Atlantic Tele-Network, Inc. Reports Fourth Quarter and Full Year 2012 Results
Fourth Quarter 2012 Financial Highlights:
-
Total revenues were
$184.4 million -
Adjusted EBITDA increased 15% from the fourth quarter of 2011 to
$47.0 million -
Operating income, inclusive of gain on asset sale of
$11.6 million , more than doubled to$28.6 million -
Net income attributable to ATN's stockholders was
$13.1 million , or$0.84 per diluted share, compared to$4.1 million , or$0.27 per share in the prior year -
Cash and cash equivalents totaled approximately
$136.6 million
Full Year 2012 Financial Highlights:
-
Total revenues were
$741.4 million -
Adjusted EBITDA increased 23% to
$197.6 million -
Operating income increased 80% to
$99.5 million -
Net income attributable to ATN's stockholders was
$48.9 million , or$3.13 per diluted share compared to$1.41 last year -
Net cash provided by operating activities was
$187.5 million , up 41% year-over-year -
Cash dividends paid amounted to
$18.5 million
Fourth Quarter/Full Year 2012 Financial Results
"The fourth quarter was very much in line with the year, both of which
were marked by increasing profitability and operating cash flow with a
decline in U.S. retail wireless revenues offsetting solid growth in
international wireless revenues," said
"Our wireless subscriber metrics in the fourth quarter had mixed results. On the positive side, our international wireless subscriber base continued to increase and we repeated the pattern of recent quarters with solid prepaid subscriber growth domestically. On the negative side, we continue to struggle with the operating challenges from the dispersed, rural geography of our U.S. postpaid customer base, which we discussed recently in announcing our agreement to sell our main U.S. retail wireless business. Within that context, our team has done an excellent job of maintaining domestic ARPU and focusing on delivering high quality service to our customers.
"In the fourth quarter, U.S. wholesale revenues remained consistent with
the prior year. Throughout the year, our roaming partners continued to
overbuild, which was largely offset by growth in data volume per site.
Wireline revenue was flat for the quarter and the year. However, that
masks a more complex story as rapidly rising data and wholesale capacity
revenue and U.S. enterprise sales volume are offsetting declines in
traditional voice revenue and severe pricing pressure in the U.S.
enterprise segment,"
Total revenues for the fourth quarter were
Adjusted EBITDA1 for the 2012 fourth quarter was
Total revenues for the full year 2012 were
Commenting on full year results,
Recent Corporate Developments
-
On
January 22, 2013 , the Company announced a definitive agreement to sell its U.S. retail wireless business operating under the Alltel name to AT&T. Under the terms of the agreement, AT&T will purchase the operations in an all-cash transaction valued at approximately$780 million . The acquisition, which is currently expected to be completed in the second half of 2013, is subject to customary closing conditions, including completion of the required reviews and approvals by theDepartment of Justice andFederal Communications Commission . This business is reported as part of the U.S. Wireless segment, and for the fourth quarter of 2012 it generated revenues, operating income and adjusted EBITDA of approximately$114.7 million ,$7.1 million and$21.9 million , respectively. For the year, revenues, operating income and adjusted EBITDA were approximately$464.4 million ,$41.4 million and$98.5 million , respectively. -
On
December 7, 2012 , the Company declared a quarterly dividend of$0.25 per share, payable onDecember 31, 2012 , on all common shares outstanding to stockholders of record as ofDecember 20, 2012 . The quarterly dividend was raised 8.7% to$0.25 per share onSeptember 14, 2012 , which represented the Company's 14th consecutive annual dividend increase.
Fourth Quarter 2012 Operating Highlights
U.S. Wireless Service Revenues
U.S. wireless service revenues include voice and data service revenues
from the Company's prepaid and postpaid retail operations as well as its
wholesale roaming operations. Total service revenues from the U.S.
wireless businesses were
U.S. retail wireless service revenues
were
U.S. wholesale wireless revenues
were
International Wireless Revenues
International wireless revenues include retail and wholesale voice and
data wireless revenues from international operations in
Wireline Revenues
Wireline revenues are primarily generated by the Company's wireline
operations in
Reportable Operating Segments
The Company has four reportable segments: (i) U.S. Wireless; (ii)
International Integrated Telephony, which operates in
U.S. |
International |
Island |
U.S. |
Reconciling |
Total | |||||||||||||||||||||||
Total Revenue | $ | 139,814 | $ | 23,334 | $ | 15,870 | $ | 5,366 | $ | - | $ | 184,384 | ||||||||||||||||
Adjusted EBITDA | 37,197 | 10,769 | 2,974 | (101 | ) | (3,801 | ) | 47,038 | ||||||||||||||||||||
Operating Income (Loss) | 30,383 | 6,230 | (2,999 | ) | (826 | ) | (4,189 | ) | 28,599 | |||||||||||||||||||
(1) Reconciling items are comprised of corporate general and administrative costs and acquisition-related charges.
Balance Sheet and Cash Flow Highlights
Cash and cash equivalents at
Conference Call Information
About
Cautionary Language Concerning Forward Looking Statements
This press release contains forward-looking statements relating to,
among other matters, our future financial performance and results of
operations; our proposed sale of our Alltel operations and the expected
timetable for the completion of such sale; the competitive environment
in our key markets, demand for our services and industry trends; the
outcome of regulatory matters; our continued access to the credit and
capital markets; the pace of our network expansion and improvement,
including our level of estimated future capital expenditures and our
realization of the benefits of these investments; and management's plans
and strategy for the future. These forward-looking statements are based
on estimates, projections, beliefs, and assumptions and are not
guarantees of future events or results. Actual future events and results
could differ materially from the events and results indicated in these
statements as a result of many factors, including, among others, (1) the
general performance of our operations, including operating margins,
wholesale revenues, and the future retention and turnover of our
subscriber base; (2) our ability to receive requisite regulatory
consents and approvals and satisfy other conditions needed to complete
our proposed sale of our Alltel operations; (3) our ability to maintain
favorable roaming arrangements; (4) increased competition; (5) economic,
political and other risks facing our foreign operations; (6) the loss of
certain
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 |
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Unaudited Condensed Consolidated Balance Sheets | ||||||||
(in Thousands) | ||||||||
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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 |
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 |
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Unaudited Condensed Consolidated Statements of Operations | |||||||||||||||||
(in Thousands, Except per Share Data) | |||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||
|
December 31, | ||||||||||||||||
2012 |
2011 (a) |
2012 |
2011 (a) |
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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 |
$ | 13,116 | $ | 4,146 | $ | 48,932 | $ | 21,794 | |||||||||
Net income per weighted average share attributable to |
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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 |
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Unaudited Condensed Consolidated Cash Flow Statement | |||||||||||
(in Thousands) | |||||||||||
Year Ended December 31, | |||||||||||
2012 |
2011 |
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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 |
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Operating Data for U.S. Retail Wireless Operations | |||||||||||||||||||||
Three Months Ended: |
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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 | ||||||||||||||||
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U.S. Retail Wireless Operations Key Performance Indicators | ||||||||||||||||||||||||||
Three Months Ended: |
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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 |
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Reconciliation of Non-GAAP Measures | ||||||||||||||||||||||||||||||
(In Thousands) | ||||||||||||||||||||||||||||||
Reconciliation of Net Income to Adjusted EBITDA for the Three Months Ended December, 2011 and 2012 |
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Three Months Ended |
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U.S Wireless |
International |
Island |
U.S. Wireline |
Reconciling |
Total |
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Net income attributable to |
$ | 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 |
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U.S Wireless |
International |
Island |
U.S. Wireline |
Reconciling |
Total |
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Net income attributable to |
$ | 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 |
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Year Ended |
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U.S Wireless |
International |
Island |
U.S. Wireline |
Reconciling |
Total |
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Net income attributable to |
$ | 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 |
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U.S Wireless |
International |
Island |
U.S. Wireline |
Reconciling |
Total |
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Net income attributable to |
$ | 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 | |||||||||
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For the Three |
For the Year |
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Operating income | $ | 7,127 | $ | 41,387 | |||||
Depreciation and amortization | 13,885 | 56,266 | |||||||
Acquisition-related charges | 861 | 861 | |||||||
Adjusted EBITDA | $ | 21,873 | $ | 98,514 |
Chief
Executive Officer
or
Chief
Financial Officer
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