EXHIBIT 99.6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
FOR THE SALE OF ITS DIRECTORIES BUSINESS
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 2003
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
Historical Pro Forma Pro Forma
Consolidated Adjustments Consolidated
------------ ----------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 33,482 $ 35,545 (a)(b)(c)(d) $ 69,027
Restricted cash 310 -- 310
Accounts receivable - trade 45,536 -- 45,536
Materials and supplies 10,924 -- 10,924
Prepayments and other current assets 5,091 (100)(a)(b) 4,991
--------- --------- ---------
Total current assets 95,343 35,445 130,788
Investment -- 1,078(b) 1,078
Property, plant and equipment, net 450,711 (25)(b) 450,686
Goodwill 77,225 (38,821)(b) 38,404
Intangible assets 23,026 -- 23,026
Debt issuance costs 20,484 (3,356)(a)(b)(d) 17,128
Deferred charges and other assets 26,030 -- 26,030
--------- --------- ---------
Total assets $ 692,819 $ (5,679) $ 687,140
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current portion of long-term obligations $ 7,998 $ -- 7,998
Accounts payable - affiliates 1,624 3,656 (b) 5,280
Accounts payable, accrued and other current liabilities 45,596 (1,003)(b) 44,593
Advance billings and customer deposits 9,852 -- 9,852
--------- --------- ---------
Total current liabilities 65,070 2,653 67,723
Long-term obligations, net of current portion 601,859 (106,650)(a)(b)(d) 495,209
Other deferred credits and long-term liabilities 31,227 -- 31,227
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 authorized,
33,481 issued and 30,555 outstanding 334 -- 334
Treasury stock, 2,926 shares at cost (12,500) -- (12,500)
Paid in capital in excess of par value 277,810 -- 277,810
Accumulated deficit (253,757) 98,318 (b)(c)(d) (155,439)
Accumulated other comprehensive loss (17,224) -- (17,224)
--------- --------- ---------
Total stockholders' equity (deficit) (5,337) 98,318 92,981
--------- --------- ---------
Total liabilities and stockholders' equity (deficit) $ 692,819 $ (5,679) $ 687,140
========= ========= =========
The notes to this unaudited pro forma condensed consolidated balance sheet are
an integral part of the pro forma financial information presented.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2003
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Pro Forma Pro Forma
Consolidated Adjustments Consolidated
------------ ----------- ------------
Operating revenue:
Local telephone 54,001 78 (g) 54,079
Wireless 10,330 -- 10,330
Directory 8,278 (8,278)(e) --
Internet 6,296 -- 6,296
Interexchange 4,766 -- 4,766
-------- -------- --------
Total operating revenue 83,671 (8,200) 75,471
Operating expense:
Local telephone (exclusive of depreciation and amortization) 27,847 208 (g) 28,055
Wireless (exclusive of depreciation and amortization) 6,564 -- 6,564
Directory (exclusive of depreciation and amortization) 3,449 (3,449)(e) --
Internet (exclusive of depreciation and amortization) 9,276 -- 9,276
Interexchange (exclusive of depreciation and amortization) 6,589 -- 6,589
Depreciation and amortization 22,600 (2)(e) 22,598
Loss on disposal of assets 746 -- 746
-------- -------- --------
Total operating expense 77,071 (3,243) 73,828
Operating income 6,600 (4,957) 1,643
Other income and expense:
Interest expense (13,329) 1,405 (f) (11,924)
Interest income and other 192 -- 192
Equity in earnings of investment -- 478 (e) 478
-------- -------- --------
Total other income (expense) (13,137) 1,883 (11,254)
-------- -------- --------
Loss before income taxes (6,537) (3,074) (9,611)
Income taxes -- -- --
-------- -------- --------
Loss from continuing operations $ (6,537) $ (3,074) $ (9,611)
======== ======== ========
Loss per share from continuing operations - basic and diluted $ (0.21) $ (0.10) $ (0.31)
======== ======== ========
Weighted average shares outstanding:
Basic and diluted 30,653 30,653 30,653
======== ======== ========
The notes to this unaudited pro forma condensed consolidated statement of
operations are an integral part of the pro forma
financial information presented.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Historical Pro Forma Pro Forma
Consolidated Adjustments Consolidated
------------ ----------- ------------
Operating revenue:
Local telephone 226,447 -- 226,447
Wireless 43,180 -- 43,180
Directory 33,604 (33,604)(h) --
Internet 20,847 -- 20,847
Interexchange 19,424 -- 19,424
--------- -------- ---------
Total operating revenue 343,502 (33,604) 309,898
Operating expense:
Local telephone (exclusive of depreciation and amortization) 117,277 421 (j) 117,698
Wireless (exclusive of depreciation and amortization) 27,912 -- 27,912
Directory (exclusive of depreciation and amortization) 14,170 (14,170)(h) --
Internet (exclusive of depreciation and amortization) 29,502 -- 29,502
Interexchange (exclusive of depreciation and amortization) 27,547 -- 27,547
Depreciation and amortization 82,940 (11)(h) 82,929
Loss on disposal of assets 2,163 -- 2,163
Goodwill impairment loss 64,755 -- 64,755
--------- -------- ---------
Total operating expense 366,266 (13,760) 352,506
Operating loss (22,764) (19,844) (42,608)
Other income and expense:
Interest expense (51,704) 5,870 (i) (45,834)
Interest income and other 2,203 -- 2,203
Equity in earnings of investment -- 1,911 (h) 1,911
--------- -------- ---------
Total other income (expense) (49,501) 7,781 (41,720)
--------- -------- ---------
Loss before income taxes (72,265) (12,063) (84,328)
Income taxes -- -- --
--------- -------- ---------
Loss from continuing operations $ (72,265) $(12,063) $ (84,328)
========= ======== =========
Loss per share from continuing operations - basic and diluted $ (2.30) $ (0.38) $ (2.68)
Weighted average shares outstanding:
Basic 31,464 31,464 31,464
Diluted 31,474 31,474 31,474
The notes to this unaudited pro forma condensed consolidated statement of
operations are an integral part of the pro forma
financial information presented.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated balance sheet as of March
31, 2003 presents the consolidated financial position of Alaska Communications
Systems Group, Inc. (the "Company") assuming the sale of certain net assets of
its directory segment (the "Directories Business") indirectly to a Canadian
Income Trust (the "Transaction") had been completed on that date. The unaudited
pro forma condensed consolidated statements of operations of the Company for the
three months ended March 31, 2003 and for the year ended December 31, 2002
presents the Company's consolidated results of operations assuming that the
Transaction had been completed on January 1, 2003 and January 1, 2002,
respectively. In the opinion of management, these statements include all
material adjustments necessary to reflect, on a pro forma basis, the impact of
the Transaction on the historical financial information of the Company. The
adjustments set forth in the "Pro Forma Adjustments" column are described more
fully in Note 2 to the unaudited pro forma condensed consolidated financial
information.
Following the Transaction, which was completed on May 8, 2003, the Company
retained a minority interest in the Directories Business of 12.58%. The Company
will also maintain minority representation through up to three Managers of the
permitted nine Managers of ACS Media LLC, the newly formed operating company for
the Directories Business, so long as it owns an interest of 10% or more in the
Directories Business or has material contracts with it. Therefore, the Company's
financial statements will no longer include the financial position, results of
operations or cash flows previously attributed to its Directories Business after
the date of the Transaction. The Company will continue to record its pro-rata
share of earnings or loss of the Directories Business under the equity method of
accounting for partnership interests. Accordingly, the unaudited pro forma
condensed consolidated financial information presented reflects the exclusion of
the assets and liabilities disposed of and the results of operations of the
Directories Business. The minority interest in the projected earnings or loss of
the Directories Business has been reflected in these unaudited pro forma
condensed consolidated statements of operations.
The Company's retained 12.58% interest in ACS Media LLC is subject to an
exchange rights agreement that permits conversion to 2,519 units of the ACS
Media Income Fund (the "Fund") after the expiration of a ninety-day lockup
period. Units of the Fund are traded on the Toronto Stock Exchange under the
symbol AYP.UN. The Company can sell its exchanged units to a qualified investor
or investors in a private placement transaction or offer them in a secondary
public offering at its option after the expiration of a 180 day lockup
agreement with the underwriters of the Fund's offering in Canada.
This unaudited pro forma condensed consolidated financial information
should be read in conjunction with the consolidated financial statements and the
related notes such financial statements contained in our Annual Report on Form
10-K for the year ended December 31, 2002 and our Quarterly Report on Form 10-Q
for the three months ended March 31, 2003 as filed with the Securities and
Exchange Commission on March 6, 2003 and May 6, 2003, respectively. Our
unaudited pro forma condensed consolidated financial information has been
presented for informational purposes only and does not necessarily reflect the
results of operations or financial position for the Company that would have
existed had we operated without our Directories Business for the periods
presented and should not be relied upon as being indicative of our future
results after the transaction.
2. PRO FORMA ASSUMPTIONS AND ADJUSTMENTS
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31,
2003
The unaudited pro forma condensed consolidated balance sheet has been
prepared to reflect the following transactions as if they had occurred on March
31, 2003. Actual amounts could vary from these pro forma adjustments.
(a) Debt issuance by the Company
The Company entered into an arrangement with the Metropolitan Life
Insurance Company (MetLife) to provide a credit facility to its
Directories Business on May 8, 2003 immediately prior to the sale of
its Directories Business to the Fund. The Company then drew $35,000
of term loans against the facility, using $1,468 to pay fees and
expenses related to the debt issuance and $87 to prepay an annual
agency fee to MetLife. Of the $33,445 in net cash proceeds, $413 was
deposited into the Directories Business as cash working capital and
the Company retained $33,032. The credit facility is non-recourse to
the Company after the completion of the Transaction.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(b) Proceeds of the Fund's Offering and the Company's sale of a majority
interest in the Directories Business to the Fund
Based on an underwriting and investment agreement signed on April
28, 2003, the Fund sold 17,500 units (the "Offering") on May 8, 2003
for net proceeds of $110,435, after deducting its underwriters' fees
and transaction expenses of $10,246. The Funds net proceeds were
used to acquire from the Company an 87.42% interest in the
Directories Business. The Company received net proceeds of $105,059
after deducting its fees and expenses associated with the
Transaction of $5,376.
As a part of the sale of a majority interest in the Directories
Business, the Fund has acquired certain assets and assumed certain
liabilities and the Company has retained a minority interest in the
business, which it will account for under the equity method for
partnerships. The following table indicates the Company's estimated
basis in assets sold to and liabilities assumed by the Fund and its
retained interest as if the Transaction had closed on March 31,
2003.
Proceeds of the Transaction:
Gross proceeds from the Fund $ 110,435
Fees and expenses of the Transaction (5,376)
---------
Net proceeds of the Transaction $ 105,059
=========
Pro forma basis in Directories Business sold:
Assets sold to the Fund:
Current assets * $ 4,256
Property, plant and equipment, net 25
Goodwill 38,821
Debt issue cost 1,468
---------
44,570
Liabilities assumed by the Fund:
Current liabilities (1,003)
Long-term debt (35,000)
---------
Basis of Directories Business 8,567
Equity in minority interest retained (1,078)
---------
Basis in net assets sold to the Fund $ 7,489
=========
Pro forma gain on sale of Directories Business ** $ 97,570
=========
* Current assets includes $3,656 representing the equivalent of
approximately 40 days of accounts receivable of the
Directories Business carved out of the Company's accounts
payable - affiliates that had previously been eliminated while
the Directories Business was a wholly owned consolidated
subsidiary. This amount is reflected as "accounts payable -
affiliates" in the unaudited pro forma condensed consolidated
balance sheet.
** The Company expects to realize an income tax benefit from net
operating loss carryforwards equal to the income tax effect of
the Transaction of approximately $40,100. This income tax
benefit from net operating losses had previously been fully
reserved.
(c) The Company realized a gain on foreign exchange of $4,104 as a
result of currency fluctuation from Cdn$1.45 to US$1 on April 28,
2003, the date the underwriting and investment agreements were
executed, to Cdn$1.40 to US$1 on May 8, 2003, the date the Offering
closed and the Transaction was consummated. The Offering was
conducted in Canada and the Fund trades under the symbol AYP.UN on
the Toronto Exchange. The adjustment represents the effects of this
exchange gain as if it had occurred on March 31, 2003.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(d) As a condition of obtaining an amendment and waiver to the Company's
senior bank credit facility obtained to permit the sale of its
Directories Business, the Company was required to use a specified
amount of the proceeds to prepay a portion of the outstanding term
loans under the facility. To fulfill this requirement, the Company
prepaid $106,650 of outstanding bank debt on May 13, 2003. As a
result of the early extinguishments of outstanding debt, $3,356 of
debt issuance cost was charged to interest expense as a component of
continuing operations. The adjustment represents the effects of this
prepayment as if it had occurred on March 31, 2003.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
THREE MONTHS ENDED MARCH 31, 2003
The unaudited pro forma condensed consolidated statement of operations for
the three months ended March 31, 2003 has been prepared to reflect the following
adjustments as if the Transaction had occurred on January 1, 2003. The unaudited
pro forma condensed consolidated statement of operations does not reflect the
effect of the following pro forma adjustments, as they are non-recurring in
nature:
- The gain on disposition of an 87.42% interest in the Company's
Directories Business as described in (b),
- The gain on foreign exchange as described in (c), and
- The pro-rata charge off of debt issuance cost resulting from the
early extinguishments of debt as described in (d).
Only results from continuing operations are depicted. Actual amounts could
vary from these pro forma adjustments.
(e) Represents the effect of eliminating the results of operations of
the Directories Business from the unaudited pro forma condensed
consolidated statement of operations as a result of the sale of
87.42% of that business to the Fund and recording the Company's
retained 12.58% interest in the projected results of the Directories
Business on a stand-alone basis under the equity method of
accounting for partnership interest.
(f) Represents the effect of the prepayment of $106,650 of the Company's
senior bank credit facility on the unaudited pro forma condensed
consolidated statement of operations as described more fully in (d).
The adjustment to interest expense includes a reduction to quarterly
cash interest expense of $1,209 and a reduction to quarterly debt
issuance cost amortization of $196.
The senior bank credit facility that was partially prepaid as a
condition of the transaction is variable interest rate debt based on
the one, two, three or six month London Inter-Bank Offer Rate, or
LIBOR, at the Company's option at each term loan contract rollover
date. The average LIBOR rate in effect at the time of the prepayment
was 1.375%. A 1/8% increase in the LIBOR rate would increase the
$1,209 adjustment for quarterly cash interest expense by $34 and a
1/8% decrease in the LIBOR rate would decrease it by $34.
(g) Represents $78 of incremental quarterly revenue related to a 10 year
billing and collection contract, $49 of corporate joint and common
cost previously allocated to the directories business that will now
be absorbed by the Company's remaining businesses, $75 of
incremental quarterly white pages publishing costs and $81 of
incremental yellow pages advertising costs anticipated under a 50
year publishing agreement with the Directories Business, and $3 of
other expense.
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
YEAR ENDED DECEMBER 31, 2002
The unaudited pro forma condensed consolidated statement of operations for
the year ended December 31, 2002 has been prepared to reflect the following
adjustments as if the Transaction had occurred on January 1, 2002. The unaudited
pro forma condensed consolidated statement of operations does not reflect the
effect of the following pro forma adjustments, as they are non-recurring in
nature:
- The gain on disposition of an 87.42% interest in the Company's
Directories Business as described in (b),
- The gain on foreign exchange as described in (c), and
- The pro-rata charge off of debt issuance cost resulting from the
early extinguishments of debt as described in (d).
Only results from continuing operations are depicted. Actual amounts could vary
from these pro forma adjustments.
(h) Represents the effect of eliminating the results of operations of
the Directories Business from the unaudited pro forma condensed
consolidated statement of operations as a result of the sale of
87.42% of that business to the Fund and recording the Company's
retained 12.58% interest in the projected results of the Directories
Business on a stand-alone basis under the equity method of
accounting for partnership interest.
(i) Represents the effect of the prepayment of $106,650 of the Company's
senior bank credit facility on the unaudited pro forma condensed
consolidated statement of operations as described more fully in (d).
The adjustment to interest expense includes a reduction to annual
cash interest expense of $5,077 and a reduction to annual debt
issuance cost amortization of $793.
The senior bank credit facility that was partially prepaid as a
condition of the transaction is variable interest rate debt based on
the one, two, three or six month LIBOR at the Company's election at
each term loan contract rollover date. The average LIBOR rate in
effect at the time of the prepayment was 1.375%. A 1/8% increase in
the LIBOR rate would increase the $5,077 adjustment for avoided
annual cash interest expense by $135 and a 1/8% decrease in the
LIBOR rate would decrease it by $135.
(j) Represents $106 of corporate joint and common cost previously
allocated to the directories business that will now be absorbed by
the Company's remaining businesses, $300 of incremental annual white
pages publishing costs anticipated under a 50-year publishing
agreement with the Directories Business and $15 of other.