Quarterly report pursuant to Section 13 or 15(d)

Information About the Company's Operating Segments

v3.20.1
Information About the Company's Operating Segments
 3 Months Ended
Mar. 31, 2020
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, 2020, 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 our Annual Report on Form 10-K for the year ended December 31, 2019.
Performance Measures

Revenue by segment from contracts with customers, classified by customer type and significant service offerings follows:
Three months ended
March 31,
2020 2019
amounts in thousands
GCI Holdings
Consumer Revenue
Wireless $ 28,358    27,492   
Data 44,294    41,178   
Video 20,758    21,016   
Voice 3,800    4,461   
Business Revenue
Wireless 19,238    18,384   
Data 83,394    68,110   
Video 4,022    3,825   
Voice 6,416    6,204   
Lease, grant, and revenue from subsidies 21,281    22,541   
Total GCI Holdings 231,561    213,211   
Corporate and other 4,238    4,525   
Total $ 235,799    217,736   

Liberty Broadband revenue totaled $4.1 million and $3.5 million for the three months ended March 31, 2020 and 2019, respectively.

The Company had gross receivables of $272.7 million and deferred revenue of $39.1 million at March 31, 2020 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, 2020 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 $191.5 million in the remainder of 2020, $179.1 million in 2021, $120.1 million in 2022, $39.8 million in 2023 and $62.4 million in 2024 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.

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.

Adjusted OIBDA is summarized as follows:
Three months ended
March 31,
2020 2019
amounts in thousands
GCI Holdings $ 86,395    44,471   
Liberty Broadband (4,981)   (3,117)  
Corporate and other (10,329)   (6,306)  
71,085    35,048   
Eliminate Liberty Broadband 4,981    3,117   
$ 76,066    38,165   

Other Information
March 31, 2020
Total Investments Capital
assets in affiliates expenditures
amounts in thousands
GCI Holdings $ 3,162,093    542    35,257   
Liberty Broadband 12,225,154    12,194,726    15   
Corporate and other 7,831,434    166,023    408   
Eliminate Liberty Broadband (12,225,154)   (12,194,726)   (15)  
Consolidated $ 10,993,527    166,565    35,665   

The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:
Three months ended
March 31,
2020 2019
amounts in thousands
Adjusted OIBDA $ 76,066    38,165   
Stock-based compensation (2,475)   (5,631)  
Depreciation and amortization (63,008)   (67,678)  
Insurance proceeds —    2,500   
Operating income (loss) 10,583    (32,644)  
Interest expense
 (36,255)   (37,618)  
Share of earnings (loss) of affiliates, net
 (707)   (3,296)  
Realized and unrealized gains (losses) on financial instruments, net
 (833,992)   1,009,600   
Tax Sharing Agreement (10,533)   9,081   
Other, net 2,380    2,768   
Earnings (loss) before income taxes
 $ (868,524)   947,891