Exhibit 99.1
July 27, 2004
John Lowber, (907) 868-5628; jlowber@gci.com
Bruce Broquet, (907) 868-6660; bbroquet@gci.com
David Morris, (907) 265-5396; dmorris@gci.com
FOR IMMEDIATE RELEASE
GCI REPORTS SECOND QUARTER 2004 FINANCIAL RESULTS
o Consolidated revenue of $103.8 million
o Net income of $7.7 million or $0.13 per diluted share
o EBITDA of $34.9 million
o New wireless distribution agreement with Dobson
o GCI announces stock repurchase program
ANCHORAGE, AK -- GCI (NASDAQ:GNCMA) today reported net income of $7.7
million, or earnings per diluted share of $0.13, for the second quarter of 2004.
The company's second quarter net income compares to income of $4.8 million, or
earnings per diluted share of $0.08 in the same period of 2003.
GCI announced a 10-year distribution agreement with Dobson
Communications that will add new wireless products to GCI's bundle. GCI also
announced the initiation of a stock repurchase program.
GCI's second quarter 2004 revenues totaled $103.8 million, an increase
of 8.2 percent over second quarter 2003 revenues of $95.9 million. For the
current quarter, earnings before interest, taxes, depreciation, amortization and
accretion (EBITDA) totaled $34.9 million. Second quarter 2004 EBITDA increased
$4.1 million or 13.3 percent over the same quarter in 2003. Second quarter 2003
EBITDA totaled $30.8 million.
Sequentially, revenues for the company decreased 4.7 percent from first
quarter 2004 revenues of $108.9 million. GCI's second quarter EBITDA of $34.9
million compares to EBITDA, as adjusted, of $35.2 million in the first quarter
of 2004.
For the second quarter of 2004, GCI met its revenue guidance and
exceeded its EBITDA guidance. The company expected revenues of approximately
$103 million to $105 million, and EBITDA of approximately $31 million, excluding
the effects of any receivable recovery from MCI. GCI recorded a benefit of
approximately $1.1 million relating to the use of the MCI credit during the
quarter.
GCI's 10-year distribution agreement with Dobson Communications allows
GCI to offer a full line of state-of-the-art voice and data wireless products
and services to its customers throughout Alaska. GCI will market these products
and services under its own brand as stand alone wireless products and as
additions to packaged offerings. The agreement also allows GCI to develop new
products and services combining both wireless and wireline technologies. GCI
will provide billing and all customer support services for its wireless
services. Under a separate agreement, Dobson will lease 10 MHz of GCI's 1900 MHz
wireless spectrum
and will expand services in existing and new Alaska markets. Dobson's wireless
spectrum is in the 800 MHz spectrum band. The lease agreement enables GCI and
Dobson to expand overall system capacity. This will create a more efficient
wireless system providing better service to customers. The agreement fulfills
GCI's wireless buildout requirement to retain the PCS "B" block license.
GCI's Board of Directors has authorized the company to repurchase up to
$5 million per quarter of its common stock. GCI has obtained permission from its
lenders and preferred shareholders for the first $10 million of buybacks. The
company expects to continue the repurchases subject to the availability of free
cash flow, credit facilities, the price of the stock and the requisite consents
of lenders and preferred shareholders. The repurchase will comply with the
restrictions of Securities Exchange Commission rule 10b-18.
"It's been a good quarter," said Ron Duncan, GCI president. "In
addition to record second quarter results we are announcing the resolution of
two key issues that are of significant interest to our shareholders. First, we
have negotiated an agreement with Dobson Communications that will let us include
their wireless products in our package of services. Second, the GCI Board has
authorized a plan to allow the company to repurchase up to $5 million per
quarter of our shares. This is the first step in fulfilling our commitment to
return free cash flow to our shareholders."
"We remain on track for 2004. We expect third quarter revenues of
approximately $103 million to $105 million and EBITDA of approximately $31
million, excluding the effects of any receivable recovery from MCI. We are
maintaining our guidance for total revenues of $410 million to $420 million and
EBITDA of $129 million to $134 million, before any benefit from credits against
services purchased from MCI."
Customer Highlights
o The local services business added 2,000 access lines during the second
quarter and now serves 110,600 local lines, an estimated 24 percent share
of the total access line market in Alaska.
o GCI had 100,300 statewide Internet customers at the end of second quarter
2004. At the end of the second quarter of 2004, more than 56,800 of these
Internet customers are using GCI cable modem service, an increase of 5,100
over the first quarter of 2004. The number of customers served on GCI's
statewide dial-up Internet platform decreased during the second quarter.
Most of these customers migrated to cable modems.
o GCI cable television services now pass 204,485 homes and serve 135,173
subscribers. Subscribers increased sequentially by 1,192 subscribers from
the first quarter of 2004. The increase in subscribers is primarily
attributable to seasonal additions from hotels.
o Long-distance billable minutes increased 4.5 percent to 293.7 million
minutes for the second quarter as compared to the same quarter of 2003, and
decreased 2.6 percent sequentially.
Long Distance Results
For the second quarter of 2004, long distance revenues totaled $60.9
million as compared to revenues of $58 million in the second quarter of 2003 and
$65.9 million in the first quarter of 2004. Long distance revenues increased 5.0
percent year-over-year and declined 7.6 percent sequentially. The year-over-year
revenue increase was attributed to an increase in private line, dedicated and
other data services revenues and managed network services revenues. The
sequential decrease in long distance revenues is due primarily to the
recognition of $6.1 million of project revenues in the first quarter of 2004.
Switched minutes revenues were down slightly compared to the prior year due
primarily to lower rates per minute offsetting minute growth. Sequentially,
switched minutes revenues were mostly flat.
Long distance EBITDA, increased 8.2 percent for the second quarter of
2004 to $21.0 million as compared to $19.4 million in the second quarter of the
prior year. Long distance EBITDA for the second quarter of 2004 was down $0.7
million sequentially from $21.7 million, as adjusted, in the first quarter of
2004. Long distance EBITDA included MCI bad debt recoveries of $1.1 million in
the second quarter of 2004 and $1.2 million in the first quarter of 2004.
Total minutes-of-use are up 4.5 percent in the second quarter of 2004
when compared to the second quarter of 2003. Sequentially, minutes-of-use are
down 2.6 percent compared to the first quarter of 2004. The year-over-year
increase in minutes is attributable to the improving "lower 48" economy,
including an increase in minutes carried for common carriers.
The total number of billed long distance customers increased 5.4
percent when customer counts are compared between June 2004 and March 2004.
Cable Television Results
Cable television revenues for the second quarter increased 5.4 percent
to $25.2 million from $23.9 million in the second quarter of 2003, and were up
1.2 percent from $24.9 million in the first quarter of 2004. EBITDA of $11.5
million for the second quarter of 2004 increased 4.5 percent from the second
quarter of 2003, and increased 4.5 percent when compared to $11 million in the
first quarter of 2004. The increase in revenues is due primarily to the increase
in sales of digital special interest (Digital) cable television and cable modem
services. The increase in EBITDA is primarily attributable to certain refunds
and rebates received from cable television programmers during the second quarter
of 2004.
Gross margins, as a percentage of revenues, increased by 147 basis
points year-over-year and 319 basis points sequentially. The increase in gross
margins is primarily attributable to the aforementioned refunds and rebates
received from programmers. The growth rate from Digital and cable modems is
helping to mitigate the effects of continuing increases in programming and
copyright costs.
As of June 30, 2004, the company's cable television operations passed
204,485 homes and served 135,173 subscribers (106,277 equivalent basic
subscribers). For the second quarter, average revenue per equivalent basic
subscriber was $78.27, an increase of 10.3 percent when compared to the second
quarter 2003 average revenue of $70.99. Sequentially, average revenue was up 2.2
percent, from $76.59, over the first quarter of 2004. Subscribers increased
sequentially by 1,192 subscribers from the first quarter of 2004. This compares
to an increase of 947 subscribers in the second quarter of 2003 over the first
quarter of 2003. The increase in subscribers is primarily attributable to a
seasonal increase in hotel customers offsetting a seasonal decline in
residential customers.
During the first quarter of 2004 GCI launched several new service
packages designed to compete aggressively with the satellite providers'
offerings. The customer response to these packages during the second quarter has
been very strong. Seasonal residential churn in the second quarter of 2004
appears consistent with historical second quarter trends.
The company offers Digital service in Anchorage, Fairbanks, Juneau,
Kenai, Soldotna, Ketchikan and the Mat-Su Valley area. GCI served 38,800 Digital
customers at the end of the second quarter of 2004, an increase of 4,800
customers compared to the first quarter of 2004. The sequential increase in
Digital customers was due to the launch of several new service packages.
GCI, along with the other largest publicly traded multiple system
operators, signed a pledge to support and adhere to voluntary reporting
guidelines on common operating statistics to provide investors and others with a
better understanding of the company's operations. The operating statistics below
include capital expenditures and customer information from cable services and
the components of our local services and Internet services utilizing our cable
services' facilities.
GCI's capital expenditures by standard reporting category for the six
months periods ending June 30, 2004 and 2003 follow (amounts in thousands):
2004 2003
-------------- -------------
Customer premise equipment $ 6,970 3,830
Commercial 213 171
Scalable infrastructure 2,805 459
Line extensions 149 243
Upgrade/rebuild 3,355 963
Support capital 595 263
-------------- -------------
Sub-total 14,087 5,929
Remaining reportable segments and All Other
capital expenditures 50,060 11,446
-------------- -------------
$ 64,147 17,375
============== =============
The standard definition of a customer relationship is the number of
customers who receive at least one level of service, encompassing voice, video,
and data services, without regard to which services customers purchase. These
relationships do not include local telephone customers except those receiving
phone service through the cable television plant. At June 30, 2004 and 2003,
GCI's cable business had 123,300 and 124,300 customer relationships,
respectively.
The standard definition of a revenue-generating unit is the sum of all
primary analog video, digital video, high-speed data and telephony customers,
not counting additional outlets. At June 30, 2004 and 2003, GCI's cable business
had 192,000 and 177,800 revenue generating units, respectively. The increase in
the revenue generating units of 6,200 and 14,200 from March 31, 2004 and June
30, 2003 respectively, is due to an increase in the number of cable modem and
Digital Local Phone Service (DLPS) customers.
Local Telephone Results
For the second quarter 2004, local telephone service revenues totaled
$11.2 million, an increase of 21.7 percent, when compared to $9.2 million in the
second quarter of 2003. Sequentially, revenue was down $0.6 million or 5.1
percent from $11.8 million in the first quarter of 2004. The increase in
year-over-year revenues is attributable to increasing customer counts, Universal
Service Fund and directory services revenues. The sequential decrease in
revenues is due to out-of-period Universal Service Fund revenues recognized in
the first quarter 2004.
In the second quarter, local services generated $0.2 million of EBITDA,
an improvement of $1.2 million over the $1.0 million loss in the second quarter
of
2003. Sequentially, second quarter EBITDA of $0.2 million compares to EBITDA of
$0.6 million in the first quarter of 2004. If the local telephone business
received credit for access cost savings on calls placed by GCI long distance
customers who are also GCI local customers, the company's local telephone
business would have reported EBITDA of $1.7 million in the second quarter of
2004.
At the end of the second quarter of 2004, GCI provided local service
to approximately 110,600 access lines statewide. This represents an increase of
2,000 access lines, or 1.8 percent, over the 108,600 access lines reported at
the end of the first quarter of 2004. The company estimates it has attained a 24
percent share of the total access line market in Alaska. Approximately 84
percent of GCI's access lines are provisioned on its own facilities or on resold
local loops.
In early April 2004, GCI began converting customers to its DLPS
technology. The roll out of DLPS will enable GCI to avoid wholesale and loop
rental costs from local phone lines leased from the incumbent local exchange
carrier. GCI plans to provision 8,000 to 12,000 DLPS lines by the end of 2004.
Approximately 1,500 DLPS lines are currently in service.
Internet Access Results
Internet access revenues for the second quarter of 2004 totaled $6.5
million, an increase of 35.4 percent year-over-year and 1.6 percent
sequentially. Second quarter 2003 revenues were $4.8 million and first quarter
2004 revenues were $6.4 million. EBITDA for the second quarter totaled $2.2
million, an improvement of $0.8 million year-over-year and $0.3 million
sequentially. Second quarter 2003 EBITDA was $1.4 million and first quarter 2004
EBITDA was $1.9 million. The increase in Internet access revenues and EBITDA
results from the migration of existing customers to cable modem access and
customers adding more features and services, increasing economies of scale and
effective cost containment controls.
At the end of the second quarter of 2004, GCI had 100,300 statewide
Internet customers, a decrease of 300 customers sequentially and an increase of
8,100 year-over-year. GCI's statewide Internet customers included 56,800
subscribers using cable modem access. This represents an increase of 5,100
subscribers, or 9.9 percent, over the prior quarter's subscriber count of
51,700. On a year-over-year basis, GCI experienced a 40.2 percent increase in
cable modem subscribers, from 40,500 at the end of the second quarter of 2003.
At the end of the second quarter of 2004 GCI's average revenue per
cable modem (ARPM) was $36.84 as compared to $40.20 at the end of the first
quarter of 2004 and $40.98 at the end of the second quarter of 2003. Total cable
modem revenues for the second quarter of 2004 increased 1.9 percent sequentially
over the first quarter of 2004 and 23.8 percent year-over-year. The increase in
revenues is due to the increase in the number of modem customers. The decline in
ARPM is due to an increase in the number of customers for GCI's free cable modem
product and increasing sales of GCI's lower priced cable modem products.
GCI began offering Internet access services during 1998 and its dial-up
Internet service is offered in most major Alaska markets. GCI is the largest
Internet access provider in Alaska.
Other Items
During the three months ending June 30, 2004, core capital expenditures
increased to $17.6 million as compared to $14.9 million in the first quarter of
2004. Additionally, GCI spent $21.3 million relating to its new undersea fiber
in the second quarter of 2004. GCI used approximately $10 million in cash during
the second quarter before any draws on its revolving credit facility.
The new undersea fiber system was completed during the quarter and GCI
now has the only SONET protected physically diverse fiber system connecting
Alaska and the lower 48 states.
GCI will hold a conference call to discuss the quarter's results on
Wednesday, July 28, 2004 beginning at 2 p.m. (Eastern). To access the briefing
on July 28, dial 888-323-5254 (international callers should dial 773-756-4631)
and identify your call as "GCI." In addition to the conference call, GCI will
make available net conferencing. To access the call via net conference, log on
to www.gci.com and follow the instructions. A replay of the call will be
available for 72-hours by dialing 888-567-0444, access code 7461 (international
callers should dial 402-998-1800.)
GCI is the largest telecommunications company in Alaska. A pioneer in
bundled services, GCI provides local, wireless, and long distance telephone,
cable television, Internet and data communication services throughout Alaska.
More information about the company can be found at www.gci.com.
The foregoing contains forward-looking statements regarding the
company's expected results that are based on management's expectations as well
as on a number of assumptions concerning future events. Actual results might
differ materially from those projected in the forward looking statements due to
uncertainties and other factors, many of which are outside GCI's control.
Additional information concerning factors that could cause actual results to
differ materially from those in the forward looking statements is contained in
GCI's cautionary statement sections of Form 10-K and 10-Q filed with the
Securities and Exchange Commission.
# # #
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands) June 30, December 31,
Assets 2004 2003
- ---------------------------------------------------------------------------------- --------------- --------------
Current assets:
Cash and cash equivalents $ 4,041 10,435
--------------- --------------
Receivables 73,407 70,235
Less allowance for doubtful receivables 2,034 1,954
--------------- --------------
Net receivables 71,373 68,281
Deferred income taxes, net 6,260 7,195
Prepaid and other current assets 4,898 12,159
Inventories 1,595 1,513
Property held for sale 1,253 2,173
Notes receivable from related parties 1,197 1,885
--------------- --------------
Total current assets 90,617 103,641
--------------- --------------
Property and equipment in service, net of depreciation 419,098 369,039
Construction in progress 16,512 33,618
--------------- --------------
Net property and equipment 435,610 402,657
--------------- --------------
Cable certificates 191,241 191,241
Goodwill 41,972 41,972
Other intangible assets, net of amortization of $1,960 and $1,656
at June 30, 2004 and December 31, 2003, respectively 4,534 3,895
Deferred loan and senior notes costs, net of amortization of $1,826
and $5,308 at June 30, 2004 and December 31, 2003, respectively 9,350 5,757
Notes receivable from related parties 4,370 4,281
Other assets 8,919 9,576
--------------- --------------
Total other assets 260,386 256,722
--------------- --------------
Total assets $ 786,613 763,020
=============== ==============
(Continued)
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)
(Amounts in thousands) June 30, December 31,
Liabilities, Redeemable Preferred Stock, and Stockholders' Equity 2004 2003
- ---------------------------------------------------------------------------------- --------------- --------------
Current liabilities:
Current maturities of obligations under capital leases $ 6,318 5,139
Accounts payable 27,367 34,133
Deferred revenue 14,744 21,275
Accrued payroll and payroll related obligations 14,316 17,545
Accrued liabilities 7,774 8,156
Accrued interest 6,843 8,645
Subscriber deposits 518 651
--------------- --------------
Total current liabilities 77,880 95,544
Long-term debt 371,986 345,000
Obligations under capital leases, excluding current maturities 35,802 38,959
Obligation under capital lease due to related party, excluding current
maturity 688 677
Deferred income taxes, net of deferred income tax benefit 29,318 24,168
Other liabilities 6,599 6,366
--------------- --------------
Total liabilities 522,273 510,714
--------------- --------------
Redeemable preferred stock 22,572 25,664
--------------- --------------
Stockholders' equity :
Common stock (no par):
Class A. Authorized 100,000 shares; issued 53,486 and 52,589
shares at June 30, 2004 and December 31, 2003, respectively 207,250 202,362
Class B. Authorized 10,000 shares; issued 3,866 and 3,868 shares
at June 30, 2004 and December 31, 2003, respectively;
convertible on a share-per-share basis into Class A common stock 3,267 3,269
Less cost of 341 and 338 Class A common shares held in treasury at
June 30, 2004 and December 31, 2003, respectively (1,937) (1,917)
Paid-in capital 13,459 12,836
Notes receivable with related parties issued upon stock option exercise (4,351) (4,971)
Retained earnings 24,174 15,371
Accumulated other comprehensive loss (94) (308)
--------------- --------------
Total stockholders' equity 241,768 226,642
--------------- --------------
Commitments and contingencies
Total liabilities, redeemable preferred stock, and stockholders' equity $ 786,613 763,020
=============== ==============
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(Amounts in thousands, except per share amounts) 2004 2003 2004 2003
--------------- --------------- -------------- ---------------
Revenues $ 103,786 95,939 212,702 188,716
Cost of goods sold (exclusive of depreciation, amortization
and accretion shown separately below) 33,257 30,071 72,002 60,319
Selling, general and administrative expenses 36,102 34,294 71,506 67,287
Bad debt expense (recovery) (487) 802 (884) 1,399
Depreciation, amortization and accretion expense 15,704 12,800 31,462 26,301
--------------- --------------- -------------- ---------------
Operating income 19,210 17,972 38,616 33,410
--------------- --------------- -------------- ---------------
Other income (expense):
Interest expense (6,036) (9,138) (13,553) (18,292)
Loss on early extinguishment of debt - - (6,136) -
Amortization and write-off of loan and senior notes fees (387) (625) (3,014) (1,698)
Interest income 79 165 187 331
--------------- --------------- -------------- ---------------
Other expense, net (6,344) (9,598) (22,516) (19,659)
--------------- --------------- -------------- ---------------
Net income before income taxes and cumulative
effect of a change in accounting principle 12,866 8,374 16,100 13,751
Income tax expense 5,141 3,564 6,450 5,846
--------------- --------------- -------------- ---------------
Net income before cumulative effect of a change
in accounting principle 7,725 4,810 9,650 7,905
Cumulative effect of a change in accounting
principle, net of income tax benefit of $367 - - - (544)
--------------- --------------- -------------- ---------------
Net income $ 7,725 4,810 9,650 7,361
=============== =============== ============== ===============
Basic and diluted net income per common share:
Net income before cumulative effect of a change
in accounting principle $ 0.13 0.08 0.15 0.12
Cumulative effect of a change in accounting
principle, net of income tax benefit of $367 - - - (0.01)
--------------- --------------- -------------- ---------------
Net income $ 0.13 0.08 0.15 0.11
=============== =============== ============== ===============
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
(Unaudited)
Traditional Summary Six Months Ended June 30, 2004
Long Local
Distance Cable Services Internet Combined
----------------------------------------------------
Revenues $ 126,736 50,033 23,010 12,923 212,702
Cost of goods sold (exclusive of depreciation,
amortization and accretion shown separately
below) 41,652 13,414 13,368 3,568 72,002
----------------------------------------------------
Contribution 85,084 36,619 9,642 9,355 140,700
Selling, general and
administrative expenses 43,666 13,666 8,928 5,246 71,506
Bad debt expense (recovery) (1,286) 402 - - (884)
----------------------------------------------------
EBITDA, as adjusted 42,704 22,551 714 4,109 70,078
Less loss on early extinguishment of debt 6,136 - - - 6,136
----------------------------------------------------
EBITDA 36,568 22,551 714 4,109 63,942
Add loss on early extinguishment of debt 6,136 - - - 6,136
Less depreciation, amortization and
accretion expense 18,266 9,370 1,963 1,863 31,462
----------------------------------------------------
Operating income (loss) $ 24,438 13,181 (1,249) 2,246 38,616
====================================================
Integrated Summary EBITDA, as Adjusted
(Unaudited) Six Months Ended June 30, 2004
Voice Data Video Combined
-----------------------------------------
Traditional Summary EBITDA, as Adjusted:
Long Distance $ 42,704 42,704
Cable 22,551 22,551
Local Services 714 714
Internet 4,109 4,109
-----------------------------------------
43,418 4,109 22,551 70,078
EBITDA, as Adjusted, Reallocations:
Long Distance (23,523) 23,523 -
Cable 5,502 (5,502) -
Local Services (88) 88 -
-----------------------------------------
Integrated Summary EBITDA, as Adjusted $ 19,807 33,222 17,049 70,078
=========================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
(Unaudited)
Traditional Summary Six Months Ended June 30, 2003
Long Local
Distance Cable Services Internet Combined
---------------------------------------------------
Revenues $114,355 47,310 17,671 9,380 188,716
Cost of goods sold (exclusive of depreciation,
amortization and accretion shown separately
below) 33,150 12,831 11,512 2,826 60,319
---------------------------------------------------
Contribution 81,205 34,479 6,159 6,554 128,397
Selling, general and
administrative expenses 42,155 12,564 8,432 4,136 67,287
Bad debt expense (recovery) 1,032 367 - - 1,399
---------------------------------------------------
EBITDA 38,018 21,548 (2,273) 2,418 59,711
Add loss on early extinguishment of debt - - - - -
Less depreciation, amortization and
accretion expense 13,803 9,062 1,736 1,700 26,301
---------------------------------------------------
Operating income (loss) $ 24,215 12,486 (4,009) 718 33,410
===================================================
Integrated Summary EBITDA
(Unaudited) Six Months Ended June 30, 2003
Voice Data Video Combined
-----------------------------------------
Traditional Summary EBITDA:
Long Distance $ 38,018 38,018
Cable 21,548 21,548
Local Services (2,273) (2,273)
Internet 2,418 2,418
-----------------------------------------
35,745 2,418 21,548 59,711
EBITDA Reallocations:
Long Distance (16,120) 16,120 -
Cable 4,522 (4,522) -
Local Services (55) 55 -
-----------------------------------------
Integrated Summary EBITDA $ 19,570 23,115 17,026 59,711
=========================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
(Unaudited)
Traditional Summary Three Months Ended June 30, 2004
Long Local
Distance Cable Services Internet Combined
----------------------------------------------------
Revenues $ 60,870 25,181 11,218 6,517 103,786
Cost of goods sold (exclusive of depreciation,
amortization and accretion shown separately
below) 18,274 6,352 6,822 1,809 33,257
----------------------------------------------------
Contribution 42,596 18,829 4,396 4,708 70,529
Selling, general and
administrative expenses 22,276 7,115 4,246 2,465 36,102
Bad debt expense (recovery) (678) 191 - - (487)
----------------------------------------------------
EBITDA 20,998 11,523 150 2,243 34,914
Less depreciation, amortization and
accretion expense 9,003 4,691 1,071 939 15,704
----------------------------------------------------
Operating income (loss) $ 11,995 6,832 (921) 1,304 19,210
====================================================
Integrated Summary EBITDA
(Unaudited) Three Months Ended June 30, 2004
Voice Data Video Combined
-----------------------------------------
Traditional Summary EBITDA:
Long Distance $ 20,998 20,998
Cable 11,523 11,523
Local Services 150 150
Internet 2,243 2,243
-----------------------------------------
21,148 2,243 11,523 34,914
EBITDA Reallocations:
Long Distance (11,648) 11,648 -
Cable 2,764 (2,764) -
Local Services (57) 57 -
-----------------------------------------
Integrated Summary EBITDA $ 9,443 16,712 8,759 34,914
=========================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
(Unaudited)
Traditional Summary Three Months Ended June 30, 2003
Long Local
Distance Cable Services Internet Combined
---------------------------------------------------
Revenues $ 58,032 23,872 9,245 4,790 95,939
Cost of goods sold (exclusive of depreciation,
amortization and accretion shown separately
below) 16,412 6,374 5,863 1,422 30,071
---------------------------------------------------
Contribution 41,620 17,498 3,382 3,368 65,868
Selling, general and
administrative expenses 21,595 6,315 4,431 1,953 34,294
Bad debt expense (recovery) 584 218 - - 802
---------------------------------------------------
EBITDA 19,441 10,965 (1,049) 1,415 30,772
Less depreciation, amortization and
accretion expense 6,814 4,296 872 818 12,800
---------------------------------------------------
Operating income (loss) $ 12,627 6,669 (1,921) 597 17,972
===================================================
Integrated Summary EBITDA
(Unaudited) Three Months Ended June 30, 2003
Voice Data Video Combined
-----------------------------------------
Traditional Summary EBITDA:
Long Distance $ 19,441 19,441
Cable 10,965 10,965
Local Services (1,049) (1,049)
Internet 1,415 1,415
-----------------------------------------
18,392 1,415 10,965 30,772
EBITDA Reallocations:
Long Distance (8,410) 8,410 -
Cable 2,406 (2,406) -
Local Services (28) 28 -
-----------------------------------------
Integrated Summary EBITDA $ 9,954 12,259 8,559 30,772
=========================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULE
(Unaudited)
Traditional Summary Three Months Ended March 31, 2004
Long Local
Distance Cable Services Internet Combined
---------------------------------------------------
Revenues $ 65,866 24,852 11,792 6,406 108,916
Cost of goods sold (exclusive of depreciation,
amortization and accretion shown separately
below) 23,378 7,062 6,546 1,759 38,745
---------------------------------------------------
Contribution 42,488 17,790 5,246 4,647 70,171
Selling, general and
administrative expenses 21,390 6,551 4,682 2,781 35,404
Bad debt expense (recovery) (608) 211 - - (397)
---------------------------------------------------
EBITDA, as adjusted 21,706 11,028 564 1,866 35,164
Less loss on early extinguishment of debt 6,136 - - - 6,136
---------------------------------------------------
EBITDA 15,570 11,028 564 1,866 29,028
Add loss on early extinguishment of debt 6,136 - - - 6,136
Less depreciation, amortization and
accretion expense 9,263 4,679 892 924 15,758
---------------------------------------------------
Operating income (loss) $ 12,443 6,349 (328) 942 19,406
===================================================
Integrated Summary EBITDA, as Adjusted
(Unaudited) Three Months Ended March 31, 2004
Voice Data Video Combined
-----------------------------------------
Traditional Summary EBITDA, as Adjusted:
Long Distance $ 21,706 21,706
Cable 11,028 11,028
Local Services 564 564
Internet 1,866 1,866
-----------------------------------------
22,270 1,866 11,028 35,164
EBITDA, as Adjusted, Reallocations:
Long Distance (11,875) 11,875 -
Cable 2,738 (2,738) -
Local Services (31) 31 -
-----------------------------------------
Integrated Summary EBITDA, as Adjusted $ 10,364 16,510 8,290 35,164
=========================================
Non-GAAP Financial Reconciliation Schedule
(Unaudited, Amounts in Millions)
Three Months Ended
June 30, 2004 June 30, 2003 March 31, 2004
-------------------- ------------------- ---------------------
EBITDA, as adjusted (Note 1) $ 34.9 30.8 35.2
Loss on early extinguishment of debt --- --- (6.1)
-------------------- ------------------- ---------------------
EBITDA (Note 2) 34.9 30.8 29.1
Depreciation, amortization and accretion
expense (15.7) (12.8) (15.8)
Loss on early extinguishment of debt --- --- 6.1
-------------------- ------------------- ---------------------
Operating income 19.2 18.0 19.4
-------------------- ------------------- ---------------------
Other income (expense):
Interest expense (6.0) (9.1) (7.5)
Loss on early extinguishment of debt --- --- (6.1)
Amortization and write-off of loan and
senior notes fee expense (0.4) (0.6) (2.7)
Interest income 0.1 0.1 0.1
-------------------- ------------------- ---------------------
Other expense, net (6.3) (9.6) (16.2)
-------------------- ------------------- ---------------------
Net income before income taxes 12.9 8.4 3.2
Income tax expense 5.2 3.6 1.3
-------------------- ------------------- ---------------------
Net income $ 7.7 4.8 1.9
==================== =================== =====================
Six Months Ended
June 30, 2004 June 30, 2003
-------------------- -------------------
EBITDA, as adjusted (Note 1) $ 70.1 59.7
Loss on early extinguishment of debt (6.1) ---
-------------------- -------------------
EBITDA (Note 2) 64.0 59.7
Depreciation, amortization and accretion
expense (31.5) (26.3)
Loss on early extinguishment of debt 6.1 ---
-------------------- -------------------
Operating income 38.6 33.4
-------------------- -------------------
Other income (expense):
Interest expense (13.6) (18.3)
Loss on early extinguishment of debt (6.1) ---
Amortization and write-off of loan and
senior notes fee expense (3.0) (1.7)
Interest income 0.2 0.3
-------------------- -------------------
Other expense, net (22.5) (19.7)
-------------------- -------------------
Net income before income taxes and
cumulative effect of a change in
accounting principle 16.1 13.7
Income tax expense 6.4 5.8
-------------------- -------------------
Net income before cumulative effect of
a change in accounting principle 9.7 7.9
Cumulative effect of a change in
accounting principle, net of income tax
benefit of $0.4 --- (0.5)
-------------------- -------------------
Net income $ 9.7 7.4
==================== ===================
Notes:
(1) EBITDA (as defined in Note 2 below) before deducting Loss on Early
Extinguishment of Debt during the three months ended March 31, 2004 and
the six months ended June 30, 2004.
(2) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
the sum of Net Income, Interest Expense, Amortization and Write-off of
Loan and Senior Notes Fees, Interest Income, Taxes, and Depreciation,
Amortization and Accretion. EBITDA is not presented as an alternative
measure of net income, operating income or cash flow from operations, as
determined in accordance with accounting principles generally accepted in
the United States of America. GCI's management uses EBITDA to evaluate the
operating performance of its business, and as a measure of performance for
incentive compensation purposes. GCI believes EBITDA is a measure used as
an analytical indicator of income generated to service debt and fund
capital expenditures. In addition, multiples of current or projected
EBITDA are used to estimate current or prospective enterprise value.
EBITDA does not give effect to cash used for debt service requirements,
and thus does not reflect
funds available for investment or other discretionary uses. EBITDA as
presented herein may not be comparable to similarly titled measures
reported by other companies.