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Atlantic Tele-Network, Inc. Reports Second Quarter 2012 Results

Use of Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with generally accepted accounting principles (GAAP), this news release also contains non-GAAP financial measures. Specifically, ATN has presented Adjusted EBITDA and ARPU measures. Adjusted EBITDA is defined as net income attributable to ATN, Inc. stockholders before interest, taxes, depreciation and amortization, acquisition related charges, impairment of intangible assets, gain on disposition of long-lived assets, other income or expense, bargain purchase gain, net income attributable to non-controlling interests, and equity in earnings of unconsolidated affiliates. ARPU, or monthly average revenue per subscriber/unit, is computed by dividing total retail service revenues per period by the weighted average number of subscribers with service during that period, and then dividing that result by the number of months in the period. The Company believes that the inclusion of these non-GAAP financial measures helps investors to gain a meaningful understanding of the Company's core operating results and enhance comparing such performance with prior periods, without the distortion of the recent increased expenses associated with the Alltel transaction. ATN’s management uses these non-GAAP measures, in addition to GAAP financial measures, as the basis for measuring our core operating performance and comparing such performance to that of prior periods. The non-GAAP financial measures included in this news release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Reconciliations of the non-GAAP financial measures used in this news release to the most directly comparable GAAP financial measures are set forth in the text of, and the accompanying tables to, this press release.

1 See Table 5 for reconciliation of Net Income to Adjusted EBITDA.

Table 1

ATLANTIC TELE-NETWORK, INC.
Unaudited Condensed Consolidated Balance Sheets
(in Thousands)
   
June 30, December 31,
2012 2011
Assets:
Cash and cash equivalents $ 79,837 $ 48,735
Other current assets 130,922 135,165
   
Total current assets 210,759 183,900
 
Property, plant and equipment, net 456,239 483,203
Goodwill and other intangible assets, net 182,114 186,871
Other assets 27,700 19,757
   
Total assets $ 876,812 $ 873,731
 
Liabilities and Stockholders’ Equity:
Current portion of long-term debt $ 15,680 $ 25,068
Other current liabilities 118,611 120,710
   
Total current liabilities 134,291 145,778
 
Long-term debt, net of current portion 258,235 257,146
Other liabilities 115,556 118,277
   
Total liabilities 508,082 521,201
 
Total Atlantic Tele-Network, Inc.’s stockholders’ equity 309,817 294,266
Non-controlling interests 58,913 58,264
   
Total equity 368,730 352,530
   
Total liabilities and stockholders’ equity $ 876,812 $ 873,731

Table 2

ATLANTIC TELE-NETWORK, INC.
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, Except per Share Data)
       
Three Months Ended Six Months Ended
June 30, June 30,
  2012   2011 (a)   2012   2011 (a)
Revenues:
U.S. wireless:
Retail $ 84,062 $ 95,410 $ 170,812 $ 195,079
Wholesale 51,569 51,870 98,952 96,567
International wireless 20,315 18,434 39,270 32,497
Wireline 20,889 20,886 42,437 41,557
Equipment and other   8,458     7,153     16,712     16,208  
 
Total revenue 185,293 193,753 368,183 381,908
 
Operating expenses:
Termination and access fees 38,951 54,539 79,434 106,313
Engineering and operations 21,945 21,897 43,281 43,802
Sales, marketing and customer service 31,203 36,079 63,377 67,908
Equipment expense 21,989 18,486 42,340 40,069
General and administrative 21,549 30,775 44,907 56,390
Acquisition-related charges - 316 5 567
Depreciation and amortization   26,582     25,384     53,606     50,192  
 
Total operating expenses   162,219     187,476     326,950     365,241  
 
Operating income 23,074 6,277 41,233 16,667
 
Other income (expense):
Interest income (expense), net (3,927 ) (4,150 ) (7,806 ) (7,842 )
Other income (expense) (331 ) 4 (295 ) 599
Equity in earnings of unconsolidated affiliates   930     239     2,331     755  
 
Other income (expense), net (3,328 ) (3,907 ) (5,770 ) (6,488 )
 
Income before income taxes 19,746 2,370 35,463 10,179
Income taxes   7,979     1,052     14,759     4,882  
 
Net income 11,767 1,318 20,704 5,297
Net loss (income) attributable to non-controlling interests, net of tax   (1,237 )   497     (853 )   1,015  
 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 10,530   $ 1,815   $ 19,851   $ 6,312  
 

Net income per weighted average share attributable to Atlantic Tele-Network, Inc. stockholders:

Basic $ 0.68 $ 0.12 $ 1.28 $ 0.41
Diluted $ 0.67 $ 0.12 $ 1.27 $ 0.41
 
Weighted average common shares outstanding:
Basic 15,535 15,394 15,495 15,389
Diluted 15,609 15,497 15,581 15,478
 
 
a) Certain reclassifications have been made to prior period amounts to conform to the current presentation

Table 3

ATLANTIC TELE-NETWORK, INC.
Unaudited Condensed Consolidated Cash Flow Statement
(in Thousands)
   
Six Months Ended June 30,
  2012     2011  
 
Net income $ 20,704 $ 5,297
Depreciation and amortization 53,606 50,192
Change in working capital (2,459 ) (18,410 )
Other   7,757     5,950  
 
Net cash provided by operating activities 79,608 43,029
 
Capital expenditures (32,272 ) (45,428 )
Other   -     4,554  
 
Net cash used by investing activities (32,272 ) (40,874 )
 
Borrowings under credit facility 321,378 23,096
Principal repayments of long-term debt (327,487 ) (6,516 )
Dividends paid on common stock (7,119 ) (6,771 )
Distributions to non-controlling interests (929 ) (1,608 )
Other   (2,077 )   (909 )
 
Net cash used by financing activities (16,234 ) 7,292
 
Net change in cash and cash equivalents 31,102 9,447
 
Cash and cash equivalents, beginning of period   48,735     37,330  
 
Cash and cash equivalents, end of period $ 79,837   $ 46,777  

Table 4

ATLANTIC TELE-NETWORK, INC.
Operating Data for U.S. Retail Wireless Operations
                         
Three Months Ended:   JUN 2011   SEP 2011   DEC 2011   MAR 2012   JUN 2012    
 

 

 

 

 

 

 

 

 

 

 
Beginning Subscribers

674,080

638,839

592,620

579,716

578,585

Prepay 169,673 145,854 123,157 121,688 130,981
Postpay 504,407 492,985 469,463 458,028 447,604
 
Gross Additions 38,859 30,018 46,757 54,837 55,448
Prepay 13,951 9,784 22,639 32,372 31,868
Postpay 24,908 20,234 24,118 22,465 23,580
 
Net Additions (35,241) (46,219) (12,904) (1,131) 4,962
Prepay (23,819) (22,697) (1,469) 9,293 10,471
Postpay (11,422) (23,522) (11,435) (10,424) (5,509)
 
Ending Subscribers 638,839 592,620 579,716 578,585 583,547
Prepay 145,854 123,157 121,688 130,981 141,452
Postpay 492,985 469,463 458,028 447,604 442,095
                         
ATLANTIC TELE-NETWORK, INC.
U.S. Retail Wireless Operations Key Performance Indicators
                     
Three Months Ended:   JUN 2011   SEP 2011   DEC 2011   MAR 2012   JUN 2012
         
 
 
Average Subscribers (weighted monthly) 655,292 618,862 583,470 578,531 580,441
 
Monthly Average Revenues per Subscriber/Unit (ARPU)
 
● Subscriber ARPU $47.90 $47.51 $48.56 $49.36 $47.63
 
● Postpaid Subscriber ARPU $54.47 $52.68 $54.43 $54.15 $53.96
 
Monthly Postpay Subscriber Churn 2.42% 2.97% 2.55% 2.41% 2.18%
 
Monthly Blended Subscriber Churn 3.73% 4.05% 3.40% 3.22% 2.90%
                     

Table 5

ATLANTIC TELE-NETWORK, INC.
Reconciliation of Non-GAAP Measures
(In Thousands)
           
                         
Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended June 30, 2011 and 2012
 
Three Months Ended June 30, 2011

 

 

 

 

   

U.S Wireless

 

International Integrated Telephony

  Island Wireless  

U.S. Wireline

 

Reconciling Items

 

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 1,815
Net income attributable to non-controlling interests, net of tax (497 )
Income taxes 1,052
Equity in earnings of unconsolidated affiliates (239 )
Other income (4 )
Interest expense, net   4,150  
Operating income (loss) $ 6,507 $ 6,640 $ (2,440 ) $ 51 $ (4,481 ) $ 6,277
Depreciation and amortization 17,363 4,557 2,453 791 220 25,384
Acquisition-related charges   -     -     218       -       98       316  
Adjusted EBITDA $ 23,870 $ 11,197 $ 231 $ 842 $ (4,163 ) $ 31,977
                         
 
Three Months Ended June 30, 2012

 

 

 

 

   

U.S Wireless

 

International Integrated Telephony

  Island Wireless  

U.S. Wireline

 

Reconciling Items

 

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 10,530
Net loss attributable to non-controlling interests, net of tax 1,237
Income taxes 7,979
Equity in earnings of unconsolidated affiliates (930 )
Other income 331
Interest expense, net   3,927  
Operating income (loss) $ 23,978 $ 4,141 $ 287 $ (666 ) $ (4,666 ) $ 23,074
Depreciation and amortization   18,324     4,490     2,783       693       292       26,582  
Adjusted EBITDA $ 42,302 $ 8,631 $ 3,070 $ 27 $ (4,374 ) $ 49,656
                         
 
                         
Reconciliation of Net Income to Adjusted EBITDA for the Six Months Ended June 30, 2011 and 2012
 
Six Months Ended June 30, 2011

 

 

 

 

   

U.S Wireless

 

International Integrated Telephony

  Island Wireless  

U.S. Wireline

 

Reconciling Items

 

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 6,312
Net income attributable to non-controlling interests, net of tax (1,015 )
Income taxes 4,882
Equity in earnings of unconsolidated affiliates (755 )
Other income (599 )
Interest expense, net   7,842  
Operating income (loss) $ 16,934 $ 12,884 $ (4,103 ) $ 11 $ (9,059 ) $ 16,667
Depreciation and amortization 34,771 9,104 4,323 1,577 417 50,192
Acquisition-related charges   -     -     218       -       349       567  
Adjusted EBITDA $ 51,705 $ 21,988 $ 438 $ 1,588 $ (8,293 ) $ 67,426
                         
 
Six Months Ended June 30, 2012
   

U.S Wireless

 

International Integrated Telephony

  Island Wireless  

U.S. Wireline

 

Reconciling Items

 

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 19,851
Net loss attributable to non-controlling interests, net of tax 853
Income taxes 14,759
Equity in earnings of unconsolidated affiliates (2,331 )
Other income 295
Interest expense, net   7,806  
Operating income (loss) $ 42,900 $ 10,377 $ (1,324 ) $ (1,089 ) $ (9,631 ) $ 41,233
Depreciation and amortization 37,026 9,017 5,569 1,438 556 53,606
Acquisition-related charges   -     -     -       -       5       5  
Adjusted EBITDA $ 79,926 $ 19,394 $ 4,245 $ 349 $ (9,070 ) $ 94,844
                                             




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