Alaska Communications Systems Reports First Quarter 2001 Operating Results In Line with Previous Guidance.Business Editors ANCHORAGE Anchorage (ăng`kərĭj), city (1990 pop. 226,338), Anchorage census div., S central Alaska, a port at the head of Cook Inlet; inc. 1920. , Alaska--(BUSINESS WIRE)--April 26, 2001 Alaska Communications Systems This article is about the current telecommunications company. For the historical "Alaska Communications System", see AT&T Alascom. Alaska Communications Systems, (or ACS) is a telecommunications corporation, headquartered in Anchorage, Alaska. Group, Inc. ("ACS (Asynchronous Communications Server) See network access server. ") (Nasdaq:ALSK) reported today results of operations for the first quarter of 2001. Revenues for the first quarter increased $3.0 million to $81.2 million, or 3.8%, over first quarter 2000 revenues and in line with the Company's previous guidance for the quarter. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the first quarter was $30.7 million compared to $29.8 for the first quarter of 2000 and above the guidance previously provided by the Company of $28 to $30 million for the quarter. Chuck Robinson, Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of ACS, said, "We are pleased that ACS achieved strong sequential One after the other in some consecutive order such as by name or number. growth in revenues and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and feel that 2001 is off to a tremendous start. We achieved these results despite the continuing impasse im·passe n. 1. A road or passage having no exit; a cul-de-sac. 2. A situation that is so difficult that no progress can be made; a deadlock or a stalemate: reached an impasse in the negotiations. in resolving a number of regulatory issues and a miscue mis·cue n. 1. Games A stroke in billiards that misses or just brushes the ball because of a slip of the cue. 2. A mistake. intr.v. mis·cued, mis·cu·ing, mis·cues 1. with the Infinite (mathematics) infinite - 1. Bigger than any natural number. There are various formal set definitions in set theory: a set X is infinite if (i) There is a bijection between X and a proper subset of X. (ii) There is an injection from the set N of natural numbers to X. Minutes program, which we have subsequently corrected. We believe that we are the best positioned telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. provider in the markets we serve, including our competitive markets. We continue to invest in our integrated communications platform that allows us to deliver high quality services using ACS owned facilities to our 330,000 wireline, 77,000 cellular, 65,000 long distance, and 44,000 Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the customers throughout Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States ." ACS also provided revisions to financial performance guidance for 2001. The Company reported that it expects revenues of approximately $322 to $332 million and EBITDA of $123 to $127 million for the year ending December December: see month. 31, 2001. For the second quarter of 2001, ACS expects revenues of approximately $78 to $82 million and EBITDA of between $29 and $31 million, consistent with the first quarter of the year. Capital expenditures for the year are expected to be $75 to $80 million, including the previously announced investments in enhanced network capabilities, additional fiber optic optic /op·tic/ (op´tik) ocular (1). op·tic or op·ti·cal adj. 1. Of or relating to the eye or vision. 2. capacity and a customer relationship management system. The Company cited the costs it incurred during the first quarter and into the second quarter associated with its long distance programs, slow line growth in the local telephone business and the unresolved Not completed; not finished; not linked together. See resolve. status of a number of regulatory issues as the causes for the revisions to its previous guidance. Kevin KEVIN Keepers of the Eternal Vigilance of the Islamic Nation (fictional, from White Teeth by Zadie Smith) P. Hemenway, Senior Vice President and CFO See Chief Financial Officer. of ACS, stated, "Our cash flow remains strong and we continue to grow revenue and EBITDA. The issues with our Infinite Minutes offering are largely behind us and we expect to see improving margins going forward. Reductions in cash operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the rest of our business are already manifesting themselves in our operating results. We are focused on growing revenues and improving our cost structure during 2001 and beyond. As a result of these continuing efforts we expect to generate positive net cash flow after debt service and capital expenditures for both the third and fourth quarters of 2001." The Company incurred a net loss of $4.9 million for the quarter ended March 31, 2001, or $0.15 per share, compared to a loss of $3.1 million, or $0.10 per share for the first quarter of 2000. Net loss before goodwill amortization for the quarter ended March 31, 2001 was $2.9 million, or $0.09 per share. ACS's management will be hosting a conference call at 5:00 P.M. Eastern time on Thursday Thursday: see week. , April 26, 2001 to discuss the first quarter results and the Company's outlook for the remainder of 2001. Investors can access this conference call or replay it at a later date by accessing the Company's website at http://www.ACSalaska.com. The Company's first quarter 2001 results of operations are reviewed in further detail below. Financial Highlights -- Quarter ended March 31, 2001: ----------------------------------------------------- -- Revenues increased to $81.2 million from $78.2 million for the same period in 2000. Beginning with the first quarter of 2001, the Company is reporting directory and interexchange as separate segments. Prior year amounts have been reclassified to conform with the current presentation. All amounts are discussed at the consolidated level after the elimination of inter-company revenue and expense. - Local telephone revenue, which is now reported exclusive of the non-regulated component of directory revenue, decreased from $58.1 million in the first quarter 2000 to $54.7 million in 2001. This decrease was primarily due to a reduction in access revenue of $2.7 million as a result of reduced regulated operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. and interstate in·ter·state adj. Involving, existing between, or connecting two or more states. n. One of a system of highways extending between the major cities of the 48 contiguous United States. Noun 1. access revenue recorded during 2000 resulting from the allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as of ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. traffic minutes to the interstate jurisdiction for which there is no corresponding revenue in 2001. - Cellular revenues increased 7.5% to $9.3 million for the first quarter 2001 from $8.6 million in 1999. Cellular subscribers increased 6.3% to 76,803. The Company continues to have success in adding new cellular subscribers. - Directory revenue, which represents the non-regulated component of our directory business, grew 6.4% over the corresponding quarter in 2000 to $7.9 million. - Internet revenues grew 174.1% to $3.1 million from $1.1 million in 2000 primarily as a result of the acquisition and integration of Internet Alaska, Inc. during the second quarter of 2000 and the rollout of the Company's DSL DSL in full Digital Subscriber Line Broadband digital communications connection that operates over standard copper telephone wires. It requires a DSL modem, which splits transmissions into two frequency bands: the lower frequencies for voice (ordinary service. - Interexchange revenues increased 131.5% from $2.6 million for 2000 to $6.0 million in 2001. The dramatic growth in interexchange revenue is due to a 93.7% increase in long distance customers from 33,745 in 2000 to 65,372 in 2001. The dramatic increase in long distance customers was a result of customer acceptance of the Company's Infinite Minutes product offering. -- Operating expenses increased 6.3% to $71.2 million in 2001 from $67.0 million in 2000. As a percentage of revenues, operating expenses were 87.6% for 2001 compared to 85.6% for 2000. Operating expenses before depreciation and amortization were $51.7 million for 2001 compared to $49.9 for 2000, or 63.6% and 63.7% of revenue, respectively. - Local telephone expenses decreased $6.5 million, or 18.4% from $35.3 million for the first quarter in 2000 to $28.8 million for 2001, reflecting continuing success at improving our cost structure. As a percentage of local telephone revenues, operating expenses for 2001 dropped to 52.7% compared to 60.7% for 2000, or an 8.0% improvement in operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . - Cellular expenses increased $0.1 million, or 1.8%, from $5.5 million for the first quarter in 2000 to $5.6 for 2001. Cellular expenses as a percentage of cellular revenue decreased from 63.5% in 2000 to 60.1% in 2001, reflecting continued improvement in cellular operating margin. - Directory - Directory expenses increased $0.2 million over 2000 to $3.5 million. Directory expense is 44% of directory revenue. - Internet expenses increased $2.3 million, or 161.7%, from $1.4 million in 2000 to $3.7 million in 2001 as a result of the acquisition and integration of Internet Alaska, Inc. in the second quarter of 2000 and the continuing rollout of the Company's DSL service. As a percentage of revenue, Internet operating expenses declined from 126.0% in 2000 to 120.3% in 2001. - Interexchange expenses increased by $5.6 million, or 140.9%. The increase in interexchange was primarily the result of an increase in long distance customers from 33,745 in 2000 to 65,372 in 2001 and the associated increase in minutes of use combined with marketing costs associated with the Company's Infinite Minutes program. The Company has replaced the Infinite Minutes program with tiered long distance offerings designed to improve operating margins while providing customers choices among calling plans. - Depreciation and Amortization increased by $2.4 million, or 14.1%, to $19.5 million for 2001 compared with $17.1 million during 2000 due to the Company's investments in capital assets capital assets n. equipment, property, and funds owned by a business. (See: capital, capital account) and the acquisition of Internet Alaska, Inc. over the course of the last twelve months. -- EBITDA, or Earnings Before Interest expense, Taxes on income, Depreciation, and Amortization, was $30.7 million for 2001 compared to 2000 EBITDA of $29.8 million, or an increase of $0.9 million or 3.0%, due to the factors discussed above. -- Capital Expenditures - the Company has invested $43.9 million in capital assets during the first quarter of 2001, including $19.5 million in additional fiber capacity between Anchorage, Fairbanks Fairbanks, city (1990 pop. 30,843), Fairbanks North Star Borough, E central Alaska, on the Chena River near its confluence with the Tanana; inc. 1903. Fairbanks is the only sizable urban center in the vast Alaskan interior. , Juneau Juneau (j  `nō), city (1990 pop. 26,751), state capital, SE Alaska, in the Alaska Panhandle; settled by gold miners 1880, inc. 1900. and
Seattle, Washington  This page is protected from moves until disputes have been resolved on the .The reason for its protection is listed on the protection policy page. and approximately $10 million in ATM network enhancements. The Company expects to invest an additional $31 to $36 million in capital assets over the remainder of 2001. ACS is the leading diversified diversified (di·verˑ·s , facilities based telecommunications carrier in Alaska, offering local telephone service, wireless, long distance, data, and Internet services to business and residential customers throughout Alaska. ACS currently serves approximately 330,000 access lines, 77,000 cellular customers, 65,000 long distance customers and 44,000 Internet customers throughout the State. ACS is traded on NASDAQ under the symbol "ALSK." Statements contained in this press release that are not historical fact are "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " that involve a number of known and unknown risks or uncertainties. Additional factors, which may affect actual results, are contained in the Company's filings with the SEC. Forward-looking statements in this release are made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995.
Schedule 1
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in Thousands, Except Per Share Amounts)
Three Months Ended
March 31,
2001 2000
Operating revenues:
Local telephone $ 54,697 $ 58,137
Cellular 9,282 8,631
Directory 7,939 7,463
Internet 3,111 1,135
Interexchange 5,950 2,570
Other 255 290
-------- --------
Total operating revenues 81,234 78,226
Operating expenses:
Local telephone 28,812 35,313
Cellular 5,578 5,482
Directory 3,499 3,289
Internet 3,743 1,430
Interexchange 9,544 3,961
Other 478 391
Depreciation and
amortization 19,547 17,126
-------- --------
Total operating expenses 71,201 66,992
Operating income 10,033 11,234
Other income and expense:
Interest expense (16,038) (15,902)
Interest income and other 1,017 1,557
Equity in earnings (loss)
of investments 69 (142)
-------- --------
Total other income
and expense (14,952) (14,487)
Loss before income taxes (4,919) (3,253)
Income tax benefit 50 115
-------- --------
Net loss $ (4,869) $ (3,138)
======== ========
Net loss per share -
basic and diluted $ (0.15) $ (0.10)
======== ========
Weighted average
shares outstanding 31,468 32,696
======== ========
EBITDA $ 30,666 $ 29,775
======== ========
Note: Certain reclassifications have been made to the 2000 data to
conform with the current presentation.
Schedule 2
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET DATA
(Unaudited, in Thousands)
March 31,
2001 2000
Cash and cash equivalents $ 35,787 $ 86,747
Property, plant and
equipment, net 487,717 450,219
Total assets 903,365 922,465
Long-term debt 612,405 616,288
Stockholders' equity 210,524 245,258
Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF LOCAL TELEPHONE REVENUES
(Unaudited, in Thousands)
Three Months Ended
March 31,
2001 2000
Local telephone revenues:
Local network service $ 23,263 $ 23,845
Network access revenue 26,236 28,963
Deregulated and other 5,198 5,329
-------- --------
Local telephone revenues $ 54,697 $ 58,137
======== ========
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
As of March 31,
2001 2000
Local telephone:
Retail access lines 273,911 278,868
Wholesale access lines 16,844 16,525
UNE loops 41,520 31,843
------- -------
Total access lines 332,275 327,236
Average access lines
for the quarter 330,868 326,422
Annual growth rate 1.5% 5.3%
Cellular:
Covered population 462,057 460,802
Ending subscribers 76,803 72,270
Average subscribers
for the quarter 76,368 72,669
Annual growth rate 6.3% 7.6%
Penetration 16.6% 15.7%
Minutes of use (000's) 32,412 25,155
Average Revenue per Unit $ 40.51 $ 39.59
Long Distance:
Long distance subscribers 65,372 33,745
Minutes of use (000's) 68,848 19,044
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