UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ◻ | ||
Non-accelerated filer ◻ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes
As of August 10, 2020, the registrant had outstanding
1
ATN INTERNATIONAL, INC.
FORM 10-Q
Quarter Ended June 30, 2020
2
Cautionary Statement Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (or the “Report”) contains forward-looking statements relating to, among other matters, our future financial performance and results of operations including the impact of the novel coronavirus pandemic on the economies of the markets we serve, our business and operations, revenue, operating income, EBITDA expectations and capital expenditures for 2020; the competitive environment in our key markets, demand for our services and industry trends; the impact of the Connect America Fund II federal support revenues and the FirstNet transaction; the impact of digital enhancements; our liquidity; 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, revenues, capital expenditures, and the future growth and retention of our major customers and subscriber base and consumer demand for solar power; (2) our ability to maintain favorable roaming arrangements, receive roaming traffic and satisfy the needs and demands of our major wireless customers; (3) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (4) government regulation of our businesses, which may impact our FCC and other telecommunications licenses or our renewables businesses; (5) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (6) economic, political and other risks and opportunities facing our operations; (7) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (8) our ability to expand and obtain funding for our renewable energy business; (9) our ability to find investment or acquisition or disposition opportunities that fit the strategic goals of the Company; (10) the occurrence of weather events and natural catastrophes; (11) increased competition; (12) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (13) our continued access to capital and credit markets; and (14) the risk of currency fluctuation for those markets in which we operate. 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, 2019, filed with the SEC on March 2, 2020, as amended by Amendment No. 1 to the 2019 Annual Report on Form 10-K filed with the SEC on April 29, 2020, and the other reports we file from time to time with the SEC. Except as required by law, the Company undertakes no obligation and has no intention 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, except as required by law.
In this Report, the words “the Company,” “we,” “our,” “ours,” “us” and “ATN” refer to ATN International, Inc. and its subsidiaries. This Report contains trademarks, service marks and trade names that are the property of, or licensed by, ATN and its subsidiaries.
Reference to dollars ($) refer to US dollars unless otherwise specifically indicated.
3
PART I—FINANCIAL INFORMATION
Item 1. Unaudited Condensed Consolidated Financial Statements
ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands, Except Share Data)
June 30, | December 31, | |||||
| 2020 |
| 2019 | |||
ASSETS | ||||||
Current Assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Restricted cash |
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Short-term investments |
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Accounts receivable, net of allowances for credit losses of $ |
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Inventory, materials and supplies |
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Prepayments and other current assets |
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Total current assets |
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Fixed Assets: | ||||||
Property, plant and equipment |
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Less accumulated depreciation |
| ( |
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Net fixed assets |
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Telecommunication licenses, net |
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Goodwill |
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Customer relationships, net |
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Operating lease right-of-use assets |
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Other assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY | ||||||
Current Liabilities: | ||||||
Current portion of long-term debt | $ | | $ | | ||
Accounts payable and accrued liabilities |
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Dividends payable |
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Accrued taxes |
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Current portion of operating lease liabilities | | | ||||
Advance payments and deposits |
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Total current liabilities |
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Deferred income taxes |
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Operating lease liabilities, excluding current portion | | | ||||
Other liabilities |
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Long-term debt, excluding current portion |
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Total liabilities |
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Commitments and contingencies (Note 13) | ||||||
ATN International, Inc. Stockholders’ Equity: | ||||||
Preferred stock, $ |
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Common stock, $ |
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Treasury stock, at cost; |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income |
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Total ATN International, Inc. stockholders’ equity |
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Non-controlling interests |
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Total equity |
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Total liabilities and equity | $ | | $ | | ||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
4
ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(Unaudited)
(In Thousands, Except Per Share Data)
Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2020 |
| 2019 |
| 2020 |
| 2019 | |||||
REVENUE: | ||||||||||||
Communication services | $ | | $ | | $ | | $ | | ||||
Other |
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Total revenue |
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OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated): | ||||||||||||
Termination and access fees |
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Engineering and operations |
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Sales, marketing and customer service |
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General and administrative |
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Transaction-related charges |
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Depreciation and amortization |
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(Gain) Loss on disposition of long-lived assets | | ( | | | ||||||||
Total operating expenses |
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Income from operations |
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OTHER INCOME (EXPENSE) | ||||||||||||
Interest income | | | ||||||||||
Interest expense |
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Other income (expense) |
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Other income (expense), net |
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INCOME BEFORE INCOME TAXES |
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Income tax provisions |
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NET INCOME |
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Net income attributable to non-controlling interests, net of tax expense of $ |
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NET INCOME (LOSS) ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS | $ | | $ | ( | $ | | $ | ( | ||||
NET INCOME (LOSS) PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS: | ||||||||||||
Basic | $ | | $ | ( | $ | | $ | ( | ||||
Diluted | $ | | $ | ( | $ | | $ | ( | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: | ||||||||||||
Basic |
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Diluted |
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DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK | $ | | $ | | $ | | $ | | ||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
5
ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(Unaudited)
(In Thousands)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2020 |
| 2019 | 2020 | 2019 | |||||||
Net income | $ | | $ | | $ | | $ | | ||||
Other comprehensive income (loss): | ||||||||||||
Foreign currency translation adjustment |
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| ( |
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Unrealized gain (loss) on derivatives | | ( | ( | ( | ||||||||
Other comprehensive income (loss), net of tax |
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Comprehensive income |
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Less: Comprehensive income attributable to non-controlling interests |
| ( |
| ( |
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Comprehensive income (loss) attributable to ATN International, Inc. | $ | | $ | ( | $ | | $ | ( | ||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
6
ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019
(In Thousands, Except Per Share Data)
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| Accumulated |
| Total |
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Treasury | Additional | Other | ATNI | Non- | |||||||||||||||||||||
Common | Stock, | Paid In | Retained | Comprehensive | Stockholders’ | Controlling | Total | ||||||||||||||||||
Stock | at cost | Capital | Earnings | Income/(Loss) | Equity | Interests | Equity |
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Balance, March 31, 2020 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
Purchase of |
| — | ( | — | — | — | ( | — | ( | ||||||||||||||||
Stock-based compensation |
| — | — | | — | — | | | | ||||||||||||||||
Dividends declared on common stock ($ |
| — | — | — | ( | — | ( | ( | ( | ||||||||||||||||
Repurchase of non-controlling interests | — | — | ( | — | — | ( | ( | ( | |||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net income |
| — | — | — | | — | | | | ||||||||||||||||
Other comprehensive income |
| — | — | — | — | | | — | | ||||||||||||||||
Total comprehensive income | — | — | — | — | — |
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Balance, June 30, 2020 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
Balance, March 31, 2019 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
Purchase of |
| — | ( | — | — | — | ( | — | ( | ||||||||||||||||
Stock-based compensation |
| — | — | | — | — | | — | | ||||||||||||||||
Dividends declared on common stock ($ |
| — | — | — | ( | — | ( | ( | ( | ||||||||||||||||
Repurchase of non-controlling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||
Net income |
| — | — | — | ( | — | ( | | | ||||||||||||||||
Other comprehensive income |
| — | — | — | — | | | — | | ||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | — |
| ( |
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Balance, June 30, 2019 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
7
ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(In Thousands, Except Per Share Data)
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| Accumulated |
| Total |
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Treasury | Additional | Other | ATNI | Non- | |||||||||||||||||||||
Common | Stock, | Paid In | Retained | Comprehensive | Stockholders’ | Controlling | Total | ||||||||||||||||||
Stock | at cost | Capital | Earnings | Income/(Loss) | Equity | Interests | Equity |
| |||||||||||||||||
Balance, December 31, 2019 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
Purchase of |
| — | ( | — | — | — | ( | — | ( | ||||||||||||||||
Stock-based compensation |
| — | — | | — | — | | | | ||||||||||||||||
Dividends declared on common stock ($ |
| — | — | — | ( | — | ( | ( | ( | ||||||||||||||||
Repurchase of non-controlling interests | — | — | ( | — | — | ( | ( | ( | |||||||||||||||||
Comprehensive income: | |||||||||||||||||||||||||
Net income |
| — | — | — | | — | | | | ||||||||||||||||
Other comprehensive loss |
| — | — | — | — | ( | ( | — | ( | ||||||||||||||||
Total comprehensive income | — | — | — | — | — |
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Balance, June 30, 2020 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
Balance, December 31, 2018 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
Purchase of |
| — | ( | — | — | — | ( | — | ( | ||||||||||||||||
Stock-based compensation |
| — | — | | — | — | | — | | ||||||||||||||||
Dividends declared on common stock ($ |
| — | — | — | ( | — | ( | ( | ( | ||||||||||||||||
Repurchase of non-controlling interests | — | — | — | — | — | — | ( | ( | |||||||||||||||||
Investments made by minority shareholders in consolidated affiliates | — | — | — | — | — | — | | | |||||||||||||||||
Comprehensive income (loss): | |||||||||||||||||||||||||
Net income (loss) |
| — | — | — | ( | — | ( | | | ||||||||||||||||
Other comprehensive income |
| — | — | — | — | | | — | | ||||||||||||||||
Total comprehensive income (loss) | — | — | — | — | — |
| ( |
| |
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Balance, June 30, 2019 | $ | | $ | ( | $ | | $ | | $ | ( | $ | | $ | | $ | | |||||||||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
8
ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019
(Unaudited)
(In Thousands)
Six Months Ended June 30, | ||||||
2020 |
| 2019 |
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Cash flows from operating activities: | ||||||
Net income | $ | | $ | | ||
Adjustments to reconcile net income to net cash flows provided by operating activities: | ||||||
Depreciation and amortization | |
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Provision for doubtful accounts | |
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Amortization of debt discount and debt issuance costs | |
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Stock-based compensation | |
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Deferred income taxes | ( |
| ( | |||
Loss on equity investments | | — | ||||
Loss on disposition of long-lived assets | | | ||||
Unrealized loss on foreign currency | | ( | ||||
Other non-cash activity | ||||||