UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
     
 
FORM 8-K/A

(Amendment No. 2)
 
CURRENT REPORT
 
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): November 5, 2008
 
 
GENERAL COMMUNICATION, INC.
  
 
(Exact name of registrant as specified in its charter)
  
 
 
State of Alaska
  
0-15279
  
92-0072737
  
 
(State or other Jurisdiction of
  
Commission File Number
  
(I.R.S Employer
  
 
Incorporation or organization)
      
Identification No.)
  
 
   
2550 Denali Street
        
   
Suite 1000
        
   
Anchorage, Alaska
  
99503
    
   
(Address of Principal Executive offices)
  
 (Zip Code)
 
  
 
Registrant’s telephone number, including area code: (907) 868-5600
 
 
NONE
  
 
(Former name or former address, if changed since last report)
  
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
 
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
Item 4.02(a)
Non-Reliance of Previously Issued Financial Statements or a Related Audit Report or Completed Internal Review

Explanatory Note
General Communication, Inc. (the "Company") previously filed a Form 8-K on November 6, 2008 that contained preliminary information in Item 4.02(a) of such Form 8-K regarding the amount deprecation expense was understated for the first and second quarters of 2008.  The Company filed an Amendment No. 1 to such Form 8-K on November 13, 2008 to add additional information to disclose the effect of the restatement on our balance sheets as of March 31 and June 30, 2008 as well the impact on net income and earnings per share for the three months ended March 31, 2008 and the three and six months ended June 30, 2008, and statement of cash flows for the three and six months ended March 31 and June 30, 2008, respectively.

This Amendment No. 2 to such Form 8-K/A Amendment No. 1 amends and restates the information contained in such Form 8-K/A Amendment No. 1 Item 4.02(a).  Specifically, this Form 8-K/A Amendment No. 2 corrects income tax expense for the three months ended March 31, 2008 and June 30, 2008, resulting in a $1.1 million decrease in income tax expense to $1.4 million for the three months ended March 31, 2008, and a $1.1 million increase in income tax expense to $1.8 million for the three months ended June 30, 2008.  The income tax expense for the six months ended June 30, 2008, is unchanged.  While the company believes that the financial information included in this Form 8-K/A Amendment No. 2 is materially correct, the Company's auditors have not yet concluded all aspects of their review of our financial statements.  Accordingly, the financial information included herein should be considered preliminary and may be subject to change following the conclusion of the review.  The information in Items 2.02 and 9.01 included in our Form 8-K filed on November 6, 2008 was preliminary and, therefore, will not be updated in this Form 8-K/A Amendment No. 2.

On November 5, 2008, management of the Company, after discussions with the Audit Committee of the Board of Directors of the Company and the Company’s independent registered public accounting firm, KPMG LLP, determined that it was necessary to restate the Company’s consolidated financial statements for the quarters ended March 31, 2008 and June 30, 2008 in order to correct the error in such financial statements described below.  Accordingly, the Company’s consolidated interim financial statements previously filed for those periods should no longer be relied upon.

In late December 2007, a subsidiary of the Company, Alaska DigiTel, LLC (“Alaska DigiTel”), committed to a substantial upgrade of its wireless network during 2008 and expected to decommission certain assets at or near the end of 2008. As a result of this decision the estimated useful life of these assets changed, and the net book value at the date the decision was determined should have been depreciated over the remaining period the assets were expected to be used. The Company has recently determined that Alaska DigiTel’s depreciation expense was understated by $4.5 million and $4.0 million in the first and second quarters of 2008, respectively.

In light of the disclosure provided in this report, we have evaluated our internal control over financial reporting at Alaska DigiTel, which was excluded from our most recent annual evaluation of internal control over financial reporting, and have concluded that it does not include activities adequate to timely identify changes in financial reporting risks, monitor the continued effectiveness of controls, and does not include staff with adequate technical expertise to ensure that policies and procedures necessary for reliable interim and annual financial statements are selected and applied. These control deficiencies in our Alaska DigiTel business represent material weaknesses in our internal control over financial reporting and lead to the failure to timely identify and respond to triggering events which necessitated a change in useful life of depreciable assets to ensure reporting in accordance with GAAP.  We are currently assessing a remediation plan for these material weaknesses.
 
 
The Company intends to provide all restated financial information referred to in this Item 4.02(a), including explanatory information, in an amendment to its Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2008 and June 30, 2008.

The expected impact of the restatement follows (amounts in thousands, except per share amounts):

   
Three months ended March 31, 2008
  
   
As previously reported1
    
Adjust-ments
    
As restated
  
Consolidated Income Statement:
                  
Revenues
   $ 134,674       ---       134,674  
                         
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
     51,311       ---       51,311  
Selling, general and administrative expenses
     46,406       ---       46,406  
Depreciation and amortization expense
     22,782       4,461       27,243  
Operating income
     14,175       (4,461 )     9,714  
                         
Other income (expense):
                        
Interest expense
     (8,685 )     ---       (8,685 )
Loan and senior note fees
     (223 )     ---       (223 )
Interest income
     81       ---       81  
Minority interest
     (50 )     1,026       976  
Other expense, net
     (8,877 )     1,026       (7,851 )
                         
Income before income tax expense
     5,298       (3,435 )     1,863  
                         
Income tax expense
     2,769       (1,342 )     1,427  
                         
Net income
   $ 2,529       (2,093 )     436  
                         
Basic net income per common share
   $ 0.05       (0.04 )     0.01  
                         
Diluted net income per common share
   $ 0.04       (0.04 )     0.00  
                         
Consolidated Condensed Statement of Cash Flow:
                        
Cash provided by operating activities
   $ 35,524       ---       35,524  
Cash used in investing activities
     (50,830 )     ---       (50,830 )
Cash used in financing activities
     19,397       ---       19,397  
                         
1 As reported on Form 10-Q for the quarter ended March 31, 2008
  
 
 
   
March 31, 2008
  
Consolidated Condensed Balance Sheet
  
As previously reported1
    
Adjust-ments
    
As restated
  
Assets
                  
Total current assets
   $ 140,694       ---       140,694  
                         
Property and equipment in service, net of depreciation
     519,675       (4,461 )     515,214  
Construction in progress
     84,950       ---       84,950  
Net property and equipment
     604,625       (4,461 )     600,164  
                         
Total other assets
     286,869       ---       286,869  
Total assets
   $ 1,032,188       (4,461 )     1,027,727  
                         
Liabilities, Minority Interest, and Stockholders' Equity
                        
Total current liabilities
     89,235       ---       89,235  
                         
Long-term debt
     555,667       ---       555,667  
Obligations under capital leases, excluding current maturities
     2,306       ---       2,306  
Obligation under capital lease due to related party, excluding current maturity
     441       ---       441  
Deferred income taxes
     103,207       (1,342 )     101,865  
Other liabilities
     17,175       ---       17,175  
Total liabilities
     768,031       (1,342 )     766,689  
                         
Minority interest
     6,528       (1,026 )     5,502  
                         
Common stock (no par):
                        
Class A common stock
     150,616       ---       150,616  
Class B common stock
     2,750       ---       2,750  
Less cost of Class A and Class B common shares held in treasury
     (3,450 )     ---       (3,450 )
Paid-in capital
     22,180       ---       22,180  
Retained earnings
     85,533       (2,093 )     83,440  
Total stockholders’ equity
     257,629       (2,093 )     255,536  
Total liabilities, minority interest, and stockholders’ equity
     1,032,188       (4,461 )     1,027,727  
                         
1 As reported on Form 10-Q for the quarter ended March 31, 2008
  


   
Three Months Ended June 30, 2008
  
   
As previously reported1
    
Adjust-ments
    
As restated
  
Consolidated Income Statement:
                  
Revenues
   $ 142,461       ---       142,461  
                         
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
     52,448       ---       52,448  
Selling, general and administrative expenses
     48,260       ---       48,260  
Depreciation and amortization expense
     23,707       4,001       27,708  
Operating income
     18,046       (4,001 )     14,045  
                         
Other income (expense):
                        
Interest expense
     (10,899 )     ---       (10,899 )
Loan and senior note fees
     (879 )     ---       (879 )
Interest income
     402       ---       402  
Minority interest
     26       920       946  
Other expense, net
     (11,350 )     920       (10,430 )
                         
Income before income tax expense
     6,696       (3,081 )     3,615  
                         
Income tax expense
     3,191       (1,408 )     1,783  
                         
Net income
   $ 3,505       (1,673 )     1,832  
                         
Basic net income per common share
   $ 0.07       (0.03 )     0.04  
                         
Diluted net income per common share
   $ 0.07       (0.04 )     0.03  
                         
1 As reported on Form 10-Q for the quarter ended June 30, 2008
  
 
 
   
Six Months Ended June 30, 2008
  
   
As previously reported1
    
Adjust-ments
    
As restated
  
Consolidated Income Statement:
                  
Revenues
   $ 277,135       ---       277,135  
                         
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
     103,759       ---       103,759  
Selling, general and administrative expenses
     94,666       ---       94,666  
Depreciation and amortization expense
     46,489       8,462       54,951  
Operating income
     32,221       (8,462 )     23,759  
                         
Other income (expense):
                        
Interest expense
     (19,584 )     ---       (19,584 )
Loan and senior note fees
     (1,102 )     ---       (1,102 )
Interest income
     483       ---       483  
Minority interest
     (24 )     1,946       1,922  
Other expense, net
     (20,227 )     1,946       (18,281 )
                         
Income before income tax expense
     11,994       (6,516 )     5,478  
                         
Income tax expense
     5,960       (2,750 )     3,210  
                         
Net income
   $ 6,034       (3,766 )     2,268  
                         
Basic net income per common share
   $ 0.12       (0.08 )     0.04  
                         
Diluted net income per common share
   $ 0.11       (0.07 )     0.04  
                         
Consolidated Condensed Statement of Cash Flow:
                        
Cash provided by operating activities
   $ 109,457       ---       109,457  
Cash used in investing activities
     (155,977 )     ---       (155,977 )
Cash used in financing activities
     129,149       ---       129,149  
                         
1 As reported on Form 10-Q for the quarter ended June 30, 2008
  
 
 
   
June 30, 2008
  
Consolidated Condensed Balance Sheet
  
As previously reported1
    
Adjust-ments
    
As restated
  
Assets
                  
Total current assets
   $ 225,213       ---       225,213  
                         
Property and equipment in service, net of depreciation
     692,561       (8,462 )     684,099  
Construction in progress
     115,809       ---       115,809  
Net property and equipment
     808,370       (8,462 )     799,908  
                         
Total other assets
     301,174       ---       301,174  
Total assets
   $ 1,334,757       (8,462 )     1,326,295  
                         
Liabilities, Minority Interest, and Stockholders' Equity
                        
Total current liabilities
     117,772       ---       117,772  
                         
Long-term debt
     702,952       ---       702,952  
Obligations under capital leases, excluding current maturities
     96,254       ---       96,254  
Obligation under capital lease due to related party, excluding current maturity
     1,864       ---       1,864  
Deferred income taxes
     89,315       (2,750 )     86,565  
Long-term deferred revenue
     37,738       ---       37,738  
Other liabilities
     19,766       ---       19,766  
Total liabilities
     1,065,661       (2,750 )     1,062,911  
                         
Minority interest
     6,502       (1,946 )     4,556  
                         
Stockholders’ equity:
                        
Class A common stock
     150,706       ---       150,706  
Class B common stock
     2,750       ---       2,750  
Less cost of Class A and Class B common shares held in treasury
     (3,422 )     ---       (3,422  
Paid-in capital
     23,522       ---       23,522  
Retained earnings
     89,038       (3,766 )     85,272  
Total stockholders’ equity
     262,594       (3,766 )     258,828  
Total liabilities, minority interest, and stockholders’ equity
     1,334,757       (8,462 )     1,326,295  
                         
1 As reported on Form 10-Q for the quarter ended June 30, 2008
  


 
 
 

 SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 

     
GENERAL COMMUNICATION, INC.
     
(Registrant)
       
Date: November 18, 2008
      
       
   
By
 /s/ John M. Lowber
     
Name: John M. Lowber
     
Title:  Senior Vice President,
     
Chief Financial Officer,
     
Secretary and Treasurer
     
(Principal Financial Officer)