Quarterly report pursuant to Section 13 or 15(d)

Information About the Company's Operating Segments

v3.19.1
Information About the Company's Operating Segments
 3 Months Ended
Mar. 31, 2019
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 Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA (as defined below), and subscriber metrics.
    
For the three months ended March 31, 2019 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 in note 2 to the accompanying consolidated financial statements to the Annual Report on Form 10-K for the year ended December 31, 2018.

Performance Measures

Revenue by segment from contracts with customers, classified by customer type and significant service offerings follows:
 
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



Liberty Broadband revenue totaled $3.5 million and $11.8 million for the three months ended March 31, 2019 and 2018, respectively.

The Company had gross receivables of $206 million and deferred revenue of $36 million at March 31, 2019 from contracts with customers, which amounts exclude receivables and deferred revenue arising from leases, grants, and subsidies. Our customers generally pay for services in advance of the performance obligation and therefore these prepayments are recorded as deferred revenue. The deferred revenue is recognized as revenue in the accompanying condensed consolidated statements of operations as the services are provided. Changes in the contract liability balance for the Company during the three months ended March 31, 2019 were not materially impacted by other factors.

The Company expects to recognize revenue in the future related to performance obligations that are unsatisfied (or partially unsatisfied) of approximately $158 million in the remainder of 2019, $193 million in 2020, $127 million in 2021, $86 million in 2022 and $24 million in 2023 and thereafter.

The Company applies certain practical expedients as permitted under ASC 606 and does not disclose information about remaining performance obligations that have original expected durations of one year or less, information about revenue remaining from usage based performance obligations that are recognized over time as-invoiced, or variable consideration allocated to wholly unsatisfied performance obligations.

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, insurance proceeds 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.

Adjusted OIBDA is summarized as follows:
 
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



Other Information
 
 
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



The following table provides a reconciliation of segment Adjusted OIBDA to operating income (loss) and earnings (loss) from continuing operations before income taxes:
 
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
)