-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sc9LDSbqeRVe6u37Z9K576gxuW0/jElVOPlZItZq/C/hW9FatrxWSXkgUWEUyhln P1sjMnpBASGYNXYxuM/OFQ== 0000881817-99-000001.txt : 19990517 0000881817-99-000001.hdr.sgml : 19990517 ACCESSION NUMBER: 0000881817-99-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CCPR INC CENTRAL INDEX KEY: 0000881817 STANDARD INDUSTRIAL CLASSIFICATION: RADIO TELEPHONE COMMUNICATIONS [4812] IRS NUMBER: 133517074 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-19869 FILM NUMBER: 99624151 BUSINESS ADDRESS: STREET 1: 110 EAST 59TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129068485 MAIL ADDRESS: STREET 1: 110 EAST 59TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: CELLULAR COMMUNICATIONS OF PUERTO RICO INC DATE OF NAME CHANGE: 19930328 10-Q 1 CCPR, INC. - FORM 10-Q - MARCH 31, 1999 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 0-19869 ------------------------------------------------------------ CCPR, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 13-3517074 - ------------------------------------ ------------------------------------ (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 110 East 59th Street, New York, New York 10022 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 355-3466 - -------------------------------------------------------------------------------- (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 X No ----- ----- The number of shares outstanding of the issuer's common stock as of March 31, 1999 was 1,000. CCPR, Inc. and Subsidiaries Index PART I. FINANCIAL INFORMATION Page - ------ --------------------- ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets - March 31, 1999 and December 31, 1998 ........................... 2 Condensed Consolidated Statements of Income - Three months ended March 31, 1999 and 1998 ..................... 3 Condensed Consolidated Statement of Shareholder's (Deficiency) - Three months ended March 31, 1999 ............... 4 Condensed Consolidated Statements of Cash Flows- Three months ended March 31, 1999 and 1998 ..................... 5 Notes to Condensed Consolidated Financial Statements ........... 6 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition ............................. 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk ..... 14 PART II. OTHER INFORMATION - ------- ----------------- Item 6. Exhibits and Reports on Form 8-K ............................... 15 SIGNATURES............................................................... 16 - ---------- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CCPR, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
MARCH 31, DECEMBER 31, 1999 1998 --------------------------------- (Unaudited) (See Note) ASSETS Current assets: Cash and cash equivalents $ 27,173,000 $ 32,613,000 Accounts receivable - trade, less allowance for doubtful accounts of $1,162,000 (1999) and $1,582,000 (1998) 17,299,000 18,806,000 Due from parent company 4,424,000 4,180,000 Equipment inventory 10,929,000 7,635,000 Prepaid expenses and other current assets 4,655,000 5,433,000 --------------------------------- Total current assets 64,480,000 68,667,000 Property, plant and equipment, net 128,961,000 125,422,000 Unamortized license acquisition costs 168,116,000 169,453,000 Deferred financing costs, less accumulated amortization of $1,732,000 (1999) and $1,446,000 (1998) 8,435,000 8,721,000 Other assets, less accumulated amortization of $1,061,000 (1999) and $957,000 (1998) 1,082,000 1,197,000 --------------------------------- $ 371,074,000 $ 373,460,000 ================================= LIABILITIES AND SHAREHOLDER'S (DEFICIENCY) Current liabilities: Accounts payable $ 12,966,000 $ 15,003,000 Accrued expenses 17,161,000 16,128,000 Due to NTL Incorporated 64,000 58,000 Due to parent company 1,919,000 1,926,000 Interest payable 3,363,000 8,367,000 Deferred revenue 6,994,000 6,335,000 --------------------------------- Total current liabilities 42,467,000 47,817,000 Long-term debt 355,000,000 355,000,000 Obligation under capital lease 9,078,000 9,157,000 Commitments and contingent liabilities Shareholder's (deficiency): Common stock - $.01 par value; authorized , issued and outstanding 1,000 shares - - Additional paid-in capital 17,570,000 17,570,000 (Deficit) (53,041,000) (56,084,000) --------------------------------- (35,471,000) (38,514,000) --------------------------------- $ 371,074,000 $ 373,460,000 =================================
Note: The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date. See accompanying notes. 2 CCPR, Inc. and Subsidiaries Condensed Consolidated Statements of Income (Unaudited) THREE MONTHS ENDED MARCH 31 ------------------------------- 1999 1998 ------------------------------- REVENUES: Service revenue $ 40,849,000 $ 34,459,000 Equipment revenue 7,446,000 4,954,000 ------------------------------- 48,295,000 39,413,000 COSTS AND EXPENSES: Cost of equipment sold 6,788,000 4,575,000 Operating expenses 3,881,000 4,115,000 Selling, general and administrative expenses 16,498,000 16,133,000 Depreciation of rental equipment 360,000 241,000 Depreciation expense 7,063,000 5,946,000 Amortization expense 1,696,000 1,690,000 ------------------------------- 36,286,000 32,700,000 ------------------------------- Operating income 12,009,000 6,713,000 OTHER INCOME (EXPENSE): Interest income and other, net 70,000 32,000 Interest expense (8,194,000) (5,365,000) ------------------------------- Income before income tax provision 3,885,000 1,380,000 Income tax provision (842,000) (391,000) ------------------------------- Net income $ 3,043,000 $ 989,000 =============================== See accompanying notes. 3 CCPR, Inc. and Subsidiaries Condensed Consolidated Statement of Shareholder's (Deficiency) (Unaudited)
COMMON STOCK ADDITIONAL -------------------- PAID-IN SHARES AMOUNT CAPITAL (DEFICIT) ------------------------------------------------------- Balance, December 31, 1998 1,000 $ - $ 17,570,000 $ (56,084,000) Net income for the three months ended March 31, 1999 3,043,000 ------------------------------------------------------- Balance, March 31, 1999 1,000 $ - $ 17,570,000 $ (53,041,000) =======================================================
See accompanying notes. 4 CCPR, Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited)
THREE MONTHS ENDED MARCH 31 ------------------------------- 1999 1998 ------------------------------- Net cash provided by operating activities $ 5,524,000 $ 5,562,000 INVESTING ACTIVITIES Purchase of cellular license interest - (8,686,000) Purchase of property, plant and equipment (10,885,000) (7,661,000) Proceeds from maturities of marketable securities - 235,000 ------------------------------- Net cash (used in) investing activities (10,885,000) (16,112,000) ------------------------------- FINANCING ACTIVITIES Principal payments of capital lease obligation (72,000) (65,000) Due to parent company (7,000) 11,400,000 ------------------------------- Net cash provided by (used in) financing activities (79,000) 11,335,000 ------------------------------- Increase (decrease) in cash and cash equivalents (5,440,000) 785,000 Cash and cash equivalents at beginning of period 32,613,000 9,445,000 ------------------------------- Cash and cash equivalents at end of period $ 27,173,000 $ 10,230,000 =============================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for interest exclusive of amounts capitalized $ 13,198,000 $ 10,188,000 Income taxes paid 577,000 200,000 SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES: Liabilities incurred to acquire property, plant and equipment $ 5,262,000 $ 1,938,000 Long-term debt issued to acquire cellular license interest - 8,900,000
See accompanying notes. 5 CCPR, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 1999 are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is required to be adopted in fiscal years beginning after June 15, 1999. Management does not anticipate that the adoption of this new standard will have a significant effect on earnings or the financial position of the Company. Note B - Merger Agreement On May 3, 1999, Cellular Communications of Puerto Rico, Inc. ("CCPR"), the parent company of CCPR, Inc. announced that it had entered into an agreement with SBC Communications Inc. ("SBC") under which it would be acquired in a transaction valued at $29.50 per outstanding share. The announcement also noted that SBC had formed a joint venture with Telefonos de Mexico S.A. de C.V. ("Telmex") to effect the acquisition. SBC and Telmex through the joint venture will pay shareholders $29.50 per share and assume the outstanding debt of CCPR. The companies aim to complete the merger by late third quarter, pending a vote by the CCPR shareholders and regulatory approvals. 6 CCPR, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited)(continued) NOTE C - UNAMORTIZED LICENSE ACQUISITION COSTS Unamortized license acquisition costs consist of: MARCH 31, DECEMBER 31, 1999 1998 ----------------------------- (Unaudited) Deferred cellular license costs $ 5,935,000 $ 5,935,000 Excess of purchase price paid over the fair market value of tangible assets acquired 207,052,000 207,052,000 ----------------------------- 212,987,000 212,987,000 Accumulated amortization 44,871,000 43,534,000 ----------------------------- $ 168,116,000 $ 169,453,000 ============================= NOTE D - PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consist of: MARCH 31, DECEMBER 31, 1999 1998 ----------------------------- (Unaudited) Land $ 1,951,000 $ 1,951,000 Office building 9,922,000 9,922,000 Operating equipment 149,700,000 142,252,000 Office furniture and other equipment 37,589,000 33,909,000 Rental equipment 3,786,000 3,413,000 Construction in progress 8,764,000 8,387,000 ----------------------------- 211,712,000 199,834,000 Accumulated depreciation 82,751,000 74,412,000 ----------------------------- $ 128,961,000 $ 125,422,000 ============================= 7 CCPR, Inc. and Subsidiaries Notes to Condensed Consolidated Financial Statements (unaudited) (continued) NOTE E - ACCRUED EXPENSES Accrued expenses consist of: MARCH 31, DECEMBER 31, 1999 1998 ------------------------------- (Unaudited) Accrued compensation $ 1,070,000 $ 1,309,000 Accrued franchise, property and income taxes 6,476,000 6,105,000 Commissions payable 852,000 1,237,000 Accrued equipment purchases 4,362,000 2,340,000 Subscriber deposits 1,441,000 1,384,000 Other 2,960,000 3,753,000 ------------------------------- $ 17,161,000 $ 16,128,000 =============================== NOTE F - LONG-TERM DEBT Long-term debt consists of: MARCH 31, DECEMBER 31, 1999 1998 ------------------------------- (Unaudited) Senior Subordinated Notes $ 200,000,000 $ 200,000,000 Bank loan 155,000,000 155,000,000 ------------------------------- $ 355,000,000 $ 355,000,000 =============================== NOTE G - COMMITMENTS AND CONTINGENT LIABILITIES As of March 31, 1999, the Company was committed to purchase approximately $2,500,000 for cellular network and other equipment and for construction services. In addition, as of March 31, 1999, the Company had commitments to purchase cellular telephones, pagers and accessories of approximately $3,700,000. In 1992, the Company entered into an agreement which in effect provides for a twenty year license to use its service mark in Puerto Rico and the U.S. Virgin Islands which is also licensed to many of the non-wireline cellular systems in the United States. The Company is required to pay licensing and advertising fees, and to maintain certain service quality standards. The total fees paid for 1999 were $302,000, which were determined by the size of the Company's markets. 8 CCPR, Inc. and Subsidiaries ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On May 3, 1999, Cellular Communications of Puerto Rico, Inc. ("CCPR"), the parent company of CCPR, Inc. announced that it had entered into an agreement with SBC Communications Inc. ("SBC") under which it would be acquired in a transaction valued at $29.50 per outstanding share. The announcement also noted that SBC had formed a joint venture with Telefonos de Mexico S.A. de C.V. ("Telmex") to effect the acquisition. SBC and Telmex through the joint venture will pay shareholders $29.50 per share and assume the outstanding debt of CCPR. The companies aim to complete the merger by late third quarter, pending a vote by the CCPR shareholders and regulatory approvals. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1999 AND 1998 - ------------------------------------------ Service revenue increased to $40,849,000 from $34,459,000. Lower average revenue and minutes of use of new prepaid subscribers and the selection by existing subscribers of alternate rate plans resulted in average monthly revenue per cellular subscriber for the first quarter decreasing to $43 in 1999 from $56 in 1998. The Company expects these trends to continue for the foreseeable future. Ending subscribers were 332,600 and 211,900 as of March 31, 1999 and 1998, respectively. Ending pagers in use were 58,800 and 51,600 as of March 31, 1999 and 1998, respectively. The income from equipment, before depreciation of rental equipment, increased to $658,000 from $379,000 primarily because the Company is not selling telephones below their cost to prepaid subscribers. Reductions in the cost of cellular telephones also contributed to this change. The Company intends to continue to sell telephones at or above cost to prepaid subscribers. The Company expects the growth in prepaid subscribers to continue, therefore the Company expects the trend in equipment income to continue for the foreseeable future. Operating expenses decreased to $3,881,000 from $4,115,000 primarily due to a reduction in interconnection expense, offset by additional costs associated with the expanded network (including paging operations). Operating expenses as a percentage of service revenue decreased to 10% in 1999 from 12% in 1998. Selling, general and administrative expenses increased to $16,498,000 from $16,133,000 as a result of all of the following: an increase in selling and marketing costs, property taxes and subscriber billing expense. The increases in selling and marketing costs, property taxes and subscriber billing expense were 173%, 54% and 45%, respectively of the $365,000 increase. These increases were partially offset by a decrease in bad debt expense which was (176%) of the increase. 9 CCPR, Inc. and Subsidiaries Depreciation of rental equipment increased to $360,000 from $241,000 due to an increase in the number of rental telephones and pagers. Depreciation expense increased to $7,063,000 from $5,946,000 primarily because of an increase in property, plant and equipment. Amortization expense increased to $1,696,000 from $1,690,000 primarily due to an increase in deferred financing costs. Interest income and other, net, increased to $70,000 from $32,000 primarily due to an increase in interest income on short-term investments. Interest expense increased to $8,194,000 from $5,365,000 as a result of the new bank loan commencing in August 1998. The provision for income taxes increased to $842,000 from $391,000 as a result of an increase in Puerto Rico and U.S. Virgin Islands taxable income of certain of the Company's consolidated subsidiaries. LIQUIDITY AND CAPITAL RESOURCES The Company requires capital to expand its Puerto Rico and U.S. Virgin Islands cellular and paging network and for debt service. The Company is currently adding cell sites and increasing capacity throughout its Puerto Rico and U.S. Virgin Islands markets. The Company expects to use approximately $28,000,000 in the remainder of 1999 for contemplated additions to the cellular network, the paging network, and for other non-cell site related capital expenditures. The Company's commitments at March 31, 1999 of $2,500,000 for cellular network and other equipment and for construction services are included in the total anticipated expenditures. The Company expects to be able to meet these requirements with cash and cash equivalents on hand and cash from operations. In August 1998, a wholly-owned subsidiary of the Company, CCPR Services, Inc. ("Services"), entered into a $170,000,000 credit agreement with various banks. Services has $15,000,000 available under the bank loan until September 2001. The terms include the payment of interest at least quarterly at a floating rate, which is, at Services' option, either (a) the greater of the bank's prime rate or the Federal Funds Rate plus 0.5% or (b) LIBOR, plus, based on the ratio of the Company and its subsidiaries debt to cash flow and the floating rate in effect, either 0% to 1.25% or 1.25% to 2.5%. The effective rate on Services' borrowings as of March 31, 1999 was 7.62%. The terms also include an unused commitment fee of 0.5% per annum which is payable quarterly. Principal payments commence on September 30, 2001 based on two amortization schedules. One schedule is for the first $95,000,000 borrowed which includes quarterly payments until June 2006. The other schedule is for the remainder of the amount borrowed which includes quarterly payments until June 2005. 10 CCPR, Inc. and Subsidiaries In connection with the bank loan, the Company has pledged to the banks the stock of its subsidiaries and the Company and its subsidiaries have given the banks a security interest in their assets. The Company and its subsidiaries have guaranteed the payment in full when due of the principal, interest and fees owing under the bank loan, which guarantee is full, joint and several. The bank loan also includes, among other things, restrictions on the Company and its subsidiaries (i) dividend payments, (ii) acquisitions, (iii) investments, (iv) sales and dispositions of assets, (v) additional indebtedness and (vi) liens. The bank loan requires that the Company and its subsidiaries maintain certain ratios of indebtedness to cash flow, fixed charges to cash flow and debt service to cash flow. In January 1997, Services issued $200,000,000 principal amount 10% Senior Subordinated Notes due 2007 (the "Notes"). The Notes are unconditionally guaranteed by the Company, which guarantee is full, joint and several. The Notes are due on February 1, 2007. Interest on the Notes is payable semiannually on February 1 and August 1. The Notes are redeemable, in whole or in part, at the option of Services at any time on or after February 1, 2002, at a redemption price of 105% that declines annually to 100% in 2005, in each case together with accrued and unpaid interest to the redemption date. The Indenture contains certain covenants with respect to Services, the Company and certain subsidiaries that limit their ability to, among other things, (i) incur additional indebtedness, (ii) pay dividends or make other distributions or restricted payments, (iii) create liens, (iv) sell assets, (v) enter into mergers or consolidations or (vi) sell or issue stock of subsidiaries. The Company is highly leveraged. Such leverage could limit the Company's ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes, increases its vulnerability to adverse changes in general economic conditions or increases in interest rates, and requires that a substantial portion of cash flow from operations be dedicated to debt service requirements. The leveraged nature of the Company and the Company's continued compliance with the restrictions in its debt agreements could limit its ability to respond to market conditions, meet extraordinary capital needs or restrict other business activities such as acquisitions. Management does not anticipate that the company and its subsidiaries will generate sufficient cash flow from operations to repay at maturity the entire principal amount of the outstanding indebtedness. Accordingly, the Company may be required to consider a number of measures, including (i) refinancing all or a portion of such indebtedness, (ii) seeking modifications of the terms of such indebtedness, (iii) seeking additional debt financing, which would be subject to obtaining necessary lender consents, (iv) seeking additional equity financing or (v) a combination of the foregoing. The particular measures the Company may undertake and the ability of the Company to accomplish those measures will depend on the financial condition of the Company 11 CCPR, Inc. and Subsidiaries and its subsidiaries at the time, as well as a number of factors beyond the control of the Company. No assurance can be given that any of the foregoing measures can be accomplished, or can be accomplished on terms which are favorable to the Company. Cash provided by operating activities was $5,524,000 and $5,562,000 for the three months ended March 31, 1999 and 1998, respectively. The change is primarily due to changes in operating assets and liabilities. Purchases of property, plant and equipment of $10,885,000 in 1999 were primarily for additional cell sites and increased capacity in the Company's cellular and paging networks. Write-offs of accounts receivable, net of recoveries as a percentage of service revenues was 2.6% for the three months ended March 31, 1999 compared to 3.6% for the year ended December 31, 1998. This percentage decreased because the Company and its subsidiaries have increased prepaid subscribers. YEAR 2000 The Company has a comprehensive Year 2000 project designed to identify and assess the risks associated with its information systems, products, operations and infrastructure, suppliers, and customers that are not Year 2000 compliant, and to develop, implement and test remediation and contingency plans to mitigate these risks. The project comprises four phases: (1) identification of risks, (2) assessment of risks, (3) development of remediation and contingency plans and (4) implementation and testing. The Company has incurred approximately $1,500,000 related to its Year 2000 project and estimates that it will incur costs of $1,100,000 to complete the renovation, validation and implementation phases and achieve year 2000 readiness. The Company's assessment is focused on its information technology ("IT") systems, in particular its cellular and paging network and its billing, provisioning and customer service system. The Company is also evaluating the readiness of third-parties such as utility companies that the Company depends upon for the operation of its network. The Company's leased office space and other non-IT equipment which may have embedded technology that may be affected by the year 2000 problem is being separately assessed. The Company has completed the assessment of its IT systems and expects to complete the remediation and testing of its IT systems year 2000 readiness by June 1999. The evaluation of the readiness of the major third-parties is expected to be completed by June 1999. The Company is also reviewing its detailed contingency plans for potential modifications to address year 2000 issues. This review is expected to be completed by June 1999. The Company currently believes that the most reasonably likely worst case scenario with respect to the Year 2000 is the failure of the electric company or the local exchange telephone company to be ready for the year 2000. This could cause a temporary interruption in the provision of service to customers or in the Company's ability to complete telephone calls, or both. Either or both could have a material adverse effect on operations, although it is not possible at this time to 12 CCPR, Inc. and Subsidiaries quantify the amount of revenues and gross profit that might be lost, or the costs that could be incurred. The contingency plan to address some of these risks involve utilizing back-up power supplies and alternative interconnections, which would require time to implement and may be constrained due to capacity and/or training limitations. The Company has had experience in implementing its disaster recovery plan due to Hurricane Georges, which struck Puerto Rico and the U.S. Virgin Islands in September 1998 and caused the electric company and local exchange telephone company to experience service interruptions. As the Year 2000 project continues, the Company may discover additional problems, may not be able to develop, implement or test remediation or contingency plans, or may find that the costs of these activities exceed current expectations. In many cases, the Company is relying on assurances from suppliers that new and upgraded information systems and other products will be Year 2000 ready. The Company plans to test such third-party systems and products, but cannot be sure that its tests will be adequate or that, if problems are identified, they will be addressed by the supplier in a timely and satisfactory way. Because the Company uses a variety of information systems and has additional systems embedded in its operations and infrastructure, the Company cannot be sure that all of its systems will work together in a Year 2000-ready fashion. Furthermore, the Company cannot be sure that it will not suffer business interruptions, either because of its own Year 2000 problems or those of third-parties upon whom the Company is reliant for services. The Company is continuing to evaluate its Year 2000-related risks and corrective actions. However, the risks associated with the Year 2000 problem are pervasive and complex; they can be difficult to identify and address, and can result in material adverse consequences to the Company. Even if the Company, in a timely manner, completes all of its assessments, identifies and test remediation plans believed to be adequate, and develops contingency plans believed to be adequate, some problems may not be identified or corrected in time to prevent material adverse consequences to the Company. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 Certain statements contained herein constitute "forward-looking statements" as that term is defined under the Private Securities Litigation Reform Act of 1995. When used herein, the words, "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions identify such forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from those contemplated, projected, forecasted, estimated or budgeted, whether expressed or implied, by such forward-looking statements. Such factors include the following: general economic and business conditions in Puerto Rico and the U.S. Virgin Islands, industry trends, the Company's ability to continue to design and build its network, install facilities, obtain and maintain any required government licenses or approvals and finance construction and development, all in a timely manner, at 13 CCPR, Inc. and Subsidiaries reasonable costs and on satisfactory terms and conditions, as well as assumptions about customer acceptance, churn rates, overall market penetration and competition from providers of alternative services, the impact of new business opportunities requiring significant up-front investment, Year 2000 readiness, and availability, terms and deployment of capital. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in the reported market risks since the end of the most recent fiscal year. 14 CCPR, Inc. and Subsidiaries PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27. Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed by the Company during the quarter ended March 31, 1999. 15 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. CCPR, INC. Date: May 12, 1999 By: /s/ J. Barclay Knapp --------------------------------- J. Barclay Knapp President Date: May 12, 1999 By: /s/ Gregg Gorelick --------------------------------- Gregg Gorelick Vice President-Controller (Principal Accounting Officer) 16 EX-27 2 FINANCIAL DATA SCHEDULE - MARCH 31, 1999
5 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 27,173,000 0 18,461,000 1,162,000 10,929,000 9,079,000 211,712,000 82,751,000 371,074,000 42,467,000 355,000,000 0 0 0 (35,471,000) 371,074,000 7,446,000 48,295,000 6,788,000 10,669,000 16,498,000 0 8,194,000 3,885,000 (842,000) 3,043,000 0 0 0 3,043,000 0 0
-----END PRIVACY-ENHANCED MESSAGE-----