Quarterly report pursuant to Section 13 or 15(d)

Information About the Company's Operating Segments

v3.10.0.1
Information About the Company's Operating Segments
 9 Months Ended
Sep. 30, 2018
Segment Reporting [Abstract]  
Information About the Company's Operating Segments
Information About the Company'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, and subscriber metrics.
    
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 and nine months ended September 30, 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 September 30,
 
2018
 
2017
 
Revenue
 
Adjusted OIBDA
 
Revenue
 
Adjusted OIBDA
 
amounts in thousands
GCI Holdings
$
205,047

 
57,945

 
—

 
—

Liberty Broadband
3,518

 
(2,198
)
 
3,430

 
(3,346
)
Corporate and other
5,099

 
(7,205
)
 
5,493

 
(5,277
)
 
213,664

 
48,542

 
8,923

 
(8,623
)
Eliminate Liberty Broadband
(3,518
)
 
2,198

 
(3,430
)
 
3,346

 
$
210,146

 
50,740

 
5,493

 
(5,277
)


 
Nine Months Ended September 30,
 
2018
 
2017
 
Revenue
 
Adjusted OIBDA
 
Revenue
 
Adjusted OIBDA
 
amounts in thousands
GCI Holdings
$
489,620

 
156,608

 
—

 
—

Liberty Broadband
18,680

 
(414
)
 
9,643

 
(12,262
)
Corporate and other
15,220

 
(20,256
)
 
15,639

 
(20,071
)
 
523,520

 
135,938

 
25,282

 
(32,333
)
Eliminate Liberty Broadband
(18,680
)
 
414

 
(9,643
)
 
12,262

 
$
504,840

 
136,352

 
15,639

 
(20,071
)


Other Information
 
 
September 30, 2018
 
 
Total
 
Investments
 
Capital
 
 
assets
 
in affiliates
 
expenditures
 
 
amounts in thousands
GCI Holdings
 
$
3,561,569

 
—

 
86,977

Liberty Broadband
 
12,082,674

 
11,977,368

 
35

Corporate and other
 
6,318,888

 
174,134

 
2,399

 
 
21,963,131

 
12,151,502

 
89,411

Eliminate Liberty Broadband
 
(12,082,674
)
 
(11,977,368
)
 
(35
)
Consolidated
 
$
9,880,457

 
174,134

 
89,376



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 September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
 
amounts in thousands
Consolidated segment Adjusted OIBDA
$
50,740

 
(5,277
)
 
136,352

 
(20,071
)
Stock‑based compensation
(7,761
)
 
(4,369
)
 
(20,926
)
 
(10,968
)
Depreciation and amortization
(62,848
)
 
(823
)
 
(143,257
)
 
(2,398
)
Operating income (loss)
(19,869
)
 
(10,469
)
 
(27,831
)
 
(33,437
)
Interest expense
(37,614
)
 
—

 
(81,304
)
 
—

Share of earnings (loss) of affiliates, net
10,856

 
1,648

 
18,714

 
4,971

Realized and unrealized gains (losses) on financial instruments, net
495,509

 
472,763

 
(4,328
)
 
1,270,764

Other, net
(834
)
 
328

 
(982
)
 
1,073

Earnings (loss) from continuing operations before income taxes
$
448,048

 
464,270

 
(95,731
)
 
1,243,371