UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-15279
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A. | Full title of the plan and the address of the plan, if different from that of the issuer named below: |
GCI 401(k) Plan
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B. | Name of issuer of the securities held pursuant to the plan and the address of its principal executive office: |
GENERAL COMMUNICATION, INC.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
FORM 11-K
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
TABLE OF CONTENTS
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Schedules not listed above are omitted because of the absence of conditions under which they are required under the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 |
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Exhibit | |
Exhibit No. 23.1 – Consent of Grant Thornton LLP (Independent Registered Public Accounting Firm) (filed herewith) | |
Report of Independent Registered Public Accounting Firm
Plan Trustees and Participants
General Communication, Inc. 401(k) Plan
We have audited the accompanying statements of net assets available for benefits of General Communication, Inc. 401(k) Plan (the “Plan”) as of December 31, 2014 and 2013, and the related statements of changes in net assets available for benefits for the years ended December 31, 2014 and 2013. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Plan’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of General Communication, Inc. 401(k) Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the years ended December 31, 2014 and 2013 in conformity with accounting principles generally accepted in the United States of America.
The supplemental information in the accompanying schedules, Schedule H, Line 4i - Schedule of Assets (Held at End of Year) and Schedule H, Line 4a - Schedule of Delinquent Participant Contributions, has been subjected to audit procedures performed in conjunction with the audit of General Communication, Inc. 401(k) Plan’s financial statements. The supplemental information is presented for purposes of additional analysis and is not a required part of the basic financial statements but include supplemental information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplementary information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the basic financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information in the accompanying schedules, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information referred to above is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.
/s/ GRANT THORNTON LLP
Anchorage, AK
June 19, 2015
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Statements of Net Assets Available for Benefits
December 31, 2014 and 2013
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| | | | | | | |
(Amounts in thousands) | | 2014 | | 2013 |
Assets | | | | |
Investments at fair value: | | | | |
Participant directed: | | | | |
Money market funds | | $ | 1,248 |
| | 786 |
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Common stocks | | 50,581 |
| | 48,965 |
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Mutual funds | | 168,848 |
| | 141,444 |
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Common collective trust | | 20,954 |
| | 19,620 |
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Total investments at fair value | | 241,631 |
| | 210,815 |
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Receivables: | | | | |
Notes receivable from participants | | 4,904 |
| | 4,926 |
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Participant contributions | | 1,600 |
| | 1,138 |
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Employer contributions | | 1,517 |
| | 1,037 |
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Unsettled trades | | 115 |
| | 463 |
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| | 8,136 |
| | 7,564 |
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Liabilities | | | | |
Administrative expenses payable | | 55 |
| | 60 |
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Excess participant contributions refundable | | 50 |
| | 34 |
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Net assets available for benefits at fair value | | 249,662 |
| | 218,285 |
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Adjustment from fair value to contract value for fully benefit- responsive investment contracts | | (209 | ) | | (116 | ) |
Net assets available for benefits at contract value | | $ | 249,453 |
| | 218,169 |
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See accompanying notes to financial statements.
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Statements of Changes in Net Assets Available for Benefits
Years Ended December 31, 2014 and 2013
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(Amounts in thousands) | | 2014 | | 2013 |
Additions to net assets attributed to: | | |
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Contributions: | | | | |
Participant | | $ | 12,275 |
| | 10,361 |
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Employer | | 9,538 |
| | 8,483 |
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Total contributions | | 21,813 |
| | 18,844 |
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Investment income: | | |
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Net appreciation in fair value of investments | | 13,456 |
| | 27,560 |
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Dividend income | | 7,393 |
| | 4,133 |
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Total investment income | | 20,849 |
| | 31,693 |
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Interest from participant loans receivable | | 207 |
| | 242 |
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Total additions | | 42,869 |
| | 50,779 |
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Deductions to net assets attributed to: | | |
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Participant withdrawals | | (11,471 | ) | | (12,404 | ) |
Corrective distribution of excess contributions | | (50 | ) | | (34 | ) |
Administrative expenses | | (64 | ) | | (32 | ) |
Total deductions | | (11,585 | ) | | (12,470 | ) |
Net increase in net assets available for benefits | | 31,284 |
| | 38,309 |
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Net assets available for benefits at beginning of period | | 218,169 |
| | 179,860 |
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Net assets available for benefits at end of period | | $ | 249,453 |
| | 218,169 |
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GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
(1) Description of Plan
The following description of the GCI 401(k) Plan ("Plan") provides general information only. Participants should refer to the Plan document for a more complete description of the Plan's provisions.
General
The Plan is a defined contribution plan covering employees of General Communication, Inc. (“GCI”) and affiliated companies, including employees of United Utilities, Inc. (“UUI”), Unicom, Inc. ("Unicom") and Denali Media Holdings, Corp. ("DMH") (collectively, the "Company"). Effective July 30, 2013, employees of participating employers are eligible to make employee deferral contributions on the first entry date after their date of hire, and are eligible to share in Company matching contributions, if any, on the first entry date after completing one year of service, as defined in the Plan document. Prior to July 30, 2013, employees were eligible to make employee deferral contributions on the first entry date after completing one year of service. The entry dates are the first day of each quarter during the year. GCI and affiliated companies are parties-in-interest to the Plan.
Contributions
The Plan provides for a qualified cash or deferred arrangement as defined in Section 401(k) of the Internal Revenue Code of 1986 ("Code"). A participant may elect the following methods to make employee contributions:
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1. | Salary Reduction Contributions which will not be included in the participant's current earnings for federal income tax purposes but rather are taxable upon distribution, or |
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2. | Roth 401(k) Contributions which will be included in the participant's current earnings for federal income tax purposes and are not taxable upon distribution. |
Eligible employees of the Company may elect to reduce their compensation in any amount up to 50% of such compensation subject to a maximum of $17,500 in 2014 and 2013. Contributions may be made as salary reduction or Roth 401(k) contributions or a combination of both.
Compensation considered for all Plan purposes is subject to a compensation ceiling of $260,000 and $255,000 in 2014 and 2013, respectively. Participants who have attained age 50 before the end of the plan year are eligible to make catch-up contributions of no more than $5,500 per year for each of the years ended December 31, 2014 and 2013. Participant catch-up contributions are not eligible for matching.
The Plan allows up to 100% matching, as determined each year by the Company’s Board of Directors, of employee contributions. Company matching contributions made to the Plan may be invested in any Plan investment at any time by the participant. For the years ended December 31, 2014 and 2013, the Company matched 100% of participant's contributions, up to a maximum match of 10% of each participant's eligible compensation, for employees of GCI, UUI, and Unicom, while employees of DMH received matching contributions starting in August of 2013 equal to 50% of the participants' contributions, up to a maximum match of 3% of eligible compensation.
Matching amounts contributed to the Plan by the Company are not taxed to the participant until distribution upon retirement, hardship, disability, death or termination of employment. Plan earnings on Company matching contributions are taxable to the employee either upon distribution or, in the case of certain qualifying GCI common stock distributions, upon eventual disposition of the stock.
Participant Accounts
Each participant account is credited with the participant's contributions, employer matching contributions and allocations of Plan earnings and losses. Plan earnings and losses are allocated on a daily basis, based upon the number of shares in each investment held by each participant account. Participants may change their investment allocation on a daily basis.
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
Vesting
A participant's interest in his or her Salary Reduction Contributions and Roth 401(k) Contributions is always fully vested and is not subject to forfeiture.
The participant's interest in the Company matched portion of their account (“Matching Account”) is vested based upon years of service with the Company (as defined in the Plan document), in accordance with the following schedule:
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Years of Service | Vested Percentage |
Less than 1 | 0% |
1 or more but less than 2 | 20% |
2 or more but less than 3 | 30% |
3 or more but less than 4 | 45% |
4 or more but less than 5 | 60% |
5 or more but less than 6 | 80% |
6 or more | 100% |
Any portion of a participant's account which is forfeitable shall be forfeited on the earlier of the date a terminated participant receives a distribution or the date on which the participant experiences five consecutive one-year breaks in service (as defined in the Plan document).
A participant's interest in their Matching Account fully vests without regard to the number of years of service when the participant, while still employed: (i) attains Normal Retirement Age (as defined in the Plan document); (ii) dies; or (iii) becomes totally and permanently disabled. A participant's interest in their Matching Account fully vests upon termination or partial termination of the Plan or upon complete discontinuance of Company contributions.
If a participant terminates participation for any reason other than attainment of Normal Retirement Age and retirement, death or disability while any portion of his or her account in the Plan is forfeitable, receives a distribution of his or her vested account balance attributable to Company matching contributions, and again becomes an eligible employee, the participant may repay that entire distribution before the earlier of five consecutive one-year breaks in service or five years from his reemployment date. Upon such repayment, the value of that participating employee's account previously forfeited will be restored.
Payment of Benefits
A participant or beneficiary may elect to receive a lump-sum distribution equal to the value of the participant’s vested interest in his or her account upon termination due to death, disability or retirement, or any other termination of employment.
Participants who terminate with vested benefits less than $1,000 will automatically receive the value of the vested balance in their account as a lump-sum distribution.
Forfeitures
If a participating employee terminates employment for any reason other than attainment of Normal Retirement Age and retirement, death or disability, that portion of his or her account attributable to Company matching contributions which has not vested will be forfeited. All forfeited amounts are used to pay Plan administrative expenses or to reduce future Company matching contributions. During 2014 and 2013, employer contributions were reduced by $0 and $247,000, respectively, from forfeited nonvested accounts. At December 31, 2014 and 2013, $200,000 and $74,000, respectively, had been forfeited but had not yet been used to pay Plan administrative expenses or reduce the Company’s matching contributions.
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
Notes Receivable from Participants
Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of the portion of their vested account. Loan transactions are treated as a transfer to/(from) the appropriate investment fund (from)/to the participant’s loan. Loan terms range from one to five years. Loans are secured by the vested balance in the participant’s account and accrue interest at a fixed rate calculated at the loan date. In 2014 and 2013, the fixed rate was calculated using the bank prime loan rate reported at www.federalreserve.gov on the loan date plus two percent. Principal and interest are paid ratably through semi-monthly payroll deductions.
(2) Summary of Significant Accounting Policies
Basis of Accounting
The Plan financial statements are based on the accrual method of accounting.
Investment contracts held by a defined-contribution plan are required to be reported at fair value; however, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined-contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The Plan invests in investment contracts through a collective trust. The Statement of Net Assets Available for Benefits presents the fair value of the investment in the collective trust, as well as the adjustment of the investment in the collective trust from fair value to contract value relating to the investment contracts. The Statement of Changes in Net Assets Available for Benefits is prepared on a contract value basis.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires the Plan to make estimates and assumptions, such as those regarding the fair value of investments, that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in net assets available for benefits during the reporting period. Estimates are based on past experience and other considerations reasonable under the circumstances. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Investments are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 6 for discussion of fair value measurements.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) includes the Plan’s gains and losses on investments bought and sold as well as held during the year.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan document.
Payment of Benefits
Benefits are recorded when paid.
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
(3) Administration of Plan Assets
Fidelity Investments is the Plan's recordkeeper and asset trustee. Administrative expenses related to the Plan of $64,000 and $32,000 for the years ended December 31, 2014 and 2013, respectively, were paid by the Plan to the recordkeeper and asset trustee. The asset trustee charges trade fees for all transactions in common stock investments. Trade fees for mutual fund investments, if any, are described in each fund’s prospectus. Company employees provide administrative support to the Plan, but no employee receives compensation from the Plan and the Company is not reimbursed for these expenses.
(4) Amendment or Termination
The Company's Board of Directors has reserved the right to amend or terminate the Plan. No amendment may reduce the accrued benefits of any participant or give the Company any interest in the trust assets of the Plan. In the event of termination of the Plan, a participant in the Plan becomes fully vested in his or her Matching Account.
(5) Investments
The following investment choices were offered to Plan participants during the year ended December 31, 2014:
Common Stock:
Mutual Funds:
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• | Allianz NFJ Small Cap Value Fund |
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• | American Funds EuroPacific Growth Fund R-4 |
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• | Deutsche Real Estate Securities Fund |
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• | Fidelity Spartan Market Index Fund |
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• | Harbor Capital Appreciation Fund |
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• | JPMorgan Equity Income Fund |
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• | PIMCO Funds Total Return Fund |
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• | Vanguard Small Cap Growth Index |
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• | Vanguard Target Retirement 2020 |
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• | Vanguard Target Retirement 2030 |
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• | Vanguard Target Retirement 2040 |
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• | Vanguard Target Retirement 2050 |
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• | Vanguard Target Retirement Income |
Common Collective Trust Funds
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• | Morley Stable Value Fund |
Participants have the option of having self-directed brokerage accounts for which they may choose to buy any common stock or mutual fund.
Common stock investment prices per share at December 31, 2014 and 2013, were as follows:
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| | 2014 | | 2013 |
GCI Class A | | $ | 13.75 |
| | 11.15 |
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GCI Class B | | $ | 13.73 |
| | 10.96 |
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GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
Investments which represent 5% or more of the Plan’s net assets at December 31, 2014 and 2013, were as follows (amounts in thousands):
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| | 2014 | | 2013 |
GCI Class A and Class B common stock | | $ | 47,203 |
| | 46,452 |
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Morley Stable Value | | $ | 20,954 |
| | 19,620 |
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Vanguard Target Retirement 2020 Fund | | $ | 18,575 |
| | 11,400 |
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Vanguard Target Retirement 2040 Fund | | $ | 18,202 |
| | 13,678 |
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JPMorgan Equity Income Fund | | $ | 18,105 |
| | 16,043 |
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Vanguard Target Retirement 2030 Fund | | $ | 18,103 |
| | 13,455 |
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Fidelity Spartan Market Index Fund | | $ | 15,578 |
| | 13,477 |
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American Funds EuroPacific Growth Fund R-4 | | $ | 15,347 |
| | 15,829 |
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Harbor Capital Appreciation Fund | | $ | 13,713 |
| | 11,629 |
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Allianz NFJ Small Cap Value Fund | | $ | 12,267 |
| | 12,397 |
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PIMCO Funds Total Return Fund | | $ | 11,590 |
| | 11,594 |
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The percentage of plan assets invested in common stock of the plan sponsor at December 31, 2014 and 2013 are 19% and 21%, respectively.
The Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) have appreciated in value during the years ended December 31, 2014 and 2013, as follows (amounts in thousands):
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| | 2014 | | 2013 |
Common stock | | $ | 9,838 |
| | 6,965 |
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Mutual funds | | 3,477 |
| | 20,459 |
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Common collective trusts | | 141 |
| | 136 |
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| | $ | 13,456 |
| | 27,560 |
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(6) Fair Value Measurements
Following are descriptions of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2014 and 2013.
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• | Common stocks: The fair value of common stocks are based on quoted market prices. |
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• | Mutual funds: Valued at the net asset value of shares held by the Plan at year end. |
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• | Common collective trust funds: Valued at the Net Asset Value ("NAV") per share reported at the close of each business day or reporting period. NAV is used by the Plan as a practical expedient to estimating the fair value as these investments do not have readily determinable fair values (see Note 7). |
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• | Money market funds: Valued at cost, which approximates fair value. |
The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
Investments Measured at Fair Value
Investments measured at fair value consisted of the following types of instruments as of December 31, 2014 and 2013 (amounts in thousands):
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| | Fair Value Measurements at Reporting Date Using | | |
December 31, 2014 | | Quoted Prices in Active Markets for Identical Assets (Level 1) | | Significant Other Observable Inputs (Level 2) | | Significant Unobservable Inputs (Level 3) | | Total |
Mutual funds: | | | | | | | | |
Small cap | | $ | 21,072 |
| | — |
| | — |
| | 21,072 |
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Mid cap | | 5,001 |
| | — |
| | — |
| | 5,001 |
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Large cap | | 63,543 |
| | — |
| | — |
| | 63,543 |
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Target date retirement | | 63,974 |
| | — |
| | — |
| | 63,974 |
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Bond fund investments | | 15,258 |
| | — |
| | — |
| | 15,258 |
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Money market funds | | 1,248 |
| | — |
| | — |
| | 1,248 |
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Common stocks | | 50,581 |
| | — |
| | — |
| | 50,581 |
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Common collective trust | | — |
| | — |
| | 20,954 |
| | 20,954 |
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Total investments at fair value | | $ | 220,677 |
| | — |
| | 20,954 |
| | 241,631 |
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December 31, 2013 | | |
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Mutual funds: | | |
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Small cap | | $ | 20,712 |
| | — |
| | — |
| | 20,712 |
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Mid cap | | 3,458 |
| | — |
| | — |
| | 3,458 |
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Large cap | | 57,211 |
| | — |
| | — |
| | 57,211 |
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Target date retirement | | 45,967 |
| | — |
| | — |
| | 45,967 |
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Bond fund investments | | 14,096 |
| | — |
| | — |
| | 14,096 |
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Money market funds | | 786 |
| | — |
| | — |
| | 786 |
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Common stocks | | 48,965 |
| | — |
| | — |
| | 48,965 |
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Common collective trust | | — |
| | — |
| | 19,620 |
| | 19,620 |
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Total investments at fair value | | $ | 191,195 |
| | — |
| | 19,620 |
| | 210,815 |
|
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
A reconciliation of the beginning and ending balances of the investments measured at fair value using significant unobservable inputs (Level 3) follows (amounts in thousands):
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| | | | |
| | Common Collective Trust |
Balance at January 1, 2013 | | $ | 18,334 |
|
Realized gains (included in net appreciation in fair value of investments on the Statements of Changes in Net Assets Available for Benefits) | | 19 |
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Unrealized losses relating to instruments still held at the reporting date (included in net appreciation in fair value of investments on the Statements of Changes in Net Assets Available for Benefits) | | (129 | ) |
Purchases | | 6,341 |
|
Sales | | (4,945 | ) |
Balance at December 31, 2013 | | 19,620 |
|
Realized gains (included in net appreciation in fair value of investments on the Statements of Changes in Net Assets Available for Benefits) | | 20 |
|
Unrealized gains relating to instruments still held at the reporting date (included in net appreciation in fair value of investments on the Statements of Changes in Net Assets Available for Benefits) | | 213 |
|
Purchases | | 6,623 |
|
Sales | | (5,522 | ) |
Balance at December 31, 2014 | | $ | 20,954 |
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(7) Common Collective Trust Fund
The Plan's investments include the Morley Stable Value Fund (the “Fund”) which is a common collective trust designed for preservation of capital, relatively stable returns consistent with its comparatively low risk profile, and liquidity for benefit-responsive payments. The Fund seeks to achieve this objective by investing primarily in a variety of high quality stable value investment contracts as well as cash and cash equivalents. The Fund may invest in conventional, synthetic, and separate account investment contracts issued by life insurance companies, banks, and other financial institutions. Characteristics of these contracts allow for their principal value to remain stable regardless of the volatility of the bond markets.
Contract value is the relevant measurement attribute for that portion of the net assets of a collective investment trust attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the underlying defined contribution plans. Contract value represents invested principal plus accrued interest. In determining contract value, the Trustee considers such factors as the benefit responsiveness of the contracts, the ability of the parties of the contract to perform in accordance with the terms of the contracts and the likelihood of default by the issuer of an investment security.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The income factor is determined daily based upon the income earned on all investments in the Fund. The average yield was 1.41% and 1.17% for the years ended December 31, 2014 and 2013, respectively. The average yield based on the interest rate credited to participants was 1.46% and 1.25% for the years ended December 31, 2014 and 2013, respectively. The crediting interest rate is based on an agreed-upon formula with the issuer, but cannot be less than zero.
The contracts are nontransferable but provide for benefit responsive withdrawals and participant transfers to noncompeting options by plan participants at contract value. Withdrawals from the Fund for benefit payments and participant transfers to noncompeting options to be paid to Plan participants shall be made within 30 days after written notification has been received and are considered as made immediately after the next valuation date subsequent to the Plan trustee’s approval. Withdrawals, other than for benefit
GENERAL COMMUNICATION, INC.
GCI 401(k) PLAN
Notes to Financial Statements
payments and participant transfers to noncompeting options are made one year after notification is received from the participating plan. The Plan trustee, however, reserves the right to grant a withdrawal earlier than that mentioned above if there are sufficient cash assets to satisfy the withdrawal and it is not detrimental to the best interest of the Fund.
(8) Income Taxes
The Plan is qualified under Section 401(a) of the Code pursuant to a favorable opinion letter dated March 31, 2014, issued by the Internal Revenue Service on the form of the Plan document. Although the opinion letter received by the Plan Sponsor does not yet reflect recent minor changes made to the Plan, the Plan Administrator believes the Plan is currently designed and is operated in compliance with the applicable requirements of the Code.
GAAP requires plan management to evaluate tax positions taken by the plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the Internal Revenue Service. The Plan Administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or asset or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan Administrator believes it is no longer subject to income tax examinations for years prior to 2011.
(9) Reconciliation of Financial Statements to Form 5500
The following is a reconciliation of net assets available for plan benefits per the financial statements to the Form 5500 (amounts in thousands):
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| | | | | | | |
| | 2014 | | 2013 |
Net assets available for plan benefits per the financial statements | | $ | 249,453 |
| | 218,169 |
|
Adjustment from contract value to fair value for the fully benefit responsive investment contracts | | 209 |
| | 116 |
|
Excess participant contributions refundable | | 50 |
| | 34 |
|
Net assets available for Plan benefits per Form 5500 | | $ | 249,712 |
| | 218,319 |
|
The following is a reconciliation of investment income per the financial statements to the Form 5500 (amounts in thousands):
|
| | | | | | | |
| | 2014 | | 2013 |
Net increase in net assets available for benefits | | $ | 31,284 |
| | 38,309 |
|
Adjustment from contract value to fair value for fully benefit-responsive investment contracts | | 93 |
| | (246 | ) |
Excess participant contributions refundable | | 16 |
| | 34 |
|
Net income per Form 5500 | | $ | 31,393 |
| | 38,097 |
|
(10) Non-exempt Transactions
During 2012, the Company failed to timely remit to the Plan withheld employee contributions on multiple occasions and in the aggregate amount of $2,000 during the year in accordance with the plan asset provisions of the Department of Labor (“DOL”) Regulation 2510.3-102, resulting in a prohibited, or nonexempt, transaction. The accompanying Schedule of Delinquent Participant Contributions discloses this transaction in accordance with the DOL’s Rules and Regulations for Reporting and Disclosure under ERISA. During 2014, the Company has corrected the non-exempt transactions by paying the required corrections to the Plan to reflect foregone earnings that would have been credited to participants’ accounts if the late remittances had been made on a timely basis. Such amounts are not material to the Plan’s financial statements.
(11) Risks and Uncertainties
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the participants’ account balances and the amounts reported in the Statements of Net Assets Available for Benefits.
GENERAL COMMUNICATION, INC.
GCI 401(K) PLAN
Schedule H, Line 4a – Schedule of Delinquent Participant Contributions
December 31, 2014
|
| | | | | | | | | | | | | | |
(Amounts in thousands) | | Total That Constitutes Nonexempt Prohibited Transactions |
Participant Contributions Transferred Late to Plan | | Contributions Not Corrected | | Contributions Corrected Outside VFCP | | Contributions Pending Correction in VFCP | | Total Fully Corrected Under VFCP and PTE 2002-51 |
$ | 2 |
| | — |
| | 2 |
| | — |
| | — |
|
GENERAL COMMUNICATION, INC.
GCI 401(K) PLAN
Schedule H, Line 4i – Schedule of Assets (Held at End of Year)
December 31, 2014
|
| | | | | | | |
(Amounts in thousands, except share and unit amounts) | | | |
(a) | (b) Identity of Issue | (c) Description of Investment | (d) Cost | (e) Current Value |
| Common Stock: | | | |
* | GCI Class A common stock | 3,390,077 shares | ** |
| $ | 46,614 |
|
* | GCI Class B common stock | 42,882 shares | ** |
| 589 |
|
* | Common stocks held in Self-directed Brokerage Accounts | 126,920 shares | ** |
| 3,378 |
|
| | | |
| 50,581 |
|
| Mutual Fund Investments: | | |
| |
|
| Allianz NFJ Small Cap Value Fund | 441,109 shares | ** |
| 12,267 |
|
| American Funds EuroPacific Growth Fund R-4 | 331,766 shares | ** |
| 15,347 |
|
| Deutsche Real Estate Securities Fund | 208,873 shares | ** |
| 4,959 |
|
* | Fidelity Spartan Market Index Fund | 260,200 shares | ** |
| 15,578 |
|
| Harbor Capital Appreciation Fund | 234,337 shares | ** |
| 13,713 |
|
| JPMorgan Equity Income Fund | 1,268,771 shares | ** |
| 18,105 |
|
| Loomis Sayles Bond Fund | 247,313 shares | ** |
| 3,668 |
|
| PIMCO Funds Total Return Fund | 1,087,272 shares | ** |
| 11,590 |
|
| Vanguard Small Cap Growth Index | 246,635 shares | ** |
| 8,743 |
|
| Vanguard Target Retirement 2020 | 652,675 shares | ** |
| 18,575 |
|
| Vanguard Target Retirement 2030 | 623,369 shares | ** |
| 18,103 |
|
| Vanguard Target Retirement 2040 | 611,622 shares | ** |
| 18,202 |
|
| Vanguard Target Retirement 2050 | 145,722 shares | ** |
| 4,316 |
|
| Vanguard Target Retirement Income | 368,557 shares | ** |
| 4,758 |
|
* | Mutual funds held in Self-directed Brokerage Accounts | 38,467 shares | ** |
| 924 |
|
| | | |
| 168,848 |
|
| | | |
| |
|
| Collective Trust Fund: | | |
| |
|
| Morley Stable Value Fund | 874,226 shares | ** |
| 20,954 |
|
| | | |
| |
|
| | | |
| 240,383 |
|
| | | |
| |
|
* | Money Market funds held in Self-directed Brokerage Accounts | 1,248,466 shares | ** |
| 1,248 |
|
| Notes receivable from participants | Interest bearing at 4.25% to 7.0% | — |
| 4,904 |
|
| | | |
| $ | 246,535 |
|
| | | |
| |
|
* | Party-in-interest | | |
| |
|
** | Not required for participant directed investments | |
| |
|
| | | |
| |
|
| See accompanying report of independent registered public accounting firm. | |
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees of the Plan have duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
GCI 401(k) Plan
|
| |
By: | /s/ Peter Pounds |
| Peter Pounds |
| Senior Vice President |
| |
Date: | June 19, 2015 |