Exhibit 99.1
March 15, 2006
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 ANNOUNCES CORRECTION OF PREVIOUSLY ANNOUNCED
2005 FINANCIAL RESULTS
ANCHORAGE, AK -- GCI (NASDAQ:GNCMA) announced today an adjustment in the
amount of $1.3 million that reduces previously announced 2005 annual and fourth
quarter revenues. The adjustment, net of $0.5 million of deferred income taxes,
will reduce net income by $0.8 million. On September 1, 2005, GCI implemented a
complex conversion to a new unified billing and provisioning system across
multiple segments and products. The adjustment is due, in part, to certain
configuration errors made to the new system for credits and other adjustments
issued to customers that were undetected by the company prior to the end of
2005. The adjustment also includes the effect of credits and adjustments issued
subsequent to December 31, 2005 which pertained to accounts receivable balances
recorded as of year end.
The errors were identified after the company's normal financial press
release was issued and conference call was held on March 2, 2006. The
appropriate adjustments are reflected in the company's 2005 Annual Report on
Form 10-K that will be filed timely on Thursday, March 16, 2006. The company
further determined that because the configuration error was undetected as of
December 31, 2005 the matter constitutes a material weakness in the company's
internal control over financial reporting pursuant to rules mandated by Section
404 of the Sarbanes-Oxley Act of 2002. The internal control deficiency is being
remediated, and GCI does not expect to report any further material adjustments
as a result of this deficiency.
The 2005 Annual Report on Form 10-K will report net income of $20.8
million, diluted earnings per share of $0.37 and revenues of $443.0 million. The
company previously reported 2005 net income of $21.6 million, diluted earnings
per share of $0.38 and revenues of $444.3 million.
GCI revised its reported fourth quarter 2005 net income to $8.6 million,
earnings per diluted share to $0.16 and revenues to $112.1 million. The company
previously reported fourth quarter 2005 net income of $9.4 million, earnings per
diluted shares of $0.17 and revenues of $113.4 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA)
for 2005 total $150.7 million, as adjusted to exclude $2.8 million in expenses
from the early extinguishment of debt. GCI previously reported 2005 EBITDA of
$152.0 million, as adjusted to exclude the expense from the early extinguishment
of debt. Fourth quarter EBITDA totals $42.9 million as compared to $44.2 million
previously reported for the fourth quarter of 2005. The attached schedule
contains a reconciliation of EBITDA to net income.
GCI reaffirms previously announced financial guidance for revenues of $450
million to $460 million and EBITDA of $150 million to $154 million for the year
2006. First quarter revenues are still expected to be in the range of $112
million to $114 million and EBITDA is expected to exceed $37 million. The
company's plan to repurchase up to $20 million of its stock during the first
half of 2006, subject to market conditions and the company's financial
performance, remains unchanged. The purchases will comply with the restrictions
of Securities Exchange Commission Rule 10b-18.
GCI will hold a conference call to discuss changes to the 2005 results,
including the fourth quarter, on Wednesday, March 15, 2006 beginning at 3:15
p.m. (Eastern). To access the briefing on March 15, call the conference operator
between 3:00 p.m. and 3:15 p.m. (Eastern) at 877-918-6632. (International
callers should dial 210-234-0028) and identify your call as "GCI." In addition
to the conference call, GCI will make available net conferencing. To access the
call via net conference, log on to www.gci.com and follow the instructions. The
call will be archived online for two weeks. A replay of the call will be
available at 5 p.m. (Eastern) for 72-hours by dialing 800-756-4244, access code
7461 (International callers should dial 203-369-3015.)
GCI is the largest Alaska-based and operated integrated telecommunications
provider. A pioneer in bundled services, GCI 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 statement sections of Form 10-K and 10-Q filed with the
Securities and Exchange Commission.
# # #
General Communication, Inc.
Non-GAAP Financial Reconciliation Schedule
(Unaudited, Amounts in Millions)
Three Months Ended
December 31, 2005
--------------------
EBITDA (Note 1) $ 42.9
Depreciation and amortization expense (19.6)
--------------------
Operating income 23.3
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Other income (expense):
Interest expense (8.4)
Amortization and write-off of loan and
senior notes fee expense (0.2)
Interest income 0.1
--------------------
Other expense, net (8.5)
--------------------
Net income before income taxes 14.8
Income tax expense (6.2)
--------------------
Net income $ 8.6
====================
Year Ended
December 31,
2005(Note 3)
--------------------
EBITDA, as adjusted (Note 2) $ 150.7
Loss on termination of capital lease (2.8)
--------------------
EBITDA (Note 1) 147.9
Depreciation and amortization expense (74.1)
Loss on termination of capital lease 2.8
--------------------
Operating income 76.5
--------------------
Other income (expense):
Interest expense (34.1)
Loss on termination of capital lease (2.8)
Amortization and write-off of loan and
senior notes fee expense (3.4)
Interest income 0.6
--------------------
Other expense, net (39.7)
--------------------
Net income before income taxes 36.8
Income tax expense (16.0)
--------------------
Net income $ 20.8
====================
Notes:
(1) EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is
the sum of Net Income, Interest Expense, Amortization and Write-off of
Loan and Senior Notes Fees, Interest Income, Income Tax Expense, and
Depreciation and Amortization Expense. EBITDA is not presented as an
alternative measure of net income, operating income or cash flow from
operations, as determined in accordance with accounting principles
generally accepted in the United States of America. 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.
(2) EBITDA (as defined in Note 1 above) before deducting Loss on Termination
of Capital Lease.
(3) Due to rounding, totals in this column may not agree to the sum of the
reported activity.