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GCI Liberty Reports Third Quarter 2020 Financial Results

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GCI Liberty, Inc. ("GCI Liberty") (NASDAQ:GLIBA, GLIBP)) today reported third quarter 2020 results. Headlines include(1):

  • GCI(2) revenue increased 11% compared to the third quarter of 2019
    • GCI Consumer revenue up 8%
    • GCI Business revenue up 13%
  • GCI operating income increased $24 million and Adjusted OIBDA(3) up 27%
  • Liquidity as of September 30th
    • $553 million of cash and cash equivalents, including $105 million at GCI
    • $271 million undrawn capacity under the GCI senior credit facility

"GCI had a fantastic quarter," said GCI CEO, Ron Duncan. "The launch of the Anchorage 5G network was a major milestone for the company and recent tests show that our wireless speeds are twice as fast as national competitors in the market. I'm particularly proud of the effort our team has made in 2020 to ensure our customers have the connectivity they need to work from home and learn from home. By providing low cost connectivity to schools across the state for low income students, GCI is helping bridge the digital divide. We are committed to doing our part to make sure that no Alaskan is left behind."

Corporate Update

On August 6, 2020, GCI Liberty and Liberty Broadband Corporation ("Liberty Broadband") announced that they have entered into a definitive merger agreement under which Liberty Broadband has agreed to acquire GCI Liberty in a stock-for-stock merger (the "Combination"). Additional information regarding the Combination can be found in the press release and presentation issued by GCI Liberty on August 6, 2020 which are available at ir.gciliberty.com/index.php/news-releases and www.gciliberty.com/events, respectively, and the definitive merger proxy statement filed on October 30, 2020. GCI Liberty will hold a virtual special meeting of stockholders on December 15, 2020 at 10:30 a.m. (M.S.T.) where stockholders will be asked to consider and vote on proposals related to the Combination.

The closing of the Combination is subject to, among other things, certain regulatory approvals, including transfer of control approval by the Federal Communications Commission ("FCC"), waiting period requirements under the Hart-Scott-Rodino Act ("HSR") and approval by the Regulatory Commission of Alaska ("RCA"). GCI Liberty and Liberty Broadband filed applications with the RCA on September 16, 2020. The RCA's approval must become a final order before the Combination can close. The HSR waiting period expired on October 9, 2020. The FCC released public notice of approval of transfer of control on October 23, 2020, which is expected to become a final order on December 2, 2020 (subject to the absence of any applicable challenge). GCI Liberty expects the Combination to close no later than the first quarter of 2021, subject to COVID-19 related delays.

Note on COVID-19

GCI Liberty continues to monitor and assess the effects of the COVID-19 pandemic on its operations and various investments.

GCI has seen a substantial increase in network traffic since early March, with utilization stabilizing at approximately 25% greater than pre-COVID-19 levels. The network continues to perform well despite higher levels of traffic. To assist Alaskans impacted by the COVID-19 pandemic, the State of Alaska has restricted GCI and other service providers from charging late fees to or disconnecting residential customers impacted by COVID-19 until November 15, 2020. The following discussion includes the impact of GCI's COVID-19 related offers and programs on financial results and subscriber metrics. However, the financial impact of COVID-19 was not material to GCI Liberty's operating results in the third quarter.

GCI Liberty is in compliance with all debt covenants as of September 30, 2020. GCI's leverage, as defined in its credit agreement, was 3.7x, versus a maximum allowable leverage of 6.5x.

Discussion of Results

Unless otherwise noted, the following discussion compares financial information for the three months ended September 30, 2020 to financial information for the same period in 2019.

GCI

The following table provides GCI's operating metrics and financial results for the third quarter of 2019 and 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3Q19

 

 

3Q20

 

 

% Change

 

(amounts in thousands, except operating metrics)

 

 

 

 

 

 

 

 

 

 

GCI Consolidated Financial Metrics

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Consumer

 

$

110,322

 

 

$

119,327

 

 

 

8

 

%

Business

 

 

110,706

 

 

 

124,939

 

 

 

13

 

%

Total revenue

 

$

221,028

 

 

$

244,266

 

 

 

11

 

%

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

 

$

3,663

 

 

$

28,048

 

 

 

666

 

%

Operating income margin (%)

 

 

1.7

%

 

 

11.5

%

 

 

980

 

bps

 

 

 

 

 

 

 

 

 

 

 

Adjusted OIBDA(a)

 

$

71,960

 

 

$

91,617

 

 

 

27

 

%

Adjusted OIBDA margin(a) (%)

 

 

32.6

%

 

 

37.5

%

 

 

490

 

bps

 

 

 

 

 

 

 

 

 

 

 

GCI Consumer

 

 

 

 

 

 

 

 

 

 

Financial Metrics

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Wireless

 

$

41,929

 

 

$

43,749

 

 

 

4

 

%

Data

 

 

42,920

 

 

 

47,852

 

 

 

11

 

%

Video

 

 

21,198

 

 

 

23,931

 

 

 

13

 

%

Voice

 

 

4,275

 

 

 

3,795

 

 

 

(11

)

%

Total revenue

 

$

110,322

 

 

$

119,327

 

 

 

8

 

%

Operating Metrics

 

 

 

 

 

 

 

 

 

 

Wireless:

 

 

 

 

 

 

 

 

 

 

Revenue generating lines in service(b)

 

 

180,100

 

 

 

179,600

 

 

 

-

 

%

Non-revenue generating lines in service(c)

 

 

8,300

 

 

 

2,700

 

 

 

(67

)

%

Wireless lines in service

 

 

188,400

 

 

 

182,300

 

 

 

(3

)

%

Data:

 

 

 

 

 

 

 

 

 

 

Revenue generating cable modem subscribers(d)

 

 

124,600

 

 

 

138,200

 

 

 

11

 

%

Video:

 

 

 

 

 

 

 

 

 

 

Basic subscribers

 

 

82,200

 

 

 

76,000

 

 

 

(8

)

%

Homes passed

 

 

253,400

 

 

 

253,400

 

 

 

-

 

%

Voice - Total access lines in service(e)

 

 

40,800

 

 

 

37,300

 

 

 

(9

)

%

 

 

 

 

 

 

 

 

 

 

 

GCI Business

 

 

 

 

 

 

 

 

 

 

Financial Metrics

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

Wireless

 

$

24,393

 

 

$

21,440

 

 

 

(12

)

%

Data

 

 

70,813

 

 

 

90,377

 

 

 

28

 

%

Video

 

 

4,115

 

 

 

2,277

 

 

 

(45

)

%

Voice

 

 

11,385

 

 

 

10,845

 

 

 

(5

)

%

Total revenue

 

$

110,706

 

 

$

124,939

 

 

 

13

 

%

Operating Metrics

 

 

 

 

 

 

 

 

 

 

Wireless - Revenue generating lines in service(b)

 

 

21,100

 

 

 

25,200

 

 

 

19

 

%

Data - Revenue generating cable modem subscribers(d)

 

 

9,000

 

 

 

12,800

 

 

 

42

 

%

Voice - Total access lines in service(e)

 

 

34,800

 

 

 

33,400

 

 

 

(4

)

%

a)

See reconciling schedule 1.

b)

A revenue generating wireless line in service is defined as a wireless device with a monthly fee for services.

c)

A non-revenue generating wireless line in service is defined as a data-only line with no monthly fee for services.

d)

A revenue generating cable modem subscriber is defined by the purchase of cable modem service regardless of the level of service purchased. If one entity purchases multiple cable modem service access points, each access point is counted as a subscriber.

e)

A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network.

GCI revenue increased driven by growth in both consumer and business revenue. GCI Adjusted OIBDA increased due to the aforementioned higher revenue, which more than offset higher selling, general and administrative expenses.

GCI Consumer

Consumer revenue grew in the third quarter with wireless, data and video revenue gains more than offsetting a decline in voice. Wireless revenue growth was due to higher plan revenue. Data revenue growth was driven by higher subscriber counts. Both wireless and data revenue generating subscriber counts also increased on a sequential basis. The increase in video revenue was driven by reclassification of the cable advertising business from GCI Business to GCI Consumer effective August 1, 2020, due to the sale of certain broadcasting assets previously owned by GCI. Excluding the impact of this reclassification, video revenue was down in the quarter.

GCI Business

GCI Business revenue increased in the third quarter as higher data revenue more than offset declines in wireless, video and voice. Data revenue increased primarily from increases in the government, health and education businesses. Video revenue decreased due to the aforementioned sale of broadcast properties during the quarter and the subsequent reclassification of cable advertising sale revenue to GCI Consumer. Voice revenue declined slightly due to fewer subscribers. Wireless revenue declined driven by lower backhaul revenue and grant revenue, partially offset by higher roaming.

Rural Health Care ("RHC") Update

On October 20, 2020, the Wireline Competition Bureau approved the cost-based rural rates GCI applied for services provided to its RHC customers for the funding years ending June 30, 2019 and June 30, 2020. Based on historical experience, GCI anticipates that it should collect the entire outstanding amount in accounts receivable related to these two funding years, approximately $175 million, within three to six months of receipt of the letter. The approval has no material impact on the income statement.

Capital Expenditures

Year to date, GCI has spent $102 million on capital expenditures, excluding capitalized interest and accrued capital expenditures from 2019. Capital expenditure spending was related primarily to investments in the wireless and hybrid fiber coax networks.

Share Repurchases

GCI Liberty did not repurchase shares from August 1, 2020 through October 31, 2020. The total remaining repurchase authorization for GCI Liberty is approximately $494 million.

FOOTNOTES

1)

GCI Liberty's President and CEO, Greg Maffei, will discuss these headlines and other matters on GCI Liberty's earnings conference call which will begin at 11:15 a.m. (E.S.T.) on November 5, 2020. For information regarding how to access the call, please see "Important Notice" later in this document.

2)

GCI Liberty's principal asset is GCI Holdings, LLC ("GCI" or "GCI Holdings"), Alaska's largest communications provider. Other assets include its interests in Charter Communications, Inc. ("Charter"), Liberty Broadband Corporation and LendingTree.

3)

For a definition of Adjusted OIBDA and Adjusted OIBDA margin and applicable reconciliations, see the accompanying schedules

 

GCI LIBERTY FINANCIAL METRICS

 

 

 

 

 

 

 

 

(amounts in millions)

 

3Q19

 

3Q20

 

Revenue

 

 

 

 

 

 

 

GCI Holdings

 

$

221,028

 

 

$

244,266

 

 

Corporate and other

 

 

6,016

 

 

 

2,626

 

 

Total GCI Liberty Revenue

 

$

227,044

 

 

$

246,892

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

GCI Holdings

 

$

3,663

 

 

$

28,048

 

 

Corporate and other

 

 

(7,837

)

 

 

(17,976

)

 

Total GCI Liberty Operating Income (Loss)

 

$

(4,174

)

 

$

10,072

 

 

 

 

 

 

 

 

 

 

Adjusted OIBDA

 

 

 

 

 

 

 

GCI Holdings

 

$

71,960

 

 

$

91,617

 

 

Corporate and other

 

 

(5,382

)

 

 

(16,336

)

 

Total GCI Liberty Adjusted OIBDA

 

$

66,578

 

 

$

75,281

 

 

NOTES

The following financial information with respect to GCI Liberty's investments in equity securities and equity affiliates is intended to supplement GCI Liberty's consolidated statements of operations which are included in its Forms 10-Q for the three months ended September 30, 2020.

Fair Value of Public Holdings

 

 

 

 

 

 

 

 

(amounts in millions)

 

6/30/2020

 

9/30/2020

 

Charter(1)

 

$

2,733

 

$

3,345

 

Liberty Broadband(1)

 

 

5,291

 

 

6,098

 

LendingTree(2)

 

 

997

 

 

1,057

 

Total

 

$

9,021

 

$

10,500

 

(1)

Represents fair value of the investments in Charter and Liberty Broadband. A portion of the Charter equity securities are considered covered shares and subject to certain contractual restrictions in accordance with the indemnification obligation, as described below.

(2)

Represents fair value of the investment in LendingTree. In accordance with GAAP, this investment is accounted for using the equity method of accounting and is included in the balance sheet of GCI Liberty at $166 million and $157 million at June 30, 2020 and September 30, 2020, respectively.

Cash and Debt

The following presentation is provided to separately identify cash and liquid investments and debt information.

 

 

 

 

 

 

 

 

(amounts in millions)

 

6/30/2020

 

9/30/2020

 

Cash and Cash Equivalents:

 

 

 

 

 

 

 

GCI

 

$

88

 

 

$

105

 

 

Corporate and other

 

 

464

 

 

 

448

 

 

Total GCI Liberty Consolidated Cash

 

$

552

 

 

$

553

 

 

 

 

 

 

 

 

 

 

Debt:

 

 

 

 

 

 

 

Senior Notes

 

$

775

 

 

$

775

 

 

Senior Credit Facility

 

 

511

 

 

 

511

 

 

Finance Leases and Other(1)

 

 

107

 

 

 

106

 

 

Total GCI Debt

 

$

1,393

 

 

$

1,392

 

 

 

 

 

 

 

 

 

 

Margin Loan

 

$

1,300

 

 

$

1,300

 

 

1.75% Exchangeable Senior Debentures due 2046

 

 

477

 

 

 

477

 

 

Total Corporate Level Debt

 

$

1,777

 

 

$

1,777

 

 

 

 

 

 

 

 

 

 

Total GCI Liberty Debt

 

$

3,170

 

 

$

3,169

 

 

Fair market value adjustment and deferred loan costs

 

 

196

 

 

 

353

 

 

Finance leases and tower obligation (excluded from GAAP Debt)

 

 

(100

)

 

 

(99

)

 

Total GCI Liberty Debt (GAAP)

 

$

3,266

 

 

$

3,423

 

 

 

 

 

 

 

 

 

 

Other Financial Obligations:

 

 

 

 

 

 

 

Indemnification Obligation(2)

 

$

215

 

 

$

310

 

 

Preferred Stock(3)

 

 

178

 

 

 

178

 

 

 

 

 

 

 

 

 

 

GCI Leverage(4)

 

 

4.2x

 

 

 

3.7x

 

 

(1)

Includes the Wells Fargo Note Payable and current and long-term obligations under finance leases and communication tower obligations.

(2)

Indemnity to Qurate Retail, pursuant to an indemnification agreement (the "indemnification agreement"), with respect to the Liberty Interactive LLC ("LI LLC") 1.75% exchangeable debentures due 2046 (the "Charter exchangeable debentures"), as described below.

(3)

Preferred shares have a 7% coupon, $25 per share liquidation preference plus accrued and unpaid dividends and 1/3 vote per share. The redemption date is the first business day following the twenty-first anniversary of the March 8, 2018 auto conversion. The preferred stock is considered a liability for GAAP purposes.

(4)

As defined in GCI's credit agreement.

GCI Liberty cash was flat in the quarter as an increase in cash at GCI was offset by corporate expense. GCI cash increased as cash from operations more than offset capital expenditures. Both GCI Liberty and GCI debt were flat for the quarter.

Subsequent to quarter end, on October 7, 2020, GCI, LLC (a wholly owned subsidiary of GCI Liberty) issued $600 million of 4.750% senior notes due 2028. The net proceeds of the offering, together with cash on hand and incremental borrowings under the senior credit facility, were used to fund the redemption of all $450 million of GCI, LLC's 6.875% senior notes due 2025 and all $325 million of GCI, LLC's 6.625% senior notes due 2024 on October 14, 2020 and October 23, 2020, respectively. In addition, on October 15, 2020, GCI, LLC amended its senior credit facility, which consisted of a $241 million term loan B and a $550 million revolving credit facility. The amendment, among other things, extended the maturity of the senior credit facility from December 27, 2023 to October 15, 2025 (provided that the term loan B is refinanced or repaid in full by April 15, 2025) and increased the aggregate principal amount of the term loan B to $400 million.

Pursuant to an indemnification agreement, GCI Liberty will compensate Qurate Retail for any payments made in excess of the adjusted principal amount of the LI LLC Charter exchangeable debentures to any holder that exercises its exchange right on or before the put/call date of October 5, 2023. This indemnity is supported by a negative pledge in favor of Qurate Retail on the reference shares of Class A common stock of Charter held at GCI Liberty that underlie the LI LLC Charter exchangeable debentures. The indemnification obligation on GCI Liberty's balance sheet is valued based on the estimated exchange feature in the LI LLC Charter exchangeable debentures. As of September 30, 2020, a holder of the LI LLC Charter exchangeable debentures has the ability to exchange, and accordingly, the indemnification obligation has been classified as a current liability.

Important Notice: GCI Liberty (NASDAQ:GLIBA, GLIBP)) President and CEO, Greg Maffei, will discuss GCI Liberty's earnings release on a conference call which will begin at 11:15 a.m. (E.S.T.) on November 5, 2020. The call can be accessed by dialing (800) 458-4121 or (323) 794-2093, passcode 9390868, at least 10 minutes prior to the start time. The call will also be broadcast live across the Internet and archived on our website. To access the webcast go to www.gciliberty.com/events. Links to this press release and replays of the call will also be available on GCI Liberty's website.

This press release includes certain forward-looking statements, including statements about business strategies, market potential, future financial prospects, capital expenditures, the Combination, including satisfaction of conditions to the Combination and the timing of the Combination, the impact of COVID-19, Alaska's economy, the launch of new products and services, matters relating to the RHC program, indemnification by GCI Liberty, the continuation of our stock repurchase program and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, possible changes in market acceptance of new products or services, competitive issues, regulatory matters affecting our businesses, the satisfaction of conditions to the Combination, continued access to capital on terms acceptable to GCI Liberty, changes in law and government regulations, the availability of investment opportunities, general market conditions (including as a result of COVID-19) and market conditions conducive to stock repurchases. These forward-looking statements speak only as of the date of this press release, and GCI Liberty expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in GCI Liberty's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents of GCI Liberty, including the most recent Forms 10-K and Forms 10-Q, for additional information about GCI Liberty and about the risks and uncertainties related to GCI Liberty's business which may affect the statements made in this press release.

Additional Information

Nothing in this communication shall constitute a solicitation to buy or an offer to sell securities of Liberty Broadband or GCI Liberty. The offer and sale of shares in the Combination will only be made pursuant to Liberty Broadband's effective registration statement. Liberty Broadband's stockholders, GCI Liberty's stockholders and other investors are urged to read the joint proxy statement/prospectus included in the registration statement on Form S-4 filed regarding the Combination and any other relevant documents filed with the SEC, as well as any amendments or supplements to those documents, because they will contain important information about the Combination. Copies of these SEC filings are available free of charge at the SEC's website (http://www.sec.gov). Copies of the filings together with the materials incorporated by reference therein are also available, without charge, by directing a request to Liberty Broadband Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor Relations, Telephone: (720) 875-5700 or to GCI Liberty, Inc., 12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor Relations, Telephone: (720) 875-5900.

Participants in the Solicitation

Liberty Broadband and GCI Liberty and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the Combination. Information about Liberty Broadband's directors and executive officers is available in Liberty Broadband's definitive proxy statement for its 2020 annual meeting of stockholders, which was filed with the SEC on April 10, 2020. Information about GCI Liberty's directors and executive officers is available in GCI Liberty's definitive proxy statement for its 2020 annual meeting of stockholders, which was filed with the SEC on April 10, 2020. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, are contained in the joint proxy statement/prospectus included in the registration statement on Form S-4 filed with the SEC and other relevant materials to be filed with the SEC, as well as any amendments or supplements to those documents, regarding the Combination when they become available. Investors should read the joint proxy statement/prospectus included in the registration statement on Form S-4 carefully before making any voting or investment decisions. You may obtain free copies of these documents from Liberty Broadband and GCI Liberty as indicated above.

NON-GAAP FINANCIAL MEASURES

To provide investors with additional information regarding our financial results, this press release includes a presentation of Adjusted OIBDA, which is a non-GAAP financial measure, for GCI Liberty (and certain of its subsidiaries) and GCI Holdings together with a reconciliation to that entity or such businesses' operating income, as determined under GAAP. GCI Liberty defines Adjusted OIBDA as operating income (loss) plus depreciation and amortization, stock-based compensation, separately reported litigation settlements, insurance proceeds, restructuring, acquisition and other related costs and impairment charges. Further, this press release includes Adjusted OIBDA margin which is also a non-GAAP financial measure. GCI Liberty defines Adjusted OIBDA margin as Adjusted OIBDA divided by revenue.

GCI Liberty believes Adjusted OIBDA 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. Because Adjusted OIBDA is used as a measure of operating performance, GCI Liberty views operating income as the most directly comparable GAAP measure. Adjusted OIBDA is not meant to replace or supersede operating income or any other GAAP measure, but rather to supplement such GAAP measures in order to present investors with the same information that GCI Liberty's management considers in assessing the results of operations and performance of its assets. Please see the attached schedules for applicable reconciliations.

SCHEDULE 1

The following table provides a reconciliation of GCI's operating income to its Adjusted OIBDA for the three months ended September 30, 2019 and September 30, 2020, respectively.

GCI HOLDINGS ADJUSTED OIBDA RECONCILIATION

 

 

 

 

 

 

 

 

(amounts in thousands)

 

3Q19

 

3Q20

 

GCI Holdings

 

 

 

 

 

 

 

Operating Income

 

$

3,663

 

 

$

28,048

 

Depreciation and amortization

 

 

65,762

 

 

 

60,284

 

Stock-based compensation

 

 

4,017

 

 

 

3,285

 

Insurance proceeds and restructuring, net

 

 

(1,482

)

 

 

 

Adjusted OIBDA

 

$

71,960

 

 

$

91,617

 

SCHEDULE 2

The following table provides a reconciliation of operating income (loss) calculated in accordance with GAAP to Adjusted OIBDA for GCI Liberty for the three months ended September 30, 2019 and September 30, 2020, respectively.

GCI LIBERTY ADJUSTED OIBDA RECONCILIATION

 

 

 

 

 

 

 

(amounts in thousands)

 

3Q19

 

3Q20

 

GCI Liberty

 

 

 

 

 

 

GCI Liberty Operating Income (Loss)

 

$

(4,174

)

 

$

10,072

 

Stock-based compensation

 

 

5,768

 

 

 

4,521

 

Insurance proceeds and restructuring, net

 

 

(1,482

)

 

 

 

Depreciation and amortization

 

 

66,466

 

 

 

60,688

 

Consolidated GCI Liberty Adjusted OIBDA

 

$

66,578

 

 

$

75,281

 

GCI Holdings

 

$

71,960

 

 

 

91,617

 

Corporate and other

 

 

(5,382

)

 

 

(16,336

)

GCI LIBERTY, INC. AND SUBSIDIARIES

BALANCE SHEET INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2020

 

2019

 

 

 

amounts in thousands,

 

 

 

except share amounts

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

552,604

 

569,520

 

 

Trade and other receivables, net of allowance for doubtful accounts of $6,916 and $7,516, respectively

 

 

283,687

 

114,435

 

 

Other current assets

 

 

61,593

 

43,868

 

 

Total current assets

 

 

897,884

 

727,823

 

 

Investments in equity securities

 

 

3,350,749

 

2,605,293

 

 

Investments in affiliates, accounted for using the equity method

 

 

157,484

 

167,643

 

 

Investment in Liberty Broadband measured at fair value

 

 

6,097,955

 

5,367,242

 

 

Property and equipment, net

 

 

1,045,585

 

1,090,901

 

 

Intangible assets not subject to amortization

 

 

 

 

 

 

Goodwill

 

 

830,268

 

855,837

 

 

Cable certificates

 

 

305,000

 

305,000

 

 

Other

 

 

37,500

 

41,500

 

 

 

 

 

1,172,768

 

1,202,337

 

 

Intangible assets subject to amortization, net

 

 

356,327

 

391,979

 

 

Tax sharing receivable

 

 

88,349

 

84,534

 

 

Other assets, net

 

 

192,741

 

295,693

 

 

Total assets

 

$

13,359,842

 

11,933,445

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

117,728

 

92,893

 

 

Deferred revenue

 

 

26,748

 

27,886

 

 

Current portion of debt, including $820,035 and $0 measured at fair value, respectively

 

 

823,166

 

3,008

 

 

Indemnification obligation

 

 

309,541

 

202,086

 

 

Other current liabilities

 

 

84,161

 

69,149

 

 

Total current liabilities

 

 

1,361,344

 

395,022

 

 

Long-term debt, net, including $0 and $658,839 measured at fair value, respectively

 

 

2,599,521

 

3,263,210

 

 

Obligations under finance leases and tower obligations, excluding current portion

 

 

93,742

 

97,507

 

 

Long-term deferred revenue

 

 

48,724

 

57,986

 

 

Deferred income tax liabilities

 

 

1,865,998

 

1,527,109

 

 

Preferred stock

 

 

178,066

 

178,002

 

 

Derivative instrument

 

 

63,456

 

71,305

 

 

Other liabilities

 

 

116,301

 

133,020

 

 

Total liabilities

 

 

6,327,152

 

5,723,161

 

 

Equity

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Series A common stock, $0.01 par value. Authorized 500,000,000 shares; issued and outstanding 101,350,710 shares at September 30, 2020 and 101,306,716 shares at December 31, 2019

 

 

1,014

 

1,013

 

 

Series B common stock, $0.01 par value. Authorized 20,000,000 shares; issued and outstanding 4,488,568 shares at September 30, 2020 and 4,437,593 shares at December 31,2019

 

 

45

 

44

 

 

Series C common stock, $0.01 par value. Authorized 1,040,000,000 shares; no issued and outstanding at September 30, 2020 and December 31, 2019

 

 

 

 

 

Additional paid-in capital

 

 

3,231,926

 

3,221,885

 

 

Accumulated other comprehensive earnings (loss), net of taxes

 

 

8,148

 

(4,084

)

 

Retained earnings

 

 

3,782,834

 

2,982,626

 

 

Total stockholders' equity

 

 

7,023,967

 

6,201,484

 

 

Non-controlling interests

 

 

8,723

 

8,800

 

 

Total equity

 

 

7,032,690

 

6,210,284

 

 

Commitments and contingencies

 

 

 

 

 

 

Total liabilities and equity

 

$

13,359,842

 

11,933,445

 

 

GCI LIBERTY, INC. AND SUBSIDIARIES

STATEMENT OF OPERATIONS INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

 

September 30,

 

 

 

 

2020

 

2019

 

 

 

 

amounts in thousands, except per share amounts

 

 

Revenue

 

$

246,892

 

 

227,044

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

Operating expense (exclusive of depreciation and amortization shown separately below)

 

 

69,561

 

 

72,637

 

 

 

Selling, general and administrative, including stock-based compensation

 

 

106,571

 

 

93,597

 

 

 

Depreciation and amortization expense

 

 

60,688

 

 

66,466

 

 

 

Insurance proceeds and restructuring, net

 

 

 

 

(1,482

)

 

 

 

 

 

236,820

 

 

231,218

 

 

 

Operating income (loss)

 

 

10,072

 

 

(4,174

)

 

 

Other income (expense):

 

 

 

 

 

 

 

Interest expense (including amortization of deferred loan fees)

 

 

(29,722

)

 

(38,353

)

 

 

Share of earnings (losses) of affiliates, net

 

 

(9,035

)

 

1,921

 

 

 

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

 

 

1,172,685

 

 

156,165

 

 

 

Tax sharing agreement

 

 

26,146

 

 

2,362

 

 

 

Other, net

 

 

(7,314

)

 

(540

)

 

 

 

 

 

1,152,760

 

 

121,555

 

 

 

Earnings (loss) before income taxes

 

 

1,162,832

 

 

117,381

 

 

 

Income tax (expense) benefit

 

 

(338,446

)

 

(28,087

)

 

 

Net earnings (loss)

 

 

824,386

 

 

89,294

 

 

 

Less net earnings (loss) attributable to the non-controlling interests

 

 

(26

)

 

(28

)

 

 

Net earnings (loss) attributable to GCI Liberty, Inc. shareholders

 

$

824,412

 

 

89,322

 

 

 

Basic net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share

 

$

7.81

 

 

0.85

 

 

 

Diluted net earnings (loss) attributable to Series A and Series B GCI Liberty, Inc. shareholders per common share

 

$

7.74

 

 

0.84

 

 

 

GCI LIBERTY, INC. AND SUBSIDIARIES

STATEMENT OF CASH FLOWS INFORMATION

(unaudited)

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

 

September 30,

 

 

 

2020

 

2019

 

 

 

amounts in thousands

 

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings (loss)

 

$

803,112

 

 

1,226,824

 

 

Adjustments to reconcile net earnings (loss) to net cash from operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

184,856

 

 

200,035

 

 

Stock-based compensation expense

 

 

11,389

 

 

18,153

 

 

Share of (earnings) losses of affiliates, net

 

 

7,504

 

 

2,443

 

 

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

 

 

(1,199,560

)

 

(1,844,863

)

 

Deferred income tax expense (benefit)

 

 

336,874

 

 

478,850

 

 

Other, net

 

 

9,232

 

 

(2,843

)

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Current and other assets

 

 

(81,460

)

 

39,289

 

 

Payables and other liabilities

 

 

(4,048

)

 

(35,774

)

 

Net cash provided (used) by operating activities

 

 

67,899

 

 

82,114

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Capital expended for property and equipment

 

 

(107,247

)

 

(108,633

)

 

Proceeds from derivative instrument

 

 

 

 

105,866

 

 

Settlement of derivative instrument

 

 

 

 

(105,866

)

 

Other investing activities, net

 

 

25,634

 

 

6,340

 

 

Net cash provided (used) by investing activities

 

 

(81,613

)

 

(102,293

)

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings of debt

 

 

 

 

325,000

 

 

Repayment of debt, finance leases and tower obligations

 

 

(6,596

)

 

(334,275

)

 

Repurchases of GCI Liberty common stock

 

 

 

 

(43,910

)

 

Other financing activities, net

 

 

(3,060

)

 

(7,802

)

 

Net cash provided (used) by financing activities

 

 

(9,656

)

 

(60,987

)

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

(23,370

)

 

(81,166

)

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

576,150

 

 

492,032

 

 

Cash, cash equivalents and restricted cash at end of period

 

$

552,780

 

 

410,866

 

 

 

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