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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

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 001-12593

ATN INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

47-0728886
(I.R.S. Employer
Identification No.)

500 Cummings Center, Suite 2450
Beverly, Massachusetts
(Address of principal executive offices)

01915
(Zip Code)

(978619-1300

(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

Common Stock, par value $.01 per share

ATNI

The Nasdaq Stock Market LLC

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    No  

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). Yes    No  

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

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     No  

As of May 10, 2024, the registrant had outstanding 15,317,229 shares of its common stock ($.01 par value).

Table of Contents

ATN INTERNATIONAL, INC.

FORM 10-Q

Quarter Ended March 31, 2024

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

3

PART I—FINANCIAL INFORMATION

4

Item 1

Unaudited Condensed Consolidated Financial Statements

4

Condensed Consolidated Balance Sheets at March 31, 2024 and December 31, 2023

4

Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2024 and 2023

5

Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2024 and 2023

6

Condensed Consolidated Statements of Equity for the Three Months Ended March 31, 2024 and 2023

7

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

8

Notes to Unaudited Condensed Consolidated Financial Statements

9

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36-57

Item 3

Quantitative and Qualitative Disclosures About Market Risk

57

Item 4

Controls and Procedures

58

PART II—OTHER INFORMATION

58

Item 1

Legal Proceedings

58

Item 1A

Risk Factors

58

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

58

Item 5

Other Information

59

Item 6

Exhibits

60

SIGNATURES

61

CERTIFICATIONS

2

Table of Contents

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; 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; 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) the general performance of our operations, including operating margins, revenues, capital expenditures, and the retention of and future growth of our subscriber base and ARPU; (2) our ability to replace and remove all prohibited mobile telecommunications equipment in our U.S. network on the timeframe and at the cost approved by the FCC; (3) our ability to satisfy the needs and demands of our major carrier customers; (4) government funding program availability and regulation of our businesses, which may impact our revenue, operating costs, and telecommunications licenses; (5) the adequacy and expansion capabilities of our network capacity and customer service system to support our customer growth; (6) our ability to efficiently and cost-effectively upgrade our networks and information technology platforms to address rapid and significant technological changes in the telecommunications industry; (7) continued access to capital and credit markets on terms we deem favorable; (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) our ability to continue to cost-effectively service our debt to levels needed to fund our business  given rising interest rates; (10) our estimated plan with respect to material construction projects and the effect such progress will have on our financial results; (11) increased risk of political, geopolitical and other risks and opportunities facing our operations, including those resulting from the persistence of high inflation and other macroeconomic headwinds including increased costs and supply chain disruptions; (12) the loss of, or an inability to recruit skilled personnel in our various jurisdictions, including key members of management; (13) our ability to find investment or acquisition or disposition opportunities that fit our strategic goals; (14) the occurrence of weather events and natural catastrophes and our ability to secure the appropriate level of insurance coverage for these assets; and (15) increased competition. 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, 2023, filed with the SEC on March 15, 2024, and the other reports we file from time to time with the SEC.  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.

References to dollars ($) refer to US dollars unless otherwise specifically indicated.

3

Table of Contents

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)

March 31, 

December 31, 

    

2024

    

2023

ASSETS

Current Assets:

Cash and cash equivalents

$

56,467

$

49,225

Restricted cash

 

12,751

 

12,942

Short-term investments

 

300

 

300

Accounts receivable, net of allowances for credit losses of $16.9 million and $16.4 million, respectively

 

138,456

 

138,616

Customer receivable

7,506

7,249

Inventory, materials and supplies

 

16,207

 

19,133

Prepayments and other current assets

 

58,040

 

53,807

Total current assets

 

289,727

 

281,272

Fixed Assets, net

 

1,071,482

 

1,080,659

Telecommunication licenses, net

 

113,319

 

113,319

Goodwill

 

40,104

 

40,104

Intangible assets, net

 

17,685

 

19,585

Operating lease right-of-use assets

 

97,735

 

99,335

Customer receivable - long term

45,165

45,676

Other assets

 

103,937

 

103,764

Total assets

$

1,779,154

$

1,783,714

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

Current Liabilities:

Current portion of long-term debt

$

20,476

$

24,290

Current portion of customer receivable credit facility

7,569

7,110

Accounts payable and accrued liabilities

 

161,418

 

182,069

Dividends payable

 

3,757

 

3,701

Accrued taxes

 

11,642

 

10,876

Current portion of lease liabilities

15,674

15,164

Advance payments and deposits

 

53,081

 

49,984

Total current liabilities

 

273,617

 

293,194

Deferred income taxes

 

18,123

 

19,775

Lease liabilities, excluding current portion

74,856

76,936

Deferred revenue, long-term

61,611

64,035

Other liabilities

 

76,387

 

74,531

Customer receivable credit facility, net of current portion

40,408

38,943

Long-term debt, excluding current portion

 

520,815

 

492,580

Total liabilities

 

1,065,817

 

1,059,994

Redeemable noncontrolling interests:

Preferred redeemable noncontrolling interests

61,442

60,094

Common redeemable noncontrolling interests

23,179

25,823

Total redeemable noncontrolling interests

84,621

85,917

ATN International, Inc. Stockholders’ Equity:

Preferred stock, $0.01 par value per share; 10,000,000 shares authorized, none issued and outstanding

 

 

Common stock, $0.01 par value per share; 50,000,000 shares authorized; 17,845,445 and 17,702,476 shares issued, respectively, 15,501,510 and 15,421,481 shares outstanding, respectively

 

173

 

173

Treasury stock, at cost; 2,343,935 and 2,280,995 shares, respectively

 

(92,463)

 

(90,447)

Additional paid-in capital

 

207,551

 

205,797

Retained earnings

 

405,031

 

417,282

Accumulated other comprehensive income

 

9,700

 

8,268

Total ATN International, Inc. stockholders’ equity

 

529,992

 

541,073

Noncontrolling interests

 

98,724

 

96,730

Total equity

 

628,716

 

637,803

Total liabilities, redeemable noncontrolling interests and equity

$

1,779,154

$

1,783,714

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 MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

(In Thousands, Except Per Share Data)

Three months ended March 31, 

    

2024

    

2023

REVENUE:

Communication services

$

181,268

$

181,308

Construction

1,586

590

Other

 

3,940

 

3,876

Total revenue

 

186,794

 

185,774

OPERATING EXPENSES (excluding depreciation and amortization unless otherwise indicated):

Cost of communication services and other

 

80,390

 

79,040

Cost of construction revenue

1,570

588

Selling, general and administrative

 

61,315

 

61,348

Stock-based compensation

1,909

1,778

Transaction-related charges

 

19

 

13

Restructuring expenses

1,190

2,887

Depreciation and amortization

 

34,340

 

36,404

Amortization of intangibles from acquisitions

1,980

3,247

Gain on disposition of assets

(493)

(167)

Total operating expenses

 

182,220

 

185,138

Income from operations

 

4,574

 

636

OTHER INCOME (EXPENSE)

Interest income

445

182

Interest expense

 

(11,520)

 

(8,807)

Other income

 

172

 

194

Other (expense)

 

(10,903)

 

(8,431)

LOSS BEFORE INCOME TAXES

 

(6,329)

 

(7,795)

Income tax expense (benefit)

 

1,619

 

(740)

NET LOSS

 

(7,948)

 

(7,055)

Net loss attributable to noncontrolling interests, net of tax (benefit) expense of $0.3 million and $(0.6) million respectively

 

1,633

 

1,170

NET LOSS ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS

$

(6,315)

$

(5,885)

NET LOSS PER WEIGHTED AVERAGE SHARE ATTRIBUTABLE TO ATN INTERNATIONAL, INC. STOCKHOLDERS:

Basic

$

(0.50)

$

(0.44)

Diluted

$

(0.50)

$

(0.44)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

Basic

 

15,437

 

15,768

Diluted

 

15,437

 

15,768

DIVIDENDS PER SHARE APPLICABLE TO COMMON STOCK

$

0.24

$

0.21

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 COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

(In Thousands)

Three months ended
March 31, 

2024

    

2023

Net loss

$

(7,948)

$

(7,055)

Other comprehensive income:

Foreign currency translation adjustment net of tax expense of $0 and $0 million

 

 

111

Reclassification of loss on pension settlement, net of $0 and $0 million of tax

369

Unrealized gain on derivatives net of tax expense of $0.5 million and $0

1,432

Other comprehensive income (loss), net of tax

 

1,432

 

480

Comprehensive loss

 

(6,516)

 

(6,575)

Less: Comprehensive (income) loss attributable to noncontrolling interests

 

1,633

 

1,170

Comprehensive loss attributable to ATN International, Inc.

$

(4,883)

$

(5,405)

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 MARCH 31, 2024 AND 2023

(Unaudited)

(In Thousands, Except Per Share Data)

Total Equity

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, 2023

$

173

$

(90,447)

$

205,797

$

417,282

$

8,268

$

541,073

$

96,730

$

637,803

Purchase of 62,940 shares of common stock

 

(2,016)

(2,016)

(2,016)

Stock-based compensation

 

1,754

1,754

155

1,909

Dividends declared on common stock ($0.24 per common share)

(3,720)

(3,720)

(40)

(3,760)

Accrued dividend - redeemable preferred units

(1,348)

(1,348)

(1,348)

Deemed dividend - redeemable common units

(868)

(868)

3,512

2,644

Comprehensive income:

Net loss

 

(6,315)

(6,315)

(1,633)

(7,948)

Other comprehensive income

 

1,432

1,432

1,432

Total comprehensive income (loss)

(6,315)

1,432

 

(4,883)

 

(1,633)

 

(6,516)

Balance, March 31, 2024

$

173

$

(92,463)

$

207,551

$

405,031

$

9,700

$

529,992

$

98,724

$

628,716

Balance, December 31, 2022

$

173

$

(73,825)

$

198,449

$

449,806

$

6,210

$

580,813

$

96,016

$

676,829

Purchase of 71,563 shares of common stock

 

(2,840)

(2,840)

(2,840)

Stock-based compensation

1,634

1,634

144

1,778

Dividends declared on common stock ($0.21 per common share)

(3,315)

(3,315)

(3,315)

Repurchase of noncontrolling interests

(68)

(68)

(527)

(595)

Accrued dividend - redeemable preferred units

(1,045)

(1,045)

(1,045)

Deemed dividend - redeemable common units

(2,531)

(2,531)

2,820

289

Comprehensive income:

Net income (loss)

 

(5,885)

(5,885)

(1,170)

(7,055)

Other comprehensive income (loss)

 

480

480

480

Total comprehensive income (loss)

(5,885)

480

 

(5,405)

 

(1,170)

 

(6,575)

Balance, March 31, 2023

$

173

$

(76,665)

$

200,015

$

437,030

$

6,690

$

567,243

$

97,283

$

664,526

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 CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(Unaudited)

(In Thousands)

Three Months Ended March 31,

2024

    

2023

Cash flows from operating activities:

Net loss

$

(7,948)

$

(7,055)

Adjustments to reconcile net loss to net cash flows provided by operating activities:

Depreciation and amortization

34,340

 

36,404

Amortization of intangibles from acquisitions

1,980

3,247

Provision for doubtful accounts

1,322

 

1,378

Amortization of debt discount and debt issuance costs

625

 

569

Gain on disposition of assets and contingent consideration

(493)

(167)

Stock-based compensation

1,909

 

1,778

Deferred income taxes

(2,181)

 

(1,953)

Loss on pension settlement

369

Gain on investments

(170)

(315)

Changes in operating assets and liabilities, excluding the effects of acquisitions and dispositions:

Accounts receivable

2,183

 

3,573

Customer receivable

254

745

Prepaid income taxes

 

679

Accrued taxes

3,966

 

6,953

Materials and supplies, prepayments, and other current assets

(626)

 

(3,503)

Accounts payable and accrued liabilities, advance payments and deposits and other current liabilities

(9,624)

 

(24,548)

Other assets

340

141

Other liabilities

(2,701)

 

(2,283)

Net cash provided by operating activities

 

23,176

 

16,012

Cash flows from investing activities:

Capital expenditures

 

(36,016)

 

(50,598)

Government capital programs

Amounts disbursed

(13,473)

(2,127)

Amounts received

10,546

593

Purchases of strategic investments

(630)

Purchase of intangible assets

(573)

Purchase of investments - employee benefit plan

(25)

Proceeds from investments - employee benefit plan

201

Proceeds from sale of assets

3,655

Net cash used in investing activities

 

(35,685)

 

(52,762)

Cash flows from financing activities:

Dividends paid on common stock

 

(3,701)

 

(3,310)

Payment of debt issuance costs

 

(72)

 

(119)

Finance lease payments

(443)

(249)

Term loan - repayments

 

(3,801)

 

(1,171)

Revolving credit facility – borrowings

46,000

57,553

Revolving credit facility – repayments

(18,302)

(14,000)

Proceeds from customer receivable credit facility

 

3,700

 

4,300

Repayment of customer receivable credit facility

(1,804)

(1,570)

Purchases of common stock – stock- based compensation

(1,896)

(1,433)

Purchases of common stock – share repurchase plan

(121)

(1,407)

Repurchases of noncontrolling interests

(595)

Net cash provided by financing activities

 

19,560

 

37,999

Net change in cash, cash equivalents, and restricted cash

 

7,051

 

1,249

Total cash, cash equivalents, and restricted cash, beginning of period

 

62,167

 

59,728

Total cash, cash equivalents, and restricted cash, end of period

$

69,218

$

60,977

Supplemental cash flow information:

Interest paid

$

10,291

$

6,711

Taxes paid

$

748

$

29

Dividends declared, not paid

$

3,720

$

3,315

Noncash investing activity:

Purchases of property, plant and equipment included in accounts payable and accrued expenses

Amounts accrued for reimbursable capital expenditures from government capital programs

$

33,446

$

1,435

Amounts accrued for non-reimbursable capital expenditures

$

14,032

$

14,773

The accompanying condensed notes are an integral part of these condensed consolidated financial statements.

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ATN INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.ORGANIZATION AND BUSINESS OPERATIONS

The Company is a leading provider of digital infrastructure and communications services with a focus on rural and remote markets in the United States, and internationally, including Bermuda and the Caribbean region.

The Company has developed significant operational expertise and resources that it uses to augment its capabilities in its local markets. With this support, the Company’s operating subsidiaries are able to improve their quality of service with greater economies of scale and expertise than would typically be available in the size markets they operate in. The Company provides management, technical, financial, regulatory, and marketing services to its operating subsidiaries and typically receives a management fee calculated as a percentage of their revenues, which is eliminated in consolidation. The Company also actively evaluates investment opportunities and other strategic transactions, both domestic and international, and generally looks for those that it believes fit the Company’s profile of telecommunications businesses and have the potential to complement the Company’s “First-to-Fiber” and “Glass & Steel™” approach in markets while keeping a focus on generating excess operating cash flows over extended periods of time. The Company uses the cash generated from its operations to maintain an appropriate ratio of debt and cash on hand and to fund growth and capital expenditures, to return cash to its stockholders through dividends or stock repurchases, and make strategic investments or acquisitions.

For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Notes 1 and 12 to the Consolidated Financial Statements included in this Report.

As of March 31, 2024, the Company offered the following types of services to its customers:

Mobile Telecommunications Services. The Company offers mobile communications services over its wireless networks and related equipment (such as handsets) to both business and consumer customers.

Fixed Telecommunications Services. The Company provides fixed data and voice telecommunications services to business and consumer customers. These services include consumer broadband and high-speed data solutions for businesses. For some markets, fixed services also include video services and revenue derived from support under certain government programs.

Carrier Telecommunication Services.  The Company delivers services to other telecommunications providers including the leasing of critical network infrastructure such as tower and transport facilities, wholesale roaming and long distance voice services, site maintenance and international long-distance services.

Managed Services. The Company provides information technology services such as network, application, infrastructure and hosting services to both its business and consumer customers to complement its fixed services in its existing markets.

Through March 31, 2024, the Company identified two operating segments to manage and review its operations and to facilitate investor presentations of its results. These two operating segments are as follows:

International Telecom. In the Company’s international markets, it offers fixed services, mobility services, carrier services and managed services to customers in Bermuda, the Cayman Islands, Guyana and the US Virgin Islands.

US Telecom. In the United States, the Company offers fixed services, carrier services, and managed services to business customers and consumers in Alaska and the western United States. As of March 31,

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2024 the Company provided mobility services to retail customers in the western United States.

The following chart summarizes the operating activities of the Company’s principal subsidiaries, the segments in which it reports its revenue and the markets it served during the three months ended March 31, 2024:

International Telecom

US Telecom

Services

   

Markets

Tradenames

  

Services

   

Markets

Tradenames

Mobility Services

Bermuda, Guyana, US Virgin Islands

One, GTT, Viya

Mobility Services

 

United States (rural markets)

Choice, Choice NTUA Wireless

Fixed Services

Bermuda, Cayman Islands, Guyana, US Virgin Islands

One, Logic, GTT, Viya

Fixed Services

United States

Alaska Communications, Commnet, Choice, Choice NTUA Wireless, Sacred Wind Communications, Ethos, Deploycom

Carrier Services

Bermuda, Guyana, US Virgin Islands

One, Essextel, GTT, Viya

Carrier Services

United States

Alaska Communications, Commnet, Sacred Wind Communications

Managed Services

Bermuda, Cayman Islands, US Virgin Islands, Guyana

Fireminds, One, Logic, GTT, Viya, Brava

Managed Services

 

United States

Alaska Communications, Choice

For further information about the Company’s financial segments and geographical information about its operating revenues and assets, see Note 12 to the Unaudited Condensed Consolidated Financial Statements included in this Report.

Restructuring Expense

In order to reduce the Company’s US Telecom and International Telecom segments’ cost structure, the Company has incurred, since the first quarter of 2023, certain network termination and reduction in force costs totaling $12.4 million through March 31, 2024. Of this amount, $1.2 million and $2.9 million were recorded during the three months ended March 31, 2024 and 2023, respectively. A summary of the costs, since the first quarter of 2023, is below (in thousands):

US

International

Telecom

Telecom

Total

Employee termination benefits

$

1,960

$

4,681

$

6,641

Contract termination costs

5,777

5,777

Total

$

7,737

$

4,681

$

12,418

The charge is recorded in Restructuring Expenses on the Company’s Consolidated Income Statements. During the three months ended March 31, 2024, the Company paid $2.0 million of the restructuring costs. In total, since the first quarter of 2023 and through March 31, 2024, the Company paid $7.7 million, recorded a gain of $0.3 million on lease termination, and $5.0 million of the restructuring costs remain accrued. In conjunction with the restructuring, the Company terminated certain leases and removed $5.6 million of lease right of use assets and $5.9 million of lease liabilities from its balance sheet.

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2. BASIS OF PRESENTATION

The accompanying condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial information included herein is unaudited; however, the Company believes such information and the disclosures herein are adequate to make the information presented not misleading and reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair statement of the Company’s financial position and results of operations for the periods described therein. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. Results of interim periods may not be indicative of results for the full year. These condensed consolidated financial statements and related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 15, 2024.

The condensed consolidated financial statements include the accounts of the Company, its subsidiaries in which the Company holds controlling interests and certain entities which are consolidated in accordance with the provisions of the Financial Accounting Standards Board’s (“FASB”) authoritative guidance on the consolidation of variable interest entities, since it is determined that the Company is the primary beneficiary of these entities.

Recent Accounting Pronouncements

In December 2023, the FASB released ASU 2023-09, titled "Enhancements to Income Tax Disclosures," with the aim of improving the clarity and usefulness of income tax disclosures. The update focuses primarily on enhancing disclosures related to rate reconciliation and income taxes paid. ASU 2023-09 becomes effective for annual reporting periods starting after December 15, 2024, with early adoption permitted. While the changes prescribed by ASU 2023-09 are implemented prospectively, retrospective application is also allowed. The Company has chosen not to early adopt this standard and is currently assessing its potential impact on our consolidated financial statements and accompanying disclosures.

In November 2023, the FASB issued ASU No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (ASU 2023-07), which requires that a public entity disclose, on an interim and annual basis, significant segment expense categories and amounts that are regularly provided to its chief operating decision maker (CODM) and included in each reported measure of segment profit or loss. An entity must also disclose, by reportable segment, the amount and composition of other expenses. The standard requires an entity to disclose the title and position of its CODM and explain how the CODM uses these reported measures in assessing segment performance and determining how to allocate resources. ASU 2023-07 will be effective for annual periods beginning after December 15, 2023, and interim periods beginning after December 31, 2024, with retrospective application. The standard allows early adoption of these requirements and we are currently evaluating the disclosure impacts of our adoption.

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3. REVENUE RECOGNITION AND RECEIVABLES

Revenue Accounted for in Accordance with Other Guidance

The Company records revenue in accordance with ASC 606 from contracts with customers and ASC 842 from lease agreements, as well as government grants. Lease revenue recognized under ASC 842 is disclosed in Note 4 and government grant revenue is disclosed in Note 8.

Timing of Revenue Recognition

Revenue accounted for in accordance with ASC 606 consisted of the following for the periods presented below (in thousands):

Three months ended March 31,2024

International

US

Telecom

Telecom

Total

Services transferred over time

$

88,560

$

78,043

$

166,603

Goods and services transferred at a point in time

3,034

3,271

6,305

Total revenue accounted for under ASC 606

$

91,594

$

81,314

$

172,908

Operating lease income

72

2,034

2,106

Government grant revenue (1)

1,393

10,387

11,780

Total revenue

$

93,059

$

93,735

$

186,794

Three months ended March 31,2023

International

US

Telecom

Telecom

Total

Services transferred over time

$

85,680

$

81,072

$

166,752

Goods and services transferred at a point in time

3,259

2,546

5,805

Total revenue accounted for under ASC 606

$

88,939

$

83,618

$

172,557

Operating lease income

72

1,831

1,903

Government grant revenue (1)

1,397

9,917

11,314

Total revenue

$

90,408

$

95,366

$

185,774

(1)Revenue recognized from CAF II, USF and RDOF programs. Refer to Note 8.

Contract Assets and Liabilities

The Company recognizes contract assets and liabilities on its balance sheet. Contract assets represent unbilled amounts typically resulting from consumer Mobility contracts with both a multiyear service period and a promotional discount. In these contracts, the revenue recognized exceeds the amount billed to the customer. The current portion of the contract asset is recorded in prepayments and other current assets and the noncurrent portion is included in other assets on the Company’s balance sheets.

Contract liabilities consist of advance payments and billings in excess of revenue recognized. Mobility and Fixed revenue for postpaid customers is generally billed one month in advance and recognized over the period that the corresponding service is rendered to customers. To the extent the service is not provided by the reporting date the amount is recognized as a contract liability. Prepaid service, including Mobility services, sold to customers is recorded as deferred revenue prior to the commencement of services. Contract liabilities also include certain long term fixed business and carrier service customer contracts. The current portion of contract liabilities are recorded in advanced payments and deposits and the noncurrent portion is included in deferred revenue, long-term on the Company’s balance sheets.

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In July 2019, the Company entered into a Network Build and Maintenance Agreement with AT&T Mobility, LLC (“AT&T”) that was subsequently amended through March 31, 2024 (the “FirstNet Agreement”). In connection with the FirstNet Agreement, the Company is building a portion of AT&T’s network for the First Responder Network Authority in or near the Company’s current operating areas in the western United States (the “FirstNet Transaction”). The FirstNet Transaction includes construction and service performance obligations. The current portion of receivables under this agreement is recorded in customer receivable and the long-term portion is recorded in customer receivable long-term on the Company’s balance sheet.

In May 2023, the Company amended its current roaming agreement and entered into a carrier management services agreement with Verizon Wireless (the “Verizon CMS Agreement”). The transaction includes service performance obligations under which revenue is recognized over time. The Company allocates the transaction price of these agreements to each performance obligation based on the relative standalone selling price of each performance obligation in the contract. The standalone selling price is the estimated price the Company would charge for the good or service in a separate transaction with similar customers in similar circumstances.

Contract assets and liabilities consisted of the following (amounts in thousands):

March 31, 2024

December 31, 2023

$ Change

% Change

Contract asset – current

$

3,469

$

3,616

$

(147)

(4.1)

%

Contract asset – noncurrent

5,490

5,509

(19)

(0.3)

%

Contract liability – current

(31,721)

(30,990)

(731)

2.4

%

Contract liability – noncurrent

(61,611)

(64,035)

2,424

(3.8)

%

Net contract liability

$

(84,373)

$

(85,900)

$

1,527

(1.8)

%

The decrease in the Company’s net contract liability was due to the timing of customer prepayments, contract billings, and recognition of deferred revenue. During the three months ended March 31, 2024, the Company recognized revenue of $16.8 million related to its December 31, 2023 contract liability and amortized $1.3 million of the December 31, 2023 contract asset to revenue.

Contract Acquisition Costs

The March 31, 2024 and 2023 balance sheets include contract acquisition costs of $11.4 million and $9.0 million, respectively, in other assets. During the three months ended March 31, 2024 and 2023, the Company amortized $1.6 million and $1.1 million, respectively, of contract acquisition costs.

Remaining Performance Obligations

Remaining performance obligations represent the transaction price allocated to unsatisfied performance obligations of certain multiyear Mobility contracts, which include a promotional discount, Managed Services contracts, and the Company’s Carrier Services construction and service contracts. The transaction price allocated to unsatisfied performance obligations was $463 million and $494 million at March 31, 2024 and December 31, 2023, respectively. The decrease during 2024 was due to the Company satisfying certain performance obligations. The Company expects to satisfy approximately 34