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):
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March
3, 2016
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ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
(Exact
name of registrant as specified in its charter)
Delaware
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000-28167
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52-2126573
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(State or other jurisdiction
of incorporation)
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(Commission
File Number)
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(IRS Employer
Identification No.)
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600 Telephone Ave, Anchorage, Alaska
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99503
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s telephone number, including area code
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907 - 297 - 3000
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(Former name or former address, if changed since last report.)
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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 3, 2016, Alaska Communications Systems Group, Inc. (the
“Company”) released its financial results for the fourth quarter and
year ended December 31, 2015. 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 3, 2016 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 3, 2016.
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.
Date: March 3, 2016
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Alaska Communications Systems Group, Inc.
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/s/ Leonard A. Steinberg
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Leonard A. Steinberg
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Corporate Secretary
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Exhibit Index
Exhibit No.
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Description
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99.1
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Alaska Communications Systems Group, Inc. Press Release dated
March 3 2016.
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Exhibit 99.1
Alaska
Communications Reports Strong Fourth Quarter and Year-End 2015 Results
-Achieved
Run-Rate Adjusted EBITDA of $55.4 million, in line with 2015 guidance-
-Posted
Total Wireline Revenues of $219.8 million, a 2.2% increase-
-Reported
full-year Business and Wholesale Revenue growth of 9.3% -
ANCHORAGE, Alaska--(BUSINESS WIRE)--March 3, 2016--Alaska Communications
Systems Group, Inc. (NASDAQ: ALSK) today reported financial results for
its fourth quarter and full year ended Dec. 31, 2015.
“Alaska Communications set high goals for 2015. We successfully
transitioned out of wireless operations and streamlined the business
with a focus on areas of maximum opportunity such as a fiber broadband
and IT managed services. Business and Wholesale revenue grew 9.3
percent, ahead of our longer term directional guidance and demonstrating
our ability to take share. Achieving all of our planned wireless sale
synergies, we delivered on our run-rate Adjusted EBITDA guidance.
“We are entering 2016 with momentum, positioning to become the premier
cloud enabler for business. We expect to drive increasingly profitable
growth and free cash flow expansion to generate long-term shareholder
value,” Anand Vadapalli, president and CEO of Alaska Communications said.
Revenue Highlights: Year over Year Fourth Quarter
-
Total service and other, representing Total Wireline revenues
excluding any stub period wireless revenues:
-
Revenue increased to $56.6 million from $53.5 million, up 5.8
percent.
-
Total broadband revenue reached $19.4 million from $17.5 million,
up 10.4 percent.
-
Business and wholesale service:
-
Comprised 56.8 percent of total service and other revenue.
-
Revenue grew to $32.2 million from $27.8 million, up 15.7 percent.
-
Broadband revenues reached $13.4 from $11.1, up 20.8 percent.
-
Consumer service:
-
Comprised 17.0 percent of total service and other revenue.
-
Revenue was $9.7 million, down 6.3 percent from $10.3 million.
-
Broadband revenue was $5.9 million, down 7.6 percent from $6.4
million.
-
Access and Other:
-
Comprised 26.1 percent of total service and other revenue.
-
Revenue was $14.8 million, down 4.0 percent from $15.4 million.
Financial Highlights: Fourth Quarter and Year ended Dec. 31, 2015
-
Adjusted EBITDA of $13.8 million, bringing the fourth quarter annual
run-rate to $55.4 million.
-
Total operating revenue of $56.6 million, bringing the year to $232.8
million, including total service and other revenues of $219.8 million.
-
Net capital expenditures were $8.2 million for the quarter and $32.9
million for the year.
-
Net debt at year-end of $161.7 million.
-
Cash remained strong at $36.0 million.
Laurie Butcher, Alaska Communications senior vice-president of finance,
said, “We accomplished all of our guidance targets for 2015. Business
revenue was strong at 9.3 percent growth, while consumer revenue
declines reflect industry trends and planned reductions in lower speed
connections. During the year, we reduced our debt balances by $244
million dollars, making us one of the lowest levered companies in our
industry. In 2016, we are committed to growing revenue, Adjusted EBITDA
and free cash flow.”
2016 Guidance:
-
Total Service and Other Revenue of approximately $228 million
-
Adjusted EBITDA of approximately $59 million
-
Capital Expenditures of approximately $35 million
-
Free Cash Flow of approximately $5 million
Conference Call
The Company will host a conference call and
live webcast on Thursday, March 3, 2016 at 3:00 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
1-888-466-4440 and enter pass code 857497. All other parties can access
the call at 1-719-785-1758.
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 4, 2016 at 6:00 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 5646561. All other parties can call
1-719-457-0820 and enter pass code 5646561.
About Alaska Communications
Alaska Communications (NASDAQ:
ALSK) is the leading provider of advanced broadband and IT managed
services for businesses and consumers in Alaska. The company operates a
highly reliable, advanced statewide data network with the latest
technology and the most diverse undersea fiber optic system connecting
Alaska to the contiguous U.S. For more information, visit www.alaskacommunications.com
or 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, Free
Cash Flow and Net Debt, 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, 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, the effects of competition in our markets, our relatively
small size compared with our competitors, 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, our ability to service our debt and
refinance when it comes due, labor negotiations, and benefits costs, our
ability to control other operating 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, regulatory changes,
changes in technology and standards, 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.
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Schedule 1
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ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
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CONSOLIDATED SCHEDULE OF OPERATIONS
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(Unaudited, In Thousands Except Per Share Amounts)
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Three Months Ended
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Twelve Months Ended
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December 31,
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December 31,
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2015
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2014
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2015
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2014
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Operating revenues:
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Operating revenues, non-affiliates
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$
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56,631
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$
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75,886
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$
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232,242
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$
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307,917
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Operating revenues, affiliates
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-
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1,623
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575
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6,946
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Total operating revenues
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56,631
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77,509
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232,817
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314,863
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Operating expenses:
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Cost of services and sales, non-affiliates
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26,106
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32,580
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107,162
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123,854
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Cost of services and sales, affiliates
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-
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13,821
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4,961
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57,116
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Selling, general & administrative
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17,407
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26,472
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88,389
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|
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101,398
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Depreciation and amortization
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8,376
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6,733
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33,867
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|
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32,583
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Loss (gain) on disposal of assets, net
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112
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(486
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)
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(46,252
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)
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126
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Loss on impairment of goodwill
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-
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5,986
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-
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5,986
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Earnings from equity method investments
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-
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(6,713
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)
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(3,056
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)
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(35,960
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)
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Total operating expenses
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52,001
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78,393
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185,071
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285,103
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Operating income (loss)
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4,630
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(884
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)
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47,746
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|
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29,760
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Other income and expense:
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Interest expense
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(4,088
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)
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(8,266
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)
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(19,841
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)
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(34,410
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)
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Loss on extinguishment of debt
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-
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-
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(4,878
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)
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-
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Interest income
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2
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41
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58
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83
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Total other income and expense
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(4,086
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)
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(8,225
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)
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(24,661
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)
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(34,327
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)
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Income (loss) before income tax expense
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544
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(9,109
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)
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23,085
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(4,567
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)
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Income tax (expense) benefit
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(218
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)
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3,751
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(10,200
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)
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1,787
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Net income (loss)
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326
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(5,358
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)
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12,885
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(2,780
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)
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Less net loss attributable to noncontrolling interest
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(13
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)
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-
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(69
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)
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-
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Net income (loss) attributable to ACS
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$
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339
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$
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(5,358
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)
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$
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12,954
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$
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(2,780
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)
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Basic
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$
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0.01
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$
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(0.11
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)
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$
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0.26
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$
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(0.06
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)
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Diluted
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$
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0.01
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$
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(0.11
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)
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$
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0.25
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$
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(0.06
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)
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Weighted average shares outstanding:
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Basic
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50,415
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49,540
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50,247
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|
|
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49,334
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Diluted
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|
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51,617
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|
|
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49,540
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|
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51,368
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|
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|
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49,334
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Schedule 2
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ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
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CONSOLIDATED BALANCE SHEETS
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(Unaudited, In Thousands Except Per Share Amounts)
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|
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|
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|
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December 31,
|
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December 31,
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Assets
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2015
|
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2014
|
|
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Current assets:
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Cash and cash equivalents
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$
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36,001
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$
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31,709
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Restricted cash
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|
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1,824
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|
|
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|
|
467
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Accounts receivable, net of allowance of $1,693 and $2,338
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|
25,225
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|
|
|
|
|
30,900
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Materials and supplies
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|
|
4,674
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|
|
|
|
|
4,321
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Prepayments and other current assets
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|
|
8,068
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|
|
|
|
|
6,575
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Current assets held-for-sale
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|
-
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|
|
|
|
|
9,565
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Total current assets
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|
|
75,792
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|
|
|
|
|
83,537
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|
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|
|
|
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Property, plant and equipment
|
|
|
1,337,098
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|
|
|
|
|
1,333,134
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Less: accumulated depreciation and amortization
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|
|
(967,776
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)
|
|
|
|
|
(976,401
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)
|
Property, plant and equipment, net
|
|
|
369,322
|
|
|
|
|
|
356,733
|
|
|
|
|
|
|
|
|
Deferred income taxes
|
|
|
16,660
|
|
|
|
|
|
22,978
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|
Equity method investments
|
|
|
-
|
|
|
|
|
|
252,067
|
|
Non-current assets held-for-sale
|
|
|
-
|
|
|
|
|
|
14,664
|
|
Other assets
|
|
|
1,827
|
|
|
|
|
|
301
|
|
Total assets
|
|
$
|
463,601
|
|
|
|
|
$
|
730,280
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Current portion of long-term obligations
|
|
$
|
3,671
|
|
|
|
|
$
|
15,521
|
|
Accounts payable, accrued and other current liabilities,
non-affiliates
|
|
|
51,275
|
|
|
|
|
|
54,373
|
|
Accounts payable, accrued and other current liabilities, affiliates,
net *
|
|
|
-
|
|
|
|
|
|
4,853
|
|
Advance billings and customer deposits
|
|
|
4,513
|
|
|
|
|
|
4,490
|
|
Current liabilities held-for-sale
|
|
|
-
|
|
|
|
|
|
18,728
|
|
Total current liabilities
|
|
|
59,459
|
|
|
|
|
|
97,965
|
|
|
|
|
|
|
|
|
Long-term obligations, net of current portion
|
|
|
185,018
|
|
|
|
|
|
413,978
|
|
Other long-term liabilities, net of current portion
|
|
|
65,265
|
|
|
|
|
|
24,370
|
|
Non-current liabilities held-for-sale
|
|
|
-
|
|
|
|
|
|
2,107
|
|
Deferred AWN capacity revenue, net of current portion
|
|
|
-
|
|
|
|
|
|
56,734
|
|
Total liabilities
|
|
|
309,742
|
|
|
|
|
|
595,154
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACS stockholders' equity:
|
|
|
|
|
|
|
Common stock, $.01 par value; 145,000 authorized
|
|
|
505
|
|
|
|
|
|
497
|
|
Additional paid in capital
|
|
|
156,971
|
|
|
|
|
|
154,368
|
|
Accumulated deficit
|
|
|
(1,634
|
)
|
|
|
|
|
(14,588
|
)
|
Accumulated other comprehensive loss
|
|
|
(3,086
|
)
|
|
|
|
|
(5,151
|
)
|
Total ACS stockholders' equity
|
|
|
152,756
|
|
|
|
|
|
135,126
|
|
Noncontrolling interest
|
|
|
1,103
|
|
|
|
|
|
-
|
|
Total stockholders' equity
|
|
|
153,859
|
|
|
|
|
|
135,126
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
$
|
463,601
|
|
|
|
|
$
|
730,280
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Affiliate balances are related to activity with our equity method
investment in AWN.
|
|
|
|
|
|
On February 2, 2015 we sold our interest in AWN.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2015
|
|
|
|
|
|
2014
|
|
|
|
|
|
2015
|
|
|
|
|
|
2014
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
$
|
326
|
|
|
|
|
$
|
(5,358
|
)
|
|
|
|
$
|
12,885
|
|
|
|
|
$
|
(2,780
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
|
8,376
|
|
|
|
|
|
6,733
|
|
|
|
|
|
33,867
|
|
|
|
|
|
32,583
|
|
Gain on wireless sale
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(48,232
|
)
|
|
|
|
|
-
|
|
Loss (gain) on the disposal of assets, net
|
|
|
|
|
112
|
|
|
|
|
|
(486
|
)
|
|
|
|
|
1,980
|
|
|
|
|
|
126
|
|
Loss on impairment of goodwill
|
|
|
|
|
-
|
|
|
|
|
|
5,986
|
|
|
|
|
|
-
|
|
|
|
|
|
5,986
|
|
Unrealized loss (gain) on ineffective hedge
|
|
|
|
|
83
|
|
|
|
|
|
(273
|
)
|
|
|
|
|
(737
|
)
|
|
|
|
|
(273
|
)
|
Amortization of debt issuance costs and debt discount
|
|
|
|
|
1,052
|
|
|
|
|
|
1,178
|
|
|
|
|
|
4,114
|
|
|
|
|
|
5,104
|
|
Amortization of ineffective hedge
|
|
|
|
|
-
|
|
|
|
|
|
337
|
|
|
|
|
|
1,970
|
|
|
|
|
|
1,613
|
|
Loss on extinguishment of debt
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
4,878
|
|
|
|
|
|
-
|
|
Amortization of deferred capacity revenue
|
|
|
|
|
(697
|
)
|
|
|
|
|
(976
|
)
|
|
|
|
|
(2,859
|
)
|
|
|
|
|
(3,795
|
)
|
Stock-based compensation
|
|
|
|
|
110
|
|
|
|
|
|
634
|
|
|
|
|
|
2,008
|
|
|
|
|
|
2,511
|
|
Deferred income tax expense (benefit)
|
|
|
|
|
1,312
|
|
|
|
|
|
(3,755
|
)
|
|
|
|
|
4,883
|
|
|
|
|
|
(2,047
|
)
|
Provision for uncollectible accounts
|
|
|
|
|
(127
|
)
|
|
|
|
|
387
|
|
|
|
|
|
1,258
|
|
|
|
|
|
3,329
|
|
Cash distribution from equity method investments
|
|
|
|
|
-
|
|
|
|
|
|
6,713
|
|
|
|
|
|
3,056
|
|
|
|
|
|
35,960
|
|
Earnings from equity method investments
|
|
|
|
|
-
|
|
|
|
|
|
(6,713
|
)
|
|
|
|
|
(3,056
|
)
|
|
|
|
|
(35,960
|
)
|
Other non-cash expense, net
|
|
|
|
|
117
|
|
|
|
|
|
113
|
|
|
|
|
|
934
|
|
|
|
|
|
431
|
|
Changes in operating assets and liabilities
|
|
|
|
|
(3,583
|
)
|
|
|
|
|
6,758
|
|
|
|
|
|
(4,368
|
)
|
|
|
|
|
8,381
|
|
Net cash provided by operating activities
|
|
|
|
|
7,081
|
|
|
|
|
|
11,278
|
|
|
|
|
|
12,581
|
|
|
|
|
|
51,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(12,698
|
)
|
|
|
|
|
(12,507
|
)
|
|
|
|
|
(50,914
|
)
|
|
|
|
|
(46,423
|
)
|
Capitalized interest
|
|
|
|
|
(326
|
)
|
|
|
|
|
(728
|
)
|
|
|
|
|
(1,558
|
)
|
|
|
|
|
(2,810
|
)
|
Change in unsettled capital expenditures
|
|
|
|
|
608
|
|
|
|
|
|
(703
|
)
|
|
|
|
|
3,995
|
|
|
|
|
|
(2,003
|
)
|
Cash received in acquisition of business
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
68
|
|
Proceeds on wireless sale
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
285,160
|
|
|
|
|
|
-
|
|
Proceeds on sale of assets
|
|
|
|
|
11
|
|
|
|
|
|
-
|
|
|
|
|
|
3,140
|
|
|
|
|
|
136
|
|
Return of capital from equity investment
|
|
|
|
|
-
|
|
|
|
|
|
5,787
|
|
|
|
|
|
1,875
|
|
|
|
|
|
14,073
|
|
Net change in restricted cash
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(1,357
|
)
|
|
|
|
|
-
|
|
Net cash (used) provided by investing activities
|
|
|
|
|
(12,405
|
)
|
|
|
|
|
(8,151
|
)
|
|
|
|
|
240,341
|
|
|
|
|
|
(36,959
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayments of long-term debt
|
|
|
|
|
(571
|
)
|
|
|
|
|
(397
|
)
|
|
|
|
|
(333,961
|
)
|
|
|
|
|
(24,419
|
)
|
Proceeds from the issuance of long-term debt
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
90,061
|
|
|
|
|
|
-
|
|
Debt issuance costs
|
|
|
|
|
(346
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(4,901
|
)
|
|
|
|
|
-
|
|
Cash paid for debt extinguishment
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(391
|
)
|
|
|
|
|
-
|
|
Cash paid in acquisition of business
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(291
|
)
|
|
|
|
|
(795
|
)
|
Cash proceeds from non-controlling interest
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
250
|
|
|
|
|
|
-
|
|
Payment of withholding taxes on stock-based compensation
|
|
|
|
|
(6
|
)
|
|
|
|
|
(7
|
)
|
|
|
|
|
(408
|
)
|
|
|
|
|
(593
|
)
|
Excess tax benefit from share-based payments
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
733
|
|
|
|
|
|
-
|
|
Proceeds from issuance of common stock
|
|
|
|
|
144
|
|
|
|
|
|
135
|
|
|
|
|
|
278
|
|
|
|
|
|
267
|
|
Net cash used by financing activities
|
|
|
|
|
(779
|
)
|
|
|
|
|
(269
|
)
|
|
|
|
|
(248,630
|
)
|
|
|
|
|
(25,540
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in cash and cash equivalents
|
|
|
|
|
(6,103
|
)
|
|
|
|
|
2,858
|
|
|
|
|
|
4,292
|
|
|
|
|
|
(11,330
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
42,104
|
|
|
|
|
|
28,851
|
|
|
|
|
|
31,709
|
|
|
|
|
|
43,039
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period
|
|
|
|
$
|
36,001
|
|
|
|
|
$
|
31,709
|
|
|
|
|
$
|
36,001
|
|
|
|
|
$
|
31,709
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
|
|
$
|
4,981
|
|
|
|
|
$
|
9,526
|
|
|
|
|
$
|
16,101
|
|
|
|
|
$
|
31,562
|
|
Income taxes paid, net
|
|
|
|
$
|
994
|
|
|
|
|
$
|
40
|
|
|
|
|
$
|
4,936
|
|
|
|
|
$
|
260
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 4
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
ADJUSTED EBITDA
|
(Unaudited, In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
|
December 31,
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
|
$
|
326
|
|
|
|
$
|
(5,358
|
)
|
|
|
|
$
|
12,885
|
|
|
|
$
|
(2,780
|
)
|
Add (subtract):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
|
4,088
|
|
|
|
|
8,266
|
|
|
|
|
|
19,841
|
|
|
|
|
34,410
|
|
Loss on extinguishment of debt
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
4,878
|
|
|
|
|
-
|
|
Interest income
|
|
|
|
|
(2
|
)
|
|
|
|
(41
|
)
|
|
|
|
|
(58
|
)
|
|
|
|
(83
|
)
|
Depreciation and amortization
|
|
|
|
|
8,376
|
|
|
|
|
6,733
|
|
|
|
|
|
33,867
|
|
|
|
|
32,583
|
|
Loss on impairment of goodwill
|
|
|
|
|
-
|
|
|
|
|
5,986
|
|
|
|
|
|
-
|
|
|
|
|
5,986
|
|
Loss (gain) on disposal of assets, net
|
|
|
|
|
112
|
|
|
|
|
(486
|
)
|
|
|
|
|
(46,252
|
)
|
|
|
|
126
|
|
Earnings from equity method investments
|
|
|
|
|
-
|
|
|
|
|
(6,713
|
)
|
|
|
|
|
(3,056
|
)
|
|
|
|
(35,960
|
)
|
AWN distributions received/receivable, net
|
|
|
|
|
-
|
|
|
|
|
12,500
|
|
|
|
|
|
765
|
|
|
|
|
50,000
|
|
Income tax expense (benefit)
|
|
|
|
|
218
|
|
|
|
|
(3,751
|
)
|
|
|
|
|
10,200
|
|
|
|
|
(1,787
|
)
|
Stock-based compensation
|
|
|
|
|
110
|
|
|
|
|
634
|
|
|
|
|
|
2,008
|
|
|
|
|
2,511
|
|
Long-term cash incentives
|
|
|
|
|
425
|
|
|
|
|
470
|
|
|
|
|
|
1,781
|
|
|
|
|
2,042
|
|
Pension adjustment
|
|
|
|
|
(76
|
)
|
|
|
|
-
|
|
|
|
|
|
134
|
|
|
|
|
-
|
|
Gift of services
|
|
|
|
|
(388
|
)
|
|
|
|
-
|
|
|
|
|
|
(388
|
)
|
|
|
|
-
|
|
Earthquake related expense
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
1,228
|
|
Net loss attributable to noncontrolling interest
|
|
|
|
|
13
|
|
|
|
|
-
|
|
|
|
|
|
69
|
|
|
|
|
-
|
|
Wireless sale transaction-related and wind down costs
|
|
|
|
|
643
|
|
|
|
|
4,057
|
|
|
|
|
|
13,272
|
|
|
|
|
4,297
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
13,845
|
|
|
|
$
|
22,297
|
|
|
|
|
$
|
49,946
|
|
|
|
$
|
92,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 adjusted EBITDA presented on a run rate basis of Q4 times 4
|
|
|
|
|
|
|
|
$
|
55,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, gain or loss on asset purchases or disposals,
earnings on equity method investments, gain on the sale of our
wireless operations, provisions for taxes, wireless
transaction-related costs, loss attributable to noncontrolling
interest, stock-based compensation, pension adjustments,
earthquake related expenses and expenses under the company’s long
term cash incentive plan (“LTCI”). LTCI expenses are considered
part of an interim compensation structure to mitigate the dilutive
impact of additional share issuances for executive compensation.
Distributions from AWN are included in Adjusted EBITDA.
|
|
|
Schedule 5
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
FREE CASH FLOW
|
(Unaudited, In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Twelve Months Ended
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
|
$
|
13,845
|
|
|
|
$
|
22,297
|
|
|
|
$
|
49,946
|
|
|
|
$
|
92,573
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(12,698
|
)
|
|
|
|
(12,507
|
)
|
|
|
|
(39,914
|
)
|
|
|
|
(46,423
|
)
|
Milestone billings for fiber build project for a carrier customer
|
|
|
|
|
4,500
|
|
|
|
|
3,960
|
|
|
|
|
7,000
|
|
|
|
|
5,960
|
|
Net capital expenditures
|
|
|
|
|
(8,198
|
)
|
|
|
|
(8,547
|
)
|
|
|
|
(32,914
|
)
|
|
|
|
(40,463
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of North Slope fiber network
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition price
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(11,000
|
)
|
|
|
|
-
|
|
Less: 50% due in 2016
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
5,500
|
|
|
|
|
-
|
|
Less: proceeds on sale of fiber to JV partner
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
2,650
|
|
|
|
|
-
|
|
Less: other cash proceeds
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
400
|
|
|
|
|
-
|
|
Net North Slope purchase
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(2,450
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of GCI/AWN capacity revenue
|
|
|
|
|
(520
|
)
|
|
|
|
(814
|
)
|
|
|
|
(2,169
|
)
|
|
|
|
(3,151
|
)
|
Earthquake related expense
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(1,228
|
)
|
Cash interest expense
|
|
|
|
|
(4,981
|
)
|
|
|
|
(9,526
|
)
|
|
|
|
(16,101
|
)
|
|
|
|
(31,562
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow
|
|
|
|
$
|
146
|
|
|
|
$
|
3,410
|
|
|
|
$
|
(3,688
|
)
|
|
|
$
|
16,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
recurring operating cash requirements which include capital
expenditures, net of cash received for a fiber build for carrier
customer, less cash interest expense, earthquake related expenses,
significant non-cash revenue associated with our interconnection
agreement with AWN and GCI, and in Q2 2015 the purchase of the
North Slope fiber network.
ACS continues to have net operating losses and is not a
significant taxpayer on ordinary income. Income taxes paid in 2015
are related to the Wireless retail sale and are not included in
free cash flow.
|
|
Schedule 6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
REVENUE GROWTH
|
(Unaudited, In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
Twelve Months Ended
|
|
|
|
December 31,
|
|
|
|
December 31,
|
Service revenue:
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
Business and wholesale customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice
|
|
|
$
|
5,425
|
|
|
|
$
|
5,551
|
|
|
|
$
|
21,969
|
|
|
|
$
|
22,499
|
|
Broadband
|
|
|
|
13,438
|
|
|
|
|
11,125
|
|
|
|
|
50,007
|
|
|
|
|
43,783
|
|
Managed IT services
|
|
|
|
1,069
|
|
|
|
|
952
|
|
|
|
|
3,316
|
|
|
|
|
3,492
|
|
Other
|
|
|
|
2,381
|
|
|
|
|
1,848
|
|
|
|
|
8,089
|
|
|
|
|
7,104
|
|
Wholesale
|
|
|
|
9,860
|
|
|
|
|
8,320
|
|
|
|
|
36,792
|
|
|
|
|
33,043
|
|
Business and wholesale service revenue
|
|
|
|
32,173
|
|
|
|
|
27,796
|
|
|
|
|
120,173
|
|
|
|
|
109,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer customers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice
|
|
|
|
3,273
|
|
|
|
|
3,533
|
|
|
|
|
13,530
|
|
|
|
|
14,932
|
|
Broadband
|
|
|
|
5,914
|
|
|
|
|
6,400
|
|
|
|
|
25,050
|
|
|
|
|
24,841
|
|
Other
|
|
|
|
468
|
|
|
|
|
372
|
|
|
|
|
1,341
|
|
|
|
|
1,563
|
|
Consumer service revenue
|
|
|
|
9,655
|
|
|
|
|
10,305
|
|
|
|
|
39,921
|
|
|
|
|
41,336
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service revenue
|
|
|
|
41,828
|
|
|
|
|
38,101
|
|
|
|
|
160,094
|
|
|
|
|
151,257
|
|
Growth in service revenue
|
|
|
|
9.8
|
%
|
|
|
|
|
|
|
|
5.8
|
%
|
|
|
|
Growth in broadband service revenue
|
|
|
|
10.4
|
%
|
|
|
|
|
|
|
|
9.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment sales and installations
|
|
|
|
1,715
|
|
|
|
|
1,900
|
|
|
|
|
6,382
|
|
|
|
|
5,321
|
|
Access
|
|
|
|
8,167
|
|
|
|
|
8,591
|
|
|
|
|
33,644
|
|
|
|
|
35,323
|
|
High cost support
|
|
|
|
4,921
|
|
|
|
|
4,921
|
|
|
|
|
19,682
|
|
|
|
|
23,192
|
|
Total service and other revenue
|
|
|
|
56,631
|
|
|
|
|
53,513
|
|
|
|
|
219,802
|
|
|
|
|
215,093
|
|
Growth in service and other revenue
|
|
|
|
5.8
|
%
|
|
|
|
|
|
|
|
2.2
|
%
|
|
|
|
Growth excluding equipment sales
|
|
|
|
6.4
|
%
|
|
|
|
|
|
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireless and AWN related revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue, equipment sales and other
|
|
|
|
-
|
|
|
|
|
18,198
|
|
|
|
|
6,300
|
|
|
|
|
77,054
|
|
Transition services
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
4,769
|
|
|
|
|
-
|
|
CETC
|
|
|
|
-
|
|
|
|
|
4,984
|
|
|
|
|
1,654
|
|
|
|
|
19,565
|
|
Amortization of deferred AWN capacity revenue
|
|
|
|
-
|
|
|
|
|
814
|
|
|
|
|
292
|
|
|
|
|
3,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total wireless & AWN related revenue
|
|
|
|
-
|
|
|
|
|
23,996
|
|
|
|
|
13,015
|
|
|
|
|
99,770
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
$
|
56,631
|
|
|
|
$
|
77,509
|
|
|
|
$
|
232,817
|
|
|
|
$
|
314,863
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted for prior year access reserve releases:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total service and other revenue
|
|
|
|
56,631
|
|
|
|
|
53,513
|
|
|
|
|
219,802
|
|
|
|
|
215,093
|
|
Prior year access reserve releases
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(3,502
|
)
|
Adjusted total service and other revenue
|
|
|
|
56,631
|
|
|
|
|
53,513
|
|
|
|
|
219,802
|
|
|
|
|
211,591
|
|
Growth in service and other revenue
|
|
|
|
5.8
|
%
|
|
|
|
|
|
|
|
3.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule 7
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
KEY OPERATING STATISTICS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
|
December 31,
|
|
September 30,
|
|
December 31,
|
|
|
|
|
|
2015
|
|
|
|
|
2015
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer access lines
|
|
|
|
|
|
37,683
|
|
|
|
|
|
39,016
|
|
|
|
|
|
43,773
|
Business access lines
|
|
|
|
|
|
76,598
|
|
|
|
|
|
78,164
|
|
|
|
|
|
79,168
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voice ARPU consumer
|
|
|
|
|
$
|
28.45
|
|
|
|
|
$
|
29.09
|
|
|
|
|
$
|
26.48
|
Voice ARPU business
|
|
|
|
|
$
|
23.37
|
|
|
|
|
$
|
23.66
|
|
|
|
|
$
|
23.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Broadband:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer connections
|
|
|
|
|
|
33,275
|
|
|
|
|
|
33,488
|
|
|
|
|
|
37,412
|
Business connections (1)
|
|
|
|
|
|
18,824
|
|
|
|
|
|
19,125
|
|
|
|
|
|
18,798
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU consumer
|
|
|
|
|
$
|
58.63
|
|
|
|
|
$
|
59.16
|
|
|
|
|
$
|
55.91
|
ARPU business (1)
|
|
|
|
|
$
|
235.81
|
|
|
|
|
$
|
218.54
|
|
|
|
|
$
|
197.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
How we calculate broadband connections has changed to exclude
certain internal use circuits. Historical amounts have been
restated to reflect appropriate comparisons period over period.
|
Schedule 8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
|
|
Long Term Debt and Net Debt
|
|
(Unaudited, In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
2015 senior secured credit facilities due 2018
|
|
|
|
$
|
89,750
|
|
|
|
$
|
-
|
|
Debt issuance costs - 2015 senior secured credit facilities due 2018
|
|
|
|
|
(3,406
|
)
|
|
|
|
-
|
|
2010 senior credit facility term loan due 2016
|
|
|
|
|
-
|
|
|
|
|
322,700
|
|
Debt discount - 2010 senior credit facility term loan due 2016
|
|
|
|
|
-
|
|
|
|
|
(1,014
|
)
|
Debt issuance costs - 2010 senior credit facility term loan due 2016
|
|
|
|
|
-
|
|
|
|
|
(2,810
|
)
|
6.25% convertible notes due 2018
|
|
|
|
|
104,000
|
|
|
|
|
114,000
|
|
Debt discount - 6.25% convertible notes due 2018
|
|
|
|
|
(4,641
|
)
|
|
|
|
(7,242
|
)
|
Debt issuance costs - 6.25% convertible notes due 2018
|
|
|
|
|
(1,010
|
)
|
|
|
|
(1,659
|
)
|
Capital leases and other long-term obligations
|
|
|
|
|
3,996
|
|
|
|
|
5,524
|
|
Total debt
|
|
|
|
|
188,689
|
|
|
|
|
429,499
|
|
Less current portion
|
|
|
|
|
(3,671
|
)
|
|
|
|
(15,521
|
)
|
Long-term obligations, net of current portion
|
|
|
|
$
|
185,018
|
|
|
|
$
|
413,978
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
$
|
188,689
|
|
|
|
$
|
429,499
|
|
Plus debt discounts and debt issuance costs
|
|
|
|
|
9,057
|
|
|
|
|
12,725
|
|
Gross debt
|
|
|
|
|
197,746
|
|
|
|
|
442,224
|
|
Cash and cash equivalents
|
|
|
|
|
(36,001
|
)
|
|
|
|
(31,709
|
)
|
Net debt
|
|
|
|
$
|
161,745
|
|
|
|
$
|
410,515
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA*
|
|
|
|
$
|
55,380
|
|
|
|
$
|
92,573
|
|
|
|
|
|
|
|
|
|
|
|
Net debt
|
|
|
|
$
|
161,745
|
|
|
|
$
|
410,515
|
|
|
|
|
|
|
|
|
|
|
|
Net leverage^
|
|
|
|
|
2.9
|
|
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
|
* 2015 adjusted EBITDA is presented on a run rate basis of Q4 times
4.
|
|
|
|
^The leverage ratio calculation methodology specified in our credit
agreement differs in certain elements from the methodology above;
please refer to the Liquidity and Capital Resource section of Item 7
of the most recent 10K for details on calculations pursuant to the
credit agreement.
|
|
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
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