8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): February 20, 2008

Alaska Communications Systems Group, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	000-28167	52-2126573
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
600 Telephone Avenue, Anchorage, Alaska		99503-6091
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: (907) 297-3000

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On February 22, 2008, Alaska Communications Systems Group, Inc. (the "Company") issued a press release announcing certain matters relating to its expected 2007 fiscal year end results. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

(a) On February 20, 2008, management of the Company and the Audit Committee of its Board of Directors concluded that the Company’s previously issued financial statements and earnings press releases relating to periods commencing on or after January 1, 2006 should no longer be relied upon. In the course of its 2007 annual review of financial results and application of financial controls, management identified errors in the Company’s previously reported depreciation expense for fiscal years 2006 and 2007. Certain groups of assets employed in the Company's intrastate operations are depreciated over extended lives as required by state regulations, giving rise to "regulatory assets." As the result of a programmatic error, the Company incorrectly ceased to depreciate those regulatory assets prior to their becoming fully depreciated. The Company’s regulatory asset and the depreciation of the asset are governed by Statement of Financial Accounting Standards (SFAS) 71 "Accounting for the Effe cts of Certain Types of Regulation."

Based on its review to date, management has concluded that the Company will need to restate its financial statements for all quarterly and annual periods commencing on or after January 1, 2006. These periods comprise the three months ended March 31, June 30 and September 30 in each of 2006 and 2007 and the fiscal year ended December 31, 2006. The Company's management and its Audit Committee have discussed the matters set forth in this Item 4.02(a) with KPMG LLP, the Company’s independent registered accounting firm.

In light of the disclosure provided in this report, management has concluded that material weaknesses exist in the Company's internal controls over financial reporting.

The Company intends to provide all restated financial statements referred to in this Item 4.02(a), including explanatory information, in its upcoming Annual Report on Form 10-K for the fiscal year ended December 31, 2007. In addition, the Company expects to inclu de in such Form 10-K management's conclusions and further assessments relating to the material weaknesses in the Company's internal controls over financial reporting.

The Company issued a press release on February 22, 2008 addressing the matters set forth in this Item 4.02(a), a copy of which is attached as Exhibit 99.1 hereto and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

Exhibit 99.1 -- Press Release dated February 22, 2008

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.

	Alaska Communications Systems Group, Inc.
February 22, 2008	By:	/s/ David Wilson
		Name: David Wilson
		Title: SVP & Chief Financial Officer

Exhibit Index

Exhibit No.	Description
99.1	Press release dated February 22, 2008

EX-99.1

Alaska Communications Systems • 600 Telephone Avenue • Anchorage, AK 99503

Investors:
Investor Relations
Alaska Communications Systems
(907) 564-7556
investors@acsalaska.com

ACS Determines its 2006 and 2007 Depreciation Expenses Were Underreported
Expects Restatement of 2006 and 2007 Financial Statements
Announces Preliminary 2007 Revenue and EBITDA Results
Postpones Fourth Quarter 2007 Earnings Call

Anchorage, Alaska, February 22, 2008 (BUSINESS WIRE) —Alaska Communications Systems Group, Inc. (NASDAQ: ALSK) (the “company” or “ACS”) today announced that in the course of its 2007 annual review of financial results and application of financial controls, management identified errors in the company’s previously reported depreciation expense for fiscal years 2006 and 2007. The company expects no significant changes to previously reported revenues, EBITDA or cash flows; however, previously reported depreciation expense and net income will change. As a result, management has concluded that the company’s internal controls over financial reporting contained a material weakness and that investors should not rely on the company’s previously issued financial statements or earnings press releases covering reporting periods beginning on or after January 1, 2006. The company expects no changes to its financial statements covering periods prior to January 1, 2006.

Background
During the company’s review of its financial results and preparation of financial statements for the fiscal year ended December 31, 2007, the company detected errors previously made in its accounting for depreciation. Specifically, certain groups of assets employed in its intrastate operations are depreciated over extended lives as required by state regulations, giving rise to “regulatory assets.”  As the result of a programmatic error, the company incorrectly ceased to depreciate those regulatory assets prior to their becoming fully depreciated. The company’s regulatory asset and the depreciation of the asset are governed by Statement of Financial Accounting Standards (SFAS) 71 Accounting for the Effects of Certain Types of Regulation.

Anticipated Impact on Depreciation Expense
Based on the review to date, management currently anticipates that the restatement will result in an increase of depreciation expense of approximately $6 million to $8 million for the fiscal year ended December 31, 2006, and $5 million to $7 million for the nine months ended September 30, 2007. As depreciation is a non-cash charge, the restatement is not expected to impact the company’s dividend policy or the financial covenants of its credit agreement.

2007 Expected Revenue and EBITDA
ACS today also announced that it expects to report total revenues and EBITDA for the twelve months ended December 31, 2007 of approximately $380 million and $132 million, respectively. Expected performance for 2007 compares favorably to prior guidance of $370 million to $375 million for revenue, and $128 million to $130 million for EBITDA.

Fourth Quarter 2007 Conference Call Postponed & Appearance at Raymond James’ 29^th Annual Institutional Investors Conference Cancelled
Given the ongoing review and resources allocated to the timely restatement of financial results, ACS will postpone and reschedule its conference call and webcast related to its fourth quarter and full-year 2007 operating results and will not present at the Raymond James 29th Annual Institutional Investors Conference on Wednesday, March 5, 2008.

Where to Find Restated Financial Statements
ACS intends to provide all restated and current financial data comprehensively in its upcoming Annual Report on Form 10-K. The company will file the 10-K as soon as practicable, but preparation of the restated information could delay the 10-K filing past the normal filing deadline of March 17, 2008. The company does not intend to file amendments to any previously filed Form 10-Ks or 10-Qs.

About Alaska Communications Systems
ACS is the leading integrated communications provider in Alaska, offering wireline and wireless communications services to business and residential customers throughout Alaska. More information can be found on the company’s website at www.acsalaska.com or at its investor site at www.alsk.com.

Forward-Looking EBITDA Guidance
This press release includes information related to management’s estimate of EBITDA for the year ended December 31, 2007. EBITDA, as defined by the company, may not be similar to EBITDA measures used by other companies and is not a measurement under generally accepted accounting principles (GAAP). Management believes that EBITDA provides useful information to investors about the company’s performance because it eliminates the effects of period-to-period changes in costs associated with capital investments, interest and stock-based compensation expense that are not directly attributable to the underlying performance of the company’s business operations. Management believes the most directly comparable GAAP measure would be “Net cash provided by operating activities.” As a result of the ongoing review described above and the likely restatements required, the company is not providing an estimate of net cash provided by operating activities at this time.

Forward-Looking Statements
This press release includes certain “forward-looking statements,” as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management’s beliefs as well as on a number of assumptions, expectations and beliefs concerning the review and audit of its current and previously issued financial statements and press releases made using information currently available to management. Readers are cautioned not to put undue reliance on such forward-looking statements which may change in the course of its ongoing review. While ACS is not currently aware of other accounting errors requiring adjustment to any prior period financial statements, there can be no assurances that ACS or its independent registered public accounting firm will not find additional accounting errors requiring further adjustments in those or earlier periods. In addition, there can be no assurance that additional accounting errors will not be found that materially change actual results from those expectations presented in this press release. For additional 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 for the year ended December 31, 2006 and on Forms 10-Q filed subsequently. ACS is also filing a current report on Form 8-K with the SEC containing information related to the matters addressed in this press release. 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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