ATN International, Inc.
Mar 1, 2012

Atlantic Tele-Network, Inc. Reports Fourth Quarter and Full Year 2011 Results

Fourth Quarter 2011 Financial Highlights:

Full Year 2011 Financial Highlights:

BEVERLY, Mass.--(BUSINESS WIRE)-- Atlantic Tele-Network, Inc. (NASDAQ: ATNI), today reported results for the fourth quarter and year ended December 31, 2011.

"This was our first full quarter without the burden of overlapping transition expenses associated with the Alltel asset acquisition, and we are pleased to have posted a significant year-over-year increase in Adjusted EBITDA," said Michael Prior, Chief Executive Officer. "Additionally, we saw improvement in certain of our subscriber metrics, including increased gross additions and ARPU, and reduced churn. We are encouraged by the positive customer response to the new value plans we launched during the fourth quarter, but there is still room for improvement in this business. Among the priorities for 2012, we need to increase gross customer additions and maintain or improve churn, while at the same time reducing retail operating expenses.

"Fourth quarter results also benefited from an 88% year-over-year increase in our Island Wireless segment revenues, primarily reflecting the increased strength of our Bermuda operations following the merger we completed there in the second quarter of 2011," Mr. Prior said.

Total revenues for the fourth quarter were $182.9 million, a 6% decline from the $194.7 million reported for the fourth quarter of 2010, reflecting net subscriber attrition that the Company experienced since the Alltel acquisition as the Company transitioned distribution channels, subscriber contracts and credit policies, systems and networks.

Adjusted EBITDA1 for the 2011 fourth quarter was $40.7 million, an increase of 30% over the $31.3 million reported in last year's fourth quarter, and reflected improved performance in all four of ATN's reportable segments.

Total operating income was $10.9 million, an increase of 18% from the $9.3 million reported in last year's fourth quarter. Fourth quarter 2011 operating income was negatively impacted by a $3.1 million increase in depreciation and amortization expenses over the prior year's fourth quarter, as well as a $2.4 million intangible asset impairment charge related to the Company's Island Wireless segment. Fourth quarter 2010 operating income also included a net benefit of $2.1 million in acquisition-related charges due to a final settlement of estimated Alltel acquisition costs.

Net income attributable to ATN's stockholders was $4.1 million, or $0.27 per diluted share, inclusive of $2.4 million or $0.16 per diluted share in a non-cash impairment charge noted above. Fourth quarter 2011 net income attributable to ATN's stockholders increased 26% from the $3.3 million, or $0.21 per diluted share, earned in the fourth quarter of 2010. Excluding the effect of the non-cash impairment charge, net income attributable to ATN's stockholders would have doubled as compared to the fourth quarter of 2010.

Commenting on full year 2011 results, Mr. Prior said, "This was a year of significant achievement for ATN. We completed the transition of the customer base and retail operations we acquired in the Alltel asset transaction to our own networks and operating platforms, and we considerably expanded our international wireless business. Despite the negative impact of certain transition initiatives and related overlapping expenses, we were able to report year-over-year increases in Adjusted EBITDA and operating cash flow of 24% and 31%, respectively. In 2012, we will focus both on improving operating efficiencies across our organization and pursuing additional opportunities to build value."

Fourth Quarter 2011 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 amounted to $134.4 million in the fourth quarter of 2011, compared to $150.2 million in the fourth quarter of 2010.

U.S. retail wireless service revenues were $86.0 million for the fourth quarter of 2011, a decrease of 16% from the $102.8 million reported in the 2010 fourth quarter. Retail service revenue declined as a result of the net subscriber attrition that the Company experienced during the year. At the end of the fourth quarter of 2011, the Company had approximately 582,000 U.S. retail subscribers, of which approximately 458,000 were postpaid subscribers and approximately 124,000 were prepaid subscribers. Additional operating data on our U.S. retail wireless business can be found in Table 4 of this release.

U.S. wholesale wireless revenues were $48.4 million, an increase of 2% over the $47.4 million reported in the fourth quarter of 2010. Data revenues accounted for 46% of wholesale wireless revenues for the quarter, compared to 34% a year earlier. Data volume growth has largely offset the impact of the previously-reported revenue losses in certain areas of the Company's legacy "roam only" markets and rate reductions for voice and data.

International Wireless Revenues

International wireless revenues include retail and wholesale voice and data wireless revenues from international operations in Bermuda and the Caribbean, including the U.S. Virgin Islands. Total revenues from international wireless were $19.5 million in the fourth quarter of 2011, an increase of $6.0 million, or 44%, over the $13.5 million reported in the fourth quarter of 2010. This increase was primarily due to the Company's merger of its Bermuda operations with one of its competitors on May 2, 2011 and growth in the number of wireless subscribers in the U.S. Virgin Islands.

Wireline Revenues

Wireline revenues are generated by the Company's wireline operations in Guyana, including international telephone calls into and out of that country, its integrated voice and data operations in New England and its wholesale transport operations in New York State. Total revenues from wireline amounted to $21.7 million in the fourth quarter of 2011, an increase of 9% from $19.9 million reported in the fourth quarter of 2010. The increase resulted primarily from data revenue and local wireline service growth in Guyana, as well as growth in fiber optic capacity revenues in New York State.

Reportable Operating Segments

The Company has four reportable segments: i) U.S. Wireless, ii) International Integrated Telephony, which operates in Guyana, iii) Island Wireless, which generates its revenues and has its assets located in Bermuda and the Caribbean (including the U.S. Virgin Islands) and iv) U.S. Wireline. Financial data on our reportable operating segments for the three months ended December 31, 2011 are as follows (in thousands):

                       
 

U.S.
Wireless

 

International
Integrated
Telephony

 

Island
Wireless

 

U.S.
Wireline

 

Reconciling
Items 1

  Total
           
                                       
Total Revenue $ 139,538   $ 24,039   $ 14,511     $ 4,855   $ -     $ 182,943
Adjusted EBITDA   31,806     11,526     389       1,163     (4,170 )     40,714
Operating Income (Loss)   12,888     7,078     (4,865 )     355     (4,517 )     10,939
                                       

(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 December 31, 2011 were $48.7 million. Long-term debt was $257.1 million. For the fourth quarter, net cash provided by operating activities was $47.9 million and was $132.6 million for the full year 2011. Fourth quarter capital expenditures were $35.5 million, and $101.4 million for the full year 2011. The Company expects full year 2012 capital expenditures to approximate $90 to $110 million, of which $50 to $65 million is expected to be allocated to the U.S. Wireless segment.

Conference Call Information

Atlantic Tele-Network will host a conference call tomorrow, Friday, March 2, 2012 at 9:00 a.m. Eastern Time (ET) to discuss its fourth quarter results for 2011. The call will be hosted by Michael Prior, President and Chief Executive Officer, and Justin Benincasa, Chief Financial Officer. The dial-in numbers are US/Canada: 877-734-4582 and International: 678-905-9376, conference ID 53061698. A replay of the call will be available at ir.atni.com beginning at approximately 1:00 p.m. (ET) on Friday, March 2, 2012.

About Atlantic Tele-Network

Atlantic Tele-Network, Inc. (NASDAQ:ATNI), headquartered in Beverly, Massachusetts, provides telecommunications services to rural, niche and other under-served markets and geographies in the United States, Bermuda and the Caribbean. Through our operating subsidiaries, we provide both wireless and wireline connectivity to residential and business customers, including a range of mobile wireless solutions, local exchange services and broadband internet services and are the owner and operator of terrestrial and submarine fiber optic transport systems. For more information, please visit www.atni.com.

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; 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, and the future retention and turnover of our subscriber base; (2) our ability to maintain favorable roaming arrangements; (3) increased competition; (4) economic, political and other risks facing our foreign operations; (5) the loss of certain FCC and other licenses, USF funds or other regulatory changes affecting our businesses; (6) rapid and significant technological changes in the telecommunications industry; (7) any loss of any key members of management; (8) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure and retail wireless business; (9) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (10) the occurrence of severe weather and natural catastrophes; (11) our continued access to capital and credit markets; and (12) our ability to realize the value that we believe exists in our businesses. These and other additional factors that may cause actual future events and results to differ materially from the events and results indicated in the forward-looking statements above are set forth more fully under Item 1A "Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the SEC on March 16, 2011. The Company undertakes no obligation to update these forward-looking statements to reflect actual results, changes in assumptions or changes in other factors that may affect such forward-looking statements.

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, 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)
           
  December 31,   December 31,
  2011   2010
Assets:          
Cash and Cash Equivalents $ 48,735   $ 37,330
Other Current Assets   135,165     116,959
           
Total Current Assets   183,900     154,289
           
Property, Plant and Equipment, net   483,203     463,891
Goodwill and Other Intangible Assets, net   186,871     187,762
Other Assets   19,757     22,254
           
Total Assets $ 873,731   $ 828,196
           
Liabilities and Stockholders' Equity:          
Current Portion of Long Term Debt $ 25,068   $ 12,194
Other Current Liabilities   120,710     126,108
           
Total Current Liabilities   145,778     138,302
           
Long Term Debt, Net of Current Portion   257,146     272,049
Other Liabilities   118,277     88,809
           
Total Liabilities   521,201     499,160
           
Total Atlantic Tele-Network, Inc.'s Stockholders' Equity   294,266     283,768
Non-Controlling Interests   58,264     45,268
           
Total Equity   352,530     329,036
           
Total Liabilities and Stockholders' Equity $ 873,731   $ 828,196
 

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,
    2011   2010 (a)   2011   2010 (a)
Revenues:                                
U.S. Wireless:                                
Retail   $ 85,997     $ 102,795     $ 370,218     $ 293,126  
Wholesale     48,378       47,370       201,993       159,807  
International Wireless     19,495       13,522       73,003       50,615  
Wireline     21,653       19,913       84,957       84,488  
Equipment and Other     7,420       11,065       29,025       31,109  
                                 
Total Revenue     182,943       194,665       759,196       619,145  
                                 
Operating Expenses:                                
Termination and Access Fees     49,790       51,711       205,526       160,554  
Engineering and Operations     21,266       24,347       85,234       71,032  
Sales, Marketing and Customer Service     34,089       31,839       136,013       94,661  
Equipment Expense     19,396       28,421       73,185       75,335  
General and Administrative     17,689       27,055       99,087       88,783  
Acquisition-Related Charges     107       (2,121 )     772       13,760  
Depreciation and Amortization     27,242       24,152       104,100       76,736  
Impairment of Intangible Assets     2,425       -       2,425       -  
Gain on Dispostion of Long-Lived Assets     -       -       (2,397 )     -  
                                 
Total Operating Expenses     172,004       185,404       703,945       580,861  
                                 
Operating Income     10,939       9,261       55,251       38,284  
                                 
Other Income (Expense):                                
Interest Income (Expense), net     (4,880 )     (2,878 )     (16,943 )     (9,405 )
Other Income     273       109       1,129       543  
Equity in Earnings of Unconsolidated Affiliates     1,545       287       3,029       743  
Bargain Purchase Gain, net of taxes of $18,016     -       -       -       27,024  
                                 
Other Income (Expense), net     (3,062 )     (2,482 )     (12,785 )     18,905  
                                 
Income Before Income Taxes     7,877       6,779       42,466       57,189  
Income Taxes     4,494       4,160       20,569       19,607  
                                 
Net Income     3,383       2,619       21,897       37,582  
Net Loss (Income) Attributable to Non-Controlling Interests, net of tax     763       660       (103 )     872  
                                 
Net Income Attributable to Atlantic Tele-Network, Inc. Stockholders   $ 4,146     $ 3,279     $ 21,794     $ 38,454  
                                 
Net Income Per Weighted Average Share Attributable to Atlantic Tele-Network, Inc. Stockholders:                                
Basic   $ 0.27     $ 0.21     $ 1.42     $ 2.51  
Diluted   $ 0.27     $ 0.21     $ 1.41     $ 2.48  
Weighted Average Common Shares Outstanding:                                
Basic     15,427       15,382       15,396       15,323  
Diluted     15,530       15,505       15,495       15,484  
                                 
                                 
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,
  2011   2010
               
Net Income $ 21,897     $ 37,582  
Gain on Bargain Purchase, Net of Tax   -       (27,024 )
Impairment of Intangible Assets   2,425       -  
Depreciation and Amortization   104,100       76,736  
Change in Working Capital   (37,960 )     (4,875 )
Other   42,141       20,383  
               
Net Cash Provided by Operating Activities   132,603       102,802  
               
Capital Expenditures   (101,401 )     (135,688 )
Acquisitions of Businesses, Net of Cash Acquired   -       (225,498 )
Cash Acquired in Business Combinations   4,087       (57 )
Other   1,667       4,782  
               
Net Cash Used by Investing Activities   (95,647 )     (356,461 )
               
Borrowings Under Credit Facility   137,069       264,000  
Principal Repayments of Long Term Debt   (146,362 )     (49,568 )
Payment of Debt Issuance Costs   (1,037 )     (4,322 )
Dividends Paid on Common Stock   (13,703 )     (12,569 )
Distributions to Non-Controlling Interests   (2,814 )     (1,870 )
Other   1,296       5,072  
               
Net Cash Used by Financing Activities   (25,551 )     200,743  
               
Net Change in Cash and Cash Equivalents   11,405       (52,916 )
               
Cash and Cash Equivalents, Beginning of Period   37,330       90,246  
               
Cash and Cash Equivalents, End of Period $ 48,735     $ 37,330  
 

Table 4

ATLANTIC TELE-NETWORK, INC.
Operating Data for U.S. Retail Wireless Operations
                     
Three Months Ended:   DEC 2010   MAR 2011   JUN 2011   SEP 2011   DEC 2011
    766,556   717,745   674,080   638,839   592,620
Beginning Subscribers                    
Prepay   216,854   194,795   169,673   145,854   123,157
Postpay   549,702   522,950   504,407   492,985   469,463
                     
Gross Additions   51,882   46,680   38,859   30,018   46,757
Prepay   27,136   19,922   13,951   9,784   22,639
Postpay   24,746   26,758   24,908   20,234   24,118
                     
Net Additions   (48,811)   (43,665)   (35,241)   (46,219)   (10,246)
Prepay   (22,059)   (25,122)   (23,819)   (22,697)   1,189
Postpay   (26,752)   (18,543)   (11,422)   (23,522)   (11,435)
                     
Ending Subscribers   717,745   674,080   638,839   592,620   582,374
Prepay   194,795   169,673   145,854   123,157   124,346
Postpay   522,950   504,407   492,985   469,463   458,028
                     
 
ATLANTIC TELE-NETWORK, INC.
U.S. Retail Wireless Operations Key Performance Indicators
                     
Three Months Ended:   DEC 2010   MAR 2011   JUN 2011   SEP 2011   DEC 2011
                     
                     
                     
Average Subscribers (weighted monthly)   741,228   695,399   655,292   618,862   584,652
                     
Monthly Average Revenues per Subscriber/Unit (ARPU)                    
                     

? Subscriber ARPU

  $45.88   $47.23   $47.90   $47.51   $48.46
                     
? Postpaid Subscriber ARPU   $53.71   $53.78   $54.47   $52.68   $54.43
                     
Monthly Postpay Subscriber Churn   3.18%   2.93%   2.42%   2.97%   2.55%
                     
Monthly Blended Subscriber Churn   4.48%   4.29%   3.73%   4.05%   3.25%
 

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 31, 2010 and 2011
                                             

 

 

Three Months Ended December 31, 2010

    U.S Wireless  

International
Integrated
Telephony

  U.S. Wireline  

Island
Wireless

   

Reconciling
Items

  Total
               
                                             
Net Income Attributable to Atlantic Tele-Network, Inc. Stockholders                                       $ 3,279  
Net Income Attributable to Non-Controlling Interests, net of tax                                         (660 )
Income Taxes                                         4,160  
Equity in Earnings of Unconsolidated Affiliates                                         (287 )
Other Income                                         (109 )
Interest Expense, net                                         2,878  
Operating Income (Loss)   $ 9,280   $ 5,600   $ (178 )   $ (2,700 )   $ (2,741 )   $ 9,261  
Depreciation and Amortization     17,052     4,378     764       1,808       150       24,152  
Acquisition-Related Charges     -     -     -       -       (2,121 )     (2,121 )
Adjusted EBITDA   $ 26,332   $ 9,978   $ 586     $ (892 )   $ (4,712 )   $ 31,292  
                                             
                                             

 

 

Three Months Ended December 31, 2011

    U.S Wireless  

International
Integrated
Telephony

  U.S. Wireline  

Island
Wireless

   

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                                         (273 )
Interest Expense, net                                         4,880  
Operating Income (Loss)   $ 12,888   $ 7,078   $ 355     $ (4,865 )   $ (4,517 )   $ 10,939  
Depreciation and Amortization     18,918     4,448     808       2,829       239       27,242  
Impairment of Intangible Assets     -           -       2,425       -       2,425  
Acquisition-Related Charges     -     -     -       -       108       108  
Adjusted EBITDA   $ 31,806   $ 11,526   $ 1,163     $ 389     $ (4,170 )   $ 40,714  
                                             
                                             
                                             
                                             
Reconciliation of Net Income to Adjusted EBITDA for the Years Ended December 31, 2010 and 2011
                                             

 

 

Year Ended December 31, 2010

    U.S Wireless  

International
Integrated
Telephony

  U.S. Wireline  

Island
Wireless

   

Reconciling
Items

  Total
               
                                             
Net Income Attributable to Atlantic Tele-Network, Inc. Stockholders                                       $ 38,454  
Net Income Attributable to Non-Controlling Interests, net of tax                                         (872 )
Income Taxes                                         19,607  
Equity in Earnings of Unconsolidated Affiliates                                         (743 )
Other Income                                         (543 )
Bargain Purchase Gain, net of taxes of $18,016                                         (27,024 )
Interest Expense, net                                         9,405  
Operating Income (Loss)   $ 48,261   $ 27,371   $ (288 )   $ (6,410 )   $ (30,650 )   $ 38,284  
Depreciation and Amortization     50,662     17,480     2,936       5,271       387       76,736  
Acquisition-Related Charges     -     -     -       -       13,760       13,760  
Adjusted EBITDA   $ 98,923   $ 44,851   $ 2,648     $ (1,139 )   $ (16,503 )   $ 128,780  
                                             
                                             

 

 

Year Ended December 31, 2011

    U.S Wireless  

International
Integrated
Telephony

  U.S. Wireline  

Island
Wireless

 

Reconciling
Items

  Total
             
                                             
Net Income Attributable to Atlantic Tele-Network, Inc. Stockholders                                       $ 21,794  
Net Loss Attributable to Non-Controlling Interests, net of tax                                         103  
Income Taxes                                         20,569  
Equity in Earnings of Unconsolidated Affiliates                                         (3,029 )
Other Income                                         (1,129 )
Interest Expense, net                                         16,943  
Operating Income (Loss)   $ 56,664   $ 26,734   $ 255     $ (10,153 )   $ (18,249 )   $ 55,251  
Depreciation and Amortization     72,106     18,058     3,182       9,855       899       104,100  
Impairment of Intangible Assets     -           -       2,425       -       2,425  
Gain on Dispostion of Long-Lived Assets     (2,397 )                                 (2,397 )
Acquisition-Related Charges     -     -     -       -       772       772  
Adjusted EBITDA   $ 126,373   $ 44,792   $ 3,437     $ 2,127     $ (16,578 )   $ 160,151  

Atlantic Tele-Network, Inc.
Michael T. Prior, 978-619-1300
Chief Executive Officer
or
Justin D. Benincasa, 978-619-1300
Chief Financial Officer

Source: Atlantic Tele-Network, Inc.

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