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Atlantic Tele-Network, Inc. Reports Fourth Quarter And Full Year 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 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, 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)
       
December 31, December 31,

2012

2011

Assets:
Cash and cash equivalents $ 136,647 $ 48,735
Other current assets 126,104 135,165
   
Total current assets 262,751 183,900
 
Property, plant and equipment, net 450,547 483,203
Goodwill and other intangible assets, net 180,904 186,872
Other assets 23,273 19,756
   
Total assets $ 917,475 $ 873,731
 
Liabilities and Stockholders’ Equity:
Current portion of long-term debt $ 15,680 $ 25,068
Other current liabilities 143,525 120,710
   
Total current liabilities 159,205 145,778
 
Long-term debt, net of current portion 250,900 257,146
Other liabilities 113,130 118,277
   
Total liabilities 523,235 521,201
 
Total Atlantic Tele-Network, Inc.’s stockholders’ equity 334,146 294,266
Non-controlling interests 60,094 58,264
   
Total equity 394,240 352,530
   
Total liabilities and stockholders’ equity $ 917,475 $ 873,731
 
         

Table 2

ATLANTIC TELE-NETWORK, INC.
Unaudited Condensed Consolidated Statements of Operations
(in Thousands, Except per Share Data)
 
Three Months Ended Year Ended
December 31, December 31,

2012

2011 (a)

2012

2011 (a)

Revenues:
U.S. wireless:
Retail $ 83,703 $ 85,997 $ 337,784 $ 370,218
Wholesale 48,083 48,378 201,938 201,993
International wireless 21,301 19,355 81,619 72,230
Wireline 21,255 21,653 84,828 84,957
Equipment and other   10,042     7,560     35,197     29,798  
 
Total revenue 184,384 182,943 741,366 759,196
 
Operating expenses:
Termination and access fees 37,572 49,527 155,797 204,604
Engineering and operations 22,912 21,269 88,756 85,236
Sales, marketing and customer service 30,075 34,071 121,381 135,944
Equipment expense 26,770 19,657 92,517 74,105
General and administrative 20,017 17,691 85,354 99,097
Acquisition-related charges 861 108 868 772
Depreciation and amortization 25,833 27,256 105,487 104,159
Impairment of intangible assets 3,350 2,425 3,350 2,425
Gain on disposition of long-lived assets   (11,605 )   -     (11,605 )   (2,397 )
 
Total operating expenses   155,785     172,004     641,905     703,945  
 
Operating income 28,599 10,939 99,461 55,251
 
Other income (expense):
Interest income (expense), net (2,966 ) (4,873 ) (13,718 ) (16,928 )
Other income (expense) 2,478 266 2,346 1,114
Equity in earnings of unconsolidated affiliates   524     1,545     3,535     3,029  
 
Other income (expense), net 36 (3,062 ) (7,837 ) (12,785 )
 
Income before income taxes 28,635 7,877 91,624 42,466
Income taxes   14,184     4,494     38,457     20,569  
 
Net income 14,451 3,383 53,167 21,897
Net loss (income) attributable to non-controlling interests, net of tax   (1,335 )   763     (4,235 )   (103 )
 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 13,116   $ 4,146   $ 48,932   $ 21,794  
 
Net income per weighted average share attributable to Atlantic Tele-Network, Inc. stockholders:
Basic $ 0.84 $ 0.27 $ 3.15 $ 1.42
Diluted $ 0.84 $ 0.27 $ 3.13 $ 1.41
 
Weighted average common shares outstanding:
Basic 15,572 15,427 15,531 15,396
Diluted 15,663 15,530 15,619 15,495
 
 
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)
         
Year Ended December 31,

2012

2011

 
Net income $ 53,167 $ 21,897
Depreciation and amortization 105,487 104,159
Change in operating assets and liabilities 13,294 (38,006 )
Other   15,523     44,553  
 
Net cash provided by operating activities 187,471 132,603
 
Capital expenditures (77,421 ) (101,401 )
Cash acquired in business combinations - 4,087
Other   15,163     1,667  
 
Net cash used by investing activities (62,258 ) (95,647 )
 
Borrowings under credit facility 321,378 137,069
Principal repayments of long-term debt (335,327 ) (146,361 )
Payments of debt issuance costs (3,564 ) (1,037 )
Dividends paid on common stock (18,491 ) (13,703 )
Distributions to non-controlling interests (3,389 ) (2,814 )
Other   2,092     1,295  
 
Net cash used by financing activities (37,301 ) (25,551 )
 
Net change in cash and cash equivalents 87,912 11,405
 
Cash and cash equivalents, beginning of period   48,735     37,330  
 
Cash and cash equivalents, end of period $ 136,647   $ 48,735  
 
                     

Table 4

ATLANTIC TELE-NETWORK, INC.
Operating Data for U.S. Retail Wireless Operations
                                 
Three Months Ended:       DEC 2011     MAR 2012     JUN 2012     SEP 2012     DEC 2012
578,585 583,547 585,418
Beginning Subscribers 592,620 579,716
Prepay 123,157 121,688 130,981 141,452 153,108
Postpay 469,463 458,028 447,604 442,095 432,310
 
Gross Additions 46,757 54,837 55,448 66,539 69,719
Prepay 22,639 32,372 31,868 40,779 39,843
Postpay 24,118 22,465 23,580 25,760 29,876
 
Net Additions (12,904 ) (1,131 ) 4,962 1,871 2,348
Prepay (1,469 ) 9,293 10,471 11,656 9,548
Postpay (11,435 ) (10,424 ) (5,509 ) (9,785 ) (7,200 )
 
Ending Subscribers 579,716 578,585 583,547 585,418 587,766
Prepay 121,688 130,981 141,452 153,108 162,656
Postpay       458,028       447,604       442,095       432,310       425,110  
 
                     
ATLANTIC TELE-NETWORK, INC.
U.S. Retail Wireless Operations Key Performance Indicators
                                 
Three Months Ended:       DEC 2011     MAR 2012     JUN 2012     SEP 2012     DEC 2012
 
 
 
Average Subscribers (weighted monthly) 583,470 578,531 580,441 583,607 585,519
 
Monthly Average Revenues per Subscriber/Unit (ARPU)
 
● Subscriber ARPU $ 48.56 $ 49.36 $ 47.63 $ 46.87 $ 46.79
 
● Postpaid Subscriber ARPU $ 54.43 $ 54.15 $ 53.96 $ 54.52 $ 55.16
 
Monthly Postpay Subscriber Churn 2.55 % 2.41 % 2.18 % 2.70 % 2.88 %
 
Monthly Blended Subscriber Churn 3.40 % 3.22 % 2.90 % 3.70 % 3.84 %
 

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 December, 2011 and 2012

 
Three Months Ended December 31, 2011
       

U.S Wireless

   

International Integrated Telephony

   

Island Wireless

   

U.S. Wireline

   

Reconciling Items

   

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 4,146
Net loss attributable to non-controlling interests, net of tax (763 )
Income taxes 4,494
Equity in earnings of unconsolidated affiliates (1,545 )
Other income (266 )
Interest expense, net   4,873  
Operating income (loss) $ 12,888 $ 7,078 $ (4,865 ) $ 355 $ (4,517 ) $ 10,939
Depreciation and amortization 18,918 4,448 2,843 808 239 27,256
Acquisition-related charges - - - - 108 108
Impairment of intangible assets   -         -       2,425         -         -         2,425  
Adjusted EBITDA $ 31,806 $ 11,526 $ 403 $ 1,163 $ (4,170 ) $ 40,728
                                       
 
Three Months Ended December 31, 2012

 

 

 

 

       

U.S Wireless

   

International Integrated Telephony

   

Island Wireless

   

U.S. Wireline

   

Reconciling Items

   

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 13,116
Net income attributable to non-controlling interests, net of tax 1,335
Income taxes 14,184
Equity in earnings of unconsolidated affiliates (524 )
Other income (2,478 )
Interest expense, net   2,966  
Operating income (loss) $ 30,383 $ 6,230 $ (2,999 ) $ (826 ) $ (4,189 ) $ 28,599
Depreciation and amortization 17,558 4,539 2,623 725 388 25,833
Acquisition-related charges 861 - - - - 861
Impairment of intangible assets - - 3,350 - - 3,350
Gain on disposition of long-lived assets   (11,605 )       -       -         -         -         (11,605 )
Adjusted EBITDA $ 37,197 $ 10,769 $ 2,974 $ (101 ) $ (3,801 ) $ 47,038
                                       
 
                                       
Reconciliation of Net Income to Adjusted EBITDA for the Year Ended December 31, 2011 and 2012
 
Year Ended December 31, 2011

 

 

 

 

       

U.S Wireless

   

International Integrated Telephony

   

Island Wireless

   

U.S. Wireline

   

Reconciling Items

   

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 21,794
Net income attributable to non-controlling interests, net of tax 103
Income taxes 20,569
Equity in earnings of unconsolidated affiliates (3,029 )
Other income (1,114 )
Interest expense, net   16,928  
Operating income (loss) $ 56,664 $ 26,734 $ (10,153 ) $ 255 $ (18,249 ) $ 55,251
Depreciation and amortization 72,106 18,058 9,914 3,182 899 104,159
Acquisition-related charges - - 218 - 554 772
Impairment of intangible assets - - 2,425 - - 2,425
Gain on disposition of long-lived assets   (2,397 )       -       -         -         -         (2,397 )
Adjusted EBITDA $ 126,373 $ 44,792 $ 2,404 $ 3,437 $ (16,796 ) $ 160,210
                                       
 
Year Ended December 31, 2012

 

 

 

 

       

U.S Wireless

   

International Integrated Telephony

   

Island Wireless

   

U.S. Wireline

   

Reconciling Items

   

Total

 
Net income attributable to Atlantic Tele-Network, Inc. stockholders $ 48,932
Net income attributable to non-controlling interests, net of tax 4,235
Income taxes 38,457
Equity in earnings of unconsolidated affiliates (3,535 )
Other income (2,346 )
Interest expense, net   13,718  
Operating income (loss) $ 101,677 $ 23,203 $ (3,263 ) $ (2,481 ) $ (19,675 ) $ 99,461
Depreciation and amortization 72,338 17,963 11,067 2,860 1,259 105,487
Acquisition-related charges 861 - - - 7 868
Impairment of intangible assets - - 3,350 - - 3,350
Gain on disposition of long-lived assets   (11,605 )       -       -         -         -         (11,605 )
Adjusted EBITDA       $ 163,271       $ 41,166     $ 11,154       $ 379       $ (18,409 )     $ 197,561  
 
Reconciliation of Operating Income to Adjusted EBITDA for the Alltel Business
         
               

 

       

For the Three Months Ended December 31, 2012

   

For the Year Ended December 31, 2012

 
Operating income $ 7,127 $ 41,387
Depreciation and amortization 13,885 56,266
Acquisition-related charges   861       861
Adjusted EBITDA       $ 21,873     $ 98,514




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