______________________________________________________________________
______________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
[X] OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1996
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)
Chase Financial Center
P.O. Box 1730
St. Croix, U.S. Virgin Islands 00821
(809) 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 June 30, 1996, the registrant had outstanding 12,272,500 shares
of its common stock ($.01 par value).
______________________________________________________________________
<PAGE>
<TABLE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Columnar Amounts in Thousands)
<CAPTION>
December 31, June 30,
1995 1996
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $18,822 $ 9,750
Accounts receivable, net 63,353 62,851
Materials and supplies 8,656 10,141
Prepayments and other current assets 5,781 6,242
Total current assets 96,612 88,984
Fixed assets:
Property, plant and equipment 286,856 312,155
Less accumulated depreciation (101,729) (108,747)
Franchise rights and cost in excess of
underlying book value, less accumulated
amortization of $9,769,000 41,533 40,832
and $10,470,000
Net fixed assets 226,660 244,240
Property costs recoverable from future rev. 20,000 23,540
Uncollected authorized rate increases 4,339 3,488
Other assets 16,263 16,389
363,874 $376,641
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 6,969 $15,777
Accounts payable 19,568 23,305
Accrued taxes 6,177 5,421
Advance payments and deposits 2,719 2,673
Other current liabilities 8,815 11,448
Current portion of long-term debt 17,872 13,539
Total current liabilities 62,120 72,163
Deferred income taxes and tax credits 28,188 27,642
Long-term debt, excluding current portion 120,297 114,597
Pension and other long-term liabilities 9,457 8,964
Minority interest 12,856 14,128
Contingencies and commitments (Note C)
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;
12,272,500 shares issued and outstanding 123 123
Paid-in capital 81,852 81,852
Retained earnings 48,981 57,172
Total stockholders' equity 130,956 139,147
363,874 376,641
</TABLE>
See notes to consolidated condensed financial statements.
2
<PAGE>
<TABLE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Columnar Amounts in Thousands, Except per Share Data)
<CAPTION>
(Unaudited) (Unaudited)
3 Months Ended 6 Months Ended
1995 1996 1995 1996
============== ================
<S> <C> <C> <C> <C>
Telephone Operations:
Revenues:
Local exchange service 6,284 6,278 12,416 12,589
Access charges 3,517 3,712 7,049 7,076
International long-distance revenues 31,059 38,232 54,321 73,473
Universal Service Fund 3,087 2,802 6,174 5,604
Billing and other revenues 1,117 1,275 2,218 2,304
Directory advertising 712 644 1,424 1,293
Total revenues 45,776 52,943 83,602 102,339
Expenses:
Plant specific operations 3,157 4,152 6,356 7,869
Plant nonspecific operations 5,286 5,212 10,459 10,135
Customer operations 1,433 1,630 2,883 3,224
Corporate operations 3,315 3,206 6,539 6,127
International long-distance exp. 17,596 23,989 29,811 46,294
Taxes other than income 797 712 1,567 1,628
Total expenses 31,584 38,901 57,615 75,277
Income from telephone operations 14,192 14,042 25,987 27,062
Other Operations:
Revenues:
Cellular services 1,119 1,581 2,323 3,219
Product sales and rentals 1,207 1,358 2,356 2,644
Total revenues 2,326 2,939 4,679 5,863
Expenses of other operations 1,878 2,103 3,635 4,177
Income from other operations 448 836 1,044 1,686
Non-operating Revenues and Expenses:
Interest expense (3,146) (2,862) (6,359) (5,730)
Interest income 248 85 454 227
Other revenues and expenses (3,544) (2,464) (5,900) (6,906)
Non-operating revenues and exp., net (6,442) (5,241) (11,805) (12,409)
Income before income taxes and minority 8,198 9,637 15,226 16,339
interest
Income taxes 3,485 3,952 6,370 6,876
Income before minority interest 4,713 5,685 8,856 9,463
Minority interest (637) (680) (1,094) (1,272)
Net income $ 4,076 $ 5,005 $ 7,762 $ 8,191
Net income per share $ 0.33 $ 0.41 $ 0.63 $ 0.67
Weighted average shares outstanding 12,273 12,273 12,273 12,273
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE>
<TABLE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Columnar Amounts in Thousands)
<CAPTION>
(Unaudited)
6 Months Ended
June 30,
1995 1996
<S> <C> <C>
Net cash flows provided by operating activities $17,321 $20,992
Cash flows from investing activities:
Capital expenditures (5,536) (28,839)
Net cash used in investing activities (5,536) (28,839)
Cash flows from financing activities:
Repayment of long-term debt (6,198) (10,033)
Issuance of long-term debt 4,750 -
Net borrowings (repayments) on notes payable (572) 8,808
Net cash flows provided (used) by (2,020) (1,225)
financing activities
Net increase (decrease) in cash 9,765 (9,072)
Cash, Beginning of Period 17,515 18,822
Cash, End of Period $27,280 $9,750
Supplemental cash flow information:
Interest paid $6,455 $5,797
Income taxes paid $4,015 $8,523
Depreciation and Amortization Expense $9,650 $9,154
</TABLE>
See notes to consolidated condensed financial statements.
4
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Columnar Amounts in Thousands)
A. GENERAL
SIGNIFICANT ACCOUNTING POLICIES
The consolidated balance sheet of Atlantic Tele-Network, Inc. and
subsidiaries (the "Company") at December 31, 1995 has been taken
from audited financial statements at that date. All other
consolidated condensed financial statements contained herein have
been prepared by the Company and are unaudited. The consolidated
condensed financial statements should be read in conjunction with
the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
The unaudited interim consolidated 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 six months ended June 30, 1995 and 1996 are not
necessarily indicative of the operating results for the full year
not yet completed.
B. PROPERTY COSTS RECOVERABLE FROM FUTURE REVENUES
On September 15, 1995, Hurricane Marilyn struck the Virgin
Islands causing extensive damage to the outside telephone plant
of Vitelco. None of the damage was covered by insurance.
Vitelco's estimate of the historical cost of the facilities
damaged or destroyed by Hurricane Marilyn is approximately $27
million with associated accumulated depreciation of approximately
$9 million. These costs have been removed from the property
accounts and along with certain excess maintenance costs and
costs of removal which are estimated at $5.5 million as of June
30, 1996 have been classified as property costs recoverable from
future revenues because the Company anticipates that future
revenue in an amount at least equal to the capitalized cost will
result from inclusion of these costs in allowable costs for rate
making purposes. Due to uncertainties in this estimation
process, it is reasonably possible that estimated costs of
damaged or destroyed property as well as excess maintenance costs
and costs of removal will be revised in the near term. The
Company has received approval from the Federal Communications
Commission to include the interstate portion of these costs in
its rate base and amortize them over a five year period.
However, the treatment by the Public Services Commission for the
intrastate telecommunications plant has not yet been determined.
In order to minimize the intrastate rate increases which might be
required to enable Vitelco to recover these costs, on May 6,
1996, Vitelco applied to the Industrial Development Commission of
the Virgin Islands for a 5-year exemption from 90% of Virgin
Islands income taxes and 100% of Virgin Islands gross receipts and
certain other taxes. This application is still pending, and it's
ultimate outcome cannot be determined by management at this time.
5
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Columnar Amounts in Thousands)
C. CONTINGENCIES AND COMMITMENTS
The Company presently has no insurance coverage for its outside
plant for damages caused by wind storms. The Company is exploring
alternatives to enable it to insure this risk in whole or in
part, but believes that such insurance for outside plant is
currently not available at reasonable rates.
On October 11, 1995, the Guyana Public Utilities Commission
("PUC") 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 87 countries.
The order reduces these rates by 10%, and during off-peak hours,
by an additional 50% of the reduced rate. In most cases, the
existing rates are already less than GT&T's payment obligations
to foreign carriers. The rate reduction was implemented by GT&T
effective October 22, 1995. The order also calls for GT&T to
deposit 15% of gross revenues into an escrow account that would
be earmarked for capital expenditures for a new
telecommunications expansion plan in Guyana to be developed by
the PUC. The Company is unable to determine whether the escrow
payments will be a pretax charge to GT&T's income or an increase
in GT&T's rate base. GT&T has filed an appeal from the PUC order
to the High Court in Guyana. On December 1, 1995, the High Court
issued an order which effectively provides a stay on the
requirement of depositing 15% of gross revenues into the escrow
account. This matter is still pending before the courts and its
ultimate outcome cannot be determined by management at this time.
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).
At GT&T's request and with the consent of the government of
Guyana, the Plan was modified in certain respects and the date
for completion of the Plan was extended first to August 28, 1994
and then to February 28, 1995. The government of Guyana has to
date not accepted a request made by the Company and GT&T in
December 1994 to modify certain other aspects of the Plan. The
government has referred to the PUC the failure of GT&T to
complete the Plan by February 28, 1995. However, hearings on
this subject before the PUC are currently stayed pending GT&T's
appeal from the PUC's October 11, 1995 order discussed above.
Failure to timely fulfill the terms of the Plan could result in
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.
6
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
THREE AND SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Columnar Amounts in Thousands)
D. LITIGATION SETTLEMENT
On February 7, 1996, the two principal shareholders and Co-Chief
Executive Officers of the Company entered into a Global
Settlement Agreement and Release pursuant to which they agreed to
settle all then pending litigation between them concerning the
management of ATN and related matters. As part of the
settlement, the Company agreed to indemnify the officers over a
period of time for a portion (approximately $2,800,000 in the
aggregate) of the fees and expenses incurred by them in
connection with the management dispute and related litigation.
The company has accrued $2.8 million for this indemnification
obligation in the first quarter of 1996. In addition, and as
contemplated by the settlement, the Board of Directors of the
Company has determined to explore possible means of enhancing
stockholder value for ATN, including a possible business
combination involving ATN.
7
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Introduction
The Company's revenues and income from continuing operations are
derived principally from the operations of its telephone
subsidiaries, Vitelco and GT&T. Vitelco derives most of its
revenues from local telephone and long-distance access services.
GT&T derives almost all of its revenues from international
telephone services. Other operations in the Company's
Consolidated Statements of Operations include: VitelCellular,
which provides cellular telephone service in the U.S. Virgin
Islands; and Vitelcom, which supplies customer premises equipment
in the U.S. Virgin Islands.
The principal components of operating expenses for the Company's
telephone operations are plant specific operations expenses,
plant non-specific operations expenses, customer operations
expenses, corporate operations expenses, long-distance expenses
and taxes other than income taxes. These categories are
consistent with FCC accounting practices. Plant specific
operations expenses relate to support and maintenance of
telephone plant and equipment and include vehicle expense, land
and building expense, central office switching expense and cable
and wire expense. Plant non-specific operations expenses consist
of depreciation charges for telephone plant and equipment and
expenses related to telephone plant and network administration,
engineering, power, materials and supplies, provisioning and
plant network testing. Customer operations expenses relate to
marketing, providing operator services for call completion and
directory assistance, and establishing and servicing customer
accounts. Corporate operations expenses include Vitelco's and
GT&T's expenses for executive management and administration,
corporate planning, accounting and finance, external relations,
personnel, labor relations, data processing, legal services,
procurement and general insurance. 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. Taxes other than income taxes
include gross receipts taxes, property taxes, and other
miscellaneous taxes.
RESULTS OF OPERATIONS
Three and Six Months ended June 30, 1995 and 1996
Revenues from telephone operations for the three months ended
June 30, 1996 were $52.9 million as compared to $45.8 million for
the corresponding period of the prior year, an increase of $7.2
million (16%). Revenues from telephone operations for the six
months ended June 30, 1996 were $102.3 million as compared to
$83.6 million for the corresponding period of the prior year, an
increase of $18.7 million (22%). The increases were principally
due to a $7.6 and $20.3 million increase in audiotext traffic
revenues at GT&T for the three and six months ended June 30, 1996
respectively. GT&T's audiotext traffic increased sharply in the
first 8 months of 1995 hitting a peak of 11.7 million minutes for
the month of August. Since then audiotext traffic has held
relatively steady at about 10 million minutes per month.
Audiotext is a highly competitive business, and GT&T may
experience significant increases or decreases in the volume and
profit margins of its audiotext traffic during the remainder of
1996.
8
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Vitelco's telephone operations revenues decreased $432,000 and
$1.2 million for the three and six months ended June 30, 1996,
respectively. These reductions in revenues were due principally
as a result of Hurricane Marilyn which put approximately 37,800
of Vitelco's approximately 60,000 access lines out of service on
September 15, 1995. Service was substantially restored by May
1996. At June 30, 1996 Vitelco had 58,824 lines in service.
Consolidated telephone operating expenses increased $7.3 million
(23%) and $17.7 (31%) for the three and six months ended June 30,
1996. This increase was due principally to increases in
audiotext and outbound traffic expenses at GT&T of $6.4 million,
and $16.5 million for the three and six months ended June 30,
1996 respectively due to increased traffic volume. As a result
of a rate decrease ordered by the Guyana PUC on October 11, 1995,
GT&T's outbound international traffic has increased by
approximately 40% during the first six months of 1996 resulting
in an approximately $500,000 per month increase in outbound
traffic expenses. An additional factor contributing to the
increase in consolidated telephone operating expenses was plant
specific expense which increased as a result of increased plant
in service, although certain expenses at Vitelco were reduced in
the first quarter of 1996 as Vitelco's work force was shifted
from maintenance activities to repairing the damage caused by
Hurricane Marilyn.
Income from telephone operations decreased $150,000 for the three
months ended June 30, 1996 but was up $1.1 million (4%) for the
six months ended June 30, 1996. These changes occurred
principally as a result of factors affecting revenues from
telephone operations and consolidated telephone operating
expenses discussed above. GT&T's contribution to income from
telephone operations increased by $353,000 (4%) and $2.0 million
(12%) for the three and six months ended June 30, 1996
respectively, while Vitelco's contribution to income from
telephone operations decreased by $503,000 and $929,000 for the
same periods.
Income before minority interest increased $972,000 and $607,000
for the three and six months ended June 30, 1996 respectively.
The significant factors that contributed to these increases were:
(i) the $150,000 decrease and $1.1 million increase in
income from telephone operations discussed above;
(ii) $388,000 and $642,000 increases in income from
other operations from increase cellular operations;
(iii) $121,000 and $402,000 decreases in net
interest expense due to reduced debt;
(iv ) a $1.1 million decrease for the three months and a $1
million increase for the six months in other non
operating revenues and expenses. This was principally
due to decrease of certain corporate expenses in the second
quarter of 1996 and a non-recurring charge of $2.8 million
in the first three months of 1996 for the companies
obligation to reimburse its two Co-Chief Executive
Officers for certain litigation expenses in connection
with a management dispute settled in February 1996.
The Company's effective tax rate for the three and six months
ended June 30, 1996 was 41.0% and 42.1% as compared to 42.5% and
41.8% for the corresponding periods of the prior year.
9
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
The minority interest in earnings consists primarily of the
Guyana government's 20% interest in GT&T.
Regulatory Considerations
On October 11, 1995 the Guyana PUC issued an order which
temporarily reduced GT&T's rates for outbound international calls
and required GT&T to deposit 15% of its gross revenues into an
escrow account that would be earmarked for capital expenditures
for a new telecommunications expansion plan in Guyana. The
temporary rate changes ordered by the PUC have been put into
effect, although GT&T has obtained a court order staying the
escrow payment obligations. These rate changes have resulted in
an increase of approximately 40% in GT&T's unprofitable outbound
traffic which in turn has resulted in an approximately $200,000
per month decrease in GT&T's revenue from such traffic and an
increase in GT&T's outbound traffic expenses of approximately
$500,000 per month during the first six months of 1996. If the
PUC's escrow payment order had been in effect for the first six
months of 1996 it would have required payments of approximately
$11.3 million. The Company is unable to determine whether the
escrow payments would be a pretax charge to GT&T's income or an
increase in GT&T's rate base.
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"). At GT&T's request and with the consent of the
government of Guyana, the Plan was modified in certain respects
and the date for completion of the Plan was extended first to
August 28, 1994 and then to February 28, 1995. The government of
Guyana has to date not accepted a request made by the Company
and GT&T in December 1994 to modify certain other aspects of the
Plan. The government has referred to the PUC the failure of GT&T
to complete the Expansion Plan by February 28, 1995. However
hearings on this subject before the PUC are currently stayed
pending GT&T's appeal from the PUC's October 11, 1995 order
discussed above. Failure to timely fulfill the terms of the
Expansion Plan could result in 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.
Liquidity and Capital Resources
The Company depends upon funds received from subsidiaries to meet
its capital needs, including servicing existing debt and its
ongoing program of seeking to acquire telecommunications licenses
and businesses. The major source of funds for the Company has
been advisory fees received from GT&T, and interest income from
advances to subsidiaries of the Company.
10
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Other potential sources of funds to the Company are from
repayment of loans to subsidiaries or dividends from GT&T or ATN
- VI. However, the RTFC Loan limits the payment of dividends by
ATN - VI unless ATN - VI meets certain financial ratios (which
were not met at June 30, 1996). Consequently ATN - VI was
restricted from paying dividends at that date. At June 30, 1996,
the Company also holds a note of ATN - VI in the amount of
approximately $24 million which may be repaid by ATN - VI in
whole or in part without regard to the limit on the payment of
dividends by ATN - VI.
ATN - VI's ability to obtain funds to repay its note is dependent
upon dividends from Vitelco, and Vitelco is subject to
restrictions on payment of dividends under its loan agreement
with the Rural Utility Service ("RUS") and its 1989 and 1991
Settlement Agreements with the PSC. Under Vitelco's Settlement
Agreements with the Public Service Commission (PSC), which are
currently more restrictive than the RUS Loans, dividends by
Vitelco are generally limited to 60% of its net income, although
additional amounts are permitted to be paid for the sole purpose
of servicing ATN - VI's debt to RTFC. At June 30, 1996, Vitelco
was restricted from paying any dividends.
The RTFC Loan and RUS Loan agreements also require, among other
things, maintenance of minimum debt service and times interest
earned coverage and restrictions on issuance of additional long-
term debt. As of June 30, 1996, the Company was in compliance
with all covenants contained in its long-term debt agreements.
Vitelco estimates that the total cost of repairing damage to its
telephone plant caused by Hurricane Marilyn will be approximately
$45 million, of which approximately $37 million was expended
through June 30, 1996. Vitelco financed these expenditures from
its cash balances (which were $21.4 million as of September 1,
1995), from cash flows from its operating activities, from $5
million of borrowings under a preexisting line of credit with
RTFC and an additional $5 million of borrowings under a new $15
million line of credit from RTFC which Vitelco obtained after the
hurricane. Vitelco has also applied to the RUS for $35.1 million
of long term financing. Borrowings under Vitelco's preexisting
line of credit are required to be repaid within 12 months of the
date of the borrowing, but may be repaid from the proceeds of
borrowings under the new $15 million line of credit. Borrowings
under Vitelco's $15 million line of credit will mature on March
31, 1997, at which date, if long-term loan funds from RUS have
not yet been made available to Vitelco, Vitelco will have the
option of rolling the outstanding amount borrowed under that line
of credit into a 15-year term loan from RTFC having terms
substantially similar to those contained in Vitelco's existing
long-term loan from RTFC.
GT&T is not subject to any contractual restrictions on payment of
dividends. However, the capital needs of GT&T's Expansion Plan,
the working capital required for GT&T's rapid growth in audiotext
traffic in 1995 and GT&T's own debt service obligations have
precluded GT&T from paying any significant funds to the Company
other than the advisory fees mentioned above. Because the
Company pays fees owing to audiotext traffic providers on a more
rapid schedule than it collects on its audiotext traffic, the
Company had to invest increasing amounts in the working capital
related to its audiotext traffic during the period that this
traffic was growing at a rapid rate. The rate of growth in the
required working capital for this traffic decreased shortly after
August, 1995 when the volume of audio text traffic peaked and
then leveled off. As a result of the reduced need by GT&T's
audio text business for increasing amounts of working capital,
GT&T has been contributing significantly to the Company's
liquidity.
11
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
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. If that portion of the PUC's
October 11, 1995 order which requires GT&T to make escrow
payments equal to 15% of its revenues comes into effect, GT&T
will most likely require external financing to enable it to make
such payments, and there can be no assurance that the Company
will be able to obtain any such financing.
The Company's short term bank credit facility, under which the
Company has $5.5 million of loans outstanding, expired on October
1, 1994. The bank has orally agreed to renew this facility until
October 1, 1996 and to waive the prohibition on borrowing under
the facility during the first thirty days of the renewal period.
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. The Company anticipates that GT&T's
foreign currency earnings will enable GT&T to service its debt
and pay its hard currency tax obligations. There are no Guyana
legal restrictions on the conversion of Guyana's currency into
U.S. dollars or on the expatriation of foreign currency from
Guyana.
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, however, the
Guyana dollar has declined in value to the current rate of
approximately 142 to the U.S. dollar, and it has remained
relatively stable at approximately that rate since 1994.
The effect of inflation on the Company's financial results of
telephone operations in the U.S. Virgin Islands has not been
significant in recent years. The effect of inflation on the cost
of providing telephone service in the U.S. Virgin Islands has
generally been offset (without any increase in local subscribers'
rates) by increased revenues resulting from growth in the number
of subscribers and from regulatory cost recovery practices in
determining access revenues.
12
<PAGE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
PART II-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
Not applicable.
13
<PAGE>
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: August 12, 1996 /s/ Craig A. Knock
Craig A. Knock
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
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
*** (COLUMNAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) ***
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 9,750
<SECURITIES> 0
<RECEIVABLES> 62,851
<ALLOWANCES> 0
<INVENTORY> 10,141
<CURRENT-ASSETS> 88,984
<PP&E> 352,987
<DEPRECIATION> 108,747
<TOTAL-ASSETS> 376,641
<CURRENT-LIABILITIES> 72,163
<BONDS> 114,597
0
0
<COMMON> 123
<OTHER-SE> 139,024
<TOTAL-LIABILITY-AND-EQUITY> 376,641
<SALES> 108,202
<TOTAL-REVENUES> 108,202
<CGS> 79,454
<TOTAL-COSTS> 79,454
<OTHER-EXPENSES> 6,906
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,730
<INCOME-PRETAX> 16,339
<INCOME-TAX> 6,876
<INCOME-CONTINUING> 8,191
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,191
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
</TABLE>
