________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1998
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-19551
Atlantic Tele-Network, Inc.
(exact name of issuer as specified in its charter)
Delaware 47-072886
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
19 Estate Thomas/Havensight
P.O. Box 12030
St. Thomas, U.S. Virgin Islands 00801
(340) 777-8000
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 X No ____
As of September 30, 1998, the registrant had outstanding 4,900,700 shares
of its common stock ($.01 par value).
________________________________________________________________________
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Columnar Amounts in Thousands)
- -------------------------------------------------------------------------------
December 31, September 30,
ASSETS 1997 1998
(Unaudited)
------------ ------------
Current assets:
Cash $ 15,803 $ 28,897
Accounts receivable, net 38,077 31,952
Materials and supplies 3,536 3,855
Prepayments and other current assets 1,039 2,101
------------ ------------
Total current assets 58,455 66,805
Fixed assets:
Property, plant and equipment 39,042 48,651
Less accumulated depreciation - (3,513)
------------ ------------
Net fixed assets 39,042 45,138
Uncollected surcharges 5,941 2,186
Investment in and advances to
Bermuda Digital Communications Ltd. - 4,017
Other assets 4,611 6,617
------------ ------------
$ 108,049 $ 124,763
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,382 $ 9,750
Accrued taxes 3,391 7,382
Advance payments and deposits 809 1,146
Other current liabilities 2,854 2,167
Current portion of long-term debt 3,298 3,401
------------ ------------
Total current liabilities 20,734 23,846
Deferred income taxes 2,464 3,958
Long-term debt, excluding current portion 14,536 12,231
Minority interest 16,071 18,138
Contingencies and commitments (Note D)
Stockholders' equity:
Preferred stock, par value $.01 per share;
10,000,000 shares authorized-
none issued and outstanding
Common stock, par value $.01 per share;
20,000,000 shares authorized;
4,909,000 shares issued and 4,900,700 outstanding 49 49
Treasury Stock - (67)
Paid-in capital 54,195 54,195
Retained earnings - 12,413
------------ ------------
Total stockholders' equity 54,244 66,590
============ ============
$ 108,049 $ 124,763
============ ============
See notes to consolidated and combined condensed financial statements.
2
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED CONDENSED
STATEMENTS OF OPERATIONS
(Columnar Amounts in Thousands, Except Per Share Data)
- -------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------------------------------
1997 1998 1997 1998
Combined Consolidated Combined Consolidated
---------------------------------------------------------
Telephone Operations
Revenues:
International long-distance revenues $ 35,860 $ 24,566 $ 92,977 $ 65,548
Local exchange service 738 2,378 2,123 7,012
Other revenues 198 364 598 852
---------- ---------- ---------- ----------
Total revenues 36,796 27,308 95,698 73,412
Expenses:
International long-distance expenses 17,957 9,833 56,550 31,108
Telephone operating expenses 5,465 5,833 16,348 16,123
General and administrative 1,486 1,670 4,845 4,134
---------- ---------- ---------- ----------
Total expenses 24,908 17,336 77,743 51,365
---------- ---------- ---------- ----------
Income from telephone operations 11,888 9,972 17,955 22,047
Other Operations
Radio, data and paging sales and service revenues - 690 - 690
Expenses of other operations - 767 - 767
---------- ---------- ---------- ----------
Income from other operations - (77) - (77)
Non-operating Revenues and Expenses:
Interest expense (925) (547) (2,916) (1,694)
Interest income 673 471 1,974 1,079
Other income (expense) - (71) - 3,763
---------- ---------- ---------- ----------
Non-operating revenues and expenses, net (252) (147) (942) 3,148
---------- ---------- ---------- ----------
Income before income taxes and minority interest 11,636 9,748 17,013 25,118
Income taxes 5,167 4,445 7,558 10,977
---------- ---------- ---------- ----------
Income before minority interest 6,469 5,303 9,455 14,141
Minority interest (1,067) (856) (1,371) (1,728)
---------- ---------- ---------- ----------
Net income $ 5,402 $ 4,447 $ 8,084 $ 12,413
========== ========== ========== ==========
Net income per share (Note B) $ 0.91 $ 2.53
========= ===========
Weighted average shares outstanding 4,908 4,909
============ ============
See notes to consolidated and combined condensed financial statements.
3
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED AND COMBINED CONDENSED
STATEMENTS OF CASH FLOWS
(Columnar Amounts in Thousands)
- -------------------------------------------------------------------------------------
(Unaudited)
Nine Months Ended
September 30,
--------------------------------
1997 1998
Combined Consolidated
Net cash flows provided by operating activities $ 12,320 $ 29,205
Cash flows from investing activities:
Capital expenditures (5,845) (7,661)
Investment in Digicom S.A., net of cash received - (1,819)
Investment in Bermuda Digital Communications Ltd. - (1,000)
------------ ------------
Net cash flows used in investing activities (5,845) (10,480)
Cash flows from financing activities:
Repayment of long-term debt (3,971) (2,491)
Net change in advances to affiliates (1,457) (3,073)
Purchase of treasury stock - (67)
------------ ------------
Net cash flows used in financing activities (5,428) (5,631)
------------ ------------
Net increase in cash 1,047 13,094
Cash, Beginning of Period 8,182 15,803
------------ ------------
Cash, End of Period $ 9,229 $ 28,897
============ ============
Supplemental cash flow information:
Interest paid $ 2,456 $ 1,285
============ ============
Income taxes paid $ 3,683 $ 4,357
============ ============
Depreciation and amortization expense $ 4,349 $ 3,043
============ ============
See notes to consolidated and combined condensed financial statements.
4
Atlantic Tele-Network, Inc. and Subsidiaries
Notes to Consolidated and Combined Condensed
Financial Statements
Three and Nine Months Ended September 30, 1997 and 1998
(Columnar Amounts in Thousands, Except Per Share Data)
A. SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The consolidated balance sheet of Atlantic Tele-Network, Inc. and
subsidiaries (ATN or the Company) at December 31, 1997 has been taken from
audited financial statements at that date. All other consolidated and combined
condensed financial statements contained herein have been prepared by the
Company and are unaudited. The consolidated and combined condensed financial
statements should be read in conjunction with the consolidated and combined
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
The unaudited interim consolidated and combined condensed financial
statements furnished herein reflect all adjustments which are, in the opinion
of management, necessary to fairly present the financial results for the
interim periods presented. The results for the three and nine months ended
September 30, 1997 and 1998 are not necessarily indicative of the operating
results for the full year not yet completed.
BASIS OF PRESENTATION
Effective December 30, 1997, Atlantic Tele-Network, Inc. split-off into
two separate public companies (the Transaction). One, Emerging Communications,
Inc. (ECI), contained all of the operations of the Company and its
subsidiaries in the U.S. Virgin Islands. The other, ATN, continued the
business and operations of the Company in Guyana, including ownership of its
majority owned subsidiary, Guyana Telephone and Telegraph Company Limited
(GT&T). The combined financial statements of ATN for the three and nine months
ended September 30, 1997 included in this report are the separate financial
statements relating to ATN's business and operations in Guyana, including its
majority owned subsidiary GT&T, and ATN's activities as the parent company of
all of its subsidiaries. ATN's investment in subsidiaries other than GT&T and
operations of these other subsidiaries have been carved out of the combined
financial statements. The combined financial statements of ATN present the
results of operations and cash flows for the three and nine months ended
September 30, 1997 as if the business, operations and activities included in
the combined financial statements were conducted by a separate entity. All
material intercompany transactions and balances have been eliminated.
The Transaction was accounted for as a non-pro rata split-off of ATN from
the consolidated Company as it previously existed. Accordingly, ATN assets and
liabilities at December 31, 1997 have been accounted for in accordance with
Accounting Principles Board Opinion No. 29 entitled "Accounting for Nonmonetary
Transactions" and Emerging Issues Task Force 96-4 entitled "Accounting for
Reorganizations Involving a Non-Pro Rata Split-off of Certain Nonmonetary
Assets to Owners" at values as determined by the market capitalization of ATN
subsequent to the Transaction. The excess of original cost over such value has
been allocated to reduce the values assigned to long-term assets, primarily
property, plant and equipment and intangibles.
5
ACQUISITIONS
On June 2, 1998, the Company acquired a 75% interest in Digicom S.A., a
Haitian corporation principally engaged in dispatch radio, wireless data
network services and paging for $1.7 million in cash and a commitment to issue
in the future 15,873 shares of ATN common stock. The acquisition is accounted
for under the purchase method.
On July 17, 1998, the Company acquired a 30% equity interest, plus
warrants which would enable the Company to increase its investment up to 40%
under certain circumstances, in Bermuda Digital Communications Ltd. for $1.0
million in cash. The Company also provided a loan to Bermuda Digital
Communications Ltd. of $3.0 million at Citibank prime plus 3%, which was 11.5%
at September 30, 1998. This investment is accounted for under the equity
method. Bermuda Digital Communications Ltd. is a Bermuda corporation, which
when operational, will be the sole cellular and PCS competitor to Bermuda
Telephone Company.
The Company has signed advisory fee contracts with both Digicom S.A and
Bermuda Digital Communications Ltd. compensating it at 6% of gross revenues
for management services provided, effective from the respective acquisition
dates.
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted the provisions of SFAS No.
130 entitled "Reporting of Comprehensive Income". SFAS No. 130 establishes
standards for the display of comprehensive income and its components in a full
set of financial statements. Comprehensive income includes all changes in
equity during a period except those resulting from the issuance of shares of
stock and distributions to stockholders. There were no material differences
between net income and comprehensive income during the three and nine months
ended September 30, 1997 and 1998.
6
B. PRO FORMA NET INCOME PER SHARE
Combined historical income per share for the three and nine months ended
September 30, 1997 is not presented, as the information is not considered
meaningful. Pro forma net income per share as if the Transaction had occurred
January 1, 1997 is calculated as follows:
Three Months Nine Months
Ended Ended
September 30, 1997 September 30, 1997
------------------------------------------
Net income as reported $ 5,402 $ 8,084
Reduction in depreciation 678 2,034
Elimination of interest income from subsidiary,
net of interest expense on debt transferred to ECI (429) (1,287)
Tax effect (159) (478)
--------------- ---------------
Pro forma net income $ 5,492 $ 8,353
=============== ===============
Pro forma shares outstanding 4,909 4,909
=============== ===============
Pro forma net income per share $ 1.12 $ 1.70
=============== ===============
C. REGULATORY MATTERS
On December 31, 1997, GT&T applied to the Guyana Public Utilities
Commission (PUC) for a significant increase in rates for local and outbound
international long-distance service and was awarded an interim increase in
rates effective February 1, 1998 which was a substantial increase over the
rates in effect during 1997 and earlier years. Subsequently, on March 27,
1998, the PUC reduced the interim rate increase effective in part on April 1,
1998 and in part on May 1, 1998. The interim rates currently in effect are
intended to remain in effect while the PUC holds hearings and reaches a
decision on GT&T's application, although the PUC may increase or decrease
these interim rates before reaching a decision on GT&T's permanent rates. On
October 27, 1998, to reflect changed conditions since December 31, 1997, GT&T
filed for an additional rate increase.
7
In October 1995, the Guyana Public Utilities Commission issued an order
that rejected the request of GT&T for substantial increases in all telephone
rates and temporarily reduced rates for outbound long-distance calls to
certain countries. In January 1997, on an appeal by GT&T, the Guyana High
Court voided the PUC's order in regard to rates and the rates were returned to
the rates in existence in October 1995. The lost revenue was approximately
$9.5 million for the period when the order was effective. GT&T initially
instituted a surcharge effective May 1, 1997 to collect the lost revenue, but
temporarily withdrew it when the Guyana Consumers Advisory Bureau (a
non-governmental group in Guyana) instituted a suit to block it. The Consumer
Advisory Bureau's suit is still pending. In September 1997, the Guyana High
Court denied an order which the Consumer Advisory Bureau had sought to
temporarily enjoin GT&T from putting into effect a surcharge to recover the
approximately $9.5 million over a period of 18 months. GT&T put such surcharge
into effect on October 1, 1997 pending an ultimate trial on the merits, and
the Company recognized the approximately $9.5 million of lost revenues in the
third quarter of 1997. On March 27, 1998, the PUC ordered GT&T to cease
collecting this surcharge. GT&T applied to the Guyana High Court and on July
29, 1998, obtained a stay of the PUC's order pending determination of the
Consumers Advisory Bureau's suit. This order is now on appeal by the Consumers
Advisory Bureau. To date, the appellate court has declined to grant any
interim stay of the High Court's order.
In January 1997, the PUC ordered GT&T to cease paying management fees to
the Company and to recover from the Company approximately $25 million of such
fees paid by GT&T to the Company since January 1991. GT&T has applied to the
Guyana High Court to set aside the PUC's order and has obtained a stay of the
PUC's order pending determination of that application, which is still pending.
At December 31, 1996, GT&T owed the Company approximately $23 million for
advances made from time to time for the working capital and capital
expenditure needs of GT&T. GT&T's indebtedness to the Company was evidenced by
a series of promissory notes. In March 1997, the PUC voided substantially all
of the promissory notes then outstanding for failure to comply with certain
provisions of the PUC law. The PUC ordered that no further payments be made on
any of the outstanding notes and that GT&T recover from the Company all
amounts theretofore paid. The order also provided that the PUC would be
willing to authorize the payment of any amounts properly proven to the
satisfaction of the PUC to be due and payable from GT&T to the Company. GT&T
has appealed the PUC's order to the Guyana High Court and obtained a stay of
the PUC's order pending determination of that appeal. As of September 30,
1998, approximately $4 million of the advances made to GT&T were still
outstanding to the Company.
In April 1997, the PUC applied to the Guyana High Court for orders
prohibiting GT&T from paying any monies to the Company on account of
intercompany debt, advisory fees or otherwise pending the determination of
GT&T's applications concerning the January 1997 and March 1997 orders
mentioned above. The PUC's application is still pending.
8
In October 1997, the PUC ordered GT&T to increase the number of telephone
lines in service to a total of 69,278 lines by the end of 1998, 89,054 lines
by the end of 1999 and 102,126 by the end of the year 2000, to allocate and
connect an additional 9,331 telephone lines before the end of 1998 and to
provide to subscribers who request them facilities for call diversion, call
waiting, reminder call and three-way calling by the end of the year 1998. In
issuing this order, the PUC did not hear evidence or make any findings on the
cost of providing these lines and services, the adjustment in telephone rates
which may be necessary to give GT&T a fair return on its investment or the
ways and means of financing the requirements of the PUC's order. GT&T has
filed a motion against the PUC's order in the Guyana High Court and has
appealed the order on different grounds to the Guyana Court of Appeal. No stay
currently exists against this order. GT&T intends to take such steps as seem
appropriate after the level of the demand for telephone service can be
assessed in light of GT&T's current temporary rates.
In July 1998, the PUC gave notice that it would hold a public hearing on
August 25, 1998 in respect of the following matters: (i) "the validity of the
grant of monopoly rights to any owner or provider of services in the public
utility sector, having regard to the laws in force in Guyana at the relevant
time;" and (ii) "whether the Commission has power to request the Government to
issue a license to a new provider of services in the public utility sector,
where the existing provider in that sector fails or refuses to meet reasonable
demands for service in that public utility sector." While the PUC's notice did
not name GT&T as the service provider in question, the Company believes that
GT&T is the service provider which will be the subject of the hearing. This
intended hearing has been stayed by an order issued by the Guyana High Court
on an application by GT&T pending a hearing on the merits of GT&T's
application.
On October 30, 1998, the U.S. Federal Trade Commission (FTC) issued for
comments a proposed rule which would expand the definition of "pay-per-call"
services to include audiotext services such as those which GT&T terminates in
Guyana. The FTC previously received comments and conducted a workshop in 1997
in an earlier phase of this proceeding. If adopted in its present form the
FTC's proposed rule would require that a caller must receive a short preamble
at the beginning of the call advising the caller of the cost of the call and
permitting the caller to terminate the call without charge if terminated
immediately. Although GT&T has not completed its study of the ways and means
of possibly complying with this requirement, it may be technically impossible
for recipients of international audiotext traffic, such as GT&T, to separate
audiotext traffic from other incoming international traffic and permit a free
preamble for audiotext calls. The FTC's proposed rule would prohibit a local
telephone company from disconnecting a subscriber's telephone service for
failure to pay charges for an international audiotext call. This requirement
currently applies to area code 900 domestic audiotext but not to international
audiotext, and provides a collection advantage for international audiotext
over domestic audiotext. The proposed rule would also include several
requirements which, if adopted, could make it more difficult to bill and
collect for international audiotext calls. If the proposed regulations are
adopted, the provisions described above may have a significant adverse impact
on international audiotext traffic from the United States to Guyana and other
non-U.S. termination points.
9
D. CONTINGENCIES AND COMMITMENTS
The Company is subject to lawsuits and claims that arise in the normal
course of business. The Company believes, except for the items discussed below
for which the Company is currently unable to predict the outcome, the
disposition of claims currently pending will not have a material adverse
effect on the Company's financial position or results of operations.
Upon the acquisition of GT&T in January 1991, ATN entered into an
agreement with the government of Guyana to expand significantly GT&T's
existing facilities and telecommunications operations and to improve service
within a three-year period pursuant to an expansion and service improvement
plan (the Plan). The government agreed to permit rate increases in the event
of currency devaluation within the year period, but GT&T was unable to get
timely increases when the Guyana currency suffered a sharp decline in March
1991. The Plan was modified in certain respects and the date for completion of
the Plan was extended to February 1995. In 1997, the government referred to
the PUC the failure of GT&T to complete the Plan by February 1995. The PUC is
currently holding hearings on this matter. If the PUC were to find that GT&T
was not excused from fulfilling the terms of the Plan by February 1995, GT&T
could be subject to monetary penalties, cancellation of the License, or other
action by the PUC or the government which could have a material adverse affect
on the Company's business and prospects. The Plan has now been substantially
completed.
In May 1997, GT&T received a letter from the Commissioner of Inland
Revenue indicating that GT&T's tax returns for 1992 through 1996 had been
selected for an audit under the direct supervision of the Trade Minister with
particular focus on the withholding tax on payments to international audiotext
providers. In March and April 1997, the Guyanese Trade Minister publicly
announced that he had appointed a task force to probe whether GT&T should pay
withholding taxes on fees paid by GT&T to international audiotext providers.
The Minister announced that if GT&T were found guilty of tax evasion it could
owe as much as $40 million in back taxes. In July 1997, GT&T applied to the
Guyana High Court for an order prohibiting this audit on the grounds that the
decision of the Minister of Trade to set up this task force and to control and
direct its investigation was beyond his authority, violated the provisions of
the Guyanese Income Tax Act, interfered with the independence of the
Commissioner of Inland Revenue and was done in bad faith. The court issued an
order effectively staying the audit pending a determination by the court of
the merits of GT&T's application.
In June 1997, GT&T received an assessment of approximately $3.9 million
from the Commissioner of Inland Revenue for taxes for the current year based
on the disallowance as a deduction for income tax purposes of five-sixths of
the advisory fees payable by GT&T to the Company and for the timing of the
taxation on certain surcharges to be billed by GT&T. The deductibility of
these advisory fees and the deferral of these surcharges until they are
actually billed had been upheld in a decision of the High Court in August 1995
pertaining to an earlier year. In July 1997, GT&T applied to the High Court
for an order prohibiting the Commissioner of Inland Revenue from further
proceeding with this assessment on the grounds that the assessment was
arbitrary and unreasonable and capriciously contrary to the August 1995
decision of the Guyana High Court, and GT&T obtained an order of the High
Court effectively prohibiting any action on the assessment pending the
determination by the court of the merits of GT&T's application.
10
In November 1997, GT&T received assessments of approximately $14 million
from the Commissioner of Inland Revenue for taxes for the years 1991 through
1996. It is GT&T's understanding that these assessments stem from the same
audit commenced in May 1997 which the Guyana High Court stayed in its July
1997 order referred to above. Apparently because the audit was cut short as a
result of the Court's July 1997 order, GT&T did not receive notice of and an
opportunity to respond to the proposed assessments as is the customary
practice in Guyana, and substantially all of the issues raised in the
assessments appear to be based on mistaken facts. GT&T has applied to the
Guyana High Court for an order prohibiting the Commissioner of Inland Revenue
from enforcing the assessments on the grounds that the origin of the audit
with the Minister of Trade and the failure to give GT&T notice of and
opportunity to respond to the proposed assessments violated Guyana law. The
Guyana High Court has issued an order effectively prohibiting any action on
the assessments pending the determination by the Court of the merits of GT&T's
application.
E. SUBSEQUENT EVENTS
On October 30, 1998, the Board of Directors of the Company adopted a
stock option plan for the Company, reserved 250,000 shares of common stock of
the Company for options granted under the plan and granted options covering
130,000 shares in aggregate to five executives of the Company. The adoption of
the plan and the grant of the options are subject to approval by the
stockholders of the Company on or before October 30, 1999.
11
Atlantic Tele-Network, Inc. and Subsidiaries
Management Discussion and Analysis of Financial
Conditions and Results of Operations
Forward Looking Statements and Analysts' Reports
This report contains forward looking statements within the meaning of the
federal securities laws, including statements concerning future rates,
revenues, costs, capital expenditures, and financing needs and availability
and statements of management's expectations and beliefs. Actual results could
differ materially from these statements as a result of many factors, including
future economic and political conditions in Guyana, the matters discussed in
the Regulatory Considerations section of Management's Discussion and Analysis
of Financial Condition and Results of Operations in this Report and matters
discussed in the Company's Form 10K Annual Report for the fiscal year ended
December 31, 1997.
Investors should also be aware that while the Company does, from time to
time, communicate with securities analysts, it is against the Company's policy
to disclose to them any material non-public information or other confidential
information. Accordingly, shareholders should not assume that the Company
agrees with any statement or report issued by an analyst irrespective of the
content of the statement or report. Furthermore, the Company has a policy
against issuing or confirming financial forecasts or projections issued by
others. Thus, to the extent that reports issued by securities analysts contain
any projections, forecasts or opinions, such reports are not the
responsibility of the Company.
Introduction
The Company's revenues and income from operations are derived principally
from the operations of its telephone subsidiary, GT&T. GT&T derives
substantially all of its revenues from international telephone services.
In June 1998, the Company acquired a 75% interest in Digicom S.A., a
Haitian corporation principally engaged in dispatch radio, mobile
telecommunications and paging for $1.7 million in cash and 15,873 shares of
the Company's common stock. In July 1998, the Company acquired a 30% interest,
with certain options to increase that interest to 40%, in Bermuda Digital
Communications, Ltd., a Bermuda corporation which, when operational, will be
the sole cellular and PCS competitor in Bermuda to the Bermuda Telephone
Company for $1.0 million in cash. The Company also provided a loan to Bermuda
Digital Communications, Ltd. of $3.0 million at Citibank prime plus 3%, which
was 11.5% at September 30, 1998. The Company has signed advisory fee contracts
with both Digicom S.A and Bermuda Digital Communications Ltd. compensating it
at 6% of gross revenues for management services provided, effective from the
respective acquisition dates. The assets, liabilities, and operations of
Digicom and Bermuda Digital Communications, Ltd., individually and in the
aggregate, are not currently material to the assets, liabilities, and
operations of the Company on a consolidated basis.
The principal components of operating expenses for the Company are
international long-distance expenses, telephone operating expenses, and
general and administrative expenses. International long-distance expenses
consist principally of charges from international carriers for outbound
international calls from Guyana and payments to audiotext providers from whom
GT&T derives international audiotext traffic. Telephone operating expenses
consist of plant specific operations, plant non-specific operations (which
includes depreciation and amortization), customer operations, corporate
operations expenses of GT&T, and taxes other than income taxes. General and
administrative expenses consist principally of parent company overheads.
For accounting purposes, the split-off transaction of the Company into
two separate publicly held companies (the Company and the Emerging
Communications, Inc.) has been treated as a non pro-rata split-off of the
Company. In accordance with Accounting Principles Board Opinion No. 29
entitled "Accounting for Nonmonetary Transactions" and Emerging Issues Task
Force 96-4 entitled "Accounting for Reorganizations Involving a Non-Pro Rata
Split-off of Certain Nonmonetary Assets to Owners", the balance sheet of the
Company at December 31, 1997 has been adjusted to values determined by the
market capitalization of the Company immediately after the consummation of the
transaction. This adjustment includes an approximately $60 million reduction
in the Company's consolidated net fixed assets, and an approximately $45
million reduction in the Company's consolidated stockholder's equity. The
adjustment reduced the carrying value on the Company's consolidated financial
statements of its fixed assets significantly below their historical cost and
replacement value. Therefore, depreciation expense after December 31, 1997 is
not a reliable indicator of the Company's cost of replenishing its assets.
12
The financial statements for the three and nine months ended September
30, 1997 included in this report are the separate financial statements
relating to Atlantic Tele-Network, Inc.'s business and operations in Guyana
including its majority owned subsidiary, GT&T, and ATN's activities as the
parent company of all of its subsidiaries during the first nine months of
1997. These financial statements do not reflect the valuation adjustment
arising from the split-off transaction. Moreover, the statements of operations
include interest income from indebtedness of subsidiaries which were
transferred with such indebtedness to Emerging Communications, Inc. in the
split-off transaction.
As a result of the decline in 1997 in GT&T's revenues and profits from
audiotext traffic, GT&T filed on December 31, 1997 an application with the PUC
seeking rates designed to generate approximately $26 million in additional
revenues in 1998 for local and outbound international long-distance service.
In January 1998, GT&T was awarded an interim increase effective February 1,
1998 designed by the PUC to generate the equivalent of approximately $18
million in additional annual revenues for GT&T. Subsequently, on March 27,
1998, the PUC modified the interim rate increase effective in part on April 1,
1998 and in part on May 1, 1998. As modified, the interim rates are designed
to produce an annual increase in revenues of approximately $14 million over
the rates in effect in 1997. The interim rates are intended to remain in
effect while the PUC holds hearings and reaches a decision on GT&T's
application for permanent rates, although the PUC may increase or decrease
these interim rates before reaching a decision on GT&T's permanent rates. On
October 27, 1998, to reflect changed conditions since December 31, 1997, GT&T
filed an application for an additional rate increase with the PUC. This
application seeks rates designed to generate an additional $6 million in
annual revenues for GT&T over the rates applied for on December 31, 1997 or
approximately $19 million in annual revenues in excess of the interim rate
increase currently in effect. No assurance can be given as to what permanent
rates the PUC will award GT&T or as to what changes the PUC may make in the
current interim rates.
RESULTS OF OPERATIONS
Three and Nine Months ended September 30, 1997 and 1998
Net income for the third quarter of 1998 was $4.4 million, or $0.91 per
share, on operating revenues of $27.3 million, and net income for the nine
months ended September 30, 1998 was $12.4 million, or $2.53 per share, on
revenues of $73.4 million. During the third quarter of 1998, GT&T recognized
$4.5 million of revenues resulting from the settlement with a foreign
telecommunications carrier of a claim for the interruption of international
direct dial service to Guyana during 1995. In the first quarter of 1998, the
Company recorded approximately $3.8 million in other non-operating income
resulting from the settlement of a claim arising from the cancellation of an
insurance policy. After exclusion of these one-time items, the Company's core
operating revenues and earnings were $22.8 million and $2.4 million, or $0.50
per share for the third quarter of 1998 and $68.9 million and $8.1 million, or
$1.66 per share for the nine months ended September 30, 1998.
13
The Company's revenues and pro forma net income for the third quarter of
1997 were $36.8 million and $5.5 million, or $1.12 per share, and the
Company's revenues and pro forma net income for the nine months ended
September 30, 1997 were $95.7 million and $8.4 million, or $1.70 per share.
The 1997 results exclude the U.S Virgin Islands operations, which were split
off into a separate company on December 30, 1997. Third quarter revenues for
1997 included the recognition of $9.5 million of outbound international long
distance revenues at GT&T for the period from October 1995 to January 1997.
These revenues resulted from the reversal by the Guyana High Court of a
previous rate reduction order issued by the Guyana Public Utilities
Commission. After exclusion of this one-time item, the Company's core
operating revenues and pro forma net income were $27.3 million and $1.2
million, or $0.24 per share for the third quarter of 1997 and $86.2 million
and $4.1 million, or $0.83 per share, for the nine months ended September 30,
1997.
Excluding the one-time items in 1998 and 1997 discussed above, core
revenues for the third quarter of 1998 and the nine months ended September 30,
1998 decreased by $4.5 million or 16.4% and $17.3 million or 20.0%,
respectively. These decreases were due primarily to the expected decline in
audiotext revenues at GT&T. GT&T's volume of audiotext traffic fluctuated
between 8 and 9 million minutes per month in the first three quarters of 1997.
In the fourth quarter of 1997, the volume of audiotext traffic declined to
approximately 6.6 million minutes per month. In the first, second and third
quarters of 1998, audiotext traffic declined further to an average of
approximately 5.3 million, 5.0 million and 4.5 million minutes per month,
respectively. The reduction in traffic volume is estimated to account for
substantially all of the decrease in core audiotext revenues for the three and
nine months ended September 30, 1998. The Company expects that audiotext
traffic volumes will continue to decline, although the Company is unable to
predict future audiotext revenues and traffic volumes with any degree of
certainty.
The decrease in audiotext revenues was partially offset by an increase in
local exchange services, which were $2.4 million and $7.0 million for the
three and nine months ended September 30, 1998 compared to $738,000 and $2.1
million for the corresponding periods in 1997. This represents an increase of
$1.6 million and $4.9 million for the three and nine months ended September
30, 1998, or an increase of 222% and 230%, respectively. This increase in
local exchange services is primarily the result of the temporary rates granted
by the Guyana Public Utilities Commission (PUC) in response to a tariff filed
with the PUC on December 31, 1997. The increase is also partially attributable
to an increase in access lines to 58,800 at September 30, 1998 from
approximately 53,087 at September 30, 1997, an increase of 5,713 lines or 11%.
International long-distance inbound revenues other than audiotext
increased to $7.5 million and $22.3 million for the three and nine months
ended September 30, 1998, as compared to $5.8 million and $18.7 million for
the corresponding periods in 1997. This represents an increase of $1.7 million
and $3.6 million, or 30% and 19% for the three and nine months ended September
30, 1998 over the corresponding periods in 1997. This correlates to an
increase in inbound minutes of traffic from 32.7 million for the nine months
ended September 30, 1997 to 36.7 million for the nine months ended September
30, 1998; an increase of 4.0 million minutes or 12%. Management believes that
this increase in inbound telephone traffic other than audiotext is indirectly
the result of the increase in temporary rates for outbound long-distance
granted by the PUC. Because a substantial portion of GT&T's international
traffic, other than audiotext, consists of personal calls between Guyanese
expatriates and their friends and families in Guyana, management believes that
an increase in rates for outbound calls results not only in a decrease in the
volume of outbound calls, but that decrease in outbound calls in turn
stimulates an increase in the volume of inbound calls.
14
Excluding the one-time accrual of $9.5 million of revenues in 1997
discussed above, International long-distance outbound revenues decreased by
$556,000 and $2.1 million for the three and nine months ended September 30,
1998 to $3.8 million and $10.7 million, respectively. This decrease in core
international long-distance outbound revenues is primarily related to the
increased rates awarded by the PUC, as the volume of outbound international
long-distance traffic declined approximately 32% and 34% for the three and
nine months ended September 30, 1998 as compared to the corresponding period
of the prior year. The rates awarded for local and outbound international
long-distance services are temporary and they may be either increased or
decreased as a result of hearings by the PUC. On October 27, 1998, GT&T filed
for an additional rate increase of $6 million in excess of the application
filed by GT&T in December 1997, which is still pending before the PUC, and $19
million in excess of the temporary rates currently in effect.
Telephone operating expenses for the three and nine months ended
September 30, 1998 were $17.3 million and $51.4 million compared to $24.9
million and $77.7 million for the corresponding periods in 1997. This
represents a decrease of $7.6 million and $26.4 million for the three and nine
month periods of 1998 over the corresponding periods in 1997 or 30% and 34%,
respectively. The decrease was due principally to a decrease in audiotext and
outbound traffic expense at GT&T of $8.1 million and $25.4 million for the
three and nine months ended September 30, 1998, due to decreased traffic
volumes. Telephone operating expenses were approximately 76% and 75% of core
telephone operating revenues, adjusted for the one-time item of $4.5 million,
for the three and nine months ended September 30, 1998. For the three and nine
months ended September 30, 1997, telephone operating expenses were
approximately 91% and 90% of telephone operating revenues, adjusted for the
one-time item of $9.5 million previously discussed. The decreases in operating
expenses as a percentage of core operating revenues from 1997 to 1998 are due
primarily to the decline in audiotext revenues and associated international
long-distance expenses, the increases in local revenues as a result of the
temporary rate increase awarded by the PUC, and the reduction in depreciation
expense as a result of the fair value adjustment from the split up
transaction.
Other operations revenues and expenses represent the operations of
Digicom S.A. and are not material. The Company acquired a 75% interest in
Digicom on June 2, 1998.
Income from operations before interest expense, income taxes and minority
interest for the three and nine months ended September 30, 1998 was $9.9
million and $22.0 million compared to $11.9 and $18.0 for the corresponding
periods of 1997, respectively. This represents a decrease of $2.0 million or
17% for the three months ended September 30, 1998 and an increase of $4.0
million or 22% for the nine months ended September 30, 1998 over the
corresponding periods of the prior year. These changes are principally a
result of the factors affecting revenues and operating expenses discussed
above.
As has been noted above, in the first three months of 1998, the Company
recorded approximately $3.8 million in other non-operating income resulting
from the settlement of a claim arising from the cancellation of an insurance
policy. The settlement was intended to compensate the Company for the
increased cost of replacement insurance coverage over the remaining term of
the cancelled insurance policy, which was approximately 10 years. The
increased cost of the Company's replacement insurance coverage will be
accounted for as an expense over the remaining term and should not be material
to the Company's results of operation in any period.
The Company's effective tax rate for the three and nine months ended
September 30, 1998 were 45.6% and 43.7% as compared to 44.4% and 44.4% for the
corresponding periods of the prior year.
The minority interest in earnings consists primarily of the Guyana
government's 20% interest in GT&T.
15
Regulatory Considerations
As discussed above under "Introduction," GT&T has applied to the PUC for
a significant increase in rates for local and outbound international
long-distance service and has received interim rates which substantially
increase the rates over those in effect during 1997 and earlier years.
Upon the acquisition of GT&T in January 1991, GT&T entered into an
agreement with the government of Guyana to expand significantly GT&T's
existing facilities and telecommunications operations and to improve service
within a three-year period pursuant to an expansion and service improvement
plan (the "Plan"). The Plan was modified in certain respects and the date for
completion of the Plan was extended to February 1995. The government has
referred to the PUC the failure of GT&T to complete the Plan by February 1995.
The PUC is currently holding hearings on this matter. It is GT&T's position
that its failure to receive timely rate increases, to which GT&T was entitled,
to compensate for the devaluation in Guyana currency which occurred in 1991
provides legal justification for GT&T's delay in completing the Expansion
Plan. If the PUC were to find that GT&T was not excused from fulfilling the
terms of the Plan by February 1995, GT&T could be subject to monetary
penalties, cancellation of the License, or other action by the PUC or the
government which could have a material adverse affect on the Company's
business and prospects. The Plan has now been substantially completed.
In October 1995, the PUC issued an order that rejected a request of GT&T
for substantial increases in all telephone rates and temporarily reduced rates
for outbound long-distance calls to certain countries. In January 1997, on an
appeal by GT&T, the Guyana High Court voided the PUC's order in regard to
rates and the rates were returned to the rates in existence in October 1995.
The lost revenue was approximately $9.5 million for the period when the order
was effective. GT&T initially instituted such a surcharge effective May 1,
1997, but temporarily withdrew it when the Guyana Consumers Advisory Bureau (a
non-governmental group in Guyana) instituted a suit to block it. The Consumer
Advisory Bureau's suit is still pending. In September 1997, the Guyana High
Court denied an order which the Consumer Advisory Bureau had sought to
temporarily enjoin GT&T from putting into effect a surcharge to recover the
approximately $9.5 million over a period of 18 months. GT&T put such surcharge
into effect on October 1, 1997 pending an ultimate trial on the merits, and
the Company recognized the approximately $9.5 million of lost revenues in the
third quarter of 1997. On March 27 1998, the PUC ordered GT&T to cease
collecting this surcharge. GT&T applied to the Guyana High Court and, on July
29, 1998, obtained a stay of the PUC's order pending determination. This
intended hearing has been stayed by an order issued by the Guyana high Court
on an application by GT&T pending determination of the Consumers Advisory
Bureau's suit. This order is now on appeal by the Consumers Advisory Bureau.
To date, the appellate court has declined to grant any interim stay of the
High Court's order.
In January 1997, the PUC ordered GT&T to cease paying management fees to
the Company and to recover from the Company approximately $25 million of such
fees paid by GT&T to the Company since January 1991. GT&T has applied to the
Guyana High Court to set aside the PUC's order and has obtained a stay of the
PUC's order pending determination of that application, which is still pending.
16
At December 31, 1996, GT&T owed the Company approximately $23 million for
advances made from time to time for the working capital and capital
expenditure needs of GT&T. GT&T's indebtedness to the Company was evidenced by
a series of promissory notes. In March 1997, the PUC voided substantially all
of the promissory notes then outstanding for failure to comply with certain
provisions of the PUC law. The PUC ordered that no further payments be made on
any of the outstanding notes and that GT&T recover from the Company all
amounts theretofore paid. The order also provided that the PUC would be
willing to authorize the payment of any amounts properly proven to the
satisfaction of the PUC to be due and payable from GT&T to the Company. GT&T
has appealed the PUC's order to the Guyana High Court and obtained a stay of
the PUC's order pending determination of that appeal. As of September 30,
1998, approximately $4 million of the advances made to GT&T were still
outstanding to the Company.
In April 1997, the PUC applied to the Guyana High Court for orders
prohibiting GT&T from paying any monies to the Company on account of
intercompany debt, advisory fees or otherwise pending the determination of
GT&T's applications concerning the January 1997 and March 1997 orders
mentioned above. The PUC's application is still pending.
In October 1997, the PUC ordered GT&T to increase the number of telephone
lines in service to a total of 69,278 lines by the end of 1998, 89,054 lines
by the end of 1999 and 102,126 by the end of the year 2000, to allocate and
connect an additional 9,331 telephone lines before the end of the 1998 and to
provide to subscribers who request them facilities for call diversion, call
waiting, reminder call and three-way calling by the end of the year 1998. In
issuing this order, the PUC did not hear evidence or make any findings on the
cost of providing these lines and services, the adjustment in telephone rates
which may be necessary to give GT&T a fair return on its investment or the
ways and means of financing the requirements of the PUC's order. GT&T has
filed a motion against the PUC's order in the Guyana High Court and has
appealed the order on different grounds to the Guyana Court of Appeal. No stay
currently exists against this order. GT&T intends to take such steps to seek a
stay or modification of this order as seem appropriate after the level of
demand for telephone service can be assessed in light of GT&T's current
temporary rates.
In July 1998, the PUC gave notice that it would hold a public hearing on
August 25, 1998 in respect of the following matters: (i) "the validity of the
grant of monopoly rights to any owner or provider of services in the public
utility sector, having regard to the laws in force in Guyana at the relevant
time;" and (ii) "whether the Commission has power to request the Government to
issue a license to a new provider of services in the public utility sector,
where the existing provider in that sector fails or refuses to meet reasonable
demands for service in that public utility sector." While the PUC's notice did
not name GT&T as the service provider in question, the Company believes that
GT&T is the service provider, which will be the subject of the hearing. This
intended hearing has been stayed by an order issued by the Guyana high Court
on an application by GT&T pending a hearing on the merits of GT&T's
application.
In May 1997, GT&T received a letter from the Guyana Commissioner of
Inland Revenue indicating that GT&T's tax returns for 1992 through 1996 had
been selected for an audit under the direct supervision of the Trade Minister
with particular focus on the withholding tax on payments to international
audiotext providers. In March and April 1997, the Guyanese Trade Minister
publicly announced that he had appointed a task force to probe whether GT&T
should pay withholding taxes on fees paid by GT&T to international audiotext
providers. The Minister announced that if GT&T were found guilty of tax
evasion it could owe as much as $40 million in back taxes. In July 1997, GT&T
applied to the Guyana High Court for an order prohibiting this audit on the
grounds that the decision of the Minister of Trade to set up this task force
and to control and direct its investigation was beyond his authority, violated
the provisions of the Guyanese Income Tax Act, interfered with the
independence of the Commissioner of Inland Revenue and was done in bad faith.
The court issued an order effectively staying the audit pending a
determination by the court of the merits of GT&T's application.
17
In June 1997, GT&T received an assessment of approximately $3.9 million
from the Commissioner of Inland Revenue for taxes for 1996 based on the
disallowance as a deduction for income tax purposes of five-sixths of the
advisory fees payable by GT&T to the Company and for the timing of the
taxation on certain surcharges to be billed by GT&T. The deductibility of
these advisory fees and the deferral of these surcharges until they are
actually billed had been upheld in a decision of the High Court in August 1995
pertaining to an earlier year. In July 1997, GT&T applied to the High Court
for an order prohibiting the Commissioner of Inland Revenue from further
proceeding with this assessment on the grounds that the assessment was
arbitrary and unreasonable and capriciously contrary to the August 1995
decision of the Guyana High Court, and GT&T obtained an order of the High
Court effectively prohibiting any action on the assessment pending the
determination by the court of the merits of GT&T's application.
In November 1997, GT&T received assessments of approximately $14 million
from the Commissioner of Inland Revenue for taxes for the years 1991 through
1996. It is GT&T's understanding that these assessments stem from the same
audit commenced in May 1997 which the Guyana High Court stayed in its July
1997 order referred to above. Apparently because the audit was cut short as a
result of the Court's July 1997 order, GT&T did not receive notice of and an
opportunity to respond to the proposed assessments as is the customary
practice in Guyana, and substantially all of the issues raised in the
assessments appear to be based on mistaken facts. GT&T has applied to the
Guyana High Court for an order prohibiting the Commissioner of Inland Revenue
from enforcing the assessments on the grounds that the origin of the audit
with the Minister of Trade and the failure to give GT&T notice of and
opportunity to respond to the proposed assessments violated Guyana law. The
Guyana High Court has issued an order effectively prohibiting any action on
the assessments pending the determination by the Court of the merits of GT&T's
application.
On October 30, 1998, the U.S. Federal Trade Commission (FTC) issued for
comments a proposed rule which would expand the definition of "pay-per-call"
services to include audiotext services such as those which GT&T terminates in
Guyana. The FTC previously received comments and conducted a workshop in 1997
in an earlier phase of this proceeding. If adopted in its present form the
FTC's proposed rule would require that a caller must receive a short preamble
at the beginning of the call advising the caller of the cost of the call and
permitting the caller to terminate the call without charge if terminated
immediately. Although GT&T has not completed its study of the ways and means
of possibly complying with this requirement, it may be technically impossible
for recipients of international audiotext traffic, such as GT&T, to separate
audiotext traffic from other incoming international traffic and permit a free
preamble for audiotext calls. The FTC's proposed rule would prohibit a local
telephone company from disconnecting a subscriber's telephone service for
failure to pay charges for an international audiotext call. This requirement
currently applies to area code 900 domestic audiotext but not to international
audiotext, and provides a collection advantage for international audiotext
over domestic audiotext. The proposed rule would also include several
requirements which, if adopted, could make it more difficult to bill and
collect for international audiotext calls. If the proposed regulations are
adopted, the provisions described above may have a significant adverse impact
on international audiotext traffic from the United States to Guyana and other
non-U.S. termination points.
There can be no assurance as to the ultimate outcome of any of the above
described matters.
18
Liquidity and Capital Resources
The Company believes its existing liquidity and capital resources will be
adequate to meet current operating and capital needs. Without external
financing, the Company expended a total of $5.7 million in cash to acquire a
75% interest in Digicom S.A. and a minority interest in Bermuda Digital
Communications, Ltd. in June and July 1998. For the near-term, the Company's
primary sources of funds will be advisory fees, repayment of loans, and
interest from GT&T. The PUC orders in January, March, and October 1997,
discussed above under "Regulatory Considerations," could have a material
adverse impact on the Company's liquidity.
GT&T is not subject to any contractual restrictions on the payment of
dividends. However, GT&T's own capital needs and debt service obligations have
precluded GT&T from paying any significant funds to the Company other than the
advisory fees and principal and interest on intercompany debt mentioned above.
If and when the Company settles outstanding issues with the Guyana
government and the PUC with regard to GT&T's Expansion Plan and its rates for
service, GT&T may require additional external financing to enable GT&T to
further expand its telecommunications facilities. The Company has not
estimated the cost to comply with the October 1997 PUC order to increase the
number of telephone lines in service, but believes such a project would
require significant capital expenditures that would require external
financing. There can be no assurance that the Company will be able to obtain
any such financing.
The continued expansion of GT&T's network is dependent upon the ability
of GT&T to purchase equipment with U.S. dollars. A portion of GT&T's taxes in
Guyana may be payable in U.S. dollars or other hard currencies. As a result of
the rate increases recently awarded to and currently sought by GT&T and the
efforts of the U.S. FCC, AT&T and carriers in other countries to reduce
international accounting rates, it is likely that an increasing portion of the
Company's revenues will be earned in Guyana currency. The Company believes
that the majority of GT&T's revenues will continue to be denominated in U.S.
dollars or other hard currencies. While there are no legal restrictions on the
conversion of Guyana currency into U.S dollars or other hard currencies, or in
the expatriation of Guyana currency or foreign currency from Guyana, there is
little liquidity in the foreign currency markets in Guyana. GT&T has had some
difficulty in converting significant amounts of Guyana currency into U.S.
dollars in recent months. While the Company believes that it has, and will
continue to have, adequate cash flows denominated in hard currency to meet its
current operating, debt service and capital requirements, there can be no
assurance that GT&T will be able to convert its Guyana currency earnings into
hard currency to meet such obligations. At September 30, 1998, approximately
$7.0 million of the Company's total cash balances consisted of balances
denominated in the Guyana dollar.
The Company is currently exploring several opportunities to acquire
communications properties or licenses in the Caribbean and elsewhere. The
Company believes it has adequate capital resources to acquire these properties
and licenses without any external financing. However, there can be no
assurance as to whether, when or on what terms the Company will be able to
acquire any of the businesses or licenses it is currently seeking.
Impact of Devaluation and Inflation
Although the majority of GT&T's revenues and expenditures are transacted
in U.S. dollars or other hard currencies, the results of operations
nevertheless may be affected by changes in the value of the Guyana dollar.
From February 1991 until early 1994, the Guyana dollar remained relatively
stable at the rate of approximately 125 to the U.S. dollar. In 1994, the
Guyana dollar declined in value to approximately 142 to the U.S. dollar, and
it remained relatively stable at approximately that rate through 1997. In
1998, the Guyana dollar has declined in value to approximately 160 to the U.S.
dollar.
The effect of devaluation and inflation on the Company's financial
results has not been significant in the periods presented.
19
Atlantic Tele-Network, Inc. and Subsidiaries
Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
On October 19, 1998 the Company filed a report Form 8K reporting under
item 4 of the Form that Deloitte & Touche, LLP had declined to be considered
for selection as the Company's auditors for the current year and that the
Company expected its Board of Directors to make such selection soon.
20
Atlantic Tele-Network, Inc. and Subsidiaries
Signatures
Pursuant to the Securities Act of 1934, the registrant has caused this
report to be signed on its behalf by the undersigned thereunto duly
authorized.
Atlantic Tele-Network, Inc.
Date: November 12, 1998 /s/ Michael E. Holmstrom
- ----------------------- ------------------------
Michael E. Holmstrom
Chief Financial Officer and Vice-President
signing both in his capacity as Vice-
President on behalf of the Registrant and as
Chief Financial Officer of the Registrant
5
9-MOS
DEC-31-1998
SEP-30-1998
28,897
0
31,952
0
3,855
66,805
48,651
3,513
124,763
23,846
12,231
0
0
49
66,541
124,763
74,102
74,102
52,132
52,132
0
0
1,694
25,118
10,977
12,413
0
0
0
12,413
2.53
2.53
