UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ~~AND~~ EXCHANGE ACT OF 1934

For the quarterly period ended ~~February~~August 2831, 2009


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~~File ~~number~~Number 0-19603

CENTENNIAL COMMUNICATIONS CORP.

(Exact name of registrant as specified in its charter)

Delaware		06-1242753
(State or other jurisdiction of		(~~IRS~~I.R.S. Employer
incorporation or organization)		Identification No.)

3349 Route 138 Wall, NJ 07719 (Address of principal executive offices,) ~~including~~(Zip ~~zip code~~Code)

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

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 ishas asubmitted ~~large~~electronically ~~accelerated~~and ~~filer,~~posted anon ~~accelerated~~its corporate ~~filer~~Web site, a ~~non-accelerated~~if ~~filer~~any, orevery aInteractive ~~smaller~~Data ~~reporting~~File ~~company.~~required to be submitted and posted ~~See~~pursuant ~~the~~to ~~definitions~~Rule 405 of ~~“large accelerated~~Regulation S-T ~~filer,”~~(§ ~~“accelerated~~229.405 ~~filer”~~of ~~and~~this ~~“smaller~~chapter) ~~reporting~~during ~~company”~~the inpreceding ~~Rule~~12 months (or ~~12b-2~~for ofsuch shorter period that the ~~Exchange~~registrant ~~Act.~~was ~~(Check~~required ~~one~~to submit and post such files):. Yes o No o

~~Large~~ Indicate ~~accelerated~~by ~~filer~~check þmark ~~Accelerated~~whether ~~filer~~the oregistrant ~~Non-~~is a large accelerated filer, oan ~~(Do~~accelerated filer, ~~not~~a ~~check~~non-accelerated iffiler, or a smaller reporting company). ~~Smaller~~See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” oin Rule 12b-2 of the Exchange Act.

Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o
(Do not check if a smaller reporting company)

Smaller reporting company o

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common Stock — ~~110~~111,~~215~~160,~~679~~457 outstanding shares as of ~~April 3~~October 5, 2009

TABLE OF CONTENTS

	Part I — Financial Information
Item 1.	Financial Statements	3	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40	36
Item 4.	Controls and Procedures	40	37
	Part II — Other Information
Item 1.	Legal Proceedings	41	38
Item 1A.	Risk Factors	41	38
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42	38
Item 3.	Defaults Upon Senior Securities	42	38
Item 4.	Submission of Matters to a Vote of Security Holders	42	38
Item 5.	Other Information	42	38
Item 6.	Exhibits	43	38
EX-31.1: CERTIFICATION
EX-31.1
EX-31.2: CERTIFICATION
EX-31.2
EX-32.1: CERTIFICATION
EX-32.1
EX-32.2: CERTIFICATION
EX-32.2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollar amounts in thousands, except share data)

	February 28,			May 31,
	August 31,			May 31,
	2009			~~2008~~2009
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	~~159~~247,~~202~~626		$	~~105~~217,~~161~~494
Accounts receivable, less allowance for doubtful accounts of $7,065 and $7,105, respectively		101,080			93,998
Accounts receivable, less allowance for doubtful accounts of $6,261 and $5,881, respectively		109,482			105,474
Inventory — phones and accessories, net		4727,~~910~~499			4331,~~242~~104
Prepaid expenses and other current assets		3223,~~902~~859			3322,~~298~~131
Total Current Assets		~~341~~408,~~094~~466			~~275~~376,~~699~~203
Property, plant and equipment, net		~~558~~564,~~500~~331			~~578~~572,~~533~~131
Debt issuance costs, less accumulated amortization of $36,864 and $30,939, respectively		28,683			34,608
Debt issuance costs, less accumulated amortization of $40,825 and $38,843, respectively		24,722			26,704
Restricted cash		~~5,228~~568			~~6,466~~124
U.S. wireless licenses		402,395			402,~~393~~395
Puerto Rico wireless licenses		54,159			54,159
Puerto Rico wireless licenses, net		54,159			54,159
Goodwill		10,989			410,~~187~~989
Cable facility, net		3,070			3,250
Customer lists, net		4,819			4,896
Customer lists, net		4,972			9,449
Cable facility, net		2,950			3,010
Other assets		47,~~905~~504			64,~~721~~893
TOTAL ASSETS	$	1,~~413~~480,~~995~~903		$	1,~~375~~455,~~465~~504
LIABILITIES AND STOCKHOLDERS’ DEFICIT
CURRENT LIABILITIES:
Accounts payable		14,485			25,447
Current portion of long-term debt		275,000			—
Accrued expenses and other current liabilities		178,183			193,527
Accounts payable		21,751			12,679
Payable to affiliates		—			75
Accrued expenses and other current liabilities		163,795			182,544
Total Current Liabilities		~~192~~460,~~668~~546			~~219~~195,~~049~~223
Long-term debt		21,~~017~~750,~~886~~524			2,~~010~~021,~~647~~180
Deferred income taxes		~~163~~165,~~269~~064			~~151~~155,~~408~~526
Other liabilities		3330,~~078~~659			3331,~~950~~968
Minority interest in subsidiaries		1,239			4,898
Commitments and contingencies (see Note 8)
STOCKHOLDERS’ DEFICIT:
Preferred stock, $0.01 par value per share, 10,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $0.01 par value per share, 240,000,000 shares authorized; issued 110,267,206 and 107,892,406 shares, respectively; and outstanding 110,196,703 and 107,821,903 shares, respectively		1,103			1,079
Common stock, $0.01 par value per share, 240,000,000 shares authorized; issued 111,219,613 and 111,165,870 shares, respectively; and outstanding 111,419,110 and 111,095,367 shares, respectively		1,112			1,112
Additional paid-in capital		5564,~~675~~503			3662,~~787~~197
Accumulated deficit		(1991,~~047,970~~377	)		(1,~~078~~010,~~130~~835	)
Accumulated other comprehensive loss		(~~1,876~~480	)		(31,~~146~~232	)
		(993,068	)		(1,043,410	)
Less: cost of 70,503 common shares in treasury		(1,077	)		(1,077	)
Total Stockholders’ Deficit		(994,145	)		(1,044,487	)
Total Stockholders’ Deficit attributable to Centennial		(927,319	)		(949,835	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,413,995		$	1,375,465
Noncontrolling interest in subsidiaries		1,429			1,442
Total Stockholders’ Deficit		(925,890	)		(948,393	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT	$	1,480,903		$	1,455,504

See notes to Condensed Consolidated Financial Statements.

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollar amounts in thousands, except per share data)

	Three Months Ended						~~Nine Months Ended~~
	February 28,			February 29,			February 28,			February 29,
	August 31,			August 31,
	2009			2008			~~2009~~			~~2008~~
REVENUE:
Service revenue	$	247,~~415~~089		$	~~233~~249,~~361~~003		$	~~743,669~~		$	~~698,457~~
Equipment sales		1511,~~314~~835			1716,~~792~~210			~~46,165~~			~~44,234~~
		262,729			251,153			789,834			742,691
		258,924			265,213
COSTS AND EXPENSES:
Cost of services (exclusive of depreciation and amortization shown below)		4651,~~383~~923			4550,~~034~~676			~~148,300~~			~~135,975~~
Cost of equipment sold		3731,~~737~~251			3442,~~047~~149			~~120,729~~			~~95,831~~
Sales and marketing		2423,~~180~~470			25,~~503~~869			~~78,698~~			~~77,817~~
General and administrative		5148,~~595~~139			4948,~~573~~096			~~154,547~~			~~149,438~~
Depreciation and amortization		3231,~~366~~687			35,~~262~~544			~~103,019~~			~~102,873~~
Loss on disposition of assets		422			120			456			1,731
Loss (gain) on disposition of assets		122			(47	)
		192,683			189,539			605,749			563,665
		186,592			202,287
Operating income		7072,~~046~~332			6162,~~614~~926			~~184,085~~			~~179,026~~
Interest expense, net		(4239,~~735~~952	)		(4744,~~508~~880	)		~~(132,163~~	)		~~(143,901~~	)
Income from continuing operations before income tax expense and minority interest in income of subsidiaries		27,311			14,106			51,922			35,125
Income from continuing operations before income tax expense		32,380			18,046
Income tax expense		(712,~~508~~692	)		(710,~~302~~056	)		~~(20,255~~	)		~~(20,270~~	)
Income from continuing operations before minority interest in income of subsidiaries		19,803			6,804			31,667			14,855
Income from continuing operations		19,688			7,990
Minority interest in income of subsidiaries		(284	)		(171	)		(581	)		(492	)
Net loss from discontinued operations		(94	)		(337	)
Income from continuing operations		19,519			6,633			31,086			14,363
Net income		19,594			7,653
Net loss from discontinued operations		(138	)		(1,218	)		(926	)		(2,257	)
Less: Net income attributable to noncontrolling interest		(136	)		(167	)
Net income	$	19,381		$	5,415		$	30,160		$	12,106
Net income attributable to Centennial	$	19,458		$	7,486
Earnings per share:
Basic
Earnings per share from continuing operations	$	0.18		$	0.0607		$	~~0.29~~		$	~~0.13~~
Loss per share from discontinued operations		(0.00	)		(0.0100	)		~~(0.01~~	)		~~(0.02~~	)
Net income per share	$	0.18		$	0.05		$	0.28		$	0.11
Net income per share attributable to Centennial	$	0.18		$	0.07
Diluted
Earnings per share from continuing operations	$	0.1817		$	0.0607		$	~~0.28~~		$	~~0.13~~
Loss per share from discontinued operations		(0.00	)		(0.0100	)		~~(0.01~~	)		~~(0.02~~	)
Net income per share	$	0.18		$	0.05		$	0.27		$	0.11
Net income per share attributable to Centennial	$	0.17		$	0.07
Weighted-average number of shares outstanding:
Basic		~~109~~111,~~318~~135			~~107~~108,~~755~~038			~~108,550~~			~~107,457~~
Diluted		~~110~~112,~~992~~005			~~109~~110,~~987~~200			~~110,360~~			~~110,240~~

See notes to Condensed Consolidated Financial Statements.

CENTENNIAL COMMUNICATIONS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollar amounts in thousands)

	Nine Months Ended
	Three Months Ended
	February 28,			February 29,
	August 31,			August 31,
	2009			2008
OPERATING ACTIVITIES:
Net income	$	3019,~~160~~594		$	127,~~106~~653
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		~~103~~31,~~019~~687			~~102~~35,~~873~~544
Stock-based compensation		92,~~019~~029			82,~~548~~870
Excess tax benefits from stock-based compensation		(~~1,413~~16	)		(~~1,113~~102	)
Minority interest in income of subsidiaries		581			492
Loss (gain) on disposition of assets		122			(47	)
Distributions paid to minority interest		(4,240	)		—
Changes in assets and liabilities		(5,666	)		(7,130	)
Loss on disposition of assets		456			3,988
Net cash provided by operating activities		47,750			38,788
Changes in assets and liabilities		(14,754	)		(5,000	)
Net cash provided by operating activities		122,828			121,894
INVESTING ACTIVITIES:
Proceeds from disposition of assets, net of cash expenses		5022			9121
Payment for acquisition, net of cash acquired		—			(12,519	)
Payments for purchase of wireless spectrum		—			(2	)
Payments for purchase of wireless spectrum		(2	)		(3,604	)
Capital expenditures		(17,008	)		(20,664	)
Capital expenditures		(74,313	)		(75,595	)
Net cash used in investing activities		(16,986	)		(20,645	)
Net cash used in investing activities		(74,265	)		(91,627	)
FINANCING ACTIVITIES:
Repayment of debt		(~~2,219~~898	)		(~~46,417~~724	)
Proceeds from the exercise of stock options		~~6,284~~250			41,~~209~~161
Proceeds from issuance of common stock under employee stock purchase plan		—			296
Excess tax benefits from stock-based compensation		16			102
Excess tax benefits from stock-based compensation		1,413			1,113
Net cash (used in) provided by financing activities		(632	)		539
Net cash provided by (used in) financing activities		5,478			(40,799	)
Net increase in cash and cash equivalents		30,132			18,682
Net increase (decrease) in cash and cash equivalents		54,041			(10,532	)
Cash and cash equivalents, beginning of period		217,494			105,161
Cash and cash equivalents, beginning of period		105,161			94,740
Cash and cash equivalents, end of period	$	247,626		$	123,843
Cash and cash equivalents, end of period	$	159,202		$	84,208
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid during the period for:
Cash (paid) received during the period for:
Interest	$	~~141~~(52,~~340~~810	)	$	~~156~~(58,~~340~~556	)
Income taxes	$	~~3,763~~26		$	~~10,048~~(384	)
NON-CASH TRANSACTION:
Fixed assets acquired under capital leases	$	64,~~607~~223		$	61,~~021~~938
Acquisition of fixed assets	$	—		$	4,140

See notes to Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ~~(UNAUDITED) (Dollar amounts in thousands, except per share amounts)~~

(UNAUDITED)
(Dollar amounts in thousands, except per share amounts)

NOTE 1. INTERIM FINANCIAL STATEMENTS

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, these Condensed Consolidated Financial Statements do not include all disclosures required by GAAP. The results for the interim periods are not necessarily indicative of results for the full year. These Condensed Consolidated Financial Statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s May 31, ~~2008~~2009 Annual Report on Form 10-K, filed on July 30, ~~2008~~2009, which includes a summary of significant accounting policies and other disclosures. In the opinion of management, the accompanying interim unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting only of normal recurring items) necessary to present fairly the condensed consolidated financial position of Centennial Communications Corp. and Subsidiaries (the “Company” or “Centennial”) as of ~~February~~August 2831, 2009 and the results of its consolidated operations and consolidated cash flows for the three ~~and nine-~~month periods ended ~~February~~August 2831, 2009 and ~~February 29,~~ 2008.

On November 7, 2008, ~~the~~Centennial ~~Company~~ entered into ana ~~Agreement~~merger ~~and~~agreement ~~Plan~~with AT&T providing for the acquisition of ~~Merger~~Centennial by AT&T (the “Merger ~~Agreement~~”) ~~with~~or, the “AT&T ~~Inc~~Transaction”). On October 13, 2009, AT&T and Centennial announced that they had entered into a ~~Delaware~~consent ~~corporation~~decree (“with the Department of Justice which allowed the Merger to proceed, while requiring that AT&T”) divest Centennial’s operations in eight service areas in Louisiana and ~~Independence~~Mississippi. ~~Merger~~The ~~Sub~~eight ~~Inc~~service areas are Alexandria, La., ~~a Delaware~~Lafayette, ~~corporation~~La., ~~and~~LA-3 a(DeSoto), ~~direct~~LA-5 ~~wholly~~(Beauregard), LA-~~owned~~6 ~~subsidiary~~(Iberville), ofLA-7 ~~AT&T~~(West Feliciana), MS-8 (~~“Merger~~Claiborne) ~~Sub”~~and MS-9 (Copiah). Under the terms of the ~~Merger~~merger ~~Agreement~~agreement, Centennial ~~Merger~~stockholders ~~Sub~~would ~~will~~receive be$8.50 ~~merged~~per ~~with~~share ~~and~~in ~~into~~cash. ~~the~~The ~~Company,~~Merger ~~with~~was ~~the~~approved ~~Company~~by ~~continuing~~Centennial’s asstockholders in February 2009, but remains subject to approval by the ~~surviving~~Federal Communications ~~corporation~~Commission and ato ~~direct~~other ~~wholly-owned~~customary ~~subsidiary~~closing ofconditions. AT&T ~~(the~~and Centennial expect “that, assuming timely satisfaction or waiver of all remaining closing conditions, the Merger”) will be completed early in the fourth quarter of calendar year 2009.

~~Subject~~Certain toprior ~~the~~period ~~terms and conditions set forth in the Merger Agreement~~information, atprimarily ~~the~~relating ~~effective~~to ~~time of~~ the ~~Merger,~~classification ~~each~~and ~~outstanding~~presentation ~~share~~ of ~~common stock of the Company (the “Company Common Stock”),~~ ~~other~~non-controlling ~~than those shares held in the treasury of the Company and those shares with respect to which appraisal rights are properly exercised under the Delaware General Corporation Law~~interest, ~~will~~previously ~~be converted~~referred ~~into and thereafter represent the right~~ to ~~receive~~as ~~$8.50~~minority ~~in cash, without~~ interest~~. Each outstanding option to acquire Company Common Stock will be cancelled at the effective time of the Merger~~, ~~and~~has ~~the~~been ~~option~~reclassified ~~holder will receive a cash payment, without interest, equal~~ to ~~the number of~~ ~~shares~~conform ~~of Company Common Stock subject~~ to the ~~option~~current ~~multiplied~~period ~~by the excess (if any) of $8~~presentation.50 ~~over the exercise price per share of the option.~~

Completion of the Merger is not subject to a financing condition, but is subject to (i) approval of the Merger by the Company’s stockholders (which was obtained on February 24, 2009), (ii) conditions relating to approval by the Federal Communications Commission (“FCC”), (iii) expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“the HSR Act”), and (iv) other customary conditions to closing. The Company anticipates that the Merger will be completed by mid-year calendar 2009, assuming satisfaction or waiver of all of the conditions to the Merger.

On December 22, 2008, the Company and AT&T received requests for additional information from the Antitrust Division of the U.S. Department of Justice (the “DOJ”), regarding the proposed Merger. The information requests, also known as a “second request,” were issued under the HSR Act and will extend the waiting period imposed by the HSR Act until 30 days after the Company and AT&T have substantially complied with the second request, unless that period is voluntarily extended by the parties or terminated sooner by the DOJ. The second request issued to Centennial seeks information relating to its wireline operations in Puerto Rico and its wireless operations in certain portions of Louisiana, Mississippi, Puerto Rico and the U.S. Virgin Islands.

The Merger Agreement contains certain termination rights for each of the Company and AT&T. Upon termination of the Merger Agreement under certain circumstances, the Company may be obligated to make a termination payment to AT&T comprised of a termination fee of $28.5 million and reimbursement of out-of-pocket fees and expenses not exceeding $7.0 million. In addition, upon termination of the Merger Agreement under certain circumstances, an existing roaming agreement between AT&T Mobility LLC and Centennial Cellular Operating Co. LLC will be amended to extend its term and effectuate certain rate changes for the benefit of the Company.

NOTE 2. OTHER INTANGIBLE ASSETS AND GOODWILL

Other Intangible Assets

The following table presents the intangible assets not subject to amortization:

					Impairment
	As of		As of
	As of		Assets		Loss		As of
	August 31, 2009		May 31, 2009
	June 1, 2008		Acquired		Recognized		February 28, 2009
U.S. wireless licenses	$	402,395	$	402,395
U.S. wireless licenses	$	402,393	$	2	$	—	$	402,395
Puerto Rico wireless licenses		54,159		54,159
Puerto Rico wireless licenses		54,159		—		—		54,159
Total	$	456,554	$	456,554
Total	$	456,552	$	2	$	—	$	456,554

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 Federal Communications Commission (“FCC”) for a fixed ~~time~~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 Statement of Financial Accounting Standards (“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 SEC Staff Announcement “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.

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 table presents other intangible assets subject to amortization:

As of February 28, 2009

As of May 31, 2008

As of August 31, 2009

As of May 31, 2009

Estimated

Gross

Useful

Carrying

Accumulated

Carrying

Accumulated

Life

Amount

Amortization

Amount

Amortization

Cable facility

25 years

6,000

23,~~930~~050

6,000

2,~~750~~990

Customer lists

10 years

6,500

1,~~528~~681

106,~~295~~500

~~846~~1,604

7 Other intangible assets amortization expense was $137 for the three months ended August 31, 2009. Based solely on the finite lived intangible assets existing at August 31, 2009, amortization expense is estimated to be $747 for the remainder of fiscal 2010 and $840 per fiscal year for each of the next five fiscal years.

Other intangible assets amortization expense was $137 and $862 for the three and nine months ended February 28, 2009, respectively. Based solely on the finite lived intangible assets existing at February 28, 2009, amortization expense is estimated to be $223 for the remainder of fiscal 2009 and $890 per fiscal year for each of the next five fiscal years.

Goodwill

The amount of goodwill relates to the Puerto Rico broadband segment and was $10,989 ~~and $4,187~~ at ~~February 28~~August 31, 2009 and May 31, ~~2008, respectively. See Note 7 for details related to the decrease in customer lists and increase in goodwill at February 28,~~ 2009.

NOTE 3. DEBT

Long-term debt consisted of the following:

	As of			As of
	February 28, 2009			May 31, 2008
	August 31, 2009			May 31, 2009
Senior Secured Credit Facility — Term Loans	$	550,000		$	550,000
8 1/8% Senior Unsecured Notes due 2014 (the “2014 Senior Notes”)		325,000			325,000
10 1/8% 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 $1,915 and $2,287, respectively		348,085			347,713
Senior Unsecured Holdco Floating Rate Notes due 2013 (the “2013 Holdco Floating Rate Notes”), net of unamortized discount of $1,665 and $1,790, respectively		348,335			348,210
10% Senior Unsecured Holdco Fixed Rate Notes due 2013 (the “2013 Holdco Fixed Rate Notes”)		200,000			200,000
Capital Lease Obligations		8391,~~390~~045			7686,~~146~~692
Financing Obligation — Tower Sale		11,~~411~~144			11,~~788~~278
Total Long-Term Debt		2,~~017~~025,~~886~~524			2,~~010~~021,~~647~~180
Current Portion of Long-Term Debt		—(275,000	)		—
Net Long-Term Debt	$	21,~~017~~750,~~886~~524		$	2,~~010~~021,~~647~~180

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 ~~fiscal year~~February 2011, with an original aggregate principal amount of $600,000, of which $550,000 remains outstanding at ~~February~~August 2831, 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 is 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’s useable commitments under the six-year revolving credit facility are likely $147,500. The Company does not expect this change to have a material impact on its liquidity or consolidated financial statements. At February 28, 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~~7 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 2.15% as of February 28, 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.

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 August 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 1.23% as of August 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.

On September 3, 2009, the Company made a $52,500 mandatory excess cash flow payment under the Senior Secured Credit Facility, which reduced the principal balance of the term loan thereunder to $497,500.

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 (20.2580% as of ~~February~~August 2831, 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 during the ~~nine~~three months ended ~~February 28~~August 31, 2009 consist of the following:

				Collar			Collar			~~Collar~~
				Swap			Fixed			Fixed
				Fixed			Fixed
	Variable Interest			~~Fixed~~Interest			Interest			~~Interest~~
	Rate Loan	Amount		~~Interest~~Rate			Rate			~~Rate~~Trade			~~Trade~~Effective		~~Effective~~Expiration		~~Expiration~~
	Being Hedged	Hedged		~~Rate~~Floor			~~Floor~~Cap			~~Cap~~Date			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
November 2008 CCOC
2008 CPROC Collar	Senior Secured Credit Facility	$	250,000		2.43	%		4.00	%		9/26/2008			9/30/2008		6/30/2009
Collar 1	Senior Secured Credit Facility	$	200,000		—			1.76	%		2.25	%		11/25/2008		12/31/2008		9/30/2009
November 2008 CPROC Collar	Senior Secured Credit Facility	$	35,500		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
November 2008 CCOC Collar 2	Senior Secured Credit Facility	$	25,000		1.76	%		2.25	%		11/25/2008			12/31/2008		9/30/2009
2008 CPROC Collar	Senior Secured Credit Facility	$	250,000		—			2.43	%		4.00	%		9/26/2008		9/30/2008		6/30/2009
November 2008 CCOC Collar 3	Senior Secured Credit Facility	$	39,500		1.81	%		2.25	%		11/25/2008			11/30/2008		8/31/2009
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
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
2008 Holdco Swap	2013 Holdco Floating Rate Notes	$	200,000		2.85	%		—			—			5/23/2008		7/1/2008		4/1/2009

~~At February 28, 2009, $750,000 of the Company’s $900,000 of variable rate debt was hedged by~~8 ~~interest rate swaps or collars described above. All the Company’s swaps and collars have been designated as cash flow hedges.~~

AtTable February 28, 2009, the fair value of the swaps and collars was a liability of $2,968, which is included in other liabilities in the condensed consolidated balance sheets. For the nine months ended February 28, 2009, the Company recorded income of $1,270, net Contents

At August 31, 2009, $260,500 of the Company’s $900,000 of variable rate debt was hedged by interest rate collars described above. All the Company’s collars have been designated as cash flow hedges. As of September 30, 2009, all of the Company’s swaps and collars had expired.

At August 31, 2009, the fair value of the collars was a liability of $774 which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheet. For the three months ended August 31, 2009, the Company recorded income of $752, net of tax, to accumulated other comprehensive loss attributable to the change in the fair value of the 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 Notes 4 and 7 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 August 31, 2009 are summarized as follows:


August 31, 2010	$	274,650
August 31, 2011		274,799
August 31, 2012		26
August 31, 2013		1,050,368
August 31, 2014		325,637
August 31, 2015 and thereafter		101,709

		2,027,189
Less: unamortized discount		(1,665	)

	$	2,025,524

Interest expense, as reflected on the Condensed Consolidated Financial Statements, has been partially offset by interest income. The gross interest expense for the three months ended August 31, 2009 and 2008 was approximately $39,970 and $45,358, respectively.

NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reported in the condensed 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:


	August 31, 2009				May 31, 2009
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Long-term debt	$	2,025,524	$	2,031,578	$	2,021,180	$	2,056,095
Derivative financial instruments:
Interest rate swap and collar agreements liability	$	774	$	774	$	1,952	$	1,952

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 August 31, 2009 and May 31, 2009 were estimated using a quote from the broker. See Note 7 for a discussion of the framework the Company uses for determining fair value of its derivative instruments.

ofNOTE 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 realized5. ~~See Note 6 for a~~TAXES ~~discussion of the framework the Company uses for determining fair value of its derivative instruments.~~

~~Under~~In ~~certain~~accordance ofwith ~~the~~SFAS ~~agreements~~No. 109, ~~relating~~Accounting tofor ~~long-term~~Income ~~debt~~Taxes (“SFAS 109”), ~~the~~Accounting Principles ~~Company~~Board is(“APB”) ~~required~~Opinion ~~to maintain~~No. 28, ~~certain~~Interim ~~financial~~Financial ~~and~~Reporting ~~operating~~(“APB ~~covenants~~28”), and isFinancial Accounting ~~limited~~Standards inBoard ~~its~~(“FASB”) ~~ability~~Interpretation toNo. 18, ~~among~~Accounting ~~other things,~~for ~~incur~~Income ~~additional~~Taxes ~~indebtedness~~in ~~and~~Interim Periods ~~enter~~— ~~into~~An ~~transactions~~Interpretation ~~with~~of ~~affiliates~~APB Opinion No. 28 ~~Under~~(“FIN ~~certain circumstances~~18”), the Company ishas ~~prohibited~~recorded its tax provision from ~~paying~~continuing ~~cash~~operations ~~dividends~~for onthe ~~its~~three ~~common~~months ~~stock~~ended ~~under certain~~August 31, of2009 ~~such~~based ~~agreements.~~on ~~The~~its projected ~~Company~~annual isworldwide ~~not~~effective ~~aware~~tax ofrate ~~any~~(the ~~instances~~“effective oftax ~~noncompliance~~rate”) of ~~financial covenants~~39.1%.

The ~~aggregate~~Company’s ~~annual~~effective ~~principal~~tax ~~payments~~rate ~~for~~of ~~the~~39.1% ~~next~~is ~~five~~primarily ~~years~~due ~~and~~to ~~thereafter~~U.S. ~~under~~federal ~~the~~taxes and state taxes net of federal tax benefit. The Company’s ~~long-term~~effective ~~debt~~tax atrate ~~February 28,~~also ~~2009~~reflects ~~are~~its ~~summarized~~expectation that asit ~~follows:~~will claim 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.

February 28, 2010	$	—
February 28, 2011		549,512
February 29, 2012		—
February 28, 2013		550,244
February 28, 2014		825,566
February 28, 2015 and thereafter		94,479
		2,019,801
Less: unamortized discount		(1,915	)
	$	2,017,886

On June 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48, which provides clarification with respect to the accounting for uncertainty in income taxes, contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS 109. 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 is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

~~Interest~~Tax ~~expense,~~positions asare ~~reflected~~analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the ~~Condensed~~conclusion ~~Consolidated~~of ~~Financial~~federal ~~Statements~~and state audits, ~~has~~expiration ~~been~~of the statute of ~~partially~~limitations ~~offset~~for bythe ~~interest~~assessment ~~income~~of tax, case law and emerging legislation. The ~~gross~~Company’s ~~interest~~effective tax ~~expense~~rate ~~was~~includes ~~$42,774~~the effect of tax contingency reserves and ~~$133,031~~changes ~~for~~to the reserves in accordance ~~three~~with ~~and~~FIN ~~nine~~48. ~~months~~Management ~~ended~~has ~~February 28,~~concluded ~~2009,~~that ~~respectively,~~it ~~and~~is reasonably possible that the unrecognized tax benefits may decrease by approximately $47599 within the next 12 months from $11,~~959~~259 ~~and~~to $~~146~~10,~~569~~660. The ~~for~~decrease ~~the~~is ~~three~~primarily related to foreign and ~~nine~~state ~~months~~taxes ~~ended~~that ~~February 29,~~have ~~2008,~~expiring ~~respectively~~statutes of limitations.

NOTE 4. TAXES

In accordance with SFAS No. 109, Accounting for Income Taxes (“SFAS 109”), Accounting Principles Board (“APB”) Opinion No. 28, Interim Financial Reporting (“APB 28”), and Financial Accounting Standards Board (“FASB”) Interpretation No. 18, Accounting for Income Taxes in Interim Periods — An Interpretation of APB Opinion No. 28 (“FIN 18”), the Company has recorded its tax provision from continuing operations for the three and nine months ended February 28, 2009 based on its projected annual worldwide effective tax rate (the “effective tax rate”) of 38.3%.

The Company’s effective tax rate of 38.3% is primarily due to U.S. federal taxes and state taxes net of federal tax benefit. The Company’s effective tax rate also reflects its expectation that it will claim a foreign tax credit in the U.S. for the entire amount of foreign taxes the Company pays. The Company’s effective tax rate for the nine months ended February 28, 2009 was also affected by a one-time decrease in deferred tax assets in the amount of $2,834 as a result of the Company claiming a foreign tax credit in the U.S rather than a tax deduction for Puerto Rico taxes paid and a reduction in tax reserves in the amount of $2,528.

On June 1, 2007, the Company adopted the provision of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48, which provides clarification with respect to the accounting for uncertainty in income taxes, contains a two-step approach to recognizing and measuring uncertain tax positions accounted for in accordance with SFAS 109. 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 is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.

Tax positions are analyzed on a quarterly basis and adjusted based upon changes in facts and circumstances, such as the conclusion 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 effect of tax contingency reserves and changes to the reserves in accordance with FIN 48. Management has concluded that it is reasonably possible that the unrecognized tax benefits may decrease by approximately $3,537 within the next 12 months from $13,305 to $9,768. The decrease is primarily related to foreign and state taxes that have expiring statutes of limitations.

NOTE 56. DISCONTINUED OPERATIONS

On March 13, 2007, the Company sold its wholly-owned subsidiary, All American Cables and Radio Inc. (“Centennial Dominicana”), to Trilogy International Partners (“Trilogy”) for approximately $83,298 in cash, which consisted of a purchase price of $81,000 and ana ~~estimated~~ 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 No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“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. The net loss from discontinued operations for the three ~~and nine~~ months ended ~~February~~ August 2831, 2009 ~~was $138~~ and ~~$926, respectively, and for the three and nine months ended February 29,~~ 2008 was $~~1,218~~94 and $2337,~~257,~~ respectively.

NOTE 67. RECENT ACCOUNTING PRONOUNCEMENTS

In ~~April~~June ~~2008~~2009, the FASB issued ~~FASB~~SFAS ~~Staff Position (“FSP”)~~ No. ~~142-3~~168, ~~Determination~~The ofFASB ~~the Useful~~Accounting ~~Life~~Standards ofCodification tm ~~Intangible~~and ~~Assets~~the ~~(“FSP~~Hierarchy ~~142-3”).~~of ~~FSP~~Generally ~~142-3~~Accepted ~~removes~~Accounting ~~the~~Principles, ~~requirement~~a ~~under SFAS 142 to~~replacement ~~consider~~of ~~whether~~FASB anStatement ~~intangible~~No. 162 ~~asset~~(“SFAS ~~can~~168”), bewhich ~~renewed~~establishes ~~without~~the ~~substantial~~FASB ~~cost~~Accounting ~~of material~~Standards ~~modifications~~Codification toas the ~~existing~~source ~~terms~~of ~~and~~authoritative ~~conditions,~~accounting ~~and~~principles ~~replaces~~recognized itby ~~with~~the aFASB ~~requirement~~to ~~that an~~be ~~entity~~applied ~~consider its own historical experience~~ in ~~renewing~~the ~~similar~~preparation ~~arrangements, or a consideration~~ of ~~market~~financial ~~participant~~statements ~~assumptions~~ in ~~the~~conformity ~~absence~~with ofgenerally ~~historical~~accepted ~~experience~~accounting principles. ~~This~~SFAS ~~FSP~~168 ~~also~~explicitly ~~requires entities~~recognizes torules ~~disclose~~and ~~information~~interpretive ~~that~~releases ~~enables users~~ of ~~financial statements to assess~~ the ~~extent~~SEC tounder federal ~~which~~securities ~~the~~laws ~~expected~~as ~~future~~authoritative ~~cash~~GAAP ~~flows~~for ~~associated~~SEC ~~with~~registrants. ~~the~~SFAS ~~asset~~168 ~~are~~will ~~affected~~become byeffective ~~the~~September 15, ~~entity’s~~2009 ~~intent~~ and~~/or~~ ~~ability to renew or extend the arrangement. The guidance~~ will ~~become~~not ~~effective~~have asa ofmaterial ~~the beginning~~effect ofon the Company’s ~~first~~consolidated ~~fiscal~~results ~~year~~of ~~beginning after December 15~~operations, ~~2008. The Company is~~ ~~evaluating~~consolidated ~~the~~financial ~~effect~~position ~~this~~and ~~standard~~consolidated ~~will~~cash ~~have on its financial statements~~flows.

In ~~March~~June ~~2008~~2009, the FASB issued SFAS No. ~~161~~167, ~~Disclosures~~Amendments ~~about~~to ~~Derivative~~FASB ~~Instruments~~Interpretation ~~and Hedging~~No. 46(R) ~~Activities~~ (“SFAS ~~161~~ 167”)., ~~SFAS~~which ~~161~~amends isFASB ~~intended~~Interpretation No. 46 (revised December 2003) to ~~improve~~address ~~financial~~the ~~reporting~~elimination of ~~about~~the concept of a qualifying special purpose entity. SFAS 167 also replaces the ~~derivative~~quantitative-based ~~instruments~~risks and ~~hedging~~rewards ~~activities~~calculation byfor ~~requiring~~determining ~~enhanced~~which ~~disclosures~~enterprise tohas ~~enable~~a ~~investors~~controlling tofinancial ~~better~~interest ~~understand~~in ~~their~~a ~~effects~~variable oninterest an entity’s ~~financial~~with ~~position,~~an ~~financial~~approach ~~performance,~~focused ~~and~~on identifying which ~~cash~~enterprise ~~flows.~~has Itthe ~~became~~power ~~effective~~to ~~for~~direct ~~financial~~the ~~statements~~activities ~~issued~~of ~~for~~a ~~fiscal~~variable ~~years~~interest entity and ~~interim~~the obligation ~~periods~~to ~~beginning~~absorb ~~after~~losses ~~November 15,~~of ~~2008~~the entity or the right to receive benefits from the entity. ~~The~~Additionally, ~~adoption~~SFAS 167 ofprovides more timely and useful information about an enterprise’s involvement with a variable interest entity. SFAS ~~161~~167 (will become effective ~~December~~January 1,2010 ~~2008) did~~and will not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In ~~December~~May ~~2007~~2009, the FASB issued SFAS No. ~~160~~165, ~~Noncontrolling~~Subsequent ~~Interests~~Events (“SFAS 165”). SFAS 165 requires companies to recognize in ~~Consolidated~~the financial statements the effects of subsequent events that provide ~~Financial~~additional ~~Statements~~evidence —about anconditions ~~amendment~~that existed at the date of ~~ARB~~the Nobalance sheet, including the estimates inherent in the process of preparing financial statements. 51 ~~(“SFAS~~An ~~160”)~~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. ~~SFAS~~Companies ~~160~~are ~~establishes~~not ~~accounting~~permitted to recognize subsequent events ~~and~~that ~~reporting~~provide ~~standards~~evidence ~~for~~about conditions that did not exist at the ~~noncontrolling~~date ~~interest~~of inthe abalance ~~subsidiary~~sheet but arose after the balance sheet date and ~~for~~before financial statements are issued. Some nonrecognized subsequent events must be disclosed to keep the ~~deconsolidation~~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 ~~subsidiary~~statement that such an estimate cannot be made. ~~The~~SFAS ~~guidance~~165 ~~will~~applies ~~become~~prospectively ~~effective~~for interim or annual financial periods ending after June 15, 2009 (which was August 31, 2009 for the Company). In preparing the accompanying condensed consolidated financial statements, the Company has reviewed, as determined necessary by the Company’s ~~fiscal~~management, ~~year~~events ~~beginning~~that ~~June~~have occurred after August 131, 2009., ~~The~~up ~~Company~~until ~~believes~~the ~~that~~issuance of the financial statements, which occurred on the date of this ~~new~~filing with ~~pronouncement~~the ~~will~~SEC. The adoption of SFAS 165 did not have a material effect on the Company’s consolidated results of operations, consolidated financial position and consolidated cash flows.

In ~~December~~April ~~2007~~2009, the FASB issued ~~SFAS~~FASB ~~No. 141~~Staff ~~(R),~~Position ~~Business Combinations~~ (“~~SFAS 141R~~FSP”). ~~SFAS 141R~~FAS ~~establishes~~141(R)-1, ~~principles~~Accounting ~~and requirements~~ for ~~how~~Assets Acquired ~~the~~and ~~acquirer~~Liabilities ofAssumed in a ~~business~~Business ~~recognizes~~Combination ~~and measures~~That inArise ~~its~~from ~~financial~~Contingencies ~~statements~~(“FSP ~~the~~FAS 141(R)-1”). ~~identifiable~~FSP ~~assets~~FAS ~~acquired,~~141(R)-1 ~~the~~amends ~~liabilities assumed,~~ and ~~any~~ ~~noncontrolling~~clarifies ~~interest~~FASB inStatement ~~the acquiree~~No. 141(R), ~~SFAS~~Business ~~141R also provides guidance for recognizing and~~Combinations, ~~measuring~~to ~~the~~address ~~goodwill~~application ~~acquired~~issues inraised ~~the~~on ~~business~~initial ~~combination~~recognition and ~~determines~~measurement, ~~what~~subsequent ~~information to~~measurement ~~disclose~~and toaccounting, ~~enable~~and ~~users~~disclosure of ~~the~~assets ~~financial~~and ~~statements~~liabilities toarising ~~evaluate~~from ~~the~~contingencies ~~nature~~in ~~and~~a ~~financial effects of the~~ business combination. ~~The~~FSP ~~guidance~~FAS ~~will~~141(R)-1 ~~become~~is effective ~~for the Company’s fiscal year beginning June 1~~immediately, ~~2009.~~and ~~The~~its ~~Company is evaluating the~~ effect ~~this standard~~ will ~~have~~vary onwith ~~its financial~~each ~~statements~~future acquisition.

In ~~September~~April ~~2006~~2009, the ~~Emerging~~FASB ~~Issues~~issued ~~Task~~FSP ~~Force~~FAS 107-1 and Accounting Principles Board Opinion (“~~EITF~~APB”) ~~issued EITF~~ No. 06APB 28-1, ~~Accounting for~~Interim ~~Consideration~~Disclosures ~~Given~~about byFair aValue ~~Service Provider to Manufacturers or Resellers~~ of ~~Equipment~~Financial ~~Necessary for~~Instruments an(“FSP ~~End~~FAS 107-~~Customer~~1” ~~to Receive Service from the Service Provider (~~and “~~EITF~~APB 0628-1”), which ~~states~~amends ~~how~~SFAS ~~a service~~No. 107, ~~provider~~Disclosures ~~company~~about ~~that~~Fair ~~depends~~Value onof ~~specialized~~Financial ~~equipment should account for consideration~~Instruments ~~paid~~(“SFAS to107”), ~~the manufacturers~~ and ~~resellers~~Accounting ofPrinciples ~~such~~Board ~~equipment~~Opinion No. 28, ~~EITF~~Interim ~~06-1~~Financial ~~requires~~Reporting ~~that the service~~(“APB ~~provider~~28”), ~~recognize~~to ~~payments~~require ~~based~~disclosures onabout ~~the~~fair ~~form~~value of ~~benefit~~financial ~~the~~instruments ~~end-customer~~for ~~receives~~interim ~~from the~~reporting ~~manufacturer~~periods orof ~~reseller.~~publicly Iftraded ~~the~~companies ~~form~~as ofwell ~~benefit~~as isin ~~“other~~annual ~~than~~financial ~~cash”~~statements. orFSP ~~the~~FAS ~~service~~107-1 ~~provider does~~and ~~not~~APB ~~control~~28-1 ~~the~~became ~~form~~effective offor ~~benefit~~interim ~~provided~~periods toending ~~the~~after ~~customer~~June 15, ~~the~~2009 ~~consideration~~(which ~~would~~was ~~be classified as an expense. If the form of benefit is cash~~August 31, ~~the consideration would be classified as an offset to~~2009 ~~revenue. EITF 06-1 became effective~~ for the Company). ~~during~~FSP ~~the~~FAS ~~first~~107-1 ~~quarter~~and ofAPB ~~fiscal 2009. The adoption of EITF 06~~28-1 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~~ In ~~about~~April 2009, ~~fair~~the ~~value~~FASB ~~measurements.~~issued ~~SFAS~~FSP FAS 157-4, ~~applies~~Determining ~~under~~Fair ~~other~~Value ~~accounting pronouncements~~When ~~that~~the ~~require~~Volume orand ~~permit~~Level of ~~fair~~Activity ~~value~~for ~~measurements,~~ the ~~FASB~~Asset ~~having~~or ~~previously~~Liability ~~concluded in~~Have ~~those~~Significantly ~~accounting~~Decreased ~~pronouncements~~and ~~that~~Identifying ~~fair~~Transactions That ~~value~~Are isNot ~~the~~Orderly ~~relevant~~(“FSP ~~measurement~~FAS ~~attribute. Accordingly~~157-4”), ~~SFAS~~which ~~157~~provides ~~does~~additional ~~not~~guidance ~~require~~for ~~any~~estimating ~~new~~ fair value ~~measurements.~~in accordance with SFAS 157 ~~became effective~~ for ~~fiscal~~lightly-traded ~~years~~investments. ~~beginning~~FSP ~~after~~FAS ~~November 15,~~157-4 ~~2007~~also ~~(which~~includes guidance ~~was~~on ~~the~~identifying ~~fiscal~~circumstances ~~year~~that ~~beginning~~indicate ~~June 1, 2008~~apparently ~~for~~comparable ~~the~~market ~~Company).~~transactions ~~The~~do not represent independent fair value. ~~framework~~FSP ~~requires~~FAS ~~the~~157-4 ~~categorization~~applies ofprospectively ~~assets~~for interim and annual ~~liabilities~~reporting ~~into~~periods ~~three~~ending ~~levels~~after ~~based~~June 15, ~~upon~~2009 ~~the~~(which ~~assumptions~~was ~~(inputs)~~August ~~used~~31, to2009 ~~price~~for the ~~assets~~Company). orFSP FAS ~~liabilities.~~157-4 ~~The~~did ~~three~~not ~~levels~~have a material effect on the Company’s consolidated results of ~~inputs~~operations, consolidated ~~used~~financial ~~are~~position asand ~~follows:~~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 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 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 Company has retrospectively changed the classification and presentation of noncontrolling interest in its financial statements for all prior periods, which was previously referred to as minority interest.

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 February 28, 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 3). 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.

On February 12, 2008, the FASB issued FSP 157-2, Effective Date of FASB Statement No. 157 (“FSP 157-2”) which delays the effective date of SFAS 157 for one year for all nonfinancial assets including wireless licenses, other intangible assets and other long-lived assets in the determination of impairment under SFAS 142 or SFAS 144. The guidance will become effective as of the beginning of the Company’s fiscal year beginning after November 15, 2008. In October 2008, the FASB also issued FSP SFAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active (“FSP 157-3”) which clarifies the application of SFAS 157 in an inactive market and illustrates how an entity would determine fair value when the market for a financial asset is not active. The effect of implementing FSP 157-2 and FSP 157-3 is not anticipated to be material to the Company’s financial statements.

NOTE 7. ACQUISITIONS AND DISPOSITIONS

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 did not have a material effect on the Company’s financial statements.

Purchase Price Allocation

The acquisition 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 had initially been 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~~Level ~~lists~~3 ~~assets~~— Unobservable inputs that are ~~amortized~~supported onby alittle ~~straight-line~~or ~~basis~~no ~~over~~market ~~their~~activity ~~remaining~~and ~~expected~~that are ~~useful~~significant ~~lives~~to ofthe ~~approximately~~fair ~~10 years.~~value ~~See~~of ~~Note~~the 2assets ~~for~~or ~~details~~liabilities. onThis ~~how~~includes ~~the~~certain ~~Company~~pricing ~~tests goodwill~~models, ~~which~~discounted iscash ~~not~~flow ~~tax~~methodologies ~~deductible,~~and ~~for~~similar ~~impairment~~techniques that use significant unobservable inputs.

~~NOTE~~ As 8of August 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 3). ~~COMMITMENTS~~The ~~AND~~fair ~~CONTINGENCIES~~values of the interest rate 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 8. COMMITMENTS AND CONTINGENCIES AND NONCONTROLLING INTEREST

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 56), the Company has agreed to indemnify Trilogy with respect to liabilities arising as a result of the ITI litigation. The Company does not believe 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.

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 ~~February~~August 2831, 2009, the Company has paid approximately $612,~~249~~506 in connection with this agreement.

Noncontrolling interest:

Changes in noncontrolling interest for the three months ended August 31, 2009 and 2008 were as follows:


	2009			2008
Noncontrolling interest at June 1	$	1,442		$	4,898
Income attributable to noncontrolling interest		136			167
Distributions paid to noncontrolling interest		(149	)		—

Noncontrolling interest at August 31	$	1,429		$	5,065

NOTE 9. SEGMENT INFORMATION

The Company’s Condensed 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 131 (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 before ~~loss~~net ~~from~~income ~~discontinued operations,~~attributable ~~minority~~to noncontrolling interest, inloss ~~income~~from ~~of subsidiaries~~discontinued operations, income tax expense, interest expense, net, (loss) gain on disposition of assets, ~~litigation settlement expense,~~ transaction costs, stock- based ~~compensation~~ compensation expense and depreciation and amortization.

The results of operations presented below exclude Centennial Dominicana due to its classification as a discontinued operation (see Note 56). 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).

Information about the Company’s operations in its three business segments as of, and for the three ~~and nine~~ months ended, ~~February~~August 2831, 2009 and ~~February 29,~~ 2008 is as follows:

	Three Months Ended						Nine Months Ended
	February 28,			February 29,			February 28,			February 29,
	2009			2008			2009			2008
U.S. WIRELESS
Service revenue	$	121,792		$	111,619		$	361,727		$	329,756
Roaming revenue		12,899			12,526			43,845			44,711
Equipment sales		12,399			13,657			33,537			33,746
Total revenue		147,090			137,802			439,109			408,213
Adjusted operating income		59,323			50,497			168,216			155,008
Total assets		1,856,983			1,795,918			1,856,983			1,795,918
Capital expenditures		12,279			16,156			29,376			34,974
PUERTO RICO WIRELESS
Service revenue	$	76,725		$	76,708		$	233,203		$	229,893
Roaming revenue		2,395			1,838			7,895			4,437
Equipment sales		4,377			4,135			12,628			10,488
Total revenue		83,497			82,681			253,726			244,818
Adjusted operating income		27,112			30,958			73,576			86,846
Total assets		285,773			262,800			285,773			262,800
Capital expenditures		5,677			10,264			24,233			27,022
PUERTO RICO BROADBAND
Switched revenue	$	13,465		$	13,905		$	40,841		$	41,284
Dedicated revenue		19,217			18,384			58,000			52,185
Other revenue		2,341			1,630			7,039			5,460
Total revenue		35,023			33,919			105,880			98,929
Adjusted operating income		19,880			17,653			57,789			53,274
Total assets		283,358			218,724			283,358			218,724
Capital expenditures		6,102			3,753			20,704			13,599
ELIMINATIONS/ADJUSTMENTS
Total revenue(1)	$	(2,881	)	$	(3,249	)	$	(8,881	)	$	(9,269	)
Total assets(2)(3)		(1,012,119	)		(936,989	)		(1,012,119	)		(936,989	)
CONSOLIDATED
Total revenue	$	262,729		$	251,153		$	789,834		$	742,691
Adjusted operating income		106,315			99,108			299,581			295,128
Total assets		1,413,995			1,340,453			1,413,995			1,340,453
Capital expenditures		24,058			30,173			74,313			75,595

(1) Elimination of intercompany revenue, primarily from Puerto Rico broadband to Puerto Rico wireless.

(2) Elimination of intercompany investments.


	Three Months Ended
	August 31,
	2009			2008
U.S. WIRELESS
Service revenue	$	116,564		$	120,249
Roaming revenue		21,449			15,789
Equipment sales		7,921			11,769

Total revenue		145,934			147,807
Adjusted operating income		64,989			58,588
Total assets		1,928,349			1,848,983
Capital expenditures		7,556			8,706
PUERTO RICO WIRELESS
Service revenue	$	73,346		$	77,696
Roaming revenue		2,479			2,694
Equipment sales		3,914			4,442

Total revenue		79,739			84,832
Adjusted operating income		22,882			22,952
Total assets		284,906			284,833
Capital expenditures		5,592			6,730
PUERTO RICO BROADBAND
Switched revenue	$	13,257		$	13,935
Dedicated revenue		20,185			19,402
Other revenue		2,772			2,330

Total revenue		36,214			35,667
Adjusted operating income		19,369			19,753
Total assets		213,896			266,910
Capital expenditures		3,860			5,228
ELIMINATIONS/ADJUSTMENTS
Total revenue(1)	$	(2,963	)	$	(3,093	)
Total assets(2)		(946,248	)		(1,006,792	)
CONSOLIDATED
Total revenue	$	258,924		$	265,213
Adjusted operating income		107,240			101,293
Total assets		1,480,903			1,393,934
Capital expenditures		17,008			20,664

Reconciliation of adjusted operating income to net income:


(1)		Elimination of intercompany revenue, primarily from Puerto Rico broadband to Puerto Rico wireless.

(2)		Elimination of intercompany investments.

	Three Months Ended						Nine Months Ended
	February 28,			February 29,			February 28,			February 29,
	2009			2008			2009			2008
Adjusted operating income	$	106,315		$	99,108		$	299,581		$	295,128
Depreciation and amortization		(32,366	)		(35,262	)		(103,019	)		(102,873	)
Stock-based compensation expense		(2,815	)		(2,112	)		(9,019	)		(8,548	)
Transaction costs		(666	)		—			(3,002	)		—
Litigation settlement expense		—			—			—			(2,950	)
Loss on disposition of assets		(422	)		(120	)		(456	)		(1,731	)
Operating income		70,046			61,614			184,085			179,026
Interest expense, net		(42,735	)		(47,508	)		(132,163	)		(143,901	)
Income tax expense		(7,508	)		(7,302	)		(20,255	)		(20,270	)
Minority interest in income of subsidiaries		(284	)		(171	)		(581	)		(492	)
Income from continuing operations		19,519			6,633			31,086			14,363
Net loss from discontinued operations		(138	)		(1,218	)		(926	)		(2,257	)
Net income	$	19,381		$	5,415		$	30,160		$	12,106

Reconciliation of adjusted operating income to net income attributable to Centennial:


	Three Months Ended
	August 31,
	2009			2008
Adjusted operating income	$	107,240		$	101,293
Depreciation and amortization		(31,687	)		(35,544	)
Stock-based compensation expense		(2,029	)		(2,870	)
Transaction costs		(1,070	)		—
(Loss) gain on disposition of assets		(122	)		47

Operating income		72,332			62,926
Interest expense, net		(39,952	)		(44,880	)
Income tax expense		(12,692	)		(10,056	)

Income from continuing operations		19,688			7,990
Loss from discontinued operations		(94	)		(337	)

Net income		19,594			7,653
Less: Net income attributable to noncontrolling interest		(136	)		(167	)

Net income attributable to Centennial	$	19,458		$	7,486

NOTE 10. 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.

CONDENSED CONSOLIDATING BALANCE SHEET FINANCIAL DATA As of ~~February~~August 2831, 2009

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	5068,~~083~~790		$	—		$	~~109~~178,~~119~~836		$	—		$	—		$	~~159~~247,~~202~~626
Accounts receivable, net		4945,~~757~~595			—			5163,~~323~~887			—			—			~~101~~109,~~080~~482
Inventory — phones and accessories, net		159,~~996~~411			—			3118,~~914~~088			—			—			4727,~~910~~499
Prepaid expenses and other current assets		1412,~~347~~066			—			1811,~~555~~793			—			—			3223,~~902~~859
Total current assets		~~130~~135,~~183~~862			—			~~210~~272,~~911~~604			—			—			~~341~~408,~~094~~466
Property, plant & equipment, net		~~249~~245,~~074~~998			—			~~309~~318,~~426~~333			—			—			~~558~~564,~~500~~331
Debt issuance costs, net		10,304			—			18,379			—			—			28,683
Debt issuance costs		8,874			—			15,848			—			—			24,722
Restricted cash		5,228			—			—			—			—			5,228
Restricted Cash		568			—			—			—			—			568
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		—			~~989~~1,~~697~~046,290			~~556~~562,~~294~~205			(~~707~~651,~~942~~349	)		(~~838~~957,~~049~~146	)		—
Other assets		1113,~~099~~516			—			1,~~848~~757			—			—			1215,~~947~~273
Total	$	~~416~~415,~~877~~807		$	~~989~~1,~~697~~046,290		$	1,~~553~~627,~~412~~301		$	(~~707~~651,~~942~~349	)	$	(~~838~~957,~~049~~146	)	$	1,~~413~~480,~~995~~903
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	$	8,657		$	—		$	5,828		$	—		$	—		$	14,485
Current portion of long-term debt	$	142,750		$	—		$	132,250		$	—		$	—		$	275,000
Accrued expenses and other current liabilities		127,621			—			50,562			—			—			178,183
Accounts payable		12,670			—			9,081			—			—			21,751
Total current liabilities		136,278			—			56,390			—			—			192,668
Accrued expenses and other current liabilities		105,300			—			58,495			—			—			163,795
Long-term debt		795,139			591,395			83,267			548,085			—			2,017,886
Total current liabilities		260,720			—			199,826			—			—			460,546
Deferred income taxes		11,567			—			151,702			—			—			163,269
Long-term debt		653,029			591,395			(42,235	)		548,335			—			1,750,524
Other liabilities		7,895			—			25,183			—			—			33,078
Deferred income taxes		—			—			165,064			—			—			165,064
Intercompany		24,127			1,087,697			1,071,686			(263,328	)		(1,920,182	)		—
Other liabilities		6,665			—			23,994			—			—			30,659
Minority interest in subsidiaries		—			—			1,239			—			—			1,239
Intercompany		34,179			1,087,595			1,052,653			(272,845	)		(1,901,582	)		—
Redeemable preferred stock		~~634~~653,~~438~~038			—			—			—			(~~634~~653,~~438~~038	)		—
Stockholders’ (deficit) equity:
Common stock		—			—			—			1,~~103~~112			—			1,~~103~~112
Additional paid-in capital		(818,~~464~~497	)		—			818,~~464~~497			5564,~~675~~503			—			5564,~~675~~503
Accumulated (deficit) equity		(373,~~170~~258	)		(~~688~~632,~~882~~289	)		(~~654~~591,~~519~~927	)		(1991,~~047,970~~377	)		1,~~716~~597,~~571~~474			(1991,~~047,970~~377	)
Accumulated other comprehensive loss		(~~933~~69	)		(~~513~~411	)		—			~~(430~~—	)		—			(~~1,876~~480	)
		(1,192,567	)		(689,395	)		163,945			(991,622	)		1,716,571			(993,068	)
Less: treasury shares		—			—			—			(1,077	)		—			(1,077	)
Total stockholders’ (deficit) equity		(1,192,567	)		(689,395	)		163,945			(992,699	)		1,716,571			(994,145	)
Total stockholders’ (deficit) equity attributable to Centennial		(1,191,824	)		(632,700	)		226,570			(926,839	)		1,597,474			(927,319	)
Total	$	416,877		$	989,697		$	1,553,412		$	(707,942	)	$	(838,049	)	$	1,413,995
Noncontrolling interest in subsidiaries		—			—			1,429			—			—			1,429
Total stockholders’ (deficit) equity		(1,191,824	)		(632,700	)		227,999			(926,839	)		1,597,474			(925,890	)
Total	$	415,807		$	1,046,290		$	1,627,301		$	(651,349	)	$	(957,146	)	$	1,480,903

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA For the Three Months Ended ~~February~~August 2831, 2009

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
Revenue	$	~~109~~107,~~507~~001		$	—		$	~~156~~154,~~103~~885		$	—		$	(2,~~881~~962	)	$	~~262~~258,~~729~~924
Costs and expenses:
Cost of services (exclusive of depreciation and amortization shown below)		1923,~~949~~495			—			2931,~~147~~222			—			(2,~~713~~794	)		4651,~~383~~923
Cost of equipment sold		1413,~~142~~204			—			2318,~~595~~047			—			—			3731,~~737~~251
Sales and marketing		10,~~175~~991			—			1412,~~005~~479			—			—			2423,~~180~~470
General and administrative		2423,~~873~~402			—			2624,~~890~~905			—			(168	)		5148,~~595~~139
Depreciation and amortization		1615,~~385~~187			—			1516,~~981~~500			—			—			3231,~~366~~687
Loss (gain) on disposition of assets		432			—			(10	)		—			—			422
Loss on disposition of assets		114			—			8			—			—			122
		85,956			—			109,608			—			(2,881	)		192,683
		86,393			—			103,161			—			(2,962	)		186,592
Operating income		2320,~~551~~608			—			4651,~~495~~724			—			—			7072,~~046~~332
Income (loss) from investments in subsidiaries		—			19,~~381~~458			(68,~~480~~427	)		19,~~381~~458			(3230,~~282~~489	)		—
Interest (expense) income, net		(24,817	)		(11,008	)		(4,063	)		(12,147	)		9,300			(42,735	)
Interest expense, net		(23,786	)		(10,142	)		(4,344	)		(10,980	)		9,300			(39,952	)
Intercompany interest allocation		—			1110,~~008~~142			(1311,~~855~~822	)		1210,~~147~~980			(9,300	)		—
(Loss) income from continuing operations before income tax expense and minority interest in income of subsidiaries		(1,266	)		19,381			22,097			19,381			(32,282	)		27,311
(Loss) income from continuing operations before income tax expense		(3,178	)		19,458			27,131			19,458			(30,489	)		32,380
Income tax expense		(5,~~214~~249	)		—			(27,~~294~~443	)		—			—			(712,~~508~~692	)
(Loss) income from continuing operations before minority interest in income of subsidiaries		(6,480	)		19,381			19,803			19,381			(32,282	)		19,803
(Loss) income from continuing operations		(8,427	)		19,458			19,688			19,458			(30,489	)		19,688
Minority interest in income of subsidiaries		—			—			(284	)		—			—			(284	)
Loss from discontinued operations		—			—			(94	)		—			—			(94	)
(Loss) income from continuing operations		(6,480	)		19,381			19,519			19,381			(32,282	)		19,519
Net (loss) income		(8,427	)		19,458			19,594			19,458			(30,489	)		19,594
Net loss from discontinued operations		—			—			(138	)		—			—			(138	)
Less: Net income attributable to noncontrolling interest		—			—			(136	)		—			—			(136	)
Net (loss) income	$	(6,480	)	$	19,381		$	19,381		$	19,381		$	(32,282	)	$	19,381
Net (loss) income attributable to Centennial	$	(8,427	)	$	19,458		$	19,458		$	19,458		$	(30,489	)	$	19,458

CONDENSED CONSOLIDATING STATEMENT OF ~~OPERATIONS~~CASH FLOWS FINANCIAL DATA For the ~~Nine~~Three Months Ended ~~February~~August 2831, 2009

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
Revenue	$	330,762		$	—		$	467,953		$	—		$	(8,881	)	$	789,834
OPERATING ACTIVITIES:
Costs and expenses:
Net (loss) income	$	(8,427	)	$	19,458		$	19,594		$	19,458		$	(30,489	)	$	19,594
Cost of services (exclusive of depreciation and amortization shown below)		65,677			—			91,000			—			(8,377	)		148,300
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Cost of equipment sold		47,027			—			73,702			—			—			120,729
Depreciation and amortization		15,187			—			16,500			—			—			31,687
Sales and marketing		32,222			—			46,476			—			—			78,698
Stock-based compensation expense		978			—			1,051			—			—			2,029
General and administrative		74,749			—			80,302			—			(504	)		154,547
Excess tax benefit from stock-based compensation		—			—			(16	)		—			—			(16	)
Depreciation and amortization		51,012			—			52,007			—			—			103,019
Equity in undistributed earnings (loss) of subsidiaries		—			19,458			(8,427	)		19,458			(30,489	)		—
Loss (gain) on disposition of assets		532			—			(76	)		—			—			456
Loss on disposition of assets		114			—			8			—			—			122
		271,219			—			343,411			—			(8,881	)		605,749
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		12,716			(31,531	)		(15,516	)		(41,613	)		70,278			(5,666	)
Operating income		59,543			—			124,542			—			—			184,085
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		20,568			7,385			13,194			(2,697	)		9,300			47,750
Income (loss) from investments in subsidiaries		—			30,160			(30,249	)		30,160			(30,071	)		—
INVESTING ACTIVITIES:
Interest (expense) income, net		(75,973	)		(34,303	)		(11,574	)		(38,213	)		27,900			(132,163	)
Proceeds from disposition of assets, net of cash expenses		—			22			—			—			—			22
Intercompany interest allocation		—			34,303			(44,616	)		38,213			(27,900	)		—
Capital expenditures		(9,372	)		(7,636	)		—			—			—			(17,008	)
(Loss) income from continuing operations before income tax expense and minority interest in income of subsidiaries		(16,430	)		30,160			38,103			30,160			(30,071	)		51,922
NET CASH USED IN INVESTING ACTIVITIES		(9,372	)		(7,614	)		—			—			—			(16,986	)
Income tax expense		(13,819	)		—			(6,436	)		—			—			(20,255	)
FINANCING ACTIVITIES:
(Loss) income from continuing operations before minority interest in income of subsidiaries		(30,249	)		30,160			31,667			30,160			(30,071	)		31,667
Repayment of debt		—			—			(898	)		—			—			(898	)
Minority interest in income of subsidiaries		—			—			(581	)		—			—			(581	)
Proceeds from the exercise of stock options		—			—			—			250			—			250
(Loss) income from continuing operations		(30,249	)		30,160			31,086			30,160			(30,071	)		31,086
Excess tax benefit from stock-based compensation		—			—			—			16			—			16
Net loss from discontinued operations		—			—			(926	)		—			—			(926	)
Cash (paid to) received from affiliates		(10,204	)		229			16,844			2,431			(9,300	)		—
Net (loss) income	$	(30,249	)	$	30,160		$	30,160		$	30,160		$	(30,071	)	$	30,160
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(10,204	)		229			15,946			2,697			(9,300	)		(632	)
NET INCREASE IN CASH AND CASH EQUIVALENTS		992			—			29,140			—			—			30,132
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		67,798			—			149,696			—			—			217,494
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	68,790		$	—		$	178,836		$	—		$	—		$	247,626

CONDENSED CONSOLIDATING ~~STATEMENT~~BALANCE OFSHEET ~~CASH FLOWS~~ FINANCIAL DATA ~~For~~As ~~the~~of ~~Nine Months Ended February~~May 2831, 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
	(Amounts in thousands)
ASSETS
OPERATING ACTIVITIES:
Current assets:
Net (loss) income	$	(30,249	)	$	30,160		$	30,160		$	30,160		$	(30,071	)	$	30,160
Cash and cash equivalents	$	67,798		$	—		$	149,696		$	—		$	—		$	217,494
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Accounts receivable, net		47,723			—			57,751			—			—			105,474
Depreciation and amortization		51,012			—			52,007			—			—			103,019
Inventory — phones and accessories, net		7,340			—			23,764			—			—			31,104
Stock-based compensation expense		4,612			—			4,407			—			—			9,019
Prepaid expenses and other current assets		13,767			—			8,364			—			—			22,131
Excess tax benefit from stock-based compensation		—			—			(1,413	)		—			—			(1,413	)
Total current assets		136,628			—			239,575			—			—			376,203
Minority interest in income of subsidiaries		—			—			581			—			—			581
Property, plant & equipment, net		249,137			—			322,994			—			—			572,131
Distributions paid to minority interest		—			—			(4,240	)		—			—			(4,240	)
Debt issuance costs		9,589			—			17,115			—			—			26,704
Equity in undistributed earnings (loss) of subsidiaries		—			30,160			(30,249	)		30,160			(30,071	)		—
Restricted cash		124			—			—			—			—			124
Loss (gain) on disposition of assets		532			—			(76	)		—			—			456
U.S. wireless licenses		—			—			402,395			—			—			402,395
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		29,608			(30,247	)		(15,286	)		(86,871	)		88,042			(14,754	)
Puerto Rico wireless licenses, net		—			—			54,159			—			—			54,159
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		55,515			30,073			35,891			(26,551	)		27,900			122,828
Goodwill		10,989			—			—			—			—			10,989
INVESTING ACTIVITIES:
Investment in subsidiaries		—			1,026,832			570,632			(670,807	)		(926,657	)		—
Proceeds from disposition of assets, net of cash expenses		—			50			—			—			—			50
Other assets		11,017			—			1,782			—			—			12,799
Payments for purchase of wireless spectrum		—			(2	)		—			—			—			(2	)
Total	$	417,484		$	1,026,832		$	1,608,652		$	(670,807	)	$	(926,657	)	$	1,455,504
Capital expenditures		(44,705	)		(29,608	)		—			—			—			(74,313	)
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
NET CASH USED IN INVESTING ACTIVITIES		(44,705	)		(29,560	)		—			—			—			(74,265	)
Current liabilities:
FINANCING ACTIVITIES:
Accounts payable	$	6,226		$	—		$	6,453		$	—		$	—		$	12,679
Repayment of debt		—			—			(2,219	)		—			—			(2,219	)
Accrued expenses and other current liabilities		120,273			—			62,271			—			—			182,544
Proceeds from the exercise of employee stock options		—			—			—			6,284			—			6,284
Total current liabilities		126,499			—			68,724			—			—			195,223
Excess tax benefit from stock-based compensation		—			—			—			1,413			—			1,413
Long-term debt		794,966			591,395			86,609			548,210			—			2,021,180
Cash received from (paid to) affiliates		2,643			(513	)		6,916			18,854			(27,900	)		—
Deferred income taxes		4,623			—			150,903			—			—			155,526
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		2,643			(513	)		4,697			26,551			(27,900	)		5,478
Other liabilities		7,436			—			24,532			—			—			31,968
NET INCREASE IN CASH AND CASH EQUIVALENTS		13,453			—			40,588			—			—			54,041
Intercompany		23,975			1,087,824			1,069,497			(270,414	)		(1,910,882	)		—
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		36,630			—			68,531			—			—			105,161
Redeemable preferred stock		643,738			—			—			—			(643,738	)		—
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	50,083		$	—		$	109,119		$	—		$	—		$	159,202
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	)
Less: treasury shares		—			—			—			(1,077	)		—			(1,077	)
Total stockholders’ (deficit) equity attributable to Centennial		(1,183,753	)		(652,387	)		206,945			(948,603	)		1,627,963			(949,835	)
Noncontrolling interest in subsidiaries		—			—			1,442			—			—			1,442
Total stockholders’ (deficit) equity		(1,183,753	)		(652,387	)		208,387			(948,603	)		1,627,963			(948,393	)
Total	$	417,484		$	1,026,832		$	1,608,652		$	(670,807	)	$	(926,657	)	$	1,455,504

CONDENSED CONSOLIDATING ~~BALANCE~~STATEMENT ~~SHEET~~OF OPERATIONS FINANCIAL DATA AsFor ofthe ~~May~~Three Months Ended August 31, 2008 ~~(Amounts in thousands)~~

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
ASSETS
Revenue	$	110,496		$	—		$	157,809		$	—		$	(3,092	)	$	265,213
Current assets:
Costs and expenses:
Cash and cash equivalents	$	36,630		$	—		$	68,531		$	—		$	—		$	105,161
Cost of services (exclusive of depreciation and amortization shown below)		22,601			—			30,999			—			(2,924	)		50,676
Accounts receivable, net		44,768			—			49,230			—			—			93,998
Cost of equipment sold		16,470			—			25,679			—			—			42,149
Inventory — phones and accessories, net		19,633			—			23,609			—			—			43,242
Sales and marketing		11,481			—			14,388			—			—			25,869
Prepaid expenses and other current assets		15,251			—			18,047			—			—			33,298
General and administrative		22,810			—			25,454			—			(168	)		48,096
Total current assets		116,282			—			159,417			—			—			275,699
Depreciation and amortization		17,649			—			17,895			—			—			35,544
Property, plant & equipment, net		253,509			—			325,024			—			—			578,533
Loss (gain) on disposition of assets		12			—			(59	)		—			—			(47	)
Debt issuance costs, net		12,444			—			22,164			—			—			34,608
		91,023			—			114,356			—			(3,092	)		202,287
Restricted cash		6,466			—			—			—			—			6,466
Operating income		19,473			—			43,453			—			—			62,926
U.S. wireless licenses		—			—			402,393			—			—			402,393
Income (loss) from investments in subsidiaries		—			7,486			(11,987	)		7,486			(2,985	)		—
Puerto Rico wireless licenses, net		—			—			54,159			—			—			54,159
Interest expense, net		(25,738	)		(11,443	)		(4,261	)		(12,738	)		9,300			(44,880	)
Goodwill		4,187			—			—			—			—			4,187
Intercompany interest allocation		—			11,443			(14,881	)		12,738			(9,300	)		—
Investment in subsidiaries		—			959,537			586,543			(738,102	)		(807,978	)		—
(Loss) income from continuing operations before income tax expense		(6,265	)		7,486			12,324			7,486			(2,985	)		18,046
Other assets		17,521			—			1,899			—			—			19,420
Income tax expense		(5,722	)		—			(4,334	)		—			—			(10,056	)
Total	$	410,409		$	959,537		$	1,551,599		$	(738,102	)	$	(807,978	)	$	1,375,465
(Loss) income from continuing operations		(11,987	)		7,486			7,990			7,486			(2,985	)		7,990
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
Loss from discontinued operations		—			—			(337	)		—			—			(337	)
Current liabilities:
Net (loss) income		(11,987	)		7,486			7,653			7,486			(2,985	)		7,653
Accounts payable	$	15,332		$	—		$	10,115		$	—		$	—		$	25,447
Less: Net income attributable to noncontrolling interest		—			—			(167	)		—			—			(167	)
Accrued expenses and other current liabilities		121,555			—			71,972			—			—			193,527
Net (loss) income attributable to Centennial	$	(11,987	)	$	7,486		$	7,486		$	7,486		$	(2,985	)	$	7,486
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

CONDENSED CONSOLIDATING STATEMENT OF ~~OPERATIONS~~CASH FLOWS FINANCIAL DATA For the Three Months Ended ~~February~~August 2931, 2008

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
Revenue	$	107,789		$	—		$	146,613		$	—		$	(3,249	)	$	251,153
OPERATING ACTIVITIES:
Costs and expenses:
Net (loss) income	$	(11,987	)	$	7,486		$	7,653		$	7,486		$	(2,985	)	$	7,653
Cost of services (exclusive of depreciation and amortization shown below)		20,276			—			27,839			—			(3,081	)		45,034
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Cost of equipment sold		8,281			—			25,766			—			—			34,047
Depreciation and amortization		17,649			—			17,895			—			—			35,544
Sales and marketing		10,050			—			15,453			—			—			25,503
Stock-based compensation expense		1,451			—			1,419			—			—			2,870
General and administrative		24,515			—			25,226			—			(168	)		49,573
Excess tax benefit from stock-based compensation		—			—			(102	)		—			—			(102	)
Depreciation and amortization		17,764			—			17,498			—			—			35,262
Equity in undistributed earnings (loss) of subsidiaries		—			7,486			(11,987	)		7,486			(2,985	)		—
Loss (gain) on disposition of assets		~~194~~12			—			(7459	)		—			—			~~120~~(47	)
		81,080			—			111,708			—			(3,249	)		189,539
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		24,458			(14,089	)		(11,818	)		(20,951	)		15,270			(7,130	)
Operating income		26,709			—			34,905			—			—			61,614
NET CASH PROVIDED BY (USED IN)OPERATING ACTIVITIES		31,583			883			3,001			(5,979	)		9,300			38,788
Income (loss) from investments in subsidiaries		—			5,415			(1,900	)		5,415			(8,930	)		—
INVESTING ACTIVITIES:
Interest expense, net		(27,374	)		(12,925	)		(5,388	)		(29,721	)		27,900			(47,508	)
Proceeds from disposition of assets, net of cash expenses		—			—			21			—			—			21
Intercompany interest allocation		—			12,925			(14,746	)		29,721			(27,900	)		—
Payments for purchase of wireless spectrum		—			—			(2	)		—			—			(2	)
(Loss) income from continuing operations before income tax expense and minority interest in income of subsidiaries		(665	)		5,415			12,871			5,415			(8,930	)		14,106
Capital expenditures		(11,958	)		—			(8,706	)		—			—			(20,664	)
Income tax expense		(1,235	)		—			(6,067	)		—			—			(7,302	)
NET CASH USED IN INVESTING ACTIVITIES		(11,958	)		—			(8,687	)		—			—			(20,645	)
(Loss) income from continuing operations before minority interest in income of subsidiaries		(1,900	)		5,415			6,804			5,415			(8,930	)		6,804
FINANCING ACTIVITIES:
Minority interest in income of subsidiaries		—			—			(171	)		—			—			(171	)
Repayment of debt		—			—			(724	)		—			—			(724	)
(Loss) income from continuing operations		(1,900	)		5,415			6,633			5,415			(8,930	)		6,633
Proceeds from the exercise of employee stock options		—			—			—			1,161			—			1,161
Net loss from discontinued operations		—			—			(1,218	)		—			—			(1,218	)
Excess tax benefit from stock-based compensation		—			—			—			102			—			102
Net (loss) income	$	(1,900	)	$	5,415		$	5,415		$	5,415		$	(8,930	)	$	5,415
Cash (paid to) received from affiliates		(8,660	)		(883	)		14,127			4,716			(9,300	)		—
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(8,660	)		(883	)		13,403			5,979			(9,300	)		539
NET INCREASE IN CASH AND CASH EQUIVALENTS		10,965			—			7,717			—			—			18,682
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		36,630			—			68,531			—			—			105,161
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	47,595		$	—		$	76,248		$	—		$	—		$	123,843

NOTE 11. SUBSEQUENT EVENTS

On November 7, 2008, Centennial entered into a merger agreement with AT&T providing for the acquisition of Centennial by AT&T (the “Merger” or, the “AT&T Transaction”). On October 13, 2009, AT&T and Centennial announced that they had entered into a consent decree with the Department of Justice which allowed the Merger to proceed, while requiring that AT&T divest Centennial’s operations in eight service areas in Louisiana and Mississippi. The eight service areas are Alexandria, La., Lafayette, La., LA-3 (DeSoto), LA-5 (Beauregard), LA-6 (Iberville), LA-7 (West Feliciana), MS-8 (Claiborne) and MS-9 (Copiah). Under the terms of the merger agreement, Centennial stockholders would receive $8.50 per share in cash. The Merger was approved by Centennial’s stockholders in February 2009, but remains subject to approval by the Federal Communications Commission and to other customary closing conditions. AT&T and Centennial expect that, assuming timely satisfaction or waiver of all remaining closing conditions, the Merger will be completed early in the fourth quarter of calendar year 2009.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA For the Nine Months Ended February 29, 2008

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
Revenue	$	315,574		$	—		$	436,386		$	—		$	(9,269	)	$	742,691
Costs and expenses:
Cost of services (exclusive of depreciation and amortization shown below)		60,500			—			84,240			—			(8,765	)		135,975
Cost of equipment sold		25,814			—			70,017			—			—			95,831
Sales and marketing		31,343			—			46,474			—			—			77,817
General and administrative		74,487			—			75,455			—			(504	)		149,438
Depreciation and amortization		51,242			—			51,631			—			—			102,873
Loss on disposition of assets		787			—			944			—			—			1,731
		244,173			—			328,761			—			(9,269	)		563,665
Operating income		71,401			—			107,625			—			—			179,026
Income (loss) from investments in subsidiaries		—			12,106			(8,497	)		12,106			(15,715	)		—
Interest expense, net		(79,543	)		(40,939	)		(6,822	)		(44,497	)		27,900			(143,901	)
Intercompany interest allocation		—			40,939			(57,536	)		44,497			(27,900	)		—
(Loss) income from continuing operations before income tax expense and minority interest in income of		(8,142	)		12,106			34,770			12,106			(15,715	)		35,125
Income tax expense		(355	)		—			(19,915	)		—			—			(20,270	)
(Loss) income from continuing operations before minority interest in income of subsidiaries		(8,497	)		12,106			14,855			12,106			(15,715	)		14,855
Minority interest in income of subsidiaries		—			—			(492	)		—			—			(492	)
(Loss) income from continuing operations		(8,497	)		12,106			14,363			12,106			(15,715	)		14,363
Net loss from discontinued operations		—			—			(2,257	)		—			—			(2,257	)
Net (loss) income	$	(8,497	)	$	12,106		$	12,106		$	12,106		$	(15,715	)	$	12,106

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA For the Nine Months Ended February 29, 2008

	Centennial			Centennial												Centennial
	Puerto Rico			Cellular						Centennial						Communications
	Operations			Operating			Non-			Communications						Corp. and
	Corp.			Co. LLC			Guarantors			Corp.			Eliminations			Subsidiaries
	(Amounts in thousands)
OPERATING ACTIVITIES:
Net (loss) income	$	(8,497	)	$	12,106		$	12,106		$	12,106		$	(15,715	)	$	12,106
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Depreciation and amortization		51,242			—			51,631			—			—			102,873
Stock-based compensation expense		4,338			—			4,210			—			—			8,548
Excess tax benefit from stock-based compensation		—			—			(1,113	)		—			—			(1,113	)
Minority interest in income of subsidiaries		—			—			492			—			—			492
Equity in undistributed earnings (loss) of subsidiaries		—			12,106			(8,497	)		12,106			(15,715	)		—
Loss on disposition of assets		787			—			3,201			—			—			3,988
Changes in assets and liabilities, net of effects of acquisitions and dispositions and other		(3,276	)		104,991			(594,404	)		428,359			59,330			(5,000	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		44,594			129,203			(532,374	)		452,571			27,900			121,894
INVESTING ACTIVITIES:
Proceeds from disposition of assets, net of cash expenses		72			19			—			—			—			91
Payment for acquisition		(12,519	)		—			—			—			—			(12,519	)
Payments for purchase of wireless spectrum		—			(3,604	)		—			—			—			(3,604	)
Capital expenditures		(40,621	)		(34,974	)		—			—			—			(75,595	)
NET CASH USED IN INVESTING ACTIVITIES		(53,068	)		(38,559	)		—			—			—			(91,627	)
FINANCING ACTIVITIES:
Repayment of debt		—			(45,000	)		(1,417	)		—			—			(46,417	)
Proceeds from the exercise of employee stock options		—			—			—			4,209			—			4,209
Excess tax benefit from stock-based compensation		—			—			—			1,113			—			1,113
Proceeds from issuance of common stock under employee stock purchase plan		—			—			—			296			—			296
Cash received from (paid to) affiliates		7,377			(45,644	)		524,356			(458,189	)		(27,900	)		—
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		7,377			(90,644	)		522,939			(452,571	)		(27,900	)		(40,799	)
NET DECREASE IN CASH AND CASH EQUIVALENTS		(1,097	)		—			(9,435	)		—			—			(10,532	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		31,157			—			63,583			—			—			94,740
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	30,060		$	—		$	54,148		$	—		$	—		$	84,208

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW

Company Overview

We are a leading regional wireless and broadband telecommunications service provider serving approximately 1.1 million wireless customers and approximately ~~683~~789,~~300~~100 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 residential customers.

On November 7, 2008, weCentennial entered into ana ~~Agreement~~merger ~~and~~agreement ~~Plan~~with AT&T providing for the acquisition of ~~Merger~~Centennial by AT&T (the “Merger ~~Agreement~~”~~) with~~ or, the “AT&T ~~Inc~~Transaction”). On October 13, 2009, AT&T and Centennial announced that they had entered into a ~~Delaware~~consent ~~corporation~~decree (“with the Department of Justice which allowed the Merger to proceed, while requiring that AT&T”) divest Centennial’s operations in eight service areas in Louisiana and ~~Independence~~Mississippi. ~~Merger~~The ~~Sub~~eight ~~Inc~~service areas are Alexandria, La., aLafayette, ~~Delaware corporation~~La., ~~and~~LA-3 a(DeSoto), ~~direct~~LA-5 ~~wholly~~(Beauregard), LA-~~owned~~6 ~~subsidiary~~(Iberville), ofLA-7 ~~AT&T~~(West Feliciana), MS-8 (~~“Merger~~Claiborne) ~~Sub”~~and MS-9 (Copiah). Under the terms of the merger agreement, Centennial stockholders would receive $8.50 per share in cash. The Merger ~~Agreement~~was approved by Centennial’s stockholders in February 2009, ~~Merger~~but ~~Sub~~remains ~~will~~subject beto ~~merged~~approval ~~with~~by the Federal Communications Commission and ~~into~~to ~~the~~other ~~Company~~customary closing conditions. AT&T and Centennial expect that, ~~with~~assuming timely satisfaction or waiver of all remaining closing conditions, the ~~Company~~Merger ~~continuing~~will asbe completed early in the ~~surviving~~fourth ~~corporation~~quarter ~~and~~of acalendar ~~direct~~year ~~wholly-owned~~2009. ~~subsidiary~~We believe that the pendency of the AT&T ~~(the~~Transaction ~~“Merger”)~~has had and may continue to have a negative impact on our business, including making it more difficult to attract and retain customers.

~~Subject~~As todiscussed ~~the terms and conditions set forth~~ in ~~the~~Note ~~Merger~~6 ~~Agreement, at the effective time of the Merger, each outstanding share of our common stock (the “Company Common Stock”), other than those shares held in our treasury and those shares with respect~~ to ~~which appraisal rights are properly exercised under~~ the ~~Delaware~~unaudited ~~General~~Condensed ~~Corporation~~Consolidated ~~Law,~~Financial ~~will be converted into and thereafter represent the right to receive $8.50 in cash~~Statements, ~~without interest. Each outstanding option to acquire Company Common Stock will be cancelled at~~ the ~~effective time of the Merger, and the~~ ~~option~~results ~~holder will receive a cash payment, without interest, equal to the number~~ of ~~shares~~operations ~~of Company~~presented ~~Common~~below ~~Stock~~exclude ~~subject~~our toDominican ~~the~~Republic ~~option~~operations ~~multiplied by the excess~~ (~~if any~~“Centennial Dominicana”) ~~of $8~~.~~50 over the~~ ~~exercise price per share of the option.~~

~~Completion~~The ofinformation ~~the~~contained ~~Merger~~in isthis ~~not~~Part I, ~~subject~~Item 2, toupdates, aand ~~financing~~should ~~condition~~be read in conjunction with, ~~but~~information isset ~~subject~~forth toin ~~approval of~~Part II, ~~the~~Items ~~Merger~~7 byand 8, in our Annual Report on Form 10-K for the fiscal ~~Company’s~~year ~~stockholders~~ended ~~(which~~May 31, ~~was~~2009, ~~obtained~~filed ~~February~~on July 2430, 2009), ~~conditions relating~~and toshould ~~approval~~also bybe read in conjunction with the ~~Federal~~unaudited ~~Communications~~interim ~~Commission~~Condensed ~~(“FCC”),~~Consolidated ~~(iii) expiration~~Financial orStatements and accompanying notes presented ~~termination~~in Part 1, Item 1 of ~~applicable~~this ~~waiting~~Quarterly ~~periods~~Report ~~under~~on ~~the~~Form ~~Hart~~10-~~Scott-Rodino~~Q. ~~Antitrust~~Those ~~Improvements~~statements ~~Act~~in ofthe following ~~1976,~~discussion asthat ~~amended~~are ~~(“the~~not ~~HSR~~historical ~~Act”),~~in ~~and~~nature ~~other~~should ~~customary~~be ~~conditions~~considered to ~~closing.~~be Weforward-looking ~~anticipate~~ statements that ~~the Merger~~are ~~will~~inherently beuncertain. ~~completed~~Please bysee ~~mid-year~~“Cautionary ~~calendar~~Statement ~~2009,~~for ~~assuming~~Purposes ~~satisfaction~~of orthe ~~waiver~~“Safe Harbor” Provisions of ~~all~~the Private Securities Litigation Reform Act of 1995” and the “Risk Factors” section ~~conditions~~of toour ~~the~~2009 ~~Merger~~Annual Report on Form 10-K.

The Merger Agreement contains certain termination rights for each of Centennial and AT&T. Upon termination of the Merger Agreement under certain circumstances, the Company may be obligated to make a termination payment to AT&T comprised of a termination fee of $28.5 million and reimbursement of out-of-pocket fees and expenses not exceeding $7.0 million. In addition, upon termination of the Merger Agreement under certain circumstances, an existing roaming agreement between AT&T Mobility LLC and Centennial Cellular Operating Co. LLC will be amended to extend its term and effectuate certain rate changes for the benefit of the Company.

As discussed in Note 5 to the unaudited Condensed Consolidated Financial Statements, the results of operations presented below exclude our Dominican Republic operations (“Centennial Dominicana”) due to its classification as a discontinued operation.

The information contained in this Part I, Item 2, updates, and should be read in conjunction with, information set forth in Part II, Items 7 and 8, in our Annual Report on Form 10-K for the fiscal year ended May 31, 2008, filed on July 30, 2008, and should also be

read in conjunction with the unaudited interim Condensed Consolidated Financial Statements and accompanying notes presented in Part 1, Item 1 of this Quarterly Report on Form 10-Q. 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” and the “Risk Factors” section of our 2008 Annual Report on Form 10-K.

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 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. Our clusters are comprised of small cities and rural areas.

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 ~~both~~ the three ~~and nine~~ months ended ~~February~~August 2831, 2009, approximately 8681% 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~~ controlled distribution allows us to deliver an experience that we believe is unique and valued by ~~the~~ 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.

~~We believe that the success of our business is a function of our performance relative to a~~22 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 9 to the unaudited Condensed 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

• We ~~Data~~believe ~~revenue~~that ~~per~~the ~~average~~success ~~wireless~~of ~~subscriber~~our •business ~~Fiber~~is ~~route~~a ~~miles~~function —of ~~Puerto~~our ~~Rico~~performance ~~broadband~~relative •to ~~Switched~~a number ~~access~~of ~~lines~~key —drivers. ~~Puerto~~The ~~Rico~~drivers ~~broadband~~can •be ~~Dedicated~~summarized ~~access~~in ~~line~~our ~~equivalents~~ability —to ~~Puerto~~attract ~~Rico~~and ~~broadband~~retain •customers by ~~On-net~~profitably ~~buildings~~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 — ~~Puerto~~see ~~Rico~~Note ~~broadband~~9 •to ~~Capital~~the ~~expenditures~~unaudited Condensed 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.~~voice ~~The~~and ~~per~~data ~~minute~~traffic. ~~rate~~The rates paid to us isare 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~~ 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 unaudited Condensed 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 unaudited Condensed 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.~~

•

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.

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~~25 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.

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.

WeIn ~~adopted~~the process of implementing SFAS 123(R) ~~using~~we ~~the~~analyzed ~~modified~~certain ~~prospective~~key ~~transition~~variables, ~~method~~such ~~beginning~~as ~~June 1,~~expected ~~2006~~volatility and expected life to determine an accurate estimate of these variables. ~~Accordingly,~~There were no grants issued during the ~~nine~~three months ended ~~February~~August 2831, 2009,. weThe ~~recorded~~expected ~~stock-based~~life of the option is ~~compensation~~calculated ~~expense~~using ~~for~~the ~~awards~~simplified ofmethod ~~options~~set ~~granted~~out ~~prior~~in ~~to,~~SEC ~~but~~Staff ~~not~~Accounting ~~yet~~Bulletin ~~vested,~~No. 107 (as amended by Staff Accounting Bulletin No. 110) using the vesting term of ~~June~~3 or 4 1,years and the contractual ~~2006~~term of 7 or 10 years, asdepending ifon the ~~fair~~option ~~value~~tranche. ~~method~~The ~~calculated~~simplified ~~for~~method ~~purposes~~defines ofthe ~~pro~~expected life ~~forma~~as ~~disclosure~~the ~~under~~average ~~SFAS~~of ~~123 were~~the incontractual ~~effect~~term ~~for~~of ~~expense~~the ~~recognition~~options ~~purposes,~~and ~~adjusted~~the ~~for~~weighted ~~estimated~~average ~~forfeitures.~~vesting ~~For~~period for ~~awards~~all ~~of options~~option ~~granted~~tranches. ~~after~~SFAS ~~June 1,~~123(R) ~~2006,~~requires that we ~~recognized~~calculate stock-based compensation expense based on ~~the~~awards ~~estimated~~that ~~grant date~~are ~~fair~~ultimately ~~value~~expected ~~method~~to ~~using~~vest. ~~the~~Accordingly, ~~Black~~stock-~~Scholes~~based ~~valuation~~compensation ~~model.~~expense for ~~For~~the ~~these~~three ~~awards~~months ended August 31, ~~compensation expense~~2009 ~~was~~has ~~recognized~~been onreduced afor ~~straight-line~~estimated ~~basis~~forfeitures. ~~over~~When estimating ~~their~~forfeitures, ~~respective~~we ~~vesting~~consider ~~periods,~~voluntary ~~net~~termination behaviors as well as trends of actual ~~estimated~~option 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 nine months ended February 28, 2009, we utilized an expected volatility with a range of 62.11%-63.53% and an expected term 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 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. 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 nine months ended February 28, 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.~~

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 unaudited Condensed Consolidated Financial Statements. As a result, our annual tax rate reflected in our unaudited Condensed 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 45 to the unaudited Condensed 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

2926

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.

RESULTS OF OPERATIONS

U.S. Wireless Operations

	Three Months Ended										~~Nine Months Ended~~
	February		February								February		February
	August 31,
	28, 2009		29, 2008		$ Change			% Change			28, 2009		29, 2008		$ Change			% Change
	2009		2008		$ Change			% Change
	(In thousands)
Revenue:
Service revenue	$	~~121~~116,~~792~~564	$	~~111~~120,~~619~~249	$	10(3,~~173~~685	)		9(3	)%	$	~~361,727~~	$	~~329,756~~	$	~~31,971~~			10	%
Roaming revenue		1221,~~899~~449		1215,~~526~~789		~~373~~5,660			336			~~43,845~~		~~44,711~~		~~(866~~	)		(2	)
Equipment sales		127,~~399~~921		1311,~~657~~769		(13,~~258~~848	)		(933	)		~~33,537~~		~~33,746~~		~~(209~~	)		(1	)
Total revenue		~~147~~145,~~090~~934		~~137~~147,~~802~~807		9(1,~~288~~873	)		7(1	)		~~439,109~~		~~408,213~~		~~30,896~~			8
Costs and expenses:
Cost of services		2729,~~140~~108		2528,~~569~~765		~~1,571~~343			61			~~84,745~~		~~79,638~~		~~5,107~~			6
Cost of equipment sold		2115,~~096~~849		2221,~~170~~946		(16,~~074~~097	)		(528	)		~~64,662~~		~~57,508~~		~~7,154~~			12
Sales and marketing		1312,~~825~~236		1514,~~233~~154		(1,~~408~~918	)		(914	)		~~45,792~~		~~45,871~~		~~(79~~	)		(0	)
General and administrative		2523,~~706~~752		24,~~333~~354		~~1,373~~(602	)		6(2	)		~~75,694~~		~~70,188~~		~~5,506~~			8
Total costs and expenses		8780,~~767~~945		8789,~~305~~219		~~462~~(8,274	)		1(9	)		~~270,893~~		~~253,205~~		~~17,688~~			7
Adjusted operating income(1)	$	5964,~~323~~989	$	5058,~~497~~588	$	86,~~826~~401			1711	%	$	~~168,216~~	$	~~155,008~~	$	~~13,208~~			9	%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 9 to the unaudited Condensed Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. U.S. wireless service revenue ~~increased~~decreased infor the three ~~and nine~~ months ended ~~February 28~~August 31, 2009, as compared to the three ~~and nine~~ months ended ~~February~~August 2931, 2008. The ~~increase~~decrease was primarily due to ~~higher~~a ~~sales~~decrease in ofthe ~~value-added~~number ~~features~~of ~~(predominantly~~subscribers, ~~data~~partially ~~services)~~offset ~~and~~by ~~rate~~a ~~plans with~~modest ~~higher~~increase ~~recurring~~in ~~charges~~ARPU as described ~~in the ARPU section~~ below.

U.S. wireless roaming revenue increased for the three months ended ~~February~~August 2831, 2009, as compared to the three months ended ~~February~~August 2931, 2008 ~~due to an increase in data roaming revenue partially offset by a decrease in voice roaming revenue~~. The ~~decrease~~increase ~~in voice roaming revenue~~ was ~~due~~ to a decrease in the average roaming rate per minute. U.S. wireless roaming revenue decreased for the nine months ended February 28, 2009, as compared to the nine months ended February 29, 2008. The decrease was primarily due to aan ~~decrease~~ increase in ~~voice~~data roaming revenue ~~partially~~driven ~~offset~~ by an increase in data ~~roaming revenue. The decrease in voice roaming revenue was due to a decrease in the average roaming rate per minute~~traffic, partially offset by ana ~~increase~~modest decrease in voice roaming ~~MOUs~~revenue.

Equipment sales decreased during the three ~~and nine~~ months ended ~~February~~August 2831, 2009, as compared to the three ~~and nine~~ months ended ~~February~~August 2931, 2008., ~~The~~primarily ~~decrease~~due ~~in the three and nine month periods was related~~ to a decrease in the number of phones sold, ~~partially~~as ~~offset in the nine month~~a ~~period~~result byof ana ~~increase~~decrease in ~~revenue~~gross ~~associated with our phone insurance program~~additions.

Our U.S. wireless operations had approximately ~~664~~633,~~200~~100 and ~~662~~659,~~700~~800 subscribers at ~~February~~August 2831, 2009 and ~~February 29,~~ 2008, respectively. Postpaid subscribers account for 9897% of total U.S. ~~wireless~~ wireless subscribers as of ~~February~~August 2831, 2009. During the twelve months ended ~~February~~August 2831, 2009, increases in subscribers from new activations of ~~192~~164,~~200~~000 were offset by subscriber cancellations of 190,700. The monthly postpaid churn rate was 2.18% ~~and 2.4%~~ for the three ~~and nine~~ months ended ~~February~~ August 2831, 2009, as compared to 2.06% for ~~both~~ the three ~~and nine~~ months ended ~~February~~August 2931, 2008. The cancellations experienced by our U.S. wireless operations were primarily related to non-payment ~~and~~, competition and the pending AT&T Transaction.

U.S. wireless ARPU was $7476 for ~~both~~ the three ~~and nine~~ months ended ~~February~~August 2831, 2009, ~~respectively,~~ as compared to $7074 for ~~both~~ the same ~~periods~~period last year. The increase in U.S. wireless ARPU was primarily due to an increase in data ~~sales~~revenue. ofAverage ~~value-added~~MOUs ~~features~~per ~~including~~subscriber ~~data~~were ~~services (such as short message services~~1,043 ~~multi-media services and downloads) and higher access fees~~ per ~~subscriber~~ ~~due~~month tofor ~~an increase in~~ the ~~number~~three ofmonths ~~subscribers~~ended onAugust 31, ~~our~~2009, ~~Blue~~as ~~Nation~~compared ~~(nationwide) rate plans~~to 1,121 ~~which~~for ~~generally~~the ~~have~~same aperiod ~~higher~~last ~~monthly~~year.

30 Costs and expenses. Cost of services increased slightly during the three months ended August 31, 2009, as compared to the same period last year, primarily due to an increase in expenses related to providing data services.

Cost of equipment sold decreased for the three months ended August 31, 2009, as compared to the same period last year, primarily due to fewer activations and fewer phones used for customer retention, as well as a slightly lower average cost per phone.

~~recurring~~ Sales ~~charge~~and ~~than~~marketing ~~other~~expenses ~~rate~~decreased ~~plans.~~for ~~Average~~the ~~MOUs per~~three ~~subscriber~~months ~~were~~ended 1August 31,~~090~~ ~~and 1~~2009,~~105~~ ~~per~~as ~~month~~compared to ~~for~~ the three ~~and nine~~ months ended ~~February~~August 2831, ~~2009,~~ ~~respectively~~2008, asprimarily ~~compared~~due to ~~1,075~~lower ~~and~~commissions ~~1,058~~associated ~~for~~with ~~the~~fewer activations ~~three~~as ~~and~~well ~~nine~~as ~~months~~a ~~ended~~decrease ~~February 29, 2008~~in advertising expense.

~~Costs~~General and administrative expenses. ~~Cost~~decreased offor ~~services increased during~~ the three ~~and nine~~ months ended ~~February 28~~August 31, 2009, as compared to the ~~three~~same ~~and~~period ~~nine~~in ~~months~~the ~~ended~~prior ~~February 29~~year, ~~2008,~~due primarily ~~due~~ to ~~an increase~~a inreduction ~~telephone service costs, and an increase~~ in ~~expenses~~billing ~~related to providing data services, partially offset by decreases in property taxes~~costs.

Cost of equipment sold decreased for the three months ended February 28, 2009, as compared to the three months ended February 29, 2008, primarily due to a lower number of phones used for retention and activations, partially offset by higher average cost per phone. Cost of equipment sold increased for the nine months ended February 28, 2009, as compared to the nine months ended February 29, 2008, primarily due to a higher average cost per phone and a greater number of phones used for customer retention, partially offset by a lower number of activations.

Sales and marketing expenses decreased for the three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 2008, primarily due to a decrease in advertising expenses.

General and administrative expenses increased for the three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 2008, due primarily to an increase in bad debt expense.

Puerto Rico Wireless Operations

	Three Months Ended										~~Nine Months Ended~~
	February		February								February		February
	August 31,
	28, 2009		29, 2008		$ Change			% Change			28, 2009		29, 2008		$ Change			% Change
	2009		2008		$ Change			% Change
	~~(In thousands)~~		(In thousands)
Revenue:
Service revenue	$	7673,~~725~~346	$	7677,~~708~~696	$	17(4,350	)		0(6	)%	$	~~233,203~~	$	~~229,893~~	$	~~3,310~~			1	%
Roaming revenue		2,~~395~~479		12,~~838~~694		~~557~~(215	)		30(8	)		~~7,895~~		~~4,437~~		~~3,458~~			78
Equipment sales		43,~~377~~914		4,~~135~~442		~~242~~(528	)		6(12	)		~~12,628~~		~~10,488~~		~~2,140~~			20
Total revenue		8379,~~497~~739		8284,~~681~~832		~~816~~(5,093	)		1(6	)		~~253,726~~		~~244,818~~		~~8,908~~			4
Costs and expenses:
Cost of services		1315,~~416~~978		1314,~~141~~767		~~275~~1,211			28			~~43,739~~		~~39,203~~		~~4,536~~			12
Cost of equipment sold		1615,~~499~~161		1119,~~725~~939		(4,~~774~~778	)		41(24	)		~~55,462~~		~~37,862~~		~~17,600~~			46
Sales and marketing		89,~~248~~304		89,~~462~~614		(~~214~~310	)		(3	)		~~26,630~~		~~26,671~~		~~(41~~	)		(0	)
General and administrative		1816,~~222~~414		1817,~~395~~560		(~~173~~1,146	)		(17	)		~~54,319~~		~~54,236~~		83			0
Total costs and expenses		56,~~385~~857		5161,~~723~~880		4(5,~~662~~023	)		9(8	)		~~180,150~~		~~157,972~~		~~22,178~~			14
Adjusted operating income(1)	$	2722,~~112~~882	$	3022,~~958~~952	$	(~~3,846~~70	)		(120	)%	$	~~73,576~~	$	~~86,846~~	$	~~(13,270~~	)		~~(15~~	)%


(1)		Adjusted operating income represents the profitability measure of the segment — see Note 9 to the unaudited Condensed Consolidated Financial Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. Puerto Rico wireless service revenue ~~was~~decreased ~~flat~~ for the three months ended ~~February 28, 2009, and increased for the nine months ended February~~August 2831, 2009, as compared to the three ~~and nine~~ months ended ~~February~~August 2931, 2008. The ~~increase~~decrease primarily relates to a decrease 2%in ~~increase~~ARPU as well as a decrease in the number of subscribers, ~~driven~~as bycontinued declines in traditional voice customers more than offset an increase in EV-DO (evolution, data optimized)-based Instant Internet broadband data customers~~, largely offset by continued declines in traditional voice customers~~.

Roaming revenue ~~increased~~decreased during the three ~~and nine~~ months ended ~~February~~August 2831, 2009, as compared to the three ~~and nine~~ months ended ~~February~~August 2931, 2008, primarily due to ana ~~increase~~decrease in ~~certain~~ ofdata ~~our~~roaming ~~competitors’~~revenue, ~~customers~~partially offset ~~using~~by ~~data~~an ~~services~~increase ~~while~~in voice roaming ~~on our network~~revenue.

Equipment sales ~~increased~~decreased during the three ~~and nine~~ months ended ~~February~~August 2831, 2009, as compared to the three ~~and nine~~ months ended ~~February~~August 2931, 2008, primarily due ~~primarily~~to a decrease in the number of phones sold to customers, partially offset by an increase in ~~phones~~ ~~sold~~revenue per unit.

Our Puerto Rico wireless operations had approximately ~~430~~424,~~700~~400 subscribers at ~~February~~August 2831, 2009, a andecrease ~~increase~~ of 21% from subscribers at ~~February~~August 2931, 2008. ~~Our~~Postpaid ~~postpaid~~ subscribers represented approximately 99% of our total Puerto Rico Wireless subscribers at ~~February~~August 2831, 2009. During the twelve months ended ~~February~~August 2831, 2009, increases from new activations of ~~146~~147,800 were offset by subscriber cancellations of 154,000. The monthly postpaid churn rate increased to 3.3% for the three months ended August 31, 2009, from 2.5% for the same period last year. The increased cancellations experienced by our Puerto Rico wireless operations were primarily due to non-payment, competition and the pending AT&T Transaction.

Puerto Rico wireless ARPU was $63 for the three months ended August 31, 2009, as compared to $66 for the three months ended August 31, 2008. The decrease in ARPU was primarily due to lower voice access, feature, usage related revenue and roaming revenue, partially offset by higher data service revenue (including EV-DO, short message services, multimedia services and downloads) and USF revenue. Our voice subscribers used an average of 1,866 MOUs during the three months ended August 31, 2009, compared to 1,906 MOUs during the three months ended August 31, 2008.

Costs and expenses. Cost of services increased during the three months ended August 31, 2009, as compared to the three months ended August 31, 2008. The increase was primarily due to increases in property taxes, roamer service costs (amounts that we pay other wireless carriers when our subscribers use their networks), property insurance costs and long distance costs.

Cost of equipment sold decreased during the three months ended August 31, 2009, as compared to the same period last year. The decrease was primarily due to a decrease in the number of phones used for customer retention, as well as a lower cost per unit.

~~offset~~ Sales ~~by subscriber~~and ~~cancellations~~marketing ofexpenses ~~138,900.~~decreased ~~The~~during ~~monthly~~the ~~postpaid~~three ~~churn~~months ~~rate~~ended ~~increased~~August 31, to2009, ~~2.9%~~as compared ~~and~~to ~~2.7%~~the ~~for three~~same ~~and~~period ~~nine~~last ~~months~~year. ~~ended~~The ~~February 28,~~decrease ~~2009,~~was ~~respectively,~~primarily ~~from~~due ~~2.4%~~to ~~for~~decreases ~~three~~in ~~and~~direct ~~nine months~~sales ~~ended~~commissions ~~February 29,~~and ~~2008.~~compensation ~~The~~costs ~~cancellations~~as ~~experienced~~a byresult ~~our~~of ~~Puerto~~lower ~~Rico~~gross ~~wireless~~additions, ~~operations~~partially ~~were~~offset by ~~primarily~~increases ~~due~~in toadvertising ~~non-payment~~costs and ~~competition~~agent commissions.

~~Puerto~~General ~~Rico~~and ~~wireless~~administrative ~~ARPU~~expenses ~~was~~decreased ~~$65~~during ~~and $66 for~~ the three ~~and nine~~ months ended ~~February~~August 2831, 2009, ~~respectively,~~ as compared to ~~$65 and $66 for~~ the three ~~and nine~~ months ended ~~February~~August 2931, ~~2008,~~ ~~respectively~~2008. The ~~stability~~decrease ~~in ARPU~~ was primarily due to ~~higher~~decreases in ~~data~~professional ~~service (including EV-DO~~fees, ~~short~~subscriber ~~message~~billing ~~services~~costs, ~~multimedia~~compensation ~~services~~costs and ~~downloads)~~maintenance ~~and~~contract ~~roaming revenue per subscriber~~costs, partially offset by ~~lower voice access, feature, and usage related revenue per subscriber. Our voice subscribers used~~ an ~~average~~increase ofin ~~1,875~~bad ~~and~~debt ~~1,905 MOUs during the three and nine months ended February 28, 2009, respectively, compared to 1,864 and 1,839 MOUs during the three and nine months ended February 29, 2008, respectively~~expense.

Costs and expenses. Cost of services increased during the three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 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), telephone service costs, and tower-site related costs. These increases were partially offset by decreases in long distance costs, property taxes, and expenses related to providing data services.

Cost of equipment sold increased during the three and nine months ended February 28, 2009 as compared to the three and nine months ended February 29, 2008. 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 three and nine months ended February 29, 2008, the amount of loaner phones that were capitalized totaled $5,614 and $15,011, respectively. The increase in cost of equipment sold for the nine months ended February 28, 2009 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 three months ended February 28, 2009 as compared to the three months ended February 29, 2008, primarily due to decreases in direct commissions and advertising costs, partially offset by increases in compensation costs and agent commissions. Sales and marketing expenses decreased during the nine months ended February 28, 2009 as compared to the nine months ended February 29, 2008, primarily due to decreases in agent commissions and advertising costs, partially offset by increases in compensation costs and store-related costs.

General and administrative expenses decreased during the three months ended February 28, 2009, as compared to the three months ended February 29, 2008, primarily due to decreases in subscriber billing costs, fees associated with our handset insurance program, and outside legal fees, partially offset by increases in bank fees and compensation costs. General and administrative expenses increased during the nine months ended February 28, 2009, as compared to the nine months ended February 29, 2008, primarily due to increases in compensation costs, professional fees, bank fees and office and store related expenses, partially offset by decreases in bad debt expense, subscriber billing costs, fees associated with our handset insurance program, and other taxes and licenses.

Puerto Rico Broadband Operations

	Three Months Ended										~~Nine Months Ended~~
	February		February								February		February
	August 31,
	28, 2009		29, 2008		$ Change			% Change			28, 2009		29, 2008		$ Change			% Change
	2009		2008		$ Change			% Change
	~~(In thousands)~~		(In thousands)
Revenue:
Switched revenue	$	13,~~465~~257	$	13,~~905~~935	$	(~~440~~678	)		(35	)%	$	~~40,841~~	$	~~41,284~~	$	~~(443~~	)		(1	)%
Dedicated revenue		1920,~~217~~185		1819,~~384~~402		~~833~~783			54			~~58,000~~		~~52,185~~		~~5,815~~			11
Other revenue		2,~~341~~772		12,~~630~~330		~~711~~442			4419			~~7,039~~		~~5,460~~		~~1,579~~			29
Total revenue		3536,~~023~~214		3335,~~919~~667		~~1,104~~547			32			~~105,880~~		~~98,929~~		~~6,951~~			7
Costs and expenses:
Cost of services		89,~~231~~416		9,~~140~~754		(~~909~~338	)		(103	)		~~27,251~~		~~25,017~~		~~2,234~~			9
Cost of equipment sold		~~141~~242		~~151~~265		(1023	)		(79	)		~~605~~		~~460~~		~~145~~			32
Sales and marketing		1,~~949~~809		1,~~678~~934		~~271~~(125	)		16(6	)		~~5,785~~		~~4,839~~		~~946~~			20
General and administrative		45,~~822~~378		53,~~297~~961		~~(475~~1,417	)		(936	)		~~14,450~~		~~15,339~~		~~(889~~	)		(6	)
Total costs and expenses		1516,~~143~~845		1615,~~266~~914		~~(1,123~~931	)		(76	)		~~48,091~~		~~45,655~~		~~2,436~~			5
Adjusted operating income(1)	$	19,~~880~~369	$	1719,~~653~~753	$	~~2,227~~(384	)		13(2	)%	$	~~57,789~~	$	~~53,274~~	$	~~4,515~~			8	%

(1) Adjusted operating income represents the profitability measure of the segment — see Note 9 to the unaudited ~~condensed~~Condensed ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements for a reconciliation of consolidated adjusted operating income to the appropriate GAAP measure.

Revenue. Total Puerto Rico broadband revenue increased for the three months ended August 31, 2009, as compared to the three months ended August 31, 2008. This increase was primarily due to a 32% increase in total access lines and equivalents to 789,100, partially offset by a decrease in the total average recurring revenue per line.

Switched revenue decreased for the three months ended August 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 10% increase in switched access lines to 107,900 as of August 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 three months ended August 31, 2009, as compared to the same period last year. The increase was primarily the result of a 37% increase in voice grade equivalent dedicated lines to 681,200 as of August 31, 2009, partially offset by a decrease in recurring revenue per line.

Other revenue increased for the three months ended August 31, 2009, as compared to the three months ended August 31, 2008. The increase primarily relates to increases in USF support received in Puerto Rico, inter-carrier compensation revenue and installation and new construction charges.

Costs and expenses. Cost of services decreased during the three months ended August 31, 2009, as compared to the same period last year. The decrease was primarily due to decreases in network costs, utility costs and subscriber termination expense. These were partially offset by increases in installation and new construction costs, maintenance contract costs and property insurance costs.

Sales and marketing expenses decreased during the three months ended August 31, 2009, as compared to the same period last year. The decrease was primarily due to a decrease in commissions, partially offset by an increase in advertising costs.

~~Revenue.~~General ~~Total~~and ~~Puerto~~administrative ~~Rico~~expenses ~~broadband revenue~~ increased ~~for~~during the three ~~and nine~~ months ended ~~February~~ August 2831, 2009, as compared to the ~~three~~same ~~and~~period ~~nine~~in ~~months~~the ~~ended~~prior ~~February 29, 2008~~year. ~~This~~The increase was primarily due to ~~a 22% increase~~ increases in ~~total~~bad ~~access~~debt ~~lines and equivalents to 683~~expense,~~300~~ atcompensation ~~February 28,~~costs ~~2009~~and ~~from~~professional ~~559,200 at February 29, 2008~~fees.

Switched revenue decreased for the three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 2008. The decrease was primarily due to a decrease in recurring revenue per line, partially offset by a 13% increase in switched access lines to 103,700 as of February 28, 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 three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 2008. The increase was primarily the result of a 24% increase in voice grade equivalent dedicated lines to 579,600 as of February 28, 2009, partially offset by a decrease in recurring revenue per line.

Other revenue increased for the three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 2008. The increase primarily relates to increases in inter-carrier compensation revenue and installation and new construction charges.

Costs and expenses. Cost of services decreased during the three months ended February 28, 2009, as compared to the three months ended February 29, 2008, primarily due to decreases in subscriber termination expense due to a settlement related to intercarrier compensation, and network costs, partially offset by an increase in costs associated with installation and new construction. Cost of services increased during the nine months ended February 28, 2009, as compared to the nine months ended February 29, 2008, primarily due to increases in network costs, costs associated with installation and new construction, utility costs, property taxes, maintenance contract costs, long distance costs, and compensation costs. These were partially offset by a decrease in subscriber termination expense due to a settlement related to intercarrier compensation.

Sales and marketing expenses increased during the three and nine months ended February 28, 2009, as compared to the three and nine months ended February 29, 2008. The increase was primarily due to increases in advertising costs, compensation costs, and commissions.

General and administrative expenses decreased during the three months ended February 28, 2009, as compared to the three months ended February 29, 2008 primarily due to decreases in bad debt expense, compensation costs, and professional fees, partially offset by an increase in subscriber billing costs. General and administrative expenses decreased during the nine months ended February 28, 2009, as compared to the nine months ended February 29, 2008 primarily due to decreases in bad debt expense resulting from the recovery of a previously reserved accounts receivable, and compensation costs, partially offset by increases in subscriber billing costs, professional fees, and outside legal fees.

LIQUIDITY AND CAPITAL RESOURCES

Weighted Average Debt Outstanding and Interest Expense

	Three Months Ended									~~Nine Months Ended~~
	February 28,			February 29,						February 28,			February 29,
	August 31,
	2009			2008			Change			~~2009~~			~~2008~~			~~Change~~
	~~(In millions)~~			(In millions)
Weighted Average Debt Outstanding	$	2,~~015~~022.905		$	2,~~006~~011.143		$	911.762		$	~~2,013.60~~		$	~~2,024.49~~		$	~~(10.89~~	)
Weighted Average Gross Interest Rate(1)		87.59	%		9.60	%		(1.1	)%		~~8.8~~	%		~~9.7~~	%		~~(0.9~~	)%
Weighted Average Gross Interest Rate(2)		87.15	%		98.26	%		(1.1	)%		~~8.4~~	%		~~9.2~~	%		~~(0.8~~	)%
Gross Interest Expense(1)	$	4239.7797		$	4745.9636		$	(5.1939	)	$	~~132.87~~		$	~~146.57~~		$	~~(13.70~~	)
Interest Income	$	.0402		$	0.4548		$	(0.4146	)	$	~~.87~~		$	~~2.67~~		$	~~(1.80~~	)
Net Interest Expense	$	4239.7395		$	4744.5188		$	(4.7893	)	$	~~132.00~~		$	~~143.90~~		$	~~(11.90~~	)

(1)		Including amortization of debt issuance costs of $2.0 million ~~and $5.9 million~~ for the three ~~and nine~~ months ended ~~February~~August 2831, 2009, ~~respectively,~~ and ~~$2.0 million and $6.3 million for the three and nine months ended February 29,~~ 2008~~, respectively~~.
(2)		Excluding amortization of debt issuance costs of $2.0 million ~~and $5.9 million~~ for the three ~~and nine~~ months ended ~~February~~August 2831, 2009, ~~respectively,~~ and ~~$2.0 million and $6.3 million for the three and nine months ended February 29,~~ 2008~~, respectively~~.

The ~~$4.8 million~~ ~~and $11.9 million~~ decrease in net interest expense for the three ~~and nine~~ months ended ~~February~~August 2831, 2009, ~~respectively,~~ as compared to the three ~~and nine~~ months ended ~~February~~ August 2931, 2008, resulted from lower variable interest rates. asThe ~~well~~decrease asin interest ~~lower~~income ~~weighted~~resulted ~~average debt~~from insignificantly ~~the~~lower ~~nine~~interest ~~month period~~rates.

At ~~February~~August 2831, 2009, we had total liquidity of $~~306~~395.71 million, consisting of cash and cash equivalents totaling $~~159~~247.26 million and approximately $147.5 million available under our revolving credit facility. ~~Additionally, at February 28, 2009, we had restricted cash of $5.2 million, which~~ ~~is held in escrow as the result of a reciprocal escrow agreement with one of our customers.~~

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 ~~February~~August 2831, 2009. The Senior Secured ~~Credit~~ 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~~ Credit Facility also includes a six-year revolving credit facility, maturing in February 2010, with an 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 ~~six-year~~ revolving credit facility ~~are~~may ~~likely~~be $147.5 million. We do not expect this change to to have a material impact on our liquidity or consolidated financial statements. At ~~February~~August 2831, 2009, we had not borrowed any amounts under the revolving credit facility.

On ~~February~~September 53, ~~2007~~2009, we ~~amended~~made ~~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~~$52.~~25%~~5 million tomandatory ~~2.00%.~~excess ~~Under~~cash ~~the~~flow ~~terms~~payment ofunder the ~~Senior~~ Senior Secured Credit Facility, aswhich ~~amended,~~reduced ~~term~~the ~~and~~principal ~~revolving~~balance ~~loan~~of ~~borrowings~~our ~~bear~~term ~~interest~~loan atthereunder ~~LIBOR (a~~to ~~weighted average rate of 2~~$497.~~15% as of February~~5 ~~28, 2009) plus 2~~million.~~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.~~

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 1.23% as of August 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 (20.2580% as of ~~February~~August 2831, 2009) plus 5.75% and mature in January 2013 (the “2013 Holdco Floating Rate Notes”) ~~and~~ 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~~ 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. InAdditionally, we capitalized $15.4 million of debt issuance costs in connection with the issuance of the 2013 Holdco Notes.

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 8 1/8% 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 10 1/8% 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 during the ~~nine~~three months ended ~~February~~August 2831, 2009 consist of the following:

							Collar			Collar
				Swap			Fixed			Fixed
	Variable Interest			Fixed			Interest			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
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
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
2008 Holdco Swap	2013 Holdco Floating Rate Notes	$	200.0		2.85	%		—			—			5/23/2008		7/1/2008		4/1/2009

At February 28, 2009, $750.0 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 February 28, 2009, the fair value of our swaps and collars was a liability of approximately $3.0 million, which is included in other liabilities in the condensed consolidated balance sheet. For the nine months ended February 28, 2009, we recorded income of $1.3 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 February 28, 2009.

For the three and nine months ended February 28, 2009, the ratio of earnings to fixed charges was 1.59 and 1.36, respectively. 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.

Collar

Fixed

Variable Interest

Interest

Rate Loan

Amount

Rate

Trade

Effective

Expiration

Being Hedged

Hedged

Floor

Cap

Date

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 Collar

Senior Secured Credit Facility

250.0

2.43

4.00

9/26/2008

9/30/2008

6/30/2009

November 2008 CPROC Collar

Senior Secured Credit Facility

35.5

1.76

2.25

11/25/2008

12/31/2008

9/30/2009

November 2008 CCOC Collar 2

Senior Secured Credit Facility

25.5

1.76

2.25

11/25/2008

12/31/2008

9/30/2009

November 2008 CCOC Collar 3

Senior Secured Credit Facility

39.5

1.81

2.25

11/25/2008

11/30/2008

8/31/2009

~~Recent~~At ~~distress~~August 31, in2009, ~~the~~$260.5 million ~~financial~~of ~~markets~~our ~~has~~$900.0 million ~~had~~of anvariable ~~adverse~~debt ~~impact~~was onhedged ~~financial market~~by ~~activities~~interest ~~including,~~rate ~~among~~collars ~~other~~described ~~things,~~above. ~~extreme~~All ~~volatility~~our incollars ~~security~~have ~~prices,~~been ~~severely diminished~~designated ~~liquidity~~as ~~and~~cash ~~credit~~flow ~~availability,~~hedges. ~~rating downgrades of certain investments and~~As ~~declining valuations~~ of ~~others.~~September 30, ~~During the first nine months of fiscal~~ 2009, ~~these~~all ~~factors~~of ~~have not had a material adverse effect on~~ our ~~Company’s~~swaps ~~financial~~and ~~position,~~collars ~~results~~had ~~of operations or liquidity~~expired.

At ~~February~~August 2831, 2009, wethe ~~had~~fair novalue ~~off-~~of our collars was a liability of approximately $0.8 million, which is included in accrued expenses and other current liabilities in the condensed consolidated balance sheet. ~~obligations~~For the three months ended August 31, 2009, we recorded income of $0.8 million, net of tax, to accumulated other comprehensive loss attributable to the change in fair value adjustments of the 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.

~~Our~~Under ~~capital~~certain ~~expenditures~~of ~~for~~ the ~~three~~agreements relating to our long-term debt, we are required to maintain certain financial and ~~nine~~operating ~~months~~covenants, ~~ended~~and ~~February 28~~are limited in our ability to, ~~2009~~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 asin compliance with all covenants of our debt agreements at August 31, ~~follows:~~2009.

	Three Months Ended		% of Total Capital			Nine Months Ended		% of Total Capital
	February 28, 2009		Expenditures			February 28, 2009		Expenditures
	(Amounts in thousands)
U.S. Wireless	$	12,279		51.0	%	$	29,376		39.5	%
Puerto Rico Wireless		5,677		23.6			24,233		32.6
Puerto Rico Broadband		6,102		25.4			20,704		27.9
Total capital expenditures	$	24,058		100.0	%	$	74,313		100.0	%
Property, plant and equipment, net at February 28, 2009	$	558,500				$	558,500

For the three months ended August 31, 2009, the ratio of earnings to fixed charges was 1.8. 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.

~~Capital~~At ~~expenditures for our U.S. wireless operations were used to expand our coverage areas and upgrade our cell sites and call switching equipment of existing wireless properties. In Puerto Rico~~August 31, ~~these investments were used to add capacity and services~~2009, towe ~~continue~~had ~~the~~no ~~development and expansion of our Puerto Rico wireless systems, expand the EV~~off-DObalance ~~network,~~sheet ~~and to continue the expansion of our Puerto Rico Broadband network and undersea cable infrastructure~~obligations.

Our capital expenditures for the three months ended August 31, 2009 were as follows:


	Three Months Ended		% of Total Capital
	August 31, 2009		Expenditures
	(dollar amounts in thousands)
U.S. Wireless	$	7,556		44.4	%
Puerto Rico Wireless		5,592		32.9
Puerto Rico Broadband		3,860		22.7

Total capital expenditures	$	17,008		100.0	%

Property, plant and equipment, net at August 31, 2009	$	564,331

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.

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 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.

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 ~~February~~August 2831, 2009, we have paid approximately $612.35 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 ~~February~~August 2831, 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 ~~February~~August 2831, 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

3-5

After

Contractual Obligations

Total

1 Year

Years

5 Years

Long-term debt obligations (net of unamortized discount)

1,925,000

—275,000

~~550~~275,000

1,375,000

—

Interest on long-term debt obligations(1)

~~533~~508,~~287~~414

~~139~~140,~~377~~222

~~275~~265,~~409~~706

~~118~~102,~~501~~486

—

Operating lease obligations

~~248~~276,~~103~~983

3133,~~437~~281

5053,~~369~~547

3640,~~685~~409

~~129~~149,~~612~~746

Capital lease obligations

~~255~~274,~~566~~533

89,~~414~~094

1718,~~436~~869

1820,~~573~~103

~~211~~226,~~143~~467

Purchase obligations

~~121~~109,~~081~~170

11,~~911~~702

23,~~511~~725

3624,~~069~~153

49,590

Total contractual cash obligations

3,~~083~~094,~~037~~100

~~191~~469,~~139~~299

~~916~~636,~~725~~847

1,~~584~~562,~~828~~151

~~390~~425,~~345~~803

Sublessor agreements

(3,~~204~~452

)

(1,~~212~~335

)

(1,~~660~~611

)

(~~329~~490

)

(316

)

Net

3,~~079~~090,~~833~~648

~~189~~467,~~927~~964

~~915~~635,~~065~~236

1,~~584~~561,~~499~~661

~~390~~425,~~342~~787

(1) Interest payments are based on the Company’s projected interest rates and estimated principal amounts outstanding for the periods presented. The liability for income taxes under FIN 48 as of ~~February~~August 2831, 2009 of $1512,~~431~~485 is excluded from the contractual obligations table as the Company is unable to make reasonably reliable estimates of the period of cash settlement, if any with the respective taxing authority.

SUBSEQUENT EVENTS

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 ~~Merger~~“AT&T ~~Agreement~~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;

3734

• our ability to acquire, and the ~~outcome~~cost of ~~any~~acquiring, ~~legal~~additional ~~proceeding~~spectrum ~~that~~in ~~has~~our ~~been~~markets orto ~~may~~support begrowth ~~instituted~~and ~~against~~deployment ~~Centennial~~of ~~and~~advanced ~~others~~technologies, ~~relating~~including to3G ~~the~~and ~~Merger~~4G ~~Agreement~~services; • ~~the~~our ~~inability~~ability to ~~complete~~successfully ~~the~~deploy ~~Merger~~and ~~due~~deliver towireless ~~the~~data ~~failure~~services to ~~satisfy~~our ~~conditions~~customers, toincluding ~~consummate~~next ~~the~~generation ~~Merger~~3G and 4G technology; • the ~~failure~~effect of ~~the~~changes ~~Merger~~in tothe ~~close~~level ~~for~~of ~~any~~support ~~other~~provided ~~reason;~~to •us ~~risks~~by ~~that~~ the ~~proposed~~Universal ~~transaction~~Service ~~disrupts~~Fund, ~~current~~or ~~plans~~USF; ~~and~~• ~~operations~~our ~~and~~ability ~~the~~to ~~potential~~grow ~~difficulties~~our insubscriber ~~employee~~base ~~retention~~at as a ~~result~~reasonable ofcost ~~the~~to ~~Merger~~acquire; • ~~business~~our ~~uncertainty~~dependence ~~and~~on ~~contractual~~roaming ~~restrictions~~agreements ~~during~~for ~~the~~a ~~pendency~~significant ofportion ~~the Merger; • the diversion~~ of ~~management’s~~our ~~attention~~wireless ~~from~~revenue ~~ongoing~~and ~~business concerns; •~~ the ~~effect~~expected ofdecline ~~the~~in ~~announcement~~roaming ofrevenue over the ~~Merger~~long onterm; • our ~~customer~~ability ~~and~~to ~~supplier~~successfully ~~relationships,~~integrate ~~operating~~any ~~results~~acquired ~~and~~markets ~~business~~or ~~generally~~businesses; • the ~~amount~~effects of ~~the~~higher ~~costs,~~than ~~fees,~~anticipated ~~expenses~~handset ~~and~~subsidy ~~charges~~costs; ~~related~~• toour ~~the~~dependence ~~Merger;~~on •roaming ~~the~~agreements ~~timing~~for ofour ~~the~~ability ~~completion~~to ofoffer ~~the~~our ~~Merger~~wireless orcustomers ~~the~~competitively ~~impact~~priced ofregional ~~the~~and ~~Merger~~nationwide onrate ~~our~~plans ~~capital~~that ~~resources,~~include ~~cash~~areas ~~requirements,~~for ~~profitability,~~which ~~management~~we ~~resources~~do ~~and~~not ~~liquidity~~own wireless licenses; • ~~risks~~the ~~and~~effects ~~uncertainties~~of ~~relating~~adding tonew ~~our~~subscribers ~~business~~with ~~(including~~lower ~~our~~credit ~~ability~~ratings; to• ~~achieve~~our ~~strategic~~substantial ~~goals~~debt obligations, ~~objectives~~including ~~and~~restrictive ~~targets~~covenants, ~~over~~which ~~applicable~~place ~~periods),~~limitations ~~industry~~on ~~performance~~how ~~and~~we ~~the~~conduct ~~regulatory environment~~business; • ~~the~~market ~~effects~~prices offor ~~a recession in~~ the ~~United~~products ~~States~~ and ~~general~~services ~~downturn~~we inoffer ~~the~~may ~~economy,~~decline ~~including the illiquidity~~ in the ~~debt/capital markets~~future; • ~~the~~changes ~~effects~~and ofdevelopments ~~vigorous competition~~ in ~~our markets~~technology, ~~which~~including ~~may~~our ~~make~~ability itto ~~difficult~~upgrade ~~for~~our usnetworks to ~~attract~~remain competitive and ~~retain~~our ~~customers~~ability ~~and~~ to ~~grow~~anticipate ~~our~~and ~~customer~~react ~~base~~to ~~and~~frequent ~~revenue~~ and ~~which~~significant ~~may~~technological ~~increase~~changes ~~churn,~~ which ~~could~~may ~~reduce~~render ~~our~~certain ~~revenue~~technologies ~~and~~used ~~increase~~by ~~our~~us ~~costs~~obsolete; • the ~~fact~~effects ~~that many~~ of ~~our~~a ~~competitors~~decline ~~are~~in ~~larger~~the ~~than~~market wefor ~~are,~~our ~~have~~Code ~~greater~~Division ~~financial~~Multiple ~~resources~~Access ~~than~~(“CDMA”) we-based ~~do,~~technology; ~~are~~• ~~less~~the ~~leveraged~~effects ~~than~~of weconsolidation ~~are,~~in ~~have~~the ~~more~~telecommunications ~~extensive~~industry; ~~coverage~~• ~~areas~~general ~~than~~economic, ~~we do~~business, ~~and~~political ~~may offer less expensive~~ and ~~more~~social ~~technologically~~conditions ~~advanced~~in ~~products~~the ~~and~~areas ~~services~~in ~~than~~which we ~~do;~~operate, •including ~~our~~the ~~ability~~effects toof ~~gain~~downturns ~~access~~in to the ~~latest~~economy, ~~technology~~world ~~handsets~~events, interrorism, ahurricanes, ~~timeframe~~tornadoes, ~~and~~wind atstorms aand ~~cost~~other ~~similar~~natural ~~to our competitors~~disasters; • our ability to ~~acquire,~~generate cash and the availability and cost of ~~acquiring,~~ additional ~~spectrum~~capital into fund our ~~markets~~operations toand ~~support~~our ~~growth~~significant ~~and~~planned ~~deployment~~capital ofexpenditures; ~~advanced~~• ~~technologies,~~the ~~including~~effects 3Gof ~~and~~governmental 4Gregulation ~~services~~of the telecommunications industry; • our ability to ~~successfully~~attract ~~deploy~~ and ~~deliver~~retain ~~wireless~~qualified ~~data~~personnel; ~~services~~• tothe ~~our~~effects ~~customers,~~of ~~including~~network ~~next~~disruptions ~~generation 3G~~ and 4Gsystem ~~technology~~failures; • ~~the~~our ~~effect~~ability ofto ~~changes~~manage, inimplement ~~the~~and ~~level~~monitor ofbilling ~~support~~and ~~provided~~operational tosupport ussystems; by• the ~~Universal~~results ~~Service~~of ~~Fund,~~litigation filed or ~~USF;~~which •may ~~our~~be ~~ability~~filed toagainst ~~grow~~us or our ~~subscriber~~vendors, ~~base~~including atlitigation arelating ~~reasonable cost~~ to ~~acquire;~~wireless •billing, ~~our~~using ~~dependence~~wireless ontelephones ~~roaming~~while ~~agreements~~operating ~~for~~an aautomobile ~~significant~~and ~~portion~~litigation ofrelating ~~our~~to ~~wireless~~infringement ~~revenue~~of ~~and~~patents; • the ~~expected~~effects ~~decline~~of inscientific ~~roaming~~reports ~~revenue~~that ~~over~~may ~~the~~demonstrate ~~long~~possible ~~term;~~health •effects ~~our~~of ~~ability~~radio tofrequency ~~successfully~~transmission ~~integrate~~from ~~any~~use ~~acquired~~of ~~markets~~wireless ~~or businesses~~telephones; and • the ~~effects~~influence ofon ~~higher~~us ~~than~~by ~~anticipated~~our ~~handset~~significant ~~subsidy~~stockholder ~~costs;~~and anti-takeover provisions.

3835

• We ~~our~~undertake ~~dependence~~no onobligation, ~~roaming~~other ~~agreements~~than ~~for~~as ~~our~~may ~~ability~~be torequired ~~offer~~under ~~our~~the ~~wireless~~federal ~~customers~~securities ~~competitively~~laws, to ~~priced~~publicly ~~regional~~update ~~and~~or ~~nationwide~~revise ~~rate~~any ~~plans~~forward-looking ~~that~~statements, ~~include~~whether ~~areas~~as ~~for~~a ~~which~~result ~~we do not own wireless licenses; • the effects~~ of ~~adding~~ new ~~subscribers with lower credit ratings; • our substantial debt obligations~~ information, ~~including~~future ~~restrictive~~events ~~covenants,~~or ~~which~~otherwise. ~~place~~We ~~limitations~~do onnot ~~how~~assume weresponsibility ~~conduct~~for ~~business;~~the •accuracy ~~market~~and completeness ~~prices~~of ~~for~~ the ~~products~~forward-looking ~~and~~statements. ~~services~~Although we ~~offer~~believe ~~may~~that ~~decline in~~ the ~~future;~~expectations •reflected in ~~changes~~these ~~and~~forward-looking ~~developments~~statements inare ~~technology~~reasonable, ~~including~~any ~~our~~or ~~ability~~all toof ~~upgrade~~the ~~our~~forward-looking ~~networks~~statements contained toin ~~remain~~this ~~competitive~~report and ~~our~~in ~~ability~~any toother ~~anticipate~~public ~~and~~statements ~~react~~that toare ~~frequent~~made ~~and~~may ~~significant~~prove ~~technological~~to ~~changes~~be incorrect. ~~which~~This may ~~render~~occur ~~certain~~as ~~technologies~~a ~~used~~result byof usinaccurate ~~obsolete;~~assumptions •as ~~the~~a ~~effects~~consequence of aknown ~~decline~~or unknown inrisks ~~the~~and ~~market~~uncertainties. ~~for~~All ~~our~~of ~~Code~~the ~~Division Multiple Access (“CDMA”)~~ forward-~~based~~looking ~~technology;~~statements •are ~~the~~qualified ~~effects of consolidation~~ in ~~the~~their entirety ~~telecommunications~~by ~~industry;~~reference •to ~~general~~the ~~economic,~~factors ~~business,~~discussed ~~political~~under ~~and social conditions in~~ the ~~areas~~caption in“Risk ~~which~~Factors” weunder ~~operate,~~Item 1A ~~including the effects~~ of our ~~downturns~~2009 inAnnual ~~the~~Report ~~economy,~~on ~~world~~Form ~~events,~~10-K ~~terrorism,~~filed ~~hurricanes,~~on ~~tornadoes~~July 30, ~~wind~~2009. ~~storms~~We ~~and~~caution ~~other~~that ~~natural~~these ~~disasters;~~risk •factors ~~our~~may not ~~ability~~be toexhaustive. ~~generate~~We ~~cash~~operate ~~and~~in ~~the~~a ~~availability~~continually ~~and~~changing ~~cost~~business ofenvironment, ~~additional capital to fund our operations~~ and ~~our~~new ~~significant~~risk ~~planned~~factors emerge ~~capital~~from ~~expenditures;~~time ~~• our need~~ to ~~refinance~~time. orWe ~~amend~~cannot ~~existing~~predict ~~indebtedness~~these ~~prior~~new torisk ~~its~~factors, ~~stated~~nor ~~maturity;~~can •we assess the ~~effects~~impact, if ofany, ~~governmental regulation~~ of the ~~telecommunications~~new ~~industry;~~risk •factors on our ~~ability~~business toor ~~attract~~the ~~and~~extent ~~retain~~to ~~qualified~~which ~~personnel;~~any •factor ~~the~~or ~~effects~~combination of factors ~~network~~may ~~disruptions~~cause ~~and~~actual ~~system~~results ~~failures; • our ability~~ to ~~manage,~~differ ~~implement~~materially ~~and~~from ~~monitor~~those ~~billing~~expressed ~~and~~or ~~operational~~implied ~~support~~by ~~systems;~~any forward-looking •statement. ~~the~~In ~~results~~light of ~~litigation~~these ~~filed or which may be filed against us or our vendors~~risks, ~~including~~uncertainties ~~litigation~~and ~~relating to wireless billing~~assumptions, ~~using~~the forward-looking ~~wireless~~events ~~telephones~~discussed ~~while~~in ~~operating~~this anreport ~~automobile~~might ~~and~~not ~~litigation~~occur. ~~relating~~You toshould ~~infringement~~carefully ofread ~~patents;~~this report •in ~~the~~its ~~effects~~entirety. ofIt ~~scientific~~contains ~~reports~~information that ~~may~~you ~~demonstrate~~should ~~possible~~consider ~~health~~in ~~effects~~making ofany ~~radio~~investment decision ~~frequency~~in ~~transmission~~any ~~from use~~ of ~~wireless telephones; and • the influence on us by~~ our ~~significant stockholder and anti-takeover provisions~~securities.

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 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 our 2008 Annual Report on Form 10-K filed on July 30, 2008 and Item 1A in Part II of this form 10-Q, below. 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.

ITEM 3. 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 ~~February~~August 2831, 2009, we utilize interest rate ~~swap and~~ collar agreements to hedge variable interest rate risk on $~~750~~260.05 million of ~~our~~ 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 ~~February~~August 2831, 2009:

	Fiscal Year Ended February 28(9),
	Fiscal Year Ended August 31,
	2010			2011			2012			2013			2014			Thereafter			Total			Fair Value
	~~(In thousands)~~									(In thousands)
Long-term debt:
Fixed rate	$	—		$	~~(488~~—	)	$	~~(12~~—	)	$	~~200~~700,~~256~~000		$	~~825~~325,~~566~~000		$	94102,~~479~~078		$	1,~~119~~127,~~801~~078		$	1,~~154~~142,~~239~~078
Average fixed Interest rate		0.0	%		10.0	%		10.0	%		10.0	%		9.3	%		10.0	%		9.5	%		—
Average fixed interest rate											10.0	%		8.1	%		10.0	%		9.5	%		—
Variable rate	$	—275,000		$	~~550~~275,000		$	—		$	350,000		$	—		$	—		$	900,000		$	~~898~~889,~~250~~500
Average variable Interest rate(1)		1.3	%		2.7	%		3.5	%		3.8	%		4.0	%		4.1	%		3.1	%		—
Average variable interest rate(1)		1.3	%		3.1	%		3.8	%		4.2	%		4.5	%		4.7	%		3.0	%		—
Interest rate swap (pay fixed, receive variable):
Interest rate collars:
Notional amount	$	~~200~~260,~~000~~500																				$	(~~700~~774	)
Average pay rate		8.60	%
Cap (Highest)		2.25 – 4.00	%
Average receive rate		6.13	%
Floor (Lowest)		1.76 – 2.43	%
Interest rate
collar:
Notional amount	$	550,000																				$	(2,268	)
Cap		4.00	%
Floor		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 ~~at both February 28, 2009 and February 29, 2008~~ had outstanding balances of $900.0 million at August 31, 2009 and 2008. The fair value of such debt approximates the carrying value at ~~February~~August 2831, 2009 and ~~February 29,~~ 2008. Of the variable rate debt, as of ~~February~~August 2831, 2009, $~~750~~260.05 million was 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~~As ~~on our unhedged variable rate obligations outstanding at~~of ~~February 28~~September 30, 2009, aall ~~hypothetical increase or decrease~~ of ~~10%~~our inswaps ~~the~~and ~~weighted~~collars ~~average~~had ~~variable interest~~expired. ~~rate~~Based ~~would~~on ~~have increased or decreased~~ our ~~annual interest expense by approximately $2.0~~ ~~million.~~

unhedged variable rate obligations outstanding at August 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 $1.1 million.

ITEM 4. CONTROLS AND PROCEDURES

We carried out an evaluation, under the supervision and with the participation of our management including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to 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 our disclosure controls and procedures are effective as of August 31, 2009.

40 There was no change in our internal control over financial reporting during the quarter ended August 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

pursuant to 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 our disclosure controls and procedures are effective as of February 28, 2009.

There was no change in our internal control over financial reporting during the quarter ended February 28, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. 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 1A. RISK FACTORS

See “Risk Factors” in Part 1 — Item 1A in our Annual Report on Form 10-K for the year ended May 31, ~~2008~~2009 for information on risk factors. There have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended May 31, ~~2008~~2009, except as set forth below.

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. On October 13, as2009, aAT&T ~~result~~and ofCentennial ~~several~~announced ~~factors,~~that ~~including~~they ~~but~~had ~~not~~entered ~~limited~~into ~~to:~~a ~~(i) the~~consent ~~inability~~decree towith ~~obtain~~the ~~regulatory~~Department ~~approvals~~ of ~~the~~Justice ~~merger,~~which ~~including~~allowed the ~~expiration~~Merger orto ~~earlier~~proceed, ~~termination~~while ofrequiring ~~the~~that AT&T divest ~~applicable~~Centennial’s ~~waiting~~operations ~~period~~in ~~under~~eight ~~the~~service ~~Hart-Scott-Rodino~~areas ~~Antitrust~~in ~~Improvements~~Louisiana ~~Act~~and ofMississippi. ~~1976~~The ~~and~~acquisition was approved by Centennial’s stockholders in February 2009, but remains subject to approval by the Federal Communications Commission and to other customary closing conditions. AT&T and Centennial expect that, assuming timely satisfaction or towaiver ~~obtain~~of ~~such~~all ~~approvals~~remaining onclosing conditions, the ~~currently~~acquisition will be ~~proposed~~completed ~~terms;~~early orin ~~(ii)~~ the ~~failure~~fourth quarter of calendar year 2009. However, there is no assurance that the conditions to ~~satisfy~~the completion of the ~~other~~AT&T ~~conditions~~Transaction ~~for~~will ~~closing~~be ~~set~~satisfied ~~forth~~or inwaived, ~~the~~taking into ~~Merger~~account ~~Agreement~~the current regulatory environment. ~~Under~~If ~~certain~~the ~~circumstances~~AT&T Transaction is not consummated on or before November 7, if2009 (the ~~merger~~“Termination ~~agreement~~Date”), ~~with~~under certain circumstances either Centennial or AT&T ismay ~~terminated~~terminate the Merger Agreement, wesubject to AT&T’s right to extend the Termination Date in ~~may~~accordance bewith ~~required~~the terms thereof. Failure to ~~pay~~consummate the AT&T Transaction for any reason, or an extended delay before consummation, could have a ~~termination~~material ~~fee~~adverse effect on our business, results of ~~$28.5 million~~operations and ~~reimbursement~~financial ofcondition ~~out-of-pocket~~and result in a significant decline in the market ~~fees~~price ~~and~~of ~~expenses~~our common stock. If the AT&T Transaction is not ~~exceeding~~completed, $7there is no assurance that a comparable transaction will occur.~~0 million.~~

The ~~Merger~~merger ~~Agreement~~agreement ~~also~~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~~AT&T Transaction. 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 results of operations and financial condition. 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None ~~A Special Meeting of Stockholders was held on February 24, 2009. At the meeting, the following items were submitted to a vote of stockholders:~~

(1) A proposal to adopt the Agreement and Plan of Merger, dated as of November 7, 2008, as amended from time to time (the “Merger Agreement”), by and among the Company, AT&T Inc. and Independence Merger Sub Inc. was approved with 95,548,012 votes for, 22,027 votes against and 5,276 abstentions.

(2) Approval of the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to adopt the Merger Agreement was approved with 87,975,487 votes for, 7,594,766 votes against and 5,061 abstentions.

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

Each exhibit identified below is filed as a part of this report.


Exhibit
No.		Description
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.

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SIGNATURES

Pursuant to the requirements 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.

Date: ~~April~~October 713, 2009

CENTENNIAL COMMUNICATIONS CORP. By: /s/ Thomas J. Fitzpatrick Thomas J. Fitzpatrick Executive Vice President, Chief Financial Officer (Chief Financial Officer) By: /s/ Francis P. Hunt Francis P. Hunt Senior Vice President — Controller (Chief Accounting Officer)

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AtTable February 28, 2009, the fair value of the swaps and collars was a liability of $2,968, which is included in other liabilities in the condensed consolidated balance sheets. For the nine months ended February 28, 2009, the Company recorded income of $1,270, net Contents

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Filing Compare · CENTENNIAL COMMUNICATIONS CORP /DE