Alaska Communications Systems Group, Inc. (“ACS”) (NASDAQ:ALSK) today reported financial results for its second quarter and six months ended June 30, 2007.
“Our second quarter results continue to demonstrate the strength of our business strategy and execution,” said Liane Pelletier, ACS president and chief executive officer. “The ACS strategy maximizes cash flow by capturing profitable growth in the strategic telecom segments, and enhances margins overall even as certain areas of the telecom market face structural decline. The strategy drives towards a wireless-centric consumer base and a data-centric business base. As of Q2 2007, nearly half of the company’s EBITDA was derived from wireless -- driven primarily by the consumer segment -- and Internet revenues were up 27% -- driven primarily by the enterprise segment.”
“With this strategy, our sales focus increasingly targets segments and accounts that will deliver meaningful long-term value for the company. Since Q1, we won a number of key high-end enterprise accounts, we delivered strong wireless growth and we more selectively approached the wireline mass market, capitalizing on lessons learned about the tenure and profitability of certain consumer segments. This kind of operational and market focus underpins the steady increase in EBITDA,” Pelletier continued.
Financial Highlights: Second Quarter 2007 Compared to Second Quarter 2006
- Revenues were $93.2 million, a 9.6 percent increase over second quarter 2006 revenues of $85.1 million.
- Operating income increased 18.6 percent to $14.4 million compared to the second quarter 2006 operating income of $12.2 million.
- The company posted net income of $7.1 million, or $0.16 per diluted share, compared to $0.31 per diluted share during the second quarter 2006. Second quarter 2006 earnings are inclusive of non-recurring gains of $6.7 million from the liquidation of Rural Telephone Bank (RTB) class C stock that settled in April 2006 and $2.0 million from the Crest terrestrial asset purchase.
- Net cash provided by operating activities decreased to $18.8 million, or 17.1 percent, compared to $22.7 million of net cash in the same period a year ago. The reduction in operating cash flow was in line with expectations following the settlement of certain network access reserve and 2006 incentive compensation balances. Prior year cash flow also benefited from a non-recurring gain of $2.0 million.
- EBITDA was $32.4 million, an increase of 7.4 percent, compared to $30.1 million for the year ago period.
David Wilson, ACS senior vice president and chief financial officer, said, “Wireless revenues continue to ramp, growing 24 percent from a year ago to $33.3 million, driven by a 15 percent increase in average subscribers and a 9 percent increase in average revenue per user, or ARPU. Wireline revenues grew by 3 percent from a year ago to $59.9 million, driven primarily by Internet and long distance. Revenues earned from retail local access lines remains a key component of wireline revenue and while the number of retail local access lines declined by 2.7 percent over the prior year, this decline was offset by a corresponding 2.7 percent increase in ARPU driven by upselling activities and improved subscriber mix.”
“Our liquidity position continued to improve in the quarter with cash, restricted cash and investment balances increasing $3.1 million sequentially to $40.8 million. Major investments and uses of cash in the quarter included capital expenditures of $13.5 million, comprising $10.0 million in maintenance capital and $3.5 million in growth capital expenditures, and $9.2 million in dividend payments,” concluded Wilson.
Metric Highlights: Second Quarter 2007 Compared to First Quarter 2007
- Retail relationships grew for the 13th consecutive quarter, increasing by approximately 1,700 during Q2 to over 452,000.
- Increased wireless subscribers by 3.2 percent, or over 4,400, bringing the total to approximately 142,000.
- Average wireless monthly churn of 1.4 percent was unchanged from the prior quarter.
- Increased wireless ARPU, now $61.62, up from $60.60 in Q1, inclusive of CETC revenue of $9.92 and $10.26, respectively.
- DSL lines increased by 200 to approximately 45,700, reflective of second quarter sales focus.
- Retail local access lines declined by 1.1 percent to 192,000.
- Recorded approximately 238,600 total local access lines. Total local access lines decreased by approximately 7,300 or 3.0 percent, driven primarily by resale and UNE access lines leaving the network.
Six Months Financial Review
For the six months ended June 30, 2007, total revenues were $183.8 million, which represented a 9.6 percent increase over revenues of $167.7 million for the same period last year. Net income for the six months ended June 30, 2007, was $14.6 million, or $0.33 per diluted share, compared to net income of $5.1 million, or $0.12 per share, in the same period in 2006. Net cash provided by operating activities for the first half of 2007 was $46.6 million, as compared to $37.9 million in the same period in 2006. EBITDA for the six months ended June 30, 2007 was $64.8 million, an increase of 11.0 percent from $58.4 million in the same period last year.
2007 Business Outlook
Reaffirming guidance for the full-year 2007, revenues are expected to be in the range of $360 million to $370 million, and EBITDA is expected to be in the range of $120 million to $124 million, exclusive of stock-based compensation. For the year 2007, net cash interest expense is expected to be approximately $27 million.
ACS has also reaffirmed 2006 capital expenditure guidance to be approximately $46 million, comprised of maintenance capital expenditures of approximately $37 million and growth capital expenditures of approximately $9 million. The guidance presented is exclusive of ACS’ strategic investment.
Strategic Investment
“Our work continues on the strategic investment in fiber between Alaska and the Pacific Northwest, positioning ACS to more effectively compete for carrier, enterprise and government demand; to satisfy growing bandwidth needs; and to position ACS to capture favorable macroeconomic trends in Alaska,” said Pelletier. “Our project plans have met with tremendous market enthusiasm for a diverse route and an additional supplier, and the business case has clearly been reinforced. As a result, the project options have expanded and we will screen them to select the one that delivers the best long-term value for the company, consistent with our dividend policy and target capital structure objectives.”
Conference Call
The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time to discuss first quarter results. For parties in the United States and Canada, call 866-250-2351 to access the earnings call. Parties outside the United States and Canada can access the call at 303-262-2139.
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 2 hours after the call and will run until Monday, July 30, 2007 at midnight ET. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter pass code 11093306. Parties outside the United States and Canada should call 303-590-3000 and enter pass code 11093306.
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 www.acsalaska.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, 2007. 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 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, whether the company undertakes the strategic investment described above as well as the company’s ability to complete, manage, integrate, market, maintain, and attract sufficient customers to the products and services it may derive from this strategic investment. The company cannot assure you that the strategic investment, if made, will generate sufficient revenue at acceptable cost. Other factors are, without limitation, fluctuations in wireless revenue, including roaming revenue; changes in company's relationships with its roaming partners; increased competition, including from national wireless and local wireline facilities-based competitors; changes in revenue from Universal Service Funds; changes in capital expenditures, or other factors affecting the company's ability to generate sufficient earnings and cash flows to continue to make dividend payments to its stockholders; regulatory limitations on the company's ability to change its pricing or bundle its communications services or other public policy changes; the continued availability of financing necessary to support future business; changes in accounting policies or practices; changes in the demand for the company's products and services; rapid technological developments in the telecommunications industry; changes in interest rates or other general national, regional or local economic conditions, including changes in tourism in Alaska. 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 for the year ended December 31, 2006 and on Form 10-Q for the quarter ended March 31, 2007. 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.
– Tables Follow –
| Schedule 1 | ||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
| (Unaudited, in Thousands, Except per Share Amounts) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||
| Operating revenues: | ||||||||||||
| Wireline | $ | 59,906 | $ | 58,125 | $ | 118,737 | $ | 116,259 | ||||
| Wireless | 33,326 | 26,946 | 65,068 | 51,454 | ||||||||
| Total operating revenues | 93,232 | 85,071 | 183,805 | 167,713 | ||||||||
| Operating expenses: | ||||||||||||
| Wireline (exclusive of depreciation and amortization) | 44,516 | 41,537 | 88,365 | 83,642 | ||||||||
| Wireless (exclusive of depreciation and amortization) | 17,839 | 14,931 | 33,699 | 28,745 | ||||||||
| Depreciation and amortization | 16,408 | 16,034 | 32,696 | 33,131 | ||||||||
| Loss on disposal of assets, net | 21 | 383 | 24 | 1,105 | ||||||||
| Total operating expenses | 78,784 | 72,885 | 154,784 | 146,623 | ||||||||
| Operating income | 14,448 | 12,186 | 29,021 | 21,090 | ||||||||
| Other income and expense: | ||||||||||||
| Interest expense | (7,715 | ) | (7,643 | ) | (15,325 | ) | (15,617 | ) | ||||
| Loss on extinguishment of debt | - | - | - | (9,650 | ) | |||||||
| Interest income | 506 | 402 | 1,035 | 794 | ||||||||
| Other | (72 | ) | 8,561 | 8 | 8,517 | |||||||
| Total other income and expense | (7,281 | ) | 1,320 | (14,282 | ) | (15,956 | ) | |||||
| Income before income tax expense | 7,167 | 13,506 | 14,739 | 5,134 | ||||||||
| Income tax expense | (98 | ) | - | (105 | ) | - | ||||||
| Net income | $ | 7,069 | $ | 13,506 | $ | 14,634 | $ | 5,134 | ||||
| Net income per share: | ||||||||||||
| Basic | $ | 0.17 | $ | 0.32 | $ | 0.34 | $ | 0.12 | ||||
| Diluted | $ | 0.16 | $ | 0.31 | $ | 0.33 | $ | 0.12 | ||||
| Weighted average shares outstanding: | ||||||||||||
| Basic | 42,747 | 41,989 | 42,566 | 41,891 | ||||||||
| Diluted | 44,145 | 43,342 | 44,061 | 43,164 | ||||||||
| Schedule 2 | ||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In Thousands Except Per Share Amounts) | ||||||||
| Unaudited | ||||||||
| June 30, | December 31, | |||||||
| Assets | 2007 | 2006 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 38,275 | $ | 36,860 | ||||
| Restricted cash | 2,559 | 1,700 | ||||||
| Accounts receivable-trade, net of allowance of $8,467 and $7,434 | 40,188 | 39,801 | ||||||
| Materials and supplies | 10,073 | 7,977 | ||||||
| Prepayments and other current assets | 4,090 | 3,514 | ||||||
| Total current assets | 95,185 | 89,852 | ||||||
| Property, plant and equipment | 1,184,583 | 1,164,450 | ||||||
| Less: accumulated depreciation and amortization | 796,559 | 767,907 | ||||||
| Property, plant and equipment, net | 388,024 | 396,543 | ||||||
| Goodwill | 38,403 | 38,403 | ||||||
| Intangible Assets | 21,604 | 21,604 | ||||||
| Debt issuance costs | 8,494 | 9,437 | ||||||
| Deferred charges and other assets | 9,885 | 6,482 | ||||||
| Total assets | $ | 561,595 | $ | 562,321 | ||||
| Liabilities and Stockholders' Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term obligations | $ | 977 | $ | 1,025 | ||||
| Accounts payable-affiliate | - | 2,942 | ||||||
| Accounts payable, accrued and other current liabilities | 61,782 | 62,307 | ||||||
| Advance billings and customer deposits | 9,966 | 10,667 | ||||||
| Total current liabilities | 72,725 | 76,941 | ||||||
| Long-term obligations, net of current portion | 436,664 | 437,188 | ||||||
| Other deferred credits and long-term liabilities | 74,730 | 72,881 | ||||||
| Total liabilities | 584,119 | 587,010 | ||||||
| Stockholders' equity (deficit): | ||||||||
| Common stock, $.01 par value; 145,000 authorized | 428 | 423 | ||||||
| Paid in capital in excess of par value | 271,743 | 288,055 | ||||||
| Accumulated deficit | (300,099 | ) | (314,733 | ) | ||||
| Accumulated other comprehensive income (loss) | 5,404 | 1,566 | ||||||
| Total stockholders' equity (deficit) | (22,524 | ) | (24,689 | ) | ||||
| Commitments and contingencies | ||||||||
| Total liabilities and stockholders' equity (deficit) | $ | 561,595 | $ | 562,321 | ||||
Schedule 3 | |||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||
| CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||
| (Unaudited, in Thousands) | |||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||
| Cash Flows from Operating Activities: | |||||||||||||||
| Net income | $ | 7,069 | $ | 13,506 | $ | 14,634 | $ | 5,134 | |||||||
| Adjustments to reconcile net income to net cash provided (used) by operating activities: | |||||||||||||||
| Depreciation and amortization | 16,408 | 16,034 | 32,696 | 33,131 | |||||||||||
| Loss on disposal of assets, net | 21 | 383 | 24 | 1,105 | |||||||||||
| Gain on sale of long-term investment | - | (6,685 | ) | (152 | ) | (6,685 | ) | ||||||||
| Amortization of debt issuance costs and original issue discount | 479 | 479 | 952 | 4,213 | |||||||||||
| Stock based compensation | 1,566 | 1,647 | 3,248 | 3,223 | |||||||||||
| Other non-cash expenses | 263 | - | 263 | - | |||||||||||
| Changes in components of assets and liabilities: | |||||||||||||||
| Accounts receivable and other current assets | (5,499 | ) | (4,959 | ) | (3,059 | ) | (544 | ) | |||||||
| Accounts payable and other current liabilities | (971 | ) | 2,310 | (3,476 | ) | 1,772 | |||||||||
| Deferred charges and other assets | 16 | 570 | 162 | 44 | |||||||||||
| Other deferred credits | (551 | ) | (617 | ) | 1,263 | (3,534 | ) | ||||||||
| Net cash provided by operating activities | 18,801 | 22,668 | 46,555 | 37,859 | |||||||||||
| Cash Flows from Investing Activities: | |||||||||||||||
| Investment in construction and capital expenditures | (13,544 | ) | (12,243 | ) | (23,564 | ) | (20,658 | ) | |||||||
| Change in unsettled construction and capital expenditures | 6,334 | 1,040 | (808 | ) | (6,279 | ) | |||||||||
| Purchase of short-term investments | (18,815 | ) | (12,425 | ) | (36,040 | ) | (19,925 | ) | |||||||
| Proceeds from sale of short-term investments | 18,815 | 14,425 | 36,040 | 30,450 | |||||||||||
| Proceeds from liquidation of long-term investments | - | 7,663 | 162 | 7,663 | |||||||||||
| Placement of funds in restricted account | (997 | ) | - | (2,979 | ) | - | |||||||||
| Release of funds from escrow account | 519 | 965 | 2,120 | 965 | |||||||||||
| Net cash used by investing activities | (7,688 | ) | (575 | ) | (25,069 | ) | (7,784 | ) | |||||||
| Cash Flows from Financing Activities: | |||||||||||||||
| Payments of long-term debt | (214 | ) | (193 | ) | (632 | ) | (61,463 | ) | |||||||
| Proceeds from the issuance of long-term debt | - | - | - | 52,900 | |||||||||||
| Debt issuance costs | - | - | - | (1,349 | ) | ||||||||||
| Payment of cash dividend on common stock | (9,184 | ) | (9,020 | ) | (18,283 | ) | (17,356 | ) | |||||||
| Issuance of common stock | 874 | 564 | (1,156 | ) | 439 | ||||||||||
| Net cash used by financing activities | (8,524 | ) | (8,649 | ) | (20,071 | ) | (26,829 | ) | |||||||
| Increase in cash and cash equivalents | 2,589 | 13,444 | 1,415 | 3,246 | |||||||||||
| Cash and cash equivalents, beginning of period | 35,686 | 18,679 | 36,860 | 28,877 | |||||||||||
| Cash and cash equivalents, end of period | $ | 38,275 | $ | 32,123 | $ | 38,275 | $ | 32,123 | |||||||
| Supplemental Cash Flow Data: | |||||||||||||||
| Interest paid | $ | 7,017 | $ | 6,961 | $ | 14,285 | $ | 16,953 | |||||||
| Income taxes paid, net of refund | 219 | - | 353 | - | |||||||||||
| Supplemental Noncash Transactions: | |||||||||||||||
Property acquired under capital leases and mortgages | $ | - | $ | - | $ | 51 | $ | - | |||||||
| Dividend declared, but not paid | 21 | 28 | 9,210 | 9,060 | |||||||||||
Schedule 4 | ||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||
| SCHEDULE OF WIRELINE REVENUES AND EXPENSES | ||||||||||||
| (Unaudited, in Thousands) | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||
| Local network service | $ | 19,611 | $ | 20,159 | $ | 39,442 | $ | 40,056 | ||||
| Network access | 22,821 | 22,093 | 44,558 | 46,119 | ||||||||
| Deregulated and other | 5,058 | 5,234 | 10,820 | 9,586 | ||||||||
| Local telephone | 47,490 | 47,486 | 94,820 | 95,761 | ||||||||
| Internet | 7,710 | 6,089 | 14,782 | 12,075 | ||||||||
| Interexchange | 4,706 | 4,550 | 9,135 | 8,423 | ||||||||
| Total wireline revenue | $ | 59,906 | $ | 58,125 | $ | 118,737 | $ | 116,259 | ||||
| Local telephone | $ | 32,198 | $ | 31,519 | $ | 64,908 | $ | 63,628 | ||||
| Internet | 8,726 | 6,696 | 16,659 | 14,588 | ||||||||
| Interexchange | 3,592 | 3,322 | 6,798 | 5,426 | ||||||||
Total wireline expense (a) | $ | 44,516 | $ | 41,537 | $ | 88,365 | $ | 83,642 | ||||
(a) | Expenses are shown exclusive of depreciation and amortization. | |||||||||||
| Schedule 5 | ||||||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||||||
| SCHEDULE OF EBITDA CALCULATION | ||||||||||||||||
| (Unaudited, in Thousands) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Net cash provided by operating activities | $ | 18,801 | $ | 22,668 | $ | 46,555 | $ | 37,859 | ||||||||
| Adjustments to reconcile net income to net cash (provided) used by operating activities: | ||||||||||||||||
| Depreciation and amortization | (16,408 | ) | (16,034 | ) | (32,696 | ) | (33,131 | ) | ||||||||
| Loss on disposal of assets, net | (21 | ) | (383 | ) | (24 | ) | (1,105 | ) | ||||||||
| Gain on sale of long-term investment | - | 6,685 | 152 | 6,685 | ||||||||||||
| Amortization of debt issuance costs and original issue discount | (479 | ) | (479 | ) | (952 | ) | (4,213 | ) | ||||||||
| Stock based compensation | (1,566 | ) | (1,647 | ) | (3,248 | ) | (3,223 | ) | ||||||||
| Other non-cash expenses | (263 | ) | - | (263 | ) | - | ||||||||||
| Changes in components of assets and liabilities: | ||||||||||||||||
| Accounts receivable and other current assets | 5,499 | 4,959 | 3,059 | 544 | ||||||||||||
| Accounts payable and other current liabilities | 971 | (2,310 | ) | 3,476 | (1,772 | ) | ||||||||||
| Deferred charges and other assets | (16 | ) | (570 | ) | (162 | ) | (44 | ) | ||||||||
| Other deferred credits | 551 | 617 | (1,263 | ) | 3,534 | |||||||||||
| Net income | $ | 7,069 | $ | 13,506 | $ | 14,634 | $ | 5,134 | ||||||||
| Add (subtract): | ||||||||||||||||
| Interest expense | 7,715 | 7,643 | 15,325 | 15,617 | ||||||||||||
| Loss on extinguishment of debt | - | - | - | 9,650 | ||||||||||||
| Interest income | (506 | ) | (402 | ) | (1,035 | ) | (794 | ) | ||||||||
| Depreciation and amortization | 16,408 | 16,034 | 32,696 | 33,131 | ||||||||||||
| Loss on disposal of assets, net | 21 | 383 | 24 | 1,105 | ||||||||||||
| Gain on Crest asset purchase | - | (1,979 | ) | - | (1,979 | ) | ||||||||||
| Gain on sale of long-term investments | - | (6,685 | ) | (152 | ) | (6,685 | ) | |||||||||
| Income tax expense | 98 | - | 105 | - | ||||||||||||
| Stock based compensation | 1,566 | 1,647 | 3,248 | 3,223 | ||||||||||||
| EBITDA | $ | 32,371 | $ | 30,147 | $ | 64,845 | $ | 58,402 | ||||||||
| 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 gain before interest, provisions for taxes, depreciation expense, gain or loss on asset purchases or disposals, 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 6 | |||||||||||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||||||||
| ALLOCATION OF STOCK BASED COMPENSATION | |||||||||||||||
| (Unaudited, in Thousands) | |||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||
| June 30, 2007 | June 30, 2006 | ||||||||||||||
| As reported on Schedule 1 | Stock Based Compensation | Adjusted | As reported on Schedule 1 | Stock Based Compensation | Adjusted | ||||||||||
| Operating expenses: | |||||||||||||||
| Wireline (exclusive of depreciation and amortization) | $ | 44,516 | $ | (1,417 | ) | $ | 43,099 | $ | 41,537 | $ | (1,489 | ) | $ | 40,048 | |
| Wireless (exclusive of depreciation and amortization) | 17,839 | (149 | ) | 17,690 | 14,931 | (158 | ) | 14,773 | |||||||
| Depreciation and amortization | 16,408 | - | 16,408 | 16,034 | - | 16,034 | |||||||||
| Loss on disposal of assets, net | 21 | - | 21 | 383 | - | 383 | |||||||||
| Total operating expenses | $ | 78,784 | $ | (1,566 | ) | $ | 77,218 | $ | 72,885 | $ | (1,647 | ) | $ | 71,238 | |
| Six Months Ended | Six Months Ended | ||||||||||||||
| June 30, 2007 | June 30, 2006 | ||||||||||||||
| As reported on Schedule 1 | Stock Based Compensation | Adjusted | As reported on Schedule 1 | Stock Based Compensation | Adjusted | ||||||||||
| Operating expenses: | |||||||||||||||
| Wireline (exclusive of depreciation and amortization) | $ | 88,365 | $ | (2,924 | ) | $ | 85,441 | $ | 83,642 | $ | (2,915 | ) | $ | 80,727 | |
| Wireless (exclusive of depreciation and amortization) | 33,699 | (324 | ) | 33,375 | 28,745 | (308 | ) | 28,437 | |||||||
| Depreciation and amortization | 32,696 | - | 32,696 | 33,131 | - | 33,131 | |||||||||
| Loss on disposal of assets, net | 24 | - | 24 | 1,105 | - | 1,105 | |||||||||
| Total operating expenses | $ | 154,784 | $ | (3,248 | ) | $ | 151,536 | $ | 146,623 | $ | (3,223 | ) | $ | 143,400 | |
| The balances reported on Schedule 1 - Statement of Operations, include the company's adoption of FAS 123R Accounting for Stock-Based Compensation. This schedule shows the company's operating performance prior to that expense being recorded to allow analysis of the operating segments without these non-cash charges. | |||||||||||||||
| Schedule 7 | |||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||||
INVESTMENT IN CONSTRUCTION AND CAPITAL | |||||||||
| (Unaudited, in Thousands) | |||||||||
| Three Months Ended | Three Months Ended | Six Months Ended | Six Months Ended | ||||||
| June 30, | June 30, | June 30, | June 30, | ||||||
| 2007 | 2006 | 2007 | 2006 | ||||||
| Cash outlay for construction and capital expenditures | $ | 13,544 | $ | 12,243 | $ | 23,564 | $ | 20,658 | |
| Non-cash capital lease | - | - | 51 | - | |||||
| Investment in construction and capital | $ | 13,544 | $ | 12,243 | $ | 23,615 | $ | 20,658 | |
| Growth | 3,494 | 6,650 | 5,354 | 10,716 | |||||
| Maintenance and other | 10,050 | 5,593 | 18,261 | 9,942 | |||||
| Investment in construction and capital | $ | 13,544 | $ | 12,243 | $ | 23,615 | $ | 20,658 | |
| Schedule 8A | ||||||||||||
| ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | ||||||||||||
| KEY OPERATING STATISTICS | ||||||||||||
| (Unaudited) | ||||||||||||
| June 30, | March 31, | June 30, | ||||||||||
| 2007 | 2007 | 2006 | ||||||||||
| Local telephone: | ||||||||||||
| Retail access lines | 191,767 | 193,851 | 197,031 | |||||||||
| Resale access lines | 9,989 | 10,573 | 12,504 | |||||||||
| UNE lines | 36,822 | 41,453 | 53,231 | |||||||||
| Total local telephone access lines | 238,578 | 245,877 | 262,766 | |||||||||
| Average local telephone access lines for the quarter | 242,228 | 249,272 | 264,124 | |||||||||
| Average monthly local telephone revenue per line for the quarter | $ | 65.35 | $ | 63.29 | $ | 59.93 | ||||||
| Quarterly growth rate in local telephone access lines | -3.0 | % | -2.7 | % | -1.0 | % | ||||||
| Wireless: | ||||||||||||
| Covered population | 556,118 | 542,193 | 533,930 | |||||||||
| Post-paid wireless subscribers | 132,062 | 128,247 | 115,770 | |||||||||
| Average post-paid wireless subscribers | 130,155 | 126,656 | 113,474 | |||||||||
Average monthly churn for the quarter (b) | 1.3 | % | 1.3 | % | 1.2 | % | ||||||
Average monthly revenue per subscriber for the quarter (c) | $ | 64.11 | $ | 63.11 | $ | 58.85 | ||||||
| Prepaid wireless subscribers | 7,322 | 6,452 | 4,540 | |||||||||
| Resale wireless subscribers | 2,539 | 2,812 | 3,582 | |||||||||
| Total wireless subscribers | 141,923 | 137,511 | 123,892 | |||||||||
| Average subscribers for the quarter | 139,717 | 135,750 | 121,516 | |||||||||
Average monthly churn for the quarter (b) | 1.4 | % | 1.4 | % | 1.4 | % | ||||||
| Penetration | 25.5 | % | 25.4 | % | 23.2 | % | ||||||
Average monthly revenue per subscriber for the quarter (c) | $ | 61.62 | $ | 60.60 | $ | 56.51 | ||||||
| Long Distance: | ||||||||||||
| Long distance subscribers | 64,684 | 65,043 | 60,556 | |||||||||
| Average subscribers for the quarter | 64,864 | 64,519 | 59,554 | |||||||||
| Average monthly revenue per subscriber for the quarter | $ | 24.18 | $ | 22.88 | $ | 25.47 | ||||||
| Internet: | ||||||||||||
| DSL subscribers | 45,670 | 45,448 | 39,982 | |||||||||
| Dial-up subscribers | 10,968 | 11,728 | 14,738 | |||||||||
| Total Internet subscribers | 56,638 | 57,176 | 54,720 | |||||||||
| Average subscribers for the quarter | 56,907 | 56,917 | 54,373 | |||||||||
| Average monthly DSL & dial-up revenue per subscriber for the quarter | $ | 29.53 | $ | 29.01 | $ | 29.09 | ||||||
(b) | Prior year churn has been restated to negate the gross up of installs and disconnects that were caused by certain account changes. In prior periods, June 30, 2006 churn was reported at 1.6% and 1.7% for post-paid and total subscribers, respectively. | |||||||||||
(c) | CETC added $10.44 and $10.76 to postpaid wireless ARPU in the second and first quarters of 2007, respectively and $9.66 in the second quarter of 2006. CETC added $9.92 and $10.26 to total wireless ARPU in the second and first quarters of 2007, respectively and $9.32 in the second quarter of 2006. | |||||||||||
| Schedule 8B | |||||||
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. | |||||||
| KEY OPERATING STATISTICS | |||||||
| (Unaudited) | |||||||
| June 30, | March 31, | ||||||
| 2007 | 2007 | Net Movement | |||||
| Wireline retail relationships | |||||||
| Local telephone retail access lines | 191,767 | 193,851 | (2,084 | ) | |||
| Interexchange subscribers | 64,684 | 65,043 | (359 | ) | |||
| Internet subscribers | 56,638 | 57,176 | (538 | ) | |||
| 313,089 | 316,070 | (2,981 | ) | ||||
| Wireless retail relationships | |||||||
| Post-paid wireless subscribers | 132,062 | 128,247 | 3,815 | ||||
| Prepaid wireless subscribers | 7,322 | 6,452 | 870 | ||||
| 139,384 | 134,699 | 4,685 | |||||
| Total retail relationships | 452,473 | 450,769 | 1,704 | ||||
Contacts:
Director, Corporate Communications
Mary
Gasperlin, 907-297-3000 (Media)
mary.gasperlin@acsalaska.com
or
Investor
Relations, 907-564-7556 (Investors)
investors@acsalaska.com
