Exhibit 99.1
May 9, 2006
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 FIRST QUARTER 2006 FINANCIAL RESULTS
o Consolidated revenue of $112.8 million
o Net income of $3.3 million or $0.06 per diluted share
o EBITDA of $37.1 million
ANCHORAGE, AK -- GCI (NASDAQ:GNCMA) today reported net income of $3.3
million, or earnings per diluted share of $0.06, for the first quarter of 2006.
The company's first quarter net income compares to income of $4.7 million, or
earnings per diluted share of $0.08 in the same period of 2005.
GCI's first quarter 2006 revenues totaled $112.8 million, an increase
of 5.9 percent over the first quarter of 2005. Revenue increases in GCI's
Consumer, Network Access and Commercial segments were partially offset by
decreased revenue in the Managed Broadband segment.
First quarter 2006 earnings before interest, taxes, depreciation,
amortization and non-cash share based compensation expense (EBITDA) totaled
$37.1 million. EBITDA increased $2.6 million or 7.5 percent from the first
quarter of 2005. First quarter 2005 EBITDA totaled $34.5 million including the
MCI credit utilized of $0.9 million.
Sequentially, revenues for the company increased slightly over fourth
quarter 2005 revenues of $112.1 million. As expected, first quarter EBITDA of
$37.1 million decreased from EBITDA of $42.9 million in the fourth quarter of
2005. EBITDA for the fourth quarter of 2005 included a $7.5 million net benefit
from a claims settlement.
For the first quarter of 2006, GCI met its revenue and EBITDA guidance.
The company expected revenues of approximately $112 million to $114 million, and
EBITDA of approximately $37 million, excluding non-cash stock based compensation
expense. GCI reaffirms its guidance for revenues of $450 to $460 million and
EBITDA of $150 million to $154 million for the year 2006. Second quarter
revenues are expected to range between $112 million to $114 million and EBITDA
is expected to increase from the first quarter.
"First quarter results are in line with expectations and we expect that
the next three quarters will each be stronger than the first as we continue to
successfully grow our business", said Ron Duncan, GCI President. "This is the
first report in our new format which reflects our new organizational focus on
customers rather than products. We believe this change will enhance the quality
of our customer's experience and allow us to more efficiently manage
technological and product convergence."
Highlights
o Consumer revenues increased to $42.7 million, an increase of 6.2
percent over the prior year and increased 1.9 percent from the fourth
quarter of 2005. The increases were due primarily to an increase in
video and wireless sales.
o Network Access revenues increased to $37.8 million, an increase of 10.9
percent over the prior year and increased 1.3 percent over the fourth
quarter of 2005. The increase in revenues is due primarily to a 27.1
percent increase in long distance minutes carried on GCI's network for
other common carriers for the first quarter of 2006 as compared to the
first quarter of 2005. Minutes for the first quarter of 2006 increased
5.3 percent from the fourth quarter of 2005. The effect on revenues of
increases in minutes for the first quarter of 2006 were partially
offset by rate decreases.
o Commercial revenues increased 2.8 percent over the prior year and
decreased 2.6 percent from the fourth quarter of 2005. Commercial data
subscriber increases primarily contributed to the revenue increase over
the prior year.
o GCI has provisioned 25,100 consumer and commercial lines on its Digital
Local Phone Service (DLPS) facilities at the end of the first quarter
of 2006, an increase of 3,200 lines over the fourth quarter of 2005.
GCI's goal is to increase the total lines provided on its own
facilities by 20,000 during 2006.
o GCI local access lines remained relatively unchanged for the quarter
after excluding approximately 500 Internet Service Provider dial-up
lines that were turned down during the first quarter of 2006. Consumer,
Network Access and Commercial local access lines totaled 112,500 at the
end of the first quarter of 2006 representing an estimated 26 percent
share of the total access lines market in Alaska.
o GCI has 80,900 consumer and commercial cable modem access customers at
the end of the first quarter of 2006, an increase of 3,500 over the
77,400 cable modem customers at year-end 2005. GCI customers continue
to migrate from dial up access service to cable modem. Average monthly
revenue per cable modem totaled $31.22 for the first quarter of 2006.
o Through April 30, 2006 GCI repurchased 893,142 shares of its Class A
Common shares at a cost of approximately $10.1 million or $11.36 per
share. Depending on market conditions and the availability of free cash
flows, the company is authorized to purchase an additional $12.9
million of Class A shares by the end of the second quarter of 2006.
Consumer
Total consumer revenues increased 6.2 percent to $42.7 million as
compared to $40.2 million in the first quarter of 2005 and increased 1.9 percent
from the fourth quarter of 2005. The increase in revenue over the prior year is
due primarily to an increase in video and wireless sales resulting from an
increase in subscribers and an increase in subscribers purchasing digital
services.
Consumer voice revenues decreased 5.7 percent from the prior year
primarily due to a decrease in volume of long distance usage. Consumer local
access lines in service are relatively unchanged from the prior year and from
the fourth quarter of 2005. GCI converted 2,800 consumer access lines to its own
facilities during the first quarter.
Consumer video revenue increased 4.8 percent over the prior year and
increased 1.9 percent over the fourth quarter of 2005. The increase in revenue
is due to improving rates in certain markets and increases in video subscribers
purchasing digital service and renting high definition / digital video recorder
converters.
Consumer data revenues increased 12.9 percent over the prior year and
9.4 percent over the fourth quarter of 2005. The increase in consumer data
revenues is due to an increase in cable modem customers. GCI added 10,700
consumer cable modem customers over the prior year and 3,200 customers during
the first quarter of 2006.
Consumer wireless revenues increased substantially during the first
quarter of 2006. The increase in revenue is due in part to a new GCI packaged
offering that features Motorola's new Razr phone at a significant value to the
consumer.
Network Access
Network access revenues increased 10.9 percent to $37.8 million as
compared to 34.1 million in the first quarter of 2005 and increased 1.3 percent
from the fourth quarter of 2005.
Voice revenues increased 16.7 percent over the prior year and increased
2.1 percent from the fourth quarter of 2005. Network access minutes increased
27.1 percent to 288.0 million minutes for the first quarter of 2006 as compared
to the first quarter of 2005. Minutes for the first quarter of 2006 increased
5.3 percent from the fourth quarter of 2005. The effect on revenues of increases
in minutes for the first quarter of 2006 were partially offset by rate
decreases.
Data revenues were relatively unchanged from the prior year and from
the fourth quarter of 2005.
Commercial
Commercial revenues increased 2.8 percent to $26.1 million as compared
to $25.4 million in the first quarter of 2005 and decreased 2.6 percent from the
fourth quarter of 2005.
Increases in video, data and wireless revenues were partially offset by
a decrease in voice revenues due primarily to declining rates per minute when
compared to the first quarter of 2005. Commercial revenues decreased from the
fourth quarter of 2005 due to a decrease in managed services revenues.
GCI converted 400 commercial local access lines to its own facilities
during the first quarter.
Basic commercial video customers increased by 1,300 subscribers from
the prior year and increased by 1,000 subscribers from the fourth quarter of
2005. Commercial video customers are primarily hotel video customers.
Managed Broadband
Managed broadband revenues totaled $6.2 million in the first quarter of
2006, a decrease of 8.8 percent from the first quarter of 2005 and an increase
of 3.3 percent over the fourth quarter of 2005. The decrease from the prior year
quarter is due to fewer multi-site SchoolAccess customers and a decrease in
rates charged for certain services provided to rural health customers. The
decrease in multi-site customers was off-set by an increase in single-site
SchoolAccess customers which generate less revenue.
Other Items
Total selling, general and administrative expenses (SG&A) increased 6.7
percent to $39.7 million as compared to $37.2 million in the first quarter of
2005 and decreased 2.2 percent from the fourth quarter of 2005. The increase was
due primarily to an increase in medical claims, information technology costs and
share-based compensation expense due to the adoption of a new accounting rule on
January 1, 2006. SG&A expenses are recorded by segment using a combination of
direct charges and an allocation based on prior year gross margins by segment.
During the first quarter of 2006 GCI's capital expenditures totaled
$14.9 million as compared to $15.2 million in the fourth quarter of 2005.
GCI will hold a conference call to discuss the quarter's results on
Wednesday, May 10, 2006 beginning at 2 p.m. (Eastern). To access the briefing on
May 10, dial 888-603-9217 (International callers should dial 415-228-4584.) 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 866-454-2100, access code 7461 (International callers
should dial 203-369-1240.)
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) March 31, December 31,
Assets 2006 2005
- --------------------------------------------------------------------------------------- --------------- ---------------
Current assets:
Cash and cash equivalents $ 43,031 44,362
--------------- ---------------
Receivables 82,598 78,279
Less allowance for doubtful receivables 5,891 5,317
--------------- ---------------
Net receivables 76,707 72,962
Deferred income taxes, net 17,485 19,596
Prepaid expenses 6,933 8,347
Notes receivable from related parties 3,484 922
Inventories 3,135 1,556
Property held for sale 2,314 2,312
Other current assets 2,540 2,572
--------------- ---------------
Total current assets 155,629 152,629
--------------- ---------------
Property and equipment in service, net of depreciation 440,814 453,008
Construction in progress 15,690 8,337
--------------- ---------------
Net property and equipment 456,504 461,345
--------------- ---------------
Cable certificates 191,565 191,565
Goodwill 42,181 42,181
Other intangible assets 6,274 6,201
Deferred loan and senior notes costs, net of amortization of $1,702
and $1,451 at March 31, 2006 and December 31, 2005, respectively 7,760 8,011
Notes receivable from related parties 90 2,544
Other assets 11,427 9,299
--------------- ---------------
Total other assets 259,297 259,801
--------------- ---------------
Total assets $ 871,430 873,775
=============== ===============
(Continued)
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)
(Amounts in thousands) March 31, December 31,
Liabilities and Stockholders' Equity 2006 2005
- --------------------------------------------------------------------------------------- --------------- ---------------
Current liabilities:
Current maturities of obligations under long-term debt and capital leases $ 1,774 1,769
Accounts payable 22,401 23,217
Deferred revenue 16,104 16,439
Accrued payroll and payroll related obligations 14,757 17,925
Accrued liabilities 7,073 6,814
Accrued interest 2,919 9,588
Subscriber deposits 373 361
--------------- ---------------
Total current liabilities 65,401 76,113
Long-term debt 473,800 474,115
Obligation under capital leases, excluding current maturity 1,160 -
Obligation under capital lease due to related party, excluding current
maturity 613 628
Deferred income taxes, net of deferred income tax benefit 70,925 69,753
Other liabilities 10,876 9,546
--------------- ---------------
Total liabilities 622,775 630,155
--------------- ---------------
Stockholders' equity : Common stock (no par):
Class A. Authorized 100,000 shares; issued 51,360 and 51,200
shares at March 31, 2006 and December 31, 2005, respectively 177,214 178,351
Class B. Authorized 10,000 shares; issued 3,839 and 3,843 shares
at March 31, 2006 and December 31, 2005, respectively; con-
vertible on a share-per-share basis into Class A common stock 3,244 3,247
Less cost of 291 Class A and Class B common shares held in
treasury at March 31, 2006 and December 31, 2005 (1,730) (1,730)
Paid-in capital 16,912 16,425
Notes receivable with related parties issued upon stock option exercise (1,722) (1,722)
Retained earnings 54,737 49,049
--------------- ---------------
Total stockholders' equity 248,655 243,620
--------------- ---------------
Commitments and contingencies
Total liabilities and stockholders' equity $ 871,430 873,775
=============== ===============
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(Unaudited)
March 31,
(Amounts in thousands, except per share amounts) 2006 2005
------------ ------------
Revenues $ 112,822 106,510
Cost of goods sold (exclusive of depreciation and amortization shown
separately below) 36,184 35,200
Selling, general and administrative expenses 39,614 37,180
Bad debt expense (recovery) 501 (353)
Depreciation and amortization expense 20,161 17,705
------------ ------------
Operating income 16,362 16,778
------------ ------------
Other income (expense):
Interest expense (8,554) (8,331)
Amortization of loan and senior notes fees (251) (483)
Interest income 157 179
Other (113) -
------------ ------------
Other expense, net (8,761) (8,635)
------------ ------------
Net income before income taxes and cumulative effect of a change in
accounting principle 7,601 8,143
Income tax expense 3,679 3,480
------------ ------------
Net income before cumulative effect of a change in accounting
principle 3,922 4,663
Cumulative effect of a change in accounting principle, net of income tax
benefit of $425 (608) -
------------ ------------
Net income 3,314 4,663
Preferred stock dividends - 93
------------ ------------
Net income available to common shareholders $ 3,314 4,570
============ ============
Basic net income per common share:
Net income before cumulative effect of a change in accounting principle $ 0.07 0.08
Cumulative effect of a change in accounting principle (0.01) -
------------ ------------
Net income $ 0.06 0.08
============ ============
Diluted net income per common share:
Net income before cumulative effect of a change in accounting principle $ 0.07 0.08
Cumulative effect of a change in accounting principle (0.01) -
------------ ------------
Net income $ 0.06 0.08
============ ============
Common shares used to calculate basic EPS 54,561 55,108
============ ============
Common shares used to calculate diluted EPS 56,217 56,341
============ ============
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES
(Unaudited)
(Amounts in thousands)
First Quarter 2006
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
-------- -------- ---------- --------- ------
Revenues
Voice $ 11,311 24,485 8,023 - 43,819
Video 22,003 - 1,726 - 23,729
Data 6,961 13,338 15,910 6,208 42,417
Wireless 2,388 - 469 - 2,857
------------------------------------------------------------------
Total 42,663 37,823 26,128 6,208 112,822
Cost of goods
sold 15,923 8,776 10,424 1,061 36,184
------------------------------------------------------------------
Contribution 26,740 29,047 15,704 5,147 76,638
SG&A 18,406 9,178 8,909 3,234 39,727
Bad debt
expense 257 - 139 105 501
------------------------------------------------------------------
EBITDA 8,077 19,869 6,656 1,808 36,410
Add share-based
compensation 262 206 161 49 678
------------------------------------------------------------------
EBITDA, as
adjusted $ 8,339 20,075 6,817 1,857 37,088
==================================================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES
(Unaudited)
(Amounts in thousands)
First Quarter 2005
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
-------- -------- ---------- --------- ------
Revenues
Voice $ 11,996 20,969 8,781 - 41,746
Video 20,994 - 1,644 - 22,638
Data 6,245 13,175 14,746 6,815 40,981
Wireless 957 - 188 - 1,145
------------------------------------------------------------------
Total 40,192 34,144 25,359 6,815 106,510
Cost of goods
sold 14,951 7,787 11,385 1,077 35,200
------------------------------------------------------------------
Contribution 25,241 26,357 13,974 5,738 71,310
SG&A 17,533 8,077 8,403 3,167 37,180
Bad debt
expense (245) - (93) (15) (353)
------------------------------------------------------------------
EBITDA $ 7,953 18,280 5,664 2,586 34,483
==================================================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES
(Unaudited)
(Amounts in thousands)
Fourth Quarter 2005 (1)
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
-------- -------- ---------- --------- ------
Revenues
Voice $ 11,720 23,995 7,867 - 43,582
Video 21,612 - 1,773 - 23,385
Data 6,419 13,264 16,778 6,038 42,499
Wireless 2,194 - 430 - 2,624
------------------------------------------------------------------
Total 41,945 37,259 26,848 6,038 112,090
Cost of goods
sold 14,645 2,109 9,419 1,098 27,271
------------------------------------------------------------------
Contribution 27,300 35,150 17,429 4,940 84,819
SG&A 18,672 9,425 9,100 3,446 40,643
Bad debt
expense 501 - 324 383 1,208
Restructuring
expense 37 - 36 - 73
------------------------------------------------------------------
EBITDA $ 8,090 25,725 7,969 1,111 42,895
==================================================================
(1) The fourth quarter of 2005 segment results are estimates that will be
finalized when we report our results for the applicable quarter for the year
2006.
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES
(Unaudited)
(Amounts in thousands)
Second Quarter 2005 (1)
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
-------- -------- ---------- --------- ------
Revenues
Voice $ 11,592 23,939 8,796 - 44,327
Video 21,142 - 1,889 - 23,031
Data 6,321 12,968 15,469 7,002 41,760
Wireless 1,293 - 254 - 1,547
------------------------------------------------------------------
Total 40,348 36,907 26,408 7,002 110,665
Cost of goods sold 15,712 7,791 11,151 1,391 36,045
------------------------------------------------------------------
Contribution 24,636 29,116 15,257 5,611 74,620
SG&A 17,807 8,403 8,574 3,235 38,019
Bad debt expense
(recovery) (220) - (114) 528 194
------------------------------------------------------------------
EBITDA $ 7,049 20,713 6,797 1,848 36,407
==================================================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
SUPPLEMENTAL SCHEDULES
(Unaudited)
(Amounts in thousands)
Third Quarter 2005 (1)
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
-------- -------- ---------- --------- ------
Revenues
Voice $ 11,512 26,652 8,273 - 46,437
Video 20,983 - 1,857 - 22,840
Data 6,328 13,372 16,599 6,248 42,547
Wireless 1,619 - 318 - 1,937
------------------------------------------------------------------
Total 40,442 40,024 27,047 6,248 113,761
Cost of goods sold 15,452 7,853 11,963 1,077 36,345
------------------------------------------------------------------
Contribution 24,990 32,171 15,084 5,171 77,416
SG&A 18,007 8,636 8,693 3,284 38,620
Bad debt expense (429) - (451) 911 31
Restructuring expense 624 737 380 153 1,894
Loss on termination
of capital lease 921 1,089 562 225 2,797
------------------------------------------------------------------
EBITDA 5,867 21,709 5,900 598 34,074
Add restructuring
charge to be paid in
future periods 424 502 259 104 1,289
------------------------------------------------------------------
EBITDA,
as adjusted $ 6,291 22,211 6,159 702 35,363
==================================================================
(1) The second, third and fourth quarter of 2005 segment results are estimates
that will be finalized when we report our results for the applicable
quarter for the year 2006.
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
KEY PERFORMANCE INDICATORS
(Unaudited)
Mar 31, 2006 Mar 31, 2006
as compared to as compared to
Mar 31, Mar 31, Dec 31, Mar 31, Dec 31, Mar 31, Dec 31,
2006 2005 2005 2005 2005 2005 2005
---- ---- ---- ---- ---- ---- ----
Consumer
Voice
Total local access lines in service 68,600 69,000 68,400 (400) 200 -0.6% 0.3%
DLPS access lines in service 24,100 10,400 21,300 13,700 2,800 131.7% 13.1%
Video
Basic subscribers 122,100 122,000 122,600 100 (500) 0.1% -0.4%
Digital programming tier subscribers 54,900 48,000 53,700 6,900 1,200 14.4% 2.2%
HD/DVR converter boxes 16,200 6,700 12,500 9,500 3,700 141.8% 29.6%
Homes passed 216,000 209,600 215,000 6,400 1,000 3.1% 0.5%
Data
Cable modem subscribers 74,000 63,300 70,900 10,700 3,100 16.9% 4.4%
Commercial
Voice:
Total local access lines in service 40,600 39,900 40,700 700 (100) 1.8% -0.2%
DLPS access lines in service 1,000 400 600 600 400 150.0% 66.7%
Video
Hotels and mini-headend 13,900 12,700 12,900 1,200 1,000 9.4% 7.8%
subscribers
Basic subscribers 1,500 1,400 1,500 100 - 7.1% 0.0%
----------------------------------- ---------------------- ----------------------
Total basic subscribers 15,400 14,100 14,400 1,300 1,000 9.2% 6.9%
=================================== ====================== ======================
Data
Cable modem subscribers 6,900 6,000 6,500 900 400 15.0% 6.2%
Broadband
SchoolAccess(R) customers 47 43 (47) 4 - 9.3% 0.0%
Rural health customers 21 21 21 - - 0.0% 0.0%
Combined Consumer & Commercial
Wireless
Total lines in service 20,100 9,500 16,100 10,600 4,000 111.6% 24.8%
Mar 31, 2006 Mar 31, 2006
Three Months Ended as Compared to as Compared to
Mar 31, Mar 31, Dec 31, Mar 31, Dec 31, Mar 31, Dec 31,
2006 2005 2005 2005 2005 2005 2005
---- ---- ---- ---- ---- ---- ----
Consumer
Voice
Long-distance minutes carried
(in millions) 36.9 40.8 40.2 (3.9) (3.3) -9.6% -8.2%
Video
Avgerage gross revenue per
subscriber $ 63.87 $ 59.25 $ 60.00 $ 4.62 $ 3.87 7.8% 6.5%
NAS
Voice
Long-distance minutes carried
(in millions) 288.0 226.6 273.5 61.4 14.6 27.1% 5.3%
Commercial
Voice:
Long-distance minutes carried
(in millions) 35.1 35.1 33.2 0.0 1.9 0.1% 5.8%
General Communication, Inc.
Non-GAAP Financial Reconciliation Schedule
(Unaudited, Amounts in Millions)
Three Months Ended
March 31, March 31, December 31,
2006 2005 2005
------------ ------------ --------------
EBITDA, as adjusted (Note 1) $ 37.2 34.5 43.0
Share-based compensation expense (0.7) --- (0.1)
------------ ------------ --------------
EBITDA (Note 2) 36.5 34.5 42.9
Depreciation and amortization expense (20.1) (17.8) (19.6)
------------ ------------ --------------
Operating income 16.4 16.7 23.3
------------ ------------ --------------
Other income (expense):
Interest expense (8.6) (8.3) (8.4)
Amortization of loan and senior notes
fee expense (0.3) (0.5) (0.2)
Interest income 0.1 0.2 0.1
------------ ------------ --------------
Other expense, net (8.8) (8.6) (8.5)
------------ ------------ --------------
Net income before income taxes and
cumulative effect of a change in
accounting principle 7.6 8.1 14.8
Income tax expense (3.7) (3.5) (6.2)
------------ ------------ --------------
Net income before cumulative effect
of a change in accounting
principle 3.9 4.6 8.6
Cumulative effect of change in
accounting principle, net of income
tax benefit of $0.4 (0.6) --- ---
------------ ------------ --------------
Net income $ 3.3 4.6 8.6
============ ============ ==============
Notes:
(1) EBITDA (as defined in Note 2 below) before deducting share-based
compensation expense.
(2) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
the sum of Net Income, Interest Expense, Amortization of Loan and Senior
Notes Fees, Interest Income, Income Tax Expense, and Depreciation and
Amortization Expense. 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.