Attached files
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| 8-K - 8-K - GRIZZLY MERGER SUB 1, LLC | gciform8k03022016.htm |
Exhibit 99.1
GCI REPORTS FOURTH QUARTER 2015 FINANCIAL RESULTS
Consolidated Revenue of $241 million and $979 million for the Year
Adjusted EBITDA of $71 million and $330 million for the Year
March 2, 2016, Anchorage, Alaska - General Communication, Inc. (“GCI”) (NASDAQ: GNCMA) today announced its results for the fourth quarter and year end 2015.
2015 Operating and Financial Highlights and Significant Recent Events
Strong growth in Managed Broadband and Consumer data drove fourth quarter revenues to $241 million, up $13 million or five percent over the fourth quarter of 2014. Annual revenues were $979 million, up $68 million or eight percent over 2014, driven by growth in wireless roaming and our broadband data products.
Quarterly Adjusted EBITDA was $71 million, which is flat when compared with the fourth quarter of 2014. Adjusted EBITDA for the year was $330 million, up $7 million or two percent over the prior year. Adjusted EBITDA for the quarter was negatively affected by a reduction in political advertising revenues, which were down approximately $5 million on a year-over-year basis as well as approximately $4 million in non-recurring SG&A charges.
Roaming Agreements: We mentioned during our third quarter earnings call that we were completing long-term agreements with our primary roaming partners. We have completed these agreements, which will assist us in sustaining stable wireless roaming revenues for GCI’s future, and will enable GCI to make capital investment decisions with the security of long-term guaranteed roaming payments. The contracts are long-term agreements with minimum cash payments. These agreements will reduce the cash we receive from roaming and backhaul by approximately 20 percent or $25 million in 2016 when compared with 2015. Notwithstanding the negative cash impact to GCI in 2016, we believe these agreements are valuable to GCI, and substantially mitigate a key risk factor in the business.
Tower Sales: During 2016, we expect to monetize our urban wireless towers and rooftop locations for approximately $90 million in a sale lease back transaction. We will redeploy and invest the cash received into our broadband infrastructure in Alaska.
Billing System Update: In order to drive operational efficiency and improve our customer relationship experience, we recently signed a contract with a billing system provider to migrate our two primary billing platforms into a new unified billing system. We anticipate the conversion will take place in 2018. As part of this process, we are significantly simplifying our rate plans and eliminating our non-core billing systems. Already this year we have shut down two smaller wireless billing systems.
“We finished 2015 on strong operational footing, which sets us up to capitalize on opportunities in 2016”, said Ron Duncan, GCI’s president and chief executive officer. “Our broadband data products continue to provide core growth and our new wireless roaming agreements secure an important revenue source for the long-term health of the company. We also anticipate selling our urban wireless towers in 2016, which will provide us additional capital that we intend to re-invest in the growth of our company. This sale will support significant investments in a diverse fiber to the North Slope and continued expansion of our TERRA network. These steps demonstrate GCI’s commitment to being the leader in broadband infrastructure in Alaska.”
Wireless
Wireless segment revenues were $60 million for the quarter and $268 million for the year, a three percent decline and one percent decline year-over-year respectively. The decline is due to changes in revenue
allocation between the wireline and wireless segment after closing the AWN transaction, which was offset by an increase in our roaming revenues.
The wireless segment revenue detail is as follows:
($ millions) | 4Q15 | 4Q14 | 2015 | 2014 | |
Wholesale Wireless | 21 | 25 | 84 | 100 | |
Roaming and Backhaul | 26 | 23 | 129 | 116 | |
USF Support | 13 | 14 | 55 | 54 | |
Total Wireless Revenue | 60 | 62 | 268 | 270 | |
Wireless segment Adjusted EBITDA was $39 million for the quarter, an increase of $6 million or 18 percent over the fourth quarter of 2014. Annual wireless Adjusted EBITDA was $179 million in 2015, growing $21 million or 13 percent over 2014. Growth in Adjusted EBITDA was a result of increased roaming revenues along with a decrease in roaming costs.
Wireline
Wireline segment revenues of $181 million for the fourth quarter were $14 million, or eight percent higher than the fourth quarter of 2014. Full year revenues of $711 million were $71 million or 11 percent higher than the prior year.
Adjusted EBITDA for the quarter was $32 million and $151 million for the year. EBITDA declined by eight percent for the year and 16 percent for the quarter on a year-over-year basis. These declines are due to changes in allocations between the segments, reduced political advertising and one-time SG&A costs.
Wireline - Consumer
Consumer revenues were $89 million for the quarter, a year-over-year increase of $13 million or 17 percent. Annual revenues of $351 million represent growth of $63 million or 22 percent from the prior year. Revenue growth in 2015 was driven by broadband data subscriber and APRU growth, which combined to provide a 15 percent increase in broadband data revenues over 2014. Revenue also benefited in 2015 from equipment installment plan revenues and the acquired wireless subscriber base. Wireless ARPU was negatively impacted by lower ARPUs from subscribers that bring their own device.
Our cable modem subscribers were up 3,000 in the quarter and 8,200 for the year. Pro-forma for the 87,000 acquired wireless customers in the AWN transaction we saw a reduction of 8,800 wireless subscribers for the year with 4,100 of those coming in the fourth quarter. During the year we moved 53,100 or just over 60 percent of the acquired subscribers onto our primary billing system. We expect to complete the migration in the next year and will continue to have pressure on wireless subscriber net adds until the transition is complete.
Broadband network investment and improving our data product offering remains a key priority for the Company. Our Gigabit red consumer data service is now available to all of our Anchorage subscribers, and was expanded to include the Matanuska Valley in mid-January. GCI plans to launch the Gigabit red service in Fairbanks and Juneau in 2016.
Wireline - Business Services
Revenues in the business services group were $52 million in the fourth quarter, a $7 million or 11 percent decline from the same period in 2014. Annual revenues of $210 million marked a $16 million or seven percent decline from the prior year. The substantial majority of these declines were from lower advertising revenues as compared to 2014, which was a particularly strong year for political advertising in Alaska.
Wireline - Managed Broadband
Managed broadband revenues of $40 million for the quarter drove annual revenues to $150 million, up $8 million or 24 percent over the fourth quarter of 2014 and $23 million or 19 percent over the prior full year. Our managed broadband revenue growth has been driven primarily by customer bandwidth upgrades that have been made possible by our significant and ongoing investment in the TERRA network.
SG&A
SG&A expenses were $89 million in the fourth quarter of 2015, up $10 million or 12 percent from a year ago. Annual SG&A expenses totaled $338 million, an increase of $45 million or 15 percent. Growth in SG&A is a result of one-time AWN transition costs and other recurring costs to support the acquired wireless subscribers. Additionally, we have increased our spending in IT and network support and maintenance.
Other Events
GCI repurchased 0.2 million shares of its Class A common stock during the fourth quarter, bringing the total shares repurchased in 2015 to 3.0 million.
2015 versus Guidance
Our total revenue in 2015 was $979 million, above our guidance range of $920 -$970 million.
Our Adjusted EBITDA guidance was $310 - $335 million for 2015, and at $330 million we were at the high end of the range.
Capital expenditures for the year totaled $176 million, slightly above guidance of $170 million.
2016 Guidance
Adjusted EBITDA Guidance
Adjusted EBITDA is expected to be between $295 million and $325 million in 2016 as compared to $330 million in 2015. In comparing 2015 to 2016, it is important to highlight key differences.
• | GCI entered into new roaming and backhaul agreements with its largest roaming partners that will result in GCI receiving lower roaming payments in exchange for entering into long-term agreements that provide GCI a high degree of visibility of roaming payments for the next several years. For GAAP purposes, associated roaming and backhaul revenues will be calculated based on amortizing cumulative minimum cash payments evenly over the contract life, which will result in a $30 million non-cash reduction in 2016 GAAP revenues. Our Adjusted EBITDA guidance adds back the non-cash impact on revenues. The year-over-year cash impact of these agreements is a $25 million reduction in EBITDA. |
• | In connection with migrating billing platforms, we will incur approximately $8 million of operating expenses in 2016, which will not be capitalized and will reduce Adjusted EBITDA. |
In total, these two changes represent a reduction of approximately $33 million of Adjusted EBITDA. When adjusting for these impacts, 2016 mid-point Adjusted EBITDA guidance represents a four percent increase year-over-year.
Revenue Guidance
Revenue is expected to be between $930 million and $980 million in 2016. Of this amount, roaming and backhaul revenues are expected to be between $70 million and $80 million compared to 2015 roaming and backhaul revenues of $129 million. It is important to note that the 2016 guidance on revenue does not include $30 million of cash we will receive from our roaming and backhaul partners in excess of our reported revenues. This cash is included in our Adjusted EBITDA guidance.
Excluding the impact of the new roaming and backhaul agreements, all other 2016 mid-point revenues are expected to grow 4 percent year-over-year.
($ millions) | 2015 | 2016 | % Change (Mid-Point) |
Revenues excluding Roaming and Backhaul | 850 | 860-900 | 4% |
Reported Roaming and Backhaul | 129 | 70-80 | -42% |
Total Reported Revenues | 979 | 930-980 | -2% |
Add back non-cash reduction | 0 | 30 | |
Total Reported Revenues and non-cash reduction | 979 | 960-1,010 | 1% |
Capital Expenditure Guidance
Capital expenditures are expected to be approximately $210 million, and capital expenditures net of tower sale proceeds to be re-invested in 2016 are expected to be approximately $150 million. The tower sale proceeds will be used primarily to fund two projects. We will expand our network to include a diverse fiber to the North Slope of Alaska. We will also ring and expand our TERRA network to increase our rural networks capacity and reliability. These multi-year projects are expected to total $85 million with approximately $60 million being invested in 2016.
Use of Non-GAAP Measure
Adjusted EBITDA is presented herein and is a non-GAAP measure. See our attached financials for a reconciliation of this non-GAAP measure to the nearest GAAP measure.
Conference Call
The Company will hold a conference call to discuss the financial results on Thursday, March 3rd, at 2:00 p.m. (Eastern). To access the call, call the conference operator between 1:45-2:00 p.m. (Eastern) at 844-850-0551 (International callers should dial +1-412-902-4197) and identify your call as “GCI”.
In addition to dial-up access, GCI will make available net conferencing. To access the call via net conference, log on to gci.com and follow the instructions.
A replay of the call will be available for 72-hours by dialing 877-344-7529, access code 10069357 (International callers should dial +1-412-317-0088).
Forward-Looking Statement Disclosure
The foregoing contains forward-looking statements regarding GCI’s expected results that are based on management’s expectations as well as on a number of assumptions concerning future events. Actual results might differ materially from those projected in the forward-looking statements due to uncertainties and other factors, many of which are outside GCI’s control. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained in GCI’s cautionary statement sections of Forms 10-K and 10-Q filed with the Securities and Exchange Commission.
About GCI
GCI is the largest Alaska-based and operated, integrated telecommunications provider, offering wireless, voice, data, and video services statewide. Learn more about GCI at www.gci.com.
Contacts:
Investors: Kyle Jones, 907.868.7105; kjones@gci.com
Media: David Morris, 907.265.5396, dmorris@gci.com
# # #
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(Amounts in thousands) | December 31, | |||||
ASSETS | 2015 | 2014 | ||||
Current assets: | ||||||
Cash and cash equivalents | $ | 26,528 | 15,402 | |||
Receivables (including $0 and $27,944 from a related party at December 31, 2015 and 2014, respectively) | 208,384 | 212,441 | ||||
Less allowance for doubtful receivables | 3,630 | 4,542 | ||||
Net receivables | 204,754 | 207,899 | ||||
Prepaid expenses | 12,862 | 12,179 | ||||
Inventories | 11,322 | 17,032 | ||||
Other current assets | 3,129 | 153 | ||||
Total current assets | 258,595 | 252,665 | ||||
Property and equipment | 2,384,530 | 2,341,511 | ||||
Less accumulated depreciation | 1,290,149 | 1,229,029 | ||||
Net property and equipment | 1,094,381 | 1,112,482 | ||||
Goodwill | 239,263 | 229,560 | ||||
Cable certificates | 191,635 | 191,635 | ||||
Wireless licenses | 86,347 | 86,347 | ||||
Other intangible assets, net of amortization | 69,290 | 66,015 | ||||
Deferred loan and senior notes costs, net of amortization of $7,227 and $8,644 at December 31, 2015 and 2014, respectively | 16,335 | 10,949 | ||||
Other assets | 26,462 | 52,725 | ||||
Total other assets | 629,332 | 637,231 | ||||
Total assets | $ | 1,982,308 | 2,002,378 | |||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||
CONSOLIDATED BALANCE SHEETS | ||||||
(Unaudited) | ||||||
(Continued) | ||||||
(Amounts in thousands) | December 31, | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | 2015 | 2014 | ||||
Current liabilities: | ||||||
Current maturities of obligations under long-term debt and capital leases | $ | 12,050 | 8,722 | |||
Accounts payable (including $0 and $7,447 to a related party at December 31, 2015 and 2014, respectively) | 63,014 | 76,918 | ||||
Deferred revenue | 34,128 | 29,314 | ||||
Accrued payroll and payroll related obligations | 31,337 | 32,803 | ||||
Accrued liabilities | 22,822 | 14,457 | ||||
Accrued interest (including $5,132 and $0 to a related party at December 31, 2015 and 2014, respectively) | 13,655 | 6,654 | ||||
Subscriber deposits | 1,242 | 1,212 | ||||
Total current liabilities | 178,248 | 170,080 | ||||
Long-term debt, net (including $54,810 and $0 due to a related party at December 31, 2015 and 2014, respectively) | 1,344,764 | 1,036,056 | ||||
Obligations under capital leases, excluding current maturities (including $1,824 and $1,857 due to a related party at December 31, 2015 and 2014, respectively) | 59,651 | 68,356 | ||||
Deferred income taxes | 106,145 | 131,752 | ||||
Long-term deferred revenue | 93,427 | 85,734 | ||||
Other liabilities (including $32,820 and $0 for derivative stock appreciation rights with a related party at December 31, 2015 and 2014, respectively) | 80,812 | 43,178 | ||||
Total liabilities | 1,863,047 | 1,535,156 | ||||
Commitments and contingencies | ||||||
Stockholders’ equity: | ||||||
Common stock (no par): | ||||||
Class A. Authorized 100,000 shares; issued 35,593 and 37,998 shares at December 31, 2015 and 2014, respectively; outstanding 35,567 and 37,972 shares at December 31, 2015 and 2014, respectively | — | 13,617 | ||||
Class B. Authorized 10,000 shares; issued and outstanding 3,154 and 3,159 shares at December 31, 2015 and 2014, respectively; convertible on a share-per-share basis into Class A common stock | 2,664 | 2,668 | ||||
Less cost of 26 Class A common shares held in treasury at December 31, 2015 and 2014 | (249 | ) | (249 | ) | ||
Paid-in capital | 6,631 | 26,773 | ||||
Retained earnings | 79,217 | 124,547 | ||||
Total General Communication, Inc. stockholders' equity | 88,263 | 167,356 | ||||
Non-controlling interests | 30,998 | 299,866 | ||||
Total stockholders’ equity | 119,261 | 467,222 | ||||
Total liabilities and stockholders’ equity | $ | 1,982,308 | 2,002,378 | |||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | |||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||
YEARS ENDED DECEMBER 31, 2015, 2014, AND 2013 | |||||||||
(Unaudited) | |||||||||
(Amounts in thousands, except per share amounts) | 2015 | 2014 | 2013 | ||||||
Revenues: | |||||||||
Non-related party | $ | 973,251 | 850,656 | 782,971 | |||||
Related party | 5,283 | 59,542 | 28,677 | ||||||
Total revenues | 978,534 | 910,198 | 811,648 | ||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below): | |||||||||
Non-related party | 321,457 | 291,770 | 275,701 | ||||||
Related party | 881 | 10,934 | 4,761 | ||||||
Total cost of goods sold | 322,338 | 302,704 | 280,462 | ||||||
Selling, general and administrative expenses | |||||||||
Non-related party | 337,839 | 289,674 | 268,026 | ||||||
Related party | 540 | 3,973 | 3,039 | ||||||
Total selling, general and administrative expenses | 338,379 | 293,647 | 271,065 | ||||||
Depreciation and amortization expense | 181,767 | 170,285 | 147,259 | ||||||
Software impairment charge | 29,839 | — | — | ||||||
Operating income | 106,211 | 143,562 | 112,862 | ||||||
Other income (expense): | |||||||||
Interest expense (including amortization of deferred loan fees) | (78,786 | ) | (72,496 | ) | (69,725 | ) | |||
Related party interest expense | (6,602 | ) | — | — | |||||
Loss on extinguishment of debt | (27,700 | ) | — | (103 | ) | ||||
Impairment of equity method investment | (12,593 | ) | — | — | |||||
Unrealized loss on derivative instrument with related party | (11,160 | ) | — | — | |||||
Other | 2,917 | (1,793 | ) | (350 | ) | ||||
Other expense, net | (133,924 | ) | (74,289 | ) | (70,178 | ) | |||
Income (loss) before income taxes | (27,713 | ) | 69,273 | 42,684 | |||||
Income tax (expense) benefit | 1,847 | (10,029 | ) | (10,957 | ) | ||||
Net income (loss) | (25,866 | ) | 59,244 | 31,727 | |||||
Net income attributable to non-controlling interests | 159 | 51,687 | 22,321 | ||||||
Net income (loss) attributable to General Communication, Inc. | $ | (26,025 | ) | 7,557 | 9,406 | ||||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share | $ | (0.69 | ) | 0.18 | 0.23 | ||||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share | $ | (0.69 | ) | 0.18 | 0.23 | ||||
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share | $ | (0.69 | ) | 0.18 | 0.23 | ||||
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share | $ | (0.69 | ) | 0.18 | 0.23 | ||||
Common shares used to calculate Class A basic EPS | 34,764 | 36,112 | 36,194 | ||||||
Common shares used to calculate Class A diluted EPS | 37,921 | 39,386 | 39,502 | ||||||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Fourth Quarter 2015 | Fourth Quarter 2014 | |||||||||||||
Wireless | Wireline | Wireless | Wireline | |||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 60,108 | 21,253 | 81,361 | 61,665 | 9,539 | 71,204 | |||||||
Data | — | 104,099 | 104,099 | — | 94,959 | 94,959 | ||||||||
Video | — | 33,753 | 33,753 | — | 39,227 | 39,227 | ||||||||
Voice | — | 22,131 | 22,131 | — | 23,401 | 23,401 | ||||||||
Total | 60,108 | 181,236 | 241,344 | 61,665 | 167,126 | 228,791 | ||||||||
Cost of goods sold | 17,002 | 68,595 | 85,597 | 24,686 | 56,961 | 81,647 | ||||||||
Contribution | 43,106 | 112,641 | 155,747 | 36,979 | 110,165 | 147,144 | ||||||||
Less SG&A | (4,488 | ) | (84,261 | ) | (88,749 | ) | (4,443 | ) | (74,712 | ) | (79,155 | ) | ||
Plus share-based compensation expense | — | 2,828 | 2,828 | — | 2,268 | 2,268 | ||||||||
Plus accretion expense | 63 | 66 | 129 | 148 | 140 | 288 | ||||||||
Other | — | 566 | 566 | — | 109 | 109 | ||||||||
Adjusted EBITDA | $ | 38,681 | 31,840 | 70,521 | 32,684 | 37,970 | 70,654 | |||||||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Fourth Quarter 2015 | Third Quarter 2015 | |||||||||||||
Wireless | Wireline | Wireless | Wireline | |||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 60,108 | 21,253 | 81,361 | 80,424 | 21,487 | 101,911 | |||||||
Data | — | 104,099 | 104,099 | — | 100,245 | 100,245 | ||||||||
Video | — | 33,753 | 33,753 | — | 32,959 | 32,959 | ||||||||
Voice | — | 22,131 | 22,131 | — | 23,458 | 23,458 | ||||||||
Total | 60,108 | 181,236 | 241,344 | 80,424 | 178,149 | 258,573 | ||||||||
Cost of goods sold | 17,002 | 68,595 | 85,597 | 18,031 | 64,686 | 82,717 | ||||||||
Contribution | 43,106 | 112,641 | 155,747 | 62,393 | 113,463 | 175,856 | ||||||||
Less SG&A | (4,488 | ) | (84,261 | ) | (88,749 | ) | (5,115 | ) | (77,540 | ) | (82,655 | ) | ||
Plus share-based compensation expense | — | 2,828 | 2,828 | — | 2,660 | 2,660 | ||||||||
Plus accretion expense | 63 | 66 | 129 | 126 | 65 | 191 | ||||||||
Other | — | 566 | 566 | — | 474 | 474 | ||||||||
Adjusted EBITDA | $ | 38,681 | 31,840 | 70,521 | 57,404 | 39,122 | 96,526 | |||||||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL SCHEDULES | ||||||||||||||
(Unaudited) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
Twelve Months Ended December 31, 2015 | Twelve Months Ended December 31, 2014 | |||||||||||||
Wireless | Wireline | Wireless | Wireline | |||||||||||
Segment | Segment | Total | Segment | Segment | Total | |||||||||
Revenues | ||||||||||||||
Wireless | $ | 267,676 | 83,896 | 351,572 | 269,977 | 33,747 | 303,724 | |||||||
Data | — | 399,685 | 399,685 | — | 363,255 | 363,255 | ||||||||
Video | — | 133,893 | 133,893 | — | 144,434 | 144,434 | ||||||||
Voice | — | 93,384 | 93,384 | — | 98,785 | 98,785 | ||||||||
Total | 267,676 | 710,858 | 978,534 | 269,977 | 640,221 | 910,198 | ||||||||
Cost of goods sold | 70,899 | 251,439 | 322,338 | 90,920 | 211,784 | 302,704 | ||||||||
Contribution | 196,777 | 459,419 | 656,196 | 179,057 | 428,437 | 607,494 | ||||||||
Less SG&A | (18,137 | ) | (320,242 | ) | (338,379 | ) | (21,631 | ) | (272,016 | ) | (293,647 | ) | ||
Plus share-based compensation expense | — | 10,902 | 10,902 | — | 8,392 | 8,392 | ||||||||
Plus accretion expense | 559 | 562 | 1,121 | 733 | 516 | 1,249 | ||||||||
Other | — | 511 | 511 | — | (372 | ) | (372 | ) | ||||||
Adjusted EBITDA | $ | 179,199 | 151,152 | 330,351 | 158,159 | 164,957 | 323,116 | |||||||
General Communication, Inc. | ||||||||||||||||
Non-GAAP Financial Reconciliation Schedule | ||||||||||||||||
(Unaudited, Amounts in Thousands) | ||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||
December 31, | December 31, | September 30, | December 31, | December 31, | ||||||||||||
2015 | 2014 | 2015 | 2015 | 2014 | ||||||||||||
Net income (loss) | $ | (8,879 | ) | 5,796 | 17,495 | (25,866 | ) | 59,244 | ||||||||
Income tax expense (benefit) | 3,110 | 1,400 | 8,122 | (1,847 | ) | 10,029 | ||||||||||
Income (loss) before income taxes | (5,769 | ) | 7,196 | 25,617 | (27,713 | ) | 69,273 | |||||||||
Other (income) expense: | ||||||||||||||||
Interest expense (including amortization of deferred loan fees) | 19,073 | 18,267 | 19,260 | 78,786 | 72,496 | |||||||||||
Related party interest expense | 1,842 | — | 1,828 | 6,602 | — | |||||||||||
Loss on extinguishment of debt | — | — | — | 27,700 | — | |||||||||||
Impairment of equity method investment | — | — | — | 12,593 | — | |||||||||||
Derivative instrument unrealized (income) loss | 6,120 | — | (30 | ) | 11,160 | — | ||||||||||
Other | (472 | ) | 84 | (1,202 | ) | (2,917 | ) | 1,793 | ||||||||
Other expense, net | 26,563 | 18,351 | 19,856 | 133,924 | 74,289 | |||||||||||
Operating income | 20,794 | 25,547 | 45,473 | 106,211 | 143,562 | |||||||||||
Plus depreciation and amortization expense | 46,204 | 42,442 | 45,157 | 181,767 | 170,285 | |||||||||||
Plus software impairment charge | — | — | 2,571 | 29,839 | — | |||||||||||
Plus share-based compensation expense | 2,828 | 2,268 | 2,660 | 10,902 | 8,392 | |||||||||||
Plus accretion expense | 129 | 288 | 191 | 1,121 | 1,249 | |||||||||||
Other | 566 | 109 | 474 | 511 | (372 | ) | ||||||||||
Adjusted EBITDA (Note 1) | $ | 70,521 | 70,654 | 96,526 | 330,351 | 323,116 | ||||||||||
Note: | ||||
(1) Earnings plus imputed interest on financed devices before:
•Net interest expense,
•Income taxes,
•Depreciation and amortization expense,
•Loss on extinguishment of debt,
•Software impairment charge,
•Derivative instrument unrealized income (loss),
•Share-based compensation expense,
•Accretion expense,
•Loss attributable to non-controlling interest resulting from NMTC transactions,
•Gains and impairment losses on equity and cost method investments,
•Other non-cash adjustments.
Adjusted EBITDA is not presented as an alternative measure of net income, operating income or cash flow from operations, as determined in accordance with accounting principles generally accepted in the United States of America. GCI's management uses Adjusted EBITDA to evaluate the operating performance of its business, and as a measure of performance for incentive compensation purposes. GCI believes Adjusted EBITDA is useful to investors and other users of our financial
information in understanding and evaluating operating performance as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected Adjusted EBITDA are used to estimate current or prospective enterprise value. Adjusted EBITDA does not give effect to cash used for debt service requirements, and thus does not reflect funds available for investment or other discretionary uses. Adjusted EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies.
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||||||
WIRELINE SEGMENT SUPPLEMENTAL REVENUE SCHEDULES | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
(Amounts in thousands) | ||||||||||||||||||
Fourth Quarter 2015 | Fourth Quarter 2014 | |||||||||||||||||
Business | Managed | Business | Managed | |||||||||||||||
Consumer | Services | Broadband | Total | Consumer | Services | Broadband | Total | |||||||||||
Revenues | ||||||||||||||||||
Wireless | $ | 19,233 | 2,020 | — | 21,253 | 9,158 | 381 | — | 9,539 | |||||||||
Data | 34,442 | 35,012 | 34,645 | 104,099 | 30,294 | 37,694 | 26,971 | 94,959 | ||||||||||
Video | 28,445 | 5,308 | — | 33,753 | 29,159 | 10,068 | — | 39,227 | ||||||||||
Voice | 7,160 | 9,524 | 5,447 | 22,131 | 7,839 | 10,253 | 5,309 | 23,401 | ||||||||||
Total | $ | 89,280 | 51,864 | 40,092 | 181,236 | 76,450 | 58,396 | 32,280 | 167,126 | |||||||||
(Amounts in thousands) | ||||||||||||||||||
Fourth Quarter 2015 | Third Quarter 2015 | |||||||||||||||||
Business | Managed | Business | Managed | |||||||||||||||
Consumer | Services | Broadband | Total | Consumer | Services | Broadband | Total | |||||||||||
Revenues | ||||||||||||||||||
Wireless | $ | 19,233 | 2,020 | — | 21,253 | 19,451 | 2,036 | — | 21,487 | |||||||||
Data | 34,442 | 35,012 | 34,645 | 104,099 | 32,465 | 35,238 | 32,542 | 100,245 | ||||||||||
Video | 28,445 | 5,308 | — | 33,753 | 28,483 | 4,476 | — | 32,959 | ||||||||||
Voice | 7,160 | 9,524 | 5,447 | 22,131 | 7,420 | 10,316 | 5,722 | 23,458 | ||||||||||
Total | $ | 89,280 | 51,864 | 40,092 | 181,236 | 87,819 | 52,066 | 38,264 | 178,149 | |||||||||
(Amounts in thousands) | ||||||||||||||||||
Twelve Months Ended December 31, 2015 | Twelve Months Ended December 31, 2014 | |||||||||||||||||
Business | Managed | Business | Managed | |||||||||||||||
Consumer | Services | Broadband | Total | Consumer | Services | Broadband | Total | |||||||||||
Revenues | ||||||||||||||||||
Wireless | $ | 75,799 | 8,097 | — | 83,896 | 30,998 | 2,749 | — | 33,747 | |||||||||
Data | 130,213 | 142,033 | 127,439 | 399,685 | 113,306 | 144,945 | 105,004 | 363,255 | ||||||||||
Video | 115,074 | 18,819 | — | 133,893 | 111,175 | 33,259 | — | 144,434 | ||||||||||
Voice | 30,110 | 41,026 | 22,248 | 93,384 | 32,535 | 45,010 | 21,240 | 98,785 | ||||||||||
Total | $ | 351,196 | 209,975 | 149,687 | 710,858 | 288,014 | 225,963 | 126,244 | 640,221 | |||||||||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | |||||||||||||||||
KEY PERFORMANCE INDICATORS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
December 31, 2015 | December 31, 2015 | ||||||||||||||||
as compared to | as compared to | ||||||||||||||||
December 31, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | |||||||||||
Wireline Segment | |||||||||||||||||
Consumer | |||||||||||||||||
Data | |||||||||||||||||
Cable modem subscribers | 127,300 | 119,100 | 124,300 | 8,200 | 3,000 | 6.9 | % | 2.4 | % | ||||||||
Video | |||||||||||||||||
Basic subscribers | 114,000 | 116,400 | 113,600 | (2,400 | ) | 400 | (2.1 | )% | 0.4 | % | |||||||
Digital programming tier subscribers | 59,500 | 63,800 | 59,500 | (4,300 | ) | — | (6.7 | )% | — | % | |||||||
HD/DVR converter boxes | 114,000 | 108,400 | 110,700 | 5,600 | 3,300 | 5.2 | % | 3.0 | % | ||||||||
Homes passed | 251,900 | 248,200 | 251,200 | 3,700 | 700 | 1.5 | % | 0.3 | % | ||||||||
Voice | |||||||||||||||||
Local access lines in service | 50,400 | 54,600 | 51,000 | (4,200 | ) | (600 | ) | (7.7 | )% | (1.2 | )% | ||||||
Business Services | |||||||||||||||||
Data | |||||||||||||||||
Cable modem subscribers | 12,700 | 14,100 | 14,200 | (1,400 | ) | (1,500 | ) | (9.9 | )% | (10.6 | )% | ||||||
Voice | |||||||||||||||||
Local access lines in service | 46,600 | 47,400 | 47,100 | (800 | ) | (500 | ) | (1.7 | )% | (1.1 | )% | ||||||
Consumer and Business Services Combined | |||||||||||||||||
Wireless | |||||||||||||||||
Consumer Lifeline lines in service | 28,100 | 25,000 | 28,100 | 3,100 | — | 12.4 | % | — | % | ||||||||
Consumer prepaid lines in service | 23,800 | 10,600 | 27,100 | 13,200 | (3,300 | ) | 124.5 | % | (12.2 | )% | |||||||
Consumer postpaid lines in service | 146,300 | 95,800 | 146,700 | 50,500 | (400 | ) | 52.7 | % | (0.3 | )% | |||||||
Business Services postpaid lines in service | 29,600 | 18,200 | 30,000 | 11,400 | (400 | ) | 62.6 | % | (1.3 | )% | |||||||
Total wireless lines in service | 227,800 | 149,600 | 231,900 | 78,200 | (4,100 | ) | 52.3 | % | -1.8 | % | |||||||
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES | ||||||||||||||||||||||
KEY PERFORMANCE INDICATORS | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
December 31, 2015 | December 31, 2015 | |||||||||||||||||||||
Three Months Ended | as compared to | as compared to | ||||||||||||||||||||
December 31, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | ||||||||||||||||
2015 | 2014 | 2015 | 2014 | 2015 | 2014 | 2015 | ||||||||||||||||
Wireline segment | ||||||||||||||||||||||
Consumer | ||||||||||||||||||||||
Video | ||||||||||||||||||||||
Average monthly revenue per subscriber | $ | 83.10 | $ | 83.57 | $ | 80.85 | $ | (0.47 | ) | $ | 2.25 | (0.6 | )% | 2.8 | % | |||||||
Combined Consumer and Business Services | ||||||||||||||||||||||
Data | ||||||||||||||||||||||
Average monthly revenue per cable modem subscriber | $ | 87.31 | $ | 83.01 | $ | 84.87 | $ | 4.30 | $ | 2.44 | 5.2 | % | 2.9 | % | ||||||||
Wireless | ||||||||||||||||||||||
Average monthly revenue per subscriber | $ | 43.37 | $ | 50.16 | $ | 44.24 | $ | (6.79 | ) | $ | (0.87 | ) | (13.5 | )% | (2.0 | )% | ||||||