UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): November 5, 2008
| GENERAL COMMUNICATION, INC. | ||
| (Exact name of registrant as specified in its charter) |
| State of Alaska | 0-15279 | 92-0072737 | ||||
| (State or other Jurisdiction of | Commission File Number | (I.R.S Employer | ||||
| Incorporation or organization) | Identification No.) |
| 2550 Denali Street | ||||||||
| Suite 1000 | ||||||||
| Anchorage, Alaska | 99503 | |||||||
| (Address of Principal Executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: (907) 868-5600
| NONE | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
| o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 4.02(a) | Non-Reliance of Previously Issued Financial Statements or a Related Audit Report or Completed Internal Review |
Explanatory Note: General Communication, Inc. (the "Company") previously filed a Form 8-K on November 6, 2008 that contained preliminary information in Item 4.02(a) of such Form 8-K regarding the amount deprecation expense was understated for the first and second quarters of 2008. This Amendment No. 1 to such Form 8-K amends and restates the information contained in such Form 8-K Item 4.02(a) in its entirety. Additionally, this Amendment No. 1 adds additional information to disclose the effect of the restatement on our balance sheets as of March 31 and June 30, 2008 as well the impact on net income and earnings per share for the three months ended March 31, 2008 and the three and six months ended June 30, 2008, and statement of cash flows for the three and six months ended March 31 and June 30, 2008, respectively. While the company believes that the financial information included in this Form 8-K/A is materially correct, the company's auditors have not yet concluded all aspects of their review of our financial statements. Accordingly, the financial information included herein should be considered preliminary and may be subject to change following the conclusion of the review. The information in Items 2.02 and 9.01 was preliminary and, therefore, will not be updated in this Form 8-K/A.
On November 5, 2008, management of the Company, after discussions with the Audit Committee of the Board of Directors of the Company and the Company’s independent registered public accounting firm, KPMG LLP, determined that it was necessary to restate the Company’s consolidated financial statements for the quarters ended March 31, 2008 and June 30, 2008 in order to correct the error in such financial statements described below. Accordingly, the Company’s consolidated interim financial statements previously filed for those periods should no longer be relied upon.
In late December 2007, a subsidiary of the Company, Alaska DigiTel, LLC (“Alaska DigiTel”), committed to a substantial upgrade of its wireless network during 2008 and expected to decommission certain assets at or near the end of 2008. As a result of this decision the estimated useful life of these assets changed, and the net book value at the date the decision was determined should have been depreciated over the remaining period the assets were expected to be used. The Company has recently determined that Alaska DigiTel’s depreciation expense was understated by $4.5 million and $4.0 million in the first and second quarters of 2008, respectively.
In light of the disclosure provided in this report, management of the Company is assessing the impact on its internal controls over financial reporting.
The Company intends to provide all restated financial information referred to in this Item 4.02(a), including explanatory information, in an amendment to its Quarterly Report on Form 10-Q for the fiscal quarters ended March 31, 2008 and June 30, 2008.
The expected impact of the restatement follows (amounts in thousands, except per share amounts):
| Three months ended March 31, 2008 | ||||||||||||
As previously reported1 | Adjustments | As restated | ||||||||||
| Consolidated Income Statement: | ||||||||||||
| Revenues | $ | 134,674 | --- | 134,674 | ||||||||
| Cost of goods sold (exclusive of depreciation and amortization shown separately below) | 51,311 | --- | 51,311 | |||||||||
| Selling, general and administrative expenses | 46,406 | --- | 46,406 | |||||||||
| Depreciation and amortization expense | 22,782 | 4,461 | 27,243 | |||||||||
| Operating income | 14,175 | (4,461 | ) | 9,714 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (8,685 | ) | --- | (8,685 | ) | |||||||
| Loan and senior note fees | (223 | ) | --- | (223 | ) | |||||||
| Interest income | 81 | --- | 81 | |||||||||
| Minority interest | (50 | ) | 1,026 | 976 | ||||||||
| Other expense, net | (8,877 | ) | 1,026 | (7,851 | ) | |||||||
| Income before income tax expense | 5,298 | (3,435 | ) | 1,863 | ||||||||
| Income tax expense | 2,769 | (248 | ) | 2,521 | ||||||||
| Net income (loss) | $ | 2,529 | (3,187 | ) | (658 | ) | ||||||
| Basic net income (loss) per common share | $ | 0.05 | (0.06 | ) | (0.01 | ) | ||||||
| Diluted net income (loss) per common share | $ | 0.04 | (0.06 | ) | (0.02 | ) | ||||||
| Consolidated Condensed Statement of Cash Flow: | ||||||||||||
| Cash provided by operating activities | $ | 35,524 | --- | 35,524 | ||||||||
| Cash used in investing activities | (50,830 | ) | --- | (50,830 | ) | |||||||
| Cash used in financing activities | 19,397 | --- | 19,397 | |||||||||
1 As reported on Form 10-Q for the quarter ended March 31, 2008 | ||||||||||||
| March 31, 2008 | ||||||||||||
| Consolidated Condensed Balance Sheet | As previously reported1 | Adjustments | As restated | |||||||||
| Assets | ||||||||||||
| Total current assets | $ | 140,694 | --- | 140,694 | ||||||||
| Property and equipment in service, net of depreciation | 519,675 | (4,461 | ) | 515,214 | ||||||||
| Construction in progress | 84,950 | --- | 84,950 | |||||||||
| Net property and equipment | 604,625 | (4,461 | ) | 600,164 | ||||||||
| Total other assets | 286,869 | --- | 286,869 | |||||||||
| Total assets | $ | 1,032,188 | (4,461 | ) | 1,027,727 | |||||||
| Liabilities, Minority Interest, and Stockholders' Equity | ||||||||||||
| Total current liabilities | 89,235 | --- | 89,235 | |||||||||
| Long-term debt | 555,667 | --- | 555,667 | |||||||||
| Obligations under capital leases, excluding current maturities | 2,306 | --- | 2,306 | |||||||||
| Obligation under capital lease due to related party, excluding current maturity | 441 | --- | 441 | |||||||||
| Deferred income taxes | 103,207 | (248 | ) | 102,959 | ||||||||
| Other liabilities | 17,175 | --- | 17,175 | |||||||||
| Total liabilities | 768,031 | (248 | ) | 767,783 | ||||||||
| Minority interest | 6,528 | (1,026 | ) | 5,502 | ||||||||
| Stockholders' equity: | ||||||||||||
| Class A common stock | 150,616 | --- | 150,616 | |||||||||
| Class B common stock | 2,750 | --- | 2,750 | |||||||||
| Less cost of Class A and Class B common shares held in treasury | (3,450 | ) | --- | (3,450 | ||||||||
| Paid-in capital | 22,180 | --- | 22,180 | |||||||||
| Retained earnings | 85,533 | (3,187 | ) | 82,346 | ||||||||
| Total stockholders’ equity | 257,629 | (3,187 | ) | 254,442 | ||||||||
| Total liabilities, minority interest, and stockholders’ equity | 1,032,188 | (4,461 | ) | 1,027,727 | ||||||||
1 As reported on Form 10-Q for the quarter ended March 31, 2008 | ||||||||||||
| Three Months Ended June 30, 2008 | ||||||||||||
As previously reported1 | Adjust-ments | As restated | ||||||||||
| Consolidated Income Statement: | ||||||||||||
| Revenues | $ | 142,461 | --- | 142,461 | ||||||||
| Cost of goods sold (exclusive of depreciation and amortization shown separately below) | 52,448 | --- | 52,448 | |||||||||
| Selling, general and administrative expenses | 48,260 | --- | 48,260 | |||||||||
| Depreciation and amortization expense | 23,707 | 4,001 | 27,708 | |||||||||
| Operating income | 18,046 | (4,001 | ) | 14,045 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (10,899 | ) | --- | (10,899 | ) | |||||||
| Loan and senior note fees | (879 | ) | --- | (879 | ) | |||||||
| Interest income | 402 | --- | 402 | |||||||||
| Minority interest | 26 | 920 | 946 | |||||||||
| Other expense, net | (11,350 | ) | 920 | (10,430 | ) | |||||||
| Income before income tax expense | 6,696 | (3,081 | ) | 3,615 | ||||||||
| Income tax expense | 3,191 | (2,502 | ) | 689 | ||||||||
| Net income | $ | 3,505 | (579 | ) | 2,926 | |||||||
| Basic net income per common share | $ | 0.07 | (0.01 | ) | 0.06 | |||||||
| Diluted net income per common share | $ | 0.07 | (0.01 | ) | 0.06 | |||||||
1 As reported on Form 10-Q for the quarter ended June 30, 2008 | ||||||||||||
| Six Months Ended June 30, 2008 | ||||||||||||
As previously reported1 | Adjust-ments | As restated | ||||||||||
| Consolidated Income Statement: | ||||||||||||
| Revenues | $ | 277,135 | --- | 277,135 | ||||||||
| Cost of goods sold (exclusive of depreciation and amortization shown separately below) | 103,759 | --- | 103,759 | |||||||||
| Selling, general and administrative expenses | 94,666 | --- | 94,666 | |||||||||
| Depreciation and amortization expense | 46,489 | 8,462 | 54,951 | |||||||||
| Operating income | 32,221 | (8,462 | ) | 23,759 | ||||||||
| Other income (expense): | ||||||||||||
| Interest expense | (19,584 | ) | --- | (19,584 | ) | |||||||
| Loan and senior note fees | (1,102 | ) | --- | (1,102 | ) | |||||||
| Interest income | 483 | --- | 483 | |||||||||
| Minority interest | (24 | ) | 1,946 | 1,922 | ||||||||
| Other expense, net | (20,227 | ) | 1,946 | (18,281 | ) | |||||||
| Income before income tax expense | 11,994 | (6,516 | ) | 5,478 | ||||||||
| Income tax expense | 5,960 | (2,750 | ) | 3,210 | ||||||||
| Net income | $ | 6,034 | (3,766 | ) | 2,268 | |||||||
| Basic net income per common share | $ | 0.12 | (0.08 | ) | 0.04 | |||||||
| Diluted net income per common share | $ | 0.11 | (0.07 | ) | 0.04 | |||||||
| Consolidated Condensed Statement of Cash Flow: | ||||||||||||
| Cash provided by operating activities | $ | 109,457 | --- | 109,457 | ||||||||
| Cash used in investing activities | (155,977 | ) | --- | (155,977 | ) | |||||||
| Cash used in financing activities | 129,149 | --- | 129,149 | |||||||||
1 As reported on Form 10-Q for the quarter ended June 30, 2008 | ||||||||||||
| June 30, 2008 | ||||||||||||
| Consolidated Condensed Balance Sheet | As previously reported1 | Adjust-ments | As restated | |||||||||
| Assets | ||||||||||||
| Total current assets | $ | 225,213 | --- | 225,213 | ||||||||
| Property and equipment in service, net of depreciation | 692,561 | (8,462 | ) | 684,099 | ||||||||
| Construction in progress | 115,809 | --- | 115,809 | |||||||||
| Net property and equipment | 808,370 | (8,462 | ) | 799,908 | ||||||||
| Total other assets | 301,174 | --- | 301,174 | |||||||||
| Total assets | $ | 1,334,757 | (8,462 | ) | 1,326,295 | |||||||
| Liabilities, Minority Interest, and Stockholders' Equity | ||||||||||||
| Total current liabilities | 117,772 | --- | 117,772 | |||||||||
| Long-term debt | 702,952 | --- | 702,952 | |||||||||
| Obligations under capital leases, excluding current maturities | 96,254 | --- | 96,254 | |||||||||
| Obligation under capital lease due to related party, excluding current maturity | 1,864 | --- | 1,864 | |||||||||
| Deferred income taxes | 89,315 | (2,750 | ) | 86,565 | ||||||||
| Long-term deferred revenue | 37,738 | --- | 37,738 | |||||||||
| Other liabilities | 19,766 | --- | 19,766 | |||||||||
| Total liabilities | 1,065,661 | (2,750 | ) | 1,062,911 | ||||||||
| Minority interest | 6,502 | (1,946 | ) | 4,556 | ||||||||
| Stockholders’ equity: | ||||||||||||
| Class A common stock | 150,706 | --- | 150,706 | |||||||||
| Class B common stock | 2,750 | --- | 2,750 | |||||||||
| Less cost of Class A and Class B common shares held in treasury | (3,422 | ) | --- | (3,422 | ||||||||
| Paid-in capital | 23,522 | --- | 23,522 | |||||||||
| Retained earnings | 89,038 | (3,766 | ) | 85,272 | ||||||||
| Total stockholders’ equity | 262,594 | (3,766 | ) | 258,828 | ||||||||
| Total liabilities, minority interest, and stockholders’ equity | 1,334,757 | (8,462 | ) | 1,326,295 | ||||||||
1 As reported on Form 10-Q for the quarter ended June 30, 2008 | ||||||||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| GENERAL COMMUNICATION, INC. | |||
| (Registrant) | |||
| Date: November 13, 2008 | |||
| By | /s/ John M. Lowber | ||
| Name: John M. Lowber | |||
| Title: Senior Vice President, | |||
| Chief Financial Officer, | |||
| Secretary and Treasurer | |||
| (Principal Financial Officer) |