AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 13, 2002
REGISTRATION NO. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GENERAL COMMUNICATION, INC.
(Exact name of registrant as specified in its charter)
ALASKA 4813 92-0072737
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
2550 DENALI STREET, SUITE 1000
ANCHORAGE, ALASKA 99503-2781
(907) 265-5600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOHN M. LOWBER
SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
GENERAL COMMUNICATION, INC.
2550 DENALI STREET, SUITE 1000
(907) 265-5600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
STEVEN D. MILLER, ESQUIRE JULIUS BRECHT, ESQUIRE
B. SCOTT PULLARA, ESQUIRE WOHLFORTH, ARGETSINGER,
SHERMAN & HOWARD L.L.C. JOHNSON & BRECHT
633 SEVENTEENTH STREET 900 WEST 5TH AVENUE, SUITE 600
SUITE 3000 ANCHORAGE, ALASKA 99501
DENVER, COLORADO 80202
(303) 297-2900
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are being
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
--------------------------- ---------------- -------------- ------------------ ----------------
Class A Common Stock, no par value 4,500,000 shares $ 7.41 $ 33,345,000 $ 3,067.74
(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933. The
maximum price per share information is based on the average of the high
and the low sale prices of General Communication, Inc. Class A Common
Stock reported on the Nasdaq National Market System on February 12,
2002.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
The information in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the Registration
Statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
SUBJECT TO COMPLETION FEBRUARY 13, 2002
PRELIMINARY PROSPECTUS
4,500,000 SHARES
GENERAL COMMUNICATION, INC. [GENERAL COMMUNICATION, INC. LOGO]
CLASS A COMMON STOCK
(NO PAR VALUE)
This prospectus relates to the public offering, from time to time, by
the shareholders of General Communication, Inc. listed in the section titled
"Selling Shareholders" of up to 4,500,000 shares of GCI Class A Common Stock.
The selling shareholders are subsidiaries of WorldCom, Inc., or WorldCom. GCI
and WorldCom currently have material relationships and they intend to maintain
strategic and commercial relationships with each other for the foreseeable
future. Please see "Selling Shareholders" for additional information.
The price to the public for the shares and the proceeds to the selling
shareholders will depend upon the market price of the securities when sold. The
shares covered by this prospectus represent approximately 8.8% of the total
shares of class A common stock outstanding on December 31, 2001. GCI will not
receive any of the proceeds from the sales of the shares by the selling
shareholders.
GCI's class A common stock is traded on the Nasdaq National Market
under the symbol "GNCMA." On February 12, 2002, the last reported sale price on
the Nasdaq National Market for our class A common stock was $ 7.62 per share. We
have two classes of common stock - class A common stock and class B common
stock. The rights of class A common stock and class B common stock are
substantially identical, except that holders of the class A common stock are
entitled to one vote per share and holders of the class B common stock are
entitled to ten votes per share. The class B common stock is fully convertible
at any time into class A common stock, at the option of the holder, on a
one-for-one basis. Both classes of common stock vote together as one class on
all matters generally submitted to a vote of shareholders, including the
election of directors.
You should rely on only the information included in this prospectus or
any supplement to this prospectus or incorporated by reference into this
prospectus. We have not authorized anyone else to provide you with different
information. Neither the delivery of this prospectus nor any sale of the shares
of our class A common stock shall, under any circumstances, create any
implication that there has been no change in our affairs since the date of this
prospectus.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY REVIEW "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF
CERTAIN MATTERS YOU SHOULD CONSIDER WHEN INVESTING IN SECURITIES OF GCI.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. IT IS A CRIME TO MAKE ANY REPRESENTATION TO
THE CONTRARY.
TABLE OF CONTENTS
Page
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GENERAL COMMUNICATION, INC............................................................................................1
RISK FACTORS..........................................................................................................2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS............................................................11
USE OF PROCEEDS......................................................................................................13
SELLING SHAREHOLDERS.................................................................................................13
PLAN OF DISTRIBUTION.................................................................................................16
WHERE YOU CAN FIND MORE INFORMATION..................................................................................20
LEGAL MATTERS........................................................................................................21
EXPERTS..............................................................................................................21
GENERAL COMMUNICATION, INC.
References in this prospectus to "GCI," "we," "us" or "our" refer to
General Communication, Inc. and its direct and indirect subsidiaries, unless the
context otherwise requires.
GENERAL
General Communication, Inc. is a diversified telecommunications
provider and, based on market share, is Alaska's largest facilities-based
long-distance, cable television and Internet services provider. GCI is a
significant provider in Alaska of an integrated package of long-distance, local
and wireless telecommunications services, cable television services and Internet
services. We believe we are well positioned to take advantage of growth
opportunities in the communications, data and entertainment markets.
GCI was incorporated in 1979 under the laws of the State of Alaska. Our
executive offices are located at 2550 Denali Street, Suite 1000, Anchorage,
Alaska 99503, and our telephone number is (907) 265-5600.
RECENT DEVELOPMENTS
For recent developments regarding GCI, we refer you to our most recent
and future filings under the Securities Exchange Act of 1934 and any prospectus
supplements.
You should read the entire prospectus and the documents incorporated by
reference into this prospectus, including the risk factors, financial data and
related notes, before making an investment decision.
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RISK FACTORS
Before you invest in our class A common stock, you should be aware that
there are various risks associated with investing in GCI, including those
described below. You should consider carefully these risk factors together with
all of the other information included in this prospectus or any prospectus
supplement or incorporated by reference into this prospectus before you decide
to purchase shares of class A common stock. If any of the events described in
the following risks or in the other information included in this prospectus or
any prospectus supplement or incorporated by reference into this prospectus
actually occur, our business, financial condition and operating results could be
materially adversely affected, the trading price of the class A common stock
could decline and you could lose all or part of your investment.
WE FACE COMPETITION THAT MAY REDUCE OUR MARKET SHARE AND HARM OUR
FINANCIAL PERFORMANCE.
There is substantial competition in the telecommunications industry.
The traditional dividing lines between long-distance telephone service, local
telephone service, wireless telephone service, Internet services and video
services are increasingly becoming blurred. Through mergers and various service
integration strategies, major providers, including us, are striving to provide
integrated communications service offerings within and across geographic
markets.
We expect competition to increase as a result of the rapid development
of new technologies, products and services. We cannot predict which of many
possible future technologies, products or services will be important to maintain
our competitive position or what expenditures will be required to develop and
provide these technologies, products or services. Our ability to compete
successfully will depend on marketing and on our ability to anticipate and
respond to various competitive factors affecting the industry, including new
services that may be introduced, changes in consumer preferences, economic
conditions and pricing strategies by competitors. To the extent we do not keep
pace with technological advances or fail to timely respond to changes in
competitive factors in our industry and in our markets we could lose market
share or experience a decline in our revenue and net income. Competitive
conditions create a risk of market share loss and the risk that customers shift
to less profitable lower margin services. Competitive pressures also create
challenges for our ability to grow new businesses or introduce new services
successfully and execute on our business plan. Each of our business segments
also faces the risk of potential price cuts by our competitors that could
materially adversely affect our market share and gross margins.
LONG-DISTANCE SERVICES. The long-distance industry is intensely
competitive and subject to constant technological change. Competition is based
upon price and pricing plans, the type of services offered, customer service,
billing services, performance, perceived quality, reliability and availability.
A number of our competitors are substantially larger than we are and has greater
financial, technical and marketing resources than we have.
In the long-distance market, we compete against AT&T Alascom, Alaska
Communications Systems, Inc., or ACS, the Matanuska Telephone Association and
certain smaller rural local telephone carrier affiliates. There is also the
possibility that new competitors will enter the Alaska market. In addition,
wireless services continue to grow as an alternative to wireline services as a
means of reaching customers.
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Historically, we have competed in the long-distance market by offering
substantial discounts from rates charged by our competitors and by providing
desirable packages of services. Discounts have been eroded in recent years due
to lowering of prices by AT&T Alascom and entry of other competitors into the
long-distance markets we serve. In addition, our competitors have also begun to
offer their own packages of services. If competitors lower their rates further
or develop more attractive packages of services, we may be forced to reduce our
rates or add additional services, which would have a material adverse effect on
our revenues and net income.
CABLE SERVICES. Our cable television systems face competition from
alternative methods of receiving and distributing television signals, including
direct broadcast satellite, and from other sources of news, information and
entertainment such as off-air television broadcast programming, newspapers,
movie theaters, live sporting events, interactive computer services, Internet
services and home video products, including videotape cassette and video disks.
Our cable television systems also face competition from potential overbuilds of
our existing cable systems by other cable television operators and alternative
methods of receiving and distributing television signals. The extent to which
our cable television systems are competitive depend, in part, upon our ability
to provide quality programming and other services at competitive prices.
We believe that the greatest source of potential competition could come
from the direct broadcast satellite industry. Currently, due to the existing
structure of satellite orbital slots and orientations and satellite transmission
power and to the lack of local signals available from direct broadcast satellite
providers, competition from direct broadcast satellite providers has been
limited. However, the changing nature of technology and of the direct broadcast
satellite business may result in greater satellite coverage within the State of
Alaska. The resulting increase in competition could adversely affect our market
share and net income from our cable television business.
LOCAL TELEPHONE SERVICES. In the local telephone market, we compete
against ACS, the incumbent local exchange carrier, in Anchorage, Juneau and
Fairbanks. We have filed applications with regulatory agencies to provide local
telephone service in other markets where ACS is the incumbent provider, and we
may provide local telephone service in other locations in the future where we
would face other competitors. In the local telephone services market, The
Telecommunications Act of 1996, or the 1996 Telecom Act, judicial decisions, and
state legislative and regulatory developments have increased the likelihood that
barriers to local telephone competition will be substantially reduced or
removed. These initiatives include requirements that local exchange carriers
negotiate with entities, including us, to provide interconnection to the
existing local telephone network, to allow the purchase, at cost-based rates, of
access to unbundled network elements, to establish dialing parity, to obtain
access to rights-of-way and to resell services offered by the incumbent local
exchange carrier. We have been able to obtain interconnection, access and
related services from the local exchange carriers at rates which allow us to
offer competitive services. However, if we are unable to continue to obtain
these services and access at acceptable rates, our ability to offer local
telephone services, and our revenues and net income, could be materially
adversely affected. To date, we have been successful in capturing a significant
portion of the local telephone market in the locations where we are offering
these services. However, there can be no assurance that we will continue to be
successful in attracting or retaining these customers.
INTERNET SERVICES. The Internet industry is highly competitive, rapidly
evolving and subject to constant technological change. Competition is based upon
price and pricing plans, service packages, the types of services offered, the
technologies used, customer service, billing services, perceived quality,
reliability and availability. As of December 31, 2001, we competed with more
than five Alaska based Internet providers, and competed with other domestic,
non-Alaska based providers that provide national
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service coverage. Several of the providers have substantially greater financial,
technical and marketing resources than we do.
With respect to our high-speed cable modem service, ACS and other
Alaska telephone service providers are providing competitive high speed Internet
access over their telephone lines (which is commonly called DSL service). Direct
broadcast satellite providers and others could provide wireless high speed
Internet service in competition with our high speed cable modem services.
Niche providers in the industry, both local and national, compete with
certain of our Internet service products, such as web-hosting, list services and
email.
THE REGULATORY AND LEGISLATIVE ENVIRONMENT CREATES CHALLENGES FOR OUR
BUSINESS SEGMENTS.
LOCAL TELEPHONE SERVICES. Our success in the local telephone market
depends on our continued ability to obtain interconnection, access and related
services on terms that are just and reasonable and that are based on the cost of
providing these services. Our local telephone services business faces the risk
of the impact of the implementation of current regulations and legislation,
unfavorable changes in regulation or legislation or the introduction of new
regulation. Our ability to enter into the local telephone market depends on our
negotiation or arbitration with local exchange carriers to allow interconnection
to the carrier's existing local telephone network, to allow the purchase, at
cost-based rates, of access to unbundled network elements, to establish dialing
parity, to obtain access to rights-of-way and to resell services offered by the
local exchange carrier. We have in the past been successful in these arbitration
proceedings as to the material terms, including prices and technical and
competitive issues. Future arbitration proceedings with respect to new or
existing markets could result in a change in our cost of serving these markets
via the facilities of the incumbent local exchange carrier or via wholesale
offerings.
The Supreme Court of the United States has before it several cases
relating to the provisions of the 1996 Telecom Act, including most notably the
provisions and Federal Communications Commission, or FCC, regulations dealing
with the pricing of unbundled network elements. The outcome of these cases could
also result in a change in our cost of serving new and existing markets via the
facilities of the incumbent local exchange carrier or via wholesale offerings.
The FCC, the courts of the State of Alaska, the Federal District Court
of Alaska and the Ninth Circuit Court of Appeals also have before them several
appeals by one of our competitors relating to the interpretation by the
Regulatory Commission of Alaska, or RCA, of various provisions of the 1996
Telecom Act. These appeals include the provisions and FCC regulations dealing
with the pricing of unbundled network elements, including the results of
arbitration proceedings before the RCA and the decision of the RCA to remove an
exemption from certain of its rules available to ACS known as the "rural
exemption." We have been largely successful in the appeals of these arbitration
proceedings as to the material terms, including prices and technical issues,
through the current stages. These appeals could also result in a change in our
costs of serving new and existing markets via the facilities of the incumbent
local telephone carrier or via wholesale offerings.
We have recently qualified under FCC regulations as an "essential
telecom carrier," or ETC, with respect to our provision of local telephone
service in Fairbanks and Juneau. ETCs are entitled to receive a subsidy paid by
the Universal Service Fund. If we do not continue to qualify for this status in
Fairbanks and Juneau or if we do not qualify for this status in rural areas
where we propose to offer new services, we would not receive this subsidy and
our net cost of providing local telephone services in these areas would be
materially adversely impacted.
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CABLE SERVICES. The cable television industry is subject to extensive
regulation at the various levels, and many aspects of such regulation are
currently the subject of judicial proceedings and administrative or legislative
proposals. In particular, FCC regulations limit our ability to set and increase
rates for our basic cable television service package and for the provision of
cable television-related equipment. The law permits certified local franchising
authorities to order refunds of rates paid in the previous 12-month period
determined to be in excess of the permitted reasonable rates. It is possible
that rate reductions or refunds of previously collected fees may be required of
us in the future. Currently, pursuant to Alaska law, the basic cable rates in
Juneau are the only rates in Alaska subject to regulation by the local
franchising authority, and the rates in Juneau were reviewed and approved by the
RCA in October 2000. In addition, the FCC has recently adopted rules which will
require cable operators to carry the digital signals of broadcast television
stations. However, the FCC has tentatively decided that cable operators should
not be required to carry both the analog and digital services of broadcast
television stations while broadcasters are transitioning from analog to digital
transmission. Carrying both the analog and digital services of broadcast
television stations would consume additional cable capacity. As a result, a
requirement to carry both analog and digital services of broadcast television
stations could require the removal of popular programming services with
materially adverse results for cable operators, including us.
Other existing federal regulations, including copyright licensing
rules, are currently the subject of judicial proceedings, legislative hearings
and administrative proposals which could change, in varying degrees, the manner
in which cable television systems operate. Neither the outcome of these
proceedings nor their impact upon the cable television industry in general, or
on our activities and prospects in the cable television business in particular,
can be predicted at this time. There can be no assurance that future regulatory
actions taken by Congress, the FCC or other federal, state or local government
authorities will not have an adverse effect on our business, financial condition
or results of operations.
Proposals are continuing to be made before Congress and the FCC to
mandate cable operators to provide "open access" over their cable systems to
Internet service providers. As of the date of this prospectus, the FCC has
declined to impose such requirements. If the FCC or other authorities mandate
additional access to our cable systems, we cannot predict the effect that this
would have on our Internet service offerings.
INTERNET SERVICES. Changes in the regulatory environment relating to
the Internet access market, including changes that affect communications costs
or increase competition from the incumbent local telephone carrier or other
communications service providers, could adversely affect the prices at which we
sell ISP services.
OUR SUBSTANTIAL LEVERAGE WILL REDUCE CASH FLOW FROM OPERATIONS
AVAILABLE TO FUND OUR BUSINESS AND MAY CAUSE A DECLINE IN OUR CREDIT RATING
AND/OR LIMIT OUR ABILITY TO RAISE ADDITIONAL CAPITAL.
We have substantial indebtedness. As of December 31, 2001, we had total
outstanding debt of approximately $400 million. We plan to incur additional
indebtedness in the future as we implement our business plan. In connection with
the execution of our business strategies, we are continuously evaluating
acquisition opportunities with respect to each of our business segments and we
may elect to finance acquisitions by incurring additional indebtedness. We must
use a portion of our future cash flow from operations to pay the principal and
interest on our indebtedness, which will reduce the funds available for our
operations, including capital investments and business expenses. This could
hinder our ability to
5
adjust to changing market and economic conditions. If we incur significant
additional indebtedness, our credit rating could be adversely affected. As a
result, our borrowing costs would likely increase and our access to capital may
be adversely affected.
OUR CREDIT FACILITIES RESTRICT OUR ABILITY TO INCUR ADDITIONAL
INDEBTEDNESS AND MAKE CAPITAL EXPENDITURES AND CONTAIN CERTAIN OTHER
RESTRICTIONS ON OUR BUSINESS OPERATIONS.
Our existing credit facilities restrict our and certain of our
subsidiaries' ability to incur additional indebtedness, make certain capital
expenditures, pay dividends or make certain other restricted payments,
consummate certain asset sales, enter into certain transactions with affiliates
and incur liens. These credit facilities also impose restrictions on the ability
of a subsidiary to pay dividends or make certain payments to us, merge or
consolidate with any other person or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of our assets. These credit
facilities also require that we maintain certain financial ratios. A breach of
any of these covenants could result in a default under the credit facilities.
Our current business strategy includes the acquisition of additional assets and
the expansion of our existing businesses and service offerings. In addition, our
business strategy may in the future be expanded to include activities outside
the State of Alaska. It is likely that our current and future expansion and
growth plans will require significant additional capital in excess of capital
generated from operations and will result in significant capital expenditures.
If we are unable to negotiate modifications to these restrictions, they could
hinder our ability to follow through with expansion and growth plans.
WE HAVE A HISTORY OF OPERATING LOSSES.
If we do not maintain profitability, we may be unable to make capital
expenditures necessary to implement our business plan, meet our debt service
requirements or otherwise conduct our business in an effective and competitive
manner. This would require us to divert cash from other uses, which may not be
possible or may detract from the growth of our businesses. These events could
limit our ability to increase our revenues and net income or cause these amounts
to decline.
WE DEPEND ON A SMALL NUMBER OF CUSTOMERS FOR A SUBSTANTIAL PORTION OF
OUR REVENUE AND BUSINESS.
For the year ended December 31, 2000, we provided long-distance
services to WorldCom and to Sprint Corporation which generated revenues of
approximately 23.3% of our total revenues for that year. For the nine months
ended September 30, 2001, we provided long distance services to WorldCom and
Sprint which generated revenues of approximately 26.0% of our total revenues for
that period. These two customers are free to seek out long-distance
communication services from our competitors upon expiration of their contracts
(in March 2006, in the case of WorldCom, and in March 2004, in the case of
Sprint) or earlier upon a default or the occurrence of certain events. These
events are a force majeure event or a substantial change in applicable law or
regulation under the applicable contract.
Mergers and acquisitions in the telecommunications industry are
relatively common. If a change in control of WorldCom or Sprint were to occur,
it would not permit them to terminate their existing contracts with us, but
could in the future result in the termination of or a material adverse change in
our relationships with WorldCom or Sprint.
In addition, WorldCom's and Sprint's need for our long-distance
services depends directly upon their ability to obtain and retain their own
long-distance customers and upon the needs of those customers for long-distance
services.
6
The loss of one or both of WorldCom or Sprint as customers, a material
adverse change in our relationships with them or a material loss of or reduction
in their long-distance customers would have a material adverse effect on our
financial condition and results of operations.
WE DEPEND ON A LIMITED NUMBER OF THIRD-PARTY VENDORS TO SUPPLY
TELECOMMUNICATIONS EQUIPMENT.
We depend on a limited number of third-party vendors to supply cable,
Internet and telephony-related equipment. If our providers of this equipment are
unable to timely supply the equipment necessary to meet our needs or provide
them at an acceptable cost, we may not be able to satisfy demand for our
services and competitors may fulfill this demand.
PROLONGED SERVICE INTERRUPTIONS COULD AFFECT OUR BUSINESS.
We rely heavily on our network equipment, telecommunications providers,
data and software, to support all of our functions. We rely on our networks and
the networks of others for substantially all of our revenues. We are able to
deliver services only to the extent that we can protect our network systems
against damage from power or telecommunication failures, computer viruses,
natural disasters, unauthorized access and other disruptions. While we endeavor
to provide for failures in the network by providing back-up systems and
procedures, we cannot guarantee that these back-up systems and procedures will
operate satisfactorily in an emergency. Should we experience a prolonged
failure, it could seriously jeopardize our ability to continue operations. In
particular, should a significant service interruption occur, our ongoing
customers may choose a different provider, and our reputation may be damaged,
reducing our attractiveness to new customers.
To the extent that any disruption or security breach results in a loss
or damage to our customers' data or applications, or inappropriate disclosure of
confidential information, we may incur liability and suffer from adverse
publicity. In addition, we may incur additional costs to remedy the damage
caused by these disruptions or security breaches.
IF A FAILURE OCCURS IN OUR UNDERSEA FIBER OPTIC CABLE, OUR ABILITY TO
IMMEDIATELY RESTORE THE ENTIRETY OF OUR SERVICE MAY BE LIMITED.
Our telecommunications facilities include an undersea fiber optic cable
which carries a large portion of our Internet voice and data traffic to and from
the contiguous lower 48 states. We are currently seeking arrangements to obtain
alternative telecommunications facilities as backup facilities. If a failure of
our undersea fiber optic facilities occurs before we are able to secure adequate
backup facilities, some of the telecommunications services we offer to our
customers could be interrupted, which could have a material impact on our
business and results of operations.
OUR BUSINESSES ARE CURRENTLY GEOGRAPHICALLY CONCENTRATED IN ALASKA.
We offer a variety of voice, video and data services to residential,
commercial and governmental customers in the State of Alaska. As a result of
this geographic concentration, our growth and operations depend in part upon
economic conditions in Alaska. The economy of Alaska is dependent upon the
natural resource industries, in particular oil production, as well as tourism,
government spending and United States military spending. To date, we have not
experienced deterioration in our businesses resulting from the conditions of
these markets generally. However, until the next Alaska tourist season begins in
early summer
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we cannot assess the impact of the current condition of the economy in general
on these markets, especially on the Alaska tourism industry. Any deterioration
in these markets could have an adverse impact on the demand for
telecommunication and cable television services and on our results of operations
and financial condition. In addition, the customer base in Alaska is limited.
Alaska has a population of approximately 625,000 people, approximately 42% of
whom are located in the Anchorage area. We have already achieved significant
market penetration with respect to our service offerings in Anchorage and in
other locations in Alaska. We may not be able to continue to increase in our
market share of the existing markets for our services and no assurance can be
given that the Alaskan economy will continue to grow and increase the size of
the markets we serve or increase the demand for the services we offer.
OUR BEST GROWTH OPPORTUNITIES MAY BE IN GEOGRAPHIC AREAS THAT DIFFER
FROM THOSE OF OUR EXISTING BUSINESSES.
We have achieved significant market penetration in the State of Alaska
for many of the services we offer. However, opportunities for expanding our
market geographically in the State of Alaska or attaining significant additional
market penetration in the State of Alaska are limited. As a result, the best
opportunities for expanding our business may arise in other geographic areas
such as the contiguous lower 48 states. There can be no assurance that we will
find attractive opportunities to grow our businesses outside the State of Alaska
or that we will have the necessary expertise to take advantage of such
opportunities. The Alaska voice, video and data telecommunications markets are
unique and distinct within the United States due to Alaska's large geographical
size and its distance from the rest of the United States. The expertise we have
developed in operating our businesses in the State of Alaska may not provide us
with the necessary expertise to successfully enter other geographic markets.
WE MAY FAIL TO DEVELOP OUR WIRELESS SERVICES.
We offer wireless mobile services by reselling other providers'
wireless mobile services. We offer wireless local telephone services over our
own facilities, and have purchased personal communications system, or PCS, and
local multipoint distribution system, or LMDS, wireless broadband licenses in
FCC auctions covering markets in Alaska. We have fewer subscribers to our
wireless services than to our other service offerings. The geographic coverage
of our wireless services is also smaller than the geographic coverage of our
other services. Some of our competitors offer or propose to offer an integrated
bundle of communications, entertainment and information services, including
wireless services. If we are unable to expand and further develop our wireless
services, we may not be able to meet the needs of customers who desire packaged
services, and our competitors who offer theses services would have an advantage.
This could result in the loss of market share for our other service offerings.
OUR EFFORTS TO DEVELOP CABLE TELEPHONY MAY BE UNSUCCESSFUL.
An element of our business strategy is to develop voice telephone
service utilizing our coaxial cable facilities. If we are able to develop this
service, we will be able to utilize our own cable facilities to provide local
access to our customers and avoid paying local loop charges to the incumbent
local telephone services carrier. In order to successfully develop and market
this new service, we must integrate new technology with our existing facilities.
The viability of this service depends on the adoption of industry-wide standards
for the sending and receiving of voice communications over cable facilities and
the availability of the equipment necessary to provide the service at a
cost-effective price. The development and marketing of this service will require
a substantial capital investment by us. If we are unable to successfully develop
and market voice telephone service, we will not be able to recover any capital
investment we may make and the margins on our local telephone services business
will not improve.
8
WE DO NOT HAVE INSURANCE TO COVER CERTAIN RISKS TO WHICH WE ARE
SUBJECT.
We are self-insured for damage or loss to certain of our transmission
facilities, including our buried, under sea, and above-ground transmission
lines. If we become subject to substantial uninsured liabilities due to damage
or loss to such facilities, our financial results may be adversely affected.
DEMAND FOR SOME OF OUR COMMUNICATIONS PRODUCTS AND SERVICES COULD BE
ADVERSELY AFFECTED BY A DOWNTURN IN THE UNITED STATES ECONOMY AS WELL AS CHANGES
IN THE GLOBAL ECONOMY.
Unfavorable economic conditions resulting from the current economic
recession in the United States may cause our customers to reduce their demand
for our communications products and services. To date we have not experienced a
reduction in demand for our products and services. However, if the economic
conditions in the United States worsen or if a wider or global economic slowdown
occurs, our results of operations and financial condition may be adversely
affected.
As our business has grown, we have become increasingly subject to
adverse changes in general economic conditions and economic conditions in the
State of Alaska, which can result in reductions in capital expenditures by
customers, longer sales cycles, deferral or delay of purchase commitments for
products or services and increased price competition. Although these factors
have not materially impacted us in recent years, if the current economic
slowdown continues or worsens, these factors could adversely affect our business
and results of operations.
POTENTIAL SALES OF LARGE AMOUNTS OF OUR CLASS A COMMON STOCK INTO THE
MARKET COULD LOWER THE MARKET PRICE OF OUR CLASS A COMMON STOCK.
As of December 31, 2001, we had 50,967,196 shares of class A common
stock outstanding. As of December 31, 2001, an aggregate of 8,251,509 shares
were held directly or indirectly by WorldCom. In addition, as of December 31,
2001, WorldCom, directly or indirectly, held shares of our class B common stock
and series C preferred stock that were convertible into, and options presently
exercisable for, an aggregate of an additional 2,121,624 shares of class A
common stock and Toronto Dominion Capital held shares of our series B preferred
stock that were convertible into an aggregate of 3,062,162 shares of class A
common stock. These shareholders have significant registration rights.
This prospectus covers the resale by the persons named in "Selling
Shareholders" of an aggregate of 4,500,000 million shares of our class A common
stock, representing approximately 8.8% of our class A common stock outstanding
as of December 31, 2001. Sales of a substantial number of shares of class A
common stock by the persons named in "Selling Shareholders" or the other persons
identified above, or the perception that such sales may occur, could cause the
market price of class A common stock to decline and impede our ability to raise
capital through sales of class A common stock or securities convertible into or
exercisable for class A common stock.
OUR STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY, WHICH MAY AFFECT YOUR
INVESTMENT.
Our class A common stock price may fluctuate significantly as a result
of:
o variations and fluctuations in our operating results and revenues, and
related public announcements by us or our competitors;
9
o competitors' success in the marketplace and with regulatory agencies;
o the consummation, or failure to consummate, acquisitions;
o failure to meet analyst and investor expectations with respect to our
operating results and revenues;
o changes in our industry, including regulatory conditions;
o general economic and market conditions that impact the needs of
customers and potential customers for communications services;
o the size of the public float of our class A common stock; and
o the number of shares of class A common stock offered pursuant to this
prospectus and the price at which those shares are offered from
time-to-time, compared to the normal daily trading volumes and prices
of our class A common stock.
The securities of many companies have experienced extreme price and
volume fluctuation in recent periods that is often unrelated to their operating
performance. In addition, the market prices for securities of
telecommunications, Internet-related and technology companies have frequently
reached elevated levels which are often not sustainable and may not bear any
relationship to that company's operating performance. If the market price of our
class A common stock reaches a level which the market believes is elevated, it
is likely to materially decline. In the past, companies that have experienced
volatility in the market price of their stock have been the object of securities
class action litigation. If we were the object of securities class action
litigation, it could result in substantial costs and diversion of management's
attention and resources.
A SIGNIFICANT PERCENTAGE OF OUR VOTING SECURITIES ARE HELD BY A SMALL
NUMBER OF SHAREHOLDERS AND THESE SHAREHOLDERS CAN CONTROL STOCKHOLDER DECISIONS
ON VERY IMPORTANT MATTERS.
As of December 31, 2001, prior to giving effect to the sale of the
4,500,000 shares of class A common stock as described under "Selling
Shareholders," WorldCom owned approximately 17% and our executive officers and
directors and their affiliates owned approximately 29% of our combined
outstanding class A and class B common stock, representing approximately 47% of
the combined voting power of that stock (including outstanding series B
preferred stock voting with class A common stock on an as-converted basis).
After giving effect to the sale of all of the shares offered by this prospectus,
WorldCom would still own approximately 9% and our executive officers and
directors and their affiliates would still own approximately 21% of such
outstanding class A and class B common stock, representing approximately 42% of
the combined voting power of such stock. These shareholders can significantly
influence if not control our management policy and all fundamental corporate
actions, including mergers, substantial acquisitions and dispositions and
election of directors to the Board. This concentration of ownership may have the
effect of discouraging third parties from making bids for us, delaying or
preventing a change of control, or reducing premiums paid to our shareholders
for their stock and could have an adverse effect on the market price of our
class A common stock.
10
IT MAY BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE US, EVEN IF DOING SO
MAY BE BENEFICIAL TO OUR SHAREHOLDERS.
Certain provisions of our restated articles of incorporation may
discourage, delay or prevent a change in control of our company that a
shareholder may consider favorable. These provisions include the following:
- authorizing our board of directors to issue "blank check"
preferred stock, which could increase the number of
outstanding shares and thwart a takeover attempt; and
- classifying our board of directors with staggered three-year
terms, which may lengthen the time required to gain control of
our board of directors.
IT IS UNLIKELY YOU WILL RECEIVE A RETURN ON YOUR SHARES THROUGH THE
PAYMENT OF A CASH DIVIDEND.
We have never declared or paid cash dividends on any of our common
stock and have no intention of doing so in the foreseeable future. As a result,
it is unlikely that you will receive a return on your shares through the payment
of cash dividends. Furthermore, our existing credit facilities restrict our and
certain of our subsidiaries' ability to pay dividends, further limiting the
likelihood any such dividends will be declared.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
This prospectus contains or incorporates by reference forward-looking
statements that involve risk and uncertainties. The statements contained in this
prospectus that are not purely historical are forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. In this prospectus, in any prospectus
supplement or in the documents incorporated or deemed to be incorporated by
reference into this prospectus, we state our future strategies, plans,
objectives or goals and our beliefs of future events and of our future operating
results, financial position and cash flows. In some cases, you can identify
those so-called "forward-looking statements" by words such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of those words and other
comparable words. All forward-looking statements involve known and unknown
risks, uncertainties and other important factors that may cause our actual
results, performance, achievements, plans and objectives to differ materially
from any future results, performance, achievements, plans and objectives
expressed or implied by these forward-looking statements. In evaluating those
statements, you should specifically consider various factors, including those
outlined below. Those factors may cause our actual results to differ materially
from any of our forward-looking statements. Such risks, uncertainties and other
factors include those described under the heading "Risk Factors" and include but
are not limited to:
o Material adverse changes in the economic conditions in the markets we
serve and in general economic conditions;
o The efficacy of the rules and regulations to be adopted by the FCC and
state public regulatory agencies to implement the provisions of the
1996 Telecom Act; the outcome of litigation relating to the act; and
the impact of regulatory changes relating to access reform;
o Our responses to competitive products, services and pricing, including
pricing pressures, technological developments, alternative routing
developments, and the ability to offer combined service packages that
include local, cable and Internet services;
11
o The extent and pace at which different competitive environments develop
for each segment of our business;
o The extent and duration for which competitors from each segment of the
telecommunication industries are able to offer combined or full service
packages prior to our being able to do so;
o The degree to which we experience material competitive impacts to our
traditional service offerings prior to achieving adequate local service
entry;
o Competitor responses to our products and services and overall market
acceptance of such products and services;
o The outcome of our negotiations with incumbent local exchange carriers
and state regulatory arbitrations and approvals with respect to
interconnection agreements;
o Our ability to purchase network elements or wholesale services from
incumbent local exchange carriers at a price sufficient to permit the
profitable offering of local telephone service at competitive rates;
o Success and market acceptance for new initiatives, many of which are
untested;
o The level and timing of the growth and profitability of new
initiatives, particularly local telephone services expansion, Internet
(consumer and business) services expansion and wireless services;
o Start-up costs associated with entering new markets, including
advertising and promotional efforts;
o Risks relating to the operations of new systems and technologies and
applications to support new initiatives;
o Local conditions and obstacles;
o The impact of oversupply of capacity resulting from excessive
deployment of network capacity;
o Uncertainties inherent in new business strategies, new product launches
and development plans, including local telephone services, Internet
services, wireless services, digital video services, cable modem
services, DSL services, and transmission services and the offering of
these services in geographic areas with which we are unfamiliar;
o The risks associated with technological requirements, technology
substitution and changes and other technological developments;
o Development and financing of telecommunication, local telephone,
wireless, Internet and cable networks and services;
o Future financial performance, including the availability, terms and
deployment of capital; the impact of regulatory and competitive
developments on capital outlays, and the ability to achieve cost
savings and realize productivity improvements and the consequences of
increased leverage;
12
o Availability of qualified personnel;
o Changes in, or failure, or inability, to comply with, government
regulations, including, without limitation, regulations of the FCC, the
RCA, and adverse outcomes from regulatory proceedings;
o Uncertainties in federal military spending levels and military base
closures in markets in which we operate; and
o The ongoing global and domestic trend towards consolidation in the
telecommunications industry, which trend may be the effect of making
the competitors larger and better financed and afford these competitors
with extensive resources and greater geographic reach, allowing them to
compete more effectively.
You should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement, and such risks,
uncertainties and other factors speak, only as of the date on which it was
originally made and we expressly disclaim any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statement to reflect
any change in our expectations with regard to those statements or any other
change in events, conditions or circumstances on which any such statement is
based, except as required by law. New factors emerge from time to time, and it
is not possible for us to predict what factors will arise or when. In addition,
we cannot assess the impact of each factor on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
USE OF PROCEEDS
This prospectus relates to shares of our class A common stock being
offered and sold for the account of the selling shareholders named in this
prospectus. All net proceeds from the sale of the shares will go to the selling
shareholders. We will not receive any proceeds from the sale of shares by the
selling shareholders.
SELLING SHAREHOLDERS
We have registered for resale a total of 4,500,000 shares of class A
common stock covered by this prospectus on behalf of MCI Communications
Corporation, or MCIC, and MCI WORLDCOM Network Services, Inc., or Network
Services. MCIC and Network Services, and their parent corporation, WorldCom,
each have, and have had, material relationships with GCI. The general nature of
the current relationships and those existing during the past three years are set
forth below in this "Selling Shareholders" section. WorldCom, MCIC and Network
Services filed a Schedule 13D with the SEC on November 13, 2001. In the Schedule
13D, they disclose that they intend to monitor their investments in GCI, to take
actions consistent with their best interests and, subject to market conditions
and other factors, to explore opportunities to sell approximately one-half of
their interest in GCI. In the Schedule 13D, they also disclose that they intend
to maintain strategic and commercial relationships with GCI for the foreseeable
future and expect that their two current representatives on GCI's board of
directors will continue as directors, subject to their nomination and approval
at GCI's annual meetings of shareholders. We also intend to continue to maintain
strategic and commercial relationships with WorldCom and its subsidiaries for
the foreseeable future.
13
We have registered the shares of class A common stock to permit the
selling shareholders (and their pledgees, donees, transferees or other
successors-in-interest that receive shares from a selling shareholder as a gift,
or other non-sale related transfer after the date of this prospectus) to resell
the shares when they deem appropriate. This prospectus also covers any
additional shares of class A common stock which become issuable in connection
with the shares registered for sale hereby as a result of any stock dividend,
stock split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of our
outstanding shares of class A common stock. We have agreed to prepare and file
such amendments and supplements to the Registration Statement of which this
prospectus is a part as may be necessary to keep this Registration Statement
effective until the earlier of the date upon which all of the shares are sold or
270 days from the effective date of the Registration Statement.
Based upon information provided to us by the selling shareholders, the
following table sets forth the names of the selling shareholders, the number of
shares of class A common stock owned prior to this offering and the percentage
of our outstanding class A common stock which such shares represented on
December 31, 2001, the number of shares registered by this prospectus and the
number of shares of class A common stock that will be owned by each selling
shareholder after the sale of the registered shares and the percentage of
outstanding class A common stock which such shares represented on December 31,
2001, assuming all of the shares offered hereby are sold. We do not know how
long the selling shareholders will hold the shares before selling them or if
they will sell them and we currently have no agreements, arrangements or
understandings with the selling shareholders regarding the sale of any of the
shares.
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED
OWNED PRIOR TO THE AFTER COMPLETION OF THE
OFFERING MAXIMUM NUMBER OF OFFERING
-------- SHARES BEING --------
NAME NUMBER PERCENT OFFERED NUMBER PERCENT
---- ------ ------- ------- ------ -------
MCI Communications
Corporation (1) 9,097,342(2) 17.8 4,500,000 4,597,342(2) 9.0
MCI WORLDCOM
Network Services, Inc. (1) 9,097,342(2) 17.8 4,500,000 4,597,342(2) 9.0
- ----------
(1) MCIC is a direct wholly-owned subsidiary of WorldCom. Network
Services is a direct wholly-owned subsidiary of MCIC. As a
result, the shares listed as beneficially owned by Network
Services are also included in the shares listed as
beneficially owned by MCIC, and all shares listed as owned by
either are beneficially owned by WorldCom.
(2) Includes 833,333 shares of class A common stock issuable upon
conversion of the 1,000 shares of series C preferred stock
which are owned directly by Network Services (such conversion
is based on a liquidation preference of $1,000 and a
conversion price of $12) and 12,500 shares of class A common
stock presently issuable upon exercise of options which are
owned directly by Network Services to purchase class A common
stock. Does not include 37,500 shares of class A common stock
issuable upon exercise of options, one-third of which will
vest and become exercisable on each of June 28, 2002, 2003 and
2004.
Beginning in 1993, we established a significant business relationship
with MCI Communications Corporation, or MCI. In September 1998, WorldCom
acquired MCI by merging MCI into MCIC, which was and is a wholly-owned
subsidiary of WorldCom. Network Services is a wholly-owned subsidiary of MCIC.
Since January 1999, we have maintained a significant business relationships with
WorldCom, MCIC and Network Services, including the following:
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o Under the WorldCom Traffic Carriage Agreement entered into by
us with MCI as of January 1, 1993, (i) we agreed to terminate
all Alaska-Bound WorldCom long distance traffic, (ii) we
agreed to handle WorldCom's toll-free 800 traffic originating
in Alaska and terminating in the lower 49 states and traffic
for WorldCom's calling card customers when they are in Alaska,
(iii) we agreed to handle WorldCom's Alaska toll-free 800
traffic, and (iv) we agreed to provide data circuits to
WorldCom as required. Under a separate GCI Traffic Carriage
Agreement dated the same date, WorldCom agreed to (i)
terminate all of our long-distance traffic terminating in the
lower 49 states, excluding Washington, Oregon, and Hawaii,
(ii) originate calls for our calling card customers when they
are in the lower 49 states, (iii) provide toll-free 800
service for our customer requirements outside of Alaska, and
(iv) provide certain Internet access services. Revenues
attributed to the WorldCom Traffic Carriage Agreement were
approximately $42.7 million in the nine-months ended September
30, 2001 and were approximately $53.1 million in 2000, and
$43.7 million in 1999, or approximately 15.8%, 18.1% and 15.6%
of total revenues, respectively, for that nine-month period
and those years. Payments by GCI to WorldCom under the GCI
Traffic Carriage Agreement were approximately $4.7 million in
the nine-months ended September 30, 2001 and were
approximately $7.0 million in 2000 and $7.6 million in 1999.
The WorldCom Traffic Carriage Agreement was amended in March
2001 to extend its term by five years, to March 2006, and to
reduce the rate that we charge for certain WorldCom traffic
over the extended term of the contract.
o Effective June 30, 2001, we acquired WorldCom's 85% interest
in Kanas Telecom, Inc., a company that owns and operates an
800-mile fiber optic cable system constructed along the
trans-Alaska oil pipeline corridor extending from Prudhoe Bay
to Valdez, Alaska.
o On December 31, 1992, we entered into a $12,000,000 loan
agreement with National Bank of Alaska, of which approximately
$9,000,000 of the proceeds were used to acquire from Alascom,
Inc., capacity on the undersea fiber optic cable system
linking Seward, Alaska and Pacific City, Oregon. Concurrently,
we leased the capacity under a ten-year all events, take or
pay, contract with WorldCom, who subleased the capacity back
to us. The obligation was fully paid and the lease and
sublease were cancelled at December 31, 1999.
o Two officers or employees of WorldCom serve as directors of
GCI pursuant to a Voting Agreement entered into as of October
31, 1996 among GCI, Network Services, TCI GCI, Inc., Prime II
Management, L.P., Ronald A. Duncan (who is our President and
Chief Executive Officer and a director) and Robert M. Walp
(who is our Vice Chairman of the Board and a director). The
Voting Agreement expired in June 2001. The Voting Agreement
provided that each party to the agreement must vote the
party's GCI Common Stock for the nominees of the other parties
in the election of directors to our board of directors and on
other matters to which the parties unanimously agree. The
number of directors which each party to the agreement could
nominate at our 2001 annual meeting of shareholders, and the
persons so nominated under these terms were as follows:
o two directors nominated by WorldCom, who are Ronald
R. Beaumont and Stephen R. Mooney;
o one director nominated by Mr. Duncan, who is Mr.
Duncan; and
15
o one director nominated by Mr. Walp, who is Mr. Walp.
o In exchange for the 85% interest in Kanas Telecom that we
acquired from WorldCom, on June 30, 2001 we issued 9,000
shares of our series C preferred stock to WorldCom and 1,000
shares of our series C preferred stock to Network Services, in
each case with a liquidation preference of $1,000 per share.
Prior to the acquisition, we had provided management services
to Kanas Telecom. The series C preferred stock is convertible,
is non-voting and pays a 6% per annum quarterly cash dividend.
Each share of the series C preferred stock is convertible into
a number of shares of class A common stock equal to the
liquidation preference divided by the conversion price. As of
December 31, 2001, the liquidation preference was $1,000 per
share and the conversion price was $12. We may redeem the
series C preferred stock at any time in whole but not in part.
Mandatory redemption can be required at any time after the
fourth anniversary of the issuance date at the option of
holders of 80% of the outstanding shares of the series C
preferred stock or upon the occurrence with respect to GCI of
certain change of control transactions, a bankruptcy, a
liquidation or dissolution or the sale of all of substantially
all of GCI's assets. The redemption price is $1,000 per share
plus the amount of all accrued and unpaid dividends, whether
earned or declared, through the redemption date. In the event
of a liquidation of GCI the holders of series C preferred
stock shall be entitled to be paid an amount equal to the
redemption price before any distribution or payment is made
upon our common stock and other shares of our capital stock
hereafter issued which by its terms is junior to the series C
preferred stock. Our series B preferred stock is senior to the
series C preferred stock. The redemption amount on December
31, 2001 was $10,150,000.
o In June 2000, we granted stock options to certain of our
directors or the company for which each may have been
employed. The option grants to Ronald R. Beaumont and Stephen
R. Mooney were made to WorldCom Ventures, Inc., a wholly-owned
indirect subsidiary of WorldCom. Each option was for 25,000
shares of class A common stock, at an exercise price of $7.50
per share. The options vest in four equal annual installments
and expire if not exercised within ten years of their grant.
o GCI is a party to an Amended and Restated Registration Rights
Agreements dated June 30, 2001 with Network Services and
WorldCom regarding our class A common stock, class B common
stock and series C preferred stock, pursuant to which GCI is
required to effect no more than four "demand" registrations
and an unlimited number of "piggy-back" registrations.
Generally, we are required to pay all registration expenses in
connection with each registration pursuant to the registration
rights agreement. The registration of the 4,500,000 shares of
class A common stock covered by this prospectus is being
effected pursuant to the registration rights agreement.
PLAN OF DISTRIBUTION
We are registering the shares offered under this prospectus on behalf
of the selling shareholders. All costs, expenses and fees in connection with the
registration of shares offered hereby will be borne by us pursuant to the
Amended and Restated Registration Rights Agreement described above. Brokerage
commissions and similar selling expenses, if any, attributable to the sale of
shares will be borne by the selling shareholders.
Sales of shares may be effected by the selling shareholders or their
pledgees, donees, transferees or other successors-in-interest selling shares
received from a selling shareholder as a gift or other non-sale
16
related transfer after the date of this prospectus (all of whom may be selling
shareholders). Selling shareholders may sell the shares from time to time on any
stock exchange or automated interdealer quotation system on which the securities
are listed or quoted, in the over-the-counter market, in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at prices otherwise negotiated.
The selling shareholders may sell the securities by one or more of the
following methods, without limitation:
o block trades in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and
resell a portion of the block as principal to facilitate the
transaction;
o purchases by a broker or dealer as principal and resale by the
broker or dealer for its own account pursuant to this
prospectus;
o an exchange distribution in accordance with the rules of any
stock exchange on which the securities are listed;
o ordinary brokerage transactions and transactions in which the
broker solicits purchases;
o privately negotiated transactions;
o short sales;
o through the writing of options on the securities, whether or
not the options are listed on an options exchange;
o through the distribution of the securities by any selling
shareholder to its partners, members or shareholders;
o one or more underwritten offerings on a firm commitment or
best efforts basis; and
o any combination of any of these methods of sale.
The selling shareholders may also transfer the securities by gift. We
do not know of any arrangements by the selling shareholders for the sale of any
of the securities.
Brokers, dealers or underwriters may act as principals, or as an agent
of a selling shareholder. Broker-dealers may agree with a selling shareholder to
sell a specified number of the shares at a stipulated price per share. If the
broker-dealer is unable to sell shares acting as agent for a selling
shareholder, it may purchase as principal any unsold shares at the stipulated
price. Broker-dealers who acquire shares as principals may thereafter resell the
shares from time to time in transactions in any stock exchange or automated
interdealer quotation system on which the shares are then listed or quoted, at
prices and on terms then prevailing at the time of sale, at prices related to
the then-current market price or in negotiated transactions. Broker-dealers may
use block transactions and sales to and through broker-dealers, including
transactions of the nature described above. Provided a selling shareholder meets
the criteria and conforms to the requirements of Rule 144 under the Securities
Act of 1933, a selling shareholder may also sell the shares in accordance with
Rule 144 rather than pursuant to this prospectus.
17
From time to time, one or more of the selling shareholders may pledge,
hypothecate or grant a security interest in some or all of the shares owned by
them. The pledgees, secured parties or persons to whom the shares have been
hypothecated will, upon foreclosure in the event of default, be deemed to be
selling shareholders. The number of a selling shareholder's securities offered
under this prospectus will decrease as and when it takes such actions. The plan
of distribution for that selling shareholder's securities will otherwise remain
unchanged. In addition, a selling shareholder may, from time to time, sell the
securities short, and, in those instances, this prospectus may be delivered in
connection with the short sales and the securities offered under this prospectus
may be used to cover short sales.
The selling shareholders and any underwriters, brokers, dealers or
agents that participate in the distribution of the securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the resale
of the securities sold by them may be deemed to be underwriting discounts and
commissions.
A selling shareholder may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with that selling shareholder,
including, without limitation, in connection with distributions of the
securities by those broker-dealers. A selling shareholder may enter into option
or other transactions with broker-dealers that involve the delivery of the
securities offered hereby to the broker-dealers, who may then resell or
otherwise transfer those securities. A selling shareholder may also loan or
pledge the shares offered hereby to a broker-dealer and the broker-dealer may
sell the shares offered hereby so loaned or upon a default may sell or otherwise
transfer the pledged shares offered hereby.
Because each selling shareholder may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the Securities Act, each selling
shareholder will be subject to the prospectus delivery requirements of the
Securities Act. We have informed the selling shareholders that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act of 1934 may apply to their sales in the market.
To the extent required under the Securities Act, the aggregate amount
of selling shareholders' securities being offered and the terms of the offering,
the names of any agents, brokers, dealers or underwriters and any applicable
commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a
selling shareholder and/or purchasers of selling shareholders' securities, for
whom they may act (which compensation as to a particular broker-dealer might be
in excess of customary commissions).
Upon notification to us by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act. That supplement will disclose:
o the name of the selling shareholder and of the participating
broker-dealer(s);
o the number of shares involved;
o the price at which such shares were sold;
18
o the commissions paid or discounts or concessions allowed to
such broker-dealer(s), where applicable;
o whether such broker-dealer(s) conducted any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
o other facts material to the transaction.
The selling shareholders and other persons participating in the sale or
distribution of the shares will be subject to applicable provisions of the
Securities Exchange Act, and the rules and regulations thereunder, including
Regulation M. This regulation may limit the timing of purchases and sales of any
of the shares by the selling shareholders and any other person. The
anti-manipulation rules under the Securities Exchange Act apply to sales of
shares in the market and to activities of the selling shareholders and their
respective affiliates. Furthermore, Regulation M may restrict the ability of any
person engaged in the distribution of the shares to engage in market-making
activities with respect to the particular shares being distributed for a period
of up to five business days before the distribution. These restrictions may
affect the marketability of the securities and the ability of any person or
entity to engage in market-making activities with respect to the shares.
GCI has agreed to indemnify the selling shareholders, each underwriter
who participates in an offering of the shares of class A common stock, each of
their respective directors, officers, employees and agents and each person, if
any, who controls any such selling shareholder or underwriter within the meaning
of Section 15 of the Securities Act against certain liabilities, including
liabilities under the Securities Act. The selling shareholders have agreed to
indemnify and hold harmless, and to cause any underwriter retained by the
selling shareholders to indemnify and hold harmless GCI, each of its directors,
each of its officers who have signed this Registration Statement and each other
person, if any, who controls GCI within the meaning of Section 15 of the
Securities Act against certain liabilities, including liabilities arising under
the Securities Act.
19
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy
statements and other information with the SEC. You may read and copy any
document we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain further information about
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Our SEC filings are also available to the public over the Internet at the SEC's
web site at http://www.sec.gov, which contains reports, proxy statements and
other information regarding registrants like us that file electronically with
the SEC.
This prospectus is part of a registration statement on Form S-3 filed
by us with the SEC under the Securities Act. As permitted by SEC rules, this
prospectus does not contain all of the information included in the registration
statement and the accompanying exhibits filed with the SEC. You may refer to the
registration statement and its exhibits for more information. Furthermore,
statements contained in this prospectus concerning any document filed as an
exhibit are not necessarily complete and, in each instance, we refer you to the
copy of the document filed as an exhibit to the registration statement.
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus and
information that we file with the SEC will automatically update and supersede
the information in this prospectus.
We are incorporating by reference the following documents that we have
previously filed with the SEC under file no. 0-15279:
o our Annual Report on Form 10-K for the year ended December 31,
2000;
o our Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2001, June 30, 2001 and September 30, 2001;
o the description of our capital stock contained in our
registration statement on Form 10\A filed with the SEC on May
18, 1994 under the Securities Exchange Act and any subsequent
amendments and reports filed to update such description.
We are also incorporating by reference into this prospectus all of our
future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act until this offering has been completed.
20
You may obtain a copy of any of our filings that are incorporated by
reference, at no cost, by writing to or telephoning us at the following address:
General Communication, Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503-2781
Attention: John M. Lowber
Telephone: (907) 265-5600
You should rely only on the information provided in this prospectus or
incorporated by reference. We have not authorized anyone to provide you with
different information. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the first page of
the prospectus.
LEGAL MATTERS
Sherman & Howard L.L.C. has passed upon the validity of the class A
common stock offered by this prospectus. Stephen M. Brett, who is a member of
the Board of Directors of General Communication, Inc., is of counsel to Sherman
& Howard L.L.C. As of the date of this prospectus, Mr. Brett has the present
right to acquire 25,000 shares of class A common stock for $7.50 per share
pursuant to outstanding stock options. Sherman & Howard L.L.C. will receive fees
at its standard rates for legal services rendered to GCI in connection with the
Registration Statement of which this prospectus is a part and related matters.
EXPERTS
The consolidated financial statements and schedule of General
Communication, Inc. as of December 31, 2000 and 1999, and for each of the years
in the three-year period ended December 31, 2000, have been incorporated by
reference herein and in the registration statements in reliance upon the reports
of KPMG LLP, independent accountants, incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
21
GENERAL COMMUNICATION, INC.
4,500,000 SHARES OF CLASS A COMMON STOCK
PROSPECTUS
We have not authorized any dealer, salesperson or other person to give
any information or represent anything contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell nor
does it solicit to buy any shares of class A common stock in any jurisdiction
where it is unlawful. The information in this prospectus is current as of
February __, 2002.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an estimate of the expenses which will be incurred by
GCI in connection with the issuance and distribution of the securities being
registered.
SEC filing fee $ 3,000*
Printing and engraving expenses $ 5,000*
Legal fees and expenses $ 60,000*
Accounting fees and expenses $ 22,000*
Total $ 90,000*
- ----------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Restated Articles of Incorporation (the "Articles") provide for the
indemnification to the full extent permitted by, and in the manner permissible
under, the laws of the State of Alaska and any other applicable laws, of any
person who is made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, other than an action
by or in the right of GCI, by reason of the fact that he or she is or was a
director, officer, employee or agent of GCI or is or was serving at the request
of GCI as an officer, director, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise. The Articles provide that
these requirements are deemed to be a contract between GCI and each director and
officer who serves in such capacity at any time while those requirements of the
Articles are in effect. We have not as of the date of this prospectus entered
into any express agreement with our officers and directors setting forth these
terms of indemnification.
In addition to providing indemnification for non-derivative actions
that is similar to the indemnification in the Articles, our Amended and Restated
Bylaws (the "Bylaws") further provide for indemnification of any person who was
or is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of GCI to procure a judgment in its
favor by reason of or arising from the fact that the person is or was a
director, officer, employee or agent of GCI, or is or was serving at the request
of GCI as a director, officer, employee or agent of another enterprise.
According to the Bylaws, unless otherwise ordered by a court, indemnification
will only be made by GCI upon a determination by (i) a majority of the
disinterested directors of the Board, (ii) a majority vote of shareholders or
(iii) independent legal counsel that such indemnification is proper because the
person to be indemnified met the applicable standard of conduct. The Bylaws
further provide, in accordance with Alaska law, that indemnification will not be
made by GCI in respect of any claim, issue or matter as to which the person has
been adjudged to be liable for negligence or misconduct in the performance of
the person's duty to GCI, except to the extent that the court in which the
action or suit was brought determines upon application that, despite the
adjudication of liability, in view of all circumstances of the case, the person
is fairly and reasonably entitled to indemnification for such expenses that the
court considers proper. The Bylaws also state that to the extent a director,
officer, employee or agent of GCI
II-1
has been successful in his or her defense of an action for which he or she is
entitled to indemnification, that person will be indemnified against expenses
and attorney fees actually and reasonably incurred in connection with the
defense.
The Bylaws also provide that GCI may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of GCI
or who is or was serving at the request of GCI as a director, officer, employee
or agent of another enterprise against any liability asserted against that
person and incurred by that person in any such capacity, or arising out of that
status, whether or not GCI would have the power to indemnify that person against
such liability under provisions of the Bylaws. We have obtained directors' and
officers' liability insurance, which is subject to certain deductibles,
exclusions and other limitations.
The selling shareholders have agreed to indemnify and hold harmless,
and to cause any underwriter retained by the selling shareholders to indemnify
and hold harmless GCI, each of its directors, each of its officers who have
signed this Registration Statement and each other person, if any, who controls
GCI within the meaning of Section 15 of the Securities Act of 1933 against
certain liabilities, including liabilities arising under the Securities Act of
1933.
ITEM 16. EXHIBITS
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
EXHIBIT
NUMBER REFERENCE
------- ---------
4.1 Restated Articles of Incorporation Incorporated herein by reference is Exhibit 3.1
to GCI's Annual Report on Form 10-K for the year
ended December 31, 2000
4.2 Statement of Stock Designation Incorporated herein by reference is Exhibit 10.79
(Series B) to GCI's Quarterly Report on Form 10 Q for the
period ended March 31, 1999
4.3 Statement of Stock Designation Incorporated herein by reference is Exhibit 9 to
(Series C) Schedule 13D, as amended, originally filed by
WorldCom, MCIC and Network Services on
November 9, 2001.
4.4 Amended and Restated Registration Rights Incorporated herein by reference is Exhibit 10 to
Agreement dated as of June 30, 2001 among Schedule 13D, as amended, originally filed by
General Communication, Inc., MCI WORLDCOM WorldCom, MCIC and Network Services on November
Network Services, Inc. and WorldCom, Inc. 9, 2001.
4.5 Amended and Restated Bylaws Incorporated herein by reference is Exhibit 3.2
to GCI's Annual Report on Form 10-K for the year
ended December 31, 1999
II-2
5.1 Opinion of Sherman & Howard L.L.C. Filed herewith
23.1 Consent of Sherman & Howard L.L.C. Included in Exhibit 5.1
23.2 Consent of KPMG LLP, Independent Filed herewith
Public Accountant
24.1 Power of Attorney Included on the signature page of this
registration statement
ITEM 17. UNDERTAKINGS
(a) RULE 415 OFFERING.
GCI hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-3
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
GCI hereby undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of GCI's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) REQUEST FOR ACCELERATION OF EFFECTIVE DATE.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
GCI pursuant to the provisions set forth or described in Item 15 of this
Registration Statement, or otherwise, GCI has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by GCI of expenses incurred or paid by a
director, officer or controlling person of GCI of expenses incurred or paid by a
director, officer or controlling person of GCI in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, GCI will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933, and will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing this registration statement on Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Municipality of Anchorage, State
of Alaska, on the 13th day of February, 2002.
GENERAL COMMUNICATION, INC.
By /s/ Ronald A. Duncan
--------------------------------
RONALD A. DUNCAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Ronald A. Duncan and John M. Lowber, and each of
them, such person's true and lawful attorneys-in-fact and agents, with full
power of substitution and revocation, for such person and in such person's name,
place and stead, in any and all amendments (including post-effective amendments
to this registration statement) and any additional registration statement filed
pursuant to Rule 462 under the Securities Act of 1933 for the same offering
contemplated by this Registration Statement, and to file the same with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Carter F. Page Chairman of the Board February 13, 2002
- ------------------------------------
CARTER F. PAGE and Director
/s/ Ronald A. Duncan President, Chief Executive February 13, 2002
- ------------------------------------ Officer and Director
RONALD A. DUNCAN (Principal Executive Officer)
Vice Chairman of Board
- ------------------------------------ and Director -------------------
ROBERT M. WALP
II-5
Director
- ------------------------------------ -------------------
RONALD R. BEAUMONT
/s/ Stephen M. Brett Director February 13, 2002
- ------------------------------------
STEPHEN M. BRETT
Director
- ------------------------------------ -------------------
DONNE F. FISHER
/s/ William P. Glasgow Director February 13, 2002
- ------------------------------------
WILLIAM P. GLASGOW
/s/ Paul S. Lattanzio Director February 13, 2002
- ------------------------------------
PAUL S. LATTANZIO
/s/ Stephen R. Mooney Director February 13, 2002
- ------------------------------------
STEPHEN R. MOONEY
/s/ James M. Schneider Director February 13, 2002
- ------------------------------------
JAMES M. SCHNEIDER
/s/John M. Lowber Senior Vice President, February 13, 2002
- ------------------------------------ Chief Financial Officer,
JOHN M. LOWBER Secretary and Treasurer
(Principal Financial Officer)
/s/ Alfred J. Walker Vice President, Chief February 13, 2002
- ------------------------------------ Accounting Officer
ALFRED J. WALKER (Principal Accounting Officer)
II-6
EXHIBIT INDEX
EXHIBIT
NUMBER REFERENCE
------ ---------
4.1 Restated Articles of Incorporation Incorporated herein by reference is Exhibit 3.1
to GCI's Annual Report on Form 10-K for the year
ended December 31, 2000
4.2 Statement of Stock Designation Incorporated herein by reference is Exhibit 10.79
(Series B) to GCI's Quarterly Report on Form 10 Q for the
period ended March 31, 1999
4.3 Statement of Stock Designation Incorporated herein by reference is Exhibit 9 to
(Series C) Schedule 13D, as amended, originally filed by
WorldCom, MCIC and Network Services on
November 9, 2001.
4.4 Amended and Restated Registration Rights Incorporated herein by reference is Exhibit 10 to
Agreement dated as of June 30, 2001 among Schedule 13D, as amended, originally filed by
General Communication, Inc., MCI WORLDCOM WorldCom, MCIC and Network Services on November
Network Services, Inc. and WorldCom, Inc. 9, 2001.
4.5 Amended and Restated Bylaws Incorporated herein by reference is Exhibit 3.2
to GCI's Annual Report on Form 10-K for the year
ended December 31, 1999
5.1 Opinion of Sherman & Howard L.L.C. Filed herewith
23.1 Consent of Sherman & Howard L.L.C. Included in Exhibit 5.1
23.2 Consent of KPMG LLP, Independent Filed herewith
Public Accountant
24.1 Power of Attorney Included on the signature page of this
registration statement