Annual report pursuant to Section 13 and 15(d)

Information About the Company's Operating Segments

v3.19.3.a.u2
Information About the Company's Operating Segments
 12 Months Ended
Dec. 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 year ended December 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.

For segment reporting purposes, 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 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.

Performance Measures
 
Years ended December 31,
 
2019
 
2018
 
2017
 
Revenue
 
Adjusted OIBDA
 
Revenue
 
Adjusted OIBDA
 
Revenue
 
Adjusted OIBDA
 
amounts in thousands
GCI Holdings
$
869,662

 
256,878

 
715,842

 
217,832

 
—

 
—

Liberty Broadband
14,859

 
(16,891
)
 
22,256

 
(3,528
)
 
13,092

 
(16,416
)
Corporate and other
25,071

 
(21,865
)
 
23,920

 
(24,731
)
 
23,817

 
(25,762
)
 
909,592

 
218,122

 
762,018

 
189,573

 
36,909

 
(42,178
)
Eliminate Liberty Broadband
(14,859
)
 
16,891

 
(22,256
)
 
3,528

 
(13,092
)
 
16,416

 
$
894,733

 
235,013

 
739,762

 
193,101

 
23,817

 
(25,762
)

Other Information
 
December 31, 2019
 
December 31, 2018
 
Total
 
Investments
 
Capital
 
Total
 
Investments
 
Capital
 
assets
 
in affiliates
 
expenditures
 
assets
 
in affiliates
 
expenditures
 
amounts in thousands
GCI Holdings
$
3,162,753

 
585

 
147,022

 
3,343,372

 
719

 
131,029

Liberty Broadband
12,256,342

 
12,194,674

 
500

 
12,098,437

 
12,004,376

 
41

Corporate and other
8,770,692

 
167,058

 
1,459

 
5,317,450

 
176,311

 
3,323

 
24,189,787

 
12,362,317

 
148,981

 
20,759,259

 
12,181,406

 
134,393

Eliminate Liberty Broadband
(12,256,342
)
 
(12,194,674
)
 
(500
)
 
(12,098,437
)
 
(12,004,376
)
 
(41
)
Consolidated
$
11,933,445

 
167,643

 
148,481

 
8,660,822

 
177,030

 
134,352



The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:
 
Years ended December 31,
 
2019
 
2018
 
2017
 
amounts in thousands
Adjusted OIBDA
$
235,013

 
193,101

 
(25,762
)
Stock‑based compensation
(24,897
)
 
(28,207
)
 
(26,583
)
Depreciation and amortization
(266,333
)
 
(206,946
)
 
(3,252
)
Impairment of intangibles and long-lived assets
(167,062
)
 
(207,940
)
 
—

Insurance proceeds and restructuring, net
5,758

 
—

 
—

Operating income (loss)
(217,521
)
 
(249,992
)
 
(55,597
)
Interest expense
(153,803
)
 
(119,296
)
 
—

Share of earnings (loss) of affiliates, net
(2,629
)
 
25,772

 
7,001

Realized and unrealized gains (losses) on financial instruments, net
3,002,400

 
(681,545
)
 
637,164

Tax sharing agreement
26,646

 
(32,105
)
 
—

Other, net
13,172

 
205

 
2,467

Earnings (loss) before income taxes
$
2,668,265

 
(1,056,961
)
 
591,035