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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended May 31, 1999

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____

Commission file number 0-19603

CENTENNIAL CELLULAR CORP.
(Exact name of registrant as specified in its charter)
Delaware 06-1242753
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1305 Campus Parkway
Neptune, NJ 07753
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (732) 919-1000

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

Securities registered pursuant to Section 12(g) of the Act: Class A Common
Stock, par
value $.01 per
share

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 __.

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

As of July 30, 1999, there were 31,200,961 shares of Class A Common
Stock outstanding. The aggregate market value of the Class A Common Stock held
by non-affiliates of the Company, based upon the last reported sale price of the
Class A Common Stock on The Nasdaq Stock Market on July 30, 1999 of $39.75 per
share, was $1,240,238,199.



DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the Company's Proxy Statement to be filed with the
Commission pursuant to Rule 14a-6 under the Securities Exchange Act of 1934 in
connection with the Company's 1999 Annual Meeting of Shareholders are
incorporated by reference in Part III, Items 10-13 of this Annual Report on Form
10-K.



TABLE OF CONTENTS


PAGE
PART I


Item 1. Business..........................................................1
Item 2. Properties.......................................................11
Item 3. Legal Proceedings................................................12
Item 4. Submission of Matters to a Vote of Security Holders..............12

PART II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..........................................13
Item 6. Selected Consolidated Financial Data.............................15
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................16
Item 7A. Quantitative and Qualitative Disclosure About Market Risk........32
Item 8. Financial Statements and Supplementary Data......................32
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure..........................33

PART III

Item 10. Directors and Executive Officers of the Registrant...............33
Item 11. Executive Compensation...........................................33
Item 12. Security Ownership of Certain Beneficial Owners and
Management...................................................33
Item 13. Certain Relationships and Related Transactions...................33

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K Signatures.......................................34




PART I

ITEM 1. BUSINESS

GENERAL

Centennial Cellular Corp., a Delaware corporation (together with its
direct and indirect subsidiaries "Centennial" or the "Company"), is one of the
largest independent wireless communications providers in the United States and
Puerto Rico. Financial information about business segments is incorporated by
reference to Note 17 to the Consolidated Financial Statements on page F-24 of
this report.

Our service areas have total net pops (as defined below) of
approximately 10.8 million. The Company had 454,100 subscribers as of May 31,
1999. Centennial's domestic wireless telephone systems serve 5.8 million net
pops and its service area covers approximately 81,645 square miles in eight
states. Our subsidiary in Puerto Rico, Centennial de Puerto Rico, provides
wireless and wireline telephone services over a common communications network in
Puerto Rico. Its licensed service areas cover 3.8 million net pops in Puerto
Rico and the U.S. Virgin Islands. In addition, we own minority shares,
representing approximately 1.2 million net pops, in other cellular operations
controlled and managed by other cellular operators, referred to as "investment
interests".

The Company's wireless telephone systems, which include systems
utilizing both cellular and personal communications service ("PCS") licenses,
provide communications services to vehicle-installed ("mobile") and hand-held
("portable") wireless telephones. Wireless telephone systems are designed to
allow for significant mobility of the subscriber. In addition to mobility,
wireless telephone systems provide access through system interconnections to
local and long distance telecommunications networks and offer other ancillary
services such as voice-mail, call-waiting, call-forwarding and conference
calling.

On January 7, 1999, Centennial merged with CCW Acquisition Corp., a
new Delaware corporation organized by Welsh, Carson, Anderson & Stowe VIII, L.P.
("WCAS VIII"). As a result of the merger, a new group of equity investors
acquired a 92.9% ownership interest in Centennial. The remaining 7.1% interest
is owned by public stockholders. The merger was accounted for as a
recapitalization in which the historical basis of the Company's assets and
liabilities was not affected and no new goodwill related to the merger was
created.

Centennial was organized in 1988. The Company's principal corporate
office is located at 1305 Campus Parkway, Neptune, New Jersey 07753. Its
telephone number is (732) 919-1000.

THE WIRELESS TELEPHONE INDUSTRY

The Company operates its domestic wireless telephone systems pursuant
to 29 cellular licenses and operates its Puerto Rico wireless telephone system
pursuant to a PCS license. The Company's PCS license also covers the U.S. Virgin
Islands. Wireless telephone technology is based upon the radio coverage of a
given geographic area by a number of overlapping "cells." Each cell contains a
transmitter-receiver at a "base station" or "cell site" that communicates by
radio signal with wireless telephones located in the cell and is connected to a
mobile telephone switching office (the "switch"), which are connected to the
local landline telephone network. Since wireless telephone systems are fully
interconnected with the landline telephone network and long distance networks,
subscribers can receive and originate both local and long distance calls from
their wireless telephones.

If a wireless telephone user leaves the service area of the wireless
telephone system during a call, the call is generally continued and carried
through a technical interface established with an adjacent system through
intersystem networking arrangements. Such an arrangement is referred to as
roaming.

1


THE COMPANY'S OPERATIONS

DOMESTIC SYSTEMS

Our domestic systems are among the leading independent providers of
cellular telecommunications services in smaller metropolitan and rural areas. We
attempt to acquire cellular systems next to our existing markets. We focus on
underdeveloped rural and small-city cellular areas that have a significant
number of potential customers for wireless communications because we believe
these areas offer:

o POTENTIAL PENETRATION GROWTH. We believe these areas are in the early
stages of their growth cycles and offer significant opportunities for
increases in penetration of the market for users and potential users
of cellular services and in cellular usage by subscribers;

o INSULATION FROM POTENTIAL COMPETITION. These regions are currently
subject to less competition from other wireless providers, such as
personal communications services, as compared to larger metropolitan
service areas. The population density of these regions suggests that
the construction of a personal communications services network may not
be economically attractive to competitors at present.

o ABOVE-AVERAGE REVENUE PER SUBSCRIBER. Our domestic markets are
strategically located between larger metropolitan areas and tend to
exhibit long commute times and well-traveled roadways. Customers of
other wireless communications providers who enter our service areas
and use their wireless phones have the potential to generate high
levels of cellular revenues.

Our domestic cellular interests consist primarily of three operating
clusters:

o MICHIANA CLUSTER contains approximately 3.4 million net pops in
Michigan, Ohio and Indiana, covering portions of three major
interstate highways that connect Chicago, Detroit and Indianapolis.

o EAST TEXAS/LOUISIANA CLUSTER contains approximately 2.1 million net
pops, covering portions of interstate highway I-10, as well as
sections of Texas, Louisiana and Mississippi adjacent to Houston, New
Orleans, Shreveport and Baton Rouge.

o SOUTHWESTERN CLUSTER contains approximately 296,000 net pops, covering
the Yuma, Arizona and El Centro, California markets and is bordered by
Los Angeles to the northwest, San Diego to the west, Phoenix to the
east and Mexicali, Mexico to the south.

PUERTO RICO SYSTEMS

Our Puerto Rico business, which is conducted through our subsidiary in
Puerto Rico, Centennial de Puerto Rico, provides a broad range of wireless and
wireline telephone services in the Commonwealth of Puerto Rico, an area covering
approximately 3.8 million net pops. Centennial de Puerto Rico offers wireless
and wireline communications services using shared switches and a sophisticated
328 mile fiber optic network laid throughout the island of Puerto Rico. The
digital personal communications services network allows for coverage in most
areas of Puerto Rico using its established base of 132 wireless antenna sites
and digital technology to transmit its calls.


2


Centennial de Puerto Rico offers both personal communications services
and local telephone service to its customers.

o PERSONAL COMMUNICATIONS SERVICES. Personal communication services
refer to the series of two-way mobile communication licenses awarded
by the Federal Communications Commission ("FCC") which use digital
wireless technologies. Our personal communications services business
currently covers approximately 85% of the total population on the
island of Puerto Rico and targets high volume users. We began offering
personal communication services in December 1996.

o FIXED WIRELESS SERVICES. Centennial de Puerto Rico began offering
fixed wireless service to business and residential customers in August
1997. The Company is able to leverage its existing PCS infrastructure
to provide digital fixed wireless service at a low incremental cost
wherever its PCS coverage already exists.

o COMPETITIVE LOCAL EXCHANGE SERVICES. Centennial de Puerto Rico
provides communication services to business and government customers
over our fiber optic network through Lambda Operations, Inc. These
services include local and long distance telephone, data, video and
internet related services.

We believe that Puerto Rico represents an attractive market for
communications services due to unmet demand for wireless and wireline telephone
service, high population density in the island's metropolitan areas, a growing
economy and a stable business environment. We also believe that our targeted
customers have sophisticated communications service requirements, including the
need for a reliable network providing broadband data access and private line
services and high quality customer service.

WIRELESS TELEPHONE MARKETS AND INTERESTS

The Company focuses on acquiring controlling ownership interests in
wireless telephone systems serving markets contiguous or proximate to its
current markets. The Company's strategy of clustering its wireless telephone
operations enables it to achieve operating and cost efficiencies, as well as
joint advertising and marketing benefits. Clustering also allows the Company to
offer its subscribers wider home calling areas and more areas of uninterrupted
service as they travel through an area or state. In addition to expanding its
existing clusters, the Company may seek to acquire interests in wireless
telephone systems in other geographic areas. The Company may pursue other
communications businesses related to its wireless telephone and other mobile
service operations, as well as other communications businesses it determines to
be desirable. The consideration for such acquisitions may consist of shares of
stock, cash, assumption of liabilities or a combination thereof.


3



The chart below sets forth certain information about the domestic
wireless telephone systems, the Puerto Rico wireless telephone system and the
investment interests as of July 31, 1999. Those domestic wireless telephone
systems and the investment interests which are in Metropolitan Statistical Areas
("MSAs") are asterisked; the remainder are in Rural Service Areas ("RSAs"). As
used in this Annual Report on Form 10-K, "pops" means the population of a market
derived from the 1997 Kagan's Cellular Telephone Atlas, and "net pops" means a
market's pops multiplied by the percentage interest that the Company owns in an
entity licensed by the FCC to construct or operate a wireless telephone system
in that market.





MARKETS OWNERSHIP POPS NET POPS
------- --------- ---- --------



Domestic Wireless Telephone Systems

MICHIANA CLUSTER
Kalamazoo, MI* 100.0% 306,000 306,000
Cass, MI 100.0% 294,000 294,000
Newaygo, MI 100.0% 241,000 241,000
Battle Creek, MI* 100.0% 195,000 195,000
Benton Harbor, MI* 100.0% 161,000 161,000
Jackson, MI* 100.0% 155,000 155,000
Roscommon, MI 100.0% 136,000 136,000
--------- ---------
System Subtotal 1,488,000 1,488,000
--------- ---------

South Bend, IN* 100.0% 306,000 306,000
Richmond, IN 100.0% 222,000 222,000
Newton, IN 100.0% 213,000 213,000
Elkhart-Goshen, IN* 91.7% 169,000 155,000
Williams, OH 100.0% 127,000 127,000
--------- ---------
System Subtotal 1,037,000 1,023,000
--------- ---------

Fort Wayne, IN* 100.0% 438,000 438,000
Miami, IN 100.0% 178,000 178,000
Kosciusko, IN 100.0% 174,000 174,000
Huntington, IN 100.0% 145,000 145,000
--------- ---------
System Subtotal 935,000 935,000
--------- ---------
Cluster Subtotal 3,460,000 3,446,000
--------- ---------

EAST TEXAS/LOUISIANA CLUSTER
Beauregard, LA 100.0% 385,000 385,000
Beaumont-Port Arthur, TX* 100.0% 377,000 377,000
Lafayette, LA* 94.5% 230,000 217,000
West Feliciana, LA 100.0% 182,000 182,000
Claiborne, MS 100.0% 155,000 155,000
Alexandria, LA* 93.2% 142,000 132,000
Iberville, LA 100.0% 181,000 181,000
DeSoto, LA 100.0% 149,000 149,000
Copiah, MS 100.0% 122,000 122,000
Bastrop, LA 100.0% 115,000 115,000
Caldwell, LA 100.0% 74,000 74,000
--------- ---------
Cluster Subtotal 2,112,000 2,089,000
--------- ---------

SOUTHWESTERN CLUSTER
Yuma, AZ 100.0% 153,000 153,000
El Centro, CA 100.0% 143,000 143,000
--------- ---------
Cluster Subtotal 296,000 296,000
--------- ---------

Total Domestic Wireless Telephone Systems 5,868,000 5,831,000
========= =========

PUERTO RICO WIRELESS
TELEPHONE SYSTEM 100.0% 3,839,000 3,839,000
========= =========



4






MARKETS OWNERSHIP POPS NET POPS
------- --------- ---- --------


Investment Interests

SACRAMENTO VALLEY CLUSTER 23.5%
Sacramento, CA* 1,503,000 353,000
Stockton, CA* 540,000 127,000
Modesto, CA* 429,000 101,000
Reno, NV* 302,000 71,000
Chico, CA* 203,000 47,000
Redding, CA* 168,000 39,000
Yuba City, CA* 142,000 33,000
Tehama, CA 101,000 24,000
Storey, NV 117,000 27,000
Sierra, CA 93,000 22,000
--------- ---------
Cluster Subtotal 3,598,000 844,000
--------- ---------

SAN FRANCISCO BAY AREA CLUSTER 2.9%
San Francisco, CA* 3,925,000 113,000
San Jose, CA* 1,600,000 46,000
Vallejo, CA* 503,000 14,000
Santa Rosa-Petaluma, CA* 429,000 12,000
Salinas, CA* 342,000 10,000
Santa Cruz, CA* 242,000 7,000
--------- ---------
Cluster Subtotal 7,041,000 202,000

Lawrence, PA 14.3% 382,000 55,000
Del Norte, CA 6.9% 213,000 15,000
Modoc, CA 25.0% 63,000 16,000
Lake Charles, LA* 25.1% 176,000 44,000
---------- ---------

Total Investment Interests 11,473,000 1,176,000
========== =========

Total Domestic Wireless Telephone Systems, Puerto Rico
Wireless Telephone System and Investment Interests 21,180,000 10,846,000
========== ==========



As of May 31, 1999, the Company's domestic and Puerto Rico wireless
telephone systems had 454,100 subscribers in the markets listed above, and for
each of fiscal 1998, 1997, 1996 and 1995 the Company had 322,200, 203,900,
135,000 and 85,920 subscribers, respectively, in such markets. At May 31, 1999,
the Company's pro rata share of subscribers relating to the Investment Interests
was approximately 128,000.

All of the Company's systems are currently operational. A system is
deemed operational when it has met the FCC's requirements for an operating
license and has received an FCC license to commence operations.

PRODUCTS AND SERVICES

The Company's principal source of revenue is providing network access
and airtime minutes of use to wireless telephone subscribers. Other services
available to wireless telephone subscribers are similar to those provided by
conventional landline telephone systems, including custom calling features such
as voice mail, call forwarding, call waiting and conference calling. In Puerto
Rico, the Company also offers fixed wireless, enhanced services (including
internet), long distance, and, to businesses only, dedicated and switched local
phone services.

The Company is responsible for the quality, pricing and packaging of
its wireless service for each of the domestic wireless telephone systems and the
Puerto Rico integrated communication system. The Company offers several pricing
plans and customers are able to choose the plan that best fits their calling
needs. The plans combine different charges for monthly access, usage, custom
calling features and, in some cases, varying amounts of pre-paid minutes of
usage.

5



The Company also generates revenue from subscribers of other wireless
telephone systems when such subscribers ("roamers") place or receive calls on
its systems. Reciprocal agreements between the Company and other wireless
telephone system operators allow their respective subscribers to place calls in
most service areas throughout the country and Puerto Rico.

The Company offers for sale or lease to its customers a wide variety
of wireless telephones, including mobile, transportable and fully portable
wireless telephones. The Company generally has offered significant discounts on
wireless telephones in an effort to attract domestic customers.

MARKETING

The Company's marketing objective is to increase its customer base,
increase usage and reduce subscriber cancellations. The current marketing
strategy emphasizes continued net subscriber growth and targets customers who
are likely to generate higher monthly revenues. However, as a result of broader
acceptance of wireless telephone and the continued decline in the cost of
wireless equipment, subscribers may be drawn from an increasingly wider range of
occupations and demographics. In marketing wireless telephone service, the
Company stresses the quality of its wireless telephone service, easy and rapid
access to telephone services, competitive prices, state-of-the-art features, and
the local presence of its customer service representatives and technical staff
(see "Customer Service"). In areas where the domestic wireless telephone systems
are in markets adjacent or proximate to one another, the Company offers wider
home calling areas, enabling subscribers to make calls in a larger geographic
area without incurring roaming fees. The Company uses a variety of television,
billboard, radio and newspaper advertising to stimulate interest in telephone
service.

The Company uses both its own internal sales force and independent
agents, dealers and resellers to obtain customers for wireless telephone service
in the domestic wireless telephone systems and the Puerto Rico integrated
communication system. The Company's internal sales force of over 900 employees
is paid on a salary plus commission basis. Sales commissions are structured to
take into account the rate plan selected, and for the domestic wireless
telephone system, the length of the subscriber's contract and the type of
wireless telephone sold. The Company also maintains an ongoing training program
to improve the effectiveness of its internal sales force. The Company's dealers
are independent contractors paid solely on a commission basis, and include
entities whose principal business is selling wireless telephones as well as
other entities whose customers may become wireless telephone users, such as
office supply stores, car stereo companies, auto parts stores, appliance stores
and department stores.

CUSTOMER SERVICE

The Company is committed to assuring consistently high quality
customer service. Each of the domestic wireless telephone systems and the Puerto
Rico integrated communication system has a local staff, including a manager,
customer service representatives and technical engineering staff. The Company
has established local customer support facilities in all the domestic wireless
telephone systems and the Puerto Rico integrated communication system, and
customers are able to report wireless telephone service problems to a local
office 24 hours a day. The Company believes that by having local offices and
customer support facilities it is better able to service customers and monitor
the technical quality of the Domestic wireless telephone systems and the Puerto
Rico integrated communication system.

6


SYSTEM CONSTRUCTION, OPERATION AND DEVELOPMENT

Construction of wireless telephone systems is capital intensive,
requiring a substantial investment for land and improvements, buildings, towers,
switches, cell site equipment, microwave equipment, engineering and
installation. Until technological limitations on total capacity are approached,
additional wireless telephone system capacity can normally be added in
increments that closely match demand and at less than the proportionate cost of
the initial coverage and capacity. Most of the domestic systems were upgraded
during the summer of 1999 to offer digital services and currently support both
digital and analog wireless service.

The Company hires consulting engineers and telecommunications general
contractors to assist the Company's internal technical personnel in the design
and management of the construction and expansion of each of the domestic
wireless telephone systems and Puerto Rico integrated communication system. By
doing so, the Company believes it improves the overall system engineering and
construction quality and reduces the expense and time required to make and keep
the systems operating at a high level of technical quality.

In accordance with its strategy of developing market clusters, the
Company has selected wireless switching systems that are capable of serving
multiple markets with a single switch. Where the Company has deemed it
appropriate, the Company has implemented microwave links and fiber
interconnection in the domestic wireless telephone systems and Puerto Rico
integrated communication system, which provides ongoing cost efficiency and
generally improves system reliability.

The construction of the Company's Puerto Rico integrated communication
system is capital intensive, in part because numerous low power PCS base station
transmitters are required to provide coverage to the licensed area. The Company
continues to invest in response to rapid growth. A second switch was installed
in 1999 and cell sites have been upgraded to provide additional capacity. The
Company is a participant in the ARCOS I and Americas II undersea cables linking
Puerto Rico, the United States mainland and Latin America. ARCOS I is expected
to be operational in the fourth quarter of the year 2000 and Americas II is
expected to be operational in January 2000. Centennial's participation in these
undersea cables is expected to yield cost savings for the Company.

The FCC has established construction benchmarks which require that 30
MHz broadband PCS systems, such as the Puerto Rico wireless telephone system,
serve at least one-third of the population in its licensed area within five
years of being licensed and two-thirds of the population in their licensed area
within ten years of being licensed. The Company believes it is in compliance
with this requirement.

FISCAL 1997 ACQUISITION

On September 12, 1996, the Company acquired 100% of the ownership
interests in the partnership owning the wireless telephone system serving the
Benton Harbor, Michigan MSA for approximately $35 million in cash. The Benton
Harbor market represents approximately 161,400 Net Pops.

FISCAL 1999 DISPOSITION

On June 8, 1998, the Company disposed of its investment interest in
the Coconino, Arizona RSA, representing approximately 43,500 Net Pops, for $13.5
million in cash. The Company recorded a pre-tax gain of approximately $7.6
million in relation to the sale of this investment interest.

FISCAL 2000 ACQUISITION

On June 28, 1999, the Company entered into an agreement to acquire
100% of the ownership interests in a partnership owning the wireless telephone
system serving the Allegen, Michigan RSA. The Allegen market represents
approximately 100,000 Net Pops. The Company has agreed to a purchase price of
approximately $34 million in cash and stock, subject to adjustment. The
obligation of the Company to consummate this transaction is subject to certain
closing conditions, including the relevant regulatory approvals. The Company
anticipates completing this acquisition in October 1999.

7


COMPETITION

COMPETITION FROM OTHER WIRELESS SYSTEMS. The FCC grants two 25 MHz
licenses to operate cellular telephone systems in each of 306 MSAs and of 428
RSAs. The FCC also grants two 30 MHz licenses to operate broadband PCS systems
in each of 51 defined Major Trading Areas ("MTAs") and one 30 MHz and three 10
MHz licenses in each of 493 Basic Trading Areas ("BTAs"), which are component
parts of MTAs. The FCC has granted licenses to eight companies (including
Centennial) to provide wireless telephony services in all or part of our service
areas. The Company currently holds cellular licenses in 29 MSAs and RSAs, and
one broadband PCS license in the Puerto Rico MTA. The Company's systems compete
directly with both cellular and broadband PCS licensees in each market on the
basis of quality, price, area served, services offered and responsiveness of
customer service. The Company also may be placed at a competitive disadvantage
with the other licensees in a market if such licensees provide wireless
telephone service in adjacent markets.

Our main competitors for wireless services in the Puerto Rico market
are Cellular Communications of Puerto Rico, Inc. ("CCPR") and the Puerto Rico
Telephone Company ("PRTC"). CCPR recently announced their agreement to be
acquired by SBC Communications Inc. and Telefonos de Mexico subject to obtaining
regulatory approval. In March 1999, the GTE Group ("GTE") acquired PRTC. Both
competitors were earlier entrants into the Puerto Rico wireless market and have
greater resources than we do. They currently hold subscriber market shares of
approximately 49% and 34%, respectively. CCPR and PRTC offer cellular service
based on both analog and digital technology. We offer digital service in Puerto
Rico.

We expect increased competition in the wireless market from other
broadband personal communication services license holders. They include
ClearComm L.P., which through a joint venture with Telefonica Larga Distancia
("TLD"), a subsidiary of Telefonica Internacional S.A., is expected to enter the
wireless market shortly. In June 1999, TeleCorp PCS Inc., an affiliate of AT&T
Corp., doing business as SunCom, entered the Puerto Rico marketplace as the
second PCS entrant.

PRTC is also our primary competitor for traditional wireline telephone
service. We also expect to have competition from CCPR, Telefonica Espana and
resellers of PRTC's network. GTE may make changes to improve its competitive
position in Puerto Rico. Any increase in our market presence for wireline
communication services will depend upon our ability to obtain customers that are
underserved by PRTC or looking for an alternative.

Many of the Company's competitors are larger and may have access to
more substantial financial resources than the Company. These competitors include
Regional Bell Operating Companies, large independent telephone companies and
AT&T Wireless, among others.

COMPETING TECHNOLOGIES. Competition from entities using communications
technologies comparable to cellular service is developing more slowly because we
are in rural and small city areas. Competing technologies or any new
technologies may provide significant competition for our domestic wireless
telephone systems. New technologies that are comparable to cellular service
include:

o personal communications services
o ESMR and
o satellite-based services

Many personal communication services licensees who will compete with
us have access to substantial capital resources. In addition, many of these
companies, or their affiliates, already operate large cellular telephone systems
and thus bring significant wireless experience to this new marketplace.

8



ESMR is a two-way wireless communications service that incorporates
characteristics of cellular technology, including many low-power transmitters
and connection with the network that provides traditional telephone services.
ESMR service may compete with cellular service by providing digital
communication technology, lower rates, enhanced privacy and additional features
such as electronic mail and built-in paging. Nextel Communications, Inc. is the
primary provider of such services today.

The FCC has issued a number of licenses for satellite-based services
that would enable subscribers to access mobile communications systems throughout
the world. Additional proposals for the provision of satellite services remain
pending with the FCC and foreign regulatory bodies must approve certain aspects
of some satellite systems.

REGULATION

FEDERAL REGULATION. Pursuant to the Communications Act of 1934, as
amended (the "Communications Act"), the cellular, PCS, paging, conventional
mobile telephone systems and SMR systems operated by the Company are licensed
and regulated by the FCC as Commercial Mobile Radio Service ("CMRS") facilities.
Currently, the FCC limits entities to holding licenses for a total of 45 MHz of
licensed CMRS spectrum in any given market area, although the FCC is considering
modifying or removing this restriction.

Cellular and PCS licenses are granted for a term of up to ten years,
after which they must be renewed. Licenses may be revoked and license renewal
applications denied for cause. It is possible that there may be competition for
a license upon the expiration of its initial license term. While there can be no
assurance that any license will be renewed, the FCC's rules provide for a
significant renewal preference to a cellular and PCS licensee that has used its
spectrum for its intended purpose, and complied with FCC regulations and the
federal communications statutes. If a cellular and PCS licensee is awarded a
renewal expectancy, its renewal will be granted without further consideration of
any competing applications.

The FCC's rules prohibit CMRS licensees from imposing restrictions on
the resale of wireless service by parties who purchase blocks of telephone
numbers from an operational system and then resell them to the public. This
prohibition expires on November 24, 2002.

The FCC also regulates a number of other aspects of the operation and
ownership of CMRS systems. There can be no assurance that any FCC requirements
currently applicable to the Company's CMRS systems will not be changed in the
future.

STATE AND LOCAL REGULATION. Under the Communications Act, no state may
regulate the entry of CMRS providers, such as the Company, or the rates charged
for CMRS service. However, they can regulate other terms and conditions of
service.

The siting and construction of the CMRS facilities, including
transmission towers, antennas and equipment shelters, may be subject to state or
local zoning, land use and other local regulations. Before a system can be put
into commercial operation, the holder of a FCC CMRS license must obtain all
necessary zoning and building permit approvals for the transmitter sites and
MTSO locations.

RECENT FEDERAL AND STATE LEGISLATION. The Telecommunications Act of
1996 (the "1996 Act"), contains significant provisions aimed, in part, at
opening local telecommunications markets to competition. These provisions
govern, among other telecommunications matters, the removal of market-entry
barriers and impose on incumbent local exchange carriers ("ILECs") duties to
negotiate, in good faith, reasonable and nondiscriminatory interconnection
agreements and access to unbundled network elements at any technically feasible
point within the carrier's network. The 1996 Act encourages competition through
provisions governing resale, number portability, dialing parity, access to
right-of-ways and numbering administration.

9



The overall impact of the 1996 Act on the business of the Company is
unclear and will likely remain so for the foreseeable future. The Company has
benefited from reduced costs in acquiring required communications services, such
as ILEC interconnection. However, other provisions of the 1996 Act relating to
interconnection, telephone number portability, equal access and resale could
subject the Company to increased competition.

Comprehensive telecommunications reform legislation was enacted in
1996 by the Commonwealth of Puerto Rico. This legislation, titled the Puerto
Rico Telecommunications Act of 1996 (the "Puerto Rico Act"), intends to open the
Puerto Rico telecommunications market to competition and, among other things, it
establishes the Puerto Rico Telecommunications Regulatory Board (the "Board")
which has been given primary regulatory jurisdiction in Puerto Rico over all
telecommunications services, all service providers, and all persons with a
direct or indirect interest in said services or providers. On December 12, 1996,
the Board assumed jurisdiction over all intra-island telecommunications matters.
The Puerto Rico legislature is currently considering legislation to amend the
Puerto Rico Act.

FCC AND STATE PROCEEDINGS. The 1996 Act imposes interconnection
obligations on all telecommunications carriers in order to facilitate the entry
of new telecommunications providers. This requirement has the potential of
creating benefits for the Company's CMRS and other telecommunications
businesses. In August 1996, the FCC issued comprehensive rules regarding the
introduction of competition into the local telephone market. These rules address
most aspects of the provision of competitive local telephony services from both
facilities-based and non-facilities-based competitors, including cellular and
paging operators. The rules address the process by which potential competitors
negotiate with incumbent telephone companies for interconnection, the facilities
that must be available for interconnection, the use of components of the
incumbents' networks, the resale of services of others, and the pricing of
interconnection and other services and facilities used for offering competitive
local telephone services. The rules also provide that ILECs must begin paying
the Company and other wireless providers immediately for terminating
landline-originated traffic on the wireless facilities. On appeal, in January
1999, the U.S. Supreme Court largely upheld the FCC's rules.

Decisions relating to Universal Service and access charge reform have
also been released by the FCC. These decisions have been appealed. The Fifth
Circuit Court of Appeals reversed and remanded the FCC rules pertaining to
Universal Service. Among other things, the Fifth Circuit upheld the authority of
the FCC to create a special fund to subsidize telecommunications and internet
services for schools and libraries, but held that the FCC could not use
intra-state revenue as a source of funds to support the Schools and Library
Fund, thus creating a greater burden on interstate revenues. The Fifth Circuit
held that ILECs could not use access charges that are assessed on long distance
carriers to subsidize Universal Service obligations.

On December 26, 1996, the Company, on behalf of its PCS subsidiary,
filed a petition with the Board seeking arbitration of the many unresolved
issues in the negotiation with PRTC for interconnection of the Company's PCS
network with PRTC's landline telephone network. On January 21, 1997, the Company
filed a petition with the Board seeking arbitration of the many unresolved
issues in the negotiation with PRTC for interconnection of the Company's fiber
optic network with PRTC's landline telephone network. Subsequently, in March
1997, the Company and its PCS subsidiary successfully negotiated interconnection
agreements with PRTC covering most of the unresolved issues. Those agreements,
which reflect considerably lower interconnection rates than those PRTC had been
charging, have been approved by the Board and were in effect from April 1997 to
April 1999. On February 16 and 17, 1999, the Company's PCS and landline
subsidiaries arbitrated their second interconnection agreement with PRTC and
entered into an agreement on March 27, 1999 pursuant to the arbitrator's

10



decision. The Company filed for reconsideration of the arbitrator's findings
with the Puerto Rico Telecommunications Board. On July 23, 1999, the Board
rendered a decision under which the Company will benefit from being assessed
lower interconnection charges for a broader range of calls than originally
permitted by the arbitrator. (Under federal law, all calls from the Company's
wireless customers to PRTC's customers are already subject to lower charges).
However, the Company will not be entitled to compensation for its construction
of diverse routing (which enhances reliability) between its facilities and
PRTC's facilities.

DIGITAL WIRELESS TECHNOLOGY

The wireless industry currently is converting rapidly from analog to
digital technology. This conversion is due in part to capacity constraints in
many of the largest cellular markets, such as Los Angeles, New York and Chicago.
As carriers reach limited capacity levels, certain calls may be unable to be
completed, especially during peak hours. Digital technology increases system
capacity and offers other advantages over analog technology, including improved
overall average signal quality, improved call security, potentially lower
incremental costs for additional subscribers and the ability to provide data
transmission services.

The Company has upgraded its cellular telephone systems from analog to
digital technology and provides digital cellular telephone service in most of
its cellular telephone markets. The implementation of digital technology
increases capacity and responds to subscriber demand for longer battery life,
secure and confidential communications, the introduction of new cellular
telephone services such as calling line identification, and the delivery of data
communications.

The benefits of digital radio channels can only be achieved if
subscribers purchase cellular telephones that are capable of transmitting and
receiving digital signals. Currently, such telephones are more costly than
analog telephones. In addition, since most of the Company's existing domestic
subscribers currently have cellular telephones that exclusively utilize analog
technology, it will be necessary to continue to support, and if necessary
increase, the number of analog radio channels within the network for many years.

EMPLOYEES

The Company had approximately 1,726 employees as of May 31, 1999. None
of the Company's employees is represented by a labor organization. The Company
considers its relationship with its employees to be good.

ITEM 2. PROPERTIES

The Company leases office space at 1305 and 1325 Campus Parkway,
Neptune, New Jersey, where it has its principal corporate office. The Company
also leases office space at 1415 Wyckoff Road, Farmingdale, New Jersey.

The properties for switch and cell sites in the domestic wireless
telephone systems and the Puerto Rico wireless telephone system are either owned
(approximately 16%) or leased (approximately 84%), typically under short-term
leases, by the Company or one of its subsidiaries or the partnership, joint
venture or corporation which holds the construction permit or license (in the
case of the domestic wireless telephone systems in which the Company has a
minority interest).

The Company considers the properties owned and leased by it to be
suitable and adequate for its business operations.

11



ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings, other than routine
litigation incidental to the business, to which the Company or any of its
subsidiaries is a party to or which any of their property is subject.

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

There were no matters submitted to a vote of Centennial's shareholders
during the fiscal quarter ended May 31, 1999.

DIRECTORS AND EXECUTIVE OFFICERS OF CENTENNIAL

The names, ages and positions of the executive officers and directors
of Centennial are listed below along with their business experience during at
least the past five years.

Executive officers of Centennial are elected annually by the board of
directors and serve until their successors are duly elected and qualified. Each
director is elected annually and serves until their successors are duly elected
and qualified. There are no arrangements or understandings between any officer
and any other person pursuant to which the officer was selected, and there are
no family relationships between any executive officers or any directors of the
Company.

MICHAEL J. SMALL, 41, is President, Chief Executive Officer and a
director of Centennial. He joined Centennial upon the consummation of the
merger. Prior to joining Centennial, Mr. Small served as Executive Vice
President and Chief Financial Officer of 360 Degree Communications Company (now
a subsidiary of ALLTEL Corporation) since 1995. Prior to 1995, he served as
President of Lynch Corporation, a diversified acquisition-oriented company with
operations in telecommunications, manufacturing and transportation services.

PETER W. CHEHAYL, 51, became Senior Vice President, Treasurer and
Chief Financial Officer of Centennial. He joined Centennial upon the
consummation of the merger. Prior to joining Centennial, Mr. Chehayl was the
Vice President and Treasurer of 360 Degree Communications Company (now a
subsidiary of ALLTEL Corporation) since 1996. From 1991 to 1996, he served as
Vice President-Capital Markets at Sprint Corporation.

PHILLIP H. MAYBERRY, 46, has been President - Domestic Operations of
Centennial since January 1999 and was Senior Vice President-Operations since
December 1994. He served as Vice President, Operations of Centennial from April
1990 to December 1994. From March 1989 to April 1990, Mr. Mayberry was a Vice
President and General Manager of Metro Mobile CTS, Inc., a cellular telephone
company.

KARI L. JORDAN, 45, has been President-Caribbean Operations of
Centennial since January 1999. She joined Centennial in January 1998 as Senior
Vice President of International Operations from PrimeCo Communications L.P.
where she was responsible for the operations of the North Texas MTA. From 1990
to January 1997, Ms. Jordan worked at US Cellular as Vice President of Business
Development. During her tenure at US Cellular, Ms. Jordan also served as Vice
President of National Operations and Regional General Manager.

THOMAS R. COGAR, Jr., 42, has been Senior Vice President and Chief
Technology Officer- Domestic Operations of Centennial since March 1999. He
joined Centennial in September 1990 as Director of Engineering and was appointed
Vice President, Engineering in August 1991. From May 1987 to September 1990, Mr.
Cogar was employed by Metro Mobile CTS, Inc. in various technical capacities,
most recently as Northeast Manager of Technical Operations.

12



MICHAEL MARRERO, 37, has been Senior Vice President - Engineering
(Puerto Rico) and Chief Technology Officer- Puerto Rico Operations of Centennial
since March 1999. He joined Centennial in April 1995 as Director of Technical
Operations and was appointed Vice President - Engineering (Puerto Rico) in April
1997. Prior to joining Centennial, Mr. Marrero served as the Manager of
Strategic Planning for the PRTC from May 1988 to April 1995. Prior to 1987, Mr.
Marrero served in various capacities at Bell Corp.

THOMAS E. BUCKS, 43, has been Senior Vice President - Controller of
Centennial since March 1995. Prior to joining Centennial, Mr. Bucks was employed
by Southwestern Bell Corporation in various financial capacities, most recently
as District Manager - Financial Analysis and Planning.

JOHN H. CASEY, III, 43, has been Senior Vice President -
Administration of Centennial since July 1997 and served as Vice
President-Operations from January 1995 to June 1997. He was a Regional Manager
of Centennial from January 1991 to December 1994. From August 1989 to December
1990, Mr. Casey was employed by McCaw Cellular One as a district general
manager.

THOMAS E. MCINERNEY, 57, is a director and the Chairman of the board
of directors of Centennial. He has served as a managing member or general
partner of the respective sole general partners of WCAS VIII and other
associated investment partnerships since 1986. He is a director of The Cerplex
Group, Inc., The BISYS Group, Inc., MEDE America Corporation and several private
companies.

ANTHONY J. DE NICOLA, 34, is a director of Centennial. He has served
as a managing member or general partner of the respective sole general partners
of WCAS VIII and other associated investment partnerships since 1994.
Previously, Mr. de Nicola worked for William Blair & Co. for four years
financing middle market buyouts. He is a director of MEDE America Corporation
and several private companies.

RUDOLPH E. RUPERT, 33, is a director of Centennial. In April, 1999 he
became a managing member or general partner at the respective sole general
partners of WCAS VIII and other associated investment partnerships. He was a
Vice President of the investment adviser to WCAS VIII and other associated
investment partnerships from 1997 to April, 1999. From 1994 to 1997, he worked
at General Atlantic Partners where he was involved in the information technology
industry. From 1987 to 1992, he worked for Lazard Freres and Company. Mr. Rupert
is a director of several private companies.

MARK T. GALLOGLY, 42, is a director of Centennial. He is a member of
the limited liability company that acts as the general partner of Blackstone
Capital Partners, L.P. and its affiliates. He is a Senior Managing Director of
The Blackstone Group L.P. and has been with Blackstone since 1989. Mr. Gallogly
is a member of the boards of directors of Intermedia Partners VI, L.P., CommNet
Cellular Inc. and TWFanch-One Co.

LAWRENCE H. GUFFEY, 30, is a director of Centennial. He is a Managing
Director of The Blackstone Group, L.P., with which he has been associated since
1991. He is a member of the board of directors of CommNet Cellular Inc. and
TWFanch-One Co.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET INFORMATION AND HOLDERS

Centennial's class A common stock has been traded in The Nasdaq Stock
Market ("Nasdaq") under the symbol CYCL since December 3, 1991. The following
table lists the high and low sale prices of the class A common stock reported on
Nasdaq for the fiscal quarters indicated.

13


HIGH LOW

1998

First Quarter $ 6.04 $ 4.29
Second Quarter 7.04 5.25
Third Quarter 7.38 6.00
Fourth Quarter 11.77 5.50

1999

First Quarter 13.83 11.21
Second Quarter 13.46 7.33
Third Quarter 35.38 13.17
Fourth Quarter 76.75 30.50

2000

First Quarter (through July 30, 1999) 49.50 34.88

As of July 30, 1999, there were approximately 117 record holders of
Centennial's class A common stock. Such number does not include persons whose
shares are held of record by a bank, brokerage house or clearing agency, but
does include such banks, brokerage houses and clearing agencies.

DIVIDEND POLICY

Centennial has not paid any cash dividends on its common stock and
currently intends for the foreseeable future to retain all cash inflows
generated for use in the Company's business. Centennial is effectively
prohibited from paying cash dividends on its common stock by the provisions of
the Company's credit facility.














14

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The selected consolidated financial data set forth below for each of
the five years in the period ended May 31, 1999 was derived from the Company's
audited Consolidated Financial Statements. The following information should be
read in conjunction with Management's Discussion and Analysis of Results of
Operations and Financial Condition and the Consolidated Financial Statements and
notes thereto included elsewhere herein.



Year Ended May 31,
------------------

1999 1998 1997 1996 1995
---- ---- ---- ---- ----


STATEMENT OF OPERATIONS DATA

Revenues......................................... $ 369,151 $ 235,816 $149,212 $108,110 $ 82,651

Recapitalization costs........................... 52,831 - - - -

Operating income (loss).......................... 15,971 (14,986) (27,868) (23,196) (31,198)

Loss before extraordinary item................... (45,088) (31,947) (33,295) (16,631) (32,730)

Extraordinary loss on early extinguishment of debt,
net of income taxes of ($16,698)............... (35,079) - - - -

Net loss......................................... $ (80,167) $ (31,947) $(33,295) $(16,631) $(32,730)
========= ========= ======== ======== ========

Dividend requirements on Preferred Stock......... $ 9,906 $ 16,451 $ 15,948 $ 13,590 $ 12,634
========= ========= ======== ======== ========

Loss applicable to common shares................. $ (90,073) $ (48,398) $ 49,243) $(30,221) $(45,364)
========= ========= ======== ======== ========



Basic and diluted earnings per share:

Loss before extraordinary item....................... $ (1.20) $ (0.84) $ (0.82) $ (0.51) $ (0.90)
======== ======== ======== ======== ========
Extraordinary loss on early extinguishment of debt... $ (0.76) $ - $ - $ - $ -
======== ======== ======== ======== ========
Net loss applicable to common shares................. $ (1.96) $ (0.84) $ (0.82) $ (0.51) $ (0.90)
======== ======== ======== ======== ========
Weighted average number of basic common shares
outstanding during the period..................... 46,032 57,455 59,714 59,222 50,476
======== ======== ======== ======== ========

BALANCE SHEET DATA

Total assets......................................... $ 986,281 $847,417 $844,850 $785,812 $844,384

Long-term debt....................................... 1,459,295 510,000 429,000 350,000 350,000

Redeemable Preferred Stock........................... - 193,539 193,539 189,930 176,340

Common stockholders' equity (deficit)................ (602,978) 40,409 112,882 160,006 188,831





See Notes 13 and 14 of the fiscal 1999 consolidated financial statements
regarding recent acquisitions and the effect of such acquisitions on the
comparability of the historical financial statements of the Company. See Notes 1
and 2 of the fiscal 1999 consolidated financial statements regarding a change in
accounting estimate made during fiscal 1999.

Years prior to fiscal 1999 have been restated to give effect to the
three-for-one stock split distributed on January 13, 1999 in the form of a stock
dividend.

15



ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION

Results of Operations (Dollars in thousands, except subscriber, pop and share
data)

On January 7, 1999, CCW Acquisition Corp. ("Acquisition"), a
Delaware corporation organized at the direction of Welsh, Carson, Anderson &
Stowe VIII, L.P. ("WCAS VIII"), merged with and into the Company (the "Merger").
The Company continued as the surviving corporation in the Merger (the "Surviving
Corporation"). The Merger was accounted for as a recapitalization in which the
historical basis of the Company's assets and liabilities are not affected and no
new goodwill related to the Merger is created.

Pursuant to the terms of the merger agreement, dated as of July 2,
1998 and amended as of November 29, 1998, between the Company and Acquisition
(as amended, the "Merger Agreement"), at the time of the Merger, (i) the
Company's outstanding class A common stock was converted into the right to
receive $13.83 per share (adjusted for a three for one stock split for holders'
of record on January 8, 1999) in cash or to receive common shares of the
Surviving Corporation (the "Surviving Corporation Shares") representing 7.1% of
the Surviving Corporation Shares outstanding immediately after the Merger, (ii)
the Company's outstanding class B common stock was converted into the right to
receive $13.83 per share in cash, and (iii) all outstanding convertible
redeemable preferred stock and second series convertible redeemable preferred
stock were converted into the right to receive $13.83 per share in cash on an
as-converted basis. Holders of class A common stock who elected to receive
Surviving Corporation Shares each received approximately 9.3% of the shares with
respect to which they had made an effective election.

Pursuant to the Merger Agreement, at the time of the Merger, each
option to purchase class A common stock granted under the Company's 1991
Employee Stock Option Plan and Non-Employee/Officer Director Option Plan, as
amended, was exercised or canceled pursuant to its terms or in exchange for a
cash amount equal to the difference between $13.83 and the exercise price of the
option prior to the effective time of the Merger.

The Company recorded one-time charges of $52,831 for the fiscal year
ended May 31, 1999 as recapitalization costs. These costs are primarily due to
the purchase by the Company of non-qualifying disposition of stock options
exercised, restricted shares and the outstanding options from employees. As part
of the Merger all outstanding options purchased were recorded as additional
compensation.

The Company is in a highly competitive business, competing with other
providers of wireless telephone service and providers of telephone services
using different technologies. Since August 1988, the Company has acquired
twenty-nine wireless telephone markets in the United States that it owns and
manages ("Domestic"). In addition, the Company acquired one of two Metropolitan
Trading Areas ("MTA") licenses to provide broadband personal communications
services ("PCS") in the Commonwealth of Puerto Rico and the U.S. Virgin Islands
("PCS Wireless"). The Company also participates in the alternative access
business in Puerto Rico ("Wireline", and collectively with PCS Wireless,
Centennial de Puerto Rico). The Company wholly owns Centennial de Puerto Rico.
In December 1996, the Company began providing wireless telephone services in
Puerto Rico.

16



The Company must continue to adapt its business to technological,
competitive and economic changes. It is dependent on its ability to increase its
number of subscribers, net of cancellations, and to achieve acceptable revenue
per subscriber levels in increasingly competitive markets.

The Company is highly leveraged. The Company requires substantial
capital to operate, construct, expand and acquire wireless telephone systems, to
build-out its Puerto Rico telecommunications network and to pay debt service.
Historically, the Company has been dependent upon borrowings, the issuance of
its equity securities and operating cash flow to provide funds for such
purposes. There can be no assurance that it will continue to have access to such
sources of funds.

YEAR ENDED MAY 31, 1999 AND MAY 31, 1998

Revenue for the year ended May 31, 1999 was $369,151, an increase of
$133,335 or 57% over revenue of $235,816 for the year ended May 31, 1998.

Total Domestic service revenue, excluding roaming usage, increased
$34,466 to $153,615 representing a 29% increase from the year ended May 31,
1998, primarily due to an increase in subscribers. Domestic roamer usage
increased to $83,336 or 42% over roamer revenues of $58,850 for the year ended
May 31, 1998, primarily due to an increase in usage of $34,055 partially offset
by a decrease in the rate per minute of $9,569. Total PCS Wireless service
revenue increased $55,957 or 111% to $106,224. This increase reflects PCS
Wireless subscriber growth of $68,197, partially offset by lower subscriber
pricing of $12,240. Total Wireline service revenue increased by $14,895 to
$17,726.

The increase in equipment sales of wireless telephones and accessories
to subscribers was due to a larger number of telephone and accessory units sold
during the current year.

Wireless subscribers at May 31, 1999 were approximately 454,100, an
increase of 41% from the 322,200 subscribers at May 31, 1998. Increases from new
activations of 242,500 were offset by subscriber cancellations of 110,600. The
cancellations experienced by the Company are primarily the result of competitive
factors and non-payment. Domestic had approximately 320,600 and 252,700
subscribers at May 31, 1999 and 1998, respectively. PCS Wireless had
approximately 133,500 and 69,500 subscribers at May 31, 1999 and 1998,
respectively, and, as a result, accounted for approximately 49% of the net
increase in subscriptions.

Consolidated revenue per subscriber per month, based upon an average
number of subscribers, was $74 for the year ended May 31, 1999, as compared to
$72 for the year ended May 31, 1998. The average monthly revenue per subscriber
for the year ended May 31, 1999 was approximately $69 in the Domestic markets
and approximately $89 for PCS Wireless. The Company expects that revenue per
subscriber will be impacted by competition and lower reciprocal per minute
roaming rates with other wireless carriers.

Cost of equipment sold increased during the year ended May 31, 1999,
primarily due to an increase in the number of telephone units sold.

17



Cost of services increased during the year ended May 31, 1999,
primarily due to the variable costs associated with a larger revenue and
subscription base and increased wireless coverage areas resulting from the
continued expansion of the Company's network.

Sales and marketing expenses increased during the year ended May 31,
1999, primarily due to the increase in gross subscriber additions.

General and administrative expenses increased during the year ended
May 31, 1999, primarily due to increased costs to support the expanding
subscriber base.

Earnings before interest, taxes, depreciation, amortization,
extraordinary items, income from equity investments, gain (loss) on disposition
of assets, allocations to minority interests in consolidated subsidiaries and
recapitalization costs ("Adjusted EBITDA") for the year ended May 31, 1999 was
$183,498, an increase of $84,290 or 85% over the year ended May 31, 1998.
Adjusted EBITDA for Domestic was $127,431, an increase of $40,761 over the year
ended May 31, 1998. Adjusted EBITDA for Centennial de Puerto Rico was $56,067,
an increase of $43,529 over the year ended May 31, 1998. Adjusted EBITDA is
presented because it is a financial indicator used in the telecommunications
industry. Our calculation of Adjusted EBITDA may or may not be consistent with
the calculation of Adjusted EBITDA by other companies and should not be viewed
as an alternative to generally accepted accounting principles (GAAP)
measurements such as operating income, net income or cash flows from operations.

The Company anticipates continued increases in the cost of services,
sales and marketing and general and administrative expenses as the growth of its
existing business continues. In addition, the Company expects that the continued
development of its markets as well as its participation in the Puerto Rico
telecommunications business will contribute to a continued increase in the level
of expenses.

Depreciation and amortization for the year ended May 31, 1999 was
$114,696, an increase of $502 or less than 1% over the year ended May 31, 1998.
The increase results from capital expenditures made during fiscal 1999 and 1998
in connection with the development and network expansion of the Company's
wireless telephone systems and the purchase of PCS phones in Puerto Rico. The
increase related to such capital expenditures was largely offset by the effect
of the Company prospectively changing the amortization period for its cellular
telephone licenses and the difference between the cost of its equity investments
and the underlying book value of such investments from ten years to forty years
effective March 1, 1999. The Company changed such amortization periods to better
reflect the period over which the economic benefits of the cellular licenses and
equity investments are expected to be realized. The effect of such changes in
amortization periods was a reduction in amortization expense of $11,989 for the
year ended May 31, 1999. Prior to the change in amortization periods, certain
cellular licenses became fully amortized during the year ended May 31, 1999,
which also partially offset the increase in depreciation and amortization.
Depreciation and amortization related to Centennial de Puerto Rico increased by
$14,622 over the year ended May 31, 1998.

Operating income for the year ended May 31, 1999 was $15,971, an
increase of $30,957 from the loss of $14,986 for the year ended May 31, 1998.
Included in operating income for the year ended May 31, 1999 was $52,831 of
recapitalization costs incurred in connection with the Merger. The operating
loss for Centennial de Puerto Rico was $4,841 and $20,254 for the years ended
May 31, 1999 and 1998, respectively. The operating loss for Centennial de Puerto
Rico includes $13,494 of recapitalization costs for the year ended May 31, 1999.

18



During the year ended May 31, 1999, the Company sold its investment
interest in the wireless telephone system serving the Coconino, Arizona RSA for
a cash purchase price of $13,500. The Company recognized a gain of $7,608 as a
result of the sale (see "Acquisitions, Exchanges, and Dispositions"). In
addition, the Company recognized a net gain of $423 upon the disposition of
fixed assets during fiscal 1999.

Net interest expense was $87,693 for the year ended May 31, 1999, an
increase of $44,223 or 102% from the year ended May 31, 1998. Gross interest
costs for the years ended May 31, 1999 and May 31, 1998 were $92,102 and
$45,155, respectively. The increase in interest expense reflects an increase in
long-term debt of $953,795 from May 31, 1998. On January 7, 1999 the Company
utilized a portion of these additional borrowings to repay existing debt,
including the early extinguishment of 99.5% of its Senior Notes due in 2001 and
2004. The increase in long-term debt is also the result of additional borrowings
related to the recapitalization of the Company, working capital needs and
capital expenditures related to the buildout of Centennial de Puerto Rico's PCS
network infrastructure and the purchase of PCS telephones. The average debt
outstanding during the year ended May 31, 1999 was $883,791, an increase of
$413,375 as compared to the average debt level of $470,416 during the year ended
May 31, 1998. The Company's weighted average interest rate increased to 10.42%
for the year ended May 31, 1999 from 9.60% for the year ended May 31, 1998.

After loss attributable to minority interests in subsidiaries for the
year ended May 31, 1999, a pretax loss, before extraordinary items, of $51,908
was incurred, as compared to a pretax loss of $45,544 for the year ended May 31,
1998. The income tax benefit was $6,820 for the year ended May 31, 1999. The tax
benefits are non-cash in nature.

The loss before extraordinary item of $45,088 for the year ended May
31, 1999 represents an increase of $13,141 from the loss before extraordinary
item of $31,947 for the year ended May 31, 1998. The Company had a $35,079
extraordinary loss on the early extinguishment of debt, net of income taxes of
$16,698 for the year ended May 31, 1999. These factors resulted in a net loss of
$80,167 for the year ended May 31, 1999, which represents an increase of $48,220
or 151% from the net loss of $31,947 for the year ended May 31, 1998. Centennial
de Puerto Rico accounted for 26% of the consolidated net loss for the year ended
May 31, 1999 as compared to 96% for 1998.

YEAR ENDED MAY 31, 1998 AND MAY 31, 1997

Revenue for the year ended May 31, 1998 was $235,816, an increase of
$86,604 or 58% over revenue of $149,212 for the year ended May 31, 1997.

Total Domestic service revenue, excluding roaming usage, increased
$31,392 to $119,149 representing a 36% increase from the year ended May 31,
1997, primarily due to an increase in subscribers. During the year ended May 31,
1998, Domestic roamer usage increased to $58,850 or 11% over roamer revenues of
$52,917 for the year ended May 31, 1997, primarily due to an increase in usage
of $14,830 partially offset by a decrease in the rate per minute of $8,897.
Centennial de Puerto Rico accounted for $47,418 or 56% of the increase in
service revenue. The year ended May 31, 1998 represented the first full year of
operations for Centennial de Puerto Rico. Total PCS Wireless service revenue

19


increased $44,786 to $50,267. This increase in service revenue for Centennial de
Puerto Rico also reflects Wireline revenue growth of $2,631 to $2,831.

The increase in equipment sales of wireless telephones and accessories
to subscribers was due to a larger number of telephone units sold during the
current year.

Wireless subscribers at May 31, 1998 were approximately 322,200, an
increase of 58% from the 203,900 subscribers at May 31, 1997. Increases from new
activations of 191,400 were offset by subscriber cancellations of 73,100. The
cancellations experienced by the Company are primarily the result of competitive
factors. Domestic had approximately 252,700 and 187,000 subscribers at May 31,
1998 and 1997, respectively. PCS Wireless had approximately 69,500 and 16,900
subscribers at May 31, 1998 and 1997, respectively, and, as a result, accounted
for 44% of the net increase in subscriptions.

Consolidated revenue per subscriber per month, based upon an average
number of subscribers for the year ended May 31, 1998, was $72 as compared to
$74 for the year ended May 31, 1997. The average monthly revenue per subscriber
was approximately $68 in the Domestic markets and approximately $92 for PCS
Wireless.

Cost of equipment sold increased during the year ended May 31, 1998,
primarily due to an increase in the number of telephone units sold and higher
phone costs for Centennial de Puerto Rico. These increases were partially offset
by a general decline in the wholesale prices of telephones.

Cost of services increased during the year ended May 31, 1998
primarily due to the variable costs associated with a larger revenue and
subscription base and increased wireless coverage areas resulting from the
continued expansion of the Company's network.

Sales and marketing expenses increased during the year ended May 31,
1998, primarily due to the increase in gross subscriber additions.

General and administrative expenses increased during the year ended
May 31, 1998, primarily due to increased costs to support the expanding
subscriber base.

Recurring EBITDA for the year ended May 31, 1998 was $99,208, an
increase of $43,356 or 78% over the year ended May 31, 1997. Recurring EBITDA
for the Domestic operations was $86,670, an increase of $22,393 over the year
ended May 31, 1997. Recurring EBITDA for Centennial de Puerto Rico was $12,538,
an increase of $20,963 over the year ended May 31, 1997.

Depreciation and amortization for the year ended May 31, 1998 was
$114,194, an increase of $30,474 or 36% over the year ended May 31, 1997. The
increase resulted from capital expenditures made during fiscal 1998 and 1997 in
connection with the development and network expansion of the Company's wireless
telephone systems. Depreciation and amortization related to Centennial de Puerto
Rico accounted for $26,464 or 87% of the increase.

The operating loss for the year ended May 31, 1998 was $14,986, a
decrease of $12,882 or 46% from the loss of $27,868 for the year ended May 31,
1997. The operating loss for Centennial de Puerto Rico was $20,254 and $14,753
for the years ended May 31, 1998 and 1997, respectively.

20



Net interest expense was $43,470 for the year ended May 31, 1998, an
increase of $11,902 or 38% from the year ended May 31, 1997. Interest expense
for the year ended May 31, 1997 was reduced by $2,752 of capitalized interest
charges related to the acquisition cost of the Company's Puerto Rico PCS license
during the pre-operational stage of the business. Gross interest costs for the
year ended May 31, 1998 and 1997 were $45,155 and $36,131, respectively. The
increase in gross interest costs reflects additional borrowings for working
capital, debt service and capital expenditures related to the buildout of
Centennial de Puerto Rico's PCS network infrastructure and the purchase of PCS
telephones. The average debt outstanding during the year ended May 31, 1998 was
$470,416, an increase of $95,523 as compared to the average debt level of
$374,893 during the year ended May 31, 1997. The increase in average debt
outstanding is principally related to the $76,000 in additional borrowings for
Centennial de Puerto Rico. The Company's weighted average interest rate
decreased to 9.60% for the year ended May 31, 1998 from 9.64% for the year ended
May 31, 1997.

After income attributable to minority interests in subsidiaries for
the year ended May 31, 1998, a pretax loss of $45,544 was incurred, as compared
to a pretax loss of $40,590 for the year ended May 31, 1997. The income tax
benefit was $13,597 for the year ended May 31, 1998. The tax benefits are
non-cash in nature.

The net loss of $31,947 for the year ended May 31, 1998 represents a
decrease of $1,348 or 4% from the net loss of $33,295 for the year ended May 31,
1997. Centennial de Puerto Rico accounted for 96% of the consolidated net loss
for the year ended May 31, 1998 as compared to 52% for 1997.

LIQUIDITY AND CAPITAL RESOURCES

For the year ended May 31, 1999, earnings were less than fixed charges
by $64,128. Fixed charges consist of interest expense, including amortization of
debt issue costs and the portion of rents deemed representative of the interest
portion of leases. The amount by which earnings were less than fixed charges
includes non-cash charges of $114,696 relating to depreciation and amortization.

As of May 31, 1999, the Company had $300,120 of property, plant and
equipment (net) placed in service. During the year ended May 31, 1999, the
Company made capital expenditures of $103,404, to continue the construction of
its Centennial de Puerto Rico systems and its Domestic systems to expand the
coverage areas of existing properties and to upgrade its cell sites and call
switching equipment. Capital expenditures for Centennial de Puerto Rico were
$65,496 for the year ended May 31, 1999, representing 63% of the Company's total
capital expenditures. Centennial de Puerto Rico's capital expenditures included
$38,941 to continue the buildout of the Company's PCS network infrastructure and
$26,555 to purchase telephone units which remain the property of the Company
while in use by subscribers. The Company's future commitments for property and
equipment include the addition of cell sites to expand coverage and enhancements
to the existing infrastructure of its wireless telephone systems. During fiscal
year 2000, the Company anticipates capital expenditures in its Domestic systems
of approximately $35,000. The Company currently estimates that the cost to

21



continue the expansion of its Puerto Rico network infrastructure and purchase
telephone units through fiscal 2000 will be approximately $80,000. This
acceleration is related to the growth the Company has experienced in its
Centennial de Puerto Rico business. Amounts required to finance the Company's
capital expenditures are expected to come primarily from cash flow generated
from operations with the remainder coming from borrowings under the Company's
existing revolving credit facility. The Company may seek various sources of
external financing including, but not limited to, bank financing, joint
ventures, partnerships and placement of debt or equity securities of the
Company.

In connection with the Merger, the Company and certain of its
subsidiaries entered into a credit facility ("Credit Facility") with Merrill
Lynch Capital Corporation, Bank of America, the Chase Manhattan Bank, The Bank
of Nova Scotia and Morgan Stanley Senior Funding, Inc. and certain other
financial institutions. The Credit Facility consists of three term loans in the
aggregate principal amount of $900,000, and a revolving credit facility with an
aggregate principal amount of $150,000, of which $897,750 and $36,000,
respectively, were outstanding as of May 31, 1999. Borrowings under the term
loans and the revolving credit facility bear interest at a rate per annum of the
LIBOR rate plus the applicable margin. The maximum applicable margin for the
term loans ranges between 3.00% and 3.75% above LIBOR. The Company has the
ability to choose between various LIBOR rates at the interest reset dates. The
weighted average LIBOR rate at May 31, 1999 was 4.99%. Based upon the Company's
leverage ratio after the delivery of certain financial statements after May 31,
1999, the applicable margin for portions of the term loans and the revolving
credit facility was reduced by 0.25% to 0.50%, effective July 7, 1999. The
Company's common stock in its subsidiaries is pledged as collateral for the
debt.

In connection with the Merger, an affiliate of WCAS VIII purchased
$180,000 of unsecured subordinated notes due 2009 and common shares of the
Company ("Mezzanine Debt"). The issuance has been allocated $157,500 to debt and
$22,500 to equity. The difference between the face value of the Mezzanine Debt
and the amount allocated to debt is being amortized over the term of the
Mezzanine Debt. The Mezzanine Debt bears cash interest at a rate of 10% or
pay-in-kind interest at a rate of 13% per annum.

The Company and a wholly-owned subsidiary of the Company issued
$370,000 of senior subordinated notes to qualified institutional buyers under a
private placement offering pursuant to Rule 144A and Regulation S under the
Securities Act of 1933, as amended. Approximately $57,500 of the proceeds from
this offering was used to purchase a portfolio of government securities that has
been pledged for the benefit of holders of the senior subordinated notes to pay
the first three interest payments on the notes. These investments, which include
government securities and overnight investments at May 31, 1999, are recorded as
restricted investments on the Company's consolidated balance sheet.

Under the above debt agreements, the Company is required to maintain
certain financial and operating covenants, is restricted in its use of
borrowing, and is limited in its ability to pay dividends and incur additional
indebtedness. The Company was in compliance with all covenants of their debt
agreements at May 31, 1999.

Additionally, in connection with the Merger, the Company consummated
tender offers to repurchase its two outstanding public debt issuances (the "Debt
Offers"). At the expiration of the Debt Offers, the Company paid consent
solicitation fees and tender offer payments to 99.4% of holders of its 8 7/8%
Senior Notes due 2001 and 99.8% of its 10 1/8% Senior Notes due 2005. The cost

22



to the Company of the redemption, including accrued interest, premium and
expenses were $396,812. In conjunction with the Merger the Company wrote off the
debt issuance costs related to the extinguished debt. The Company recognized an
extraordinary loss of $35,079, net of income taxes of $16,698 for the early
extinguishment of the Senior Notes.

Prior to the Merger, a wholly owned subsidiary of the Company had a
$180,000 revolving credit facility, as amended (the "Puerto Rico Credit
Facility"). The interest rate payable under the Puerto Rico Credit Facility was
based, at the election of the Company, on (a) the base rate, as defined, plus a
margin of 1.50% or (b) the Eurodollar base rate, as defined, plus a margin of
2.50%, adjusted for the maintenance of certain specified ratios, as applicable.

Additionally, prior to the Merger, the Company had a $75,000 domestic
revolving credit facility (the "Domestic Credit Facility"). The interest rate
payable on the Domestic Credit Facility was based, at the election of the
Company, on (a) the base rate, as defined, plus a margin of 2%, or (b) the
Eurodollar base rate, as defined, plus a margin of 3.00%.

Prior to the Merger, the Company had outstanding two classes of
preferred stock. During the years ended May 31, 1999, 1998 and 1997, the Company
paid quarterly cash dividends with respect to both classes of preferred stock
totaling $9,906, $12,338 and $8,226, respectively.

During the years ended May 31, 1999 and 1998, the Company purchased
23,501 and 4,630,200 shares of its class A common stock for an aggregate
purchase price of $1,077 and $28,813, respectively. These shares have been
accounted for as treasury shares. Subsequent to May 31, 1999, the Company has
not directly purchased any additional shares of its class A common stock.

In order to meet its obligations with respect to its operating needs,
capital expenditures, and debt service obligations, it is important that the
Company continue to improve operating cash flow. Increases in revenue will be
dependent upon continuing growth in the number of subscribers and maximizing
revenue per subscriber. The Company has continued the development of its
managerial, administrative and marketing functions, and is continuing the
construction of wireless systems in its existing and recently acquired markets
in order to achieve these objectives. There is no assurance that growth in
subscribers or revenue will occur. In addition, the Company's participation in
the Puerto Rico telecommunications business has been, and is expected to
continue to be, capital intensive. Further, due to the start-up nature of its
Centennial de Puerto Rico operations, the Company expects that it will require
additional cash investment to fund its operations over the next several years.
The Puerto Rico telecommunications operations has been, and is expected to
continue to be, highly competitive with the two existing wireless telephone
providers, as well as the other Puerto Rico telecommunications license holders.
There is no assurance that the Centennial de Puerto Rico operations will
continue to generate cash flows or reach profitability.

The following tables sets forth (in thousands), for the periods
indicated, the Company's net cash provided by operating activities before
interest payments (net cash provided), the Company's principal uses of such cash
and the cash available for (required from) financing and investing activities:

23





Years Ended May 31,
-------------------
1999 1998
---- ----
% of net % of net
cash cash
Amount provided Amount provided
------ -------- ------ --------

Net cash provided by Operating
Activities $ 144,178 73% $54,771 56%
Interest paid 52,844 27% 42,738 44%
--------- ---- ------- ----
Net cash provided $ 197,022 100% $97,509 100%
========= ==== ======= ====

Principal uses of cash
Interest paid $ 52,844 27% $42,738 44%
Property, plant & equipment 103,404 52% 129,300 133%
--------- ---- ------- ----
Total $ 156,248 79% $172,038 176%
========= ==== ======== ====
Cash available for (required from) other
financing and investing activities
$ 40,774 21% $(74,529) (76)%
========= ==== ======== ====



Net cash provided by operating activities for the year ended May 31,
1999 was sufficient to fund the Company's expenditures for property, plant and
equipment of $103,404.

24



The following table sets forth the primary cash flows provided by
(used in) other financing and investing activities for the periods indicated:



Years Ended May 31,
-------------------
1999 1998
---- ----


Proceeds from disposition of assets $ 4,702 $ 45
Proceeds from issuance of class A common stock 427,650 863
Proceeds from issuance of long-term debt 1,484,500 216,000
Proceeds from shareholder note receivable - 3,000
Disposition of equity investment 13,500 -
Distributions received from equity investments-net 10,958 9,322
----------- ---------
Cash available $ 1,941,310 $ 229,230
----------- ---------

Acquisition of other assets (2,200) (6,178)
Repayment of long-term debt (531,643) (135,000)
Debt issuance costs paid (61,212) (1,167)
Redemption of preferred stock (128,154) -
Treasury stock purchases (1,077) (28,813)
Acquisition of equity investment (3,000) -
Purchase of common stock in conjunction with the
recapitalization (1,052,436) -
Recapitalization costs paid (45,575) -
Premiums paid on early extinguishment of debt (44,634) -
Purchase of restricted securities-net (57,501) -
Dividends paid (18,131) (12,338)
-------- ---------
Capital (needed) available for operations and capital
expenditures $ (4,253) $ 45,734
========== =========



Based upon current market conditions and its current capital
structure, the Company believes that cash flows from operations and funds from
currently available credit facilities will be sufficient to enable the Company
to meet required cash commitments through the next twelve month period.

ACQUISITIONS, EXCHANGES AND DISPOSITIONS

The Company's primary acquisition strategy is to acquire controlling
ownership interests in wireless systems serving markets contiguous or proximate
to its current markets. The Company's strategy of clustering its wireless
operations in contiguous and proximate geographic areas enables it to achieve
operating and cost efficiencies as well as joint advertising and marketing
benefits. Clustering also allows the Company to offer its subscribers more areas
of uninterrupted service as they travel. In addition to expanding its existing
clusters, the Company also may seek to acquire interests in wireless systems in
other geographic areas. The Company also may pursue other communications
businesses related to its wireless telephone and other mobile service
operations, as well as other communications businesses it determines to be
desirable. The consideration for such acquisitions may consist of shares of
stock, cash, assumption of liabilities, or a combination thereof.


25



On June 28, 1999, the Company entered into an agreement to acquire
100% of the ownership interests in a partnership owning the wireless telephone
system serving the Allegan, Michigan RSA. The Allegan market represents
approximately 100,000 net pops. The Company has agreed to a purchase price of
approximately $34,000 in cash and stock, subject to adjustment. The obligation
of the Company to consummate this transaction is subject to certain closing
conditions, including the relevant regulatory approvals. The Company anticipates
completing this transaction in October 1999.

During fiscal 1999, the Company exercised its right to acquire the
minority interests held by Century Federal, Inc. in the Cass and Jackson,
Michigan systems for the prices paid by Century Federal for such minority
interests in the acquisitions of such systems ($2,000 and $1,000, respectively).
All of the purchase price was allocated to cellular telephone licenses. As a
result of these transactions, the Company owns 100% of these systems.

On June 8, 1998, the Company disposed of its investment interest in
the Coconino, Arizona RSA, representing approximately 43,500 net pops, for
$13,500 in cash. During fiscal 1999, the Company recorded a pre-tax gain of
approximately $7,608 in relation to the sale of this Investment Interest.

On September 12, 1996, the Company acquired 100% of the ownership
interests in the partnership owning the wireless telephone system serving the
Benton Harbor, Michigan MSA for approximately $35,000 in cash. The Benton Harbor
market represents approximately 161,400 net pops.

COMMITMENTS AND CONTINGENCIES

The Company has filed a shelf registration statement with the
Securities and Exchange Commission (the "SEC") for up to 8,000,000 shares of its
class A common stock that may be offered from time to time in connection with
acquisitions. The registration statement was declared effective by the SEC on
July 14, 1994. As of July 30, 1999, 4,239,231 shares remain available for future
acquisitions.

The Company has filed a shelf registration statement with the SEC for
the issuance of $500,000 of the Company's debt securities which was declared
effective by the SEC on April 6, 1995. The debt securities may be issued from
time to time, in series, on terms to be specified in one or more prospectus
supplements at the time of the offering. If so specified with respect to any
particular series, the debt securities may be convertible into shares of the
Company's class A common stock. As of July 30, 1999, $400,000 of debt securities
remained available for issuance.

The Year 2000 issue is the result of many computer programs being
written abbreviating dates by using two digits rather than four digits in the
year field. As a result, unless corrected, a computer program that has date
sensitive software may recognize a date using "00" in the year field as 1900
rather than the year 2000. This could result in system failures and errors
causing disruptions to various aspects of our business, including computer
systems, voice and data networks and building infrastructures.

26



The Company began a review of its computer systems and related
software in fiscal 1998 to identify systems and software which might malfunction
due to a misidentification of the year 2000. A committee consisting of members
of senior management from various disciplines was formed and is meeting
regularly to discuss the steps to be taken, and the results of steps that have
been completed, to deal with any potential Year 2000 issues. The Company's plan
to address the Year 2000 issue consists of six phases: (i) Awareness (ii)
Assessment (iii) Remediation (iv) Testing (v) Implementation and (vi)
Contingency Planning.

For the Company's internal computer systems and software, the
awareness and assessment phases have been completed and the remediation stage is
in process. Testing and implementation are expected to be completed by September
1999.

Most of the Company's customer-related computer systems and databases,
including its billing systems, are managed by third parties under contractual
arrangements. We have taken an active role in monitoring the progress of these
third parties, including selective Year 2000 compliance testing. The Company has
been informed by these third parties that their remediation efforts are in
various stages with final completion anticipated in September 1999.

For the local equipment used in the transmission and reception of all
signals, the Company completed the awareness and assessment phases in 1998. Any
remediation efforts that were necessary have since been completed and the
Company believes this local equipment is Year 2000 compliant.

The Company's systems are interconnected with various networks and
systems operated by third parties, including landline communications networks,
long-distance networks, the networks of other wireless service providers as well
as public utilities. The operators of these networks and systems are responsible
for addressing the Year 2000 issue in their own systems. The ability of the
Company's systems to operate, including the ability to provide wireless service,
is dependent upon these third party networks and systems being Year 2000
compliant. We have requested information from these vendors in order to
determine to what extent we may be exposed to their failure to correct their own
year 2000 problems. While many of these third parties have indicated to the
Company that they are or anticipate being Year 2000 compliant prior to December
31, 1999, the Company cannot assure that these third parties will have taken the
necessary corrective actions prior to the year 2000.

We currently believe that the Company's worst case scenario with
respect to the Year 2000 may involve the interruption of telecommunications or
public utilities services and/or interruption of customer billing. Either or
both of these events could have a material adverse effect on the Company's
financial condition or results of operations.

The Company has contingency plans in place for maintaining and
restoring service in the event of a natural disaster, power failure or
software-related interruption of service, and is working to utilize this
experience in the development and implementation of its Year 2000 contingency
plans. The Company's Year 2000 contingency plans will consist of the following:
identifying teams that will be on site at the network operating centers at the
time of the date change to monitor the networks and critical systems to react
immediately to commence repairs; developing alternate plans for critical work
processes in the event these processes experience Year 2000 disruptions; and
developing alternate processes to support critical customer functions in the
event mechanized processes experience Year 2000 disruptions. The Company
anticipates having these Year 2000 contingency plans in place before December
31, 1999.

27



The amounts expended to date by the Company related to Year 2000
compliance have not been material and have been expensed as incurred. The
Company does not anticipate that future amounts to be expended related to Year
2000 compliance will be material or have an adverse effect on the Company's
financial condition or results of operations.

CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR"
PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
(DOLLARS IN THOUSANDS, EXCEPT SUBSCRIBER, POP AND SHARE DATA)

This report contains or incorporates by reference forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Where any such forward-looking statement includes a statement of the
assumptions or bases underlying such forward-looking statement, the Company
cautions that assumed facts or bases almost always vary from actual results, and
the differences between assumed facts or bases and actual results can be
material, depending upon the circumstances. Where, in any forward-looking
statement, the Company or its management expresses an expectation or belief as
to future results, there can be no assurance that the statement of expectation
or belief will result or be achieved or accomplished. The words "believe",
"expect", "estimate", "anticipate", "project" and similar expressions may
identify forward-looking statements.

Taking into account the foregoing, the following are identified as
important factors that could cause actual results to differ materially from
those expressed in any forward-looking statement made by, or on behalf of, the
Company:

NET LOSSES; STOCKHOLDERS' EQUITY (DEFICIT)

The Company has reported net losses of $80,167, $31,947 and $33,295
for the fiscal years ended May 31, 1999, 1998 and 1997 respectively. Operating
income (loss) was $15,971, $(14,986) and $(27,868) for the respective periods.
Gross interest expense was $92,102, $45,155 and $33,379 for the respective
periods. There can be no assurance that profitability will be achieved in the
foreseeable future.

Reflecting net losses in prior periods, the common stockholders'
deficit as stated on the Company's consolidated balance sheet at May 31, 1999
was $602,978. The Company's assets, including its cellular telephone and PCS
licenses, are recorded on its balance sheet at historical cost. The Company
believes that the current fair value of such assets is significantly in excess
of their historical cost.

LEVERAGE; CAPITAL REQUIREMENTS

The wireless telephone business is capital intensive. The Company
requires substantial capital to operate, construct, expand and acquire wireless
telephone systems; to build out and operate its Puerto Rico Wireless Telephone
System; and to service its debt. Historically, the Company has been dependent
upon borrowings, operating cash flow and the issuance of its equity securities

28



to provide funds for such purposes. The Company will be dependent on external
financing measures to meet its operating, debt service, dividend and capital
expenditure requirements. In connection with the Merger, the Company incurred
additional indebtedness in the aggregate amount of approximately $976 million.
Some additional measures which the Company may from time to time consider
include, but are not limited to: bank financing, joint ventures, partnerships
and public and private placement of its debt or equity securities.

In recent years, the Company has incurred substantial indebtedness in
connection with the acquisition, construction and start-up expenses of wireless
telephone systems. At May 31, 1999, the Company had an aggregate of $1,463,795
outstanding principal amount of debt securities. The Indentures (as defined
below) for the Company's outstanding issues of publicly-held debt, as well as
the Company credit facility, impose certain restrictions including the
incurrence of additional indebtedness. See "Restrictive Covenants; Consequences
of Default" below.

For the year ended May 31, 1999, earnings were less than fixed charges
by $64,128. Such amounts reflect non-cash charges of $114,696, relating to
depreciation and amortization.

HIGHLY COMPETITIVE INDUSTRY

The Company's ability to maintain or increase its offering of wireless
telephone and other communications services can be subject to the changes in
consumer demand, price competition, and the cost and supply of hardware,
software and other technology required to provide such services. Future
profitability also may be affected by the Company's ability to compete with
other communications service enterprises. In each market the Company offers
service, there are competitive providers of wireless telephone service,
including providers of cellular, PCS, enhanced specialized mobile radio ("ESMR")
and satellite services. Competition for customers in each of the Company's
markets is principally on the basis of the technical quality of service, price,
size of area covered, services and enhancements offered, capacity and
responsiveness of customer service. Many of the Company's competitors have
financial resources which are substantially greater than those of the Company
and its partners in such markets.

The Company also faces competition from resellers. The FCC requires
providers of wireless telephone services to offer service to resellers on a
nondiscriminatory basis. A reseller buys blocks of telephone numbers from a
wireless telephone service provider, usually at a discounted rate, and resells
the service to the public for a profit. Many telecommunications companies resell
wireless telephone service as a complement to other services, such as long
distance or local telephone services.

In addition to competition from cellular and broadband PCS licensees,
there is also competition from a variety of other communications technologies.
See Item 1. "Business/Competition/Competing Technologies." Continuing
technological advances in the communications field make it impossible to predict
the extent of additional future competition for wireless systems, but it is
certain that in the future there will be more potential substitutes for wireless
service. There can be no assurance that the Company will not face significant
future competition or that the Company's current wireless technology will not
eventually become obsolete.

29


HIGHLY REGULATED INDUSTRY

The licensing, ownership, construction, operation and sale of
controlling interests in wireless telephone systems are regulated by the FCC.
Certain aspects of wireless telephone system ownership, sale, construction, and
operation (including, but not limited to, rates and the resale of wireless
service) may be subject to public utility or other state and municipal
regulation in the areas in which the Company provides service. Changes in the
regulation of wireless telephone system operators or their activities (such as
increased price regulation by state authorities or a decision by the FCC to
permit more than two licensees in each service area) could adversely affect the
business and operating results of the Company.

In addition, FCC licenses are subject to renewal and regulatory
compliance requirements. The transfer of a license or any controlling interest
in a license is subject to prior approval by the FCC.

DEVELOPING AND CHANGING TECHNOLOGIES; SUBSCRIBER CANCELLATIONS

The success of the Company's operations may be adversely affected by
matters beyond its control, such as changes in technology, decisions by the
federal government as to spectrum allocation and competition, and the future
cost of wireless telephones. The Company and the industry have also been
affected by high rates of subscriber cancellations that require continuing
replacement of the customer base in order to maintain subscription levels and
revenues.

RESTRICTIVE COVENANTS; CONSEQUENCES OF DEFAULT

The terms of the Company's credit facility require the Company to meet
and maintain certain financial and operating covenants. The credit facility also
restricts the Company from directly or indirectly declaring or paying any
dividends on its presently or subsequently issued common stock, limits the
ability of the Company to incur additional indebtedness and limits any
distributions of assets to its stockholders.

The Company was in compliance with all of the above covenants as of
May 31, 1999. The Company presently expects to remain in compliance with such
covenants, but there can be no assurance to such effect.

CONTROL BY CERTAIN STOCKHOLDERS

WCAS VIII, certain of its affiliates and certain other equity
investors hold 92.9% of Centennial's outstanding shares of common stock.
Accordingly, these equity investors, directly or indirectly, control our company
and have the power to elect all of our directors, appoint new management and
approve or reject any action requiring the approval of stockholders, including
adopting amendments to our charter and approving mergers and sales of
substantially all of our assets. In addition, the existence of a controlling
stockholder may have the effect of making it difficult for a third party to
acquire, or of discouraging a third party from seeking to acquire, a majority of
the outstanding Centennial common stock. See Item 1 "Business/General" and Item
13 "Certain Relationships and Related Transactions".

ACQUISITIONS AND INVESTMENTS

Opportunities for growth through acquisitions and investments in the
Company's wireless telephone and other communications businesses, and future

30



operating results and the success of acquisitions and investments within and
outside the United States may be subject to the effects of, and changes in, U.S.
and foreign trade and monetary policies, laws and regulations, political and
economic developments, inflation rates, and the effects of taxes and operating
conditions.

OPERATING HAZARDS AND UNINSURED RISKS

While the Company maintains insurance against certain of the risks
associated with its wireless telephone and other communications businesses, the
occurrence of a significant event for which the Company is not fully insured
could have a material adverse affect on the Company.

REFINANCING AND INTEREST RATE EXPOSURE RISKS

The business and operating results of the Company can be adversely
affected by factors such as the availability or cost of capital, changes in
interest rates, changes in tax rates due to new tax laws, market perceptions of
the cellular telephone or other communications businesses of the Company, or
security ratings.

POTENTIAL FOR CHANGES IN ACCOUNTING STANDARDS

Authoritative generally accepted accounting principle or policy
changes from such standard setting bodies as the Financial Accounting Standards
Board or the SEC may affect the Company's results of operations or financial
position.

INVESTMENT INTERESTS; CAPITAL CALLS

With respect to any system in which the Company now or in the future
holds an investment interest, the Company has limited ability to direct the
operation of such system and, if it does not meet a capital call, the Company's
ownership interest in such system may be diluted. Capital calls with respect to
the investment interests for the fiscal years ended May 31, 1999, 1998 and 1997
were approximately, $0, $787 and $2,878, respectively. The Company has, to date,
paid all capital calls that it has received. Although the Company anticipates
that such capital calls will decrease over time, there can be no assurance that
such capital calls will, in fact, decrease. Capital calls may also be issued in
connection with acquisitions by the respective limited partnerships. The Company
intends to fund its pending and future capital calls from internally generated
funds, bank borrowings or the issuance of additional debt or equity securities.
There can be no assurance that the Company will be able to pay such capital
calls when due.

31



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to market risks due to fluctuations in interest
rates. A majority of the Company's long-term debt has variable interest rates.
The Company utilizes interest rate swap and collar agreements to hedge variable
interest rate risk on a portion of its variable interest rate debt as part of
its interest rate risk management program.

The table below presents principal (or notional) amounts and related
average interest rate by year of maturity for the Company's long-term debt and
interest rate swap and collar agreements. Weighted average variable rates are
based on implied forward rates in the yield curve as of May 31, 1999 (based on
information provided by one of the Company's lending institutions):





Amounts in thousands:

Year ended May 31,
------------------
2000 2001 2002 2003 2004 Thereafter Total Fair value
---- ---- ---- ---- ---- ----------- ----- ----------


Long-term debt:
Fixed rate - - $ 1,388 - - $528,657 $530,045 $544,845
Average interest rate - - 8.88% - - 10.52% 10.52% -
Variable rate $ 4,500 $ 4,500 $27,000 $60,750 $83,250 $753,750 $933,750 $933,750
Average interest rate (1) 5.59% 5.89% 6.07% 6.18% 6.25% 6.37% 6.34% -
Interest rate swaps (pay
fixed, receive variable):
Notional amount $350,000 $350,000 $150,000 - - - - $ 5,369
Average pay rate 5.40% 5.40% 5.38% - - - - -
Average receive rate 5.59% 5.89% 6.07% - - - - -
Interest rate collar:
Notional amount $100,000 $100,000 $100,000 $100,000 - - - $ 938
Cap 7.00% 7.00% 7.00% 7.00% - - - -
Floor 4.45% 4.45% 4.45% 4.45% - - - -



(1) Represents the average interest rate before applicable margin


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary financial information that
are required to be included pursuant to this Item 8 are listed in Item 14 under
the caption "(a)1. Index of Financial Statements" in this Annual Report on Form
10-K, together with the respective pages in this Annual Report on Form 10-K
where such information is located. The financial statements and supplementary
financial information specifically referenced in such list are incorporated in
this Item 8 by reference.


32


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

During the fiscal year ended May 31, 1999, the Company was not
involved in any disagreement with its independent certified public accountants
on accounting principles or practices or on financial statement disclosure.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information with respect to the directors of the Company required
to be included pursuant to this Item 10 will be included under the caption
"Election of Directors" in the Company's Proxy Statement relating to the 1999
Annual Meeting of Shareholders (the "Proxy Statement"), to be filed with the
Securities and Exchange Commission pursuant to Rule 14a-6 under the Securities
Exchange Act of 1934, as amended, and is incorporated in this Item 10 by
reference. The information with respect to the executive officers of the Company
required to be included pursuant to this Item 10 is included under the caption
"Executive Officers of Centennial" in Part I of this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information with respect to executive compensation required to be
included pursuant to this Item 11 will be included under the captions "Executive
Compensation" and "Certain Relationships and Related Transactions" in the Proxy
Statement and is incorporated in this Item 11 by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information with respect to the security ownership of (1)
beneficial owners of more than 5% of the Class A Common Stock and Class B Common
Stock, (2) the directors or nominees for director of the Company, (3) each of
the top five executive officers and (4) all directors and officers of the
Company as a group required to be included pursuant to this Item 12 will be
included under the captions "Principal Shareholders of the Company", "Election
of Directors" and "Executive Compensation and Other Information--Beneficial
Ownership by Management" in the Proxy Statement and is incorporated in this Item
12 by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company is controlled by WCAS VIII. WCAS VIII and its affiliates
have an approximate 60.5% common stock interest. The Company entered into a
stockholders' agreement with WCAS VIII and Blackstone Capital Partners
("Blackstone"), under which an affiliate of each of WCAS VIII and Blackstone
receives an annual monitoring fee of $450 and $300, respectively. For the year
ended May 31, 1999, the Company recorded expenses of $313 under the
stockholders' agreement. At May 31, 1999, $125 of such amount was recorded
within payable to affiliates in the Company's consolidated balance sheet.

Prior to the Merger, the Company was controlled by Century
Communications Corp. ("Century"). Century had an approximate 34% common stock


33



interest and, through ownership of the Company's class B common stock which had
disproportionate votes per share (15 votes per share), an approximate 74% voting
interest in the Company at May 31, 1998. For the years ended May 31, 1999, 1998
and 1997, the Company recorded expenses of $583, $1,000 and $750, respectively,
under a services agreement pursuant to which Century, through its personnel,
provided certain services to the Company. At May 31, 1998, $250 of such amount
was recorded within payable to affiliates on the Company's consolidated balance
sheet.

Leavy, Rosenweig and Hyman, of which David Z. Rosenweig, a director
and Secretary of the Company prior to the Merger, is a member, serves as general
counsel to Century, and prior to the Merger, the Company. The Company paid
approximately $248, $426 and $656, for legal services to Leavy, Rosenweig and
Hyman for the fiscal years ended May 31, 1999, 1998 and 1997, respectively.

Additional information with respect to any reportable transaction,
business relationship or indebtedness between the Company and the beneficial
owners of more than 5% of the class A common stock, the directors or nominees
for director of the Company, the executive officers of the Company or the
members of the immediate families of such individuals required to be included
pursuant to this Item 13 will be included under the caption "Executive
Compensation and Other Information--Certain Relationships and Related
Transactions" in the Proxy Statement and is incorporated in this Item 13 by
reference.

See Note 7 to the Company's consolidated financial statements for
further discussion of transactions with related parties.


PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

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

1. INDEX OF FINANCIAL STATEMENTS

The following financial statements are included at the indicated page
in this Annual Report on Form 10-K and incorporated in this Item 14(a)1 by
reference:

PAGE

Independent Auditors' Report .....................................F-1
Consolidated Balance Sheets.......................................F-2
Consolidated Statements of Operations.............................F-4
Consolidated Statements of Common Stockholders'
Equity (Deficit).............................................F-5
Consolidated Statements of Cash Flows.............................F-6
Notes to Consolidated Financial Statements........................F-8


34



2. FINANCIAL STATEMENT SCHEDULE

Schedule II. Valuation and Qualifying Accounts


3. EXHIBITS

See Item 14(c) below.


(b) Reports on Form 8-K

The Company did not file a Report on Form 8-K during the fiscal quarter
ended May 31, 1999.

(c) Exhibits

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


EXHIBIT NUMBER DESCRIPTION

2.1 Agreement and Plan of Merger, dated as of July 2, 1998, by
and between CCW Acquisition Corp. and Centennial Cellular
Corp. (incorporated by reference to Exhibit 2.1 to
Centennial Cellular Corp.'s Current Report on Form 8-K filed
on July 16, 1999).

2.2 Amendment to Agreement and Plan of Merger, dated as of
November 29, 1998, by and between CCW Acquisition Corp. and
Centennial Cellular Corp. (incorporated by reference to
Exhibit 2.1 to Centennial Cellular Corp.'s Current Report on
Form 8-K filed on, 1999).

3.1 Amended and Restated Certificate of Incorporation of
Centennial Cellular Corp. (incorporated by reference to
Exhibit 3.1 to Centennial Cellular Corp.'s Current Report on
Form 8-K filed on January 22, 1999).

3.2 Amended and Restated By-Laws of Centennial Cellular Corp.
(incorporated by reference to Exhibit 3.2 to Centennial
Cellular Corp.'s Current Report on Form 8-K filed on January
22, 1999).

4.1 First Amended and Restated Stockholders Agreement dated as
of January 20, 1999 among CCW Acquisition Corp. and the
Purchasers named in Schedules I, II, III and IV thereto
(incorporated by reference to Exhibit 99.3 to Centennial
Cellular Corp.'s Registration Statement on Form S-4 filed on
July 6, 1999).

4.2 First Amended and Restated Registration Rights Agreement
dated as of January 20, 1999 among CCW Acquisition Corp. and
the Purchasers named in Schedules I, II, III and IV thereto
(incorporated by reference to Exhibit 99.4 to Centennial
Cellular Corp.'s Registration Statement on Form S-4 filed on
July 6, 1999).


35


EXHIBIT NUMBER DESCRIPTION

4.3 Indenture dated as of December 14, 1998 between Centennial
Cellular Operating Co. LLC and Centennial Finance Corp. and
The Chase Manhattan Bank, as trustee, relating to the
10-3/4% Senior Subordinated Notes due 2008 (incorporated by
reference to Exhibit 4.4 to Centennial Cellular Corp.'s
Current Report on Form 8-K filed on January 22, 1999).

4.4 Assumption Agreement and Supplemental Indenture, dated as of
January 7, 1999, to the Indenture dated as of December 14,
1998 (incorporated by reference to Exhibit 4.5 to Centennial
Cellular Corp.'s Current Report on Form 8-K filed on January
22, 1999).

4.5 Form of 10 3/4% Senior Subordinated Note due 2008, Series B
of the registrant (included in Exhibit 4.3).

4.6 Registration Rights Agreement, dated as of December 14,
1998, among Centennial Cellular Operating Co. LLC,
Centennial Finance Corp. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated, NationsBanc Montgomery Securities LLC,
Morgan Stanley & Co. Incorporated and Chase Securities Inc.,
as initial purchasers (incorporated by reference to Exhibit
4.3 to Centennial Cellular Corp.'s Current Report on Form
8-K filed on January 22, 1999).

4.7 Pledge and Escrow Agreement, dated as of December 14, 1998,
from Centennial Cellular Operating Co. LLC and Centennial
Finance Corp., as Pledgors, to The Chase Manhattan Bank, as
Trustee (incorporated by reference to Exhibit 4.8 to
Centennial Cellular Corp.'s Current Report on Form 8-K filed
on January 22, 1999).

10.1 Credit Agreement dated as of January 7, 1999 among
Centennial Cellular Operating Co. LLC, as Borrower;
Centennial Wireless PCS Operations Corp., as PR Borrower;
Centennial Cellular Corp., as a Guarantor; the other
Guarantors party thereto; each of the lenders named therein;
Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as lead arranging agent; Nationsbank, N.A., as
co-arranger and administrative agent; The Chase Manhattan
Bank, as co-arranger and co-documentation agent; The Bank of
Nova Scotia, as co-documentation agent; Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
syndication agent; and Morgan Stanley Senior Funding, Inc.,
as senior managing agent (incorporated by reference to
Exhibit 10.1 to Centennial Cellular Corp.'s Current Report
on Form 8-K filed on January 22, 1999).

*10.2 Employment Agreement dated as of January 7, 1999 between
Centennial Cellular Corp. and Michael Small (incorporated by
reference to Exhibit 10.3 to Centennial Cellular Corp.'s
Current Report on Form 8-K filed on January 22, 1999).


36


EXHIBIT NUMBER DESCRIPTION

*10.3 Incentive Award Plan, as amended (incorporated by reference
to Exhibit 10.11 to Centennial Cellular Corp.'s Form S-1
filed on September 27, 1991).

*10.4 1993 Management Equity Incentive Plan, (incorporated by
reference to Exhibit 10.9 to Centennial Cellular Corp.'s
Annual Report on Form 10-K for the fiscal year ended May 31,
1994).

*10.5 1993 Non-Employment/Officer Directors' Stock Option Plan,
(incorporated by reference to Exhibit 10.10 to Centennial
Cellular Corp.'s Annual Report on Form 10-K for the fiscal
year ended May 31, 1994).

10.6 Agreement establishing Sacramento Valley Limited
Partnership, as amended, among PacTel Mobile Access,
Roseville Telephone Co., Citizens Utilities Company of
California and Contel Mobilcom, Inc., (incorporated by
reference to Exhibit 10.14 to Centennial Cellular Corp.'s
Registration Statement on Form S-1 filed on September 27,
1991).

10.7 Agreement establishing GTE Mobilnet of San Francisco Limited
Partnership, as amended (incorporated by reference to
Exhibit 10.15 to Centennial Cellular Corp.'s Registration
Statement on Form S-1 filed on September 27, 1991).

10.8 Facilities Agreement dated as of January 2, 1995 between
Century ML Cable Venture and Century-ML Cable Corporation
(incorporated by reference to Exhibit 10.16 to Centennial
Cellular Corp.'s Annual Report on Form 10-K for the fiscal
year ended May 31, 1997).

+12 Computation of Ratios.

+21 Subsidiaries of Centennial Cellular Corp.

+23.1 Consent of Deloitte & Touche LLP.

+27 Financial Data Schedule.


* Constitutes a management contract or compensatory plan or arrangement.

+ Filed herewith.


37



INDEPENDENT AUDITORS' REPORT


Board of Directors and Stockholders
Centennial Cellular Corp.
Neptune, New Jersey

We have audited the accompanying consolidated balance sheets of
Centennial Cellular Corp. and Subsidiaries (the "Company") as of May 31, 1999
and 1998, and the related consolidated statements of operations, common
stockholders' equity (deficit) and cash flows for each of the three years in the
period ended May 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Centennial Cellular Corp.
and Subsidiaries as of May 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
May 31, 1999 in conformity with generally accepted accounting principles.




/s/Deloitte & Touche LLP

New York, New York
July 7, 1999


F-1



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)





May 31,
---------------------------------
1999 1998
--------------- --------------


ASSETS

CURRENT ASSETS:

Cash and cash equivalents $ 51,141 $ 14,620
Restricted investments 39,480 -
Accounts receivable, less allowance for doubtful
accounts of $3,763 and $2,693, respectively 46,326 37,178
Inventory - phones and accessories, less allowance for 7,631 7,304
obsolescence of $1,315 and $529, respectively
Prepaid expenses and other current assets 737 548
-------------- -------------

TOTAL CURRENT ASSETS 145,315 59,650

PROPERTY, PLANT AND EQUIPMENT - net 300,120 263,661

RESTRICTED INVESTMENTS, long-term 19,038 -

EQUITY INVESTMENTS IN WIRELESS SYSTEMS - net 75,723 87,634

DEBT ISSUANCE COSTS, less accumulated amortization of
$2,905 and $6,097, respectively 58,307 8,538

CELLULAR TELEPHONE LICENSES, less accumulated
amortization of $298,725 and $263,633, respectively 202,599 235,508

PERSONAL COMMUNICATIONS SERVICES LICENSE, less accumulated
amortization of $3,893 and $2,324, respectively 58,866 60,435

GOODWILL, less accumulated amortization of $30,430
and $27,016, respectively 119,172 124,533

OTHER ASSETS - net 7,141 7,458
-------------- -------------

TOTAL $ 986,281 $ 847,417
============== =============





See notes to consolidated financial statements

F-2



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(CONTINUED)
(Amounts in thousands, except share data)





May 31,
-------------------------------
1999 1998
-------------- -------------



LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
Current portion of long term debt $ 4,500 $ -
Accounts payable 22,968 9,805
Accrued expenses and other current liabilities 102,371 64,445
Payable to affiliates 125 435
-------------- -------------

TOTAL CURRENT LIABILITIES 129,964 74,685

LONG-TERM DEBT 1,459,295 510,000
DEFERRED LIABILITY - 2,200
DEFERRED INCOME TAXES - 26,584

COMMITMENTS AND CONTIGENCIES (Note 10)

PREFERRED STOCK:

Convertible redeemable preferred stock
(at aggregate liquidation value) par value $.01 per share,
0 and 102,187 shares authorized, issued and outstanding
respectively (redemption value of $1,823.00 per share) - 186,287

Second series convertible redeemable preferred stock
(at aggregate liquidation value) par value $.01 per share,
0 and 3,978 shares authorized, issued and outstanding
respectively (redemption value of $1,823.00 per share) - 7,252

Senior preferred stock, par value $.01 per share, dividend
rate 14%, 0 and 250,000 shares authorized respectively, none issued - -

Additional preferred stock, par value $.01 per share, authorized
0 and 10,000,000 shares, 0 and 3,978 shares issued as second series
convertible redeemable preferred stock - -

COMMON STOCKHOLDERS' EQUITY (DEFICIT):
Common stock par value $.01 per share:
Class A, 1 vote per share, 50,000,000 and 100,000,000 shares authorized
respectively; issued, 31,224,462 and 50,150,049 shares,
respectively; and outstanding 31,200,961 and 45,253,422 shares, respectively 312 501
Class B, 15 votes per share, 0 and 50,000,000 shares authorized respectively,
issued and outstanding 0 and 10,544,113 shares, respectively - 105
Additional paid-in capital 419,374 357,684
Accumulated deficit (1,021,587) (284,238)
-------------- -------------
(601,901) 74,052
Less: Cost of 23,501 and 4,896,627, Class A common shares
in treasury (1,077) (30,614)
Deferred compensation - (3,029)
-------------- -------------

TOTAL COMMON STOCKHOLDERS' EQUITY (DEFICIT) (602,978) 40,409
-------------- -------------

TOTAL $ 986,281 $ 847,417
============== =============




See notes to consolidated financial statements

F-3




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





Year Ended May 31,
-----------------------------------------
1999 1998 1997
------------ ----------- -----------

REVENUE:
Service revenue - Domestic $ 236,951 $ 177,999 $ 140,674
Service revenue - Puerto Rico 123,950 53,098 5,680
Equipment sales - Domestic 4,951 3,503 2,643
Equipment sales - Puerto Rico 3,299 1,216 215
------------ ----------- -----------
369,151 235,816 149,212
------------ ----------- -----------

COSTS AND EXPENSES:
Cost of equipment sold - Domestic 18,354 15,623 15,441
Cost of equipment sold - Puerto Rico 4,711 1,229 571
Cost of services - Domestic 26,651 24,226 19,061
Cost of services - Puerto Rico 23,181 13,740 3,155
Sales and marketing- Domestic 29,560 22,561 17,131
Sales and marketing - Puerto Rico 21,978 13,313 5,596
General and administrative - Domestic 39,906 32,422 27,407
General and administrative - Puerto Rico 21,312 13,494 4,998
Depreciation and amortization - Domestic 67,282 81,402 77,392
Depreciation and amortization - Puerto Rico 47,414 32,792 6,328
Recapitalization costs 52,831 - -
------------ ----------- -----------
353,180 250,802 177,080
------------ ----------- -----------

OPERATING INCOME (LOSS) 15,971 (14,986) (27,868)
------------ ----------- -----------

INCOME FROM EQUITY INVESTMENTS 11,502 13,069 15,180
GAIN ON DISPOSITION OF ASSETS 8,031 5 3,819
INTEREST EXPENSE - NET 87,693 43,470 31,568
------------ ----------- -----------

LOSS BEFORE INCOME TAX BENEFIT, MINORITY INTEREST
AND EXTRAORDINARY ITEM (52,189) (45,382) (40,437)

INCOME TAX BENEFIT (6,820) (13,597) (7,295)
------------ ----------- -----------

LOSS BEFORE MINORITY INTEREST AND
EXTRAORDINARY ITEM (45,369) (31,785) (33,142)

MINORITY INTEREST IN LOSS (INCOME) OF SUBSIDIARIES 281 (162) (153)
------------ ----------- -----------

LOSS BEFORE EXTRAORDINARY ITEM (45,088) (31,947) (33,295)

EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT OF
DEBT, NET OF INCOME TAXES OF ($16,698) (35,079) - -
------------ ----------- -----------

NET LOSS $ (80,167) $ (31,947) $ (33,295)
============ =========== ===========

DIVIDEND ON PREFERRED STOCK $ 9,906 $ 16,451 $ 15,948
------------ ----------- -----------

LOSS APPLICABLE TO COMMON SHARES $ (90,073) $ (48,398) $ (49,243)
============ =========== ===========

BASIC AND DILUTED EARNINGS PER SHARE:
LOSS BEFORE EXTRAORDINARY ITEM $ (1.20) $ (0.84) $ (0.82)
============ =========== ===========
EXTRAORDINARY LOSS ON EARLY EXTINGUISHMENT
OF DEBT $ (0.76) $ - $ -
============ =========== ===========
NET LOSS APPLICABLE TO COMMON SHARES $ (1.96) $ (0.84) $ (0.82)
============ =========== ===========

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 46,032 57,455 59,714
============ =========== ===========



See notes to consolidated financial statements

F-4



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDERS' EQUITY (DEFICIT)
(Amounts in thousands, except share data)






Common Stock Additional Shareholder Deferred Accumu-
Class A Class B Paid-In Treasury Note Compen- lated
Shares Dollars Shares Dollars Capital Stock Receivable sation Deficit Total
--------- ------ ------- ------- ------- -------- ---------- -------- --------- -----

Balance at June 1, 1996, as 16,461,858 $165 10,544,113 $105 $ 383,533 $ (1,801) $(3,000) $ - $(218,996) $160,006
previously reported

3- for- 1 common stock split
effective January 13, 1999 32,923,716 330 - - (330) - - - - -
---------- ---- ---------- --- --------- -------- -------- ------- --------- ----------

Balance at June 1, 1996 49,385,574 495 10,544,113 105 383,203 (1,801) (3,000) - (218,996) 160,006

Common stock issued in
conjunction with incentive
plans 93,078 - - - 132 - - - - 132

Preferred stock dividends - - - - (15,948) - - - - (15,948)

Income tax benefit-stock options
exercised - - - - 1,987 - - - - 1,987

Net loss - - - - - - - - (33,295) (33,295)
--------- ---- ---------- --- --------- -------- -------- ------- --------- ----------

Balance at May 31, 1997 49,478,652 495 10,544,113 105 369,374 (1,801) (3,000) - (252,291) 112,882

Common stock issued in con-
junction with incentive plans 671,397 6 - - 4,761 - - (3,029) - 1,738

Preferred stock dividends - - - - (16,451) - - - - (16,451)

Treasury stock purchases - - - - - (28,813) - - - (28,813)

Repayment of shareholder note
receivable - - - - - - 3,000 - - 3,000

Net loss - - - - - - - - (31,947) (31,947)
--------- ---- ---------- --- --------- -------- -------- ------- --------- ----------

Balance at May 31, 1998 50,150,049 501 10,544,113 105 357,684 (30,614) - (3,029) (284,238) 40,409

Common stock issued in
connection with incentive
plans 1,403,823 14 - - 4,880 - - - - 4,894

Common stock issued in
connection with employee
stock purchase plan 48,880 - - - 257 - - - - 257

Deferred compensation employment
agreement 50,003 1 - - 749 - - (750) - -

Recapitalization:

Repurchase of the class A
& B common stock (44,447,328) (444) (10,544,113) (105) (340,336) - - 2,573 (692,002)(1,030,314)

Retirement of treasury
stock (4,896,627) (49) - - - 30,614 - - (30,565) -

Recapitalization costs - - - - (16,165) - - - 65,385 49,220

Capital contributions 28,915,662 289 - - 422,211 - - - - 422,500

Preferred stock dividends - - - - (9,906) - - - - (9,906)

Treasury stock purchases - - - - - (1,077) - - - (1,077)

Amortization of deferred
compensation - - - - - - - 1,206 - 1,206

Net loss - - - - - - - - (80,167) (80,167)
---------- ---- ---------- --- --------- -------- -------- ------- --------- ----------

Balance at May 31, 1999 31,224,462 $312 - $ - $ 419,374 $ (1,077) $ - $ - $(1,021,587)$(602,978)
========== ==== ========== ==== ========= ======== ======== ======= =========== ==========





See notes to consolidated financial statements

F-5




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)




Year Ended May 31,
-------------------------------------------------
1999 1998 1997
--------------- ------------- -------------



OPERATING ACTIVITIES:

Cash received from subscribers and others $ 401,316 $ 260,147 $ 173,781
Cash paid to suppliers, employees and
governmental agencies (204,294) (162,638) (116,016)
Interest paid (52,844) (42,738) (30,809)
-------------- ------------ ------------

NET CASH PROVIDED BY OPERATING ACTIVITIES 144,178 54,771 26,956
-------------- ------------ ------------

INVESTING ACTIVITIES:

Proceeds from disposition of assets 4,702 45 5,200
Capital expenditures (103,404) (129,300) (88,990)
Acquisition of other assets (2,200) (6,178) (629)
Purchase of restricted securities (77,499) - -
Proceeds from maturity of restricted securities 19,998 - -
Disposition of equity investment 13,500 - -
Acquisition of equity investment and wireless telephone system (3,000) - (34,908)
Acquisition of personal communication service license - - (2,752)
Distributions received from equity investments 10,958 10,109 6,863
Capital contributed to equity investments - (787) (2,878)
-------------- ------------ ------------

NET CASH USED IN INVESTING ACTIVITIES (136,945) (126,111) (118,094)
-------------- ------------ ------------

FINANCING ACTIVITIES:

Proceeds from the issuance of long-term debt 1,484,500 216,000 119,000
Repayment of long-term debt (531,643) (135,000) (40,000)
Debt issuance costs paid (61,212) (1,167) (3,650)
Premiums paid on early extinguishment of debt (44,634) - -
Proceeds from issuance of class A common stock 427,650 863 132
Redemption of preferred stock (128,154) - -
Purchase of common stock in conjunction with recapitalization (1,052,436) - -
Dividends paid (18,131) (12,338) (8,226)
Proceeds from shareholder note receivable - 3,000 -
Treasury stock purchases (1,077) (28,813) -
Recapitalization costs paid (45,575) - -
-------------- ------------ ------------

NET CASH PROVIDED BY FINANCING ACTIVITIES 29,288 42,545 67,256
-------------- ------------ ------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 36,521 (28,795) (23,882)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 14,620 43,415 67,297
-------------- ------------ ------------

CASH AND CASH EQUIVALENTS, END OF YEAR $ 51,141 $ 14,620 $ 43,415
============== ============ ============




See notes to consolidated financial statements


F-6




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)

(Amounts in thousands)



Year Ended May 31,
------------------------------------
1999 1998 1997
--------- --------- ---------


RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:

Net loss $ (80,167) $ (31,947) $ (33,295)
--------- --------- ---------

Adjustments to reconcile net loss to net cash
provided by operating activities:

Depreciation and amortization 114,696 114,194 83,720
Minority interest in income (loss) of subsidiaries (281) 162 153
Deferred income taxes (9,886) (17,393) (10,623)
Equity in undistributed earnings of investee companies (11,502) (13,069) (15,180)
Gain on disposition of assets (8,031) (5) (3,819)
Extraordinary loss on extinguishment of debt 35,079 - -
Recapitalization costs 52,831 - -
Other 5,577 3,469 1,925
Change in assets and liabilities net of effects of
acquisitions:
Accounts receivable - (increase) (11,052) (9,225) (3,393)
Prepaid expenses and other current assets -
(increase) (858) (3,014) (2,614)
Accounts payable, accrued expenses and
other current liabilities- increase 55,586 8,981 7,337
Customer deposits and prepayments -
increase 2,186 2,618 2,745
--------- --------- ---------

Total adjustments 224,345 86,718 60,251
--------- --------- ---------

Net cash provided by operating activities $ 144,178 $ 54,771 $ 26,956
========= ========= =========







See notes to consolidated financial statements

F-7




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS - Centennial Cellular Corp. (together with its
subsidiaries and partnership interests, the "Company") operates wireless
telephone systems which produce high quality, high capacity communications to
and from vehicle-installed and hand-held wireless telephones. Wireless telephone
systems are designed to allow for mobility of the subscriber. In addition to
mobility, wireless telephone systems provide access through system
interconnections to local and long distance telecommunications networks and
offer other ancillary services such as voice mail, call waiting, call forwarding
and conference calling. These communications services can be integrated with a
variety of competing networks. Wireless telephone service is provided to
post-pay and pre-paid subscribers through a variety of price plans, the most
common being a monthly fixed charge plus additional variable charges per minute
of airtime used.

The Company owns, operates and invests in wireless telephone systems in the
United States pursuant to 29 cellular licenses which it owns. The Company began
began providing wireless telephone service in Puerto Rico on December 12, 1996
pursuant to a Major Trading Area Personal Communications Service ("PCS") license
to provide broadband PCS in the Commonwealth of Puerto Rico and the U.S. Virgin
Islands. The Company also participates in the alternative access business in
Puerto Rico ("Puerto Rico Wireline") pursuant to the Federal Communications
Commission's requirements for interstate service and pursuant to an
authorization issued to Puerto Rico Wireline in December 1994 by the Public
Service Commission of the Commonwealth of Puerto Rico for intrastate service.
Puerto Rico Wireline began providing competitive alternative access service in
September 1997.

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

RESTRICTED INVESTMENTS - Restricted investments consist of overnight
deposits and U.S. government securities with original maturity dates of greater
than three months. All U.S. government securities are classified as
held-to-maturity under the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 115 "Accounting for Certain Investments in Debt and
Equity Securities". Accordingly, these securities are presented at cost,
adjusted for amortization of premiums and discounts (See Notes 3 and 6).

INVENTORY - Inventory consists primarily of handsets and accessories.
Inventory is stated at the lower of cost or market, determined on a specific
identification basis.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment is stated at
cost. Depreciation is computed by the straight-line method over the estimated
useful lives of the assets:

Wireless telephone transmission and distribution systems
and related equipment 10 years
Miscellaneous equipment and furniture and fixtures. 5-15 years
PCS phones 18 months

CELLULAR TELEPHONE AND PERSONAL COMMUNICATIONS SERVICE LICENSES - Cellular
licenses consist of amounts allocated under purchase accounting from the
purchase price of acquired assets. Amortization of cellular telephone licenses
is computed using the straight-line method. For the years ended May 31, 1998 and
1997, the Company amortized its cellular telephone licenses over ten years.
Effective March 1, 1999, the Company prospectively changed its amortization
period for cellular telephone licenses from ten years to forty years to better
reflect the period over which the economic benefits of the cellular licenses are
expected to be realized. The effect of this change in the quarter ended May 31,


F-8



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

1999 was to increase net income by approximately $9,272 and increase income per
common share-basic and diluted by $0.30 and $0.29, respectively. The effect of
this change for the year ended May 31, 1999 was to decrease loss per common
share-basic and diluted by $0.20. The PCS license is being amortized over a
forty-year life using the straight line method commencing with the date of
operations, December 12, 1996 (See Valuation of long lived assets). During the
fiscal year ended May 31, 1997, the Company capitalized interest cost of $2,752
related to the acquisition of the PCS license. During the fiscal years ended
1999 and 1998, no interest was capitalized.

EQUITY INVESTMENTS IN WIRELESS SYSTEMS - The Company accounts for its
equity investments in wireless systems under the equity method. Under the equity
method, the Company records such investments at purchased cost at the date of
acquisition and adjusts for distributions received from the partnerships,
additional capital contributions, and the Company's share of the partnership's
results of operations. The difference between the cost of such investment and
the underlying book value of $117,789 as of May 31, 1999 is amortized over forty
years. For the years ended May 31, 1998 and 1997, the Company amortized the
difference between the cost of such investment and the underlying book value
over ten years. Effective March 1, 1999, the Company prospectively changed its
amortization period for the difference between the cost of such investment and
the underlying book value from ten years to forty years to better reflect the
period over which the economic benefits of the equity investments are expected
to be realized. The effect of this change in the quarter ended May 31, 1999 was
to increase net income by approximately $2,717 and increase income per common
share-basic and diluted by $0.09 and $0.08, respectively. The effect of this
change for the fiscal year ended May 31, 1999 was to decrease loss per common
share-basic and diluted by $0.06.

GOODWILL - The excess of purchase price over the estimated fair value of
tangible and intangible net assets acquired is being amortized using the
straight-line method over 40 years (See Valuation of long lived assets).

OTHER ASSETS - Included in other assets at May 31, 1999 and 1998 is a
$6,000 deferred charge, net of accumulated amortization of $590 and $350,
respectively, which represents certain costs incurred by the Company in relation
to an agreement with Century-ML Cable Venture dated January 2, 1995. These costs
are being amortized over the life of the agreement (25 years).

INCOME TAXES - The Company accounts for income taxes in accordance with
SFAS No. 109, "Accounting for Income Taxes" which provides that deferred income
taxes are determined by the asset and liability method. Deferred tax assets and
liabilities are recognized based on the differences between the book and tax
basis of assets and liabilities using presently enacted tax rates.

LOSS PER COMMON SHARE - Loss per common share is calculated using the
average number of shares of outstanding common stock during the period. The
number of shares outstanding has been calculated based on the requirements of
SFAS No. 128, "Earnings per Share". Due to the net losses incurred during the
periods presented, all options outstanding are antidilutive; thus basic and
diluted EPS shares are equal.

REVENUE RECOGNITION - Wireless telephone service income includes earned
subscriber service revenues, net of associated roaming costs. Subscriber
services paid in advance are recognized as income when earned. Installation and
connection revenue is recognized in the period in which the installation and
connection services are provided. The services provided to earn these
installation and connection revenues relate to the programming of the phones and
establishing the customer account. Related costs from installations and
connections are recorded in the period the installation and connection services
are provided.

VALUATION OF LONG LIVED ASSETS - Long-lived assets such as property, plant
and equipment, licenses and goodwill are reviewed for impairment whenever events


F-9



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

or changes in circumstances indicate that the carrying amount may not be
recoverable. The Company in its valuation considers current market values of
wireless properties, competition, prevailing economic conditions, government
policy including taxation and the Company's and the industry's historical and
current growth patterns. The Company also considers the recoverability of the
cost of its long lived assets based on a comparison of estimated undiscounted
operating cash flows for the systems which generated long lived assets with the
carrying value of the long lived assets.

MANAGEMENT ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting periods. Actual results could differ from those estimates.

DERIVATIVE FINANCIAL INSTRUMENTS - The Company uses interest rate swap and
collar agreements as part of its interest rate risk management program. Interest
rate swap agreements are used to modify variable rate obligations to fixed rate
obligations, thereby reducing the exposure to higher interest rates. Amounts
paid or received under interest rate swap agreements are accrued as interest
rates change with the offset recorded in interest expense. 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.

REPORTING ON THE COST OF START-UP ACTIVITIES - The Company adopted
Statement of Position ("SOP") 98-5 "Reporting on the Cost of Start-up
Activities" during fiscal 1999. Adoption of SOP 98-5 did not have a material
impact on the consolidated financial statements of the Company.

CASH AND CASH EQUIVALENTS - Short-term investments classified as cash
equivalents in the consolidated financial statements consist principally of
overnight deposits and commercial paper with acquired maturities of three months
or less.

STOCK SPLIT - On January 13, 1999, outstanding shares of class A common
stock were split three-for-one. All class A common share and per share amounts
have been restated to reflect the split.

RECLASSIFICATIONS - Certain prior year balances have been reclassified to
conform with the current year presentation.

NEW ACCOUNTING PRONOUNCEMENT - The Financial Accounting Standards Board
issued Statement of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities" in June, 1998. The Company will adopt SFAS No. 133 effective
June 1, 2001. The Company has not yet determined the impact of the adoption of
SFAS No. 133 on future results of operations or financial condition.


F-10




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

2. THE MERGER

On January 7, 1999, CCW Acquisition Corp. ("Acquisition"), a Delaware
corporation organized at the direction of Welsh, Carson, Anderson & Stowe VIII,
L.P. ("WCAS VIII"), merged with and into the Company (the "Merger"). The Company
continued as the surviving corporation in the Merger (the "Surviving
Corporation"). The Merger was accounted for as a recapitalization in which the
historical basis of the Company's assets and liabilities are not affected and no
new goodwill related to the Merger is created.

Pursuant to the terms of the merger agreement, dated as of July 2, 1998 and
amended as of November 29, 1998, between the Company and Acquisition (as
amended, the "Merger Agreement"), at the time of the Merger, (i) the Company's
outstanding class A common stock was converted into the right to receive $13.83
per share (adjusted for a three for one stock split for holders' of record on
January 8, 1999) in cash or to receive common shares of the Surviving
Corporation (the "Surviving Corporation Shares") representing 7.1% of the
Surviving Corporation Shares outstanding immediately after the Merger, (ii) the
Company's outstanding class B common stock was converted into the right to
receive $13.83 per share in cash, and (iii) all outstanding convertible
redeemable preferred stock and second series convertible redeemable preferred
stock was converted into the right to receive $13.83 per share in cash on an
as-converted basis. Holders of class A common stock who elected to receive
Surviving Corporation Shares each received approximately 9.3% of the shares with
respect to which they had made an effective election.

Pursuant to the Merger Agreement, at the time of the Merger, each option to
purchase class A common stock granted under the Company's 1991 Employee Stock
Option Plan and Non-Employee/Officer Director Option Plan, as amended, was
exercised or canceled pursuant to its terms or in exchange for a cash amount
equal to the difference between $13.83 and the exercise price of the option
prior to the effective time of the Merger.

The Company recorded one-time charges of $52,831 for the fiscal year ended
May 31, 1999 as recapitalization costs. These costs are primarily due to the
purchase by the Company of non-qualifying disposition of stock options
exercised, restricted shares and the outstanding options from employees. As part
of the Merger all outstanding options purchased were recorded as additional
compensation. The Puerto Rico operation accounted for $13,494 of the
recapitalization costs. In the fourth quarter of fiscal 1999, the Company
reduced recapitalization costs by $6,021, as a result of actual costs incurred
being less than those previously estimated. The effect of this reduction in
recapitalization costs for the quarter ended May 31, 1999 was to increase income
per common share-basic and diluted by $0.19. The effect of this reduction in
recapitalization costs for the fiscal year ended May 31, 1999 was to decrease
loss per common share-basic and diluted by $0.13.

3. RESTRICTED INVESTMENTS

Restricted investments are classified as current or long-term, based on the
dates of the interest payments for which they are pledged. At May 31, 1999,
restricted investments consists of the following:



Current Long-term
------- ---------


U.S government securities (due November 15, 1999) $ 19,482 -
U.S government securities (due May 15, 2000) - $ 19,038
Overnight deposits 19,998 -
--------- ---------
$ 39,480 $ 19,038
========= =========




F-11


CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


4. ACCOUNT ANALYSIS

Property, plant and equipment consists of the following:



May 31,
--------------------------
1999 1998
---------- ----------

Land $ 2,055 $ 1,946
Wireless telephone transmission and distribution systems
and related equipment 348,925 274,376
Miscellaneous equipment and furniture and fixture 27,204 22,523
PCS phones 34,309 44,497
---------- ----------
412,493 343,342
Less accumulated depreciation (112,373) (79,681)
---------- ----------
$ 300,120 $ 263,661
========== ==========


Depreciation expense was approximately $63,830, $46,211, and $17,684 for
the years ended May 31, 1999, 1998 and 1997, respectively.

Accrued expenses and other current liabilities consists of the following:



May 31,
--------------------------
1999 1998
---------- ----------

Accrued interest payable $ 37,517 $ 3,570
Customer deposits & prepayments 12,531 10,345
Accrued roamer service 3,457 3,731
Accrued dividend on preferred stock - 8,225
Accrued network buildout 1,177 8,181
Accrued unpaid invoices 30,629 20,079
Accrued property tax 8,558 4,744
Accrued miscellaneous 8,502 5,570
--------- ----------
$ 102,371 $ 64,445
========= ==========


5. EQUITY INVESTMENTS IN WIRELESS SYSTEMS

On June 8, 1998, the Company disposed of its investment interest in the
Coconino, Arizona RSA, representing approximately 43,500 Net Pops, for $13,500
in cash. The Company recorded a pre-tax gain of approximately $7,608 in relation
to the sale of this investment interest in fiscal 1999, which is recorded in
gain on disposition of assets in the consolidated statement of operations.



F-12


CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

The following summarizes the assets, liabilities and partners' capital, and
results of operations of the six wireless partnerships in which the Company's
investments are accounted for by the equity method. All amounts have been
derived from the individual wireless partnerships' financial statements through
December 31, 1998 and adjusted for interim financial activity from the wireless
partnerships' calendar year end to the Company's fiscal year end.



May 31,
--------------------------
1999 1998
---------- ----------
(unaudited)

Assets
Current $ 117,663 $ 141,772
Noncurrent 529,479 493,011
--------- ----------
$ 647,142 $ 634,783
========= ==========
Liabilities and Partners' Capital
Current liabilities $ 97,516 $ 84,087
Noncurrent liabilities 2,337 2,032
Partners' capital 547,289 548,664
--------- ----------
$ 647,142 $ 634,783
========= ==========






Year Ended May 31,
------------------
1999 1998 1997
---------- ---------- ----------

(unaudited)

Results of Operations
Revenues $ 611,603 $ 569,756 $ 520,873
Costs and expenses 478,463 456,881 386,397
Other expense (income) 430 (764) (120)
---------- --------- ----------
Net income $ 132,710 $ 113,639 $ 134,596
========== ========= ==========
Centennial Cellular Corp. share of
partnership net income $ 11,502 $ 13,069 $ 15,180
========== ========= ==========


The following presents the Company's ownership percentage of the wireless
partnerships in which the Company's investments are accounted for by the equity
method as of May 31, 1999:

WIRELESS PARTNERSHIP % OWNERSHIP

Lake Charles CellTel Co. 25.1%

Sacramento-Valley Limited Partnership 23.5%

Modoc RSA Limited Partnership 25.0%

Cal-One Cellular Limited Partnership 6.9%

Pennsylvania RSA-6 (I) and (II) Limited Partnership 14.3%

GTE Mobilnet of California Limited Partnership 2.9%

Under the terms of certain partnership agreements, the Company may be
committed to funding other partners' portions of capital expenditures and other
costs, if other means of financing are not available to the partnerships. The
Company does not expect such funding to be material.


F-13



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

6. LONG-TERM DEBT


May 31,
--------------------------
1999 1998
---------- ----------

8 7/8% Senior Notes due 2001 $ 1,388 $ 250,000
10 1/8% Senior Notes due 2005 219 100,000
Domestic Credit Facility - 10,000
Term Loans 897,750 -
Revolving Credit Facility 36,000 -
Mezzanine Debt 158,438 -
10 3/4% Subordinated Debt due 2008 370,000 -
Puerto Rico Credit Facility - 150,000
---------- ----------
Total Long -Term Debt $1,463,795 $ 510,000
Current Portion of Term Loan (4,500) -
---------- ----------
Net Long-Term Debt $1,459,295 $ 510,000
========== ==========



In connection with the Merger, the Company and certain of its subsidiaries
have entered into a credit facility ("Credit Facility") with Merrill Lynch
Capital Corporation, Nations Bank, N.A. , the Chase Manhattan Bank, The Bank of
Nova Scotia and Morgan Stanley Senior Funding, Inc. and certain other financial
institutions. The Credit Facility consists of three term loans in the aggregate
principal amount of $900,000, and a revolving credit facility with an aggregate
principal amount of $150,000, of which $897,750 and $36,000, respectively, were
outstanding as of May 31, 1999. Borrowings under the term loans and the
revolving credit facility bear interest at a rate per annum of the LIBOR rate
plus the applicable margin. The maximum applicable margin for the term loans
ranges between 3.00% and 3.75% above LIBOR. The Company has the ability to
choose between various LIBOR rates at the interest reset dates. The weighted
average LIBOR rate at May 31, 1999 was 4.99%. Based upon the Company's leverage
ratio after the delivery of certain financial statements after May 31, 1999, the
applicable margin for portions of the term loans and the revolving credit
facility may be reduced by up to 1.25%. The Company's common stock in its
subsidiaries is pledged as collateral for the debt.

In connection with the Merger, an affiliate of WCAS VIII purchased $180,000
of unsecured subordinated notes due 2009 and common shares of the Company
("Mezzanine Debt"). The issuance has been allocated $157,500 to debt and $22,500
to equity. The difference between the face value of the Mezzanine Debt and the
amount allocated to debt is being amortized over the term of the Mezzanine Debt.
The Mezzanine Debt bears cash interest at a rate of 10% or pay-in-kind interest
at a rate of 13% per annum.

The Company and a wholly-owned subsidiary of the Company issued $370,000 of
senior subordinated notes to qualified institutional buyers under a private
placement offering pursuant to Rule 144A and Regulation S under the Securities
Act of 1933, as amended. Approximately $57,500 of the proceeds from this
offering was used to purchase a portfolio of government securities that has been
pledged for the benefit of holders of the senior subordinated notes to pay the
first three interest payments on the notes. These investments, which include
government securities and overnight investments at May 31, 1999, are recorded as
restricted investments on the Company's consolidated balance sheet.

Additionally, in connection with the Merger, the Company consummated tender
offers to repurchase its two outstanding public debt issuances (the "Debt
Offers"). At the expiration of the Debt Offers, the Company paid consent
solicitation fees and tender offer payments to 99.4% of holders of its 8 7/8%
Senior Notes due 2001 and 99.8% of its 10 1/8% Senior Notes due 2005. The cost
to the Company of the redemption, including accrued interest, premium and
expenses were $396,812. In conjunction with the Merger the Company wrote off the
debt issuance costs related to the extinguished debt.


F-14


CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

The Company recognized an extraordinary loss of $35,079, net of income taxes of
$16,698 for the early extinguishment of the Senior Notes.

Prior to the Merger, a wholly owned subsidiary of the Company had a
$180,000 revolving credit facility, as amended (the "Puerto Rico Credit
Facility"). The interest rate payable under the Puerto Rico Credit Facility was
based, at the election of the Company, on (a) the base rate, as defined, plus a
margin of 1.50% or (b) the Eurodollar base rate, as defined, plus a margin of
2.50%, adjusted for the maintenance of certain specified ratios, as applicable.

Additionally, prior to the Merger, the Company had a $75,000 domestic
revolving credit facility (the "Domestic Credit Facility"). The interest rate
payable on the Domestic Credit Facility was based, at the election of the
Company, on (a) the base rate, as defined, plus a margin of 2%, or (b) the
Eurodollar base rate, as defined, plus a margin of 3.00%.

The aggregate annual principal payments for the next five years and
thereafter under the Company's debt at May 31, 1999 are summarized as follows:

May 31, 2000 $ 4,500
May 31, 2001 4,500
May 31, 2002 28,388
May 31, 2003 60,750
May 31, 2004 83,250
May 31, 2005 and thereafter 1,282,407
------------
$ 1,463,795
============

Under the above debt agreements, the Company is required to maintain
certain financial and operating covenants, is restricted in its use of
borrowing, and is limited in its ability to pay dividends and incur additional
indebtedness. The Company was in compliance with all covenants of their debt
agreements at May 31, 1999.

Interest expense, as reflected on the financial statements, has been
partially offset by interest income. The gross interest expense for the years
ended May 31, 1999, 1998 and 1997 was approximately $92,102, $45,155 and
$33,379, respectively.

The Company utilizes interest rate swap and collar agreements to hedge
variable interest rate risk under the term loans to a fixed rate as part of its
interest rate risk management program. The interest rate swap and collar
agreements cover a portion of the outstanding principal of the Company's term
loans. The notional amounts of the interest rate swap and collar agreements as
of May 31, 1999 were $350,000 and $100,000, respectively. The counter-parties on
the interest rate swap and collar agreements are major financial institutions.
The interest rate swap agreements expire at various times through March 2003,
while the interest rate collar agreement expires February 2004. Amounts paid
under swap agreements were immaterial and charged to interest expense. The
effect of the swap agreements on the weighted average borrowing rate was
insignificant.

7. TRANSACTIONS WITH AFFILIATED COMPANIES

The Company is controlled by WCAS VIII. WCAS VIII and its affiliates have
an approximate 60.5% common stock interest. The Company entered into a
stockholders' agreement with WCAS VIII and Blackstone Capital Partners
("Blackstone"), under which an affiliate of each of WCAS VIII and Blackstone
receives an annual monitoring fee of $450 and $300, respectively. For the year
ended May 31, 1999, the Company recorded expenses of $313 under the
stockholders' agreement. At May 31, 1999, $125 of such amount was recorded
within payable to affiliates in the Company's consolidated balance sheet.


F-15




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

Prior to the Merger, the Company was controlled by Century Communications
Corp. ("Century"). Century had an approximate 34% common stock interest and,
through ownership of the Company's class B common stock which had
disproportionate votes per share (15 votes per share), an approximate 74% voting
interest in the Company at May 31, 1998. For the years ended May 31, 1999, 1998
and 1997, the Company recorded expenses of $583, $1,000 and $750, respectively,
under a services agreement pursuant to which Century, through its personnel,
provided certain services to the Company. At May 31, 1998, $250 of such amount
was recorded within payable to affiliates on the Company's consolidated balance
sheet.

Leavy Rosensweig & Hyman, of which David Z. Rosensweig, a director and
Secretary of the Company prior to the Merger, is a member, serves as general
counsel to Century and, prior to the Merger, the Company. The Company paid
approximately $248, $426 and $656, for legal services to Leavy, Rosensweig &
Hyman for the fiscal years ended May 31, 1999, 1998, and 1997, respectively.

8. INCOME TAXES

The provision (benefit) for income taxes are summarized as follows:




Year Ended May 31,
------------------
1999 1998 1997
---------- ---------- ----------


Current (Federal and State) $ 3,066 $ 3,796 $ 3,328
Deferred (Federal and State) (9,886) (17,393) (10,623)
---------- -------- ----------

$ (6,820) $(13,597) $ (7,295)
========== ======== ==========


Deferred income taxes result primarily from non-deductible depreciation and
amortization resulting from book and tax basis differences of acquired
subsidiaries.

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




Year Ended May 31,
------------------
1999 1998 1997
---------- ---------- ----------

Computed tax benefit at federal statutory rate
on the loss before income taxes and minority
interest $ (18,266) $ (15,883) $ (14,153)
Non-deductible amortization resulting from
acquired subsidiaries 1,309 1,341 1,346
Minority interest in loss (income) of subsidiaries 98 (57) (54)
State and local income tax provision (benefit),
net of federal income tax benefit 500 (533) (569)
Non recognized benefit of loss of Puerto Rico subsidiary - - 926
Nondeductible compensation 9,258 - -
Nondeductible interest related to high yield debt obligation 573 - -
Other, including the utilization of accumulated net
operating losses and establishment of valuation allowance
for certain net operating losses (292) 1,535 5,209
---------- --------- ----------

$ (6,820) $ (13,597) $ (7,295)
========== ========= ==========


F-16



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

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

Year Ended May 31,
------------------
1999 1998
-------- --------

DEFERRED TAX ASSETS:
Tax loss carryforward $ 70,647 $ 50,895
Other 4,157 576
Valuation allowance (18,570) (13,189)
-------- --------
$ 56,234 $ 38,282
======== ========

DEFERRED TAX LIABILITIES:
Amortization of intangible assets $31,447 $ 43,958
Depreciation of fixed assets 24,787 20,908
------- --------
$56,234 $ 64,866
======= ========

Net deferred tax liabilities $ - $ 26,584
======= ========

The valuation allowance recorded at May 31, 1999 and 1998 represents the
portion of recorded tax loss carryforwards for which it is more likely than not
that the benefit of such carryforwards will not be realized.

The net deferred tax liability at May 31, 1998 of $26,584 has been
classified as non-current deferred income taxes on the consolidated balance
sheet.

At May 31, 1999, the Company and its subsidiaries had approximately
$167,336 of net operating loss carryforwards for federal income tax purposes,
expiring through May 31, 2019, some of which are subject to limitation on their
future utilization under Section 382 of the Internal Revenue Code of 1986.

9. HURRICANE GEORGES

In September 1998, the Commonwealth of Puerto Rico sustained damage as a
result of the effects of Hurricane Georges. The Company received insurance
proceeds for network infrastructure and phones damaged by the hurricane and as a
result did not incur a significant gain or loss. Additionally, during the year
ended May 31, 1999, the Company recorded approximately $2,047 of insurance
recoveries related to subscriber credits and business interruption within
revenue.

10. COMMITMENTS AND CONTINGENCIES

EQUIPMENT AND INSTALLATION SERVICES

In July 1998, the Company entered into an agreement with Northern Telecom
pursuant to which the Company has agreed, subject to certain conditions, to
purchase equipment and installation services for its domestic wireless telephone
systems over the next 3 years at a cost of approximately $50,000, of which
approximately $25,783 has been purchased or ordered as of May 31, 1999.

LEGAL PROCEEDINGS

There are no material legal proceedings, other than routine litigation
incidental to the business, to which the Company or any of its subsidiaries is a
party to or which any of their property is subject.


F-17



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

LEASE COMMITMENTS

The Company's annual lease obligations and expenses under operating leases
were approximately $8,697, $6,891 and $4,230 for each of the years ended May 31,
1999, 1998 and 1997, respectively. The majority of these operating leases are
short-term in nature and may be canceled by either party if appropriate notice
is given. As of May 31, 1999, the aggregate minimum rental commitments under
noncancelable leases with initial terms in excess of one year were as follows:

May 31, 2000 $ 8,457
May 31, 2001 7,282
May 31, 2002 5,507
May 31, 2003 3,149
May 31, 2004 1,760
May 31, 2005 and thereafter 7,817
------------
$ 33,972
============

11. COMMON STOCK AND PREFERRED STOCK

COMMON STOCK

Prior to the Merger, the voting rights with respect to the two classes of
the Company's common stock were as follows: class A shares entitled the holder
to one vote per share, class B shares entitled the holder to fifteen votes per
share.

Pursuant to the terms of the Merger Agreement, shares of class B common
stock were convertible into shares of class A common stock on a one-for-one
basis or the rights of class A common stock. The class B common stock was
converted into the right to receive $13.83 per share in cash.

During the years ended May 31, 1999 and 1998, the Company purchased 23,501
and 4,630,200 shares of its class A common stock for an aggregate purchase price
of $1,077 and $28,813, respectively. These shares have been accounted for as
treasury shares.

PREFERRED STOCK

In connection with a previous business combination, the Company issued the
Convertible Redeemable Preferred Stock valued at $128,450 and 1,367,909 shares
of class B common stock representing 18.8% of the then common equity. The
Company later issued the second series convertible redeemable preferred stock
valued at $5,000. During the years ended May 31, 1999, 1998 and 1997, the
Company paid quarterly cash dividends with respect to both classes of preferred
stock totaling $9,906, $12,338 and $8,226, respectively. Both classes of
preferred stock were converted into the right to receive $13.83 per share in
cash on an as-converted basis pursuant to the terms of the Merger Agreement.

12. COMPENSATION PLANS AND ARRANGEMENTS

1999 STOCK OPTION PLAN

The Company's 1999 Stock Option and Restricted Stock Purchase Plan (the
"1999 Stock Option Plan") provides for the grant of "incentive stock options" as
defined in Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code"), as well as non-qualified stock options and the right to purchase shares


F-18



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

of class A common stock of the Company on a restricted basis to employees,
officers, directors and others providing services to the Company. Generally, the
exercise price of incentive and non-qualified stock options and the purchase
price of restricted stock may be as determined by the Board of Directors of the
Company or a committee thereof. The exercise price of incentive stock options
issued under the 1999 Stock Option Plan is required to be no less than the fair
market value of shares of class A common stock at the time of grant of such
options. The maximum term of each incentive stock option and non-qualified stock
option issued under the 1999 Stock Option Plan is ten years. The number of
shares of class A common stock of the Company reserved for issuance under the
1999 Stock Option Plan is 1,950,000 shares.

For any participant who owns shares possessing more than 10% of the voting
rights of the outstanding class A common stock, the exercise price of any
incentive stock option must be at least 110% of the fair market value of the
shares subject to such option on the date of the grant and the term of the
option may not be longer than five years. Options become exercisable at such
time or times as the Board of Directors or committee granting such options
determine when such options are granted. Options granted under the 1999 Stock
Option Plan are not transferable by the holder. As of May 31, 1999, incentive
stock options and non-qualified stock options exercisable for an aggregate
1,814,000 shares of class A common stock were outstanding under the 1999 Stock
Option Plan, and 26,502 shares of class A common stock were issued and
outstanding as restricted stock under the 1999 Stock Option Plan.

1991 EMPLOYEE STOCK OPTION PLAN

The Company's 1991 Employee Stock Option Plan (the "Employee Stock Option
Plan") as amended, provided for the grant of options to purchase up to 6,075,000
shares of class A common stock reserved thereunder to directors, officers and
other key employees of the Company. The Employee Stock Option Plan permitted the
issuance of "incentive stock options", as defined in Section 422A of the Code,
as well as non-qualified stock options and stock appreciation rights. The
maximum term of each option was ten years.

For any participant who owned shares possessing more than 10% of the voting
rights of the outstanding common stock, the exercise price of any incentive
stock option must be at least 110% of the fair market value of the shares
subject to such option on the date of grant and the term of the option may not
be longer than five years. Options became exercisable at such time or times as
the Employee Stock Option Committee determined when it granted options. The
Employee Stock Option Plan permitted the exercise of options by the payment of
cash or delivery of shares of class A common stock equal in fair market value on
the date of exercise to the exercise price. Options granted under the Employee
Stock Option Plan were not transferable by the holder. During the fiscal years
ended May 31, 1999, 1998 and 1997 the number of such options awarded were
approximately 0, 1,464,000 and 2,777,346, respectively.

Pursuant to the Merger Agreement, at the time of the Merger, each option to
purchase class A common stock granted under the Employee Stock Option Plan was
exercised or canceled pursuant to its terms or in exchange for a cash amount
equal to the difference between $13.83 and the exercise price of the option
prior to the effective time of the Merger, and the Employee Stock Option Plan
was terminated (See Note 2).

DIRECTOR OPTION PLAN

The Company's Non-Employee/Officer Director Option Plan (the "Director
Option Plan") was adopted on October 27, 1993. The Director Option Plan provided
for the grant of non-qualified options to purchase up to 150,000 shares of class
A common stock to non-employee/officer directors, who were not employees of the
Company or its subsidiaries. Options for 3,000 shares of class A common stock
were automatically granted under the Director Option Plan on the date of the
annual meeting of shareholders of the Company in each of the years 1993 through
1998. Generally, the option price of non-qualified stock options granted may be
as determined by the Director Option Committee, but must be at least equal to
100% of the fair market value of the shares on the date of the grant.


F-19



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


Options became exercisable at the rate of 20% per year beginning with the
first anniversary of the date of the grant. The Director Option Plan permitted
the exercise of options by payments of cash or class A common stock equal in
value to the option price. Options granted under the Director Option Plan were
not transferable by the holder other than by will or the laws of descent and
distribution. During each of the fiscal years ended May 31, 1999, 1998 and 1997,
0, 12,000 and 12,000 of such options were awarded, respectively.

Pursuant to the Merger Agreement, at the time of the Merger, each option to
purchase class A common stock granted under the Director Option Plan, as
amended, was exercised or canceled pursuant to its terms or in exchange for a
cash amount equal to the difference between $13.83 and the exercise price of the
option prior to the effective time of the Merger, and the Director Option Plan
was terminated (See Note 2).

A summary of the status of the Company's stock options as of May 31, 1997,
1998 and 1999 and changes during the years then ended are presented below:



Weighted
Average
Exercise
Number Price
------ --------


1997 Outstanding at June 1, 1996 2,164,716 $ 4.66
Granted 4,086,846 $ 3.86
Exercised (5,112) $ 3.25
Canceled (2,787,888) $ 4.80
-----------
Outstanding at May 31, 1997 3,458,562 $ 3.60

1998 Granted 1,476,000 $ 6.33
Exercised (151,848) $ 3.51
Canceled (274,785) $ 4.46
-----------
Options outstanding as of May 31, 1998 4,507,929 $ 4.45

1999 Granted 1,826,000 $ 13.93
Exercised (1,403,823) $ 3.49
Canceled (3,116,106) $ 4.92
-----------
Options outstanding as of May 31, 1999 1,814,000 $ 13.93
=========== ========

Options exercisable at May 31, 1999 - $ -
=========== ========




The following table summarizes information about options outstanding at May
31, 1999:




Range of Number Weighted Average Number
Exercise Outstanding Remaining Weighted Average Exercisable Weighted Average
Prices at 5/31/99 Contractual Life Exercise Price at 5/31/99 Exercise Price
----------- ------------ -------------------- ---------------- ------------- ---------------

$ 13.83-18.00 1,811,000 9.60 years $ 13.90 - $ -
$ 35.00 3,000 9.79 years $ 35.00 - $ -
---------- ---------- ------- ----------- --------------
1,814,000 9.60 years $ 13.93 - $ -
========= ========== ======= =========== ==============




F-20




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

The following table summarizes information about options exercisable at May
31, 1998 and 1997:

Year ended Number Weighted Average
May 31, Exercisable Exercise Price

1998 1,695,003 $ 3.60
1997 1,456,419 $ 3.49

1991 EMPLOYEE STOCK PURCHASE PLAN

The Company had reserved 600,000 shares of class A common stock for
issuance under the 1991 Employee Stock Purchase Plan (the "Purchase Plan").
Under the Purchase Plan, eligible employees (which generally includes all
full-time employees of the Company) were able to subscribe for shares of class A
common stock at a purchase price of 85% of the average market price (as defined)
of the class A common stock on the first day or last day of the payroll
deduction period relating to an offering under the Purchase Plan. Payment of the
purchase price of the shares was to be made in installments through payroll
deductions, with no right of prepayment. The Purchase Plan was administered by
the Compensation Committee of the Board of Directors. Rights to purchase shares
of class A common stock under the Purchase Plan could not be transferred by the
recipient and could be forfeited in the event of the recipient's termination of
employment. During the fiscal years ended May 31, 1999, 1998 and 1997, 48,880,
105,780 and 93,360 shares, respectively, were purchased by employees under the
Purchase Plan. The Purchase Plan was terminated in connection with the Merger.

EQUITY INCENTIVE PLAN

The Company's 1993 Equity Incentive Plan (the "Equity Plan") was adopted by
the Board of Directors and approved by the stockholders on October 27, 1993 and
amended on October 29, 1996. The plan permitted the issuance of up to 1,050,000
shares of the Company's class A common stock for high levels of performance and
productivity by officers and other management employees of the Company. The plan
authorized the Compensation Committee of the Company's Board of Directors to
grant stock based awards that include but were not limited to, restricted stock,
performance shares and deferred stock. The Committee determined the recipients
and provisions of the grants under the Equity Plan, including the grant price,
term and number of shares subject to grant.

Generally, any employee will realize compensation taxable as ordinary
income, and the Company will be entitled to a corresponding tax deduction in an
amount equal to the sum of any cash received by the employee plus the fair
market value of any shares of class A common stock received by the employee.
During the fiscal years ended May 31, 1999, 1998 and 1997, the number of
restricted shares issued for awards under the Equity Plan were 0, 393,000, and
0. These restricted shares vested pursuant to the Merger Agreement and the
Equity Plan was terminated.

The estimated weighted average fair value of options granted during fiscal
1999, 1998 and 1997 were $6.89 per share, $2.23 per share, and $1.16 per share,
respectively. The Company applies APB Opinion No. 25 and related interpretations
in accounting for its plans. Accordingly, no compensation cost has been
recognized with respect to its stock option, and stock purchase plans.


F-21



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

Had compensation cost for the Company's stock option plans and stock
purchase plan been determined based on the fair value of the awards on the grant
dates in accordance with the accounting provisions of SFAS No. 123 "Accounting
for Stock-Based Compensation", the Company's net loss and net loss per common
share for the years ended May 31, 1999, 1998 and 1997 would have been increased
to the pro forma amounts indicated below:

1999 1998 1997
----------- ----------- ---------
Loss applicable to common shares:
As reported $ (90,073) $(48,398) $(49,243)
Pro forma $ (91,228) $(49,306) $(49,921)

Loss per common share:
As reported $ (1.96) $ (0.84) $ (0.82)
Pro forma $ (1.98) $ (0.86) $ (0.84)


The fair value of options granted under the Company's stock option plans during
fiscal 1999, 1998 and 1997 was estimated on the dates of grant using the
Black-Scholes options-pricing model with the following weighted average
assumptions used:

1999 1998 1997
-------- --------- -------
Expected Volatility 57.00% 43.63% 36.78%
Risk-Free Interest Rate 5.64% 5.45% 6.00%
Expected Lives of Option Grants 4 years 3 years 3 years
Expected Dividend Yield 0.00% 0.00% 0.00%

RETIREMENT PLANS

The Company sponsors 401(k) defined contribution retirement plans covering
employees of its wholly owned subsidiaries. If a participant decides to
contribute, a portion of the contribution is matched by the Company. Effective
in fiscal year 1999, the Company began providing a profit sharing component to
the retirement plans. The profit share contribution made by the Company is based
on the results of the Company, as defined under the profit share agreement.
Total expense under the plans was approximately $1,376, $326, and $221 for the
years ended May 31, 1999, 1998, and 1997, respectively. The profit sharing
component represented approximately $816 of the total expense for the year ended
May 31, 1999.

13. ACQUISITIONS

During fiscal 1999, the Company exercised its right to acquire the minority
interests held by Century Federal, Inc., an affiliate of Century ("Century
Federal"), in the Cass and Jackson, Michigan systems for the prices paid by
Century Federal for such minority interests in the acquisitions of such systems
($2,000 and $1,000, respectively). All of the purchase price was allocated to
cellular telephone licenses. As a result of these transactions, the Company owns
100% of these systems.

On September 12, 1996, the Company acquired, for approximately $35,000 in
cash, 100% of the ownership interests in the partnership owning the wireless
telephone system serving the Benton Harbor, Michigan MSA. The Benton Harbor
market represents approximately 161,400 Net Pops. Approximately $33,429 of the
purchase price was allocated to cellular telephone license and $1,234 was
allocated to property, plant and equipment.


F-22



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

14. PRO FORMA INFORMATION

The summary pro forma information includes the operations of the Company
and the completed Benton Harbor, Michigan MSA acquisition as if such acquisition
had been consummated as of June 1, 1996.

Year Ended May 31,
------------------
(Unaudited)
1997
----
Revenues $ 152,293
Net loss $ (32,255)
Basic loss per common
share $ (0.81)

Pro forma loss per common share for the year ended May 31, 1997 is
calculated using the weighted average number of common shares outstanding during
the period.

15. FAIR VALUE OF FINANCIAL INSTRUMENTS

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




Fiscal Year Ended May 31,
------------------------------------------------------------------
1999 1998
------------------------------------------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
------------ ------------ ----------- -----------

Debt $ 1,463,795 $ 1,478,595 $ 510,000 $ 555,432
Derivative financial instruments:
Interest rate swap agreements - 5,369 - -
Interest rate collar agreement - 938 - -


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. All derivative financial instruments are off-balance
sheet and therefore have no carrying value. The fair values of the interest rate
swap and collar agreements are estimated using quotes from brokers.

16. SUBSEQUENT EVENT

In June 1999, the Company entered into an agreement to acquire 100% of the
ownership interests in a partnership owning the wireless telephone system
serving the Allegan, Michigan RSA. The Allegan market represents approximately
100,000 Net Pops. The Company has agreed to a purchase price of approximately
$34,000 in cash and stock, subject to adjustment. The obligation of the Company
to consummate this transaction is subject to certain closing conditions,
including the relevant regulatory approvals. The Company anticipates completing
this acquisition in October 1999.


F-23



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)

17. SEGMENT INFORMATION

The Company adopted SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information" during fiscal 1999. The Company's
consolidated financial statements include two distinct business segments:
Domestic and Puerto Rico. The Company determines its segments based on
geographic location. The Company measures the operating performance of each
segment based on Adjusted EBITDA. Adjusted EBITDA is defined as earnings before
income from minority cellular investment interests, allocations to minority
interests in consolidated subsidiaries, interest expense, interest income,
income taxes, depreciation and amortization, gain on sale of assets,
recapitalization costs and other non-recurring charges.

Information about the Company's operations in its two business segments for the
years ended May 31, 1999, 1998 and 1997 is as follows:




Domestic Puerto Rico Eliminations Consolidated
-------- ----------- ------------ ----- ------------


YEAR ENDED MAY 31, 1999
Total revenues $241,902 $127,249 $ - $369,151
Adjusted EBITDA 127,431 56,067 - 183,498
Total assets 850,645 248,295 (112,659) (a) 986,281
Capital expenditures 37,908 65,496 - 103,404

YEAR ENDED MAY 31, 1998
Total revenues $181,502 $ 54,314 $ - $235,816
Adjusted EBITDA 86,670 12,538 - 99,208
Total assets 718,231 221,504 (92,318) (a) 847,417
Capital expenditures 38,996 90,304 - 129,300

YEAR ENDED MAY 31, 1997
Total revenues $143,317 $ 5,895 $ - $149,212
Adjusted EBITDA 64,277 (8,425) - 55,852
Total assets 764,495 150,455 (70,100) (a) 844,850
Capital expenditures 38,921 50,069 - 88,990


(a) Elimination of intercompany investments


RECONCILIATION OF LOSS BEFORE INCOME TAX BENEFIT, MINORITY INTEREST AND
EXTRAORDINARY ITEM




May 31,
-------
1999 1998 1997
--------- --------- ---------

Adjusted EBITDA for reportable segments $ 183,498 $ 99,208 $ 55,852
Interest Expense (net) 87,693 43,470 31,568
Depreciation and Amortization 114,696 114,194 83,720
Recapitalization costs 52,831 - -
Income from Equity Investments 11,502 13,069 15,180
Gain on disposition of assets 8,031 5 3,819
--------- --------- ---------
Loss before Income Tax Benefit, Minority Interest
And Extraordinary Item $ (52,189) $(45,382) $ (40,437)
========= ======== =========



F-24



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


18. CONSOLIDATING FINANCIAL DATA

Centennial Cellular Operating Co. LLC is a wholly-owned subsidiary of the
Company and is a joint and several co-issuer on the $370,000 senior
subordinated notes issued by the Company. Separate financial statements and
other disclosures concerning Centennial Cellular Operating Co. LLC are not
presented because they are not material to investors.


CONSOLIDATING BALANCE SHEET FINANCIAL DATA
As of May 31, 1999
(Amounts in thousands)



Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
---------------- ----------- ------------ ------------


ASSETS
Current assets:
Cash and cash equivalents $ 51,141 $ - $ - $ 51,141
Restricted investments 39,480 - - 39,480
Accounts receivable - net 46,326 - - 46,326
Inventory - phones and accessories - net 7,631 - - 7,631
Prepaid expenses and other current assets 737 - - 737
---------------- -------- ------------ -----------

Total current assets 145,315 - - 145,315

Property, plant & equipment - net 300,120 - - 300,120

Restricted Investments, long-term 19,038 19,038

Equity investments - cell systems 75,723 - - 75,723

Debt issuance costs - net 58,307 - - 58,307

Cellular telephone licenses - net 202,599 - - 202,599

Personal communications services licenses - net 58,866 - - 58,866

Goodwill - net 119,172 - - 119,172

Intercompany - 9,253 (9,253) -

Other assets - net (172,859) 180,000 - 7,141
---------------- -------- ------------ -----------

Total $ 806,281 $189,253 $(9,253) $986,281
================ ======== ============ ===========





F-25



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


Note 18 - Continued


CONSOLIDATING BALANCE SHEET FINANCIAL DATA
(CONTINUED)
As of May 31, 1999
(Amounts in thousands)





Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
------------------ ---------- ------------ ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current Portion of long term debt $ 4,500 $ - $ - $ 4,500
Accounts payable 22,968 - 22,968
Accrued expenses and other
current liabilities 94,056 8,315 102,371
Payable to affiliates 125 - - 125
--------- --------- ---------- -----------
Total current liabilities 121,649 8,315 - 129,964

Long-term debt 1,300,857 158,438 - 1,459,295

Intercompany 9,253 - (9,253) -

Common stockholders' equity (deficit):
Class A common stock 296 16 - 312
Additional paid-in capital 396,890 22,484 - 419,374
Accumulated deficit (1,021,587) - - (1,021,587)
--------- --------- ---------- -----------
(624,401) 22,500 - (601,901)

Less: treasury shares (1,077) - - (1,077)
--------- --------- ---------- -----------

Total common stockholders' equity (deficit) (625,478) 22,500 - (602,978)
--------- --------- ---------- -----------

Total $ 806,281 $ 189,253 $(9,253) $ 986,281
========= ========= ========== ===========





F-26



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


Note 18 - Continued


CONSOLIDATING STATEMENT OF OPERATIONS FINANCIAL DATA
FOR THE YEAR ENDED MAY 31, 1999
(Amounts in thousands)





Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Subsidiaries
-------------------- ---------------- ---------------------



Revenue $ 369,151 $ - $ 369,151
-------------------- ---------------- ---------------------

Costs and expenses:
Cost of equipment sold 23,065 - 23,065
Cost of services 49,832 - 49,832
Sales and Marketing 51,538 - 51,538
General & Administrative 61,218 - 61,218
Depreciation and amortization 114,696 - 114,696
Recapitalization costs 52,831 - 52,831
-------------------- ---------------- ---------------------
353,180 - 353,180
-------------------- ---------------- ---------------------

Operating income (loss) 15,971 - 15,971
-------------------- ---------------- ---------------------

Income from equity investments 11,502 - 11,502
Gain on disposition of assets 8,031 - 8,031
Interest expense - net 87,693 - 87,693
-------------------- ---------------- ---------------------

Loss before income tax
benefit, minority interest and extraordinary item (52,189) - (52,189)

Income tax benefit (6,820) - (6,820)
-------------------- ---------------- ---------------------

Loss before minority interest and extraordinary item (45,369) - (45,369)

Minority interest in loss
of subsidiaries 281 - 281
-------------------- ---------------- ---------------------

Loss before extraordinary item (45,088) - (45,088)

Extraordinary loss on early
extinguishment of debt - net of
income taxes of $(16,698) (35,079) - (35,079)
-------------------- ---------------- ---------------------



Net Loss $ (80,167) $ - $ (80,167)
==================== ================ =====================





F-27



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


Note 18 - Continued


CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Year Ended May 31, 1999
(Amounts in thousands)





Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
---------------- ------------ ------------ -------------
OPERATING ACTIVITIES:


Cash received from subscribers and others $ 401,316 $ - $ - $ 401,316
Cash paid to suppliers, employees and
governmental agencies (204,294) (204,294)
Interest paid (51,906) (938) - (52,844)
---------------- ------------ ------------ -------------

NET CASH PROVIDED By (USED IN) OPERATING ACTIVITIES 145,116 (938) - 144,178
---------------- ------------ ------------ -------------

INVESTING ACTIVITIES:

Proceeds from disposition of assets 4,702 - - 4,702
Capital expenditures (103,404) - - (103,404)
Acquisition of other assets (2,200) - - (2,200)
Purchase of restricted securities (77,499) - - (77,499)
Proceeds from maturity of restricted securities 19,998 - - 19,998
Disposition of equity investment 13,500 - - 13,500
Acquisition of equity investment and wireless telephone system (3,000) - - (3,000)
Distributions received from equity investments 10,958 - - 10,958
---------------- ------------ ------------ -------------

NET CASH USED IN INVESTING ACTIVITIES (136,945) - - (136,945)
---------------- ------------ ------------ -------------

FINANCING ACTIVITIES:

Proceeds from the issuance of long-term debt 1,326,062 158,438 - 1,484,500
Repayment of long-term debt (531,643) - - (531,643)
Debt issuance costs paid (61,212) - - (61,212)
Premiums paid on early extinguishment of debt (44,634) - - (44,634)
Proceeds from issuance of class A common stock 405,150 22,500 - 427,650
Redemption of preferred stock (128,154) - - (128,154)
Purchase of common stock in conjunction with recapitalization (1,052,436) - - (1,052,436)
Dividends paid (18,131) - - (18,131)
Treasury stock purchases (1,077) - - (1,077)
Cash advances from parent (to affiliates) 180,000 (180,000) -
Recapitalization costs paid (45,575) - - (45,575)
---------------- ------------ ------------ -------------


NET CASH PROVIDED BY FINANCING ACTIVITIES 28,350 938 - 29,288
---------------- ------------ ------------ -------------

NET INCREASE IN CASH AND CASH EQUIVALENTS 36,521 - - 36,521

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 14,620 - - 14,620
---------------- ------------ ------------ -------------

CASH AND CASH EQUIVALENTS, END OF YEAR $ 51,141 $ - $ - $ 51,141
================ ============ ============ =============




F-28


CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


Note 18 - Continued


CONSOLIDATING STATEMENT OF CASH FLOWS FINANCIAL DATA
For the Year Ended May 31, 1999
(CONTINUED)
(Amounts in thousands)




Centennial
Centennial Centennial Cellular
Cellular Operating Cellular Corp. and
Co. LLC Corp. Eliminations Subsidiaries
------------------ ---------- ------------ ------------


RECONCILIATION OF NET LOSS TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:

Net loss $ (80,167) $ - $ - $ (80,167)
------------ ---------- --------- -----------
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:

Depreciation and amortization 114,696 - - 114,696
Minority interest in income (loss) of subsidiaries (281) - - (281)
Deferred income taxes (9,886) - - (9,886)
Equity in undistributed earnings of investee companies (11,502) - - (11,502)
Gain on disposition of assets (8,031) - - (8,031)
Extraordinary loss on extinguishment of debt 35,079 - - 35,079
Recapitalization costs 52,831 - - 52,831
Other 5,577 - - 5,577
Change in assets and liabilities net of effects of
acquisitions:
Accounts receivable - (increase) (11,052) - - (11,052)
Prepaid expenses and other current assets -
(increase) (858) (9,253) 9,253 (858)
Accounts payable, accrued expenses and
other current liabilities- increase 56,524 8,315 (9,253) 55,586
Customer deposits and prepayments -
increase 2,186 - - 2,186
------------ ---------- --------- -----------

Total adjustments 225,283 (938) - 224,345
------------ ---------- --------- -----------

Net cash provided by (used in) operating activities $ 145,116 $ (938) $ - $ 144,178
============ ========== ========= ===========





F-29



CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended May 31, 1999, 1998 and 1997
(Amounts in thousands, except subscriber and share data)


19. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)





Three Months Ended
------------------
August 31, November 30, February 28, May 31,
1997 1997 1998 1998
--------- --------- --------- ---------


Revenues $ 52,189 $ 58,575 $ 58,941 $ 66,111
Operating income (loss) (2,792) (5,933) (8,597) 2,336
Net loss (6,786) (9,626) (9,670) (5,865)
Loss per share applicable to
common shareholders (basic and diluted) (.18) (.23) (.25) (.18)






Three Months Ended
------------------
August 31, November 30, February 28, May 31,
1998 1998 1999 1999
--------- --------- --------- ---------




Revenues $ 77,446 $ 87,152 $ 97,993 $ 106,560
Operating income (loss) 6,831 10,196 (43,233) 42,177
Income (loss) before
extraordinary item 5,655 688 (53,080) 1,649
Net income (loss) 5,655 688 (93,606) 7,096
Income (loss) per share before
extraordinary item applicable to
common shareholders (basic and diluted) .03 (.06) (1.33) .05



Significant fourth quarter adjustments are described in Note 1 and Note 2.


F-30



INDEPENDENT AUDITORS' REPORT




Board of Directors and Stockholders
Centennial Cellular Corp.
Neptune, New Jersey

We have audited the consolidated financial statements of Centennial Cellular
Corp. and Subsidiaries (the "Company") as of May 31, 1999 and 1998 and for each
of the three years in the period ended May 31, 1999, and have issued our report
thereon dated July 7, 1999 (included elsewhere in this Form 10-K). Our audits
also included the financial statement schedule listed in Item 14. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.



/s/Deloitte & Touche LLP

New York, New York
July 7, 1999



F-31




CENTENNIAL CELLULAR CORP. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Amounts in thousands)





Balance at Charged to Charged to Balance at
beginning costs and other end of
of period expenses accounts Deductions period
----------------------------------------------------------------------------

Year ended May 31, 1999

Allowance for Doubtful Accounts $ 2,693 $ 8,967 $ - $ 7,897 $ 3,763
======== ======== ======== ======== ========
Reserve for Inventory Obsolescence $ 529 $ 2,135 $ - $ 1,349 $ 1,315
======== ======== ======== ======== ========

Year ended May 31, 1998
Allowance for Doubtful Accounts $ 2,130 $ 7,339 $ - $ 6,776 $ 2,693
======== ======== ========= ========= ========
Reserve for Inventory Obsolescence $ 250 $ 279 $ - $ - $ 529
======== ======== ========= ========= ========

Year ended May 31, 1997
Allowance for Doubtful Accounts $ 1,471 $ 4,860 $ - $ 4,201 $ 2,130
======== ======== ========= ========= ========
Reserve for Inventory Obsolescence $ 250 $ - $ - $ - $ 250
======== ======== ========= ========= ========




F-32




SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this Annual Report
on Form 10-K for the fiscal year ended May 31, 1999 to be signed on its behalf
by the undersigned, thereunto duly authorized, on the 13th day of August, 1999.


CENTENNIAL CELLULAR CORP.



By: /s/Michael J. Small
---------------------------
MICHAEL J. SMALL
President, Chief Executive Officer and Director


Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Annual Report on Form 10-K for the fiscal year ended May 31, 1999
has been signed below by the following persons in the capacities indicated on
the 13th day of August, 1999.


/s/Michael J. Small President, Chief Executive Officer
- ------------------------------ and Director (Principal Executive Officer)
MICHAEL J. SMALL

/s/Peter W. Chehayl Senior Vice President, Treasurer and
- ------------------------------ Chief Financial Officer, (Principal Financial
PETER W. CHEHAYL Officer)

/s/Thomas E. Bucks Senior Vice President-Controller
- ------------------------------ (Principal Accounting Officer)
THOMAS E. BUCKS

/s/Thomas E. McInerney Chairman, Board of Directors
- ------------------------------
THOMAS E. MCINERNEY

/s/Anthony J. De Nicola Director
- ------------------------------
ANTHONY J. DE NICOLA

/s/Rudolph E. Rupert Director
- ------------------------------
RUDOLPH E. RUPERT

/s/Mark T. Gallogly Director
- ------------------------------
MARK T. GALLOGLY

/s/Lawrence H. Guffey Director
- ------------------------------
LAWRENCE H. GUFFEY





II-1



Exhibit 12

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (AMOUNTS IN THOUSANDS)





-------------------------------------------------------------------------
Year Ended May 31,
1999 1998 1997 1996 1995
-------------------------------------------------------------------------



Loss before income tax benefit, minority interest &
extraordinary item $(52,189) $ (45,382) $ (40,437)$ (28,212) $ (47,117)

Minus adjustment so as to include only distributed
income of less than 50% owned equity investments (544) (2,960) (8,317) (3,603) (1,774)

Add: Fixed Charges 106,396 70,940 56,999 56,833 42,769
Less: Capitalized interest - - (2,752) (5,200) -
Less: Preferred stock dividends (11,395) (23,488) (19,458) (23,073) (18,226)
--------- ----------- ----------- -------------- ------------

Earnings, as defined $ 42,268 $ (890) $ (13,965) $ (3,255) $ (24,348)
========= =========== =========== ============== ============

Fixed charges:

Interest expense, including amortization of
debt issuance costs 92,102 45,155 33,379 27,886 23,996
Interest portion of rent expense 2,899 2,297 1,410 674 547
Capitalized interest - - 2,752 5,200 -
Preferred stock dividends 11,395 23,488 19,458 23,073 18,226
--------- ----------- ----------- -------------- ------------
Fixed charges, as defined $106,396 $ 70,940 $ 56,999 $ 56,833 $ 42,769
========= =========== =========== ============== ============

Ratio of earnings to fixed charges (1) -- --- --- --- ---
========= =========== =========== ============== ============

Amount by which earnings are less than fixed charges $(64,128) $ (71,830) $ (70,964) $ (60,088) $ (67,117)
========= =========== =========== ============== ============



(1) The ratio of earnings to fixed charges is less than one-to-one and, therefore, earnings are inadequate to cover fixed charges.







EXHIBIT 21

SUBSIDIARIES OF CENTENNIAL CELLULAR CORP.,
A DELAWARE CORPORATION





NAME STATE OF ORGANIZATION


Alexandria Cellular Corp. Delaware
Alexandria Cellular License Corp. Delaware
Bauce Communications, Inc. Oregon
Bauce Communications of Beaumont, Inc. Oregon
Centennial Asia Pacific Cellular Holding Corp. Nevada
Centennial Ashe Cellular Corp. Delaware
Centennial Beauregard Cellular LLC Delaware
Centennial Beauregard Holding Corp. Delaware
Centennial Benton Harbor Cellular Corp. Delaware
Centennial Benton Harbor Holding Corp. Delaware
Centennial Caldwell Cellular Corp. Delaware
Centennial Cellular Operating Co. LLC Delaware
Centennial Cellular Telephone Company of Del Norte Delaware
Centennial Cellular Telephone Company of Lawrence Delaware
Centennial Cellular Telephone Company of Modoc Delaware
Centennial Cellular Telephone Company of Sacramento Valley Delaware
Centennial Cellular Telephone Company of San Francisco Delaware
Centennial Cellular Wireless Holding Corp. New Jersey
Centennial Claiborne Cellular Corp. Delaware
Centennial Clinton Cellular Corp. Delaware
Centennial DeSoto Cellular Corp. Delaware
Centennial Hammond Cellular LLC Delaware
Centennial Iberia Holding Corp. Delaware
Centennial Jackson Cellular Corp. Delaware
Centennial Lafayette Cellular Corp. Louisiana
Centennial Lake Charles Cellular Corp. Delaware
Centennial Louisiana Holding Corp. Delaware
Centennial Michigan RSA 6 Cellular Corp. Delaware
Centennial Michigan RSA 7 Cellular Corp. Delaware
Centennial Microwave Corp. Delaware
Centennial Morehouse Cellular LLC Delaware
Centennial Puerto Rico Realty Corporation Puerto Rico
Centennial Puerto Rico Wireless Corporation Delaware
Centennial Randolph Cellular LLC Delaware
Centennial Randolph Holding Corp. Delaware
Centennial Wireless PCS License Corp. Delaware
Centennial Wireless PCS Operations Corp. Delaware
Century Beaumont Cellular Corp. Delaware
Century Cellular Realty Corp. Delaware




Century Charlottesville Cellular Corp. Virginia
Century Charlottesville Cellular Corp. Delaware
Century El Centro Cellular Corp. California
Century Elkhart Cellular Corp. Delaware
Century Indiana Cellular Corp. Delaware
Century Lynchburg Cellular Corp. Delaware
Century Lynchburg Cellular Corp. Virginia
Century Michiana Cellular Corp. Delaware
Century Michigan Cellular Corp. Delaware
Century Montgomery Cellular Corp. Delaware
Century Roanoke Cellular Corp. Virginia
Century Roanoke Cellular Corp. Delaware
Century Rural Cellular Corp. Delaware
Century South Bend Cellular Corp. Delaware
Century Yuma Paging Corp. Delaware
Century Yuma Cellular Corp. Delaware
El Centro Cellular Corporation Delaware
Elkhart Metronet, Inc. Indiana
Hendrix Electronics, Inc. California
Hendrix Radio Communications, Inc. California
Iberia Cellular Telephone Company LLC Delaware
Lafayette Communications, Inc. Delaware
Lambda Communications, Incorporated (Incorporado) Puerto Rico
Lambda Operations Corp. Delaware
Lambda PCS Corp. Nevada
Lambda Realty Corp. Delaware
Mega Comm, LLC Delaware
Centennial Mega Comm Holding Corp. Delaware
Michiana Metronet, Inc. Indiana
South Bend Metronet, Inc. Indiana
Centennial Tri-State Operating Partnership Delaware