-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HnmiMHIygC346iDo7qo1s6qYIe+VBGEeaVLKMrxPB7J/xrkSpUQ/J63UVtUROnl6 v4o2bJfDnMlXR1g+VI2HYw== 0001157523-07-001923.txt : 20070222 0001157523-07-001923.hdr.sgml : 20070222 20070222161018 ACCESSION NUMBER: 0001157523-07-001923 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070222 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070222 DATE AS OF CHANGE: 20070222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALASKA COMMUNICATIONS SYSTEMS GROUP INC CENTRAL INDEX KEY: 0001089511 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 522126573 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-28167 FILM NUMBER: 07642392 BUSINESS ADDRESS: STREET 1: 600 TELEPHONE AVENUE STREET 2: - CITY: ANCHORAGE STATE: AK ZIP: 99503 BUSINESS PHONE: 9072973000 MAIL ADDRESS: STREET 1: 600 TELEPHONE AVENUE STREET 2: - CITY: ANCHORAGE STATE: AK ZIP: 99503 FORMER COMPANY: FORMER CONFORMED NAME: ALEC HOLDINGS INC DATE OF NAME CHANGE: 19990624 8-K 1 a5340593.txt ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 22, 2007 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. ---------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-28167 52-2126573 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 600 Telephone Ave, Anchorage, Alaska 99503 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 907-297-3000 ------------------------------ - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02 Results of Operations and Financial Condition On February 22, 2007, Alaska Communications Systems Group, Inc. reported its financial results for the fiscal year ended December 31, 2006. The press release is attached hereto as Exhibit 99.1. The information in this Form 8-K shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, regardless of any general incorporation language in such filing. Item 9.01 Financial Statements and Exhibits Exhibit No. Description - ----------- ----------- Exhibit 99.1 Alaska Communications Systems Group, Inc. Press Release dated February 22, 2007 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned, thereunto duly authorized. Date: February 22, 2007 Alaska Communications Systems Group, Inc. /s/ David Wilson ----------------------------------------- David Wilson, Senior Vice President and Chief Financial Officer EX-99.1 2 a5340593ex991.txt EXHIBIT 99.1 Exhibit 99.1 Alaska Communications Systems Reports Fourth Quarter and Year-End 2006 Results - Revenues Increase 11.2% to $91.7 Million from $82.5 Million in Fourth Quarter 2005- - Cash Provided by Operating Activities Increases 9.0% to $26.5 Million - - EBITDA Increases to $31.4 Million, Up 17.4% Compared to Fourth Quarter 2005 - ANCHORAGE, Alaska--(BUSINESS WIRE)--Feb. 22, 2007--Alaska Communications Systems Group, Inc. ("ACS") (Nasdaq:ALSK) today reported financial results for its fourth quarter and year ended December 31, 2006. Liane Pelletier, ACS president and chief executive officer, stated, "Once again we have proven that with continued focus on fundamentals, we can achieve superior results. 2006 closed with total financial performance above plan, with liquidity in the stock enhanced through the sale of all remaining private equity interests, with a stronger management team and with many operating components significantly enhanced through process improvement. Over the last two plus years, ACS has continued to exceed its revenue and EBITDA targets, and demonstrated the value of its asset mix. The ACS team concluded the year with annual revenue growth of 7.0 percent and annual EBITDA growth of 8.5 percent, driving continued expansion in cash flow per share." "A stable incumbent local telephone company has effectively transformed into a growing wireless-wireline company that is driving top line growth while managing costs. As a result, ACS is well positioned to take advantage of further growth opportunities in its market," commented Pelletier. "Consistent with the direction conveyed in the last quarter's earnings release, ACS continues to evaluate certain Alaskan investment opportunities that will position the company for long term shareholder value enhancement. No further update is available as of today, but the Board and the executive team are focused on the evaluation and more will be reported as it is appropriate. In the meantime, the company is pleased to share a 2007 performance outlook that is consistent with what the organization has achieved over the past 3 years: continued growth in recurring revenue, EBITDA and distributable cash flow," concluded Pelletier. Financial Highlights: Fourth Quarter 2006 Compared to Fourth Quarter 2005 -- Revenues were $91.7 million, representing an 11.2 percent increase. -- Operating income increased to $13.9 million compared to fourth quarter 2005 operating income of $4.7 million. -- The Company posted net income of $6.1 million, or $0.14 per share (diluted). The net loss for the fourth quarter 2005 was $4.9 million or $0.12 per share. -- Net cash provided by operations increased 9.0 percent to $26.5 million. -- EBITDA increased to $31.4 million, up 17.4 percent. EBITDA performance benefited from $2.4 million of out-of-period CETC receipts. David Wilson, ACS senior vice president and chief financial officer, said, "The strength of our wireless offering continues to drive strong top and bottom line growth. Wireless revenue rose 38.7 percent to $32.7 million compared to $23.6 million a year ago. Our wireless subscribers grew 14 percent annually to 134,000; and ARPU grew by 5.8 percent annually to $60.01. Wireless performance also benefited from foreign roaming revenue of $3.2 million and the receipt of $2.4 million of out of period CETC revenue which helped expand wireless EBITDA margin to just under 50 percent in the quarter." "Strong organic top line growth coupled with stringent cost containment continues to drive cash flow expansion, with $90.7 million of cash generated from operating activities in 2006, up 61.1 percent over the prior year. We remain well positioned from a liquidity standpoint and exited the year with cash, restricted cash and investments of $38.6 million, down only $5.3 million in a year where we delevered by $9.0 million and invested $21.0 million in our pre-funded capex program," added Wilson. Metric Highlights: Fourth Quarter 2006 Compared to Third Quarter 2006 -- Increased the total number of retail customer relationships across all product lines by approximately 7,100 to 446,400. -- Increased wireless subscribers by 3.4 percent, or approximately 4,400, bringing the total to almost 134,000. -- Recorded post-paid churn of 1.8 percent compared to 1.7 percent in the prior quarter. Overall average wireless monthly churn was 2.1 percent compared to 1.9 percent. As expected churn was impacted by the aggressive transition of subscribers from the TDMA to the CDMA network and by troop deployments. -- Recorded wireless ARPU of $60.01, a seasonally consistent shift from $60.77 in Q3, inclusive of CETC revenue of $9.85 and $9.82, respectively. -- Increased long distance subscribers by over 2,000 to approximately 64,000 customers. -- Retail local access lines declined by 0.6 percent to 195,000 while DSL lines increased 5.6 percent to over 44,000 lines. DSL line gains exceeded 2,300 while retail local access lines losses were only 1,200. -- Recorded approximately 252,700 total local network access lines. Total access lines decreased by approximately 6,500 or 2.5 percent. Annual Financial Review For the year ended December 31, 2006: -- Total revenues were $349.8 million, which represented a 7.0 percent increase over 2005 revenues of $326.8 million. -- Net income for 2006 was $20.0 million, or $0.46 per share (diluted), as compared to a net loss of $41.6 million, or $1.04 per share, in 2005; -- Net cash provided by operating activities for 2006 was $90.7 million as compared to $56.3 million in 2005. - -0- *T - -- EBITDA for 2006 was $121.9 million, an increase of 8.5 percent from $112.4 million in 2005. 2006 performance benefited from: -- $2.4 million of out of period CETC revenue received in the fourth quarter; -- $1.0 million vendor credit received in the first quarter; and -- Strong network access revenue that management estimates was $2 million higher than long term trends. *T -- Investment in construction and capital investments totaled $59.4 million, comprising maintenance capital spend of $37.3 million; investments in pre-funded growth capital expenditures of $21.0 million; and $1.1 million of IRU capacity funded as part of a negotiated settlement. 2007 Business Outlook For the full year 2007, revenues are expected to be in the range of $350 million to $360 million, and EBITDA is expected to be in the range of $118 million to $122 million. As noted above under the heading "Annual Financial Review," 2006 EBITDA performance benefited from out of period CETC revenue, a significant vendor credit and network access revenue that was higher than long term trends. For 2007 ACS expects net cash interest expense to be approximately $27 million and capital expenditures to be approximately $42 million, comprised of maintenance capital expenditures of approximately $37 million; and wireless capacity augmentation in the major tourist corridors of $5 million, funded by excess cash generated in 2006. Conference Call The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time to discuss fourth quarter results. For parties in the United States and Canada, call 800-240-2430 to access the earnings call. International parties can access the call at 303-262-2137. The live webcast of the conference call is 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, February 26, 2007 at midnight ET. To hear the replay, parties in the United States and Canada should call 800-405-2236 and enter pass code 11083252. International parties should call 303-590-3000 and enter pass code 11083252. 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, fluctuations in wireless revenue, including roaming revenue; changes in the company's relationships with its roaming partners; increased competition, including wireline facilities-based competition; changes in capital expenditures, strategic investments, or other factors affecting the company's ability to generate sufficient earnings and cash flows to continue to make dividend payments to its stockholders; changes in revenue from Universal Service Funds; 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, retail and wholesale; 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 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. All information in this release is as of February 22, 2007. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company's expectations. Tables Follow Schedule 1 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited, in Thousands, Except per Share Amounts) Three Months Twelve Months Ended Ended December 31, December 31, ---------------- ------------------ 2006 2005 2006 2005 -------- ------- --------- -------- Operating revenues: Local telephone $48,435 $49,455 $192,058 $202,842 Wireless 32,689 23,565 115,584 86,235 Internet 6,602 5,490 25,221 21,672 Interexchange 4,002 3,965 16,954 16,060 -------- ------- --------- -------- Total operating revenues 91,728 82,475 349,817 326,809 Operating expenses: Local telephone 34,182 32,474 130,178 126,982 Wireless 16,610 13,191 62,022 49,407 Internet 7,987 6,714 29,625 23,298 Interexchange 3,478 4,683 12,633 17,314 Depreciation and amortization 15,590 20,759 63,259 82,819 Loss (gain) on disposal of assets, net - (84) 1,105 (152) -------- ------- --------- -------- Total operating expenses 77,847 77,737 298,822 299,668 Operating income 13,881 4,738 50,995 27,141 Other income and expense: Interest expense (7,764) (8,685) (31,103) (35,894) Loss on extinguishment of debt - (1,790) (9,650) (34,882) Interest income 549 929 1,835 2,253 Other (83) (122) 8,360 (253) -------- ------- --------- -------- Total other income and expense (7,298) (9,668) (30,558) (68,776) -------- ------- --------- -------- Net income (loss) before income tax expense 6,583 (4,930) 20,437 (41,635) Income tax expense (443) - (443) - -------- ------- --------- -------- Net income (loss) $ 6,140 $(4,930) $ 19,994 $(41,635) ======== ======= ========= ======== Net income (loss) per share: Basic $ 0.15 $ (0.12) $ 0.48 $ (1.04) ======== ======= ========= ======== Diluted $ 0.14 $ (0.12) $ 0.46 $ (1.04) ======== ======= ========= ======== Weighted average shares outstanding: Basic 42,249 41,580 42,045 40,185 -------- ------- --------- -------- Diluted 43,820 41,580 43,387 40,185 -------- ------- --------- -------- Schedule 2 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONSOLIDATED BALANCE SHEETS (Unaudited, In Thousands Except Per Share Amounts) December December 31, 31, Assets 2006 2005 ----------- ---------- Current assets: Cash and cash equivalents $ 36,860 $ 28,877 Restricted cash 1,700 4,415 Short-term investments - 10,525 Accounts receivable-trade, net of allowance of $7,434 and $6,206 39,801 41,080 Materials and supplies 7,977 7,885 Prepayments and other current assets 3,514 3,445 ----------- ---------- Total current assets 89,852 96,227 Property, plant and equipment 1,164,450 1,116,780 Less: accumulated depreciation and amortization 767,907 718,750 ----------- ---------- Property, plant and equipment, net 396,543 398,030 Goodwill 38,403 38,403 Intangible Assets 21,604 21,688 Debt issuance costs 9,437 11,733 Deferred charges and other assets 6,482 10,332 ----------- ---------- Total assets $ 562,321 $ 576,413 =========== ========== Liabilities and Stockholders' Equity (Deficit) Current liabilities: Current portion of long-term obligations $ 1,025 $ 683 Accounts payable-affiliate 2,942 2,844 Accounts payable, accrued and other current liabilities 62,307 54,920 Advance billings and customer deposits 10,667 9,712 ----------- ---------- Total current liabilities 76,941 68,159 Long-term obligations, net of current portion 437,188 444,895 Other deferred credits and long-term liabilities 72,881 82,223 ----------- ---------- Total liabilities 587,010 595,277 ----------- ---------- Stockholders' equity (deficit): Common stock, $.01 par value; 145,000 authorized, 42,323 and 46,230 issued and 42,323 and 41,681 outstanding, respectively 423 462 Treasury stock, 0 and 4,549 shares at cost - (18,443) Paid in capital in excess of par value 288,055 333,522 Accumulated deficit (314,733) (334,727) Accumulated other comprehensive income 1,566 322 ----------- ---------- Total stockholders' equity (deficit) (24,689) (18,864) ----------- ---------- Commitments and contingencies Total liabilities and stockholders' equity (deficit) $ 562,321 $ 576,413 =========== ========== Schedule 3 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited, in Thousands) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ------------------- 2006 2005 2006 2005 --------- -------- --------- --------- Cash Flows from Operating Activities: Net income (loss) $ 6,140 $ (4,930) $ 19,994 $ (41,635) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 15,590 20,759 63,259 82,819 Loss (gain) on disposal of assets, net - (84) 1,105 (152) Gain on sale of long-term investments - - (6,685) - Amortization of debt issuance costs and original issue discount 484 1,252 5,180 18,760 Other non-cash expenses 234 109 234 109 Stock based compensation 1,979 1,417 6,870 2,800 Changes in components of assets and liabilities: Accounts receivable and other current assets 2,865 2,923 1,118 (2,650) Accounts payable and other current liabilities 8,208 506 8,556 (7,977) Other deferred credits (13,349) 1,986 (12,774) 502 Deferred charges and other assets 4,351 376 3,882 3,760 --------- -------- --------- --------- Net cash provided by operating activities 26,502 24,314 90,739 56,336 Cash Flows from Investing Activities: Construction and capital expenditures (19,795) (15,584) (60,216) (58,422) Purchase of short-term investments (17,900) (13,250) (57,500) (95,095) Proceeds from the sale of short-term investments 17,900 22,050 68,025 119,770 Sale of long-term investments - - 7,663 - Placement of funds in restricted account - (400) - (700) Release of funds from escrow - 475 2,715 975 --------- -------- --------- --------- Net cash used by investing activities (19,795) (6,709) (39,313) (33,472) Cash Flows from Financing Activities: Payments of long-term debt (202) (12,182) (61,860) (459,015) Proceeds from the issuance of long-term debt - - 52,900 375,000 Debt issuance costs - - (1,349) (11,307) Payment of dividend on common stock (9,072) (8,306) (35,475) (30,393) Issuance of common stock 1,185 73 2,341 88,885 Stock issuance costs - - - (7,817) --------- -------- --------- --------- Net cash used by financing activities (8,089) (20,415) (43,443) (44,647) Increase/(decrease) in cash and cash equivalents (1,382) (2,810) 7,983 (21,783) Cash and cash equivalents, beginning of period 38,242 31,687 28,877 50,660 --------- -------- --------- --------- Cash and cash equivalents, end of period $ 36,860 $ 28,877 $ 36,860 $ 28,877 ========= ======== ========= ========= Supplemental Cash Flow Data: Interest paid $ 7,025 $ 6,472 $ 31,280 $ 39,474 Income taxes paid, net of refund 264 - 264 - (Increase)/decrease in accounts payable for construction and capital expenditures (741) (5,975) 915 (5,975) Supplemental Noncash Transactions: Property acquired under capital leases and mortgages $ 60 $ - $ 60 $ - Dividend declared, but not paid 28 30 9,105 8,347 Schedule 4 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF LOCAL TELEPHONE REVENUES (Unaudited, in Thousands) Three Months Twelve Months Ended Ended December 31, December 31, ---------------- ------------------ 2006 2005 2006 2005 -------- ------- --------- -------- Local telephone revenue: Local network service $19,750 $20,807 $ 80,177 $ 86,482 Network access 22,689 22,836 90,894 92,379 Deregulated and other 5,996 5,812 20,987 23,981 -------- ------- --------- -------- Total local telephone revenue $48,435 $49,455 $192,058 $202,842 ======== ======= ========= ======== Schedule 5 ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. SCHEDULE OF EBITDA CALCULATION (Unaudited, in Thousands) Three Months Ended Twelve Months Ended December 31, December 31, ------------------ ------------------ 2006 2005 2006 2005 --------- -------- --------- -------- Net cash provided by operating activities $ 26,502 $ 24,314 $ 90,739 $ 56,336 Adjustments to reconcile net income to net cash (provided) used by operating activities: Depreciation and amortization (15,590) (20,759) (63,259) (82,819) Gain (loss) on disposal of assets, net - 84 (1,105) 152 Gain on sale of long-term investments - - 6,685 - Amortization of debt issuance costs and original issue discount (484) (1,252) (5,180) (18,760) Other non-cash expenses (234) (109) (234) (109) Stock based compensation (1,979) (1,417) (6,870) (2,800) Changes in components of assets and liabilities: Accounts receivable and other current assets (2,865) (2,923) (1,118) 2,650 Accounts payable and other current liabilities (8,208) (506) (8,556) 7,977 Other deferred credits 13,349 (1,986) 12,774 (502) Deferred charges and other assets (4,351) (376) (3,882) (3,760) --------- -------- --------- -------- Net income (loss) $ 6,140 $ (4,930) $ 19,994 $(41,635) Add (subtract): Interest expense 7,764 8,685 31,103 35,894 Loss on extinguishment of debt - 1,790 9,650 34,882 Interest income (549) (929) (1,835) (2,253) Depreciation and amortization 15,590 20,759 63,259 82,819 (Gain) loss on disposal of assets, net - (84) 1,105 (152) Gain on Crest asset purchase - - (1,979) - Income tax expense 443 - 443 - Gain on sale of long-term investment - - (6,685) - Stock based compensation 1,979 1,417 6,870 2,800 --------- -------- --------- -------- EBITDA $ 31,367 $ 26,708 $121,925 $112,355 ========= ======== ========= ======== 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 between Segments (Unaudited, in Thousands) Three Months Ended December 31, 2006 ------------------------------------------ As reported on Stock Based Schedule 1 Compensation Adjusted ----------------- -------------- --------- Operating expenses: Local telephone $ 34,182 $(1,682) $ 32,500 Wireless 16,610 (203) 16,407 Internet 7,987 (81) 7,906 Interexchange 3,478 (13) 3,465 Depreciation and amortization 15,590 - 15,590 Loss on disposal of assets, net - - - ----------------- -------------- --------- Total operating expenses $ 77,847 $(1,979) $ 75,868 ================= ============== ========= Twelve Months Ended December 31, 2006 ------------------------------------------ As reported on Stock Based Schedule 1 Compensation Adjusted ----------------- -------------- --------- Operating expenses: Local telephone $130,178 $(5,880) $124,298 Wireless 62,022 (677) 61,345 Internet 29,625 (269) 29,356 Interexchange 12,633 (44) 12,589 Depreciation and amortization 63,259 - 63,259 (Gain) loss on disposal of assets, net 1,105 - 1,105 ----------------- -------------- --------- Total operating expenses $298,822 $(6,870) $291,952 ================= ============== ========= Three Months Ended December 31, 2005 ------------------------------------- As reported on Stock Based Schedule 1 Compensation Adjusted ------------ -------------- --------- Operating expenses: Local telephone $ 32,474 $(1,229) $ 31,245 Wireless 13,191 (129) 13,062 Internet 6,714 (53) 6,661 Interexchange 4,683 (6) 4,677 Depreciation and amortization 20,759 - 20,759 Loss on disposal of assets, net (84) - (84) ------------ -------------- --------- Total operating expenses $ 77,737 $(1,417) $ 76,320 ============ ============== ========= Twelve Months Ended December 31, 2005 ------------------------------------- As reported on Stock Based Schedule 1 Compensation Adjusted ------------ -------------- --------- Operating expenses: Local telephone $126,982 $(2,432) $124,550 Wireless 49,407 (252) 49,155 Internet 23,298 (104) 23,194 Interexchange 17,314 (12) 17,302 Depreciation and amortization 82,819 - 82,819 (Gain) loss on disposal of assets, net (152) - (152) ------------ -------------- --------- Total operating expenses $299,668 $(2,800) $296,868 ============ ============== ========= 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 Expenditures (Unaudited, in Thousands) Three Twelve Twelve Months Months Months Ended Ended Ended December December December 31, 31, 31, 2006 2006 2005 -------- -------- -------- Cash outlay for construction and capital expenditures $19,795 $60,216 $58,422 Increase/(decrease) in accounts payable for construction and capital expenditures 741 (915) 5,975 Non-cash capital lease 60 60 - -------- -------- -------- Investment in construction and capital $20,596 $59,361 $64,397 ======== ======== ======== Growth 4,569 21,003 26,735 Maintenance 16,027 37,258 35,044 IRU funded from Crest settlement - 1,100 - Investment funded by excess 2005 cash - - 2,618 -------- -------- -------- Investment in construction and capital $20,596 $59,361 $64,397 ======== ======== ======== Schedule 8A ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING STATISTICS (Unaudited) December September December 31, 30, 31, 2006 2006 2005 --------- --------- --------- Local telephone: Retail access lines 194,815 195,997 199,341 Resale access lines 11,226 12,045 13,966 UNE lines 46,626 51,089 57,578 --------- --------- --------- Total local telephone access lines 252,667 259,131 270,885 ========= ========= ========= Average local telephone access lines for the quarter 255,899 260,949 274,455 Average monthly local telephone revenue per line for the quarter $ 63.09 $ 61.14 $ 60.06 Quarterly growth rate in local telephone access lines -2.5% -1.4% -2.6% Wireless: Covered population 541,940 534,542 523,827 Post-paid wireless subscribers 125,064 121,066 107,144 Average post-paid wireless subscribers 123,065 118,418 103,721 Quarterly growth rate - post- paid wireless subscribers 3.3% 4.6% 6.8% Average monthly churn for the quarter 1.8% 1.7% 1.8% Average monthly revenue per subscriber for the quarter(a) $ 62.16 $ 62.94 $ 60.74 Prepaid wireless subscribers 5,907 5,023 5,710 Resale wireless subscribers 3,017 3,481 4,683 Total wireless subscribers 133,988 129,570 117,537 Average subscribers for the quarter 131,779 126,731 114,588 Quarterly growth rate 3.4% 4.6% 5.3% Average monthly churn for the quarter 2.1% 1.9% 2.0% Penetration 24.7% 24.2% 22.4% Average monthly revenue per subscriber for the quarter(a) $ 60.01 $ 60.77 $ 56.71 Long Distance: Long distance subscribers 63,995 61,984 56,317 Average subscribers for the quarter 62,990 61,270 54,938 Average monthly revenue per subscriber for the quarter $ 21.18 $ 24.64 $ 24.06 Internet: DSL subscribers 44,066 41,744 35,844 Dial-up subscribers 12,591 13,555 17,401 --------- --------- --------- Total Internet subscribers 56,657 55,299 53,245 ========= ========= ========= Average subscribers for the quarter 55,978 55,010 52,751 Average monthly DSL & dial-up revenue per subscriber for the quarter $ 28.88 $ 29.40 $ 29.15 (a) Wireless ARPU has been restated to exclude late fees and early termination charges and to allocate competitive eligible telecommunications carrier (CETC) revenue only to postpaid and wholesale subscribers. CETC added $10.29 and 10.20 to postpaid wireless ARPU in the fourth and third quarter of 2006, respectively and $9.33 in the fourth quarter of 2005. CETC added $9.85 and $9.82 to total wireless ARPU in the fourth and third quarter of 2006, respectively and $8.84 in the fourth quarter of 2005. Out of period CETC revenue is excluded from ARPU. Schedule 8B ALASKA COMMUNICATIONS SYSTEMS GROUP, INC. KEY OPERATING STATISTICS (Unaudited) December September 31, 30, Net 2006 2006 Movement -------- --------- ---------- Local telephone retail access lines 194,815 195,997 (1,182) Post-paid wireless subscribers 125,064 121,066 Prepaid wireless subscribers 5,907 5,023 -------- --------- 130,971 126,089 4,882 -------- --------- Long distance subscribers 63,995 61,984 2,011 DSL and dial up subscribers 56,657 55,299 1,358 -------- --------- ---------- Total retail relationships 446,438 439,369 7,069 ======== ========= ========== CONTACT: ACS Investors (Investors) Alaska Communications Systems Investor Relations, 907-564-7556 investors@acsalaska.com or ACS Corporate Communications (Media) Mary Gasperlin, 907-297-3000 Director, Corporate Communications mary.gasperlin@acsalaska.com -----END PRIVACY-ENHANCED MESSAGE-----