Alaska Communications Systems 8-K Alaska Communications Systems Reports First Quarter 2011 Results

Exhibit 99.1

Alaska Communications Systems Reports First Quarter 2011 Results

- Revenue increased by 5 percent to $86.6 Million Compared to Prior Year -

- Cash Provided by Operating activities increased 28 percent Compared to Prior Year -

- EBITDA Increased 7 Percent to $31.7 Million Compared to Prior Year -

- Post Paid Data ARPU Increased 58 Percent to $14.78 Compared to Prior Year -

ANCHORAGE, Alaska--(BUSINESS WIRE)--April 28, 2011--Alaska Communications Systems Group, Inc. (“ACS”) (NASDAQ:ALSK) today reported financial results for its first quarter ended March 31, 2011.

“Our first quarter results demonstrate strong operating cash flows, providing us the runway we need to execute on our plans for growing the business. Our focus on enabling cloud services for businesses and leveraging our strength in wireless data will center our actions for 2011,” said Anand Vadapalli, ACS president and chief executive officer.

“In line with expectations we previously set on the fourth quarter call, our sequential quarter performance for enterprise was impacted by several factors including certain out of period customer credits. Yet, enterprise revenues demonstrated year over year growth, and our market activity and sales results remain very encouraging. On the wireless front, a still high volume of disconnects was offset in part with our strength in data, providing strong sequential and year over year growth in data subscribers and ARPU,” concluded Vadapalli.

Financial Highlights: First Quarter 2011 Compared to First Quarter 2010

• Revenues of $86.6 million increased by $4.1 million, or 5.0 percent, from $82.4 million in the prior year:
  • Enterprise revenue increased by $0.6 million, or 4.8 percent, with higher data revenue of $0.8 million.
  • Wireless revenue increased by $4.3 million, or 13.2 percent, with higher data revenue of $3.8 million and higher CETC revenue of $3.4 million, which benefited by a favorable release of $3.0 million in reserves for CETC on prepaid services, offset by declines in wireless voice and device revenue.
  • Retail, wholesale and access wireline revenues declined by $0.7 million, or 1.9 percent, with ISP revenue growth partially offsetting continued declines in retail and local line counts.
• EBITDA of $31.7 million increased by $2.0 million, or 6.7 percent, from $29.7 million in the prior year.
  • Wireless EBITDA increased by $2.9 million, or 20.2 percent, to $17.3 million. Wireless EBITDA was favorably impacted by the release of $3.0 million in revenue reserves for CETC on prepaid services which drove an expansion in wireless EBITDA margins to 47.1 percent from 44.3 percent in the prior year.
  • Wireline EBITDA declined by $0.9 million, or 6.0 percent, to $14.4 million. Wireline performance was adversely impacted by $0.7 million in legal reserves which drove a contraction in wireline EBITDA margins to 28.9 percent from 30.7 percent in the prior year.
• Net cash provided by operating activities of $21.7 million was up 27.8 percent from $17.0 million in the prior year with the current period benefiting from higher EBITDA and improved working capital management.
• Net income of $2.7 million, or $0.06 per diluted share, compared to net income of $1.3 million, or $0.03 per diluted share in the prior year.

Metric Highlights: First Quarter 2011 Compared to Fourth Quarter 2010

• Total retail wireless ARPU increased to $70.76 from $69.31 in the fourth quarter with the current period benefiting from gains in data ARPU.
• Wireless subscribers decreased from 120,413 to 116,243. The decrease included 1,118 in out of period disconnects for non-revenue generating subscribers.
• Postpaid wireless data ARPU increased by 12.3 percent sequentially to $14.78.
• Postpaid wireless subscriber churn of 2.4 percent improved from 2.5 percent.
• DSL lines increased by 56 to 45,754 and ISP ARPU increased by 4.9 percent to $42.80.
• Retail local lines declined by 2,167 to 154,486.
• Total local lines decreased by 2,620 to 169,813.

“We are pleased with the strong performance in net cash provided by operating activities of $21.7 million which increased by 27.8 percent over first quarter 2010. We enter the year on solid financial footing, and we look forward to driving performance in our key areas of growth. We expect to continue to manage all areas of operating expenses to continue to generate strong operating margins. With our payout ratio continuing to be below levels established by our Board of Directors, we are generating excess cash to create value for our investors,” said Wayne Graham, ACS chief financial officer.

2011 Business Outlook

As previously reported, ACS expects:

• Revenues will modestly exceed 2010 levels;
• EBITDA will be in line with 2010 levels;
• To incur approximately$33 million in net cash interest expense;
• Maintenance Capital expenditures to be in line with 2010, at approximately $37 million; and
• To fund approximately $12 million to upgrade backhaul from cell towers.

Conference Call

The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time. Parties in the United States and Canada can call 877-941-0843 to access the conference call. Parties outside the United States and Canada can access the call at 480-629-9643. The live webcast of the conference call will be accessible from the "Events Calendar" section of the company's website (www.alsk.com). The webcast will be archived for a period of 90 days. A telephonic replay of the conference call will also be available two hours after the call and will run until Thursday, May 5, 2011 at midnight ET. To hear the replay, parties in the United States and Canada can call 800-406-7325 and enter pass code 4411962. Parties outside the United States and Canada can call 303-590-3030 and enter pass code 4411962.

About Alaska Communications

Headquartered in Anchorage, Alaska Communications Systems Group, Inc. (“ACS”) (NASDAQ:ALSK), through its subsidiaries, provides wireline, wireless and other telecommunications and technology services to consumer, business and enterprise customers in the State of Alaska and beyond using its statewide and interstate network. The Alaska Communications wireline operations include the state's most advanced data networks and the most diverse undersea fiber optic system connecting Alaska to the contiguous United States. These networks together with our data, data hosting, and technology services provide our business, governmental, and carrier customers with the integrated, customized solution sets that they need to reduce costs while increasing their ability to focus on their business objectives. The company’s wireless operations include a statewide 3G CDMA network, reaching across Alaska from the North Slope to Ketchikan, with coverage extended via best-in-class CDMA carriers in the Lower 49 and Canada. By investing in the fastest-growing market segments and attracting the highest-quality customers, Alaska Communications seeks to drive top and bottom-line growth, while continually improving the customer experience and cost structure through process improvement, employee engagement, and network improvement. More information can be found on the company's website at www.alaskacommunications.com or at its investor site at www.alsk.com.

Forward-Looking EBITDA Guidance

This press release includes information related to management's estimate of EBITDA for the year ending December 31, 2011. EBITDA, as defined by the company, may not be similar to EBITDA measures used by other companies and is not a measurement under generally accepted accounting principles (GAAP). Management believes that EBITDA provides useful information to investors about the company's performance because it eliminates the effects of period-to-period changes in costs associated with capital investments, interest and stock-based compensation expense that are not directly attributable to the underlying performance of the company's business operations. Management believes the most directly comparable GAAP measure would be "Net cash provided by operating activities." Due to the difficulty in forecasting and quantifying the amounts that would be required to be included in this comparable GAAP measure, the company is not providing an estimate of year-end 2011 net cash provided by operating activities at this time.

Forward-Looking Statements

This press release includes certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made using information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside ACS' control. Such factors are, without limitation, adverse national economic conditions, adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing, adverse local economic conditions, including an unexpected downturn in the Alaskan oil and gas or tourism markets, changes in capital expenditures, the effects of competition in our markets, or other factors affecting the company's ability to generate sufficient earnings and cash flows to continue to make dividend payments to its stockholders; the company’s ability to complete, manage, integrate, market, maintain, and attract sufficient customers to the products and services it may derive from the construction of AKORN and purchase and integration of Crest Communications Corporation; adverse changes in labor matters, including workforce levels, labor negotiations, and benefits costs; disruption of our suppliers' provisioning of critical products or services; the impact of natural or man-made disasters; changes in company's relationships with large carrier or enterprise customers or its roaming partners; changes in revenue from Universal Service Funds; unforeseen changes in public policies; changes in accounting policies, including the company’s application of regulatory accounting rules, which could result in an impact on earnings; or disruptive technological developments in the telecommunications industry. For further information regarding risks and uncertainties associated with ACS' business, please refer to the company's SEC filings, including, but not limited to, the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of the company's SEC filings may be obtained by contacting its investor relations department at 907-564-7556 or by visiting its investor relations website at www.alsk.com.

				Schedule 1
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, In Thousands, Except Per Share Amounts)
	Three Months Ended
	March 31,
	2011			2010
Total operating revenues	$	86,593		$	82,447
Operating expenses:
Cost of services and sales		32,885			32,399
Selling, general & administrative		23,278			20,770
Depreciation and amortization		14,935			18,761
(Gain) loss on disposal of assets, net		43			(488	)
Total operating expenses		71,141			71,442
Operating income		15,452			11,005
Other income and expense:
Interest expense		(9,692	)		(8,748	)
Interest income		8			14
Total other income and expense		(9,684	)		(8,734	)
Income before income tax expense		5,768			2,271
Income tax expense		(3,069	)		(1,001	)
Net income	$	2,699		$	1,270
Net income per share:
Basic and Diluted	$	0.06		$	0.03
Weighted average shares outstanding:
Basic		44,808			44,493
Diluted		46,106			45,227

						Schedule 2
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
			March 31,			December 31,
Assets			2011			2010
Current assets:
	Cash and cash equivalents		$	15,046		$	15,316
	Restricted cash			4,912			4,912
	Accounts receivable-trade, net of allowance of $5,179 and $6,616			34,400			36,985
	Materials and supplies			7,515			6,533
	Prepayments and other current assets			4,714			3,999
	Deferred income taxes			13,793			10,949
		Total current assets		80,380			78,694
Property, plant and equipment				1,403,515			1,416,718
Less: accumulated depreciation and amortization				(999,224	)		(1,005,736	)
	Property, plant and equipment, net			404,291			410,982
Non-current investments				355			355
Goodwill				8,850			8,850
Intangible assets				24,118			24,118
Debt issuance costs				8,181			8,584
Deferred income taxes				71,158			76,813
Equity method investment				2,060			2,060
Other assets				10,384			10,159
Total assets			$	609,777		$	620,615
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
	Current portion of long-term obligations		$	5,235		$	5,213
	Accounts payable, accrued and other current liabilities			59,512			62,539
	Advance billings and customer deposits			9,332			9,568
		Total current liabilities		74,079			77,320
Long-term obligations, net of current portion				548,287			548,096
Other long-term liabilities				14,800			15,688
Total liabilities				637,166			641,104
Commitments and contingencies
Stockholders' equity (deficit):
	Common stock, $.01 par value; 145,000 authorized			452			447
	Additional paid in capital			156,383			166,259
	Accumulated deficit			(185,461	)		(188,160	)
	Accumulated other comprehensive loss			1,237			965
		Total stockholders' equity (deficit)		(27,389	)		(20,489	)
Total liabilities and stockholders' equity (deficit)			$	609,777		$	620,615

				Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In Thousands)
	Three Months Ended
	March 31,
	2011			2010
Cash Flows from Operating Activities:
Net income	$	2,699		$	1,270
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,935			18,761
Amortization of debt issuance costs and debt discount		2,014			1,830
Stock-based compensation		1,344			448
Deferred income taxes		3,038			939
Provision for uncollectible accounts		495			772
Other non-cash expenses		228			(216	)
Changes in operating assets and liabilities		(3,059	)		(6,827	)
Net cash provided by operating activities		21,694			16,977
Cash Flows from Investing Activities:
Investment in construction and capital expenditures		(8,188	)		(5,190	)
Change in unsettled construction and capital expenditures		(859	)		(5,229	)
Net change in restricted accounts		-			255
Net cash used by investing activities		(9,047	)		(10,164	)
Cash Flows from Financing Activities:
Repayments of long-term debt		(1,294	)		(7,184	)
Proceeds from the issuance of long-term debt		-			12,000
Debt issuance costs		(84	)		-
Payment of cash dividend on common stock		(9,628	)		(9,576	)
Payment of withholding taxes on stock-based compensation		(1,912	)		(185	)
Proceeds from issuance of common stock		1			67
Net cash used by financing activities		(12,917	)		(4,878	)
Change in cash and cash equivalents		(270	)		1,935
Cash and cash equivalents, beginning of period		15,316			6,271
Cash and cash equivalents, end of period	$	15,046		$	8,206
Supplemental Cash Flow Data:
Interest paid	$	(9,838	)	$	(9,272	)
Income tax refunds	$	-		$	66
Supplemental Noncash Transactions:
Property acquired under capital leases	$	-		$	1
Dividend declared, but not paid	$	9,721		$	9,595
Additions to ARO asset	$	7		$	19

				Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF EBITDA CALCULATION
(Unaudited, In Thousands)
	Three Months Ended
	March 31,
	2011			2010
Net cash provided by operating activities	$	21,694		$	16,977
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		(14,935	)		(18,761	)
Amortization of debt issuance costs and debt discount		(2,014	)		(1,830	)
Stock-based compensation		(1,344	)		(448	)
Deferred income taxes		(3,038	)		(939	)
Provision for uncollectible accounts		(495	)		(772	)
Other non-cash expenses		(228	)		216
Changes in operating assets and liabilities		3,059			6,827
Net income	$	2,699		$	1,270
Add (subtract):
Interest expense		9,692			8,748
Interest income		(8	)		(14	)
Depreciation and amortization		14,935			18,761
(Gain) loss on disposal of assets		43			(488	)
Gift of services		(51	)		-
Income tax expense		3,069			1,001
Stock-based compensation		1,344			448
EBITDA	$	31,723		$	29,726

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. The Company has disclosed its net income before interest, provisions for taxes, depreciation expense, gain or loss on asset purchases or disposals, gift of services, amortization of intangibles and stock-based compensation expense (EBITDA) because the Company believes it is an important indicator as it provides information about our ability to service debt, pay dividends and fund capital expenditures. EBITDA is not a GAAP measure and should not be considered a substitute for net cash provided by operating activities and other measures of financial performance recorded in accordance with GAAP.

				Schedule 5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF OPERATING REVENUE AND EBITDA MARGIN BY SEGMENT
(Unaudited, In Thousands)
	Three Months Ended
	March 31,
	2011			2010
Operating Revenue
Enterprise	$	12,274		$	11,717
Retail		20,233			20,642
Wholesale		2,105			2,604
Access		15,195			15,000
Wireline		49,807			49,963
Wireless		36,786			32,484
Total operating revenue	$	86,593		$	82,447
Wireline EBITDA
Operating revenue	$	49,807		$	49,963
Operating expenses (a)		(36,514	)		(35,028	)
Gift of services		(51	)		-
Stock-based compensation		1,172			396
Wireline EBITDA	$	14,414		$	15,331
EBITDA Margin		28.9	%		30.7	%
Wireless EBITDA
Operating revenue	$	36,786		$	32,484
Operating expenses (a)		(19,649	)		(18,141	)
Stock-based compensation		172			52
Wireless EBITDA	$	17,309		$	14,395
EBITDA Margin		47.1	%		44.3	%
(a) Exclusive of depreciation, amortization and gains/loss on disposal of assets

				Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
INVESTMENT IN CONSTRUCTION AND CAPITAL
(Unaudited, In Thousands)
	Three Months Ended
	March 31,
	2011			2010
Investment in construction and capital	$	8,188		$	5,190
Capitalized interest		(360	)		(543	)
Investment in construction and capital, net of capitalized interest	$	7,828		$	4,647
Growth		419			-
Maintenance and other		7,409			4,584
Capital funded by the selling shareholders of Crest		-			63
Investment in construction and capital, net of capitalized interest	$	7,828		$	4,647

								Schedule 7
	ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
	KEY OPERATING STATISTICS
	(Unaudited)
		March 31,			December 31,			March 31,
		2011			2010			2010
Wireline:
Retail
Local			154,486			156,653			160,829
Quarterly growth rate in retail local telephone access lines			-1.4	%		-0.8	%		-1.9	%
Average monthly revenue per subscriber for the quarter		$	18.06		$	18.15		$	18.13
Long Distance
Long distance subscribers			61,310			59,166			60,356
Average monthly retail revenue per subscriber for the quarter		$	16.92		$	17.51		$	18.20
Internet
DSL subscribers			45,754			45,698			46,466
Dial-up subscribers			3,973			4,262			5,154
			49,727			49,960			51,620
Average monthly DSL & dial-up revenue per subscriber for the quarter		$	42.80		$	40.81		$	36.36
Wholesale
Resale access lines			3,102			3,158			6,238
UNE lines			12,225			12,622			14,226
			15,327			15,780			20,464
Quarterly growth rate in wholesale local access lines			-2.9	%		-3.9	%		-5.4	%
Average monthly revenue per subscriber for the quarter		$	33.48		$	33.37		$	30.66
Wireless:
Wireless subscribers			116,243			120,413			130,484
Average monthly churn for the quarter			2.7	%		2.6	%		3.1	%
Average monthly data revenue per postpaid subscriber for the quarter		$	14.78		$	13.16		$	9.34
Average monthly revenue per retail subscriber for the quarter (a) (b)		$	70.76		$	69.31		$	64.72
(a) First quarter 2011 excludes $3.0 million out-of-period CETC, or $8.61 in ARPU.
(b) CETC added $18.13 to wireless retail ARPU in the first quarter of 2011, $17.98 in the fourth quarter of 2010, and $15.08 in the first quarter of 2010.

CONTACT:
Alaska Communications Investors:
Vice President, Investor Relations and Financial Planning & Analysis
Michael Allen, 907-564-7556
investors@acsalaska.com