UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark one)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 of 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [Fee Required] (1)
For the fiscal year ended December 31, 1995
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15
OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required]
For the transition period from ______ to _______
Commission File No. 0-15279
GENERAL COMMUNICATION, INC.
(Exact name of registrant as specified in its charter)
Alaska 92-0072737
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
2550 Denali Street Suite 1000 Anchorage, Alaska 99503
(Address of principal executive offices)
Registrant's telephone number, including area code: (907) 265-5600
Securities Registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Class A common stock Class B common stock
(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant, computed by reference to the average bid and asked prices of such
stock as of the close of trading on April 15, 1996 was approximately
$48,426,000.
The number of shares outstanding of the registrant's common stock as of
April 15, 1996, was:
Class A common stock - 19,696,207 shares; and
Class B common stock - 4,175,434 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
- -----------------------
(1) Fee paid with initial filing of Form 10-K on or about March 29, 1996.
GENERAL COMMUNICATION, INC.
1995 ANNUAL REPORT ON FORM 10-K/A
TABLE OF CONTENTS
Page
INTRODUCTION.................................................................................................... 3
PART III......................................................................................................... 3
Item 10. Directors and Executive Officers of the Registrant ........................................... 3
Item 11. Executive Compensation ....................................................................... 7
Item 12. Security Ownership of Certain Beneficial Owners and Management .............................. 21
Item 13. Certain Relationships and Related Transactions .............................................. 30
Part IV......................................................................................................... 33
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ......................................................................... 33
ASS008BD.WP5 Page 2
INTRODUCTION
General Communication, Inc. ("Company") hereby amends the following
items, financial statements, exhibits or other portions of its Annual Report for
the year ended December 31, 1995 ("Annual Report") on Form 10-K as set forth in
the following pages. Specifically, the information required by Part III of Form
10-K which the Company had in its Annual Report included by incorporation by
reference to certain portions of the Company's definitive Proxy Statement for
its annual shareholder meeting to be held in 1996 ("Proxy Statement") and which
Proxy Statement is to be filed pursuant to Regulation 14A of the Securities
Exchange Act of 1934, as amended, is expressly filed with the Commission as an
amendment to and expressly made a part of the Annual Report, i.e., Item 10, Part
III, Item 11, Part III, Item 12, Part III, and Item 13, Part III of Form 10-K.
In addition, the Company amends its Form 10-K for the year ended December 31,
1995 to include copies of four commercial agreements pursuant to Item 14, Part
IV of Form 10-K.
PART III
(1) Item 10, Part III. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following text is extracted from the draft Proxy Statement. The
record date for purposes of this amendment to the Annual Report has been set as
April 15, 1995 ("Record Date"):
1. DIRECTOR ELECTIONS
General
The board of directors of the Company ("Board") is classified into
three classes: Class I, Class II, and Class III. Under the current Revised
Bylaws to the Company ("Bylaws"), the number of directors is established as
being not less than three nor more than twelve and may be changed from time to
time by action of the Board.
Presently the number of directors constituting the Board is seven.
Pursuant to the Acquisition Plan, the Board intends to adopt a
resolution expanding the size of the Board from seven to nine positions and
allocate one new position to each of Classes II and III. The Board then would
consist of Classes I, II, and III, each with three members per class. The Board
intends to adopt another resolution to fill the two new positions with
individuals selected by the Prime Sellers pursuant to the Voting Agreement
described further elsewhere in this Form 10-K, provided the shareholders of the
Company ("Shareholders") approve the Acquisition Plan. See, "SHAREHOLDINGS OF
PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Acquisition Plan,
Voting Agreement," and "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS: Certain
Transactions with Management and Others - Acquisition Plan." The Board intends
to resolve further that these two new appointments would stand for election by
the Shareholders at the Company's annual shareholder meeting to be held in 1996
("Meeting") to complete the remaining one year and two year terms of their
respective classes. Therefore, at the Meeting, three individuals will be elected
to positions in Class I of the Board for three year terms, one individual will
be elected to a position in Class II of the Board to serve the remaining one
year of the three year term of that class, and one individual will be elected to
a position in Class III of the Board to serve the remaining two years of the
three year term of that class. The individuals so elected will serve subject to
the provisions of the Bylaws and until the election and qualification of their
respective successors.
Management believes that its proposed nominees for election as
directors are willing to serve as such, and it is intended that the proxy
holders named in the accompanying form of Proxy or their substitutes will vote
for the election of these nominees unless specifically instructed to the
contrary. However,
ASS008BD.WP5 Page 3
if any nominee at the time of the election is unable,
unavailable or, for good cause, unwilling to serve and, as a consequence other
nominees are designated, the proxy holders named in the Proxy or their
substitutes will have discretion and authority to vote or refrain from voting in
accordance with their judgment with respect to other nominees.
Business Background of Directors, Nominees, and Executive Officers of the
Company
As of the Record Date the nominees proposed by management for election
as directors at the Meeting were as follows: for Class I - John W. Gerdelman,
Carter F. Page, and Robert M. Walp. Further information with respect to these
nominees and all directors is set forth in the following table as of the Record
Date. In addition, similar information is provided for executive officers of the
Company. All executive officers are elected for annual terms, subject to their
earlier death, resignation or removal in accordance with the Articles and
Bylaws, until their successors are chosen and qualify. There are no family
relations of first cousin or closer, among the persons named in the table, by
blood, marriage, or adoption. The Board is unaware of any legal proceedings
which may have occurred during the past five years and which would be material
to an evaluation of the integrity or ability of any director or executive
officer of the Company to serve. Furthermore, the Board is unaware of any legal
proceedings which may have occurred in which any director or executive officer
of the Company was or is a party adverse to the Company or any of its
subsidiaries or has a material interest adverse to the Company or any of its
subsidiaries.
ASS008BD.WP5 Page 4
====================================================================================================================
DIRECTORS, NOMINEES, AND EXECUTIVE OFFICERS OF THE COMPANY
Name Age Positions, Business Experience
- --------------------------------------------- -------------- -------------------------------------------------------
Ronald A. Duncan (1) 43 Director, President and Chief Executive Officer of
the Company since January 1, 1989. Prior to that,
Mr. Duncan was the Executive Vice President and a
director of the Company from 1979 through December,
1988.
Donne F. Fisher (1) 57 Nominee. Director of the Company since 1980. Mr.
Fisher has been a consultant to Tele-Communications,
Inc. ("TCI") since December, 1995 and has been a
director of TCI since 1980. Prior to becoming a
consultant to TCI, he was Executive Vice President of
TCI from December, 1991 to December, 1995 and had
been a Senior Vice President of TCI from 1982 to
December, 1995. He has served as Vice President,
Treasurer and Chief Financial Officer of most of
TCI's subsidiaries. TCI is a cable television
company which owns and operates cable television
systems primarily located in the United States.
John W. Gerdelman (1) 43 Nominee. Director of the Company since July, 1994.
Mr. Gerdelman has been President, Network Services
for MCI Telecommunications Corporation, a wholly
owned subsidiary of MCI Communications Corporation in
Washington, D.C., since September, 1994. Prior to
that, he was Senior Vice President for MCI
Telecommunications Corporation from July, 1992 to
September, 1994. Prior to that, he was President of
MCI Services, Inc. in Sergeant Bluff, Iowa from July,
1989 to July, 1992. MCI through its subsidiaries
provides telecommunication and related services
throughout the country and internationally.
Carter F. Page (1) 64 Director and Chairman of the Board of the Company
since 1980. From December, 1987 to December, 1989,
Mr. Page served as a consultant to WestMarc
Communications, Inc., a wholly owned subsidiary of
TCI ("WSMC"), in matters related to the Company. He
served as President and director of WSMC from 1972 to
December, 1987. Since then and to the present, he has
been managing general partner of Semaphore Partners,
a general partnership and investment vehicle in the
communications industry.
Larry E. Romrell (1) 56 Director of the Company since 1980. Mr. Romrell has
been an Executive Vice President of TCI since 1994,
President and director of TCI Technology Ventures,
Inc. since 1994, and Senior Vice President of TCI
since 1991, is the President of WSMC, and has been
employed by WSMC in various capacities from 1961.
ASS008BD.WP5 Page 5
James M. Schneider (1) 43 Nominee. Director of the Company since July, 1994.
Mr. Schneider has been Senior Vice President Corporate
Finance Consumer Markets for MCI Communications
Corporation in Washington, D.C. since August,
1995. Prior to that, he was Senior Vice President
Finance Consumer Markets for MCI Telecommunications
Corporation since November, 1993. Prior to that, he was
Corporate Controller for MCI from September, 1993 to
November, 1993. Prior to that, Mr. Schneider was with
the accounting firm of Price Waterhouse from 1973 to
September, 1993 and was a partner in that firm from
October, 1983 to September, 1993.
Robert M. Walp (1) 68 Director, Vice Chairman of the Company since January
1, 1989. Prior to that, Mr. Walp served as President
and Chief Executive Officer and a Director of the
Company from 1979.
William C. Behnke 38 Senior Vice President Marketing and Sales for the
Company since January, 1994. Prior to that Mr.
Behnke was Vice President of the Company and
President of GCI Network Systems, Inc. from February,
1992 to January, 1994 when that corporation, a
subsidiary of GCI Communication Corp. (a wholly owned
subsidiary of the Company, "GCC"), was merged into
GCC. Prior to that, he was Vice President of the
Company and General Manager of GCI Network Systems,
Inc. from June, 1989 to February, 1992. Prior to
that, he was Senior Vice President for Transalaska
Data Systems, Inc. from August, 1984 to June, 1989.
Richard P. Dowling 52 Senior Vice President - Corporate Development for the
Company since December, 1990. Prior to that, Mr.
Dowling was Senior Vice President-Operations and
Engineering for the Company from December, 1989 to
December, 1990. Prior to that he was Vice
President-Operations and Engineering for the Company
from 1981 to December, 1989.
G. Wilson Hughes 50 Executive Vice President and General Manager of the
Company since June, 1991. Prior to that, Mr. Hughes
was President and a member of the board of directors
of Northern Air Cargo, Inc. from March, 1989 to June,
1991. Prior to that, he was President and a member
of the board of directors of Enserch Alaska Services,
Inc. from June, 1984 to December, 1988.
John M. Lowber 46 Senior Vice President and Chief Financial Officer for
the Company since December, 1989. Prior to that, Mr.
Lowber was Vice President-Administration for the
Company from 1985 to December, 1989. He has been
Chief Financial Officer for the Company since
January, 1987 and Secretary/Treasurer of the Company
since July, 1988. Prior to joining the Company, Mr.
Lowber was a senior manager at KPMG Peat Marwick.
Dana L. Tindall 34 Senior Vice President-Regulatory Affairs since
January, 1994. Prior to that Ms. Tindall was Vice
President-Regulatory Affairs for the Company from
January, 1991 to January, 1994. Prior to that, she
was Director Regulatory Affairs for the Company from
October, 1989 through December, 1990, and prior to
that she was Manager Regulatory Affairs for the
Company from 1985 to October, 1989.
ASS008BD.WP5 Page 6
============================================= ============== =======================================================
- ------------------------
1 Messrs. Gerdelman, Page, and Walp were, as of the Record Date, Class I directors whose terms will expire
at the time of the 1996 annual shareholder meeting. Messrs. Duncan and Romrell were, as of the Record
Date, Class II directors whose terms will expire at the time of the 1997 annual shareholder meeting.
Messrs. Fisher and Schneider were, as of the Record Date, Class III directors whose terms will expire at
the time of the 1998 annual shareholder meeting. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Acquisition Plan."
- ------------------------
In addition, one of the directors, Mr. Fisher, serves on the boards of
directors of most of TCI's subsidiaries.
Compliance with Section 16(a) of the Exchange Act
Based upon a review of Exchange Act Forms 3, 4, and 5 completed and
furnished to it by Shareholders, the Company is unaware of any director,
officer, or beneficial owner of more than 10 percent of any class of common
stock of the Company who failed to file on a timely basis, as provided in those
forms, reports required under Section 16(a) of that act during the year ended
December 31, 1995.
(2) Item 11, Part III. EXECUTIVE COMPENSATION.
The following text is extracted from the Proxy Statement:
Remuneration of Directors and Executive Officers
Summary Compensation. The following table sets forth a summary of the
compensation paid by the Company to its chief executive officer for services in
all capacities for each of the years ended December 31, 1993, 1994, and 1995,
respectively. It also sets forth similar information for the four most highly
compensated executive officers of the Company aside from the chief executive
officer rendering services to the Company and its subsidiaries, whose aggregate
salary and bonuses exceeded $100,000 for the year ended December 31, 1995 (Mr.
Duncan and these four executive officers, collectively, "Named Executive
Officers").
ASS008BD.WP5 Page 7
==============================================================================================================================
SUMMARY COMPENSATION TABLE
Long Term Compensation
------------------------------------
Annual Compensation Awards Payouts
------------------------- ----------- -------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Annual Restricted Securities All Other
Name & Compensa- Stock Underlying LTIP Compen-
Principal Salary (1) Bonus (1) tion (2),(3) Awards Options/SARs Payouts (4) sation (5)
Position Year ($) ($) ($) ($) (#) ($) ($)
- ------------------------------------------------------------------------------------------------------------------------------
Ronald A. Duncan President 1995 89,550 -0- 14,736 -0- -0- -0- 144,470
and Chief Exec. Officer (6) 1994 89,550 99,960 41,322 -0- -0- -0- 110,400
1993 89,550 27,830 536,970 -0- -0- -0- 103,500
William C. Behnke 1995 110,002 -0- 41,931 -0- 50,000 -0- 20,000
Senior Vice President, 1994 109,168 136,194 90,049 -0- -0- -0- -0-
Marketing and Sales (7) 1993 90,000 41,900 64,569 -0- -0- -0- -0-
G. Wilson Hughes 1995 150,002 -0- 16,305 -0- 260,000 -0- 76,586
Executive Vice President 1994 150,003 89,698 15,843 -0- -0- -0- 61,059
and General Manager (8) 1993 149,547 31,666 9,342 -0- -0- -0- 58,074
John M. Lowber 1995 125,000 -0- 15,321 -0- 100,000 -0- 65,000
Senior Vice President, 1994 125,514 117,757 12,814 -0- -0- -0- 65,000
Administration, Chief 1993 125,000 32,746 177,792 -0- -0- -0- 65,000
Financial Officer,
Secretary/Treasurer (9)
Dana L. Tindall 1995 103,699 24,000 14,949 -0- -0- -0- -0-
Senior Vice President, 1994 93,555 97,467 30,208 -0- -0- -0- -0-
Regulatory Affairs (10) 1993 90,220 38,349 42,299 -0- 50,000 -0- -0-
=============================================================================================================================
- ------------------------
1 Amounts shown include cash and non-cash compensation earned and
received by executive officers as well as amounts earned but deferred
at the election of those officers, including employee base salary and
contributions to the Stock Purchase Plan (included in column (c) of
this table) and bonuses (included in column (d) of this table). Does
not include Company contributions to the Stock Purchase Plan for the
account of the participating employee (included in column (e) of this
table). Does not include value of options granted as shown in column
(g) of this table in that they were not in-the-money at the time of
grant. Mr. Lowber was as of December 31, 1995, the only employee of the
Company. The other individuals named in this table were as of that date
employees of GCC. Management of the Company anticipated that this
arrangement would continue. See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control - Pledges of Stock of
Subsidiaries."
2 Perquisites and other personal benefits, securities and property for
each Named Executive Officer did not exceed the lesser of either
$50,000 or 10% of the total of annual salary and bonus reported for
that individual.
3 During the years ended December 31, 1993 through 1995, Messrs. Duncan,
Lowber, and Hughes and Ms. Tindall participated in the Company's Stock
Purchase Plan through which those persons contributed funds under a
payroll deduction arrangement, and the Company matched those
contributions on a dollar-for-dollar basis. The contributions by the
Company were made to all employees of the Company and its subsidiaries
who participated in the plan, including the identified persons.
Contributions identified in this column (e) are those of the Company to
the plan only. Prior to July 1,
ASS008BD.WP5 Page 8
1995 employee and Company contributions were invested in Company common
stock, and employee contributions received up to 100% matching, as
determined by the Company each year, in Company common stock. On and
after that date, employees could direct their contributions to be
invested by the plan in Company common stock, MCI common stock, TCI
common stock or various identified mutual funds. Also on and after that
date, employee contributions directed into investments other than
Company common stock are to receive Company matching contributions of
up to 50 cents on the dollar as determined by the Board. The
contributions are invested in the name of the plan and for the benefit
of the respective participants in the plan. All securities were
purchased or otherwise acquired at fair market value on the date of
purchase or acquisition. See, "MATTERS TO BE ACTED UPON AT THE MEETING:
1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive
Officers - Stock Purchase Plan."
4 The Company had no long term incentive plan during the three-year
period ended December 31, 1995.
5 All incidental compensation to each Named Executive Officer did not for
the years ended December 31, 1993 through 1995, exceed the lesser of
$50,000 or 10% of total annual salary and bonus reported for the
officer.
6 For 1995, column (e) includes $10,756 of Company matching contributions
to the Stock Purchase Plan.
For 1994, column (e) includes prepaid portion of salary for 1995 of
$30,000 and $9,240 of Company matching contributions to the Stock
Purchase Plan. For 1993, column (e) includes the value of options
exercised (income derived), calculated as the fair market value less
the exercise price of the options at $1.25 per share for 247,947 shares
of Class A common stock granted in April, 1988, in the amount of
$495,894 and includes prepaid portion of salary for 1994 of $30,000 and
$8,994 of Company matching contributions to the Stock Purchase Plan.
For 1993, 1994, and 1995 column (i), includes the deferred compensation
agreement entered into between Mr. Duncan and the Company dated August
13, 1993 ("Second Duncan Deferred Compensation Agreement"). Under the
Second Duncan Deferred Compensation Agreement, the Company is to pay to
Mr. Duncan deferred compensation in an amount not to exceed $625,000
plus interest in addition to the regular compensation he now earns or
may in the future earn. This deferred compensation is to be credited to
Mr. Duncan each July 1 that he is employed by the Company in amounts as
follows:
Year Amount
---- ------
1993 $100,000
1994 100,000
1995 125,000
1996 150,000
1997 150,000
-------
Total $625,000
The full amount of deferred compensation plus accrued interest will be
due and payable to Mr. Duncan upon the termination of his employment
with the Company, provided that, should he voluntarily terminate his
employment or his employment is terminated for cause, only that portion
of the deferred compensation credited as of the December 31 immediately
preceding that termination plus interest will be due and payable and
the remainder of the deferred compensation will be canceled. No
compensation was received by Mr. Duncan under this agreement during the
years ended December 31, 1993, 1994, or 1995.
7 For 1995, column (e) includes the value of options exercised (income
derived) calculated as the fair market value less the exercise price of
the options at $0.001 per share for 10,000 shares of Class A common
stock granted in June, 1989 in the amount of $41,865.
For 1994, column (e) includes the value of options exercised (income
derived), calculated as the fair market value less the exercise price
of the options at $.001 per share for 17,500 shares of Class A common
stock granted in June, 1989 in the amount of $89,983. For 1993, column
(e) includes the value of options exercised (income derived),
calculated as the fair market value less the exercise price of the
options at $.001 per share for 15,000 shares of Class A common stock
granted in June, 1989 in the amount of $64,516.
For 1995, column (i) include an allocation pursuant to a deferred
compensation plan with Mr. Behnke of $20,000 of deferred compensation
vesting over the five year period beginning in 1995.
8 For 1995, column (e) includes the Company's contributions to the Stock
Purchase Plan for the benefit of Mr. Hughes in the amount of $12,750.
ASS008BD.WP5 Page 9
For 1994, column (e) includes the Company's contributions to the Stock
Purchase Plan for the benefit of Mr. Hughes in the amount of $15,000.
For 1993, column (e) includes the Company's contributions to the Stock
Purchase Plan for the benefit of Mr. Hughes in the amount of $8,994.
For 1993 through 1995, column (i), represents the amount accrued
through a deferred compensation agreement entered into between Mr.
Hughes and the Company dated April 30, 1991 ("Hughes Deferred
Compensation Agreement") during and for the years ended December 31,
1993, 1994, and 1995. The Company entered into the Hughes Deferred
Compensation Agreement, a five year deferred bonus agreement, with Mr.
Hughes dated April 30, 1991. Under the Hughes Deferred Compensation
Agreement, Mr. Hughes will receive deferred compensation of $50,000 per
year accrued annually on December 31 of each year of the agreement. The
agreement further provides that accumulated balances on Mr. Hughes
deferred compensation will accrue interest at 10% per year, compounded
annually. The plan was amended to provide for deferred compensation of
$65,000 in 1995 and $75,000 per year in 1996 and in subsequent years.
Each contribution vests over the following three years after the
corresponding contribution. The agreement provides that after five
years, or upon termination of his employment with the Company, Mr.
Hughes may elect to have the full balance of the deferred compensation
paid in cash, in a lump sum or in monthly installments for up to ten
years. The agreement provides that in the event of a deferred payment,
the residual balance will continue to accrue interest. Interest accrued
under the agreement in the amounts of $8,074, $11,059, and $11,585
during the years ended December 31, 1993, 1994, and 1995, respectively.
The agreement is part of an employment agreement described further
elsewhere in this section. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Employment Contracts and Termination
of Employment and Change of Control Arrangements."
9 For 1995, column (e) includes $12,852 of Company matching contributions
to the Stock Purchase Plan.
For 1994, column (e) includes $11,844 of Company matching contributions
pursuant to the Company's Stock Purchase Plan.
For 1993, column (e), includes the value of options exercised (income
derived), calculated as the fair market value less the exercise price
of the option at $1.00 per share for 75,000 shares granted in April,
1988, in the amount of $168,750 and $8,500 of Company matching
contributions to the Stock Purchase Plan.
For 1993, 1994, and 1995, column (i), the amount accrued through the
Lowber Deferred Compensation Agreement ("Lowber Deferred Compensation
Agreement") during and for the years ended December 31, 1993 through
1995, respectively. The Company entered into the Lowber Deferred
Compensation Agreement providing for deferred compensation of $65,000
per year in each year of a seven year term and accruing annually on
July 1 of each year of the term, the proceeds of which were used to
purchase a life insurance policy which has been collaterally assigned
to the Company to the extent of premiums paid by the Company. At the
earlier of termination of employment or upon election by Mr. Lowber
subsequent to the end of the seven year term of the agreement, the
collateral assignment will be terminated with the Company. The
agreement provides that if Mr. Lowber leaves the employment of the
Company voluntarily, he will lose the unvested portion of the
compensation. The Lowber Deferred Compensation Agreement is a part of
Mr. Lowber's employment agreement with the Company described further
elsewhere in this section. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Compensation Committee Report on
Executive Compensation."
10 For 1995, column (e) includes $12,802 of Company matching contributions
pursuant to the Stock Purchase Plan.
For 1994, column (e) includes $13,190 of Company matching contributions
pursuant to the Stock Purchase Plan and the value of options exercised
(income derived), calculated as the fair market value less the exercise
price of $2.25 per share for 5,000 shares of Class A common stock
granted December, 1989, in the amount of $15,312.
For 1993, column (e) includes $6,145 of Company matching contributions
pursuant to the Stock Purchase Plan and the value of options exercised
(income derived), calculated as the fair market value less the exercise
price of $.75 per share for 9,917 shares and $2.25 for 83 shares of
Class A common stock granted in March, 1987 and December, 1989,
respectively, in the total amount of $36,125.
- -------------------
ASS008BD.WP5 Page 10
Option/SAR Grants. The following table sets forth information on the
individual grants of stock options (whether or not in tandem with stock
appreciation rights ("SARs")), and freestanding SARs made during the Company's
fiscal year ended December 31, 1995 to the Named Executive Officers. There were
no tandem SARs or freestanding SARs associated with the Company during this
period.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
Potential Realizable Value
of Assumed
Annual Rates
of Stock Price
Appreciation for
Individual Grants Option Term
----------------------------------------------------- ----------------
(a) (b) (c) (d) (e) (f) (g)
Number of
Securities % of Total
Underlying Options/SARs
Option/SARs Granted to Exercise or Expir-
Granted (1) Employees Base Price (2) ation
Name (#) in Fiscal Year ($/Sh) Date 5% ($) (3) 10% ($) (3)
- ------------------------ ---------------- -------------------- --------------- --------------- ------------ ---------------
Ronald A. Duncan -0- -0- - - - -
William C. Behnke 50,0004 8.2 4.00 3/1/05 126,000 319,000
G. Wilson Hughes 260,0005 42.6 4.00 3/1/05 654,000 1,657,000
John M. Lowber 100,0006 16.4 4.00 3/1/05 252,000 638,000
Dana L. Tindall -0- -0- - - - -
- ------------------------
1 Options in Class A common stock.
2 The exercise price of the options was equal to the market price of the
Class A common stock at the time of grant.
3 The potential realizable dollar value of a grant is calculated as the
product of the following: (1) the difference between (i) the product of
the per-share market price at the time of grant and the sum of 1 plus
the adjusted stock price appreciation rate (the assumed rate of
appreciation compounded annually over the term of the option) and (ii)
the per-share exercise price of the option; and (2) the number of
securities underlying the grant at fiscal year end.
4 The option is for 50,000 shares at $4.00 per share vesting in the
following amounts on the indicated dates: (1) 5,000 shares on March 1,
1998; (2) 15,000 shares on March 1, 1999; (3) 15,000 shares on March 1,
2000; and (4) 15,000 shares on March 1, 2001. The options were granted
pursuant to the Stock Option Plan and will expire if not exercised
before March 1, 2005.
5 The option is for 260,000 shares at $4.00 per share vesting in the
following amounts on the indicated dates: (1) 60,000 shares on June 1,
1997; (2) 60,000 shares on June 1, 1998; (3) 60,000 shares on June 1,
1999; and (4) 80,000 shares on June 1, 2000. The options were granted
pursuant to the Stock Option Plan and will expire if not exercised
before March 1, 2005.
ASS008BD.WP5 Page 11
6 The option is for 100,000 shares at $4.00 per share vesting in the
following amounts on the indicated dates: (1) 10,000 shares on March 1,
1998; (2) 30,000 shares on March 1, 1999; (3) 30,000 shares on March 1,
2000; and (4) 30,000 shares on March 1, 2001. The options were granted
pursuant to the Stock Option Plan and will expire if not exercised
before March 1, 2005.
- ------------------------
Aggregated Option/SAR Exercises and Year-End Option/SAR Value. The
following table sets forth information concerning each exercise of stock options
during the year ended December 31, 1995, by each of the Named Executive Officers
and the fiscal year-end value of unexercised options. There were no tandem SARs
or freestanding SARs associated with the Company during this period.
ASS008BD.WP5 Page 12
AGGREGATED OPTION/SAR EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUE TABLE
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs at
at FY-End (#) FY-End ($) (1),(2)
Shares Acquired Value
on Exercise Realized (1) Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable
- ------------------------------- --------------------- --------------- ----------------------- -----------------------
Ronald A. Duncan -0- -0- 90,000/110,000 180,000/220,000
William C. Behnke 10,000 41,865 160,190/75,000 575,865/100,000
G. Wilson Hughes -0- -0- 200,000/310,000 650,000/422,500
John M. Lowber -0- -0- 167,500/182,500 560,000/265,000
Dana L. Tindall -0- -0- 71,400/85,000 155,600/170,000
- -----------------------
1 The dollar values in columns (c) and (e) of the table are calculated by
determining the difference between the fair market value of the
securities underlying the options and the exercise price of the options
at exercise or fiscal year-end, respectively.
2 An option is "in-the-money" if the fair market value of the underlying
securities exceeds the exercise price of the option.
- -----------------------
Long-Term Incentive Plan Awards. The Company had no long-term incentive
plan in operation during the year ended December 31, 1995.
Stock Purchase Plan. The Company adopted the Qualified Employee Stock
Purchase Plan in December, 1986, and the plan has subsequently been amended
several times by shareholder and board of director actions ("Stock Purchase
Plan"). The Stock Purchase Plan is qualified under Section 401 of the Internal
Revenue Code of 1986. The plan has been allocated 2.4 million shares of Class A
and 240,000 shares of Class B common stock of the Company for issuance to or
acquisition by the plan. Of those amounts, as of the Record Date, 620,706 shares
of Class A and 68,123 shares of Class B common stock remain available for
issuance or acquisition by the plan.
The Stock Purchase Plan permits each employee of the Company, each
employee of a subsidiary of the Company, and each employee of a subsidiary of a
subsidiary of the Company, who has completed one year of service and is at least
21 years of age to elect to participate in it. Eligible employees may elect to
reduce their compensation in any even dollar amount up to 10% of such
compensation through contributions to the plan up to a maximum of $9,500 for
1996. This limit is adjusted annually based upon inflation, at the direction of
the Internal Revenue Service. An eligible employee may contribute up to 10%
ASS008BD.WP5 Page 13
of the employee's compensation with after-tax dollars, or the employee may elect
a combination of salary reductions and after-tax contributions.
The Company may under the plan match employee salary reductions and
after tax contributions in any amount up to 100% as elected by the Company each
year. However, no more than 10% of any one employee's compensation will be
matched in any year. The combination of salary reductions, after tax
contributions, and Company matching contributions cannot exceed 25% of any
employee's compensation (determined after salary reduction) for any year. The
Company's contributions will vest over six years. Prior to July 1, 1995,
employee and Company contributions were invested in Company common stock and
employee contributions received up to 100% matching, as determined by the
Company each year, in Company common stock. On and after that date, employees
could direct their contributions to be invested by the plan in Company common
stock, MCI common stock, TCI common stock or various identified mutual funds.
Also on and after that date, employee contributions directed into investments
other than Company common stock are to receive Company matching contributions of
up to 50 cents on the dollar as determined by the Board. The contributions are
invested in the name of the plan for the benefit of the respective participants
in the plan.
The Stock Purchase Plan is administered through a plan committee whose
chair is the plan administrator. The assets of the plan are invested from time
to time by the plan administrator under the direction of the trustee which as of
the Record Date was National Bank of Alaska. As of the Record Date, the plan
administrator was Alfred J. Walker. The plan administrator and members of the
committee were all employees of the Company or its subsidiaries. The plan
administrator and committee members are appointed by the Board. The committee
has broad administrative discretion under the terms of the plan.
The purpose of the Stock Purchase Plan is to provide employees of the
Company, its subsidiaries, and their subsidiaries a convenient means of
investing in the Company. The plan provides an incentive to employees as
shareholders of the Company to redouble their efforts to make the Company
successful and thereby increase the value of their investments. Through
discretionary contributions by the Company to the plan which in turn increase
the stock ownership in the Company by participants in the plan, the plan
provides further incentive to employees of the Company.
Stock Option Plan. The Company adopted its 1986 Stock Option Plan in
December, 1986, and the plan has subsequently been amended several times by
shareholder and board of directors action ("Stock Option Plan"). The Stock
Option Plan is a non-qualified plan under the Internal Revenue Code of 1986.
The Stock Option Plan has been allocated 3,200,000 shares of Class A
common stock of the Company to be subject to options granted under the plan and
further subject to adjustment upon the occurrence of stock dividends, stock
splits, mergers, consolidations, or certain other changes in corporate structure
or capitalization. Of that amount, as of the Record Date, 2,289,900 shares were
subject to outstanding options, 578,256 shares had been issued upon the exercise
of options under the plan, and 331,844 shares of that stock remained available
for subsequent granting of options under the plan.
Through the Stock Option Plan, the Company acting through its board of
directors may provide special incentives to officers, non-employee directors,
and other key employees by offering them an opportunity to acquire an equity
interest in the Company. An option granted under the Stock Option Plan may have
an option exercise price less than, equal to, or greater than the fair market
value on the date of grant of the option. Options granted pursuant to the Stock
Option Plan are only exercisable if at the time of exercise the option holder is
an employee, or non-employee director, of the Company.
ASS008BD.WP5 Page 14
The Stock Option Plan provides that all options granted under the plan
must expire not later than ten years after the date of grant. If an option
expires or terminates, the shares subject to the option will be available for
future grants of options under the Stock Option Plan. The plan provides that it
shall continue until such time as the Board's adoption, by a simple majority
vote, of a resolution suspending or terminating the plan or discontinuing
granting options under the plan. However, any such suspension, termination, or
discontinuance will not affect options then outstanding under the plan. No
options may be granted after termination of the plan.
The Stock Option Plan is administered by a committee composed of the
Board. Key employees, including officers and directors and non-employee
directors of the Company, are eligible to participate in the plan. The committee
selects the eligible employees to whom options are granted and, subject to the
terms of the Stock Option Plan, the number of shares subject to each option.
Subject to the provisions of the Stock Option Plan, the committee has broad
discretion in administering the plan, and is authorized to determine the times
at which options will be granted and exercisable and the fair market value of
the shares covered by each option at the time of grant, to prescribe the form
evidencing options, to interpret the plan, and to prescribe, amend, and rescind
rules and regulations relating to the plan.
Unfunded Deferred Compensation Plan. In February, 1995 the Company
established a non-qualified, unfunded deferred compensation plan to provide a
means by which certain employees of the Company and its subsidiaries may elect
to defer receipt of designated percentages or amounts of their compensation and
to provide a means for certain other deferrals of compensation. Employees
eligible to participate in the plan are determined by the Board.
The Company may, at its discretion, contribute matching deferrals in
amounts selected by the Company. Participants immediately vest in all elective
deferrals and all income and gain attributable to that participation. Matching
contributions and all income and gain attributable to them over a six-year
period. Participants may elect to be paid in either a single lump sum payment or
annual installments over a period not to exceed 10 years. Vested balances are
payable upon termination of employment, unforeseen emergencies, death and total
disability. Participants are general creditors of the Company with respect to
deferred compensation benefits of the plan.
Compensation To Directors. In July, 1995, each director of the Company
(with the exceptions of Messrs. Schneider and Gerdelman) received $2,000 in
director fees for the 12 month period July, 1995 -June, 1996. Messrs. Schneider
and Gerdelman, as a matter of MCI Communications Corporation policy, declined to
accept such remuneration for serving on a board outside of MCI and its
subsidiaries. During the year ended December 31, 1995, the directors of the
Company received no other direct compensation for serving in those capacities
but were reimbursed for travel and out-of-pocket expenses incurred in connection
with attendance at meetings of the Board. The same policy was followed during
calendar year 1996 up through the Record Date, and management anticipated that
such policy would continue through the balance of 1996. It is anticipated that
the directors will receive similar director fees in July, 1996 for the 12 month
period July 1996 - June 1997.
Employment Contracts and Termination of Employment and Change of Control
Arrangements
The Company entered into employment agreements with Mr. Hughes in
April, 1991 and with Mr. Lowber in July, 1992 and has deferred compensation
agreements with Messrs. Duncan, Hughes, Behnke and Lowber, the terms of which
are described elsewhere in this Proxy Statement. See footnotes 6 through 9 to
the Summary Compensation Table in "MATTERS TO BE ACTED UPON AT THE MEETING: 1.
DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers - Summary
Compensation." The Company has no employment agreements with Ms. Tindall, the
other Named Executive Officer.
ASS008BD.WP5 Page 15
The Company entered into a deferred compensation agreement with Mr.
Duncan in June, 1989 ("First Duncan Deferred Compensation Agreement"). Under the
First Duncan Deferred Compensation Agreement as of June 12, 1989, the Company
credited an account on its books with $325,000 for the benefit of Mr. Duncan as
a deferred bonus for Mr. Duncan's past service to the Company. Amounts in the
account were to accrue interest at 10% per annum unless there was an investment
election by Mr. Duncan to have the balance in the account treated as though it
was invested in the common stock of the Company, In July, 1989, Mr. Duncan made
the investment election, and the Company issued a total of 105,111 shares of
Class A common stock in its name for the benefit of Mr. Duncan. The stock is not
voted. The full amount of the deferred compensation will be due and payable to
Mr. Duncan upon the termination of his employment with the Company. The Company
entered into a Second Duncan Deferred Compensation Agreement with Mr. Duncan as
further described in footnote 6 to the Summary Compensation Table found
elsewhere in this Proxy Statement. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive
Officers - Summary Compensation." In September, 1995, the Company agreed to buy
back 100,000 shares of its Class A common stock to fund the vested portion
subject to that second agreement. However, with the concurrence of Mr. Duncan,
the Company subsequently during September-October, 1995 bought a total of only
13,750 shares under that second agreement for a total of $47,880, i.e., at a
weighted average of $3.48 per share.
Mr. Hughes' employment agreement provides for base compensation and in
addition deferred compensation of $50,000 per year for five years accruing
interest at 10% per annum, compounded annually. The plan was amended to provide
for deferred compensation of $65,000 in 1995 and $75,000 per year in 1996 and in
subsequent years. Each contribution vests over the following three years after
the corresponding contributions. This compensation is tied to achievement of the
Company's cash flow objectives with the opportunity for significant increases in
the level of compensation if the Company exceeds those objectives. Mr. Hughes
has also been granted stock options for 250,000 shares of Class A common stock
at $1.75 per share which will vest over a period of five years, but one-half of
any remaining unvested portion of the options will be vested at the option of
the Company, should Mr. Hughes' employment with the Company be terminated by the
Company. In September, 1995, the Company agreed to buy back 3,750 shares of its
Class A common stock to fund certain of the vested portions subject to the
Hughes Deferred Compensation Agreement. The total purchase price was $12,658,
i.e., at $3.375 per share.
Mr. Lowber's employment agreement provides for base compensation and in
addition deferred compensation of $450,000 to vest over seven years at the rate
of $65,000 per year, with full vesting to occur should he die, his position in
the Company be terminated, or the Company terminate his employment. In addition,
Mr. Lowber is to receive an annual cash bonus of $30,000 based upon Company and
individual performance.
The Company entered into a deferred compensation agreement with Mr.
Behnke in February, 1995 ("Behnke Deferred Compensation Agreement'). Under the
Behnke Deferred Compensation Agreement Mr. Behnke is to receive $20,000 per
year, to vest over a five year period including the year of the allocation, and
accruing interest at 10% per annum. The first allocation under the plan was made
in December, 1995.
Except as disclosed in this Proxy Statement, as of December 31, 1995
and the Record Date, there were no compensatory plans or arrangements including
payments to be received from the Company with respect to the Named Executive
Officers for the year ended December 31, 1995 where such a plan or arrangement
resulted in or will result from the resignation, retirement, or any other
termination of such individual's employment with the Company or its subsidiaries
or from a change of control of the Company or a change in the individual's
responsibilities following a change in control and where the amount involved,
including all periodic payments or installments, exceeded $100,000.
ASS008BD.WP5 Page 16
Report on Repricing of Options/SARs
During the year ended December 31, 1995, the Company did not adjust or
amend the exercise price of stock options or SARs previously awarded to any of
the Named Executive Officers, whether through amendment, cancellation or
replacement grants, or any other means.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee is composed of the members of the Board, and
the identity and relationships of the members of the committee to the Company
are described elsewhere in this Proxy Statement. See, "MATTERS TO BE ACTED UPON
AT THE MEETING: 1. DIRECTOR ELECTIONS - Business Background of Directors,
Nominees, and Executive Officers of the Company," "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT" and "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS." During the year ended December 31, 1995, both Messrs. Walp and
Duncan, executive officers of the Company, participated in deliberations of the
Compensation Committee concerning executive officer compensation but not
including their respective compensations.
Compensation Committee Report on Executive Compensation
In January, 1994, the Board established a compensation committee
composed of all of the members of the Board ("Compensation Committee"). The
Board established the duties of the Compensation Committee as follows:
(1) Preparing, on an annual basis for the review of and action
by the Board, a statement of policies, goals, and plans for executive
officer and Board member compensation, if any, and, specifically a
statement of expected performance and compensation of and the criteria
on which compensation is based for the chief executive officer and such
other executive officers of the Company as the Board may designate for
this purpose;
(2) Monitoring the effect of ongoing events on and the
effectiveness of existing compensation policies, goals, and plans,
including but not limited to the status of the premise that all pay
systems correlate with the compensation goals and policies of the
Company, and, at its own direction or at the direction of the Board;
(3) Monitoring compensation-related publicity and public and
private sector developments on executive compensation;
(4) Familiarizing itself with and monitoring the tax,
accounting, corporate, and securities law ramifications of the
compensation policies of the Company, including but not limited to
comprehending a senior executive officer's total compensation package,
its total cost to the Company and its total value to the recipient,
paying close attention to salary, bonuses, individual insurance and
health benefits, perquisites, loans made or guaranteed by the Company,
special benefits to specific executive officers, individual pensions,
and other retirement benefits;
(5) Establishing the overall cap on executive compensation,
the measure of performance for executive officers, either by
predetermined measurements or by a subjective evaluation; and
(6) Striving to make the compensation plans of the Company
simple, fair, and structured so as to maximize shareholder value.
ASS008BD.WP5 Page 17
For the year ended December 31, 1995, the duties of the Compensation
Committee in the area of executive compensation specifically included addressing
the reasonableness of compensation paid to executive officers. In doing so, the
committee took into account how compensation compared to compensation paid by
competing companies as well as the Company's performance and available
resources.
The compensation policy of the Company as established by the
Compensation Committee is that a portion of the annual compensation of senior
executive officers relates to and is contingent upon the performance of the
Company. In addition, executive officers participating in deferred compensation
agreements established by the Company are under those agreements unsecured
creditors of the Company.
In February, 1995 the Compensation Committee established compensation
levels for all corporate officers including the Named Executive Officers. Also
at that time the Compensation Committee established structured annual incentive
bonus agreements with Mr. Duncan and with each of several of its executive
officers, including Messrs. Behnke, Hughes and Lowber, and Ms. Tindall. The
agreements included the premise that the Company's performance, or that of a
division or subsidiary, as the case may be, for purposes of compensation would
be measured by the Compensation Committee against goals established at that time
and were reviewed and approved by the Board. The goals included targets for
revenues and cash flow standards for the Company or the relevant division or
subsidiary. Targeted objectives were set and measured from time to time by the
Compensation Committee. Other business achievements of the Company obtained
through the efforts of an executive officer were also taken into consideration
in the evaluation of performance. See, "MATTERS TO BE ACTED UPON AT THE MEETING:
1. DIRECTOR ELECTIONS - Remuneration of Directors and Executive Officers -
Summary Compensation."
During the year ended December 31, 1995 the Compensation Committee
monitored and provided direction for the Company's Stock Purchase Plan and Stock
Option Plan. Because the incentive bonus standards set by the committee for the
Company for that year were not met, no incentive bonuses tied to Company
performance were awarded to the Named Executive Officers and other executive
officers of the Company or to the officers of the subsidiaries of the Company.
In addition, the Compensation Committee reviewed compensation levels of members
of management, evaluated the performance of management, and considered
management succession and related matters. The Compensation Committee reviewed
in detail all aspects of compensation for the Named Executive Officers and other
executive officers of the Company. Corresponding duties were carried out by the
boards of directors of the subsidiaries of the Company with respect to employees
of those entities, and the same individuals served as directors of each of these
boards.
The practice of the Compensation Committee in future years will likely
be to review directly the compensation and performance of Mr. Duncan as chief
executive officer and to review recommendations by Mr. Duncan for the
compensation of other senior executive officers.
Performance Graph
The following graph includes a line graph comparing the yearly
percentage change in the Company's cumulative total shareholder return on its
Class A common stock during the five year period from December 31, 1990 through
December 31, 1995. This return is measured by dividing (1) the sum of (a) the
cumulative amount of dividends for the measurement period (assuming dividend
reinvestment, if any) and (b) the difference between the Company's share price
at the end and the beginning of the measurement period, by (2) the share price
at the beginning of that measurement period. This line graph is compared in the
following graph with two other line graphs during that five year period: (1) a
market
ASS008BD.WP5 Page 18
index and (2) a peer index. The market index is the Center for Research in
Securities Prices Index for the Nasdaq Stock Market for United States companies.
It presents cumulative total returns for a broad based equity market assuming
reinvestment of dividends and is based upon companies whose equity securities
are traded on the Nasdaq Stock Market. The peer index is the Center for Research
in Securities Prices Index for Nasdaq Telecommunications Stock. It presents
cumulative total returns for the equity market in the telecommunications
industry segment assuming reinvestment of dividends and is based on companies
whose equity securities are traded on the Nasdaq Stock Market. The line graphs
represent monthly index levels derived from compounding daily returns.
In constructing each of the line graphs in the following graph, the
closing price at the beginning point of the five year measurement period has
been converted into a fixed investment, stated in dollars, in the Company's
Class A common stock (or in the stocks represented by a given index in the cases
of the two comparison indexes), with cumulative returns for each subsequent
fiscal year measured as a change from that investment. Data for each succeeding
fiscal year during the five-year measurement period are plotted with points
showing the cumulative total return as of that point. The value of a
shareholder's investment as of each point plotted on a given line graph is the
number of shares held at that point multiplied by the then prevailing share
price.
The Company's Class B common stock is traded over-the-counter on a more
limited basis, and therefore comparisons similar to those previously described
for the Class A common stock are not directly available. However, the
performance of Class B common stock may be analogized to that of the Class A
common stock in that the Class B common stock is readily convertible to Class A
common stock by request to the Company.
ASS008BD.WP5 Page 19
As to the electronic filing of the Form 10-K/A with the Securities and
Exchange Commission, the Performance Graph is presented in the following tabular
form giving the cumulative total returns as of the last business day for each
year in question:
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
GENERAL COMMUNICATION, INC.
================================= ======================= ========================== ===============================
NASDAQ Stock NASDAQ Peer
Market Index Index for
Measurement Period for U.S. Telecommunications
(Fiscal Year Covered) Company Companies Stock
- --------------------------------- ----------------------- -------------------------- -------------------------------
Measurement Point
12/31/90 $100.00 $100.00 $100.00
FYE 12/31/91 90.48 160.56 137.92
FYE 12/31/92 123.81 186.87 169.40
FYE 12/31/93 241.27 214.51 261.20
FYE 12/30/94 196.83 209.69 215.95
FYE 12/29/95 260.32 296.30 259.94
================================= ======================= ========================== ===============================
ASS008BD.WP5 Page 20
(3) Item 12, Part III. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following text is extracted from the Proxy Statement.
SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
Principal Shareholders
So far as is known to management of the Company, as of the Record Date,
the following persons each owned beneficially more than 5% of the outstanding
shares of Class A common stock or Class B common stock of the Company. A
beneficial owner includes any person who, directly or indirectly, through any
contract, arrangement, understanding, relationship, or otherwise, has or shares
the following powers within 60 days of the Record Date: (1) voting power, which
includes the power to vote or to direct the voting of shares of common stock of
the Company; or (2) investment power, which includes the power to dispose of or
to direct the disposition of, such shares of common stock of the Company. So far
as is known to the Company, the persons named in the table had sole voting and
investment power with respect to the shares indicated as owned by them except as
otherwise stated in the footnotes to the table. Shares issuable upon exercise of
outstanding options and warrants are deemed to be outstanding for the purpose of
computing the percentage of ownership of persons owning such options or warrants
but have not been deemed to be outstanding for the purpose of computing the
percentage of ownership of any other person.
ASS008BD.WP5 Page 21
==============================================================================================================
SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS
Title Amount and Nature
of Name and Address of Beneficial Percent
Class of Beneficial Owner Ownership of Class
- ------------------------------ ------------------------------- ------------------------- ---------------------
Class A Ronald A. Duncan 1,281,971 (1) 6.4
Class B 2550 Denali St., Suite 1000 248,062 (1) 5.9
Anchorage, Alaska 99503
Class A General Communication, Inc. 1,688,643 8.6
Class B Employee Stock Purchase Plan 145,698 3.5
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Class A Bufka & Rodgers, Inc. 1,116,900 5.7
Class B 425 North Martingale Road, -0- -
Suite 750
Schaumburg, Illinois 60173
Class A Kearns-Tribune Corporation 300,200 1.5
Class B 400 Tribune Building 225,000 5.4
Salt Lake City, Utah 84111
Class A Bob Magness 273,992 (2) 1.4
Class B Chairman of the Board 815,048 (2) 19.5
Tele-Communications, Inc.
5619 DTC Parkway
Englewood, Colorado 80111
Class A MCI Telecommunications 6,251,509 (3) 31.7
Class B Corporation 1,275,791 (3) 30.5
1801 Pennsylvania Avenue, N.W.
Washington, D.C. 20006
Class A Robert M. Walp 572,845 (4) 2.9
Class B 804 P Street, No. 4 303,457 (4) 7.3
Anchorage, Alaska 99501
Class A Voting Agreement 7,638,900 (5) 38.8
Class B c/o General Communication, 2,400,591 (5) 57.5
Inc.
2550 Denali Street, Suite 1000
Anchorage, Alaska 99503
Attn: Ronald A. Duncan
Class A Wellington Management Co. 1,400,800 (6) 7.1
Class B 75 State Street -0- -
Boston, Massachusetts 02109
Class A TCI GCI, Inc. -0- -
Class B 5619 DTC Parkway 590,043 (7) 14.1
Englewood, Colorado 80111
============================== =============================== ========================= =====================
- -------------------
1 Includes 18,560 shares of Class A and 8,242 shares of Class B common
stock gifted by Mr. Duncan to the Amanda Miller Trust, where Ms. Miller
is the daughter of Mr. Duncan's spouse, Dani Bowman, and Mr. Duncan has
a reversionary interest in those shares. Includes 105,111 shares of
Class A common stock of the Company held by the Company in its name but
for the benefit of Mr. Duncan pursuant to the terms of the First Duncan
Deferred Compensation Agreement and 13,750
ASS008BD.WP5 Page 22
shares of Class A common stock of the Company held by the Company in
its name but for the benefit of Mr. Duncan pursuant to the terms of the
Second Duncan Deferred Compensation Agreement. See "MATTERS TO BE ACTED
UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors
and Executive Officers - Summary Compensation." Includes 852,775 shares
of Class A and 233,708 shares of Class B common stock of the Company
owned by Mr. Duncan but subject to a Voting Agreement. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement." Does not include 5,760 shares of Class A
or 27,020 shares of Class B common stock held by Ms. Bowman, to which
Mr. Duncan disavows any interest.
Mr. Duncan had as of the Record Date the following interests in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote -852,775 shares of Class A and
233,708 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition - 103,341 shares of Class A and no shares of
Class B common stock; and (4) shared power to dispose or to direct the
disposition - 841,209 shares of Class A and 239,820 shares of Class B
common stock.
2 Includes 177,324 shares of Class A common stock of the Company and
194,440 shares of Class B common stock of the Company from the Estate
of Betsy Magness, in which Mr. Magness is beneficial owner and
executor.
Mr. Magness owns 25 percent, beneficially and of record, and another 25
percent, beneficially as executor of the Estate of Betsy Magness, of
the stock of KGBB, Inc., a Colorado corporation which holds 40,000
shares of Class A common stock of the Company, and as a result may be
deemed to have shared voting and investment power over those 40,000
shares. The number of shares in the table includes 20,000 shares of
Class A common stock of the Company directly and beneficially owned by
Mr. Magness due to his shareholdings in KGBB, Inc.
3 All of these shares are subject to a Voting Agreement. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement."
MCI Telecommunications Corporation had as of the Record Date the
following interests in the shares beneficially owned by it: (1) sole
power to vote or to direct the vote - no shares of Class A or Class B
common stock; (2) shared power to vote or to direct the vote -
6,251,509 shares of Class A common stock and 1,275,791 shares of Class
B common stock; (3) sole power to dispose or to direct the disposition
- 6,251,509 shares of Class A and 1,275,791 shares of Class B common
stock; (4) shared power to dispose or to direct the disposition - no
shares of Class A or Class B common stock.
4 Includes 534,616 shares of Class A and 301,049 shares of Class B common
stock of the Company owned by Mr. Walp but subject to a Voting
Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Voting Agreement."
Mr. Walp had as of the Record Date the following interests in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote - 534,616 shares of Class A and
301,049 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition- 534,616 shares of Class A and 301,049 shares of
Class B common stock; and (4) shared power to dispose or to direct the
disposition - 38,229 shares of Class A and 2,408 shares of Class B
common stock.
5 The Voting Agreement is described elsewhere in this Proxy Statement.
Does not include shares to be issued to the Prime Sellers. See
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement."
6 Number of shares beneficially owned by the reporting person with shared
dispositive power. Number of shares beneficially owned by the reporting
person with shared voting power was 720,800 shares.
7 All of these shares are subject to the Voting Agreement. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in
Control - Voting Agreement."
TCI GCI, Inc. had as of the Record Date the following interests in the
shares beneficially owned by it: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote - no shares of Class A common stock
and 590,043 shares of Class B common stock; (3) sole power to dispose
or to direct the disposition - no shares of Class A common stock and
590,043 shares of Class B common stock; (4) shared power to dispose or
to direct disposition - no shares of Class A or Class B common stock.
- ------------------
ASS008BD.WP5 Page 23
Management
The following table sets forth information with respect to the
beneficial ownership of shares of the Company's Class A and Class B common stock
as of the Record Date by each director and nominee of the Company, by the Named
Executive Officers and by all directors and executive officers of the Company as
a group. Shares issuable upon exercise of outstanding options and warrants are
deemed to be outstanding for the purpose of computing the percentage of
ownership of the individual owning such options or warrants but have not been
deemed to be outstanding for the purpose of computing the percentage of
ownership of any other individual. So far as is known to the Company, the
individuals identified in the table had sole voting and investment power with
respect to the shares indicated as owned by them except as otherwise stated in
the footnotes to the table.
ASS008BD.WP5 Page 24
====================================================================================================================
SHAREHOLDINGS OF MANAGEMENT OF THE COMPANY
Amount and Nature
Title of Beneficial Percent
Class Name of Beneficial Owner Ownership (1),(2) of Class (3)
- ------------------------------ ---------------------------- --------------------------- ----------------------------
Class A William C. Behnke 235,274 1.2
Class B -0- -
Class A Ronald A. Duncan 1,281,971 (4) 6.4
Class B 248,062 (4) 5.9
Class A Donne F. Fisher 211,307 (5) 1.0
Class B 27,688 (5) *
Class A John W. Gerdelman -0- (6) -
Class B -0- (6) -
Class A G. Wilson Hughes 545,726 (7) 2.7
Class B 2,642 *
Class A John M. Lowber 413,488 2.0
Class B 6,140 *
Class A Carter F. Page 207,327 1.0
Class B 25,246 *
Class A Larry E. Romrell -0- (5) *
Class B 328 (5) *
Class A James M. Schneider -0- (6) -
Class B -0- (6) -
Class A Dana L. Tindall 190,760 1.0
Class B 3,647 *
Class A Robert M. Walp 572,845 (8) 2.9
Class B 303,457 (8) 7.3
Class A All Directors and 4,113,1755 (6) 19.3
Class B Executive Officers as a 699,3785 (6) 16.8
Group
(13 Persons)
============================== ============================ =========================== ============================
- ------------------------
1 Includes interests of executive officers and directors in shares of
common stock of the Company held as of December 31, 1995 by the
trustees the Company's Stock Purchase Plan in that allocations under
the plan are made quarterly on March 31, June 30, September 30, and
December 31. These shares are not immediately accessible to
participants in that plan. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and
Executive Officers - Summary Compensation and Stock Purchase Plan."
2 Includes options and warrants granted to individual directors and
executive officers as of the Record Date.
3 An asterisk (*) means the person is the beneficial owner of less than
1% of the corresponding class of common stock.
4 Includes 18,560 shares of Class A and 8,242 shares of Class B common
stock gifted by Mr. Duncan to the Amanda Miller Trust, where Ms. Miller
is the daughter of Mr. Duncan's spouse Dani Bowman, and Mr. Duncan has
a reversionary interest in those shares. Includes 105,111 shares of
Class A common stock of the Company held by the Company in its name but
for the benefit of Mr. Duncan pursuant to the terms of the First Duncan
Deferred Compensation Agreement and 13,750 shares of Class A common
stock of the Company held by the Company in its name but for the
benefit of Mr. Duncan pursuant to the terms of the Second Duncan
Deferred Compensation Agreement. See, "MATTERS TO BE ACTED UPON AT THE
MEETING: 1. DIRECTOR ELECTIONS - Remuneration of Directors and
Executive Officers - Summary
ASS008BD.WP5 Page 25
Compensation." Includes 852,775 shares of Class A and 233,708 shares of
Class B common stock of the Company owned by Mr. Duncan but subject to
a Voting Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Voting Agreement." Does not include
5,760 shares of Class A or 27,020 shares of Class B common stock held
by Ms. Bowman, to which Mr. Duncan disavows any interest.
Mr. Duncan had as of the Record Date the following interest in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote -852,775 shares of Class A and
233,708 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition - 103,341 shares of Class A and no shares of
Class B common stock; and (4) shared power to dispose or to direct the
disposition - 841,209 shares of Class A and 239,780 shares of Class B
common stock.
5 Does not include holdings of TCI GCI, Inc. in the Company, where TCI
GCI, Inc. is a subsidiary of TCI and Mr. Fisher is a consultant for and
Mr. Romrell is an officer of TCI.
6 Does not include holdings of MCI Telecommunications Corporation in the
Company, where Messrs. Gerdelman and Schneider are officers of that
corporation.
7 Includes 3,750 shares of Class A common stock of the Company held by
the Company in its name but for the benefit of Mr. Hughes pursuant to
the terms of the Hughes Deferred Compensation Agreement. See, "MATTERS
TO BE ACTED UPON AT THE MEETING: 1. DIRECTOR ELECTIONS - Remuneration
of Directors and Executive Officers - Summary Compensation."
8 Includes 534,616 shares of Class A and 301,049 shares of Class B common
stock of the Company owned by Mr. Walp but subject to a Voting
Agreement. See, "SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND
MANAGEMENT: Changes in Control - Voting Agreement."
Mr. Walp had as of the Record Date the following interests in the
shares beneficially owned by him: (1) sole power to vote or to direct
the vote - no shares of Class A or Class B common stock; (2) shared
power to vote or to direct the vote - 534,616 shares of Class A and
301,049 shares of Class B common stock; (3) sole power to dispose or to
direct the disposition - 534,616 shares of Class A and 301,049 shares
of Class B common stock; and (4) shared power to dispose or to direct
the disposition - 38,229 shares of Class A and 2,408 shares of Class B
common stock.
- ----------------------
Changes in Control
Acquisition Plan. On March 14, 1996 the Company entered into four
non-binding letters of intent as an initial step in a plan of acquisition
("Acquisition Plan") to acquire several Alaskan cable companies ("Cable
Companies") that offer cable television services to more than 101,000
subscribers serving approximately 74% of households throughout the state. The
total purchase price is approximately $280.7 million, and, as a part of the
Acquisition Plan, the Company is to issue approximately 16.3 million share of
Class A common stock to the owners of the Cable Companies valued at $105.7
million. The balance of the purchase price is to be provided by approximately
$175 million of bank financing. As a part of the Acquisition Plan, the Company
proposes to raise additional capital separate from the acquisitions through a
sale of 2 million shares of Class A common stock ("MCI Company Shares") to MCI
Telecommunications Corporation ("MCI") valued at $13 million. The Company has
entered into a non-binding letter of intent with MCI on that proposed sale. Both
the shares to be issued to MCI and to the Cable Company owners are valued at
$6.50 per share. The letters of intent provide that the definitive terms and
conditions for several proposed transactions of the Acquisition Plan ("Proposed
Transactions") are to be reduced to written agreements with final closings to
occur not later than December 31, 1996. As of April 29, 1996, the Company was in
the process of entering into those agreements ("Purchase Agreements"), subject
to, among other conditions, the prior approval of the shareholders of the
Company.
The Cable Companies involved in the Proposed Transactions are as
follows: (1) Prime Cable of Alaska, L.P. ("Prime"); (2) Alaska Cablevision, Inc.
("Alaska Cablevision"); (3) McCaw/Rock Homer Cable System, a joint venture, and
McCaw/Rock Seward Cable System, a joint venture ("McCaw/Rock Homer
ASS008BD.WP5 Page 26
Cable System" and "McCaw/Rock Seward Cable System," respectively, collectively,
"McCaw/Rock Cable Systems"); and (4) Alaskan Cable Network, Inc. ("Alaskan
Cable").
Prime owns and operates cable television businesses located in
Anchorage, Eagle River, Chugiak, Kenai, Soldotna, Bethel, Fort Richardson, and
Elmendorf Air Force Base, Alaska ("Prime Alaska System"). Alaska Cablevision
owns and operates cable television businesses and cable television systems
located in Petersburg, Wrangell, Cordova, Valdez, Kodiak, Nome, and Kotzebue,
Alaska. McCaw/Rock Homer Cable System owns and operates the cable television
business and cable television system located in Homer, Alaska. McCaw/Rock Seward
Cable System owns and operates the cable television business and cable
television system located in Seward, Alaska. Alaskan Cable owns and operates
cable television businesses and cable television systems located in Fairbanks,
Juneau, Sitka and Ketchikan, Alaska.
As a result of the final closing on the Proposed Transactions, there
will be no material differences in the rights of shareholders of the Company.
However, a substantial number of new shares of Class A common stock will be
issued to certain of the Cable Companies or their principals, thus diluting the
interest of existing shareholders.
The Prime Purchase Agreement centers on the Company's offer to acquire
all of the partnership and participation interests in Prime from the present
holders of those securities who are entities affiliated with a Prime management
group ("Prime Sellers"). As a result of the Proposed Transactions involving
Prime, the Company would become the owner, directly or indirectly through
wholly-owned subsidiaries, of 100% of the limited partner and general partner
interests in Prime. Under the Prime Purchase Agreement, the Company is to
deliver to the Prime Sellers at closing 11.8 million shares of its Class A
common stock in payment and exchange for those security interests in Prime.
Under that agreement the Prime Sellers are to have the right to require
registration of those shares under the federal Securities Act of 1933, as
amended ("Securities Act"), for the initial distribution to them and, if
required, subsequent resales by them in the open market. Such rights are subject
to restrictions on resales during the 149 day period commencing with the final
closing date of the agreement. The Prime Purchase Agreement provides that Prime
II Management, L.P., the manager of Prime as of the Record Date, is to enter
into a management agreement ("Prime Management Agreement") with the Company
whereby the limited partnership would for a fee provide management services to
Prime with respect to the Prime Alaska System. The term of the Prime Management
Agreement is to be nine years, but it is terminable after two years at the
option of either party.
The Prime Purchase Agreement is subject to a number of conditions
precedent to its final closing including the obtaining of consents of various
persons including state and federal regulators, shareholders of the parties
involved including the Company, the Prime owners, lenders, and partners, and the
Company's lenders. It is also subject to MCI purchasing the MCI Company Shares
as further described below.
Under the Prime letter of intent, the Company is to take such actions
as are necessary to cause its Board to expand to include two additional members.
The Company is to cooperate with the Prime Sellers to amend the Voting Agreement
described elsewhere in this Proxy Statement in order that the Prime Sellers may
become parties to that agreement and appoint two members to the Board as of the
final closing on the Prime Purchase Agreement. See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement." The right
to designate one of those members to be elected to the Board is to continue
until the Prime Sellers cease to own in the aggregate at least 10% of the
outstanding Class A common stock of the Company. The other one of such two
members is to continue until the Prime Management Agreement terminates.
The Alaska Cablevision Purchase Agreement centers on the Company's
offer to purchase all of the assets (excluding cash assets) of Alaska
Cablevision. Alaska Cablevision has two affiliated
ASS008BD.WP5 Page 27
companies, the McCaw/Rock Cable Systems, as described below. Under the Alaska
Cablevision Purchase Agreement, the Company is to deliver to Alaska Cablevision
on the final closing date as payment for the Alaska Cablevision assets
$26,650,000 plus an amount equal to Alaska Cablevision's current assets as of
that date payable as follows: (1) $16,650,000 plus an amount equal to Alaska
Cablevision's current assets as of that date, in cash; and (2) $10,000,000 in
subordinated notes of the Company convertible into shares of the Company's Class
A common stock at conversion rates as set forth in the agreement. Should all of
the notes be converted in accordance with the terms of the agreement, the
Company would issue a total of 1,538,000 shares of Class A common stock. The
notes are to bear simple, non-compounding interest at the lowest rate allowable
by the Internal Revenue Service under imputed interest rules in effect as of the
closing on the Alaska Cablevision Purchase Agreement. Any indebtedness on the
notes not previously converted into common stock of the Company is to be due and
payable in full in a single, lump sum payment on the tenth anniversary of the
initial date of issuance of the notes. The notes are to be subordinated to the
Company's presently existing and later incurred senior indebtedness. The notes
are to be convertible on an annual basis into shares of common stock of the
Company during a 15 day period each year for 10 years. Under the agreement and
following the expiration of a 180 day period commencing with the final closing
date on the agreement, the holders of those shares are to be entitled to one
demand registration under the Securities Act per year for 10 years, and they are
to have other piggyback registration rights with respect to those shares. The
Alaska Cablevision Purchase Agreement is subject to a number of conditions
precedent to its final closing including the obtaining of consents of various
persons including state and federal regulators, shareholders of the Company and
Alaska Cablevision, and the lenders of the Company and Alaska Cablevision.
The McCaw/Rock Purchase Agreement centers on the Company's offer to
purchase all of the assets (excluding cash assets) of the McCaw/Rock Cable
Systems. Under the Agreement the Company is to deliver to McCaw/Rock Cable
Systems on the final closing date as payment for the assets of those systems
$4,350,000 plus an amount equal to the systems' current assets as of that date
payable in cash. The agreement is subject to a number of conditions precedent to
its final closing including the obtaining of consents of various persons
including state and federal regulators, shareholders of the Company and of the
owners of the McCaw/Rock Cable Systems, and the lenders of the Company and the
systems.
The Alaskan Cable Purchase Agreement centers on the Company's offer to
purchase all of the assets of Alaskan Cable. Under the agreement, the Company is
to deliver to Alaskan Cable on the final closing date, as payment for those
assets, $70 million, payable as follows: (1) $51 million in cash; and (2)
2,923,077 shares of the Company's Class A common stock. Under the agreement the
present Alaskan Cable shareholder is to have the right to require registration
of those shares under the Securities Act for the initial distribution to and
subsequent resales by that person and subject further to restrictions on resales
during the 149 day period commencing with the final closing date of the
agreement. The Alaskan Cable Purchase Agreement is subject to a number of
conditions precedent to its final closing including the obtaining of consents of
various persons including state and federal regulators, shareholders of the
Company and Alaskan Cable, and the lenders of the Company and Alaskan Cable.
The MCI Purchase Agreement centers on the purchase by MCI of the MCI
Company Shares to be issued by the Company upon final closing on the agreement
and the payment of the purchase price by MCI. The agreement states that MCI's
obligation to purchase the shares is contingent upon the consummation of the
Prime Purchase Agreement. The agreement is further subject to a number of
conditions precedent to its final closing including the obtaining of all
required federal, state, and local regulatory consents and approvals, as well as
any consents and approvals required by the shareholders of the Company or any
material agreement of the Company. Under the agreement, MCI is to have the right
to require registration under the Securities Act of a portion or all of those
shares. These shares would be subject to the provisions of the Voting Agreement
discussed elsewhere in this Proxy Statement, See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control Voting Agreement."
ASS008BD.WP5 Page 28
Should the 18.3 million shares of Class A common stock to be issued
under the Acquisition Plan be issued as of the Record Date, the percent
shareholdings in the Company would become as follows: (1) Prime Sellers - 28%;
(2) MCI -- 23% (down from approximately 30% immediately prior to the closing on
the Proposed Transactions involved in the Acquisition Plan); (3) the Company's
employees and management combined -- 9%; (4) Alaskan Cable -- 7%; (5) Alaska
Cablevision -- 4%; and (6) others -- 29%. The shareholdings of MCI, the Cable
Companies, and certain other persons are subject to the Voting Agreement
described elsewhere in this Proxy Statement. See, "SHAREHOLDINGS OF PRINCIPAL
SHAREHOLDERS AND MANAGEMENT: Changes in Control - Voting Agreement."
Voting Agreement. As a part of the agreement for the issuance of
6,251,509 shares of Class A and 1,275,791 shares of Class B common stock of the
Company to MCI in 1993 ("MCI Stock"), the Company agreed to assure the
corporation that it may appoint a minimum of two members to the Company's
expanded seven member board of directors. On May 28, 1993, three principal
shareholders, including two officers and directors of the Company (Messrs.
Duncan and Walp and WSMC), entered into a voting agreement ("Voting Agreement")
with MCI which provides in part, that the voting stock of these persons will be
voted at shareholder meetings as a block in favor of no more than two nominees
by the corporation for no more than two positions on the board of directors at
any one time. The Voting Agreement similarly commits MCI and the other three
parties to vote their shares for four board nominees proposed by and allocated
between the other parties.
As a part of the Acquisition Plan, the parties to the Voting Agreement
allowed the Prime Sellers, through a designated representative, to become a
party to and participant in the agreement. The agreement is to be amended to
accommodate the increase of the board of directors from seven to nine positions
and to provide expressly that the voting stock of the participants in the Voting
Agreement will be voted at shareholder meetings as a block in favor of no more
than two nominees to be presented by the Prime Sellers for no more than two
positions on the board at any one time. Such right to designate an individual to
one of those positions to be elected to the board is to continue until the Prime
Sellers cease to own in the aggregate at least 10% of the outstanding Class A
common stock of the Company. The right to select an individual to the other one
of such two positions is to continue until the Prime Management Agreement
terminates.
As of the Record Date, Mr. Gerdelman remained as one of the recommended
MCI Telecommunications Corporation selections for the Board. It is anticipated
that the parties to the Voting Agreement will cast all of their votes for
Messrs. Gerdelman, Page, and Walp. It is anticipated that the parties to the
Voting Agreement will cast all of their votes for these two nominees, and for
the nominees proposed by the Prime Sellers, provided the shareholders approve
the Acquisition Plan. As of the Record Date, the voting stock of the parties to
the Voting Agreement (in April, 1995 WSMC transferred its shareholdings in the
Company to TCI GCI, Inc., and TCI GCI, Inc. became subject to the Voting
Agreement) constituted in excess of a simple majority of the outstanding voting
power of the Company. The term of the Voting Agreement will be through the
completion of the annual meeting of shareholders of the Company taking place in
1997 or until there is only one party to that agreement, which ever first
occurs. However, the parties may extend the term upon unanimous consent.
Pledges of Stock of Subsidiaries. Should the Company default on its
obligations under the Credit Agreement with its present Senior Lender, that
lender may exercise the pledge of stock provisions of that agreement pertaining
to the subsidiaries of the Company and thereby gain direct control of the
essential operating assets through which the Company and its subsidiaries
provide telecommunication services. See, "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS: Certain Transactions with Management and Others - Credit
Agreement."
ASS008BD.WP5 Page 29
(4) Item 13, Part III. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The following text is extracted from the Proxy Statement:
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions with Management and Others
Acquisition Plan. The Acquisition Plan includes Proposed Transactions
providing that the Prime Sellers will have the right to select individuals for
nominees to two positions on the board of directors of the Company. The
Acquisition Plan also provides registration rights to owners of certain of the
Cable Companies. The Acquisition Plan requires the Company to enter into the
Prime Management Agreement with an affiliate of the Prime Sellers. These
transactions are further described elsewhere in this Proxy Statement. See,
"Changes in Control - Acquisition Plan" elsewhere in this Proxy Statement.
MCI Agreements. In December, 1992, MCI and the Company entered into a
letter of intent outlining the general terms and conditions of several proposed
arrangements between them to be subsequently reduced to separate agreements
("MCI Agreements"). Under the MCI Agreements, in addition to MCI acquiring a
substantial portion of the outstanding common stock of the Company and entering
into the Voting Agreement to ensure that it would be able to appoint or
otherwise elect at least two members to the Board, MCI and the Company have
established or will establish various business arrangements between them. These
arrangements include the following: (1) providing telecommunications services by
each party to the other; (2) licensing of certain MCI service marks to the
Company for use in Alaska; (3) leasing by MCI from the Company and the
subleasing back by the Company of one-ninth of the undersea fiber optic cable
linking Seward, Alaska with Pacific City, Oregon; (4) purchasing by MCI of
certain service marks of the Company; (5) other communication network sharing;
and (6) sharing of various marketing, engineering, and operating resources. As
of the Record Date, the Company had executed access service, carrier, 1-800
collect service mark and product, and undersea fiber optic cable agreements with
MCI pertaining to items (1)-(3) and was in the process of negotiating agreements
pertaining to items (4)-(6). These arrangements have during the year ended
December 31, 1995 resulted in revenues to MCI and its subsidiaries of
approximately $8.4 million and revenues to the Company of approximately $24
million.
In March, 1996, the Company and MCI amended the Contract for Alaska
Access Services and the MCI Carrier Agreement, both of which agreements the
parties had initially entered into effective January 1, 1993. The access
agreement addresses transmission services provided by the Company to MCI for its
traffic and the charges for such services. The carrier agreement addresses
transmission services provided by MCI to the Company for its traffic and the
charges for such services. The carrier agreement amendment is the fifth
effective amendment to the agreement and extends the term of the agreement by
three years. The prior amendments provided for new, expanded, or revised
services by MCI to the Company and adjustments of charges for those services.
The access agreement amendment is the first effective amendment to the
agreement. It extends the term of the agreement by three years and reduces the
rate in dollars to be charged by the Company for certain MCI traffic for the
time period April 1, 1996 through July 1, 1999 and thereafter. The rate
reduction, if applied to the number of minutes to be carried by the Company in
1996 and 1997, based upon minutes carried by the Company during 1995, would
reduce the Company's 1996 and 1997 revenue by approximately $322,000 and
$399,000, respectively. Those recent amendments to the two agreements do not
otherwise change the agreements. The Company considered the amendments of both
agreements together as in its best interest. With these amendments, the Company
is assured that MCI, the Company's largest customer, will continue to make use
of the Company's services during the extended term.
ASS008BD.WP5 Page 30
As a part of the Acquisition Plan, MCI has agreed to purchase an
additional 2 million shares of Class A common stock of the Company. See,
"SHAREHOLDINGS OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control -
Acquisition Plan."
Credit Agreement. In May, 1993, the Company completed a refinancing
which provided a new $15 million senior facility ("Credit Agreement") with
NationsBank in Dallas, Texas ("Senior Lender"). The Credit Agreement continues a
number of conditions imposed under previous credit agreements entered into by
the Company. In compliance with one of those conditions, the Company previously
formed GCC, an Alaska corporation and wholly owned subsidiary of the Company. On
November 30, 1990 all of the Company's operating assets were transferred to GCC,
where all of the outstanding capital stock of GCC was pledged to the then senior
lenders of the Company. This reorganization proposal was approved by the
shareholders of the Company at the June 7, 1990 annual shareholders meeting.
That pledge is now made to the Senior Lender and will remain in place for so
long as the Credit Agreement remains in effect. As of the Record Date, the
outstanding common stock of GCC remained pledged to the Senior Lender.
Throughout the year ended December 31, 1995 and from that date through the
Record Date, the Company was in full compliance with all terms of the Credit
Agreement. See, "ANNUAL REPORT."
WSMC Agreements. The Company purchased services and used some
facilities of WSMC to allow the Company to provide its telecommunication
services in other states in the country. The total of such purchases from WSMC
by the Company during the year ended December 31, 1995 was approximately
$245,000.
Duncan Lease. The Company entered into a long-term capital lease
agreement in 1991 with a partnership of which Mr. Duncan, the Company's
president, was a 50% owner. Mr. Duncan sold his interest in the partnership in
1992 but remained a guarantor on the note used to finance acquisition of the
property. During 1993, Mr. Duncan married Dani Bowman, the individual to whom he
sold his interest in the partnership, and as of the Record Date, the property
was owned in its entirety by the president's spouse. The property under lease
consists of a building presently occupied cupied by the Company. The lease term
is 15 years with monthly payments of $14,400, increasing in $800 increments at
each two year anniversary of the lease. The first incremental increase occurred
in 1993. If the owner sells the premises prior to the end of the tenth year of
the lease, the owner will rebate to the Company one-half of the net sales price
received in excess of $900,000. If the property is not sold prior to the tenth
year of the lease, the owner will pay the Company the greater of one-half of the
appreciated value of the property over $900,000, or $500,000. The leased asset
was capitalized in 1991 at the owner's cost of $900,000 and the related
obligation was recorded in the financial statements for the Company as reflected
in the Annual Report. See, "ANNUAL REPORT."
Indebtedness of Management
On August 13, 1993 Mr. Duncan obtained a loan of $500,000 from the
Company ("Duncan Loan") and executed a non-recourse promissory note to the
Company which bears an interest rate equal to the variable rate paid by the
Company on its Credit Agreement with its Senior Lender. Mr. Duncan is to pay off
the Duncan Loan in one payment of principal and accrued interest 90 days after
the termination of his employment with the Company or July 30, 1998, whichever
is earlier. The money was used to pay down a portion of the indebtedness of Mr.
Duncan on the WSMC Loans allowing for the release to Mr. Duncan of 223,000
shares of Class A common stock used as collateral on that loan. Those shares
were then pledged as collateral to secure the Duncan Loan. See, "SHAREHOLDINGS
OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT: Changes in Control - Duncan Stock
Pledges." The largest outstanding balance of principal and interest on the
Duncan Loan during the year ended December 31, 1995 was $585,966 on that date.
As of the Record Date the outstanding balance of principal and interest on the
Duncan Loan was $597,223.
ASS008BD.WP5 Page 31
During 1995, the Company made payments to others on behalf of Mr.
Duncan in the amount of $592. These payments, when added to advances made to Mr.
Duncan in prior years totalled $15,594. Mr. Duncan reimbursed the Company
$14,144 during 1995, which left a total of $1,450 outstanding at December 31,
1995.
In May, 1994 Mr. Duncan received additional loans totalling $55,000
from the Company and executed two promissory notes totalling that amount. The
terms were for interest to accrue at 7% per annum with principal to be paid in
August, 1994. The notes were extended, and the full principal and interest in
the amount of $55,686 was paid on March 6, 1995.
In September, 1995, Mr. Duncan received an additional loan in the
amount of $70,000. The terms were for interest to accrue at the variable rate
paid by the Company on its Credit Agreement with its Senior Lender. The full
principal and interest owed in the amount of $71,486 were paid in full on
December 29, 1995.
In April, 1993 Mr. Behnke obtained a loan from the Company in the
amount of $48,000 and executed a promissory note. The note bears interest at 9%
per annum, is secured by options to purchase 85,190 shares of Class A common
stock of the Company, and was due on December 31, 1995. The Company extended the
due date on the note to June 30, 1997. Accrued interest on the note totalled
$11,540 at December 31, 1995 and $12,782 on the Record Date. In September, 1995
Mr. Behnke obtained another loan from the Company in the amount of $50,000 and
executed a promissory note. The note bears interest at a rate equal to that paid
by the Company to its Senior Lender pursuant to the Company's senior credit
facility. The note is secured by the same options to purchase those 85,190
shares of Class A common stock and is due on June 30, 1997. Accrued interest on
the note totalled $1,150 at December 31, 1995 and $2,276 on the Record Date.
In August, 1994 and April, 1995 Mr. Dowling received loans from the
Company of $224,359 and $86,000 respectively, and executed promissory notes
secured by 160,297 shares of Company Class A and 74,028 shares of Class B common
stock. The notes bear interest at 10% per annum and are payable in ten equal
installments of principal and interest with the first payment on each due in
August, 1996. Payment has not been made on the notes. The Company has extended
the term of the notes with ten equal installments of principal and interest over
a period of ten years due in August of each year with the first payment on each
note due in August, 1996. Accrued interest totalled $36,476 at December 31, 1995
and $45,405 on the Record Date.
Except as disclosed in this Proxy Statement, neither as a group nor
individually did any director, executive officer, nominee for election as a
director, any member of the immediate family of these persons, or any
corporation or organization of which such director, executive officer, or
nominee is an executive officer or partner and is directly or indirectly the
beneficial owner of 10% or more of any class of equity securities of that
corporation, or any trust or other estate in which such director, executive
officer, or nominee of the Company has a substantial beneficial interest or as
to which such person serves as a trustee or in a similar capacity have during
the year ended December 31, 1995 nor during the portion of calendar year 1996
ended on the Record Date, an indebtedness to the Company in an amount in excess
of $60,000.
ASS008BD.WP5 Page 32
PART IV
(5) Item 14, Part IV. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(c) Exhibits.
(1) Exhibit A: Transponder Purchase Agreement for Galaxy
X between Hughes Communications Galaxy, Inc. and GCI
Communication Corp.;
(2) Exhibit B: Galaxy X Transponder Service Agreement
between Hughes Communications Satellite Services,
Inc. and GCI Communication Corp.;
(3) Exhibit C: Framework Agreement between National Bank
of Alaska and General Communication, Inc.; and
(4) Exhibit D: 1996 Call-Off Contract between National
Bank of Alaska and General Communication, Inc.
These four commercial agreements have been included as exhibits to this Form
10-K/A in that they were executed in the year ended December 31, 1995 but were
not included in the Company's Form 10-K for that year. Portions of the
agreements identified as Exhibits A, C, and D have been redacted in that they
are considered confidential by the Company. The unredacted agreements have been
separately filed with the Securities and Exchange Commission pursuant to Rule
101(c)(1)(i) of Regulation S-T.
ASS008BD.WP5 Page 33
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
GENERAL COMMUNICATION, INC.
By: /s/ Ronald A. Duncan
Ronald A. Duncan, President
(Chief Executive Officer)
Date: April 25, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the date indicated.
Signature Title Date
/s/ Carter F. Page Chairman of the Board April 25, 1996
Carter F. Page and Director
/s/ Robert M. Walp Vice Chairman of the Board April 23, 1996
Robert M. Walp and Director
/s/ Ronald A. Duncan President and Director, April 25, 1996
Ronald A. Duncan (Chief Executive Officer)
/s/ Donne F. Fisher Director April 25, 1996
Donne F. Fisher
/s/ John W. Gerdelman Director April 25, 1996
John W. Gerdelman
/s/ Larry E. Romrell Director April 25, 1996
Larry E. Romrell
/s/ James M. Schneider Director April 25, 1996
James M. Schneider
/s/ John M. Lowber Senior Vice President, April 25, 1996
John M. Lowber Chief Financial Officer,
Secretary and Treasurer
/s/ Alfred J. Walker Vice President and Chief April 25, 1996
Alfred J. Walker Accounting Officer
ASS008BD.WP5 Page 34