1. | Our rural high cost payments will remain unchanged at $55 million annually over the next ten years, subject to performance commitments and elimination of any duplicative support after five years. |
2. | Urban high cost support was phased down 20 percent per year in 2012 and 2013 and subsequently frozen. Under the Alaska plan, this revenue will continue to phase |
($ millions) | 3Q16 | 3Q15 | 2Q16 |
Wholesale Wireless | 16 | 20 | 17 |
Roaming and Backhaul | 21 | 45 | 21 |
USF Support | 13 | 15 | 13 |
Other | 2 | 0 | 3 |
Total Wireless Revenue | 52 | 80 | 54 |
($ millions) | 3Q16 | Leverage on EBITDA | Leverage on Cash Flow |
Total Debt | 1,484 | 5.0x | 4.5x |
Less Cash | (93) | (0.3x) | (0.3x) |
Net Debt | 1,391 | 4.6x | 4.2x |
Adjusted EBITDA (Last 2 quarters annualized) | 299 | ||
Add back of roaming cash flows allowed by new credit facility | 30 | ||
Annualized Cash Flow | 329 |
• | Revenue is expected to be between $930 million and $980 million in 2016. |
• | Previously our Adjusted EBITDA guidance was between $295 million and $325 million, including the $30 million adjustment. The change in the roaming adjustment would imply guidance of $265 to $295 million. We are increasing the guidance to $280 to $295 million. |
• | Capital expenditures are expected to be approximately $210 million. |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(Amounts in thousands) | ||||||
September 30, | December 31, | |||||
ASSETS | 2016 | 2015 | ||||
Current assets: | ||||||
Cash and cash equivalents | $ | 92,622 | 26,528 | |||
Receivables | 200,294 | 208,384 | ||||
Less allowance for doubtful receivables | 4,436 | 3,630 | ||||
Net receivables | 195,858 | 204,754 | ||||
Prepaid expenses | 16,253 | 12,862 | ||||
Inventories | 7,966 | 11,322 | ||||
Other current assets | 173 | 3,129 | ||||
Total current assets | 312,872 | 258,595 | ||||
Property and equipment | 2,505,753 | 2,384,530 | ||||
Less accumulated depreciation | 1,412,540 | 1,290,149 | ||||
Net property and equipment | 1,093,213 | 1,094,381 | ||||
Goodwill | 239,263 | 239,263 | ||||
Cable certificates | 191,635 | 191,635 | ||||
Wireless licenses | 92,347 | 86,347 | ||||
Other intangible assets, net of amortization | 70,062 | 69,290 | ||||
Other assets | 32,560 | 27,429 | ||||
Total other assets | 625,867 | 613,964 | ||||
Total assets | $ | 2,031,952 | 1,966,940 | |||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(Continued) | ||||||
(Amounts in thousands) | ||||||
September 30, | December 31, | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | 2016 | 2015 | ||||
Current liabilities: | ||||||
Current maturities of obligations under long-term debt, capital leases, and tower obligation | $ | 13,046 | 12,050 | |||
Accounts payable | 51,551 | 63,014 | ||||
Deferred revenue | 33,115 | 34,128 | ||||
Accrued payroll and payroll related obligations | 29,251 | 31,337 | ||||
Accrued interest (including $3,718 and $5,132 to a related party at September 30, 2016 and December 31, 2015, respectively) | 25,465 | 13,655 | ||||
Accrued liabilities | 17,002 | 22,822 | ||||
Subscriber deposits | 876 | 1,242 | ||||
Total current liabilities | 170,306 | 178,248 | ||||
Long-term debt, net (including $56,157 and $54,810 to a related party at September 30, 2016 and December 31, 2015, respectively) | 1,330,199 | 1,329,396 | ||||
Obligations under capital leases, excluding current maturities (including $1,785 and $1,824 due to a related party at September 30, 2016 and December 31, 2015, respectively) | 52,713 | 59,651 | ||||
Deferred income taxes | 113,710 | 106,145 | ||||
Long-term deferred revenue | 120,875 | 93,427 | ||||
Tower obligation | 88,060 | — | ||||
Other liabilities (including $16,980 and $32,820 for derivative stock appreciation rights with a related party at September 30, 2016 and December 31, 2015, respectively) | 64,202 | 80,812 | ||||
Total liabilities | 1,940,065 | 1,847,679 | ||||
Commitments and contingencies | ||||||
Stockholders’ equity: | ||||||
Common stock (no par): | ||||||
Class A. Authorized 100,000 shares; issued 33,164 and 35,593 shares at September 30, 2016 and December 31, 2015, respectively; outstanding 33,138 and 35,567 shares at September 30, 2016 and December 31, 2015, respectively | — | — | ||||
Class B. Authorized 10,000 shares; issued and outstanding 3,154 at September 30, 2016 and December 31, 2015; convertible on a share-per-share basis into Class A common stock | 2,664 | 2,664 | ||||
Less cost of 26 Class A common shares held in treasury at September 30, 2016 and December 31, 2015 | (249 | ) | (249 | ) | ||
Paid-in capital | 14,609 | 6,631 | ||||
Retained earnings | 44,215 | 79,217 | ||||
Total General Communication, Inc. stockholders' equity | 61,239 | 88,263 | ||||
Non-controlling interests | 30,648 | 30,998 | ||||
Total stockholders’ equity | 91,887 | 119,261 | ||||
Total liabilities and stockholders’ equity | $ | 2,031,952 | 1,966,940 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
(Amounts in thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||
Revenues: | ||||||||||||
Non-related party | $ | 236,655 | 258,573 | 701,519 | 731,907 | |||||||
Related party | — | — | — | 5,283 | ||||||||
Total revenues | 236,655 | 258,573 | 701,519 | 737,190 | ||||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below): | ||||||||||||
Non-related party | 73,494 | 82,717 | 227,926 | 235,860 | ||||||||
Related party | — | — | — | 881 | ||||||||
Total cost of goods sold | 73,494 | 82,717 | 227,926 | 236,741 | ||||||||
Selling, general and administrative expenses: | ||||||||||||
Non-related party | 88,974 | 82,655 | 264,642 | 249,090 | ||||||||
Related party | — | — | — | 540 | ||||||||
Total selling, general and administrative expenses | 88,974 | 82,655 | 264,642 | 249,630 | ||||||||
Depreciation and amortization expense | 47,819 | 45,157 | 143,033 | 135,563 | ||||||||
Software impairment charge | — | 2,571 | — | 29,839 | ||||||||
Operating income | 26,368 | 45,473 | 65,918 | 85,417 | ||||||||
Other income (expense): | ||||||||||||
Interest expense (including amortization of deferred loan fees) | (19,666 | ) | (19,260 | ) | (58,199 | ) | (59,713 | ) | ||||
Related party interest expense | (1,881 | ) | (1,828 | ) | (5,558 | ) | (4,760 | ) | ||||
Derivative instrument unrealized income (loss) with related party | 4,800 | 30 | 15,840 | (5,040 | ) | |||||||
Loss on extinguishment of debt | — | — | — | (27,700 | ) | |||||||
Impairment of equity method investment | — | — | — | (12,593 | ) | |||||||
Other | 613 | 1,202 | 1,702 | 2,445 | ||||||||
Other expense, net | (16,134 | ) | (19,856 | ) | (46,215 | ) | (107,361 | ) | ||||
Income (loss) before income taxes | 10,234 | 25,617 | 19,703 | (21,944 | ) | |||||||
Income tax (expense) benefit | (2,407 | ) | (8,122 | ) | (7,596 | ) | 4,957 | |||||
Net income (loss) | 7,827 | 17,495 | 12,107 | (16,987 | ) | |||||||
Net income (loss) attributable to non-controlling interests | (116 | ) | (136 | ) | (350 | ) | 278 | |||||
Net income (loss) attributable to General Communication, Inc. | $ | 7,943 | 17,631 | 12,457 | (17,265 | ) | ||||||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share | $ | 0.21 | 0.45 | 0.33 | (0.45 | ) | ||||||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share | $ | 0.21 | 0.45 | 0.33 | (0.45 | ) | ||||||
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share | $ | 0.14 | 0.44 | 0.08 | (0.45 | ) | ||||||
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share | $ | 0.14 | 0.44 | 0.08 | (0.45 | ) | ||||||
Common shares used to calculate Class A basic EPS | 32,033 | 34,031 | 33,008 | 35,037 | ||||||||
Common shares used to calculate Class A diluted EPS | 35,478 | 38,115 | 36,793 | 38,195 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Third Quarter 2016 | Third Quarter 2015 | |||||||||||||
Wireless | Wireline | Wireless | Wireline | |||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 52,327 | 22,071 | 74,398 | 80,424 | 21,487 | 101,911 | |||||||
Data | — | 110,032 | 110,032 | — | 100,245 | 100,245 | ||||||||
Video | — | 30,770 | 30,770 | — | 32,959 | 32,959 | ||||||||
Voice | — | 21,455 | 21,455 | — | 23,458 | 23,458 | ||||||||
Total | 52,327 | 184,328 | 236,655 | 80,424 | 178,149 | 258,573 | ||||||||
Cost of goods sold | 15,313 | 58,181 | 73,494 | 18,031 | 64,686 | 82,717 | ||||||||
Contribution | 37,014 | 126,147 | 163,161 | 62,393 | 113,463 | 175,856 | ||||||||
Less SG&A | (5,138 | ) | (83,836 | ) | (88,974 | ) | (5,115 | ) | (77,540 | ) | (82,655 | ) | ||
Plus share-based compensation | — | 2,810 | 2,810 | — | 2,660 | 2,660 | ||||||||
Plus imputed interest on financed devices | — | 651 | 651 | — | 268 | 268 | ||||||||
Plus accretion | 142 | 264 | 406 | 126 | 65 | 191 | ||||||||
Other | — | 131 | 131 | — | 206 | 206 | ||||||||
Adjusted EBITDA | $ | 32,018 | 46,167 | 78,185 | 57,404 | 39,122 | 96,526 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Third Quarter 2016 | Second Quarter 2016 | |||||||||||||
Wireless | Wireline | Wireless | Wireline | |||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 52,327 | 22,071 | 74,398 | 53,875 | 17,973 | 71,848 | |||||||
Data | — | 110,032 | 110,032 | — | 108,007 | 108,007 | ||||||||
Video | — | 30,770 | 30,770 | — | 31,645 | 31,645 | ||||||||
Voice | — | 21,455 | 21,455 | — | 22,266 | 22,266 | ||||||||
Total | 52,327 | 184,328 | 236,655 | 53,875 | 179,891 | 233,766 | ||||||||
Cost of goods sold | 15,313 | 58,181 | 73,494 | 17,081 | 61,060 | 78,141 | ||||||||
Contribution | 37,014 | 126,147 | 163,161 | 36,794 | 118,831 | 155,625 | ||||||||
Less SG&A | (5,138 | ) | (83,836 | ) | (88,974 | ) | (4,171 | ) | (83,851 | ) | (88,022 | ) | ||
Plus share-based compensation | — | 2,810 | 2,810 | — | 2,683 | 2,683 | ||||||||
Plus imputed interest on financed devices | — | 651 | 651 | — | 633 | 633 | ||||||||
Plus accretion | 142 | 264 | 406 | 211 | 231 | 442 | ||||||||
Other | — | 131 | 131 | — | 179 | 179 | ||||||||
Adjusted EBITDA | $ | 32,018 | 46,167 | 78,185 | 32,834 | 38,706 | 71,540 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||
Wireless | Wireline | Wireless | Wireline | |||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 157,664 | 56,842 | 214,506 | 207,568 | 62,643 | 270,211 | |||||||
Data | — | 325,010 | 325,010 | — | 295,586 | 295,586 | ||||||||
Video | — | 95,824 | 95,824 | — | 100,140 | 100,140 | ||||||||
Voice | — | 66,179 | 66,179 | — | 71,253 | 71,253 | ||||||||
Total | 157,664 | 543,855 | 701,519 | 207,568 | 529,622 | 737,190 | ||||||||
Cost of goods sold | 47,426 | 180,500 | 227,926 | 53,897 | 182,844 | 236,741 | ||||||||
Contribution | 110,238 | 363,355 | 473,593 | 153,671 | 346,778 | 500,449 | ||||||||
Less SG&A | (13,320 | ) | (251,322 | ) | (264,642 | ) | (13,649 | ) | (235,981 | ) | (249,630 | ) | ||
Plus share-based compensation | — | 7,820 | 7,820 | — | 8,074 | 8,074 | ||||||||
Plus imputed interest on financed devices | — | 1,885 | 1,885 | — | 438 | 438 | ||||||||
Plus accretion | 498 | 742 | 1,240 | 496 | 496 | 992 | ||||||||
Other | — | 435 | 435 | — | (493 | ) | (493 | ) | ||||||
Adjusted EBITDA | $ | 97,416 | 122,915 | 220,331 | 140,518 | 119,312 | 259,830 |
General Communication, Inc. | ||||||||||||||||
Non-GAAP Financial Reconciliation Schedule | ||||||||||||||||
(Unaudited, Amounts in Thousands) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | June 30, | September 30, | September 30, | ||||||||||||
2016 | 2015 | 2016 | 2016 | 2015 | ||||||||||||
Net income (loss) | $ | 7,827 | 17,495 | 3,298 | 12,107 | (16,987 | ) | |||||||||
Income tax expense (benefit) | 2,407 | 8,122 | 2,122 | 7,596 | (4,957 | ) | ||||||||||
Income (loss) before income taxes | 10,234 | 25,617 | 5,420 | 19,703 | (21,944 | ) | ||||||||||
Other (income) expense: | ||||||||||||||||
Interest expense (including amortization of deferred loan fees) | 19,666 | 19,260 | 19,362 | 58,199 | 59,713 | |||||||||||
Related party interest expense | 1,881 | 1,828 | 1,846 | 5,558 | 4,760 | |||||||||||
Derivative instrument unrealized (income) loss with related party | (4,800 | ) | (30 | ) | (6,510 | ) | (15,840 | ) | 5,040 | |||||||
Loss on extinguishment of debt | — | — | — | — | 27,700 | |||||||||||
Impairment on equity method investment | — | — | — | — | 12,593 | |||||||||||
Other | (613 | ) | (1,202 | ) | (587 | ) | (1,702 | ) | (2,445 | ) | ||||||
Other expense, net | 16,134 | 19,856 | 14,111 | 46,215 | 107,361 | |||||||||||
Operating income | 26,368 | 45,473 | 19,531 | 65,918 | 85,417 | |||||||||||
Plus depreciation and amortization expense | 47,819 | 45,157 | 48,072 | 143,033 | 135,563 | |||||||||||
Plus software impairment charge | — | 2,571 | — | — | 29,839 | |||||||||||
Plus share-based compensation expense | 2,810 | 2,660 | 2,683 | 7,820 | 8,074 | |||||||||||
Plus imputed interest on financed devices | 651 | 268 | 633 | 1,885 | 438 | |||||||||||
Plus accretion expense | 406 | 191 | 442 | 1,240 | 992 | |||||||||||
Other | 131 | 206 | 179 | 435 | (493 | ) | ||||||||||
Adjusted EBITDA (Note 1) | $ | 78,185 | 96,526 | 71,540 | 220,331 | 259,830 | ||||||||||
Note: |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
WIRELINE SEGMENT SUPPLEMENTAL REVENUE SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Third Quarter 2016 | Third Quarter 2015 | |||||||||||||
Consumer | Business | Total | Consumer | Business | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 19,866 | 2,205 | 22,071 | 19,451 | 2,036 | 21,487 | |||||||
Data | 35,255 | 74,777 | 110,032 | 32,465 | 67,780 | 100,245 | ||||||||
Video | 26,134 | 4,636 | 30,770 | 28,483 | 4,476 | 32,959 | ||||||||
Voice | 6,551 | 14,904 | 21,455 | 7,420 | 16,038 | 23,458 | ||||||||
Total | $ | 87,806 | 96,522 | 184,328 | 87,819 | 90,330 | 178,149 | |||||||
(Amounts in thousands) | ||||||||||||||
Third Quarter 2016 | Second Quarter 2016 | |||||||||||||
Consumer | Business | Total | Consumer | Business | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 19,866 | 2,205 | 22,071 | 15,651 | 2,322 | 17,973 | |||||||
Data | 35,255 | 74,777 | 110,032 | 34,818 | 73,189 | 108,007 | ||||||||
Video | 26,134 | 4,636 | 30,770 | 26,813 | 4,832 | 31,645 | ||||||||
Voice | 6,551 | 14,904 | 21,455 | 6,764 | 15,502 | 22,266 | ||||||||
Total | $ | 87,806 | 96,522 | 184,328 | 84,046 | 95,845 | 179,891 | |||||||
(Amounts in thousands) | ||||||||||||||
Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||
Consumer | Business | Total | Consumer | Business | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 50,055 | 6,787 | 56,842 | 56,566 | 6,077 | 62,643 | |||||||
Data | 105,033 | 219,977 | 325,010 | 95,771 | 199,815 | 295,586 | ||||||||
Video | 81,294 | 14,530 | 95,824 | 86,629 | 13,511 | 100,140 | ||||||||
Voice | 20,357 | 45,822 | 66,179 | 22,950 | 48,303 | 71,253 | ||||||||
Total | $ | 256,739 | 287,116 | 543,855 | 261,916 | 267,706 | 529,622 | |||||||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | |||||||||||||||||
KEY PERFORMANCE INDICATORS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
September 30, 2016 | September 30, 2016 | ||||||||||||||||
as compared to | as compared to | ||||||||||||||||
September 30, | September 30, | June 30, | September 30, | June 30, | September 30, | June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | |||||||||||
Wireline Segment | |||||||||||||||||
Consumer | |||||||||||||||||
Data | |||||||||||||||||
Cable modem subscribers | 127,000 | 124,300 | 127,000 | 2,700 | — | 2.2 | % | — | % | ||||||||
Video | |||||||||||||||||
Basic subscribers | 108,900 | 113,600 | 110,000 | (4,700 | ) | (1,100 | ) | (4.1 | )% | (1.0 | )% | ||||||
Digital programming tier subscribers | 54,400 | 59,500 | 55,600 | (5,100 | ) | (1,200 | ) | (8.6 | )% | (2.2 | )% | ||||||
HD/DVR converter boxes | 117,300 | 110,700 | 117,800 | 6,600 | (500 | ) | 6.0 | % | (0.4 | )% | |||||||
Homes passed | 250,200 | 251,200 | 249,500 | (1,000 | ) | 700 | (0.4 | )% | 0.3 | % | |||||||
Voice | |||||||||||||||||
Local access lines in service | 49,000 | 51,000 | 49,500 | (2,000 | ) | (500 | ) | (3.9 | )% | (1.0 | )% | ||||||
Business | |||||||||||||||||
Data | |||||||||||||||||
Cable modem subscribers | 13,200 | 14,200 | 13,000 | (1,000 | ) | 200 | (7.0 | )% | 1.5 | % | |||||||
Voice | |||||||||||||||||
Local access lines in service | 46,100 | 47,100 | 46,200 | (1,000 | ) | (100 | ) | (2.1 | )% | (0.2 | )% | ||||||
Consumer and Business Combined | |||||||||||||||||
Wireless | |||||||||||||||||
Consumer Lifeline lines in service | 28,700 | 28,100 | 28,400 | 600 | 300 | 2.1 | % | 1.1 | % | ||||||||
Consumer prepaid lines in service | 29,600 | 27,100 | 27,900 | 2,500 | 1,700 | 9.2 | % | 6.1 | % | ||||||||
Consumer postpaid lines in service | 141,000 | 146,700 | 143,900 | (5,700 | ) | (2,900 | ) | (3.9 | )% | (2.0 | )% | ||||||
Business postpaid lines in service | 27,100 | 30,000 | 27,900 | (2,900 | ) | (800 | ) | (9.7 | )% | (2.9 | )% | ||||||
Total wireless lines in service | 226,400 | 231,900 | 228,100 | (5,500 | ) | (1,700 | ) | (2.4 | )% | -0.7 | % |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
KEY PERFORMANCE INDICATORS | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
September 30, 2016 | September 30, 2016 | |||||||||||||||||||||
Three Months Ended | as compared to | as compared to | ||||||||||||||||||||
September 30, | September 30, | June 30, | September 30, | June 30, | September 30, | June 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2016 | 2015 | 2016 | ||||||||||||||||
Wireline segment | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||
Video | ||||||||||||||||||||||
Average monthly revenue per subscriber | $ | 79.63 | $ | 80.85 | $ | 80.38 | $ | (1.22 | ) | $ | (0.75 | ) | (1.5 | )% | (0.9 | )% | ||||||
Combined Consumer and Business | ||||||||||||||||||||||
Data | ||||||||||||||||||||||
Average monthly revenue per cable modem subscriber | $ | 88.54 | $ | 84.87 | $ | 88.32 | $ | 3.67 | $ | 0.22 | 4.3 | % | 0.2 | % | ||||||||
Wireless | ||||||||||||||||||||||
Average monthly revenue per subscriber | $ | 37.21 | $ | 44.24 | $ | 39.22 | $ | (7.03 | ) | $ | (2.01 | ) | (15.9 | )% | (5.1 | )% |