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

Stocks in this article: ATNI

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)
   
September 30, December 31,

2012

2011

Assets:
Cash and cash equivalents $ 111,408 $ 48,735
Other current assets 138,281 135,165
   
Total current assets 249,689 183,900
 
Property, plant and equipment, net 447,426 483,203
Goodwill and other intangible assets, net 181,016 186,871
Other assets 28,368 19,757
   
Total assets $ 906,499 $ 873,731
 
Liabilities and Stockholders’ Equity:
Current portion of long-term debt $ 15,680 $ 25,068
Other current liabilities 136,567 120,710
   
Total current liabilities 152,247 145,778
 
Long-term debt, net of current portion 254,568 257,146
Other liabilities 117,309 118,277
   
Total liabilities 524,124 521,201
 
Total Atlantic Tele-Network, Inc.’s stockholders’ equity 322,261 294,266
Non-controlling interests 60,114 58,264
   
Total equity 382,375 352,530
   
Total liabilities and stockholders’ equity $ 906,499 $ 873,731
 
 

Table 2

ATLANTIC TELE-NETWORK, INC.
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, Except per Share Data)
       
Three Months Ended Nine Months Ended
September 30, September 30,

2012

2011 (a)

 

2012

2011 (a)

 

Revenues:
U.S. wireless:
Retail $ 83,269 $ 89,143 $ 254,081 $ 284,221
Wholesale 54,918 57,048 153,854 153,615
International wireless 21,048 20,377 60,318 52,874
Wireline 21,120 21,748 63,573 63,305
Equipment and other   8,443     6,030     25,155     22,238  
 
Total revenue 188,798 194,346 556,981 576,253
 
Operating expenses:
Termination and access fees 38,790 48,764 118,224 155,077
Engineering and operations 20,796 20,165 64,077 63,967
Sales, marketing and customer service 27,930 33,965 91,307 101,874
Equipment expense 23,408 14,379 65,747 54,447
General and administrative 22,194 25,014 67,101 81,405
Acquisition-related charges 2 98 7 664
Depreciation and amortization 26,048 26,712 79,654 76,903
Gain on disposition of long-lived assets   -     (2,397 )   -     (2,397 )
 
Total operating expenses   159,168     166,700     486,117     531,940  
 
Operating income 29,630 27,646 70,864 44,313
 
Other income (expense):
Interest income (expense), net (2,983 ) (4,221 ) (10,753 ) (12,063 )
Other income (expense) 199 255 (133 ) 854
Equity in earnings of unconsolidated affiliates   679     729     3,011     1,484  
 
Other income (expense), net (2,105 ) (3,237 ) (7,875 ) (9,725 )
 
Income before income taxes 27,525 24,409 62,989 34,588
Income taxes   9,513     11,193     24,273     16,074  
 
Net income 18,012 13,216 38,716 18,514
Net loss (income) attributable to non-controlling interests, net of tax   (2,047 )   (1,880 )   (2,900 )   (866 )
 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 15,965   $ 11,336   $ 35,816   $ 17,648  
 
Net income per weighted average share attributable to Atlantic Tele-Network, Inc. stockholders:
Basic $ 1.03 $ 0.74 $ 2.31 $ 1.15
Diluted $ 1.02 $ 0.73 $ 2.30 $ 1.14
 
Weighted average common shares outstanding:
Basic 15,560 15,401 15,517 15,393
Diluted 15,651 15,489 15,605 15,490
 
 
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)
   
Nine Months Ended September 30,

2012

2011

 
Net income $ 38,716 $ 18,514
Depreciation and amortization 79,654 76,903
Change in working capital 17,167 (10,965 )
Other   1,938     285  
 
Net cash provided by operating activities 137,475 84,737
 
Capital expenditures (50,505 ) (65,850 )
Cash acquired in business combinations - 4,087
Other   -     1,667  
 
Net cash used by investing activities (50,505 ) (60,096 )
 
Borrowings under credit facility 321,378 93,153
Principal repayments of long-term debt (331,407 ) (89,603 )
Payments of debt issuance costs (3,564 ) (1,020 )
Dividends paid on common stock (10,692 ) (10,159 )
Distributions to non-controlling interests (2,010 ) (2,531 )
Other   1,998     302  
 
Net cash used by financing activities (24,297 ) (9,858 )
 
Net change in cash and cash equivalents 62,673 14,783
 
Cash and cash equivalents, beginning of period   48,735     37,330  
 
Cash and cash equivalents, end of period $ 111,408   $ 52,113  
 
 

Table 4

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

 

 

 

 

Beginning 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
 
Gross Additions 30,018 46,757 54,837 55,448 66,539
Prepay 9,784 22,639 32,372 31,868 40,779
Postpay 20,234 24,118 22,465 23,580 25,760
 
Net Additions

(46,219

) (12,904 ) (1,131 ) 4,962 1,871
Prepay (22,697 ) (1,469 ) 9,293 10,471 11,656
Postpay (23,522 ) (11,435 ) (10,424 ) (5,509 ) (9,785 )
 
Ending Subscribers 592,620 579,716 578,585 583,547 585,418
Prepay 123,157 121,688 130,981 141,452 153,108
Postpay   469,463     458,028     447,604     442,095     432,310      
 
 
ATLANTIC TELE-NETWORK, INC.
U.S. Retail Wireless Operations Key Performance Indicators
                     
Three Months Ended:   SEP 2011   DEC 2011   MAR 2012   JUN 2012   SEP 2012
         
 
 
Average Subscribers (weighted monthly) 618,862 583,470 578,531 580,441 583,607
 
Monthly Average Revenues per Subscriber/Unit (ARPU)
 

-- Subscriber ARPU

$47.51 $48.56 $49.36 $47.63 $46.87
 

-- Postpaid Subscriber ARPU

$52.68 $54.43 $54.15 $53.96 $54.52
 
Monthly Postpay Subscriber Churn 2.97% 2.55% 2.41% 2.18% 2.70%
 
Monthly Blended Subscriber Churn   4.05%   3.40%   3.22%   2.90%   3.70%
 

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 September 30, 2011 and 2012
 
Three Months Ended September 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 $ 11,336
Net income attributable to non-controlling interests, net of tax 1,880
Income taxes 11,193
Equity in earnings of unconsolidated affiliates (729 )
Other income (255 )
Interest expense, net   4,221  
Operating income (loss) $ 26,840 $ 6,771 $ (1,186 ) $ (111 ) $ (4,668 ) $ 27,646
Depreciation and amortization 18,417 4,506 2,748 797 244 26,712
Acquisition-related charges - - - - 98 98
Gain on disposition of long-lived assets   (2,397 )     -     -       -       -       (2,397 )
Adjusted EBITDA $ 42,860 $ 11,277 $ 1,562 $ 686 $ (4,326 ) $ 52,059
                         
 
Three Months Ended September 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 $ 15,965
Net loss attributable to non-controlling interests, net of tax 2,047
Income taxes 9,513
Equity in earnings of unconsolidated affiliates (679 )
Other income (199 )
Interest expense, net   2,983  
Operating income (loss) $ 28,394 $ 6,596 $ 760 $ (566 ) $ (5,554 ) $ 29,630
Depreciation and amortization 17,754 4,406 2,875 697 316 26,048
Acquisition-related charges   -       -     -       -       2       2  
Adjusted EBITDA $ 46,148 $ 11,002 $ 3,635 $ 131 $ (5,236 ) $ 55,680
                         
 
                         
Reconciliation of Net Income to Adjusted EBITDA for the Nine Months Ended September 30, 2011 and 2012
 
Nine Months Ended September 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 $ 17,648
Net income attributable to non-controlling interests, net of tax 866
Income taxes 16,074
Equity in earnings of unconsolidated affiliates (1,484 )
Other income (854 )
Interest expense, net   12,063  
Operating income (loss) $ 43,775 $ 19,655 $ (5,289 ) $ (101 ) $ (13,727 ) $ 44,313
Depreciation and amortization 53,188 13,610 7,070 2,374 661 76,903
Acquisition-related charges - - 218 - 446 664
Gain on disposition of long-lived assets   (2,397 )     -     -       -       -       (2,397 )
Adjusted EBITDA $ 94,566 $ 33,265 $ 1,999 $ 2,273 $ (12,620 ) $ 119,483
                         
 
Nine Months Ended September 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 $ 35,816
Net loss attributable to non-controlling interests, net of tax 2,900
Income taxes 24,273
Equity in earnings of unconsolidated affiliates (3,011 )
Other income 133
Interest expense, net   10,753  
Operating income (loss) $ 71,294 $ 16,973 $ (564 ) $ (1,655 ) $ (15,184 ) $ 70,864
Depreciation and amortization 54,780 13,424 8,444 2,135 871 79,654
Acquisition-related charges   -     -   -     -     7     7  
Adjusted EBITDA $ 126,074 $ 30,397 $ 7,880 $ 480 $ (14,306 ) $ 150,525




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