Exhibit 99.1 Alaska Communications Systems Reports First Quarter Results; Wireless and Broadband Offerings Show Strong Progress; Over 100 New Business Wins Added In the Quarter ANCHORAGE, Alaska--(BUSINESS WIRE)--April 29, 2004--Alaska Communications Systems Group, Inc. ("ACS") (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), 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 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 and accelerated consulting 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 State of Alaska contract," commented Liane Pelletier, President and CEO of ACS. "At the end of last year we made strategic changes in the way we approach the business market vastly improving our sales process and restructuring the way we offer our services to commercial accounts. As a result in the first quarter we recorded over 100 business wins which included new accounts as well as old customers who decided to return to ACS for local services and often also added data, long distance and wireless services to their relationship with us. In the consumer market, we initiated a number of integrated bundles towards the end of the first quarter with good initial success in obtaining new customers and providing our existing customers with the convenience and value of the full product line. In addition, we continued our back office transformation in order to provide improved customer care and a growing number of our customer facing service representatives are becoming experienced in presenting multiple service offerings. These initiatives are having a positive impact on our business as we saw an improvement in our competitive line position since we began our bundling campaigns in March." "We are also encouraged by continued strong results in our broadband 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 voice and data network would occur in May. This technology provides us with some of the most advanced wireless offerings in the United States and will position us to continue to grow as the clear telecommunications 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 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, Senior Vice President and CFO of ACS. "Significantly we were able to reduce headcount 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 incremental cost 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 to 311,919, in line with many LECs as the Company faced 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, improved by $2.31 to $44.19 and MOU (Minutes of Use) increased by 25.2% over the same period last year. -- ACS ended the quarter with 19,429 DSL subscribers, an increase of 9.3% subscribers on a sequential 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 that substantially resolves a number of regulatory proceedings with regards to the Fairbanks and Juneau markets. The Company was encouraged by the agreement as it allows ACS to increase UNE-L 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 network will significantly increase ACS's network capacity, and position the Company to deliver advanced data services like Web browsing, picture-taking and audio streaming over high-speed 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 Chief Financial Officer of Triumph Communications, a subsidiary of Hughes Electronics. Prior to this, David was at DIRECTV 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 and local services. Mark is an industry veteran and has additional experience in senior roles at ATU 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, 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" 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, 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 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, 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, 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 in the telecommunications industry as a result of the Telecommunications Act of 1996 and other similar federal and state legislation and the federal and state rules and regulations enacted pursuant to that legislation; regulatory limitations on ACS's ability to change its pricing for communications services; the possible future unavailability of SFAS 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; 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; 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 for the year ended December 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 CONTACT: Alaska Communications Systems David Wilson, 907-297-3000 www.acsalaska.com or The Blueshirt Group Chris Danne, Rakesh Mehta, 415-217-7722 chris@blueshirtgroup.com rakesh@blueshirtgroup.com