Exhibit 99.1
July 30, 2003
John Lowber, (907) 868-5628; jlowber@gci.com
Bruce Broquet, (907) 868-6660; bbroquet@gci.com
David Morris, (907) 265-5396; dmorris@gci.com
FOR IMMEDIATE RELEASE
GCI REPORTS DETAILED SECOND QUARTER 2003 FINANCIAL RESULTS
ANCHORAGE, AK -- GCI (NASDAQ:GNCMA) today reported its detailed second
quarter 2003 results. For the second quarter of 2003, the company recorded net
income of $4.8 million or $0.08 per share on a diluted basis. The second quarter
2003 net income compares to a net loss of ($1.1) million or ($0.03) per share
for the second quarter of 2002. For the six-months ended June 30, 2003, GCI
recorded net income of $7.4 million or $0.11 per share on a diluted basis, after
the cumulative effect of a change in accounting principle of ($0.5) million or
($0.01) per share on a diluted basis, net of income tax benefit. GCI recorded
net income of $1.1 million or $0.00 per share on a diluted basis for the
six-months ending June 30, 2002.
Revenues totaled $95.9 million for the second quarter of 2003, an
increase of 3.5 percent as compared to $92.7 million in the second quarter of
2002. Earnings before interest, taxes, depreciation, amortization and accretion
(EBITDA) increased to $30.8 million for the second quarter of 2003, an increase
of $12.1 million when compared to second quarter 2002 EBITDA of $18.7 million.
EBITDA for the second quarter of 2002 included a charge of $9.7 million
increasing the company's reserve for bad debts due to the WorldCom bankruptcy.
The EBITDA for the second quarter of 2003 includes a $0.9 million non-recurring
refund from an intrastate access cost pool that previously overcharged the
company for access services. Revenues for the second quarter increased
sequentially 3.3 percent to $95.9 million as compared to revenues of $92.8
million in the first quarter of 2003. GCI's second quarter EBITDA of $30.8
million compares to EBITDA of $28.9 million in the first quarter of 2003. EBITDA
for the first quarter of 2003 included a net $1.9 million refund from a local
exchange carrier for access services rendered in previous years. GCI's second
quarter 2003 revenues of $95.9 million and EBITDA of $30.8 million exceeded
guidance for revenues of approximately $92 million to $95 million and EBITDA in
excess of $28.9 million, respectively.
"The detailed results for the second quarter demonstrate that the
company continues to perform solidly on all fronts," said Ron Duncan, GCI
president. "While long distance voice revenues are down from the prior year, the
drop is almost completely offset by increased data and other business units
revenue growth. Selling, general and administrative expenses as a percentage of
revenues are stable and margins are increasing."
"We recently announced that MCI extended its Contract for Alaska Access
Services for five years to July 2008. In addition, MCI received bankruptcy court
approval for the settlement agreement that resolves all receivables with GCI.
Under terms of that agreement, the balance of GCI's approximately $11.1 million
claim, will be paid to GCI in the form of a credit against future services
purchased from MCI. We expect to fully utilize this amount within the next two
years. We are very pleased with the outcome of the settlement agreement and we
look forward to continuing our strategic alliance with MCI."
The company's local services business added 2,900 access lines during
the second quarter and now serves 101,900 access lines, an estimated 21 percent
share of the total access line market in Alaska. GCI's statewide dial-up
Internet platform decreased 1,300 customers to 70,300 customers during the
second quarter as more customers continue to migrate to cable modems. More than
40,500 Internet customers are using GCI cable modem service, an increase of
1,900 over the first quarter of 2003. GCI cable television services now pass
200,405 homes and serve 137,230 basic subscribers. Basic subscribers increased
sequentially by 947 subscribers from the first quarter of 2003. GCI serves
30,700 digital customers in Anchorage, Fairbanks, Juneau, Kenai, Soldotna and
the Mat-Su Valley. Digital service was added to the Mat-Su Valley during the
second quarter of 2003.
Highlights:
o Consolidated revenues increased 3.5 percent to $95.9 million for the second
quarter of 2003 as compared to $92.7 million in 2002. Second quarter 2003
revenues increased approximately 3.3 percent sequentially over revenues of
$92.8 million in the first quarter of 2003.
o Consolidated EBITDA increased to $30.8 million in the second quarter 2003
as compared to $18.7 million in 2002. Consolidated EBITDA for the second
quarter of 2002 included a charge of $9.7 million increasing the company's
reserve for bad debts. Consolidated second quarter EBITDA of $30.8 million
increased $1.9 million sequentially, an increase of 6.6 percent, from $28.9
million for the first quarter of 2003. Second quarter 2003 EBITDA of $30.8
million includes a $0.9 million non-recurring refund from an intrastate
access cost pool that previously overcharged the company for access
services.
o MCI and GCI resolved billing disputes that arose from the WorldCom
bankruptcy proceedings and agreed to extend their service contract to July
of 2008.
o Broadband, private line and other data revenues including high capacity
leases increased 19.8 percent to $21.2 million during the second quarter of
2003 as compared to $17.7 million in the same period of 2002.
o GCI had approximately 101,900 local access lines in service at the end of
the second quarter 2003 representing an increase of 2,900 access lines over
the first quarter or an annualized sequential growth rate of 11.7 percent.
The company estimates it has an approximate 21 percent share of the total
access line market in Alaska. Approximately 87 percent of GCI's access
lines are provisioned on its own facilities or on resold local loops.
o GCI serves approximately 92,200 Internet customers. GCI's statewide dial-up
Internet platform decreased 1,300 customers to 70,300 customers during the
second quarter as more customers continue to migrate to cable modems.
o The company had more than 40,500 cable modem customers at the end of the
second quarter 2003, as compared to 31,200 at the end of the second quarter
of 2002. GCI's cable modem penetration rate is one of the highest in the
nation. More than 99 percent of GCI's cable customers are able to receive
cable modem service.
o During the three months ending June 30, 2003 capital expenditures decreased
to $10.9 million as compared to $20.1 million in second quarter of 2002.
Interest expense increased approximately $2.9 million during the second
quarter of 2003 as compared to the second quarter of 2002 due to the
refinancing of the company's senior debt in the fourth quarter of 2002. GCI
generated approximately $9.0 million of free cash flow during the second
quarter before repayment of $2.7 million of senior debt and payment of bank
fees related to an amendment of its senior credit facility that extended
its maturity to October 31, 2007.
o GCI estimates that third quarter revenues will total approximately $95
million to $97 million and EBITDA is expected to total approximately $32
million.
o GCI has been advised by Ron Duncan, the company's CEO, that he intends to
establish a 10b5-1 Plan for the sale of up to 285,000 shares of his GCI
stock between September 1 and the end of the year.
o GCI will further discuss second quarter highlights and provide additional
commentary during its Investor and Analyst Conference call on Thursday,
July 31 at 2:00 p.m. EDT. More information about the call can be found at
www.gci.com, click on "Investors."
Long Distance Results
Long distance and related revenues for the second quarter of 2003
decreased $0.8 million or 1.4 percent to $58.0 million as compared to $58.8
million for the second quarter of 2002. Broadband, private line and dedicated
data services revenues, product sales and long haul fiber lease revenues
increased $3.5 million offsetting most of the $4.2 million decrease in switched
minutes revenues. Switched minutes revenues decreased as a result of fewer
minutes carried and lower rates. For the second quarter of 2003 long distance
EBITDA totaled $19.4 million as compared to $9.1 million in the second quarter
of 2002. EBITDA growth for the second quarter of 2003 is primarily attributable
to the second quarter 2002 $9.7 million bad debt charge for the WorldCom
bankruptcy.
Long distance revenues of $58.0 million for the second quarter of 2003
are up $1.9 million, an increase of 3.0 percent, from $56.3 million in the first
quarter of 2003. Switched minutes, broadband, private line and dedicated data
services revenues and long haul fiber lease revenues increased $3.7 million
sequentially from the first quarter of 2003, offsetting a $1.4 million decrease
in product sales revenues. Switched minutes revenues increased $1.9 million
sequentially from the first quarter of 2003 primarily due to the seasonal
increase in minutes offset, in part, by slightly lower rates. Long distance
EBITDA of $19.4 million for the second quarter of 2003 increased 4.3 percent
from $18.6 million in the first quarter of 2003. The sequential increase in
EBITDA is primarily attributable to increases in higher margin broadband,
private line and other data revenues and decreases in lower margin equipment
revenues.
Total minutes-of-use were down 5.3 percent in the second quarter of
2003 as compared to the second quarter of 2002 and were up 8.5 percent
sequentially from the first quarter of 2003.
Revenues from broadband, private line and other data services including
high capacity leases increased 19.8 percent to $21.2 million during the second
quarter of 2003 as compared to $17.7 million in the same period of 2002 and were
up 8.2 percent from $19.6 million in the first quarter of 2003. The increase in
revenue results from growing demand for data services by commercial and
governmental customers and others, and delivery of broadband services into rural
Alaska.
The total number of billed long distance customers for the last month
of the second quarter of 2003 increased 1.1 percent from the last month of the
first quarter of 2003.
Cable Television Results
Cable television revenues for the second quarter increased 9.1 percent
to $23.9 million from $21.9 million in the second quarter of 2002, and were up
2.1 percent from $23.4 million in the first quarter of 2003. EBITDA increased
11.1 percent to $11.0 million from $9.9 million in the second quarter of 2002,
and increased 3.8 percent from $10.6 million in the second quarter of 2003. The
increase in revenues and EBITDA is due, in part, to the increase in basic
subscribers and more sales of higher margin products such as digital television
and cable modem services.
Gross margins as a percentage of revenues increased by 79 basis points
year-over-year and 85 basis points sequentially. The growth rate in higher value
products such as digital cable service and cable modems is expected to help
mitigate the margin effects of increasing programming and copyright costs.
As of June 30, 2003, the company's cable television operations passed
200,405 homes and served 137,230 basic subscribers (111,403 equivalent basic
subscribers). Average revenue per equivalent basic subscriber increased 8.2
percent to $70.99 for the second quarter of 2003 as compared to $65.64 for the
second quarter of 2002, and was up 2.2 percent from $69.48 from the first
quarter of 2003. The company added 947 basic subscribers to its system during
the second quarter.
The company offers special interest digital cable television service in
Anchorage, Fairbanks, Juneau, Kenai, Soldotna and the Mat-Su Valley area. GCI
served 30,700 special interest digital customers at the end of the second
quarter of 2003. During the second quarter of 2003, GCI began offering digital
cable television in the Mat-Su Valley. GCI acquired the Mat-Su Valley cable
system, which passes more than 13,500 homes and serves more than 7,800 basic
subscribers, in the fourth quarter of 2001.
In October 2002 GCI, along with the other largest publicly traded
multiple system operators, signed a pledge to support and adhere to new
voluntary reporting guidelines on common operating statistics to provide
investors and others with a better understanding of the company's operations.
The operating statistics below include capital expenditures and customer
information from cable television, cable telephony and cable modem services.
GCI's capital expenditures by standard reporting category for the six
months ending June 30, 2003 and 2002 follow (amounts in thousands):
2003 2002
--------- ---------
Customer premise equipment ("CPE") $ 3,830 3,233
Commercial 171 325
Scalable infrastructure 459 2,199
Line extensions 243 242
Upgrade/rebuild 963 2,533
Support capital 263 4,118
--------- ---------
$ 5,929 12,650
========= =========
The standardized definition of a customer relationship is the number of
customers that receive at least one level of service, encompassing voice, video,
and data services, without regard to which services customers purchase. At June
30, 2003 and 2002 GCI's cable business had 124,318 and 123,257 customer
relationships, respectively.
The standardized definition of a revenue-generating unit is the sum of
all primary analog video, digital video, high-speed data and telephony
customers, not counting additional outlets. At June 30, 2003 and 2002 GCI's
cable business had 177,793 and 166,432 revenue generating units, respectively.
The increase in the revenue generating units of 4,512 and 3,852 from March 31,
2003 and 2002, respectively, is due to an increase in the number of hotels that
subscribe to cable television services for their summer tourist season. Each
hotel room is considered to be a revenue-generating unit.
Local Telephone Results
Local telephone service revenues for the second quarter increased 13.6
percent to $9.2 million as compared to $8.1 million in the second quarter of
2002, and increased 9.5 percent sequentially from $8.4 million in the first
quarter of 2003. The increase in sequential local service revenues is
attributable to increasing customer counts and several one time revenue
adjustments in the first quarter, none of which were individually material which
reduced first quarter revenues below what they otherwise would have been.
Local services generated a $1.0 million EBITDA loss for the second
quarter, an increase of $0.1 million over the $0.9 million loss in the second
quarter of 2002. The second quarter EBITDA loss of $1.0 million compares to a
$1.2 million EBITDA loss in the first quarter of 2003. If the local telephone
business was given credit for approximately $1.7 million in access cost savings
on calls placed by GCI long distance customers who are also GCI local customers,
the company's local telephone business would have reported positive EBITDA.
GCI's local telephone business has been generating positive cash flow on a
stand-alone basis for several quarters.
GCI provided local service for approximately 101,900 access lines at
the end of the second quarter of 2003, an increase of 2,900 access lines or 2.9
percent from the 99,000 access lines in service at the end of the first quarter
of 2003. The company estimates it has attained a 21 percent share of the total
access line market in Alaska.
Internet Access Results
At the end of the second quarter of 2003 GCI had 92,200 Internet
customers. This includes 51,700 dial-up customers who do not have any form of
cable modem service and 24,900 dial-up customers who also have cable modem
service. Approximately 6,300 of the dial-up customers who also have cable modem
service have not activated their dial-up service. GCI had a total of 40,500
cable modem customers including 15,600 customers who do not have any GCI dial-up
plan. The company added 9,300 cable modem customers at the end of the second
quarter of 2003 when compared to the second quarter of 2002. GCI's cable modem
penetration is one of the highest in the nation. GCI's statewide dial-up
Internet platform decreased 1,300 customers to 70,300 customers during the
second quarter of 2003 as more customers continue to migrate to cable modems.
GCI reported a total of 71,600 Internet customers at the end of the
first quarter of 2003. This number was based on the total number of active
dial-up customers. As noted above, not all cable modem customers paying for a
dial-up plan have activated their dial-up service. When GCI first started
selling cable modem service it was packaged in a way that almost all cable modem
customers were also dial up customers. As GCI introduced new packages and plans
and started promoting its new cable modem LiteSpeed service the number of cable
modem customers without a dial up plan increased substantially. An internal
audit during the second quarter revealed that these numbers had risen
substantially enough that they should be reported separately. In future quarters
GCI will report Internet customers in the format above.
Internet access revenues for the second quarter of 2003 totaled $4.8
million, an increase of 23.1 percent year-over-year and 4.3 percent sequentially
when compared to second quarter 2002 revenues of $3.9 million and first quarter
2003 revenues of $4.6 million. The increase in Internet access revenues is
attributed to existing subscribers adding additional features and services, and
customer migration from the dial-up platform to cable modem or GCI's LiveWire
high speed service.
The second quarter EBITDA of $1.4 million is an improvement of $0.8
million over the EBITDA of $0.6 million in the second quarter of 2002 and an
improvement of $0.4 million over the EBITDA of $1.0 million in the first quarter
of 2003. Internet access results continue to improve, reflecting increasing
economies of scale, operating cost controls and migration of dial up customers
to higher speed data service.
During the first quarter of 2003 GCI began offering a new cable modem
service called LiteSpeed as an alternative product to dial-up Internet service
and HyperNet 384/64 kilobit-per-second cable modem service priced at $39.99 per
month to GCI long distance customers. LiteSpeed is a 64/32 kilobit-per-second
Internet service offered at $24.99 per month to GCI long distance customers.
GCI began offering Internet access services during 1998 and its dial-up
Internet service is offered in most major Alaska markets. Due to the completion
of major cable plant upgrades, GCI can now offer cable modem service to 99
percent of its cable entertainment subscribers. GCI is now providing cable modem
Internet access in the Anchorage, Fairbanks, Juneau, Valdez, Sitka, Nome,
Seward, Kenai, Soldotna, Mat-Su Valley, Cordova, Petersburg, Wrangell, Homer,
Bethel, Kodiak and Ketchikan.
Other Items
GCI has been advised by Ron Duncan, the company's CEO, that he intends
to establish a plan under Section 10b5-1 of the Securities Act for the sale of
approximately 230,000 to 285,000 shares of his GCI stock between September 1 and
the end of the year.
Under the terms of the plan 150,000 shares would be sold in the open
market during specific periods subject to market prices. A total of $750,000
worth of stock would be sold back to GCI at the closing price on prescribed
dates subject to market prices pursuant to the terms of Mr. Duncan's Loan
Agreement with the company which provides for payment in either cash or stock.
The proceeds of Mr. Duncan's sale of stock to the company will be used
in its entirety to reduce his debt to GCI. The majority of the proceeds from any
open market sales will be used to reduce secured debt to a third party.
The U.S. Securities and Exchange Commission in 2000 enacted Rule
10b5-1, which permits executives to sell or buy their company's stock throughout
the life of the 10b5-1 plan, regardless of the timing of financial release dates
or other corporate developments.
GCI will host a conference call to discuss the quarter's results on
Thursday, July 31 beginning at 2 p.m. (Eastern). To access the briefing on July
31, dial 877-709-5341 (international callers should dial 630-395-0019) and
identify your call as "GCI." The call can also be accessed through web
conferencing available at www.gci.com. A replay of the call will be available
for 72-hours by dialing 888-566-0111, access code 7461 (international caller
should dial 402-998-0995).
Based on revenues, GCI is the largest Alaska-based and operated
integrated telecommunications provider and provides local, wireless, and long
distance telephone, cable television, Internet and data communication services
throughout Alaska. More information about the company can be found at
www.gci.com.
The foregoing contains forward-looking statements regarding the
company's expected results that are based on management's expectations as well
as on a number of assumptions concerning future events. Actual results might
differ materially from those projected in the forward looking statements due to
uncertainties and other factors, many of which are outside GCI's control.
Additional information concerning factors that could cause actual results to
differ materially from those in the forward looking statements is contained in
GCI's cautionary statements sections of Form 10K and 10-Q filed with the
Securities and Exchange Commission.
# # #
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
Assets 2003 2002
- -----------------------------------------------------------------------------------------------------------------
(Amounts in thousands)
Current assets:
Cash and cash equivalents $ 17,977 11,940
--------------------------------------
Receivables:
Trade 70,549 63,111
Employee 320 391
Other 2,621 3,093
--------------------------------------
73,490 66,595
Less allowance for doubtful receivables 13,522 14,010
--------------------------------------
Net receivables 59,968 52,585
--------------------------------------
Prepaid and other current assets 9,938 9,171
Deferred income taxes, net 8,829 8,509
Notes receivable with related parties 1,059 697
Property held for sale 1,037 1,037
Inventories 408 400
--------------------------------------
Total current assets 99,216 84,339
--------------------------------------
Property and equipment in service, net of depreciation 376,838 381,394
Construction in progress 13,530 16,958
--------------------------------------
Net property and equipment 390,368 398,352
--------------------------------------
Cable certificates, net of amortization of $26,775 and $26,884 at June
30, 2003 and December 31, 2002, respectively 191,241 191,132
Goodwill, net of amortization of $7,200 at June 30, 2003 and
December 31, 2002 41,972 41,972
Other intangible assets, net of amortization of $1,327 and $1,848
at June 30, 2003 and December 31, 2002, respectively 3,393 3,460
Deferred loan and senior notes costs, net of amortization of $5,999 and
$4,110 at June 30, 2003 and December 31, 2002, respectively 10,838 9,961
Notes receivable with related parties 5,060 5,142
Other assets, at cost, net of amortization of $39 and $24 at June 30,
2003 and December 31, 2002, respectively 5,282 4,424
--------------------------------------
Total other assets 257,786 256,091
--------------------------------------
Total assets $ 747,370 738,782
======================================
(Continued)
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)
June 30, December 31,
Liabilities and Stockholders' Equity 2003 2002
- -----------------------------------------------------------------------------------------------------------------
(Amounts in thousands)
Current liabilities:
Current maturities of obligations under long-term debt and capital
leases $ 22,900 1,857
Accounts payable 29,227 33,605
Deferred revenue 18,094 18,290
Accrued payroll and payroll related obligations 13,933 11,821
Accrued liabilities 8,000 5,763
Accrued interest 5,987 7,938
Subscriber deposits 758 889
--------------------------------------
Total current liabilities 98,899 80,163
Long-term debt, excluding current maturities 335,000 357,700
Obligations under capital leases, excluding current maturities 42,094 44,072
Obligations under capital leases due to related party, excluding current
maturities 691 703
Deferred income taxes, net of deferred income tax benefit 21,902 16,061
Other liabilities, including accretion of $1,629 and $0 at June 30, 2003
and December 31, 2002, respectively 6,807 4,956
--------------------------------------
Total liabilities 505,393 503,655
--------------------------------------
Redeemable preferred stocks 26,907 26,907
--------------------------------------
Stockholders' equity
Common stock (no par):
Class A. Authorized 100,000 shares; issued 52,112 and 51,795
shares at June 30, 2003 and December 31, 2002, respectively 200,149 199,903
Class B. Authorized 10,000 shares; issued 3,874 and 3,875
shares at June 30, 2003 and December 31, 2002, respectively;
convertible on a share-per-share basis into Class A common stock 3,273 3,274
Less cost of 338 and 317 Class A common shares held in treasury
at June 30, 2003 and December 31, 2002, respectively (1,917) (1,836)
Paid-in capital 11,554 11,222
Notes receivable with related parties issued upon stock option exercise (5,650) (5,650)
Retained earnings 8,188 1,847
Accumulated other comprehensive loss (527) (540)
--------------------------------------
Total stockholders' equity 215,070 208,220
Commitments and contingencies
--------------------------------------
Total liabilities and stockholders' equity $ 747,370 738,782
======================================
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2003 2002 2003 2002
---------------- ------------------ ------------------- ------------------
(Amounts in thousands, except per share amounts)
Revenues $ 95,939 92,740 188,716 180,950
Cost of sales and services 30,071 30,861 60,319 62,098
Selling, general and administrative expenses 34,294 32,585 67,287 63,886
Bad debt expense 802 10,616 1,399 11,197
Depreciation, amortization and accretion expense 12,800 13,912 26,301 27,870
---------------- ------------------ ------------------- ------------------
Operating income 17,972 4,766 33,410 15,899
---------------- ------------------ ------------------- ------------------
Other income (expense):
Interest expense (9,138) (6,236) (18,292) (12,827)
Amortization of loan and senior notes fees (625) (371) (1,698) (1,128)
Interest income 165 155 331 228
---------------- ------------------ ------------------- ------------------
Other expense, net (9,598) (6,452) (19,659) (13,727)
---------------- ------------------ ------------------- ------------------
Net income (loss) before income taxes and
cumulative effect of a change in accounting
principle 8,374 (1,686) 13,751 2,172
Income tax (expense) benefit (3,564) 583 (5,846) (1,063)
---------------- ------------------ ------------------- ------------------
Net income (loss) before cumulative effect of a
change in accounting principle 4,810 (1,103) 7,905 1,109
Cumulative effect of a change in accounting
principle, net of income tax benefit of $367 - - (544) -
---------------- ------------------ ------------------- ------------------
Net income (loss) $ 4,810 (1,103) 7,361 1,109
================ ================== =================== ==================
Basic and diluted net income (loss) per common share:
Net income (loss) before cumulative effect of a
change in accounting principle $ 0.08 (0.03) 0.12 0.00
Cumulative effect of a change in accounting
principle, net of income tax benefit of $367 - - (0.01) -
---------------- ------------------ ------------------- ------------------
Net income (loss) $ 0.08 (0.03) 0.11 0.00
================ ================== =================== ==================
Non-GAAP Financial Reconciliation Schedule
(Amounts in Millions)
Three Months Ended
June 30, 2003 June 30, 2002 March 31, 2003
---------------- --------------- ----------------
EBITDA (Note 1) $ 30.8 18.7 28.9
Depreciation, amortization and accretion
expense 12.8 13.9 13.5
---------------- --------------- ----------------
Operating income 18.0 4.8 15.4
---------------- --------------- ----------------
Other income (expense):
Interest expense (9.1) (6.2) (9.2)
Deferred loan and senior notes fee
expense (0.6) (0.4) (1.1)
Interest income 0.1 0.1 0.2
---------------- --------------- ----------------
Other expense, net (9.6) (6.5) (10.1)
---------------- --------------- ----------------
Net income (loss) before income
taxes and cumulative effect of a
change in accounting principle 8.4 (1.7) 5.3
Income tax (expense) benefit (3.6) 0.6 (2.2)
---------------- --------------- ----------------
Net income (loss) before cumulative
effect of a change in accounting
principle 4.8 (1.1) 3.1
Cumulative effect of a change in
accounting principle, net of income tax
benefit of $0.4 --- --- (0.5)
---------------- --------------- ----------------
Net income (loss) $ 4.8 (1.1) 2.6
================ =============== ================
Non-GAAP Financial Reconciliation Schedule (continued)
(Amounts in Millions)
Six Months Ended
June 30, 2003 June 30, 2002
---------------- ---------------
EBITDA (Note 1) $ 59.7 43.8
Depreciation, amortization and accretion
expense 26.3 27.9
---------------- ---------------
Operating income 33.4 15.9
---------------- ---------------
Other income (expense):
Interest expense (18.3) (12.8)
Deferred loan and senior notes fee
expense (1.7) (1.1)
Interest income 0.3 0.2
---------------- ---------------
Other expense, net (19.7) (13.7)
---------------- ---------------
Net income before income taxes and
cumulative effect of a change in
accounting principle 13.7 2.2
Income tax expense (5.8) (1.1)
---------------- ---------------
Net income before cumulative effect
of a change in accounting principle 7.9 1.1
Cumulative effect of a change in accounting
principle, net of income tax benefit of
$0.4 (0.5) ---
---------------- ---------------
Net income $ 7.4 1.1
================ ===============
Notes:
(1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
the sum of Net Income (Loss), Net Other Expense, Taxes, and Depreciation,
Amortization and Accretion. EBITDA is not presented as an alternative measure of
Net Income (Loss), Operating income or cash flow from operations, as determined
in accordance with Generally Accepted Accounting Principals (GAAP.) GCI's
management uses EBITDA to evaluate the operating performance of its business,
and as a measure of performance for incentive compensation purposes. GCI
believes EBITDA is a measure used as an analytical indicator of income generated
to service debt and fund capital expenditures. In addition, multiples of current
or projected EBITDA are used to estimate current or prospective enterprise
value. EBITDA does not give effect to cash used for debt service requirements,
and thus does not reflect funds available for investment or other discretionary
uses. EBITDA as presented herein may not be comparable to similarly titled
measures reported by other companies.
Traditional Summary Six Months Ended June 30, 2003 Six Months Ended June 30, 2002
------------------------------ ------------------------------
Long Local Long Local
Distance Cable Services Internet Combined Distance Cable Services Internet Combined
---------------------------------------------- ---------------------------------------------
Revenues $114,355 47,310 17,671 9,380 188,716 114,786 43,265 15,414 7,485 180,950
Cost of sales 33,150 12,831 11,512 2,826 60,319 38,139 11,981 9,633 2,345 62,098
---------------------------------------------- ---------------------------------------------
Contribution 81,205 34,479 6,159 6,554 128,397 76,647 31,284 5,781 5,140 118,852
---------------------------------------------- ---------------------------------------------
Selling, general and
administrative expenses 42,155 12,564 8,432 4,136 67,287 39,418 11,928 7,972 4,568 63,886
Bad debt expense 1,032 367 - - 1,399 11,175 22 - - 11,197
---------------------------------------------- ---------------------------------------------
EBITDA 38,018 21,548 (2,273) 2,418 59,711 26,054 19,334 (2,191) 572 43,769
Depreciation & amortization 13,803 9,062 1,736 1,700 26,301 16,479 8,266 1,668 1,457 27,870
---------------------------------------------- ---------------------------------------------
Operating income (loss) $ 24,215 12,486 (4,009) 718 33,410 9,575 11,068 (3,859) (885) 15,899
============================================== =============================================
Integrated Summary EBITDA
Six Months Ended June 30, 2003 Six Months Ended June 30, 2002
------------------------------ ------------------------------
Enter- Enter-
Voice Data tainment Combined Voice Data tainment Combined
----------------------------------------- --------------------------------------------
Traditional Summary EBITDA:
Long Distance $ 38,018 38,018 26,054 26,054
Cable 21,548 21,548 19,334 19,334
Local Services (2,273) (2,273) (2,191) (2,191)
Internet 2,418 2,418 572 572
----------------------------------------- --------------------------------------------
35,475 2,418 21,548 59,711 23,863 572 19,334 43,769
EBITDA Reallocations:
Long Distance (16,120) 16,120 - (12,098) 12,098 -
Cable 4,522 (4,522) - 3,101 (3,101) -
Local Services (55) 55 - (75) 75 -
----------------------------------------- --------------------------------------------
Integrated Summary EBITDA $ 19,570 23,115 17,026 59,711 11,690 15,846 16,233 43,769
========================================= ============================================
Traditional Summary Three Months Ended June 30, 2003 Three Months Ended June 30, 2002
-------------------------------- --------------------------------
Long Local Long Local
Distance Cable Services Internet Combined Distance Cable Services Internet Combined
---------------------------------------------- ---------------------------------------------
Revenues $ 58,032 23,872 9,245 4,790 95,939 58,803 21,919 8,106 3,912 92,740
Cost of sales 16,412 6,374 5,863 1,422 30,071 18,761 6,025 4,924 1,151 30,861
---------------------------------------------- ---------------------------------------------
Contribution 41,620 17,498 3,382 3,368 65,868 40,042 15,894 3,182 2,761 61,879
---------------------------------------------- ---------------------------------------------
Selling, general and
administrative expenses 21,595 6,315 4,431 1,953 34,294 20,812 5,477 4,094 2,202 32,585
Bad debt expense 584 218 - - 802 10,145 471 - - 10,616
---------------------------------------------- ---------------------------------------------
EBITDA 19,441 10,965 (1,049) 1,415 30,772 9,085 9,946 (912) 559 18,678
Depreciation & amortization 6,814 4,296 872 818 12,800 8,392 4,095 858 567 13,912
---------------------------------------------- ---------------------------------------------
Operating income (loss) $ 12,627 6,669 (1,921) 597 17,972 693 5,851 (1,770) (8) 4,766
============================================== =============================================
Integrated Summary EBITDA
Three Months Ended June 30, 2003 Three Months Ended June 30, 2002
-------------------------------- --------------------------------
Enter- Enter-
Voice Data tainment Combined Voice Data tainment Combined
---------------------------------------- -------------------------------------------
Long Distance $19,441 19,441 9,085 9 085
Cable 10,965 10,965 9,946 9,946
Local Services (1,049) (1,049) (912) (912)
Internet 1,415 1,415 559 559
---------------------------------------- -------------------------------------------
18,392 1,415 10,965 30,772 8,173 559 9,946 18,678
EBITDA Reallocations:
Long Distance (8,410) 8,410 - (4,200) 4,200 -
Cable 2,406 (2,406) - 1,705 (1,705) -
Local Services (28) 28 - (41) 41 -
----------------------------------------- -------------------------------------------
Integrated Summary EBITDA $ 9,954 12,259 8,559 30,772 3,932 6,505 8,241 18,678
========================================= ===========================================
Traditional Summary Three Months Ended June 30, 2003 Three Months Ended March 31, 2003
-------------------------------- ---------------------------------
Long Local Long Local
Distance Cable Services Internet Combined Distance Cable Services Internet Combined
---------------------------------------------- ---------------------------------------------
Revenues $ 58,032 23,872 9,245 4,790 95,939 56,323 23,438 8,426 4,590 92,777
Cost of sales 16,412 6,374 5,863 1,422 30,071 16,738 6,457 5,649 1,404 30,248
---------------------------------------------- ---------------------------------------------
Contribution 41,620 17,498 3,382 3,368 65,868 39,585 16,981 2,777 3,186 62,529
---------------------------------------------- ---------------------------------------------
Selling, general and
administrative expenses 21,595 6,315 4,431 1,953 34,294 20,560 6,249 4,001 2,183 32,993
Bad debt expense 584 218 - - 802 448 149 - - 597
---------------------------------------------- ---------------------------------------------
EBITDA 19,441 10,965 (1,049) 1,415 30,772 18,577 10,583 (1,224) 1,003 28,939
Depreciation & amortization 6,814 4,296 872 818 12,800 6,989 4,766 864 882 13,501
---------------------------------------------- ---------------------------------------------
Operating income (loss) $ 12,627 6,669 (1,921) 597 17,972 11,588 5,817 (2,088) 121 15,438
============================================== =============================================
Integrated Summary EBITDA
Three Months Ended June 30, 2003 Three Months Ended March 31, 2003
-------------------------------- ---------------------------------
Enter- Enter-
Voice Data tainment Combined Voice Data tainment Combined
---------------------------------------- -------------------------------------------
Long Distance $19,441 19,441 18,577 18,577
Cable 10,965 10,965 10,583 10,583
Local Services (1,049) (1,049) (1,224) (1,224)
Internet 1,415 1,415 1,003 1,003
---------------------------------------- -------------------------------------------
18,392 1,415 10,965 30,772 17,353 1,003 10,583 28,939
EBITDA Reallocations:
Long Distance (8,410) 8,410 - (7,710) 7,710 -
Cable 2,406 (2,406) - 2,116 (2,116) -
Local Services (28) 28 - (27) 27 -
----------------------------------------- -------------------------------------------
Integrated Summary EBITDA $ 9,954 12,259 8,559 30,772 9,616 10,856 8,467 28,939
========================================= ===========================================