCOC Swap	Senior Secured Credit Facility	$	39.5		2.54	%		—			—			5/23/2008		5/31/2008		11/30/2008
November 2008 CCOC Collar 3	Senior Secured Credit Facility	$	39.5		—			1.81	%		2.25	%		11/25/2008		11/30/2008		8/31/2009
Holdco Swap	2013 Holdco Floating Rate Notes	$	200.0		10.46	%		—			—			10/31/2007		12/31/2007		6/30/2008
2008 Holdco Swap	2013 Holdco Floating Rate Notes	$	200.0		2.85	%		—			—			5/23/2008		7/1/2008		4/1/2009

At May 31, 2009, $550.0 million of our $900.0 million of variable debt was hedged by interest rate swaps or collars described above. All our swaps and collars have been designated as cash flow hedges.

At May 31, 2009, the fair value of our swaps and collars was a liability of approximately $2.0 million, which is included in other liabilities in the condensed consolidated balance sheet. For the fiscal year ended May 31, 2009, we recorded income of $1.9 million, net of tax, to accumulated other comprehensive loss attributable to the change in fair value adjustments of the swaps and collars, the full amount of which is expected to be reclassified into interest expense within the next 12 months as the underlying exposures are realized.

Under certain of the agreements relating to our long-term debt, we are required to maintain certain financial and operating covenants, and are limited in our ability to, among other things, incur additional indebtedness and enter into transactions with affiliates. Under certain circumstances, we are prohibited from paying cash dividends on our common stock under certain of such agreements. We were in compliance with all covenants of our debt agreements at May 31, 2009.

For the fiscal year ended May 31, 2009, the ratio of earnings to fixed charges was 1.50. Fixed charges consist of interest expense, including amortization of debt issuance costs, loss on extinguishment of debt, and the portion of rents deemed representative of the interest portion of leases.

At May 31, 2009, we had no off-balance sheet obligations.

Our capital expenditures for fiscal 2009 were as follows:


	Fiscal Year Ended		% of Total Capital
	May 31, 2009		Expenditures
	(dollar amounts in thousands)

U.S. Wireless	$	58,551		48.3	%
Puerto Rico Wireless		31,050		25.6
Puerto Rico Broadband		31,615		26.1

Total capital expenditures	$	121,216		100.0	%
Property, plant and equipment, net at May 31, 2009	$	572,131

Capital expenditures for our U.S. wireless operations were used to expand our coverage areas, upgrade our cell sites and call switching equipment of existing wireless properties and spectrum clearing for 3G. In Puerto Rico, these investments were used to add capacity and services, to continue the development and expansion of our Puerto Rico wireless systems, expand the EV-DO network, and to continue the expansion of our Puerto Rico Broadband network and undersea cable infrastructure.

We expect to finance our capital expenditures primarily from cash flow generated from operations, borrowings under our existing credit facilities and proceeds from the sale of assets. We may also seek various other sources of external financing, including additional bank financing, joint ventures, partnerships and issuance of debt or equity securities.

To meet our obligations with respect to our operating needs, capital expenditures and debt service obligations, it is important that we continue to improve operating cash flow. Increases in revenue will be dependent upon, among other things, continued growth in the number of customers and maximizing revenue per subscriber. We have continued the construction and upgrade of wireless and broadband systems in our markets to achieve these objectives. There is no assurance that growth in customers or revenue will occur.

In December 2004, the FASB issued SFAS 123(R), which addresses the accounting for share-based payment transactions in which a company receives employee services in exchange for either our equity instruments or liabilities that are based on the fair value of our equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123(R) eliminates the ability to account for share-based compensation transactions using the intrinsic method that we currently use and requires that such transactions be accounted for using a fair-value-based method and recognized as expense in the consolidated statement of operations. For the fiscal year ended May 31, 2009, the application of SFAS 123(R) resulted in incremental stock-based compensation expense of $9.5 million. As of May 31, 2009, there was approximately $15.3 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted; that cost is expected to be recognized over a period of 2.4 years.

Based upon existing market conditions and our present capital structure, we believe that cash flows from operations and funds from currently available credit facilities will be sufficient to enable us to meet required cash commitments through the next twelve-month period.

Centennial, its subsidiaries, affiliates and significant stockholders (including Welsh, Carson, Anderson & Stowe (“Welsh Carson”) and its affiliates) may from time to time, depending upon market conditions, seek to purchase certain of Centennial’s or its subsidiaries’ securities in the open market or by other means, in each case to the extent permitted by existing covenant restrictions.

Acquisitions and Dispositions

The terms and conditions of our merger agreement with AT&T limit our ability to make acquisitions. Subject to the merger agreement, we may pursue acquisitions of communications businesses that we believe will enhance our scope and scale. Our strategy of clustering our operations in proximate geographic areas enables us to achieve operating and cost efficiencies, as well as joint marketing benefits, and also allows us to offer our subscribers more areas of uninterrupted service as they travel. In addition to expanding our existing clusters, we also may seek to acquire interests in communications businesses in other geographic areas. The consideration for such acquisitions may consist of shares of stock, cash, assumption of liabilities, a combination thereof or other forms of consideration.

On October 23, 2007, we acquired 1900 MHz (personal communications services, or PCS) wireless spectrum covering approximately 400,000 Pops in Lima and Findlay-Tiffin, Ohio, markets contiguous to our existing footprint in Ft. Wayne, Indiana, for $3.6 million.

On September 18, 2007, we completed the purchase of Islanet Communications (“Islanet”), a provider of data and voice communications to business and residential customers in Puerto Rico, for $15.0 million.

On March 13, 2007, we sold our Dominican Republic operations to Trilogy International Partners for approximately $83.3 million.

On December 20, 2006, we disposed of our 14.29% limited partnership interest in the Pennsylvania RSA No. 6(I) Limited Partnership, representing approximately 30,100 Net Pops, for $7.1 million.

On November 29, 2006, we acquired, in the FCC’s advanced wireless services spectrum auction, two 20 MHz licenses covering over 1.3 million Pops in Grand Rapids and Lansing, Michigan for an aggregate cost of approximately $9.1 million.

On October 25, 2006, we acquired 10 MHz of PCS spectrum covering approximately 730,000 Pops in the Fort Wayne, Indiana market for approximately $5.8 million.

On February 16, 2006, we disposed of our investment interest in the Cal-One Cellular Limited Partnership, representing approximately 14,700 Net Pops.

Commitments and Contingencies

On July 1, 2008, we entered into an Information Services Agreement with Fidelity Information Services, Inc. (“Fidelity”) pursuant to which Fidelity agreed to provide billing services, facilities network fault detection, correction and management performance and usage monitoring and security for our wireless operations throughout the Company. This agreement has an initial term of 10 years, expiring on June 30, 2018, and includes a minimum volume commitment based on the number of subscribers processed per year. Based on this minimum, we have agreed to purchase a total of $121.1 million of billing related services from Fidelity through June 30, 2018. This commitment is classified as purchase obligations in the Contractual Obligations table below. As of May 31, 2009, we have paid approximately $9.0 million in connection with this agreement.

We have filed a shelf registration statement with the SEC for the sale of up to 72,000,000 shares of our common stock that may be offered from time to time in connection with acquisitions. The SEC declared the registration statement effective on July 14, 1994. As of May 31, 2009, 37,613,079 shares remain available for issuance under the shelf. In addition, we have registered under separate shelf registration statements an aggregate of approximately 43,000,000 shares of our common stock for resale by affiliates of Welsh Carson.

The following table summarizes our scheduled contractual cash obligations and commercial commitments at May 31, 2009 (unless otherwise noted), and the effect that such obligations are expected to have on liquidity and cash flow in future periods.


				Less than			1-3						After
Contractual Obligations	Total			1 Year			Years			3-5 Years			5 Years

Long-term debt obligations (net of unamortized discount)	$	1,925,000		$	—		$	1,100,000		$	825,000		$	—
Interest on long-term debt obligations(1)		548,229			138,020			273,882			136,327			—
Operating lease obligations		276,351			33,038			52,210			38,847			152,256
Capital lease obligations		263,867			8,743			18,110			19,324			217,690
Purchase obligations		121,081			11,911			23,511			36,069			49,590

Total contractual cash obligations		3,134,528			191,712			1,467,713			1,055,567			419,536
Sublessor agreements		(3,452	)		(1,335	)		(1,611	)		(490	)		(16	)

Net	$	3,131,076		$	190,377		$	1,466,102		$	1,055,077		$	419,520


(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 May 31, 2009 of $10,891 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.

Related Party Transactions

As of July 23, 2009, Welsh Carson and its affiliates held approximately 19% of our outstanding common stock. In January 1999, we entered into a stockholders’ agreement with Welsh Carson and other parties, under which an affiliate of Welsh Carson received an annual monitoring fee of approximately $0.5 million. Prior to fiscal 2008, The Blackstone Group was one of our principal stockholders and received an annual monitoring fee of approximately $0.3 million. Our obligation to pay such fee to the Blackstone Group terminated in fiscal 2008. The stockholders’ agreement and our obligation to pay such fee to Welsh Carson terminated in its entirety in fiscal 2009. We recorded expenses of approximately $0.2 million, $0.5 million and $0.8 million under the stockholders’ agreement for each of the fiscal years ended May 31, 2009, 2008 and 2007, respectively. At May 31, 2008, approximately $0.1 million of such amounts were recorded within payable to affiliates in our consolidated balance sheets.


Item 7A.	*Quantitative and Qualitative Disclosures About Market Risk*

Financial derivatives are used as part of the overall risk management strategy. These instruments are used to manage risk related to changes in interest rates. The portfolio of derivative financial instruments has consisted of interest rate swap and collar agreements. Interest rate swap agreements were used to modify variable rate obligations to fixed rate obligations, thereby reducing the exposure to higher interest rates. Interest rate collar agreements were used to lock in a maximum rate if interest rates rise, but allow us to otherwise pay lower market rates, subject to a floor. We formally document all relationships between hedging instruments and hedged items and the risk management objective and strategy for each hedge transaction. Amounts paid or received under interest rate swap and collar agreements were accrued as interest rates change with the offset recorded in interest expense. All of our derivative transactions are entered into for non-trading purposes.

We are subject to market risks due to fluctuations in interest rates. Approximately $900.0 million of our long-term debt has variable interest rates. As of May 31, 2009, we utilize interest rate swap and collar agreements to hedge variable interest rate risk on $550.0 million of our $900.0 million variable interest rate debt as part of our interest rate risk management program.

The table below presents principal amounts and related average interest rate by year of maturity for our long-term debt. Weighted average variable rates are based on implied forward rates in the yield curve as of May 31, 2009:


	Fiscal Year Ended May 31,																				Estimated
	2010		2011			2012			2013			2014			Thereafter			Total			Fair Value
	(in thousands)

Long-term debt:
Fixed rate	$	—	$	(487	)	$	17		$	200,325		$	825,624		$	97,491		$	1,122,970		$	1,156,095
Average fixed interest rate		10.0%		10.0	%		10.0	%		10.0	%		10.0	%		9.4	%		9.4	%		—
Variable rate	$	—	$	550,000		$	—		$	350,000		$	—		$	—		$	900,000		$	900,000
Average variable interest rate(1)		1.1%		3.2	%		4.1	%		4.6	%		4.8	%		4.9	%		3.7	%		—
Interest rate collars:
Notional amount	$	550,000																			$	1,952
Cap (Highest)		4.00%
Floor (Lowest)		1.76%


(1)		Represents the average interest rate before applicable margin on the Senior Secured Credit Facility debt and the 2013 Holdco Floating Rate Notes.

Our primary interest rate risk results from changes in LIBOR, which is used to determine the interest rates applicable on our variable rate debt under our Senior Secured Credit Facility and our 2013 Holdco Floating Rate Notes. We have variable rate debt that had outstanding balances of $900.0 million at May 31, 2009 and 2008. The fair value of such debt approximates the carrying value at May 31, 2009 and 2008. Of the variable rate debt, as of May 31, 2009, $550.0 million is hedged using interest rate collar and swap agreements that expire at various dates through September 2009. These swaps and collars are designated as cash flow hedges. Based on our unhedged variable rate obligations outstanding at May 31, 2009, a hypothetical increase or decrease of 10% in the weighted average variable interest rate would have increased or decreased our annual interest expense by approximately $1.6 million.


Item 8.	*Financial Statements and Supplementary Data*

The consolidated financial statements and supplementary financial information that are required to be included pursuant to this Item 8 are listed in Item 15 under the caption “Index of Consolidated Financial Statements” in this Annual Report on Form 10-K, together with the respective pages in this Annual Report on Form 10-K where such information is located. The consolidated financial statements and supplementary financial information specifically referenced in such list are incorporated in this Item 8 by reference.


Item 9.	*Changes in and Disagreements with Accountants on Accounting and Financial Disclosure*

None


Item 9A.	*Controls and Procedures*

Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K, the Company’s management carried out an evaluation under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) of the Exchange Act). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of fiscal 2009.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Management has evaluated internal control over financial reporting of the Company using the criteria for effective internal control established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management has assessed the effectiveness of the Company’s internal control over financial reporting as of May 31, 2009. Based on this assessment, management concluded that the internal control over financial reporting of the Company was effective as of May 31, 2009.

The Company’s consolidated financial statements included in this annual report have been audited by Deloitte & Touche LLP, independent registered public accounting firm. Deloitte & Touche LLP has also issued an attestation report on the effectiveness of the Company’s internal controls as of May 31, 2009, which report is included in the Consolidated Financial Statements commencing on Page F-1.

Change in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the fourth quarter of fiscal 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


Item 9B.	*Other Information*

None

PART III


Item 10.	*Directors, Executive Officers and Corporate Governance*

Certain information with respect to our directors required to be included pursuant to this Item 10 is included under the caption “Directors and Executive Officers of Centennial” under Item 4 of this Annual Report on Form 10-K. Other required information will either be included in the Proxy Statement under the captions “Election of Directors”, “Section 16(a) Beneficial Ownership Reporting Compliance” and “Board of Directors and Corporate Governance — Committees of the Board of Directors” and incorporated in this Item 10 by reference or provided in an amendment to this Form 10-K to be filed no later than September 28, 2009.


Item 11.	*Executive Compensation*

The information required to be included pursuant to this Item 11 will either be included in the Proxy Statement under the captions “Compensation Discussion and Analysis,” “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation” and “Compensation Committee Report on Executive Compensation” and incorporated in this Item 11 by reference or provided in an amendment to this Form 10-K to be filed no later than September 28, 2009.


Item 12.	*Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*

Except for the Equity Compensation Plan information set forth below, the information with respect to the security ownership of (1) beneficial owners of more than 5% of our common stock, (2) our directors, (3) each of our named executive officers and (4) all of our directors and executive officers as a group required to be included pursuant to this Item 12 will either be included in the Proxy Statement under the captions “Principal Stockholders of the Company,” “Election of Directors” and “Beneficial Ownership by Management” and incorporated in this Item 12 by reference or provided in an amendment to this Form 10-K to be filed no later than September 28, 2009.

Equity Compensation Plan Information

The following table provides information as of May 31, 2009 about our common stock that may be issued upon the exercise of options, warrants and rights under our existing equity compensation plans, the Centennial Communications Corp. and its Subsidiaries 1999 Stock Option and Restricted Stock Purchase Plan (the “1999 Stock Option Plan”) and the Centennial Communications Corp. and its Subsidiaries 2008 Stock Option and Restricted Stock Purchase Plan (the “2008 Stock Option Plan”):

Number of securities

remaining available for

Number of securities

Weighted-average

future issuance under

to be issued upon

exercise price of

equity compensation

exercise of outstanding

outstanding

plans (excluding

options, warrants and

options, warrants

securities reflected in

rights

and rights

column (a))

Plan category

(a)

(b)

(c)

Equity compensation plans approved by stockholders(1)

9,357,409

6.16

10,000,000

Equity compensation plans not approved by stockholders

—

Total

9,357,409

6.16

10,000,000


(1)		Our existing equity compensation plans have been approved by our stockholders. The 1999 Stock Option Plan expired in January 2009. We have not issued any stock options, warrants or rights under the 2008 Stock Option Plan.

See Note 7 to the Consolidated Financial Statements for a description of the 1999 Stock Option Plan and the 2008 Stock Option Plan.


Item 13.	*Certain Relationships and Related Transactions and Director Independence*

The information required to be included pursuant to this Item 13 will either be included in the Proxy Statement under the captions “Certain Relationships and Related Transactions,” “Related Person Transaction Approval Policy,” “Board of Directors and Corporate Governance — Independence” and “Board of Directors and Corporate Governance — Committees of the Board of Directors” and incorporated in this Item 13 by reference or provided in an amendment to this Form 10-K to be filed no later than September 28, 2009.


Item 14.	*Principal Accountant Fees and Services*

The information required to be included in this Annual Report on Form 10-K under Item 14 will either be included in our Proxy Statement under the caption “Audit Fees” and incorporated in this Item 14 by reference or provided in an amendment to this Form 10-K to be filed no later than September 28, 2009.

PART IV


Item 15.	*Exhibits and Financial Statement Schedules*

(a) The following documents are filed as part of this Annual Report on Form 10-K:

1. Index of Consolidated Financial Statements

The following consolidated financial statements are included at the indicated pages in this Annual Report on Form 10-K and incorporated in this Item 15(a) by reference:


	Page

Report of Independent Registered Public Accounting Firm		F-1
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Common Stockholders’ Deficit		F-5
Consolidated Statements of Cash Flows		F-6
Notes to Consolidated Financial Statements		F-7

2. Financial Statement Schedule

Schedule II — Valuation and Qualifying Accounts

3. Exhibits

See Item 15(b) below.

(b) Exhibits

The following documents are filed as part of this Annual Report on Form 10-K:


Exhibit
Number			Description

	2	.1	Agreement and Plan of Merger, dated as of November 7, 2008, by and among Centennial Communications Corp., AT&T Inc. and Independence Merger Sub Inc. (Incorporated by reference to Exhibit 2.1 to Centennial Communications Corp.’s Form 8-K filed on November 13, 2008).
	3	.1	Amended and Restated Certificate of Incorporation of Centennial Communications Corp. (incorporated by reference to Exhibit 3.1 to Centennial Communications Corp.’s Annual Report on Form 10-K filed on August 29, 2003).
	3	.2	Amended and Restated By-Laws of Centennial Communications Corp. (incorporated by reference to Exhibit 3.2 to Centennial Communications Corp.’s Current Report on Form 8-K filed on May 29, 2008).
	3	.3	Certificate of Formation of Centennial Cellular Operating Co. LLC (incorporated by reference to Exhibit 3.3 to Centennial Communications Corp.’s Registration Statement on Form S-4 filed on March 5, 1999).
	3	.4	Limited Liability Company Agreement of Centennial Cellular Operating Co. LLC (incorporated by reference to Exhibit 3.4 to Centennial Communications Corp.’s Registration Statement on Form S-4 filed on March 5, 1999).
	3	.5	Certificate of Incorporation of Centennial Puerto Rico Operations Corp. (incorporated by reference to Exhibit 3.11 to Centennial Communications Corp.’s Registration Statement on Form S-3 filed on June 9, 2000).
	3	.6	By-Laws of Centennial Puerto Rico Operations Corp. (incorporated by reference to Exhibit 3.12 to Centennial Communications Corp.’s Registration Statement on Form S-3 filed on June 9, 2000).
	4	.1	Second Amended and Restated Registration Rights Agreement dated as of July 24, 2006, among Centennial Communications Corp. and the Purchasers named in Schedules I, II, III, IV and V thereto (incorporated by reference to Exhibit 4.2 to Centennial Communications Corp.’s Registration Statement on Form S-3 filed on July 26, 2006).


Exhibit
Number			Description

	4	.2	Agreement With Respect To The Second Amended and Restated Registration Rights Agreement dated as of June 4, 2007 among Centennial Communications Corp. and the Purchasers named in the Schedules thereto (incorporated by reference to Exhibit 4.1.2 to Centennial Communications Corp.’s Annual Report on Form 10-K filed on August 9, 2007).
	4	.3	Indenture, dated as of June 20, 2003, by and among Centennial Cellular Operating Co. LLC, Centennial Communications Corp., Centennial Puerto Rico Operations Corp., and U.S. Bank National Association as trustee, relating to the 101/8% Senior Notes due 2013 (incorporated by reference to Exhibit 4.6 to Centennial Communications Corp.’s Annual Report on Form 10-K filed on August 29, 2003).
	4	.4	Form of 101/8% Senior Notes due 2013 (included in Exhibit 4.3)
	4	.5	Indenture, dated as of February 9, 2004, by and among Centennial Cellular Operating Co. LLC, Centennial Communications Corp., Centennial Puerto Rico Operations Corp., and U.S. Bank National Association as trustee, relating to the 8 1 / 8% Senior Notes due 2014 (incorporated by reference to Exhibit 4.8 to Centennial Communications Corp.’s Registration Statement on Form S-4 filed on February 25, 2004).
	4	.6	Form of 81/8% Senior Note due 2014 (incorporated by reference to Exhibit 4.11 to Centennial Communications Corp.’s Registration Statement on Form S-4 filed on February 25, 2004).
	4	.7	Indenture, dated as of December 21, 2005, between Centennial Communications Corp. and U.S. Bank National Association, as trustee, relating to $350,000,000 aggregate principal amount of Senior Floating Rate Notes due 2013 (incorporated by reference to Exhibit 4.1 to Centennial Communications Corp.’s Current Report on Form 8-K filed on December 28, 2005).
	4	.8	Indenture, dated as of December 21, 2005, between Centennial Communications Corp. and U.S. Bank National Association, as trustee, relating to $200,000,000 aggregate principal amount of 10% Senior Notes due 2013 (incorporated by reference to Exhibit 4.2 to Centennial Communications Corp.’s Current Report on Form 8-K filed on December 28, 2005).
	10	.1.1	Credit Agreement dated as of February 9, 2004, by and among Centennial Communications Corp., as Guarantor, Centennial Cellular Operating Co. LLC, as Borrower, Centennial Puerto Rico Operations Corp., as PR Borrower, the other Guarantors party thereto, Credit Suisse First Boston, as Joint Lead Arranger and Administrative Agent, Lehman Brothers, Inc., as Joint Lead Arranger, Lehman Commercial Paper, Inc., as Syndication Agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1.1 to Centennial Communications Corp.’s Registration Statement on Form S-4 filed on February 25, 2004).
	10	.1.2	Amendment No. 1 and Agreement dated as of February 10, 2005, to the Credit Agreement dated as of February 9, 2004, among Centennial Cellular Operating Co. LLC, as Borrower; Centennial Puerto Rico Operations Corp., as PR Borrower; Centennial Communications Corp., as a Guarantor; the other Guarantors party thereto; Credit Suisse First Boston, as joint lead arranger and administrative agent; Lehman Brothers, Inc., as joint lead arranger; Lehman Commercial Paper, Inc., as syndication agent, and the Lenders party thereto. (incorporated by reference to Exhibit 10.1 to Centennial Communications Corp.’s Form 8-K filed on February 10, 2005).
	10	.1.3	Amendment No. 2 and Agreement, dated as of December 21, 2005 to the Credit Agreement, dated as of February 9, 2004, among Centennial Cellular Operating Co. LLC, as Borrower, Centennial Puerto Rico Operations Corp., as PR Borrower, Centennial Communications Corp., as a Guarantor, the other Guarantors party thereto, Credit Suisse First Boston, as joint lead arranger and administrative agent, Lehman Brothers, Inc., as joint lead arranger, Lehman Commercial Paper, Inc., as syndication agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to Centennial Communications Corp.’s Current Report on Form 8-K filed on December 28, 2005).
	10	.1.4	Amendment No. 3 And Agreement dated as of February 5, 2007, to the Credit Agreement dated as of February 9, 2004, among Centennial Cellular Operating Co. LLC, as Borrower; Centennial Puerto Rico Operations Corp., as PR Borrower; Centennial Communications Corp., as a Guarantor; the other Guarantors party thereto; each of the lenders from time to time party thereto; Credit Suisse, as joint lead arranger and administrative agent; Lehman Brothers, Inc., as joint lead arranger; Lehman Commercial Paper, Inc., as syndication agent; and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to Centennial Communications Corp’s Quarterly Report on Form 10-Q filed on April 5, 2007).


Exhibit
Number			Description

	10	.1.5	Security Agreement dated as of February 9, 2004, by and among Centennial Cellular Operating Co. LLC, as Borrower, Centennial Puerto Rico Operations Corp., as PR Borrower, each of the guarantors listed on the signature pages thereto and Credit Suisse First Boston (incorporated by reference to Exhibit 10.1.2 to Centennial Communications Corp.’s Registration Statement on Form S-4 filed on February 25, 2004).
	+10	.2	First Amended and Restated Centennial Communications Corp. and its Subsidiaries 1999 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to Centennial Communications Corp.’s Annual Report on Form 10-K filed on August 9, 2007).
	+10	.3	Centennial Communications Corp. and its Subsidiaries 2008 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Appendix A to Centennial Communications Corp.’s Definitive Proxy Statement on Schedule 14A filed on August 13, 2008).
	+10	.4	Form of Stock Option Agreement pursuant to First Amended and Restated Centennial Communications Corp. and its Subsidiaries 1999 Stock Option and Restricted Stock Purchase Plan and Centennial Communications Corp. and its Subsidiaries 2008 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Exhibit 10.3 to Centennial Communications Corp.’s Annual Report on Form 10-K filed on August 9, 2007).
	+10	.5	Form of Stock Option Agreement pursuant to First Amended and Restated Centennial Communications Corp. and its Subsidiaries 1999 Stock Option and Restricted Stock Purchase Plan and Centennial Communications Corp. and its Subsidiaries 2008 Stock Option and Restricted Stock Purchase Plan (incorporated by reference to Exhibit 10.4 to Centennial Communications Corp.’s Annual Report on Form 10-K filed on July 30, 2008).
	10	.6	Voting Agreement, dated as of November 7, 2008, by and among AT&T Inc., Centennial Communications Corp. and Welsh, Carson, Anderson & Stowe VIII. L.P. (Incorporated by reference to Exhibit 10.1 to Centennial Communications Corp.’s Form 8-K filed on November 13, 2008).
	+10	.7	Form of Amended and Restated Employment Agreement between Centennial Communications Corp. and each of Michael J. Small, Thomas J. Fitzpatrick, Phillip H. Mayberry, Carlos T. Blanco, and Tony L. Wolk (Incorporated by reference to Exhibit 10.2 to Centennial Communications Corp.’s Form 10-Q filed on January 8, 2009).
	+10	.8	Form of Amended and Restated Change In Control Severance Agreement between Centennial Communications Corp. and each of Michael J. Small, Thomas J. Fitzpatrick, Phillip H. Mayberry, Carlos T. Blanco, and Tony L. Wolk (Incorporated by reference to Exhibit 10.3 to Centennial Communications Corp.’s Form 10-Q filed on January 8, 2009)
	**12		Computation of Ratios.
	**21		Subsidiaries of Centennial Communications Corp.
	**23	.1	Consent of Deloitte & Touche LLP.
	**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.


+		Constitutes a management contract or compensatory plan or arrangement.

**		Filed herewith.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Centennial Communications Corp.

Wall, New Jersey

We have audited the accompanying consolidated balance sheets of Centennial Communications Corp. and subsidiaries (the “Company”) as of May 31, 2009 and 2008, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for each of the three years in the period ended May 31, 2009. Our audits also included the financial statement schedule listed in the Index at Item 15(a)2. We also have audited the Company’s internal control over financial reporting as of May 31, 2009, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company’s management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and financial statement schedule and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the company’s board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

F-1

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollar amounts in thousands, except per share data)


	May 31,
	2009			2008

ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	217,494		$	105,161
Accounts receivable, less allowance for doubtful accounts of $5,881 and $7,105, respectively		105,474			93,998
Inventory — phones and accessories, net		31,104			43,242
Prepaid expenses and other current assets		22,131			33,298

Total Current Assets		376,203			275,699
Property, plant and equipment, net		572,131			578,533
Debt issuance costs, less accumulated amortization of $38,843 and $30,939, respectively		26,704			34,608
Restricted cash		124			6,466
U.S. wireless licenses		402,395			402,393
Puerto Rico wireless licenses		54,159			54,159
Goodwill		10,989			4,187
Cable facility, net		3,010			3,250
Customer lists, net		4,896			9,449
Other assets		4,893			6,721

TOTAL ASSETS	$	1,455,504		$	1,375,465


LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable		12,679			25,447
Accrued expenses and other current liabilities		182,544			193,527
Payable to affiliates		—			75

Total Current Liabilities		195,223			219,049
Long-term debt		2,021,180			2,010,647
Deferred income taxes		155,526			151,408
Other liabilities		31,968			33,950
Minority interest in subsidiaries		1,442			4,898
Commitments and contingencies (see Note 10)
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 111,165,870 and 107,892,406 shares, respectively; and outstanding 111,095,367 and 107,821,903 shares, respectively		1,112			1,079
Additional paid-in capital		62,197			36,787
Accumulated deficit		(1,010,835	)		(1,078,130	)
Accumulated other comprehensive loss		(1,232	)		(3,146	)

		(948,758	)		(1,043,410	)
Less: cost of 70,503 common shares in treasury		(1,077	)		(1,077	)

Total Stockholders’ Deficit		(949,835	)		(1,044,487	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,455,504		$	1,375,465

See notes to consolidated financial statements.

F-3

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollar amounts in thousands, except per share data)


	Fiscal Year Ended May 31,
	2009			2008			2007

REVENUE:
Service revenue	$	991,739		$	942,038		$	856,451
Equipment sales		59,851			59,337			55,445

		1,051,590			1,001,375			911,896

COSTS AND EXPENSES:
Cost of services (exclusive of depreciation and amortization shown below)		193,427			182,181			172,396
Cost of equipment sold		150,043			129,905			124,957
Sales and marketing		97,635			101,842			94,974
General and administrative		206,324			200,288			174,211
Depreciation and amortization		136,170			139,719			130,389
Loss on disposition of assets		473			3,050			1,344

		784,072			756,985			698,271

OPERATING INCOME		267,518			244,390			213,625
INTEREST EXPENSE, NET		(173,274	)		(190,209	)		(201,646	)
LOSS ON EXTINGUISHMENT OF DEBT		—			(307	)		(990	)
GAIN ON SALE OF EQUITY INVESTMENTS		—			—			4,730

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE, MINORITY INTEREST IN INCOME OF SUBSIDIARIES AND INCOME FROM EQUITY INVESTMENTS		94,244			53,874			15,719
INCOME TAX EXPENSE		(25,145	)		(25,193	)		(8,022	)

INCOME FROM CONTINUING OPERATIONS BEFORE MINORITY INTEREST IN INCOME OF SUBSIDIARIES AND INCOME FROM EQUITY INVESTMENTS		69,099			28,681			7,697
MINORITY INTEREST IN INCOME OF SUBSIDIARIES		(784	)		(704	)		(1,542	)
INCOME FROM EQUITY INVESTMENTS		—			—			804

INCOME FROM CONTINUING OPERATIONS		68,315			27,977			6,959

DISCONTINUED OPERATIONS:
Income		—			—			461
Loss on disposition		(1,020	)		(2,924	)		(33,132	)
Tax expense		—			—			(5,907	)

NET LOSS FROM DISCONTINUED OPERATIONS		(1,020	)		(2,924	)		(38,578	)

NET INCOME (LOSS)	$	67,295		$	25,053		$	(31,619	)

EARNINGS (LOSS) PER SHARE:
BASIC
EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.62		$	0.26		$	0.07
LOSS PER SHARE FROM DISCONTINUED OPERATIONS		(0.01	)		(0.03	)		(0.37	)

NET INCOME (LOSS) PER SHARE	$	0.61		$	0.23		$	(0.30	)

DILUTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS	$	0.61		$	0.25		$	0.06
LOSS PER SHARE FROM DISCONTINUED OPERATIONS		(0.01	)		(0.03	)		(0.36	)

NET INCOME (LOSS) PER SHARE	$	0.60		$	0.22		$	(0.30	)

WEIGHTED-AVERAGE NUMBER OF SHARES OUTSTANDING DURING THE YEAR:
BASIC		109,055			107,544			105,673

DILUTED		110,697			110,120			108,182

See notes to consolidated financial statements.

F-4

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS’ DEFICIT

(Dollar amounts in thousands)


													Accumulated
					Additional								Other
	Common Stock				Paid-In		Treasury			Accumulated			Comprehensive
	Shares		Amount		Capital		Stock			Deficit			(Loss) Income			Total

Balance at May 31, 2006		105,224,491	$	1,052	$	4,211	$	(1,077	)	$	(1,071,760	)	$	2,715		$	(1,064,859	)

Net loss		—		—		—		—			(31,619	)		—			(31,619	)
Other comprehensive loss		—		—		—		—			—			(1,831	)		(1,831	)

Comprehensive loss		—		—		—		—			—			—			(33,450	)
Common stock issued in connection with incentive plans		1,572,186		16		5,232		—			—			—			5,248
Stock — based compensation		—		—		8,573		—			—			—			8,573
Common stock issued in connection with employee stock purchase plan		102,609		1		460		—			—			—			461
Income tax benefit from stock options exercised		—		—		1,356		—			—			—			1,356

Balance at May 31, 2007		106,899,286	$	1,069	$	19,832	$	(1,077	)	$	(1,103,379	)	$	884		$	(1,082,671	)

Net income		—		—		—		—			25,053			—			25,053
Other comprehensive loss		—		—		—		—			—			(4,030	)		(4,030	)

Comprehensive income		—		—		—		—			—			—			21,023
Common stock issued in connection with incentive plans		958,096		10		4,433		—			—			—			4,443
Stock — based compensation		—		—		12,011		—			—			—			12,011
Common stock issued in connection with employee stock purchase plan		35,024		—		296		—			—			—			296
Income tax benefit from stock options exercised		—		—		215		—			—			—			215
Cumulative effect of change in accounting for income taxes (See Note 8)		—		—		—		—			196			—			196

Balance at May 31, 2008		107,892,406	$	1,079	$	36,787	$	(1,077	)	$	(1,078,130	)	$	(3,146	)	$	(1,044,487	)

Net income		—		—		—		—			67,295			—			67,295
Other comprehensive income		—		—		—		—			—			1,914			1,914

Comprehensive income		—		—		—		—			—			—			69,209
Common stock issued in connection with incentive plans		3,273,464		33		10,230		—			—			—			10,263
Stock — based compensation		—		—		9,501		—			—			—			9,501
Income tax benefit from stock options exercised		—		—		5,679		—			—			—			5,679

Balance at May 31, 2009		111,165,870	$	1,112	$	62,197	$	(1,077	)	$	(1,010,835	)	$	(1,232	)	$	(949,835	)

See notes to consolidated financial statements.

F-5

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)


	Fiscal Year Ended May 31,
	2009			2008			2007

OPERATING ACTIVITIES:
Net income (loss)	$	67,295		$	25,053		$	(31,619	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		136,170			139,719			137,562
Stock-based compensation		9,501			12,011			8,573
Excess tax benefits from stock-based compensation		(1,639	)		(1,110	)		(1,288	)
Minority interest in income of subsidiaries		784			704			1,542
Distributions paid to minority interest		(4,240	)		(99	)		(479	)
Deferred income taxes		14,921			10,904			1,831
Income from equity investments		—			—			(804	)
Distributions received from equity investments		—			—			386
Loss on disposition of assets		473			5,974			33,433
Gain on sale of equity investment		—			—			(4,730	)
Changes in operating assets and liabilities, net of effects of acquisitions and dispositions:
Accounts receivable — (increase) decrease		(10,252	)		(5,541	)		1,362
Inventory — phones and accessories, net — decrease (increase)		12,138			(11,448	)		(11,594	)
Prepaid expenses and other assets — (increase) decrease		(509	)		11,448			10,300
Restricted cash — decrease (increase)		6,342			(540	)		(5,926	)
Accounts payable, accrued expenses and other current liabilities — decrease		(15,985	)		(6,604	)		(1,983	)
Deferred revenue and customer deposits — (decrease) increase		(8,131	)		5,389			1,246
Other		17,705			15,135			3,330

NET CASH PROVIDED BY OPERATING ACTIVITIES		224,573			200,995			141,142

INVESTING ACTIVITIES:
Proceeds from disposition of assets, net of cash expenses		179			148			362
Capital expenditures		(121,216	)		(133,507	)		(119,234	)
Proceeds from sale of discontinued operation		—			—			83,298
Acquisition of minority interest, net		—			—			(2,500	)
Payments for acquisition, net of cash acquired		—			(12,519	)		—
Payments for purchase of wireless spectrum		(2	)		(3,610	)		(14,925	)
Proceeds from sale of equity investment		—			—			7,100

NET CASH USED IN INVESTING ACTIVITIES		(121,039	)		(149,488	)		(45,899	)

FINANCING ACTIVITIES:
Repayment of debt		(3,103	)		(46,935	)		(101,822	)
Debt issuance costs paid		—			—			(562	)
Proceeds from the exercise of stock options		10,263			4,443			5,248
Proceeds from issuance of common stock under employee stock purchase plan		—			296			461
Excess tax benefits from stock-based compensation		1,639			1,110			1,288

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		8,799			(41,086	)		(95,387	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		112,333			10,421			(144	)
CASH AND CASH EQUIVALENTS, BEGINNING OF FISCAL YEAR		105,161			94,740			94,884

CASH AND CASH EQUIVALENTS, END OF FISCAL YEAR	$	217,494		$	105,161		$	94,740

SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during the fiscal year for:
Interest	$	166,360		$	187,271		$	199,718

Income taxes	$	4,858		$	11,770		$	6,421

NON-CASH TRANSACTION:
Fixed assets acquired under capital leases	$	10,666		$	8,465		$	10,545

Acquisitions of fixed assets	$	—		$	4,140		$	—

See notes to consolidated financial statements.

F-6

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Years Ended May 31, 2009, 2008 and 2007
(Dollar amounts in thousands, except per share amounts)


Note 1.	Description of Business and Summary of Significant Accounting Principles

Description of Business:

Centennial Communications Corp. (together with its subsidiaries and partnership interest, the “Company”) provides wireless communications and broadband services in Puerto Rico and wireless communications in the United States (“U.S.”). On January 7, 1999, CCW Acquisition Corp., a Delaware corporation organized at the direction of Welsh, Carson, Anderson & Stowe VIII, L.P. merged with and into the Company. The Company continued as the surviving corporation. The merger was accounted for as a recapitalization in which the historical basis of the Company’s assets and liabilities were not affected and no new goodwill was created.

At May 31, 2009, the Company owned and operated wireless licenses in Puerto Rico and the U.S. Virgin Islands and provided voice, data and Internet services on broadband networks in Puerto Rico. The Company also owned and operated wireless telephone systems in the United States.

On November 7, 2008, the Company entered into an Agreement and Plan of Merger with AT&T Inc. (“AT&T”) providing for the acquisition of Centennial by AT&T (the “AT&T Transaction”). Under the terms of the AT&T Transaction, the Company’s stockholders will receive $8.50 per share in cash. The AT&T Transaction was approved by the Company’s stockholders in February 2009. Completion of the AT&T Transaction is not subject to a financing condition but remains subject to (i) approval by the Federal Communications Commission (“FCC”) and (ii) other customary conditions. The applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired; however, the parties are still discussing the transaction with the Department of Justice. The parties anticipate that the AT&T Transaction will be completed during the third quarter of calendar year 2009, assuming timely satisfaction or waiver of all remaining closing conditions.

On March 13, 2007, the Company sold its Dominican Republic operations (“Centennial Dominicana”), to Trilogy International Partners (“Trilogy”) for approximately $83,298 in cash, which consisted of a purchase price of $81,000 and a working capital adjustment of $2,298, which resulted in a loss on disposition of assets of $33,132. No tax benefit has been recognized on the sale as management does not believe that realization of the benefit resulting from the capital loss is more likely than not. This disposition has been accounted for by the Company as a discontinued operation in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 144, Accounting for the Impairment of Disposal of Long Lived Assets (“SFAS 144”) (see Note 2).

Principles of Consolidation:

The consolidated financial statements include the accounts of the Company and all of its majority-owned subsidiaries and partnership interests from their respective incorporation or acquisition dates. All material intercompany transactions and balances have been eliminated.

Review of Strategic and Financial Alternatives:

During the fiscal year ended May 31, 2006, the Company completed a review of strategic and financial alternatives, the result of which was the issuance of $550,000 aggregate principal amount of senior notes due 2013, the payment of a $5.52 per share special cash dividend (see below) and associated one-time cash payment of approximately $13,011 to vested common stock option holders and pre-payment of $39,500 under its $750,000 senior secured credit facility (the “Senior Secured Credit Facility”). The consolidated results of operations for the fiscal years ended May 31, 2007 and 2006 includes a total of approximately $19,621 of costs related to this process.

F-7

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Fiscal Years Ended May 31, 2009, 2008 and 2007
(Dollar amounts in thousands, except per share amounts)

Cash, Cash Equivalents and Restricted Cash:

The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Cash equivalents, which are stated at cost and approximate fair value, consist principally of overnight deposits and commercial paper. Restricted cash is held in escrow as the result of a reciprocal escrow agreement with one of the Company’s customers.

Allowance for Doubtful Accounts:

The Company maintains an allowance for doubtful accounts for estimated losses, which result from its customers not making required payments. The Company bases its allowance on the likelihood of recoverability of its customer accounts receivable based on past experience and by reviewing current collection trends that are expected to continue. If economic or industry trends worsen beyond the Company’s estimates, it would increase its allowance for doubtful accounts by recording additional expense.

Inventory:

Inventory consists primarily of phones and accessories. Inventory is stated at the lower of cost or market, determined on a first-in, first-out (“FIFO”) basis.

Property, Plant and Equipment:

Property, plant and equipment is stated at original cost. Depreciation is computed using the straight-line method over the following estimated useful lives:


Transmission and distribution systems and related equipment			4-30 years
Miscellaneous equipment and furniture and fixtures			5-20 years

In its Puerto Rico wireless operations in fiscal 2008, the Company sold and loaned phones to its customers. When the Company sells a phone to a customer, the cost of the phone sold is charged to cost of equipment sold whereas the cost of a phone which was loaned to a customer was recorded as an asset within property, plant and equipment and was charged to depreciation expense over the life of the phone, or 18 months. As of June 1, 2008, the Company no longer loaned phones to customers.

Goodwill and Other Intangible Assets:

A significant portion of the Company’s intangible assets are licenses that provide the Company’s wireless operations with the exclusive right to utilize radio frequency spectrum designated on the license to provide wireless communication services. In general, the Company’s wireless licenses are issued by the FCC for a fixed period, generally ten years, at which time they are subject to renewal. Historically, renewals of licenses through the FCC have occurred routinely and at nominal cost. Moreover, the Company has determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the estimated useful life of its U.S. wireless and Puerto Rico wireless licenses. As a result, the U.S. wireless and Puerto Rico wireless licenses are treated as indefinite-lived intangible assets under the provisions of SFAS No. 142, Goodwill and Other Intangible Assets (“SFAS 142”) and are not amortized, but rather are tested for impairment. The Company reevaluates the estimated useful life determination for U.S. wireless and Puerto Rico wireless licenses each reporting period to determine whether events and circumstances continue to support an indefinite useful life.

The Company tests its wireless licenses for impairment annually, and more frequently if indications of impairment exist. The Company uses a direct value approach in performing its annual impairment test on its wireless licenses, in accordance with a September 29, 2004 Staff Announcement from the staff of the Securities and

F-8

Exchange Commission (“SEC”), “Use of the Residual Method to Value Acquired Assets Other Than Goodwill.” The direct value approach determines fair value using estimates of future cash flows associated specifically with the licenses. If the fair value of the wireless licenses is less than the carrying amount of the licenses, an impairment is recognized.

Goodwill and other intangible assets with indefinite lives are subject to impairment tests. The Company currently tests goodwill for impairment using a residual value approach on an annual basis as of January 31 or on an interim basis if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying value. Specifically, goodwill impairment is determined using a two-step process. The first step of the goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit (calculated using a discounted cash flow method) with its carrying amount, including goodwill. The Company determined that its reporting units for SFAS 142 are its operating segments determined under SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”). If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test is performed to measure the amount of impairment loss, if any. The second step of the goodwill impairment test compares implied fair value (i.e., fair value of reporting unit less the fair value of the unit’s assets and liabilities, including identifiable intangible assets) of the reporting unit’s goodwill with the carrying amount of that goodwill. If the carrying value of goodwill exceeds its implied fair value, the excess is required to be recorded as an impairment.

The Company performed its annual goodwill and intangible asset impairment analyses during the third quarter of fiscal year 2009. Based upon the results of these analyses, there were no impairments.

The following tables present the intangible assets not subject to amortization during the fiscal years ended May 31, 2009 and May 31, 2008.


	As of				Impairment		As of
	June 1,		Assets		Loss		May 31,
	2008		Acquired		Recognized		2009

U.S. wireless licenses(1)	$	402,393	$	2	$	—	$	402,395
Puerto Rico wireless licenses		54,159		—		—		54,159

Total	$	456,552	$	2	$	—	$	456,554


	As of				Impairment		As of
	June 1,		Assets		Loss		May 31,
	2007		Acquired		Recognized		2008

U.S. wireless licenses(1)	$	398,783	$	3,610	$	—	$	402,393
Puerto Rico wireless licenses		54,159		—		—		54,159

Total	$	452,942	$	3,610	$	—	$	456,552


(1)		Includes adjustments of $45,000 to U.S. wireless licenses pursuant to SFAS No. 109 Accounting for Income Taxes (“SFAS 109”).

F-9

Other Intangible Assets Subject to Amortization

The following table presents other intangible assets subject to amortization:

As of May 31, 2009

As of May 31, 2008

Estimated

Gross

Useful

Carrying

Accumulated

Carrying

Accumulated

Life

Amount

Amortization

Amount

Amortization

Cable facility

25 years

6,000

2,990

6,000

2,750

Customer lists

10 years

6,500

1,604

10,295

846

Other intangible asset amortization expense was $998, $1,086, and $240 for the fiscal years ended May 31, 2009, 2008 and 2007, respectively. Based solely on the finite lived intangible assets existing at May 31, 2009, amortization expense is estimated to be $840 per fiscal year for each of the next five years.

Goodwill

The amount of goodwill relates to the Puerto Rico broadband segment and was $10,989 and $4,187 at May 31, 2009 and May 31, 2008, respectively. See Note 3 for details related to the decrease in customer lists and increase in goodwill at May 31, 2009 as compared to May 31, 2008.

Valuation of Long-Lived Assets:

Long-lived assets such as property, plant and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company in its valuation considers current market values of properties similar to its own, competition, prevailing economic conditions, government policy, including taxation and the historical and current growth patterns of both the Company and the industry. The Company also considers the recoverability of the cost of its long-lived assets based on a comparison of estimated undiscounted operating cash flows for the related businesses with the carrying value of the long-lived assets. Considerable management judgment is required to estimate the fair value of an impairment, if any, of the Company’s assets. These estimates are very subjective in nature; the Company believes that its estimates are consistent with assumptions that marketplace participants would use in their estimates of fair value. Estimates related to recoverability of assets are critical accounting policies as management must make assumptions about future revenue and related expenses over the life of an asset, and the effect of recognizing impairment could be material to the Company’s consolidated financial position as well as the Company’s consolidated results of operations. Actual revenue and costs could vary significantly from such estimates.

Derivative Financial Instruments:

Financial derivatives are used as part of the overall risk management strategy. These instruments are used to manage risk related to changes in interest rates. The portfolio of derivative financial instruments has consisted of interest rate swap and collar agreements. Interest rate swap agreements were used to modify variable rate obligations to fixed rate obligations, thereby reducing the exposure to higher interest rates. Interest rate collar agreements were used to lock in a maximum rate if interest rates rise, but allow the Company to otherwise pay lower market rates, subject to a floor. At inception, the Company formally documents all relationships between hedging instruments and hedged items and the risk management objective and strategy for each hedge transaction. In addition, the Company assesses, both at inception of the hedge and on an ongoing basis, whether the derivative in the hedging transaction has been highly effective in offsetting changes in fair value or cash flows of the hedged item and whether the derivative is expected to continue to be highly effective. The impact of ineffectiveness, if any, is

F-10

recognized in results of operations. Amounts paid or received under interest rate swap and collar agreements were accrued as interest rates change with the offset recorded in interest expense.

The Company records all derivatives in other assets or other liabilities on its balance sheet at their fair values. If the derivative is designated as a cash flow hedge and the hedging relationship qualifies for hedge accounting, the effective portion of the change in fair value of the derivative is recorded in other comprehensive income (loss) and reclassified to interest expense when the hedged debt affects interest expense.

Revenue Recognition:

Wireless revenue:

The Company recognizes wireless service revenue in the period the service is provided to its customers. Services billed in advance are recorded as deferred revenue and recognized as income when earned. Revenue from sales of handsets and accessories are recognized in the period these products are sold to the customer. The Company has multiple billing cycles, all of which span its quarter-ends. As a result of the Company’s billing cycle cut-off times, the Company accrues for service revenue earned, but not yet billed, at the end of each quarter. Revenue from other services is recognized when earned.

In November 2002, the Emerging Issues Task Force (“EITF”) of the FASB reached a consensus on EITF No. 00-21, “Accounting for Revenue Arrangements with Multiple Deliverables” (“EITF No. 00-21”). This consensus requires that revenue arrangements with multiple deliverables be divided into separate units of accounting if the deliverables in the arrangement meet specific criteria. In addition, arrangement consideration must be allocated among the separate units of accounting based on their relative fair values, with certain limitations. The Company has determined that the sale of wireless services with an accompanying handset constitutes a revenue arrangement with multiple deliverables. Upon adoption of EITF No. 00-21, the Company discontinued deferring non-refundable, up-front activation fees to the extent that the aggregate activation fee and handset proceeds received from a subscriber do not exceed the fair value of the handset sold. Additionally, to the extent that the aggregate activation fee and handset proceeds received from a subscriber do not exceed the fair value of the handset sold, activation fees will be included in equipment sales rather than service revenues in the statement of operations.

Broadband revenue:

The Company recognizes broadband revenue in the period service is provided to its customers. The Company has multiple billing cycles, all of which span the end of its fiscal quarterly periods. As a result of its billing cycle cut-off times, the Company accrues for switched and dedicated revenue earned, but not yet billed, at the end of each of its fiscal quarters. The Company recognizes revenue from one-time, up-front installation or set-up fees over the estimated term of the customer relationship.

Other revenue:

Revenue from other services is recognized when earned. Revenue from equipment sales is recognized in the period these products are sold to the customer.

Depreciation and Amortization:

Cost of equipment sold and cost of services exclude depreciation and amortization for all periods presented.

F-11

Income Taxes:

The Company accounts for income taxes in accordance with SFAS No. 109, which provides that deferred income taxes are determined by the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of existing differences between the financial statement and tax bases of assets and liabilities. A valuation allowance is provided when the Company determines that it is more likely than not that a portion of the deferred tax balance will not be realized. The effect of a change in the tax rate on deferred taxes is recognized in the period of enactment.

Earnings (Loss) per Share:

Earnings (loss) per share is calculated using the weighted-average number of shares of outstanding common stock during the period. For the fiscal year ended May 31, 2009, the difference between the basic and diluted weighted average number of shares outstanding represented approximately 1,641,388 potentially dilutive common shares as a result of outstanding options. For the year ended May 31, 2009, options to purchase approximately 3,797,000 shares were excluded from the calculation of diluted earnings (loss) per share because the grant prices exceeded the market prices.

Compensated Absences:

Employees of the Company are entitled to paid vacation depending on job classification, length of service, and other factors. When the amount is reasonably estimable, a liability has been recorded for employees in the accompanying consolidated financial statements. In certain circumstances, the amount is not reasonably estimable and no liability has been recorded for those employees in the accompanying consolidated financial statements.

Stock-Based Compensation:

On June 1, 2006, the Company adopted SFAS No. 123 (revised 2004), Share Based Payment (“SFAS 123(R)”), using the modified prospective application method, as permitted under SFAS 123(R), which requires measurement of compensation cost of all stock-based awards at fair value on the date of grant and recognition of compensation expense over the service periods for awards expected to vest. Under this method, compensation expense includes the portion vesting in the period for (1) all stock-based awards granted prior to, but not vested as of June 1, 2006, based on the grant date fair value estimated in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), and (2) all stock-based awards granted subsequent to June 1, 2006, based on the grant date fair value estimated in accordance with the provisions of SFAS 123(R). The Company has elected to treat awards with graded vesting as a single award when estimating fair value. The Company now recognizes the cost of all employee stock awards on a straight-line basis over their respective vesting periods, net of estimated forfeitures. Accordingly, prior period amounts have not been restated. Under the modified prospective method, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.

For the fiscal year ended May 31, 2009, the application of SFAS 123(R) resulted in incremental stock-based compensation expense of $9,501, of which $980 was recorded in cost of services, $559 was recorded in sales and

F-12

marketing and $7,962 was recorded in general and administrative in the accompanying Consolidated Statement of Operations. For the fiscal year ended May 31, 2009, the incremental stock-based compensation expense caused income before income taxes to decrease by $9,501, net income to decrease by $6,241 and basic and diluted earnings per share to decrease by $0.06 per share. Cash provided by operating activities decreased and cash provided by financing activities increased by $1,639 for the fiscal year ended May 31, 2009, related to excess tax benefits from the exercise of stock-based awards.

Management Estimates:

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”), which require management to make estimates and assumptions that affect reported amounts and disclosures. Actual results could differ from those estimates. Examples of significant estimates include the allowance for doubtful accounts and the recoverability of intangible assets and other long-lived assets.

Recent Accounting Pronouncements:

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification ^tm and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162 (“SFAS 168”), which establishes the FASB Accounting Standards Codification as the source of authoritative accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles. SFAS 168 explicitly recognizes rules and interpretive releases of the SEC under federal securities laws as authoritative GAAP for SEC registrants. SFAS 168 will become effective September 15, 2009 and will not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In June 2009, the FASB issued SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS 167”), which amends FASB Interpretation No. 46 (revised December 2003) to address the elimination of the concept of a qualifying special purpose entity. SFAS 167 also replaces the quantitative-based risks and rewards calculation for determining which enterprise has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity and the obligation to absorb losses of the entity or the right to receive benefits from the entity. Additionally, SFAS 167 provides more timely and useful information about an enterprise’s involvement with a variable interest entity. SFAS 167 will become effective January 2010 and will not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In May 2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”). SFAS 165 requires companies to recognize in the financial statements the effects of subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements. An entity shall disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued. Companies are not permitted to recognize subsequent events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after the balance sheet date and before financial statements are issued. Some nonrecognized subsequent events must be disclosed to keep the financial statements from being misleading. For such events a company must disclose the nature of the event, an estimate of its financial effect, or a statement that such an estimate cannot be made. SFAS 165 applies prospectively for interim or annual financial periods ending after June 15, 2009. The adoption of SFAS 165 is not expected to have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

F-13

In April 2009, the FASB issued FASB Staff Position (“FSP”) FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies (“FSP FAS 141(R)-1”). FSP FAS 141(R)-1 amends and clarifies FASB Statement No. 141(R), Business Combinations, to address application issues raised on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. FSP FAS 141(R)-1 is effective immediately, and its effect will vary with each future acquisition.

In April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board Opinion (“APB”) No. APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP FAS 107-1” and “APB 28-1”), which amends SFAS No. 107, Disclosures about Fair Value of Financial Instruments (“SFAS 107”), and Accounting Principles Board Opinion No. 28, Interim Financial Reporting (“APB 28”), to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP FAS 107-1 and APB 28-1 became effective for interim periods ending after June 15, 2009. FSP FAS 107-1 and APB 28-1 are not expected to have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP FAS 157-4”), which provides additional guidance for estimating fair value in accordance with SFAS 157 for lightly-traded investments. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate apparently comparable market transactions do not represent independent fair value. FSP FAS 157-4 applies prospectively for interim and annual reporting periods ending after June 15, 2009. FSP FAS 157-4 is not expected to have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In April 2008, the FASB issued FSP No. 142-3, Determination of the Useful Life of Intangible Assets (“FSP 142-3”). FSP 142-3 removes the requirement under SFAS 142 to consider whether an intangible asset can be renewed without substantial cost of material modifications to the existing terms and conditions, and replaces it with a requirement that an entity consider its own historical experience in renewing similar arrangements, or a consideration of market participant assumptions in the absence of historical experience. This FSP also requires entities to disclose information that enables users of financial statements to assess the extent to which the expected future cash flows associated with the asset are affected by the entity’s intent and/or ability to renew or extend the arrangement. The guidance became effective as of the beginning of the Company’s fiscal year beginning after December 15, 2008 (which was June 1, 2009 for the Company). The Company is evaluating the impact this standard will have on its financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). SFAS 161 is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 (which was March 1, 2009 for the Company). The adoption of this new pronouncement did not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51 (“SFAS 160”). SFAS 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The guidance became effective as of the beginning of the Company’s fiscal year beginning after December 15, 2008 (which was June 1, 2009 for the Company). The adoption of this new pronouncement did not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

F-14

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (“SFAS 141R”). SFAS 141R establishes principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree. SFAS 141R also provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. The guidance became effective as of the beginning of the Company’s fiscal year beginning after December 15, 2008 (which was June 1, 2009 for the Company). The adoption of this new pronouncement did not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurement (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States and expands disclosures about fair value measurements. SFAS 157 applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. SFAS 157 became effective for fiscal years beginning after November 15, 2007 (which was June 1, 2008 for the Company). The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. The three levels of inputs used are as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of May 31, 2009, the Company’s only assets or liabilities that fell under the scope of SFAS 157 were its liabilities under interest rate hedging agreements (see Note 5). The fair values of the interest rate swap/collar agreements were based on prices obtained from financial institutions that develop values based on inputs observable in active markets, including interest rates. Accordingly, the Company’s fair value measurements of its derivative instruments are classified as Level 2 inputs.


Note 2.	Discontinued Operations

On March 13, 2007, the Company sold its Dominican Republic operations to Trilogy for approximately $83,298 in cash, which consisted of a purchase price of $81,000 and a working capital adjustment of $2,298, which resulted in a loss on disposition of assets of $33,132. The disposition was accounted for by the Company as a discontinued operation in accordance with SFAS 144. No tax benefit has been recognized on the sale as management does not believe that realization of the benefit resulting from the capital loss is more likely than not.

F-15

Summarized financial information for the discontinued operations of Centennial Dominicana is as follows:


	Fiscal Year Ended May 31,
	2009			2008			2007*

Revenue	$	—		$	—		$	58,232
Income from discontinued operations		—			—			461
Loss on disposition		(1,020	)		(2,924	)		(33,132	)
Income tax expense		—			—			(5,907	)

Net loss from discontinued operations	$	(1,020	)	$	(2,924	)	$	(38,578	)


	*	The results for the fiscal year ended May 31, 2007 include the results of operations of Centennial Dominicana through the date of its sale on March 13, 2007.


Note 3.	Acquisitions and Dispositions

On October 23, 2007, the Company acquired 1900 MHz (PCS) wireless spectrum covering approximately 400,000 Pops in Lima and Findlay-Tiffin, Ohio, markets contiguous to the Company’s existing footprint in Ft. Wayne, Indiana, for $3,610.

On September 18, 2007, the Company completed the acquisition of Islanet Communications (“Islanet”), a provider of data and voice communications to business and residential customers in Puerto Rico for $15,000, exclusive of a positive $2,369 working capital adjustment and direct costs of $582, for a net aggregate purchase price of $13,213. The Company has included the operations of Islanet in its results since the acquisition date.

The acquisition of Islanet was accounted for under the purchase method of accounting with the Company treated as the acquiring entity in accordance with SFAS No. 141, Business Combinations (“SFAS 141”). Accordingly, the consideration paid by the Company to complete the acquisition was allocated preliminarily to the assets and liabilities acquired based upon their estimated fair values as of the date of the acquisition. The final allocation of purchase price was based upon certain valuations and other analyses that were completed during the quarter ended November 30, 2008.

The final purchase price allocations as of the date of acquisition are as follows:


Current assets	$	561
Property, plant and equipment, net		1,663
Customer lists		6,500
Deferred tax asset		3,381
Goodwill		6,802

Total Assets Acquired		18,907
Current liabilities assumed		3,419
Deferred tax liability		2,275

Net assets acquired	$	13,213


	*	Customer lists assets are amortized on a straight-line basis over their remaining expected useful lives of approximately 10 years. See Note 2 for details on how the Company tests goodwill, which is not tax deductible, for impairment.

F-16

This acquisition did not have a material effect on the Company’s results of operations for the fiscal year ended May 31, 2009, nor would it have had a material effect on the Company’s results of operations prior to the acquisition.

On March 13, 2007, the Company sold its Dominican Republic operations to Trilogy (see Note 2).

On December 20, 2006, the Company disposed of its 14.29% limited partnership interest in the Pennsylvania RSA No. 6(I) Limited Partnership, representing approximately 30,100 Net Pops, for $7,100.

On November 29, 2006, the Company acquired, in the FCC’s advanced wireless services spectrum auction, two 20 MHz licenses covering over 1.3 million Pops in Grand Rapids and Lansing, Michigan for an aggregate cost of approximately $9,100.

On October 25, 2006, the Company acquired 10 MHz of PCS spectrum covering approximately 730,000 Pops in the Fort Wayne, Indiana market for approximately $5,800.

On February 16, 2006, the Company disposed of its investment interest in the Cal-One Cellular Limited Partnership, representing approximately 14,700 Net Pops.


Note 4.	Supplementary Financial Information

Property, plant and equipment consists of the following:


	May 31,
	2009			2008

Land	$	2,971		$	2,971
Transmission and distribution systems and related equipment(1)		1,061,022			1,036,317
Miscellaneous equipment and furniture and fixtures		270,489			242,162
PCS phones		44,802			45,845

		1,379,284			1,327,295
Accumulated depreciation		(807,153	)		(748,762	)

Property, plant and equipment, net	$	572,131		$	578,533


	(1)	Inclusive of assets recorded as capital leases of $86,029 and $75,363 for fiscal 2009 and 2008, respectively.

Depreciation expense was approximately $135,172, $138,633 and $130,148 for the fiscal years ended May 31, 2009, 2008 and 2007, respectively. Depreciation expense includes the depreciation of assets recorded under capital leases.

Accrued expenses and other current liabilities consisted of the following:


	May 31,
	2009		2008

Accrued miscellaneous	$	97,605	$	101,995
Deferred revenue and customer deposits		31,282		39,413
Accrued interest payable		45,211		47,000
Accrued income taxes payable		8,446		5,119

Accrued expenses and other current liabilities	$	182,544	$	193,527

F-17


Note 5.	Debt

Long-term debt consisted of the following:


	May 31,
	2009		2008

Senior Secured Credit Facility — Term Loans	$	550,000	$	550,000
81/8% Senior Unsecured Notes due 2014 (the “2014 Senior Notes”)		325,000		325,000
101/8% Senior Unsecured Notes due 2013 (the “2013 Senior Notes”)		500,000		500,000
Senior Unsecured Holdco Floating Rate Notes due 2013 (the “2013 Holdco Floating Rate Notes”), net of unamortized discount of $1,790 and $2,287, respectively		348,210		347,713
10% Senior Unsecured Holdco Fixed Rate Notes due 2013 (the “2013 Holdco Fixed Rate Notes”)		200,000		200,000
Capital Lease Obligations		86,692		76,146
Financing Obligation — Tower Sale		11,278		11,788

Total Long-Term Debt		2,021,180		2,010,647
Current Portion of Long-Term Debt		—		—

Net Long-Term Debt	$	2,021,180	$	2,010,647

Senior Secured Credit Facility

On February 9, 2004, the Company’s wholly-owned subsidiaries, Centennial Cellular Operating Co. LLC (“CCOC”) and Centennial Puerto Rico Operations Corp. (“CPROC”), as co-borrowers, entered into the $750,000 Senior Secured Credit Facility. The Company and its direct and indirect domestic subsidiaries, including CCOC and CPROC, are guarantors under the Senior Secured Credit Facility. The Senior Secured Credit Facility consists of a seven-year term loan, maturing in February 2011, with an original aggregate principal amount of $600,000, of which $550,000 remains outstanding at May 31, 2009. The Senior Secured Credit Facility requires amortization payments in an aggregate principal amount of $550,000 in two equal installments of $275,000 in August 2010 and February 2011. The Senior Secured Credit Facility also includes a six-year revolving credit facility, maturing in February 2010, with an aggregate principal amount of up to $150,000; however, $2,500 of this commitment was from a subsidiary of Lehman Brothers Holdings Inc. (“Lehman Brothers”). Due to the Chapter 11 bankruptcy filing by Lehman Brothers in September 2008, the Company believes it is unlikely that this $2,500 commitment will be honored by Lehman Brothers. Accordingly, the Company believes its useable commitments under the revolving credit facility may be $147,500. The Company does not expect this change to have a material impact on its liquidity or consolidated financial statements. At May 31, 2009, the Company had not borrowed any amounts under the revolving credit facility.

On February 5, 2007, the Company amended its Senior Secured Credit Facility to lower the interest rate on term loan borrowings by 0.25% through a reduction in the London Inter-Bank Offering Rate (“LIBOR”) spread from 2.25% to 2.00%. Under the terms of the Senior Secured Credit Facility, as amended, term and revolving loan borrowings will bear interest at LIBOR (a weighted average rate of 1.73% as of May 31, 2009) plus 2.00% and LIBOR plus 3.25%, respectively. The Company’s obligations under the Senior Secured Credit Facility are collateralized by liens on substantially all of the Company’s assets.

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High-Yield Notes

On December 21, 2005, the Company issued $550,000 in aggregate principal amount of 2013 Holdco Notes. The 2013 Holdco Notes were issued in two series consisting of (i) $350,000 of 2013 Holdco Floating Rate Notes that bear interest at three-month LIBOR (1.21% as of May 31, 2009) plus 5.75% and mature in January 2013, and (ii) $200,000 of 2013 Holdco Fixed Rate Notes that bear interest at 10% and mature in January 2013. The 2013 Holdco Floating Rate Notes were issued at a 1% discount with the Company receiving net proceeds of $346,500. The Company used the net proceeds from the offering, together with a portion of its available cash, to pay a special cash dividend of $5.52 per share to the Company’s common stockholders and to prepay $39,500 of term loans under the Senior Secured Credit Facility. In connection with the completion of the 2013 Holdco Notes offering, the Company entered into an amendment to the Senior Secured Credit Facility to permit, among other things, the issuance of the 2013 Holdco Notes and the payment of the special cash dividend. Additionally, the Company capitalized $15,447 of debt issuance costs in connection with the issuance of the 2013 Holdco Notes.

On February 9, 2004, concurrent with the Senior Secured Credit Facility, the Company and its wholly-owned subsidiaries, CCOC and CPROC, as co-issuers, issued $325,000 aggregate principal amount of 2014 Senior Notes. The Company used the net proceeds from the 2014 Senior Notes offering to refinance outstanding indebtedness.

On June 20, 2003, the Company and CCOC, as co-issuers, issued $500,000 aggregate principal amount of 2013 Senior Notes. CPROC is a guarantor of the 2013 Senior Notes.

Derivative Financial Instruments

The Company, either directly or through one of its wholly-owned subsidiaries, CCOC or CPROC, uses financial derivatives as part of its overall risk management strategy. These instruments are used to manage risk related to changes in interest rates. The portfolio of derivative financial instruments has consisted of interest rate swap and collar agreements. Interest rate swap agreements are used to modify variable rate obligations to fixed rate obligations, thereby reducing the exposure to higher interest rates. Interest rate collar agreements are used to lock in a maximum rate if interest rates rise, but allow the Company to otherwise pay lower market rates, subject to a floor. The Company formally documents all relationships between hedging instruments and hedged items and the risk management objective and strategy for each hedge transaction. All of the Company’s derivative transactions are entered into for non-trading purposes. The Company’s derivative financial instruments effective or entered into in fiscal 2009 consist of the following:


							Collar			Collar
				Swap			Fixed			Fixed
				Fixed			Interest			Interest
	Variable Interest Rate Loan	Amount		Interest			Rate			Rate			Trade		Effective		Expiration
	Being Hedged	Hedged		Rate			Floor			Cap			Date		Date		Date

May 2007 CCOC Collar	Senior Secured Credit Facility	$	200,000		—			4.24	%		5.35	%		5/1/2007		12/31/2007		12/31/2008
November 2008 CCOC Collar 1	Senior Secured Credit Facility	$	200,000		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
2008 CPROC Swap	Senior Secured Credit Facility	$	250,000		4.45	%		—			—			9/18/2007		3/31/2008		9/30/2008
CPROC Collar	Senior Secured Credit Facility	$	35,500		—			4.66	%		5.50	%		10/31/2006		12/29/2006		6/30/2008
2008 CPROC Collar	Senior Secured Credit Facility	$	250,000		—			2.43	%		4.00	%		9/26/2008		9/30/2008		6/30/2009
June 2008 CPROC Swap	Senior Secured Credit Facility	$	35,500		2.61	%		—			—			5/23/2008		6/30/2008		12/31/2008
November 2008 CPROC Collar	Senior Secured Credit Facility	$	35,500		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
CCOC Collar	Senior Secured Credit Facility	$	25,000		—			4.66	%		5.50	%		10/31/2006		12/29/2006		6/30/2008
June 2008 CCOC Swap	Senior Secured Credit Facility	$	25,000		2.61	%		—			—			5/23/2008		6/30/2008		12/31/2008
November 2008 CCOC Collar 2	Senior Secured Credit Facility	$	25,000		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
May 2008 CCOC Swap	Senior Secured Credit Facility	$	39,500		2.54	%		—			—			5/23/2008		5/31/2008		11/30/2008
November 2008 CCOC Collar 3	Senior Secured Credit Facility	$	39,500		—			1.81	%		2.25	%		11/25/2008		11/30/2008		8/31/2009
Holdco Swap	2013 Holdco Floating Rate Notes	$	200,000		10.46	%		—			—			10/31/2007		12/31/2007		6/30/2008
2008 Holdco Swap	2013 Holdco Floating Rate Notes	$	200,000		2.85	%		—			—			5/23/2008		7/1/2008		4/1/2009

F-19

At May 31, 2009, $550,000 of the Company’s $900,000 of variable rate debt was hedged by interest rate swaps or collars described above. All the Company’s swaps and collars have been designated as cash flow hedges.

At May 31, 2009, the fair value of the swaps and collars was a liability of $1,952 which is included in other liabilities in the consolidated balance sheet. For the fiscal year ended May 31, 2009, the Company recorded income of $1,914, net of tax, to accumulated other comprehensive loss attributable to the change in the fair value of the swaps and collars, the full amount of which is expected to be reclassified into interest expense within the next 12 months as the underlying exposures are realized. See Note 1 for a discussion of the framework the Company uses for determining fair value of its derivative instruments.

Under certain of the agreements relating to long-term debt, the Company is required to maintain certain financial and operating covenants, and is limited in its ability to, among other things, incur additional indebtedness and enter into transactions with affiliates. Under certain circumstances, the Company is prohibited from paying cash dividends on its common stock under certain of such agreements.

The aggregate annual principal payments for the next five years and thereafter under the Company’s long-term debt at May 31, 2009 are summarized as follows:


May 31, 2010	$	—
May 31, 2011		549,513
May 31, 2012		17
May 31, 2013		550,325
May 31, 2014		825,624
May 31, 2015 and thereafter		97,491

		2,022,970
Less: unamortized discount		(1,790	)

	$	2,021,180

Interest expense, as reflected on the Consolidated Financial Statements, has been partially offset by interest income. The gross interest expense for the fiscal years ended May 31, 2009, 2008 and 2007 was approximately $173,995, $193,315 and $206,300, respectively.


Note 6.	Fair Value of Financial Instruments

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued expenses, other liabilities and short-term debt approximate fair value because of the short-term maturity of these financial instruments. Fair value is determined by the most recently traded price of the security at the consolidated balance sheet date. The estimated fair value of the Company’s debt and derivative financial instruments is summarized as follows:


	May 31,
	2009				2008
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value

Long-term debt	$	2,021,180	$	2,056,095	$	2,010,647	$	2,013,934
Derivative financial instruments:
Interest rate swap and collar agreements liability	$	1,952	$	1,952	$	5,675	$	5,675

F-20

Fair value for debt was determined based on interest rates that are currently available to the Company for the issuance of debt with similar terms and remaining maturities. The fair value of the interest rate swap and collar agreements at May 31, 2009 and 2008 were estimated using a quote from the broker.


Note 7.	Compensation Plans and Arrangements

2003 Employee Stock Purchase Plan:

In July 2003, the Company adopted the 2003 Employee Stock Purchase Plan (the “Plan”), which was substantially similar to the 2000 Employee Stock Purchase Plan. The Plan was a successor to the 2000 Employee Stock Purchase Plan. The Company has reserved 600,000 shares of common stock for issuance under the Plan. Under the current Plan, eligible employees, which generally include all full-time employees, are able to subscribe for shares of common stock at a purchase price equal to 85% of the average market price (as defined) on the last day of the payroll deduction period relating to an offering under the Plan. Payment of the purchase price of the shares is made in installments through payroll deductions. The Plan is administered by the Compensation Committee of the Board of Directors. Rights to purchase shares of common stock under the Plan cannot be transferred by the recipient and can be forfeited in the event of employment termination. The Company did not offer the plan in fiscal 2009 or fiscal 2008. The number of shares purchased during the fiscal year ended May 31, 2007 was 102,609.

1999 Stock Option Plan and 2008 Stock Option Plan:

The Company’s 1999 Stock Option and Restricted Stock Purchase Plan (the “1999 Stock Option Plan”) provided for the grant of incentive stock options as defined in Section 422A of the Internal Revenue Code of 1986, as amended (the “Code”), as well as non-qualified stock options and the right to purchase shares of common stock of the Company on a restricted basis to employees, officers, directors and others providing services to the Company. Generally, the exercise price of incentive and non-qualified stock options and the purchase price of restricted stock may be as determined by the Board of Directors of the Company or a committee thereof. The exercise price of incentive stock options issued under the 1999 Stock Option Plan was required to be no less than the fair market value of shares of common stock at the time of grant of such options. The maximum term of each incentive stock option issued under the 1999 Stock Option Plan was ten years. The term of each non-qualified stock option generally ranged between seven and ten years. The 1999 Stock Option Plan was amended several times to increase the number of shares of common stock of the Company authorized for issuance under the stock option plan. In addition, in connection with a special dividend paid in January 2006, certain adjustments to outstanding options under the 1999 Stock Option Plan were made in accordance with the terms of such plan. All of the Company’s outstanding stock options at May 31, 2009 are under the 1999 Stock Option Plan. The 1999 Stock Option Plan expired in January 2009.

In September 2008, the Company’s stockholders approved the Centennial Communications Corp. and its Subsidiaries 2008 Stock Option and Restricted Stock Purchase Plan (the “2008 Stock Option Plan”). The terms of the 2008 Stock Option Plan are substantially consistent with the terms of the 1999 Stock Option Plan. No stock options, warrants or rights have been issued under the 2008 Stock Option Plan. The aggregate number of shares authorized for issuance under the 2008 Stock Option Plan is 10,000,000.

For any participant who owns shares possessing more than 10% of the voting rights of the outstanding common stock, the exercise price of any incentive stock option must be at least 110% of the fair market value of the shares subject to such option on the date of the grant and the term of the option may not be longer than five years. Options become exercisable at such time or times as the Board of Directors or committee granting such options determine when such options are granted. Options granted under the 1999 Stock Option Plan are generally not transferable by the holder.

F-21

A summary of the status of the Company’s stock options as of May 31, 2007, 2008 and 2009 and changes during the fiscal years then ended are presented below:


						Weighted-Average
				Weighted-		Remaining		Aggregate
				Average		Contractual Term		Intrinsic
	Shares			Exercise Price		(in years)		Value

Outstanding, May 31, 2006		10,862,877			4.97		5.73		17,696

Granted		3,659,500			9.73
Exercised		(1,613,611	)		3.50
Canceled/forfeited		(651,567	)		6.42

Outstanding, May 31, 2007		12,257,199			6.55		6.27		44,729

Granted		426,500			7.75
Exercised		(916,474	)		4.38
Canceled/forfeited		(594,651	)		8.38

Outstanding, May 31, 2008		11,172,574			6.67		5.56		20,979

Granted		1,895,000			8.17
Exercised		(3,457,263	)		3.38
Canceled/forfeited		(252,902	)		8.39

Outstanding, May 31, 2009		9,357,409			8.14		6.16		8,845

Vested at May 31, 2009 and expected to vest thereafter		8,935,219			8.10		6.05		8,761

Options exercisable at May 31, 2007		6,059,436		$	4.69		4.58		33,357
Options exercisable at May 31, 2008		7,928,115		$	5.61		4.46		19,895
Options exercisable at May 31, 2009		5,839,162		$	4.98		4.77		8,139

The following table summarizes information about options outstanding at May 31, 2009:


	Options Outstanding
			Weighted-Average
			Remaining				Options Exercisable
Range of	Options		Contractual		Weighted-Average		Options		Weighted-Average
Exercise Prices	Outstanding		Life (Years)		Exercise Price		Exercisable		Exercise Price

$1.39-3.48		657,434		4.09	$	3.28		657,433	$	3.28
$3.65-4.71		507,786		2.44		3.93		507,782		3.93
$5.21-8.34		1,385,617		5.20		6.16		1,097,875		6.15
$8.37-9.79		3,574,253		5.90		8.54		1,885,878		8.67
$10.19-15.50		3,232,319		7.86		10.21		1,690,194		10.22

		9,357,409		6.16	$	8.14		5,839,162	$	4.98

The estimated weighted-average fair value of options granted during fiscal 2009, 2008 and 2007 were $5.04 per share, $5.08 per share and $6.59 per share, respectively. The total intrinsic value of options exercised during the years ended May 31, 2009, 2008, and 2007 was $15,501, $4,751, and $7,086, respectively.

The Company received cash from the exercise of stock options of $10,263, $4,443 and $5,248 during the fiscal years ended May 31, 2009, 2008, and 2007, respectively. The actual tax benefit realized for the tax deductions from option exercise of the share-based payment arrangements totaled $4,755, $1,421 and $2,465 for the years ended May 31, 2009, 2008 and 2007, respectively.

F-22

The fair value of options granted under the Company’s stock option plans during fiscal 2009, 2008 and 2007 was estimated on the dates of grant using the Black-Scholes options-pricing model with the following weighted-average assumptions used:


	Fiscal Year Ended May 31,
	2009	2008	2007

Expected volatility	62.1%-63.5%	63.2%-70.5%	59.7%-70.7%
Risk-free interest rate	3.3%-3.6%	2.7%-4.7%	4.4%-4.8%
Expected lives of option grants	6.25 years	6.25 years	4.5-6.25 years
Expected dividend yield	0.00%	0.00%	0.00%

The expected volatility assumption used in the Black-Scholes option-pricing model was based solely on historical volatility, calculated using the historical weekly price changes of the Company’s common stock over the most recent period equal to the expected life of the stock option on the date of grant. The risk-free interest rate was determined using the implied yield currently available for zero-coupon U.S. government issues with a remaining term equal to the expected life of the stock options. Beginning on June 1, 2006, the expected life of the option is calculated using the simplified method set out in SEC Staff Accounting Bulletin No. 107 using the vesting term of 3 or 4 years and the contractual term of 7 or 10 years. The simplified method defines the expected life as the average of the contractual term of the options and the weighted average vesting period for all option tranches. The Company does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield.

As part of the requirements of SFAS 123(R), the Company is required to estimate potential forfeitures of stock grants and adjust recorded compensation cost accordingly. The forfeiture rate was estimated based on relevant historical forfeitures. The estimate of forfeitures will be adjusted over the requisite service period to the extent that actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures will be recognized through a cumulative catch-up adjustment in the period of change and will also impact the amount of stock compensation expense to be recognized in future periods.

A summary of the status and changes of the Company’s nonvested shares related to its equity incentive plans as of and during the fiscal year ended May 31, 2009 is presented below:


				Weighted Average
	Shares			Grant-Date Fair Value

Nonvested at May 31, 2006		6,125,527			3.65
Granted		3,581,000			6.67
Vested		(2,826,077	)		3.41
Forfeited		(682,687	)		3.70

Nonvested at May 31, 2007		6,197,763		$	5.49
Granted		293,500			4.56
Vested		(3,141,765	)		4.81
Forfeited		(105,039	)		4.82

Nonvested at May 31, 2008		3,244,459		$	6.09
Granted		1,733,000			5.11
Vested		(1,377,506	)		5.59
Forfeited		(81,706	)		5.52

Nonvested at May 31, 2009		3,518,247		$	5.82

F-23

As of May 31, 2009, there was approximately $15,297 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted; that cost is expected to be recognized over a period of 2.4 years. The total fair value of shares vested was $7,700, $15,106 and $9,647 during the fiscal years ended May 31, 2009, 2008 and 2007, respectively.

Retirement Plans

The Company sponsors 401(k) defined contribution retirement plans covering employees of its wholly-owned subsidiaries in the United States and Puerto Rico. If a participant decides to contribute, a portion of the contribution is matched by the Company. The Company also provides a profit sharing component to the retirement plans. The profit share contribution made by the Company is based on the Company’s financial results and the approval of the compensation committee. Total expense under the plans was approximately $2,326, $1,811 and $1,514 for the fiscal years ended May 31, 2009, 2008 and 2007, respectively. For the fiscal year ended May 31, 2009, the amount of profit sharing was $1,074. There was no profit sharing component for the fiscal years ended May 31, 2008 and 2007.


Note 8.	Income Taxes

Income from continuing operations before income tax expense, minority interest in income of subsidiaries and income from equity investments is as follows:


	Year Ended May 31,
	2009		2008		2007

Domestic	$	65,600	$	29,783	$	9,542
Foreign		28,644		24,091		6,177

Total	$	94,244	$	53,874	$	15,719

The components of the Company’s provision for (benefit from) income taxes are summarized as follows:


	Year Ended May 31,
	2009			2008			2007

Current:
Federal	$	1,064		$	373		$	1,398
State		(2,448	)		2,930			2,647
Foreign		8,219			3,975			(2,420	)

	$	6,835		$	7,278		$	1,625

Deferred:
Federal		24,785			14,715			6,335
State		(3,903	)		(2,072	)		1,088
Foreign		(2,572	)		5,272			(1,026	)

		18,310			17,915			6,397

Total	$	25,145		$	25,193		$	8,022

F-24

The effective income tax rate of the Company differs from the statutory rate as a result of the following items:


	Year Ended May 31,
	2009			2008			2007

Computed tax expense at federal statutory rate on the income from continuing operations before income tax expense, minority interest in income of subsidiaries and income from equity investments	$	32,985		$	18,858		$	5,502
(Reduction) Increase in Tax Reserves, net		(4,974	)		1,847			(7,298	)
State and local income tax (benefit) provision, net of federal income tax benefit		(3,404	)		(420	)		2,513
Reduction in tax receivable		162			—			4,218
Foreign taxes and rate differential		(356	)		5,214			3,257
Other		732			(306	)		(170	)

	$	25,145		$	25,193		$	8,022

Temporary differences and carryforwards that give rise to a significant portion of deferred tax assets and liabilities are as follows:


	Year Ended May 31,
	2009			2008

Deferred Tax Assets:
Tax loss and credit carryforwards	$	62,826		$	85,981
Capital loss carryforward		43,045			42,687
Bad debt reserve		2,203			3,331
Deferred income		3,857			3,361
Other		3,933			2,734
Valuation allowance		(92,225	)		(94,088	)

		23,639			44,006

Deferred Tax Liabilities:
Unrealized gain on interest rate swaps		(720	)		(2,529	)
Amortization of intangible assets		132,596			127,724
Depreciation of fixed assets		37,849			49,776

		169,725			174,971

Net deferred tax liabilities	$	(146,086	)	$	(130,965	)

At May 31, 2009, the Company’s consolidated balance sheet includes a current deferred tax asset of $9,440 (which is included in prepaid expenses and other current assets) and a non-current deferred tax liability of $155,526. At May 31, 2008, the Company’s consolidated balance sheet includes a current deferred tax asset of $20,443 (which is included in prepaid expenses and other current assets) and a non-current deferred tax liability of $151,408.

At May 31, 2009, the Company had approximately $16,791 of net operating loss carryforwards for federal income tax purposes, expiring from 2012 through 2027, which are subject to limitations on their future utilization under the Internal Revenue Code of 1986. A valuation allowance has been recorded against approximately $11,223 of these net operating loss carryforwards. The Company also had approximately $609,289 of state tax net operating loss carryforwards, expiring from 2010 through 2021. A valuation allowance has been recorded against approximately $600,313 of the state net operating loss carryforwards.

F-25

For the year ended May 31, 2009, the Company’s effective tax rate reflects a foreign tax credit in the U.S. for the entire amount of foreign taxes the Company pays. The effect of this is to reduce the Company’s effective tax rate. Foreign taxes were deducted in prior years. At May 31, 2009, the Company has no foreign tax credit carryforwards.

During the fiscal year ended May 31, 2007, the company sold its Dominican Republic operations resulting in a capital loss of $121,491 of which $840 was used to offset capital gains. These losses may be carried forward for five years. The company has set up a valuation allowance against the entire remaining capital loss since it does not believe it is more likely than not that the loss will be utilized.

At May 31, 2009, the Company has U.S. federal minimum tax credit carryforwards of approximately $10,138 and Puerto Rico minimum tax credit carryforwards of approximately $1,191 which are available to reduce U.S. federal and Puerto Rico regular income taxes, respectively, if any, over an indefinite period.

Based on its business projections, the Company believes that it is more likely than not that its deferred tax assets will be realized due to the future reversal of its taxable temporary differences related to definite-lived fixed assets, as well as the indefinite carryforward period related to its federal minimum tax credit carryforwards. In addition, the Company expects to generate future taxable income, exclusive of reversing temporary differences, or implement appropriate tax strategies to utilize the loss carryforwards within the carryforward period.

The Company has not provided for any U.S. deferred income taxes on the undistributed earnings of its foreign operations based upon its determination that such earnings will be indefinitely reinvested. If such earnings were not considered indefinitely reinvested, deferred U.S. and foreign income taxes would have been provided.

The income tax benefits of employee stock option compensation expense for tax purposes in excess of the amounts recognized for financial reporting purposes credited to additional paid-in capital was $5,679, $215 and $1,356 for the years ended May 31, 2009, 2008 and 2007, respectively.

For the years ended May 31, 2009 and 2008, the Company recorded a decrease in its tax liabilities of approximately $1,810, and an increase in its tax liabilities of approximately $3,204, respectively. Both the decrease in 2009 and the increase in 2008 are a result of the adjustment of the carrying amounts of its derivatives to reflect their fair values.

The Company establishes reserves for tax contingencies when, despite the belief that the Company’s tax return positions are fully supported, it is probable that certain positions may be challenged and may not be fully sustained. The tax contingency reserves are analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the progress of federal and state audits, expiration of the statute of limitations for the assessment of tax, case law and emerging legislation. The Company’s effective tax rate includes the impact of tax contingency reserves and changes to the reserves, including related interest, as considered appropriate by management. The tax contingency reserve was decreased for the year ended May 31, 2009 by $4,974, primarily attributable to the reduction in exposure due to the expiration of the statute of limitations and the settlement of various audits, and increased for the fiscal year ended May 31, 2008 by $1,847 primarily attributable to the increase in foreign and state reserves and related interest.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (“FIN 48”), on June 1, 2007. As a result of the implementation of FIN 48, the Company reduced its liability for net unrecognized tax benefits by $196, and accounted for the reduction as a cumulative effect of a change in accounting principle that resulted in an increase to retained earnings of $196. The amount of unrecognized tax benefit was $10,891 as of May 31, 2009. In addition, the total amount of accrued interest recorded as of May 31, 2009 was $1,095. Included in this balance were positions that, if recognized, would affect the effective tax rate by $10,891 as of May 31, 2009.

F-26

A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding accrued interest) is as follows (in millions):


	Year Ended May 31,
	2009			2008

Unrecognized tax benefits balance at June 1	$	22,623		$	20,572
Increase in tax positions for prior years		577			201
Decrease in tax positions for prior years		(98	)		—
Increase in tax positions for current year		4,353			4,349
Lapse of statute of limitations		(8,845	)		(2,499	)

Unrecognized tax benefits balance at May 31	$	18,610		$	22,623

The Company recognizes potential interest related to unrecognized tax benefits in income tax expense.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. The Company is no longer subject to U.S. federal income tax examinations for years before 2005 and generally, is no longer subject to state and local income tax examinations by tax authorities for years before 2004. The state of Michigan commenced an audit of the Company’s tax returns for the years ended May 31, 2003 through May 31, 2006 and the IRS commenced an audit of the Company’s tax return for the year ended May 31, 2006. The Company’s tax returns are not currently under audit in any other taxing jurisdiction.

Management has concluded that it is reasonably possible that the unrecognized tax benefits may decrease by approximately $1,129 within the next 12 months. The decrease is primarily related to foreign and state taxes that have expiring statutes of limitations.


Note 9.	Related Party Transactions

At July 23, 2009, Welsh Carson and its affiliates held approximately 19% of the Company’s outstanding common stock. In January 1999, the Company entered into a stockholders’ agreement with Welsh Carson and other parties, under which an affiliate of Welsh Carson received an annual monitoring fee of $450. Prior to fiscal 2008, The Blackstone Group was one of the Company’s principal stockholders and received an annual monitoring fee of $300. The Company’s obligation to pay such fee to the Blackstone Group terminated in fiscal 2008 and the stockholders’ agreement and the Company’s obligation to pay such fee to Welsh Carson terminated in its entirety in fiscal 2009. The Company recorded expenses of $150, $450 and $750 under the stockholders’ agreement for each of the fiscal years ended May 31, 2009, 2008 and 2007, respectively. At May 31, 2008, $75 of such amounts were recorded within payable to affiliates in the Company’s consolidated balance sheets.


Note 10.	Commitments and Contingencies

Legal Proceedings:

In 2001, the Company’s previously sold Dominican Republic subsidiary, Centennial Dominicana, commenced litigation against International Telcom, Inc. (“ITI”) to collect an approximate $1,800 receivable owed under a traffic termination agreement between the parties relating to international long distance traffic terminated by Centennial Dominicana in the Dominican Republic. Subsequently, ITI counterclaimed against Centennial Dominicana claiming that Centennial Dominicana breached the traffic termination agreement and is claiming damages in excess of $40,000. The matter is subject to arbitration in Miami, Florida and a decision of the arbitration panel is expected shortly. In connection with the sale of Centennial Dominicana (see Note 2), the Company has agreed to indemnify Trilogy with respect to liabilities arising as a result of the ITI litigation. The Company does not believe

F-27

that any damage payments would have a material adverse effect on the Company’s consolidated results of operations, consolidated financial position or consolidated cash flows.

The Company is subject to other claims and legal actions that arise in the ordinary course of business. The Company does not believe that any of these other pending claims or legal actions will have a material adverse effect on its consolidated results of operations, consolidated financial position or consolidated cash flows.

Guarantees:

The Company currently does not guarantee the debt of any entity outside of its consolidated group. In the ordinary course of its business, the Company enters into agreements with third parties that provide for indemnification of counter parties. Examples of these types of agreements are underwriting agreements entered into in connection with securities offerings and agreements relating to the sale or purchase of assets. The duration, triggering events, maximum exposure and other terms under these indemnification provisions vary from agreement to agreement. In general, the indemnification provisions require the Company to indemnify the other party to the agreement against losses it may suffer as a result of the Company’s breach of its representations and warranties contained in the underlying agreement or for misleading information contained in a securities offering document. The Company is unable to estimate the maximum potential liability for these types of indemnifications as the agreements generally do not specify a maximum amount, and the actual amounts are dependant on future events, the nature and likelihood of which cannot be determined at this time. Historically, the Company has never incurred any material costs relating to these indemnification agreements. Accordingly, the Company believes the estimated fair value of these agreements is minimal.

Lease Commitments:

The Company leases facilities and equipment under noncancelable operating and capital leases. Terms of the leases, including renewal options and escalation clauses, vary by lease. When determining the term of a lease, the Company includes renewal options that are reasonably assured. Rent expense is recorded on a straight-line basis over the initial lease term and those renewal periods that are reasonably assured. The difference between rent expense and rent paid is recorded as deferred rent. Leasehold improvements are depreciated over the shorter of their economic lives, which begins once the assets are ready for their intended use, or the lease term.

Additionally, during both fiscal years ended May 31, 2004 and 2003, the Company entered into sale-leaseback transactions where the Company sold telecommunication towers and leased back the same telecommunications towers. As a result of provisions in the sale and lease-back agreements that provide for continuing involvement by the Company, the Company accounted for the sale and lease-back of certain towers as a finance obligation. For the sale and lease-back of towers determined to have no continuing involvement, sale-leaseback accounting has been followed. The Company has recognized a deferred gain on the sale of such telecommunications towers and is accounting for substantially all of its leases under the lease-backs as capital leases. As such, the deferred gain is being amortized in proportion to the amortization of the leased telecommunications towers.

F-28

As of May 31, 2009, the future minimum rental commitments under noncancelable leases with initial terms in excess of one year for the next five years and thereafter were as follows:


								Capital
						Net		Leases and
	Operating		Less:			Operating		Financing
	Leases		Sublease			Leases		Obligations

May 31, 2010		33,038		(1,335	)		31,703		8,743
May 31, 2011		28,177		(1,041	)		27,136		8,926
May 31, 2012		24,033		(570	)		23,463		9,184
May 31, 2013		20,873		(361	)		20,512		9,517
May 31, 2014		17,974		(129	)		17,845		9,807
May 31, 2015 and thereafter		152,256		(16	)		152,240		217,690

Total minimum lease payments	$	276,351	$	(3,452	)	$	272,899		263,867

Less amount representing interest									(177,175	)

Present value of net minimum lease payments								$	86,692

Rent expense under operating leases was approximately $44,980, $40,745 and $36,259 for the fiscal years ended May 31, 2009, 2008 and 2007, respectively.

Other Commitments and Contingencies:

On July 1, 2008, the Company entered into an Information Services Agreement with Fidelity Information Services, Inc. (“Fidelity”) pursuant to which Fidelity agreed to provide billing services, facilities network fault detection, correction and management performance and usage monitoring and security for the Company’s wireless operations. This agreement has an initial term of 10 years, expiring on June 30, 2018, and includes a minimum volume commitment based on the number of subscribers processed per year. Based on this minimum, the Company has agreed to purchase a total of $121,081 of billing related services from Fidelity through June 30, 2018. As of May 31, 2009, the Company has paid approximately $8,957 in connection with this agreement.


Note 11.	Condensed Consolidating Financial Data

CCOC and CPROC are wholly-owned subsidiaries of the Company. CCOC is a joint and several co-issuer on the 2013 Senior Notes issued by the Company, and CPROC has unconditionally guaranteed the 2013 Senior Notes. The Company, CCOC and CPROC are joint and several co-issuers of the 2014 Senior Notes. Separate financial statements and other disclosures concerning CCOC and CPROC are not presented because they are not material to investors.

F-29

CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of May 31, 2009
(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries

ASSETS
Current assets:
Cash and cash equivalents	$	67,798		$	—		$	149,696		$	—		$	—		$	217,494
Accounts receivable, net		47,723			—			57,751			—			—			105,474
Inventory — phones and accessories, net		7,340			—			23,764			—			—			31,104
Prepaid expenses and other current assets		13,767			—			8,364			—			—			22,131

Total current assets		136,628			—			239,575			—			—			376,203
Property, plant & equipment, net		249,137			—			322,994			—			—			572,131
Debt issuance costs		9,589			—			17,115			—			—			26,704
Restricted cash		124			—			—			—			—			124
U.S. wireless licenses		—			—			402,395			—			—			402,395
Puerto Rico wireless licenses, net		—			—			54,159			—			—			54,159
Goodwill		10,989			—			—			—			—			10,989
Investment in subsidiaries		—			1,026,832			570,632			(670,807	)		(926,657	)		—
Other assets		11,017			—			1,782			—			—			12,799

Total	$	417,484		$	1,026,832		$	1,608,652		$	(670,807	)	$	(926,657	)	$	1,455,504


LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	6,226		$	—		$	6,453		$	—		$	—		$	12,679
Accrued expenses and other current liabilities		120,273			—			62,271			—			—			182,544

Total current liabilities		126,499			—			68,724			—			—			195,223
Long-term debt		794,966			591,395			86,609			548,210			—			2,021,180
Deferred income taxes		4,623			—			150,903			—			—			155,526
Other liabilities		7,436			—			24,532			—			—			31,968
Intercompany		23,975			1,087,824			1,069,497			(270,414	)		(1,910,882	)		—
Minority interest in subsidiaries		—			—			1,442			—			—			1,442
Redeemable preferred stock		643,738			—			—			—			(643,738	)		—
Stockholders’ (deficit) equity:
Common stock		—			—			—			1,112			—			1,112
Additional paid-in capital		(818,330	)		—			818,330			62,197			—			62,197
Accumulated (deficit) equity		(364,831	)		(651,747	)		(611,385	)		(1,010,835	)		1,627,963			(1,010,835	)
Accumulated other comprehensive loss		(592	)		(640	)		—			—			—			(1,232	)

		(1,183,753	)		(652,387	)		206,945			(947,526	)		1,627,963			(948,758	)
Less: treasury shares		—			—			—			(1,077	)		—			(1,077	)

Total stockholders’ (deficit) equity		(1,183,753	)		(652,387	)		206,945			(948,603	)		1,627,963			(949,835	)

Total	$	417,484		$	1,026,832		$	1,608,652		$	(670,807	)	$	(926,657	)	$	1,455,504

F-30

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
For the Fiscal Year Ended May 31, 2009
(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

Revenue	$	442,583		$	—		$	620,655		$	—		$	(11,648	)	$	1,051,590

Costs and expenses:
Cost of services (exclusive of depreciation and amortization shown below)		83,754			—			120,649			—			(10,976	)		193,427
Cost of equipment sold		57,649			—			92,394			—			—			150,043
Sales and marketing		40,800			—			56,835			—			—			97,635
General and administrative		100,476			—			106,520			—			(672	)		206,324
Depreciation and amortization		66,404			—			69,766			—			—			136,170
Loss (gain) on disposition of assets		711			—			(238	)		—			—			473

		349,794			—			445,926			—			(11,648	)		784,072

Operating income		92,789			—			174,729			—			—			267,518

Income (loss) from investments in subsidiaries		—			67,295			(15,911	)		67,295			(118,679	)		—
Interest (expense) income, net		(100,371	)		(44,793	)		(15,680	)		(49,630	)		37,200			(173,274	)
Intercompany interest allocation		—			44,793			(57,223	)		49,630			(37,200	)		—

(Loss) income from continuing operations before income tax expense and minority interest in income of subsidiaries		(7,582	)		67,295			85,915			67,295			(118,679	)		94,244
Income tax expense		(8,329	)		—			(16,816	)		—			—			(25,145	)

(Loss) income from continuing operations before minority interest in income of subsidiaries		(15,911	)		67,295			69,099			67,295			(118,679	)		69,099
Minority interest in income of subsidiaries		—			—			(784	)		—			—			(784	)

(Loss) income from continuing operations		(15,911	)		67,295			68,315			67,295			(118,679	)		68,315
Net loss from discontinued operations		—			—			(1,020	)		—			—			(1,020	)

Net (loss) income	$	(15,911	)	$	67,295		$	67,295		$	67,295		$	(118,679	)	$	67,295

F-31

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Fiscal Year Ended May 31, 2009
(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

OPERATING ACTIVITIES:
Net (loss) income	$	(15,911	)	$	67,295		$	67,295		$	67,295		$	(118,679	)	$	67,295

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		66,404			—			69,766			—			—			136,170
Stock-based compensation		4,769			—			4,732			—			—			9,501
Excess tax benefits from stock-based compensation		—			—			(1,639	)		—			—			(1,639	)
Minority interest in income of subsidiaries		—			—			784			—			—			784
Distributions paid to minority interest		—			—			(4,240	)		—			—			(4,240	)
Equity in undistributed earnings (loss) of subsidiaries		—			67,295			(15,911	)		67,295			(118,679	)		—
Loss (gain) on disposition of assets		711			—			(238	)		—			—			473
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		34,563			(75,074	)		(45,386	)		(172,432	)		274,558			16,229

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		90,536			59,516			75,163			(37,842	)		37,200			224,573

INVESTING ACTIVITIES:
Proceeds from disposition of assets, net of cash expenses		—			179			—			—			—			179
Payments for purchase of wireless spectrum		—			(2	)		—			—			—			(2	)
Capital expenditures		(62,163	)		(59,053	)		—			—			—			(121,216	)

NET CASH USED IN INVESTING ACTIVITIES		(62,163	)		(58,876	)		—			—			—			(121,039	)

FINANCING ACTIVITIES:
Repayment of debt		—			—			(3,103	)		—			—			(3,103	)
Proceeds from the exercise of employee stock options		—			—			—			10,263			—			10,263
Excess tax benefits from stock-based compensation		—			—			—			1,639			—			1,639
Cash received from (paid to) affiliates		2,795			(640	)		9,105			25,940			(37,200	)		—

NET CASH PROVIDED (USED IN) BY FINANCING ACTIVITIES		2,795			(640	)		6,002			37,842			(37,200	)		8,799

NET INCREASE IN CASH AND CASH EQUIVALENTS		31,168			—			81,165			—			—			112,333
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		36,630			—			68,531			—			—			105,161

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	67,798		$	—		$	149,696		$	—		$	—		$	217,494

F-32

CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA

As of May 31, 2008

(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

ASSETS
Current assets:
Cash and cash equivalents	$	36,630		$	—		$	68,531		$	—		$	—		$	105,161
Accounts receivable, net		44,768			—			49,230			—			—			93,998
Inventory — phones and accessories, net		19,633			—			23,609			—			—			43,242
Prepaid expenses and other current assets		15,251			—			18,047			—			—			33,298

Total current assets		116,282			—			159,417			—			—			275,699
Property, plant & equipment, net		253,509			—			325,024			—			—			578,533
Debt issuance costs		12,444			—			22,164			—			—			34,608
Restricted cash		6,466			—			—			—			—			6,466
U.S. wireless licenses		—			—			402,393			—			—			402,393
Puerto Rico wireless licenses, net		—			—			54,159			—			—			54,159
Goodwill		4,187			—			—			—			—			4,187
Investment in subsidiaries		—			959,537			586,543			(738,102	)		(807,978	)		—
Other assets, net		17,521			—			1,899			—			—			19,420

Total	$	410,409		$	959,537		$	1,551,599		$	(738,102	)	$	(807,978	)	$	1,375,465


LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	15,332		$	—		$	10,115		$	—		$	—		$	25,447
Accrued expenses and other current liabilities		121,555			—			71,972			—			—			193,527
Payable to affiliates		—			—			75			—			—			75

Total current liabilities		136,887			—			82,162			—			—			219,049
Long-term debt		793,161			591,395			78,378			547,713			—			2,010,647
Deferred income taxes		1,478			—			149,930			—			—			151,408
Other liabilities		8,111			—			25,839			—			—			33,950
Intercompany		26,770			1,087,184			1,078,602			(244,474	)		(1,948,082	)		—
Minority interest in subsidiaries		—			—			4,898			—			—			4,898
Redeemable preferred stock		606,538			—			—			—			(606,538	)		—
Stockholders’ (deficit) equity:
Common stock		—			—			—			1,079			—			1,079
Additional paid-in capital		(818,497	)		—			818,497			36,787			—			36,787
Accumulated (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

F-33

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA

For the Fiscal Year Ended May 31, 2008

(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

Revenue	$	424,558		$	—		$	589,244		$	—		$	(12,427	)	$	1,001,375

Costs and expenses:
Cost of services		79,197			—			114,739			—			(11,755	)		182,181
Cost of equipment sold		36,192			—			93,713			—			—			129,905
Sales and marketing		42,805			—			59,037			—			—			101,842
General and administrative		99,580			—			101,380			—			(672	)		200,288
Depreciation and amortization		70,400			—			69,319			—			—			139,719
Loss on disposition of assets		1,001			—			2,049			—			—			3,050

		329,175			—			440,237			—			(12,427	)		756,985

Operating income		95,383			—			149,007			—			—			244,390

Income (loss) from investments in subsidiaries		—			25,053			(24,847	)		25,053			(25,259	)		—
Interest expense, net		(105,759	)		(52,818	)		(11,064	)		(57,768	)		37,200			(190,209	)
Loss on extinguishment of debt		—			—			(307	)		—			—			(307	)
Intercompany interest allocation		—			52,818			(73,386	)		57,768			(37,200	)		—

(Loss) income from continuing operations before income tax expense, minority interest in income of subsidiaries and income from equity investments		(10,376	)		25,053			39,403			25,053			(25,259	)		53,874
Income tax expense		(14,471	)		—			(10,722	)		—			—			(25,193	)

(Loss) income from continuing operations before minority interest in income of subsidiaries and income from equity investments		(24,847	)		25,053			28,681			25,053			(25,259	)		28,681
Minority interest in income of subsidiaries		—			—			(704	)		—			—			(704	)

(Loss) income from continuing operations		(24,847	)		25,053			27,977			25,053			(25,259	)		27,977
Net loss from discontinued operations		—			—			(2,924	)		—			—			(2,924	)

Net (loss) income	$	(24,847	)	$	25,053		$	25,053		$	25,053		$	(25,259	)	$	25,053

F-34

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA

For the Fiscal Year Ended May 31, 2008

(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

OPERATING ACTIVITIES:
Net (loss) income	$	(24,847	)	$	25,053		$	25,053		$	25,053		$	(25,259	)	$	25,053

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		70,400			—			69,319			—			—			139,719
Stock-based compensation		6,029			—			5,982			—			—			12,011
Excess tax benefits from stock-based compensation		—			—			(1,110	)		—			—			(1,110	)
Minority interest in loss of subsidiaries		—			—			704			—			—			704
Distributions paid to minority interest		—			—			(99	)		—			—			(99	)
Income from equity investments		—			—			12,605			—			—			12,605
Equity in undistributed earnings of subsidiaries		—			25,053			(24,847	)		25,053			(25,259	)		—
Loss on disposition of assets		1,001			—			4,973			—			—			5,974
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		52,360			106,007			(157,033	)		(73,614	)		78,418			6,138

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		104,943			156,113			(64,453	)		(23,508	)		27,900			200,995

INVESTING ACTIVITIES:
Proceeds from disposition of assets, net of cash expenses		72			76			—			—			—			148
Payment for acquisition		(12,519	)		—			—			—			—			(12,519	)
Payments for purchase of wireless spectrum		—			(3,610	)		—			—			—			(3,610	)
Capital expenditures		(71,572	)		(61,935	)		—			—			—			(133,507	)

NET CASH USED IN INVESTING ACTIVITIES		(84,019	)		(65,469	)		—			—			—			(149,488	)

FINANCING ACTIVITIES:
Repayment of debt		—			(45,000	)		(1,935	)		—			—			(46,935	)
Proceeds from the exercise of employee stock options		—			—			—			4,443			—			4,443
Excess tax benefits from stock-based compensation		—			—			—			1,110			—			1,110
Proceeds from issuance of common stock under employee stock purchase plan		—			—			—			296			—			296
Cash (paid to) received from affiliates		(15,451	)		(45,644	)		71,336			17,659			(27,900	)		—

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(15,451	)		(90,644	)		69,401			23,508			(27,900	)		(41,086	)

NET INCREASE IN CASH AND CASH EQUIVALENTS		5,473			—			4,948			—			—			10,421
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		31,157			—			63,583			—			—			94,740

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	36,630		$	—		$	68,531		$	—		$	—		$	105,161

F-35

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA

For the Fiscal Year Ended May 31, 2007

(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

Revenue	$	387,405		$	—		$	528,560		$	—		$	(4,069	)	$	911,896

Costs and expenses:
Cost of services		70,510			—			103,867			—			(1,981	)		172,396
Cost of equipment sold		35,178			—			89,779			—			—			124,957
Sales and marketing		39,887			—			55,087			—			—			94,974
General and administrative		91,416			—			84,883			—			(2,088	)		174,211
Depreciation and amortization		65,884			—			64,505			—			—			130,389
Loss (gain) on disposition of assets		1,764			—			(420	)		—			—			1,344

		304,639			—			397,701			—			(4,069	)		698,271

Operating income		82,766			—			130,859			—			—			213,625

(Loss) income from investments in subsidiaries		—			(31,619	)		(30,181	)		(31,619	)		93,419			—
Interest expense, net		(102,923	)		(66,814	)		27,650			(59,559	)		—			(201,646	)
Loss on extinguishment of debt		—			—			(990	)		—			—			(990	)
Gain on sale of equity investment		—			—			4,730			—			—			4,730
Intercompany interest allocation		—			66,814			(126,373	)		59,559			—			—

(Loss) income from continuing operations before income tax expense, minority interest in income of subsidiaries and income from equity investments		(20,157	)		(31,619	)		5,695			(31,619	)		93,419			15,719
Income tax (expense) benefit		(10,024	)		—			2,002			—			—			(8,022	)

(Loss) income from continuing operations before minority interest in income of subsidiaries and income from equity investments		(30,181	)		(31,619	)		7,697			(31,619	)		93,419			7,697
Minority interest in income of subsidiaries		—			—			(1,542	)		—			—			(1,542	)
Income from equity investments		—			—			804			—			—			804

(Loss) income from continuing operations		(30,181	)		(31,619	)		6,959			(31,619	)		93,419			6,959
Net loss from discontinued operations		—			—			(38,578	)		—			—			(38,578	)

Net (loss) income	$	(30,181	)	$	(31,619	)	$	(31,619	)	$	(31,619	)	$	93,419		$	(31,619	)

F-36

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA

For the Fiscal Year Ended May 31, 2007

(Amounts in thousands)


	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating Co.			Non-			Communications						Corp. and
	Corp.			LLC			Guarantors			Corp.			Eliminations			Subsidiaries

OPERATING ACTIVITIES:
Net (loss) income	$	(30,181	)	$	(31,619	)	$	(31,619	)	$	(31,619	)	$	93,419		$	(31,619	)

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		65,884			—			71,678			—			—			137,562
Stock-based compensation		4,363			—			4,210			—			—			8,573
Excess tax benefits from stock-based compensation		—			—			(1,288	)		—			—			(1,288	)
Minority interest in loss of subsidiaries		—			—			1,542			—			—			1,542
Distributions paid to minority interest		—			—			(479	)		—			—			(479	)
Income from equity investments		—			—			(804	)		—			—			(804	)
Equity in undistributed earnings of subsidiaries		—			(31,619	)		(30,181	)		(31,619	)		93,419			—
Distribution received from equity investment		—			—			386			—			—			386
Loss on disposition of assets		1,764			—			31,669			—			—			33,433
Loss on sale of equity investment		—			—			(4,730	)		—			—			(4,730	)
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		18,893			264,379			93,802			41,396			(419,904	)		(1,434	)

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		60,723			201,141			134,186			(21,842	)		(233,066	)		141,142

INVESTING ACTIVITIES:
Proceeds from disposition of assets, net of cash expenses		40			—			322			—			—			362
Proceeds from the sale of discontinued operations		—			—			83,298			—			—			83,298
Acquisition of minority interest, net		—			—			(2,500	)		—			—			(2,500	)
Payments for purchase of wireless spectrum		—			—			(14,925	)		—			—			(14,925	)
Capital expenditures		(55,248	)		—			(63,986	)		—			—			(119,234	)
Proceeds from the sale of equity investment		—			—			7,100			—			—			7,100

NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(55,208	)		—			9,309			—			—			(45,899	)

FINANCING ACTIVITIES:
Repayment of debt					(100,488	)		(1,334	)					—			(101,822	)
Debt issuance costs paid		(278	)		(284	)		—						—			(562	)
Proceeds from the exercise of employee stock options		—			—			—			5,248			—			5,248
Excess tax benefits from stock-based compensation		—			—			1,288						—			1,288
Proceeds from issuance of common stock under employee stock purchase plan		—			—						461						461
Cash received from (paid to) affiliates		(209	)		(100,369	)		(148,621	)		16,133			233,066			—

NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(487	)		(201,141	)		(148,667	)		21,842			233,066			(95,387	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		5,028						(5,172	)		—						(144	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		26,129			—			68,755			—			—			94,884

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	31,157		$	—		$	63,583		$	—		$	—		$	94,740

F-37


Note 12.	Segment Information

The Company’s Consolidated Financial Statements include three reportable segments: U.S. wireless, Puerto Rico wireless, and Puerto Rico broadband. The Company determines its reportable segments based on the aggregation criteria of SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (e.g., types of services offered and geographic location). U.S. wireless represents the Company’s wireless systems in the United States that it owns and manages. Puerto Rico wireless represents the Company’s wireless operations in Puerto Rico and the U.S. Virgin Islands. Puerto Rico broadband represents the Company’s offering of broadband services including switched voice, dedicated (private line) and other services in Puerto Rico. The Company measures the operating performance of each segment based on adjusted operating income. 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, loss on extinguishment of debt, gain on sale of equity investment, interest expense, net, loss on disposition of assets, litigation settlement expense, transaction costs, stock based compensation expense and depreciation and amortization.

The results of operations presented below exclude Centennial Dominicana due to its classification as discontinued operations (see Note 2). Prior to the classification of Centennial Dominicana as a discontinued operation, the results of its operations were included in the Puerto Rico wireless segment (previously the Caribbean wireless segment) and the Puerto Rico broadband segment (previously the Caribbean broadband segment).

F-38

Information about the Company’s operations in its three business segments for the fiscal years ended May 31, 2009, 2008 and 2007 is as follows:


	Fiscal Year Ended May 31,
	2009			2008			2007

U.S. wireless
Service revenue	$	479,417		$	447,011		$	392,048
Roaming revenue		59,631			58,299			65,480
Equipment sales		44,306			45,374			41,043

Total revenue		583,354			550,684			498,571
Adjusted operating income		235,809			212,768			184,658
Total assets		1,894,762			1,835,140			1,807,792
Capital expenditures		58,551			61,935			56,641
Puerto Rico wireless
Service revenue	$	312,073		$	307,596		$	283,135
Roaming revenue		10,064			6,682			4,602
Equipment sales		15,544			13,963			14,401

Total revenue		337,681			328,241			302,138
Adjusted operating income		107,774			118,065			101,659
Total assets		284,927			275,721			271,242
Capital expenditures		31,050			39,342			36,763
Puerto Rico broadband
Switched revenue	$	54,353		$	55,332		$	54,267
Dedicated revenue		77,438			71,227			61,389
Other revenue		10,412			8,318			7,185

Total revenue		142,203			134,877			122,841
Adjusted operating income		82,241			73,291			67,763
Total assets		216,169			254,580			193,286
Capital expenditures		31,615			32,230			21,805
Eliminations
Total revenue(1)	$	(11,648	)	$	(12,427	)	$	(11,654	)
Total assets(2)		(940,354	)		(989,976	)		(950,339	)
Consolidated
Total revenue	$	1,051,590		$	1,001,375		$	911,896
Adjusted operating income		425,824			404,124			354,080
Total assets		1,455,504			1,375,465			1,321,981
Capital expenditures		121,216			133,507			115,209


(1)		Elimination of intercompany revenue, primarily from Puerto Rico broadband to Puerto Rico wireless.

(2)		Elimination of intercompany investments.

F-39

Reconciliation of adjusted operating income to net income (loss)


	Fiscal Year Ended May 31,
	2009			2008			2007

Adjusted operating income	$	425,824		$	404,124		$	354,080
Depreciation and amortization		(136,170	)		(139,719	)		(130,389	)
Stock based compensation expense		(9,501	)		(12,011	)		(8,437	)
Transaction costs		(12,162	)		(2,004	)		(285	)
Litigation settlement expense		—			(2,950	)		—
Loss on disposition of assets		(473	)		(3,050	)		(1,344	)

Operating income		267,518			244,390			213,625
Interest expense, net		(173,274	)		(190,209	)		(201,646	)
Gain on sale of equity investment		—			—			4,730
Loss on extinguishment of debt		—			(307	)		(990	)
Income tax expense		(25,145	)		(25,193	)		(8,022	)
Minority interest in income of subsidiaries		(784	)		(704	)		(1,542	)
Income from equity investments		—			—			804

Income from continuing operations		68,315			27,977			6,959
Loss from discontinued operations		(1,020	)		(2,924	)		(38,578	)

Net income (loss)	$	67,295		$	25,053		$	(31,619	)


Note 13.	Quarterly Financial Information (unaudited)

Provided below is summarized quarterly financial data:


	Three Months Ended
	August 31,			November 30,			February 28,			May 31,
	2008			2008			2009			2009

Revenue	$	265,213		$	261,892		$	262,729		$	261,756
Operating income		62,926			51,113			70,046			83,433
Income tax expense		(10,056	)		(2,691	)		(7,508	)		(4,890	)
Income from continuing operations		7,823			3,744			19,519			37,229
Net loss from discontinued operations		(337	)		(451	)		(138	)		(94	)
Net income		7,486			3,293			19,381			37,135
Earnings (loss) per share:
Basic
Earnings per share from continuing operations	$	0.07		$	0.03		$	0.18		$	0.34
(Loss) per share from discontinued operations		0.00			(0.00	)		(0.00	)		(0.01	)

Net income per share	$	0.07		$	0.03		$	0.18		$	0.33
Diluted
Earnings per share from continuing operations	$	0.07		$	0.03		$	0.18		$	0.33
(Loss) per share from discontinued operations		0.00			(0.00	)		(0.00	)		(0.01	)

Net income per share	$	0.07		$	0.03		$	0.18		$	0.32

F-40


	Three Months Ended
	August 31,			November 30,			February 29,			May 31,
	2007			2007			2008			2008

Revenue	$	247,970		$	243,568		$	251,153		$	258,684
Operating income		63,277			54,135			61,614			65,364
Income tax expense		(8,261	)		(4,707	)		(7,302	)		(4,923	)
Income from continuing operations		6,280			1,450			6,633			13,614
Net loss from discontinued operations		(514	)		(525	)		(1,218	)		(667	)
Net income		5,766			925			5,415			12,947
Earnings (loss) per share:
Basic
Earnings per share from continuing operations	$	0.06		$	0.01		$	0.06		$	0.13
(Loss) per share from discontinued operations		0.00			(0.00	)		(0.01	)		(0.02	)

Net income per share	$	0.06		$	0.01		$	0.05		$	0.11
Diluted
Earnings per share from continuing operations	$	0.06		$	0.01		$	0.06		$	0.12
(Loss) per share from discontinued operations		0.00			(0.00	)		(0.01	)		(0.02	)

Net income per share	$	0.06		$	0.01		$	0.05		$	0.10

F-41

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CENTENNIAL COMMUNICATIONS CORP.


	By:	/s/ Michael J. Small

Michael J. Small

Chief Executive Officer and Director

Dated July 30, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



/s/ Michael J. Small Michael J. Small	Chief Executive Officer and Director (Principal Executive Officer)	July 30, 2009

/s/ Thomas J. Fitzpatrick Thomas J. Fitzpatrick	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	July 30, 2009

/s/ Francis P. Hunt Francis P. Hunt	Senior Vice President and Controller (Principal Accounting Officer)	July 30, 2009

/s/ J. Stephen Vanderwoude J. Stephen Vanderwoude	Chairman, Board of Directors	July 30, 2009

/s/ Darren C. Battistoni Darren C. Battistoni	Director	July 30, 2009

/s/ Michael R. Coltrane Michael R. Coltrane	Director	July 30, 2009

/s/ Anthony J. de Nicola Anthony J. de Nicola	Director	July 30, 2009

/s/ Thomas E. McInerney Thomas E. McInerney	Director	July 30, 2009

/s/ John J. Mueller John J. Mueller	Director	July 30, 2009

/s/ James P. Pellow James P. Pellow	Director	July 30, 2009

/s/ Raymond A. Ranelli Raymond A. Ranelli	Director	July 30, 2009

/s/ Scott N. Schneider Scott N. Schneider	Director	July 30, 2009

/s/ Paul H. Sunu Paul H. Sunu	Director	July 30, 2009


	Balance at		Charged to		Charged to						Balance
	beginning of		costs and		other						at end of
	fiscal Year		expenses		accounts			Deductions			fiscal Year

Fiscal year ended May 31, 2009 Allowance for Doubtful Accounts	$	7,105	$	18,337	$	(241	)	$	(19,320	)	$	5,881

Reserve for Inventory Obsolescence	$	2,344	$	834	$	—		$	(1,101	)	$	2,077

Fiscal year ended May 31, 2008 Allowance for Doubtful Accounts	$	7,571	$	17,950	$	146		$	(18,562	)	$	7,105

Reserve for Inventory Obsolescence	$	1,553	$	1,784	$	—		$	(993	)	$	2,344

Fiscal year ended May 31, 2007 Allowance for Doubtful Accounts	$	5,441	$	13,475	$	43		$	(11,388	)	$	7,571

Reserve for Inventory Obsolescence	$	1,398	$	811	$	—		$	(656	)	$	1,553


	Names
	Doing	State or Country of
Name of Company	Business	Organization
Bauce Communications of Beaumont, Inc.	*	Oregon
Bauce Communications, Inc.	*	Oregon
Centennial Beauregard Cellular LLC	*	Delaware
Centennial Benton Harbor Cellular Corp.	*	Delaware
Centennial Benton Harbor Holding Corp.	*	Delaware
Centennial Caldwell Cellular LLC	*	Delaware
Centennial Caribbean Holding LLC	*/	Delaware
Centennial Cellular Operating Co. LLC	*/	Delaware
Centennial Cellular Tri-State Operating Partnership	*	New York
Centennial Claiborne Cellular Corp.	*	Delaware
Centennial Clinton Cellular Corp.	*	Delaware
Centennial Florida Switch Corp.	**	Delaware
Centennial Hammond Cellular LLC	*	Delaware
Centennial Jackson Cellular Corp.	*	Delaware
Centennial Lafayette Communications LLC	*	Delaware
Centennial Mega Comm Holding Corp.	*	Delaware
Centennial Michiana License Co. LLC	*	Delaware
Centennial Michigan RSA 6 Cellular Corp.	*	Delaware
Centennial Michigan RSA 7 Cellular Corp.	*	Delaware
Centennial Morehouse Cellular LLC	*	Delaware
Centennial Puerto Rico License Corp.	**	Delaware
Centennial Puerto Rico Operations Corp.	**	Delaware
Centennial Randolph Cellular LLC	*	Delaware
Centennial Randolph Holding Corp.	*	Delaware
Centennial Southeast License Company LLC	*	Delaware
Centennial USVI Operations Corp.	**	Delaware
Century Beaumont Cellular Corp.	*	Delaware
Century Cellular Realty Corp.	*	Delaware
Century Elkhart Cellular Corp.	*	Delaware
Century Indiana Cellular Corp.	*	Delaware
Century Michiana Cellular Corp.	*	Delaware
Century Michigan Cellular Corp.	*	Delaware
Century Southbend Cellular Corp.	*	Delaware
Elkhart Cellular Telephone Company	*	Delaware
Elkhart Metronet Inc.	*	Indiana
Fillcare Reinsurance Company Limited	None	Bermuda
Lafayette Cellular Telephone Company	*	Delaware
Mega Comm LLC	*	Delaware
Michiana Metronet Inc.	*	Indiana
Southbend Metronet Inc.	*	Indiana
Zodiac Newco, LLC	None	Delaware



	By: /s/ Michael J. Small
	Name: Michael J. Small
	Title: Chief Executive Officer



	By: /s/ Thomas J. Fitzpatrick
	Name: Thomas J. Fitzpatrick
	Title: Chief Financial Officer