x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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92-0072737
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(State or other jurisdiction of
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(I.R.S Employer
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incorporation or organization)
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Identification No.)
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12300 Liberty Boulevard
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Englewood, Colorado
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80112
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbols
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Name of exchange on which registered
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Series A Common Stock, par value $0.01 per share
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GLIBA
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The Nasdaq Stock Market LLC
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Series A Cumulative Redeemable preferred stock, par value $0.01 per share
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GLIBP
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The Nasdaq Stock Market LLC
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Large accelerated filer
x
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Accelerated filer ☒
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Non-accelerated filer ☐
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Smaller reporting company ☐
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Emerging growth company ☐
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 2.
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Item 6.
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GCI LIBERTY, INC. AND SUBSIDIARIES
|
||||||
Condensed Consolidated Balance Sheets
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||||||
(unaudited)
|
||||||
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|||
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March 31,
|
|
December 31,
|
|||
|
2019
|
|
2018
|
|||
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amounts in thousands
|
|||||
Assets
|
|
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|
|||
Current assets:
|
|
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|
|||
Cash and cash equivalents
|
$
|
422,420
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|
491,257
|
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Trade and other receivables, net of allowance for doubtful accounts of $17,548 and $7,555, respectively
|
175,825
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182,600
|
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Current portion of tax sharing receivable
|
36,781
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36,781
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Other current assets
|
34,349
|
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40,100
|
|
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Total current assets
|
669,375
|
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750,738
|
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Investments in equity securities (note 5)
|
1,867,838
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1,533,517
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|
Investments in affiliates, accounted for using the equity method (note 6)
|
172,975
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|
|
177,030
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|
|
Investment in Liberty Broadband measured at fair value (note 6)
|
3,915,632
|
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3,074,373
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Property and equipment, net
|
1,161,345
|
|
|
1,184,606
|
|
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Intangible assets not subject to amortization
|
|
|
|
|
|
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Goodwill
|
855,837
|
|
|
855,837
|
|
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Cable certificates
|
305,000
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|
305,000
|
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Wireless licenses
|
191,697
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190,000
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Other
|
16,500
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|
16,500
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|
|
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1,369,034
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1,367,337
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Intangible assets subject to amortization, net (note 7)
|
423,431
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436,006
|
|
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Tax sharing receivable
|
74,782
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65,701
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Other assets, net
|
163,848
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|
71,514
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|
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Total assets
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$
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9,818,260
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8,660,822
|
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(Continued)
|
|||
See accompanying notes to interim condensed consolidated financial statements.
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GCI LIBERTY, INC. AND SUBSIDIARIES
|
||||||
Condensed Consolidated Balance Sheets
|
||||||
(unaudited)
|
||||||
|
||||||
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March 31,
|
|
December 31,
|
|||
|
2019
|
|
2018
|
|||
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amounts in thousands, except share amounts
|
|||||
Liabilities and Equity
|
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|
|||
Current liabilities:
|
|
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|
|||
Accounts payable and accrued liabilities
|
$
|
80,678
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|
100,334
|
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Deferred revenue
|
32,004
|
|
|
31,743
|
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Current portion of debt, net of deferred financing costs (note 8)
|
901,306
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900,759
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Variable forward
|
91,484
|
|
|
20,340
|
|
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Other current liabilities
|
67,490
|
|
|
27,618
|
|
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Total current liabilities
|
1,172,962
|
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1,080,794
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Long-term debt, net, including $521,376 and $462,336 measured at fair value (note 8)
|
2,042,158
|
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1,985,275
|
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Obligations under finance leases and tower obligations, excluding current portion (note 9)
|
118,039
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122,245
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Long-term deferred revenue
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62,324
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65,954
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Deferred income tax liabilities
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1,064,198
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793,696
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Preferred stock (note 10)
|
177,445
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177,103
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Indemnification obligation (note 4)
|
110,317
|
|
|
78,522
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|
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Other liabilities
|
121,835
|
|
|
50,543
|
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Total liabilities
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4,869,278
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4,354,132
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Equity
|
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Stockholders’ equity:
|
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Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 101,078,065 shares at March 31, 2019 and 102,058,816 shares at December 31, 2018
|
1,011
|
|
|
1,021
|
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Series B common stock, $.01 par value. Authorized 20,000,000 shares; issued and outstanding 4,441,109 shares at March 31, 2019 and 4,441,609 shares at December 31, 2018
|
44
|
|
|
44
|
|
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Series C common stock, $.01 par value. Authorized 1,040,000,000 shares; no shares issued
|
—
|
|
|
—
|
|
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Additional paid-in capital
|
3,212,878
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3,251,957
|
|
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Accumulated other comprehensive earnings (loss), net of taxes
|
3,068
|
|
|
168
|
|
|
Retained earnings
|
1,722,471
|
|
|
1,043,933
|
|
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Total stockholders' equity
|
4,939,472
|
|
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4,297,123
|
|
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Non-controlling interests
|
9,510
|
|
|
9,567
|
|
|
Total equity
|
4,948,982
|
|
|
4,306,690
|
|
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Commitments and contingencies
|
|
|
|
|
||
Total liabilities and equity
|
$
|
9,818,260
|
|
|
8,660,822
|
|
|
|
|
|
|||
See accompanying notes to interim condensed consolidated financial statements.
|
GCI LIBERTY, INC. AND SUBSIDIARIES
|
||||||
Condensed Consolidated Statements of Operations
|
||||||
(Unaudited)
|
||||||
|
|
|
|
|||
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Three Months Ended
|
|||||
|
March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands, except per share amounts
|
|||||
Revenue
|
$
|
217,736
|
|
|
61,204
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
Operating expense (exclusive of depreciation and amortization shown separately below)
|
68,893
|
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|
19,819
|
|
|
Selling, general and administrative, including stock-based compensation (note 12)
|
116,309
|
|
|
32,733
|
|
|
Insurance proceeds
|
(2,500
|
)
|
|
—
|
|
|
Depreciation and amortization expense
|
67,678
|
|
|
16,021
|
|
|
|
250,380
|
|
|
68,573
|
|
|
Operating income (loss)
|
(32,644
|
)
|
|
(7,369
|
)
|
|
Other income (expense):
|
|
|
|
|
|
|
Interest expense (including amortization of deferred loan fees)
|
(37,618
|
)
|
|
(8,248
|
)
|
|
Share of earnings (losses) of affiliates, net (note 6)
|
(3,296
|
)
|
|
(2,492
|
)
|
|
Realized and unrealized gains (losses) on financial instruments, net (note 4)
|
1,009,600
|
|
|
(71,481
|
)
|
|
Tax sharing agreement
|
9,081
|
|
|
(6,883
|
)
|
|
Other, net
|
2,768
|
|
|
1,697
|
|
|
|
980,535
|
|
|
(87,407
|
)
|
|
Earnings (loss) before income taxes
|
947,891
|
|
|
(94,776
|
)
|
|
Income tax (expense) benefit
|
(269,405
|
)
|
|
(75,955
|
)
|
|
Net earnings (loss)
|
678,486
|
|
|
(170,731
|
)
|
|
Less net earnings (loss) attributable to the non-controlling interests
|
(57
|
)
|
|
(39
|
)
|
|
Net earnings (loss) attributable to GCI Liberty, Inc. shareholders
|
$
|
678,543
|
|
|
(170,692
|
)
|
Basic net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share (note 3)
|
$
|
6.47
|
|
|
(1.58
|
)
|
Diluted net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share (note 3)
|
$
|
6.41
|
|
|
(1.58
|
)
|
|
|
|
|
|||
See accompanying notes to interim condensed consolidated financial statements.
|
GCI LIBERTY, INC. AND SUBSIDIARIES
|
||||||
Condensed Consolidated Statements of Cash Flows
|
||||||
(Unaudited)
|
||||||
|
||||||
|
Three Months Ended
|
|||||
|
March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Cash flows from operating activities:
|
|
|
|
|||
Net earnings (loss)
|
$
|
678,486
|
|
|
(170,731
|
)
|
Adjustments to reconcile net earnings (loss) to net cash from operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
67,678
|
|
|
16,021
|
|
|
Stock-based compensation expense
|
5,631
|
|
|
5,236
|
|
|
Share of (earnings) losses of affiliates, net
|
3,296
|
|
|
2,492
|
|
|
Realized and unrealized (gains) losses on financial instruments, net
|
(1,009,600
|
)
|
|
71,481
|
|
|
Deferred income tax expense (benefit)
|
269,397
|
|
|
75,596
|
|
|
Other, net
|
2,489
|
|
|
243
|
|
|
Change in operating assets and liabilities:
|
|
|
|
|
|
|
Current and other assets
|
20,882
|
|
|
(20,092
|
)
|
|
Payables and other liabilities
|
(17,194
|
)
|
|
(1,889
|
)
|
|
Net cash provided (used) by operating activities
|
21,065
|
|
|
(21,643
|
)
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Cash and restricted cash from acquisition of GCI Holdings
|
—
|
|
|
147,957
|
|
|
Capital expended for property and equipment
|
(40,114
|
)
|
|
(6,500
|
)
|
|
Other
|
803
|
|
|
—
|
|
|
Net cash provided (used) by investing activities
|
(39,311
|
)
|
|
141,457
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
Borrowings of debt
|
—
|
|
|
1,000,000
|
|
|
Repayment of debt, capital lease, and tower obligations
|
(4,739
|
)
|
|
(81,386
|
)
|
|
Repurchases of GCI Liberty common stock
|
(43,910
|
)
|
|
—
|
|
|
Contributions from (distributions to) parent, net
|
—
|
|
|
(1,121,320
|
)
|
|
Distribution to non-controlling interests
|
—
|
|
|
(3,272
|
)
|
|
Derivative payments
|
—
|
|
|
(80,001
|
)
|
|
Other financing activities, net
|
(1,929
|
)
|
|
(4,341
|
)
|
|
Net cash provided (used) by financing activities
|
(50,578
|
)
|
|
(290,320
|
)
|
|
Net increase (decrease) in cash, cash equivalents and restricted cash
|
(68,824
|
)
|
|
(170,506
|
)
|
|
Cash, cash equivalents and restricted cash at beginning of period
|
492,032
|
|
|
574,148
|
|
|
Cash, cash equivalents and restricted cash at end of period
|
$
|
423,208
|
|
|
403,642
|
|
|
|
|
||
Cash and cash equivalents including restricted cash
|
|
$
|
147,957
|
|
Receivables
|
|
171,014
|
|
|
Property and equipment
|
|
1,211,392
|
|
|
Goodwill
|
|
966,044
|
|
|
Intangible assets not subject to amortization
|
|
572,500
|
|
|
Intangible assets subject to amortization
|
|
468,737
|
|
|
Other assets
|
|
83,422
|
|
|
Deferred revenue
|
|
(92,561
|
)
|
|
Debt, including capital leases
|
|
(1,707,002
|
)
|
|
Other liabilities
|
|
(251,692
|
)
|
|
Deferred income tax liabilities
|
|
(276,683
|
)
|
|
Preferred stock
|
|
(174,922
|
)
|
|
Non-controlling interest
|
|
(7,000
|
)
|
|
|
|
$
|
1,111,206
|
|
|
|
Three Months Ended
|
||
|
|
March 31,
|
||
|
|
2018
|
||
|
|
amounts in thousands, except per share amounts
|
||
Revenue
|
|
$
|
219,470
|
|
Net earnings (loss)
|
|
$
|
(180,981
|
)
|
Net earnings (loss) attributable to GCI Liberty shareholders
|
|
$
|
(180,826
|
)
|
Basic net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share
|
|
$
|
(1.68
|
)
|
Diluted net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share
|
|
$
|
(1.68
|
)
|
|
Three Months Ended March 31,
|
||||
|
2019
|
|
2018
|
||
|
number of shares in thousands
|
||||
Basic WASO
|
104,842
|
|
|
107,735
|
|
Diluted WASO
|
105,864
|
|
|
107,735
|
|
Antidilutive shares excluded from diluted WASO
|
—
|
|
|
1,599
|
|
|
|
March 31, 2019
|
|
December 31, 2018
|
|||||||||||||||
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
|
|
$
|
351,076
|
|
|
351,076
|
|
|
—
|
|
|
384,071
|
|
|
384,071
|
|
|
—
|
|
Equity securities
|
|
$
|
1,862,553
|
|
|
1,862,553
|
|
|
—
|
|
|
1,529,901
|
|
|
1,529,901
|
|
|
—
|
|
Investment in Liberty Broadband
|
|
$
|
3,915,632
|
|
|
3,915,632
|
|
|
—
|
|
|
3,074,373
|
|
|
3,074,373
|
|
|
—
|
|
Variable forward
|
|
$
|
91,484
|
|
|
—
|
|
|
91,484
|
|
|
20,340
|
|
|
—
|
|
|
20,340
|
|
Indemnification obligation
|
|
$
|
110,317
|
|
|
—
|
|
|
110,317
|
|
|
78,522
|
|
|
—
|
|
|
78,522
|
|
Exchangeable senior debentures
|
|
$
|
521,376
|
|
|
—
|
|
|
521,376
|
|
|
462,336
|
|
|
—
|
|
|
462,336
|
|
|
|
Three Months Ended
|
|||||
|
|
March 31,
|
|||||
|
|
2019
|
|
2018
|
|||
|
|
amounts in thousands
|
|||||
Equity securities
|
|
$
|
334,320
|
|
|
(131,562
|
)
|
Investment in Liberty Broadband
|
|
841,259
|
|
|
22,621
|
|
|
Variable forward
|
|
(71,144
|
)
|
|
8,743
|
|
|
Indemnification obligation
|
|
(31,795
|
)
|
|
28,717
|
|
|
Exchangeable senior debentures
|
|
(63,040
|
)
|
|
—
|
|
|
|
|
$
|
1,009,600
|
|
|
(71,481
|
)
|
|
|
|
March 31,
|
|
December 31,
|
|||
|
|
|
2019
|
|
2018
|
|||
|
|
|
amounts in thousands
|
|||||
Charter (a)
|
|
|
$
|
1,858,883
|
|
|
1,526,984
|
|
Other investments (b)
|
|
|
8,955
|
|
|
6,533
|
|
|
|
|
|
$
|
1,867,838
|
|
|
1,533,517
|
|
|
March 31, 2019
|
|
December 31, 2018
|
||||||||||
|
Percentage
ownership
|
|
Market
value
|
|
Carrying
amount
|
|
Carrying
amount
|
||||||
|
|
|
dollars in thousands
|
||||||||||
LendingTree (a)
|
26.9
|
%
|
|
$
|
1,210,769
|
|
|
$
|
171,116
|
|
|
174,002
|
|
Other
|
various
|
|
|
NA
|
|
|
1,859
|
|
|
3,028
|
|
||
|
|
|
|
|
$
|
172,975
|
|
|
177,030
|
|
|||
|
|
|
|
|
|
|
|
||||||
(a) Both the Company's ownership interest in LendingTree and the Company's share of LendingTree's earnings (losses) are reported on a three month lag. The market value disclosed is as of March 31, 2019.
|
|
|
March 31,
|
|
December 31,
|
|||
|
|
2019
|
|
2018
|
|||
|
|
amounts in thousands
|
|||||
Current assets
|
|
$
|
74,299
|
|
|
84,574
|
|
Investment in Charter, accounted for using the equity method
|
|
11,999,494
|
|
|
12,004,376
|
|
|
Other assets
|
|
9,585
|
|
|
9,487
|
|
|
Total assets
|
|
12,083,378
|
|
|
12,098,437
|
|
|
Long-term debt, including current portion
|
|
523,238
|
|
|
522,928
|
|
|
Deferred income tax liabilities
|
|
961,665
|
|
|
965,829
|
|
|
Other liabilities
|
|
8,720
|
|
|
11,062
|
|
|
Equity
|
|
10,589,755
|
|
|
10,598,618
|
|
|
Total liabilities and shareholders' equity
|
|
$
|
12,083,378
|
|
|
12,098,437
|
|
|
|
Three months ended
|
|||||
|
|
March 31,
|
|||||
|
|
2019
|
|
2018
|
|||
|
|
amounts in thousands
|
|||||
Revenue
|
|
$
|
3,458
|
|
|
11,791
|
|
Operating expenses, net
|
|
(9,659
|
)
|
|
(9,545
|
)
|
|
Operating income (loss)
|
|
(6,201
|
)
|
|
2,246
|
|
|
Share of earnings (losses) of affiliates
|
|
34,849
|
|
|
9,302
|
|
|
Gain (loss) on dilution of investment in affiliate
|
|
(41,403
|
)
|
|
(26,757
|
)
|
|
Other income (expense), net
|
|
(6,120
|
)
|
|
(4,812
|
)
|
|
Income tax benefit (expense)
|
|
4,574
|
|
|
4,951
|
|
|
Net earnings (loss)
|
|
$
|
(14,301
|
)
|
|
(15,070
|
)
|
|
|
March 31, 2019
|
||||||||
|
|
Gross
|
|
|
|
Net
|
||||
|
|
carrying
|
|
Accumulated
|
|
carrying
|
||||
|
|
amount
|
|
amortization
|
|
amount
|
||||
|
|
amounts in thousands
|
||||||||
Customer relationships
|
|
$
|
408,267
|
|
|
(65,354
|
)
|
|
342,913
|
|
Other amortizable intangibles
|
|
126,453
|
|
|
(45,935
|
)
|
|
80,518
|
|
|
Total
|
|
$
|
534,720
|
|
|
(111,289
|
)
|
|
423,431
|
|
|
|
Outstanding
|
|
|
|||||||
|
|
Principal
|
|
Carrying Value
|
|||||||
|
|
March 31,
|
|
March 31,
|
|
December 31,
|
|||||
|
|
2019
|
|
2019
|
|
2018
|
|||||
|
|
amounts in thousands
|
|||||||||
Margin Loan Facility
|
|
$
|
900,000
|
|
|
900,000
|
|
|
900,000
|
|
|
Exchangeable senior debentures
|
|
477,250
|
|
|
521,376
|
|
|
462,336
|
|
||
Senior notes
|
|
775,000
|
|
|
802,107
|
|
|
803,287
|
|
||
Senior credit facility
|
|
714,510
|
|
|
714,510
|
|
|
715,124
|
|
||
Wells Fargo note payable
|
|
7,436
|
|
|
7,436
|
|
|
7,554
|
|
||
Deferred financing costs
|
|
—
|
|
|
(1,965
|
)
|
|
(2,267
|
)
|
||
Total debt
|
|
$
|
2,874,196
|
|
|
2,943,464
|
|
|
2,886,034
|
|
|
Debt classified as current (included in other current liabilities)
|
|
|
|
(901,306
|
)
|
|
(900,759
|
)
|
|||
Total long-term debt
|
|
|
|
$
|
2,042,158
|
|
|
1,985,275
|
|
|
Three months ended
|
||
|
March 31, 2019
|
||
|
amounts in thousands
|
||
Operating lease cost (1)
|
$
|
9,780
|
|
|
|
||
Finance lease cost
|
|
||
Depreciation of leased assets
|
$
|
2,159
|
|
Interest on lease liabilities
|
506
|
|
|
Total finance lease cost
|
$
|
2,665
|
|
|
Three months ended
|
|
March 31, 2019
|
Weighted-average remaining lease term (years):
|
|
Finance leases
|
3.5
|
Operating leases
|
5.8
|
Weighted-average discount rate:
|
|
Finance leases
|
4.9
|
Operating leases
|
5.8
|
|
|
March 31,
|
||
|
|
2019
|
||
|
|
amounts in thousands
|
||
Operating leases:
|
|
|
||
Operating lease right-of-use assets, net (1)
|
|
$
|
101,551
|
|
|
|
|
||
Current operating lease liabilities (2)
|
|
$
|
28,235
|
|
Operating lease liabilities (3)
|
|
71,254
|
|
|
Total operating lease liabilities
|
|
$
|
99,489
|
|
|
|
|
||
Finance Leases:
|
|
|
||
Property and equipment, at cost
|
|
$
|
41,084
|
|
Accumulated depreciation
|
|
(9,354
|
)
|
|
Property and equipment, net
|
|
$
|
31,730
|
|
|
|
|
||
Current obligations under finance leases (4)
|
|
$
|
11,778
|
|
Obligations under finance leases and tower obligations
|
|
26,921
|
|
|
Total finance lease liabilities
|
|
$
|
38,699
|
|
|
Finance Leases
|
|
Operating Leases
|
|
Tower Obligation
|
||||
|
amounts in thousands
|
||||||||
Remainder of 2019
|
$
|
10,088
|
|
|
26,966
|
|
|
5,739
|
|
2020
|
13,459
|
|
|
31,437
|
|
|
7,797
|
|
|
2021
|
12,044
|
|
|
22,530
|
|
|
7,953
|
|
|
2022
|
5,293
|
|
|
13,737
|
|
|
8,112
|
|
|
2023
|
678
|
|
|
9,720
|
|
|
8,274
|
|
|
Thereafter
|
1,734
|
|
|
21,952
|
|
|
142,825
|
|
|
Total lease payments
|
43,296
|
|
|
126,342
|
|
|
180,700
|
|
|
Less: imputed interest
|
(4,597
|
)
|
|
(26,853
|
)
|
|
(88,593
|
)
|
|
Total lease liabilities
|
$
|
38,699
|
|
|
99,489
|
|
|
92,107
|
|
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 #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
|
|
|
Series A
|
||||||||||||
|
|
|
|
|
|
Weighted
|
|
Aggregate
|
||||||
|
|
|
|
|
|
average
|
|
intrinsic
|
||||||
|
|
Awards
|
|
|
|
remaining
|
|
value
|
||||||
|
|
(000's)
|
|
WAEP
|
|
life
|
|
(millions)
|
||||||
Outstanding at January 1, 2019
|
|
1,650
|
|
|
$
|
47.61
|
|
|
|
|
|
|
||
Granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Exercised
|
|
(40
|
)
|
|
$
|
22.59
|
|
|
|
|
|
|
||
Forfeited/Cancelled
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Outstanding at March 31, 2019
|
|
1,610
|
|
|
$
|
48.22
|
|
|
1.5
|
years
|
|
$
|
12
|
|
Exercisable at March 31, 2019
|
|
1,276
|
|
|
$
|
48.78
|
|
|
1.1
|
years
|
|
$
|
9
|
|
|
|
Series B
|
||||||||||||
|
|
|
|
|
|
Weighted
|
|
Aggregate
|
||||||
|
|
|
|
|
|
average
|
|
intrinsic
|
||||||
|
|
Awards
|
|
|
|
remaining
|
|
value
|
||||||
|
|
(000's)
|
|
WAEP
|
|
life
|
|
(millions)
|
||||||
Outstanding at January 1, 2019
|
|
1,223
|
|
|
$
|
56.10
|
|
|
|
|
|
|
||
Granted
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Exercised
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Forfeited/Cancelled
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
||
Outstanding at March 31, 2019
|
|
1,223
|
|
|
$
|
56.10
|
|
|
3.8
|
years
|
|
$
|
—
|
|
Exercisable at March 31, 2019
|
|
905
|
|
|
$
|
56.01
|
|
|
4.1
|
years
|
|
$
|
—
|
|
•
|
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
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
GCI Holdings
|
|
|
|
|||
Consumer Revenue
|
|
|
|
|||
Wireless
|
$
|
27,492
|
|
|
7,762
|
|
Data
|
41,178
|
|
|
10,026
|
|
|
Video
|
21,016
|
|
|
5,762
|
|
|
Voice
|
4,461
|
|
|
1,168
|
|
|
Business Revenue
|
|
|
|
|||
Wireless
|
18,384
|
|
|
5,427
|
|
|
Data
|
68,110
|
|
|
18,431
|
|
|
Video
|
3,825
|
|
|
1,022
|
|
|
Voice
|
6,204
|
|
|
1,627
|
|
|
Lease, grant, and revenue from subsidies
|
22,541
|
|
|
5,567
|
|
|
Total GCI Holdings
|
213,211
|
|
|
56,792
|
|
|
Corporate and other
|
4,525
|
|
|
4,412
|
|
|
Total
|
$
|
217,736
|
|
|
61,204
|
|
|
Three Months Ended March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
GCI Holdings
|
$
|
44,471
|
|
|
19,748
|
|
Liberty Broadband
|
(3,117
|
)
|
|
4,560
|
|
|
Corporate and other
|
(6,306
|
)
|
|
(5,860
|
)
|
|
|
35,048
|
|
|
18,448
|
|
|
Eliminate Liberty Broadband
|
3,117
|
|
|
(4,560
|
)
|
|
|
$
|
38,165
|
|
|
13,888
|
|
|
|
March 31, 2019
|
||||||||
|
|
Total
|
|
Investments
|
|
Capital
|
||||
|
|
assets
|
|
in affiliates
|
|
expenditures
|
||||
|
|
amounts in thousands
|
||||||||
GCI Holdings
|
|
$
|
3,386,445
|
|
|
613
|
|
|
39,689
|
|
Liberty Broadband
|
|
12,083,378
|
|
|
11,999,494
|
|
|
17
|
|
|
Corporate and other
|
|
6,431,815
|
|
|
172,362
|
|
|
425
|
|
|
Eliminate Liberty Broadband
|
|
(12,083,378
|
)
|
|
(11,999,494
|
)
|
|
(17
|
)
|
|
Consolidated
|
|
$
|
9,818,260
|
|
|
172,975
|
|
|
40,114
|
|
|
Three Months Ended March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Consolidated segment Adjusted OIBDA
|
$
|
38,165
|
|
|
13,888
|
|
Stock‑based compensation
|
(5,631
|
)
|
|
(5,236
|
)
|
|
Depreciation and amortization
|
(67,678
|
)
|
|
(16,021
|
)
|
|
Insurance proceeds
|
2,500
|
|
|
—
|
|
|
Operating income (loss)
|
(32,644
|
)
|
|
(7,369
|
)
|
|
Interest expense
|
(37,618
|
)
|
|
(8,248
|
)
|
|
Share of earnings (loss) of affiliates, net
|
(3,296
|
)
|
|
(2,492
|
)
|
|
Realized and unrealized gains (losses) on financial instruments, net
|
1,009,600
|
|
|
(71,481
|
)
|
|
Tax Sharing Agreement
|
9,081
|
|
|
(6,883
|
)
|
|
Other, net
|
2,768
|
|
|
1,697
|
|
|
Earnings (loss) from continuing operations before income taxes
|
$
|
947,891
|
|
|
(94,776
|
)
|
•
|
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, specifically the state of the Alaska economy;
|
•
|
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.
|
•
|
The FCC reduced the rates charged to RHC customers by approximately 26%.
|
•
|
The Company's participating subsidiary received a letter of inquiry and request from the Enforcement Bureau of the FCC in March 2018.
|
•
|
The Company's participating subsidiary received multiple funding denial notices from Universal Service Administrative Company ("USAC"), denying the RHC funding requests that had been submitted by a rural health customer.
|
|
Three Months Ended March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Revenue
|
|
|
|
|||
GCI Holdings
|
$
|
213,211
|
|
|
56,792
|
|
Corporate and other
|
4,525
|
|
|
4,412
|
|
|
Consolidated
|
$
|
217,736
|
|
|
61,204
|
|
|
|
|
|
|||
Operating Income (Loss)
|
|
|
|
|||
GCI Holdings
|
$
|
(23,978
|
)
|
|
3,096
|
|
Corporate and other
|
(8,666
|
)
|
|
(10,465
|
)
|
|
Consolidated
|
$
|
(32,644
|
)
|
|
(7,369
|
)
|
|
|
|
|
|||
Adjusted OIBDA
|
|
|
|
|||
GCI Holdings
|
$
|
44,471
|
|
|
19,748
|
|
Corporate and other
|
(6,306
|
)
|
|
(5,860
|
)
|
|
Consolidated
|
$
|
38,165
|
|
|
13,888
|
|
|
Three Months Ended March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Interest expense
|
|
|
|
|||
GCI Holdings
|
$
|
(21,176
|
)
|
|
(5,205
|
)
|
Corporate and other
|
(16,442
|
)
|
|
(3,043
|
)
|
|
Consolidated
|
$
|
(37,618
|
)
|
|
(8,248
|
)
|
|
|
|
|
|||
Share of earnings (losses) of affiliates, net
|
|
|
|
|||
GCI Holdings
|
$
|
(106
|
)
|
|
—
|
|
Corporate and other
|
(3,190
|
)
|
|
(2,492
|
)
|
|
Consolidated
|
$
|
(3,296
|
)
|
|
(2,492
|
)
|
|
|
|
|
|||
Realized and unrealized gains (losses) on financial instruments, net
|
|
|
|
|||
GCI Holdings
|
$
|
1,858
|
|
|
—
|
|
Corporate and other
|
1,007,742
|
|
|
(71,481
|
)
|
|
Consolidated
|
$
|
1,009,600
|
|
|
(71,481
|
)
|
|
|
|
|
|||
Tax sharing agreement
|
|
|
|
|||
GCI Holdings
|
$
|
—
|
|
|
—
|
|
Corporate and other
|
9,081
|
|
|
(6,883
|
)
|
|
Consolidated
|
$
|
9,081
|
|
|
(6,883
|
)
|
|
|
|
|
|||
Other, net
|
|
|
|
|||
GCI Holdings
|
$
|
1,209
|
|
|
130
|
|
Corporate and other
|
1,559
|
|
|
1,567
|
|
|
Consolidated
|
$
|
2,768
|
|
|
1,697
|
|
|
Three Months Ended March 31,
|
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Equity securities
|
$
|
334,320
|
|
|
(131,562
|
)
|
Investment in Liberty Broadband
|
841,259
|
|
|
22,621
|
|
|
Variable forward
|
(71,144
|
)
|
|
8,743
|
|
|
Indemnification obligation
|
(31,795
|
)
|
|
28,717
|
|
|
Exchangeables senior debentures
|
(63,040
|
)
|
|
—
|
|
|
|
$
|
1,009,600
|
|
|
(71,481
|
)
|
|
|
Three Months Ended March 31,
|
|||||
|
|
2019
|
|
2018
|
|||
|
|
amounts in thousands
|
|||||
Cash flow information
|
|
|
|
|
|||
Net cash provided (used) by operating activities
|
|
$
|
21,065
|
|
|
(21,643
|
)
|
Net cash provided (used) by investing activities
|
|
(39,311
|
)
|
|
141,457
|
|
|
Net cash provided (used) by financing activities
|
|
(50,578
|
)
|
|
(290,320
|
)
|
|
|
|
$
|
(68,824
|
)
|
|
(170,506
|
)
|
|
Three Months Ended
March 31, |
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Revenue
|
$
|
213,211
|
|
|
215,058
|
|
Operating expenses (excluding stock-based compensation included below):
|
|
|
|
|||
Operating expense
|
(64,305
|
)
|
|
(63,010
|
)
|
|
Selling, general and administrative expenses
|
(104,435
|
)
|
|
(84,259
|
)
|
|
Adjusted OIBDA
|
44,471
|
|
|
67,789
|
|
|
Stock-based compensation
|
(3,996
|
)
|
|
(1,676
|
)
|
|
Legal settlement
|
—
|
|
|
(3,600
|
)
|
|
Insurance proceeds
|
2,500
|
|
|
—
|
|
|
Depreciation and amortization
|
(66,953
|
)
|
|
(58,669
|
)
|
|
Operating income (loss)
|
$
|
(23,978
|
)
|
|
3,844
|
|
|
Three Months Ended
March 31, |
|||||
|
2019
|
|
2018
|
|||
|
amounts in thousands
|
|||||
Consumer
|
|
|
|
|||
Wireless
|
$
|
39,907
|
|
|
40,990
|
|
Data
|
41,178
|
|
|
39,062
|
|
|
Video
|
21,021
|
|
|
22,477
|
|
|
Voice
|
4,484
|
|
|
5,299
|
|
|
Business
|
|
|
|
|||
Wireless
|
22,757
|
|
|
23,803
|
|
|
Data
|
69,035
|
|
|
68,327
|
|
|
Video
|
3,825
|
|
|
3,685
|
|
|
Voice
|
11,004
|
|
|
11,415
|
|
|
Total
|
$
|
213,211
|
|
|
215,058
|
|
|
Variable rate debt
|
|
Fixed rate debt
|
||||||||||
|
Principal amount
|
|
Weighted average interest rate
|
|
Principal amount
|
|
Weighted average interest rate
|
||||||
|
dollar amounts in thousands
|
||||||||||||
GCI Holdings
|
$
|
721,946
|
|
|
4.7
|
%
|
|
$
|
775,000
|
|
|
6.8
|
%
|
Corporate and other
|
$
|
900,000
|
|
|
4.5
|
%
|
|
$
|
477,250
|
|
|
1.8
|
%
|
•
|
Improvement of the design and operation of control activities and procedures associated with user access to the affected IT systems, including removing all inappropriate IT system access associated with the material weakness and ensuring no inappropriate activity occurred during the period.
|
•
|
Enhance management’s risk assessment to emphasize and evaluate the interdependencies of business processes, automated control activities, and effective ITGCs.
|
•
|
Enhance controls related to the review of payroll changes and of payroll calculations after payroll is processed by the third-party processing company, but before payments are disbursed to employees.
|
|
GCI Liberty Series A Common Stock
|
||||||||||
Period
|
(a) Total
Number of
Shares
Purchased
|
|
(b) Average
Price Paid
per Share
|
|
(c) Total
Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
|
(d) Maximum
Number (or
approximate
Dollar Value) of
Shares that May
Yet Be
Purchased
Under the Plan
or Programs
|
||||
January 1 - 31, 2019
|
922,273
|
|
|
$
|
43.26
|
|
|
3,319,983
|
|
|
$498.5 million
|
February 1 - 28, 2019
|
83,970
|
|
|
$
|
47.76
|
|
|
3,403,953
|
|
|
$494.4 million
|
March 1 - 31, 2019
|
—
|
|
|
$
|
—
|
|
|
3,403,953
|
|
|
$494.4 million
|
Total
|
1,006,243
|
|
|
|
|
|
|
|
|
Exhibit No.
|
Description
|
||
10.1
|
|||
10.2
|
|||
31.1
|
|||
31.2
|
|||
32
|
|||
101
|
The following materials from GCI Liberty, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets; (ii) Condensed Consolidated Statements of Operations; (iii) Condensed Consolidated Statements of Comprehensive Earnings; (iv) Condensed Consolidated Statements of Cash Flows; (v) Condensed Consolidated Statements of Equity; and (vi) Notes to Condensed Consolidated Financial Statements *
|
*
|
Filed herewith.
|
|
|
**
|
Furnished herewith
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Gregory B. Maffei
|
|
President and Chief Executive Officer
|
|
May 9, 2019
|
Gregory B. Maffei
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Mark D. Carleton
|
|
Chief Financial Officer
|
|
May 9, 2019
|
Mark D. Carleton
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
|
|
1.
|
Use of the Aircraft.
During the Term (as defined below), you may use up to 80 hours per year worth of flight time (the “Annual Allotment”) on the Aircraft for personal use (“Personal Flight Time”). You may schedule Personal Flight Time with GCC’s flight department subject to availability of the Aircraft. GCC will not have any obligation to roll over any unused Annual Allotment, and GCC will have no obligation to continue to own or lease any Aircraft other than pursuant to GCC’s obligations under the Second Amended and Restated Aircraft Lease Agreement between GCI Communications Corp. and 560 Company, Inc., dated May 9, 2011, as amended by the First Amendment, dated November 30, 2018 (together, the “Aircraft Lease Agreement”).
|
2.
|
IRS Reporting.
The fair market value of Personal Flight Time will be reflected as income on your W-2 in accordance with applicable IRS regulations based on the Standard Industry Fare Level formula (SIFL) pursuant to 26 C.F.R. §1.61-21(g) or a comparable successor provision.
|
3.
|
Term.
The term of this Agreement (the “Term”) will be deemed to have commenced on January 1, 2019 (the “Effective Date”) and will expire on the earliest of (i) the date that you cease to be employed by GCC or any of its subsidiaries and (ii) the date that GCC ceases to own or lease any Aircraft.
|
4.
|
Governing Law.
This Agreement will be governed by, and will be construed and enforced in accordance with, the laws of the State of Colorado without regard to the conflicts of laws principles of that jurisdiction.
|
5.
|
Entire Agreement.
This Agreement and the Aircraft Lease Agreement constitute the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes any and all previous written or oral representations, promises, agreements or understandings of whatever nature between the parties with respect to the subject matter. This Agreement may not be altered or amended except by an agreement in writing signed by both parties. This Agreement may be signed in counterparts.
|
|
|
|
|
Date:
|
May 9, 2019
|
|
/s/ Gregory B. Maffei
|
|
|
|
Gregory B. Maffei
President and Chief Executive Officer
|
|
|
|
|
Date:
|
May 9, 2019
|
|
/s/ Mark D. Carleton
|
|
|
|
Mark D. Carleton
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|