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.
Large 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 November 9, 2022, the registrant had outstanding
ATN INTERNATIONAL, INC.
FORM 10-Q
Quarter Ended September 30, 2022
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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 our expectations regarding the benefits of our acquisition of Alaska Communications; the impact of federal support program revenues; expectations regarding future revenue, operating income, EBITDA and capital expenditures; the competitive environment in our key markets, demand for our services and industry trends; our expectations regarding construction progress under our agreement as part of the FirstNet Transaction and the effect such progress will have on our financial results; expectations regarding litigation; 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) our ability to successfully transition our U.S. Telecom business away from wholesale wireless to other carrier and consumer-based services; (2) our ability to replace and remove all ZTE equipment in our U.S. network, as required by the FCC in a timely and cost-effective manner; (3) the general performance of our operations, including operating margins, revenues, capital expenditures, and the retention of and future growth of our subscriber base and average revenue per user; (4) our ability to realize cost synergies and expansion plans for our newly acquired Alaska Communications business; (5) our ability to satisfy the needs and demands of our major carrier customers; (6) our ability to efficiently and cost-effectively upgrade our networks and IT platforms to address rapid and significant technological changes in the telecommunications industry; (7) government funding and subsidy program availability and regulation of our businesses, which may impact our revenue, expansion plans and operating costs; (8) our reliance on a limited number of key suppliers and vendors for timely supply of equipment and services relating to our network infrastructure; (9) economic, political and other risks and opportunities facing our operations, including those resulting from the pandemic, geopolitical tensions, including the invasion of Ukraine, and from inflation, including increased costs and supply chain disruptions; (10) the loss of or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (11) our ability to find investment or acquisition or disposition opportunities that fit our strategic goals; (12) the occurrence of weather events and natural catastrophes and our ability to secure the appropriate level of insurance coverage for our assets; (13) increased competition; (14) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (15) our continued access to capital and credit markets; 16) our ability to successfully recognize the expected benefits of our acquisition of Sacred Wind Enterprises. 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” in each of our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 16, 2022, our Quarterly Report on Form 10-Q, filed with the SEC on August 8, 2022, and the other reports we file from time to time with the SEC. We undertake no obligation and have 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.
References to dollars ($) refer to US dollars unless otherwise specifically indicated.
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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)
September 30, | December 31, | |||||
| 2022 |
| 2021 | |||
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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Customer receivable | | | ||||
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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Intangible assets, net |
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Operating lease right-of-use assets |
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Customer receivable - long term | | | ||||
Other assets |
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Total assets | $ | | $ | | ||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY | ||||||
Current Liabilities: | ||||||
Current portion of long-term debt | $ | | $ | | ||
Current portion of customer receivable credit facility | | | ||||
Accounts payable and accrued liabilities |
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Dividends payable |
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Accrued taxes |
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Current portion of lease liabilities | | | ||||
Advance payments and deposits |
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Total current liabilities |
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Deferred income taxes |
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Lease liabilities, excluding current portion | | | ||||
Other liabilities |
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Customer receivable credit facility, net of current portion | | | ||||
Long-term debt, excluding current portion |
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Total liabilities |
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Commitments and contingencies (Note 14) | ||||||
Redeemable noncontrolling interests: | ||||||
Preferred redeemable noncontrolling interests | | | ||||
Common redeemable noncontrolling interests | | | ||||
Total redeemable noncontrolling interests | | | ||||
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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Noncontrolling interests |
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Total equity |
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Total liabilities, redeemable noncontrolling interests and equity | $ | | $ | | ||
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
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ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Unaudited)
(In Thousands, Except Per Share Data)
Three months ended September 30, | Nine months ended September 30, | ||||||||||||
| 2022 |
| 2021 |
| 2022 |
| 2021 |
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REVENUE: | |||||||||||||
Communication services | $ | | $ | | $ | | $ | | |||||
Construction | | | | | |||||||||
Other |
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Total revenue |
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OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated): | |||||||||||||
Cost of communication services and other |
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Cost of construction revenue | | | | | |||||||||
Selling, general and administrative |
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Transaction-related charges |
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Depreciation and amortization |
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Amortization of intangibles from acquisitions | | | | | |||||||||
(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 |
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Other income (expense), net |
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INCOME BEFORE INCOME TAXES |
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| ( |
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Income tax benefit |
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| ( |
| ( |
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NET INCOME (LOSS) |
| ( |
| ( |
| ( |
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Net (income) loss attributable to noncontrolling interests, net of tax expense (benefit) 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 NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Unaudited)
(In Thousands)
Three months ended | Nine months ended | ||||||||||
2022 |
| 2021 |
| 2022 |
| 2021 | |||||
Net income (loss) | $ | ( | $ | ( | $ | ( | $ | | |||
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustment |
| ( |
| ( |
| ( |
| ( | |||
Reclassification of loss on pension settlement, net of $( | — | — | | — | |||||||
Unrealized gain (loss) on derivatives | — | | ( | | |||||||
Other comprehensive income (loss), net of tax |
| ( |
| ( |
| ( |
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Comprehensive income (loss) |
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Less: Comprehensive income (loss) attributable to noncontrolling 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.
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ATN INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(Unaudited)
(In Thousands, Except Per Share Data)
Total Redeemable Noncontrolling Interests | Total Equity | |||||||||||||||||||||||
Redeemable | Redeemable | Total | Treasury | Additional | Redeemable | Other | ATNI | Non- | ||||||||||||||||
Preferred | Common | Redeemable | Common | Stock, | Paid In | Retained | Common | Comprehensive | Stockholders’ | Controlling | Total | |||||||||||||
Units | Units | Noncontrolling Interests | Stock | at cost | Capital | Earnings | Units | Income/(Loss) | Equity | Interests | Equity | |||||||||||||
Balance, June 30, 2022 | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | — | $ | | $ | | $ | | $ | |
Stock-based compensation | — | — | — |
| — | — | | — | — | — | | | | |||||||||||
Dividends declared on common stock ($ | — | — | — | — | — | — | ( | — | — | ( | — | ( | ||||||||||||
Investments made by minority shareholders in consolidated affiliates | — | — | — |
| — | — | — | — | — | — | — | | | |||||||||||
Repurchase of noncontrolling interests | — | — | — |
| — | — | ( | — | — | — | ( | ( | ( | |||||||||||
Accrued dividend - redeemable preferred units | | — | | — | — | — | ( | — | — | ( | — | ( | ||||||||||||
Deemed dividend - redeemable common units | — | | | — | — | — | ( | | — | — | — | — | ||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net income (loss) | — | ( | ( |
| — | — | — | ( | ( | — | ( | | ( | |||||||||||
Other comprehensive income | — | — | — |
| — | — | — | — | — | ( | ( | — | ( | |||||||||||
Total comprehensive income (loss) | — | ( | ( | — | — | — | ( | ( | ( |
| ( |
| |
| ( | |||||||||
Balance, September 30, 2022 | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | — | $ | | $ | | $ | | $ | |
Balance, June 30, 2021 | $ | — | $ | — | $ | — | $ | | $ | ( | $ | | $ | | $ | — | $ | ( | $ | | $ | | $ | |
Issuance of | | — | |
| — | — | — | — | — | — | — | — | — | |||||||||||
Issuance of | — | | |
| — | — | — | — | — | — | — | — | — | |||||||||||
Purchase of | — | — | — |
| — | ( | — | — | — | — | ( | — | ( | |||||||||||
Stock-based compensation | — | — | — | — | — | | — | — | — | | | | ||||||||||||
Exercise of stock options | — | — | — | — | — | | — | — | — | | — | | ||||||||||||
Noncontrolling interests in acquired entity | — | — | — | — | — | — | — | — | — | — | | | ||||||||||||
Dividends declared on common stock ($ | — | — | — | — | — | — | ( | — | — | ( | ( | ( | ||||||||||||
Accrued dividend on redeemable preferred | | — | | — | — | — | ( | — | — | ( | — | ( | ||||||||||||
Repurchase of noncontrolling interests | — | — | — | — | — | — | — | — | — | — | ( | ( | ||||||||||||
Deemed dividend - redeemable common units | — | | | — | — | — | ( | | — | — | — | — | ||||||||||||
Comprehensive income: | ||||||||||||||||||||||||
Net income (loss) | — | ( | ( |
| — | — | — | ( | ( | — | ( | | ( | |||||||||||
Other comprehensive income (loss) | — | — | — |
| — | — | — | — | — | ( | ( | — | ( | |||||||||||
Total comprehensive income (loss) | — | ( | ( | — | — | — | ( | ( | ( |
| ( |
| |
| ( | |||||||||
Balance, September 30, 2021 | $ | | $ | | $ | | $ | | $ | ( | $ | | $ | | $ | — | $ | ( | $ | | $ | | $ | |
The accompanying condensed notes are an integral part of these condensed consolidated financial statements.
7