10-Q

Net cash paid or received:

Interest paid including capitalized interest

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



	x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-15279



	GENERAL COMMUNICATION, INC.
	(Exact name of registrant as specified in its charter)



	State of Alaska		92-0072737
	(State or other jurisdiction of		(I.R.S Employer
	incorporation or organization)		Identification No.)



	2550 Denali Street
	Suite 1000
	Anchorage, Alaska		99503
	(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (907) 868-5600



	Not Applicable
	Former name, former address and former fiscal year, if changed since last report

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer", "accelerated filer” and "smaller reporting company" in Rule 12b-2 of the Exchange Act:



Large accelerated filer ¨	Accelerated filer x
Non-accelerated filer ¨ (Do not check if a smaller reporting company)	Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

¨ Yes x No

The number of shares outstanding of the registrant's classes of common stock as of November 2, 2015 was:

35,785,000 shares of Class A common stock; and

3,154,000 shares of Class B common stock.

GENERAL COMMUNICATION, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2015

TABLE OF CONTENTS



			Page No.

Cautionary Statement Regarding Forward-Looking Statements			3

Part I. FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Consolidated Balance Sheets (unaudited) as of September 30, 2015 and December 31, 2014	4

		Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2015 and 2014	6

		Consolidated Statements of Stockholders’ Equity (unaudited) for the nine months ended September 30, 2015 and 2014	7

		Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2015 and 2014	8

		Condensed Notes to Interim Consolidated Financial Statements (unaudited)	9

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38

	Item 4.	Controls and Procedures	39

Part II. OTHER INFORMATION

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40

	Item 6.	Exhibits	40

	Other items are omitted, as they are not applicable.

SIGNATURES			42

Cautionary Statement Regarding Forward-Looking Statements

You should carefully review the information contained in this Quarterly Report, but should particularly consider any risk factors that we set forth in this Quarterly Report and in other reports or documents that we file from time to time with the Securities and Exchange Commission (“SEC”). In this Quarterly Report, in addition to historical information, we state our future strategies, plans, objectives or goals and our beliefs of future events and of our future operating results, financial position and cash flows. In some cases, you can identify these so-called “forward-looking statements” by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “project,” or “continue” or the negative of these words and other comparable words. All forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance, achievements, plans and objectives to differ materially from any future results, performance, achievements, plans and objectives expressed or implied by these forward-looking statements. In evaluating these statements, you should specifically consider various factors, including those identified under “Risk Factors” in Item 1A of our annual report on Form 10-K for the year ended December 31, 2014. Those factors may cause our actual results to differ materially from any of our forward-looking statements. For these forward looking statements, we claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.

You should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement, and the related risks, uncertainties and other factors speak only as of the date on which they were originally made and we expressly disclaim any obligation or undertaking to update or revise any forward-looking statement to reflect any change in our expectations with regard to these statements or any other change in events, conditions or circumstances on which any such statement is based. New factors emerge from time to time, and it is not possible for us to predict what factors will arise or when. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS




GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in thousands)
	September 30,		December 31,
ASSETS	2015		2014
Current assets:
Cash and cash equivalents	$	59,689	15,402

Receivables (including $0 and $27,944 from a related party at September 30, 2015 and December 31, 2014, respectively)	189,039		212,441
Less allowance for doubtful receivables	4,695		4,542
Net receivables	184,344		207,899

Deferred income taxes	49,075		56,120
Prepaid expenses	13,068		12,179
Inventories	10,075		17,032
Other current assets	3,136		153
Total current assets	319,387		308,785

Property and equipment	2,435,768		2,341,511
Less accumulated depreciation	1,350,470		1,229,029
Net property and equipment	1,085,298		1,112,482

Goodwill	239,098		229,560
Cable certificates	191,635		191,635
Wireless licenses	86,347		86,347
Other intangible assets, net of amortization	65,053		66,015
Deferred loan and senior notes costs, net of amortization of $6,542 and $8,644 at September 30, 2015 and December 31, 2014, respectively	16,969		10,949
Other assets	27,791		52,725
Total other assets	626,893		637,231
Total assets	$	2,031,578	2,058,498

See accompanying condensed notes to interim consolidated financial statements.
			(Continued)



GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Continued)
(Amounts in thousands)
	September 30,			December 31,
LIABILITIES AND STOCKHOLDERS’ EQUITY	2015			2014
Current liabilities:
Current maturities of obligations under long-term debt and capital leases	$	11,902		8,722
Accounts payable (including $0 and $7,447 to a related party at September 30, 2015 and December 31, 2014, respectively)	50,417			76,918
Deferred revenue	33,917			29,314
Accrued payroll and payroll related obligations	29,138			32,803
Accrued interest	26,689			6,654
Accrued liabilities	17,135			14,457
Subscriber deposits	1,100			1,212
Total current liabilities	170,298			170,080

Long-term debt, net	1,345,098			1,036,056
Obligations under capital leases, excluding current maturities (including $1,832 and $1,857 due to a related party at September 30, 2015 and December 31, 2014, respectively)	61,885			68,356
Deferred income taxes	176,007			187,872
Long-term deferred revenue	94,701			85,734
Other liabilities	73,018			43,178
Total liabilities	1,921,007			1,591,276

Commitments and contingencies
Stockholders’ equity:
Common stock (no par):
Class A. Authorized 100,000 shares; issued 35,850 and 37,998 shares at September 30, 2015 and December 31, 2014, respectively; outstanding 35,824 and 37,972 shares at September 30, 2015 and December 31, 2014, respectively	—			13,617
Class B. Authorized 10,000 shares; issued and outstanding 3,154 and 3,159 at September 30, 2015 and December 31, 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 September 30, 2015 and December 31, 2014	(249		)	(249	)
Paid-in capital	(4,931		)	26,773
Retained earnings	82,020			124,547
Total General Communication, Inc. stockholders' equity	79,504			167,356
Non-controlling interests	31,067			299,866
Total stockholders’ equity	110,571			467,222
Total liabilities and stockholders’ equity	$	2,031,578		2,058,498

See accompanying condensed notes to interim consolidated financial statements.



GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Amounts in thousands, except per share amounts)	2015			2014		2015		2014
Revenues:
Non-related party	$	258,573		225,677		731,907		636,416
Related party	—			15,048		5,283		44,991
Total revenues	258,573			240,725		737,190		681,407

Cost of goods sold (exclusive of depreciation and amortization shown separately below):
Non-related party	82,717			73,971		235,860		212,821
Related party	—			2,930		881		8,236
Total cost of goods sold	82,717			76,901		236,741		221,057

Selling, general and administrative expenses:
Non-related party	82,655			71,717		249,090		211,144
Related party	—			1,066		540		3,348
Total selling, general and administrative expenses	82,655			72,783		249,630		214,492

Depreciation and amortization expense	45,157			41,705		135,563		127,843
Software impairment charge	2,571			—		29,839		—
Operating income	45,473			49,336		85,417		118,015

Other income (expense):
Loss on extinguishment of debt	—			—		(27,700	)	—
Interest expense (including amortization of deferred loan fees)	(21,088		)	(17,848	)	(64,473	)	(54,229	)
Impairment of equity method investment	—			—		(12,593	)	—
Derivative instrument unrealized income (loss)	30			—		(5,040	)	—
Other	1,202			(563	)	2,445		(1,709	)
Other expense, net	(19,856		)	(18,411	)	(107,361	)	(55,938	)

Income (loss) before income taxes	25,617			30,925		(21,944	)	62,077
Income tax (expense) benefit	(8,122		)	(5,078	)	4,957		(8,629	)
Net income (loss)	17,495			25,847		(16,987	)	53,448

Net income (loss) attributable to non-controlling interests	(136		)	15,932		278		36,466
Net income (loss) attributable to General Communication, Inc.	$	17,631		9,915		(17,265	)	16,982

Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share	$	0.45		0.24		(0.45	)	0.41
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share	$	0.45		0.24		(0.45	)	0.41
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share	$	0.44		0.24		(0.45	)	0.41
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share	$	0.44		0.24		(0.45	)	0.41

See accompanying condensed notes to interim consolidated financial statements.



GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Unaudited)
	Class A Common Stock			Class B Common Stock		Class A Shares Held in Treasury		Paid-in Capital		Retained Earnings		Non- controlling Interests		Total Stockholders’ Equity

(Amounts in thousands)
Balances at January 1, 2014	$	11,467		2,673		(866	)	26,880		116,990		300,210		457,354
Net income	—			—		—		—		16,982		36,466		53,448
Common stock repurchases and retirements	(1,972		)	—		—		—		—		—		(1,972	)
Shares issued under stock option plan	344			—		—		—		—		—		344
Issuance of restricted stock awards	2,144			—		—		(2,144	)	—		—		—
Share-based compensation expense	—			—		—		6,131		—		—		6,131
Issuance of treasury shares related to deferred compensation payment	—			—		617		98		—		—		715
Distribution to non-controlling interest	—			—		—		—		—		(37,500	)	(37,500	)
Adjustment to investment by non-controlling interest	—			—		—		—		—		(2,131	)	(2,131	)
Other	3			(3	)	—		—		—		100		100
Balances at September 30, 2014	$	11,986		2,670		(249	)	30,965		133,972		297,145		476,489

Balances at January 1, 2015	$	13,617		2,668		(249	)	26,773		124,547		299,866		467,222
Net income (loss)	—			—		—		—		(17,265	)	278		(16,987	)
Common stock repurchases and retirements	(19,062		)	—		—		—		(25,262	)	—		(44,324	)
Shares issued under stock option plan	295			—		—		—		—		—		295
Issuance of restricted stock awards	5,146			—		—		(5,146	)	—		—		—
Share-based compensation expense	—			—		—		7,982		—		—		7,982
Distribution to non-controlling interest	—			—		—		—		—		(765	)	(765	)
Investment by non-controlling interest	—			—		—		—		—		3,209		3,209
Non-controlling interest acquisition	—			—		—		(34,310	)	—		(271,521	)	(305,831	)
Other	4			(4	)	—		(230	)	—		—		(230	)
Balances at September 30, 2015	$	—		2,664		(249	)	(4,931	)	82,020		31,067		110,571

See accompanying condensed notes to interim consolidated financial statements.



GENERAL COMMUNICATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(Unaudited)
(Amounts in thousands)
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	(16,987	)	53,448
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	135,563			127,843
Loss on extinguishment of debt	27,700			—
Software impairment charge	29,839			—
Deferred income tax expense (benefit)	(5,006		)	8,629
Impairment of equity method investment	12,593			—
Share-based compensation expense	8,074			6,124
Other noncash income and expense items	14,146			7,206
Change in operating assets and liabilities	20,588			16,967
Net cash provided by operating activities	226,510			220,217
Cash flows from investing activities:
Purchases of property and equipment	(134,562		)	(124,871	)
Grant proceeds	14,007			1,136
Purchase of businesses, net of cash received	(12,736		)	(1,670	)
Proceeds from sale of investment	7,551			—
Purchases of other assets and intangible assets	(7,191		)	(7,735	)
Note receivable issued to an equity method investee	(3,000		)	—
Restricted cash	49			5,871
Purchase of investments	—			(21,409	)
Other	(4,760		)	49
Net cash used for investing activities	(140,642		)	(148,629	)
Cash flows from financing activities:
Repayment of debt and capital lease obligations	(492,068		)	(97,388	)
Issuance of 2025 Notes	445,973			—
Borrowing on Amended Senior Credit Facility	295,000			55,000
Purchase of noncontrolling interests	(282,505		)	—
Issuance of Searchlight note payable and derivative stock appreciation rights	75,000			—
Purchase of treasury stock to be retired	(44,324		)	(1,972	)
Payment of bond call premium	(20,244		)	—
Payment of debt issuance costs	(13,979		)	—
Distribution to non-controlling interest	(4,932		)	(37,500	)
Proceeds from stock option exercises	295			344
Borrowing on other long-term debt	203			421
Net cash used for financing activities	(41,581		)	(81,095	)
Net increase (decrease) in cash and cash equivalents	44,287			(9,507	)
Cash and cash equivalents at beginning of period	15,402			44,971
Cash and cash equivalents at end of period	$	59,689		35,464

See accompanying condensed notes to interim consolidated financial statements.

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

The accompanying unaudited interim consolidated financial statements include the accounts of General Communication, Inc. (“GCI”) and its direct and indirect subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. They should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2014, filed with the SEC on March 5, 2015, as part of our annual report on Form 10-K. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of operations for interim periods are not necessarily indicative of the results that may be expected for an entire year or any other period.


(1)	Business and Summary of Significant Accounting Principles

In the following discussion, GCI and its direct and indirect subsidiaries are referred to as “we,” “us” and “our.”


(a)	Business

GCI, an Alaska corporation, was incorporated in 1979. We provide a full range of wireless, data, video, and voice services to residential customers, businesses, governmental entities and educational institutions primarily in Alaska.


(b)	Principles of Consolidation

Our consolidated financial statements include the consolidated accounts of GCI and its wholly owned subsidiaries, The Alaska Wireless Network, LLC ("AWN") of which we owned a two-third interest through February 2, 2015 when we purchased the remaining one-third interest, and four variable interest entities (“VIEs”) for which we are the primary beneficiary after providing certain loans and guarantees. These VIEs are Terra GCI Investment Fund, LLC (“TIF”), Terra GCI 2 Investment Fund, LLC (“TIF 2”), Terra GCI 2-USB Investment Fund, LLC (“TIF 2-USB”) and Terra GCI 3 Investment Fund, LLC (“TIF 3”). We also include in our consolidated financial statements non-controlling interests in consolidated subsidiaries for which our ownership is less than 100 percent. All significant intercompany transactions between non-regulated affiliates of our company are eliminated. Intercompany transactions generated between regulated and non-regulated affiliates of our company are not eliminated in consolidation.


(c)	Non-controlling Interests

Non-controlling interests represent the equity ownership interests in consolidated subsidiaries not owned by us. Non-controlling interests are adjusted for contributions, distributions, and income and loss attributable to the non-controlling interest partners of the consolidated entities. Income and loss is allocated to the non-controlling interests based on the respective governing documents.


(d)	Acquisition

On February 2, 2015, we purchased Alaska Communications Systems Group, Inc.'s (“ACS”) interest in AWN ("AWN NCI Acquisition") and substantially all the assets of ACS and its affiliates related to ACS’s wireless operations (“Acquired ACS Assets”) (collectively the "Wireless Acquisition"). Under the terms of the agreement, we paid ACS $293.2 million, excluding working capital adjustments and agreed to terminate certain agreements related to the use of ACS network assets that were included as part of the original transaction that closed in July 2013. The Acquired ACS Assets include substantially all of ACS’s wireless subscriber assets, including subscriber contracts, and certain of ACS’s CDMA network assets, including fiber strands and associated cell site electronics and microwave facilities and associated electronics. We assumed from ACS post-closing liabilities of ACS and its affiliates under contracts assumed by us and liabilities with respect to the ownership by ACS of its equity interest in AWN to the extent accruing and related to the period after closing. All other liabilities were retained by ACS and its affiliates.

We have accounted for the AWN NCI Acquisition as the acquisition of a non-controlling interest in accordance with Accounting Standards Codification ("ASC") 810, Consolidation, and the Acquired ACS Assets as the acquisition of assets that do not constitute a business in accordance with ASC 805-50, Business Combinations - Related Issues. Total consideration transferred to ACS in the transaction consisted of the cash payment, settlement of working capital, and the fair market value of certain rights to receive future capacity terminated as part of the Wireless Acquisition agreement. The future capacity

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

receivable assets transferred as consideration were adjusted to fair value as of the acquisition date resulting in a gain of $1.2 million recorded in Other Income (Expense) in our Consolidated Statements of Operations for the nine months ended September 30, 2015. We allocated the total consideration transferred to ACS between the AWN NCI Acquisition and the Acquired ACS Assets based on the relative fair values of the assets and non-controlling interest received.

The following table summarizes the allocation of total consideration transferred to ACS between the AWN NCI Acquisition and the Acquired ACS Assets excluding working capital adjustments (amounts in thousands):



Total consideration transfered to ACS	$	304,838

Allocation of consideration between wireless assets and non-controlling interest acquired:
AWN non-controlling interest	$	303,831
Property and equipment	746
Other intangible assets	261
Total consideration	$	304,838

We have accounted for the AWN NCI Acquisition as an equity transaction, with the carrying amount of the non-controlling interest adjusted to reflect the change in ownership of AWN. The difference between the fair value of consideration paid and the carrying amount of the non-controlling interest has been recognized as additional paid-in capital in our Consolidated Statement of Stockholders' Equity. The impact of the AWN NCI Acquisition is summarized in the following table (amounts in thousands):



Reduction of non-controlling interest	$	268,364
Additional paid-in capital	35,467
Fair value of consideration paid for acquisition of equity interest	$	303,831

Pursuant to the accounting guidance in ASC 805-50, we determined that the Acquired ACS Assets did not meet the criteria necessary to constitute a business combination and was therefore accounted for as an asset purchase. We recognized the assets acquired in our Consolidated Balance Sheets at their allocated cost on the day of acquisition.

In conjunction with the Wireless Acquisition, we amended certain agreements related to the right to use ACS network assets. We adjusted the related right to use asset to fair value as of the acquisition date resulting in a loss of $3.8 million recorded in Other Income (Expense) in our Consolidated Statements of Operations for the nine months ended September 30, 2015.

During the nine months ended September 30, 2015, we completed three immaterial business acquisitions for total cash consideration of $12.7 million, net of cash received. We accounted for the transactions using the acquisition method of accounting under ASC 805, Business Combinations. Accordingly, the assets received, liabilities assumed and any non-controlling interests were recorded at their estimated fair value as of the acquisition date. We determined the estimated fair values using a combination of the discounted cash flows method and estimates made by management.


(e)	Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. This new standard provides guidance for the recognition, measurement and disclosure of revenue resulting from contracts with customers and will supersede virtually all of the current revenue recognition guidance under GAAP. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The standard permits the use of either the retrospective or cumulative effect transition method. Early adoption is permitted for annual periods beginning December 15,

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

2016. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations.

In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The update is in response to accounting complexity concerns, particularly from the asset management industry. ASU 2015-02 modifies the consolidation evaluation for reporting organizations that are required to determine whether they should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). The ASU is effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including early adoption in an interim period. The adoption of this guidance is not expected to have a material effect on our financial position or results of operations.

In April 2015, the FASB issued ASU No. 2015-03, Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03 requires an entity to present debt issuance costs related to a recognized debt liability in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. In August 2015, the FASB issued ASU No. 2015-15, Interest - Imputed Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements which clarifies that the guidance in ASU 2015-03 does not apply to line-of-credit arrangements. According to ASU 2015-15, line-of-credit arrangements will continue to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issue costs ratably over the term of the arrangement. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. An entity should apply the new guidance on a retrospective basis. We expect to adopt this guidance when effective, and do not expect this guidance to have a material effect on our financial position or results of operation, although it will change the financial statement classification of our debt issuance costs.

In June 2015, the FASB issued ASU No. 2015-10, Technical Corrections and Updates. The amendments in this update cover a wide range of topics in the codification and are generally categorized as follows: Amendments Related to Differences between Original Guidance and the Codification; Guidance Clarification and Reference Corrections; Simplification; and, Minor Improvements. The amendments are effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, but not required; at this time we are not early adopting. As the objectives of this standard are to clarify the codification, correct unintended application of guidance, eliminate inconsistencies, and, to improve the codification’s presentation of guidance, the adoption of this standard is not expected to have a material effect on our financial position or results of operations.

In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. Under ASU 2015-11, inventory will be measured at the “lower of cost and net realizable value” and options that currently exist for “market value” will be eliminated. The ASU defines net realizable value as the “estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.” No other changes were made to the current guidance on inventory measurement. The ASU is effective for interim and annual periods beginning after December 15, 2016. Early application is permitted and should be applied prospectively. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations.

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)


(f)	Regulatory Accounting

We account for our regulated operations in accordance with the accounting principles for regulated enterprises. These accounting principles recognize the economic effects of rate regulation by recording cost and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, plant and equipment is depreciated over lives approved by regulators and certain costs and obligations are deferred based upon approvals received from regulators to permit recovery of such amounts in future years. Our cost studies and depreciation rates for our regulated operations are subject to periodic audits that could result in a change to recorded revenues.


(g)	Earnings (Loss) per Common Share

We compute net income (loss) attributable to GCI per share of Class A and Class B common stock using the “two class” method. Therefore, basic net income (loss) per share is computed by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common and dilutive common equivalent shares outstanding during the period. The computation of the dilutive net income (loss) per share of Class A common stock assumes the conversion of Class B common stock to Class A common stock, while the dilutive net income (loss) per share of Class B common stock does not assume the conversion of those shares. Additionally, in applying the “two-class” method, undistributed earnings are allocated to both common shares and participating securities. Our restricted stock grants are entitled to dividends and meet the criteria of a participating security.

We allocate undistributed earnings in periods of net income based on the contractual participation rights of Class A common shares, Class B common shares, and participating securities as if the earnings for the period had been distributed. We do not allocate undistributed earnings to participating securities in periods in which we have a net loss. In accordance with our Articles of Incorporation, if and when dividends are declared on our common stock in accordance with Alaska corporate law, equivalent dividends shall be paid with respect to the shares of Class A and Class B common stock, including participating securities. Both classes of common stock have identical dividend rights and would therefore share equally in our net assets in the event of liquidation. As such, we have allocated undistributed earnings on a proportionate basis.

Earnings (loss) per common share (“EPS”) and common shares used to calculate basic and diluted EPS consist of the following (amounts in thousands, except per share amounts):



	Three Months Ended September 30,
	2015				2014
	Class A			Class B	Class A			Class B
Basic net income per share:
Numerator:
Net income available to common stockholders	$	16,213		1,418	$	9,161		754
Less: Undistributed income allocable to participating securities	(920		)	—	(526		)	—
Undistributed income allocable to common stockholders	15,293			1,418	8,635			754
Denominator:
Weighted average common shares outstanding	34,031			3,155	36,220			3,162
Basic net income attributable to GCI common stockholders per common share	$	0.45		0.45	$	0.24		0.24

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)



	Three Months Ended September 30,
	2015					2014
	Class A			Class B		Class A			Class B
Diluted net income per share:
Numerator:
Undistributed income allocable to common stockholders for basic computation	$	15,293		1,418		$	8,635		754
Reallocation of undistributed earnings as a result of conversion of Class B to Class A shares	1,418			—		754			—
Reallocation of undistributed earnings as a result of conversion of dilutive securities	22			(34	)	2			(3	)
Effect of derivative instruments that may be settled in cash or shares	(18		)	—		—			—
Effect of share based compensation that may be settled in cash or shares	4			—		(3		)	—
Net income adjusted for allocation of undistributed earnings and effect of contracts that may be settled in cash or shares	$	16,719		1,384		$	9,388		751
Denominator:
Number of shares used in basic computation	34,031			3,155		36,220			3,162
Conversion of Class B to Class A common shares outstanding	3,155			—		3,162			—
Unexercised stock options	122			—		120			—
Effect of derivative instruments that may be settled in cash or shares	781			—		—			—
Effect of share based compensation that may be settled in cash or shares	26			—		26			—
Number of shares used in per share computation	38,115			3,155		39,528			3,162
Diluted net income attributable to GCI common stockholders per common share	$	0.44		0.44		$	0.24		0.24



	Nine Months Ended September 30, 2015
	2015					2014
	Class A			Class B		Class A			Class B
Basic net income (loss) per share:
Numerator:
Net income (loss) available to common stockholders	$	(15,838	)	(1,427	)	$	15,686		1,296
Less: Undistributed income allocable to participating securities	—			—		(868		)	—
Undistributed income (loss) allocable to common stockholders	(15,838		)	(1,427	)	14,818			1,296
Denominator:
Weighted average common shares outstanding	35,037			3,158		36,149			3,162
Basic net income (loss) attributable to GCI common stockholders per common share	$	(0.45	)	(0.45	)	$	0.41		0.41

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)



	Nine Months Ended September 30, 2015
	2015					2014
	Class A			Class B		Class A			Class B
Diluted net income (loss) per share:
Numerator:
Undistributed income (loss) allocable to common stockholders for basic computation	$	(15,838	)	(1,427	)	$	14,818		1,296
Reallocation of undistributed earnings (loss) as a result of conversion of Class B to Class A shares	(1,427		)	—		1,296			—
Reallocation of undistributed earnings as a result of conversion of dilutive securities	—			—		3			(5	)
Effect of share based compensation that may be settled in cash or shares	—			—		(4		)	—
Net income (loss) adjusted for allocation of undistributed earnings and effect of contracts that may be settled in cash or shares	$	(17,265	)	(1,427	)	$	16,113		1,291
Denominator:
Number of shares used in basic computation	35,037			3,158		36,149			3,162
Conversion of Class B to Class A common shares outstanding	3,158			—		3,162			—
Unexercised stock options	—			—		120			—
Effect of share based compensation that may be settled in cash or shares	—			—		26			—
Number of shares used in per share computation	38,195			3,158		39,457			3,162
Diluted net income (loss) attributable to GCI common stockholders per common share	$	(0.45	)	(0.45	)	$	0.41		0.41

Weighted average shares associated with outstanding securities for the three and nine months ended September 30, 2015 and 2014, which have been excluded from the computations of diluted EPS, because the effect of including these securities would have been anti-dilutive, consist of the following (shares, in thousands):



	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Derivative instruments that may be settled in cash or shares, the effect of which is anti-dilutive	—	—	595	—
Shares associated with anti-dilutive unexercised stock options	—	28	120	30
Share-based compensation that may be settled in cash or shares, the effect of which is anti-dilutive	—	—	26	—
Total excluded	—	28	741	30

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)


(h)	Common Stock

Following are the changes in issued common stock for the nine months ended September 30, 2015 and 2014 (shares, in thousands):



	Class A		Class B
Balances at December 31, 2013	37,299		3,165
Class B shares converted to Class A	3		(3	)
Shares issued upon stock option exercises	40		—
Share awards issued	1,186		—
Shares retired	(148	)	—
Shares acquired to settle minimum statutory tax withholding requirements	(37	)	—
Balances at September 30, 2014	38,343		3,162

Balances at December 31, 2014	37,998		3,159
Class B shares converted to Class A	5		(5	)
Shares issued upon stock option exercises	38		—
Share awards issued	647		—
Shares retired	(2,761	)
Shares acquired to settle minimum statutory tax withholding requirements	(77	)	—
Balances at September 30, 2015	35,850		3,154

GCI’s Board of Directors has authorized a common stock buyback program for the repurchase of GCI’s Class A and Class B common stock in order to reduce the outstanding shares of Class A and Class B common stock. We are authorized to increase our repurchase limit $5.0 million per quarter indefinitely and to use stock option exercise proceeds to repurchase additional shares. If stock repurchases are less than the total approved quarterly amount the difference may be carried forward and used to repurchase additional shares in future quarters. The cost of the repurchased common stock reduced Common Stock and Retained Earnings in our Consolidated Balance Sheets.

During the three months ended September 30, 2015 and 2014, we repurchased 0.4 million and 0.1 million shares, respectively, of our Class A common stock under the stock buyback program at a cost of $7.3 million and $1.3 million, respectively. During the nine months ended September 30, 2015 and 2014, we repurchased 2.8 million and 0.1 million shares, respectively, of our Class A common stock under the stock buyback program at a cost of $43.2 million and $1.3 million, respectively. The stock was constructively retired as of September 30, 2015. Under this program we are currently authorized to make up to $94.3 million of repurchases as of September 30, 2015.


(i)	Accounts Receivable and Allowance for Doubtful Receivables

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful receivables is our best estimate of the amount of probable credit losses in our existing accounts receivable. We base our estimates on the aging of our accounts receivable balances, financial health of specific customers, regional economic data, changes in our collections process, regulatory requirements and our customers’ compliance with Universal Service Administrative Company rules. We review our allowance for doubtful receivables methodology at least annually.

Depending upon the type of account receivable our allowance is calculated using a pooled basis with an allowance for all accounts greater than 120 days past due or a specific identification method. When a

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

specific identification method is used, potentially uncollectible accounts due to bankruptcy or other issues are reviewed individually for collectability. Account balances are charged off against the allowance when we believe it is probable the receivable will not be recovered. We do not have any off-balance-sheet credit exposure related to our customers.


(j)	Derivative Financial Instruments

We account for our derivative instruments in accordance with ASC 815-10, Derivatives and Hedging. ASC 815-10 establishes accounting and reporting standards requiring that derivative instruments, including derivative instruments embedded in other contracts, be recorded on the balance sheet as either an asset or liability measured at its fair value. ASC 815-10 also requires that changes in the fair value of derivative instruments be recognized currently in results of operations unless specific hedge accounting criteria are met. We have not entered into any hedging activities to date. We recognize all derivative instruments as either assets or liabilities in our Consolidated Balance Sheets at their respective fair values. Our derivative instruments (as described in Note 5) includes stock appreciation rights, which have been recorded as a liability at fair value, and will be revalued at each reporting date, with changes in the fair value of the instrument included in our Consolidated Statements of Operations as Derivative Instrument Unrealized Income (Loss).


(k)	Guarantees

We offer a device trade-in program, "Upgrade Now", which provides eligible customers a specified-price trade-in right to upgrade their device. Participating customers must have purchased a financed device using an Equipment Installment Plan ("EIP") from us and have a qualifying monthly wireless service plan with us. Upon qualifying for an Upgrade Now device trade-in, the customer's remaining EIP balance is settled provided they trade in their eligible used device in good working condition and purchase a new device from us on a new EIP.

For customers who enroll in Upgrade Now, we defer the portion of equipment sales revenue which represents the estimated value of the trade-in right guarantee. The estimated value of the guarantees are based on various economic and customer behavioral assumptions, including the customer's estimated remaining EIP balance at trade-in, the expected fair value of the used handset at trade-in and the probability and timing of a trade-in.

We assess facts and circumstances at each reporting date to determine if we need to adjust the guarantees. The recognition of subsequent adjustments to the guarantees as a result of these assessments are recorded as adjustments to revenue. When customers upgrade their devices, the difference between the trade-in credit to the customer and the fair value of the returned devices is recorded against the guarantees.


(l)	Revenue Recognition

Wireless

We offer new and existing wireless customers the option to participate in Upgrade Now, a program that is described above in Note 1(k). Upgrade Now is a multiple-element arrangement typically consisting of the trade-in right, handset, and one month of wireless service. At the inception of the arrangement, revenue is allocated between the separate units of accounting based upon each components' relative selling price on a standalone basis. This is subject to the requirement that revenue recognized is limited to the amounts already received from the customer that are not contingent on the delivery of additional products or services to the customer in the future.

We recognize the full amount of the fair value of the trade-in right (not an allocated value) as the guarantee and the remaining allocable consideration is allocated to the handset and wireless service. We recognize revenue for the entire amount of the EIP receivable at the time of sale, net of the fair value of the trade-in right guarantee and imputed interest. See Note 1(k) for more information on guarantees.

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

Remote and Urban High Cost Support

We recorded high cost support revenue under the Universal Service Fund (“USF”) program of $16.5 million and $16.5 million for the three months ended September 30, 2015 and 2014, respectively, and $50.6 million and $50.0 million for the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015, we have $46.1 million in high cost support accounts receivable.


(m)	Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant items subject to estimates and assumptions include the allowance for doubtful receivables, unbilled revenues, accrual of the USF high cost Remote area program support, share-based compensation, inventory at lower of cost or market, reserve for future customer credits, liability for incurred but not reported medical insurance claims, valuation allowances for deferred income tax assets, depreciable and amortizable lives of assets, the carrying value of long-lived assets including goodwill, cable certificates, wireless licenses,and broadcast licenses, the fair value of equity method investments evaluated for impairment, our effective tax rate, imputed interest rate, purchase price allocations, deferred lease expense, asset retirement obligations, the accrual of cost of goods sold (exclusive of depreciation and amortization expense), depreciation, the derivative stock appreciation rights liability, guarantees, and the accrual of contingencies and litigation. Actual results could differ from those estimates.


(n)	Classification of Taxes Collected from Customers

We report sales, use, excise, and value added taxes assessed by a governmental authority that is directly imposed on a revenue-producing transaction between us and a customer on a net basis in our Consolidated Statements of Operations. The following are certain surcharges reported on a gross basis in our Consolidated Statements of Operations (amounts in thousands):



	Three Months Ended September 30,			Nine Months Ended September 30,
	2015		2014	2015	2014
Surcharges reported gross	$	1,426	990	3,960	3,224


(o)	Reclassifications and Immaterial Error Correction

Reclassifications have been made to the 2014 financial statements to make them comparable with the 2015 presentation.

During the third quarter of 2015, we determined that the purchase of the noncontrolling interest from ACS in the Consolidated Statement of Cash Flows for the three months ended March 31, 2015 and the six months ended June 30, 2015 should have been reported as a financing outflow instead of an investing outflow as previously reported. The classification error had no effect on previously reported Consolidated Balance Sheets, Consolidated Statements of Operations, Adjusted EBITDA, or the Consolidated Statement of Stockholders' Equity. In order to assess materiality of this error we considered SAB 99, "Materiality" and SAB 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements," and determined that the impact of this classification error on prior period interim consolidated financial statements was immaterial.

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

The impact of the immaterial classification error for the prior periods is as follows (amounts in thousands):



Consolidated Statements of Cash Flows for the three months ended March 31, 2015		As Previously Reported		Adjustment		As Revised
Net cash used for investing activities	$	(328,682	)	280,505		(48,177	)
Net cash provided by financing activities		281,370		(280,505	)	865

Consolidated Statements of Cash Flows for the six months ended June 30, 2015
Net cash used for investing activities	$	(372,469	)	280,505		(91,964	)
Net cash provided (used) by financing activities		251,698		(280,505	)	(28,807	)


(2)	Consolidated Statements of Cash Flows Supplemental Disclosures

Changes in operating assets and liabilities consist of (amounts in thousands):



Nine Months Ended September 30,	2015			2014
Decrease in accounts receivable, net	$	16,916		5,185
Increase in prepaid expenses	(813		)	(3,278	)
Decrease in inventories	6,957			2,449
Decrease in other current assets	17			135
Increase in other assets	(7,886		)	(511	)
Decrease in accounts payable	(8,095		)	(2,365	)
Increase in deferred revenues	1,532			4,198
Decrease in accrued payroll and payroll related obligations	(3,783		)	(246	)
Increase (decrease) in accrued liabilities	2,505			(722	)
Increase in accrued interest	20,035			14,205
Decrease in subscriber deposits	(590		)	(160	)
Decrease in long-term deferred revenue	(6,437		)	(3,108	)
Increase in components of other long-term liabilities	230			1,185
Total change in operating assets and liabilities	$	20,588		16,967

The following item is for the nine months ended September 30, 2015 and 2014 (amounts in thousands):

The following items are non-cash investing and financing activities for the nine months ended September 30, 2015 and 2014 (amounts in thousands):



	2015		2014
Non-cash consideration for Wireless Acquisition	$	23,326	—
Non-cash additions for purchases of property and equipment	$	17,683	36,805
Asset retirement obligation additions to property and equipment	$	1,730	382
Net capital lease obligation	$	—	9,386
Distribution to non-controlling interest	$	—	4,167
Deferred compensation distribution denominated in shares	$	—	617

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

(3) Intangible Assets and Goodwill

Goodwill increased $9.5 million during the nine months ended September 30, 2015 as a result of business combinations.

Amortization expense for amortizable intangible assets was as follows (amounts in thousands):



	Three Months Ended September 30,			Nine Months Ended September 30,
	2015		2014	2015		2014
Amortization expense	$	2,701	2,382	$	7,919	$	6,981

Amortization expense for amortizable intangible assets for each of the five succeeding fiscal years is estimated to be (amounts in thousands):



Years Ending December 31,
2015	$	10,636
2016	$	8,957
2017	$	6,653
2018	$	4,733
2019	$	3,660


(4)	Long-Term Debt

Amended Senior Credit Facility

On February 2, 2015, GCI Holdings, Inc. ("Holdings"), our wholly owned subsidiary, entered into a Fourth Amended and Restated Credit and Guarantee Agreement with MUFG Union Bank, N.A., Suntrust Bank, Bank of America, N.A., as documentation agent, and Credit Agricole Corporate and Investment Bank, as administrative agent ("Amended Senior Credit Facility"). The Amended Senior Credit Facility added a $275.0 million Term B loan to the existing Senior Credit Facility described in Note 6(c) of our December 31, 2014 annual report on Form 10-K. The Amended Senior Credit Facility was subsequently amended on August 3, 2015 ("First Amendment").

Under the Amended Senior Credit Facility and First Amendment, the interest rate for the Term B loan is London Interbank Offered Rate ("LIBOR") plus 3.25%, with a 0.75% LIBOR floor. The Term B loan requires principal payments of 0.25% of the original principal amount on the last day of each calendar quarter with the full amount maturing on February 2, 2022 or December 3, 2020 if our Senior Notes due 2021 are not refinanced prior to such date. The interest rate, maturity, and other terms of the existing Senior Credit Facility as described in Note 6(c) of our December 31, 2014 annual report on Form 10-K did not change as a result of this amendment.

In connection with the Amended Senior Credit Facility and First Amendment, we paid loan fees and other expenses of $6.2 million that were deferred and are being amortized over the life of the Amended Senior Credit Facility.

Searchlight Note

On February 2, 2015, we sold an unsecured promissory note to an affiliate of Searchlight Capital, L.P. ("Searchlight") in the principal amount of $75.0 million at an issue price of 100% that will mature on February 2, 2023 and bears interest at a rate of 7.5% per year ("Searchlight Note"). We may not prepay the Searchlight Note prior to February 2, 2019. On July 13, 2015, we amended the Searchlight transaction documents to permit Searchlight to pledge the Searchlight Note and related stock appreciation rights, subject to our right to redeem the Searchlight Note for 50% of its then current outstanding balance in the event a lender attempts to enforce its rights with respect to such pledged collateral.

In conjunction with the Searchlight Note, we entered into a stock appreciation rights agreement pursuant to which we issued to Searchlight three million stock appreciation rights which entitles Searchlight to receive, upon

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

exercise, an amount payable at our election in either cash or shares of GCI's Class A common stock equal in value to the excess of the fair market value of a share of GCI Class A common stock on the date of exercise over the price of $13.00. We allocated the $75.0 million in total proceeds received to the stock appreciation rights based on the fair value of the stock appreciation rights on the day of issuance with the remainder allocated to the Searchlight Note. The allocation resulted in a $21.7 million discount for the Searchlight Note that will be amortized over the term of the note using the effective interest method. Please see note 5 for additional information on the stock appreciation rights.

We have the option to pay the annual interest obligation on the Searchlight Note in cash or by capitalizing such interest and adding it to the outstanding principal amount of the note. If we elect to capitalize interest in a given year, we are also required to issue additional stock appreciation rights in the amount of four hundredths of a stock appreciation right for each dollar of interest being capitalized.

Senior Notes

On April 1, 2015 (“Closing Date”), GCI, Inc. our wholly owned subsidiary, completed an offering of $450.0 million in aggregate principal amount of 6.875% Senior Notes due 2025 (“2025 Notes”) at an issue price of 99.105%. We used the net proceeds from this offering to repay and retire all $425.0 million of our outstanding senior unsecured notes due 2019 (“2019 Notes”).

At any time before April 15, 2020, the 2025 Notes are redeemable at our option, in whole or in part, on not less than thirty nor more than sixty days’ notice, at a redemption price equal to 100% of the principal amount of the 2025 Notes, plus a premium calculated as defined in the 2025 Notes agreement, and accrued and unpaid interest (if any) to the date of redemption.

At any time on or after April 15, 2020, the 2025 Notes are redeemable at our option, in whole or in part, on not less than thirty nor more than sixty days’ notice, at the following redemption prices (expressed as percentages of principal amount), plus accrued and unpaid interest (if any) to the date of redemption:



If redeemed during the twelve month period commencing April 15 of the year indicated:	Redemption Price
2020	103.438	%
2021	102.292	%
2022	101.146	%
2023 and thereafter	100.000	%

The 2025 Notes mature on April 15, 2025. Semi-annual interest payments are payable on April 15 and October 15, beginning on October 15, 2015.

The 2025 Notes were issued pursuant to an Indenture, dated as of April 1, 2015, between us and MUFG Union Bank, N.A., as trustee.

We are not required to make mandatory sinking fund payments with respect to the 2025 Notes.

Upon the occurrence of a change of control, each holder of the 2025 Notes will have the right to require us to purchase all or any part of such holder’s 2025 Notes at a purchase price equal to 101% of the principal amount of such 2019 Notes, plus accrued and unpaid interest on such 2025 Notes, if any. If we or certain of our subsidiaries engage in asset sales, we must generally either invest the net cash proceeds from such sales in our business within a period of time, prepay debt under any outstanding credit facility, or make an offer to purchase a principal amount of the 2025 Notes equal to the excess net cash proceeds, with the purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

The 2025 Notes are senior unsecured obligations which rank equally in right of payment with our existing and future senior unsecured debt, including our 6.75% Senior Notes due 2021, and senior in right of payment to all future subordinated indebtedness.

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

The covenants in the indenture restrict GCI, Inc. and certain of its subsidiaries from incurring additional debt or entering into sale and leaseback transactions; paying dividends or distributions on capital stock or repurchase capital stock; issuing stock of subsidiaries; making certain investments; creating liens on assets to secure debt; entering into transactions with affiliates; merging or consolidating with another company; and transferring and selling assets. These covenants are subject to a number of limitations and exceptions, as further described in the 2025 Notes indenture.

We paid closing costs totaling $7.9 million in connection with the offering, which were recorded as deferred loan costs and are being amortized over the term of the 2025 Notes. We recorded a $27.7 million loss on extinguishment of debt in our Consolidated Statements of Operations for the nine months ended September 30, 2015. Included in the loss was $20.2 million in call premium payments to redeem our 2019 Notes, $5.4 million in unamortized 2019 Notes deferred loan costs, and $2.1 million for the unamortized portion of the 2019 Notes original issue discount.


(5)	Fair Value Measurements and Derivative Instruments

Recurring Fair Value Measurements

Assets and liabilities measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014 are as follows (amounts in thousands):



September 30, 2015	Level 1 ⁽¹⁾		Level 2 ⁽²⁾	Level 3 ⁽³⁾	Total
Assets:
Deferred compensation plan assets (mutual funds)	$	1,660	—	—	1,660
Liabilities:
Derivative stock appreciation rights	$	—	—	26,700	26,700

December 31, 2014	Level 1 ⁽¹⁾		Level 2 ⁽²⁾	Level 3 ⁽³⁾	Total
Assets:
Deferred compensation plan assets (mutual funds)	$	2,068	—	—	2,068

⁽¹⁾ Quoted prices in active markets for identical assets or liabilities
⁽²⁾ Observable inputs other than quoted prices in active markets for identical assets and liabilities
⁽³⁾ Inputs that are generally unobservable and not corroborated by market data

The fair value of our mutual funds is determined using quoted market prices in active markets utilizing market observable inputs.

The fair value of our derivative stock appreciation rights was determined using a lattice-based valuation model (see the section "Derivative Financial Instruments" below for more information).

Current and Long-Term Debt

The carrying amounts and approximate fair values of our current and long-term debt, excluding capital leases, at September 30, 2015 and December 31, 2014 are as follows (amounts in thousands):



	September 30, 2015			December 31, 2014
	Carrying Amount		Fair Value	Carrying Amount	Fair Value
Current and long-term debt	$	1,348,448	1,380,691	1,036,678	1,055,952

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

The following methods and assumptions were used to estimate fair values:


•	The fair values of the 6.75% Senior Notes due 2021 and the 6.875% Senior Notes due 2025 both issued by GCI, Inc., our wholly owned subsidiary, are based upon quoted market prices for the same or similar issues (Level 2).


•	The fair value of our Searchlight Note Payable is based on the current rates offered to us for similar remaining maturities plus an additional premium to reflect its subordination to our 2021 and 2025 Notes (Level 3).


•	The fair value of our Amended Senior Credit Facility and Wells Fargo note payable are estimated to approximate their carrying value because the instruments are subject to variable interest rates (Level 2).

Derivative Financial Instruments

In connection with the $75.0 million unsecured promissory note issued to Searchlight on February 2, 2015, we entered into a stock appreciation rights agreement pursuant to which we issued to Searchlight three million stock appreciation rights. Each stock appreciation right entitles Searchlight to receive, upon exercise, an amount payable at our election in either cash or shares of GCI's Class A common stock equal in value to the excess of the fair market value of a share of GCI Class A common stock on the date of exercise over the price of $13.00. The instruments are exercisable on the fourth anniversary of the grant date and will expire eight years from the date of grant. We have determined that the stock appreciation rights are required to be separately accounted for as derivative instruments and subject to fair value liability accounting under ASC 815-10.

We use a lattice based valuation model to value the stock appreciation rights liability at each reporting date. The model incorporates transaction details such as our stock price, instrument term and settlement provisions, as well as highly complex and subjective assumptions about volatility, risk-free interest rates, issuer behavior and holder behavior. The lattice model uses highly subjective assumptions and the use of other reasonable assumptions could provide different results.

We revalue our derivative liability at each reporting period and recognize gains or losses in our Consolidated Statements of Operations attributable to the change in the fair value of the instruments. The stock appreciation rights liability is included within Other Liabilities in our Consolidated Balance Sheets and are classified as Level 3 within the fair value hierarchy.

The following table summarizes the changes in fair value of all financial instruments measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the nine months ended September 30, 2015:



Fair Value Measurement Using Level 3 Inputs
	Derivative Stock Appreciation Rights
Balance at January 1, 2015	$	—
Issuance	21,660
Fair value adjustment at end of period, included in Other Income (Expense)	5,040
Balance at September 30, 2015	$	26,700


(6)	Stockholders’ Equity

Share-based Compensation

Our Amended and Restated 1986 Stock Option Plan ("Stock Option Plan"), provides for the grant of options and restricted stock awards (collectively "award") for a maximum of 15.7 million shares of GCI Class A common stock, subject to adjustment upon the occurrence of stock dividends, stock splits, mergers, consolidations or certain other changes in corporate structure or capitalization. If an award expires or terminates, the shares subject to the award will be available for further grants of awards under the Stock Option Plan. The Compensation Committee of GCI’s Board of Directors administers the Stock Option Plan. Substantially all restricted stock awards granted vest over periods of up to three years. Substantially all options vest in equal

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

installments over a period of five years and expire ten years from the date of grant. The requisite service period of our awards is generally the same as the vesting period. Options granted pursuant to the Stock Option Plan are only exercisable if at the time of exercise the option holder is our employee, non-employee director, or a consultant or advisor working on our behalf. New shares are issued when stock option agreements are exercised or restricted stock awards are granted. We have not issued any new options since 2010 when we transitioned to issuing restricted stock awards. We have 1.8 million shares available for grant under the Stock Option Plan at September 30, 2015.

A summary of option activity under the Stock Option Plan as of September 30, 2015 and changes during the period then ended is presented below:



	Shares (in thousands)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2015	308		$	6.86
Exercised	(38	)	$	7.77
Expired	(2	)	$	7.63
Outstanding at September 30, 2015	268		$	6.73	3.4 years	$	2,828
Exercisable at September 30, 2015	268		$	6.73	3.4 years	$	2,828

A summary of nonvested restricted stock award activity under the Stock Option Plan as of September 30, 2015 and changes during the period then ended is presented below:



	Shares (in thousands)		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2015	1,744		$	9.11
Granted	647		$	14.70
Vested	(342	)	$	10.27
Forfeited	(7	)	$	12.54
Nonvested at September 30, 2015	2,042

The weighted average grant date fair value of awards granted during the nine months ended September 30, 2015 and 2014, were $14.70 and $9.89, respectively. We have recorded share-based compensation expense of $8.0 million and $6.1 million for the nine months ended September 30, 2015 and 2014, respectively. Share-based compensation expense is classified as Selling, General and Administrative Expense in our Consolidated Statements of Operations. Unrecognized share-based compensation expense was $10.8 million relating to 2.0 million restricted stock awards as of September 30, 2015. We expect to recognize share-based compensation expense over a weighted average period of 1.6 years for restricted stock awards.

(7) Segments

Our reportable segments are business units that offer different products and are each managed separately.

A description of our reportable segments follows:

Wireless - We offer wholesale wireless services.

Wireline - We offer a full range of retail wireless, data, video and voice services to residential customers, businesses, governmental entities and educational institutions; wholesale data and voice services to common carrier customers; data and managed services to rural schools and health organizations and regulated voice services to residential and commercial customers in rural communities primarily in Southwest Alaska.

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

We evaluate performance and allocate resources based on earnings 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 New Markets Tax Credit ("NMTC") transactions, gains and impairment losses on equity and cost method investments, and other non-cash adjustments, plus imputed interest on financed devices (“Adjusted EBITDA”). Management believes that this measure is useful to investors and other users of our financial information in evaluating operating profitability as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected earnings before depreciation and amortization, net interest expense, and income taxes (“EBITDA”) are used to estimate current or prospective enterprise value. The accounting policies of the reportable segments are the same as those described in Note 1, “Business and Summary of Significant Accounting Policies” of this Form 10-Q. We have no intersegment sales.

We earn all revenues through sales of services and products within the United States. All of our long-lived assets are located within the United States of America, except approximately 82% of our undersea fiber optic cable systems which transit international waters and all of our satellite transponders.

Summarized financial information for our reportable segments for the three and nine months ended September 30, 2015 and 2014 follows (amounts in thousands):



	Three Months Ended				Nine Months Ended
	Wireless		Wireline	Total Reportable Segments	Wireless		Wireline	Total Reportable Segments
September 30, 2015
Revenues	$	80,424	178,149	258,573	$	207,568	529,622	737,190
Adjusted EBITDA	$	57,404	39,122	96,526	$	140,518	119,312	259,830

September 30, 2014
Revenues	$	76,398	164,327	240,725	$	208,312	473,095	681,407
Adjusted EBITDA	$	47,279	45,915	93,194	$	125,475	126,987	252,462

A reconciliation of reportable segment Adjusted EBITDA to consolidated income (loss) before income taxes follows (amounts in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30, 2015
	2015			2014		2015			2014
Reportable segment Adjusted EBITDA	$	96,526		93,194		$	259,830		252,462
Less depreciation and amortization expense	(45,157		)	(41,705	)	(135,563		)	(127,843	)
Less software impairment charge	(2,571		)	—		(29,839		)	—
Less share-based compensation expense	(2,660		)	(2,153	)	(8,074		)	(6,124	)
Less accretion expense	(191		)	(359	)	(992		)	(961	)
Other	(474		)	359		55			481
Consolidated operating income	45,473			49,336		85,417			118,015
Less other expense, net	(19,856		)	(18,411	)	(107,361		)	(55,938	)
Consolidated income (loss) before income taxes	$	25,617		30,925		$	(21,944	)	62,077

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)


(8)	Related Party Transaction

ACS was a related party for financial statement reporting purposes through the date of the Wireless Acquisition on February 2, 2015. Included in our related party disclosures were ACS' provision to us of local service lines and network capacity in locations where we do not have our own facilities, our provision to ACS of wholesale wireless services for their use of our network to sell services to their respective retail customers, and our receipt of ACS' high cost support from USF for its wireless customers. For the period January 1, 2015 to February 2, 2015, we paid ACS $6.2 million and received $8.1 million in payments from ACS. For the nine months ended September 30, 2014, we paid $48.2 million and received $29.5 million in payments from ACS. We also have long term capacity exchange agreements with ACS for which no money is exchanged.


(9)	Variable Interest Entities

New Markets Tax Credit Entities

We have entered into several arrangements under the NMTC program with US Bancorp to help fund a $59.3 million project that extended terrestrial broadband service for the first time to rural Northwestern Alaska communities via a high capacity hybrid fiber optic and microwave network ("TERRA-NW"). The NMTC program was provided for in the Community Renewal Tax Relief Act of 2000 (the “Act”) to induce capital investment in qualified lower income communities. The Act permits taxpayers to claim credits against their federal income taxes for up to 39% of qualified investments in the equity of community development entities (“CDEs”). CDEs are privately managed investment institutions that are certified to make qualified low-income community investments.

On August 30, 2011, we entered into the first arrangement (“NMTC #1”). In connection with the NMTC #1 transaction we loaned $58.3 million to TIF, a special purpose entity created to effect the financing arrangement, at 1% interest due August 30, 2041. Simultaneously, US Bancorp invested $22.4 million in TIF. TIF then contributed US Bancorp’s contribution and the loan proceeds to certain CDEs. The CDEs, in turn, loaned the $76.8 million in funds less payment of placement fees, at interest rates varying from 1% to 3.96%, to our wholly owned subsidiary, Unicom, as partial financing for TERRA-NW.

On October 3, 2012, we entered into the second arrangement (“NMTC #2”). In connection with the NMTC #2 transaction we loaned $37.7 million to TIF 2 and TIF 2-USB, special purpose entities created to effect the financing arrangement, at 1% interest due October 2, 2042. Simultaneously, US Bancorp invested $17.5 million in TIF 2 and TIF 2-USB. TIF 2 and TIF 2-USB then contributed US Bancorp’s contributions and the loan proceeds to certain CDEs. The CDEs, in turn, loaned the $55.2 million in funds less payment of placement fees, at interest rates varying from 0.7099% to 0.7693%, to Unicom, as partial financing for TERRA-NW.

On December 11, 2012, we entered into the third arrangement (“NMTC #3”). In connection with the NMTC #3 transaction we loaned $8.2 million to TIF 3, a special purpose entity created to effect the financing arrangement, at 1% interest due December 10, 2042. Simultaneously, US Bancorp invested $3.8 million in TIF 3. TIF 3 then contributed US Bancorp’s contributions and the loan proceeds to a CDE. The CDE, in turn, loaned the $12.0 million in funds less payment of placement fees, at an interest rate of 1.35%, to Unicom, as partial financing for TERRA-NW.

US Bancorp is the sole investor in TIF, TIF 2, TIF 2-USB and TIF 3, and as such, is entitled to substantially all of the benefits derived from the NMTCs. All of the loan proceeds to Unicom net of syndication and arrangement fees, were restricted for use on TERRA-NW. We completed construction of TERRA-NW and placed the final phase into service in 2014.

These transactions include put/call provisions whereby we may be obligated or entitled to repurchase US Bancorp’s interests in TIF, TIF 2, TIF 2-USB and/or TIF 3. We believe that US Bancorp will exercise the put options in August 2018, October 2019 and December 2019, at the end of the compliance periods for NMTC #1, NMTC #2 and NMTC #3, respectively. The NMTCs are subject to 100% recapture for a period of seven years as provided in the Internal Revenue Code. We are required to be in compliance with various regulations and contractual provisions that apply to the NMTC arrangements. Non-compliance with applicable requirements could result in projected tax benefits not being realized by US Bancorp. We have agreed to indemnify US Bancorp for any loss or recapture of NMTCs until such time as our obligation to deliver tax benefits is

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

relieved. There have been no credit recaptures as of September 30, 2015. The value attributed to the puts/calls is nominal.

We have determined that TIF, TIF 2, TIF 2-USB and TIF 3 are VIEs. The consolidated financial statement of TIF, TIF 2, TIF 2-USB and TIF 3 include the CDEs discussed above. The ongoing activities of the VIEs – collecting and remitting interest and fees and NMTC compliance – were all considered in the initial design and are not expected to significantly affect economic performance throughout the life of the VIEs. Management considered the contractual arrangements that obligate us to deliver tax benefits and provide various other guarantees to US Bancorp; US Bancorp’s lack of a material interest in the underlying economics of the project; and the fact that we are obligated to absorb losses of the VIEs. We concluded that we are the primary beneficiary of each and consolidated the VIEs in accordance with the accounting standard for consolidation.

US Bancorp’s contributions, net of syndication fees and other direct costs incurred in structuring the NMTC arrangements, are included in Non-controlling Interests on the Consolidated Balance Sheets. Incremental costs to maintain the structure during the compliance period are recognized as incurred to selling, general and administrative expense.

The assets and liabilities of our consolidated VIEs were $140.9 million and $104.2 million, respectively, as of September 30, 2015 and December 31, 2014.

Equity Method Investment

We own a 40.8% interest in a next generation carrier-class communications services firm. We account for our investment using the equity method. Due to declining economic conditions in the sector that it operates, additional financing was needed for the company to maintain its business plan. In March 2015, the existing owners provided financial support in the form of a loan of which our portion is $3.0 million. We determined that the additional financing provided to the company was a reconsideration event under ASC 810 and have subsequently determined that the entity is a VIE due to insufficient equity to finance its operations as a result of the decline in economic conditions.

We concluded that the company's board has the power to direct the significant activities of the entity. The board is comprised of five members of which we may choose two of the board members. As we do not control the board, we concluded that we do not have the power to direct the significant activities of the entity and are not the primary beneficiary. Our maximum exposure to loss related to the VIE is the combination of the investment and note receivable. We do not have a contractual obligation to provide additional financing.

During the second quarter of 2015, it became apparent that we would not recover the carrying value of our investment. We determined that the fair value of the equity investment was $0 and subsequently wrote-off the entire value of our investment resulting in an impairment loss of $12.6 million for the nine months ended September 30, 2015 that is recorded in Other Income (Expense) in our Consolidated Statements of Operations. The fair value determination was based upon market information obtained during the second quarter of 2015, the estimated liquidation value of the entity's assets and the amount of senior secured debt at the valuation date.

We have a note receivable with the entity of $3.0 million that is recorded in Other Current Assets in our Consolidated Balance Sheets as of September 30, 2015. We believe we will recover the value of the note receivable, therefore, we have not recorded an impairment loss related to the note receivable as of September 30, 2015. We will continue to monitor the entity's financial performance and record an impairment to the note receivable if it becomes apparent that the full value is no longer recoverable.


(10)	Software Impairment

During the years ended December 31, 2013 and 2014, we internally developed computer software in our Wireline segment to replace our wireless, Internet, video, local service, and long distance customer billing systems. During the first quarter of 2015, we completed a detailed assessment of our progress to date and determined it was no longer probable that the computer software being developed would be completed and placed in service. Our assessment concluded that the cost of continuing the development would be much higher than originally estimated, and the timing and scope risks were substantial. We identified development

GENERAL COMMUNICATION, INC. AND SUBSIDIARIES

Condensed Notes to Interim Consolidated Financial Statements

(Unaudited)

work, hardware, and software recorded as Construction in Progress through the first quarter of 2015, that may be applicable to our replacement customer billing solution, future internally developed software, and other system needs and therefore should remain capital assets. We considered the remaining capital expenditures for this billing system to have a fair value of $0 and recorded an impairment charge of $20.7 million during the nine months ended September 30, 2015, by recording an expense which is included in Software Impairment Charge in our Consolidated Statements of Operations.

During the nine months ended September 30, 2015, we reassessed our plans for our internally developed machine-to-machine billing system in our Wireline segment, and decided to no longer market this system to third parties. Accordingly we recognized an impairment of $0.5 million and $7.1 million during the three and nine months ended September 30, 2015, respectively, by recording an expense which is included in Software Impairment Charge in our Consolidated Statements of Operations.

During the third quarter of 2015, we evaluated user management software we purchased in 2014 and determined that we would not be able to use the software. Accordingly we recognized an impairment of $1.0 million during the three and nine months ended September 30, 2015 by recording an expense which is included in Software Impairment Charge in our Consolidated Statement of Operations.

Part I

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In the following discussion, General Communication, Inc. (“GCI”) and its direct and indirect subsidiaries are referred to as “we,” “us” and “our.”

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our interim consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including those related to the allowance for doubtful receivables, unbilled revenues, accrual of the Universal Service Fund (“USF”) high cost Remote area program support, share-based compensation, inventory at lower of cost or market, reserve for future customer credits, guarantees, liability for incurred but not reported medical insurance claims, valuation allowances for deferred income tax assets, depreciable and amortizable lives of assets, the carrying value of long-lived assets including goodwill, cable certificates, wireless licenses, and broadcast licenses,the fair value of equity method investments evaluated for impairment, our effective tax rate, imputed interest rate, purchase price allocations, deferred lease expense, asset retirement obligations, the accrual of cost of goods sold (exclusive of depreciation and amortization expense) ("Cost of Goods Sold"), depreciation, the derivative stock appreciation rights liability, and accrual of contingencies and litigation. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. See also our “Cautionary Statement Regarding Forward-Looking Statements.”

Update on Economic Conditions

Our business and operations depend upon economic conditions in Alaska. The economy of Alaska is dependent upon natural resource industries, and in particular oil exploration, development, and production, as well as both state and federal government spending, investment earnings and tourism. We believe the Alaska state economy continues to be stable despite declines in energy prices. The decline in energy prices has put significant pressure on the Alaska state government budget since the majority of its revenues come from the oil industry. The Alaska state government has significant reserves that we believe will help fund the state government for the next couple of years. A long-term decrease in oil prices, could have an adverse impact on the demand for our products and services and on our results of operations and financial condition.

General Overview

Through our focus on long-term results, acquisitions, and strategic capital investments, we strive to consistently grow our revenues and expand our margins. We have historically met our cash needs for operations and regular and maintenance capital expenditures through our cash flows from operating activities. Historically, cash requirements for significant acquisitions and major capital expenditures have been provided largely through our financing activities.

On February 2, 2015, we purchased Alaska Communications Systems Group, Inc.'s (“ACS”) interest in The Alaska Wireless Network, LLC ("AWN") and substantially all the assets of ACS and its affiliates related to ACS’s wireless operations (“Acquired ACS Assets”) (collectively the "Wireless Acquisition"). Under the terms of the agreement, we transfered to ACS a cash payment of $293.2 million excluding working capital adjustments and agreed to terminate or amend certain agreements related to the use of ACS network assets that were included as part of the original transaction that closed in July 2013. The Acquired ACS Assets include substantially all of ACS’s wireless subscriber assets, including subscriber contracts, and certain of ACS’s CDMA network assets, including fiber strands and associated cell site electronics and microwave facilities and associated electronics. We assumed from ACS post-closing liabilities of ACS and its affiliates under contracts assumed by us and liabilities with respect to the ownership by ACS of its equity interest in AWN to the extent accruing and related to the period after closing. All other liabilities were retained by ACS and its affiliates.

Results of Operations

The following table sets forth selected financial data as a percentage of total revenues for the periods indicated (underlying data rounded to the nearest thousand):



	Three Months Ended September 30,		Percentage Change¹ 2015	Nine Months Ended September 30,		Percentage Change¹ 2015
	2015	2014	vs. 2014	2015	2014	vs. 2014
Statements of Operations Data:
Revenues:
Wireless segment	31%	32%	5%	28%	31%	—%
Wireline segment	69%	68%	8%	72%	69%	12%
Total revenues	100%	100%	7%	100%	100%	8%
Selling, general and administrative expenses	32%	30%	14%	34%	31%	16%
Depreciation and amortization expense	17%	17%	8%	18%	19%	6%
Software impairment charge	1%	—%	---%	4%	—%	100%
Operating income	18%	20%	(8)%	12%	17%	(28)%
Other expense, net	8%	8%	8%	15%	8%	92%
Income (loss) before income taxes	10%	13%	(17)%	(3)%	9%	(135)%
Net income (loss)	7%	11%	(32)%	(2)%	8%	(132)%
Net income attributable to the non-controlling interests	—%	7%	(101)%	—%	5%	(99)%
Net income (loss) attributable to GCI	7%	4%	78%	(2)%	2%	(202)%

¹Percentage change in underlying data

We evaluate performance and allocate resources based on earnings 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 New Markets Tax Credit transactions, gains and impairment losses on equity and cost method investments, and other non-cash adjustments, plus imputed interest on financed devices (“Adjusted EBITDA”). Management believes that this measure is useful to investors and other users of our financial information in evaluating operating profitability as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected earnings before depreciation and amortization expense, net interest expense and income taxes (“EBITDA”) are used to estimate current or prospective enterprise value. See Note 7 in the accompanying "Condensed Notes to Interim Consolidated Financial Statements" included in Part I of this quarterly report on Form 10-Q for a reconciliation of consolidated Adjusted EBITDA, a non-GAAP financial measure, to consolidated income (loss) before income taxes.

Overview of Revenues and Cost of Goods Sold

Total revenues increased 7% from $240.7 million in the three months ended September 30, 2014 to $258.6 million in the same period in 2015. Total revenues increased 8% from $681.4 million in the nine months ended September 30, 2014 to $737.2 million in the same period in 2015. Revenue increased in both the Wireline and Wireless segments for the three months ended September 30, 2015 when compared to the same period in 2014. Revenue increased in our Wireline segment and decreased in our Wireless segment for the nine months ended September 30, 2015 compared to the same period in 2014. See the discussion below for more information by segment.

Total Cost of Goods Sold increased 8% from $76.9 million in the three months ended September 30, 2014 to $82.7 million in the same period in 2015. Total Cost of Goods Sold increased 7% from $221.1 million in the nine months ended September 30, 2014 to $236.7 million in the same period in 2015. Cost of Goods Sold decreased in our Wireless segment and increased in our Wireline segment for the three and nine months ended September 30, 2015 compared to the same periods in 2014. See the discussion below for more information by segment.

Wireless Segment Overview

Wireless segment revenue, Cost of Goods Sold, and Adjusted EBITDA for the three and nine months ended September 30, 2015 and 2014 are as follows (amounts in thousands):



	Three Months Ended September 30,			Percentage		Nine Months Ended September 30,		Percentage
	2015		2014	Change		2015	2014	Change
Revenue	$	80,424	76,398	5	%	207,568	208,312	—	%
Cost of Goods Sold	$	18,031	24,021	(25	)%	53,897	66,234	(19	)%
Adjusted EBITDA	$	57,404	47,279	21	%	140,518	125,475	12	%

Wireless Segment Revenues

The increase in revenue for the three months ended September 30, 2015 when compared to the same period in 2014 is primarily due to the following:


•	A $8.0 million increase in roaming revenue primarily due to increased traffic from our roaming partners and


•	A $1.9 million decrease in the contra-revenue wireless handset cash incentives to ACS for the sale of wireless handsets to their retail customers prior to the February 2, 2015 close of the Wireless Acquisition.

The increase is partially offset by a $6.9 million decrease in plan fee revenue primarily due to our transition to a fixed percentage allocation of plan fee revenue from the Wireline segment following the February 2, 2015 close of the Wireless Acquisition.

The decrease in revenue for the nine months ended September 30, 2015 when compared to the same period in 2014 is primarily due to a $18.9 million decrease in plan fee revenue due to our transition to a fixed percentage allocation of plan fee revenue from the Wireline segment following the February 2, 2015 close of the Wireless Acquisition.

The decrease is partially offset by the following:


•	A $10.7 million increase in roaming revenue primarily due to increased traffic from our roaming partners and


•	A $6.6 million decrease in the contra-revenue wireless handset cash incentives to ACS for the sale of wireless handsets to their retail customers prior to the February 2, 2015 close of the Wireless Acquisition.

Wireless Segment Cost of Goods Sold

The decrease in Cost of Goods Sold is primarily due to the following:


•	A $4.2 million decrease in distribution and capacity costs for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily because we were able to extend an agreement with a customer which resulted in the resolution of certain issues and the release of the related reserve and reduction of long distance traffic used by our wireless customers,


•	A $2.1 million and $7.6 million decrease in roaming costs for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, primarily due to better management of permanent roaming customers, and

•

A $4.3 million and $3.8 million decrease in wireless equipment costs for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively. During the three and nine months ended September 30, 2014, the Wireless segment gave a wireless equipment subsidy to the Wireline segment in accordance with the AWN agreements. Following the February 2, 2015 close of the Wireless Acquisition this subsidy was discontinued but the Wireless segment started recording a portion of the wireless equipment costs to encourage the Wireline segment to transition customers from our CDMA network to our GSM network which partially offset the decrease.

The decreases above are partially offset by a $1.1 million and $3.1 million increase in network maintenance costs for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively.

Wireless Segment Adjusted EBITDA

The increase in Adjusted EBITDA for the three and nine months ended September 30, 2015 when compared to the same periods in 2014 is primarily due to increased Revenues for the three months ended September 30, 2015 as described above in "Wireless Segment Revenues" and decreased Cost of Goods Sold as described above in “Wireless Segment Cost of Goods Sold” and in selling, general and administrative expenses for the three and nine months ended September 30, 2015.

Wireline Segment Overview

Our Wireline segment offers services and products under three major customer groups as follows:



		Customer Group
Wireline Segment Services and Products		Consumer	Business Services	Managed Broadband

Retail wireless		X	X

Data:
	Internet	X	X	X
	Data networks		X	X
	Managed services		X	X

Video		X	X

Voice:
	Long-distance	X	X	X
	Local access	X	X	X


•	Consumer – we offer a full range of retail wireless, data, video and voice services to residential customers.


•	Business Services - we offer a full range of retail wireless, data, video and voice services to businesses, governmental entities, educational institutions and wholesale data and voice services to common carrier customers.


•	Managed Broadband – we offer data and managed services to rural schools and health organizations and regulated voice services to residential and commercial customers in rural communities primarily in Southwest Alaska.

The components of Wireline segment revenue for the three and nine months ended September 30, 2015 and 2014 are as follows (amounts in thousands):



	Three Months Ended September 30,			Percentage		Nine Months Ended September 30,		Percentage
	2015		2014	Change		2015	2014	Change
Consumer
Wireless	$	19,451	7,989	143	%	56,566	21,840	159	%
Data	32,465		28,755	13	%	95,771	83,012	15	%
Video	28,483		27,896	2	%	86,629	82,016	6	%
Voice	7,420		7,972	(7	)%	22,950	24,696	(7	)%
Business Services
Wireless	2,036		834	144	%	6,077	2,368	157	%
Data	35,238		36,857	(4	)%	107,021	107,251	—	%
Video	4,476		10,432	(57	)%	13,511	23,191	(42	)%
Voice	10,316		11,657	(12	)%	31,502	34,757	(9	)%
Managed Broadband
Data	32,542		26,596	22	%	92,794	78,033	19	%
Voice	5,722		5,339	7	%	16,801	15,931	5	%
Total Wireline segment revenue	$	178,149	164,327	8	%	529,622	473,095	12	%

Wireline segment Cost of Goods Sold and Adjusted EBITDA for the three and nine months ended September 30, 2015 and 2014 are as follows (amounts in thousands):



	Three Months Ended September 30,			Percentage		Nine Months Ended September 30,		Percentage
	2015		2014	Change		2015	2014	Change
Wireline segment Cost of Goods Sold	$	64,686	52,880	22	%	182,844	154,823	18	%
Wireline segment Adjusted EBITDA	$	39,122	45,915	(15	)%	119,312	126,987	(6	)%

Selected key performance indicators for our Wireline segment follow:



	September 30,				Percentage
	2015		2014		Change
Consumer
Data:
Cable modem subscribers¹	124,300		117,000		6	%
Video:
Basic subscribers²	113,600		115,900		(2	)%
Digital programming tier subscribers³	59,500		64,200		(7	)%
HD/DVR converter boxes⁴	110,700		105,600		5	%
Homes passed	251,200		248,000		1	%
Video ARPU - quarter-to-date⁵	$	80.85	$	80.22	1	%
Video ARPU - year-to-date⁶	$	83.24	$	77.91	7	%
Voice:
Total local access lines in service⁷	51,000		55,900		(9	)%
Business Services
Data:
Cable modem subscribers¹	14,200		14,200		—	%
Voice:
Total local access lines in service⁷	47,100		47,400		(1	)%
Combined Consumer and Business Services
Wireless
Consumer Lifeline wireless lines in service⁸	28,100		25,600		10	%
Consumer prepaid wireless lines in service⁹	27,100		11,700		132	%
Consumer postpaid wireless lines in service¹⁰	146,700		91,000		61	%
Business Services postpaid wireless lines in service¹⁰	30,000		18,600		61	%
Total wireless lines in service	231,900		146,900		58	%
Wireless ARPU - quarter-to-date¹¹	$	44.24	$	50.87	(13	)%
Wireless ARPU - year-to-date¹²	$	46.60	$	49.93	(7	)%
Cable Modem ARPU - quarter-to-date¹³	$	84.87	$	80.20	6	%
Cable Modem ARPU - year-to-date¹⁴	$	84.27	$	77.48	9	%
¹A 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. Cable modem subscribers may also be video basic subscribers though basic video service is not required to receive cable modem service.
²A basic subscriber is defined as one basic tier of service delivered to an address or separate subunits thereof regardless of the number of outlets purchased.
³A digital programming tier subscriber is defined as one digital programming tier of service delivered to an address or separate subunits thereof regardless of the number of outlets or digital programming tiers purchased. Digital programming tier subscribers are a subset of basic subscribers.
⁴A high-definition/digital video recorder ("HD/DVR") converter box is defined as one box rented by a digital programming or basic tier subscriber. A digital programming or basic tier subscriber is not required to rent an HD/DVR converter box to receive service.



⁵Applicable average monthly video revenues divided by the average number of basic subscribers at the beginning and end of each month in the period ("Video ARPU") for the three months ended September 30, 2015 and 2014.
⁶ Video ARPU for the nine months ended September 30, 2015 and 2014.
⁷A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network.
⁸A Lifeline wireless line in service is defined as a revenue generating wireless device that is eligible for Lifeline support. The Universal Service Fund's Lifeline program is administered by the Universal Service Administrative Company and is designed to ensure that quality telecommunications services are available to low-income customers at affordable rates.
⁹ A prepaid wireless line in service is defined as a revenue generating wireless device where service is purchased in advance of use. The purchased credit is used to pay for wireless services at the point the service is accessed or consumed.
¹⁰A postpaid wireless line in service is defined as a revenue generating wireless device where service is provided by a prior arrangement with a subscriber and the subscriber is billed after the fact according to their use of wireless services at the end of each month.
¹¹Average monthly wireless revenues, excluding those from common carrier customers, divided by the average of wireless subscribers at the beginning and end of each month in the period ("Wireless ARPU") for the three months ended September 30, 2015 and 2014. Revenue used for this calculation includes Wireline segment - Consumer - Wireless, Wireline segment - Business Services - Wireless and wholesale wireless revenues earned from GCI retail subscribers included in the Wireless segment.
¹² The average of the monthly wireless revenues, excluding those from common carrier customers, divided by the number of wireless subscribers at the end of of each month for each of the months in the nine months ended September 30, 2015. Average monthly wireless revenues, excluding those from common carrier customers, divided by the average of wireless subscribers at the beginning and end of each month in the period for the nine months ended September 30, 2014. Revenue used for this calculation includes Wireline segment - Consumer - Wireless, Wireline segment - Business Services - Wireless and wholesale wireless revenues earned from GCI retail subscribers included in the Wireless segment.
¹³Applicable average monthly cable modem revenues divided by the average number of subscribers at the beginning and end of each month in the period ("Cable Modem ARPU") for the three months ended September 30, 2015 and 2014.
¹⁴ Cable Modem ARPU for the nine months ended September 30, 2015 and 2014.

Wireline Segment Revenues

Consumer

The items contributing to the increase in wireless revenue include:


•	A $3.2 million and $12.6 million increase in plan fee revenue in the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, primarily due to the acquisition of ACS' wireless subscribers following the February 2, 2015 close of the Wireless Acquisition, and

•

A $8.1 million and $20.1 million increase in equipment sales revenue in the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, due to an increase in the number of financed devices. In late 2014 we began encouraging our customers to purchase wireless devices through our financing program instead of subsidizing their device purchases. We offer a discount on the monthly plan fee for customers who choose to finance their device rather than buying a subsidized device.

The increase in data revenue is primarily due to a $5.0 million or 20% and $14.4 million or 20% increase in cable modem revenue for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, due to an increase in the number of subscribers and our subscribers’ selection of plans that offer higher speeds and higher included usage amounts.

Business Services

The decrease in video revenue for the three and nine months ended September 30, 2015 when compared to the same periods in 2014 is primarily due to a decrease in advertising after the completion of the latest election cycle.

Managed Broadband

The increase in data revenue is primarily due to an increase in monthly contract revenue due to increased data network capacity purchased by our existing ConnectMD^® and SchoolAccess^® customers.

Wireline Segment Cost of Goods Sold

The items contributing to the increase in Wireline segment Cost of Goods Sold include:


•	A $0.8 million or 5% and $5.0 million or 10% increase in video Cost of Goods Sold for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, primarily due to increased rates paid to programmers partially offset by a decrease in basic video subscribers,

•

A $6.6 million or 107% and $16.5 million or 93% increase in wireless Cost of Goods Sold for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, primarily due to an increase in the number of handsets sold and a change in the allocation between the Wireline and Wireless segments following the February 2, 2015 close of the Wireless Acquisition. During the three and nine months ended September 30, 2014, the Wireline segment received a wireless equipment subsidy from the Wireless segment in accordance with the AWN agreements. Following the close of the Wireless Acquisition this subsidy was discontinued except the Wireless segment started recording a portion of the wireless equipment costs to encourage the Wireline segment to transition customers from our CDMA network to our GSM network which partially offset the increase, and


•	A $2.5 million or 55% and $4.9 million or 38% increase in the costs to provide services for Rural Health and SchoolAccess customers for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively.

Wireline Segment Adjusted EBITDA

The decrease in Adjusted EBITDA for the three and nine months ended September 30, 2015 when compared to the same periods in 2014 is primarily due to increased Cost of Goods Sold as described above in "Wireline Segment Cost of Goods Sold" and in selling, general and administrative expense for the three and nine months ended September 30, 2015. The decrease is partially offset by an increase in revenues as described above in "Wireline Segment Revenues."

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 14% to $82.7 million and 16% to $249.6 million for the three and nine months ended September 30, 2015, respectively. Items contributing to the increase include:


•	A $4.0 million and $16.9 million increase in costs related to the acquisition of ACS' wireless subscribers and its non-controlling interest in AWN for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively,


•	A $4.1 million and $14.0 million increase in labor and health insurance costs for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively,


•	A $1.7 million and $3.8 million increase in contract labor costs for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively,


•	A $2.3 million increase in inventory adjustments for the nine months ended September 30, 2015 when compared to the same period in 2014, primarily due to the write-off of obsolete wireless handsets,


•	A $0.5 million and $2.0 million increase in share-based compensation expense for the three and nine months ended September 30, 2015, when compared to the same periods in 2014, respectively, and


•	A $0.7 million and $2.2 million increase in bad debt expense for the three and nine months ended September 30, 2015 when compared to the same periods in 2014.

As a percentage of total revenues, selling, general and administrative expenses increased from 30% and 31% for the three and nine months ended September 30, 2014, respectively, to 32% and 34% for the three and nine months ended September 30, 2015, respectively. The increase in selling, general, and administrative expenses as a percentage of total revenues is primarily due to the costs related to the acquisition of ACS' wireless subscribers and its non-controlling interest in AWN.

Depreciation and Amortization Expense

Depreciation and amortization expense increased $3.5 million to $45.2 million and $7.7 million to $135.6 million in the three and nine months ended September 30, 2015 compared to the same periods in 2014, respectively. The increases are primarily due to new assets placed in service in the last three months of 2014 and in the first nine months of 2015, partially offset by assets which became fully depreciated during the last three months of 2014 and in the first nine months of 2015.

Software Impairment Charge

Software impairment charge increased $2.6 million and $29.8 million in the three and nine months ended September 30, 2015 when compared to the same periods in 2014 primarily due to an impairment charge as discussed below.

During the years ended December 31, 2013 and 2014, we internally developed computer software to replace our wireless, Internet, video, local service, and long distance customer billing systems. During the first quarter of 2015, we completed a detailed assessment of our progress to date and determined it was no longer probable that the computer software being developed would be completed and placed in service. Our assessment concluded that the cost of continuing the development would be much higher than originally estimated, and the timing and scope risks were substantial. We identified development work, hardware, and software recorded as Construction in Progress through the first quarter of 2015, that may be applicable to our replacement customer billing solution, future internally developed software, and other system needs and therefore should remain capital assets. We considered the remaining capital expenditures for this billing system to have a fair value of $0 and recorded an impairment charge of $20.7 million during the nine months ended September 30, 2015, by recording an expense which is included in Software Impairment Charge in our Consolidated Statements of Operations. We are in the process of identifying an established packaged customer billing solution.

During the first quarter of 2015, we reassessed our plans for our internally developed machine-to-machine billing system and decided to no longer market this system to third parties. Accordingly we recognized an impairment of $0.5 million and $7.1 million during the three and nine months ended September 30, 2015, respectively, by recording an expense which is included in Software Impairment Charge in our Consolidated Statements of Operations.

Other Expense, Net

Other expense, net of other income, increased $1.4 million to $19.9 million and $51.4 million to $107.4 million in the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively. Items contributing to the change include:


•	A $27.7 million loss on extinguishment of debt for the nine months ended September 30, 2015, due to the retirement of our 2019 Notes (please see Part I - Item 2 - "Liquidity and Capital Resources" for additional information),


•	A $12.6 million impairment charge for the nine months ended September 30, 2015 recorded to reflect an other than temporary decline in fair value for one of our equity investments,


•	A $4.7 million gain for the nine months ended September 30, 2015 recorded upon the sale of one of our cost method investments,


•	A $5.0 million unrealized loss for the nine months ended September 30, 2015 recorded for a derivative instrument where we issued 3.0 million stock appreciation rights to an affiliate of Searchlight Capital, L.P. ("Searchlight"),


•	A $3.2 million and $10.2 million increase in interest expense attributable to increased borrowing on our Amended Senior Credit Facility for the three and nine months ended September 30, 2015 when compared to the same periods in 2014, respectively, and


•	A $2.6 million net loss for the nine months ended September 30, 2015, from adjusting to fair value the assets included in the consideration transfered in the Wireless Acquisition and adjusting to fair value amendments to certain agreements related to the right to use ACS network assets.

Income Tax (Expense) Benefit

Income tax (expense) benefit totaled $(8.1) million and $5.0 million in the three and nine months ended September 30, 2015, respectively. Our effective income tax rate was 32% and 23% in the three and nine months ended September 30, 2015, respectively. Income tax expense totaled $5.1 million and $8.6 million and our effective income tax rate was 16% and 14% in the three and nine months ended September 30, 2014, respectively. Our effective income tax rate was lower in 2014 due to the inclusion of income attributable to the non-controlling interest in AWN in income before income taxes and the exclusion of income taxes on income attributable to the non-controlling interest in AWN. We completed the Wireless Acquisition on February 2, 2015, after which ACS no longer has a non-controlling interest in AWN.

At September 30, 2015, we have income tax net operating loss carryforwards of $284.9 million that will begin expiring in 2020 if not utilized, and alternative minimum tax credit carryforwards of $1.7 million available to offset regular income taxes payable in future years.

We have recorded deferred tax assets of $117.1 million associated with income tax net operating losses that were generated from 2000 to 2014 and that expire from 2020 to 2034, respectively, and with charitable contributions that were converted to net operating losses in 2004 through 2007, 2013, and 2014 and that expire in 2024 through 2027, 2033, and 2034, respectively.

Tax benefits associated with recorded deferred tax assets are considered to be more likely than not realizable through future reversals of existing taxable temporary differences and future taxable income exclusive of reversing temporary differences and carryforwards. The amount of deferred tax assets considered realizable, however, could be reduced if estimates of future taxable income during the carryforward period are reduced which would result in additional income tax expense. We estimate that our effective annual income tax expense rate for financial statement purposes will be 20% to 25% in the year ending December 31, 2015.

Liquidity and Capital Resources

Our principal sources of current liquidity are cash and cash equivalents. We believe, but can provide no assurances, that we will be able to meet our current and long-term liquidity, capital requirements and fixed charges through our cash flows from operating activities, existing cash, cash equivalents, and credit facilities, and other external financing and equity sources. Should operating cash flows be insufficient to support additional borrowings and principal payments scheduled under our existing credit facilities, capital expenditures will likely be reduced, which would likely reduce future revenues.

As discussed in the General Overview section of this Item 2, on February 2, 2015, we completed the Wireless Acquisition to purchase ACS' wireless subscriber base and its one-third ownership interest in AWN for $293.2 million excluding working capital adjustments and the termination or amendment of certain agreements related to the use of ACS network assets that were included as part of the original transaction that closed in July 2013. Following the close of the transaction, AWN is our wholly owned subsidiary and we are entitled to 100% of the future cash flows from AWN.

To fund the purchase from ACS, on February 2, 2015, our wholly owned subsidiary, GCI Holdings, Inc., entered into a Fourth Amended and Restated Credit and Guarantee Agreement with Credit Agricole Corporate and Investment Bank, as administrative agent, that included a $275.0 million Term B loan ("Amended Senior Credit Facility"). The Amended Senior Credit Facility was subsequently amended on August 3, 2015 ("First Amendment"). The interest rate under the Term B loan is London Interbank Offered Rate (“LIBOR”) plus 3.25%, with a 0.75% LIBOR floor. The Term B loan will mature on February 2, 2022 or December 3, 2020, if our Senior Notes due 2021 are not refinanced prior to such date. We also sold an unsecured promissory note to Searchlight in the principal amount of $75.0 million that will mature on February 2, 2023 and will bear interest at a rate of 7.5% per year ("Searchlight Note"). A portion of the proceeds from the Searchlight Note were used to finance the Wireless Acquisition and the remainder was used for general corporate purposes. Additionally, we entered into a stock appreciation rights agreement pursuant to which we issued to Searchlight three million stock appreciation rights which entitles Searchlight to receive, upon exercise, an amount payable at our election in either cash or shares of GCI's Class A common stock equal in value to the excess of the fair market value of a share of GCI Class A common stock on the date of exercise over the price of $13.00.

On April 1 2015, we closed on the issuance of $450.0 million of new 6.875% Senior Notes due 2025 at an issue price of 99.105% issued by our wholly owned subsidiary, GCI, Inc. The net proceeds of the offering were used to retire our existing 2019 Notes (see Note 6(b) of our December 31, 2014 annual report on Form 10-K). We paid closing costs totaling $7.9 million in connection with the offering, which were recorded as deferred loan costs and will be amortized over the term of the 2025 Notes. We recorded a $27.7 million loss on extinguishment of debt for the nine months ended September 30, 2015.

While our short-term and long-term financing abilities are believed to be adequate as a supplement to internally generated cash flows to fund capital expenditures and acquisitions as opportunities arise, turmoil in the global financial markets may negatively impact our ability to further access the capital markets in a timely manner and on attractive terms, which may have a negative impact on our ability to grow our business.

We monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on safety of principal and secondarily on maximizing yield on those funds.

Our net cash flows provided by and (used for) operating, investing and financing activities, as reflected in the Consolidated Statements of Cash Flows, are summarized as follows (amounts in thousands):



	Nine Months Ended September 30,
	2015			2014
Operating activities	$	226,510		220,217
Investing activities	(140,642		)	(148,629	)
Financing activities	(41,581		)	(81,095	)
Net increase (decrease) in cash and cash equivalents	$	44,287		(9,507	)

Investing Activities

Net cash used in investing activities during the nine months ended September 30, 2015, consists primarily of cash paid for capital expenditures. Net cash used in investing activities during the nine months ended September 30, 2014, consists primarily of cash paid for capital expenditures and an investment of $15.0 million for a 39% interest in a next generation carrier-class communications services firm. Our most significant recurring investing activity has been capital expenditures and we expect that this will continue in the future. A significant portion of our capital expenditures is based on the level of customer growth and the technology being deployed.

Our cash expenditures for property and equipment, including construction in progress, totaled $134.6 million and $124.9 million during the nine months ended September 30, 2015 and 2014, respectively. Depending on available opportunities and the amount of cash flow we generate during 2015, we expect our 2015 core capital expenditures to total approximately $170.0 million. This estimate is based on purchases in 2015 regardless of the timing of cash payments.

Financing Activities

Net cash used for financing activities for the nine months ended September 30, 2015, consists primarily of borrowings on our Amended Senior Credit Facility and Searchlight Note to fund the Wireless Acquisition partially offset by our payment to complete the Wireless Acquisition, costs paid to retire our 2019 Notes, costs paid for the 2025 Notes, and repurchases of our stock. Net cash used for financing activities for the nine months ended September 30, 2014, consists primarily of repayments of our Senior Credit Facility and distributions paid to ACS from AWN partially offset by proceeds from borrowing on our Senior Credit Facility.

Proceeds from borrowings fluctuate from year to year based on our liquidity needs. We may use excess cash to make optional repayments on our debt or repurchase our common stock depending on various factors, such as market conditions.

Available Borrowings Under Amended Senior Credit Facility

Our Amended Senior Credit Facility includes a $240.0 million term loan, a $275.0 million Term B loan, and a $150.0 million revolving credit facility with a $25.0 million sublimit for letters of credit. We had $240.0 million and $273.6 million outstanding under the term loan and Term B loan, respectively, at September 30, 2015. Under the revolving portion of the Amended Senior Credit Facility we have $22.5 million of letters of credit outstanding, which leaves $127.5 million available for borrowing as of September 30, 2015. A total of $513.6 million is outstanding as of September 30, 2015.

Debt Covenants

We are subject to covenants and restrictions applicable to our $325.0 million in aggregate principal amount of 6.75% Senior Notes due 2021, our $450.0 million in aggregate principal amount of 6.875% Senior Notes due 2025, and our Amended Senior Credit Facility. We are in compliance with the covenants, and we believe that neither the covenants nor the restrictions in our indentures or loan documents will limit our ability to operate our business.

Share Repurchases

During the nine months ended September 30, 2015 and 2014, we repurchased 2.8 million and 0.1 million shares, respectively, of our Class A common stock under the stock buyback program at a cost of $43.2 million and $1.3

million, respectively. The stock was constructively retired as of September 30, 2015. Under this program we are currently authorized to make up to $94.3 million of repurchases as of September 30, 2015.

We expect to continue the repurchases for an indefinite period dependent on leverage, liquidity, company performance, and market conditions and subject to continued oversight by GCI’s Board of Directors. The open market repurchases have and will continue to comply with the restrictions of SEC Rule 10b-18.

Critical Accounting Policies and Estimates

Our accounting and reporting policies comply with GAAP. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. The financial position and results of operations can be affected by these estimates and assumptions, which are integral to understanding reported results. Critical accounting policies are those policies that management believes are the most important to the portrayal of our financial condition and results, and require management to make estimates that are difficult, subjective or complex. Most accounting policies are not considered by management to be critical accounting policies. Several factors are considered in determining whether or not a policy is critical in the preparation of financial statements. These factors include, among other things, whether the estimates are significant to the financial statements, the nature of the estimates, the ability to readily validate the estimates with other information including third parties or available prices, and sensitivity of the estimates to changes in economic conditions and whether alternative accounting methods may be utilized under GAAP. For all of these policies, management cautions that future events rarely develop exactly as forecast, and the best estimates routinely require adjustment. Management has discussed the development and the selection of critical accounting policies with our Audit Committee.

Those policies considered to be critical accounting policies for 2015 are revenue recognition related to revenues from the Remote high cost, rural health, and schools and libraries USF programs, the allowance for doubtful receivables, impairment and useful lives of intangible assets, and the valuation allowance for net operating loss deferred tax assets. A complete discussion of our critical accounting policies can be found in Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our December 31, 2014 annual report on Form 10-K.

Other significant accounting policies, not involving the same level of measurement uncertainties as those discussed above, are nevertheless important to an understanding of the financial statements. A complete discussion of our significant accounting policies can be found in Note 1 in the accompanying “Condensed Notes to Interim Consolidated Financial Statements” and in Part IV of our annual report on Form 10-K for the fiscal year ended December 31, 2014.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes and adjustments to the fair value of our derivative stock appreciation rights liability. Market risk is the potential loss arising from adverse changes in market rates and prices. We do not hold or issue financial instruments for trading purposes.

Interest Rate Risk

Our Amended Senior Credit Facility carries interest rate risk. Our Amended Senior Credit Facility consists of a term loan, Term B loan, and revolving credit facility. Amounts borrowed under the term loan bear interest at LIBOR plus 2.75% or less depending upon our Total Leverage Ratio (as defined in the Amended Senior Credit Facility agreement). Amounts borrowed under the Term B loan bear interest at LIBOR plus 3.25%. Should the LIBOR rate change, our interest expense will increase or decrease accordingly. As of September 30, 2015, we have borrowed $523.0 million subject to interest rate risk. On this amount, each 1% increase in the LIBOR interest rate would result in $5.2 million of additional gross interest cost on an annualized basis. All of our other material borrowings have a fixed interest rate.

Other Market Risk

As our derivative stock appreciation rights are subject to fair value liability accounting, we revalue the instrument at each reporting date and recognize changes in the fair value of the derivative liability as a component of Other Income (Expense) included in our Consolidated Statements of Operations. The earnings effect of the fair value adjustment at each reporting date is sensitive to changes in our stock price volatility. At September 30, 2015, a 1% increase in our stock price volatility used to determine the fair value of our stock appreciation rights would result in recognition of $0.4 million of additional derivative instrument unrealized loss.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 (“Exchange Act”) is recorded, processed, summarized, accumulated and communicated to our management, including our principal executive and financial officers, to allow timely decisions regarding required financial disclosure, and reported as specified in the SEC’s rules and forms. As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Exchange Act Rule 13a - 15(e)) under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based on that evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and procedures were ineffective as of September 30, 2015.

Our management concluded that as of September 30, 2015, we did not maintain effective internal control over financial reporting due to a material weakness associated with management’s review of significant and unusual transactions effecting the cash flow statement. See note 1(o) in the accompanying “Condensed Notes to Interim Consolidated Financial Statements” included in Part I of the quarterly report on Form 10-Q for further discussion of this immaterial error correction.

The certifications attached as Exhibits 31 and 32 to this report should be read in conjunction with the disclosures set forth herein.

Management's Plan for Remediation of Material Weakness

We identified the misclassification error when we performed a classification review specific to the cash flow statement during the preparation of our third quarter of 2015 Form 10-Q. Prior to the third quarter of 2015 we had a review process over significant and unusual transactions but this process did not specifically address the cash flow statement. During the third quarter of 2015 we strengthened our internal controls over the preparation of the cash flow statement by including a review of cash flow statement classifications in our accounting memos on significant and unusual transactions. During the fourth quarter of 2015 we will continue to include a review of cash flow statement classifications in our accounting memos on significant and unusual transactions.

Changes in Internal Control Over Financial Reporting

In our December 31, 2014 annual report on Form 10-K we reported that we did not maintain effective internal control over financial reporting due to a material weakness associated with inadequately designed internal controls in our financial reporting process related to the calculation of our income tax expense during all quarters in 2014. During the first quarter of 2015, we remediated our material weakness by strengthening the design and operation of our controls over the initial calculation and the review and approval of the calculation of our income tax expense. We reinforced to our staff that a heightened sense of awareness is needed during the initial preparation, as well as to any subsequent changes, and during analysis of the result.

Except as described above there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) identified in connection with the evaluation of our controls performed during the quarter ended September 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On February 2, 2015, we purchased ACS’s wireless subscribers. As a result of this transaction, we are currently in the process of integrating new income streams. We are evaluating changes to processes, information technology systems and other components of internal controls over financial reporting as part of our ongoing integration activities, and as a result, controls will be changed as needed.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Internal control over financial reporting has inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements will not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.

We may enhance, modify, and supplement internal controls and disclosure controls and procedures based on experience.

PART II. OTHER INFORMATION

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds


(a)	Not applicable.


(b)	Not applicable.


(c)	The following table provides information about repurchases of shares of our Class A common stock during the quarter ended September 30, 2015:



	(a) Total Number of Shares Purchased¹	(b) Average Price Paid per Share		(c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs²	(d) Maximum Number (or approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs³
July 1, 2015 to July 31, 2015	52,149	$	17.33	52,149	$	100,743,106
August 1, 2015 to August 31, 2015	217,401	$	16.90	213,730	$	97,137,512
September 1, 2015 to September 30, 2015	164,476	$	17.06	164,476	$	94,331,353
Total	434,026
¹Consists of 430,355 shares from open market purchases made under our publicly announced repurchase plan and 3,671 shares from private purchases made to settle the minimum statutory tax-withholding requirements pursuant to restricted stock award vesting.
²The repurchase plan was publicly announced on November 3, 2004. Our plan does not have an expiration date, however transactions pursuant to the plan are subject to periodic approval by our Board of Directors. We expect to continue the repurchases for an indefinite period dependent on leverage, liquidity, company performance, market conditions and subject to continued oversight by our Board of Directors.
³The total amount approved by our Board of Directors for repurchase under our publicly announced repurchase plan was $373.7 million through September 30, 2015, consisting of $358.4 million through December 31, 2014, and an additional $15.3 million during the nine months ended September 30, 2015. We have made total repurchases under the program of $279.4 million through September 30, 2015. If stock repurchases are less than the total approved quarterly amount the difference may be carried forward and used to repurchase additional shares in future quarters, subject to board approval.

Item 6. Exhibits

Listed below are the exhibits that are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):



Exhibit No.	Description
4.1	Amended and Restated Securityholder Agreement by and between General Communication, Inc. and Searchlight ALX, LTD dated as of July 13, 2015 *
4.2	Unsecured Promissory Note Due 2023 entered into as of July 13, 2015 by and between General Communication, Inc. and Searchlight ALX, LTD. *
4.3	Amended and Restated Stock Appreciation Rights Agreement entered into as of July 13, 2015 by and between General Communication, Inc. and Searchlight ALX, LTD. *
10.1	Twenty-Third Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication, Corp. dated July 27, 2015 # *
10.2	Twenty-Fourth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication, Corp. dated September 2, 2015 # *
31.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by our President and Director *
31.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by our Senior Vice President, Chief Financial Officer and Secretary *
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by our President and Director *
32.2	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by our Senior Vice President, Chief Financial Officer and Secretary *
101	The following materials from General Communication, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Stockholders' Equity; (iv) Consolidated Statements of Cash Flows; and (v) Condensed Notes to Interim Consolidated Financial Statements *

#	CONFIDENTIAL PORTION has been omitted pursuant to a request for confidential treatment by us to, and the material has been separately filed with, the SEC. Each omitted Confidential Portion is marked by three asterisks.
*	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GENERAL COMMUNICATION, INC.



Signature	Title	Date


/s/ Ronald A. Duncan	President and Director	November 5, 2015
Ronald A. Duncan	(Principal Executive Officer)

/s/ Peter J. Pounds	Senior Vice President, Chief Financial	November 5, 2015
Peter J. Pounds	Officer and Secretary (Principal Financial Officer)

/s/ Lynda L. Tarbath	Vice President, Chief Accounting	November 5, 2015
Lynda L. Tarbath	Officer (Principal Accounting Officer)



Date of Early Cash-Out Notice or Date of Change of Control Notice	Guaranteed Minimum Value
Date of this Agreement	$13.00
On the first anniversary of the date of this Agreement	$14.56
On the second anniversary of the date of this Agreement	$16.34



On the third anniversary of the date of this Agreement	$18.36
On the fourth anniversary of the date of this Agreement	$20.66
On the fifth anniversary of the date of this Agreement	$23.28
On the sixth anniversary of the date of this Agreement	$26.25
On the seventh anniversary of the date of this Agreement	$29.64
On the eighth anniversary of the date of this Agreement	$33.49
On a date that is in between the date of this Agreement and the eighth anniversary of this Agreement (not including the date that is the first, second, third, fourth, fifth, sixth, seventh or eighth anniversary of the date of this Agreement)	An amount equal to: A + ((B – A) * (C/365)) Where: A = the Guaranteed Minimum Value of the first anniversary immediately preceding the date of the Early Cash-Out Notice or the Change of Control Notice (either such notice, the “Notice”) B = the Guaranteed Minimum Value of the first anniversary immediately following the date of the Notice C = the number of days between the first anniversary immediately preceding the date of the Notice



Number of SARs Before Exercise of PIK Payment Option or Adjustment Event	Date of Exercise of PIK Payment Option or Applicable Adjustment Event	Number of SARs Issued In Connection With Exercise of PIK Payment Option Or Adjustment Event	Number of SARS After Exercise of PIK Payment Option or Adjustment Event	Notation Made By
3,000,000



INTELSAT CORPORATION		GCI COMMUNICATION CORP.

By:	/s/ Stephen A. Chernow	By:	/s/ Jimmy R. Sipes

Name:	Stephen A. Chernow	Name:	Jimmy R. Sipes

Title:	VP & Deputy General Counsel	Title:	VP Network Services & Chief Engineer

Date:	July 24, 2015	Date:	July 27, 2015



SVO #	****/ Transponder No	Transponder Type	Capacity Term	**** Fee
	****	****	** – **	US$**
	****	****	** – **	US$**
	****	****	** – **	US$**** *
	****	****	** – **	US$**
	****	****	** – **	US$**
	****	****	** – **	US$**
	****	****	** – **	US$**** *
	****	****	** – **	US$**
	****	****	** – **	US$**** *
	****	****	** – **	US$**** *
	****	****	** – **	US$**** *
	****	****	** – **	US$**
	****	****	** – **	US$**** *
	****	****	** – **	US$**** *
	****	****	** – **	US$**** *
	****	****	** – **	US$** *
	****	****	** – **	US$** *
	****	****	** – **	US$** *
	****	****	** – **	US$** *
	****	****	** – **	US$** *
	****	****	** – -- **	US$** US$**
	****	****	** – **	US$** **
	****	****	** – **	US$**


By:	/s/ Eric Zinterhofer Name: Eric Zinterhofer Title: Director


(a)	any failure on the part of Maker to make any principal payment under this Note when due, whether by acceleration or otherwise;


(c)	any failure on the part of Maker to keep or perform any of the terms or provisions (other than payment) of this Note and the continuation of such failure for 30 days after notice of such failure by Payee to Maker;


(d)	Maker becomes insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, or Maker commences any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or similar law or statute;


(e)	a proceeding shall be commenced against Maker under any bankruptcy, reorganization, arrangement, readjustment of debt, moratorium or similar law or statute, and relief is ordered against it, or the proceeding is controverted but is not dismissed within 60 days after commencement thereof;


(f)	Maker consents to or suffers the appointment of a receiver, trustee or custodian to any substantial part of its assets that is not vacated within 30 days;


(g)	any representation or warranty made by the Maker herein or in the Securityholder Agreement shall prove to have been false or misleading in any material respect when so made; or



	General Communication, Inc.
	By: _/s/ Peter Pounds_____________ Name: Peter Pounds Title: SVP and CFO



	Searchlight ALX, LTD
	By: _/s/ Eric Zinterhofer__________ Name: Eric Zinterhofer Title: Director


1.	Except as specifically provided herein, all terms and provisions of the Agreement shall remain in full force and effect.


2.	Section 1.1, Description of Capacity. This Section shall be deleted and replaced with the following:


3.	Article 2, Capacity Term. The Capacity Term for the ** Transponder shall commence and continue until . In addition the Capacity Term for transponder shall be **.


4.	Section 3.1, ** Fee. Customer’s ** Fee shall be as set forth in Appendix A attached hereto.


4.	Except as specifically set forth in this Amendment, all terms and conditions of the Agreement remain in full force and effect.


1.	I have reviewed this quarterly report on Form 10-Q of General Communication, Inc. for the period ended September 30, 2015;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;


c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


(1)	The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Long-Term Debt (Details) - USD ($)			3 Months Ended		9 Months Ended
Long-Term Debt (Details) - USD ($)	Apr. 01, 2015	Feb. 02, 2015	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Debt Instrument [Line Items]
Loan fees and other expenses					$ 13,979,000	$ 0
Loss on extinguishment of debt			$ 0	$ 0	27,700,000	0
Payment of debt call premiums					$ 20,244,000	$ 0
Medium-term Notes [Member] \| Amended Senior Credit Facility [Member]
Debt Instrument [Line Items]
Debt face amount		$ 275,000,000.0
Percentage of principal payable		0.25%
Loan fees and other expenses		$ 6,200,000
Medium-term Notes [Member] \| Amended Senior Credit Facility [Member] \| London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument [Line Items]
Spread on variable rate		3.25%
Interest rate floor		0.75%
Unsecured Debt [Member] \| Searchlight ALX, LP Promissory Note [Member]
Debt Instrument [Line Items]
Debt face amount		$ 75,000,000.0
Debt stated percentage		7.50%
Redemption price (percentage)					50.00%
Debt issuance price, percent		100.00%
Unamortized discount		$ 21,700,000
Senior Notes [Member] \| Senior Notes 6.875 Percent due 2025 [Member]
Debt Instrument [Line Items]
Debt face amount	$ 450,000,000
Debt stated percentage	6.875%
Debt issuance price, percent	99.105%
Repayments of debt	$ 425,000,000
Purchase price of debt in occurance of change of control, percentage of principal amount	101.00%
Purchase price in event of an asset sale, percentage of principal	100.00%
Issuance cost	$ 7,900,000
Senior Notes [Member] \| Senior Notes Due 2021
Debt Instrument [Line Items]
Debt stated percentage	6.75%
Senior Notes [Member] \| Senior Notes Due 2019
Debt Instrument [Line Items]
Loss on extinguishment of debt					$ 27,700,000
Payment of debt call premiums					20,200,000
Write off of deferred debt issuance costs					5,400,000
Write off of debt discount					$ 2,100,000
Common Stock - Class A [Member] \| Stock Appreciation Rights (SARs) [Member]
Debt Instrument [Line Items]
Stock Appreciation Rights		3,000,000
Stock Appreciation Rights issued for interest capitalization (percent)		4.00%
Exercise price of stock appreciation rights (per share)		$ 13.00
Common Stock - Class A [Member] \| Stock Appreciation Rights (SARs) [Member] \| Searchlight ALX, LP Promissory Note [Member]
Debt Instrument [Line Items]
Stock Appreciation Rights		3,000,000
Exercise price of stock appreciation rights (per share)		$ 13.00

Stockholders' Equity (Summary of nonvested restricted stock award activity) (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Shares (in thousands)
Nonvested beginning balance (shares)	1,744
Granted (shares)	647
Vested (shares)	(342)
Forfeited (shares)	(7)
Nonvested ending balance (shares)	2,042
Weighted Average Grant Date Fair Value
Nonvested, Beginning (USD per share) \| $ / shares	$ 9.11
Granted (USD per share) \| $ / shares	14.70
Vested (USD per share) \| $ / shares	10.27
Forfeited (USD per share) \| $ / shares	$ 12.54

Consolidated Statements of Cash Flows Supplemental Disclosures (Changes in operating assets and liabilities) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Supplemental Cash Flow Elements [Abstract]
Decrease in accounts receivable, net	$ 16,916	$ 5,185
Increase in prepaid expenses	(813)	(3,278)
Decrease in inventories	6,957	2,449
Decrease in other current assets	17	135
Increase in other assets	(7,886)	(511)
Decrease in accounts payable	(8,095)	(2,365)
Increase in deferred revenues	1,532	4,198
Decrease in accrued payroll and payroll related obligations	(3,783)	(246)
Increase (decrease) in accrued liabilities	2,505	(722)
Increase in accrued interest	20,035	14,205
Decrease in subscriber deposits	(590)	(160)
Decrease in long-term deferred revenue	(6,437)	(3,108)
Increase in components of other long-term liabilities	230	1,185
Total change in operating assets and liabilities	$ 20,588	$ 16,967

Business and Summary of Significant Accounting Principles (Narratives) (Details) shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($) shares	Sep. 30, 2014 USD ($) shares	Sep. 30, 2015 USD ($) entity shares	Sep. 30, 2014 USD ($) shares	Feb. 02, 2015	Dec. 31, 2014 USD ($)
Business
Year founded			1979
Principles of Consolidation
Number of VIEs \| entity			4
Common Stock
Stock repurchased during period, value			$ 44,324,000	$ 1,972,000
Accounts Receivable and Allowance for Doubtful Receivables
Period past due for write-off of trade accounts receivable			120 days
Revenue Recognition
Revenues	$ 258,573,000	$ 240,725,000	$ 737,190,000	681,407,000
Receivables	189,039,000		189,039,000			$ 212,441,000
Total High Cost Support Program [Member]
Revenue Recognition
Revenues	16,500,000	$ 16,500,000	50,600,000	$ 50,000,000
Receivables	46,100,000		$ 46,100,000
Common Stock - Class A [Member]
Common Stock
Stock repurchased during period, shares \| shares			2,761	148
Stock repurchased during period, value			$ 19,062,000	$ 1,972,000
Stock Buyback Program [Member]
Common Stock
Authorized amount, repurchase of stock	5,000,000
Stock repurchase program, remaining value authorized to be repurchased	$ 94,300,000.0		$ 94,300,000.0
Stock Buyback Program [Member] \| Common Stock - Class A [Member]
Common Stock
Stock repurchased during period, shares \| shares	400	100	2,800	100
Stock repurchased during period, value	$ 7,300,000	$ 1,300,000	$ 43,200,000	$ 1,300,000
ACS Wireless [Member]
Principles of Consolidation
Voting interests acquired					33.33%
Interests acquired from noncontrolling interest					66.67%