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