Alaska Communications Systems Reports First Quarter Results; Wireless and Broadband Offerings Show Strong Progress; Over 100 New Business Wins Added In the Quarter.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 29, 2004 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) today reported financial results for its first quarter ended March 31, 2004. Revenues for the first quarter of 2004 were $75.4 million, essentially in line with first quarter 2003 revenues of $75.5 million, adjusted to exclude revenue from the Company's Directory business sold in 2003. Reported revenues, including Directory, for the first quarter of 2003 were $83.8 million. The Company's net loss for the first quarter of 2004 was $8.8 million or $0.30 per share (basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ), which compares to a net loss of $6.6 million, or $0.21 per share (basic and diluted) for the same period in 2003. 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 of 2004 was $22.5 million, which was impacted by charges to operations of approximately $3.5 million related to employee restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and accelerated consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" that were completed in the first quarter. "We have made good progress in improving our business and better serving our customers as revenues increased 5.9% over the same period last year excluding the Company's exited Directory business and the discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: State of 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 contract," commented Liane li·an·a also li·ane n. Any of various climbing, woody, usually tropical vines. [Alteration of French liane, probably from lier, to bind, from Old French; see liable.] Pelletier Pelletier is the name of several people.
"We are also encouraged by continued strong results in our broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). and wireless offerings," added Ms. Pelletier. "In the first quarter, we added 1,649 broadband customers and close to 1,000 wireless customers in a seasonally weak period for wireless in which we usually show a decrease in subscribers. We also further strengthened our competitive position in wireless as we announced that the launch of our new CDMA (Code Division Multiple Access) A method for transmitting simultaneous signals over a shared portion of the spectrum. The foremost application of CDMA is the digital cellular phone technology from QUALCOMM that operates in the 800 MHz band and 1.9 GHz PCS band. voice and data network would occur in May. This technology provides us with some of the most advanced wireless offerings in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. and will position us to continue to grow as the clear telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. leader in Alaska. Additionally our entertainment package through DISH continues to sell nicely and has served as an excellent spearhead in offering integrated bundles to the consumer market. As we enter the warmer months in Alaska, we are starting to more aggressively capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the positive demand for satellite TV and our entertainment bundles in the marketplace." "We made a number of investments this quarter which have already benefited our cost structure and strengthened ACS," commented David Wilson David Wilson may refer to:
n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. by 6.5% in the first quarter, mostly through voluntary retirement. This increased expenses for the quarter but will result in approximately $4 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. incremental cost Incremental Cost The encompassing change that a company experiences within its balance sheet due to one additional unit of production. Notes: Incremental cost is the overall change that a company experiences by producing one additional unit of good. savings longer term. Additionally, we accelerated a number of consulting projects, including targeted research and implementation programs which helped enable the March roll-out of our focused bundling campaigns and a single source vendor program which has already resulted in annualized cost savings of $600,000. While impacting EBITDA for the quarter by $3.5 million, we believe the employee restructuring and the consulting projects have already had a significant positive impact on the Company." -- Access lines declined by 0.7% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen to 311,919, in line with many LECs as the Company faced displacement displacement, in psychology: see defense mechanism. Same as offset. See base/displacement. by broadband and wireless as well as competitive pressure. -- The Company added 974 wireless subscribers from the preceding quarter. In the first quarter, Average Revenue per Unit, or ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. , improved by $2.31 to $44.19 and MOU (Minutes Of Usage) A metric used to compute billing and/or statistics for telephone calls or other network use. (Minutes of Use) increased by 25.2% over the same period last year. -- ACS ended the quarter with 19,429 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 subscribers, an increase of 9.3% subscribers on a sequential One after the other in some consecutive order such as by name or number. basis. -- Long distance subscribers decreased to 42,053 customers from the preceding quarter, primarily driven by disentanglement from the State of Alaska contract. Recent Highlights -- After the quarter end the Company announced that a settlement had been reached between ACS and GCI GCI Ground Circuit Interrupter GCI Getty Conservation Institute GCI Global Commerce Initiative GCI Green Cross International (non-profit international environmental organization) GCI Growth Competitiveness Index GCI Great Cities Institute that substantially resolves a number of regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. proceedings with regards to the 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. and Juneau Juneau (j  `nō), city (1990 pop. 26,751), state capital, SE Alaska, in the Alaska Panhandle; settled by gold miners 1880, inc. 1900. markets. The Company was encouragedby the agreement as it allows ACS to increase UNE-L UNE-L Unbundled Network Element - Loop rates and to focus resources and energy on the customer rather than lengthy regulatory battles. -- In March the Company announced that it plans to launch a CDMA voice and data network with initial deployment in May 2004. This CDMA 1x-RTT and EV-DO (EVolution-Data Only) A 3G high-speed digital data service provided by cellular carriers worldwide that use the CDMA technology, including Verizon and Sprint in the U.S. EV-DO works on EV-DO cellphones as well as laptops and portable devices that have EV-DO modems. network will significantly increase ACS's network capacity, and position the Company to deliver advanced data services like Web browsing See browse. , picture-taking and audio streaming See streaming audio. over high-speed high-speed adj. 1. Operated or designed for operation at high speed: a high-speed food processor. 2. Taking place at high speed: a high-speed chase. 3. wireless connectivity. During the quarter ACS made two key additions to its management team. -- David Wilson joined the company as Chief Financial Officer. David was David Was (born David Weiss, 26 October 1952, Detroit) is, with his stage-brother Don Was, the founder of the influential 1980s pop group, Was (Not Was). Reviewed by The New York Times Chief Financial Officer of Triumph Communications, a subsidiary of Hughes Electronics. Prior to this, David was at DIRECTV DirecTV (trademarked as "DIRECTV") is a direct broadcast satellite (DBS) service based in El Segundo, California, USA, that transmits digital satellite television and audio to households in the United States, the Caribbean and Latin America except for Mexico. Broadband (formerly Telocity Inc.) where he was appointed CFO, after serving as Vice President of Finance and Chief Accounting Officer. David also has 10 years of experience in public accounting at PricewaterhouseCoopers. -- Mark D. Enzenberger joined the company as Director, Product Management, from GCI. At GCI Mark held senior positions in field services, network integration, data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. and local services. Mark is an industry veteran and has additional experience in senior roles at ATU (ADSL Transceiver Unit) A device that provides ADSL modulation of the telephone line. The device at the telco side is the ATU-C (Central), which is a line card plugged into the DSLAM. Telecommunications (now ACS). ACS will host a conference call at 5:00 P.M. Eastern time today to discuss its first quarter results. For parties in the United States and Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , call 800-257-3401 to access the earnings call. International parties can access the call at 303-262-2194. Additionally, ACS will offer a live webcast of the conference call, accessible from the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section of the Company's website (www.alsk.com). The webcast will be archived for a period of 45 days. A telephonic replay of the conference call will also be available 2 hours after the call and will run until Saturday Saturday: see week; Sabbath. , May 1, 2004 at 7:00 p.m. ET. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter pass code 576387. International parties should call 303-590-3000 and enter pass code 576387. About Alaska Communications Systems - ACS is the leading integrated communications provider in Alaska, offering local telephone service, wireless, long distance, data, and 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 services to business and residential customers throughout Alaska. More information can be found on the Company's website at http://www.ascalaska.com. In addition to historical information, this release includes 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. , estimates and projections that are based on current expectations only, and are subject to a number of risks, uncertainties and assumptions, many of which are beyond the control of ACS. Actual events and results may differ materially from those anticipated, estimated or projected if one or more of these risks or uncertainties materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. , or if underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: rapid technological developments and changes in the telecommunications industries; ongoing deregulation Deregulation The reduction or elimination of government power in a particular industry, usually enacted to create more competition within the industry. Notes: Traditional areas that have been deregulated are the telephone and airline industries. in the telecommunications industry as a result of the Telecommunications Act There are several laws named the Telecommunications Act
adj. Not available, accessible, or at hand. un  a·vail of SFAS SFAS Statement of Financial Accounting StandardsSFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 71 to ACS's wireline subsidiaries; and possible changes in the demand for ACS's products and services. In addition to these factors, actual future performance, outcomes and results may differ materially because of other, more general, factors including (without limitation) changes in general industry and market conditions and growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. ; changes in interest rates or other general national, regional or local economic conditions; governmental and public policy changes; changes in accounting policies or practices adopted voluntarily or as required by accounting principles generally accepted in the United States of America UNITED STATES OF AMERICA. The name of this country. The United States, now thirty-one in number, are Alabama, Arkansas, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Missouri, New Hampshire, ; and the continued availability of financing in the amounts, at the terms and on the conditions necessary to support ACS's future business. These and other uncertainties related to ACS's business are described in greater detail in ACS's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2003. The information contained in this release is as of April 29, 2004. ACS undertakes no obligation to update or revise any of this information whether as a result of new information, future events or developments, or otherwise.
Schedule 1
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2004 and 2003
(Unaudited, in Thousands, Except per Share Amounts)
Three Months Ended
March 31,
------------------
2004 2003
-------- --------
Operating revenues:
Local telephone $ 55,782 $ 54,001
Wireless 11,601 10,330
Directory - 8,278
Internet 4,613 7,156
Interexchange 3,409 4,027
-------- --------
Total operating revenues 75,405 83,792
Operating expenses:
Local telephone 32,524 27,255
Wireless 7,928 6,910
Directory - 3,449
Internet 7,506 10,614
Interexchange 5,016 5,618
Depreciation and amortization 19,106 22,600
Loss on disposal of assets, net 227 746
-------- --------
Total operating expenses 72,307 77,192
-------- --------
Operating income 3,098 6,600
Other income and expense:
Interest expense (12,097) (13,329)
Interest income and other 230 192
-------- --------
Total other income (expense) (11,867) (13,137)
-------- --------
Loss before income taxes (8,769) (6,537)
Income taxes - -
-------- --------
Loss from continuing operations (8,769) (6,537)
Loss from discontinued operations, net of tax - (52)
-------- --------
Net loss $ (8,769)$ (6,589)
======== ========
Loss per share - basic and diluted:
Loss from continuing operations (0.30) (0.21)
Loss from discontinued operations, net of tax - -
-------- --------
Net loss $ (0.30)$ (0.21)
======== ========
Weighted average shares outstanding:
Basic and diluted 29,333 30,653
======== ========
Adjusted EBITDA $ 22,544 $ 25,309
======== ========
Note: Certain reclassifications have been made to the 2003 data to
conform with the current presentation.
Schedule 2
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
March 31, December 31,
Assets 2004 2003
---------- -----------
Current assets:
Cash and cash equivalents $ 92,279 $ 97,798
Restricted cash 3,635 3,635
Accounts receivable-trade, net of allowance
of $4,283 and $4,432 37,592 41,718
Materials and supplies 9,171 10,099
Prepayments and other current assets 5,743 5,850
---------- -----------
Total current assets 148,420 159,100
Property, plant and equipment 1,044,547 1,041,904
Less: Accumulated depreciation and
amortization 613,953 603,760
---------- -----------
Property, plant and equipment, net 430,594 438,144
Goodwill 38,403 38,403
Intangible Assets 22,009 22,055
Debt issuance costs, net of amortization of
$6,146 and $5,417 18,210 18,939
Deferred charges and other assets 8,544 8,750
---------- -----------
Total assets $ 666,180 $ 685,391
========== ===========
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term obligations $ 2,010 $ 1,982
Accounts payable-affiliates 4,850 5,082
Accounts payable, accrued and other current
liabilities 40,351 47,303
Income taxes payable - 1,095
Advance billings and customer deposits 8,387 8,766
---------- -----------
Total current liabilities 55,598 64,228
Long-term obligations, net of current portion 547,581 548,238
Other deferred credits and long-term
liabilities 69,964 71,065
Commitments and contingencies - -
Stockholders' equity (deficit):
Preferred stock, no par, 5,000 authorized,
no shares issued and outstanding - -
Common stock, $.01 par value; 145,000 shares
authorized, 33,613 and
33,611 shares issued and 29,331 and
29,343 outstanding, respectively 336 336
Common stock, $.01 par value; 267 shares
subject to mandatory redemption (1,198) (1,198)
Treasury stock, 4,283 and 4,268 shares,
respectively, at cost (17,181) (17,118)
Paid in capital in excess of par value 278,190 278,181
Accumulated deficit (262,567) (253,798)
Accumulated other comprehensive loss (4,543) (4,543)
---------- -----------
Total stockholders' equity (deficit) (6,963) 1,860
---------- -----------
Total liabilities and stockholders' equity
(deficit) $ 666,180 $ 685,391
========== ===========
Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF ADJUSTED REVENUES
(Unaudited, in Thousands)
Three Months Ended
March 31,
--------------------
2004 2003
------- ---------
Total operating revenues $75,405 $ 83,792
Adjustment for sale of the Company's directory
business - Directory revenues - (8,278)
------- ---------
Total adjusted operating revenues $75,405 $ 75,514
======= =========
Note: In an effort to provide investors with additional information
regarding the Company's results as determined by generally
accepted accounting principles (GAAP), the Company also
discloses certain non-GAAP information which management utilizes
to assess performance. Within this press release, the Company
has disclosed its total operating revenues adjusted to exclude
the impact of disposed of operations (Total adjusted operating
revenues) as the Company believes that such data will facilitate
more useful period-to-period comparisons of the Company's
ongoing operations
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF LOCAL TELEPHONE REVENUES
(Unaudited, in Thousands)
Three Months Ended
March 31,
--------------------
2004 2003
-------- -------
Local telephone revenues:
Local network service $ 22,753 $24,129
Network access revenue 27,695 25,061
Deregulated and other 5,334 4,811
-------- -------
Local telephone revenues $ 55,782 $54,001
======== =======
Schedule 5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF ADJUSTED EBITDA CALCULATION
(Unaudited, in Thousands)
Three Months Ended
March 31,
------------------
2004 2003
------- --------
Net loss $(8,769)$ (6,589)
Add (subtract):
Interest expense 12,097 13,329
Income tax benefit - -
Depreciation and amortization 19,106 22,600
Loss on disposal of assets, net 227 746
Non-cash pension expense 183 -
Non-cash adjustment to litigation reserves (300) -
------- --------
EBITDA 22,544 30,086
Adjustment for discontinued operations - 52
Adjustment for sale of the Company's
directory business - Directory EBITDA - (4,829)
------- --------
Adjusted EBITDA $22,544 $ 25,309
======= ========
Note: In an effort to provide investors with additional information
regarding the Company's results as determined by generally
accepted accounting principles (GAAP), the Company also
discloses certain non-GAAP information which management
utilizes to assess performance and believes provides useful
information to investors. Within this press release, the
Company has disclosed its net loss before interest expense,
provisions for taxes, depreciation expense, amortization
expense and other non-cash charges inclusive of non cash
pension expense and a non cash release of litigation
reserves following legal settlement (EBITDA) because the
Company believes it is an important indicator because it
provides information about our ability to service debt, pay
dividends and fund capital expenditures.
To further assist the reader in understanding operations,
EBITDA has also been adjusted to exclude the impact of
discontinued and disposed of operations (Adjusted EBITDA) as
the Company believes that such data will facilitate more
useful period-to-period comparisons of the Company's ongoing
operations. EBITDA and adjusted EBITDA are not GAAP
measures and should not be considered a substitute for net
income and loss and other measures of financial performance
recorded in accordance with GAAP.
Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
As of March 31,
-------------------
2004 2003
-------- --------
Local telephone:
Retail access lines 217,054 231,832
Wholesale access lines 20,066 19,619
UNE loop lines 69,622 64,821
UNE platform lines 5,177 4,275
-------- --------
Total local telephone access lines 311,919 320,547
======== ========
Average local telephone access lines for the
quarter 313,070 321,777
Average local telephone revenue per line for the
quarter $ 59.39 $ 55.94
Quarterly growth rate in local telephone access
lines -0.7% -0.8%
Wireless
Covered population 480,422 478,413
Ending subscribers 87,991 82,225
Average subscribers for the quarter 87,504 82,223
Quarterly growth rate 1.1% 0.0%
Activations for the quarter 5,561 4,076
Deactivations for the quarter 4,587 4,071
Average monthly churn for the quarter 1.7% 1.6%
Penetration 18.3% 17.2%
Quarterly Minutes of use (000's) 59,113 47,209
Average revenue per subscriber for the quarter $ 44.19 $ 41.88
Long Distance:
Long distance subscribers 42,053 57,677
Quarterly Minutes of use (000's) 32,139 37,848
Average subscribers for the quarter 42,610 63,839
Average revenue per subscriber for the quarter $ 26.67 $ 21.03
Internet:
DSL subscribers 19,429 13,910
Dial-Up and other service subscribers 26,257 31,373
-------- --------
Total Internet subscribers 45,686 45,283
======== ========
Average subscribers for the quarter 45,872 45,832
Average revenue per subscriber for the quarter $ 30.22 $ 25.47
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