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, 1996
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.
QUALIFIED 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
<PAGE>
Independent Auditors' Report
The General Communication, Inc. Qualified
Employee Stock Purchase Plan Trustees
General Communication, Inc. Qualified
Employee Stock Purchase Plan
We have audited the accompanying statements of net assets available for plan
benefits of General Communication, Inc. Qualified Employee Stock Purchase Plan
as of December 31, 1996 and 1995, 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, 1996. 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. Qualified Employee Stock Purchase Plan at December 31, 1996
and 1995, and the changes in those net assets available for plan benefits for
each of the years in the three-year period ended December 31, 1996, 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 and 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.
KPMG PEAT MARWICK LLP
May 16, 1997
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Index to Financial Statements and Schedules
Independent Auditors' Report dated May 16, 1997
Statements of Net Assets Available for Plan Benefits at December 31, 1996 and
1995
Statements of Changes in Net Assets Available for Plan Benefits for the Years
Ended December 31, 1996, 1995 and 1994
Notes to Financial Statements
Supplemental Schedules
Consent of Independent Auditors
Signature
<PAGE>
<TABLE>
<CAPTION>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Statements of Net Assets
Available for Plan Benefits
December 31, 1996 and 1995
1996 1995
---- ----
<S> <C> <C>
Assets:
Cash and cash equivalents (note 6) $ 462,139 206,453
----------- ---------
Investments (notes 7, 8 and 9):
General Communication, Inc.
common stock, at current value -
1,979,270 and 1,913,270 shares
at December 31, 1996 and 1995,
respectively (cost of $6,550,397
and $5,643,364, respectively) 15,710,456 9,566,350
MCI Communications Corp.
common stock, at current value -
970 and 390 shares at December 31,
1996 and 1995, respectively (cost
of $25,976 and $9,785, respectively) 31,707 10,189
Tele-Communications, Inc.
common stock, at current value -
645 and 180 shares at December 31,
1996 and 1995, respectively (cost
of $10,974 and $3,461, respectively) 8,425 3,578
TCI Satellite Entertainment, Inc.
common stock, at current value -
64 shares at December 31, 1996
(cost of $1,038) 632 ---
Mutual fund investments (cost of
$247,683 and $65,633 in 1996 and
1995, respectively) 255,616 64,467
Participant notes receivable 306,343 ---
---------- ---------
16,313,179 9,644,584
Contributions receivable:
Employee 57,870 27,518
Employer 52,135 25,328
Investment income receivable 2,259 693
----------- ---------
Net assets available
for plan benefits $16,887,582 9,904,576
=========== =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Statements of Changes in Net Assets
Available for Plan Benefits
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Contributions:
Employee share $ 1,170,538 918,423 827,793
Employer share 1,016,465 864,376 792,174
---------- --------- ---------
2,187,003 1,782,799 1,619,967
Allocated forfeitures 17,153 8,012 22,604
Investment income:
Interest income 20,642 9,840 4,132
Dividend income 8,113 155 ---
Net change in unrealized
appreciation (depreciation)
of investments 5,550,089 1,960,257 (1,266,521)
---------- --------- -----------
7,783,000 3,761,063 380,182
Distributions:
Employee withdrawals 799,994 554,618 524,061
---------- --------- ---------
Net increase (decrease) in
net assets available
for plan benefits 6,983,006 3,206,455 (143,879)
Net assets available for plan
benefits at beginning of period 9,904,576 6,698,131 6,842,010
---------- --------- ---------
Net assets available for plan
benefits at end of period $16,887,582 9,904,576 6,698,131
=========== ========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
(1) Description of Plan
The following description of the General Communication, Inc. Qualified
Employee Stock Purchase Plan ("Plan") provides general information
only. 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. ("GCI"). and affiliated companies (GCI
Communication Corp., GCI Communication Services, Inc., GCI Leasing
Co., Inc., GCI Cable, Inc., GCI Cable/Fairbanks, Inc., GCI
Cable/Juneau, Inc., and Prime Cable of Alaska L.P.) ("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 $9,500 in 1997 and 1996, and $9,240
in 1995 and 1994; 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 determined by the Company each year, but not more than 10% of
any one employee's compensation will be matched in any pay period.
Forfeitures will be allocated along with the Company matching
contributions. All matching contributions are invested in GCI class
A or class B common stock. The combination of salary reduction,
after-tax, forfeited and matching contributions cannot exceed the
lesser of 25% of any employee's compensation (determined after
salary reduction) for any year, or $30,000. Compensation considered
for all Plan purposes is subject to a compensation ceiling of
$160,000 for 1997, and $150,000 for 1996, 1995 and 1994.
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
In 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 termination
of employment. Plan earnings are taxable to the employee either upon
distribution or, in the case of stock distributions, upon the
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. Earnings of
assets other than GCI Class A and Class B common stock are allocated
based on the participant's weighted account balance (excluding
Company stock) as a proportion of total weighted account balances
(excluding Company stock) during the calendar quarter. Earnings on
Company stock are allocated to the accounts holding such Company
stock.
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.
<TABLE>
The participant's interest in the Company Matching Account is vested
based upon years of service with the Company (as defined in the Plan
agreement), in accordance with the following schedule:
<CAPTION>
Years of Service Vested Percentage
---------------- -----------------
<S> <C>
Less than 1 0
1 or more but less than 2 20
2 or more but less than 3 30
3 or more but less than 4 45
4 or more but less than 5 60
5 or more but less than 6 80
6 or more 100
</TABLE>
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
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, while still employed: (i) attains Normal Retirement age
and 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 shares of that participating employee's account
previously forfeited 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
along with the 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 $17,153, $8,012 and $22,604 as of December 31, 1995,
1994 and 1993, respectively, were allocated to the accounts of the
remaining participants in 1996, 1995 and 1994 in the ratio that the
employer match balance of each participant's account for the year
bears to the total employer match balances of all participants'
accounts for the year.
Participant Notes Receivable
Participants may borrow from their fund accounts a minimum of $1,000
up to a maximum equal to the lesser $50,000 or 50% of their vested
account balance. Loan transactions are treated as a transfer to
(from) the investment fund from (to) the Participants Notes fund.
Loan terms range from 1-5 years. The loans are secured by the vested
balance in the participant's account and bear interest at prime plus
2%,
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
fixed at the loan date. Interest rates for all notes receivable at
December 31, 1996, are 10.25 percent. Principal and interest is paid
ratably through semi-monthly payroll deductions.
(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 and Class B 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. The current value of MCI Communications Corp. common
stock, Tele-Communications, Inc. Class A common stock and TCI Satellite
Entertainment, Inc. Class A common stock is based on the average of the
closing bid and ask prices as listed on the NASDAQ National Market
System. 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
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
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 16(b)-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, 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 to satisfy the
non-discrimination test requirements for the Plan year 1995.
(6) Cash and Cash Equivalents
Included in cash and cash equivalents are interest bearing certificates
of deposit. Cash and cash equivalents at December 31, 1996 and 1995
include restricted cash of $116,214 and $111,075, respectively. This
cash has been restricted by participants from use in purchasing stock
or other investments.
(7) Investments
In 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.
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
Tele-Communications, Inc. ("TCI") Stock Fund - a fund invested in
shares of TCI common stock and TCI Satellite Entertainment Class A
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.
<TABLE>
Employees may elect to participate in more than one fund. The following
table summarizes the number of employees participating in each fund at
December 31:
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
GCI Stock Fund 345 234 207
MCI Stock Fund 46 32 -
TCI Stock Fund 23 13 -
Fidelity Puritan Trust Fund 34 29 -
Heartland Value Fund 67 52 -
Meridian Fund 40 29 -
Neuberger & Berman Guardian Fund 41 29 -
Vanguard Short-Term Corporate 16 9 -
--- --- ---
612 427 207
=== === ===
</TABLE>
(8) Unrealized Appreciation (Depreciation) of Investments
<TABLE>
The gross unrealized appreciation (depreciation) of Plan assets at
December 31 was as follows:
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
GCI stock fund $9,160,059 3,922,986 2,121,995
MCI stock fund 5,731 404 ---
TCI stock fund (2,955) 117 ---
Mutual fund investments 7,933 (1,166) ---
---------- --------- ---------
$9,170,768 3,922,341 2,121,995
========== ========= =========
</TABLE>
<PAGE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Notes to Financial Statements
(9) Net Realized Gain
Fidelity Puritan Trust Fund had a net realized gain of $182 for the
year ended December 31, 1995.
(10) 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 March 13, 1996 the IRS issued a determination letter
stating that these amendments to the Plan meet the requirements of
section 401(a) of the Code.
<PAGE>
Supplemental Schedule I
<TABLE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1996
<CAPTION>
Identity of Issue Description of Investment Cost Value
- ----------------- ------------------------- ---- -----
<S> <C> <C> <C>
General Communication, Inc. 1,979,270 shares of Class $6,550,397 15,710,456
A and Class B common stock
MCI Communications Corp. 970 shares of common stock 25,976 31,707
Tele-Communications, Inc. 645 shares of Class A 10,974 8,425
common stock
TCI Satellite 64 shares of Class A 1,038 632
Entertainment, Inc. common stock
Mutual fund investments:
Fidelity Puritan Trust Fund 1,974 shares 33,714 34,028
Heartland Value Fund 3,413 shares 102,599 108,020
Meridian Fund 1,424 shares 43,900 42,834
Neuberger & Berman
Guardian Fund 2,406 shares 58,411 61,674
Vanguard Short-Term
Corporate 843 shares 9,059 9,060
---------- ---------
Total mutual fund
investments 247,683 255,616
---------- ----------
Participant Notes Receivable 306,343 306,343
---------- ----------
Investments at December 31, 1996 $7,142,411 16,313,179
========== ==========
</TABLE>
<PAGE>
Supplemental Schedule IV
<TABLE>
GENERAL COMMUNICATION, INC.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
Item 27d - Schedule of Reportable Transactions
December 31, 1996
<CAPTION>
Current Value
Identity of Purchase Cost of of Asset on Net Gain
Party Involved Description of Asset Price Asset Transaction Date or (loss)
- -------------- -------------------- ----- ----- ---------------- ---------
<S> <C> <C> <C> <C> <C>
Series of GCI Class A and B $1,358,167 $1,358,167 $1,358,167 ---
transactions common stock
</TABLE>
<PAGE>
Exhibit
CONSENT OF INDEPENDENT AUDITORS
The General Communication, Inc. Qualified
Employee Stock Purchase Plan Trustees
General Communication, Inc. Qualified
Employee Stock Purchase Plan
We consent to incorporation by reference in the Form S-8 Registration Statement
(No. 33-24029) of our report dated May 16, 1997 related to the statements of net
assets available for plan benefits of General Communication, Inc. Qualified
Employee Stock Purchase Plan as of December 31, 1996 and 1995 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, 1996, which report appears in
the December 31, 1996 annual report on Form 11-K of General Communication, Inc.
Qualified Employee Stock Purchase Plan.
KPMG PEAT MARWICK LLP
June 26, 1997
<PAGE>
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.
QUALIFIED EMPLOYEE STOCK PURCHASE PLAN
By /s/ Alfred J. Walker
Alfred J. Walker
Plan Administrator
Dated: June 26, 1997
<PAGE>
