GENERAL COMMUNICATION, INC. | ||
(Exact name of registrant as specified in its charter) |
State of Alaska | 92-0072737 | |||
(State or other jurisdiction of incorporation or organization) | (I.R.S Employer Identification No.) | |||
2550 Denali Street Suite 1000 Anchorage, Alaska | 99503 | |||
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ☐ | Accelerated filer ☒ |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☐ |
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Year Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Total Wireless segment revenues1 | $ | 208,109 | 267,676 | 269,977 | |||||
1 See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 12 included in “Part II — Item 8 — Consolidated Financial Statements and Supplementary Data” for more information regarding the financial performance of our Wireless segment. |
Year Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Total Wireline segment revenues1 | $ | 725,703 | 710,858 | 640,221 | |||||
1 See “Part II — Item 7 — Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 12 included in “Part II — Item 8 — Consolidated Financial Statements and Supplementary Data” for more information regarding the financial performance of our Wireline segment. |
Customer Group | |||
Wireline Segment Services and Products | Consumer | Business | |
Retail wireless | X | X | |
Data: | |||
Internet | X | X | |
Data networks | X | ||
Managed services | X | ||
Video | X | X | |
Voice: | |||
Long-distance | X | X | |
Local access | 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 wireless, data, video, voice, and managed services to businesses, governmental entities, and educational institutions and wholesale data and voice services to common carrier customers and regulated voice services to residential and commercial customers in rural communities primarily in Southwest Alaska. |
• | How radio spectrum is used by licensees; |
• | The nature of the services that licensees may offer and how such services may be offered; and |
• | Resolution of issues of interference between spectrum bands. |
• | Cyberattacks that disrupt, damage, and gain unauthorized access to our network and computer systems including data breaches caused by criminal or terrorist activities; |
• | Undesired human actions including intentional or accidental errors; |
• | Malware (including viruses, worms, cryptoware, and Trojan horses), software defects, unsolicited mass advertising, denial of service, ransomware, and other malicious or abusive attacks by third parties; and, |
• | Unauthorized access to our information technology, billing, customer care, and provisioning systems and networks and those of our vendors and other providers. |
• | Increasing our vulnerability to adverse economic, industry, or competitive developments; |
• | Requiring a substantial portion of our cash flows from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to use our cash flows to fund operations, capital expenditures, and future business opportunities; |
• | Exposing us to the risk of increased interest rates to the extent of any future borrowings at variable rates of interest; |
• | Making it more difficult for us to satisfy our obligations with respect to our indebtedness. Any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default; |
• | Restricting us from making strategic acquisitions or causing us to make non-strategic divestitures; |
• | Limiting our ability to obtain additional financing for working capital, capital expenditures, product and service development, debt service requirements, acquisitions, and general corporate or other purposes; and |
• | Limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who are less highly leveraged and who, therefore, may be able to take advantage of opportunities that our leverage may prevent us from exploiting. |
Class A | Class B | |||||||||||
High | Low | High | Low | |||||||||
2016 | ||||||||||||
First Quarter | $ | 19.81 | 16.81 | 18.50 | 17.38 | |||||||
Second Quarter | $ | 18.58 | 14.28 | 17.70 | 16.95 | |||||||
Third Quarter | $ | 16.96 | 12.45 | 16.95 | 13.55 | |||||||
Fourth Quarter | $ | 19.45 | 14.13 | 16.50 | 13.55 | |||||||
2015 | ||||||||||||
First Quarter | $ | 16.22 | 12.92 | 16.11 | 13.73 | |||||||
Second Quarter | $ | 17.05 | 14.78 | 17.00 | 15.50 | |||||||
Third Quarter | $ | 19.06 | 16.15 | 19.15 | 15.71 | |||||||
Fourth Quarter | $ | 21.68 | 16.38 | 17.38 | 16.40 |
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH FOR GENERAL COMMUNICATION, INC., NASDAQ STOCK MARKET INDEX FOR UNITED STATES COMPANIES, AND NASDAQ TELECOMMUNICATIONS STOCK1,2,3,4 | |||
Measurement Period (Fiscal Year Covered) | Company ($) | Nasdaq Stock Market Index for U.S. Companies ($) | Nasdaq Telecommunications Stock ($) |
FYE 12/31/11 | 100.00 | 100.00 | 100.00 |
FYE 12/31/12 | 97.96 | 118.26 | 135.11 |
FYE 12/31/13 | 113.89 | 164.83 | 196.03 |
FYE 12/31/14 | 140.45 | 190.07 | 206.02 |
FYE 12/31/15 | 202.04 | 204.70 | 199.84 |
FYE 12/31/16 | 198.67 | 224.75 | 228.53 |
1 The lines represent annual index levels derived from compounded daily returns that include all dividends. | |||
2 The indexes are reweighted daily, using the market capitalization on the previous trading day. | |||
3 If the annual interval, based on the fiscal year-end, is not a trading day, the preceding trading day is used. | |||
4 The index level for all series was set to $100.00 on December 31, 2011. |
(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 | |||||||
October 1, 2016 to October 31, 2016 | 327,182 | $14.66 | 327,148 | $64,168,859 | ||||||
November 1, 2016 to November 30, 2016 | 342,407 | $16.34 | 206,237 | $60,869,590 | ||||||
December 1, 2016 to December 31, 2016 | 36,596 | $17.26 | 35,869 | $60,251,982 | ||||||
Total | 706,185 | |||||||||
1 | Consists of 569,254 shares from open market purchases made under our publicly announced repurchase plan and 136,931 shares from private purchases made to settle the minimum statutory tax-withholding requirements pursuant to restricted stock award vesting. |
2 | The 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. |
3 | The total amount approved by our Board of Directors for repurchase under our publicly announced repurchase plan was $399.1 million through December 31, 2016, consisting of $394.1 million through September 30, 2016, and an additional $5.0 million during the three months ended December 31, 2016. We have made total repurchases under the program of $338.8 million through December 31, 2016. 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. |
Years Ended December 31, | |||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | |||||||||||
(Amounts in thousands except per share amounts) | |||||||||||||||
Revenues | $ | 933,812 | 978,534 | 910,198 | 811,648 | 710,181 | |||||||||
Income (loss) before income taxes | $ | 1,069 | (27,213 | ) | 69,273 | 42,684 | 21,250 | ||||||||
Net income (loss) | $ | (4,136 | ) | (25,866 | ) | 59,244 | 31,727 | 9,162 | |||||||
Net income (loss) attributable to non-controlling interest | $ | (469 | ) | 159 | 51,687 | 22,321 | (511 | ) | |||||||
Net income (loss) attributable to GCI common stockholders | $ | (3,667 | ) | (26,025 | ) | 7,557 | 9,406 | 9,673 | |||||||
Basic net income (loss) attributable to GCI per common share | $ | (0.10 | ) | (0.69 | ) | 0.18 | 0.23 | 0.23 | |||||||
Diluted net income (loss) attributable to GCI per common share | $ | (0.15 | ) | (0.69 | ) | 0.18 | 0.23 | 0.23 | |||||||
Total assets1 | $ | 2,065,939 | 1,966,940 | 1,992,761 | 1,961,536 | 1,483,415 | |||||||||
Long-term debt, including current portion and net of unamortized discount and deferred loan fees1 | $ | 1,336,772 | 1,332,738 | 1,027,061 | 1,037,462 | 866,811 | |||||||||
Obligations under capital leases, including current portion | $ | 59,647 | 68,359 | 76,456 | 74,605 | 80,612 | |||||||||
Tower obligation | $ | 87,653 | — | — | — | — | |||||||||
Total GCI stockholders’ equity | $ | 22,719 | 88,263 | 167,356 | 157,144 | 157,178 | |||||||||
Dividends declared per common share | $ | — | — | — | — | — | |||||||||
1 Total assets and long-term debt, including current portion and net of unamortized discount and deferred loan fees have been recast as if we had adopted Accounting Standards Update 2015-03 as of December 31, 2012. See Note 1 included in "Part II - Item 8 - Consolidated Financial Statements and Supplementary Data" for additional information on ASU 2015-03. |
Year Ended December 31, | Percentage Change1 2016 vs. 2015 | Percentage Change1 2015 vs. 2014 | |||
2016 | 2015 | 2014 | |||
Statements of Operations Data: | |||||
Revenues: | |||||
Wireless segment | 22% | 27% | 30% | (22)% | (1)% |
Wireline segment | 78% | 73% | 70% | 2% | 11% |
Total revenues | 100% | 100% | 100% | (5)% | 8% |
Selling, general and administrative expenses | 38% | 35% | 32% | 6% | 15% |
Depreciation and amortization expense | 21% | 19% | 19% | 7% | 7% |
Software impairment charge | —% | 3% | —% | (100)% | 100% |
Operating income | 8% | 11% | 16% | (26)% | (26)% |
Other expense, net | 8% | 14% | 8% | (42)% | 80% |
Income (loss) before income taxes | —% | (3)% | 8% | 104% | (140)% |
Net income (loss) | —% | (3)% | 7% | 84% | (144)% |
Net income (loss) attributable to non-controlling interests | —% | —% | 6% | (395)% | (100)% |
Net income (loss) attributable to GCI | —% | (3)% | 1% | 86% | (444)% |
1 Percentage change in underlying data |
Year Ended December 31, | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | ||||||||||
2016 | 2015 | 2014 | ||||||||||
Revenue | 933,812 | 978,534 | 910,198 | (5 | )% | 8 | % | |||||
Cost of Goods Sold | 302,578 | 322,338 | 302,704 | (6 | )% | 6 | % | |||||
Adjusted EBITDA | 288,044 | 330,351 | 323,116 | (13 | )% | 2 | % |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||
Revenue | $ | 208,109 | 267,676 | 269,977 | (22 | )% | (1 | )% | |||
Cost of Goods Sold | $ | 62,487 | 70,899 | 90,920 | (12 | )% | (22 | )% | |||
Adjusted EBITDA | $ | 129,435 | 179,199 | 158,159 | (28 | )% | 13 | % |
• | A $53.2 million or 48% decrease in roaming revenue due to long-term roaming agreements we have entered into with our largest roaming partners (please see "Liquidity and Capital Resources" below for additional discussion of the long-term roaming agreements), and |
• | a $15.9 million or 19% decrease in plan fee revenue primarily due to a decrease in subscribers and discounts given to customers who finance or bring their own device. |
• | A $14.2 million or 15% increase in roaming revenue primarily due to increased traffic from our roaming partners, and |
• | A $8.6 million or 95% 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. |
• | A $9.8 million or 55% and $10.1 million or 36% decrease in roaming costs for 2016 and 2015, respectively, primarily due to renegotiated roaming agreements and better management of our roaming customers, |
• | A $7.7 million or 100% and $9.6 million or 55% decrease in wireless equipment costs for 2016 and 2015, respectively. The Wireless segment gave a wireless equipment subsidy to the Wireline segment in accordance with the AWN agreements in 2014. This subsidy was discontinued following the February 2, 2015 close of of the Wireless Acquisition, 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 Wireless segment did not incur any wireless equipment costs in 2016 as all such costs were recorded in the Wireline segment in 2016, and |
• | A $4.8 million or 23% decrease in distribution and capacity costs for 2015 primarily because we were able to extend an agreement with a vendor which resulted in the resolution of certain issues and the release of the related reserve and a reduction in capacity costs and costs to terminate long distance traffic. The decrease for 2016 was partially offset by the absence of the reserve that was released in 2015. |
• | A $4.5 million or 100.0% increase in non-cash wireless spectrum leasing costs in 2016 due to a non-cash exchange with a wireless carrier, and |
• | A $4.2 million or 17% increase in network maintenance costs in 2015 primarily due to the the expansion of our network and an increase in the utility and operating costs. |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||
Consumer | |||||||||||
Wireless | $ | 66,225 | 75,799 | 30,998 | (13 | )% | 145 | % | |||
Data | 140,196 | 130,213 | 113,306 | 8 | % | 15 | % | ||||
Video | 107,305 | 115,074 | 111,175 | (7 | )% | 4 | % | ||||
Voice | 26,734 | 30,110 | 32,535 | (11 | )% | (7 | )% | ||||
Business Services | |||||||||||
Wireless | 8,822 | 8,097 | 2,749 | 9 | % | 195 | % | ||||
Data | 296,202 | 269,472 | 249,949 | 10 | % | 8 | % | ||||
Video | 20,102 | 18,819 | 33,259 | 7 | % | (43 | )% | ||||
Voice | 60,117 | 63,274 | 66,250 | (5 | )% | (4 | )% | ||||
Total Wireline segment revenue | $ | 725,703 | 710,858 | 640,221 | 2 | % | 11 | % |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||
Wireline segment Cost of Goods Sold | $ | 240,091 | 251,439 | 211,784 | (5 | )% | 19 | % | |||
Wireline segment Adjusted EBITDA | $ | 158,609 | 151,152 | 164,957 | 5 | % | (8 | )% |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||||
Consumer | |||||||||||||
Data: | |||||||||||||
Cable modem subscribers1 | 127,600 | 127,300 | 119,100 | — | % | 7 | % | ||||||
Video: | |||||||||||||
Basic subscribers2 | 107,700 | 114,000 | 116,400 | (6 | )% | (2 | )% | ||||||
Digital programming tier subscribers3 | 52,000 | 59,500 | 63,800 | (13 | )% | (7 | )% | ||||||
HD/DVR converter boxes4 | 115,900 | 114,000 | 108,400 | 2 | % | 5 | % | ||||||
Homes passed | 250,800 | 251,900 | 248,200 | — | % | 1 | % | ||||||
Video ARPU5 | $ | 80.87 | $ | 83.95 | $ | 79.29 | (4 | )% | 6 | % | |||
Voice: | |||||||||||||
Total local access lines in service6 | 48,600 | 50,400 | 54,600 | (4 | )% | (8 | )% | ||||||
Business Services | |||||||||||||
Data: | |||||||||||||
Cable modem subscribers1 | 13,200 | 12,700 | 14,100 | 4 | % | (10 | )% | ||||||
Voice: |
Total local access lines in service6 | 45,900 | 46,600 | 47,400 | (2 | )% | (2 | )% | ||||||
Combined Consumer and Business Services | |||||||||||||
Wireless | |||||||||||||
Consumer Lifeline wireless lines in service7 | 27,200 | 28,100 | 25,000 | (3 | )% | 12 | % | ||||||
Consumer prepaid wireless lines in service8 | 28,500 | 23,800 | 10,600 | 20 | % | 125 | % | ||||||
Consumer postpaid wireless lines in service9 | 139,200 | 146,300 | 95,800 | (5 | )% | 53 | % | ||||||
Business Services postpaid wireless lines in service9 | 27,600 | 29,600 | 18,200 | (7 | )% | 63 | % | ||||||
Total wireless lines in service | 222,500 | 227,800 | 149,600 | (2 | )% | 52 | % | ||||||
Wireless ARPU10 | $ | 38.41 | $ | 45.82 | $ | 49.97 | (16 | )% | (8 | )% | |||
Cable modem ARPU11 | $ | 88.37 | $ | 85.03 | $ | 78.87 | 4 | % | 8 | % | |||
1 A cable modem subscriber is defined by the purchase of cable modem service regardless of the level of service purchased. If one entity purchases multiple cable modem service access points, each access point is counted as a subscriber. | |||||||||||||
2 A 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. | |||||||||||||
3 A 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. | |||||||||||||
4 A 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. | |||||||||||||
5 Applicable average monthly video revenues divided by the average number of basic subscribers at the beginning and end of each month in 2016, 2015, and 2014. | |||||||||||||
6 A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone network. | |||||||||||||
7 A 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. | |||||||||||||
8A 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. | |||||||||||||
9 A 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. | |||||||||||||
10 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 2016 and 2014. Average monthly wireless revenues, excluding those from common carrier customers, divided by the number of wireless subscribers at the end of each month for each of the months in 2015. This calculation includes applicable revenue from the Wireline segment - Consumer - Wireless and Wireline segment - Business Services - Wireless and wholesale wireless revenues earned from GCI retail subscribers included in the Wireless segment. | |||||||||||||
11 Applicable average monthly cable modem revenues divided by the average number of subscribers at the beginning and end of each month in 2016, 2015, and 2014. |
• | A $5.3 million or 31% decrease in plan fee revenue primarily due to a decrease in the number of postpaid subscribers and discounts given to customers who finance or bring their own device partially offset by an increase in revenue from prepaid subscribers, and |
• | A $2.4 million or 7% decrease in equipment sales revenue due to a decrease in the number of wireless devices sold. The decrease in equipment sales revenue was partially offset by a $4.1 million adjustment to lower the guarantee liability for our Upgrade Now program (please see Note 1 in the "Notes to Consolidated Financial Statements" included in Part IV of this annual report on Form 10-K for additional information on |
• | A $14.7 million or 548% increase in plan fee revenue primarily due to the acquisition of ACS' wireless subscribers following the February 2, 2015 close of the Wireless Acquisition. The increase was off-set by decreasing plan fee revenue due to discounts given to customers who finance or bring their own device, and |
• | A $27.2 million or 446% increase in equipment sales revenue 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 transition from subsidized devices to more financed devices will result in higher revenues when a contract is signed and a decrease in the monthly Wireless ARPU going forward. |
• | A 16% or $7.9 million decrease in wireless device Cost of Goods Sold primarily due to a decrease in the number of handsets sold partially offset by the absence of a wireless equipment subsidy from the Wireless |
• | A 11% or $4.6 million decrease in time and materials Cost of Goods Sold related to the decreased special project work described above in "Wireline Segment Revenues - Business Services", and |
• | A 11% or $3.3 million decrease in voice Cost of Goods Sold primarily due to a decrease in minutes and the movement of more traffic to our own facilities. |
• | A 82% or $22.5 million increase in wireless device Cost of Goods Sold primarily due to an increase in the number of handsets sold and and a change in the allocation between the Wireline and Wireless segments following the February 2, 2015 close of the Wireless Acquisition. The Wireline segment received a wireless equipment subsidy from the Wireless segment in accordance with the AWN agreements during 2014. 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, |
• | A 16% or $4.9 million increase in transport and storage Cost of Goods Sold primarily due to an increase in circuit costs in satellite served locations related to the increased data transport and storage revenue described above in "Wireline Segment Revenues - Business Services", and |
• | A 8% or $5.5 million increase in video Cost of Goods Sold primarily due to increased rates paid to programmers partially offset by a decrease in basic video subscribers. |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||
Selling, general and administrative expenses | $ | 358,356 | 338,379 | 293,647 | 6 | % | 15 | % |
• | A $11.5 million and $17.9 million increase in labor and health insurance costs for 2016 and 2015, respectively, |
• | A $4.0 million and $3.3 million increase in software contracts with subscription licenses instead of perpetual licenses for 2016 and 2015, respectively, |
• | A $8.0 million and $3.1 million increase in the use of contract labor for 2016 and 2015, respectively, |
• | A $2.0 million and $2.3 million increase in bad debt expense for 2016 and 2015, respectively, |
• | A $2.4 million increase to support a campaign to encourage public action related to the State of Alaska budget in 2016, |
• | A $15.8 million increase in costs related to the acquisition of ACS' wireless subscribers and its non-controlling interest in AWN in 2015, |
• | A $2.9 million increase for 2015 due to liquidated damages accrued for a contract, |
• | A $2.5 million increase in share-based compensation expense for 2015 due to an increase in our stock price, and |
• | A $2.3 million increase in inventory adjustments for 2015 primarily due to the write-off of obsolete wireless handsets. |
• | The absence of $9.0 million for costs related to the acquisition of ACS' wireless subscribers and its non-controlling interest in AWN, and |
• | The absence of $2.9 million for liquidated damages accrued for a contract in 2015. |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||
Depreciation and amortization expense | $ | 193,775 | 181,767 | 170,285 | 7 | % | 7 | % |
2016 | 2015 | 2014 | Percentage Change 2016 vs. 2015 | Percentage Change 2015 vs. 2014 | |||||||
Other expense, net | $ | 78,034 | 133,924 | 74,289 | (42 | )% | 80 | % |
• | A $27.1 million decrease in loss on extinguishment of debt primarily due to the retirement of our 2019 Notes in 2015 (please see Part II - Item 7 - "Liquidity and Capital Resources" for additional information), |
• | The absence of a $12.6 million impairment charge recorded in 2015 to reflect an other than temporary decline in fair value of an equity investment, |
• | A $3.2 million gain recorded for adjusting to fair value assets that were included in the consideration paid to acquire a fiber system, and |
• | A $3.1 million unrealized gain recorded for adjusting to fair value a derivative instrument where we issued 3.0 million stock appreciation rights to an affiliate of Searchlight. |
• | A $27.7 million loss on extinguishment of debt due to the retirement of our 2019 Notes in 2015, |
• | A $12.9 million increase in interest expense primarily attributable to increased borrowing on our Senior Credit Facility and the Searchlight note, |
• | A $12.6 million impairment charge recorded to reflect an other than temporary decline in fair value of an equity investment, |
• | A $11.2 million unrealized loss recorded for adjusting to fair value a derivative instrument where we issued 3.0 million stock appreciation rights to an affiliate of Searchlight, |
• | A $4.7 million gain recorded upon the sale of a cost method investment, and |
• | A $2.6 million net loss for 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. |
Payments Due by Period | |||||||||||||||
Total | Less Than 1 Year | 1 to 3 Years | 4 to 5 Years | More Than 5 Years | |||||||||||
Long-term debt | $ | 1,373,783 | 3,326 | 6,706 | 601,779 | 761,972 | |||||||||
Interest on long-term debt | 476,414 | 76,036 | 151,706 | 139,275 | 109,397 | ||||||||||
Capital lease obligations, including interest | 73,531 | 13,433 | 26,890 | 25,503 | 7,705 | ||||||||||
Tower obligations, including interest | 186,526 | 6,996 | 14,415 | 14,998 | 150,117 | ||||||||||
Operating lease commitments | 185,503 | 46,249 | 63,347 | 38,844 | 37,063 | ||||||||||
Purchase obligations | 54,471 | 54,471 | — | — | — | ||||||||||
Total contractual obligations | $ | 2,350,228 | 200,511 | 263,064 | 820,399 | 1,066,254 |
Name | Age | Position |
Stephen M. Brett1 | 76 | Chairman, Director |
Ronald A. Duncan1 | 64 | President, Chief Executive Officer and Director |
Peter J. Pounds | 43 | Senior Vice President, Chief Financial Officer, and Secretary |
G. Wilson Hughes | 71 | Chief Executive Officer, The Alaska Wireless Network |
William C. Behnke | 59 | Senior Vice President |
Martin E. Cary | 52 | Senior Vice President and General Manager, GCI Business |
Gregory F. Chapados | 59 | Executive Vice President and Chief Operating Officer |
Paul E. Landes | 58 | Senior Vice President and General Manager, Consumer Services |
Tina M. Pidgeon | 48 | Senior Vice President, Chief Compliance Officer, General Counsel and Government Affairs |
Bridget L. Baker1 | 56 | Director |
Jerry A. Edgerton1 | 74 | Director |
Scott M. Fisher1 | 50 | Director |
William P. Glasgow1 | 58 | Director |
Mark W. Kroloff1 | 59 | Director |
Stephen R. Mooney1 | 57 | Director |
James M. Schneider1 | 64 | Director |
Eric L. Zinterhofer1 | 45 | Director |
1The present classification of our board is as follows: (1) Class I – Messrs. Edgerton and Kroloff and Ms. Baker, whose present terms expire at the time of our 2017 annual meeting; (2) Class II – Messrs. Brett, Duncan, Mooney and Zinterhofer whose present terms expire at the time of our 2018 annual meeting; and (3) Class III – Messrs. Fisher, Glasgow, and Schneider, whose present terms expire at the time of our 2019 annual meeting. |
• | Understanding of GAAP and financial statements. |
• | Ability to assess the general application of GAAP in connection with accounting for estimates, accruals and reserves. |
• | Experience in preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by our financial statements, or experience actively supervising one or more persons engaged in such activities. |
• | Understanding of internal control over financial reporting. |
• | Understanding of audit committee functions. |
• | Education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involved the performance of similar functions. |
• | Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions. |
• | Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements. |
• | Other relevant experience. |
• | Principal Accountant Selection, Qualification – Is directly responsible for appointment, compensation, retention, oversight, qualifications and independence of our External Accountant. |
• | Financial Statements – Assists in our board's oversight of integrity of the Company financial statements. |
• | Financial Reports, Internal Control – Is directly responsible for oversight of the audit by our External Accountant of our financial reports and reports on internal control. |
• | Annual Reports – Prepares reports required to be included in our annual proxy statement. |
• | Complaints – Receives and responds to certain complaints relating to internal accounting controls, and auditing matters, confidential, anonymous submissions by our employees regarding questionable accounting or auditing matters, and certain alleged illegal acts or behavior-related conduct in violation of our Ethics Code. See "Part III – Item 10 – Code of Business Conduct and Ethics." |
• | Principal Accountant Disagreements – Resolves disagreements, if any, between our External Accountant and us regarding financial reporting. |
• | Non-Audit Services – Reviews and pre-approves any non-audit services (audit-related, tax and other non-audit related services) offered to us by our External Accountant ("Non-Audit Services"). |
• | Attorney Reports – Addresses certain attorney reports, if any, relating to violation of securities law or fiduciary duty by one of our officers, directors, employees or agents. |
• | Related Party Transactions – Reviews certain related party transactions as described elsewhere in this report. See "Part III – Item 13 – Certain Transactions." |
• | Other – Carries out other assignments as designated by our board. |
• | Review, on an annual basis, plans and targets for executive officer and board member compensation, if any – |
◦ | Review is specifically to address expected performance and compensation of, and the criteria on which compensation is based for, the Chief Executive Officer and such other of our executive officers as our board may designate for this purpose. |
• | Monitor the effect of ongoing events on, and the effectiveness of, existing compensation policies, goals, and plans – |
◦ | Events specifically include but are not limited to the status of the premise that all pay systems correlate with our compensation goals and policies. |
◦ | Report from time to time, its findings to our board. |
• | Administer our Amended and Restated 1986 Stock Option Plan ("Stock Option Plan") and approve grants of options and awards pursuant to the plan. |
• | Strive to make our compensation plans fair and structured so as to maximize shareholder value. |
• | Compensation is related to performance and must cause alignment of interests of executive officers with the long-term interests of our shareholders. |
• | Compensation targets must take into consideration competitive market conditions and provide incentives for superior performance by the Company. |
• | Actual compensation must take into consideration the Company's and the executive officer's performance over the prior year and the long-term, and the Company's resources. |
• | Compensation is based upon both qualitative and quantitative factors. |
• | Compensation must enable the Company to attract and retain management necessary to cause the Company to succeed. |
• | Base Salary. |
• | Incentive Compensation Bonus Plan ("Incentive Compensation Plan"). |
• | Stock Option Plan. |
• | Perquisites. |
• | Retirement and Welfare Benefits. |
Name | Adjusted EBITDA ($) | Discretionary ($) | Total 2016 Incentive Compensation Plan Target ($) | ||||||
Ronald A. Duncan1 | 394,668 | 1,578,674 | 1,973,342 | ||||||
Peter J. Pounds2 | 91,000 | 364,000 | 455,000 | ||||||
Gregory F. Chapados2 | 225,000 | 900,000 | 1,125,000 | ||||||
Paul E. Landes | 70,000 | 330,000 | 400,000 | ||||||
1 Mr. Duncan's incentive compensation target is $498,342 higher than what was disclosed in the 2016 Proxy Statement filed with the SEC on May 17, 2016. As disclosed in the 2016 Proxy Statement, Mr. Duncan's final incentive compensation target is calculated by multiplying the sum of his base salary, director cash compensation, estimated value of the stock grant for service as a director, and incentive compensation ("Total Compensation") by the percentage increase in Adjusted EBITDA from Adjusted EBITDA in 2013 and adding that to his target incentive compensation. | |||||||||
2 Incentive Compensation is paid out in the form of 50% cash and 50% restricted stock grants that vest at the end of three years. The number of shares issued to Mr. Pounds and Mr. Chapados are determined by dividing the 50% of Incentive Compensation for shares by the price of our Class A shares on December 31, 2012, which was $9.59. This arrangement is in place for Mr. Pounds and Mr. Chapados through 2017. |
Goals | Ronald A. Duncan | Peter J. Pounds | Gregory F. Chapados | Paul E. Landes | ||||||||||||
Adjusted EBITDA Goal – Target Incentive Compensation | $ | 394,668 | $ | 91,000 | $ | 225,000 | $ | 70,000 | ||||||||
Adjusted EBITDA Goal Achievement1 | 55.0 | % | 55.0 | % | 55.0 | % | 55.0 | % | ||||||||
2016 Adjusted EBITDA Incentive Compensation Earned | $ | 217,067 | $ | 50,050 | $ | 123,750 | $ | 38,500 | ||||||||
Discretionary | $ | 1,578,674 | $ | 364,000 | $ | 900,000 | $ | 330,000 | ||||||||
Discretionary Achievement2 | 91.9 | % | 102.9 | % | 101.6 | % | 81.0 | % | ||||||||
2016 Discretionary Incentive Compensation Earned | $ | 1,450,197 | $ | 374,473 | $ | 914,411 | $ | 267,209 | ||||||||
2016 Incentive Compensation Earned | $ | 1,667,264 | $ | 424,523 | $ | 1,038,161 | $ | 305,709 | ||||||||
1 The Adjusted EBITDA for this 2016 goal was $329.6 million for the Company. The Named Executive Officers would earn their Target Incentive Compensation for this goal if the Company had Adjusted EBITDA equal to the metric. The Target Incentive Compensation is increased or decreased by 5% for each $1 million that the actual Adjusted EBITDA is above or below the metric. For 2016, the actual Adjusted EBITDA for purposes of this goal was $320.6 million resulting in actual Adjusted EBITDA that was $9.0 million below the metric, therefore, the earned Incentive Compensation for the Adjusted EBITDA goal was decreased by 45%. | ||||||||||||||||
2 Our Compensation Committee considered the following factors regarding the Discretionary Achievement of the Named Executive Officers. With regard to Mr. Duncan, the Compensation Committee took into account his leadership during 2016, performance in developing a strategic plan for key components of our business, diversification and succession planning. With regard to Mr. Pounds, the Compensation Committee considered his leadership in regards to risk management, debt refinancing, succession planning, financial planning and management, and financial reporting. With regard to Mr. Chapados, the Compensation Committee considered, among other things, his leadership, his operating of the Wireline segment, his strategic and financial planning, and risk management. With regard to Mr. Landes, the Compensation Committee considered his leadership in succession planning, financial management and reporting, and his efforts meeting core corporate goals. |
Name | Adjusted EBITDA ($) | Discretionary ($) | Total 2017 Incentive Compensation Plan Target ($) | ||||||
Ronald A. Duncan1 | 434,131 | 1,736,526 | 2,170,657 | ||||||
Peter J. Pounds2 | 102,375 | 352,625 | 455,000 | ||||||
Martin E. Cary | 97,500 | 552,500 | 650,000 | ||||||
Gregory F. Chapados2 | 270,619 | 932,131 | 1,202,750 | ||||||
Paul E. Landes | 79,500 | 450,500 | 530,000 | ||||||
1 Mr. Duncan's incentive compensation target is calculated by multiplying the sum of his base salary, director cash compensation, estimated value of the stock grant for service as a director, and incentive compensation ("Total Compensation") by the percentage increase in Adjusted EBITDA from Adjusted EBITDA in 2013 and adding that to his target incentive compensation. Therefore, the exact amount of Mr. Duncan's 2016 Incentive Compensation Plan Target will not be known until the completion of fiscal year 2017. | |||||||||
2 Incentive Compensation is paid out in the form of 50% cash and 50% restricted stock grants that vest at the end of three years. The number of shares issued to Mr. Pounds and Mr. Chapados are determined by dividing the 50% of Incentive Compensation for shares by the price of our Class A shares on December 31, 2012, which was $9.59. This arrangement is in place for Mr. Pounds and Mr. Chapados through 2017. |
• | Use of Company Aircraft – The Company permits employees, including the Named Executive Officers, to use Company aircraft for personal travel for themselves and their guests. Such travel generally is limited to a space available basis on flights that are otherwise business-related. Where a Named Executive Officer, or a guest of that officer, flies on a space available basis, the additional variable cost to the Company (such as fuel, catering, and landing fees) is de minimus. As a result, no amount is reflected in the Summary Compensation Table for that flight. Where the additional variable cost to the Company occurs on such a flight for solely personal purposes of that Named Executive Officer or guest, that cost is included in the Summary Compensation Table entry for that officer. Because it is rare for a flight to be purely personal in nature, fixed costs (such as hangar expenses, crew salaries and monthly leases) are not included in the Summary Compensation Table. In any case, in the event such a cost is non-deductible by the Company under the Internal Revenue Code, the value of that lost deduction is included in the Summary Compensation Table entry for that Named Executive Officer. When employees, including the Named Executive Officers, use Company aircraft for such travel they are attributed with taxable income in accordance with regulations pursuant to the Internal Revenue Code. The Company does not "gross up" or reimburse an employee for taxes he or she owes on such attributed income. The variable cost of the aircraft for personal travel, if any, is included in the respective entries in the Summary Compensation Table. See "Part III – Item 11 – Executive Compensation: Summary Compensation Table." |
• | Enhanced Long-Term Disability Benefit – The Company provides the Named Executive Officers and other senior executive officers of the Company with an enhanced long-term disability benefit. This benefit provides a supplemental replacement income benefit of 60% of average monthly compensation capped at $10,000 per month. The normal replacement income benefit applying to other of our employees is capped at $5,000 per month. |
• | Enhanced Short-Term Disability Benefit – The Company provides the Named Executive Officers and other senior executive officers of the Company with an enhanced short-term disability benefit. This benefit provides a supplemental replacement income benefit of 66 2/3% of average monthly compensation, capped at $2,300 per week. The normal replacement income benefit applying to other of our employees is capped at $1,150 per week. |
• | Miscellaneous – Aside from benefits offered to its employees generally, the Company provided miscellaneous other benefits to its Named Executive Officers including the following (see "Part III – Item 11 – Executive Compensation: Summary Compensation Table – Components of 'All Other Compensation'"): |
◦ | Success Sharing – An incentive program offered to all of our employees that shares 15% of the excess Adjusted EBITDA over the highest previous year ("Success Sharing"). |
◦ | Board Fees – Provided to Mr. Duncan as one of our directors. The Compensation Committee believes that it is appropriate to provide such board fees to Mr. Duncan given the additional oversight responsibilities and the accompanying liability incumbent upon members of our board. In determining the appropriate amount of overall compensation payable to Mr. Duncan in his capacity as Chief Executive Officer, the Compensation Committee does take into account any such board fees that are payable to Mr. Duncan. This monitoring of Mr. Duncan's overall compensation package for services rendered as Chief Executive Officer and as a director is done to ensure that Mr. Duncan is not being doubly compensated for the same services rendered to the Company. |
Name and Principal Position | Year | Salary ($) | Bonus ($)1 | Nonequity Incentive Plan Compen-sation ($) | Stock Awards2 ($) | Option Awards2 ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($)3 | Total ($) | ||||||
Ronald A. Duncan4 President and Chief Executive Officer | 2016 | 925,000 | — | 833,632 | 1,118,4545 | — | — | 83,000 | 2,960,086 | ||||||
2015 | 925,000 | — | 1,096,999 | 1,269,9096 | — | — | 83,000 | 3,374,908 | |||||||
2014 | 925,000 | — | 1,087,216 | 1,093,8627 | — | — | 86,228 | 3,192,306 | |||||||
Peter J. Pounds Senior Vice President, Chief Financial Officer and Secretary | 2016 | 400,000 | 5,280 | 206,982 | 1,845,5818 | — | — | 18,279 | 2,476,122 | ||||||
2015 | 400,000 | 6,417 | 235,888 | 365,4568 | — | — | 20,437 | 1,028,198 | |||||||
2014 | 350,000 | 2,281 | 174,503 | 92,2897 | — | — | 21,426 | 640,499 | |||||||
Martin E. Cary Senior Vice President and General Manager - Business9 | 2016 | 160,000 | 115,858 | 711,699 | 1,754,25410 | — | — | 60,190 | 2,802,001 | ||||||
Gregory F. Chapados Executive Vice President and Chief Operating Officer | 2016 | 450,000 | 7,313 | 511,768 | 1,020,8835 | — | — | 22,279 | 2,012,243 | ||||||
2015 | 450,000 | 8,363 | 530,748 | 757,8636 | — | — | 24,437 | 1,771,411 | |||||||
2014 | 450,000 | — | 499,172 | 2,010,88911 | — | — | 23,426 | 2,983,487 | |||||||
Paul E. Landes Senior Vice President and General Manager - Consumer Services | 2016 | 300,000 | — | 152,855 | 1,568,69012 | — | — | 22,279 | 2,043,824 | ||||||
2015 | 300,000 | 472,279 | 233,735 | 72,3786 | — | — | 21,046 | 1,099,438 | |||||||
2014 | 250,000 | — | 291,318 | 55,0437 | — | — | 23,907 | 620,268 | |||||||
1 The Bonus Compensation represents compensation paid pursuant to the Incentive Compensation Plan in excess of the target payment under the plan. | |||||||||||||||
2 This column reflects the grant date fair values of awards of Class A common stock, restricted stock awards or stock options granted in the fiscal year indicated which were computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 718, Compensation – Stock Options ("ASC Topic 718"). | |||||||||||||||
3 See, "Components of 'All Other Compensation'" table displayed below for more detail. | |||||||||||||||
4 In 2014, Mr. Duncan received $148,625 in compensation for service on our board in the form of $65,000 in director fees and a stock award valued at $83,625. In 2015, Mr. Duncan received $183,650 in compensation for service on our board in the form of $65,000 in director fees and a stock award valued at $118,650. In 2016, Mr. Duncan received $176,300 in compensation for service on our board in the form of $65,000 in director fees and a stock award valued at $111,300. | |||||||||||||||
5 The Stock Awards granted during 2016 were for the Named Executive Officer's performance during 2015. | |||||||||||||||
6 The Stock Awards granted during 2015 were for the Named Executive Officer's performance during 2014. | |||||||||||||||
7 The Stock Awards granted during 2014 were for the Named Executive Officer's performance during 2013. | |||||||||||||||
8 In 2016, Mr. Pounds received a stock award with a grant date fair value of $458,831 for his performance during 2015, a stock award with a grant date fair value of $1,386,750 as a retention incentive. In 2015, Mr. Pounds received a stock award with a grant date fair value of $268,400 for his performance during 2014, a stock award with a grant date fair value of $48,528 for his performance related to the Wireless Acquisition, and a stock award with a grant date fair value of $48,528 as a retention incentive. | |||||||||||||||
9 Compensation for Mr. Cary is only provided for 2016 as he was not a Named Executive Officer in 2014 and 2015. | |||||||||||||||
10 In 2016, Mr. Cary received a stock award with a grant date fair value of $367,504 for his performance during 2015 and a stock award with a grant date fair value of $1,386,750 as a retention incentive. | |||||||||||||||
11 In 2014, Mr. Chapados received a stock award with a grant date fair value of $551,389 for his performance during 2013 and a stock award with a grant date fair value of $1,459,500 as a retention incentive. | |||||||||||||||
12 In 2016, Mr. Landes received a stock award with a grant date fair value of $644,190 for his performance during 2015 and a stock award with a grant date fair value of $924,500 as a retention incentive. |
Name | Year | Stock Purchase Plan1 ($) | Board Fees ($) | Success Sharing2 ($) | Use of Company Leased Aircraft3 ($) | Miscellaneous ($) | Total ($) | ||||||
Ronald A. Duncan | 2016 | 18,000 | 65,000 | — | — | — | 83,000 | ||||||
2015 | 18,000 | 65,000 | — | — | — | 83,000 | |||||||
2014 | 17,500 | 65,000 | — | 3,728 | — | 86,228 | |||||||
Peter J. Pounds | 2016 | 18,000 | — | 279 | — | — | 18,279 | ||||||
2015 | 18,000 | — | 2,437 | — | — | 20,437 | |||||||
2014 | 17,500 | — | 1,926 | — | 2,0004 | 21,426 | |||||||
Martin E. Cary | 2016 | 18,000 | 279 | 41,911 | — | 60,190 | |||||||
Gregory F. Chapados | 2016 | 18,000 | — | 279 | — | 4,0004 | 22,279 | ||||||
2015 | 18,000 | — | 2,437 | — | 4,0004 | 24,437 | |||||||
2014 | 17,500 | — | 1,926 | — | 4,0004 | 23,426 | |||||||
Paul E. Landes | 2016 | 18,000 | — | 279 | — | 4,0004 | 22,279 | ||||||
2015 | 18,000 | — | 3,046 | — | — | 21,046 | |||||||
2014 | 17,500 | — | 2,407 | — | 4,0004 | 23,907 | |||||||
1 Amounts are contributions by us matching each employee's contribution. Matching contributions by us under our GCI 401(k) Plan are available to each of our full-time employees with over one year of service. During 2016 and 2015, the match was based upon the lesser of $18,000 ($17,500 for 2014) or 10% of the employee's salary and the total of the employee's pre-tax and post-tax contributions to the plan. See "Part III – Item 11 – Compensation Discussion and Analysis: Elements of Compensation – Retirement and Welfare Benefits – GCI 401(k) Plan." | |||||||||||||
2 See "Part III – Item 11 – Compensation Discussion and Analysis: Elements of Compensation – Perquisites." | |||||||||||||
3 The value of use of Company leased aircraft is shown at the variable cost to the Company. | |||||||||||||
4 Compensation for attending certain management meetings. |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards1 ($) | ||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||
Ronald A. Duncan | 02/12/16 | --- | --- | --- | --- | --- | --- | 55,4602 | --- | --- | 1,007,154 | ||
06/01/16 | --- | --- | --- | --- | --- | --- | 7,5003 | --- | --- | 111,300 | |||
Peter J. Pounds | 02/12/16 | --- | --- | --- | --- | --- | --- | 25,2662 | --- | --- | 458,831 | ||
12/10/16 | --- | --- | --- | --- | --- | --- | 75,0004 | --- | --- | 1,386,750 | |||
Martin E. Cary | 02/12/16 | --- | --- | --- | --- | --- | --- | 20,2372 | --- | --- | 367,504 | ||
12/10/16 | --- | --- | --- | --- | --- | --- | 75,0005 | --- | --- | 1,386,750 | |||
Gregory F. Chapados | 02/12/16 | --- | --- | --- | --- | --- | --- | 56,2162 | --- | --- | 1,020,883 | ||
Paul E. Landes | 02/12/16 | --- | --- | --- | --- | --- | --- | 35,4732 | --- | --- | 644,190 | ||
12/10/16 | --- | --- | --- | --- | --- | --- | 50,0006 | --- | --- | 924,500 | |||
1 Computed in accordance with FASB ASC Topic 718. | |||||||||||||
2 Represents the 50% portion of the 2015 incentive compensation paid in the form of restricted stock grants under our Incentive Compensation Plan that were not granted until 2016. Restricted stock awards are included in the "Stock Awards" column of the Summary Compensation Table above. | |||||||||||||
3 Mr. Duncan's stock award was granted pursuant to the terms of our Director Compensation Plan. See "Part III – Item 11 – Director Compensation." | |||||||||||||
4 Mr. Pounds received a restricted stock award of 75,000 shares as a retention incentive. | |||||||||||||
5 Mr. Cary received a restricted stock award of 75,000 shares as a retention incentive. | |||||||||||||
6 Mr. Landes received a restricted stock award of 50,000 shares as a retention incentive. |
Option Awards | Stock Awards | ||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||
Ronald A. Duncan | --- | --- | --- | --- | 79,070 | 1 | 1,537,912 | 1 | --- | --- | |||||||
--- | --- | --- | --- | 55,460 | 2 | 1,078,697 | 2 | --- | --- | ||||||||
Peter J. Pounds | --- | --- | --- | --- | 50,000 | 3 | 972,500 | 3 | --- | --- | |||||||
--- | --- | --- | --- | 18,434 | 1 | 358,541 | 1 | --- | --- | ||||||||
--- | --- | --- | --- | 1,666 | 4 | 32,404 | 4 | --- | --- | ||||||||
--- | --- | --- | --- | 3,333 | 5 | 64,827 | 5 | --- | --- | ||||||||
--- | --- | --- | --- | 25,266 | 2 | 491,424 | 2 | --- | --- | ||||||||
--- | --- | --- | --- | 75,000 | 6 | 1,458,750 | 6 | --- | --- | ||||||||
Martin E. Cary | --- | --- | --- | --- | 7,795 | 1 | 151,613 | 1 | --- | --- | |||||||
--- | --- | --- | --- | 13,491 | 7 | 262,400 | 7 | --- | --- | ||||||||
75,000 | 6 | 1,458,750 | 6 | ||||||||||||||
Gregory F. Chapados | --- | --- | --- | --- | 90,000 | 8 | 1,750,500 | 8 | --- | --- | |||||||
--- | --- | --- | --- | 52,051 | 1 | 1,012,392 | 1 | --- | --- | ||||||||
--- | --- | --- | --- | 56,216 | 2 | 1,093,401 | 2 | --- | --- | ||||||||
Paul E. Landes | --- | --- | --- | --- | 4,971 | 1 | 96,686 | 1 | --- | --- | |||||||
--- | --- | --- | --- | 35,473 | 2 | 689,950 | 2 | --- | --- | ||||||||
--- | --- | --- | --- | 29,482 | 3 | 573,425 | 3 | --- | --- | ||||||||
--- | --- | --- | --- | 50,000 | 6 | 972,500 | 6 | --- | --- | ||||||||
1 Restricted stock vests on November 30, 2017. | |||||||||||||||||
2 Restricted stock vests on November 30, 2018. | |||||||||||||||||
3 Restricted stock vests on December 7, 2017. | |||||||||||||||||
4 Restricted stock vests on February 6, 2017. | |||||||||||||||||
5 Restricted stock vests on February 6, 2018. | |||||||||||||||||
6 Restricted stock vests on November 30, 2021. | |||||||||||||||||
7 Restricted stock vests 6,746 shares on November 30, 2017 and 6,745 shares on November 30, 2018. | |||||||||||||||||
8 Restricted stock vests 30,000 shares on January 1, 2017, 2018 and 2019, respectively. |
Option Awards | Stock Awards | |||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||
Ronald A. Duncan | --- | --- | 103,827 | 1,750,523 | ||||
--- | --- | 7,500 | 1 | 111,300 | ||||
Peter J. Pounds | --- | --- | 1,667 | 28,756 | ||||
--- | --- | 9,485 | 159,917 | |||||
Martin E. Cary | --- | --- | 9,669 | 163,019 | ||||
--- | --- | 7,796 | 131,441 | |||||
--- | --- | 6,746 | 113,738 | |||||
Gregory F. Chapados | --- | --- | 100,000 | 1,469,000 | ||||
--- | --- | 56,669 | 955,439 | |||||
--- | --- | 30,000 | 585,000 | |||||
Paul E. Landes | --- | --- | 5,657 | 95,377 | ||||
1 This stock award relates to Mr. Duncan's service as one of our directors. |
Name | Fees Earned or Paid in Cash ($) | Stock Awards2 ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | ||||||||||||||
Stephen M. Brett | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
Bridget L. Baker | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
Jerry A. Edgerton | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
Scott M. Fisher | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
William P. Glasgow | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
Mark W. Kroloff | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
Stephen R. Mooney | 90,000 | 111,300 | — | — | — | — | 201,300 | ||||||||||||||
James M. Schneider | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
Eric L. Zinterhofer | 65,000 | 111,300 | — | — | — | — | 176,300 | ||||||||||||||
1 Compensation to Mr. Duncan as a director is described elsewhere in this report. See "Part III – Item 11 – Executive Compensation" and "Compensation Discussion and Analysis." | |||||||||||||||||||||
2 Each director received a grant award of 7,500 shares of Company Class A common stock on June 1, 2016 (the grant date). The value of the shares on the date of grant was $14.84 per share, i.e., the closing price of the stock on Nasdaq on that date and as calculated in accordance with FASB ASC Topic 718. |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights ($) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the second column) |
Equity compensation plans approved by security holders | 3,000 | 6.74 | 1,517,940 |
Total: | 3,000 | 6.74 | 1,517,940 |
• | Each person known by us to own beneficially 5% or more of the outstanding shares of Class A common stock or Class B common stock. |
• | Each of our directors. |
• | Each of the Named Executive Officers. |
• | All of our executive officers and directors as a group. |
Name of Beneficial Owner1 | Title of Class2 | Amount and Nature of Beneficial Ownership (#) | % of Class | % of Total Shares Outstanding (Class A & B)2 | % Combined Voting Power (Class A & B)2 | |||||
Stephen M. Brett | Class A | 90,250 | * | * | * | |||||
Class B | — | — | ||||||||
Ronald A. Duncan | Class A | 1,035,792 | 3 | 3.2 | 6.2 | 19.9 | ||||
Class B | 1,174,918 | 3 | 37.3 | |||||||
Bridget L. Baker | Class A | 27,500 | 4 | * | * | * | ||||
Class B | — | — | ||||||||
Jerry A. Edgerton | Class A | 54,250 | 5 | * | * | * | ||||
Class B | — | — |
Scott M. Fisher | Class A | 590,550 | 6 | 1.8 | 1.6 | * | ||||
Class B | — | — | ||||||||
William P. Glasgow | Class A | 66,594 | 7 | * | * | * | ||||
Class B | — | — | ||||||||
Mark W. Kroloff | Class A | 58,600 | * | * | * | |||||
Class B | — | — | ||||||||
Stephen R. Mooney | Class A | 73,900 | * | * | * | |||||
Class B | — | — | ||||||||
James M. Schneider | Class A | 51,392 | * | * | * | |||||
Class B | — | — | ||||||||
G. Wilson Hughes | Class A | 721,448 | 8 | 2.2 | 2.0 | 1.2 | ||||
Class B | 2,695 | 8 | * | |||||||
Peter J. Pounds | Class A | 208,027 | * | * | * | |||||
Class B | — | — | ||||||||
Martin E. Cary | Class A | 128,916 | * | * | * | |||||
Class B | — | — | ||||||||
Gregory F. Chapados | Class A | 522,974 | 9 | 1.6 | 1.5 | * | ||||
Class B | — | — | ||||||||
Paul E. Landes | Class A | 158,006 | 10 | * | * | * | ||||
Class B | — | — | ||||||||
Black Rock, Inc. 40 East 52nd Street New York, New York 10022 | Class A | 4,221,965 | 11 | 12.9 | 11.8 | 6.6 | ||||
Class B | — | — | ||||||||
Dimensional Fund Advisors LP Palisades West, Building One 6300 Bee Cave Road Austin, Texas 78746 | Class A | 2,308,248 | 12 | 7.1 | 6.4 | 3.6 | ||||
Class B | — | — | ||||||||
GCI 401(k) Plan 2550 Denali St., Ste. 1000 Anchorage, Alaska 99503 | Class A | 2,184,252 | 6.7 | 6.2 | 3.8 | |||||
Class B | 28,152 | * | ||||||||
Gary Magness c/o Raymond L. Sutton, Jr. 303 East 17th Ave., Ste 1100 Denver, Colorado 80203-1264 | Class A | 261,563 | * | 1.9 | 7.2 | |||||
Class B | 433,924 | 13.8 | ||||||||
John W. Stanton and Theresa E. Gillespie 155 108th Avenue., N.E., Suite 450 Bellevue, Washington 98004 | Class A | 1,242,627 | 3.8 | 7.5 | 24.3 | |||||
Class B | 1,436,469 | 45.6 | ||||||||
The Vanguard Group, Inc. 100 Vanguard Blvd Malvern, Pennsylvania 19355 | Class A | 3,015,221 | 14 | 9.2 | 8.4 | 4.7 | ||||
Class B | — | — | ||||||||
All Directors and Executive Officers As a Group (17 Persons) | Class A | 4,320,841 | 15 | 13.2 | 15.4 | 25.1 | ||||
Class B | 1,177,613 | 15 | 37.3 | |||||||
* Represents beneficial ownership of less than 1% of the corresponding class or series of stock. |
1 Beneficial ownership is determined in accordance with Rule 13d-3 of the Exchange Act. Shares of our stock that a person has the right to acquire within 60 days of December 31, 2016 are deemed to be beneficially owned by such person and are included in the computation of the ownership and voting percentages only of such person. Each person has sole voting and investment power with respect to the shares indicated, except as otherwise stated in the footnotes to the table. Addresses are provided only for persons other than management who own beneficially more than 5% of the outstanding shares of Class A or B common stock. The Class A shares do not include the number of Class B shares owned although the Class B shares are convertible on a share-per-share basis into Class A shares. | ||||||||||
2 "Title of Class" includes our Class A common stock and Class B common stock. "Amount and Nature of Beneficial Ownership" and "% of Class" are given for each class of stock. "% of Total Shares Outstanding" and "% Combined Voting Power" are given for the combination of outstanding Class A common stock and Class B common stock, and the voting power for Class B common stock (10 votes per share) is factored into the calculation of that combined voting power. | ||||||||||
3 Includes 1,035,792 shares of Class A Common Stock and 1,174,918 shares of Class B Common Stock to which Mr. Duncan has a pecuniary interest (and for which 968,618 shares of Class A Common Stock and 1,116,917 shares of Class B Common Stock are pledged as security). Does not include the following (a) 20,000 shares of Class A Common Stock held by Missy, LLC, which is 25% owned by Mr. Duncan, 25% owned by Dani Bowman and 50% owned by a trust of which Mr. Duncan’s daughter is the 50% beneficiary and for which Mr. Duncan is the General Manager and has voting and dispositive power; (b) 15,000 shares of Class A Common Stock owned by the Neoma Lowndes Trust which Ms. Miller is a 50% beneficiary and for which Mr. Duncan is the trustee with sole voting and dispositive power; (c) 55,560 shares of Class A Common Stock or 8,242 shares of Class B Common Stock held by the Amanda Miller Trust, with respect to which Mr. Duncan disclaims beneficial ownership (Ms. Miller is Mr. Duncan’s daughter); (d) 63,186 shares of Class A Common Stock or 27,020 shares of Class B Common Stock held by Dani Bowman, Mr. Duncan’s wife, of which Mr. Duncan disclaims beneficial ownership. | ||||||||||
4 Includes 5,000 shares of Class A common stock pledged as security. | ||||||||||
5 Includes 54,250 shares of Class A common stock pledged as security. | ||||||||||
6 Includes 525,200 shares of Class A common stock owned by Fisher Capital Partners, Ltd. of which Mr. Fisher is a partner. | ||||||||||
7 Does not include 158 shares owned by a daughter of Mr. Glasgow. Mr. Glasgow disclaims any beneficial ownership of the shares held by his daughter. | ||||||||||
8 Includes 23,916 shares of Class A common stock allocated to Mr. Hughes under the GCI 401(k) Plan, as of December 31, 2016. Includes 178,398 shares of Class A common stock pledged as security. Excludes 26,270 shares held by the Company pursuant to Mr. Hughes' Deferred Compensation Agreement. | ||||||||||
9 Includes 15,607 shares of Class A common stock allocated to Mr. Chapados under the GCI 401(k) Plan, as of December 31, 2016. Includes 304,413 shares of Class A common stock pledged as security. | ||||||||||
10 Includes 33,933 shares of Class A common stock allocated to Mr. Landes under the GCI 401(k) Plan, as of December 31, 2016. | ||||||||||
11 As disclosed in Schedule 13G filed with the SEC on January 12, 2017, Black Rock, Inc. has sole voting power for 4,152,366 shares of Class A common stock and sole dispositive power for 4,221,965 shares of Class A common stock. | ||||||||||
12 As disclosed in Schedule 13G filed with the SEC on February 9, 2017, Dimensional Fund Advisors LP has sole voting power for 2,212,028 shares of Class A common stock and sole dispositive power for 2,308,248 shares of Class A common stock. | ||||||||||
13 As disclosed in Schedule 13G filed with the SEC on January 31, 2017. | ||||||||||
14 As disclosed in Schedule 13G filed with the SEC on February 13, 2017, The Vanguard Group, Inc. has sole voting power of 53,353 shares of Class A common stock, shared dispositive power for 54,253 shares of Class A common stock and sole dispositive power for 2,960,968 shares of Class A common stock. | ||||||||||
15 Includes 109,938 shares of Class A common stock allocated to such persons under the GCI 401(k) Plan. |
• | Full Audit Committee – The full Audit Committee can consider each Non-Audit Service. |
• | Designee – The Audit Committee can designate one of its members to approve a Non-Audit Service, with that member reporting approvals to the full committee. |
• | Pre-Approval of Categories – The Audit Committee can pre-approve categories of Non-Audit Services. Should this option be chosen, the categories must be specific enough to ensure both of the following – |
◦ | The Audit Committee knows exactly what it is approving and can determine the effect of such approval on auditor independence. |
◦ | Management will not find it necessary to decide whether a specific service falls within a category of pre-approved Non-Audit Service. |
Type of Fees | 2016 | 2015 | |||||
Audit Fees1 | $ | 1,406,817 | 1,521,063 | ||||
Audit-Related Fees2 | 28,875 | 28,875 | |||||
Tax Fees3 | 148,397 | 223,569 | |||||
All Other Fees4 | — | — | |||||
Total | $ | 1,584,089 | 1,773,507 | ||||
1 Consists of fees for our annual financial statement audit, quarterly financial statement reviews, reviews of other filings by us with the SEC, audit of our internal control over financial reporting and for services that are normally provided by an auditor in connection with statutory and regulatory filings or engagements. | |||||||
2 Consists of fees for audit of the GCI 401(k) Plan and review of the related annual report on Form 11-K filed with the SEC. | |||||||
3 Consists of fees for review of our state and federal income tax returns and consultation on various tax advice and tax planning matters. | |||||||
4 Consists of fees for any services not included in the first three types of fees identified in the table. |
(1) Consolidated Financial Statements | Page No. |
Included in Part II of this Report: | |
(2) Consolidated Financial Statement Schedules | |
Schedules are omitted, as they are not required or are not applicable, or the required information is shown in the applicable financial statements or notes thereto. | |
(Amounts in thousands) | December 31, | |||||
ASSETS | 2016 | 2015 | ||||
Current assets: | ||||||
Cash and cash equivalents | $ | 19,297 | 26,528 | |||
Receivables | 219,794 | 208,384 | ||||
Less allowance for doubtful receivables | 4,407 | 3,630 | ||||
Net receivables | 215,387 | 204,754 | ||||
Prepaid expenses | 18,599 | 12,862 | ||||
Inventories | 11,945 | 11,322 | ||||
Other current assets | 167 | 3,129 | ||||
Total current assets | 265,395 | 258,595 | ||||
Property and equipment | 2,614,875 | 2,384,530 | ||||
Less accumulated depreciation | 1,452,957 | 1,290,149 | ||||
Net property and equipment | 1,161,918 | 1,094,381 | ||||
Goodwill | 239,263 | 239,263 | ||||
Cable certificates | 191,635 | 191,635 | ||||
Wireless licenses | 92,347 | 86,347 | ||||
Other intangible assets, net of amortization | 74,444 | 69,290 | ||||
Other assets | 40,937 | 27,429 | ||||
Total other assets | 638,626 | 613,964 | ||||
Total assets | $ | 2,065,939 | 1,966,940 | |||
See accompanying notes to consolidated financial statements. |
(Amounts in thousands) | December 31, | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | 2016 | 2015 | ||||
Current liabilities: | ||||||
Current maturities of obligations under long-term debt, capital leases, and tower obligations | $ | 13,229 | 12,050 | |||
Accounts payable | 72,937 | 63,014 | ||||
Deferred revenue | 37,618 | 34,128 | ||||
Accrued payroll and payroll related obligations | 30,305 | 31,337 | ||||
Accrued liabilities | 14,729 | 22,822 | ||||
Accrued interest (including $5,132 to a related party at December 31, 2016 and 2015) | 13,926 | 13,655 | ||||
Subscriber deposits | 917 | 1,242 | ||||
Total current liabilities | 183,661 | 178,248 | ||||
Long-term debt, net (including $56,640 and $54,810 due to a related party at December 31, 2016 and 2015, respectively) | 1,333,446 | 1,329,396 | ||||
Obligations under capital leases, excluding current maturities (including $1,769 and $1,824 due to a related party at December 31, 2016 and 2015, respectively) | 50,316 | 59,651 | ||||
Deferred income taxes | 137,982 | 106,145 | ||||
Long-term deferred revenue | 135,877 | 93,427 | ||||
Tower obligation | 87,653 | — | ||||
Other liabilities (including $29,700 and $32,820 for derivative stock appreciation rights with a related party at December 31, 2016 and 2015, respectively) | 83,756 | 80,812 | ||||
Total liabilities | 2,012,691 | 1,847,679 | ||||
Commitments and contingencies | ||||||
Stockholders’ equity: | ||||||
Common stock (no par): | ||||||
Class A. Authorized 100,000 shares; issued 32,668 and 35,593 shares at December 31, 2016 and 2015, respectively; outstanding 32,642 and 35,567 shares at December 31, 2016 and 2015, respectively | — | — | ||||
Class B. Authorized 10,000 shares; issued and outstanding 3,153 and 3,154 shares at December 31, 2016 and 2015, respectively; convertible on a share-per-share basis into Class A common stock | 2,663 | 2,664 | ||||
Less cost of 26 Class A common shares held in treasury at December 31, 2016 and 2015 | (249 | ) | (249 | ) | ||
Paid-in capital | 3,237 | 6,631 | ||||
Retained earnings | 17,068 | 79,217 | ||||
Total General Communication, Inc. stockholders' equity | 22,719 | 88,263 | ||||
Non-controlling interests | 30,529 | 30,998 | ||||
Total stockholders’ equity | 53,248 | 119,261 | ||||
Total liabilities and stockholders’ equity | $ | 2,065,939 | 1,966,940 | |||
See accompanying notes to consolidated financial statements. |
(Amounts in thousands, except per share amounts) | 2016 | 2015 | 2014 | ||||||
Revenues: | |||||||||
Non-related party | $ | 933,812 | 973,251 | 850,656 | |||||
Related party | — | 5,283 | 59,542 | ||||||
Total revenues | 933,812 | 978,534 | 910,198 | ||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below): | |||||||||
Non-related party | 302,578 | 321,457 | 291,770 | ||||||
Related party | — | 881 | 10,934 | ||||||
Total cost of goods sold | 302,578 | 322,338 | 302,704 | ||||||
Selling, general and administrative expenses | |||||||||
Non-related party | 358,356 | 337,839 | 289,674 | ||||||
Related party | — | 540 | 3,973 | ||||||
Total selling, general and administrative expenses | 358,356 | 338,379 | 293,647 | ||||||
Depreciation and amortization expense | 193,775 | 181,767 | 170,285 | ||||||
Software impairment charge | — | 29,839 | — | ||||||
Operating income | 79,103 | 106,211 | 143,562 | ||||||
Other income (expense): | |||||||||
Interest expense (including amortization of deferred loan fees) | (78,628 | ) | (78,786 | ) | (72,496 | ) | |||
Related party interest expense | (7,455 | ) | (6,602 | ) | — | ||||
Derivative instrument unrealized income (loss) with related party | 3,120 | (11,160 | ) | — | |||||
Loss on extinguishment of debt | (640 | ) | (27,700 | ) | — | ||||
Impairment of equity method investment | — | (12,593 | ) | — | |||||
Other | 5,569 | 2,917 | (1,793 | ) | |||||
Other expense, net | (78,034 | ) | (133,924 | ) | (74,289 | ) | |||
Income (loss) before income taxes | 1,069 | (27,713 | ) | 69,273 | |||||
Income tax (expense) benefit | (5,205 | ) | 1,847 | (10,029 | ) | ||||
Net income (loss) | (4,136 | ) | (25,866 | ) | 59,244 | ||||
Net income attributable to non-controlling interests | (469 | ) | 159 | 51,687 | |||||
Net income (loss) attributable to General Communication, Inc. | $ | (3,667 | ) | (26,025 | ) | 7,557 | |||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share | $ | (0.10 | ) | (0.69 | ) | 0.18 | |||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share | $ | (0.10 | ) | (0.69 | ) | 0.18 | |||
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class A common share | $ | (0.15 | ) | (0.69 | ) | 0.18 | |||
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per Class B common share | $ | (0.15 | ) | (0.69 | ) | 0.18 | |||
See accompanying notes to consolidated financial statements. |
(Amounts in thousands) | Shares of Class A and B Common Stock | Class A Common Stock | Class B Common Stock | Class A and B Shares Held in Treasury | Paid-in Capital | Retained Earnings | Non- controlling Interests | Total Stockholders’ Equity | ||||||||||||||||
Balances at January 1, 2014 | 40,464 | $ | 11,467 | 2,673 | (866 | ) | 26,880 | 116,990 | 300,210 | 457,354 | ||||||||||||||
Net income | — | — | — | — | — | 7,557 | 51,687 | 59,244 | ||||||||||||||||
Common stock repurchases and retirements | (625 | ) | (6,850 | ) | — | — | — | — | — | (6,850 | ) | |||||||||||||
Shares issued under stock option plan | 51 | 466 | — | — | — | — | — | 466 | ||||||||||||||||
Issuance of restricted stock awards | 1,267 | 8,529 | — | — | (8,529 | ) | — | — | — | |||||||||||||||
Share-based compensation expense | — | — | — | — | 8,324 | — | — | 8,324 | ||||||||||||||||
Issuance of treasury shares related to deferred compensation payment | — | — | — | 617 | 98 | — | — | 715 | ||||||||||||||||
Distribution to non-controlling interest | — | — | — | — | — | — | (50,000 | ) | (50,000 | ) | ||||||||||||||
Adjustment to investment by non-controlling interest | — | — | — | — | — | — | (2,131 | ) | (2,131 | ) | ||||||||||||||
Other | — | 5 | (5 | ) | — | — | — | 100 | 100 | |||||||||||||||
Balances at December 31, 2014 | 41,157 | 13,617 | 2,668 | (249 | ) | 26,773 | 124,547 | 299,866 | 467,222 | |||||||||||||||
Net income (loss) | — | — | — | — | — | (26,025 | ) | 159 | (25,866 | ) | ||||||||||||||
Common stock repurchases and retirements | (3,317 | ) | (34,469 | ) | — | — | — | (19,305 | ) | — | (53,774 | ) | ||||||||||||
Shares issued under stock option plan | 219 | 474 | — | — | — | — | — | 474 | ||||||||||||||||
Issuance of restricted stock awards | 688 | 20,374 | — | — | (20,374 | ) | — | — | — | |||||||||||||||
Share-based compensation expense | — | — | — | — | 10,744 | — | — | 10,744 | ||||||||||||||||
Distribution to non-controlling interest | — | — | — | — | — | — | (765 | ) | (765 | ) | ||||||||||||||
Investment by non-controlling interest | — | — | — | — | — | — | 3,209 | 3,209 | ||||||||||||||||
Non-controlling interest acquisition | — | — | — | — | (10,282 | ) | — | (271,521 | ) | (281,803 | ) | |||||||||||||
Other | — | 4 | (4 | ) | — | (230 | ) | — | 50 | (180 | ) | |||||||||||||
Balances at December 31, 2015 | 38,747 | — | 2,664 | (249 | ) | 6,631 | 79,217 | 30,998 | 119,261 | |||||||||||||||
Net loss | — | — | — | — | — | (3,667 | ) | (469 | ) | (4,136 | ) | |||||||||||||
Common stock repurchases and retirements | (3,733 | ) | (196 | ) | — | — | — | (58,483 | ) | — | (58,679 | ) | ||||||||||||
Issuance of restricted stock awards | 790 | — | — | — | — | — | — | — | ||||||||||||||||
Share-based compensation expense | — | — | — | — | 11,051 | — | — | 11,051 | ||||||||||||||||
Non-controlling interest acquisition | — | — | — | — | (14,445 | ) | — | — | (14,445 | ) | ||||||||||||||
Other | 17 | 196 | (1 | ) | — | — | 1 | — | 196 | |||||||||||||||
Balances at December 31, 2016 | 35,821 | $ | — | 2,663 | (249 | ) | 3,237 | 17,068 | 30,529 | 53,248 | ||||||||||||||
See accompanying notes to consolidated financial statements. |
(Amounts in thousands) | 2016 | 2015 | 2014 | ||||||
Cash flows from operating activities: | |||||||||
Net income (loss) | $ | (4,136 | ) | (25,866 | ) | 59,244 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||
Depreciation and amortization expense | 193,775 | 181,767 | 170,285 | ||||||
Share-based compensation expense | 11,043 | 10,902 | 8,392 | ||||||
Deferred income tax expense (benefit) | 5,205 | (1,847 | ) | 10,029 | |||||
Unrealized (gain) loss on derivative instrument with related party | (3,120 | ) | 11,160 | — | |||||
Loss on extinguishment of debt | 640 | 27,700 | — | ||||||
Software impairment charge | — | 29,839 | — | ||||||
Impairment of equity method investment | — | 12,593 | — | ||||||
Other noncash income and expense items | 11,696 | 16,142 | 9,933 | ||||||
Change in operating assets and liabilities | (14,827 | ) | (8,435 | ) | 320 | ||||
Net cash provided by operating activities | 200,276 | 253,955 | 258,203 | ||||||
Cash flows from investing activities: | |||||||||
Purchases of property and equipment | (194,478 | ) | (176,235 | ) | (176,109 | ) | |||
Purchase of KKCC assets | (19,700 | ) | — | — | |||||
Purchases of other assets and intangible assets | (17,486 | ) | (13,955 | ) | (11,018 | ) | |||
Note receivable payment from an equity method investee | 3,000 | — | — | ||||||
Purchase of investments | (1,800 | ) | — | (25,735 | ) | ||||
Grant proceeds | 1,527 | 14,007 | 1,136 | ||||||
Restricted cash | 175 | 65 | 5,871 | ||||||
Proceeds from the sale of investment | — | 7,551 | 6,180 | ||||||
Purchase of businesses, net of cash received | — | (12,736 | ) | (2,514 | ) | ||||
Note receivable issued to an equity method investee | — | (3,000 | ) | — | |||||
Other | 1,599 | (4,760 | ) | 49 | |||||
Net cash used for investing activities | (227,163 | ) | (189,063 | ) | (202,140 | ) | |||
Cash flows from financing activities: | |||||||||
Repayment of debt, capital lease, and tower obligations | (132,205 | ) | (494,982 | ) | (118,585 | ) | |||
Borrowing on Senior Credit Facility | 125,000 | 295,000 | 89,000 | ||||||
Proceeds from tower transaction | 90,795 | — | — | ||||||
Purchase of treasury stock to be retired | (58,679 | ) | (53,774 | ) | (6,850 | ) | |||
Payment of debt issuance costs | (5,451 | ) | (13,979 | ) | (84 | ) | |||
Issuance of 2025 Notes | — | 445,973 | — | ||||||
Purchase of non-controlling interests | — | (282,505 | ) | — | |||||
Issuance of Searchlight note payable and derivative stock appreciation rights with related party | — | 75,000 | — | ||||||
Payment of bond call premium | — | (20,244 | ) | — | |||||
Distribution to non-controlling interest | — | (4,932 | ) | (50,000 | ) | ||||
Other | 196 | 677 | 887 | ||||||
Net cash provided by (used for) financing activities | 19,656 | (53,766 | ) | (85,632 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (7,231 | ) | 11,126 | (29,569 | ) | ||||
Cash and cash equivalents at beginning of period | 26,528 | 15,402 | 44,971 | ||||||
Cash and cash equivalents at end of period | $ | 19,297 | 26,528 | 15,402 | |||||
See accompanying notes to consolidated financial statements. |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(1) | Business and Summary of Significant Accounting Principles |
(a) | Business |
(b) | Basis of Presentation and Principles of Consolidation |
(c) | Non-controlling Interests |
(d) | Acquisitions |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Total consideration transferred 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 |
Reduction of non-controlling interest | $ | 268,364 | |||
Increase in deferred tax assets | 9,583 | ||||
Additional paid-in capital | 25,884 | ||||
Fair value of consideration paid for acquisition of equity interest | $ | 303,831 |
(e) | Recently Issued Accounting Pronouncements |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(f) | Recently Adopted Accounting Pronouncements |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(g) | Regulatory Accounting |
(h) | Earnings per Common Share |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(i) | Common Stock |
(j) | Redeemable Preferred Stock |
(k) | Treasury Stock |
(l) | Cash Equivalents |
(m) | Accounts Receivable and Allowance for Doubtful Receivables |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(n) | Inventories |
(o) | Property and Equipment |
Asset Category | Asset Lives |
Telephony transmission equipment and distribution facilities | 5-20 years |
Fiber optic cable systems | 15-25 years |
Cable transmission equipment and distribution facilities | 5-30 years |
Support equipment and systems | 3-20 years |
Transportation equipment | 5-13 years |
Property and equipment under capital leases | 12-20 years |
Buildings | 25 years |
Customer premise equipment | 2-20 years |
Studio equipment | 10-15 years |
(p) | Intangible Assets and Goodwill |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(q) | Impairment of Intangibles, Goodwill, and Long-lived Assets |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(r) | Amortization and Write-off of Loan Fees |
(s) | Other Assets |
(t) | Investments |
(u) | Asset Retirement Obligations |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Balance at December 31, 2014 | $ | 31,940 | |
Liability incurred | 2,048 | ||
Accretion expense | 1,121 | ||
Liability settled | (49 | ) | |
Balance at December 31, 2015 | 35,060 | ||
Liability incurred | 1,580 | ||
Revisions in estimated cash flows, including adjustment from tower transaction (Note 2) | 3,368 | ||
Accretion expense | 1,229 | ||
Liability settled | (82 | ) | |
Balance at December 31, 2016 | $ | 41,155 |
(v) | Derivative Financial Instrument |
(w) | Revenue Recognition |
• | Revenues generated from long-distance service usage and plan fees, Internet service excess usage, and managed services are recognized when the services are provided, |
• | We recognize unbilled revenues when the service is provided based upon minutes of use processed, and/or established rates, net of credits and adjustments, |
• | Video service package fees, local access and Internet service plan fees, and data network revenues are billed in advance, recorded as Deferred Revenue on the balance sheet, and are recognized as the associated service is provided, |
• | Certain of our wireless services offerings have been determined to be revenue arrangements with multiple deliverables. Revenues are recognized as each element is earned based on objective evidence regarding the relative fair value of each element and when there are no undelivered elements that are essential to the functionality of the delivered elements. Revenues generated from wireless service usage and plan fees are recognized when the services are provided. Revenues generated from the sale of wireless handsets and accessories are recognized when the amount is known and title to the handset and accessories passes to the customer. As the non-refundable, up- |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
• | We offer new and existing wireless customers the option to participate in Upgrade Now, a program that is described above in Note 1 of this Form 10-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 a guarantee liability 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 also in Note 1 of this Form 10-K additional information on guarantee liabilities and EIP receivables. |
• | The majority of our non-wireless equipment sale transactions involve the sale of communications equipment with no other services involved. Such equipment is subject to standard manufacturer warranties and we do not manufacture any of the equipment we sell. In such instances, the customer takes title to the equipment generally upon delivery. We recognize revenue for such transactions when title passes to the customer and the revenue is earned and realizable. On certain occasions we enter into agreements to sell and satisfactorily install or integrate telecommunications equipment for a fixed fee. Customers may have refund rights if the installed equipment does not meet certain performance criteria. We defer revenue recognition until we have received customer acceptance per the contract or agreement, and all other required revenue recognition elements have been achieved. Revenues from contracts with multiple element arrangements, such as those including installation and integration services, are recognized as each element is earned based on objective evidence regarding the relative fair value of each element and when there are no undelivered elements that are essential to the functionality of the delivered elements, |
• | Technical services revenues are derived primarily from maintenance contracts on equipment and are recognized on a prorated basis over the term of the contracts, |
• | We account for fiber capacity Indefeasible Right to Use ("IRU") agreements as an operating lease or service arrangement and we defer the revenue and recognize it ratably over the life of the IRU or as service is rendered, |
• | Access revenue is recognized when earned. We participate in an intrastate access revenue pool with other telephone companies. The pool is funded by access charges regulated by the Regulatory Commission of Alaska ("RCA") within the intrastate jurisdiction These revenues are subject to adjustment in future accounting periods as based upon adjustments made by all pool participants and Interexchange carrier customers. To the extent that a dispute arises over revenue settlements, our policy is to defer revenue recognition until the dispute is resolved, |
• | We receive grant revenue for the purpose of building or operating communication infrastructure in rural areas. We defer the revenue and recognize it over the life of the asset that was constructed using grant funds or the period of grant compliance, |
• | We offer sales incentives to new and existing customers as motivation to purchase our products and services. Cash incentives are recorded as an offset to revenue while noncash incentives are recorded as an operating expense. Sales incentives that relate to a customer contract over a specific period of time are recognized using the straight-line method over the contract term. For sales incentives that are earned by the customer over a specific period of time, we accrue an estimated offset to revenue or expense amount over the period that the incentive is earned by the customer, |
• | Other revenues are recognized when the service is provided. |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(x) | Advertising Expense |
(y) | Leases |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(z) | Interest Expense |
(aa) | Income Taxes |
(ab) | Comprehensive Income (Loss) |
(ac) | Share-based Payment Arrangements |
(ad) | Use of Estimates |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(ae) | Concentrations of Credit Risk |
(af) | Software Capitalization Policy |
(ag) | Guarantees |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(ah) | Classification of Taxes Collected from Customers |
Years Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Surcharges reported gross | $ | 3,849 | 5,058 | 4,252 |
(ai) | Reclassifications |
(2) | Tower Sale and Leaseback |
December 31, 2016 | |||
Property and equipment (1) | $ | 18,792 | |
Tower obligation(2) | $ | 87,653 | |
(1) Property conveyed to Vertical Bridge as part of the Tower Transaction, but remains on our Consolidated Balance Sheets. | |||
(2) Excluding current portion and net of deferred transaction costs. |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Years ending December 31, | Total | ||
2017 | $ | 6,996 | |
2018 | 7,136 | ||
2019 | 7,279 | ||
2020 | 7,425 | ||
2021 | 7,573 | ||
2022 and thereafter | 150,117 | ||
Total minimum payments | 186,526 | ||
Less amount representing interest | 96,722 | ||
Tower obligation | $ | 89,804 |
(3) | Consolidated Statements of Cash Flows Supplemental Disclosures |
Year ended December 31, | 2016 | 2015 | 2014 | ||||||
(Increase) decrease in accounts receivable, net | $ | (8,045 | ) | (4,230 | ) | 15,357 | |||
Increase in prepaid expenses | (6,180 | ) | (632 | ) | (4,454 | ) | |||
(Increase) decrease in inventories | (623 | ) | 5,710 | (6,631 | ) | ||||
(Increase) decrease in other current assets | (38 | ) | 24 | 88 | |||||
Increase in other assets | (11,607 | ) | (11,491 | ) | (878 | ) | |||
Decrease in accounts payable | (135 | ) | (5,579 | ) | (4,648 | ) | |||
Increase in deferred revenues | 2,446 | 1,743 | 1,728 | ||||||
Increase (decrease) in accrued payroll and payroll related obligations | (979 | ) | (1,469 | ) | 2,997 | ||||
Increase (decrease) in accrued liabilities | (8,031 | ) | 8,192 | (242 | ) | ||||
Increase (decrease) in accrued interest | 271 | 7,001 | (434 | ) | |||||
Decrease in subscriber deposits | (325 | ) | (448 | ) | (114 | ) | |||
Increase (decrease) in long-term deferred revenue | 18,649 | (8,561 | ) | (4,163 | ) | ||||
Increase (decrease) in components of other long-term liabilities | (230 | ) | 1,305 | 1,714 | |||||
Total change in operating assets and liabilities | $ | (14,827 | ) | (8,435 | ) | 320 |
Net cash paid or received: | 2016 | 2015 | 2014 | ||||||
Interest paid, net of amounts capitalized | $ | 84,546 | 76,796 | 74,618 |
2016 | 2015 | 2014 | |||||||
Non-cash additions for purchases of property and equipment | $ | 36,854 | 26,799 | 42,958 | |||||
Non-cash consideration for KKCC assets | $ | 13,993 | — | — | |||||
Asset retirement obligation additions to property and equipment | $ | 4,948 | 2,048 | 4,268 | |||||
Non-cash consideration for Wireless Acquisition | $ | — | 23,326 | — | |||||
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 Notes to Consolidated Financial Statements |
(4) | Receivables and Allowance for Doubtful Receivables |
2016 | 2015 | |||||
Trade | $ | 218,491 | 205,645 | |||
Other | 1,303 | 2,739 | ||||
Total receivables | $ | 219,794 | 208,384 |
Additions | Deductions | ||||||||||||||
Description | Balance at beginning of year | Charged to costs and expenses | Charged to other accounts | Write-offs net of recoveries | Balance at end of year | ||||||||||
December 31, 2016 | $ | 3,630 | 8,516 | — | 7,739 | 4,407 | |||||||||
December 31, 2015 | $ | 4,542 | 6,359 | — | 7,271 | 3,630 | |||||||||
December 31, 2014 | $ | 2,346 | 3,994 | — | 1,798 | 4,542 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(5) | Net Property and Equipment |
2016 | 2015 | |||||
Land and buildings | $ | 114,966 | 108,145 | |||
Telephony transmission equipment and distribution facilities | 1,271,425 | 1,215,796 | ||||
Cable transmission equipment and distribution facilities | 231,539 | 218,259 | ||||
Studio equipment | 15,456 | 15,171 | ||||
Support equipment and systems | 290,209 | 251,302 | ||||
Transportation equipment | 23,674 | 17,398 | ||||
Customer premise equipment | 158,513 | 155,971 | ||||
Fiber optic cable systems | 351,460 | 309,217 | ||||
Construction in progress | 157,633 | 93,271 | ||||
2,614,875 | 2,384,530 | |||||
Less accumulated depreciation | 1,385,620 | 1,231,457 | ||||
Less accumulated amortization on property and equipment under capital leases | 67,337 | 58,692 | ||||
Net property and equipment | $ | 1,161,918 | 1,094,381 | |||
Gross property and equipment under capital leases | $ | 112,495 | 112,495 |
Allocation of consideration to assets acquired and liabilities assumed: | |||
Property and equipment | $ | 49,794 | |
Deferred taxes | (12,211 | ) | |
Deferred revenue | (3,815 | ) | |
Total consideration | $ | 33,768 |
(6) | Intangible Assets and Goodwill |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
2016 | 2015 | ||||
Software license fees | $ | 80,839 | 63,760 | ||
Rights to use | 45,114 | 44,937 | |||
Customer relationships | 1,530 | 1,530 | |||
Right-of-way | 784 | 784 | |||
128,267 | 111,011 | ||||
Less accumulated amortization | 53,823 | 41,721 | |||
Net other intangible assets | $ | 74,444 | 69,290 |
Goodwill | Other Intangible Assets | ||||
Balance at December 31, 2014 | $ | 229,560 | 66,015 | ||
Goodwill addition from acquisitions - Wireline Segment | 9,703 | — | |||
Asset additions | — | 15,023 | |||
Software impairment | — | (1,306 | ) | ||
Amortization expense | — | (10,442 | ) | ||
Balance at December 31, 2015 | 239,263 | 69,290 | |||
Asset additions | — | 17,601 | |||
Amortization expense | — | (12,447 | ) | ||
Balance at December 31, 2016 | $ | 239,263 | 74,444 |
Years Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Amortization expense | $ | 12,447 | 10,442 | 9,715 |
Years Ending December 31, | |||
2017 | $ | 11,213 | |
2018 | $ | 9,191 | |
2019 | $ | 6,686 | |
2020 | $ | 4,904 | |
2021 | $ | 3,150 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(7) | Long-Term Debt |
December 31, | ||||||||||||||
Issue Date | Interest Rate | Principal Payments | Maturity Date | 2016 | 2015 | |||||||||
Senior Credit Facility - Term Loan B | November 17, 2016 | LIBOR plus 3.00% | 0.25% of the original principal due quarterly | February 2, 20221 | $ | 245,187 | 272,937 | |||||||
Senior Credit Facility - Term Loan A | November 17, 2016 | LIBOR plus applicable margin2 | Due at maturity | November 17, 20211 | 215,000 | 240,000 | ||||||||
Senior Credit Facility - Revolver | November 17, 2016 | LIBOR plus applicable margin2 | Due at maturity | November 17, 20211 | 55,000 | — | ||||||||
2025 Notes | April 1, 2015 | 6.875% | Due at maturity | April 15, 20253 | 450,000 | 450,000 | ||||||||
2021 Notes | May 20, 2011 | 6.75% | Due at maturity | June 1, 20214 | 325,000 | 325,000 | ||||||||
Searchlight note | February 2, 2015 | 7.5% | Due at maturity | February 2, 20235 | 75,000 | 75,000 | ||||||||
Wells Fargo note | June 30, 2014 | LIBOR plus 2.25% | Monthly installments | July 15, 2029 | 8,596 | 9,176 | ||||||||
Total Debt | 1,373,783 | 1,372,113 | ||||||||||||
Less unamortized discount | 21,878 | 24,007 | ||||||||||||
Less unamortized deferred loan fees | 15,133 | 15,368 | ||||||||||||
Less current portion of long-term debt | 3,326 | 3,342 | ||||||||||||
Long-term debt, net | $ | 1,333,446 | 1,329,396 | |||||||||||
1The Senior Credit Facility will mature on December 3, 2020 if our 2021 Notes are not refinanced prior to such date. | ||||||||||||||
2Applicable margin is based on the company’s leverage ratio and ranges from 2.00% to 3.00%. Our Senior Credit Facility Total Leverage Ratio (as defined) may not exceed 5.95 to one; the Senior Leverage Ratio (as defined) may not exceed 3.00 to one; and our Interest Coverage Ratio (as defined) must not be less than 2.50 to one at any time. | ||||||||||||||
3The notes are redeemable at our option, in whole or in part, at a redemption price defined in the 2025 Notes agreement, and accrued and unpaid interest (if any) to the date of redemption. | ||||||||||||||
4The notes are redeemable at our option, in whole or in part, at a redemption price defined in the 2021 Notes agreement, and accrued and unpaid interest (if any) to the date of redemption. | ||||||||||||||
5We may repay the Searchlight note beginning February 2, 2019. |
(a) | Senior Credit Facility |
(b) | 2025 Notes and 2021 Notes |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(c) | Searchlight Note |
(d) | Covenants |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Years ending December 31, | |||
2017 | $ | 3,326 | |
2018 | 3,344 | ||
2019 | 3,362 | ||
2020 | 3,380 | ||
2021 | 598,399 | ||
2022 and thereafter | 761,972 | ||
Total debt | 1,373,783 | ||
Less unamortized discount | 21,878 | ||
Less unamortized deferred loan fees | 15,133 | ||
Less current portion of long-term debt | 3,326 | ||
Long-term debt, net | $ | 1,333,446 |
(8) | Income Taxes |
Years Ended December 31, | |||||||||
2016 | 2015 | 2014 | |||||||
Deferred tax (expense) benefit: | |||||||||
Federal taxes | $ | (4,452 | ) | 1,360 | (9,081 | ) | |||
State taxes | (753 | ) | 487 | (948 | ) | ||||
$ | (5,205 | ) | 1,847 | (10,029 | ) |
Years Ended December 31, | |||||||||||
2016 | 2015 | 2014 | |||||||||
“Expected” statutory tax (expense) benefit | $ | (374 | ) | 9,699 | (24,246 | ) | |||||
Nondeductible officer compensation | (1,424 | ) | (1,906 | ) | (1,351 | ) | |||||
Nondeductible lobbying expenses | (1,192 | ) | (442 | ) | (425 | ) | |||||
Nondeductible entertainment expenses | (1,029 | ) | (1,059 | ) | (1,125 | ) | |||||
State income taxes, net of federal (expense) benefit | (753 | ) | 487 | (948 | ) | ||||||
Nondeductible unrealized loss on derivative instrument with related party | 1,092 | (3,906 | ) | — | |||||||
Nondeductible original issue discount | (773 | ) | (660 | ) | — | ||||||
Impact of non-controlling interest attributable to non-tax paying entity | — | 220 | 18,255 | ||||||||
Other, net | (752 | ) | (586 | ) | (189 | ) | |||||
$ | (5,205 | ) | $ | 1,847 | $ | (10,029 | ) |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
2016 | 2015 | |||||
Deferred tax assets: | ||||||
Net operating loss carryforwards | $ | 111,236 | 139,238 | |||
Deferred revenue for financial reporting purposes | 59,993 | 41,151 | ||||
Asset retirement obligations in excess of amounts recognized for tax purposes | 16,808 | 14,338 | ||||
Compensated absences accrued for financial reporting purposes | 3,505 | 3,339 | ||||
Share-based compensation expense for financial reporting purposes in excess of amounts recognized for tax purposes | 3,393 | 2,773 | ||||
Accounts receivable, principally due to allowance for doubtful receivables | 1,965 | 1,912 | ||||
Workers compensation and self-insurance health reserves, principally due to accrual for financial reporting purposes | 1,705 | 1,795 | ||||
Alternative minimum tax credits | 1,735 | 1,735 | ||||
Deferred compensation expense for tax purposes in excess of amounts recognized for financial reporting purposes | 1,687 | 1,603 | ||||
Other | 11,515 | 13,144 | ||||
Total deferred tax assets | $ | 213,542 | 221,028 | |||
Deferred tax liabilities: | ||||||
Plant and equipment, principally due to differences in depreciation | $ | 245,118 | 246,172 | |||
Intangible assets | 106,061 | 79,255 | ||||
Other | 345 | 1,746 | ||||
Total deferred tax liabilities | 351,524 | 327,173 | ||||
Net deferred tax liabilities | $ | 137,982 | 106,145 |
Years ending December 31, | Federal | State | ||||
2022 | 10,236 | 11,371 | ||||
2023 | 3,968 | 3,903 | ||||
2024 | 722 | — | ||||
2025 | 737 | — | ||||
2026 | 150 | — | ||||
2027 | 1,010 | — | ||||
2028 | 39,879 | 39,715 | ||||
2029 | 48,370 | 47,558 | ||||
2031 | 110,933 | 109,376 | ||||
2033 | 5,031 | 4,927 | ||||
2034 | 39,133 | 37,866 | ||||
2035 | 11,885 | 11,290 | ||||
Total tax net operating loss carryforwards | $ | 272,054 | 266,006 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(9) | Fair Value Measurements and Derivative Instrument |
December 31, 2016 | Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||
Assets: | ||||||||||||
Deferred compensation plan assets (mutual funds) | $ | 1,477 | — | — | 1,477 | |||||||
Liabilities: | ||||||||||||
Derivative stock appreciation rights | $ | — | — | 29,700 | 29,700 | |||||||
December 31, 2015 | Level 1 (1) | Level 2 (2) | Level 3 (3) | Total | ||||||||
Assets: | ||||||||||||
Deferred compensation plan assets (mutual funds) | $ | 1,728 | — | — | 1,728 | |||||||
Liabilities: | ||||||||||||
Derivative stock appreciation rights | $ | — | — | 32,820 | 32,820 | |||||||
(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 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
December 31, 2016 | December 31, 2015 | |||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||
Current and long-term debt | $ | 1,336,772 | 1,393,865 | 1,332,738 | 1,390,743 |
2016 | 2015 | |||
Contractual term (in years) | 2.1 - 6.1 | 4 - 8 | ||
Volatility | 37.5 | % | 40.0 | % |
Risk-free interest rate | 2.1 | % | 2.1 | % |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
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) | 11,160 | ||
Balance at December 31, 2015 | $ | 32,820 | |
Fair value adjustment at end of period, included in Other Income (Expense) | (3,120 | ) | |
Balance at December 31, 2016 | $ | 29,700 |
(10) | Stockholders’ Equity |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Shares | Weighted Average Grant Date Fair Value | |||||
Nonvested at January 1, 2016 | 1,495 | $ | 11.08 | |||
Granted | 790 | $ | 17.87 | |||
Vested | (817 | ) | $ | 11.65 | ||
Forfeited | (3 | ) | $ | 16.09 | ||
Nonvested at December 31, 2016 | 1,465 | $ | 14.41 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(11) | Earnings (Loss) per Common Share |
Year Ended December 31, 2016 | ||||||
Class A | Class B | |||||
Basic net loss per share: | ||||||
Numerator: | ||||||
Undistributed loss allocable to common stockholders | (3,343 | ) | (324 | ) | ||
Denominator: | ||||||
Weighted average common shares outstanding | 32,526 | 3,154 | ||||
Basic net loss attributable to GCI common stockholders per common share | $ | (0.10 | ) | (0.10 | ) | |
Diluted net loss per share: | ||||||
Numerator: | ||||||
Undistributed loss allocable to common stockholders for basic computation | $ | (3,343 | ) | (324 | ) | |
Reallocation of undistributed loss as a result of conversion of Class B to Class A shares | (324 | ) | — | |||
Reallocation of undistributed loss as a result of conversion of dilutive securities | — | (154 | ) | |||
Effect of derivative instrument that may be settled in cash or shares | (1,837 | ) | — | |||
Effect of share based compensation that may be settled in cash or shares | (5 | ) | — | |||
Net loss adjusted for allocation of undistributed earnings and effect of contracts that may be settled in cash or shares | $ | (5,509 | ) | (478 | ) | |
Denominator: | ||||||
Number of shares used in basic computation | 32,526 | 3,154 | ||||
Conversion of Class B to Class A common shares outstanding | 3,154 | — | ||||
Effect of derivative instrument that may settled in cash or shares | 612 | — | ||||
Effect of share based compensation that may be settled in cash or shares | 26 | — | ||||
Number of shares used in per share computation | 36,318 | 3,154 | ||||
Diluted net loss attributable to GCI common stockholders per common share | $ | (0.15 | ) | (0.15 | ) |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Years Ended December 31, | ||||||||||||
2015 | 2014 | |||||||||||
Class A | Class B | Class A | Class B | |||||||||
Basic net income (loss) per share: | ||||||||||||
Numerator: | ||||||||||||
Net income (loss) available to common stockholders | $ | (23,858 | ) | (2,167 | ) | 6,980 | 577 | |||||
Less: Undistributed income allocable to participating securities | — | — | (385 | ) | — | |||||||
Undistributed income (loss) allocable to common stockholders | $ | (23,858 | ) | (2,167 | ) | 6,595 | 577 | |||||
Denominator: | ||||||||||||
Weighted average common shares outstanding | 34,764 | 3,157 | 36,112 | 3,162 | ||||||||
Basic net income (loss) attributable to GCI common stockholders per common share | $ | (0.69 | ) | (0.69 | ) | 0.18 | 0.18 | |||||
Diluted net income (loss) per share: | ||||||||||||
Numerator: | ||||||||||||
Undistributed income (loss) allocable to common stockholders for basic computation | $ | (23,858 | ) | (2,167 | ) | 6,595 | 577 | |||||
Reallocation of undistributed earnings (loss) as a result of conversion of Class B to Class A shares | (2,167 | ) | — | 577 | — | |||||||
Reallocation of undistributed earnings (loss) as a result of conversion of dilutive securities | — | — | 1 | (2 | ) | |||||||
Net income (loss) adjusted for allocation of undistributed earnings (loss) and effect of contracts that may be settled in cash or shares | $ | (26,025 | ) | (2,167 | ) | 7,173 | 575 | |||||
Denominator: | ||||||||||||
Number of shares used in basic computation | 34,764 | 3,157 | 36,112 | 3,162 | ||||||||
Conversion of Class B to Class A common shares outstanding | 3,157 | — | 3,162 | — | ||||||||
Unexercised stock options | — | — | 112 | — | ||||||||
Number of shares used in per share computation | 37,921 | 3,157 | 39,386 | 3,162 | ||||||||
Diluted net income (loss) attributable to GCI common stockholders per common share | $ | (0.69 | ) | (0.69 | ) | 0.18 | 0.18 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Years Ended December 31, | ||||||||
2016 | 2015 | 2014 | ||||||
Derivative instrument that may be settled in cash or shares | — | 724 | — | |||||
Shares associated with unexercised stock options | 3 | 108 | 29 | |||||
Share-based compensation that may be settled in cash or shares | — | 26 | 26 | |||||
Total excluded | 3 | 858 | 55 |
(12) | Industry Segments Data |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Wireless | Wireline | Total Reportable Segments | |||||||
2016 | |||||||||
Revenues | |||||||||
Wholesale | $ | 208,109 | — | 208,109 | |||||
Consumer | — | 340,460 | 340,460 | ||||||
Business services | — | 385,243 | 385,243 | ||||||
Total | 208,109 | 725,703 | 933,812 | ||||||
Cost of Goods Sold | 62,487 | 240,091 | 302,578 | ||||||
Contribution | 145,622 | 485,612 | 631,234 | ||||||
Less SG&A | (16,439 | ) | (341,917 | ) | (358,356 | ) | |||
Plus share-based compensation expense | — | 11,043 | 11,043 | ||||||
Plus imputed interest on financed devices | — | 2,557 | 2,557 | ||||||
Plus accretion expense | 252 | 977 | 1,229 | ||||||
Other | — | 337 | 337 | ||||||
Adjusted EBITDA | $ | 129,435 | 158,609 | 288,044 | |||||
Capital expenditures | $ | 34,555 | 159,923 | 194,478 | |||||
Goodwill | $ | 164,312 | 74,951 | 239,263 | |||||
Total assets | $ | 601,796 | 1,464,143 | 2,065,939 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Wireless | Wireline | Total Reportable Segments | |||||||
2015 | |||||||||
Revenues | |||||||||
Wholesale | $ | 267,676 | — | 267,676 | |||||
Consumer | — | 351,196 | 351,196 | ||||||
Business services | — | 359,662 | 359,662 | ||||||
Total | 267,676 | 710,858 | 978,534 | ||||||
Cost of Good Sold | 70,899 | 251,439 | 322,338 | ||||||
Contribution | 196,777 | 459,419 | 656,196 | ||||||
Less SG&A | (18,137 | ) | (320,242 | ) | (338,379 | ) | |||
Plus share-based compensation expense | — | 10,902 | 10,902 | ||||||
Plus imputed interest on financed devices | — | 751 | 751 | ||||||
Plus accretion expense | 559 | 562 | 1,121 | ||||||
Other expense | — | (240 | ) | (240 | ) | ||||
Adjusted EBITDA | $ | 179,199 | 151,152 | 330,351 | |||||
Capital expenditures | $ | 47,892 | 128,343 | 176,235 | |||||
Goodwill | $ | 164,312 | 74,951 | 239,263 | |||||
Total assets | $ | 594,250 | 1,372,690 | 1,966,940 | |||||
2014 | |||||||||
Revenues | |||||||||
Wholesale | $ | 269,977 | — | 269,977 | |||||
Consumer | — | 288,014 | 288,014 | ||||||
Business Services | — | 352,207 | 352,207 | ||||||
Total | 269,977 | 640,221 | 910,198 | ||||||
Cost of Good Sold | 90,920 | 211,784 | 302,704 | ||||||
Contribution | 179,057 | 428,437 | 607,494 | ||||||
Less SG&A | (21,631 | ) | (272,016 | ) | (293,647 | ) | |||
Plus share-based compensation expense | — | 8,392 | 8,392 | ||||||
Plus accretion expense | 733 | 516 | 1,249 | ||||||
Other expense | — | (372 | ) | (372 | ) | ||||
Adjusted EBITDA | $ | 158,159 | 164,957 | 323,116 | |||||
Capital expenditures | $ | 30,243 | 145,866 | 176,109 | |||||
Goodwill | $ | 164,312 | 65,248 | 229,560 | |||||
Total assets | $ | 625,417 | 1,367,344 | 1,992,761 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Years Ended December 31, | 2016 | 2015 | 2014 | ||||||
Consolidated income (loss) before income taxes | $ | 1,069 | (27,713 | ) | 69,273 | ||||
Plus other expense, net | 78,034 | 133,924 | 74,289 | ||||||
Consolidated operating income | 79,103 | 106,211 | 143,562 | ||||||
Plus depreciation and amortization expense | 193,775 | 181,767 | 170,285 | ||||||
Plus share-based compensation expense | 11,043 | 10,902 | 8,392 | ||||||
Plus imputed interest on financed devices | 2,557 | 751 | — | ||||||
Plus accretion expense | 1,229 | 1,121 | 1,249 | ||||||
Plus software impairment charge | — | 29,839 | — | ||||||
Other | 337 | (240 | ) | (372 | ) | ||||
Reportable segment Adjusted EBITDA | $ | 288,044 | 330,351 | 323,116 |
(13) | Related Party Transactions |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(14) | Variable Interest Entities |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(15) | Commitments and Contingencies |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
Years ending December 31: | Operating | Capital | |||||
2017 | $ | 46,249 | 13,433 | ||||
2018 | 35,822 | 13,440 | |||||
2019 | 27,525 | 13,450 | |||||
2020 | 22,047 | 13,459 | |||||
2021 | 16,797 | 12,044 | |||||
2022 and thereafter | 37,063 | 7,705 | |||||
Total minimum lease payments | $ | 185,503 | 73,531 | ||||
Less amount representing interest | 13,884 | ||||||
Less current maturity of obligations under capital leases | 9,331 | ||||||
Long-term obligations under capital leases, excluding current maturity | $ | 50,316 |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(16) | Software Impairment |
GENERAL COMMUNICATION, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements |
(17) | Selected Quarterly Financial Data (Unaudited) |
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||
2016 | |||||||||
Total revenues | $ | 231,098 | 233,766 | 236,655 | 232,293 | ||||
Operating income | $ | 20,019 | 19,531 | 26,368 | 13,185 | ||||
Net income (loss) | $ | 982 | 3,298 | 7,827 | (16,243 | ) | |||
Net income (loss) attributable to GCI | $ | 1,099 | 3,415 | 7,943 | (16,124 | ) | |||
Basic net income (loss) attributable to GCI per common share | $ | 0.03 | 0.09 | 0.21 | (0.47 | ) | |||
Diluted net income (loss) attributable to GCI per common share | $ | (0.04 | ) | (0.01 | ) | 0.14 | (0.47 | ) | |
2015 | |||||||||
Total revenues | $ | 231,089 | 247,528 | 258,573 | 241,344 | ||||
Operating income | $ | 741 | 39,203 | 45,473 | 20,794 | ||||
Net income (loss) | $ | (18,725 | ) | (15,757 | ) | 17,495 | (8,879 | ) | |
Net income (loss) attributable to GCI | $ | (19,269 | ) | (15,627 | ) | 17,631 | (8,760 | ) | |
Basic net income (loss) attributable to GCI per common share | $ | (0.49 | ) | (0.41 | ) | 0.45 | (0.24 | ) | |
Diluted net income (loss) attributable to GCI per common share | $ | (0.49 | ) | (0.41 | ) | 0.44 | (0.24 | ) |
Exhibit No. | Description | Where Located | |
3.1 | Restated Articles of Incorporation of the Company dated August 20, 2007 | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 2007 filed March 7, 2008. | |
3.2 | Amended and Restated Bylaws of the Company dated June 27, 2016 | Incorporated by reference to The Company’s Report on Form 8-K for the period June 27, 2016 filed June 30, 2016. | |
4.1 | General Communication, Inc. Amended and Restated 1986 Stock Option Plan | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed March 7, 2015. | |
4.2 | Amended and Restated Securityholder Agreement by and among General Communication, Inc., Searchlight ALX, L.P., and Searchlight ALX, LTD dated as of July 13, 2015 | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015. | |
4.3 | Unsecured Promissory Note Due 2023 entered into as of July 13, 2015 by and between General Communication, Inc. and Searchlight ALX, LTD | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015. |
Exhibit No. | Description | Where Located | |
4.4 | Amended and Restated Stock Appreciation Rights Agreement entered into as of July 13, 2015 by and between General Communication, Inc. and Searchlight ALX, LTD | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2015. | |
4.5 | Amendment to the Amended and Restated Securityholder Agreement entered into as of September 7, 2016 by and between General Communication, Inc. and Searchlight ALX, LTD | Incorporated by reference to The Company's Report on Form 8-K for the period September 7, 2016 filed September 8, 2016. | |
10.1 | Order approving Application for a Certificate of Public Convenience and Necessity to operate as a Telecommunications (Intrastate Interexchange Carrier) Public Utility within Alaska | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 1991. | |
10.2 | The GCI Special Non-Qualified Deferred Compensation Plan1 | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 1995. | |
10.3 | Transponder Purchase Agreement for Galaxy X between Hughes Communications Galaxy, Inc. and GCI Communication Corp. | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 1995. | |
10.4 | Lease Agreement dated September 30, 1991 between RDB Company and General Communication, Inc. | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 1991. | |
10.5 | Transponder Lease Agreement between General Communication Incorporated and Hughes Communications Satellite Services, Inc., executed August 8, 1989 | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 1993. | |
10.6 | Addendum to Galaxy X Transponder Purchase Agreement between GCI Communication Corp. and Hughes Communications Galaxy, Inc. dated August 24, 1995 | Incorporated by reference to The Company’s Amendment No. 1 to Form S-3/A Registration Statement (File No. 333-28001) dated July 8, 1997. | |
10.7 | First Amendment to Lease Agreement dated as of September 2002 between RDB Company and GCI Communication Corp. as successor in interest to General Communication, Inc. | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10.8 | Aircraft lease agreement between GCI Communication Corp., and Alaska corporation and 560 Company, Inc., an Alaska corporation, dated as of January 22, 2001 | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10.9 | First amendment to aircraft lease agreement between GCI Communication Corp., and Alaska corporation and 560 Company, Inc., an Alaska corporation, dated as of February 8, 2002 | Incorporated by reference to The Company’s Annual Report on Form 10-K for the year ended December 31, 2002. | |
10.10 | Full-time Transponder Capacity Agreement with PanAmSat Corporation dated March 31, 2006 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2006. | |
10.11 | Registration Rights Agreement dated as of March 5, 2007 between General Communication, Inc. and John W. Stanton and Theresa E. Gillespie | Incorporated by reference to Exhibit 3 of the Schedule 13D dated March 5, 2007 filed on March 12, 2007. | |
10.12 | Second Amendment to Lease Agreement dated as of April 8, 2008 between RDB Company and GCI Communication Corp. as successor in interest to General Communication, Inc. | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2008. |
Exhibit No. | Description | Where Located | |
10.13 | First Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated February 15, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.14 | Second Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated April 9, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.15 | Third Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated June 4, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.16 | Fourth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated June 4, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.17 | Fifth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated September 30, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.18 | Sixth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated October 31, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.19 | Seventh Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated November 6, 2008 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.20 | Eighth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated June 8, 2009 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2009. | |
10.21 | Second Amended and Restated Credit Agreement dated as of January 29, 2010 by and among GCI Holdings, Inc., the other parties thereto and Calyon New York Branch, as administrative agent, and the other Lenders party thereto | Incorporated by reference to The Company's Report on Form 8-K for the period January 29, 2010 filed February 3, 2010. | |
10.22 | Ninth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated June 29, 2010 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2010 filed August 5, 2010. | |
10.23 | Amended and restated aircraft lease agreement between GCI Communication Corp., and Alaska corporation and 560 Company, Inc., an Alaska corporation, dated as of February 25, 2005 | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed March 15, 2011. | |
10.24 | First amendment to the amended and restated aircraft lease agreement between GCI Communication Corp., and Alaska corporation and 560 Company, Inc., an Alaska corporation, dated as of December 27, 2010 | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed March 15, 2011. | |
10.25 | Tenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated September 24, 2010 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed March 15, 2011. |
Exhibit No. | Description | Where Located | |
10.26 | Eleventh Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated September 23, 2010 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed March 15, 2011. | |
10.27 | Twelfth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated November 5, 2010 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed March 15, 2011. | |
10.28 | Broadband Initiatives Program Loan/Grant and Security Agreement between United Utilities, Inc. and the United States of America dated as of June 1, 2010 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed March 15, 2011. | |
10.29 | Indenture dated as of May 20, 2011 between GCI, Inc. and Union Bank, N.A., as trustee | Incorporated by reference to GCI, Inc.'s Report on Form 8-K for the period May 20, 2011 filed May 25, 2011. | |
10.30 | Supplemental Indenture dated as of May 23, 2011 between GCI, Inc. and Union Bank, N.A., as trustee | Incorporated by reference to GCI, Inc.'s Report on Form 8-K for the period May 20, 2011 filed May 25, 2011. | |
10.31 | Second Amended and Restated Aircraft Lease Agreement between GCI Communication Corp., an Alaska corporation and 560 Company, Inc., an Alaska corporation, dated May 9, 2011 | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2011 filed August 9, 2011. | |
10.32 | Credit Agreement dated August 30, 2011 by and between Unicom, Inc. as borrower and Northern Development Fund VIII, LLC as Lender and Travois New Markets Project CDE X, LLC as Lender and Waveland Sub CDE XVI, LLC as Lender and Alaska Growth Capital Bidco, Inc. as Disbursing Agent | Incorporated by reference to The Company's Report on Form 8-K for the period August 30, 2011 filed September 6, 2011. | |
10.33 | Credit Agreement dated October 3, 2012 by and between Unicom, Inc. as borrower and USBCDE Sub-CDE 74, LLC as Lender and Cherokee Nation Sub-CDE II, LLC as Lender and LBCDE Sub2, LLC as Lender and Waveland Sub CDE XXII, LLC as Lender | Incorporated by reference to The Company's Report on Form 8-K for the period October 3, 2012 filed October 9, 2012. | |
10.34 | Thirteenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated March 14, 2011 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed March 8, 2013. | |
10.35 | Fourteenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated June 7, 2011 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed March 8, 2013. | |
10.36 | Fifteenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated December 29, 2011 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed March 8, 2013. | |
10.37 | Sixteenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated December 21, 2012 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ended December 31, 2012, filed March 8, 2013. |
Exhibit No. | Description | Where Located | |
10.38 | Seventeenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated June 4, 2013 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013 filed November 8, 2013. | |
10.39 | Eighteenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation, formerly known as PanAmSat Corporation and GCI Communication Corp. dated October 17, 2013 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013 filed November 8, 2013. | |
10.40 | Broadband Initiatives Program Loan/Grant and Security Agreement between United Utilities, Inc. and The United States of America dated June 1, 2010 | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2013 filed November 8, 2013. | |
10.41 | Nineteenth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated March 20, 2014 # | Incorporated by reference to The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014 filed May 5, 2014. | |
10.42 | Twentieth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated August 11, 2014 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ending December 31, 2014 filed March 5, 2015. | |
10.43 | Fourth Amended and Restated Credit Agreement dated as of February 2, 2015 by and among GCI Holdings, Inc., GCI, Inc., the Subsidiary Guarantors party thereto, the Lenders party thereto, Union Bank, as Syndication Agent, Suntrust Bank, as Documentation Agent and Credit Agricole Corporate and Investment Bank, as Administrative Agent | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ending December 31, 2014 filed March 5, 2015. | |
10.44 | Twenty-First Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated August 11, 2014 # | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended March 31, 2015 filed May 8, 2015 | |
10.45 | Indenture dated as of April 1, 2015 between GCI, Inc. and MUFG Union Bank, N.A., as trustee | Incorporated by reference to GCI, Inc.'s Report on Form 8-K for the period April 1, 2015 filed April 6, 2015. | |
10.46 | Twenty-Second Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated August 11, 2014 # | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended June 30, 2015 filed August 5, 2015 | |
10.47 | First Amendment to the Fourth Amended and Restated Credit Agreement dated as of February 2, 2015 | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended June 30, 2015 filed August 5, 2015 | |
10.48 | Twenty-Third Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated August 11, 2014 # | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended September 30, 2015 filed November 5, 2015 | |
10.49 | Twenty-Fourth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated August 11, 2014 # | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended September 30, 2015 filed November 5, 2015 |
Exhibit No. | Description | Where Located | |
10.50 | Twenty-Fifth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated December 31, 2015 # | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ending December 31, 2015 filed March 3, 2016 | |
10.51 | Second Amendment to the Fourth Amended and Restated Credit Agreement dated as of February 2, 2015 | Incorporated by reference to The Company's Annual Report on Form 10-K for the year ending December 31, 2015 filed March 3, 2016 | |
10.52 | Twenty-Sixth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated March 7, 2016 # | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended March 31, 2016 filed May 5, 2016 | |
10.53 | Twenty-Seventh Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated June 17, 2016 # | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended June 30, 2016 filed August 3, 2016 | |
10.54 | Master Lease Agreement among The Alaska Wireless Network, LLC, AWN Tower Company, LLC and General Communication, Inc. dated August 1, 2016 | Incorporated by reference to The Company's Quarterly Report on Form 10-Q for the period ended September 30, 2016 filed November 4, 2016 | |
10.55 | Third Amendment to the Fourth Amended and Restated Credit Agreement dated as of November 17, 2016 | Incorporated by reference to The Company's Report on Form 8-K for the period November 17, 2016 filed November 23, 2016. | |
10.56 | Fourth Amendment to the Fourth Amended and Restated Credit Agreement dated as of November 17, 2016 | Incorporated by reference to The Company's Report on Form 8-K for the period November 17, 2016 filed November 23, 2016. | |
10.57 | Twenty-Eighth Amendment to the Full-Time Transponder Capacity Agreement (Pre-Launch) between Intelsat Corporation and GCI Communication Corp. dated October 31, 2016 # * | ||
10.58 | Description of Incentive Compensation Plan for Named Executive Officers1 * | “Executive Compensation” in Part III of this Annual Report on Form 10-K for the year ending December 31, 2016. | |
14 | Code Of Business Conduct and Ethics | Incorporated by reference to The Company's Report on Form 8-K for the period September 27, 2013 filed October 3, 2013. | |
21.1 | Subsidiaries of the Registrant * | ||
23.1 | Consent of Grant Thornton LLP (Independent Public Accountant for Company) * | ||
31 | Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 * | ||
32 | Certifications Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 * |
Exhibit No. | Description | Where Located | |
101 | The following materials from General Communication, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2016 and 2015; (ii) Consolidated Income Statements for the years ended December 31, 2016, 2015 and 2014; (iii) Consolidated Statements of Stockholders' Equity for the years ended December 31, 2016, 2015 and 2014; (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014; and (v) Notes to 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. | |
1 | Constitute management contracts or compensatory plans. | |
By: | /s/ Ronald A. Duncan | ||
Ronald A. Duncan, President (Chief Executive Officer) |
Date: | March 2, 2017 |
Signature | Title | Date | ||
/s/ Stephen M. Brett | Chairman of Board and Director | March 2, 2017 | ||
Stephen M. Brett | ||||
/s/ Ronald A. Duncan | President and Director (Principal Executive Officer) | March 2, 2017 | ||
Ronald A. Duncan | ||||
/s/ Bridget L. Baker | Director | March 2, 2017 | ||
Bridget L. Baker | ||||
/s/ Jerry A. Edgerton | Director | March 2, 2017 | ||
Jerry A. Edgerton | ||||
/s/ Scott M. Fisher | Director | March 2, 2017 | ||
Scott M. Fisher | ||||
/s/ William P. Glasgow | Director | March 2, 2017 | ||
William P. Glasgow | ||||
/s/ Mark W. Kroloff | Director | March 2, 2017 | ||
Mark W. Kroloff | ||||
/s/ Stephen R. Mooney | Director | March 2, 2017 | ||
Stephen R. Mooney | ||||
/s/ James M. Schneider | Director | March 2, 2017 | ||
James M. Schneider | ||||
/s/ Eric L. Zinterhofer | Director | March 2, 2017 | ||
Eric L. Zinterhofer | ||||
/s/ Peter J. Pounds | Senior Vice President, Chief Financial Officer, and Secretary (Principal Financial Officer) | March 2, 2017 | ||
Peter J. Pounds | ||||
/s/ Lynda L. Tarbath | Vice President, Chief Accounting Officer (Principal Accounting Officer) | March 2, 2017 | ||
Lynda L. Tarbath |
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 **** Transponder shall be **** on ****. |
4. | Section 3.1, **** Fee. Customer’s **** Fee for the **** shall be as set forth in Appendix A. |
5. | Except as specifically set forth in this Amendment, all terms and conditions of the Agreement remain in full force and effect. |
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$**** **** | |
**** | **** | **** - **** | US$**** ** | |
**** | **** | **** - **** | US$**** *** | |
**** | **** | **** - **** | US$**** ** | |
**** | **** | **** - **** | US$**** *** | |
**** | **** | **** - **** | US$**** ** | |
**** | **** | **** - **** | US$**** *** | |
**** | **** | **** - **** | US$**** ** |
Satellite Information | |
Satellite: | **** |
Orbital Location: | **** Longitude |
Uplink Beam/Band: | **** / **** |
Downlink Beam/Band: | **** / **** |
Nominal Transponder Bandwidth: | **** |
Customer Transponder Capacity Allocation: | **** |
1.0 | INTRODUCTION |
2.0 | SATELLITE PERFORMANCE CHARACTERISTICS |
Orbital Tolerances: | Longitude Tolerance: | **** degrees |
Inclination Tolerance: | **** degrees |
3.0 | COMMUNICATION SYSTEM PERFORMANCE CHARACTERISTICS |
Uplink Band | Downlink Band | Translation Frequency |
**** | **** | **** |
Entity | Jurisdiction of Organization | Name Under Which Subsidiary Does Business |
Alaska United Fiber System Partnership | Alaska | Alaska United Fiber System Partnership, Alaska United Fiber System, Alaska United |
BBN, Inc. | Alaska | BBN, BBN, Inc. |
Bortek, LLC | Delaware | Bortek, Bortek, LLC |
Cycle30, Inc. | Alaska | Cycle30, Inc., Cycle30 |
Denali Media Anchorage, Corp. | Alaska | Denali Media Anchorage, Corp. |
Denali Media Holdings, Corp. | Alaska | Denali Media Holdings, Corp., DMH |
Denali Media Juneau, Corp. | Alaska | Denali Media Juneau, Corp. |
Denali Media Southeast, Corp. | Alaska | Denali Media Southeast, Corp. |
GCI, Inc. | Alaska | GCI, Inc. |
GCI Cable, Inc. | Alaska | GCI Cable, GCI Cable, Inc. |
GCI Communication Corp. | Alaska | GCI, GCC, GCICC, GCI Communication Corp. |
GCI Community Development, LLC | Alaska | GCI Community Development, LLC |
GCI Fiber Communication Co., Inc. | Alaska | GCI Fiber Communication, Co., Inc., GFCC, Kanas |
GCI Holdings, Inc. | Alaska | GCI Holdings, Inc. |
GCI NADC, LLC | Alaska | GCI, GCI NADC, LLC |
GCI SADC, LLC | Alaska | GCI, GCI SADC, LLC |
GCI Wireless Holdings, LLC | Alaska | GCI Wireless Holdings, LLC |
Integrated Logic, LLC | Alaska | Integrated Logic |
Kodiak-Kenai Cable Co., LLC | Alaska | KKCC, Kodiak-Kenai Cable Co., LLC |
Kodiak-Kenai Fiber Link, Inc. | Alaska | KKFL, Kodiak-Kenai Fiber Link, Inc. |
Potter View Development Co., Inc. | Alaska | Potter View Development Co., Inc. |
Supervision, Inc. | Alaska | Supervision, Supervision, Inc. |
The Alaska Wireless Network, LLC | Delaware | The Alaska Wireless Network, AWN |
Unicom, Inc. | Alaska | Unicom, Inc., Unicom |
United-KUC, Inc. | Alaska | United-KUC, Inc., United-KUC, KUC |
United Utilities, Inc. | Alaska | United Utilities, Inc. United Utilities, UUI |
United2, LLC | Alaska | United2, LLC, United2 |
Yukon Tech, Inc. | Alaska | Yukon Tech, Yukon Tech, Inc. |
Yukon Tel. Co., Inc. | Alaska | Yukon Tel, Yukon Tel. Co., Inc. |
1. | I have reviewed this annual report on Form 10-K of General Communication, Inc. for the period ended December 31, 2016; |
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) | 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; |
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 |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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. |
March 2, 2017 | /s/ Ronald A. Duncan |
Ronald A. Duncan President and Director |
1. | I have reviewed this annual report on Form 10-K of General Communication, Inc. for the period ended December 31, 2016; |
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) | 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; |
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 |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
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. |
March 2, 2017 | /s/ Peter J. Pounds |
Peter J. Pounds | |
Senior Vice President, Chief Financial Officer, and Secretary (Principal Financial Officer) |
(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. |
Date: March 2, 2017 | /s/ Ronald A. Duncan |
Ronald A. Duncan Chief Executive Officer General Communication, Inc. |
(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. |
Date: March 2, 2017 | /s/ Peter J. Pounds |
Peter J. Pounds Chief Financial Officer General Communication, Inc. |
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Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Feb. 24, 2017 |
Jun. 30, 2016 |
|
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Entity Registrant Name | GENERAL COMMUNICATION INC | ||
Entity Central Index Key | 0000808461 | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Well Known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 160,967,837 | ||
Class A Common Stock | |||
Entity Common Stock Shares Outstanding | 32,691,000 | ||
Class B Common Stock | |||
Entity Common Stock Shares Outstanding | 3,153,000 |
CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($) shares in Thousands, $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Related party accrued interest | $ 5,132 | $ 5,132 |
Related party long-term debt | 56,640 | 54,810 |
Related party capital lease obligations, excluding current maturities | 1,769 | 1,824 |
Related party derivative stock appreciation rights | $ 29,700 | $ 32,820 |
Class A Common Stock | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Common Stock, no par value | $ 0 | $ 0 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 32,668 | 35,593 |
Common stock, shares outstanding | 32,642 | 35,567 |
Treasury stock, shares | 26 | 26 |
Class B Common Stock | ||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||
Common Stock, no par value | $ 0 | $ 0 |
Common stock, shares authorized | 10,000 | 10,000 |
Common stock, shares issued | 3,153 | 3,154 |
Common stock, shares outstanding | 3,153 | 3,154 |
Business and Summary of Significant Accounting Policies |
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Business and Summary of Significant Accounting Principles | Business and Summary of Significant Accounting Principles In the following discussion, General Communication, Inc. (“GCI”) and its direct and indirect subsidiaries are referred to as “we,” “us” and “our.”
GCI, an Alaska corporation, was incorporated in 1979. We provide a full range of wireless, data, video, voice, and managed services to residential customers, businesses, governmental entities, and educational and medical institutions primarily in Alaska.
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.
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.
Wireless 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 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 Statement of Operations for the year ended December 31, 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):
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 total of the additional deferred taxes incurred as a result of the transaction 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):
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 Sheet at their allocated cost on the day of acquisition. The deferred tax assets and additional paid-in capital were adjusted in 2016 as a result of the reallocation of partnership tax basis as determined when preparing the 2015 federal tax return. 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 Statement of Operations for the year ended December 31, 2015. Other Acquisitions During the year ended December 31, 2015, we completed three additional 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.
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers. This 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. In March 2016, the FASB issued ASU 2016-08, which amended the guidance in the new standard in order to clarify the principal versus agent assessment and is intended to make the guidance more operable and lead to more consistent application. In April 2016, the FASB issued ASU 2016-10, which clarifies the identification of performance obligations and the licensing implementation guidance in ASU 2014-09. In May 2016, the FASB issued ASU 2016-11, which rescinds SEC paragraphs pursuant to SEC staff announcements regarding ASU 2014-09. These rescissions include changes to topics pertaining to accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued ASU 2016-12, which provides clarifying guidance in certain narrow areas and adds some practical expedients to ASU 2014-09. Finally, ASU 2016-20 makes minor corrections or improvements to ASU 2014-09 that are not expected to have a significant effect on accounting practices under ASU 2014-09. The standard permits the use of either the retrospective or cumulative effect transition method. We anticipate using the retrospective method to adopt this standard. Early adoption is permitted for annual periods beginning after December 15, 2016, however, we do not plan to early adopt this standard. We have assessed our material revenue streams and we do not anticipate significant changes to our revenue recognition as a result of this new standard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Lease accounting by the lessor remains largely unchanged by the new standard. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and is required to be adopted using the modified retrospective approach. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations, but we expect that adoption will have a material impact on our long-term assets and liabilities. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC 718, Compensation - Stock Compensation. The update includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted with any adjustments reflected as of the beginning of the fiscal year of adoption. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate consideration of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2019, and is required to be adopted using the modified retrospective approach. Early adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses eight specific cash flow issues with the objective of reducing diversity in practice. The issues identified within the ASU include: debt prepayments or extinguishment costs; contingent consideration made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identified cash flows and application of the predominance principle. ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for annual and interim reporting periods. The adoption of this guidance is not expected to have a material effect on our statement of cash flows.
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 - Imputation of 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. We adopted ASU 2015-03 retrospectively as of January 1, 2016, and have reclassified $15.4 million of the December 31, 2015, Deferred Loan and Senior Note Costs, Net of Amortization balance included in Total Other Assets to Long-Term Debt, Net included in Total Liabilities. In April 2015, the FASB issued ASU 2015-05, Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The ASU provides guidance in evaluating whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for as an acquisition of a software license. If the arrangement does not contain a software license, it should be accounted for as a service contract. We adopted ASU 2015-05 prospectively as of January 1, 2016. The adoption of this standard did not have a significant effect on our financial position or results of operations. 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. We adopted ASU 2015-10 as of January 1, 2016. The adoption of this standard did not have a significant 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. We adopted ASU 2015-11 prospectively as of April 1, 2016. The adoption of this standard did not have a significant effect on our financial position or results of operations. In January 2017, the FASB issued an ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. We adopted and applied ASU 2017-01 to a transaction that we closed in November 2016 (see Note 5 of this Form 10-K for information on the transaction).
We account for the regulated operations of our incumbent local exchange carriers in accordance with the accounting principles for regulated enterprises. This accounting recognizes 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.
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 per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding during the period. The computation of the dilutive net income 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 per share of Class B common stock does not assume the conversion of those shares. The computation of the dilutive net income per share of Class A common stock also assumes the conversion of our derivative financial instrument that may be settled in cash or shares (as described in Note 11 of this Form 10-K), shares associated with unexercised stock options and deferred compensation that may be settled in cash or shares if the effect of conversion is dilutive. 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.
We have a common stock buyback program to repurchase GCI's Class A and Class B common stock. The cost of the repurchased common stock reduces Common Stock and Retained Earnings in our Consolidated Balance Sheets and is constructively retired as of December 31, 2016, 2015 and 2014.
We have 1,000,000 shares of preferred stock authorized with no shares issued and outstanding at years ended December 31, 2016, 2015 and 2014.
We account for treasury stock purchased for general corporate purposes under the cost method and include treasury stock as a component of Stockholders’ Equity.
Cash equivalents consist of certificates of deposit which have an original maturity of three months or less at the date acquired and are readily convertible into cash.
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, a pooled basis using a percentage of related accounts, or a specific identification method. When a 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 feel it is probable the receivable will not be recovered. We do not have any off-balance-sheet credit exposure related to our customers. Wireless Equipment Installment Plan ("EIP") Receivables We offer new and existing wireless customers the option to participate in Upgrade Now, a program that provides eligible customers with the ability to purchase certain wireless devices in installments over a period of up to 24 months. Participating customers have the right to trade-in the original equipment for a new device after making the equivalent of 12 monthly installment payments, provided their handset is in good working condition. Upon upgrade, the outstanding balance of the EIP is exchanged for the used handset. At the time of sale, we impute interest on the receivables associated with Upgrade Now. We record the imputed interest as a reduction to the related accounts receivable. Interest income, which is included in Other Income and (Expense) in our Consolidated Statements of Operations, is recognized over the financed installment term. We assess the collectability of our EIP receivables based upon a variety of factors, including payment trends and other qualitative factors. The credit profiles of our customers with a Upgrade Now plan are similar to those of our customers with a traditional subsidized plan. Customers with a credit profile which carries a higher risk are required to make a down payment for equipment financed through Upgrade Now.
Wireless handset inventories are stated at the lower of cost or net realizable value. Cost is determined using the average cost method. Handset costs in excess of the revenues generated from handset sales, or handset subsidies, are expensed at the time of sale. We do not recognize the expected handset subsidies prior to the time of sale because the promotional discount decision is made at the point of sale and/or because we expect to recover the handset subsidies through service revenue. Inventories of other merchandise for resale and parts are stated at the lower of cost or net realizable value. Cost is determined using the average cost method.
Property and equipment is stated at cost. Construction costs of facilities are capitalized. Equipment financed under capital leases is recorded at the lower of fair market value or the present value of future minimum lease payments at inception of the lease. Construction in progress represents transmission equipment and support equipment and systems not placed in service on December 31, 2016, that management intends to place in service during 2017 and 2018. Depreciation is computed using the straight-line method based upon the shorter of the estimated useful lives of the assets or the lease term, if applicable, in the following ranges:
Amortization of property and equipment under capital leases is included in Depreciation and Amortization Expense in our Consolidated Statements of Operations. Repairs and maintenance are charged to expense as incurred. Expenditures for major renewals and betterments are capitalized. Accumulated depreciation is removed and gains or losses are recognized at the time of sales or other dispositions of property and equipment.
Goodwill, cable certificates (certificates of convenience and public necessity), wireless licenses and broadcast licenses are not amortized. Cable certificates represent certain perpetual operating rights to provide cable services. Wireless licenses represent the right to utilize certain radio frequency spectrum to provide wireless communications services. Broadcast licenses represent the right to broadcast television stations in certain areas. Goodwill represents the excess of cost over fair value of net assets acquired in connection with a business acquisition. All other amortizable intangible assets are being amortized over 2 to 20 year periods using the straight-line method.
Cable certificates, wireless licenses and broadcast licenses are treated as indefinite-lived intangible assets and are tested annually for impairment or more frequently if events and circumstances indicate that the asset might be impaired. We assessed qualitative factors (“Step Zero”) in our annual test over our cable certificate, wireless license and broadcast license assets as of October 31, 2016 to determine if it is more likely than not that those intangible assets are impaired and require further analysis. As part of our Step Zero analysis, we considered our own economic position, estimated future growth, and geographic and industry economic outlooks. These estimates and assumptions have a significant impact on our analysis. The quantitative impairment test ("Step One") for identifiable indefinite-lived intangible assets other than goodwill consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the asset becomes its new accounting basis. Impairment testing of our cable certificate, wireless license and broadcast license assets as of October 31, 2015, used a direct discounted cash flow method. This approach requires us to make estimates and assumptions including projected cash flows and discount rates. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such impairment charge. Our goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the assets might be impaired. We used a Step Zero analysis for goodwill impairment as of October 31, 2016 to determine whether it is more likely than not that goodwill is impaired. We considered qualitative factors such as our economic position, estimated future growth, geographic and industry economic outlooks, and the margin by which our fair value exceeded the book value in 2015. These estimates and assumptions have a significant impact on our analysis. For goodwill impairment testing as of October 31, 2015, we used the quantitative two-step process. The first step of the quantitative goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. To determine our reporting units, we evaluated the components one level below the segment level and we aggregated the components if they had similar economic characteristics. As a result of this assessment, our reporting units were the same as our two reportable segments. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill that would be recognized in a business combination. We used an income approach to determine the fair value of our reporting units for purposes of our goodwill impairment test. In addition, a market-based approach is used where possible to corroborate the fair values determined by the income approach. The income approach requires us to make estimates and assumptions including projected cash flows and discount rates. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such impairment charge. We completed our annual goodwill and intangibles review and no impairment charge was recorded for the years ended December 31, 2016, 2015 and 2014. Long-lived assets, such as property, plant, and equipment, and purchased or developed intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of an asset group to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the year ended December 31, 2015, we recorded impairment charges related to our long-lived software assets (see Note 16 of this Form 10-K for detailed information). We recorded no impairment charges related to our long lived assets for the years ended December 31, 2016 and 2014.
Debt issuance costs are deferred and amortized using the effective interest method. If a refinancing or amendment of a debt instrument is a substantial modification, all or a portion of the applicable debt issuance costs are written off. If a debt instrument is repaid prior to the maturity date we will write-off the related unamortized amount of debt issuance costs.
Other Assets primarily include broadcast licenses, equity investments that are accounted for using the equity or cost method, restricted cash, long-term deposits, prepayments, long-term EIP receivables and long-term non-trade accounts receivable.
We hold investments in equity method and cost method investees. Investments in equity method investees are those for which we have the ability to exercise significant influence but do not control and are not the primary beneficiary. Significant influence typically exists if we have a 20% to 50% ownership interest in the venture unless persuasive evidence to the contrary exists. Under this method of accounting, we record our proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Cash payments to equity method investees such as additional investments, loans and advances and expenses incurred on behalf of investees, as well as payments from equity method investees such as dividends, distributions and repayments of loans and advances are recorded as adjustments to investment balances. Investments in entities in which we have no control or significant influence are accounted for under the cost method. We review our investment portfolio each reporting period to determine whether there are events or circumstances that would indicate there is a decline in the fair value that would be considered other than temporary. We recorded an impairment loss of $12.6 million related to one of our equity investments during the year ended December 31, 2015 (see "Equity Method Investment" section of Note 14 of this Form 10-K for additional information). We recorded no impairment charges to equity method or cost method investments for the years ended December 31, 2016 and 2014.
We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred in Other Liabilities on the Consolidated Balance Sheets. When the liability is initially recorded, we capitalize a cost by increasing the carrying amount of the related long-lived asset. In periods subsequent to initial measurement, changes in the liability for an asset retirement obligation resulting from revisions to either the timing or the amount of the original estimate of undiscounted cash flows are recognized. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we either settle the obligation for its recorded amount or incur a gain or loss upon settlement. The majority of our asset retirement obligations are the estimated cost to remove telephony transmission equipment and support equipment from leased property. Following is a reconciliation of the beginning and ending aggregate carrying amounts of our liability for asset retirement obligations (amounts in thousands):
During the years ended December 31, 2016 and 2015, we recorded additional capitalized costs of $4.9 million and $2.0 million, respectively, in Property and Equipment. Certain of our network facilities are on property that requires us to have a permit and the permit contains provisions requiring us to remove our network facilities in the event the permit is not renewed. We expect to continually renew our permits and therefore cannot estimate any liabilities associated with such agreements. A remote possibility exists that we would not be able to successfully renew a permit, which could result in us incurring significant expense in complying with restoration or removal provisions.
We account for our derivative instrument 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 instrument (as described in Note 9 of this Form 10-K) 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) with Related Party.
All revenues are recognized when the earnings process is complete. Revenue recognition is as follows:
Universal Service Fund As an Eligible Telecommunications Carrier ("ETC"), we receive support from the Universal Service Fund ("USF") to support the provision of wireline local access and wireless service in high cost areas. On August 31, 2016, the FCC published a Report and Order to reform the methodology for distributing USF high cost support for both wireline and wireless voice and broadband service (“Alaska High Cost Order”). The Alaska High Cost Order was a significant program change that required a reassessment of our high cost support revenue recognition. Remote High Cost Support Prior to the Alaska High Cost Order, we accrued estimated program revenue based on current line counts and the frozen per-line rates, reduced as needed by our estimate of the impact of the Statewide Support Cap. Additionally, we also considered our assessment of the impact of current FCC regulations and of the potential outcome of FCC proceedings. As of January 1, 2017, Remote high cost support payments to Alaska High Cost participants will be frozen on a per-company basis at adjusted December 2014 levels for a ten-year term in exchange for meeting individualized performance obligations to offer voice and broadband services meeting the service obligations at specified minimum speeds by five-year and ten-year service milestones to a specified number of locations. Remote high cost support is no longer dependent upon line counts and line count filings are no longer required. As a result of the Alaska High Cost Order, we apply the proportional performance revenue recognition method to account for the transition from accruals based on line counts to a fixed payment stream while our level of service provided and associated costs remain constant. Included in the calculation are the scheduled Remote high cost support payments from September 2016 through January 2027 net of our Remote accounts receivable balance at August 31, 2016. An equal amount of this result is recognized as Remote support revenue each period. In 2022, the FCC may redistribute support in areas with duplicative LTE service. We will account for any changes made by the FCC to redistribute support prospectively. Urban High Cost Support Prior to the Alaska High Cost Order, Urban high cost support payments were frozen and had phased down to 60% of the monthly average of the 2011 annual support. The Alaska High Cost Order mandates that as of January 1, 2017, Urban high cost support for 2017 and 2018 will be two-thirds and one-third of the December 2014 level of support received, respectively, with Urban high cost support ending effective December 31, 2018. We apply the proportional performance revenue recognition method to account for the impact of the declining payments while our level of service provided and associated costs remain constant. Included in the calculation are the scheduled Urban high cost support payments from September 2016 through January 2018 net of our Urban accounts receivable balance at August 31, 2016. An equal amount of this result is recognized as Urban support revenue each period. For both Remote and Urban high cost support revenue, our ability to collect our accrued USF support is contingent upon continuation of the USF program and upon our eligibility to participate in that program, which are subject to change by future regulatory, legislative or judicial actions. We adjust revenue and the account receivable in the period the FCC makes a program change or we assess the likelihood that such a change has increased or decreased revenue. We do not recognize revenue related to a particular service area until our ETC status has been approved by the RCA. We recorded high cost support revenue under the USF program of $64.1 million, $66.2 million and $66.7 million for the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2016, we have $43.9 million in high cost accounts receivable.
We expense advertising costs in the period during which the first advertisement appears. Advertising expenses were $7.0 million, $5.7 million and $5.7 million for the years ended December 31, 2016, 2015 and 2014, respectively.
Scheduled operating lease rent increases are amortized over the expected lease term on a straight-line basis. Rent holidays are recognized on a straight-line basis over the operating lease term (including any rent holiday period). Leasehold improvements are amortized over the shorter of their economic lives or the lease term. We may amortize a leasehold improvement over a term that includes assumption of a lease renewal if the renewal is reasonably assured. Leasehold improvements acquired in a business combination are amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals that are deemed to be reasonably assured at the date of acquisition. Leasehold improvements that are placed in service significantly after and are not contemplated at or near the beginning of the lease term are amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals that are deemed to be reasonably assured at the date the leasehold improvements are purchased. Leasehold improvements made by us and funded by landlord incentives or allowances under an operating lease are recorded as deferred rent and amortized as reductions to lease expense over the lease term.
Material interest costs incurred during the construction period of non-software capital projects are capitalized. Interest costs incurred during the development period of a software capital project are capitalized. Interest is capitalized in the period commencing with the first expenditure for a qualifying capital project and ending when the capital project is substantially complete and ready for its intended use. We capitalized interest costs of $3.7 million, $3.0 million and $3.6 million during the years ended December 31, 2016, 2015 and 2014, respectively.
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for their future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable earnings in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be realized.
Total comprehensive income (loss) was equal to net income (loss) during the years ended December 31, 2016, 2015 and 2014.
Compensation expense is recognized in the financial statements for share-based awards based on the grant date fair value of those awards. Share-based compensation expense includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. We are required to report the benefits associated with tax deductions in excess of recognized compensation cost as a financing cash flow rather than as an operating cash flow.
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. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, observance of trends, and other factors, as appropriate. Additionally, changes in accounting estimates are reasonably likely to occur from period to period. These factors could have a material impact on our financial statements. Significant estimates include, but are not limited to, the following: revenue recognition, the valuation of the derivative stock appreciation rights, impairment and useful lives of intangible assets, and the valuation allowance for net operating loss deferred tax assets.
Financial instruments that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Excess cash is invested in high quality short-term liquid money instruments. At December 31, 2016, and 2015, substantially all of our cash and cash equivalents were invested in short-term liquid money instruments and the balances were in excess of Federal Deposit Insurance Corporation insured limits. Our customers are located primarily throughout Alaska. Because of this geographic concentration, our growth and operations depend upon economic conditions in Alaska.
Internally used software, whether purchased or developed, is capitalized and amortized using the straight-line method over an estimated useful life of three to five years. We capitalize certain costs associated with internally developed software such as payroll costs of employees devoting time to the projects and external direct costs for materials and services. Costs associated with internally developed software to be used internally are expensed until the point the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred. The capitalization of software requires judgment in determining when a project has reached the development stage.
Certain of our customers have guaranteed levels of service. If an interruption in service occurs, we do not recognize revenue for any portion of the monthly service fee that will be refunded to the customer or not billed to the customer due to these service level agreements. Additionally, we have provided certain guarantees to U.S. Bancorp Community Development Corporation (“US Bancorp”), our tax credit investor in our four VIEs. We have guaranteed the delivery of $56.0 million of New Markets Tax Credits (“NMTC”) to US Bancorp, as well as certain loan and management fee payments between our subsidiaries and the VIEs, for which we are the primary beneficiary. In the event that the tax credits are not delivered or certain payments not made, we are obligated to provide prompt and complete payment of these obligations. See Note 14 of this Form 10-K for more information about our NMTC transactions. EIP Trade-in Right 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 from us and have a qualifying monthly wireless service plan. 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 guarantee liability. The recognition of subsequent adjustments to the guarantee liability 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 guarantee liabilities. Guarantee liabilities are included in Accrued Liabilities in our Consolidated Balance Sheets.
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):
Reclassifications have been made to the prior years' consolidated financial statements to conform to classifications used in the current year. |
Tower Sale and Leaseback (Notes) |
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Tower Sale and Leaseback [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tower Sale and Leaseback | Tower Sale and Leaseback In August 2016, we sold to Vertical Bridge Towers II, LLC (“Vertical Bridge”) 276 cell sites (“Tower Sites”) in exchange for net proceeds of $90.8 million (“Tower Transaction”). The sale included, where applicable, the towers, the land on which the towers were situated if owned by us, the obligation to pay land leases, and other executory costs. We entered into a master lease agreement in which we lease back space at the Tower Sites for an initial term of ten years, followed by the option to renew for eight additional five year periods, for a total possible lease term of 50 years. Each lease is subject to a 2% annual increase in lease payments throughout the life of the initial lease and all subsequent lease renewals. Prior to the Tower Transaction, we had the legal obligation to remove the towers upon termination of the land lease agreements. The obligation is now reduced to the removal of our equipment from the towers. Therefore, we have reduced our asset retirement obligation related to the Tower Sites by $3.4 million. Per the master lease agreement, we have the right to cure land lease defaults on behalf of Vertical Bridge and have negotiated fixed rate lease renewals as described above. Due to this continuing involvement with the Tower Sites, we determined we were precluded from applying sale-leaseback accounting. We recorded a long-term financial obligation (“Tower Obligation”) in the amount of the net proceeds received and recognize interest on the Tower Obligation at a rate of 7.1% using the effective interest method. The Tower Obligation is increased by interest expense and amortized through contractual leaseback payments made by us to Vertical Bridge. Our historical tower site asset costs continue to be depreciated and reported in Net Property and Equipment. The following table summarizes the impacts to the Consolidated Balance Sheets (amounts in thousands):
Future minimum payments related to the Tower Obligation, including expected renewals and excluding deferred transaction costs, are summarized below (amounts in thousands):
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Consolidated Statements of Cash Flows Supplemental Disclosures |
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Consolidated Statements of Cash Flows Supplemental Disclosures | Consolidated Statements of Cash Flows Supplemental Disclosures Changes in operating assets and liabilities consist of (amounts in thousands):
The following items are for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):
The following items are non-cash investing and financing activities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):
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Receivables and Allowance for Doubtful Receivables |
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Receivables and Allowance for Doubtful Receivables | Receivables and Allowance for Doubtful Receivables Receivables consist of the following at December 31, 2016 and 2015 (amounts in thousands):
As described in Note 1 of this Form 10-K we receive support from each of the various USF programs: high cost, low income, rural health care, and schools and libraries. This support was 24%, 19%, and 19% of our revenue for the years ended December 31, 2016, 2015 and 2014, respectively. We had USF net receivables of $92.0 million and $98.1 million at December 31, 2016 and 2015, respectively. Changes in the allowance for doubtful receivables during the years ended December 31, 2016, 2015 and 2014 are summarized below (amounts in thousands):
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Net Property and Equipment |
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Net Property and Equipment | Net Property and Equipment Net property and equipment consists of the following at December 31, 2016 and 2015 (amounts in thousands):
KKCC Asset Acquisition In November 2016, we acquired Kodiak-Kenai Cable Company, LLC ("KKCC") which through its wholly owned subsidiary owns the only low latency redundant fiber link between Anchorage, the Kenai Peninsula and Kodiak. We adopted ASU 2017-01, which allows us to treat the acquisition of KKCC as an asset acquisition. Total consideration transferred to the previous owners of KKCC consisted of a cash payment of $19.7 million and the fair market value of $14.0 million for indefeasible right-to-use capacity that we owned on the KKCC fiber system ("IRU Capacity") that was terminated as a result of the acquisition. The IRU Capacity included as consideration was adjusted to fair value as of the acquisition date resulting in a $3.1 million gain recorded in Other Income (Expense) in our Consolidated Statement of Operations for the year ended December 31, 2016. We allocated the total consideration transferred to the acquired assets and liabilities assumed based on the relative fair value. The following table summarizes the allocation of total consideration (amounts in thousands):
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Intangible Assets and Goodwill |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Goodwill | Intangible Assets and Goodwill As of October 31, 2016, cable certificates, wireless licenses, broadcast licenses and goodwill were tested for impairment and we determined that these intangible assets were not impaired at December 31, 2016. The remaining useful lives of our cable certificates, wireless licenses, broadcast licenses and goodwill were evaluated as of October 31, 2016, and events and circumstances continue to support an indefinite useful life. There are no indicators of impairment of our intangible assets subject to amortization as of December 31, 2016. Other Intangible Assets subject to amortization include the following at December 31, 2016 and 2015 (amounts in thousands):
Changes in Goodwill and Other Intangible Assets are as follows (amounts in thousands):
Amortization expense for definite-life intangible assets for the years ended December 31, 2016, 2015 and 2014 follow (amounts in thousands):
Amortized intangible assets are definite-life assets, and as such, we record amortization expense based on a method that most appropriately reflects our expected cash flows from these assets. Intangible assets that have finite useful lives are amortized over their useful lives using the straight-line method with a weighted-average life of 13.3 years. Amortization expense for definite-life intangible assets for each of the five succeeding fiscal years is estimated to be (amounts in thousands):
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Long-Term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Debt | Long-Term Debt Long-term debt consists of the following (amounts in thousands):
In November 2016, we amended our Senior Credit Facility. We paid loan fees and other expenses of $0.2 million that were expensed immediately in our Consolidated Statement of Operations for the year ended December 31, 2016 and $3.9 million that were deferred and are being amortized over the life of the Senior Credit Facility. We recorded a $0.6 million loss on extinguishment of debt in our Consolidated Statement of Operations for the year ended December 31, 2016 as part of this amendment. We had a $55.0 million outstanding balance and $21.0 million in letters of credit under the $200.0 million Senior Credit Facility Revolver at December 31, 2016, which leaves $124.0 million available for borrowing as of December 31, 2016.
Interest on the notes is payable semi-annually in arrears. Upon the occurrence of a change of control, each holder of the 2025 and 2021 Notes will have the right to require us to purchase all or any part of such holder’s 2025 or 2021 Notes at a purchase price equal to 101% of the principal amount of such notes, plus accrued and unpaid interest on such 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 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. In conjunction with the issuance of our 2025 Notes and the repayment of our 2019 Notes, we recorded a $27.7 million loss on extinguishment of debt in our Consolidated Statement of Operations for the year ended December 31, 2015.
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 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 is being amortized over the term of the note using the effective interest method. See Note 9 of this Form 10-K for additional information on the stock appreciation rights. Searchlight became a related party as of February 2, 2015, see Note 13 of this Form 10-K for additional information. 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.
The terms of the Senior Credit Facility include customary representations and warranties, customary affirmative and negative covenants and customary events of default. At any time after the occurrence of an event of default under the Senior Credit Facility, the lenders may, among other options, declare any amounts outstanding under the Senior Credit Facility immediately due and payable and terminate any commitment to make further loans under the Senior Credit Facility. The obligations under the Senior Credit Facility are secured by a security interest on substantially all of the assets of our wholly owned subsidiary, GCI Holdings, Inc. and the subsidiary guarantors, as defined in the Senior Credit Facility, and on the stock of GCI Holdings, Inc. The Wells Fargo note is subject to similar affirmative and negative covenants as the Senior Credit Facility and is secured by a security interest and lien on the building purchased with the funds. The 2025 and 2021 Note covenants restrict our wholly owned subsidiary, 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. Limitations and exceptions to note covenants and events of default are described in the 2025 Notes and 2021 Notes indentures. We were in compliance with all covenants required by our notes and Senior Credit Facility as of December 31, 2016. Maturities of long-term debt as of December 31, 2016 are as follows (amounts in thousands):
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes Total income tax (expense) benefit of $(5.2) million, $1.8 million and $(10.0) million for the years ended December 31, 2016, 2015 and 2014, respectively, was allocated to income (loss) in each year. Income tax (expense) benefit consists of the following (amounts in thousands):
Total income tax (expense) benefit differed from the “expected” income tax (expense) benefit determined by applying the statutory federal income tax rate of 35% as follows (amounts in thousands):
The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2016 and 2015 are summarized below (amounts in thousands):
At December 31, 2016, we have tax net operating loss carryforwards of $272.1 million that will begin expiring in 2022 if not utilized, and alternative minimum tax credit carryforwards of $1.7 million available to offset regular income taxes payable in future years. Our utilization of remaining acquired net operating loss carryforwards is subject to annual limitations pursuant to Internal Revenue Code section 382 which could reduce or defer the utilization of these losses. Our tax net operating loss carryforwards are summarized below by year of expiration (amounts in thousands):
Tax benefits associated with recorded deferred tax assets are considered to be more likely than not realizable through taxable income earned in carryback years, 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. We file federal income tax returns in the U.S. and in various state jurisdictions. We are not subject to U.S. or state tax examinations by tax authorities for years 2012 and earlier except that certain U.S. federal income tax returns for years after 2001 are not closed by relevant statutes of limitations due to unused net operating losses reported on those income tax returns. We recognize accrued interest on unrecognized tax benefits in interest expense and penalties in selling, general and administrative expenses. We did not have any unrecognized tax benefits as of December 31, 2016, 2015 and 2014, and accordingly, we did not recognize any interest expense. Additionally, we recorded no penalties during the years ended December 31, 2016, 2015 and 2014. We did not record any excess tax benefit generated from stock options exercised during the years ended December 31, 2016, 2015 and 2014, since we are in a net operating loss carryforward position and the income tax deduction will not yet reduce income taxes payable. The cumulative excess tax benefits generated for stock options exercised that have not been recognized is $7.4 million at December 31, 2016. |
Fair Value Measurements and Derivative Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements and Derivative Instruments | Fair Value Measurements and Derivative Instrument Recurring Fair Value Measurements Assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015 are as follows (amounts in thousands):
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 Instrument" 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 December 31, 2016 and 2015 are as follows (amounts in thousands):
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. are based upon quoted market prices for the same or similar issues (Level 2). •The fair value of our Searchlight Note 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 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 Instrument 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 instrument is 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 a derivative instrument and are 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. The following table shows our significant assumptions and inputs used in the lattice-based valuation model to value the stock appreciation right liability at December 31, 2016 and 2015:
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 instrument. The derivative liability is included within Other Liabilities in our Consolidated Balance Sheets and is 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 year ended December 31, 2016:
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Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders Equity | Stockholders’ Equity Common Stock GCI’s Class A and Class B common stock are identical in all respects, except that each share of Class A common stock has one vote per share and each share of Class B common stock has ten votes per share. Each share of Class B common stock outstanding is convertible, at the option of the holder, into one share of Class A common stock. 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. During the years ended December 31, 2016, 2015 and 2014 we repurchased 3.5 million, 3.0 million, and 0.4 million shares, respectively, of our Class A common stock under the stock buyback program at a cost of $55.2 million, $47.4 million and $4.2 million, respectively. Under this program we are currently authorized to make up to $60.3 million of repurchases as of December 31, 2016. 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. Shared-Based Compensation Our Amended and Restated 1986 Stock Option Plan ("Stock Option Plan"), provides for the grant of restricted stock awards 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. The requisite service period of our awards is generally the same as the vesting period. New shares are issued when restricted stock awards are granted. We have 1.5 million shares available for grant under the Stock Option Plan at December 31, 2016. The fair value of restricted stock awards is determined based on the number of shares granted and the quoted price of our common stock. We record share-based compensation expense only for those awards expected to vest using an estimated forfeiture rate based on our historical pre-vesting forfeiture data. We review our forfeiture estimates annually and adjust our share-based compensation expense in the period our estimate changes. A summary of nonvested restricted stock award activity under the Stock Option Plan for the year ended December 31, 2016, follows (share amounts in thousands):
The weighted average grant date fair value of awards granted during the years ended December 31, 2016, 2015, and 2014 were $17.87, $15.06 and $10.04, respectively. The total fair value of awards vesting during the years ended December 31, 2016, 2015, and 2014 were $13.5 million, $17.0 million and $8.5 million, respectively. We have recorded share-based compensation expense of $11.0 million, $10.9 million, and $8.4 million for the years ended December 31, 2016, 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 is $12.5 million as of December 31, 2016. We expect to recognize share-based compensation expense over a weighted average period of 2.0 years for restricted stock awards. GCI 401(k) Plan In 1986, we adopted an Employee Stock Purchase Plan (“GCI 401(k) Plan”) qualified under Section 401 of the Internal Revenue Code of 1986. The GCI 401(k) Plan provides for acquisition of GCI’s Class A common stock at market value as well as various mutual funds. We may match a percentage of the employees' contributions up to certain limits, decided by GCI’s Board of Directors each year. Our matching contributions allocated to participant accounts totaled $11.0 million, $9.8 million and $9.1 million for the years ended December 31, 2016, 2015 and 2014, respectively. We used cash to fund all of our employer-matching contributions during the years ended December 31, 2016, 2015 and 2014. |
Earnings (Loss) per Common Share (Notes) |
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Earnings (Loss) Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings (Loss) Per Common Share [Text Block] | Earnings (Loss) per Common Share Earnings 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):
Weighted average shares associated with outstanding securities for the years ended December 31, 2016, 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):
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Industry Segments Data |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Industry Segments Data | Industry Segments Data We have two reportable segments, Wireless and Wireline. 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 provide a full range of wireless, data, video, voice, and managed services to residential customers, businesses, governmental entities, and educational and medical institutions primarily in Alaska. We evaluate performance and allocate resources based on Adjusted EBITDA, which is defined as earnings plus imputed interest on financed devices before: •Net interest expense, •Income taxes, •Depreciation and amortization expense, •Loss on extinguishment of debt, •Software impairment charge, •Derivative instrument unrealized income (loss), •Share-based compensation expense, •Accretion expense, •Loss attributable to non-controlling interest resulting from NMTC transactions, •Gains and impairment losses on equity and cost method investments, •Gain recorded for adjusting to fair value assets that were included as consideration paid to acquire a fiber system, and •Other non-cash adjustments. Management believes that this measure is useful to investors and other users of our financial information in understanding and evaluating operating performance as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected Adjusted EBITDA are used to estimate current or prospective enterprise value. The accounting policies of the reportable segments are the same as those described in Note 1 of this Form 10-K. 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. Wireless plan fee and usage revenues from external customers are allocated between our Wireless and Wireline segments. The Wireless segment recorded subsidies to the Wireline segment related to wireless equipment sales based upon equipment sales and agreed-upon subsidy rates through the AWN transaction close on July 23, 2013. Subsequent to the transaction close and through March 31, 2014, although permitted, the Wireline segment was unable to meet the requirements in order to request a wireless equipment subsidy from the Wireless segment in accordance with the AWN agreements. These subsidies, which eliminate in consolidation, increase the Wireline segment Adjusted EBITDA and reduce the Wireless segment Adjusted EBITDA. The wireless equipment subsidy recorded by the Wireless segment was $0 million, $7.7 million, and $17.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. Selling, general and administrative expenses are charged to the Wireless segment based upon a shared services agreement. The remaining selling, general and administrative expenses are charged to the Wireline segment. Summarized financial information for our reportable segments for the years ended December 31, 2016, 2015 and 2014 follows (amounts in thousands):
A reconciliation of consolidated income (loss) before income taxes to reportable segment Adjusted EBITDA follows (amounts in thousands):
We earn revenues included in both the Wireless and Wireline segment from a major customer. We had no major customers for the year ended December 31, 2016. We earned revenues from a major customer, net of discounts, of $130.8 million or 13%, and $108.3 million or 12% of total consolidated revenues for the years ended December 31, 2015, and 2014 respectively. |
Related Party Transactions |
12 Months Ended |
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Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions On July 11, 2016, we repurchased 1,000,000 shares of our Class A common stock for $16.1 million from John W. Stanton and Theresa E Gillespie, husband and wife, who continue to be significant shareholders of our Class B common stock. As disclosed in Note 7 and Note 9 of this Form 10-K, we have an unsecured promissory note and stock appreciation rights with Searchlight. Searchlight received the right to nominate one person for appointment or election as a member of our Board of Directors pursuant to a Securityholder Agreement dated as of December 4, 2014. Searchlight became a related party on February 2, 2015 when we closed the Wireless Acquisition. Searchlight's nominee was appointed as a member of our Board of Directors on March 4, 2015. We entered into a long-term capital lease agreement in 1991 with the wife of GCI’s President and CEO for property occupied by us. The leased asset was capitalized in 1991 at the owner’s cost of $0.9 million and the related obligation was recorded. The lease agreement was amended in April 2008 and our existing capital lease asset and liability increased by $1.3 million to record the extension of this capital lease. The amended lease terminates on September 30, 2026. In January 2001 we entered into an aircraft operating lease agreement with a company owned by GCI’s President and CEO. The lease was amended several times, most recently in May 2011. The lease term of the aircraft may be terminated at any time by us upon 12 months’ written notice. The monthly lease rate of the aircraft is $132,000. In 2001, we paid a deposit of $1.5 million in connection with the lease. The deposit will be repaid to us no later than six months after the agreement terminates. 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 did 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 year ended December 31, 2014, we paid ACS $62.9 million and received $50.9 million in payments from ACS. We also have long-term capacity exchange agreements with ACS for which no money is exchanged. |
Variable Interest Entities |
12 Months Ended |
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Dec. 31, 2016 | |
Variable Interest Entity, Measure of Activity [Abstract] | |
Variable Interest Entities | 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 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, Inc. ("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. Restricted cash of $0.9 million and $1.1 million was held by Unicom at December 31, 2016 and 2015, respectively, and is included in our Consolidated Balance Sheets. 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 relieved. There have been no credit recaptures as of December 31, 2016. The value attributed to the put/calls is nominal. We have determined that TIF, TIF 2, TIF 2-USB and TIF 3 are VIEs. The consolidated financial statements 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 December 31, 2016 and 2015. The assets of the VIEs serve as the sole source of repayment for the debt issued by these entities. US Bank does not have recourse to us or our other assets, with the exception of customary representations and indemnities we have provided. We are not required and do not currently intend to provide additional financial support to these VIEs. While these subsidiaries are included in our consolidated financial statements, these subsidiaries are separate legal entities and their assets are legally owned by them and not available to our creditors. Equity Method Investment We owned a 40.8% interest in a next generation carrier-class communications services firm that we accounted for using the equity method and due to a reconsideration event determined that the entity was a VIE. 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 year ended December 31, 2015 that is recorded in Other Income (Expense) in our Consolidated Statement 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. The entity has subsequently closed its operations and is in the process of selling its assets. We do not have a contractual obligation to provide additional financing and we have no exposure to loss related to our involvement with the VIE. |
Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Operating Leases as Lessee We lease business offices, have entered into site lease agreements, and use satellite transponder and fiber capacity and certain equipment pursuant to operating lease arrangements. Many of our leases are for multiple years and contain renewal options. Rental costs under such arrangements amounted to $58.9 million, $51.5 million and $43.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Capital Leases as Lessee We entered into a long-term capital lease agreement in 1991 with the wife of GCI’s President and CEO for property occupied by us as further described in Note 13 of this Form 10-K. We have a capital lease agreement for transponder capacity on Intelsat, Ltd.’s (“Intelsat”) Galaxy 18 spacecraft. The Intelsat Galaxy 18 C-band and Ku-Band transponders are being leased over an expected term of 14 years. At lease inception the present value of the lease payments, excluding telemetry, tracking and command services and back-up protection, was $98.6 million. A summary of future minimum lease payments follows (amounts in thousands):
The leases generally provide that we pay the taxes, insurance and maintenance expenses related to the leased assets. Several of our leases include renewal options, escalation clauses and immaterial amounts of contingent rent expense. We expect that in the normal course of business leases that expire will be renewed or replaced by leases on other properties. Guaranteed Service Levels Certain customers have guaranteed levels of service with varying terms. In the event we are unable to provide the minimum service levels we may incur penalties or issue credits to customers. Self-Insurance Through December 31, 2016, we were self-insured for losses and liabilities related to health and welfare claims up to $700,000 per incident per year above which third party insurance applied. A reserve of $4.0 million and $4.1 million are recorded at December 31, 2016 and 2015, respectively, to cover estimated reported losses, estimated unreported losses based on past experience modified for current trends, and estimated expenses for settling claims. We are self-insured for all losses and liabilities related to workers’ compensation claims in Alaska and have a workers compensation excess insurance policy to make claims for any losses in excess of $500,000 per incident. A reserve of $2.9 million and $3.6 million are recorded at December 31, 2016 and 2015, respectively, to cover estimated reported losses and estimated expenses for open and active claims. Actual losses will vary from the recorded reserves. While we use what we believe are pertinent information and factors in determining the amount of reserves, future additions or reductions to the reserves may be necessary due to changes in the information and factors used. We are self-insured for damage or loss to certain of our transmission facilities, including our buried, undersea, and above-ground transmission lines. If we become subject to substantial uninsured liabilities due to damage or loss to such facilities, our financial position, results of operations or liquidity may be adversely affected. Litigation, Disputes, and Regulatory Matters We are involved in various lawsuits, billing disputes, legal proceedings, and regulatory matters that have arisen from time to time in the normal course of business. Management believes there are no proceedings from asserted and unasserted claims which if determined adversely would have a material adverse effect on our financial position, results of operations or liquidity. Universal Service As an ETC, we receive support from the USF for the provision of wireline local access and wireless service in Remote and Urban high cost areas as further described in Note 1 of this Form 10-K. For both Remote and Urban high cost support revenue, our ability to collect our accrued USF support is contingent upon continuation of the USF program and upon our eligibility to participate in that program, which are subject to change by future regulatory, legislative or judicial actions. We adjust revenue and the account receivable in the period the FCC makes a program change or we assess the likelihood that such a change has increased or decreased revenue. Our revenue for providing local and wireless services in these areas would be materially adversely affected by a substantial reduction of USF support. Tribal Mobility Fund I Grant In February 2014, the FCC announced our winning bids in the Tribal Mobility Fund I auction for a $41.4 million grant to partially fund expansion of our 3G wireless network, or better, to locations in Alaska where we would not otherwise be able to construct within our return-on-investment requirements. We received $0 million and $13.8 million in 2016 and 2015, respectively, and expect to receive $27.6 million in additional grant fund disbursements in the future depending on the timing of upgrades completed and test results submitted to and approved by the FCC. |
Software Impairment |
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Dec. 31, 2016 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Software Impairment | 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 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 year ended December 31, 2015 by recording an expense which is included in Software Impairment Charge in our Consolidated Statement of Operations. During the year ended December 31, 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 $7.1 million during the year ended December 31, 2015 by recording an expense which is included in Software Impairment Charge in our Consolidated Statement of Operations. During the year ended December 31, 2015, we evaluated user management software we purchased in 2014 in our Wireline segment and determined that we would not be able to use the software. Accordingly we recognized an impairment of $1.0 million during the year ended December 31, 2015 by recording an expense which is included in Software Impairment Charge in our Consolidated Statement of Operations. |
Selected Quarterly Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2016 and 2015 (amounts in thousands, except per share amounts):
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Business and Summary of Significant Accounting Principles (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation and Principles of Consolidation | Basis of Presentation and 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. |
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Non-controlling Interests | 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. |
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Acquisitions | 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. |
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Recently Issued Accounting Pronouncements and Recently Adopted Accounting Pronouncements | 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 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. In March 2016, the FASB issued ASU 2016-08, which amended the guidance in the new standard in order to clarify the principal versus agent assessment and is intended to make the guidance more operable and lead to more consistent application. In April 2016, the FASB issued ASU 2016-10, which clarifies the identification of performance obligations and the licensing implementation guidance in ASU 2014-09. In May 2016, the FASB issued ASU 2016-11, which rescinds SEC paragraphs pursuant to SEC staff announcements regarding ASU 2014-09. These rescissions include changes to topics pertaining to accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. In May 2016, the FASB issued ASU 2016-12, which provides clarifying guidance in certain narrow areas and adds some practical expedients to ASU 2014-09. Finally, ASU 2016-20 makes minor corrections or improvements to ASU 2014-09 that are not expected to have a significant effect on accounting practices under ASU 2014-09. The standard permits the use of either the retrospective or cumulative effect transition method. We anticipate using the retrospective method to adopt this standard. Early adoption is permitted for annual periods beginning after December 15, 2016, however, we do not plan to early adopt this standard. We have assessed our material revenue streams and we do not anticipate significant changes to our revenue recognition as a result of this new standard. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new standard establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Lease accounting by the lessor remains largely unchanged by the new standard. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and is required to be adopted using the modified retrospective approach. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations, but we expect that adoption will have a material impact on our long-term assets and liabilities. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which amends ASC 718, Compensation - Stock Compensation. The update includes provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial statements. ASU 2016-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted with any adjustments reflected as of the beginning of the fiscal year of adoption. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The update introduces a new forward-looking approach, based on expected losses, to estimate credit losses on certain types of financial instruments, including trade receivables. The estimate of expected credit losses will require entities to incorporate consideration of historical information, current information and reasonable and supportable forecasts. This ASU also expands the disclosure requirements to enable users of financial statements to understand the entity’s assumptions, models and methods for estimating expected credit losses. ASU 2016-13 is effective for annual and interim reporting periods beginning after December 15, 2019, and is required to be adopted using the modified retrospective approach. Early adoption is permitted for annual and interim reporting periods beginning after December 15, 2018. We are currently evaluating the impact of the provisions of this new standard on our financial position and results of operations. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This update addresses eight specific cash flow issues with the objective of reducing diversity in practice. The issues identified within the ASU include: debt prepayments or extinguishment costs; contingent consideration made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies); distributions received from equity method investees; beneficial interests in securitization transactions; and separately identified cash flows and application of the predominance principle. ASU 2016-15 is effective for annual and interim reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for annual and interim reporting periods. The adoption of this guidance is not expected to have a material effect on our statement of cash flows.
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 - Imputation of 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. We adopted ASU 2015-03 retrospectively as of January 1, 2016, and have reclassified $15.4 million of the December 31, 2015, Deferred Loan and Senior Note Costs, Net of Amortization balance included in Total Other Assets to Long-Term Debt, Net included in Total Liabilities. In April 2015, the FASB issued ASU 2015-05, Internal-Use Software (Subtopic 350-40): Customer's Accounting for Fees Paid in a Cloud Computing Arrangement. The ASU provides guidance in evaluating whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for as an acquisition of a software license. If the arrangement does not contain a software license, it should be accounted for as a service contract. We adopted ASU 2015-05 prospectively as of January 1, 2016. The adoption of this standard did not have a significant effect on our financial position or results of operations. 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. We adopted ASU 2015-10 as of January 1, 2016. The adoption of this standard did not have a significant 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. We adopted ASU 2015-11 prospectively as of April 1, 2016. The adoption of this standard did not have a significant effect on our financial position or results of operations. In January 2017, the FASB issued an ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. This ASU clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. We adopted and applied ASU 2017-01 to a transaction that we closed in November 2016 (see Note 5 of this Form 10-K for information on the transaction). |
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Regulatory Accounting | Regulatory Accounting We account for the regulated operations of our incumbent local exchange carriers in accordance with the accounting principles for regulated enterprises. This accounting recognizes 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. |
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Earnings per Common Share | Earnings 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 per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding during the period. The computation of the dilutive net income 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 per share of Class B common stock does not assume the conversion of those shares. The computation of the dilutive net income per share of Class A common stock also assumes the conversion of our derivative financial instrument that may be settled in cash or shares (as described in Note 11 of this Form 10-K), shares associated with unexercised stock options and deferred compensation that may be settled in cash or shares if the effect of conversion is dilutive. 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. |
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Common Stock | Common Stock We have a common stock buyback program to repurchase GCI's Class A and Class B common stock. The cost of the repurchased common stock reduces Common Stock and Retained Earnings in our Consolidated Balance Sheets and is constructively retired as of December 31, 2016, 2015 and 2014. Treasury Stock We account for treasury stock purchased for general corporate purposes under the cost method and include treasury stock as a component of Stockholders’ Equity. |
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Cash Equivalents | Cash Equivalents Cash equivalents consist of certificates of deposit which have an original maturity of three months or less at the date acquired and are readily convertible into cash. |
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Accounts Receivable and Allowance for Doubtful Receivables | 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, a pooled basis using a percentage of related accounts, or a specific identification method. When a 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 feel it is probable the receivable will not be recovered. We do not have any off-balance-sheet credit exposure related to our customers. Wireless Equipment Installment Plan ("EIP") Receivables We offer new and existing wireless customers the option to participate in Upgrade Now, a program that provides eligible customers with the ability to purchase certain wireless devices in installments over a period of up to 24 months. Participating customers have the right to trade-in the original equipment for a new device after making the equivalent of 12 monthly installment payments, provided their handset is in good working condition. Upon upgrade, the outstanding balance of the EIP is exchanged for the used handset. At the time of sale, we impute interest on the receivables associated with Upgrade Now. We record the imputed interest as a reduction to the related accounts receivable. Interest income, which is included in Other Income and (Expense) in our Consolidated Statements of Operations, is recognized over the financed installment term. We assess the collectability of our EIP receivables based upon a variety of factors, including payment trends and other qualitative factors. The credit profiles of our customers with a Upgrade Now plan are similar to those of our customers with a traditional subsidized plan. Customers with a credit profile which carries a higher risk are required to make a down payment for equipment financed through Upgrade Now. |
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Inventories | Inventories Wireless handset inventories are stated at the lower of cost or net realizable value. Cost is determined using the average cost method. Handset costs in excess of the revenues generated from handset sales, or handset subsidies, are expensed at the time of sale. We do not recognize the expected handset subsidies prior to the time of sale because the promotional discount decision is made at the point of sale and/or because we expect to recover the handset subsidies through service revenue. Inventories of other merchandise for resale and parts are stated at the lower of cost or net realizable value. Cost is determined using the average cost method. |
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Property and Equipment | Property and Equipment Property and equipment is stated at cost. Construction costs of facilities are capitalized. Equipment financed under capital leases is recorded at the lower of fair market value or the present value of future minimum lease payments at inception of the lease. Construction in progress represents transmission equipment and support equipment and systems not placed in service on December 31, 2016, that management intends to place in service during 2017 and 2018. Depreciation is computed using the straight-line method based upon the shorter of the estimated useful lives of the assets or the lease term, if applicable, in the following ranges:
Amortization of property and equipment under capital leases is included in Depreciation and Amortization Expense in our Consolidated Statements of Operations. Repairs and maintenance are charged to expense as incurred. Expenditures for major renewals and betterments are capitalized. Accumulated depreciation is removed and gains or losses are recognized at the time of sales or other dispositions of property and equipment. |
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Depreciation | Depreciation is computed using the straight-line method based upon the shorter of the estimated useful lives of the assets or the lease term, if applicable, in the following ranges:
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Intangible Assets and Goodwill | Intangible Assets and Goodwill Goodwill, cable certificates (certificates of convenience and public necessity), wireless licenses and broadcast licenses are not amortized. Cable certificates represent certain perpetual operating rights to provide cable services. Wireless licenses represent the right to utilize certain radio frequency spectrum to provide wireless communications services. Broadcast licenses represent the right to broadcast television stations in certain areas. Goodwill represents the excess of cost over fair value of net assets acquired in connection with a business acquisition. All other amortizable intangible assets are being amortized over 2 to 20 year periods using the straight-line method. |
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Impairment of Intangibles, Goodwill, and Long-lived Assets | Impairment of Intangibles, Goodwill, and Long-lived Assets Cable certificates, wireless licenses and broadcast licenses are treated as indefinite-lived intangible assets and are tested annually for impairment or more frequently if events and circumstances indicate that the asset might be impaired. We assessed qualitative factors (“Step Zero”) in our annual test over our cable certificate, wireless license and broadcast license assets as of October 31, 2016 to determine if it is more likely than not that those intangible assets are impaired and require further analysis. As part of our Step Zero analysis, we considered our own economic position, estimated future growth, and geographic and industry economic outlooks. These estimates and assumptions have a significant impact on our analysis. The quantitative impairment test ("Step One") for identifiable indefinite-lived intangible assets other than goodwill consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. After an impairment loss is recognized, the adjusted carrying amount of the asset becomes its new accounting basis. Impairment testing of our cable certificate, wireless license and broadcast license assets as of October 31, 2015, used a direct discounted cash flow method. This approach requires us to make estimates and assumptions including projected cash flows and discount rates. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such impairment charge. Our goodwill is tested annually for impairment, and is tested for impairment more frequently if events and circumstances indicate that the assets might be impaired. We used a Step Zero analysis for goodwill impairment as of October 31, 2016 to determine whether it is more likely than not that goodwill is impaired. We considered qualitative factors such as our economic position, estimated future growth, geographic and industry economic outlooks, and the margin by which our fair value exceeded the book value in 2015. These estimates and assumptions have a significant impact on our analysis. For goodwill impairment testing as of October 31, 2015, we used the quantitative two-step process. The first step of the quantitative goodwill impairment test is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. To determine our reporting units, we evaluated the components one level below the segment level and we aggregated the components if they had similar economic characteristics. As a result of this assessment, our reporting units were the same as our two reportable segments. If the carrying amount of a reporting unit exceeds its fair value, the second step of the goodwill impairment test compares the implied fair value of the reporting unit's goodwill with the carrying amount of that goodwill. If the carrying amount of the reporting unit's goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill that would be recognized in a business combination. We used an income approach to determine the fair value of our reporting units for purposes of our goodwill impairment test. In addition, a market-based approach is used where possible to corroborate the fair values determined by the income approach. The income approach requires us to make estimates and assumptions including projected cash flows and discount rates. These estimates and assumptions could have a significant impact on whether an impairment charge is recognized and also the magnitude of any such impairment charge. We completed our annual goodwill and intangibles review and no impairment charge was recorded for the years ended December 31, 2016, 2015 and 2014. Long-lived assets, such as property, plant, and equipment, and purchased or developed intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. Recoverability of an asset group to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount of an asset group exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset group exceeds the fair value of the asset group. During the year ended December 31, 2015, we recorded impairment charges related to our long-lived software assets (see Note 16 of this Form 10-K for detailed information). We recorded no impairment charges related to our long lived assets for the years ended December 31, 2016 and 2014. |
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Investments | Investments We hold investments in equity method and cost method investees. Investments in equity method investees are those for which we have the ability to exercise significant influence but do not control and are not the primary beneficiary. Significant influence typically exists if we have a 20% to 50% ownership interest in the venture unless persuasive evidence to the contrary exists. Under this method of accounting, we record our proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Cash payments to equity method investees such as additional investments, loans and advances and expenses incurred on behalf of investees, as well as payments from equity method investees such as dividends, distributions and repayments of loans and advances are recorded as adjustments to investment balances. Investments in entities in which we have no control or significant influence are accounted for under the cost method. We review our investment portfolio each reporting period to determine whether there are events or circumstances that would indicate there is a decline in the fair value that would be considered other than temporary. |
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Asset Retirement Obligations | Asset Retirement Obligations We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred in Other Liabilities on the Consolidated Balance Sheets. When the liability is initially recorded, we capitalize a cost by increasing the carrying amount of the related long-lived asset. In periods subsequent to initial measurement, changes in the liability for an asset retirement obligation resulting from revisions to either the timing or the amount of the original estimate of undiscounted cash flows are recognized. Over time, the liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. Upon settlement of the liability, we either settle the obligation for its recorded amount or incur a gain or loss upon settlement. The majority of our asset retirement obligations are the estimated cost to remove telephony transmission equipment and support equipment from leased property. |
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Derivatives | Derivative Financial Instrument We account for our derivative instrument 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 instrument (as described in Note 9 of this Form 10-K) 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) with Related Party. |
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Revenue Recognition | Revenue Recognition All revenues are recognized when the earnings process is complete. Revenue recognition is as follows:
Universal Service Fund As an Eligible Telecommunications Carrier ("ETC"), we receive support from the Universal Service Fund ("USF") to support the provision of wireline local access and wireless service in high cost areas. On August 31, 2016, the FCC published a Report and Order to reform the methodology for distributing USF high cost support for both wireline and wireless voice and broadband service (“Alaska High Cost Order”). The Alaska High Cost Order was a significant program change that required a reassessment of our high cost support revenue recognition. Remote High Cost Support Prior to the Alaska High Cost Order, we accrued estimated program revenue based on current line counts and the frozen per-line rates, reduced as needed by our estimate of the impact of the Statewide Support Cap. Additionally, we also considered our assessment of the impact of current FCC regulations and of the potential outcome of FCC proceedings. As of January 1, 2017, Remote high cost support payments to Alaska High Cost participants will be frozen on a per-company basis at adjusted December 2014 levels for a ten-year term in exchange for meeting individualized performance obligations to offer voice and broadband services meeting the service obligations at specified minimum speeds by five-year and ten-year service milestones to a specified number of locations. Remote high cost support is no longer dependent upon line counts and line count filings are no longer required. As a result of the Alaska High Cost Order, we apply the proportional performance revenue recognition method to account for the transition from accruals based on line counts to a fixed payment stream while our level of service provided and associated costs remain constant. Included in the calculation are the scheduled Remote high cost support payments from September 2016 through January 2027 net of our Remote accounts receivable balance at August 31, 2016. An equal amount of this result is recognized as Remote support revenue each period. In 2022, the FCC may redistribute support in areas with duplicative LTE service. We will account for any changes made by the FCC to redistribute support prospectively. Urban High Cost Support Prior to the Alaska High Cost Order, Urban high cost support payments were frozen and had phased down to 60% of the monthly average of the 2011 annual support. The Alaska High Cost Order mandates that as of January 1, 2017, Urban high cost support for 2017 and 2018 will be two-thirds and one-third of the December 2014 level of support received, respectively, with Urban high cost support ending effective December 31, 2018. We apply the proportional performance revenue recognition method to account for the impact of the declining payments while our level of service provided and associated costs remain constant. Included in the calculation are the scheduled Urban high cost support payments from September 2016 through January 2018 net of our Urban accounts receivable balance at August 31, 2016. An equal amount of this result is recognized as Urban support revenue each period. For both Remote and Urban high cost support revenue, our ability to collect our accrued USF support is contingent upon continuation of the USF program and upon our eligibility to participate in that program, which are subject to change by future regulatory, legislative or judicial actions. We adjust revenue and the account receivable in the period the FCC makes a program change or we assess the likelihood that such a change has increased or decreased revenue. We do not recognize revenue related to a particular service area until our ETC status has been approved by the RCA. |
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Advertising Expense | Advertising Expense We expense advertising costs in the period during which the first advertisement appears. |
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Leases | Leases Scheduled operating lease rent increases are amortized over the expected lease term on a straight-line basis. Rent holidays are recognized on a straight-line basis over the operating lease term (including any rent holiday period). Leasehold improvements are amortized over the shorter of their economic lives or the lease term. We may amortize a leasehold improvement over a term that includes assumption of a lease renewal if the renewal is reasonably assured. Leasehold improvements acquired in a business combination are amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals that are deemed to be reasonably assured at the date of acquisition. Leasehold improvements that are placed in service significantly after and are not contemplated at or near the beginning of the lease term are amortized over the shorter of the useful life of the assets or a term that includes required lease periods and renewals that are deemed to be reasonably assured at the date the leasehold improvements are purchased. Leasehold improvements made by us and funded by landlord incentives or allowances under an operating lease are recorded as deferred rent and amortized as reductions to lease expense over the lease term. |
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Amortization and Write-off of Loan Fees and Interest Expense | Interest Expense Material interest costs incurred during the construction period of non-software capital projects are capitalized. Interest costs incurred during the development period of a software capital project are capitalized. Interest is capitalized in the period commencing with the first expenditure for a qualifying capital project and ending when the capital project is substantially complete and ready for its intended use. Amortization and Write-off of Loan Fees Debt issuance costs are deferred and amortized using the effective interest method. If a refinancing or amendment of a debt instrument is a substantial modification, all or a portion of the applicable debt issuance costs are written off. If a debt instrument is repaid prior to the maturity date we will write-off the related unamortized amount of debt issuance costs. |
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Income Taxes | Income Taxes Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for their future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable earnings in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recognized if it is more likely than not that some portion or the entire deferred tax asset will not be realized. |
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Share-based Payment Arrangements | Share-based Payment Arrangements Compensation expense is recognized in the financial statements for share-based awards based on the grant date fair value of those awards. Share-based compensation expense includes an estimate for pre-vesting forfeitures and is recognized over the requisite service periods of the awards on a straight-line basis, which is generally commensurate with the vesting term. We are required to report the benefits associated with tax deductions in excess of recognized compensation cost as a financing cash flow rather than as an operating cash flow. |
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Use of Estimates | 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. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, observance of trends, and other factors, as appropriate. Additionally, changes in accounting estimates are reasonably likely to occur from period to period. These factors could have a material impact on our financial statements. Significant estimates include, but are not limited to, the following: revenue recognition, the valuation of the derivative stock appreciation rights, impairment and useful lives of intangible assets, and the valuation allowance for net operating loss deferred tax assets. |
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Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to concentrations of credit risk are primarily cash and cash equivalents and accounts receivable. Excess cash is invested in high quality short-term liquid money instruments. At December 31, 2016, and 2015, substantially all of our cash and cash equivalents were invested in short-term liquid money instruments and the balances were in excess of Federal Deposit Insurance Corporation insured limits. Our customers are located primarily throughout Alaska. Because of this geographic concentration, our growth and operations depend upon economic conditions in Alaska. |
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Software Capitalization Policy |
Internally used software, whether purchased or developed, is capitalized and amortized using the straight-line method over an estimated useful life of three to five years. We capitalize certain costs associated with internally developed software such as payroll costs of employees devoting time to the projects and external direct costs for materials and services. Costs associated with internally developed software to be used internally are expensed until the point the project has reached the development stage. Subsequent additions, modifications or upgrades to internal-use software are capitalized only to the extent that they allow the software to perform a task it previously did not perform. Software maintenance and training costs are expensed in the period in which they are incurred. The capitalization of software requires judgment in determining when a project has reached the development stage. |
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Guarantees | Guarantees Certain of our customers have guaranteed levels of service. If an interruption in service occurs, we do not recognize revenue for any portion of the monthly service fee that will be refunded to the customer or not billed to the customer due to these service level agreements. Additionally, we have provided certain guarantees to U.S. Bancorp Community Development Corporation (“US Bancorp”), our tax credit investor in our four VIEs. We have guaranteed the delivery of $56.0 million of New Markets Tax Credits (“NMTC”) to US Bancorp, as well as certain loan and management fee payments between our subsidiaries and the VIEs, for which we are the primary beneficiary. In the event that the tax credits are not delivered or certain payments not made, we are obligated to provide prompt and complete payment of these obligations. See Note 14 of this Form 10-K for more information about our NMTC transactions. EIP Trade-in Right 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 from us and have a qualifying monthly wireless service plan. 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 guarantee liability. The recognition of subsequent adjustments to the guarantee liability 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 guarantee liabilities. Guarantee liabilities are included in Accrued Liabilities in our Consolidated Balance Sheets. |
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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. |
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Reclassifications | Reclassifications Reclassifications have been made to the prior years' consolidated financial statements to conform to classifications used in the current year. |
Business and Summary of Significant Accounting Principles (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Consideration Transferred to Acquire Assets and Interest | 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):
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Changes in Noncontrolling Interest | The impact of the AWN NCI Acquisition is summarized in the following table (amounts in thousands):
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Schedule of Property Plant And Equipment Useful Life | Depreciation is computed using the straight-line method based upon the shorter of the estimated useful lives of the assets or the lease term, if applicable, in the following ranges:
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Schedule of Asset Retirement Obligations | Following is a reconciliation of the beginning and ending aggregate carrying amounts of our liability for asset retirement obligations (amounts in thousands):
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Excise and Sales Taxes | The following are certain surcharges reported on a gross basis in our Consolidated Statements of Operations (amounts in thousands):
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Tower Sale and Leaseback (Tables) |
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Schedule of Sale Leaseback Transactions | The following table summarizes the impacts to the Consolidated Balance Sheets (amounts in thousands):
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Schedule of Future Minimum Lease Payments for Tower Obligation | Future minimum payments related to the Tower Obligation, including expected renewals and excluding deferred transaction costs, are summarized below (amounts in thousands):
A summary of future minimum lease payments follows (amounts in thousands):
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Consolidated Statements of Cash Flows Supplemental Disclosures (Tables) |
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Cash Flow, Operating Capital | Changes in operating assets and liabilities consist of (amounts in thousands):
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Cash Payments for Interest | The following items are for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):
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Schedule of Other Significant Noncash Transactions | The following items are non-cash investing and financing activities for the years ended December 31, 2016, 2015 and 2014 (amounts in thousands):
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Receivables and Allowance for Doubtful Receivables (Tables) |
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Schedule of Receivables by Type | Receivables consist of the following at December 31, 2016 and 2015 (amounts in thousands):
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Changes in the Allowance for Doubtful Receivables | Changes in the allowance for doubtful receivables during the years ended December 31, 2016, 2015 and 2014 are summarized below (amounts in thousands):
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Net Property and Equipment (Tables) |
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Schedule of Net Property and Equipment in Service | Net property and equipment consists of the following at December 31, 2016 and 2015 (amounts in thousands):
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Schedule of Consideration Transferred to Acquire Assets and Liabilities | The following table summarizes the allocation of total consideration (amounts in thousands):
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Intangible Assets and Goodwill (Tables) |
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Schedule of Intangible Assets Subject to Amortization | Other Intangible Assets subject to amortization include the following at December 31, 2016 and 2015 (amounts in thousands):
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Changes in Goodwill and Other Intangible Assets | Changes in Goodwill and Other Intangible Assets are as follows (amounts in thousands):
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Schedule of Amortization Expense | Amortization expense for definite-life intangible assets for the years ended December 31, 2016, 2015 and 2014 follow (amounts in thousands):
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Amortization Expense for Definite-Life Intangible Assets | Amortization expense for definite-life intangible assets for each of the five succeeding fiscal years is estimated to be (amounts in thousands):
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Long-Term Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | Long-term debt consists of the following (amounts in thousands):
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Schedule of Maturities of Long-term Debt | Maturities of long-term debt as of December 31, 2016 are as follows (amounts in thousands):
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Income Tax Expense (Benefit) | Income tax (expense) benefit consists of the following (amounts in thousands):
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Schedule of Effective Income Tax Rate Reconciliation | Total income tax (expense) benefit differed from the “expected” income tax (expense) benefit determined by applying the statutory federal income tax rate of 35% as follows (amounts in thousands):
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Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 2016 and 2015 are summarized below (amounts in thousands):
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Summary of Operating Loss Carryforwards | Our tax net operating loss carryforwards are summarized below by year of expiration (amounts in thousands):
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Fair Value Measurements and Derivative Instruments (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Assets and Liabilities Measured on Recurring Basis | Assets and liabilities measured at fair value on a recurring basis as of December 31, 2016 and 2015 are as follows (amounts in thousands):
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Fair Value, by Balance Sheet Grouping | The carrying amounts and approximate fair values of our current and long-term debt, excluding capital leases at December 31, 2016 and 2015 are as follows (amounts in thousands):
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Fair Value Inputs, Liabilities, Quantitative Information [Table Text Block] | The following table shows our significant assumptions and inputs used in the lattice-based valuation model to value the stock appreciation right liability at December 31, 2016 and 2015:
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Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | 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 year ended December 31, 2016:
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Stockholders' Equity (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restricted Stock Activity | A summary of nonvested restricted stock award activity under the Stock Option Plan for the year ended December 31, 2016, follows (share amounts in thousands):
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Earnings (Loss) per Common Share (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings (Loss) Per Common Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Earnings 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):
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | Weighted average shares associated with outstanding securities for the years ended December 31, 2016, 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):
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Industry Segments Data (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Summarized financial information for our reportable segments for the years ended December 31, 2016, 2015 and 2014 follows (amounts in thousands):
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Reconciliation of Operating Profit (Loss) from Segments to Consolidated | A reconciliation of consolidated income (loss) before income taxes to reportable segment Adjusted EBITDA follows (amounts in thousands):
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Commitments and Contingencies (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Future Minimum Lease Payments | Future minimum payments related to the Tower Obligation, including expected renewals and excluding deferred transaction costs, are summarized below (amounts in thousands):
A summary of future minimum lease payments follows (amounts in thousands):
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Selected Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Quarterly Financial Information | The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2016 and 2015 (amounts in thousands, except per share amounts):
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Business and Summary of Significant Accounting Principles (Business Acquisition) (Details) - Series of Individually Immaterial Business Acquisitions [Member] $ in Millions |
12 Months Ended |
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Dec. 31, 2015
USD ($)
entity
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Business Acquisition [Line Items] | |
Number of businesses acquired | entity | 3 |
Consideration transferred | $ | $ 12.7 |
Business and Summary of Significant Accounting Principles (Asset Retirement Obligation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | |||
Balance, beginning | $ 35,060 | $ 31,940 | |
Liability incurred | 1,580 | 2,048 | |
Revisions in estimated cash flows, including adjustment from tower transaction (Note 2) | 3,368 | ||
Accretion expense | 1,229 | 1,121 | $ 1,249 |
Liability settled | (82) | (49) | |
Balance, ending | $ 41,155 | $ 35,060 | $ 31,940 |
Business and Summary of Significant Accounting Principles (Revenue Recognition) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
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Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Public Utilities, General Disclosures [Line Items] | |||||||||||
Revenues | $ 232,293 | $ 236,655 | $ 233,766 | $ 231,098 | $ 241,344 | $ 258,573 | $ 247,528 | $ 231,089 | $ 933,812 | $ 978,534 | $ 910,198 |
Receivables | 219,794 | $ 208,384 | $ 219,794 | 208,384 | |||||||
Urban High Cost Support Program [Member] | |||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||
Percentage Phase Down, Decrease in Support Payments, Maximum | 60.00% | ||||||||||
High Cost Support Program [Member] | |||||||||||
Public Utilities, General Disclosures [Line Items] | |||||||||||
Revenues | $ 64,100 | $ 66,200 | $ 66,700 | ||||||||
Receivables | $ 43,900 | $ 43,900 |
Business and Summary of Significant Accounting Principles (Surcharges Reported Gross) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Accounting Policies [Abstract] | |||
Surcharges reported gross | $ 3,849 | $ 5,058 | $ 4,252 |
Tower Sale and Leaseback (Narratives) (Details) - Tower Sale [Member] $ in Millions |
1 Months Ended |
---|---|
Aug. 31, 2016
USD ($)
| |
Sale Leaseback Transaction [Line Items] | |
Number of cell sites sold | 276 |
Net proceeds from sale of cell sites | $ 90.8 |
Number of renewal options | 8 |
Renewal period (in years) | 5 years |
Annual increase in lease payments, percentage | 2.00% |
Decrease in asset retirement obligation | $ (3.4) |
Interest rate on the Tower Obligation | 7.10% |
Minimum | |
Sale Leaseback Transaction [Line Items] | |
Lease term (in years) | 10 years |
Maximum | |
Sale Leaseback Transaction [Line Items] | |
Lease term (in years) | 50 years |
Tower Sale and Leaseback (Balance Sheet Impacts) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Tower Sale and Leaseback [Abstract] | ||
Property and equipment | $ 18,792 | |
Tower obligation | $ 87,653 | $ 0 |
Tower Sale and Leaseback (Future Minimum Payments) (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Tower Sale and Leaseback [Abstract] | |
2017 | $ 6,996 |
2018 | 7,136 |
2019 | 7,279 |
2020 | 7,425 |
2021 | 7,573 |
2022 and thereafter | 150,117 |
Total minimum payments | 186,526 |
Less amount representing interest | 96,722 |
Tower obligation | $ 89,804 |
Consolidated Statements of Cash Flows Supplemental Disclosures (Net Cash Paid or Received) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
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Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
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Supplemental Cash Flow Elements [Abstract] | |||
Interest paid, net of amounts capitalized | $ 84,546 | $ 76,796 | $ 74,618 |
Consolidated Statements of Cash Flows Supplemental Disclosures ( Non-cash Investing and Financing Activities) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Noncash or Part Noncash Acquisitions [Line Items] | |||
Non-cash additions for purchases of property and equipment | $ 36,854 | $ 26,799 | $ 42,958 |
Non-cash consideration for KKCC assets | 14,000 | ||
Asset retirement obligation additions to property and equipment | 4,948 | 2,048 | 4,268 |
Net capital lease obligation | 0 | 0 | 9,386 |
Distribution to non-controlling interest | 0 | 0 | 4,167 |
Deferred compensation distribution denominated in shares | 0 | 0 | 617 |
KKCC Assets [Member] | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Non-cash consideration for KKCC assets | 13,993 | 0 | 0 |
Wireless Assets [Member] | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Non-cash consideration for Wireless Acquisition | $ 0 | $ 23,326 | $ 0 |
Receivables and Allowance for Doubtful Receivables (Narrative) (Details) - USF Program - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Revenue support from regulatory agency, percentage | 24.00% | 19.00% | 19.00% |
Receivables net current | $ 92.0 | $ 98.1 |
Receivables and Allowance for Doubtful Receivables (Receivables by Type) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | $ 219,794 | $ 208,384 |
Trade Accounts Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | 218,491 | 205,645 |
Other Receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Receivables | $ 1,303 | $ 2,739 |
Receivables and Allowance for Doubtful Receivables (Allowance for Doubtful Receivables Rollforward) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | |||
Balance at beginning of year | $ 3,630 | $ 4,542 | $ 2,346 |
Charged to costs and expenses | 8,516 | 6,359 | 3,994 |
Charged to other accounts | 0 | 0 | 0 |
Write-offs net of recoveries | 7,739 | 7,271 | 1,798 |
Balance at end of year | $ 4,407 | $ 3,630 | $ 4,542 |
Net Property and Equipment (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Line Items] | |||
Cash payment | $ 19,700 | $ 0 | $ 0 |
Fair Market Value of IRU Capacity | 14,000 | ||
Other Income (Expense) [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Gain from adjustment to fair value | $ 3,100 |
Net Property and Equipment (Consideration Transferred) (Details) - USD ($) $ in Thousands |
1 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|
Feb. 02, 2015 |
Nov. 30, 2016 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Property, Plant and Equipment [Abstract] | |||||
Property and equipment | $ 746 | $ 49,794 | $ 194,478 | $ 176,235 | $ 176,109 |
Deferred taxes | (12,211) | $ (137,982) | $ (106,145) | ||
Deferred Revenue | (3,815) | ||||
Consideration Transferred to Acquire Assets and Liabilities | $ 33,768 |
Intangible Assets and Goodwill (Narratives) (Details) |
12 Months Ended |
---|---|
Dec. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 13 years 4 months 3 days |
Intangible Assets and Goodwill (Finite Lived) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|---|
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | $ 128,267 | $ 111,011 | |
Less accumulated amortization | 53,823 | 41,721 | |
Net other intangible assets | 74,444 | 69,290 | $ 66,015 |
Software License Fee | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | 80,839 | 63,760 | |
Rights to Use | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | 45,114 | 44,937 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | 1,530 | 1,530 | |
Right Of Way | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets, gross | $ 784 | $ 784 |
Intangible Assets and Goodwill (Rollforward) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Goodwill [Roll Forward] | |||
Goodwill beginning balance | $ 239,263 | $ 229,560 | |
Goodwill ending balance | 239,263 | 239,263 | $ 229,560 |
Finite-lived Intangible Assets [Roll Forward] | |||
Beginning Balance | 69,290 | 66,015 | |
Asset additions | 17,601 | 15,023 | |
Software impairment | (1,306) | ||
Amortization expense | (12,447) | (10,442) | (9,715) |
Ending Balance | 74,444 | 69,290 | 66,015 |
Wireless | |||
Goodwill [Roll Forward] | |||
Goodwill beginning balance | 164,312 | 164,312 | |
Goodwill ending balance | 164,312 | 164,312 | 164,312 |
Wireline | |||
Goodwill [Roll Forward] | |||
Goodwill beginning balance | 74,951 | 65,248 | |
Goodwill acquired during period | 9,703 | ||
Goodwill ending balance | $ 74,951 | $ 74,951 | $ 65,248 |
Intangible Assets and Goodwill (Amortization Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 12,447 | $ 10,442 | $ 9,715 |
Intangible Assets and Goodwill (5 Year Future Amortization ) (Details) $ in Thousands |
Dec. 31, 2016
USD ($)
|
---|---|
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
2017 | $ 11,213 |
2018 | 9,191 |
2019 | 6,686 |
2020 | 4,904 |
2021 | $ 3,150 |
Long Term Debt (Schedule of Long Term Debt Payments) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 3,326 | |
2018 | 3,344 | |
2019 | 3,362 | |
2020 | 3,380 | |
2021 | 598,399 | |
2022 and thereafter | 761,972 | |
Total debt | 1,373,783 | $ 1,372,113 |
Less unamortized discount | 21,878 | 24,007 |
Less unamortized deferred loan fees | 15,133 | 15,368 |
Less current portion of long-term debt | 3,326 | 3,342 |
Long-term debt, net | $ 1,333,446 | $ 1,329,396 |
Income Taxes (Narratives) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Operating Loss Carryforwards [Line Items] | |||
Income tax (expense) benefit | $ (5,205,000) | $ 1,847,000 | $ (10,029,000) |
Federal statutory income tax rate | 35.00% | ||
Unrecognized tax benefits | $ 0 | 0 | 0 |
Income tax interest expense | 0 | 0 | 0 |
Income tax penalties expense | 0 | $ 0 | $ 0 |
Cumulative excess tax benefits, share based compensation expense, not recognize | 7,400,000 | ||
Alternative Minimum Tax Credit Carryforward | |||
Operating Loss Carryforwards [Line Items] | |||
Alternative minimum tax credit carryforwards | 1,700,000 | ||
Federal | |||
Operating Loss Carryforwards [Line Items] | |||
Net operating loss carryforwards | $ 272,054,000 |
Income Taxes (Schedule of Income Tax Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Deferred tax (expense) benefit: | |||
Federal taxes | $ (4,452) | $ 1,360 | $ (9,081) |
State taxes | (753) | 487 | (948) |
Income Tax (Expense) Benefit, Total | $ (5,205) | $ 1,847 | $ (10,029) |
Income Taxes (Statutory Tax Rate Impact on Income Tax Expense) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Income Tax Expense (Benefit), Continuing Operations, Income Tax Reconciliation [Abstract] | |||
“Expected” statutory tax (expense) benefit | $ (374) | $ 9,699 | $ (24,246) |
Nondeductible officer compensation | (1,424) | (1,906) | (1,351) |
Nondeductible lobbying expenses | (1,192) | (442) | (425) |
Nondeductible entertainment expenses | (1,029) | (1,059) | (1,125) |
State income taxes, net of federal (expense) benefit | (753) | 487 | (948) |
Nondeductible unrealized loss on derivative instrument with related party | 1,092 | (3,906) | 0 |
Nondeductible original issue discount | (773) | (660) | 0 |
Impact of non-controlling interest attributable to non-tax paying entity | 0 | 220 | 18,255 |
Other, net | (752) | (586) | (189) |
Income Tax Expense (Benefit), Total | $ (5,205) | $ 1,847 | $ (10,029) |
Fair Value Measurements and Derivative Instruments (Carrying Amounts and Fair Value of the Financial Instruments) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Carrying Amount | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt | $ 1,336,772 | $ 1,332,738 |
Fair Value | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Current and long-term debt | $ 1,393,865 | $ 1,390,743 |
Senior Notes [Member] | 2021 Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Stated percentage | 6.75% | |
Senior Notes [Member] | 2025 Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Stated percentage | 6.875% |
Stockholders' Equity (Summary of Nonvested Restricted Stock Award Activity) (Details) - Stock Option Plan [Member] - Restricted Stock - $ / shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Shares | |||
Nonvested, Beginning | 1,495 | ||
Granted | 790 | ||
Vested | (817) | ||
Forfeited | (3) | ||
Nonvested, Ending | 1,465 | 1,495 | |
Weighted Average Grant Date Fair Value | |||
Nonvested, Beginning (USD per share) | $ 11.08 | ||
Granted (USD per share) | 17.87 | $ 15.06 | $ 10.04 |
Vested (USD per share) | 11.65 | ||
Forfeited (USD per share) | 16.09 | ||
Nonvested, Ending (USD per share) | $ 14.41 | $ 11.08 |
Earnings (Loss) per Common Share Earnings (Loss) Per Common Share (Weighted Average Shares outstanding which are anti-dilutive) (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3 | 858 | 55 |
Stock Appreciation Rights (SARs) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 724 | 0 |
Stock Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 3 | 108 | 29 |
Stock Compensation Plan [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 26 | 26 |
Industry Segments Data (Narratives) (Details) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
Jun. 30, 2016
USD ($)
|
Mar. 31, 2016
USD ($)
|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
|
Jun. 30, 2015
USD ($)
|
Mar. 31, 2015
USD ($)
|
Dec. 31, 2016
USD ($)
segment
|
Dec. 31, 2015
USD ($)
|
Dec. 31, 2014
USD ($)
|
|
Segment Reporting Information [Line Items] | |||||||||||
Number of reportable segments | segment | 2 | ||||||||||
Percentage of long-lived assets not in US | 82.00% | ||||||||||
Number of Major Customers | 0 | ||||||||||
Revenues | $ 232,293 | $ 236,655 | $ 233,766 | $ 231,098 | $ 241,344 | $ 258,573 | $ 247,528 | $ 231,089 | $ 933,812 | $ 978,534 | $ 910,198 |
Customer Concentration Risk | Sales Revenue, Net | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Revenues | $ 130,800 | $ 108,300 | |||||||||
Concentration Risk, Percentage | 13.00% | 12.00% | |||||||||
Wireless | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Equipment subsidy | 0 | $ 7,700 | $ 17,300 | ||||||||
Revenues | $ 208,109 | $ 267,676 | $ 269,977 |
Industry Segments Data (Reportable Segment) (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 02, 2015 |
Nov. 30, 2016 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | $ 232,293 | $ 236,655 | $ 233,766 | $ 231,098 | $ 241,344 | $ 258,573 | $ 247,528 | $ 231,089 | $ 933,812 | $ 978,534 | $ 910,198 | ||
Cost of Goods Sold | 302,578 | 322,338 | 302,704 | ||||||||||
Contribution | 631,234 | 656,196 | 607,494 | ||||||||||
Less SG&A | (358,356) | (338,379) | (293,647) | ||||||||||
Plus share-based compensation expense | 11,043 | 10,902 | 8,392 | ||||||||||
Plus imputed interest on financed devices | 2,557 | 751 | 0 | ||||||||||
Plus accretion expense | 1,229 | 1,121 | 1,249 | ||||||||||
Other | 337 | (240) | (372) | ||||||||||
Adjusted EBITDA | 288,044 | 330,351 | 323,116 | ||||||||||
Capital expenditures | $ 746 | $ 49,794 | 194,478 | 176,235 | 176,109 | ||||||||
Goodwill | 239,263 | 239,263 | 239,263 | 239,263 | 229,560 | ||||||||
Total assets | 2,065,939 | 1,966,940 | 2,065,939 | 1,966,940 | 1,992,761 | ||||||||
Wholesale | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 208,109 | 267,676 | 269,977 | ||||||||||
Consumer | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 340,460 | 351,196 | 288,014 | ||||||||||
Business | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 385,243 | 359,662 | 352,207 | ||||||||||
Wireless | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 208,109 | 267,676 | 269,977 | ||||||||||
Cost of Goods Sold | 62,487 | 70,899 | 90,920 | ||||||||||
Contribution | 145,622 | 196,777 | 179,057 | ||||||||||
Less SG&A | (16,439) | (18,137) | (21,631) | ||||||||||
Plus share-based compensation expense | 0 | 0 | 0 | ||||||||||
Plus imputed interest on financed devices | 0 | 0 | |||||||||||
Plus accretion expense | 252 | 559 | 733 | ||||||||||
Other | 0 | 0 | 0 | ||||||||||
Adjusted EBITDA | 129,435 | 179,199 | 158,159 | ||||||||||
Capital expenditures | 34,555 | 47,892 | 30,243 | ||||||||||
Goodwill | 164,312 | 164,312 | 164,312 | 164,312 | 164,312 | ||||||||
Total assets | 601,796 | 594,250 | 601,796 | 594,250 | 625,417 | ||||||||
Wireless | Wholesale | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 208,109 | 267,676 | 269,977 | ||||||||||
Wireless | Consumer | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 0 | 0 | 0 | ||||||||||
Wireless | Business | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 0 | 0 | 0 | ||||||||||
Wireline | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 725,703 | 710,858 | 640,221 | ||||||||||
Cost of Goods Sold | 240,091 | 251,439 | 211,784 | ||||||||||
Contribution | 485,612 | 459,419 | 428,437 | ||||||||||
Less SG&A | (341,917) | (320,242) | (272,016) | ||||||||||
Plus share-based compensation expense | 11,043 | 10,902 | 8,392 | ||||||||||
Plus imputed interest on financed devices | 2,557 | 751 | |||||||||||
Plus accretion expense | 977 | 562 | 516 | ||||||||||
Other | 337 | (240) | (372) | ||||||||||
Adjusted EBITDA | 158,609 | 151,152 | 164,957 | ||||||||||
Capital expenditures | 159,923 | 128,343 | 145,866 | ||||||||||
Goodwill | 74,951 | 74,951 | 74,951 | 74,951 | 65,248 | ||||||||
Total assets | $ 1,464,143 | $ 1,372,690 | 1,464,143 | 1,372,690 | 1,367,344 | ||||||||
Wireline | Wholesale | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 0 | 0 | 0 | ||||||||||
Wireline | Consumer | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | 340,460 | 351,196 | 288,014 | ||||||||||
Wireline | Business | |||||||||||||
Segment Reporting Information [Line Items] | |||||||||||||
Revenues | $ 385,243 | $ 359,662 | $ 352,207 |
Industry Segments Data (Reconciliation of Reportable Segment Adjusted EBITDA) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Segment Reporting [Abstract] | |||||||||||
Income (loss) before income taxes | $ 1,069 | $ (27,713) | $ 69,273 | ||||||||
Plus other expense, net | 78,034 | 133,924 | 74,289 | ||||||||
Consolidated operating income | $ 13,185 | $ 26,368 | $ 19,531 | $ 20,019 | $ 20,794 | $ 45,473 | $ 39,203 | $ 741 | 79,103 | 106,211 | 143,562 |
Plus depreciation and amortization expense | 193,775 | 181,767 | 170,285 | ||||||||
Plus share-based compensation expense | 11,043 | 10,902 | 8,392 | ||||||||
Plus imputed interest on financed devices | 2,557 | 751 | 0 | ||||||||
Plus accretion expense | 1,229 | 1,121 | 1,249 | ||||||||
Plus software impairment charge | 0 | 29,839 | 0 | ||||||||
Other | 337 | (240) | (372) | ||||||||
Adjusted EBITDA | $ 288,044 | $ 330,351 | $ 323,116 |
Variable Interest Entities (Equity Method Investment) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Jun. 30, 2015 |
|
Schedule of Equity Method Investments [Line Items] | ||||
Impairment of equity method investment | $ 0 | $ 12,593,000 | $ 0 | |
Next Generation Carrier-Class Communications Services Firm [Member] | ||||
Schedule of Equity Method Investments [Line Items] | ||||
Ownership percentage | 40.80% | |||
Fair value of equity investment | $ 0 |
Commitments and Contingencies (Narratives) (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Feb. 28, 2014 |
|
Operating Leases as Lessee | ||||
Rental costs | $ 58,900,000 | $ 51,500,000 | $ 43,800,000 | |
Capital Leases as Lessee | ||||
Capital lease term | 14 years | |||
Capital lease obligations | $ 98,600,000 | |||
Self-Insurance | ||||
Coverage limit per incident | 700,000 | |||
Self insurance reserve | 4,000,000 | 4,100,000 | ||
Workers compensation self insurance coverage limit per incident | 500,000 | |||
Workers compensation self insurance reserve | 2,900,000 | 3,600,000 | ||
Tribal Mobility Fund I Grant | ||||
Grant proceeds | 1,527,000 | 14,007,000 | $ 1,136,000 | |
FCC [Member] | ||||
Tribal Mobility Fund I Grant | ||||
Federal grant award | $ 41,400,000 | |||
Grant proceeds | 0 | $ 13,800,000 | ||
Grant awards | $ 27,600,000 |
Commitments and Contingencies (Summary of Minimum Future Lease Payments) (Details) - USD ($) $ in Thousands |
Dec. 31, 2016 |
Dec. 31, 2015 |
---|---|---|
Operating | ||
2017 | $ 46,249 | |
2018 | 35,822 | |
2019 | 27,525 | |
2020 | 22,047 | |
2021 | 16,797 | |
2022 and thereafter | 37,063 | |
Total minimum lease payments | 185,503 | |
Capital | ||
2017 | 13,433 | |
2018 | 13,440 | |
2019 | 13,450 | |
2020 | 13,459 | |
2021 | 12,044 | |
2022 and thereafter | 7,705 | |
Total minimum lease payments | 73,531 | |
Less amount representing interest | 13,884 | |
Less current maturity of obligations under capital leases | 9,331 | |
Long-term obligations under capital leases, excluding current maturity | $ 50,316 | $ 59,651 |
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Total revenues | $ 232,293 | $ 236,655 | $ 233,766 | $ 231,098 | $ 241,344 | $ 258,573 | $ 247,528 | $ 231,089 | $ 933,812 | $ 978,534 | $ 910,198 |
Operating income | 13,185 | 26,368 | 19,531 | 20,019 | 20,794 | 45,473 | 39,203 | 741 | 79,103 | 106,211 | 143,562 |
Net income (loss) | (16,243) | 7,827 | 3,298 | 982 | (8,879) | 17,495 | (15,757) | (18,725) | (4,136) | (25,866) | 59,244 |
Net income (loss) attributable to GCI | $ (16,124) | $ 7,943 | $ 3,415 | $ 1,099 | $ (8,760) | $ 17,631 | $ (15,627) | $ (19,269) | $ (3,667) | (26,025) | 7,557 |
Class A Common Stock | |||||||||||
Condensed Financial Statements, Captions [Line Items] | |||||||||||
Net income (loss) attributable to GCI | $ (23,858) | $ 6,980 | |||||||||
Basic net income (loss) attributable to General Communication, Inc. common stockholders per common share (USD per share) | $ (0.47) | $ 0.21 | $ 0.09 | $ 0.03 | $ (0.24) | $ 0.45 | $ (0.41) | $ (0.49) | $ (0.10) | $ (0.69) | $ 0.18 |
Diluted net income (loss) attributable to General Communication, Inc. common stockholders per common share (USD per share) | $ (0.47) | $ 0.14 | $ (0.01) | $ (0.04) | $ (0.24) | $ 0.44 | $ (0.41) | $ (0.49) | $ (0.15) | $ (0.69) | $ 0.18 |
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