Quarterly report pursuant to Section 13 or 15(d)

Information About GCI Liberty's Operating Segments

v3.8.0.1
Information About GCI Liberty's Operating Segments
 3 Months Ended
Mar. 31, 2018
Segment Reporting [Abstract]  
Information About GCI Liberty's Operating Segments
Information About GCI Liberty's Operating Segments

The Company, through its interests in subsidiaries and other companies, is primarily engaged in the broadband communications services industry. The Company identifies its reportable segments as (A) those consolidated companies that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA (as defined below) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of the Company’s annual pre‑tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.

The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, the Company reviews non-financial measures such as conversion rates and active customers, as appropriate.
    
The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock‑based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its businesses, including each business’s ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock‑based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP.

For the three months ended March 31, 2018, the Company has identified the following subsidiary as a reportable segment:

•
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.

For presentation purposes the Company is providing financial information for Liberty Broadband. While the Company’s equity method investment in Liberty Broadband does not meet the reportable segment threshold defined above, the Company believes that the inclusion of such information is relevant to users of these financial statements.
•
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.
The Company’s operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the consolidated subsidiaries included in the segments are the same as those described in the Company’s summary of significant accounting policies.
Performance Measures
 
Three months ended March 31,
 
2018
 
2017
 
Revenue
 
Adjusted OIBDA
 
Revenue
 
Adjusted OIBDA
 
amounts in thousands
GCI Holdings
$
56,792

 
19,748

 
—

 
—

Liberty Broadband
11,791

 
4,560

 
3,140

 
(3,961
)
Corporate and other
4,412

 
(5,860
)
 
3,969

 
(7,872
)
 
72,995

 
18,448

 
7,109

 
(11,833
)
Eliminate Liberty Broadband
(11,791
)
 
(4,560
)
 
(3,140
)
 
3,961

 
$
61,204

 
13,888

 
3,969

 
(7,872
)


Other Information
 
 
March 31, 2018
 
 
Total
 
Investments
 
Capital
 
 
assets
 
in affiliates
 
expenditures
 
 
amounts in thousands
GCI Holdings
 
$
3,555,357

 
—

 
5,777

Liberty Broadband
 
11,957,547

 
11,866,434

 
14

Corporate and other
 
6,029,394

 
112,975

 
723

 
 
21,542,298

 
11,979,409

 
6,514

Eliminate Liberty Broadband
 
(11,957,547
)
 
(11,866,434
)
 
(14
)
Consolidated GCI Liberty
 
$
9,584,751

 
112,975

 
6,500



The following table provides a reconciliation of segment Adjusted OIBDA to operating income and earnings (loss) from continuing operations before income taxes:
 
Three months ended March 31,
 
2018
 
2017
 
amounts in thousands
Consolidated segment Adjusted OIBDA
$
13,888

 
(7,872
)
Stock‑based compensation
(5,236
)
 
(2,726
)
Depreciation and amortization
(16,021
)
 
(753
)
Operating income
(7,369
)
 
(11,351
)
Interest expense
(8,248
)
 
—

Share of earnings (loss) of affiliates, net
(2,492
)
 
1,723

Realized and unrealized gains (losses) on financial instruments, net
(71,481
)
 
737,552

Other, net
1,697

 
209

Earnings (loss) from continuing operations before income taxes
$
(87,893
)
 
728,133