Exhibit 99.1
August 8, 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 SECOND QUARTER 2006 FINANCIAL RESULTS
o Consolidated revenue of $118.2 million
o Net income of $5.4 million or $0.09 per diluted share
o EBITDA of $39.5 million
ANCHORAGE, AK -- GCI (NASDAQ:GNCMA) today reported net income of $5.4
million, or earnings per diluted share of $0.09, for the second quarter of 2006.
The company's second quarter net income compares to income of $5.3 million, or
earnings per diluted share of $0.09 in the same period of 2005.
GCI's second quarter 2006 revenues totaled $118.2 million, an increase
of 6.8 percent over the second quarter of 2005. Revenue increases in GCI's
consumer and network access segments were partially offset by decreased revenue
in the commercial and managed broadband segments.
Second quarter 2006 earnings before interest, taxes, depreciation,
amortization and non-cash share based compensation expense (EBITDA) totaled
$39.5 million. EBITDA increased $3.1 million or 8.5 percent from the second
quarter of 2005. Second quarter 2005 EBITDA totaled $36.4 million including the
MCI credit utilized of $1.0 million.
Sequentially, revenues for the company increased $5.4 million over
first quarter 2006 revenues of $112.8 million. As expected, second quarter
EBITDA of $39.5 million increased from EBITDA of $37.1 million in the first
quarter of 2006.
For the second quarter of 2006, GCI exceeded its revenue and EBITDA
guidance. The company expected revenues of approximately $112 million to $114
million, and EBITDA in excess of $37.1 million, excluding non-cash stock based
compensation expense. GCI reaffirms its guidance for revenues of $450 million to
$460 million and EBITDA of $150 million to $154 million for the year 2006. Third
quarter revenues are expected to range between $116 million to $118 million and
EBITDA is expected to remain approximately the same as the second quarter.
"Our second quarter results were on the high side of our expectations,"
said Ron Duncan, GCI President. "The first half of 2006 positions us well for
another record year for total revenues and EBITDA. We face challenges in
accelerating the provisioning of local phone service on our own facilities. Our
plant upgrades are behind schedule resulting in fewer customers to convert and
it has taken longer than anticipated to turn up service in new markets. However,
we are addressing these issues and by the end of this year the company expects
to be very well positioned for the expansion of local service on our own
facilities."
Highlights
o Consumer revenues increased to $44.2 million, an increase of 9.6 percent
over the prior year and increased 3.7 percent from the first quarter of
2006. The increases were due primarily to increases in video, data and
wireless sales.
o Network access revenues increased to $41.4 million, an increase of 12.1
percent over the prior year and increased 9.4 percent over the first
quarter of 2006. The increase in revenues is due primarily to a 22.2
percent increase in long distance minutes carried on GCI's network for
other common carriers for the second quarter of 2006 as compared to the
second quarter of 2005. Minutes for the second quarter of 2006 increased
15.1 percent from the first quarter of 2006. The effect on revenues of
increases in minutes for the second quarter of 2006 were partially offset
by rate decreases.
o Commercial revenues decreased 1.5 percent from the prior year and 0.4
percent from the first quarter of 2006. A significant customer on GCI's
fiber optic cable from Prudhoe Bay to Valdez began transition of their
traffic to our competitor's microwave system in June of 2006. We expect to
sign an agreement to lease capacity on our system in connection with the
competitor's contract. We expect this transition to result in an
approximate $9.5 million annual decrease in revenues when completed. The
decrease for 2006 will be approximately one half of the expected annual
decrease depending upon the pace of the transition.
o GCI has provisioned 26,400 consumer and commercial lines on its Digital
Local Phone Service (DLPS) facilities at the end of the second quarter of
2006, an increase of 1,300 lines over the first quarter of 2006. Second
quarter conversions were approximately 1,200 below the planned number due
to delays in upgrading plant for phone service. Continued delays are
expected to materially reduce total conversions for the year. GCI now
expects to serve more than 35,000 lines on its own facilities by year end.
o GCI local access lines declined by 1,100 for the quarter. Consumer,
network access and commercial local access lines totaled 111,400 at the
end of the second quarter of 2006 representing an estimated 26 percent
share of the total access lines market in Alaska. Long distance
subscribers decreased sequentially by 1,100 comparable to the decrease in
local access lines. The decrease in wire line customers is due to wireless
substitution and a reduction in customers taking second lines.
o GCI had 82,100 consumer and commercial cable modem access customers at the
end of the second quarter of 2006, an increase of 1,200 over the 80,900
cable modem customers at the end of the first quarter 2006. GCI customers
continue to migrate from dial up access service to cable modem. Average
monthly revenue per cable modem totaled $31.54 for the second quarter of
2006 as compared to $31.22 for the first quarter of 2006.
o Beginning May 1, 2006 and ending July 31, 2006 GCI repurchased 1,280,600
shares of its Class A Common shares at a cost of approximately $15.5
million or $12.13 per share. The company is authorized to purchase an
additional $10.2 million of Class A shares by the end of the third quarter
of 2006. GCI will repurchase shares depending on market conditions and the
availability of free cash flows.
Consumer
Total consumer revenues increased 9.6 percent to $44.2 million as
compared to $40.3 million in the second quarter of 2005 and increased 3.7
percent from the first quarter of 2006. The increase in revenue is due primarily
to an increase in video, data and wireless sales.
Consumer voice revenues were relatively unchanged from the prior year
and from the first quarter of 2006. Consumer local access lines in service were
down 500 from second quarter of 2005 and 900 from the first quarter of 2006. GCI
converted 1,200 consumer access lines to its own facilities during the second
quarter.
Consumer video revenue increased 5.6 percent over the prior year and
increased 1.5 percent over the first quarter of 2006. The increase in revenue is
due to increasing average revenue per customer in certain markets and increases
in video subscribers purchasing digital service and renting high
definition/digital video recorder converters.
Consumer data revenues increased 14.8 percent over the prior year and
4.3 percent over the first quarter of 2006. 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 1,000 customers during
the second quarter of 2006.
Consumer wireless revenues increased substantially during the second
quarter of 2006.
Network Access
Network access revenues increased 12.1 percent to $41.4 million as
compared to $36.9 million in the second quarter of 2005 and increased 9.4
percent from the first quarter of 2006.
Voice revenues increased 16.3 percent over the prior year and increased
13.7 percent from the first quarter of 2006. Network access minutes increased
22.2 percent to 331.5 million minutes for the second quarter of 2006 as compared
to the second quarter of 2005. Minutes for the second quarter of 2006 increased
15.1 percent from the first quarter of 2006. The effect on revenues of increases
in minutes for the second quarter of 2006 was partially offset by rate
decreases.
Data revenues were up 4.4 percent compared to second quarter 2005 and
1.5 percent over the prior quarter.
Commercial
Commercial revenues decreased 1.5 percent to $26.0 million as compared
to $26.4 million in the second quarter of 2005 and were relatively unchanged
from the first quarter of 2006. A significant customer on GCI's fiber optic
cable from Prudhoe Bay to Valdez began transition of their traffic to our
competitor's microwave system in June of 2006. We expect to sign an agreement to
lease capacity on our system in connection with the competitor's contract. We
expect this transition to result in an approximate $9.5 million annual decrease
in revenues when completed. The decrease for 2006 will be approximately one half
of the expected annual decrease depending upon the pace of the transition.
Increases in video and wireless revenues were offset by decreases in
voice and data revenues when compared to the prior year.
GCI converted 100 commercial local access lines to its own facilities
during the first quarter.
Basic commercial video customers, as expected, increased by 1,800
subscribers from the prior year and increased by 2,600 subscribers from the
first quarter of 2006. Commercial video customers are primarily hotel video
customers.
Managed Broadband
Managed broadband revenues totaled $6.6 million in the second quarter
of 2006, a decrease of 5.7 percent from $7.0 million in the second quarter of
2005 and an increase of 6.4 percent over $6.2 million in the first quarter of
2006. 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 increase from the prior sequential
quarter was due to the sale of new services and circuits to rural health
customers.
Other Items
Total selling, general and administrative expenses (SG&A) increased 7.0
percent to $40.7 million as compared to $38.0 million in the second quarter of
2005 and increased 2.7 percent from the first quarter of 2006. The increase was
due primarily to share-based compensation expense from 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 second quarter of 2006 GCI's capital expenditures totaled
$23.9 million as compared to $14.9 million in the first quarter of 2006.
GCI will hold a conference call to discuss the quarter's results on
Wednesday, August 9, 2006 beginning at 1 p.m. (Eastern). To access the briefing
on August 9, dial 800-369-2012 (International callers should dial 210-234-0006)
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 866-415-2337, access code 7461 (International
callers should dial 203-369-0682.)
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 2006 2005
- --------------------------------------------------------------------------------------- ------------------ -----------------
Current assets:
Cash and cash equivalents $ 45,686 44,362
------------------ -----------------
Receivables 80,731 78,279
Less allowance for doubtful receivables 5,550 5,317
------------------ -----------------
Net receivables 75,181 72,962
Deferred income taxes, net 20,801 19,596
Prepaid expenses 6,286 8,347
Inventories 2,881 1,556
Notes receivable from related parties 2,685 922
Property held for sale 2,315 2,312
Other current assets 5,938 2,572
------------------ -----------------
Total current assets 161,773 152,629
------------------ -----------------
Property and equipment in service, net of depreciation 434,847 453,008
Construction in progress 24,306 8,337
------------------ -----------------
Net property and equipment 459,153 461,345
------------------ -----------------
Cable certificates 191,565 191,565
Goodwill 42,181 42,181
Other intangible assets 7,813 6,201
Deferred loan and senior notes costs, net of amortization of $1,953
and $1,451 at June 30, 2006 and December 31, 2005, respectively 7,509 8,011
Notes receivable from related parties 84 2,544
Other assets 8,143 9,299
------------------ -----------------
Total other assets 257,295 259,801
------------------ -----------------
Total assets $ 878,221 873,775
================== =================
(Continued)
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)
(Amounts in thousands) June 30, December 31,
Liabilities and Stockholders' Equity 2006 2005
- --------------------------------------------------------------------------------------- ------------------ -----------------
Current liabilities:
Current maturities of obligations under long-term debt and capital leases $ 1,894 1,769
Accounts payable 26,640 23,217
Deferred revenue 15,139 16,439
Accrued payroll and payroll related obligations 13,176 17,925
Accrued interest 8,703 9,588
Accrued liabilities 6,759 6,814
Subscriber deposits 408 361
------------------ -----------------
Total current liabilities 72,719 76,113
Long-term debt 473,360 474,115
Obligation under capital lease, excluding current maturity 1,192 ---
Obligation under capital lease due to related party, excluding current
maturity 597 628
Deferred income taxes, net of deferred income tax benefit 77,955 69,753
Other liabilities 12,146 9,546
------------------ -----------------
Total liabilities 637,969 630,155
------------------ -----------------
Stockholders' equity:
Common stock (no par):
Class A. Authorized 100,000 shares; issued 51,568 and 51,200
shares at June 30, 2006 and December 31, 2005, respectively 177,108 178,351
Class B. Authorized 10,000 shares; issued 3,380 and 3,843 shares
at June 30, 2006 and December 31, 2005, respectively; con-
vertible on a share-per-share basis into Class A common stock 2,855 3,247
Less cost of 290 and 291 Class A and Class B common shares held in
treasury at June 30, 2006 and December 31, 2005, respectively (1,723) (1,730)
Paid-in capital 17,856 16,425
Notes receivable with related parties issued upon stock option exerci (1,279) (1,722)
Retained earnings 45,435 49,049
------------------ -----------------
Total stockholders' equity 240,252 243,620
------------------ -----------------
Commitments and contingencies
Total liabilities and stockholders' equity $ 878,221 873,775
================== =================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
(Amounts in thousands, except per share amounts) 2006 2005 2006 2005
----------------- ----------------- ----------------- -----------------
Revenues $ 118,220 110,665 231,042 217,175
Cost of goods sold (exclusive of depreciation and
amortization shown separately below) 38,598 36,045 74,782 71,245
Selling, general and administrative expenses 40,667 38,019 80,281 75,199
Bad debt expense (recovery) 1,338 194 1,839 (159)
Depreciation and amortization expense 20,172 18,348 40,333 36,052
----------------- ----------------- ----------------- -----------------
Operating income 17,445 18,059 33,807 34,838
----------------- ----------------- ----------------- -----------------
Other income (expense):
Interest expense (8,696) (8,403) (17,250) (16,735)
Amortization of loan and senior notes fees (251) (448) (502) (931)
Interest income 482 112 639 291
Other 282 --- 169 ---
----------------- ----------------- ----------------- -----------------
Other expense, net (8,183) (8,739) (16,944) (17,375)
----------------- ----------------- ----------------- -----------------
Net income before income taxes and cumulative
effect of a change in accounting principle 9,262 9,320 16,863 17,463
Income tax expense 3,856 4,036 7,535 7,516
----------------- ----------------- ----------------- -----------------
Net income before cumulative effect of a change
in accounting principle 5,406 5,284 9,328 9,947
Cumulative effect of a change in accounting principle,
net of income tax benefit of $425 --- --- (608) ---
----------------- ----------------- ----------------- -----------------
Net income 5,406 5,284 8,720 9,947
Preferred stock dividends --- 55 --- 148
----------------- ----------------- ----------------- -----------------
Net income available to common shareholders $ 5,406 5,229 8,720 9,799
================= ================= ================= =================
Basic net income per common share:
Net income before cumulative effect of a change in
accounting principle $ 0.10 0.10 0.17 0.18
Cumulative effect of a change in accounting principle --- --- (0.01) ---
----------------- ----------------- ----------------- -----------------
Net income $ 0.10 0.10 0.16 0.18
================= ================= ================= =================
Diluted net income per common share:
Net income before cumulative effect of a change in
accounting principle $ 0.09 0.09 0.16 0.18
Cumulative effect of a change in accounting principle --- --- (0.01) ---
----------------- ----------------- ----------------- -----------------
Net income $ 0.09 0.09 0.15 0.18
================= ================= ================= =================
Common shares used to calculate basic EPS 55,688 54,637 55,526 54,815
================= ================= ================= =================
Common shares used to calculate diluted EPS 57,260 55,612 56,941 55,919
================= ================= ================= =================
Second Quarter 2006
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
Revenues
Voice $ 11,451 27,844 8,097 --- 47,392
Video 22,329 --- 1,933 --- 24,262
Data 7,258 13,533 15,400 6,607 42,798
Wireless 3,185 --- 583 --- 3,768
------------------------------------------------------------------
Total 44,223 41,377 26,013 6,607 118,220
Cost of goods
sold 17,124 8,794 11,605 1,075 38,598
------------------------------------------------------------------
Contribution 27,099 32,583 14,408 5,532 79,622
Less SG&A 18,544 9,771 8,857 3,495 40,667
Less / add bad
debt expense
(recovery) 677 --- 395 266 1,338
Add other
income --- --- --- 282 282
------------------------------------------------------------------
EBITDA 7,878 22,812 5,156 2,053 37,899
Add share-based
compensation 508 605 348 121 1,582
------------------------------------------------------------------
EBITDA, as
adjusted $ 8,386 23,417 5,504 2,174 39,481
==================================================================
Second Quarter 2005
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
Revenues
Voice $ 11,593 23,940 8,796 --- 44,329
Video 21,142 --- 1,889 --- 23,031
Data 6,321 12,967 15,468 7,002 41,758
Wireless 1,293 --- 254 --- 1,547
------------------------------------------------------------------
Total 40,349 36,907 26,407 7,002 110,665
Cost of goods
sold 15,712 7,791 11,151 1,391 36,045
------------------------------------------------------------------
Contribution 24,637 29,116 15,256 5,611 74,620
Less SG&A 17,629 8,547 8,309 3,534 38,019
Less / add bad
debt expense
(recovery) (220) --- (114) 528 194
------------------------------------------------------------------
EBITDA $ 7,228 20,569 7,061 1,549 36,407
==================================================================
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
Less SG&A 18,406 9,178 8,909 3,121 39,614
Less bad debt
expense 257 --- 139 105 501
Add other
income
(expense) --- --- --- (113) (113)
------------------------------------------------------------------
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
==================================================================
(Amounts in thousands)
Six Months Ended June 30, 2006
------------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
Revenues
Voice $ 22,763 52,328 16,120 - 91,211
Video 44,331 - 3,659 - 47,990
Data 14,219 26,872 31,310 12,815 85,216
Wireless 5,573 - 1,052 - 6,625
------------------------------------------------------------------
Total 86,886 79,200 52,141 12,815 231,042
Cost of goods
sold 33,047 17,570 22,029 2,136 74,782
------------------------------------------------------------------
Contribution 53,839 61,630 30,112 10,679 156,260
Less SG&A 36,950 18,949 17,766 6,616 80,281
Less / add bad
debt expense
(recovery) 934 --- 534 371 1,839
Add other
income --- --- --- 169 169
-----------------------------------------------------------------
EBITDA 15,955 42,681 11,812 3,861 74,309
Add share-based
compensation 770 811 509 170 2,260
------------------------------------------------------------------
EBITDA, as
adjusted $ 16,725 43,492 12,321 4,031 76,569
==================================================================
Six Months Ended June 30, 2005
-----------------------------------------------------------------
Network
Access Managed
Consumer Services Commercial Broadband Totals
Revenues
Voice $ 23,589 44,909 17,577 --- 86,075
Video 42,136 --- 3,533 --- 45,669
Data 12,566 26,142 30,214 13,817 82,739
Wireless 2,250 --- 442 --- 2,692
------------------------------------------------------------------
Total 80,541 71,051 51,766 13,817 217,175
Cost of goods
sold 30,663 15,578 22,536 2,468 71,245
------------------------------------------------------------------
Contribution 49,878 55,473 29,230 11,349 145,930
Less SG&A 35,161 16,624 16,713 6,701 75,199
Less / add bad
debt expense
(recovery) (464) --- (208) 513 (159)
------------------------------------------------------------------
EBITDA $ 15,181 38,849 12,725 4,135 70,890
==================================================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
KEY PERFORMANCE INDICATORS
(Unaudited)
June 30, 2006 June 30, 2006
as compared to as compared to
June 30, June 30, March 31, June 30, March 31, June 30, March 31,
2006 2005 2006 2005 2006 2005 2006
-------- -------- --------- -------- --------- -------- ---------
Consumer
Voice
Long-distance subscribers 92,757 NA 93,760 NA (1,003) NA -1.1%
Total local access lines in service 67,700 68,200 68,600 (500) (900) -0.7% -1.3%
DLPS local access lines in service 25,300 12,400 24,100 12,900 1,200 104.0% 5.0%
Video
Basic subscribers 121,900 121,200 122,100 700 (200) 0.6% -0.2%
Digital programming tier subscribers 55,100 48,700 54,900 6,400 200 13.1% 0.4%
HD/DVR converter boxes 18,800 7,400 16,200 11,400 2,600 154.1% 16.0%
Homes passed 217,100 211,000 216,000 6,100 1,100 2.9% 0.5%
Data
Cable modem subscribers 75,000 64,300 74,000 10,700 1,000 16.6% 1.4%
Network Access Services
Voice:
Long-distance subscribers 30 NA 31 NA (1) NA -3.2%
Total local access lines in service 3,300 3,600 3,300 (300) --- -8.3% 0.0%
Commercial
Voice:
Long-distance subscribers 11,676 NA 11,765 NA (89) NA -0.8%
Total local access lines in service 40,400 40,100 40,600 300 (200) 0.7% -0.5%
DLPS access lines in service 1,100 400 1,000 700 100 175.0% 10.0%
Video
Hotels and mini-headend
subscribers 16,500 14,800 13,900 1,700 2,600 11.5% 18.7%
Basic subscribers 1,500 1,400 1,500 100 - 7.1% 0.0%
------------------------------------ ------------------------- -------------------------
Total basic subscribers 18,000 16,200 15,400 1,800 2,600 11.1% 16.9%
==================================== ========================= =========================
Data
Cable modem subscribers 7,100 5,900 6,900 1,200 200 20.3% 2.9%
Broadband
SchoolAccess(R) customers 45 43 47 2 (2) 4.7% -4.3%
Rural health customers 21 21 21 - - 0.0% 0.0%
Combined Consumer & Commercial
Wireless
Total lines in service 22,900 12,161 20,100 10,739 2,800 88.3% 13.9%
June 30, 2006 June 30, 2006
Three Months Ended as Compared to as Compared to
June 30, June 30, March 31, June 30, March 31, June 30, March 31,
2006 2005 2006 2005 2006 2005 2006
-------- -------- --------- -------- --------- -------- ---------
Consumer
Voice
Long-distance minutes carried
(in millions) 35.9 40.5 36.9 (4.6) (1.0) -11.3% -2.6%
Video
Average monthly gross revenue per
subscriber $ 60.92 $ 59.22 $ 63.87 $ 1.70 $ (2.95) 2.9% -4.6%
Network Access Services
Voice
Long-distance minutes carried
(in millions) 331.5 271.3 288.0 60.2 43.5 22.2% 15.1%
Commercial
Voice:
Long-distance minutes carried
(in millions) 34.4 35.9 35.1 (1.5) (0.7) -4.2% -2.0%
General Communication, Inc.
Non-GAAP Financial Reconciliation Schedule
(Unaudited, Amounts in Millions)
Three Months Ended
June 30, 2006 June 30, 2005 March 31, 2006
-------------------- ------------------- ---------------------
EBITDA, as adjusted (Note 1) $ 39.5 36.4 37.1
Share-based compensation expense (1.6) --- (0.7)
-------------------- ------------------- ---------------------
EBITDA (Note 2) 37.9 36.4 36.4
Depreciation and amortization expense (20.2) (18.4) (20.1)
Other (0.3) --- 0.1
-------------------- ------------------- ---------------------
Operating income 17.4 18.0 16.4
-------------------- ------------------- ---------------------
Other income (expense):
Interest expense (8.7) (8.4) (8.6)
Amortization of loan and senior notes
fee expense (0.2) (0.4) (0.3)
Interest income 0.5 0.1 0.2
Other 0.3 --- (0.1)
-------------------- ------------------- ---------------------
Other expense, net (8.1) (8.7) (8.8)
-------------------- ------------------- ---------------------
Net income before income taxes and
cumulative effect of a change in
accounting principle 9.3 9.3 7.6
Income tax expense (3.9) (4.0) (3.7)
-------------------- ------------------- ---------------------
Net income before cumulative effect
of a change in accounting principle 5.4 5.3 3.9
Cumulative effect of change in accounting
principle, net of income tax benefit of
$0.4 --- --- (0.6)
-------------------- ------------------- ---------------------
Net income $ 5.4 5.3 3.3
==================== =================== =====================
Six Months Ended
June 30, 2006 June 30, 2005
-------------------- -------------------
EBITDA, as adjusted (Note 1) $ 76.6 70.9
Share-based compensation expense (2.3) ---
-------------------- -------------------
EBITDA (Note 2) 74.3 70.9
Depreciation and amortization expense (40.3) (36.1)
Other (0.2) ---
-------------------- -------------------
Operating income 33.8 34.8
-------------------- -------------------
Other income (expense):
Interest expense (17.3) (16.8)
Amortization of loan and senior notes
fee expense (0.5) (0.9)
Interest income 0.6 0.3
Other 0.2 ---
-------------------- -------------------
Other expense, net (17.0) (17.4)
-------------------- -------------------
Net income before income taxes and
cumulative effect of a change in
accounting principle 16.8 17.4
Income tax expense (7.5) (7.5)
-------------------- -------------------
Net income before cumulative effect
of a change in accounting principle 9.3 9.9
Cumulative effect of change in accounting
principle, net of income tax benefit of
$0.4 (0.6) ---
-------------------- -------------------
Net income $ 8.7 9.9
==================== ===================
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.