GCI Liberty Reports Fourth Quarter and Year End 2019 Financial Results

ENGLEWOOD, Colo.--()--GCI Liberty, Inc. (“GCI Liberty”) (Nasdaq: GLIBA, GLIBP) today reported fourth quarter and year end 2019 results. Headlines include(1):

  • GCI(2) total revenue down 1% for the fourth quarter and full year 2019
    • GCI Consumer revenue flat for both periods, with Consumer data revenue up 5% in the fourth quarter and 6% in the full year
    • GCI Business revenue down 1% in the fourth quarter and 2% in the full year
  • GCI operating loss decreased for the fourth quarter and full year
  • GCI Adjusted OIBDA(3) increased 21% in the fourth quarter and declined 4% in the full year
  • Updates to Rural Health Care matters resulted in $4 million net benefit to operating income and Adjusted OIBDA in the fourth quarter and $17 million detriment in the full year, due to:
    • FCC(4) granting the appeal of a prior funding denial, resulting in reversal of a $21 million reserve taken in the first quarter of 2019
    • Potential compliance issues identified under certain Rural Health Care contracts resulting in a $17 million loss accrual in the fourth quarter of 2019

“We had a solid fourth quarter at GCI. On a year over year basis, Adjusted OIBDA improved approximately $9 million before an additional $4 million net benefit from two significant Rural Health Care matters. We were pleased that the FCC granted the appeal of one of our largest Rural Health Care customers, and we continue to work with them on other pending regulatory matters," said GCI CEO, Ron Duncan. "Our operations performed well, with the efficiency measures that we put in place earlier in the year showing very positive results. We were pleased to see growth return to our consumer cable modem business with net additions of 2,400 subscribers for the quarter."

Discussion of Results

Unless otherwise noted, the following discussion compares financial information for the three months or year ended December 31, 2019 to the same periods in 2018.

The pro forma financial information presented herein for the three months and full year ended December 31, 2018 was prepared assuming the acquisition of GCI took place on January 1, 2017. The pro forma financial information is presented for illustrative purposes only and does not represent what the results of operations of GCI would have been had the acquisition occurred at that time. GCI's pro forma operating results include acquisition accounting adjustments primarily related to revenue, depreciation, amortization, stock compensation and the exclusion of transaction related costs. The pro forma results have also been adjusted for the FCC's October 2018 Rural Health Care decision.

GCI

GCI participates in various Universal Service Fund ("USF") programs, which provide government subsidies to customers in low income areas, including schools, libraries and other facilities. One of these programs, the USF Rural Health Care ("RHC") Program, subsidizes the rates for services provided to rural health care providers.(5) In the first quarter of 2019, GCI recorded an accounts receivable reserve of $21 million and associated bad debt expense relating to an RHC customer whose requested funding was denied under the RHC Program. As a result, GCI ceased recognizing revenue related to this customer for the period from April 1, 2019 through December 31, 2019. On February 19, 2020, the FCC issued an order that granted this customer's appeal and directed the Universal Service Administrative Company ("USAC") to reverse its previous funding denials. As a result, GCI reversed the previously recorded $21 million accounts receivable reserve and associated bad debt expense, benefiting fourth quarter operating income and Adjusted OIBDA. In the first quarter of 2020, GCI will evaluate what amount of revenue related to this contract for the last nine months of 2019 and going forward into 2020 it can recognize. Note: GCI has continued to provide service for all periods and this will be taken into account in GCI’s analysis.

Separately, in the fourth quarter of 2019, GCI became aware of potential RHC Program compliance issues related to certain active and expired contracts with certain of its RHC customers. Following an extensive review of these contracts, GCI deemed certain contracts probable of noncompliance, and accrued a loss of approximately $17 million as an expense in selling, general and administrative expense in the fourth quarter of 2019. GCI has notified the FCC of the issues and will continue to work with them to resolve these matters.(5)

The following table provides GCI’s operating metrics and pro forma financial results for the fourth quarter and full year 2018 and 2019.

(amounts in thousands, except operating metrics)

 

4Q18

 

 

4Q19

 

% Change

 

 

FY18

 

 

FY19

 

% Change

GCI Consolidated Pro Forma Financial Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer

$

114,745

 

 

$

114,595

 

 

 

%

 

$

436,668

 

 

$

438,475

 

 

 

%

Business

 

111,479

 

 

 

109,849

 

 

(1

)

%

 

 

438,622

 

 

 

431,187

 

 

(2

)

%

Total Revenue

$

226,224

 

 

$

224,444

 

 

(1

)

%

 

$

875,290

 

 

$

869,662

 

 

(1

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

$

(210,737

)

 

$

(155,325

)

 

26

 

%

 

$

(192,444

)

 

$

(182,841

)

 

5

 

%

Operating Loss Margin (%)

 

(93.2

)

%

 

(69.2

)

%

2,400

 

bps

 

 

(22.0

)

%

 

(21.0

)

%

100

 

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted OIBDA(1)

$

61,225

 

 

$

74,326

 

 

21

 

%

 

$

266,871

 

 

$

256,878

 

 

(4

)

%

Adjusted OIBDA Margin(1) (%)

 

27.1

 

%

 

33.1

 

%

600

 

bps

 

 

30.5

 

%

 

29.5

 

%

(100

)

bps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GCI Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless

$

45,370

 

 

$

46,335

 

 

2

 

%

 

$

166,847

 

 

$

168,086

 

 

1

 

%

Data

 

41,710

 

 

 

43,777

 

 

5

 

%

 

 

159,667

 

 

 

169,332

 

 

6

 

%

Video

 

22,650

 

 

 

20,678

 

 

(9

)

%

 

 

89,553

 

 

 

83,946

 

 

(6

)

%

Voice

 

5,015

 

 

 

3,805

 

 

(24

)

%

 

 

20,601

 

 

 

17,111

 

 

(17

)

%

Total Revenue

$

114,745

 

 

$

114,595

 

 

 

%

 

$

436,668

 

 

$

438,475

 

 

 

%

Operating Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue generating wireless lines in service(2)

 

 

 

 

 

 

 

 

 

 

180,400

 

 

 

176,200

 

 

(2

)

%

Non-revenue generating wireless lines in service(3)

 

 

 

 

 

 

 

 

 

 

12,300

 

 

 

6,100

 

 

(50

)

%

Wireless Lines in Service

 

 

 

 

 

 

 

 

 

 

192,700

 

 

 

182,300

 

 

(5

)

%

Data - Cable Modem Subscribers(4)

 

 

 

 

 

 

 

 

 

 

125,700

 

 

 

127,000

 

 

1

 

%

Video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic Subscribers

 

 

 

 

 

 

 

 

 

 

89,100

 

 

 

81,200

 

 

(9

)

%

Homes Passed

 

 

 

 

 

 

 

 

 

 

253,400

 

 

 

253,400

 

 

 

%

Voice - Total Local Access Lines in Service(5)

 

 

 

 

 

 

 

 

 

 

44,500

 

 

 

39,900

 

 

(10

)

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GCI Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless

$

22,969

 

 

$

21,727

 

 

(5

)

%

 

$

95,649

 

 

$

92,603

 

 

(3

)

%

Data

 

70,148

 

 

 

73,043

 

 

4

 

%

 

 

278,315

 

 

 

277,519

 

 

 

%

Video

 

7,349

 

 

 

4,242

 

 

(42

)

%

 

 

19,449

 

 

 

16,170

 

 

(17

)

%

Voice

 

11,013

 

 

 

10,837

 

 

(2

)

%

 

 

45,209

 

 

 

44,895

 

 

(1

)

%

Total Revenue

$

111,479

 

 

$

109,849

 

 

(1

)

%

 

$

438,622

 

 

$

431,187

 

 

(2

)

%

Operating Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless Lines in Service

 

 

 

 

 

 

 

 

 

 

21,500

 

 

 

20,500

 

 

(5

)

%

Data - Cable Modem Subscribers(4)

 

 

 

 

 

 

 

 

 

 

9,200

 

 

 

8,800

 

 

(4

)

%

Voice - Total Local Access Lines in Service(5)

 

 

 

 

 

 

 

 

 

 

36,500

 

 

 

34,500

 

 

(5

)

%

 

1)

See reconciling schedule 1.

2)

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

3)

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

4)

A 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.

5)

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 declined slightly in the fourth quarter and full year due to lower GCI Business revenue, while GCI Consumer revenue was stable. Operating loss declined for both the fourth quarter and full year. Adjusted OIBDA increased in the fourth quarter due to improvement in the operating performance of the business and a net $4 million benefit from the two aforementioned RHC matters. The operating performance improvement was driven by continued cost efficiencies and a focus on the core facilities based Alaska market. Adjusted OIBDA declined for the full year largely due to the previously discussed $17 million RHC charge.

In the fourth quarter of 2019, GCI Liberty recorded an impairment loss of $167 million primarily related to wireless licenses, due to increased uncertainty around GCI long-term wireless revenue. This impairment charge is excluded from fourth quarter and full year 2019 Adjusted OIBDA. In the fourth quarter of 2018, due to certain FCC program revenue changes and market factors impacting GCI operating results, GCI Liberty recorded impairment losses of $136 million and $65 million related to goodwill and cable certificates, respectively. These impairment charges are excluded from fourth quarter and full year 2018 pro forma Adjusted OIBDA.

GCI Consumer

Consumer revenue was flat for both the fourth quarter and full year as declines in video and voice revenue were offset by gains in wireless and data. The data revenue increase for both the fourth quarter and full year was due to customer migration to more expensive plans offering higher speeds and data limits. Data revenue in the fourth quarter was also driven by an increase in cable modem subscribers. Wireless revenue increased for the full year largely due to lapping the free month of service given in the third quarter of 2018 to certain customers due to the billing system conversion. Wireless revenue in the fourth quarter increased due to higher wireless handset sales. Video revenue declined in the fourth quarter and full year due to a decrease in video subscribers. Voice revenue declines in the fourth quarter and full year were primarily driven by a scheduled decrease in USF High Cost Support.

GCI Business

In the fourth quarter and full year, GCI Business revenue declined due to decreases in wireless, video and voice revenue. These declines were partially offset by an increase in data revenue in the fourth quarter and flat data revenue for the full year. Wireless revenue declined for the fourth quarter and full year due to wholesale customers moving backhaul circuits off of the GCI network. Video revenue decreased in the fourth quarter and full year due to lower political advertising revenue. In the fourth quarter, data revenue increased primarily due to higher sales to education and health care customers. For the full year, data revenue was flat as the higher sales to education and health care customers were offset by lower time and materials revenue and a reduction of revenue from the aforementioned health care customer whose RHC funding was originally denied.

Capital Expenditures

In 2019, GCI spent $133 million on capital expenditures, excluding capitalized interest and insurance payments received to cover the costs of the 2018 earthquake. Capital expenditure spending was related primarily to improvements to the wireless and hybrid fiber coax networks. GCI's capital expenditures for 2020 are expected to be similar.

Share Repurchases

GCI Liberty did not repurchase shares from November 1, 2019 through January 31, 2020. For the full year 2019, GCI Liberty repurchased 1.0 million shares of common stock at an average price of $43.64 for a total of $43.9 million. 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 highlights and other matters on GCI Liberty's earnings conference call which will begin at 5:00 p.m. (E.S.T.) on February 26, 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") and Liberty Broadband Corporation, as well as its interest in LendingTree and subsidiary Evite.

3)

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

4)

Federal Communications Commission.

5)

More detailed information regarding certain regulatory matters pending before the FCC regarding USF programs, including the RHC program, can be found in GCI Liberty's Annual Report on Form 10-K for the year ended December 31, 2019.

GCI LIBERTY GAAP FINANCIAL METRICS

 

(amounts in thousands)

 

 

4Q18

 

 

4Q19

 

 

FY18

 

 

FY19

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

GCI Holdings(1)

 

$

226,222

 

 

$

224,444

 

 

$

715,842

 

 

$

869,662

 

Corporate and other

 

 

8,700

 

 

 

7,943

 

 

 

23,920

 

 

 

25,071

 

Total GCI Liberty Revenue

 

$

234,922

 

 

$

232,387

 

 

$

739,762

 

 

$

894,733

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

 

 

 

 

 

 

 

GCI Holdings(1)

 

$

(213,595

)

 

$

(155,325

)

 

$

(208,934

)

 

$

(182,841

)

Corporate and other

 

 

(8,566

)

 

 

(9,125

)

 

 

(41,058

)

 

 

(34,680

)

Total GCI Liberty Operating Income

 

$

(222,161

)

 

$

(164,450

)

 

$

(249,992

)

 

$

(217,521

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted OIBDA

 

 

 

 

 

 

 

 

 

 

 

 

GCI Holdings(1)

 

$

61,224

 

 

$

74,326

 

 

$

217,832

 

 

$

256,878

 

Corporate and other

 

 

(4,475

)

 

 

(4,666

)

 

 

(24,731

)

 

 

(21,865

)

Total GCI Liberty Adjusted OIBDA

 

$

56,749

 

 

$

69,660

 

 

$

193,101

 

 

$

235,013

 

 

(1)

GCI Holdings 2018 pro forma financial statements differ from GCI Holdings GAAP financial statements due to the impact of acquisition accounting, including deferred revenue adjustments, depreciation and amortization of intangible and tangible assets, RHC Program revenue adjustments and other adjustments.

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 and 10-K for the three months ended September 30, 2019 and the year ended December 31, 2019.

Fair Value of Public Holdings

(amounts in millions)

 

9/30/2019

 

12/31/2019

Charter(1)

 

$

2,208

 

 

$

2,599

 

Liberty Broadband(1)

 

 

4,468

 

 

 

5,367

 

LendingTree(2)

 

 

1,069

 

 

 

1,045

 

Total

 

$

7,745

 

 

$

9,011

 

 

(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 $167 million and $166 million at September 30, 2019 and December 31, 2019, respectively.

Cash and Debt

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

(amounts in millions)

9/30/2019

 

12/31/2019

Cash:

 

 

 

 

 

GCI

$

82

 

 

$

61

 

Corporate and other

 

328

 

 

 

509

 

Total GCI Liberty Consolidated Cash

$

410

 

 

$

570

 

 

 

 

 

 

 

Debt:

 

 

 

 

 

Senior Notes

$

775

 

 

$

775

 

Senior Credit Facility

 

713

 

 

 

513

 

Finance leases, tower obligation and other(1)

 

112

 

 

 

110

 

Total GCI Debt

$

1,600

 

 

$

1,398

 

 

 

 

 

 

 

Margin Loan

$

900

 

 

$

1,300

 

1.75% Exchangeable Senior Debentures due 2046

 

477

 

 

 

477

 

Total Corporate Level Debt

$

1,377

 

 

$

1,777

 

 

 

 

 

 

 

Total GCI Liberty Debt

$

2,977

 

 

$

3,175

 

Premium on debt and deferred financing fees

 

118

 

 

 

191

 

Finance leases and tower obligation (excluded from GAAP Debt)

 

(105

)

 

 

(103

)

Total GCI Liberty Debt (GAAP)

$

2,990

 

 

$

3,263

 

 

 

 

 

 

 

Other Financial Obligations:

 

 

 

 

 

Indemnification Obligation(2)

$

137

 

 

$

202

 

Preferred Stock(3)

 

178

 

 

 

178

 

 

 

 

 

 

 

GCI Leverage(4)

 

6.0x

 

 

5.1x

 

(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/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 increased due to increased borrowings on the Margin Loan. Proceeds from the borrowings were partially used to repay a portion of the GCI Senior Credit Facility and for corporate expense. GCI cash decreased as cash flow from operations was more than offset by capital expenditures.

GCI Liberty debt increased due to the aforementioned draw on the Margin Loan, partially offset by a repayment of a portion of the GCI Senior Credit Facility.

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 December 31, 2019, a holder of the LI LLC Charter exchangeable debentures does have the ability to exchange, and accordingly, the indemnification obligation has been classified as a current liability. There is $332 million principal amount of the LI LLC Charter exchangeable debentures outstanding as of December 31, 2019.

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 5:00 p.m. (E.S.T.) on February 26, 2020. The call can be accessed by dialing (800) 458-4121 or (720) 543-0206, passcode 5580110, 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 under the Private Securities Litigation Reform Act of 1995, including statements about business strategies, market potential, future financial prospects, capital expenditures, matters relating to the Universal Service Administrative Company and Rural Health Care 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, continued access to capital on terms acceptable to GCI Liberty, changes in law and government regulations, the availability of investment opportunities 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 Form 10-K, 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.

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 loss to its Adjusted OIBDA for the three months and years ended December 31, 2018 and December 31, 2019. The pro forma financial information presented below for the fourth quarter and full year 2018 was prepared assuming the acquisition took place on January 1, 2017. The pro forma financial information is presented for illustrative purposes only and does not represent what the results of operations of GCI would have been had the acquisition occurred at that time. GCI's pro forma operating results include acquisition accounting adjustments primarily related to revenue, depreciation, amortization, stock compensation and the exclusion of transaction related costs. The pro forma results have also been adjusted for the FCC's October 2018 Rural Health Care decision described in GCI Liberty's Annual Report on Form 10-K for the year ended December 31, 2019.

GCI HOLDINGS ADJUSTED OIBDA RECONCILIATION

 

(amounts in thousands)

 

 

4Q18

 

 

4Q19

 

 

FY18

 

 

FY19

GCI Holdings

 

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

$

(210,737

)

 

$

(155,325

)

 

$

(192,444

)

 

$

(182,841

)

Depreciation and amortization

 

 

62,944

 

 

 

65,616

 

 

 

241,687

 

 

 

263,508

 

Stock-based compensation

 

 

1,078

 

 

 

2,967

 

 

 

6,088

 

 

 

14,907

 

Impairment of intangibles and long-lived assets

 

 

207,940

 

 

 

167,062

 

 

 

207,940

 

 

 

167,062

 

Insurance proceeds and restructuring, net

 

 

 

 

 

(5,994

)

 

 

 

 

 

(5,758

)

Legal settlement

 

 

 

 

 

 

 

 

3,600

 

 

 

 

Adjusted OIBDA

 

$

61,225

 

 

$

74,326

 

 

$

266,871

 

 

$

256,878

 

SCHEDULE 2

The following table provides a reconciliation of operating loss calculated in accordance with GAAP to Adjusted OIBDA for GCI Liberty for the three months and years ended December 31, 2018 and December 31, 2019, respectively.

GCI LIBERTY ADJUSTED OIBDA RECONCILIATION

 

(amounts in thousands)

 

 

4Q18

 

 

4Q19

 

 

FY18

 

 

FY19

GCI Liberty

 

 

 

 

 

 

 

 

 

 

 

 

GCI Liberty Operating Loss

 

$

(222,161

)

 

$

(164,450

)

 

$

(249,992

)

 

$

(217,521

)

Depreciation and amortization

 

 

63,689

 

 

 

66,298

 

 

 

206,946

 

 

 

266,333

 

Stock-based compensation

 

 

7,281

 

 

 

6,744

 

 

 

28,207

 

 

 

24,897

 

Impairment of intangibles and long-lived assets

 

 

207,940

 

 

 

167,062

 

 

 

207,940

 

 

 

167,062

 

Insurance proceeds and restructuring, net

 

 

 

 

 

(5,994

)

 

 

 

 

 

(5,758

)

Consolidated GCI Liberty Adjusted OIBDA

 

$

56,749

 

 

$

69,660

 

 

$

193,101

 

 

$

235,013

 

GCI LIBERTY, INC. AND SUBSIDIARIES

BALANCE SHEET INFORMATION

(unaudited)

 

 

December 31,

 

December 31,

 

2019

 

2018

 

Amounts in thousands, except share amounts

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

569,520

 

 

491,257

 

Trade and other receivables, net of allowance for doubtful accounts of $7,516 and $7,555, respectively

114,435

 

 

182,600

 

Current portion of tax sharing receivable

 

 

36,781

 

Other current assets

43,868

 

 

40,100

 

Total current assets

727,823

 

 

750,738

 

Investments in equity securities

2,605,293

 

 

1,533,517

 

Investments in affiliates, accounted for using the equity method

167,643

 

 

177,030

 

Investment in Liberty Broadband measured at fair value

5,367,242

 

 

3,074,373

 

Property and equipment, net

1,090,901

 

 

1,184,606

 

Intangible assets not subject to amortization

 

 

 

Goodwill

855,837

 

 

855,837

 

Cable certificates

305,000

 

 

305,000

 

Wireless licenses

35,000

 

 

190,000

 

Other

6,500

 

 

16,500

 

 

1,202,337

 

 

1,367,337

 

Intangible assets subject to amortization, net

391,979

 

 

436,006

 

Tax sharing receivable

84,534

 

 

65,701

 

Other assets, net

295,693

 

 

71,514

 

Total assets

$

11,933,445

 

 

8,660,822

 

 

 

 

 

Liabilities and Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

92,893

 

 

100,334

 

Deferred revenue

27,886

 

 

31,743

 

Current portion of debt, net of deferred financing costs

3,008

 

 

900,759

 

Indemnification obligation

202,086

 

 

 

Other current liabilities

69,149

 

 

47,958

 

Total current liabilities

395,022

 

 

1,080,794

 

Long-term debt, net, including $658,839 and $462,336 measured at fair value

3,263,210

 

 

1,985,275

 

Obligations under finance leases and tower obligations, excluding current portion

97,507

 

 

122,245

 

Long-term deferred revenue

57,986

 

 

65,954

 

Deferred income tax liabilities

1,527,109

 

 

793,696

 

Preferred stock

178,002

 

 

177,103

 

Derivative Instrument

71,305

 

 

 

Indemnification obligation

 

 

78,522

 

Other liabilities

133,020

 

 

50,543

 

Total liabilities

5,723,161

 

 

4,354,132

 

Equity

 

 

 

Stockholders’ equity:

 

 

 

Series A common stock, $0.01 par value. Authorized 500,000,000 shares; issued and outstanding 101,306,716 and 102,058,816 shares at December 31, 2019 and 2018, respectively

1,013

 

 

1,021

 

Series B common stock, $0.01 par value. Authorized 20,000,000 shares; issued and outstanding 4,437,593 and 4,441,609 shares at December 31, 2019 and 2018, respectively

44

 

 

44

 

Series C common stock, $0.01 par value. Authorized 1,040,000,000 shares; no issued and outstanding shares at December 31, 2019 and 2018

 

 

 

Additional paid-in capital

3,221,885

 

 

3,251,957

 

Accumulated other comprehensive earnings (loss), net of taxes

(4,084

)

 

168

 

Retained earnings

2,982,626

 

 

1,043,933

 

Total stockholders' equity

6,201,484

 

 

4,297,123

 

Non-controlling interests

8,800

 

 

9,567

 

Total equity

6,210,284

 

 

4,306,690

 

Commitments and contingencies

 

 

 

Total liabilities and equity

$

11,933,445

 

 

8,660,822

 

GCI LIBERTY, INC. AND SUBSIDIARIES

STATEMENT OF OPERATIONS INFORMATION

(unaudited)

 

 

Year Ended

 

December 31,

 

2019

 

2018

 

Amounts in thousands, except per share amounts

Revenue

$

894,733

 

 

739,762

 

Operating costs and expenses:

 

 

 

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

285,331

 

 

227,192

 

Selling, general and administrative, including stock-based compensation

399,286

 

 

347,676

 

Depreciation and amortization expense

266,333

 

 

206,946

 

Impairment of intangibles and long-lived assets

167,062

 

 

207,940

 

Insurance proceeds and restructuring, net

(5,758

)

 

 

 

1,112,254

 

 

989,754

 

Operating income (loss)

(217,521

)

 

(249,992

)

Other income (expense):

 

 

 

Interest expense (including amortization of deferred loan fees)

(153,803

)

 

(119,296

)

Share of earnings (losses) of affiliates, net

(2,629

)

 

25,772

 

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

3,002,400

 

 

(681,545

)

Tax sharing agreement

26,646

 

 

(32,105

)

Other, net

13,172

 

 

205

 

 

2,885,786

 

 

(806,969

)

Earnings (loss) before income taxes

2,668,265

 

 

(1,056,961

)

Income tax (expense) benefit

(730,023

)

 

183,307

 

Net earnings (loss)

1,938,242

 

 

(873,654

)

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

(456

)

 

(351

)

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

$

1,938,698

 

 

(873,303

)

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

$

18.41

 

 

(8.09

)

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

$

18.32

 

 

(8.09

)

GCI LIBERTY, INC. AND SUBSIDIARIES

STATEMENT OF CASH FLOWS INFORMATION

(unaudited)

 

 

Year Ended

 

December 31,

 

2019

 

2018

 

amounts in thousands

Cash flows from operating activities:

 

 

 

Net earnings (loss)

$

1,938,242

 

 

(873,654

)

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

 

 

 

Depreciation and amortization

266,333

 

 

206,946

 

Stock-based compensation expense

24,897

 

 

28,207

 

Share of (earnings) losses of affiliates, net

2,629

 

 

(25,772

)

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

(3,002,400

)

 

681,545

 

Deferred income tax expense (benefit)

729,970

 

 

(182,724

)

Intergroup tax payments

 

 

 

Impairment of intangibles and long-lived assets

167,062

 

 

207,940

 

Other, net

4,800

 

 

13,441

 

Change in operating assets and liabilities:

 

 

 

Current and other assets

3,041

 

 

(34,698

)

Payables and other liabilities

(45,969

)

 

61,657

 

Net cash provided (used) by operating activities

88,605

 

 

82,888

 

Cash flows from investing activities:

 

 

 

Cash and restricted cash from acquisition of GCI Holdings

 

 

147,957

 

Capital expended for property and equipment

(148,481

)

 

(134,352

)

Purchases of investments

 

 

(48,581

)

Proceeds from derivative instrument

105,866

 

 

 

Settlement of derivative instrument

(105,866

)

 

 

Other investing activities, net

17,799

 

 

2,700

 

Net cash provided (used) by investing activities

(130,682

)

 

(32,276

)

Cash flows from financing activities:

 

 

 

Borrowings of debt

877,308

 

 

1,588,703

 

Repayment of debt, finance leases, and tower obligations

(688,901

)

 

(254,033

)

Contributions from (distributions to) former parent, net

 

 

(1,122,272

)

Indemnification payment to Qurate Retail

 

 

(132,725

)

Derivative payments

 

 

(80,001

)

Repurchases of GCI Liberty common stock

(43,910

)

 

(111,648

)

Other financing activities, net

(18,302

)

 

(20,752

)

Net cash provided (used) by financing activities

126,195

 

 

(132,728

)

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

84,118

 

 

(82,116

)

Cash, cash equivalents and restricted cash at beginning of period

492,032

 

 

574,148

 

Cash, cash equivalents and restricted cash at end of period

$

576,150

 

 

492,032

 

 

Contacts

GCI Liberty, Inc.
Courtnee Chun, 720-875-5420

Release Summary

GCI Liberty Reports Fourth Quarter and Year End 2019 Financial Results

Contacts

GCI Liberty, Inc.
Courtnee Chun, 720-875-5420