June 18, 2003

According to the audited financial statements conducted by Burger and Comer, Guam Educational Telecommunications Corporation, commonly known as KGTF Channel 12, had a loss of $313,500 for the fiscal year ended September 30, 2002. The loss was primarily due to depreciation expense of $271,000, which was recorded for the first time under the new financial reporting model GASB 34. All units of the Government of Guam are required to adopt and implement Government Accounting Standards Board Statement 34 (GASB 34). In prior years capital outlays were expensed and depreciation on capital outlays was not recorded. KGTF is the first Government of Guam entity to issue its audited financials under this new reporting model. Because the new format is significantly different from prior years, comparative financial statements were not included in the audit report.

The audited financial statements reflect the fundraising challenges that KGTF has encountered in the face of declining economic conditions. Contributions and other revenues have dropped precipitously to $248,000 compared to $338,000 in FY 2001 and $404,000 in FY 2000. Government of Guam appropriations on the other hand declined modestly and were $464,000 in FY02, $493,000 in FY01 and $503,000 in FY00. Total revenues were $1.2 million the past year compared to $1.4 million in FY 01 and $1.5 million in FY 2000. KGTF has 22 employees, 12 of whom are government employees funded locally. The other 10 employees are paid by the Community Service Grant and are not members of the Government of Guam retirement system. Total salaries and benefits was $657,000 in FY 2002, compared to $672,000 in FY 2001. FY 2000 numbers were not available.

KGTF’s license with the Federal Communications Commission has been renewed up to April 1, 2006 with the condition that KGTF will receive a license to broadcast digital television only after December 31, 2006. KGTF management has estimated the costs of upgrading to a digital format will be between $3 – 11 million depending on the scope of upgrades implemented. Without substantial cash infusion or a change in the licensing conditions, the ability of KGTF to continue operations beyond December 31, 2006 may be in jeopardy.

For a further information on KGTF’s operations refer to the Management Discussion and Analysis, which is now part of the GASB 34 reporting format.