Alaska Communications Systems Reports First Quarter Results.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 24, 2003 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 the first quarter ended March 31, 2003. Revenues for the first quarter of 2003 increased to $83.7 million compared to $82.0 million in the same period last year. 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 from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the first quarter was $30.1 million, which compares to $32.3 million for the same period last year. During the quarter, ACS recorded a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. on a loss on disposal of assets of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $750,000. Including this non-cash charge, the Company reported a net loss of $6.6 million, or $0.21 per share, which compares to a net loss of $112.6 million, or $3.55 per share for the same period in 2002. First quarter 2002 results included a $105.4 million charge that reduced the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of the Company's goodwill. "In the first quarter, we experienced strong year-over-year growth in wireless and 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 our continued focus on cost controls resulted in positive cash flow of almost $12 million," commented Chuck chuck a hand grip to be attached to intramedullary pins to enable the surgeon to rotate or drive them into bone. 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. "At the same time, we continue to experience decreasing year-over-year revenues in our local telephone businesses and a major line loss to UNE-P UNE-P Unbundled Network Element - Platform lines. These lines, which require practically no investment on the part of our competition, give our competitor an even greater cost advantage in the marketplace. Given the competitive dynamics of our market, we will continue to aggressively lower our costs and seek 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. solutions to create a more balanced competitive environment." "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. were down by $800,000 sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen , as we continued to focus on cost management efforts," commented 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. "Additionally, we effectively managed our capital expenditures, reducing them by over $6 million from the prior year period. Due to these efforts and our strong wireless EBITDA margins of 36.5%, we were able to generate $11.8 million in cash during the quarter and freed up another $3.1 million from restricted cash." Quarter Summary -- Local telephone revenues for the first quarter were essentially flat on a sequential One after the other in some consecutive order such as by name or number. basis, but decreased by $1.3 million year-over-year. Due to the effect of the Company's aggressive cost reduction program, normalized local telephone EBITDA margins increased to 48.4% from 47.6% for the same period last year. -- Access lines ended at 335,457, a year-over-year increase of 4,799. The Company benefited from the addition of 14,910 access lines related to its 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 and other new enterprise customers, partially offset by erosion erosion (ĭrō`zhən), general term for the processes by which the surface of the earth is constantly being worn away. The principal agents are gravity, running water, near-shore waves, ice (mostly glaciers), and wind. in its access line base from competitive bypass In communications, to avoid the local telephone company by using satellites and microwave systems. and elimination of second lines as customers move to broadband solutions. -- Local network service revenues were down 5.9% year-over-year, primarily reflecting the impact of competition. -- Access revenues were flat compared to the previous year. -- Deregulated and other revenues were up 3.6% from last year. -- Cellular revenues grew by an impressive 10.4% from the prior year period in the seasonally challenging first quarter. The Company maintained its subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base in what has historically been the slowest quarter for net adds, adding over 2,600 from the prior year period while improving 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. (Average Revenue per Unit) by $2.83 to $41.88 from the same period last year. -- Directory business. On March 6th, 2003, ACS filed a preliminary prospectus Preliminary Prospectus A first draft registration statement filed by a firm prior to proceeding with an initial public offering of securities. The document, filed with the Securities & Exchange Commission, is intended to provide pertinent information to prospective shareholders with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. securities regulators in connection with a proposed Canadian public offering of its directories business. -- 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 revenues were up modestly sequentially and 63.9% year-over-year. This reflects the success 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 rollout and increased revenues from the Company's State of Alaska contract and other private network customers. ACS ended the quarter with over 13,000 DSL subscribers, an increase of approximately 1,300 subscribers on a sequential basis. -- Interexchange revenues were essentially flat from the preceding quarter and EBITDA margins improved. The Company groomed groom n. 1. A person employed to take care of horses or a stable. 2. A bridegroom. 3. One of several officers in an English royal household. 4. Archaic a. A man. b. its database to remove inactive in·ac·tive adj. 1. Not active or tending to be active. 2. a. Not functioning or operating; out of use: inactive machinery. b. subscribers, leading to a year-over-year decrease of 8,800 subscribers in preparation for bringing long distance billing in-house In-house In the context of general equities, keeping an activity within the firm. For example, rather than go to the marketplace and sell a security for a client to anyone, an attempt is made to find a buyer to complete the transaction with the firm. . This billing conversion will generate 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. cost savings of approximately $600,000 and improve service to the Company's customer base. -- Operating expenses for the quarter, before depreciation and amortization and the loss on disposal of assets, improved by over $800,000 on a sequential basis as the Company continued to focus on cost controls in a difficult telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and regulatory environment. These improvements were partially offset by continued expenses on the Company's State of Alaska contract. As of March 31, 2003, ACS had unrestricted cash of $33.5 million, a sequential increase of $11.8 million, and an undrawn un·draw tr.v. un·drew , un·drawn , un·draw·ing, un·draws To draw to one side, as a curtain. Adj. 1. undrawn - not represented in a drawing undelineated - not represented accurately or precisely line of credit of $75 million. ACS will host a conference call at 5:00 P.M. Eastern time today to discuss the first quarter results. The access dial-in number for the call is (800) 218-9073 for domestic callers or (303) 262-2076 for international callers. In order to ensure participation by phone, please dial-in 10 minutes prior to the scheduled start time. The Webcast will be available live from the Company's Investor website at www.alsk.com. An audio replay of the call will also be available two hours after the call for a period of 48 hours by dialing 800-405-2236 and entering the passcode 533605. About Alaska Communications Systems - ACS is the leading integrated communications provider in Alaska, offering local telephone service, wireless, long distance, data, and Internet services to business and residential customers throughout Alaska. ACS currently serves approximately 335,000 access lines, 82,000 cellular customers, 58,000 long distance customers and 45,000 Internet customers throughout the State. More information can be found on the Company's website at http://www.alsk.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 Alaska Communications. 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 Incorrect means to not be correct and may also refer to:
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 the Company's wireline subsidiaries; and possible changes in the demand for the Company'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 the Company's future business. These and other uncertainties related to the Company's business are described in greater detail in the Company'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, 2002. The information contained in this release is as of April 24, 2003. The Company 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, 2003 and 2002
(Unaudited, in Thousands, Except per Share Amounts)
Three Months Ended
March 31,
------------------
2003 2002
------------------
Operating revenues:
Local telephone $54,001 $55,322
Wireless 10,330 9,355
Directory 8,278 8,641
Internet 6,296 3,842
Interexchange 4,766 4,850
------------------
Total operating revenues 83,671 82,010
Operating expenses:
Local telephone 27,847 28,998
Wireless 6,564 6,042
Directory 3,449 3,426
Internet 9,276 5,128
Interexchange 6,589 6,615
Depreciation and amortization 22,600 19,259
Loss on disposal of assets, net 746 -
------------------
Total operating expenses 77,071 69,468
------------------
Operating income 6,600 12,542
Other income and expense:
Interest expense (13,329) (13,386)
Interest income and other 192 500
------------------
Total other income (expense) (13,137) (12,886)
------------------
Loss before income taxes (6,537) (344)
Income tax benefit - -
------------------
Loss from continuing operations (6,537) (344)
Loss from discontinued operations, net of tax (52) (6,872)
------------------
Loss before cumulative effect of change in
accounting principle (6,589) (7,216)
Cumulative effect of change in accounting
principle, net of tax - (105,350)
------------------
Net loss $(6,589) $(112,566)
==================
Loss per share - basic and diluted:
Loss from continuing operations (0.21) (0.01)
Loss from discontinued operations, net of tax (0.00) (0.22)
------------------
Loss before cumulative effect of change in
accounting principle $(0.21) $(0.23)
Cumulative effect of change in accounting
principle, net of tax - (3.32)
------------------
Net loss $(0.21) $(3.55)
==================
Weighted average shares outstanding:
Basic 30,653 31,743
==================
Diluted 30,653 31,743
==================
EBITDA from continuing operations $30,138 $32,301
==================
Note: Certain reclassifications have been made to the 2002 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, Dec. 31,
Assets 2003 2002
--------------------
Current assets:
Cash and cash equivalents $33,482 $18,565
Restricted cash 310 3,440
Accounts receivable-trade, net of allowance of
$6,179 and $6,075 45,536 48,820
Materials and supplies 10,924 11,203
Prepayments and other current assets 5,091 6,172
Assets held for sale - 261
--------------------
Total current assets 95,343 88,461
Property, plant and equipment 1,094,131 1,090,365
Less: Accumulated depreciation and amortization 643,420 625,276
--------------------
Property, plant and equipment, net 450,711 465,089
Goodwill 77,225 77,225
Intangible Assets 23,026 23,269
Debt issuance costs, net of amortization of
$17,410 and $16,365 20,484 21,529
Deferred charges and other assets 26,030 26,047
--------------------
Total assets $692,819 $701,620
====================
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term obligations $7,998 $5,649
Accounts payable-affiliate 1,624 1,319
Accounts payable, accrued and other current
liabilities 45,596 49,796
Advance billings and customer deposits 9,852 9,804
--------------------
Total current liabilities 65,070 66,568
Long-term obligations, net of current portion 601,859 602,114
Other deferred credits and long-term liabilities 31,227 32,930
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, 33,481 and 33,481 shares issued
and 30,555 and 30,745 outstanding,
respectively 334 334
Treasury stock, 2,926 and 2,737 shares,
respectively, at cost (12,500) (12,082)
Paid in capital in excess of par value 277,810 277,810
Accumulated deficit (253,757) (247,168)
Accumulated other comprehensive loss (17,224) (18,886)
--------------------
Total stockholders' equity (deficit) (5,337) 8
--------------------
Total liabilities and stockholders' equity
(deficit) $692,819 $701,620
====================
Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF LOCAL TELEPHONE REVENUES
(Unaudited, in Thousands)
Three Months
Ended
March 31,
----------------
2003 2002
----------------
Local telephone revenues:
Local network service $24,129 $25,644
Network access revenue 25,061 25,036
Deregulated and other 4,811 4,642
-----------------
Local telephone revenues $54,001 $55,322
=================
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF EBITDA CALCULATION
(Unaudited, in Thousands)
Three Months
Ended
March 31,
----------------
2003 2002
----------------
Loss from continuing operations $(6,537) $(344)
Add (subtract):
Interest expense 13,329 13,386
Income tax benefit - -
Depreciation and amortization 22,600 19,259
Loss on disposal of assets, net 746 -
-----------------
EBITDA from continuing operations $30,138 $32,301
=================
Note: EBITDA is presented as an additional means of evaluating the
Company's financial condition, liquidity and its ability to
satisfy rating agency and creditor requirements. The Company
incurs significant non-cash charges, including depreciation and
amortization, related to the capital assets utilized in its
operations. EBITDA is a central measure used in the Company's
compliance with debt covenants related to its senior credit
facility. EBITDA as defined by the senior credit facility's credit
agreement is net income before interest expense, provisions for
taxes, depreciation expense, amortization expense and other
noncash charges. Using this information along with Net loss
provides for a more complete analysis of results of operations.
Net loss is the most directly comparable GAAP measure.
Schedule 5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
As of March 31,
----------------
2003 2002
----------------
Local telephone:
Retail access lines 231,832 252,417
Wholesale access lines 19,619 24,537
UNE loop lines 64,821 53,704
UNE platform lines 4,275 -
----------------
Total local telephone access lines 320,547 330,658
Enterprise private network lines 14,910 -
----------------
Total access lines 335,457 330,658
================
Average local telephone access lines for the quarter 321,777 331,791
Average local telephone revenue per line for the
quarter $55.94 $55.58
Quarterly growth rate in total access lines 3.9% -0.7%
Wireless
Covered population 478,413 471,863
Ending subscribers 82,225 79,599
Average subscribers for the quarter 82,223 79,860
Quarterly growth rate 0.0% -0.7%
Activations for the quarter 4,076 3,513
Deactivations for the quarter 4,071 4,034
Penetration 17.2% 16.9%
Quarterly Minutes of use (000's) 47,209 41,233
Average revenue per subscriber for the quarter $41.88 $39.05
Long Distance:
Long distance subscribers 57,677 66,521
Quarterly Minutes of use (000's) 37,848 37,888
Average subscribers for the quarter 63,839 66,113
Average revenue per subscriber for the quarter $24.89 $24.45
Internet:
DSL subscribers 13,910 8,488
Dial-Up and other service subscribers 31,373 38,938
----------------
Total Internet subscribers 45,283 47,426
================
Average subscribers for the quarter 45,832 46,951
Average revenue per subscriber for the quarter $26.01 $26.21
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