Quarterly report pursuant to Section 13 or 15(d)

Information About the Company's Operating Segments

v3.19.2
Information About the Company's Operating Segments
 6 Months Ended
Jun. 30, 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 and six months ended June 30, 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
 
Six months ended
 
June 30,
 
June 30,
 
2019
 
2018
 
2019
 
2018
 
amounts in thousands
GCI Holdings
 
 
 
 
 
 
 
Consumer Revenue
 
 
 
 
 
 
 
Wireless
$
27,505

 
28,966

 
54,997

 
36,728

Data
41,457

 
39,243

 
82,635

 
49,269

Video
21,045

 
22,146

 
42,061

 
27,908

Voice
4,321

 
4,710

 
8,782

 
5,878

Business Revenue
 
 
 
 
 
 
 
Wireless
19,393

 
21,391

 
37,777

 
26,818

Data
63,733

 
76,223

 
131,843

 
94,654

Video
3,988

 
3,487

 
7,813

 
4,509

Voice
6,636

 
6,294

 
12,840

 
7,921

Lease, grant, and revenue from subsidies
22,901

 
25,321

 
45,442

 
30,888

Total GCI Holdings
210,979

 
227,781

 
424,190

 
284,573

Corporate and other
6,587

 
5,709

 
11,112

 
10,121

Total
$
217,566

 
233,490

 
435,302

 
294,694



Liberty Broadband revenue totaled $3.7 million and $3.4 million for the three months ended June 30, 2019 and 2018, respectively and $7.2 million and $15.2 million for the six months ended June 30, 2019 and 2018, respectively.

The Company had gross receivables of $206 million and deferred revenue of $38 million at June 30, 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 six months ended June 30, 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 $111 million in the remainder of 2019, $205 million in 2020, $139 million in 2021, $97 million in 2022 and $86 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, a non-GAAP measure, 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 by identifying those items that are not directly a reflection of each business' performance or indicative of ongoing business trends. 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 June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
 
amounts in thousands
GCI Holdings
$
66,121

 
78,915

 
110,592

 
98,663

Liberty Broadband
(4,174
)
 
(2,776
)
 
(7,291
)
 
1,784

Corporate and other
(5,511
)
 
(7,191
)
 
(11,817
)
 
(13,051
)
 
56,436

 
68,948

 
91,484

 
87,396

Eliminate Liberty Broadband
4,174

 
2,776

 
7,291

 
(1,784
)
 
$
60,610

 
71,724

 
98,775

 
85,612



Other Information
 
 
June 30, 2019
 
 
Total
 
Investments
 
Capital
 
 
assets
 
in affiliates
 
expenditures
 
 
amounts in thousands
GCI Holdings
 
$
3,361,444

 
608

 
69,979

Liberty Broadband
 
12,107,169

 
12,023,742

 
50

Corporate and other
 
7,207,265

 
169,187

 
887

Eliminate Liberty Broadband
 
(12,107,169
)
 
(12,023,742
)
 
(50
)
Consolidated
 
$
10,568,709

 
169,795

 
70,866



The following table provides a reconciliation of consolidated segment Adjusted OIBDA to operating income (loss) and earnings (loss) from continuing operations before income taxes:
 
Three months ended June 30,
 
Six months ended June 30,
 
2019
 
2018
 
2019
 
2018
 
amounts in thousands
Consolidated segment Adjusted OIBDA
$
60,610

 
71,724

 
98,775

 
85,612

Stock‑based compensation
(6,754
)
 
(7,929
)
 
(12,385
)
 
(13,165
)
Depreciation and amortization
(65,891
)
 
(64,388
)
 
(133,569
)
 
(80,409
)
Insurance proceeds and restructuring, net
(4,218
)
 
—

 
(1,718
)
 
—

Operating income (loss)
(16,253
)
 
(593
)
 
(48,897
)
 
(7,962
)
Interest expense
(40,386
)
 
(35,442
)
 
(78,004
)
 
(43,690
)
Share of earnings (loss) of affiliates, net
(1,068
)
 
10,350

 
(4,364
)
 
7,858

Realized and unrealized gains (losses) on financial instruments, net
679,098

 
(428,356
)
 
1,688,698

 
(499,837
)
Tax Sharing Agreement
7,452

 
(21,065
)
 
16,533

 
(27,948
)
Other, net
11,596

 
(1,845
)
 
14,364

 
(148
)
Earnings (loss) from continuing operations before income taxes
$
640,439

 
(476,951
)
 
1,588,330

 
(571,727
)