11-K: Annual report of employee stock purchase, savings and similar plans
Published on March 28, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________ to ___________
Commission file number 0-15279
A. Full title of the plan and the address of the plan if different from that of
the issuer named below:
GENERAL COMMUNICATION, INC.
EMPLOYEE STOCK PURCHASE PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
GENERAL COMMUNICATION, INC.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Independent Auditors' Report
The General Communication, Inc. Employee
Stock Purchase Plan Trustees
General Communication, Inc. Employee
Stock Purchase Plan
We have audited the accompanying statements of net assets available for plan
benefits of General Communication, Inc. Employee Stock Purchase Plan as of
December 31, 1995 and 1994, and the related statements of changes in net assets
available for plan benefits for each of the years in the three-year period ended
December 31, 1995. These financial statements are the responsibility of the Plan
Administrator. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of General
Communication, Inc. Employee Stock Purchase Plan at December 31, 1995 and 1994,
and the changes in those net assets available for plan benefits for each of the
years in the three-year period ended December 31, 1995, in conformity with
generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules I through IV
are presented for the purpose of additional analysis and are not a required part
of the basic financial statements but are supplementary information required by
the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedules have been subjected to the auditing procedures applied in the audits
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/KPMG PEAT MARWICK LLP
March 1, 1996
GENERAL COMMUNICATION, INC.
EMPLOYEE STOCK PURCHASE PLAN
Index to Financial Statements and Schedules
Independent Auditors' Report dated March 1, 1996
Statements of Net Assets Available for Plan Benefits at December 31, 1995 and
1994
Statements of Changes in Net Assets Available for Plan Benefits for the Years
Ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
Supplemental Schedules
Consent of Independent Auditors
Signature
See accompanying notes to financial statements.
See accompanying notes to financial statements.
GENERAL COMMUNICATION, INC.
EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
(1) Description of Plan
The following description of the General Communication, Inc. Employee
Stock Purchase Plan ("Plan") provides only general information.
Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
General
The Plan is a defined contribution plan covering employees of
General Communication, Inc. and affiliated companies (GCI
Communication Corp., GCI Communication Services, Inc. and GCI
Leasing Co., Inc.) ("Company") who have completed one year of
service, as defined in the Plan agreement.
Contributions
The Plan provides for a qualified cash or deferred arrangement as
defined in Section 401(k) of the Internal Revenue Code of 1986
("Code"). A participant may elect the following methods to make
employee contributions:
(1) Salary Reduction Contributions ("before-tax
contributions") which will not be included in the
participant's current earnings for federal income tax
purposes but rather are taxable upon distribution;
or,
(2) Non-qualified Voluntary Contributions ("after-tax
contributions") which will be included in the
participant's current earnings for federal income tax
purposes.
Eligible employees of the Company may elect to reduce their
compensation in any even dollar amount up to 10% of such
compensation up to a maximum of $9,240 in 1995 and 1994 and $8,994
in 1993; they may contribute up to 10% of their compensation with
after-tax dollars; or they may elect a combination of salary
reduction and after-tax contributions. The Company will match
employee salary reduction and after-tax contributions in any amount
(less the amount of any forfeitures) determined by the Company each
year, but not more than 10% of any one employee's compensation will
be matched in any pay period. The combination of salary reduction,
after-tax and matching contributions cannot exceed 25% of any
employee's compensation (determined after salary reduction) for any
year. Salary reduction contributions are subject to a compensation
ceiling of $150,000 for 1995 and 1994 and $235,840 for 1993.
In 1993 and 1994, the Company matched employee salary reduction and
after-tax contributions 100% with General Communication, Inc.
("GCI") Class A and Class B common stock, limited to 10% of any one
employee's compensation each pay period. Commencing July 1, 1995,
employee contributions invested in GCI Class A and Class B common
stock continue to receive up to 100% matching, as determined by the
Company each year, in GCI Class A and Class B common stock. Employee
contributions invested in other than GCI Class A and Class B common
stock receive up to 50% matching, as determined by the Company each
year, in GCI Class A and Class B common stock.
Amounts contributed to the Plan by the Company are not taxed to the
employee until distribution upon retirement, hardship or other
termination. Plan earnings are taxable to the employee either upon
distribution of the stock or eventual disposition of the stock.
Participant Accounts
Each participant account is credited with the participant's
contributions, the employer matching contributions and allocations
of Plan earnings. Plan earnings are allocated quarterly based on the
participant's weighted account balance as a proportion of total
weighted account balances during the calendar quarter.
Vesting
A participant's interest in his or her Salary Reduction Account and
Non-qualified Voluntary Account is always fully vested and is not
subject to forfeiture.
Any portion of a participant's account which is forfeitable shall be
forfeited on the earlier of the date a terminated participant
receives a distribution or the date on which the participant
experiences five consecutive one-year breaks in service (as defined
in the Plan agreement).
A participant's interest in the Company Matching Account fully vests
without regard to the number of years of service when the
participant: (i) retires under the terms of the Plan; (ii) dies, or
(iii) becomes totally and permanently disabled. A participant's
interest in the Company Matching Account fully vests upon the
termination or partial termination of the Plan or upon complete
discontinuance of Company contributions.
If a participant terminates participation for any reason other than
retirement, death or disability while any portion of his or her
account in the Plan is forfeitable, and receives a distribution of
his or her vested account balance attributable to Company matching
contributions not later than the close of the second Plan year
following the Plan year in which participation terminated, then upon
becoming an eligible employee, the participating employee will have
the right to repay the distribution to the Plan in accordance with
Plan provisions. The amount of the participant's account that was
forfeited previously will be restored.
Forfeitures
If a participating employee terminates participation for any reason
other than retirement, death or disability, that portion of his or
her account attributable to Company contributions which has not
vested will be forfeited. All amounts so forfeited will be allocated
as a component of the otherwise required employer matching
contribution to the remaining participating employees during the
first calendar quarter after the end of the year in which the
forfeitures occur. Net forfeitures amounting to $8,012, $22,604 and
$19,961 as of December 31, 1994, 1993 and 1992, respectively, were
allocated to the accounts of the remaining participants in 1995,
1994 and 1993 in the ratio that the employer match balance of each
participant's account bears to the total employer match balances of
all participants' accounts.
(2) Summary of Significant Accounting Policies
The Plan financial statements are based on the accrual method of
accounting with Plan investments stated at current value.
The current value of GCI Class A common stock is based on the average
of the closing bid and ask prices as listed on the National Association
of Securities Dealers Automated Quotation (NASDAQ) National Market
System at December 31, 1995 and 1994. The current value of GCI Class B
common stock is determined based on the average of the closing bid and
ask prices as reported on the over-the-counter market at December 31,
1995 and 1994. GCI Class B common stock is convertible into GCI Class A
common stock. The current value of MCI common stock and TCI Class A
common stock is based on the average of the closing bid and ask prices
as listed on the NASDAQ National Market System at December
31, 1995. Mutual fund investments are carried at fair market value, as
determined by individual fund management, based upon quoted market
prices.
Purchases and sales of securities are recorded on a trade-date basis.
The cost of securities is determined using the average cost method.
Shares to be issued by GCI to the Plan were initially registered in
1988 under the Federal Securities Act of 1933 (effective September 14,
1988) and under the Alaska Securities Act (effective October 26, 1988).
A subsequent registration was completed in 1993 under the Federal
Securities Act of 1933 (effective April 5, 1993). In 1993, the Company
relied upon an express exemption from registration under the Alaska
Securities Act. The registration in 1993 provides for the acquisition
by the Plan of up to 700,000 shares of GCI Class A common stock at
market value and up to 100,000 shares of GCI Class B common stock at
market value.
(3) Administration of Plan Assets
On July 1, 1995, The Heintzberger Company ("Recordkeeper") became
recordkeeper of the Plan and National Bank of Alaska ("Trustee") became
trustee of the Plan. Administrative expenses related to the Plan are
paid directly by the Company to the Recordkeeper and the Trustee.
Company employees continue to provide administrative support to the
Plan but no employee receives compensation from the Plan.
(4) Amendment or Termination
The Company's Board of Directors has reserved the right to amend or
terminate the Plan. No amendment may reduce the accrued benefits of any
participant or give the Company any interest in the trust assets of the
Plan. In the event of termination of the Plan, a participant with
respect to the Plan becomes fully vested in his or her Company Matching
Account.
The Plan was amended in 1992 to conform with revised Rule 16b-3 adopted
pursuant to the 1934 Securities Exchange Act. Such amendment provides
restrictions on participation after an officer or director makes a
withdrawal from the Plan, limitations on further participation by
officers and directors after ceasing to participate in the Plan,
approval of certain amendments by shareholders, and transferability
restrictions.
In December 1994 the Plan was amended and restated effective January,
1989 to comply with the Tax Reform Act of 1986 and other legislation
("TRA '86"). Also in December 1994 the Plan was amended to modify
matching contribution requirements and to allow
diversification of investments into selected securities or funds as
described in Footnotes (1) and (7), respectively. Investment and
matching contribution revisions to the Plan were implemented during the
third quarter of 1995.
(5) Refunded and Refundable Contributions
During 1995 and 1993, the Plan did not meet the requirements of certain
discrimination tests related to employee and employer matching
contributions for certain highly compensated employees (as defined).
Corrective distributions were made in December 1995 and 1993 to satisfy
the non-discrimination test requirements for the Plan years 1995 and
1993, respectively.
(6) Cash and Cash Equivalents
Included in cash and cash equivalents is an interest bearing
certificate of deposit. Cash and cash equivalents at December 31, 1995
and 1994 include restricted cash of $111,130 and $106,057,
respectively. This cash has been restricted by participants from use in
purchasing stock or other investments.
(7) Investments
In 1994 and 1995, the Plan was self-administered and Plan participants
invested contributions in GCI Class A and Class B common stock only.
Commencing July 1, 1995, the Plan diversified with expanded investment
choices offered to Plan participants as follows:
GCI Stock Fund - a fund invested in shares of GCI Class A and
Class B common stock
MCI Communications Corp ("MCI") Stock Fund - a fund invested in
shares of MCI common stock
Tele-Communications, Inc. ("TCI") Stock Fund - a fund invested in
shares of TCI common stock
Mutual Funds:
Fidelity Puritan Trust Fund - a mutual fund seeking high
income with preservation of capital by investing in a broadly
diversified portfolio of securities.
Heartland Value Fund - a mutual fund seeking long term capital
appreciation through investment in small company stocks
selected on a value basis.
Meridian Fund - a mutual fund making investments in small and
medium sized companies considered to be experiencing
above-average growth in revenue and earnings.
Neuberger & Berman Guardian Fund - a mutual fund investing
primarily in a large number of common stocks of
long-established, high quality companies.
Vanguard Short-Term Corporate - a mutual fund investing in
corporate debt securities, federal, state and municipal agency
obligations, certificates of deposit and commercial paper.
(8) Unrealized Appreciation (Depreciation) of Investments
(9) Net Realized Gain
Fidelity Puritan Trust Fund had a net realized gain of $182 for the
year ended December 31, 1995.
(10) Reconciliation of Financial Statements to Form 5500
Benefits payable is recorded on the Form 5500 for amounts requested for
distribution but not paid as of December 31.
(11) Income Taxes
The Plan is qualified under Section 401(a) of the Code pursuant to a
tax determination letter obtained from the Internal Revenue Service
("IRS"). The trust established pursuant to the Plan is, therefore,
exempt from taxation under Section 501(a) of the Code.
In December 1994, an application was submitted to the IRS for a
determination as to the Plan's qualification status under Section
401(a) of the Code associated with Plan changes for TRA '86, investment
diversification and modification of the employer matching contribution
percentage. On February 8, 1996 the IRS issued a determination letter
stating that these amendments to the Plan meet the requirements of
section 401(a) of the Code.
Exhibit
CONSENT OF INDEPENDENT AUDITORS
The General Communication, Inc. Employee
Stock Purchase Plan Trustees
General Communication, Inc. Employee
Stock Purchase Plan
We consent to incorporation by reference in the Form S-8 Registration Statement
(No. 33-24029) of our report dated March 1, 1996 related to the statements of
net assets available for plan benefits of General Communication, Inc. Employee
Stock Purchase Plan as of December 31, 1995 and 1994 and the related statements
of changes in net assets available for plan benefits for each of the years in
the three-year period ended December 31, 1995, which report appears in the
December 31, 1995 annual report on Form 11-K of General Communication, Inc.
Employee Stock Purchase Plan.
/s/KPMG PEAT MARWICK LLP
March 1, 1996
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the administrator of the Plan has duly caused this annual report to be
signed by the undersigned thereunto duly authorized.
GENERAL COMMUNICATION, INC.
EMPLOYEE STOCK PURCHASE PLAN
By /s/ Alfred J. Walker
Alfred J. Walker
Plan Administrator
Dated: March 1, 1996