ALSK Alaska Communications Systems Group Inc

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

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
(Exact name of registrant as specified in its charter)

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 March 4, 2015, Alaska Communications Systems Group, Inc. (the “Company”) released its financial results for the year ended December 31, 2014.  The press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.  A presentation of supplemental information to be reviewed on the Company’s earnings call to be held on March 5, 2015 will be made available on the Company’s Investor Relations website at http://www.alsk.com at the time of the call and is incorporated herein by reference.

Pursuant to General Instruction B.2 of Form 8-K, the information in this Item 2.02 is being furnished to the Securities and Exchange Commission and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information in this Item 2.02 shall not be deemed to be incorporated by reference into the filings of the Corporation under the Securities Act of 1933.

Item 9.01     Financial Statements and Exhibits

Exhibit No.          Description

Exhibit 99.1          Alaska Communications Systems Group, Inc. Press Release dated March 4, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit Index

Exhibit 99.1

Alaska Communications Reports Strong 4Q and Year-End 2014 Results

-Achieved 2014 Guidance with Adjusted EBITDA of $92.6 million and revenues of $314.9 million-

-Full year Total Service and Other Revenue increased 8.0 percent-

-Full year Total Broadband Revenue increased 10.4 percent-

-Recent sale of wireless operations will bring leverage ratio to one of lowest in industry-

ANCHORAGE, Alaska--(BUSINESS WIRE)--March 4, 2015--Alaska Communications Systems Group, Inc. (NASDAQ:ALSK) today reported financial results for its fourth quarter and full year ended Dec. 31, 2014.

“Our 2014 results reflect stellar performance to a solid business plan. We have built and continue to expand our broadband and IT managed service franchise in a growing Alaska market. The sale of our wireless operations, which closed Feb. 2, 2015, was a bold strategic move. This transaction has eliminated the wireless overhang on our valuation, reduced our debt, and will bring our leverage ratio to one of the lowest in our industry.

“We enter 2015 with good business momentum, continuing our strong performance in broadband and IT managed services. Our margins will strengthen through the course of the year as we achieve synergies and remove costs associated with the wireless operations. We have turned a page in our journey and look forward to delivering significant value creation for our shareholders,” Anand Vadapalli, president and CEO of Alaska Communications, said.

Revenue Highlights: Year over Year Fourth Quarter

• Total service and other:
  • Revenue increased to $53.5 million from $50.5 million, up 5.9 percent
  • Total broadband revenue reached $17.5 million from $16.2 million, up 8.3 percent
• Business and wholesale service:
  • Revenue grew to $27.8 million from $25.6 million, up 8.7 percent
  • Broadband revenues reached $11.1 from $10.5, up 5.8 percent
• Consumer service:
  • Revenue grew to $10.3 million from $10.1 million, increasing 1.7 percent
  • Broadband revenues increased to $6.4 million from $5.7 million, up 13.0 percent

Earnings Highlights: Fourth Quarter and Year ended Dec. 31, 2014 compared to Dec. 31, 2013

• Adjusted EBITDA increased 34.0 percent to $22.3 million from $16.6 million, bringing the year to $92.6 million.
• Total operating revenue increased 1.6 percent to $77.5 million from $76.3 million, bringing the year to $314.9 million.
• Free Cash Flow was $3.4 million for the quarter and $16.2 million for the year.

Balance Sheet Highlights

• Cash remained strong at $31.7 million at Dec. 31, 2014, and with the closing of the wireless transaction, we are expecting higher cash balances in the first half of 2015.
• Deleveraging continues with total debt reductions during the year of $24.4 million to $436.4 million at Dec. 31, 2014.
• On Feb. 2, 2015, debt was further reduced by an additional $241 million and cash was increased by $10 million from the sale of the wireless operations.

Wayne Graham, Alaska Communications chief financial officer, said, “We accomplished our goal of positioning the company to achieve one of the lowest leverage ratios among operators in our industry by using a substantial portion of the proceeds from the sale of the wireless operations to pay down debt. We are performing to a plan to achieve our operational synergies from the sale of the wireless business, and our outlook for future performance is strong. Today, we are increasing our target run rate adjusted EBITDA exiting 2015 from $54 million provided at the time of the wireless sale to a range of $54 million to $56 million. We are poised to generate significant value for our shareholders.”

2015 Guidance:

Management’s focus is continued top line performance, steady deleveraging and achieving run rate adjusted EBITDA exiting 2015 through targeted synergies. Guidance for 2015 is as follows.

• Total Wireline Revenue of approximately $220 million
• Run rate Adjusted EBITDA exiting 2015 of $54 million to $56 million
• Capital expenditures range of $34 million to $36 million, with $16 million of success based capital
• Net debt at year end of approximately $159 million, resulting in our having one of the lowest leverage ratios in our industry

Investors are encouraged to listen to the earnings conference call and review page 16 of the earnings call presentation for a better understanding of guidance during this transition year.

Conference Call

The Company will host a conference call and live webcast on Thursday, March 5, 2015 at 5:00 p.m. Eastern Time to discuss the results. The live webcast will include a slide presentation. Parties in the United States and Canada can access the call at 1-888-554-1422 and enter pass code 563023. All other parties can access the call at 1-719-457-2663.

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 April 6, 2015 at 4:00 p.m. Eastern Time. To hear the replay, parties in the United States and Canada can call 1-888-203-1112 and enter pass code 1673988. All other parties can call 1-719-457-0820 and enter pass code 1673988.

About Alaska Communications

Alaska Communications (NASDAQ: ALSK) is a leading provider of advanced broadband and IT managed service solutions for businesses and consumers in Alaska. The Company operates a highly reliable, advanced statewide data and voice network with the latest technology and the most diverse undersea fiber optic system connecting Alaska to the contiguous United States. For more information, visit http://www.alaskacommunications.com or http://www.alsk.com.

Non-GAAP Measures

In an effort to provide investors with additional information regarding our financial results, in particular with regards to our liquidity and capital resources, we have disclosed certain non-GAAP financial information such as Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow, which management utilizes to assess performance and believes provides useful information to investors. The definition of these non-GAAP measures are on Schedules 4 and 5 to this press release. Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are non-GAAP measures 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. Reconciliations of our non-GAAP measures to our nearest GAAP measures can be found on our website at http://www.alsk.com in the investment data section. Other companies may not calculate non-GAAP measures in the same manner as ACS.

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 include, without limitation, Universal Service Fund changes adverse economic conditions, adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing, and the effects of competition in our markets, the Company’s ability to compete, manage, integrate, market, maintain, and attract sufficient customers for its products and services, adverse changes in labor matters, including workforce levels, labor negotiations, and benefits costs, disruption of our supplier’s provisioning of critical products or services, the impact of natural or man-made disasters, changes in Company's relationships with large customers, unforeseen changes in public policies, and changes in accounting policies, which could result in an impact on earnings. 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.

Non-GAAP Measures:

In an effort to provide investors with additional information regarding the Company's results as determined by GAAP, the Company also discloses certain non-GAAP information which management utilizes to assess recurring performance and believes provides useful information to investors regarding baseline operating results.

The Company has disclosed Adjusted EBITDA as net income before interest, loss on extinguishment of debt, depreciation and amortization, loss on the impairment of equity investments or other assets, loss on sale of short-term investments, gain or loss on asset purchases or disposals, earnings on equity method investments, provisions for taxes, transaction-related costs, stock-based compensation, and expenses under the company’s long term cash incentive plan (“LTCI”) including adjustments to TekMate purchase price based upon achieving earn out targets. LTCI expenses are considered part of an interim compensation structure to mitigate the dilutive impact of additional share issuances for executive compensation. Transaction related costs include $1,069 of inventory write downs associated with the AWN formation and sale transactions. Distributions from AWN are included in Adjusted EBITDA. Additionally, in July 2014 an undersea cable serving Juneau, Alaska was impacted by a service disruption associated with an earthquake. The costs associated with restoration and repair of this facility is excluded from Adjusted EBITDA.

Due to the AWN structure, ACS receives certain high cost revenues ("CETC") which are reported in operating revenue, non-affiliates, and remits an equal amount to AWN as a component of our consideration for wholesale wireless services, which is reported in Cost of services and sales, affiliated. From a financial reporting perspective CETC grosses up our revenue and expense and has no impact on Adjusted EBITDA, but impacts our core margins. We therefore report Adjusted EBITDA Margin to exclude this impact.

Non-GAAP Measures:

In an effort to provide investors with additional information regarding the Company's results as determined by GAAP, the Company also discloses certain non-GAAP information which management utilizes to assess recurring performance and believes provides useful information to investors regarding baseline operating results.

Free cash flow ("FCF") is defined as Adjusted EBITDA, less capital expenditures that create an obligation to pay (“incurred capital expenditures”), plus milestone billings for a fiber build project for a carrier customer, less AWN transaction-related capital costs, less amortization of AWN capacity revenue (which is a non cash revenue item), less earthquake related costs, less cash interest expense. Note that incurred capital spending includes the costs associated with a two year fiber build project with a strategic customer however we are adding back the cash we receive from the customer for the funding of that project to FCF. Accordingly, our capital spending will be elevated because of this project, but the project will be accretive to FCF.

Our debt balances exclude $2,394 associated with the capital leases held-for-sale in conjunction with the sale of our wireless operations. Our maturity schedule includes these balances.

CONTACT:
Alaska Communications Systems Group, Inc.
Investor Contact:
Tiffany Dunn, 907-297-3103
Manager, Board and Investor Relations
investors@acsalaska.com
or
Media Contact:
Hannah Blankenship, 907-564-1326
Associate Manager, Corporate Communications
Hannah.Blankenship@acsalaska.com