Alaska Communications Systems Reports Third Quarter 2009 Results
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-Total Revenue of $91.3 million level with Prior Year1-
-Wireless and Enterprise Total 53 percent of Revenue-
-Closes $10.3 Million Enterprise Contract-
- EBITDA Increases 2.8 percent to $34.9 Million -
-Reduces 2009 Annual Guidance for Revenue and EBITDA -
ANCHORAGE, Alaska--(BUSINESS WIRE)-- Alaska Communications Systems Group, Inc. ("ACS") (NASDAQ: ALSK) today reported financial results for its third quarter ended September 30, 2009.
"The ACS strategy of capturing growth in the enterprise and wireless segments to offset reductions in legacy wire line business continues to deliver the right kind of revenue and earnings mix," said Liane Pelletier, ACS president and chief executive officer. "For the quarter, we delivered stable revenue and EBITDA growth as a result of new enterprise customers buying business IP services."
"Our participation in the enterprise market is concentrated on selling data services as they most fundamentally allow ACS to help organizations transform how they do business. In the quarter 80 percent of enterprise revenue was data versus voice. Since the last call, the most substantial win came from a federal agency, with a solution valued at more than $10 million, to be earned over six years. Clearly, ACS will also continue to leverage its large Alaska footprint to serve lower 48 carrier voice needs as well, but this will be a volatile segment as carrier market shares shift, and as voice becomes a data application," said Pelletier.
"Our participation in the wireless market this year continues to challenge ACS - a function of the economy and the iPhone. In terms of the economy, reports just out summarize what ended up being the softest tourist season in years, affecting both Alaska businesses and visitors to the state. In terms of the $99 iPhone, ACS' high quality subscriber base, able to afford the monthly service charges associated with the iPhone, were again attracted away at very high rates. ACS remains focused on delivering superior mobile data coverage, speed and local service to attract data users. In the quarter, ACS generated more gross additions than the prior three quarters, and grew data ARPU 56 percent year over year, but the subscriber additions were insufficient to outpace churn to the iPhone. We look forward to introducing Android-powered handsets over the next few months and hope they will re-establish a level playing field in devices," concluded Pelletier.
Financial Highlights: Third Quarter 2009 Compared to Third Quarter 2008
-- Revenues of $91.3 million in line with $91.3 million in the prior year.
o Enterprise revenues increased $2.7 million, or 31 percent.
o Wireless revenue declined by $2.0 million or 5.0 percent due to
declines in roaming revenue and subscribers.
o Retail, wholesale and access wireline revenues declined by $0.7
million, or 1.7 percent, with the current quarter benefiting from $2.5
million in out-of-period network access reserves compared to $1.4
million in 2008.
-- EBITDA of $34.9 million was up 2.8 percent from prior year EBITDA of
$33.9 million:
o Wireline EBITDA of $18.2 million increased by 6.2 percent, with gains
in enterprise and higher levels of network access more than offsetting
declines in retail and wholesale.
o Wireless EBITDA of $16.7 million was in line with the prior year with
tight expense management offsetting lower contributions from
subscriber and roaming revenue.
-- Net cash provided by operating activities of $21.3 million was down 26.5
percent from $29.0 million in the prior year period. The annual decline
is entirely attributable to working capital changes.
-- Net income before extraordinary item of $0.3 million, or $0.01 per
diluted share, compared to net income of $1.8 million, or $0.04 per
diluted share, in the prior year. The decline in net income is
attributable to a $4.9 million increase in depreciation expense
resulting from an assessment that with changes in technology, asset
salvage values previously set by regulators and historically viewed as
reasonable, were no longer appropriate.
-- In the third quarter 2009, ACS ceased to follow regulatory accounting
rules following its July 1, 2009 conversion to price cap regulation and
recognized an extraordinary gain, net of tax, of $37.3 million following
the extinguishment of certain regulatory liabilities.
"While we are delighted with the enterprise contracts that we have closed in the quarter and the strength of our provisioning backlog, enterprise revenue did decline by $0.2 million on a sequential basis," said David Wilson, ACS executive vice president and chief financial officer. "In order to assess the underlying momentum in enterprise, a deeper dive into the major revenue drivers in the quarter is required:
-- Firstly, the expiration of a 2007 capacity exchange agreement with
another carrier mid way through the quarter resulted in a $0.4 million
drop in revenue that had no impact on EBITDA or cash flows;
-- Secondly, share shifts that took place one layer below our level of
carrier relationship resulted in a $0.4 million sequential decline in
voice revenue; and
-- Finally, we turned up $0.6 million of new business, significant, but
somewhat below our expectations."
"While we are changing our year end guidance to reflect challenges in our carrier voice and wireless businesses, and delays in booking new enterprise revenues, our dividend payout ratio for the year continues to be within the 70-75 percent range set by the board. In addition, we anticipate $3.3 million in non-recurring cash payments in the fourth quarter from certain enterprise customers, and this is excluded from guidance," concluded Wilson.
Metric Highlights: Third Quarter 2009 Compared to Second Quarter 2009
-- Wireless monthly churn of 2.4 percent compared to 2.0 percent in the
second quarter. Key drivers of the increase were a loss of market share
to the iPhone and higher ACS initiated disconnects for non-payment.
-- Total wireless subscribers decreased by approximately 2,300 to 139,700.
-- Wireless ARPU increased by $1.90 to $64.51 from $62.61 with a $0.54 gain
in data ARPU and a $1.76 gain in CETC. Data ARPU increased by 7.4
percent to $7.84 from $7.30.
-- DSL lines declined by 500 to 46,400 while ISP ARPU increased by 1.0
percent to $34.37.
-- Retail local access lines declined by 1.8 percent to 166,600 as a result
of cord cutting and seasonality.
-- Total local access lines decreased by approximately 2.3 percent to
189,800.
Nine Month Financial Review
For the nine months ended September 30, 2009, revenues were $263.4 million, compared to $264.3 million in the same period last year. Net income before extraordinary item was $3.7 million, or $0.08 per diluted share, compared to net income of $8.3 million, or $0.19 per diluted share, in the same period in 2008. Net cash provided by operating activities for the first nine months of 2009 was $73.0 million compared to $69.2 million in the same period in 2008. EBITDA for the nine months ended September 30, 2009 was $98.6 million, compared to $99.3 million in the same period last year.
2009 Business Outlook
For the full-year 2009, ACS is changing its revenue and EBITDA guidance.
-- Revenues are now expected to be approximately $350 million versus prior
guidance of exceeding this level; and
-- EBITDA is now expected to be approximately $128 million rather than
exceeding $132 million.
As previously reported ACS expects:
-- Maintenance capital expenditures are expected to be below the $40
million spent in 2008;
-- Funding required for the completion of AKORN; the upgrade of Northstar;
and the build of a second fiber route between Anchorage and Fairbanks to
be $11 million; and
-- Net cash interest expense of $36 million.
1 Our FCC approved conversion to price cap regulation went into effect July 1, 2009. At the effective date, ACS ceased to follow regulatory accounting rules resulting in the elimination of certain intercompany transactions with regulated affiliates that were not previously eliminated during consolidation. This change reduced the absolute level of reported revenue by approximately 10 percent but had no impact on the absolute levels of reported EBITDA or cash flows.
Conference Call
The company will host a conference call and live webcast today at 5:00 p.m. Eastern Time. Parties in the United States and Canada can call 866-225-8754 to access the conference call. Parties outside the United States and Canada can access the call at 480-629-9692. 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 two hours after the call and will run until Wednesday, November 11, 2009 at midnight ET. To hear the replay, parties in the United States and Canada can call 800-406-7325 and enter pass code 4176885. Parties outside the United States and Canada can call 303-590-3030 and enter pass code 4176885.
About Alaska Communications Systems
Headquartered in Anchorage, ACS is Alaska's leading provider of broadband and other wireline and wireless solutions to Enterprise and mass market customers. The ACS wireline operations include the state's most advanced data networks and the only diverse undersea fiber optic system connecting Alaska to the contiguous United States. The ACS wireless operations include a statewide 3G CDMA network, reaching across Alaska from the North Slope to Ketchikan, with coverage extended via best-in-class CDMA carriers in the Lower 49 and Canada. By investing in the fastest-growing market segments and attracting the highest-quality customers, ACS seeks to drive top and bottom-line growth, while continually improving customer experience and cost structure through process improvement. 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, 2009. 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, adverse national economic conditions, including continuing disruption in the U.S. capital markets, adverse local economic conditions, including an unexpected downturn in the Alaska oil and gas or tourism markets, 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; the company's ability to complete, manage, integrate, market, maintain, and attract sufficient customers to the products and services it may derive from the construction of AKORN and purchase and integration of Crest Communications Corporation; adverse changes in labor matters, including workforce levels and labor negotiations; disruption of our suppliers' provisioning of critical products or services; the impact of natural or man-made disasters; changes in company's relationships with large carrier or enterprise customers or its roaming partners; changes in revenue from Universal Service Funds; unforseen changes in public policies; changes in accounting policies, including the Company's application of regulatory accounting rules, which could result in an impact on earnings; or disruptive technological developments in the telecommunications industry. 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.
Schedule 1
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, In Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Total operating revenues $ 91,262 $ 91,285 $ 263,439 $ 264,267
Operating expenses:
Cost of services and sales 35,318 35,048 101,886 98,745
Selling, general & 21,895 25,402 66,846 72,630
administrative
Depreciation and amortization 23,724 18,790 59,784 54,391
Total operating expenses 80,937 79,240 228,516 225,766
Operating income 10,325 12,045 34,923 38,501
Other income and expense:
Interest expense (9,642 ) (8,886 ) (28,284 ) (25,258 )
Interest income 30 532 81 1,541
Other - (255 ) - (255 )
Total other income and expense (9,612 ) (8,609 ) (28,203 ) (23,972 )
Income before income tax 713 3,436 6,720 14,529
Income tax expense (388 ) (1,591 ) (3,018 ) (6,275 )
Income before extraordinary 325 1,845 3,702 8,254
item
Extraordinary item, net of tax 37,346 - 37,346 -
Net income $ 37,671 $ 1,845 $ 41,048 $ 8,254
Net income per share:
Basic:
Income on continuing $ 0.01 $ 0.04 $ 0.08 $ 0.19
operations
Extraordinary item, net of 0.84 - 0.85 -
tax
Net income $ 0.85 $ 0.04 $ 0.93 $ 0.19
Weighted average shares 44,354 43,603 44,100 43,302
outstanding
Diluted
Income before extraordinary $ 0.01 $ 0.04 $ 0.08 $ 0.19
item
Extraordinary item, net of 0.82 - 0.83 -
tax
Net income $ 0.83 $ 0.04 $ 0.91 $ 0.19
Weighted average shares 45,136 44,428 44,873 44,306
outstanding
Schedule 2
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited, In Thousands Except Per Share Amounts)
September 30, December 31,
Assets 2009 2008
Current assets:
Cash and cash equivalents $ 7,127 $ 1,326
Restricted cash 5,990 20,517
Accounts receivable-trade, net of allowance of 37,919 40,433
$6,984 and $5,912
Materials and supplies 9,689 9,404
Prepayments and other current assets 6,573 6,515
Deferred income taxes 13,933 21,145
Total current assets 81,231 99,340
Property, plant and equipment 1,425,035 1,392,951
Less: accumulated depreciation and amortization (945,306 ) (891,899 )
Property, plant and equipment, net 479,729 501,052
Non-current investments 855 1,005
Goodwill 8,850 8,850
Intangible assets, net 24,049 24,118
Debt issuance costs 6,614 8,554
Deferred income taxes 82,234 105,480
Deferred charges and other assets 648 452
Total assets $ 684,210 $ 748,851
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of long-term obligations $ 883 $ 666
Accounts payable, accrued and other current 59,894 74,028
liabilities
Advance billings and customer deposits 9,736 10,399
Total current liabilities 70,513 85,093
Long-term obligations, net of current portion 537,228 538,975
Other deferred credits and long-term liabilities 30,467 98,693
Total liabilities 638,208 722,761
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $.01 par value; 145,000 authorized 444 437
Additional paid in capital 207,154 231,813
Accumulated deficit (147,082 ) (188,130 )
Accumulated other comprehensive loss (14,514 ) (18,030 )
Total stockholders' equity 46,002 26,090
Total liabilities and stockholders' equity $ 684,210 $ 748,851
Schedule 3
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited, In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Cash Flows from Operating
Activities:
Net income $ 37,671 $ 1,845 $ 41,048 $ 8,254
Adjustments to reconcile net
income to net cash provided
(used) by operating
activities:
Depreciation and 23,724 18,790 59,784 54,391
amortization
Gain on extraordinary item, (37,346 ) - (37,346 ) -
net of tax
Amortization of debt
issuance costs and original 1,752 1,636 5,205 3,640
issue discount
Stock-based compensation 851 3,103 3,416 5,618
Deferred income taxes 388 1,647 3,018 6,331
Provision for uncollectible 1,562 996 3,632 3,616
accounts
Other non-cash expenses 224 291 1,242 1,115
Changes in operating assets (7,515 ) 706 (6,992 ) (13,766 )
and liabilities
Net cash provided by 21,311 29,014 73,007 69,199
operating activities
Cash Flows from Investing
Activities:
Investment in construction (16,585 ) (37,318 ) (37,258 ) (107,900 )
and capital expenditures
Change in unsettled
construction and capital 2,654 8,093 (9,450 ) 7,933
expenditures
Change in unsettled - - (250 ) -
acquisition costs
Net change in short-term - 375 - 790
investments
Net change in restricted 721 16,236 14,527 (54,835 )
accounts
Other investing activities 150 - 150 (1,350 )
Net cash used by investing (13,060 ) (12,614 ) (32,281 ) (155,362 )
activities
Cash Flows from Financing
Activities:
Repayments of long-term (3,220 ) (155 ) (30,185 ) (2,676 )
debt
Proceeds from the issuance 3,000 - 24,500 125,000
of long-term debt
Purchase of call options - - - (20,431 )
Sale of common stock - - - 9,852
warrants
Debt issuance costs - (56 ) - (4,309 )
Payment of cash dividend on (9,622 ) (9,370 ) (28,534 ) (27,901 )
common stock
Payment of withholding
taxes on stock-based (256 ) (7 ) (1,823 ) (3,321 )
compensation
Proceeds from issuance of 795 358 1,117 944
common stock
Net cash provided (used) by (9,303 ) (9,230 ) (34,925 ) 77,158
financing activities
Change in cash and cash (1,052 ) 7,170 5,801 (9,005 )
equivalents
Cash and cash equivalents, 8,179 19,033 1,326 35,208
beginning of period
Cash and cash equivalents, $ 7,127 $ 26,203 $ 7,127 $ 26,203
end of period
Supplemental Cash Flow Data:
Interest paid $ 10,747 $ 9,894 $ 28,371 $ 23,897
Income taxes paid, net of $ (669 ) $ - $ (669 ) $ 417
refunds
Supplemental Non-cash
Transactions:
Property acquired under $ 230 $ 1,301 $ 890 $ 1,359
capital leases
Dividend declared, but not $ 9,555 $ 9,386 $ 9,555 $ 9,386
paid
Asset retirement obligation $ 288 $ 59 $ 291 $ 91
Schedule 4
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF EBITDA CALCULATION
(Unaudited, In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net cash provided by $ 21,311 $ 29,014 $ 73,007 $ 69,199
operating activities
Adjustments to reconcile net
income to net cash
(provided) used by operating
activities:
Depreciation and (23,724 ) (18,790 ) (59,784 ) (54,391 )
amortization
Gain on extraordinary 37,346 - 37,346 -
item, net of tax
Amortization of debt
issuance costs and (1,752 ) (1,636 ) (5,205 ) (3,640 )
original issue discount
Stock-based (851 ) (3,103 ) (3,416 ) (5,618 )
compensation
Deferred income taxes (388 ) (1,647 ) (3,018 ) (6,331 )
Provision for (1,562 ) (996 ) (3,632 ) (3,616 )
uncollectible accounts
Other non-cash expenses (224 ) (291 ) (1,242 ) (1,115 )
Changes in operating 7,515 (706 ) 6,992 13,766
assets and liabilities
Net income $ 37,671 $ 1,845 $ 41,048 $ 8,254
Add (subtract):
Interest expense 9,642 8,886 28,284 25,258
Interest income (30 ) (532 ) (81 ) (1,541 )
Depreciation and 23,724 18,790 59,784 54,391
amortization
(Gain) loss on disposal
of assets, net and (15 ) 259 454 1,018
impairment of long-term
investments
Gain on extraordinary (37,346 ) - (37,346 ) -
item, net of tax
Income tax expense 388 1,591 3,018 6,275
Stock-based 851 3,103 3,416 5,618
compensation
EBITDA $ 34,885 $ 33,942 $ 98,577 $ 99,273
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 income
before interest, provisions for taxes, depreciation expense, gain or loss
Note: 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 5
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
SCHEDULE OF OPERATING REVENUE AND EBITDA MARGIN BY SEGMENT
(Unaudited, In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Operating Revenue
Retail $ 21,890 $ 22,197 $ 64,401 $ 67,138
Wholesale 2,836 3,452 8,795 11,160
Access 18,426 18,251 49,396 55,701
Enterprise 11,218 8,531 33,518 23,029
Wireline 54,370 52,431 156,110 157,028
Wireless 36,892 38,854 107,329 107,239
Total operating revenue $ 91,262 $ 91,285 $ 263,439 $ 264,267
Wireline EBITDA
Operating revenue $ 54,370 $ 52,431 $ 156,110 $ 157,028
Operating expenses
(exclusive of (36,921 ) (38,035 ) (110,710 ) (108,627 )
depreciation)
Stock-based compensation 761 2,753 3,056 4,985
Net loss on disposal of - 4 31 790
assets
Wireline EBITDA $ 18,210 $ 17,153 $ 48,487 $ 54,176
EBITDA Margin 33.5 % 32.7 % 31.1 % 34.5 %
Wireless EBITDA
Operating revenue $ 36,892 $ 38,854 $ 107,329 $ 107,239
Operating expenses
(exclusive of (20,292 ) (22,415 ) (58,022 ) (62,748 )
depreciation)
Stock-based compensation 90 350 360 633
Net (gain) loss on (15 ) - 423 (27 )
disposal of assets
Wireless EBITDA $ 16,675 $ 16,789 $ 50,090 $ 45,097
EBITDA Margin 45.2 % 43.2 % 46.7 % 42.1 %
Schedule 6
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
INVESTMENT IN CONSTRUCTION AND CAPITAL
(Unaudited, In Thousands)
Three Months Three Months Nine Months Ended Nine Months Ended
Ended Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
Investment
in $ 16,585 $ 37,318 $ 37,258 $ 107,900
construction
and capital
Capitalized (524 ) (1,090 ) (3,005 ) (2,079 )
interest
Investment
in
construction
and capital, $ 16,061 $ 36,228 $ 34,253 $ 105,821
net of
capitalized
interest
Growth 2,834 23,952 9,686 73,170
Maintenance 13,227 12,276 24,247 32,651
and other
Capital
funded by
the selling - - 320 -
shareholders
of Crest
Investment
in
construction
and capital, $ 16,061 $ 36,228 $ 34,253 $ 105,821
net of
capitalized
interest
Schedule 7
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
KEY OPERATING STATISTICS
(Unaudited)
September 30, June 30, September 30,
2009 (a) 2009 2008
Wireline:
Retail
Local 166,560 169,548 177,279
Quarterly growth rate in
retail local telephone -1.8 % -1.1 % -1.8 %
access lines
Average monthly revenue per $ 18.50 $ 19.66 $ 19.82
subscriber for the quarter
Long Distance
Long distance subscribers 60,970 61,807 64,692
Average monthly retail
revenue per subscriber for $ 19.51 $ 19.84 $ 20.65
the quarter
Internet
DSL subscribers 46,360 46,845 47,639
Dial-up subscribers 6,182 6,743 7,394
52,542 53,588 55,033
Average monthly DSL &
dial-up revenue per $ 34.37 $ 34.04 $ 32.09
subscriber for the quarter
Wholesale
Resale access lines 7,368 7,815 8,577
UNE lines 15,922 16,978 21,543
23,290 24,793 30,120
Quarterly growth rate in -6.1 % -3.7 % -10.6 %
wholesale local access lines
Average monthly revenue per $ 29.16 $ 29.23 $ 28.37
subscriber for the quarter
Wireless:
Wireless subscribers (b) 139,726 142,028 149,927
Average monthly churn for 2.4 % 2.0 % 2.1 %
the quarter (b)
Average monthly revenue per
retail subscriber for the $ 64.51 $ 62.61 $ 60.79
quarter (c)
Average monthly revenue per subscriber includes the full elimination
(a) of intercompany revenue and the reclass of bad debt expense from
contra revenue to SG&A expense.
(b) Prior period metrics have been adjusted reflecting
changes disclosed in our April 21, 2009 press release.
CETC added $14.46 to wireless ARPU in the third quarter of 2009,
(c) $12.70 in the second quarter of 2009, and $10.33 in the third quarter
of 2008.
Schedule 8
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
QUARTERLY OPERATIONS WITH RECLASS AND ELIMINATION ADJUSTMENTS
(Unaudited, In Thousands)
2009 2008
Q2 Q1 Q4 (a) Q3 (a) Q2 Q1
Operating
revenues:
Retail $ 21,069 $ 21,442 $ 22,148 $ 22,197 $ 22,548 $ 22,393
Wholesale 2,918 3,041 3,208 3,452 3,772 3,936
Access 15,352 15,618 16,531 18,251 16,238 21,212
Enterprise 11,463 10,837 10,109 8,531 7,630 6,868
Wireline 50,802 50,938 51,996 52,431 50,188 54,409
Wireless 35,217 35,220 34,875 38,854 34,964 33,421
Total operating 86,019 86,158 86,871 91,285 85,152 87,830
revenues
Operating
expenses:
Cost of
services and 34,225 32,343 33,278 35,048 32,964 30,733
sales
Selling,
general & 21,840 23,111 28,012 25,402 23,426 23,802
administrative
Depreciation
and 15,175 20,885 19,611 18,790 19,138 16,463
amortization
Loss on
impairment of
goodwill and - - 29,641 - - -
intangibles
assets
Total operating 71,240 76,339 110,542 79,240 75,528 70,998
expenses
Operating income 14,779 9,819 (23,671 ) 12,045 9,624 16,832
(loss)
Other income and
expense:
Interest (10,302 ) (8,340 ) (8,814 ) (8,886 ) (9,143 ) (7,229 )
expense
Interest 17 34 154 532 706 303
income
Other - - 10 (255 ) - -
Total other income (10,285 ) (8,306 ) (8,650 ) (8,609 ) (8,437 ) (6,926 )
and expense
Income (loss) 4,494 1,513 (32,321 ) 3,436 1,187 9,906
before income tax
Income tax
(expense) (1,961 ) (669 ) 13,250 (1,591 ) (554 ) (4,130 )
benefit
Net income (loss) $ 2,533 $ 844 $ (19,071 ) $ 1,845 $ 633 $ 5,776
Net income (loss)
per share:
Basic $ 0.06 $ 0.02 $ (0.44 ) $ 0.04 $ 0.01 $ 0.13
Diluted $ 0.06 $ 0.02 $ (0.44 ) $ 0.04 $ 0.01 $ 0.13
Weighted average
shares
outstanding:
Basic 44,195 43,746 43,656 43,603 43,362 42,939
Diluted 44,651 44,527 43,656 44,428 44,304 44,308
Financial results for Q3 and Q4 2008 have been also been adjusted for the bifurcation of
(a) our convertible debt and certain other reclassifications to make the historical
statements comparable to the current reporting format.
Source: Alaska Communications Systems Group, Inc.
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