UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Mark One)

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from               to

Alaska Communications Systems Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)		52-2126573 (I.R.S. Employer Identification No.)
600 Telephone Avenue Anchorage, Alaska (Address of principal executive offices)		99503-6091 (Zip Code)

(907) 297-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Name of each exchange on which registered
None

Title of each class   Common Stock, Par Value $.01 per Share

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark if whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act.) Yes o No þ

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

     The aggregate market value of the shares of all classes of voting stock of the registrant held by non-affiliates of the registrant on June 30, 2004, was approximately $58,072,215 computed upon the basis of the closing sales price of the Common Stock on that date. For purposes of this computation, shares held by directors (and shares held by any entities in which they serve as officers) and officers of the registrant have been excluded. Such exclusion is not intended, nor shall it be deemed, to be an admission that such persons are affiliates of the registrant.

     As of October 31, 2005, there were outstanding 41,531,147 shares of Common Stock, $.01 par value, of the registrant.

None

 

 

EXPLANATORY NOTE:

Alaska Communications Systems Group, Inc. (the “Company”) and its consolidated subsidiaries is filing this Amendment No. 1 on Form 10-K/A to our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission on March 9, 2005, to reflect a correction in the balance sheet classification of auction-rate securities and short-term investments from cash and cash equivalents to a separate line item within current assets, and to reflect purchases and sales of auction-rate securities and short-term investments as investing cash flows in the statements of cash flows; and a reclassification of cash used to reacquire stock from a retired officer as a financing activity rather than an operating activity in the Statements of Cash Flows within Part II — Items 6 and 7, and Part IV — Item 15. See Note 25 of the Notes to Consolidated Financial Statements for further detail. Also included in Part IV — Item 15, is a restatement of our stock option pro forma net loss and earnings per share disclosure. This disclosure is being restated to correct errors found in our calculation of the pro forma effects of accounting for stock options in accordance with Statement of Financial Accounting Standards No. 148.

Subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2004, like many other companies that invest in auction-rate securities, Alaska Communications Systems Group, Inc. has determined, based upon supplemental accounting interpretation and in consultation with our audit committee, that our investments in auction-rate securities should not have been included in cash and cash equivalents, as had been done historically by the Company in our financial statements. We invest in auction-rate securities as part of our cash management strategy and have historically classified them as cash and cash equivalents because of the short duration of their reset periods. As a result of this change in classification, our cash flows from investing activities now include purchases and sales of auction-rate securities. This change in classification has no impact on previously reported total current assets, total assets, working capital position, results of operations or financial covenants and does not affect previously reported cash flows from operating or financing activities.

Also subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2004, we identified an error in the cash flow presentation regarding the reacquisition of Company stock owned by a retired officer. We corrected this error in the Statements of Cash Flows by reclassifying the cash used as a financing activity rather than an operating activity.

Also subsequent to the filing of our Annual Report on Form 10-K for the year ended December 31, 2004, we began to reassess our stock compensation plan models in anticipation of adopting SFAS 123R Share-Based Payment, in 2005. During that reassessment we identified certain computational errors and errors related to our stock option valuation model assumptions. The primary causes of this restatement related to the assumptions regarding the treatment of forfeitures and the period over which the compensation cost should be recorded. See Note 1 of the Notes to Consolidated Financial Statements for further detail.

Except for the aforementioned changes, this Form 10-K/A does not modify or update other disclosures in the Form 10-K, including the nature and character of such disclosure to reflect events occurring after the initial filing date of the Form 10-K.

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC .
AMENDMENT NO. 1

ANNUAL REPORT ON FORM 10-K

FOR THE YEAR ENDED DECEMBER 31, 2004

Table of Contents

				Page
Part II
Item 6.		Selected Financial Data			4
Item 7.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			5
PART IV
Item 15.		Exhibits and Financial Statement Schedules			20
		Signatures			21
Index to Consolidated Financial Statements					F-1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1
EXHIBIT 32.2

PART II

Item 6. Selected Financial Data

SELECTED HISTORICAL FINANCIAL DATA

     The following selected financial data in this amended report has been restated for the years ended December 31, 2004, 2003 and 2002 to reflect purchases and sales of auction-rate securities and other short-term investments as investing cash flows and certain payments to an affiliate as financing cash flows (see Note 25 to Consolidated Financial Statements). The following table sets forth our historical consolidated financial data as of December 31, 2004, 2003, 2002, 2001 and 2000 and for the fiscal years ended December 31, 2004, 2003, 2002, 2001 and 2000, which are derived from our audited financial statements for those years.

     The selected historical financial data set forth below is not necessarily indicative of the results of future operations and should be read in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and our consolidated financial statements and related notes thereto for the years ended December 31, 2004, 2003, 2002, 2001 and 2000.

($ in thousands)		2004				2003				2002				2001				2000
Operating Data:
Operating revenues		$	302,707			$	323,847			$	340,394			$	328,525			$	311,366
Operating expenses before loss(gain) on disposal of assets			289,735				361,074				360,995				281,402				277,598
Loss (gain) on disposal of assets			2,854				(112,622	)			2,163				—				—
Operating income (loss)			10,118				75,395				(22,764	)			47,123				33,768
Other expense			(49,647	)			(81,661	)			(49,501	)			(56,907	)			(57,950	)
Loss before income taxes, discontinued operations, extraordinary item and cumulative effect of change in accounting principle			(39,529	)			(6,266	)			(72,265	)			(9,784	)			(24,182	)
Income tax benefit (expense)			219				(1,095	)			—				195				197
Equity in income of investments			16				783				—				69				(303	)
Loss from continuing operations			(39,294	)			(6,578	)			(72,265	)			(9,520	)			(24,288	)
Loss from discontinued operations			—				(52	)			(7,632	)			(1,718	)			(917	)
Loss before cumulative effect of change in accounting principle			(39,294	)			(6,630	)			(79,897	)			(11,238	)			(25,205	)
Cumulative effect of change in accounting principle			—				—				(105,350	)			—				—
Net loss		$	(39,294	)		$	(6,630	)		$	(185,247	)		$	(11,238	)		$	(25,205	)
Loss per share — basic and diluted:
Loss from continuing operations		$	(1.33	)		$	(0.22	)		$	(2.30	)		$	(0.30	)		$	(0.74	)
Loss from discontinued operations			—				—				(0.24	)			(0.06	)			(0.03	)
Cumulative effect of change in accounting principle			—				—				(3.35	)			—				—
Net loss		$	(1.33	)		$	(0.22	)		$	(5.89	)		$	(0.36	)		$	(0.77	)
Weighted average shares outstanding (000’s):
Basic			29,592				29,980				31,464				31,523				32,654
Diluted			29,592				29,980				31,464				31,523				32,654
Balance Sheet Data (end of period):
Total assets		$	637,127			$	685,391			$	752,509			$	949,095			$	953,660
Long-term debt, including current portion			525,889				550,220				607,763				611,250				614,004
Stockholders’ equity (deficit)			(33,442	)			1,860				8				191,687				215,380
Other Financial Data:
Cash provided by operating activities		$	59,025			$	50,411			$	65,984			$	76,679			$	49,589
Cash provided (used) by investing activities			(44,455	)			64,295				(70,028	)			(95,899	)(1)			(75,795	)(1)
Cash used by financing activities			(18,486	)			(77,695	)			(8,703	)			(1,664	)			(13,892	)
Capital expenditures			51,422				50,906				72,621				88,998				73,349

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Introduction

     The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes and the other financial information included elsewhere in this Form 10-K/A.

Alaska Communications Systems Group

     We generate revenue primarily through:

•

The provision of local telephone services, including:

	•		Basic local service to retail customers within our service areas,
	•		Wholesale service to Competitive Local Exchange Carriers, or CLECs,
	•		Network access services to interexchange carriers for origination and termination of interstate and intrastate long distance phone calls,
	•		Enhanced services,
	•		Ancillary services, such as billing and collection, and
	•		Universal service payments;

	•		The provision of wireless services;
	•		The provision of Internet services; and
	•		The provision of interexchange network long-distance and data services.

     In addition, we provide video entertainment services through our partnership with the satellite operator, DISH Network.

     Local Telephone — We are the largest Local Exchange Carrier (“LEC”) in Alaska and the 13th largest in the United States. Basic local service is generally provided at a flat monthly rate and allows the user to place unlimited calls within a defined local calling area. Access revenues are generated in part by billing interexchange carriers for access to the LEC’s local network and its customers and in part by billing the local customers themselves. Universal service revenues are a subsidy paid to rural LECs to support the high cost of providing service in rural markets.

     Changes in revenue are largely attributable to changes in the number of access lines, local service rates and minutes of use. Other factors can also impact revenue, including:

	•		intrastate and interstate revenue settlement methodologies,
	•		authorized rates of return for regulated services,
	•		whether an access line is used by a business or consumer subscriber,
	•		intrastate and interstate calling patterns,
	•		customers’ selection of various local rate plan options,
	•		selection of enhanced calling services, such as voice mail, and
	•		other subscriber usage characteristics.

     LECs have three basic tiers of customers:

	•		consumer and business customers located in our local service areas that pay for local phone service and a portion of network access,
	•		interexchange carriers that pay for access to long distance calling customers located within our local service areas, and
	•		CLECs that pay for wholesale access to our network in order to provide competitive local service on either a wholesale or Unbundled Network Element (“UNE”) basis as prescribed under the Telecommunications Act.

     LECs provide access service to numerous interexchange carriers and may also bill and collect long distance charges from interexchange carrier customers on behalf of the interexchange carriers. The amount of access charge revenue associated with a particular interexchange carrier varies depending upon long distance calling patterns and the relative market share of each long distance carrier.

     Our local service rates for end users are authorized by the Regulatory Commission of Alaska, or RCA. Authorized rates are set by the Federal Communications Commission, or FCC, and the RCA for interstate and intrastate access charges, respectively, and may change from time to time.

     Wireless - We are the second largest statewide provider of wireless services in Alaska, currently serving over 100,000 subscribers. Our wireless network footprint covers over 482,000 residents, including all major population centers and highway and ferry corridors. We currently operate a TDMA digital network in substantially all of our service areas, and are rolling out a new generation of digital network known as CDMA 1xRTT, which provides customers with improved voice call quality, average mobile data speeds of 70-80kbps and provides a platform for the launch of enhanced services. We began offering CDMA 1xRTT services in several of our service areas in May 2004. In June 2004 we began offering wireless broadband service based on EV-DO which enables high speed data connectivity with speeds that burst up to 2mbps to our wireless markets in Anchorage, Fairbanks, and Juneau. We estimate that the new CDMA service currently covers 73% of our wireless footprint of 482,000 residents.

     Internet - We are the second largest provider of Internet access services in Alaska with over 47,000 customers. We offer dial-up and dedicated DSL Internet access to our customers. We are a single source provider of advanced IP based private networks in Alaska.

     Interexchange - We provide switched and dedicated long distance services to over 47,000 customers in Alaska. The traffic from these customers is carried over our owned or leased facilities.

     Video Entertainment — We provide video entertainment services on a resale basis through our partnership with the satellite provider, DISH Network. The current agreement with the provider became effective August 2003 and will either be renegotiated or terminate in December 2005.

Critical accounting policies and accounting estimates

     Management is responsible for the financial statements herein and has evaluated the accounting policies used in their preparation. Management believes these policies to be reasonable and appropriate. Our significant accounting policies are described in Note 1, “Description of Company and Summary of Significant Accounting Policies,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements. The following discussion identifies those accounting policies that management believes are critical in the preparation of our financial statements, the judgments and uncertainties affecting the application of those policies, and the possibility that materially different amounts would be reported under different conditions or using different assumptions.

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Among the significant estimates affecting the financial statements are those related to the realizable value of accounts receivable, long-lived assets (in particular, those assets accounted for under SFAS No. 71, Accounting for the Effects of Certain Types of Regulation), income taxes, network access revenue reserves and litigation reserves. Actual results may differ from those estimates.

     We use an allowance method to estimate the net realizable value of accounts receivable. As of December 31, 2004, the allowance for doubtful accounts receivable was $4.9 million. Actual collection results could vary significantly from management’s estimate.

     Access revenue is recognized when earned. We participate in access revenue pools with other telephone companies. Such pools are funded by toll revenue and/or access charges regulated by the RCA within the intrastate jurisdiction and the FCC within the interstate jurisdiction. Much of the interstate access revenue is initially recorded based on estimates. These estimates are derived from interim financial statements, available separations studies and the most recent information available about achieved rates of return. These estimates are subject to adjustment in future accounting periods as additional operational information becomes available. To the extent that disputes arise over revenue settlements, our policy is to defer revenue collected until settlement methodologies are resolved and finalized. At December 31, 2004, we had recorded liabilities of $18.6 million related to our estimate of refundable access revenue. Actual results could vary from this estimate.

     We utilize the liability method of accounting for income taxes. Under the liability method, deferred taxes reflect the temporary differences between the financial and tax bases of assets and liabilities using the enacted tax rates in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance to the extent that it is more likely than not that such deferred tax assets will not be realized. The cumulative valuation allowance against deferred tax assets was $112.2 million as of December 31, 2004, which represents 100% of all deferred tax assets.

     Our local telephone exchange operations account for costs in accordance with the accounting principles for regulated enterprises prescribed by SFAS No. 71. This accounting recognizes the economic effects of rate regulation by recording cost and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, under SFAS No. 71, plant and equipment is depreciated over lives approved by regulators and certain costs and obligations are deferred based upon approvals received from regulators to permit recovery of such amounts in future years.

     We implemented, effective January 1, 2003, higher depreciation rates for our regulated telephone plant for the interstate jurisdiction which management believes approximate the economically useful lives of the underlying plant. As a result, we have recorded a regulatory asset under SFAS No. 71 of $35.0 million as of December 31, 2004 related to depreciation of the regulated telephone plant allocable to its intrastate and local jurisdictions. We have also deferred as a regulatory asset $0.9 million of costs incurred in connection with regulatory rate making proceedings, which is being amortized over three years starting in 2003. The balance of this regulatory asset was $0.3 million at December 31, 2004. If we were not following SFAS No. 71, we would have recorded additional cumulative depreciation expense of $35.0 million for the intrastate and local jurisdictions and the deferred costs incurred in connection with regulatory rate making proceedings would have been charged to expense as incurred. We also have a regulatory liability of $54.3 million at December 31, 2004 related to accumulated removal costs. If we were not following SFAS No. 71, we would have followed SFAS No. 143 for asset retirement obligations. Non-regulated revenues and costs incurred by the local telephone exchange operations and our non-regulated operations are not accounted for under SFAS No. 71 principles.

     Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets. In accordance with the guidelines of this accounting principle, goodwill and indefinite-lived intangible assets are no longer amortized but will be assessed for impairment on at least an annual basis. SFAS No. 142 requires that goodwill be tested for impairment at the reporting unit level upon adoption and at least annually thereafter, utilizing a two-step methodology. The initial step requires us to determine the fair value of each reporting unit and compare it to the carrying value, including goodwill, of such unit. If the fair value exceeds the carrying value, no impairment loss would be recognized. However, if the carrying value of the reporting unit exceeds its fair value, the goodwill of the unit may be impaired. The amount, if any, of the impairment is then measured in the second step. We determined the fair value of each reporting unit for purposes of this test primarily by using a discounted cash flow valuation technique. Significant estimates used in the valuation include estimates of future cash flows, both future short-term and long-term growth rates, and estimated cost of capital for purposes of arriving at a discount factor. At December 31, 2004, we had recorded goodwill of $38.4 million applicable to our local telephone and wireless segments and intangible assets of $21.9 million related primarily to our wireless segment.

     We are involved in various claims, legal actions and regulatory proceedings arising in the ordinary course of business, and have recorded litigation reserves of $4.2 million against certain claims and legal actions as of December 31, 2004. We believe that the disposition of these matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows beyond the amounts already recorded. Estimates involved in developing these litigation reserves could change as these claims, legal actions and regulatory proceedings are resolved.

Results of Operations

     The following table summarizes our company’s operations for the years ended December 31, 2004, 2003, and 2002. Certain reclassifications have been made to 2003 and 2002 to conform to the current presentation of our consolidated operations.

($ in thousands, except per share data)		2004				2003				2002
Operating revenues:
Local telephone		$	211,187			$	215,686			$	226,697
Wireless			56,694				46,548				43,180
Directory			—				11,631				33,604
Internet			20,173				33,026				20,847
Interexchange			14,653				16,956				16,066
Total operating revenues			302,707				323,847				340,394
Operating expenses:
Local telephone (exclusive of depreciation and amortization)			127,918				116,653				114,832
Wireless (exclusive of depreciation and amortization)			37,918				31,064				29,352
Directory (exclusive of depreciation and amortization)			—				5,249				14,170
Internet (exclusive of depreciation and amortization)			25,739				45,523				31,299
Interexchange (exclusive of depreciation and amortization)			19,773				25,542				23,647
Contract termination and asset impairment charges			—				54,858				—
Depreciation and amortization			78,387				82,185				82,940
Loss (gain) on disposal of assets, net			2,854				(112,622	)			2,163
Goodwill impairment loss			—				—				64,755
Total operating expenses			292,589				248,452				363,158
Operating income (loss)			10,118				75,395				(22,764	)
Other income and expense:
Interest expense			(51,288	)			(71,470	)			(51,704	)
Interest income and other			1,641				(10,191	)			2,203
Total other income (expense)			(49,647	)			(81,661	)			(49,501	)
Loss before income taxes, discontinued operations and cumulative effect of change in accounting principle			(39,529	)			(6,266	)			(72,265	)
Income tax (expense) benefit			219				(1,095	)			—
Equity in income of investments			16				783				—
Loss from continuing operations			(39,294	)			(6,578	)			(72,265	)
Loss from discontinued operations			—				(52	)			(7,632	)
Loss before cumulative effect of change in accounting principle			(39,294	)			(6,630	)			(79,897	)
Cumulative effect of change in accounting principle			—				—				(105,350	)
Net loss		$	(39,294	)		$	(6,630	)		$	(185,247	)
Loss per share — basic and diluted:
Loss from continuing operations		$	(1.33	)		$	(0.22	)		$	(2.30	)
Loss from discontinued operations			—				—				(0.24	)
Cumulative effect of change in accounting principle			—				—				(3.35	)
Net loss		$	(1.33	)		$	(0.22	)		$	(5.89	)
Weighted average shares outstanding:
Basic			29,592				29,980				31,464
Diluted			29,592				29,980				31,464

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

     Operating revenues

     Operating revenue decreased $21.1 million, or 6.5%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. Wireless revenue increased compared to the corresponding period of 2003, while local telephone, Internet and interexchange revenue decreased compared to the corresponding period of 2003. On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business and on August 27, 2003, we sold the majority of our remaining interest and now own less than 0.1% of the Directories Business. We did not have any operating revenues from the Directories Business after May 8, 2003, but had recorded $11.6 million of revenues from this business for the year ended December 31, 2003.

     On September 15, 2003, we received notification from the State of Alaska that they intended to terminate our five year Telecommunications Services Partnering Agreement (“TPA”). Subsequently, we negotiated and agreed to a definitive Settlement Agreement and Mutual Release effective October 14, 2003, outlining the terms of disentanglement. Operating revenue in 2003 included $19.9 million of revenue from the TPA contract that was nonrecurring in 2004.

     Local Telephone. Local telephone revenue, which consists of local network service, network access and deregulated and other revenue, decreased $4.5 million, or 2.1%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. The following table summarizes our consolidated local telephone revenue by category:

		Year Ended December 31,
		2004				2003
		(in thousands)
Local telephone revenue:
Local network service		$	91,669			$	96,357
Network access revenue			97,536				97,759
Deregulated revenue and other			21,982				21,570
Total local telephone revenue		$	211,187			$	215,686

     The following table summarizes our local telephone access lines:

		As of December 31,
		2004				2003
Retail access lines			207,905				218,058
Wholesale access lines			16,590				19,159
Unbundled network elements — loop (UNE-L)			64,589				68,916
Unbundled network elements — platform (UNE-P)			6,365				5,333
Total local telephone access lines			295,449				311,466

     Consistent with the U.S. telecommunications industry trend, we experienced a loss of network access lines as customers migrated to broadband Internet services reducing demand for second lines, migrated to cable telephony, or replaced landline service with wireless service. Additionally, our primary competitor has begun to deploy cable telephony and began switching its UNE-L provisioned subscribers over to its own network in the Anchorage market during 2004. In November 2004 we received a final order from the RCA with respect to UNE-L rates for ACSA, retroactive to June 2004 increasing the UNE-L rate from $14.92 to $18.64. See “Item 1. Business — Regulation” for further discussion.

     Local network service revenue decreased $4.7 million, or 4.9%, for the year ended December 31, 2004, compared to the year ended December 31, 2003, while access lines in service decreased 5.1% to 295,449. The decrease in revenue primarily reflects the net effect of retail access line losses representing a revenue reduction of approximately $7.3 million offset by increases in UNE rates and average UNEs in service representing a revenue increase of approximately $2.1 million.

     Network access revenue decreased $0.2 million, or 0.2%, for the year ended December 31, 2004 compared to the same period in 2003. The decrease in network access revenue reflects the loss of retail access lines, offset by increases in special access revenue and ongoing true-ups to prior years’ interstate access and universal service fund studies. Network access revenue is based on a regulated return on rate base and recovery of allowable expenses associated with the origination and termination of toll calls for our retail and resale customers. Management expects that network access revenue will decline as a component of local telephone revenue for the foreseeable future.

     Deregulated and other revenue, which increased $0.4 million, or 1.9%, for the year ended December 31, 2004, compared to the year ended December 31, 2003, consists principally of billing and collection services, space and power rents, deregulated equipment sales, paystation revenue, regulated directory listing revenue, and other miscellaneous telephone revenue.

     Wireless. Wireless revenue increased $10.1 million, or 21.8%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. This increase is due primarily to the following:

	•		growth in average subscribers of 10.4% for the year ended December 31, 2004 over the prior year period;
	•		an increase in monthly average revenue per unit, or ARPU, of 8.6% to $44.64 for the year ended December 31, 2004, from $41.09 for the year ended December 31, 2003, primarily as a result of increased plan revenue, roaming, and regulatory surcharges; and
	•		higher gross customer adds in the year ended December 31, 2004 resulting in $4.3 million of handset revenue compared to $2.3 million for the year ended December 31, 2003.

     Internet. Internet revenue decreased $12.9 million, or 38.9%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. This decrease is primarily due to the loss of $15.5 million in revenue associated with the State of Alaska TPA, which was terminated in October 2003, offset by approximately $2.6 million of revenue increases primarily as a result of growth in DSL subscribers of 39.0% to 24,711 at December 31, 2004, from 17,784 at December 31, 2003.

     Interexchange. Interexchange revenue decreased $2.3 million, or 13.6%, for the year ended December 31, 2004, compared to the year ended December 31, 2003. The decline was primarily due to the termination of services to the State of Alaska TPA, which accounted for $4.4 million in 2003 revenue, offset by an increase in long distance subscribers of 3,884, or 9.0%, from 43,166 in 2003 to 47,050 in 2004. Total minutes of use decreased to 136.7 million for the year ended December 31, 2004, from 149.3 million for the year ended December 31, 2003.

Operating expenses

     Operating expenses increased $44.1 million, or 17.7%, from $248.5 million for the year ended December 31, 2003 to $292.6 million for the year ended December 31, 2004. Included in operating expenses for 2003 is approximately $25.7 million of expenses attributable to the State of Alaska TPA, contract termination and asset impairment charges of $54.9 million, and a net gain on disposal of assets of $112.6 million.

     On May 8, 2003, we completed the sale of a majority interest (87.42%) in its Directories Business. We did not have any expenses from operations from the Directories Business after this date.

     Depreciation and amortization associated with the operation of each of our segments has been included in total depreciation and amortization.

     Local Telephone. The components of local telephone expense are plant specific operations, plant non-specific operations, customer operations, corporate operations and property and other operating tax expense. Local telephone expense increased from $116.7 million for the year ended December 31, 2003 to $127.9 million for the year ended December 31, 2004, an increase of $11.2 million or 9.6%. The increase in local telephone expense was substantially attributable to $6.6 million of organizational restructuring costs (including $2.5 million of consulting, $1.0 million of hiring, recruiting and severance costs, and $3.1 million of early lease termination expense), $2.5 million of inventory write-downs,

and $1.5 million of other unusual charges. We also implemented a contractual wage increase for our represented employees of approximately 2.3% on January 1, 2004.

     Wireless. Wireless expense increased $6.9 million, or 22.1%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. This increase is due primarily to a $3.0 million increase in the cost of equipment associated with customer acquisition as we experienced 33,476 gross customer additions during 2004 compared to 23,220 in the prior year, an increase in leased circuit and outside services costs increase of $3.1 million associated with our CDMA deployment during 2004, and additional roaming expense.

     Internet. Internet expenses decreased by $19.8 million, or 43.5%. The decrease in Internet expense was due principally to the termination of the State of Alaska TPA, which had incurred $20.4 million of expense during 2003 with no corresponding TPA expense in 2004. The elimination of expenses associated with the TPA was partially offset by additional expenses associated with a 39.0% increase in DSL subscribers over the prior year.

     Interexchange. Interexchange expenses decreased by $5.8 million, or 22.6%. $5.2 million of this decrease was attributable to costs associated with the State of Alaska TPA, which was terminated during the fourth quarter of 2003. Additionally, minutes of use decreased 8.4% to 136.7 million for the year ended December 31, 2004, from 149.3 million for the year ended December 31, 2003.

     Contract termination and asset impairment charges. During the year ended December 31, 2003, we recorded $54.9 million in contract termination and asset impairment charges for which no corresponding charges were incurred during 2004. These charges resulted from (1) the termination of the TPA with the State of Alaska and (2) an impairment of fiber optic indefeasible rights of use and IP network and service center assets resulting from the termination of the TPA as well as changes in the communications industry and the economy.

     The following table itemizes the components of the contract termination and asset impairment charges (in thousands).

Contract termination charges:
Contract termination cash settlement		$	3,448
Loss on disposal of assets			5,648
Accounts receivable and working capital write-downs			3,575
Total contract termination charges		$	12,671
Asset impairment charges		$	42,187
Total contract termination and asset impairment charges		$	54,858

     See Note 9 “Contract Termination and Asset Impairment Charges,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, for a description of each element of the contract termination and asset impairment charges.

     Depreciation and amortization. Depreciation and amortization expense decreased $3.8 million, or 4.6%, primarily as a result of a decline in net property, plant and equipment of 5.9% from $438.1 million at December 31, 2003 to $412.3 million at December 31, 2004. Much of the decline in net property, plant and equipment resulted from the loss on disposal and asset impairment charges incurred during the third quarter of 2003, as described above.

     Loss (Gain) on disposal of assets. On April 28, 2003, we entered into an underwriting agreement to sell a majority interest in our Directories Business and on April 29, 2003 filed a final prospectus to offer this majority interest to investors through a Canadian income fund. The transaction was completed on May 8, 2003, with us selling an 87.42% interest and retaining a 12.58% interest in our Directories Business. We recognized a gain on disposition of this majority interest of our Directories Business of $97.6 million on a pre-tax basis during 2003.

     Subsequently on August 27, 2003, we disposed of substantially all of our remaining interest through the exercise of our right to convert 99.23% of our then remaining 12.58% interest to 2.5 million units of the ACS Media Income Fund, which were then sold in an underwritten offering. The transaction settled on September 4, 2003, generating $17.2 million in net

proceeds and a gain on disposition of $15.9 million. As a result of this transaction, we now own less than 0.1% of the Directories Business.

     We recorded a non-cash loss on the disposal of certain fixed assets of $2.9 million during 2004 compared to $0.9 million during 2003, exclusive of the gain on the sale of our Directories Business.

     Interest expense and interest income and other

     Interest expense decreased $20.2 million, or 28.2%, for the year ended December 31, 2004 compared to the year ended December 31, 2003. As a result of the early extinguishments of outstanding debt of $106.7 million during the second quarter of 2003 and the refinancing of $320.7 million during the third quarter of 2003, $13.1 million of debt issuance cost was charged to interest expense. We also extinguished early our interest rate swap contract during the fourth quarter of 2003. This swap contract accounted for $15.6 million of 2003 interest expense. These reductions to 2004 interest expense were partially offset by higher interest associated with our 9 7/8% senior unsecured notes due 2011, which were in effect for the full year of 2004 compared to approximately one quarter during 2003, and higher variable interest rates on principal outstanding under our senior bank credit facilities experienced during 2004 compared to 2003.

     Interest income and other increased from a net expense of $10.2 million for 2003 to income of $1.6 million for 2004, or a positive year-over-year variance of $11.8 million, due substantially to a $15.9 million non-operating impairment loss on a note receivable offset by the $4.3 million gain on foreign exchange on the sale of the Directories Business, both of which were recorded during 2003.

     Income taxes

     We have fully reserved the income tax benefit resulting from the consolidated losses we have incurred since May 14, 1999, the date of the acquisition of substantially all of our operations. During 2004, we received a refund of prior year estimated alternative minimum taxes of $0.2 million.

     Loss from discontinued operations

     During 2003, we completed a plan we adopted on March 3, 2002 to dispose of our former wireless television segment, which resulted in a loss on disposal of $0.1 million for 2003.

     Net loss

     The increase in net loss is primarily a result of the factors discussed above.

Year ended December 31, 2003 compared to year ended December 31, 2002

     Operating revenues

     Operating revenues decreased $16.6 million, or 4.9%, for the year ended December 31, 2003 compared to the year ended December 31, 2002. Wireless, Internet, and interexchange revenues increased compared to the prior period, while local telephone decreased. On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business and sold substantially all remaining interest in August 2003. We did not have any operating revenues from the Directories Business after May 8, 2003.

     Local telephone. Local telephone revenues, which consist of local network service, network access revenue, and deregulated revenues and other, decreased $11.1 million, or 4.9%, for the year ended December 31, 2003 compared to the same period in 2002.

     The following table summarizes our consolidated local telephone revenue by category:

		Year Ended December 31,
		2003				2002
		(in thousands)
Local telephone revenue:
Local network service		$	96,357			$	99,512
Network access revenue			97,759				108,335
Deregulated revenue and other			21,570				18,850
Total local telephone revenue		$	215,686			$	226,697

     The following table summarizes our local telephone access lines:

		As of December 31,
		2003				2002
Retail access lines			218,058				236,148
Wholesale access lines			19,159				22,148
Unbundled network elements — loop (UNE-L)			68,916				62,091
Unbundled network elements — platform (UNE-P)			5,333				2,620
Total local telephone access lines			311,466				323,007

     The local network service component of local telephone revenues was $96.3 million during 2003 compared with $99.5 million during 2002. Local network service revenue decreased $3.2 million or 3.2% from the prior year, while average access lines in service decreased 3.6% to 318,614. Substantially all of the decrease reflects the net effect of retail market share losses offset by increases in unbundled network element revenue. Retail access lines decreased 18,090 or 7.7% to 218,058 at December 31, 2003. Approximately 2,800 of the decrease in retail access lines was due to a change in the counting methodology adopted for 2003 and later periods to exclude company use of our access lines.

     We experienced a loss of direct retail customers during the year as customers cancelled second lines they were not using or switched to competing service providers. This reduction in direct retail customers was partially offset by an increase in wholesale lines. Generally, if a retail local network service customer of ours switches to a competitor, we continue to provide the line to the competitor on a wholesale basis at reduced revenue per line. Management believes that the continuing loss of market share we have experienced in certain of our markets is partially attributable to below cost interconnection rates mandated by the RCA for UNEs. On October 25, 2001, the RCA granted ACSA an interim UNE rate increase of $1.07, bringing the UNE rate up from $13.85 to $14.92. The interim and refundable rate increase was implemented in November 2001 and generated approximately $0.8 million in additional revenue during 2003. See “Item 1. Business — Regulation” for further discussion.

     Network access revenues decreased by $10.6 million, or 9.8%, from $108.3 million in 2002 to $97.8 million in 2003. During the second quarter of 2002, we recognized as revenue $11.1 million of previously deferred interstate access revenue related to a dispute on interstate access rates for the Anchorage market based on a favorable ruling by the District of Columbia Court of Appeals. Network access revenue is based on a regulated return on rate base and recovery of allowable expense associated with the origination and termination of toll calls for our retail and resale customers. Excluding the impact of the revenue recognized as a result of the favorable ruling by the court, the increase in network access revenues of $0.5 million compared to the corresponding period in 2002 is due primarily to updated access studies. Management expects that network access revenues will generally be on a declining trend for the foreseeable future.

     Deregulated and other revenues, which increased $2.7 million, or 14.4% from 2002, consists principally of billing and collection services, space and power rents, deregulated equipment sales, pay station revenues, regulated directory listing revenue, and other miscellaneous telephone revenues. The increase in deregulated and other revenue was due primarily to an increase in rents and billing and collection revenue.

     Wireless. Wireless revenues increased $3.4 million, or 7.8%, to $46.5 million for the year ended December 31, 2003 compared to $43.2 million for the year ended December 31, 2002. This increase is due primarily to growth in average subscribers of 4.2% from 81,170 in 2002 to 84,619 in 2003. Subscriber average monthly minutes of use increased from 202 minutes in 2002 to 227 minutes in 2003. Primarily as a result of increased minutes of use over plan allotments, the monthly average revenue per unit, or ARPU, increased from $44.33 in 2002 to $45.84 in 2003.

     Internet. Internet revenues increased from $20.8 million in 2002 to $33.0 million in 2003—an increase of $12.2 million, or 58.4%. This increase is primarily due to revenue associated with our contract with the State of Alaska and because approximately $1.2 million of this increase was earned in the prior year but could not be estimated and therefore was not recorded until the current year. Internet also experienced growth in DSL subscribers of 41.2% from 12,590 at December 31, 2002 to 17,780 at December 31, 2003.

     On September 15, 2003, we received notification from the State of Alaska that it intended to terminate a five year TPA with us and disentangle. Subsequently, we negotiated with the State and agreed to a definitive Settlement Agreement and Mutual Release effective October 14, 2003, outlining the terms of disentanglement between the parties. State of Alaska contract revenues included in Internet were $15.5 million and $8.0 million for the years ended December 31, 2003 and 2002, respectively.

     Interexchange. Interexchange revenue increased from $16.1 million in 2002 to $17.0 million in 2003—an increase of $0.9 million, or 5.5%. Long distance subscribers decreased from approximately 70,000 at December 31, 2002 to 43,166 at December 31, 2003. The decrease in subscribers was substantially due to database grooming to remove approximately 20,000 non-revenue generating inactive subscribers from the subscriber list in connection with the conversion of long distance billing from an outside service bureau to an in-house system during the first and second quarters of 2003. The average revenue per unit, or ARPU, increased to $24.97 in 2003 compared to $19.73 during 2002 and total minutes of use decreased from 153.4 million in 2002 to 149.3 million in 2003. The decline in minutes of use was due to increased competition in the marketplace, and the popularity of discount long distance calling cards. Currently, we have a low penetration on this product, but we expect our market share to grow as we increasingly offer attractive bundles to our customers, which may offset declines in interexchange revenue due to the termination of the State of Alaska contract.

     Operating expenses

     Operating expenses decreased $114.7 million, or 31.6%, from $363.2 million for the year ended December 31, 2002 to $248.5 million for the year ended December 31, 2003. Included in operating expenses for 2003 is a net gain on disposal of assets of $112.6 million and contract termination and asset impairment charges of $54.9 million. Included in operating expenses for 2002 is a goodwill impairment charge of $64.8 million and a net loss on disposal of assets of $2.2 million. Excluding these charges, operating expenses increased $10.0 million or 3.4%.

     On May 8, 2003, we completed the sale of a majority interest (87.42%) in our Directories Business. We did not have any expenses from operations from the Directories Business after this date.

     Depreciation and amortization associated with the operation of each of our segments has been included in total depreciation and amortization.

     Local telephone. The components of local telephone expense are plant specific operations, plant non-specific operations, customer operations, corporate operations and property and other operating tax expense. Local telephone expense increased from $114.8 million for the year ended December 31, 2002 to $116.7 million for the year ended December 31, 2003—an increase of $1.9 million or 1.7%. The increase in local telephone expense was substantially attributable to executive recruiting and retirement costs, litigation reserves and federal universal service charges recorded during the third and fourth quarters of 2003.

     Wireless. Wireless expense increased $1.7 million, or 5.8%, for the year ended December 31, 2003 compared to the year ended December 31, 2002. This increase is substantially due to an increase of minutes of use from 196.8 million in 2002 to 231.0 million in 2003.

     Internet. Internet expenses increased by $14.2 million, or 45.4%. The increase in Internet expense was due principally to transition expenses and operating costs associated with providing services under the State of Alaska telecommunications contract. State of Alaska contract related expense totaling $1.5 million was incurred in the previous year but was recorded in the current year as it was the first point in which the expense could be matched to the associated revenue, as discussed above in Internet revenue. We negotiated with the State and agreed to a definitive Settlement Agreement and Mutual Release effective October 14, 2003, terminating the contract and outlining the terms of disentanglement between the parties. We anticipate expense for this segment to decline as we complete the disentanglement under the contract.

     Interexchange. Interexchange expenses increased by $1.9 million, or 8.0%. The majority of this increase was caused by an increase in billing and collection fees, toll switching and litigation reserves in 2003.

     Contract termination and asset impairment charges. During the year ended December 31, 2003, we recorded $54.9 million in contract termination and asset impairment charges. These charges resulted from (1) the termination of the TPA with the State of Alaska and (2) an impairment of fiber optic indefeasible rights of use and IP network and service center assets resulting from the termination of the TPA as well as changes in the communications industry and the economy.

     The following table itemizes the components of the contract termination and asset impairment charges (in thousands).

Contract termination charges:
Contract termination cash settlement		$	3,448
Loss on disposal of assets			5,648
Accounts receivable and working capital write-downs			3,575
Total contract termination charges		$	12,671
Asset impairment charges		$	42,187
Total contract termination and asset impairment charges		$	54,858

     See Note 9 “Contract Termination and Asset Impairment Charges,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, for a description of each element of the contract termination and asset impairment charges.

     Depreciation and amortization. Depreciation and amortization expense decreased $0.8 million, or 0.9%.

     Loss (gain) on disposal of assets. On April 28, 2003, we entered into an underwriting agreement to sell a majority interest in our Directories Business and on April 29, 2003 we filed a final prospectus to offer this majority interest to investors through a Canadian income fund. The transaction was completed on May 8, 2003, with us selling an 87.42% interest and retaining a 12.58% interest in our Directories Business. We recognized a gain on disposition of this majority interest of our Directories Business of $97.6 million on a pre-tax basis.

     Subsequently on August 27, 2003, we disposed of substantially all of our remaining interest through the exercise of our right to convert 99.23% of our then remaining 12.58% interest to 2.5 million units of the ACS Media Income Fund, which were then sold in an underwritten offering. The transaction settled on September 4, 2003, generating $17.2 million in net proceeds and a gain on disposition of $15.9 million. As a result of this transaction, we now own less than 0.1% of the Directories Business.

     We recorded a non-cash loss on the disposal of certain fixed assets of $0.9 million during 2003 and $2.2 million during 2002.

     Goodwill impairment loss. We recorded a non-cash goodwill impairment charge during the fourth quarter of 2002 of $64.8 million as a result of our annual goodwill impairment test under SFAS No. 142, Goodwill and Intangible Assets. See Note 4, “Goodwill and Other Intangible Assets,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, for additional information.

     Interest expense and interest income and other

     Interest expense increased $19.8 million, or 38.2%, for the year ended December 31, 2003 compared to the year ended December 31, 2002. As a result of the early extinguishments of outstanding debt of $106.7 million during the second quarter of 2003 and the refinancing of $320.7 million during the third quarter of 2003, $13.1 million of debt issuance cost was charged to interest expense. We also extinguished early our interest rate swap contract during the fourth quarter of 2003, resulting in a charge of $8.0 million which resulted in $5.1 million of interest expense in excess of what would have been recorded had the swap not been terminated. During the second quarter of 2002, we reversed $1.7 million of previously accrued interest expense as a result of a favorable ruling by the District of Columbia Court of Appeals related to a dispute on interstate access rates for the Anchorage market. In addition, we incurred additional interest expense in 2003 under our $182 million 9⅞% senior notes due 2011, offset by lower term loan balances and the results of market interest rate effects on our variable interest rate debt.

     Interest income and other (including equity in income of investments) also declined by $12.4 million, primarily due to a $15.9 million non-operating impairment loss on a note receivable offset by the $4.3 million gain on foreign exchange on the sale of the Directories Business.

     Income taxes

     We have fully reserved the income tax benefit resulting from the consolidated losses we have incurred since May 14, 1999, the date of the acquisition of substantially all of our operations. During 2003, we incurred $1.1 million in Alternative Minimum Tax as a result of the sale of our Directories Business.

     Discontinued operations

     On March 30, 2002, our management approved a plan to offer for sale our wireless cable television service segment. As a result of this decision, the operating revenue and expense of this segment has been classified as discontinued operations under SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, for all periods presented and the assets and liabilities of the disposal group have been written down to their fair value, net of expected selling expense. The write down and results of operations of this discontinued segment resulted in a charge to discontinued operations of $52,000 and $7.6 million for the years ended December 31, 2003 and 2002, respectively. We have fully reserved in the form of a valuation allowance the income tax benefit of this discontinuance. We completed our disposal of our wireless cable television segment as of March 31, 2003.

     Cumulative effect of change in accounting principle

     During the second quarter of fiscal 2002, we also completed the transitional review for goodwill impairment required under SFAS No. 142, Goodwill and Intangible Assets. This review indicated that goodwill recorded in the local telephone, Internet and interexchange segments was impaired as of January 1, 2002. Accordingly, we measured and recognized a transitional impairment loss of $105.4 million as a cumulative effect of a change in accounting principle. See Note 4, “Goodwill and Other Intangible Assets,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, for additional discussion of the impact of this statement on our consolidated financial statements.

     Net loss

     Net loss decreased $178.6 million, or 96.4% for the year ended December 31, 2003, compared to the year ended December 31, 2002, as a result of the factors discussed above.

Liquidity and capital resources

     We have satisfied our cash requirements for operations, capital expenditures and debt service primarily through internally generated funds, the sale of stock and debt financing. For the year ended December 31, 2004, our cash flows from operating activities were $59.0 million. At December 31, 2004, we had approximately $71.2 million in net working capital, with approximately $50.7 million represented by cash and cash equivalents, $35.2 million by short term investments and $4.7 million by restricted cash. As of December 31, 2004, we had $50.0 million of remaining capacity under our former revolving credit facility, representing 100% of available capacity.

     As of December 31, 2004, we had outstanding a $198.0 million under a bank credit agreement, our 2003 senior secured credit facility, $147.5 million in senior subordinated notes due 2009 and $177.7 million in senior unsecured notes, representing substantially all of our long-term debt of $525.9 million. On May 14, 2004, we called $17.3 million of our 13% senior discount debentures due 2011. The redemption was completed on June 14, 2004 at 106.5% of the outstanding principal and as a result a call premium of $1.1 million was paid. Our board of directors authorized us to buy back up to $10 million of our outstanding debt in the open market during the three months ended December 31, 2004. During the quarter ended December 31, 2004, we repurchased $4.4 million aggregate principal amount of senior unsecured notes and $2.5 million of senior subordinated notes in the open market. From time to time we consider making purchases of our outstanding debt securities on the open market or in negotiated transactions. The timing and amount of such purchases, if any, will depend upon cash needs and market conditions, among other things. Interest on the senior subordinated notes and senior unsecured notes is payable semiannually. Interest on borrowings under the 2003 senior credit facility is payable monthly, bi-monthly, quarterly or semi-annually at our option. The 2003 senior credit facility requires $0.5 million quarterly principal payments that commenced on March 31, 2004, with the balance due in 2010. The 2003 senior secured credit facility, the senior subordinated notes and the senior unsecured notes contain a number of restrictive covenants and events of default, including covenants limiting capital expenditures, incurrence of debt, and the payment of dividends, and the 2003 senior credit facility requires us to achieve certain financial ratios. We are in compliance with all of our debt covenants as of December 31, 2004.

     In February and March 2005, we completed refinancing transactions whereby we entered into a new $380 million senior secured credit facility, the 2005 senior credit facility, and used the $335.0 million of term loan borrowings under that facility, together with the $84.1 million in gross proceeds of a simultaneous offering of our common stock and cash on hand to:

	•		repay in full and redeem the $198.0 of outstanding principal under our 2003 senior credit facility, together with interest accrued thereon;
	•		repurchase $59.3 million of outstanding principal of our senior unsecured notes, together with tender premiums and interest accrued thereon;
	•		repurchase $140.1 million of outstanding principal of our senior subordinated notes, together with tender premiums and interest accrued thereon;
	•		call for redemption the $7.4 million of remaining principal of senior subordinated notes; and
	•		pay underwriters’ discounts and transaction fees and expenses associated with the equity offering and refinancing transactions.

     These transactions resulted in total long-term obligations outstanding of approximately $458 million as of March 3, 2005, consisting primarily of the $380.0 million 2005 senior credit facility with a drawn term loan of $335.0 million and an undrawn revolving credit facility of $45.0 million, and $118.3 million remaining aggregate principal amount outstanding of senior unsecured notes. The $335.0 million term loan under the 2005 senior credit facility was drawn on February 1, 2005 and generally bears interest at an annual rate of LIBOR plus 2.00%, with a term of seven years from the date of closing and no scheduled principal payments before maturity. The $45.0 million undrawn revolving credit facility, to the extent drawn in the future, will bear interest at an annual rate of LIBOR plus 2.00% and have a term of six years from the date of closing. To the extent the $45.0 million revolving credit facility under the 2005 senior credit facility remains undrawn, we will pay an annual commitment fee of 0.375% of the undrawn principal amount over its term. We also entered into floating-to-fixed interest rate swaps with a total notional amount of approximately $135.0 million that swap the floating interest rate on a portion of the term loan borrowings under the 2005 senior credit facility for a fixed rate of 4.13% per year. Three-month LIBOR was approximately 2.64% on February 1, 2005. See Note 23, “Subsequent Events,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, for additional information about the equity offering and refinancing transactions.

     On July 15, 2002, we fulfilled a commitment to Crest to provide a loan for the aggregate principal amount of $15 million in return for certain consideration. We have an agreement that enables us to purchase additional fiber optic capacity in future years from Crest, the expenditures for which are expected to be significant and may exceed $20 million over the next two years. We purchased additional capacity under this agreement for $5.6 million during 2004. While we have an agreement with Crest, certain material terms of the agreement remain subject to continued renegotiation. The significant provisions of this agreement are: (i) purchase commitments by us for capacity in 2005 and 2006, the final price and quantity of which are subject to future events, (ii) Crest’s restoration of our traffic carried on another cable system and (iii) specific interconnection arrangements between us and Crest, should we exercise our option to purchase certain network assets from Crest. We are currently renegotiating open elements of our agreement with Crest. It is impossible to determine the ultimate outcome of these negotiations at this time. The loan was written down to zero, its estimated fair value, during September 2003.

     The following summarizes our contractual obligations and commitments with quantifiable payment terms as of December 31, 2004:

		Total				2005				2006-2007				2008-2009				Thereafter
Long-term debt		$	517,829			$	1,413			$	2,620			$	149,805			$	363,991
Capital leases			8,060				885				1,984				1,603				3,588
Operating leases			6,779				2,194				2,389				1,470				726
Unconditional purchase obligations			10,942				6,357				3,565				1,020				—
Total contractual cash obligations		$	543,610			$	10,849			$	10,558			$	153,898			$	368,305

     We also have obligations for material cash interest payments on our long-term debt that are not included in the table above. Approximately 36% of our debt at December 31, 2004 is subject variable interest rates. See “Item 7a. Quantitative and qualitative disclosure about market risk” for more information.

     The local telephone network requires the timely maintenance of plant and infrastructure. Our historical capital expenditures have been significant. The construction and geographic expansion of our wireless network has required significant capital. The implementation of our interexchange network and data services strategy is also capital intensive. Capital expenditures for 2004 were $51.4 million, of which $10.4 million was expended on CDMA 1xRTT build out and $5.6 million was expended on the Crest fiber optic capacity purchases. We intend to fund future capital expenditures with cash on hand, through internally generated cash flows, and if necessary, through borrowings under our revolving credit facility. At December 31, 2004 we had allocated $55.0 million of our total current unrestricted cash and short term investment balance of $85.9 million to fund the completion over the next two years of our CDMA 1xRTT and EV-DO build out and to secure fiber capacity within Alaska and to the lower 48 states in the United States under the terms of our agreement with Crest.

     Our capital requirements may change due to impacts of regulatory decisions that affect our ability to recover our investments, changes in technology, the effects of competition, changes in our business strategy, and our decision to pursue specific acquisition opportunities, among other things.

     We announced on October 28, 2004 the adoption of a dividend policy by our board of directors and declared our first quarterly dividend of $0.185 per share, payable on January 19, 2005 to holders of record on December 31, 2004. While we intend to continue to pay quarterly dividends, such payment is subject to our future operating and financial performance, capital expenditures, working capital requirements and other factors. Accordingly, our board of directors may modify or revoke this policy at any time. See “ Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters — Dividends.” Simultaneous with the announcement of the dividend policy, we also announced the withdrawal of our registration statements for a proposed initial public offering of income deposit securities, a separate proposed offering of senior subordinated notes and the proposed reclassification of our existing common stock into cash and shares of new class B common stock which we had filed with the SEC. No securities were sold under the withdrawn registration statements.

     Subsequent to December 31, 2004, we issued 8.8 million shares of our common stock in an equity offering that closed on February 1, 2005 and, through the partial exercise by the underwriters of their over-allotment option, an additional 1.1 million shares that closed on March 2, 2005. As a result of these issuances, we have outstanding 40.6 million shares as of March 2, 2005. The issuance of these additional shares of our common stock will increase our aggregate annual dividend payments by approximately $7.3 million to approximately $30.0 million annually based on our current dividend policy of $0.74 per share per year. See Note 23, “Subsequent Events,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, for additional information about the offering of our common stock.

     We believe that we will have sufficient working capital provided by operations and available borrowing capacity under our revolving credit facility to service our debt, pay our quarterly dividends, fund our operations, capital expenditures and other obligations over the next 12 months. Our ability to meet such obligations will be dependent upon our future financial performance, which is, in turn, subject to future economic conditions and to financial, business, regulatory and other factors, many of which are beyond our control.

Effect of new accounting standards

     In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46 (FIN 46), “Consolidation of Variable Interest Entities — An Interpretation of Accounting Research Bulletin (ARB) No. 51.” In December 2003, the FASB issued FIN 46 (revised December 2003), “Consolidation of Variable Interest Entities” (FIN 46R). FIN 46R provides guidance on how to identify variable interest entities and how to determine whether or not those entities should be consolidated. We were required to apply FIN 46R by the end of the first reporting period after March 15, 2004, for entities which were created before February 1, 2003. The adoption of FIN 46R was immediate for variable interest entities created after January 31, 2003. We have evaluated the provisions of FIN 46R and determined that we do not have any variable interest entities that require consolidation in our financial statements.

     In December 2004, the FASB issued SFAS No. 123(Revised), “Share-Based Payment.” This statement replaces SFAS No. 123, “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123(R) requires companies to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees and to record compensation cost for all stock awards granted after the required effective date and to awards modified, repurchased, or cancelled after that date. In addition, we are required to record compensation expense (as previous awards continue to vest) for the unvested portion of previously granted awards that remain outstanding at the date of adoption. SFAS 123(R) will be effective for our third quarter ending September 30, 2005. We have not yet determined the impact that SFAS 123(R) will have on our financial position and results of operations, but expect that the stock incentive plans disclosure provided in Note 1, “Description of Company and Summary of Significant Accounting Policies,” to the Alaska Communications Systems Group, Inc. Consolidated Financial Statements, provides a reasonable measure of the expected annual impact.

     Outlook

     We expect that, overall, the demand for telecommunications services in Alaska will grow, particularly as a result of:

	•		increasing demand for wireless voice and data services following the launch of our CDMA 1xRTT network;
	•		growth in demand for DSL and Internet access services due to higher business and consumer bandwidth needs; and
	•		increasing demand for private network services by government and business on a statewide basis on either a circuit switched or IP basis.

     We believe that we will be able to capitalize on this demand through our diverse service offerings on our owned circuit switched and IP facilities, new sales and marketing initiatives directed toward basic voice, enhanced and data services, and offering customers an integrated bundle of telecommunication services including local telephone, wireless, Internet, long distance, messaging and video entertainment.

     Consistent with the U.S. telecommunications industry, we experienced a loss in network access lines during the year as customers cancelled second lines, replaced wireline services with wireless, and lines migrated to cable telephony. Our primary UNE customer has announced plans to migrate most of its Anchorage area customers to its own cable telephony plant during the next three years. Consequently, we anticipate that these trends will continue.

     There are currently a number of regulatory proceedings underway at the state and federal levels that could have a significant impact on our operations. We cannot predict with certainty the impact of current or future regulatory developments on any of our businesses.

     The telecommunications industry is extremely competitive, and we expect competition to intensify in the future. As an ILEC, we face competition mainly from resellers, local providers who lease our UNEs and from providers of local telephone services over separate facilities. Moreover, while wireless telephone services have historically complemented traditional LEC services, we anticipate that existing and emerging wireless technologies may increasingly compete with LEC services. Similarly, local and interexchange service competition may come from cable television providers and voice over IP providers. In wireless services, we currently compete with at least one other wireless provider in each of our wireless service areas. In the highly competitive business for Internet access services, we currently compete with a number of established online service companies, interexchange carriers and cable companies. In the interexchange market, we believe we currently have less than 5% of total revenue in Alaska and face competition from two major interexchange providers.

     The telecommunications industry is subject to continuous technological change. We expect that new technological developments in the future will generally serve to enhance our ability to provide service to our customers. However, these developments may also increase competition or require us to make significant capital investments to maintain our leadership position in Alaska.

Impact of inflation

     The effect of inflation on our financial results has not been significant in the periods presented.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) 1. Financial Statements
		Our consolidated financial statements are submitted as a separate section of this Form 10-K/A. See Index to Consolidated Financial Statements and Schedule which appears on page F-1 hereof.
		2. Financial Statement Schedule
		Our financial statement schedules for the Company and its subsidiaries are submitted as a separate section of this Form 10-K/A. See Index to Consolidated Financial Statements and Schedule which appears on page F-1 hereof.

Exhibit
No.		Description
31.1		Certification of Liane Pelletier, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of David Wilson, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Liane Pelletier, Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of David Wilson, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted to Section 906 of The Sarbanes-Oxley Act of 2002.

SIGNATURES

     Pursuant to the requirements of Section 13 or Section 15(d) of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature		Title		Date
/s/ Liane Pelletier   Liane Pelletier		Chief Executive Officer, Chairman of the Board and President
/s/ David Wilson   David Wilson		Senior Vice President and Chief Financial Officer (Principal Accounting Officer)
/s/ Kenneth L. Sprain   Kenneth L. Sprain		Senior Vice President, Network and IT Operations
/s/ David C. Eisenberg   David C. Eisenberg		Senior Vice President, Corporate Strategy and Development
/s/ Sheldon Fisher   Sheldon Fisher		Senior Vice President, Sales and Product Marketing
/s/ Leonard A. Steinberg   Leonard A. Steinberg		Vice President, General Counsel and Corporate Secretary
/s/ Elizabeth A. Pierce   Elizabeth A. Pierce		Vice President, Human Resources and Facilities Services
/s/ Byron I. Mallott   Byron I. Mallott		Director
/s/ Brian Rogers   Brian Rogers		Director
/s/ W. Dexter Paine, III   W. Dexter Paine, III		Director
/s/ John M. Egan   John M. Egan		Director
/s/ Patrick Pichette   Patrick Pichette		Director
/s/ Gary R. Donahee   Gary R. Donahee		Director
/s/ John W. Gibson   John W. Gibson		Director

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Report of Independent Registered Public Accounting Firm		F-2
Consolidated Balance Sheets — December 31, 2004 (as restated) and 2003 (as restated)		F-3
Consolidated Statements of Operations — Years Ended December 31, 2004, 2003 and 2002		F-4
Consolidated Statements of Stockholders’ Equity (Deficit) and Comprehensive Income (Loss) — Years Ended December 31, 2004, 2003 and 2002		F-5
Consolidated Statements of Cash Flows — Years Ended December 31, 2004 (as restated), 2003 (as restated) and 2002 (as restated)		F-6
Notes to Consolidated Financial Statements— Years Ended December 31, 2004, 2003 and 2002		F-7
Schedule II — Valuation and Qualifying Accounts		F-49

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders
Alaska Communications Systems Group, Inc.
Anchorage, Alaska

     We have audited the consolidated balance sheets of Alaska Communications Systems Group, Inc. and Subsidiaries (the “Company”) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders’ equity (deficit) and comprehensive income (loss), and cash flows for each of the three years in the period ended December 31, 2004. Our audits also included the financial statement schedule listed in the index at Item 15. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits.

     We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal controls over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Alaska Communications Systems Group, Inc. and Subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

     As discussed in Note 4 to the consolidated financial statements, effective January 1, 2002 the Company adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets.

     As discussed in Note 25, the accompanying consolidated financial statements have been restated.

/s/ DELOITTE & TOUCHE LLP

Portland, Oregon
March 7, 2005
(November 2, 2005 as to Note 25)

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Balance Sheets
December 31, 2004 and 2003
(In Thousands, Except Per Share Amounts)

		As Restated — See Note 25
Assets		2004				2003
Current assets:
Cash and cash equivalents		$	50,660			$	54,576
Restricted cash			4,690				3,635
Short term investments			35,200				43,222
Accounts receivable-trade, net of allowance of $4,869 and $4,865			39,413				41,718
Materials and supplies			6,623				10,099
Prepayments and other current assets			3,724				5,850
Total current assets			140,310				159,100
Property, plant and equipment			1,061,767				1,041,904
Less: Accumulated depreciation and amortization			649,455				603,760
Property, plant and equipment, net			412,312				438,144
Goodwill			38,403				38,403
Intangible Assets			21,871				22,055
Debt issuance costs			15,482				18,939
Deferred charges and other assets			8,749				8,750
Total assets		$	637,127			$	685,391
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Current portion of long-term obligations		$	2,298			$	1,982
Accounts payable-affiliate			3,973				5,082
Accounts payable, accrued and other current liabilities			53,843				47,303
Income taxes payable			—				1,095
Advance billings and customer deposits			8,948				8,766
Total current liabilities			69,062				64,228
Long-term obligations, net of current portion			523,591				548,238
Other deferred credits and long-term liabilities			77,916				71,065
Commitments and contingencies
Stockholders’ equity (deficit):
Preferred stock, no par, 5,000 authorized, no shares issued and outstanding			—				—
Common stock, $.01 par value; 145,000 shares authorized, 35,245 and 33,611 shares issued and 30,695 and 29,343 outstanding, respectively			352				336
Common stock, $.01 par value; 0 and 267 shares subject to mandatory redemption			—				(1,198	)
Treasury stock, 4,549 and 4,268 shares, respectively, at cost			(18,443	)			(17,118	)
Paid in capital in excess of par value			282,272				278,181
Accumulated deficit			(293,092	)			(253,798	)
Accumulated other comprehensive loss			(4,531	)			(4,543	)
Total stockholders’ equity (deficit)			(33,442	)			1,860
Total liabilities and stockholders’ equity (deficit)		$	637,127			$	685,391

See Notes to Consolidated Financial Statements

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Statements of Operations
Years Ended December 31, 2004, 2003 and 2002
(In Thousands, Except Per Share Amounts)

		2004				2003				2002
Operating revenues:
Local telephone		$	211,187			$	215,686			$	226,697
Wireless			56,694				46,548				43,180
Directory			—				11,631				33,604
Internet			20,173				33,026				20,847
Interexchange			14,653				16,956				16,066
Total operating revenues			302,707				323,847				340,394
Operating expenses:
Local telephone (exclusive of depreciation and amortization)			127,918				116,653				114,832
Wireless (exclusive of depreciation and amortization)			37,918				31,064				29,352
Directory (exclusive of depreciation and amortization)			—				5,249				14,170
Internet (exclusive of depreciation and amortization)			25,739				45,523				31,299
Interexchange (exclusive of depreciation and amortization)			19,773				25,542				23,647
Contract termination and asset impairment charges			—				54,858				—
Depreciation and amortization			78,387				82,185				82,940
Loss (gain) on disposal of assets, net			2,854				(112,622	)			2,163
Goodwill impairment loss			—				—				64,755
Total operating expenses			292,589				248,452				363,158
Operating income (loss)			10,118				75,395				(22,764	)
Other income and expense:
Interest expense			(51,288	)			(71,470	)			(51,704	)
Interest income and other			1,641				(10,191	)			2,203
Total other income (expense)			(49,647	)			(81,661	)			(49,501	)
Loss before income taxes, discontinued operations and cumulative effect of change in accounting principle			(39,529	)			(6,266	)			(72,265	)
Income tax (expense) benefit			219				(1,095	)			—
Equity in income of investments			16				783				—
Loss from continuing operations			(39,294	)			(6,578	)			(72,265	)
Loss from discontinued operations			—				(52	)			(7,632	)
Loss before cumulative effect of change in accounting principle			(39,294	)			(6,630	)			(79,897	)
Cumulative effect of change in accounting principle			—				—				(105,350	)
Net loss		$	(39,294	)		$	(6,630	)		$	(185,247	)
Loss per share — basic and diluted:
Loss from continuing operations		$	(1.33	)		$	(0.22	)		$	(2.30	)
Loss from discontinued operations			—				—				(0.24	)
Cumulative effect of change in accounting principle			—				—				(3.35	)
Net loss		$	(1.33	)		$	(0.22	)		$	(5.89	)
Weighted average shares outstanding:
Basic			29,592				29,980				31,464
Diluted			29,592				29,980				31,464

See Notes to Consolidated Financial Statements

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Statements of Stockholders’ Equity (Deficit)
and Comprehensive Income (Loss)
Years Ended December 31, 2004, 2003 and 2002
(In Thousands, Except Per Share Amounts)

						Shares								Paid in								Accumulated
						Subject to								Capital in								Other
		Common				Mandatory				Treasury				Excess of				Accumulated				Comprehensive				Stockholders’
		Stock				Redemption				Stock				Par				Deficit				Loss				Equity (Deficit)
Balance, January 1, 2002		$	332			$	—			$	(9,735	)		$	276,840			$	(61,921	)		$	(13,829	)		$	191,687
Components of comprehensive loss:
Net loss			—				—				—				—				(185,247	)			—				(185,247	)
Minimum pension liability adjustment			—				—				—				—				—				(2,342	)			(2,342	)
Interest rate swap marked to market			—				—				—				—				—				(2,715	)			(2,715	)
Total comprehensive loss																											(190,304	)
Issuance of 260 shares of common stock, $.01 par			2				—				—				970				—				—				972
Purchase of 1,205 shares of treasury stock			—				—				(2,347	)			—				—				—				(2,347	)
Balance, December 31, 2002			334				—				(12,082	)			277,810				(247,168	)			(18,886	)			8
Components of comprehensive income:
Net loss			—				—				—				—				(6,630	)			—				(6,630	)
Minimum pension liability adjustment			—				—				—				—				—				191				191
Interest rate swap marked to market			—				—				—				—				—				14,152				14,152
Total comprehensive income																											7,713
Issuance of 130 shares of common stock, $.01 par			2				—				—				265				—				—				267
Grant of 200 shares from treasury stock			—				—				794				106				—				—				900
Purchase of 1,732 shares of treasury stock			—				—				(5,830	)			—				—				—				(5,830	)
267 shares subject to mandatory redemption			—				(1,198	)			—				—				—				—				(1,198	)
Balance, December 31, 2003			336				(1,198	)			(17,118	)			278,181				(253,798	)			(4,543	)			1,860
Components of comprehensive loss:
Net loss			—				—				—				—				(39,294	)			—				(39,294	)
Minimum pension liability adjustment			—				—				—				—				—				12				12
Total comprehensive loss																											(39,282	)
Purchase of 267 shares subject to mandatory redemption			—				1,198				(1,262	)			—				—				—				(64	)
Purchase of 14 shares of treasury stock, $.01 par			—				—				(63	)			—				—				—				(63	)
Dividends declared															(5,694	)											(5,694	)
Issuance of 1,634 shares of common stock, $.01 par			16				—				—				9,785				—				—				9,801
Balance — December 31, 2004		$	352			$	—			$	(18,443	)		$	282,272			$	(293,092	)		$	(4,531	)		$	(33,442	)

See Notes to Consolidated Financial Statements

ALASKA COMMUNICATIONS SYSTEMS GROUP, INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2004, 2003 and 2002
(In Thousands)

		As Restated - See note 25
Cash Flows from Operating Activities:		2004				2003				2002
Net loss		$	(39,294	)		$	(6,630	)		$	(185,247	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Loss on discontinued operations			—				52				7,632
Cumulative effect of change in accounting principle			—				—				105,350
Depreciation and amortization			78,387				82,185				82,940
Loss (gain) on disposal of assets and asset impairment charges, net			2,854				(48,863	)			2,163
Goodwill impairment loss			—				—				64,755
Amortization of debt issuance costs, original issue discount and warrants			6,088				17,048				4,524
Non-cash stock based compensation expense			—				900				—
Other non-cash expenses			12				4,118				—
Other deferred credits			3,048				1,643				3,073
Changes in components of working capital:
Accounts receivable and other current assets			7,907				7,451				(4,722	)
Accounts payable and other current liabilities			22				(6,380	)			(12,460	)
Other			1				(1,072	)			(1,375	)
Net cash used in discontinued operations			—				(41	)			(649	)
Net cash provided by operating activities			59,025				50,411				65,984
Cash Flows from Investing Activities:
Construction and capital expenditures			(51,422	)			(48,566	)			(68,434	)
Purchase of short term investments			(154,650	)			(100,053	)			(32,400	)
Proceeds from sale of short term investments			162,672				57,831				42,100
Net proceeds from sale of business unit			—				155,269				—
Release of funds from escrow			—				3,539				3,706
Placement of funds in escrow			(1,055	)			(3,725	)			—
Issuance of note receivable			—				—				(15,000	)
Net cash provided (used) by investing activities			(44,455	)			64,295				(70,028	)
Cash Flows from Financing Activities:
Payments on long-term debt			(26,962	)			(434,102	)			(7,328	)
Proceeds from issuance of long-term debt			—				375,970				—
Debt issuance costs			—				(14,000	)			—
Issuance of common stock			9,801				267				972
Purchase of treasury stock			(1,325	)			(5,830	)			(2,347	)
Net cash used by financing activities			(18,486	)			(77,695	)			(8,703	)
Increase (decrease) in cash			(3,916	)			37,011				(12,747	)
Cash and cash equivalents at beginning of the year			54,576				17,565				30,312
Cash and cash equivalents at the end of the year		$	50,660			$	54,576			$	17,565
Supplemental Cash Flow Data:
Interest paid, net of capitalized interest		$	45,470			$	51,372			$	46,930
Income taxes paid, net of refund			876				—				—
Supplemental Noncash Transactions:
Property acquired under capital leases and mortgages		$	—			$	2,340			$	4,187
Minimum pension liability adjustment			(12	)			(191	)			2,342
Interest rate swap marked to market			—				(14,152	)			2,715
Dividend declared			(5,694	)			—				—