________________________________________________________________________
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, 2000
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, 2000, the registrant had outstanding 4,986,527 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, Sept 30,
1999 2000
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $31,463 $21,665
Accounts receivable, net 20,512 20,411
Materials and supplies 4,853 5,363
Prepayments and other current assets 4,285 4,759
------------ -------------
Total current assets 61,113 52,198
------------ -------------
Fixed assets:
Property, plant and equipment 66,739 75,957
Less accumulated depreciation (10,288) (16,212)
------------ -------------
Total fixed assets, net 56,451 59,745
------------ -------------
Uncollected surcharges, net of current portion 1,428 1,105
Investment in and advances to
Bermuda Digital Communications, Ltd. 4,710 5,408
Other assets 7,746 14,688
------------ -------------
Total assets $131,448 $133,144
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $7,905 $5,272
Accrued taxes 7,823 7,492
Advance payments and deposits 1,353 1,207
Other current liabilities 4,651 3,653
Current portion of long-term debt 3,410 3,365
------------ -------------
Total current liabilities 25,142 20,989
Deferred income taxes 3,032 4,596
Long-term debt, excluding current portion 7,969 5,464
------------ -------------
Total liabilities 36,143 31,049
------------ -------------
Minority interests 20,371 21,054
------------ -------------
Contingencies and commitments (Notes 7 and 8)
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;
5,151,424 shares issued and 4,756,700 and 4,986,527 outstanding, respectively 49 52
Treasury stock, at cost (1,418) (1,580)
Paid-in capital 54,263 55,676
Retained earnings 22,040 26,893
------------ -------------
Total stockholders' equity 74,934 81,041
------------ -------------
Total liabilities and stockholders' equity $131,448 $133,144
============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
2
<PAGE>
<TABLE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(Columnar Amounts in Thousands, except per share data)
--------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three months ended Sept 30, Nine months ended Sept 30,
1999 2000 1999 2000
------------ ------------ ------------ -------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Telephone operations
Revenues:
Local exchange service revenues $2,294 $3,076 $6,319 $8,392
International long-distance revenues 16,009 15,111 50,272 46,941
Other revenues 450 749 1,204 1,801
------------ ------------ ------------ -------------
Total revenues 18,753 18,936 57,795 57,134
------------ ------------ ------------ -------------
Operating expenses:
International long-distance expenses 7,350 5,114 24,843 17,395
Telephone operating expenses 4,854 5,511 14,874 16,012
General and administrative expenses 1,314 1,144 4,130 3,258
------------ ------------ ------------ -------------
Total operating expenses 13,518 11,769 43,847 36,665
------------ ------------ ------------ -------------
Income from telephone operations 5,235 7,167 13,948 20,469
------------ ------------ ------------ -------------
Other operations:
Revenues of other operations 281 1,098 998 2,765
Expenses of other operations 442 1,360 1,378 3,447
------------ ------------ ------------ -------------
Loss from other operations (161) (262) (380) (682)
------------ ------------ ------------ -------------
Other income (expense):
Interest expense (445) (324) (1,388) (1,070)
Interest income 583 554 1,639 1,700
Other income (expense), net (120) 231 (365) 465
------------ ------------ ------------ -------------
Other income (expense), net: 18 461 (114) 1,095
------------ ------------ ------------ -------------
Income before income taxes and minority interests 5,092 7,366 13,454 20,882
Income taxes 2,649 3,623 7,063 10,231
------------ ------------ ------------ -------------
Income before minority interests 2,443 3,743 6,391 10,651
Minority interests (325) (603) (799) (1,678)
------------ ------------ ------------ -------------
Net income $2,118 $3,140 $5,592 $8,973
============ ============ ============ =============
Net income per share:
Basic and diluted $0.45 $0.63 $1.19 $1.84
============ ============ ============ =============
Weighted average common stock outstanding:
Basic and diluted 4,659 4,982 4,692 4,885
============ ============ ============ =============
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
3
<PAGE>
<TABLE>
ATLANTIC TELE-NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 2000
(Columnar Amounts in Thousands)
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine months ended Sept 30,
1999 2000
----------------------------
(Unaudited)
<S> <C> <C>
Net cash flows provided by operating activities: $15,747 $5,160
------------ ------------
Cash flows from investing activities:
Capital expenditures (8,866) (7,528)
Advances to Bermuda Digital Communications, Ltd. (1,062) (471)
------------ ------------
Net cash flows used in investing activities (9,928) (7,999)
------------ ------------
Cash flows from financing activities:
Repayment of long-term debt (2,580) (2,550)
Purchase of common stock (1,776) (162)
Cash paid in conjunction with Acquisition of Antilles Wireless - (1,500)
Dividends declared on common stock (2,097) (1,747)
Dividend to minority stockholder in GT&T (1,000)
------------ ------------
Net cash flows used in financing activities (6,453) (6,959)
------------ ------------
Net change in cash and cash equivalents (634) (9,798)
Cash and cash equivalents, beginning of period 35,116 31,463
------------ ------------
Cash and cash equivalents, end of period $34,482 $21,665
============ ============
Supplemental cash flow information:
Interest paid $1,052 $783
============ ============
Income taxes paid $7,949 $9,982
============ ============
Supplemental non cash information:
Depreciation and Amortization Expense $4,204 $5,131
============ ============
Issuance of common stock in conjunction with acquisitions - $3
============ ============
Additional paid in capital realized from issuance of Common Stock - $1,413
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
4
<PAGE>
Atlantic Tele-Network, Inc. and Subsidiaries
Notes to Consolidated Condensed
Financial Statements
Three and Nine Months Ended September 30, 1999 and 2000
1. ORGANIZATION AND BUSINESS OPERATIONS
Atlantic Tele-Network, Inc. (the "Company" or "ATN"), a Delaware
corporation, is engaged principally through its 80%-owned subsidiary, Guyana
Telephone & Telegraph Company, Limited ("GT&T"), in providing
telecommunications services, including local telephone service, long-distance
services, and cellular service in the Cooperative Republic of Guyana
("Guyana") and international telecommunications service to and from Guyana.
The Company also owns the entire equity interest in Wireless World, LLC
("Wireless World") which holds MMDS and LMDS licenses for the U.S. Virgin
Islands and is engaged in the U.S. Virgin Islands in the internet service
provider, specialized mobile radio and paging businesses and the wireless
cable television business. The Company also owns an 80% interest in ATN
(Haiti) S.A. ("ATN (Haiti)"), a Haitian corporation (formerly named Digicom
S.A.) principally engaged in dispatch radio, mobile telecommunications, and
paging, and owns or has options to buy an approximately 45% interest in Bermuda
Digital Communications, Ltd. ("BDC"), a Bermuda corporation which operates
under the name "Cellular One" and is the sole cellular and PCS competitor in
Bermuda to the Bermuda Telephone Company. Atlantic Tele-Center, Inc., a wholly
owned subsidiary of ATN, is currently developing a web-enabled outsourcing
call center in Guyana to provide customer support to companies serving the
U.S. and other markets. ATN provides management, technical, financial,
regulatory and marketing services for its subsidiaries and affiliates for a
management fee equal to 6% of revenues.
2. BASIS OF PRESENTATION
The consolidated condensed balance sheet of ATN and subsidiaries at
December 31, 1999 has been taken from audited financial statements at that
date. All of the other accompanying consolidated condensed financial
statements are unaudited. These consolidated condensed financial statements
have been prepared by the management of ATN in accordance with the rules and
regulations of the Securities and Exchange Commission ("SEC"). Accordingly,
certain information and footnote disclosures usually found in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of the management of
the Company, all adjustments (consisting only of normal recurring adjustments)
considered necessary for fair presentation of the consolidated condensed
financial statements have been included, and the accompanying condensed
consolidated financial statements present fairly the financial position and
the results of operations for the interim periods presented. The consolidated
condensed financial statements should be read in conjunction with the
consolidated financial statements and related footnotes included in the
Company's 1999 Annual Report on Form 10-K, as filed with the SEC.
3. USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
5
<PAGE>
4. NET INCOME PER SHARE
In accordance with SFAS No. 128, "Earnings Per Share," basic net income
per share is computed by dividing net income available to common shareholders
by the weighted-average number of common shares outstanding during the period
and does not include any other potentially dilutive securities. Diluted net
income per share gives effect to all potentially dilutive securities. There is
no difference between basic net income per share and diluted net income per
share for any period presented as the Company's only dilutive security, stock
options, was antidilutive to the calculation as of September 30, 1999 and as
of September 30, 2000.
5. NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS No. 133, SFAS
No. 137 and SFAS No. 138, "Accounting for Derivative Instruments and Hedging
Activities," which must be adopted by January 2001. These statements establish
accounting and reporting standards for derivative instruments including
certain derivative instruments embedded in other contracts and for hedging
activities. SFAS No. 133, SFAS No. 137 and SFAS No. 138 are not to be applied
retroactively to financial statements of prior periods. The Company expects no
material impact to its financial position upon adoption of SFAS No. 133, SFAS
No. 137 and SFAS No. 138.
6. ACQUISITIONS
In October 1999, Wireless World acquired the internet service provider
business and certain other assets of VI Access from Ackley Caribbean
Enterprises, Inc. for a purchase price of $875,000 in cash and 100,000 shares
of ATN common stock and in March 2000, Wireless World acquired the specialized
mobile radio and paging business of Ackley Caribbean Enterprises for $625,000
in cash. These acquisitions have been accounted for as purchases in accordance
with APB Opinion No. 16. The purchase price allocation for these acquisitions
is preliminary and further refinements are likely to be made based on the
completion of final valuation studies. The excess of the cost over the
estimated fair value of the net tangible assets acquired amounts to
approximately $1.4 million and has been included in other assets in the
accompanying consolidated condensed balance sheets and is being amortized on a
straight-line basis over ten years.
Effective March 31, 2000, Wireless World acquired the assets and business
of Antilles Wireless Cable T.V. Company ("Antilles Wireless") for a
consideration of 242,424 shares of ATN common stock and $1.5 million in cash.
Antilles Wireless held LMDS and MMDS licenses for the U.S. Virgin Islands and
provided wireless cable T.V. services there. The entire equity interest in
Antilles Wireless was owned by Cornelius B. Prior Jr., the chief executive
officer and majority shareholder of the Company. In accordance with AICPA
Interpretation No. 39 of Accounting Principle Bulletin 16, the assets and
liabilities acquired from Antilles Wireless have been recorded at Antilles
6
<PAGE>
Wireless' cost similar to a pooling of interests transaction, and the cash
portion of the consideration has been treated as analogous to a cash dividend.
Operating results prior to March 31, 2000 are not material and have not been
reflected in these financial statements.
Effective June 20, 2000, Wireless World acquired the "islands.vi"
internet access business of Cobex International Inc., an internet service
provider in the U.S. Virgin Islands. The acquisition added approximately 2500
subscribers to Wireless World's customer base.
7. REGULATORY MATTERS
GT&T is subject to regulation in Guyana under the provisions of its
License and under the Guyana Public Utilities Commission Act of 1999 ("PUC
law") and the Guyana Telecommunications Act of 1990 ("Telecommunications
Law"). GT&T also has certain significant rights and obligations under the
agreement pursuant to which the Company acquired its interest in GT&T in 1991.
Since December 31, 1997, GT&T has had pending before the PUC an
application for a significant increase in rates for local and outbound
international long-distance service so as to enable GT&T to earn a 15% return
on its rate base. Hearings on this application were delayed by reason of a
finding of the Guyana High Court that the chairman of the PUC had shown an
appearance of bias against GT&T. On June 29, 2000, the chairman was replaced
by a new chairman. A hearing on GT&T's rate application has been scheduled for
November 14, 2000. There have been no material developments in any of the
other matters pending before the PUC all of which are disclosed in the
Company's 1999 Annual Report on Form 10-K, as filed with the SEC.
GT&T and the Company are also involved in discussions with officials at
the highest levels in the Guyana government seeking to resolve all outstanding
PUC and Guyana tax issues affecting GT&T. There can be no assurance as to how
or when any or all of these issues will be resolved.
8. CONTINGENCIES AND COMMITMENTS
The Company is subject to a number of lawsuits and claims which are
disclosed in the Company's 1999 Annual Report on Form 10-K, as filed with the
SEC. In October 2000, representatives of GT&T and the Guyana Inland Revenue
Department met to discuss the outstanding tax issues. It was agreed that the
Company would not be liable for withholding taxes on payments made to
international audiotext traffic providers. Accordingly, GT&T discontinued the
proceedings in the Guyana High Court for an order prohibiting an audit on this
issue. (This matter was disclosed in the third paragraph of Note 12 to the
financial statements included in the Company's 1999 Annual Report). As of the
date of this report, the other matters disclosed in Note 12 are still pending.
7
<PAGE>
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, 1999.
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 80% owned telephone subsidiary, Guyana Telephone &
Telegraph Company, Ltd. ("GT&T"). GT&T derives substantially all of its
revenues from local exchange, cellular and international telephone services.
The Company also owns a 80% interest (acquired in June 1998) in ATN (Haiti)
S.A., a Haitian corporation (formerly named Digicom S.A.) principally engaged
in dispatch radio, mobile telecommunications and paging and a 30% interest
(acquired in July 1998) plus warrants which would enable the Company to
increase that interest to 45% in Bermuda Digital Communications, Ltd., a
Bermuda corporation which operates under the name "Cellular One" and is the
sole cellular and PCS competitor to the Bermuda Telephone Company. Wireless
World, LLC, a wholly owned subsidiary of the Company, conducts an internet
access business under domain names of "viaccess" and "islands.vi" and is the
largest internet service provider in the U.S. Virgin Islands. Wireless World
also holds MMDS and LMDS licenses for the U.S. Virgin Islands and provides
specialized mobile radio service, paging and wireless cable television
services there. Wireless World is currently upgrading its MMDS services to
provide digital wireless TV and broadband internet service (and, ultimately,
competitive local exchange telephone service) throughout the U.S. Virgin
Islands. All of Wireless World's businesses were acquired since October 1,
1999. Atlantic Tele-Center, Inc., a wholly owned subsidiary of ATN, is
currently developing a web-enabled outsourcing call center in Guyana to
provide customer support to companies serving the U.S. and other markets.
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 (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 expenses of the parent company.
8
<PAGE>
RESULTS OF OPERATIONS
Three and Nine Months ended September 30, 1999 and 2000
The Company had earnings of $3.1 million ($0.63 per share) and $9.0
million ($1.84 per share) for the three and nine months ended September 30,
2000. This compares to $2.1 million ($0.45 per share) and $5.6 million ($1.19
per share) for the corresponding periods of the prior year.
Telephone operating revenues for the three and nine months ended
September 30, 2000 were $18.9 million and $57.1 million as compared to $18.8
million and $57.8 million in 1999, an increase of $183,000 (1%) for the three
months and a decrease of $661,000 (1%) for the nine months ending September
30, 2000.
Inbound sent paid and outcollect international long-distance revenues,
which have the highest margin of all international long-distance revenues,
increased by $1.4 million and $6.0 million for the three and nine months ended
September 30, 2000 over the corresponding periods of 1999, principally due to
an increase in inbound minutes of traffic of approximately 242,000 (2%) and
4.2 million (10%) for the three and nine months ended September 30, 2000.
Third quarter 1999 revenues were also adversely affected by a foreign carrier
misreporting certain U.S. origin traffic as traffic originating in a country
with a lower settlement rate with GT&T. Audiotext revenues, which have a lower
profit margin than inbound sent paid and outcollect international
long-distance revenues, declined by 6.0 million minutes (75%) and 18.3 million
minutes (61%) in the three and nine months ended September 30, 2000 over the
corresponding period of the prior year. 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. Outbound long-distance revenues, also increased in 2000 over 1999
by approximately $666,000 and $1.3 million for the three and nine months ended
September 30, 2000 respectively. These increases were due to increases in
outbound international minutes of 942,000 (22%) and 2.2 million (18%) for the
three and nine months ended September 30, 2000 over the corresponding periods
of 1999.
Local exchange revenue increased $782,000 (34%) and $2.1 million (33%)
for the three and nine months ended September 30, 2000 over the corresponding
periods of 1999 as a result of increased cellular telephone revenues and a 5%
increase in lines in service.
Telephone operating expenses were $11.8 million and $36.7 million for the
three and nine months ended September 30, 2000 as compared to $13.5 million
and $43.8 million for the three and nine months ended September 30, 1999.
These expense reductions were primarily due to reductions in international
long distance expense of $2.2 million and $7.5 million for the three and nine
months ended September 30, 2000 over the prior year as result of decreased
audiotext traffic.
Telephone operating expenses were approximately 62% and 64% of telephone
operating revenues for the three and nine months ended September 30, 2000 as
compared to 72% and 76% for the same periods of the prior year. This decrease
is principally the result of increased inbound international traffic revenues
(which have no direct operating expenses) and decreased audiotext traffic
revenues which have a significantly higher cost.
9
<PAGE>
Income from telephone operations for the three and nine months ended
September 30, 2000 was $7.2 million and $20.5 million as compared to $5.2
million and $13.9 million for the corresponding periods of 1999. This
represents an increases of $1.9 million (37%) and $6.5 million (47%) for the
three and nine months ended September 30, 2000 over the corresponding periods
of the prior year. This change is principally a result of the factors
affecting revenues and operating expenses discussed above.
Other operations revenues and expenses represent the operations of ATN
(Haiti) S.A. and Wireless World, LLC. and are not material.
The Company's effective tax rate for the both the three and nine months
ended September 30, 2000 were 49% as compared to 52% for both of the
corresponding periods of the prior year.
The minority interest in earnings consists primarily of the Guyana
government's 20% interest in GT&T.
Regulatory and Tax Issues
The Company is involved in a number of regulatory and tax proceedings.
See notes 7 and 8 to the Company's Consolidated Condensed Financial Statements
included in this Report and notes 11 and 12 to the Company's Combined and
Consolidated Financial Statements included in the Company's 1999 Annual Report
on Form 10-K, as filed with the SEC. A material and adverse outcome in one or
more of these proceedings could have a material adverse impact on the
Company's financial condition and future operations.
Liquidity and Capital Resources
The Company believes its existing liquidity and capital resources are
adequate to meet current operating and capital needs, although some external
financing may be required for Wireless World's expansion which is currently
underway. The Company's current primary source of funds at the parent company
level is advisory fees from GT&T. In June 2000, GT&T paid a $5.0 million
dividend to its stockholders of which the Company received 80%. If and when
the tax and regulatory issues discussed in Notes 7 and 8 to the Consolidated
Condensed Financial Statement included in this Report and notes 11 and 12 to
the Company's Combined and Consolidated Financial Statements included in the
Company's 1999 Annual Report on Form 10-K are resolved, the Company
anticipates that GT&T may pay additional dividends to its stockholders, the
Company and the Government of Guyana. These tax and regulatory issues 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.
If and when the Company settles outstanding tax and regulatory issues
with the Guyana government and the PUC, 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.
10
<PAGE>
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
believes that the majority of GT&T's revenues will continue to be denominated
in U.S. dollars or other hard currencies. However, as a result of the rate
increases 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. While there are no legal restrictions on the conversion of
Guyana currency into U.S. dollars or other hard currencies, or on the
expatriation of Guyana currency or foreign currency from Guyana, there is
little liquidity in the foreign currency markets in Guyana. 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, 2000, approximately $7.2 million of the
Company's total cash balances consisted of balances denominated in Guyana
dollars.
The Company is currently exploring several opportunities to acquire
communications properties or licenses in the Caribbean and elsewhere. Such
acquisitions may require external financing. 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 declined in value to approximately 180 to the U.S.
dollar. Through September 30, 2000 the rate of exchange has remained at
approximately 180 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.
11
<PAGE>
Atlantic Tele-Network, Inc. and Subsidiaries
Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
On March 31, 2000, the Company issued 242,424 shares of common stock to
Cornelius B. Prior Jr., the Chief Executive Officer and principal stockholder
of the Company as partial payment for the assets and business of Antilles
Wireless Cable TV Company. The issuance and sale of these shares was exempt
from registration by reason of the exemption contained in Section 4(2) of the
Securities Act of 1933, as amended. Mr. Prior represented that he was
acquiring these shares for his own account for investment and without any view
to the distribution or resale of such shares. The share certificates were
issued with a legend restricting transfer.
On June 20, 2000, the Company issued 40,000 shares of common stock to
Cobex International, Inc. as partial payment for the assets and business of
the "islands.vi" internet service provider business of Cobex International,
Inc. Cobex International, Inc. is a privately held corporation. The issuance
and sale of these shares was exempt from registration by reason of the
exemption contained in Section 4(2) of the Securities Act of 1933, as amended.
Cobex International, Inc. represented that it was acquiring these shares for
its own account for investment and without any view to the distribution or
resale of such shares. The share certificates were issued with a legend
restricting transfer.
On July 1, 2000, the Company issued 4,403 shares of common stock under is
Directors" Remuneration Plan to Mr. J.B. Ellis, a director of the Company.
The issuance of these shares was exempt from registration by reason of the
exemption contained in Section 4(2) of the Securities Act of 1933, as
amended. Mr. Ellis represented that he was acquiring these shares for his
own account for investment and without any view to the distribution or
resale of such shares.
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.
12
<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: November 6, 2000 /s/ Cornelius B. Prior, Jr.
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Cornelius B. Prior, Jr.
Chief Executive Officer and Chairman
of the Board
Date: November 6, 2000 /s/ Steven M. Ross
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Steven M. Ross
Chief Accounting Officer
