☒
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
Delaware
|
|
92-0072737
|
|
|
(State or other jurisdiction of
|
|
(I.R.S Employer
|
|
|
incorporation or organization)
|
|
Identification No.)
|
|
|
12300 Liberty Boulevard
|
|
|
|
|
Englewood, Colorado
|
|
80112
|
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
Non-accelerated filer ☐ (Do not check if a smaller reporting company)
|
Smaller reporting company ☐
|
Emerging growth company ☐
|
|
|
|
|
|
|
Item 1.
|
|
|
|
|
|
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
|
|
|
Item 2.
|
||
|
Item 3.
|
||
|
Item 4.
|
||
|
|
|
|
|
Item 1.
|
||
|
Item 2.
|
||
|
Item 6.
|
||
|
|
|
|
GCI LIBERTY, INC. AND SUBSIDIARIES
|
||||||
Condensed Consolidated Statements of Cash Flows
|
||||||
(Unaudited)
|
||||||
|
||||||
|
Six Months Ended
|
|||||
|
June 30,
|
|||||
|
2018
|
|
2017
|
|||
|
amounts in thousands
|
|||||
Cash flows from operating activities:
|
|
|
|
|||
Net earnings (loss)
|
$
|
(474,211
|
)
|
|
482,255
|
|
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
80,409
|
|
|
1,575
|
|
|
Stock-based compensation expense
|
13,165
|
|
|
6,599
|
|
|
Share of (earnings) losses of affiliates, net
|
(7,858
|
)
|
|
(3,323
|
)
|
|
Realized and unrealized (gains) losses on financial instruments, net
|
499,837
|
|
|
(798,001
|
)
|
|
Deferred income tax expense (benefit)
|
(97,203
|
)
|
|
296,846
|
|
|
Intergroup tax payments
|
—
|
|
|
155,480
|
|
|
Other, net
|
3,377
|
|
|
539
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
Current and other assets
|
(38,681
|
)
|
|
1,150
|
|
|
Payables and other liabilities
|
68,562
|
|
|
2,301
|
|
|
Net cash provided (used) by operating activities
|
47,397
|
|
|
145,421
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
GCI Holdings cash and restricted cash acquired in consolidation
|
147,958
|
|
|
—
|
|
|
Capital expended for property and equipment
|
(40,303
|
)
|
|
(1,751
|
)
|
|
Purchases of investments
|
—
|
|
|
(76,815
|
)
|
|
Sales of investments
|
—
|
|
|
1,606
|
|
|
Net cash provided (used) by investing activities
|
107,655
|
|
|
(76,960
|
)
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Borrowings of debt
|
1,477,250
|
|
|
—
|
|
|
Repayment of debt, capital lease, and tower obligations
|
(84,971
|
)
|
|
—
|
|
|
Contributions from (distributions to) parent, net
|
(1,124,660
|
)
|
|
(70,624
|
)
|
|
Distribution to non-controlling interests
|
(3,273
|
)
|
|
—
|
|
|
Indemnification payment to Qurate Retail
|
(132,725
|
)
|
|
—
|
|
|
Derivative payments
|
(80,001
|
)
|
|
—
|
|
|
Other financing activities, net
|
(11,973
|
)
|
|
(325
|
)
|
|
Net cash provided (used) by financing activities
|
39,647
|
|
|
(70,949
|
)
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
194,699
|
|
|
(2,488
|
)
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
574,148
|
|
|
488,127
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
768,847
|
|
|
485,639
|
|
(
1
)
|
Basis of Presentation
|
|
June 30,
|
|
December 31,
|
|||
|
2018
|
|
2017
|
|||
|
amounts in thousands
|
|||||
Cash and cash equivalents
|
$
|
767,873
|
|
|
573,210
|
|
Restricted cash included in other current assets
|
974
|
|
|
938
|
|
|
Total cash and cash equivalents and restricted cash at end of period
|
$
|
768,847
|
|
|
574,148
|
|
(2)
|
Acquisition
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
132,563
|
|
Receivables
|
|
184,601
|
|
|
Property and equipment
|
|
1,211,392
|
|
|
Goodwill
|
|
932,403
|
|
|
Intangible assets not subject to amortization
|
|
572,500
|
|
|
Intangible assets subject to amortization
|
|
503,737
|
|
|
Other assets
|
|
97,279
|
|
|
Deferred revenue
|
|
(92,561
|
)
|
|
Debt, including capital leases
|
|
(1,707,002
|
)
|
|
Other liabilities
|
|
(251,692
|
)
|
|
Deferred income tax liabilities
|
|
(290,092
|
)
|
|
Preferred stock
|
|
(174,922
|
)
|
|
Non-controlling interest
|
|
(7,000
|
)
|
|
|
|
$
|
1,111,206
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||
|
|
June 30,
|
|
June 30,
|
|||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
|
amounts in thousands, except per share amounts
|
|||||||||||
Revenue
|
|
$
|
234,214
|
|
|
231,876
|
|
|
455,019
|
|
|
461,168
|
|
Net earnings (loss)
|
|
$
|
(296,701
|
)
|
|
50,234
|
|
|
(475,575
|
)
|
|
443,754
|
|
Net earnings (loss) attributable to GCI Liberty shareholders
|
|
$
|
(296,546
|
)
|
|
50,353
|
|
|
(475,265
|
)
|
|
443,990
|
|
Basic net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share
|
|
$
|
(2.75
|
)
|
|
0.46
|
|
|
(4.41
|
)
|
|
4.07
|
|
Diluted net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share
|
|
$
|
(2.75
|
)
|
|
0.46
|
|
|
(4.41
|
)
|
|
4.07
|
|
(3)
|
Revenue
|
|
Three Months Ended
|
|
Six Months Ended
|
|||
|
June 30, 2018
|
|
June 30, 2018
|
|||
|
amounts in thousands
|
|||||
GCI Holdings
|
|
|
|
|||
Consumer Revenue
|
|
|
|
|||
Wireless
|
$
|
28,966
|
|
|
36,728
|
|
Data
|
39,243
|
|
|
49,269
|
|
|
Video
|
22,146
|
|
|
27,908
|
|
|
Voice
|
4,710
|
|
|
5,878
|
|
|
Business Revenue
|
|
|
|
|||
Wireless
|
21,391
|
|
|
26,818
|
|
|
Data
|
76,223
|
|
|
94,654
|
|
|
Video
|
3,487
|
|
|
4,509
|
|
|
Voice
|
6,294
|
|
|
7,921
|
|
|
Evite
|
5,709
|
|
|
10,121
|
|
|
Lease, grant, and revenue from subsidies
|
25,321
|
|
|
30,888
|
|
|
Total
|
$
|
233,490
|
|
|
294,694
|
|
(4)
|
Stock-Based Compensation
|
|
|
Series A
|
||||||||||||
|
|
|
|
|
|
Weighted
|
|
Aggregate
|
||||||
|
|
|
|
|
|
average
|
|
intrinsic
|
||||||
|
|
Awards
|
|
|
|
remaining
|
|
value
|
||||||
|
|
(000's)
|
|
WAEP
|
|
life
|
|
(millions)
|
||||||
Outstanding at January 1, 2018
|
|
1,670
|
|
|
$
|
47.12
|
|
|
|
|
|
|
||
Granted
|
|
5
|
|
|
$
|
42.99
|
|
|
|
|
|
|
||
Exercised
|
|
(17
|
)
|
|
$
|
14.94
|
|
|
|
|
|
|
||
Forfeited/Cancelled
|
|
(3
|
)
|
|
$
|
56.17
|
|
|
|
|
|
|
||
Outstanding at June 30, 2018
|
|
1,655
|
|
|
$
|
47.44
|
|
|
2.1
|
years
|
|
$
|
8
|
|
Exercisable at June 30, 2018
|
|
1,298
|
|
|
$
|
47.76
|
|
|
1.6
|
years
|
|
$
|
7
|
|
|
|
Series B
|
||||||||||||
|
|
|
|
|
|
Weighted
|
|
Aggregate
|
||||||
|
|
|
|
|
|
average
|
|
intrinsic
|
||||||
|
|
Awards
|
|
|
|
remaining
|
|
value
|
||||||
|
|
(000's)
|
|
WAEP
|
|
life
|
|
(millions)
|
||||||
Outstanding at January 1, 2018
|
|
1,080
|
|
|
$
|
56.38
|
|
|
|
|
|
|
||
Granted
|
|
143
|
|
|
$
|
54.01
|
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Forfeited/Cancelled
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Outstanding at June 30, 2018
|
|
1,223
|
|
|
$
|
56.10
|
|
|
4.5
|
years
|
|
$
|
—
|
|
Exercisable at June 30, 2018
|
|
443
|
|
|
$
|
56.38
|
|
|
5.3
|
years
|
|
$
|
—
|
|
(5)
|
Earnings Attributable to GCI Liberty Stockholders Per Common Share
|
|
Three Months Ended June 30, 2018
|
|
Six Months Ended June 30, 2018
|
||
|
number of shares in thousands
|
||||
Basic and Diluted WASO
|
107,743
|
|
|
107,743
|
|
Antidilutive shares excluded from diluted WASO
|
1,566
|
|
|
1,526
|
|
(
6
)
|
Assets and Liabilities Measured at Fair Value
|
|
|
June 30, 2018
|
|
December 31, 2017
|
|||||||||||||||
Description
|
|
Total
|
|
Quoted prices
in active
markets
for identical
assets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|
Total
|
|
Quoted prices
in active
markets
for identical
assets
(Level 1)
|
|
Significant
other
observable
inputs
(Level 2)
|
|||||||
|
|
amounts in thousands
|
|||||||||||||||||
Cash equivalents
|
|
$
|
730,243
|
|
|
730,243
|
|
|
—
|
|
|
570,526
|
|
|
570,526
|
|
|
—
|
|
Equity securities
|
|
$
|
1,572,136
|
|
|
1,572,136
|
|
|
—
|
|
|
1,800,208
|
|
|
1,800,208
|
|
|
—
|
|
Investment in Liberty Broadband
|
|
$
|
3,231,869
|
|
|
3,231,869
|
|
|
—
|
|
|
3,634,786
|
|
|
3,634,786
|
|
|
—
|
|
Variable forward
|
|
$
|
22,255
|
|
|
—
|
|
|
22,255
|
|
|
94,807
|
|
|
—
|
|
|
94,807
|
|
Indemnification obligation
|
|
$
|
84,921
|
|
|
—
|
|
|
84,921
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Exchangeable senior debentures
|
|
$
|
491,987
|
|
|
—
|
|
|
491,987
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
|
amounts in thousands
|
|||||||||||
Equity securities
|
|
$
|
(97,478
|
)
|
|
51,212
|
|
|
(229,040
|
)
|
|
262,497
|
|
Investment in Liberty Broadband
|
|
(425,538
|
)
|
|
14,939
|
|
|
(402,917
|
)
|
|
541,206
|
|
|
Variable forward
|
|
63,809
|
|
|
(5,702
|
)
|
|
72,552
|
|
|
(5,702
|
)
|
|
Indemnification obligation
|
|
34,891
|
|
|
—
|
|
|
63,608
|
|
|
—
|
|
|
Exchangeable senior debentures
|
|
(4,040
|
)
|
|
—
|
|
|
(4,040
|
)
|
|
—
|
|
|
|
|
$
|
(428,356
|
)
|
|
60,449
|
|
|
(499,837
|
)
|
|
798,001
|
|
(7)
|
Investments in Equity Securities
|
|
|
|
June 30,
|
|
December 31,
|
|||
|
|
|
2018
|
|
2017
|
|||
|
|
|
amounts in thousands
|
|||||
Charter (a)
|
|
|
$
|
1,571,137
|
|
|
1,800,208
|
|
Other investments (b)
|
|
|
3,075
|
|
|
2,856
|
|
|
|
|
|
$
|
1,574,212
|
|
|
1,803,064
|
|
(8)
|
Investments in Affiliates Accounted for Using the Equity Method
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||
|
Percentage
ownership
|
|
Market
value
|
|
Carrying
amount
|
|
Carrying
amount
|
||||||
|
|
|
dollars in thousands
|
||||||||||
LendingTree
|
25.89
|
%
|
|
$
|
689,289
|
|
|
$
|
116,554
|
|
|
114,655
|
|
Other
|
various
|
|
|
NA
|
|
|
5,326
|
|
|
—
|
|
||
|
|
|
|
|
$
|
121,880
|
|
|
114,655
|
|
|
|
June 30,
|
|
December 31,
|
|||
|
|
2018
|
|
2017
|
|||
|
|
amounts in thousands
|
|||||
Current assets
|
|
$
|
100,985
|
|
|
84,054
|
|
Investment in Charter, accounted for using the equity method
|
|
11,891,637
|
|
|
11,835,613
|
|
|
Other assets
|
|
10,306
|
|
|
12,122
|
|
|
Total assets
|
|
12,002,928
|
|
|
11,931,789
|
|
|
Long-term debt, including current portion
|
|
523,159
|
|
|
497,370
|
|
|
Deferred income tax liabilities
|
|
943,401
|
|
|
932,593
|
|
|
Other liabilities
|
|
14,885
|
|
|
14,925
|
|
|
Equity
|
|
10,521,483
|
|
|
10,486,901
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
12,002,928
|
|
|
11,931,789
|
|
|
|
Three months ended
|
|
Six months ended
|
|||||||||
|
|
June 30,
|
|
June 30,
|
|||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
|
amounts in thousands
|
|||||||||||
Revenue
|
|
$
|
3,371
|
|
|
3,073
|
|
|
15,162
|
|
|
6,213
|
|
Operating expenses, net
|
|
(8,442
|
)
|
|
(10,406
|
)
|
|
(17,987
|
)
|
|
(19,908
|
)
|
|
Operating income (loss)
|
|
(5,071
|
)
|
|
(7,333
|
)
|
|
(2,825
|
)
|
|
(13,695
|
)
|
|
Share of earnings (losses) of affiliates
|
|
32,911
|
|
|
11,467
|
|
|
42,213
|
|
|
30,389
|
|
|
Gain (loss) on dilution of investment in affiliate
|
|
(5,205
|
)
|
|
(6,659
|
)
|
|
(31,962
|
)
|
|
(38,797
|
)
|
|
Realized and unrealized gains (losses) on financial instruments, net
|
|
(2,019
|
)
|
|
1,370
|
|
|
(2,019
|
)
|
|
2,351
|
|
|
Other income (expense), net
|
|
(5,842
|
)
|
|
(4,364
|
)
|
|
(10,654
|
)
|
|
(8,582
|
)
|
|
Income tax benefit (expense)
|
|
(4,194
|
)
|
|
2,542
|
|
|
757
|
|
|
10,912
|
|
|
Net earnings (loss)
|
|
$
|
10,580
|
|
|
(2,977
|
)
|
|
(4,490
|
)
|
|
(17,422
|
)
|
(9)
|
Variable Interest Entities
|
Financing Arrangement
|
Investment Funds
|
Transaction Date
|
Loan Amount
|
Interest Rate on Loan to Investment Fund
|
Maturity Date
|
US Bancorp Investment
|
Loan to Unicom
|
Interest Rate on Loan(s) to Unicom
|
Expected Put Option Exercise
|
NMTC #1
|
TIF
|
August 30, 2011
|
$58.3 million
|
1%
|
August 29, 2041
|
$22.4 million
|
$76.8 million
|
1% to 3.96%
|
August 2018
|
NMTC #2
|
TIF 2 & TIF 2-USB
|
October 3, 2012
|
$37.7 million
|
1%
|
October 2, 2042
|
$17.5 million
|
$52.0 million
|
0.71% to 0.77%
|
October 2019
|
NMTC #3
|
TIF 3
|
December 11, 2012
|
$8.2 million
|
1%
|
December 10, 2042
|
$3.8 million
|
$12.0 million
|
1.35%
|
December 2019
|
NMTC #4
|
TIF 4
|
March 21, 2017
|
$6.7 million
|
1%
|
March 21, 2040
|
$3.3 million
|
$9.8 million
|
0.73%
|
March 2024
|
NMTC #5
|
TIF 5-1 and TIF 5-2
|
December 22, 2017
|
$10.4 million
|
1%
|
December 22, 2047
|
$5.1 million
|
$14.7 million
|
0.67% to 1.24%
|
December 2024
|
(10)
|
Intangible Assets and Goodwill
|
|
|
GCI Holdings
|
|
Corporate and other
|
|
Total
|
||||
|
|
amounts in thousands
|
||||||||
Balance at January 1, 2018
|
|
$
|
—
|
|
|
25,569
|
|
|
25,569
|
|
Acquisitions
|
|
932,403
|
|
|
—
|
|
|
932,403
|
|
|
Balance at June 30, 2018
|
|
$
|
932,403
|
|
|
25,569
|
|
|
957,972
|
|
|
|
June 30, 2018
|
||||||||
|
|
Gross
|
|
|
|
Net
|
||||
|
|
carrying
|
|
Accumulated
|
|
carrying
|
||||
|
|
amount
|
|
amortization
|
|
amount
|
||||
|
|
amounts in thousands
|
||||||||
Customer relationships
|
|
$
|
443,268
|
|
|
(36,446
|
)
|
|
406,822
|
|
Other amortizable intangibles
|
|
112,596
|
|
|
(27,100
|
)
|
|
85,496
|
|
|
Total
|
|
$
|
555,864
|
|
|
(63,546
|
)
|
|
492,318
|
|
Remainder of 2018
|
$
|
30,506
|
|
2019
|
$
|
60,659
|
|
2020
|
$
|
52,643
|
|
2021
|
$
|
47,364
|
|
2022
|
$
|
40,946
|
|
(11)
|
Long-Term Debt
|
|
|
Outstanding
|
|
|
|||||||
|
|
Principal
|
|
Carrying Value
|
|||||||
|
|
June 30,
|
|
June 30,
|
|
December 31,
|
|||||
|
|
2018
|
|
2018
|
|
2017
|
|||||
|
|
amounts in thousands
|
|||||||||
Margin Loan
|
|
$
|
1,000,000
|
|
|
1,000,000
|
|
|
—
|
|
|
Exchangeable senior debentures
|
|
477,250
|
|
|
491,987
|
|
|
NA
|
|
||
Senior notes
|
|
775,000
|
|
|
805,596
|
|
|
NA
|
|
||
Senior credit facility
|
|
666,354
|
|
|
666,354
|
|
|
NA
|
|
||
Wells Fargo note payable
|
|
7,794
|
|
|
7,794
|
|
|
NA
|
|
||
Deferred financing costs
|
|
—
|
|
|
(3,262
|
)
|
|
—
|
|
||
Total debt
|
|
$
|
2,926,398
|
|
|
2,968,469
|
|
|
—
|
|
|
Debt classified as current (included in other current liabilities)
|
|
|
|
(2,965
|
)
|
|
—
|
|
|||
Total long-term debt
|
|
|
|
$
|
2,965,504
|
|
|
—
|
|
(12)
|
Preferred Stock
|
(13)
|
Information About the Company's Operating Segments
|
•
|
GCI Holdings-provides a full range of wireless, data, video, voice, and managed services to residential, businesses, governmental entities, and educational and medical institutions primarily in Alaska.
|
•
|
Liberty Broadband-an equity method affiliate of the Company, accounted for at fair value, has a non‑controlling interest in Charter, and a wholly‑owned subsidiary, Skyhook Wireless, Inc. ("Skyhook"). Charter is the second largest cable operator in the United States and a leading broadband communications services company providing video, Internet and voice services. Skyhook provides a Wi‑Fi based location platform focused on providing positioning technology and contextual location intelligence solutions.
|
|
Three Months Ended June 30,
|
|||||||||||
|
2018
|
|
2017
|
|||||||||
|
Revenue
|
|
Adjusted OIBDA
|
|
Revenue
|
|
Adjusted OIBDA
|
|||||
|
amounts in thousands
|
|||||||||||
GCI Holdings
|
$
|
227,781
|
|
|
78,915
|
|
|
—
|
|
|
—
|
|
Liberty Broadband
|
3,371
|
|
|
(2,776
|
)
|
|
3,073
|
|
|
(4,955
|
)
|
|
Corporate and other
|
5,709
|
|
|
(7,191
|
)
|
|
6,177
|
|
|
(6,922
|
)
|
|
|
236,861
|
|
|
68,948
|
|
|
9,250
|
|
|
(11,877
|
)
|
|
Eliminate Liberty Broadband
|
(3,371
|
)
|
|
2,776
|
|
|
(3,073
|
)
|
|
4,955
|
|
|
|
$
|
233,490
|
|
|
71,724
|
|
|
6,177
|
|
|
(6,922
|
)
|
|
Six Months Ended June 30,
|
|||||||||||
|
2018
|
|
2017
|
|||||||||
|
Revenue
|
|
Adjusted OIBDA
|
|
Revenue
|
|
Adjusted OIBDA
|
|||||
|
amounts in thousands
|
|||||||||||
GCI Holdings
|
$
|
284,573
|
|
|
98,663
|
|
|
—
|
|
|
—
|
|
Liberty Broadband
|
15,162
|
|
|
1,784
|
|
|
6,213
|
|
|
(8,916
|
)
|
|
Corporate and other
|
10,121
|
|
|
(13,051
|
)
|
|
10,146
|
|
|
(14,794
|
)
|
|
|
309,856
|
|
|
87,396
|
|
|
16,359
|
|
|
(23,710
|
)
|
|
Eliminate Liberty Broadband
|
(15,162
|
)
|
|
(1,784
|
)
|
|
(6,213
|
)
|
|
8,916
|
|
|
|
$
|
294,694
|
|
|
85,612
|
|
|
10,146
|
|
|
(14,794
|
)
|
|
|
June 30, 2018
|
||||||||
|
|
Total
|
|
Investments
|
|
Capital
|
||||
|
|
assets
|
|
in affiliates
|
|
expenditures
|
||||
|
|
amounts in thousands
|
||||||||
GCI Holdings
|
|
$
|
3,530,980
|
|
|
—
|
|
|
38,788
|
|
Liberty Broadband
|
|
12,002,928
|
|
|
11,891,637
|
|
|
24
|
|
|
Corporate and other
|
|
5,813,117
|
|
|
121,880
|
|
|
1,515
|
|
|
|
|
21,347,025
|
|
|
12,013,517
|
|
|
40,327
|
|
|
Eliminate Liberty Broadband
|
|
(12,002,928
|
)
|
|
(11,891,637
|
)
|
|
(24
|
)
|
|
Consolidated
|
|
$
|
9,344,097
|
|
|
121,880
|
|
|
40,303
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
amounts in thousands
|
|||||||||||
Consolidated segment Adjusted OIBDA
|
$
|
71,724
|
|
|
(6,922
|
)
|
|
85,612
|
|
|
(14,794
|
)
|
Stock‑based compensation
|
(7,929
|
)
|
|
(3,873
|
)
|
|
(13,165
|
)
|
|
(6,599
|
)
|
|
Depreciation and amortization
|
(64,388
|
)
|
|
(822
|
)
|
|
(80,409
|
)
|
|
(1,575
|
)
|
|
Operating income
|
(593
|
)
|
|
(11,617
|
)
|
|
(7,962
|
)
|
|
(22,968
|
)
|
|
Interest expense
|
(35,442
|
)
|
|
(5
|
)
|
|
(43,690
|
)
|
|
(5
|
)
|
|
Share of earnings (loss) of affiliates, net
|
10,350
|
|
|
1,600
|
|
|
7,858
|
|
|
3,323
|
|
|
Realized and unrealized gains (losses) on financial instruments, net
|
(428,356
|
)
|
|
60,449
|
|
|
(499,837
|
)
|
|
798,001
|
|
|
Other, net
|
(1,845
|
)
|
|
541
|
|
|
(148
|
)
|
|
750
|
|
|
Earnings (loss) from continuing operations before income taxes
|
$
|
(455,886
|
)
|
|
50,968
|
|
|
(543,779
|
)
|
|
779,101
|
|
•
|
The ability of GCI Liberty, Inc. (the "Company") to successfully integrate and recognize anticipated efficiencies and benefits from the Transactions (as defined below);
|
•
|
customer demand for the Company's products and services and the Company's ability to adapt to changes in demand;
|
•
|
competitor responses to the Company's and its businesses' products and services;
|
•
|
the levels of online traffic to the Company's businesses' websites and its ability to convert visitors into consumers or contributors;
|
•
|
uncertainties inherent in the development and integration of new business lines and business strategies;
|
•
|
future financial performance, including availability, terms and deployment of capital;
|
•
|
the ability of suppliers and vendors to deliver products, equipment, software and services;
|
•
|
the outcome of any pending or threatened litigation;
|
•
|
availability of qualified personnel;
|
•
|
changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission (the "FCC"), and adverse outcomes from regulatory proceedings;
|
•
|
changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors;
|
•
|
domestic and international economic and business conditions and industry trends;
|
•
|
consumer spending levels, including the availability and amount of individual consumer debt;
|
•
|
rapid technological changes;
|
•
|
failure to protect the security of personal information about the Company's and its businesses' customers, subjecting the Company and its businesses to potentially costly government enforcement actions or private litigation and reputational damage; and
|
•
|
the regulatory and competitive environment of the industries in which the Company operates.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
amounts in thousands
|
|||||||||||
Revenue
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
227,781
|
|
|
—
|
|
|
284,573
|
|
|
—
|
|
Corporate and other
|
5,709
|
|
|
6,177
|
|
|
10,121
|
|
|
10,146
|
|
|
Consolidated
|
$
|
233,490
|
|
|
6,177
|
|
|
294,694
|
|
|
10,146
|
|
|
|
|
|
|
|
|
|
|||||
Operating Income (Loss)
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
10,424
|
|
|
—
|
|
|
13,520
|
|
|
—
|
|
Corporate and other
|
(11,017
|
)
|
|
(11,617
|
)
|
|
(21,482
|
)
|
|
(22,968
|
)
|
|
Consolidated
|
$
|
(593
|
)
|
|
(11,617
|
)
|
|
(7,962
|
)
|
|
(22,968
|
)
|
|
|
|
|
|
|
|
|
|||||
Adjusted OIBDA
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
78,915
|
|
|
—
|
|
|
98,663
|
|
|
—
|
|
Corporate and other
|
(7,191
|
)
|
|
(6,922
|
)
|
|
(13,051
|
)
|
|
(14,794
|
)
|
|
Consolidated
|
$
|
71,724
|
|
|
(6,922
|
)
|
|
85,612
|
|
|
(14,794
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
amounts in thousands
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
(20,984
|
)
|
|
—
|
|
|
(26,189
|
)
|
|
—
|
|
Corporate and other
|
(14,458
|
)
|
|
(5
|
)
|
|
(17,501
|
)
|
|
(5
|
)
|
|
Consolidated
|
$
|
(35,442
|
)
|
|
(5
|
)
|
|
(43,690
|
)
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|||||
Share of earnings (losses) of affiliates, net
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
(50
|
)
|
|
—
|
|
|
(50
|
)
|
|
—
|
|
Corporate and other
|
10,400
|
|
|
1,600
|
|
|
7,908
|
|
|
3,323
|
|
|
Consolidated
|
$
|
10,350
|
|
|
1,600
|
|
|
7,858
|
|
|
3,323
|
|
|
|
|
|
|
|
|
|
|||||
Realized and unrealized gains (losses) on financial instruments, net
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Corporate and other
|
(428,356
|
)
|
|
60,449
|
|
|
(499,837
|
)
|
|
798,001
|
|
|
Consolidated
|
$
|
(428,356
|
)
|
|
60,449
|
|
|
(499,837
|
)
|
|
798,001
|
|
|
|
|
|
|
|
|
|
|||||
Other, net
|
|
|
|
|
|
|
|
|||||
GCI Holdings
|
$
|
688
|
|
|
—
|
|
|
818
|
|
|
—
|
|
Corporate and other
|
(2,533
|
)
|
|
541
|
|
|
(966
|
)
|
|
750
|
|
|
Consolidated
|
$
|
(1,845
|
)
|
|
541
|
|
|
(148
|
)
|
|
750
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
|
amounts in thousands
|
|||||||||||
Equity securities
|
|
$
|
(97,478
|
)
|
|
51,212
|
|
|
(229,040
|
)
|
|
262,497
|
|
Investment in Liberty Broadband
|
|
(425,538
|
)
|
|
14,939
|
|
|
(402,917
|
)
|
|
541,206
|
|
|
Variable forward
|
|
63,809
|
|
|
(5,702
|
)
|
|
72,552
|
|
|
(5,702
|
)
|
|
Indemnification obligation
|
|
34,891
|
|
|
—
|
|
|
63,608
|
|
|
—
|
|
|
Exchangeables senior debentures
|
|
(4,040
|
)
|
|
—
|
|
|
(4,040
|
)
|
|
—
|
|
|
|
|
$
|
(428,356
|
)
|
|
60,449
|
|
|
(499,837
|
)
|
|
798,001
|
|
|
|
Six Months Ended June 30,
|
|||||
|
|
2018
|
|
2017
|
|||
|
|
amounts in thousands
|
|||||
Cash flow information
|
|
|
|
|
|||
Net cash provided (used) by operating activities
|
|
$
|
47,397
|
|
|
145,421
|
|
Net cash provided (used) by investing activities
|
|
107,655
|
|
|
(76,960
|
)
|
|
Net cash provided (used) by financing activities
|
|
39,647
|
|
|
(70,949
|
)
|
|
|
|
$
|
194,699
|
|
|
(2,488
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
|||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
amounts in thousands
|
|||||||||||
Revenue
|
$
|
228,505
|
|
|
225,699
|
|
|
444,898
|
|
|
451,022
|
|
Operating expenses (excluding stock-based compensation included below):
|
|
|
|
|
|
|
|
|||||
Operating expense
|
(65,809
|
)
|
|
(67,488
|
)
|
|
(128,819
|
)
|
|
(135,907
|
)
|
|
Selling, general and administrative expenses
|
(84,161
|
)
|
|
(81,745
|
)
|
|
(167,356
|
)
|
|
(165,003
|
)
|
|
Adjusted OIBDA
|
78,535
|
|
|
76,466
|
|
|
148,723
|
|
|
150,112
|
|
|
Stock-based compensation
|
(1,667
|
)
|
|
(4,157
|
)
|
|
(3,343
|
)
|
|
(8,333
|
)
|
|
Legal settlement
|
—
|
|
|
—
|
|
|
(3,600
|
)
|
|
—
|
|
|
Depreciation and amortization
|
(57,347
|
)
|
|
(58,458
|
)
|
|
(116,662
|
)
|
|
(119,407
|
)
|
|
Operating income
|
$
|
19,521
|
|
|
13,851
|
|
|
25,118
|
|
|
22,372
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended
June 30, |
|||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||
|
amounts in thousands
|
|||||||||||
Consumer
|
|
|
|
|
|
|
|
|||||
Wireless
|
$
|
41,935
|
|
|
40,557
|
|
|
82,925
|
|
|
81,213
|
|
Data
|
39,243
|
|
|
35,418
|
|
|
78,305
|
|
|
71,506
|
|
|
Video
|
22,150
|
|
|
24,937
|
|
|
44,627
|
|
|
49,876
|
|
|
Voice
|
5,389
|
|
|
5,394
|
|
|
10,688
|
|
|
11,042
|
|
|
Business
|
|
|
|
|
|
|
|
|||||
Wireless
|
27,678
|
|
|
29,738
|
|
|
51,092
|
|
|
53,401
|
|
|
Data
|
77,189
|
|
|
72,251
|
|
|
147,240
|
|
|
149,401
|
|
|
Video
|
3,488
|
|
|
4,794
|
|
|
7,173
|
|
|
8,916
|
|
|
Voice
|
11,433
|
|
|
12,610
|
|
|
22,848
|
|
|
25,667
|
|
|
Total pro forma revenue
|
$
|
228,505
|
|
|
225,699
|
|
|
444,898
|
|
|
451,022
|
|
|
Variable rate debt
|
|
Fixed rate debt
|
||||||||||
|
Principal amount
|
|
Weighted average interest rate
|
|
Principal amount
|
|
Weighted average interest rate
|
||||||
|
dollar amounts in thousands
|
||||||||||||
GCI Holdings
|
$
|
674,148
|
|
|
4.5
|
%
|
|
$
|
775,000
|
|
|
6.8
|
%
|
Corporate and other
|
$
|
1,000,000
|
|
|
4.2
|
%
|
|
$
|
477,250
|
|
|
1.8
|
%
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Gregory B. Maffei
|
|
President and Chief Executive Officer
|
|
August 8, 2018
|
Gregory B. Maffei
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Mark D. Carleton
|
|
Chief Financial Officer
|
|
August 8, 2018
|
Mark D. Carleton
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
Date:
|
August 8, 2018
|
|
/s/ Gregory B. Maffei
|
|
|
|
Gregory B. Maffei
President and Chief Executive Officer
|
|
|
|
|
Date:
|
August 8, 2018
|
|
/s/ Mark D. Carleton
|
|
|
|
Mark D. Carleton
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|