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 September 30, 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 | 47-0728886 | |
| (State or other jurisdiction of incorporation or organization) |
(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 October 31, 2004, the registrant had outstanding 5,014,567 shares of its common stock ($.01 par value).
INDEX TO FORM 10-Q
SEPTEMBER 30, 2004
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements in this quarterly report on Form 10-Q are “Forward-Looking Statements” within 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
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share amounts)
| December 31, 2003 |
September 30, 2004 |
|||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents |
$ | 32,320 | $ | 44,815 | ||||
| Accounts receivable, net of allowance of $3,168 and $2,846 at December 31, 2003 and September 30, 2004, respectively |
9,223 | 7,237 | ||||||
| Materials and supplies |
3,624 | 3,821 | ||||||
| Prepayments and other current assets |
2,018 | 2,976 | ||||||
| Total current assets |
47,185 | 58,849 | ||||||
| FIXED ASSETS: | ||||||||
| Property, plant, and equipment |
139,488 | 153,159 | ||||||
| Less accumulated depreciation |
(48,498 | ) | (59,638 | ) | ||||
| Net fixed assets |
90,990 | 93,521 | ||||||
| GOODWILL, NET | 1,593 | 1,593 | ||||||
| OTHER INTANGIBLE ASSETS, NET | 300 | 148 | ||||||
| INVESTMENT IN AND ADVANCES TO BERMUDA DIGITAL COMMUNICATIONS, LTD. | 7,515 | 8,764 | ||||||
| OTHER ASSETS | 4,390 | 5,705 | ||||||
| Total assets |
$ | 151,973 | $ | 168,580 | ||||
| CURRENT LIABILITIES: | ||||||||
| Current portion of long-term debt |
$ | 1,081 | $ | 1,197 | ||||
| Accounts payable and accrued liabilities |
8,125 | 9,979 | ||||||
| Dividends payable |
1,271 | 1,390 | ||||||
| Accrued taxes |
6,352 | 10,766 | ||||||
| Advance payments and deposits |
2,691 | 2,852 | ||||||
| Other current liabilities |
1,143 | 1,493 | ||||||
| Total current liabilities |
20,663 | 27,677 | ||||||
| DEFERRED INCOME TAXES | 7,040 | 7,281 | ||||||
| LONG-TERM DEBT, excluding current portion | 2,511 | 4,532 | ||||||
| OTHER LONG-TERM LIABILITIES | 420 | — | ||||||
| Total liabilities |
30,634 | 39,490 | ||||||
| MINORITY INTERESTS | 19,808 | 21,205 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 7) | ||||||||
| 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 5,014,567 shares outstanding on December 31, 2003 and September 30, 2004, respectively |
52 | 52 | ||||||
| Treasury stock, at cost |
(1,839 | ) | (1,670 | ) | ||||
| Additional paid-in capital |
56,019 | 55,910 | ||||||
| Retained earnings |
47,299 | 53,593 | ||||||
| Total stockholders’ equity |
101,531 | 107,885 | ||||||
| Total liabilities and stockholders’ equity |
$ | 151,973 | $ | 168,580 | ||||
The accompanying 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 AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(Unaudited)
(Dollars in thousands, except per share amounts)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2003 |
2004 |
2003 |
2004 |
|||||||||||||
| TELEPHONE OPERATIONS: | ||||||||||||||||
| Operating revenues: |
||||||||||||||||
| International long-distance revenues |
$ | 10,428 | $ | 12,687 | $ | 29,770 | $ | 34,629 | ||||||||
| Local exchange service revenues |
8,512 | 8,501 | 24,771 | 24,553 | ||||||||||||
| Other revenues |
784 | 998 | 2,403 | 2,893 | ||||||||||||
| Total telephone operating revenues |
19,724 | 22,186 | 56,944 | 62,075 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| International long-distance expenses |
1,665 | 1,294 | 5,441 | 3,930 | ||||||||||||
| Telephone operating expenses |
7,520 | 7,978 | 21,745 | 23,570 | ||||||||||||
| General and administrative expenses |
1,670 | 1,534 | 4,976 | 4,595 | ||||||||||||
| Total telephone operating expenses |
10,855 | 10,806 | 32,162 | 32,095 | ||||||||||||
| Income from telephone operations |
8,869 | 11,380 | 24,782 | 29,980 | ||||||||||||
| OTHER OPERATIONS: | ||||||||||||||||
| Revenues of other operations |
1,284 | 1,328 | 3,562 | 3,937 | ||||||||||||
| Expenses of other operations |
2,701 | 2,873 | 7,024 | 8,390 | ||||||||||||
| Loss from other operations |
(1,417 | ) | (1,545 | ) | (3,462 | ) | (4,453 | ) | ||||||||
| OTHER INCOME (EXPENSE): | ||||||||||||||||
| Interest expense |
(73 | ) | (77 | ) | (245 | ) | (180 | ) | ||||||||
| Interest income |
120 | 134 | 384 | 369 | ||||||||||||
| Equity in earnings of Bermuda Digital Communications, Ltd. |
532 | 828 | 1,648 | 2,015 | ||||||||||||
| Other |
152 | (321 | ) | (194 | ) | 1,197 | ||||||||||
| Other income, net |
731 | 564 | 1,593 | 3,401 | ||||||||||||
| INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS | 8,183 | 10,399 | 22,913 | 28,928 | ||||||||||||
| INCOME TAXES | 4,219 | 5,703 | 11,605 | 15,866 | ||||||||||||
| INCOME BEFORE MINORITY INTERESTS | 3,964 | 4,696 | 11,308 | 13,062 | ||||||||||||
| MINORITY INTERESTS | (831 | ) | (1,065 | ) | (2,257 | ) | (2,897 | ) | ||||||||
| NET INCOME | $ | 3,133 | $ | 3,631 | $ | 9,051 | $ | 10,165 | ||||||||
| NET INCOME PER SHARE: | ||||||||||||||||
| Basic |
$ | 0.62 | $ | 0.72 | $ | 1.80 | $ | 2.02 | ||||||||
| Diluted |
$ | 0.62 | $ | 0.72 | $ | 1.80 | $ | 2.02 | ||||||||
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||||||
| Basic |
5,024 | 5,026 | 5,016 | 5,025 | ||||||||||||
| Diluted |
5,024 | 5,026 | 5,036 | 5,025 | ||||||||||||
| DIVIDENDS APPLICABLE TO COMMON STOCK | $ | 0.25 | $ | 0.275 | $ | 0.70 | $ | 0.775 | ||||||||
The accompanying 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 NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2004
(Unaudited)
(Dollars in thousands)
| For the Nine Months Ended, September 30, |
||||||||
| 2003 |
2004 |
|||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||