UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Quarter ended March 31, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number 0-19551
Atlantic Tele-Network, Inc.
(exact name of issuer as specified in its charter)
| Delaware (State or other jurisdiction of incorporation or organization) |
47-072886 (I.R.S. Employer Identification Number) |
9719 Estate Thomas
St. Thomas, U.S. Virgin Islands 00802
(340) 777-8000
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 a check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of April 30, 2004, the registrant had outstanding 5,011,024 shares of its common stock ($.01 par value).
ATLANTIC TELE-NETWORK, INC.
MARCH 31, 2004
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements in this quarterly report on Form 10-Q are “Forward-Looking Statements” with the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are or may be forward-looking statements. The forward-looking statements contained in this quarterly report reflect our current expectations concerning future results and events. Forward-looking statements generally can be identified by the use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “likely,” “will,” or other similar words or phrases. Statements that describe our objectives, plans or goals are or may be forward-looking statements. The forward-looking statements contained in this quarterly report are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements. These risks, uncertainties and other factors are further discussed in the first paragraph of Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2003 and the other sections referred to therein.
2
| ITEM 1 | Financial Statements |
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
| December 31, 2003 |
March 31, 2004 |
|||||||
| CURRENT ASSETS: |
||||||||
| Cash and cash equivalents |
$ | 32,320 | $ | 33,167 | ||||
| Accounts receivable, net of allowance of $3,168 and $2,144 at December 31, 2003 and March 31, 2004, respectively |
9,223 | 10,288 | ||||||
| Materials and supplies |
3,624 | 3,961 | ||||||
| Prepayments and other current assets |
2,018 | 2,871 | ||||||
| Total current assets |
47,185 | 50,287 | ||||||
| FIXED ASSETS: |
||||||||
| Property, plant, and equipment |
139,488 | 143,140 | ||||||
| Less accumulated depreciation |
(48,498 | ) | (52,176 | ) | ||||
| Net fixed assets |
90,990 | 90,964 | ||||||
| GOODWILL, NET |
1,593 | 1,593 | ||||||
| OTHER INTANGIBLE ASSETS, NET |
300 | 250 | ||||||
| INVESTMENT IN AND ADVANCES TO BERMUDA DIGITAL COMMUNICATIONS, LTD. |
7,515 | 7,686 | ||||||
| OTHER ASSETS |
4,390 | 4,455 | ||||||
| Total assets |
$ | 151,973 | $ | 155,235 | ||||
| CURRENT LIABILITIES: |
||||||||
| Current portion of long-term debt |
$ | 1,081 | $ | 1,169 | ||||
| Accounts payable and accrued liabilities |
8,125 | 8,312 | ||||||
| Dividends payable |
1,271 | 1,273 | ||||||
| Accrued taxes |
6,352 | 8,317 | ||||||
| Advance payments and deposits |
2,691 | 2,481 | ||||||
| Other current liabilities |
1,143 | 882 | ||||||
| Total current liabilities |
20,663 | 22,434 | ||||||
| DEFERRED INCOME TAXES |
7,040 | 6,544 | ||||||
| LONG-TERM DEBT, excluding current portion |
2,511 | 2,132 | ||||||
| OTHER LONG-TERM LIABILITIES |
420 | — | ||||||
| Total liabilities |
30,634 | 31,110 | ||||||
| MINORITY INTERESTS |
19,808 | 20,701 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 8) |
||||||||
| STOCKHOLDERS’ EQUITY: |
||||||||
| Preferred stock, $.01 par value per share; 10,000,000 shares authorized, none issued and outstanding |
— | — | ||||||
| Common stock, $.01 par value per share; 20,000,000 shares authorized; 5,151,424 shares issued and 5,000,673 and 5,011,024 shares outstanding on December 31, 2003 and March 31, 2004, respectively. |
52 | 52 | ||||||
| Treasury stock, at cost |
(1,839 | ) | (1,713 | ) | ||||
| Additional paid-in capital |
56,019 | 55,893 | ||||||
| Retained earnings |
47,299 | 49,192 | ||||||
| Total stockholders’ equity |
101,531 | 103,424 | ||||||
| Total liabilities and stockholders’ equity |
$ | 151,973 | $ | 155,235 | ||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
3
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004 AND 2003
(Unaudited)
(Dollars in thousands, except per share amounts)
| For the Three Months Ended, March 31, |
||||||||
| 2003 |
2004 |
|||||||
| TELEPHONE OPERATIONS: |
||||||||
| Operating revenues: |
||||||||
| International long-distance revenues |
$ | 9,211 | $ | 10,668 | ||||
| Local exchange service revenues |
8,041 | 7,810 | ||||||
| Other revenues |
863 | 905 | ||||||
| Total telephone operating revenues |
18,115 | 19,383 | ||||||
| Operating expenses: |
||||||||
| International long-distance expenses |
1,840 | 1,380 | ||||||
| Telephone operating expenses |
7,219 | 8,033 | ||||||
| General and administrative expenses |
1,663 | 1,638 | ||||||
| Total telephone operating expenses |
10,722 | 11,051 | ||||||
| Income from telephone operations |
7,393 | 8,332 | ||||||
| OTHER OPERATIONS: |
||||||||
| Revenues of other operations |
1,262 | 1,287 | ||||||
| Expenses of other operations |
2,108 | 2,527 | ||||||
| Loss from other operations |
(846 | ) | (1,240 | ) | ||||
| OTHER INCOME (EXPENSE): |
||||||||
| Interest expense |
(99 | ) | (53 | ) | ||||
| Interest income |
138 | 124 | ||||||
| Equity in earnings of Bermuda Digital Communications, Ltd. |
542 | 497 | ||||||
| Other income (expense), net |
(109 | ) | 1,182 | |||||
| Other income (expense), net |
472 | 1,750 | ||||||
| INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS |
7,019 | 8,842 | ||||||
| INCOME TAXES |
3,542 | 4,804 | ||||||
| INCOME BEFORE MINORITY INTERESTS |
3,477 | 4,038 | ||||||
| MINORITY INTERESTS |
(665 | ) | (893 | ) | ||||
| NET INCOME |
$ | 2,812 | $ | 3,145 | ||||
| NET INCOME PER SHARE: |
||||||||
| Basic |
$ | 0.56 | $ | 0.63 | ||||
| Diluted |
$ | 0.56 | $ | 0.63 | ||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: |
||||||||
| Basic |
4,998 | 5,024 | ||||||
| Diluted |
5,049 | 5,024 | ||||||
| DIVIDENDS APPLICABLE TO COMMON STOCK |
$ | 0.225 | $ | 0.25 | ||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
4
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2004
(Unaudited)
(Dollars in thousands)
| For the Three Months Ended, March 31, |
||||||||
| 2003 |
2004 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
| Net income |
$ | 2,812 | $ | 3,145 | ||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
||||||||
| Depreciation and amortization |
2,963 | 3,728 | ||||||
| Deferred income taxes |
2,716 | (496 | ) | |||||
| Minority interests |
665 | 893 | ||||||
| Equity in earnings of Bermuda Digital Communications, LTD |
(542 | ) | (497 | ) | ||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
1,758 | (1,065 | ) | |||||
| Materials and supplies, prepayments, and other current assets |
(728 | ) | (1,190 | ) | ||||
| Accounts payable and accrued liabilities |
(869 | ) | (233 | ) | ||||
| Accrued taxes |
(852 | ) | 1,965 | |||||
| Other |
(393 | ) | (536 | ) | ||||
| Net cash provided by operating activities |
$ | 7,530 | $ | 5,714 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
| Capital expenditures |
(1,398 | ) | (3,652 | ) | ||||
| (Advances to) repayments by Bermuda Digital Communications, Ltd. |
(45 | ) | 326 | |||||
| Net cash used in investing activities |
(1,443 | ) | (3,326 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
| Repayment of long-term debt |
(574 | ) | (291 | ) | ||||
| Net cash from stock option exercise and repurchase of common stock |
(315 | ) | — | |||||
| Distribution to minority shareholders |
(1,000 | ) | — | |||||
| Dividends paid on common stock |
(1,141 | ) | (1,250 | ) | ||||
| Net cash used in financing activities |
(3,030 | ) | (1,541 | ) | ||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS |
3,057 | 847 | ||||||
| CASH AND CASH EQUIVALENTS, beginning of the period |
30,651 | 32,320 | ||||||
| CASH AND CASH EQUIVALENTS, end of the period |
$ | 33,708 | $ | 33,167 | ||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
5
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONDENSED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2003 AND 2004
1. ORGANIZATION AND BUSINESS OPERATIONS
Atlantic Tele-Network, Inc. (the “Company” or “ATN”), a Delaware corporation, is engaged principally through its 80%-owned subsidiary, Guyana Telephone & Telegraph Company, Limited (“GT&T”), in providing telecommunications services, including local telephone service, long-distance services, and cellular service in the Cooperative Republic of Guyana (“Guyana”) and international telecommunications service to and from Guyana. The Company wholly owns Choice Communications, LLC (hereinafter referred to as “Choice Communications” or “Choice” and formerly known as Wireless World), which holds Multichannel Multipoint Distribution Service (“MMDS”) and Local Multipoint Distribution Service (“LMDS”) licenses for the United States (“U.S.”) Virgin Islands and is engaged in the U.S. Virgin Islands in the Internet service, specialized mobile radio, paging and the wireless cable television businesses. The Company owns an 80% interest in ATN (Haiti) S.A. (“ATN (Haiti)”) and an 80% interest in Transnet, S.A. (“Transnet”), Haitian corporations that have been principally engaged in dispatch radio, mobile telecommunications, paging, and Internet access and data services in Haiti and which the Company has written down. Atlantic Tele-Center, Inc. (ATC), a wholly owned subsidiary of ATN, operates a Web-enabled call center in Guyana providing customer support to companies serving the U.S. and other markets. Atlantic Tele-Sat (“ATS”), a wholly owned subsidiary of ATC, provides satellite based internet, intranet and VPN solutions to the Caribbean, Central and South America and was