General Communication Inc.
Annual Report 2017

PROXY STATEMENT

2017 ANNUAL REPORT & ADDITIONAL INFORMATION

CONTENTS

Proxy Statement

Annual Report on Form 10-K

Additional Information

Environmental Statement

16MAY201805203648

GCI LIBERTY, INC.
12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5900

Dear Stockholder:

May 21, 2018

You are cordially invited to attend the 2018 annual meeting of stockholders of GCI Liberty, Inc. (GCI Liberty)
to be held at 8:00 a.m., local time, on June 25, 2018, at the corporate offices of GCI Liberty, 12300 Liberty
Boulevard, Englewood, Colorado 80112, telephone (720) 875-5900.

At the annual meeting, you will be asked to consider and vote on the proposals described in the accompanying
notice of annual meeting and proxy statement, as well as on such other business as may properly come before
the meeting.

Your vote is important, regardless of the number of shares you own. Whether or not you plan to attend
the annual meeting, please read the enclosed proxy materials and then promptly vote via the Internet or
telephone or by completing, signing and returning by mail the enclosed proxy card. Doing so will not
prevent you from later revoking your proxy or changing your vote at the meeting.

Thank you for your cooperation and continued support and interest in GCI Liberty.

Very truly yours,

28MAR200617334700

Gregory B. Maffei
President and Chief Executive Officer

The proxy materials relating to the annual meeting will first be made available on or about May 24, 2018.

GCI LIBERTY, INC.
12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5900

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be Held on June 25, 2018

NOTICE IS HEREBY GIVEN of the annual meeting of stockholders of GCI Liberty, Inc. (GCI Liberty) to be
held at 8:00 a.m., local time, on June 25, 2018, at the corporate offices of GCI Liberty, 12300 Liberty
Boulevard, Englewood, Colorado 80112, telephone (720) 875-5900, to consider and vote on the following
proposals:

1.

2.

3.

A proposal (which we refer to as the election of directors proposal) to elect John C. Malone,
Gregory B. Maffei, Ronald A. Duncan, Gregg L. Engles, Donne F. Fisher, Richard R. Green and Sue
Ann Hamilton to serve as members of our board in the classes indicated under ‘‘Proposal 1—The
Election of Directors Proposal,’’ until their respective successors are elected and qualified, for the
applicable term prescribed in our restated certificate of incorporation, or their earlier resignation or
removal;

A proposal (which we refer to as the auditors ratification proposal) to ratify the selection of
KPMG LLP as our independent auditors for the fiscal year ending December 31, 2018; and

A proposal to adopt the GCI Liberty, Inc. 2018 Omnibus Incentive Plan (which we refer to as the
incentive plan proposal).

You may also be asked to consider and vote on such other business as may properly come before the annual
meeting.

Holders of record of our Series A common stock, par value $0.01 per share, Series B common stock, par value
$0.01 per share, and Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share, in each
case, outstanding as of 5:00 p.m., New York City time, on May 14, 2018, the record date for the annual
meeting, will be entitled to notice of the annual meeting and to vote at the annual meeting or any adjournment
or postponement thereof. These holders will vote together as a single class on each proposal. A list of
stockholders entitled to vote at the annual meeting will be available at our offices at 12300 Liberty Boulevard,
Englewood, Colorado 80112 for review by our stockholders for any purpose germane to the annual meeting for
at least ten days prior to the annual meeting.

We describe the proposals in more detail in the accompanying proxy statement. We encourage you to read the
proxy statement in its entirety before voting.

Our board of directors has unanimously approved each of the election of directors proposal, the auditors
ratification proposal and the incentive plan proposal and recommends that you vote ‘‘FOR’’ the election of each
director nominee and ‘‘FOR’’ each of the auditors ratification proposal and the incentive plan proposal.

Votes may be cast in person at the annual meeting or by proxy prior to the meeting by telephone, via the
Internet, or by mail.

Important Notice Regarding the Availability of Proxy Materials For the Annual Meeting of Stockholders
to be Held on June 25, 2018: our Notice of Annual Meeting of Stockholders, Proxy Statement, and 2017
Annual Report to Stockholders are available at www.envisionreports.com/GCIL.

YOUR VOTE IS IMPORTANT. Voting promptly, regardless of the number of shares you own, will aid us in
reducing the expense of any further proxy solicitation in connection with the annual meeting.

By order of the board of directors,

21MAR201820082841

Katherine C. Jewell
Assistant Vice President and Secretary

Englewood, Colorado
May 21, 2018

WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING, PLEASE VOTE
PROMPTLY VIA TELEPHONE OR ELECTRONICALLY VIA THE INTERNET. ALTERNATIVELY, PLEASE
COMPLETE, SIGN AND RETURN BY MAIL THE ENCLOSED PAPER PROXY CARD.

TABLE OF CONTENTS

PROXY STATEMENT SUMMARY

THE ANNUAL MEETING

. . . . . . . . . . . . . . . .
Electronic Delivery . . . . . . . . . . . . . . . . . . .
Time, Place and Date . . . . . . . . . . . . . . . . .
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . .
Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . .
Who May Vote . . . . . . . . . . . . . . . . . . . . . .
Votes Required . . . . . . . . . . . . . . . . . . . . .
Votes You Have . . . . . . . . . . . . . . . . . . . . .
Recommendation of Our Board of Directors .
Shares Outstanding . . . . . . . . . . . . . . . . . .
Number of Holders . . . . . . . . . . . . . . . . . . .
Voting Procedures for Record Holders . . . . .
Voting Procedures for Shares Held in Street
Name . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revoking a Proxy . . . . . . . . . . . . . . . . . . . .
Solicitation of Proxies . . . . . . . . . . . . . . . . .
Other Matters to Be Voted on at the Annual
Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Certain Beneficial
Owners . . . . . . . . . . . . . . . . . . . . . . . . . . .
Security Ownership of Management . . . . . . .
. . . . . . . . . . . . . . . . . .
Changes in Control

2
2
2
2
2
2
3
3
3
3
3
3

4
4
4

4

5

5
6
9

PROPOSALS OF OUR BOARD

. . . . . . . . . . .

10

PROPOSAL 1—THE ELECTION OF
DIRECTORS PROPOSAL

. . . . . . . . . . . . . . .
Board of Directors . . . . . . . . . . . . . . . . . . .
Vote and Recommendation . . . . . . . . . . . . .

PROPOSAL 2—THE AUDITORS
RATIFICATION PROPOSAL

. . . . . . . . . . . . .
Change in Independent Auditors . . . . . . . . .
Audit Fees and All Other Fees . . . . . . . . . .
Policy on Pre-Approval of Audit and
Permissible Non-Audit Services of
Independent Auditor . . . . . . . . . . . . . . . . . .
Vote and Recommendation . . . . . . . . . . . . .

PROPOSAL 3—INCENTIVE PLAN
PROPOSAL

. . . . . . . . . . . . . . . . . . . . . . . . .
Key Features of the 2018 Incentive Plan . . .
GCI Liberty, Inc. 2018 Omnibus Incentive
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10
10
14

15
15
16

16
16

17
17

17

U.S. Federal Income Tax Consequences of
Awards Granted under the 2018 Incentive
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
New Plan Benefits . . . . . . . . . . . . . . . . . . .
Vote and Recommendation . . . . . . . . . . . . .

MANAGEMENT AND GOVERNANCE
MATTERS

. . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Officers . . . . . . . . . . . . . . . . . . .
Section 16(a) Beneficial Ownership
Reporting Compliance . . . . . . . . . . . . . . . .
Code of Ethics . . . . . . . . . . . . . . . . . . . . . .
Director Independence . . . . . . . . . . . . . . . .
Board Composition . . . . . . . . . . . . . . . . . . .
Board Leadership Structure . . . . . . . . . . . . .
Board Role in Risk Oversight
. . . . . . . . . . .
Committees of the Board of Directors . . . . . .
Board Meetings . . . . . . . . . . . . . . . . . . . . .
Director Attendance at Annual Meetings . . . .
Stockholder Communication with Directors . .
Executive Sessions . . . . . . . . . . . . . . . . . .

EXECUTIVE COMPENSATION

. . . . . . . . . . .
Compensation Discussion and Analysis . . . .
Summary Compensation Table . . . . . . . . . .
Grants of Plan-Based Awards . . . . . . . . . . .
Outstanding Equity Awards at Fiscal
Year-End . . . . . . . . . . . . . . . . . . . . . . . . . .
Option Exercises and Stock Vested . . . . . . .
Potential Payments Upon Termination or
Change-in-Control

. . . . . . . . . . . . . . . . . . .

DIRECTOR COMPENSATION

. . . . . . . . . . . .

EQUITY COMPENSATION PLAN
INFORMATION

. . . . . . . . . . . . . . . . . . . . . . .

Securities Authorized for Issuance under
Equity Compensation Plans . . . . . . . . . . . . .
Equity Compensation Plan Information . . . . .

CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

. . . . . . . . . . . . . . . . . . . . .

STOCKHOLDER PROPOSALS

. . . . . . . . . . .

ADDITIONAL INFORMATION

. . . . . . . . . . . .

21
23
23

24
24

25
25
25
26
26
26
26
30
31
31
31

32
32
41
43

44
45

45

46

47

47
47

47

52

52

ANNEX A: GCI Liberty, Inc. 2018 Omnibus
Incentive Plan

. . . . . . . . . . . . . . . . . . . . . . . A-1

PROXY STATEMENT SUMMARY

2018 ANNUAL MEETING OF STOCKHOLDERS

WHEN

ITEMS OF BUSINESS

8:00 a.m., local time, on June 25,
2018

WHERE

The Corporate Offices of GCI Liberty
12300 Liberty Boulevard
Englewood, Colorado 80112

1. Election of directors proposal—To elect John C. Malone,
Gregory B. Maffei, Ronald A. Duncan, Gregg L. Engles,
Donne F. Fisher, Richard R. Green and Sue Ann Hamilton to
serve as members of our board in the classes indicated under
‘‘Proposal 1—The Election of Directors Proposal,’’ until their
respective successors are elected and qualified, for the
applicable term prescribed in our restated certificate of
incorporation, or their earlier resignation or removal.

RECORD DATE

5:00 p.m., New York City time, on
May 14, 2018

2. Auditors ratification proposal—To ratify the selection of

KPMG LLP as our independent auditors for the fiscal year
ending December 31, 2018.

3.

Incentive plan proposal—To adopt the GCI Liberty, Inc. 2018
Omnibus Incentive Plan.

Such other business as may properly come before the annual
meeting.

WHO MAY VOTE

Holders of shares of GLIBA, GLIBB and GLIBP

PROXY VOTING

Stockholders of record on the record date are entitled to vote by proxy in the following ways:

15MAY201818510671

By calling 1 (800) 652-8683 (toll
free) in the United States or Canada

15MAY201818510431
Online at
www.envisionreports.com/GCIL

15MAY201818510553

By returning a properly
completed, signed and dated
proxy card

ANNUAL MEETING AGENDA AND VOTING RECOMMENDATIONS

Proposal

Election of directors proposal

Auditors ratification proposal

Incentive plan proposal

Voting
Recommendation
(cid:1) FOR EACH
NOMINEE

(cid:1) FOR

(cid:1) FOR

Page Reference
(for more detail)

10

15

17

GCI LIBERTY, INC.
a Delaware Corporation

12300 Liberty Boulevard
Englewood, Colorado 80112
(720) 875-5900

PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS

We are furnishing this proxy statement in connection with the board of directors’ solicitation of proxies for use
at our 2018 Annual Meeting of Stockholders to be held at 8:00 a.m., local time, on June 25, 2018, at the
corporate offices of GCI Liberty, 12300 Liberty Boulevard, Englewood, Colorado 80112, or at any adjournment
or postponement of the annual meeting. At the annual meeting, we will ask you to consider and vote on the
proposals described in the accompanying Notice of Annual Meeting of Stockholders. The proposals are
described in more detail in this proxy statement. We are soliciting proxies from holders of our Series A
common stock, par value $0.01 per share (GLIBA), Series B common stock, par value $0.01 per share
(GLIBB), and Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (GLIBP). We refer
to GLIBA and GLIBB together with shares of our Series C common stock, par value $0.01 per share (none of
which were issued or outstanding as of the record date) as our common stock. We refer to our common stock
together with GLIBP as our capital stock.

On March 9, 2018, pursuant to the Agreement and Plan of Reorganization, dated as of April 4, 2017, by and
among Qurate Retail, Inc., a Delaware corporation formerly known as Liberty Interactive Corporation (Qurate
Retail), Liberty Interactive LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of
Qurate Retail (Liberty LLC), and GCI Liberty, Inc., an Alaska corporation (Old GCI Liberty), as amended (the
GCI Reorganization Agreement), Qurate Retail acquired a controlling equity interest in Old GCI Liberty in
exchange for certain assets and liabilities of Qurate Retail’s Ventures Group (Ventures Group), which
controlling equity interest Qurate Retail subsequently split-off to holders of its Series A and Series B Liberty
Ventures common stock (the split-off) in full redemption thereof (such transactions together with the other
transactions contemplated by the GCI Reorganization Agreement, the Transactions).

Following the Transactions, our company and Qurate Retail operate as separate, publicly traded companies,
and neither has any stock ownership, beneficial or otherwise, in the other.

On March 22, 2018, Old GCI Liberty entered into an Agreement and Plan of Merger (as amended, the
Reincorporation Merger Agreement) with GCI Liberty, which was then named ‘‘GCI Merger Sub, Inc.’’ and
was a direct, wholly owned subsidiary of Old GCI Liberty, providing for the merger of Old GCI Liberty with and
into GCI Liberty (the Reincorporation Merger), with GCI Liberty continuing as the surviving corporation in the
Reincorporation Merger and existing under the laws of the State of Delaware. Old GCI Liberty entered into the
Reincorporation Merger Agreement for the limited purposes of changing Old GCI Liberty’s state of incorporation
from Alaska to Delaware and adopting a new certificate of incorporation and bylaws to account for certain
differences in Delaware law as compared to Alaska law. On May 7, 2018, the shareholders of Old GCI Liberty
approved the Reincorporation Merger Agreement at a special meeting, and the Reincorporation Merger was
completed on May 10, 2018. Upon completion of the Reincorporation Merger, our company’s name was
changed from ‘‘GCI Merger Sub, Inc.’’ to ‘‘GCI Liberty, Inc.’’ and we continue to conduct the businesses and
operations of Old GCI Liberty as they were previously conducted.

References to, and descriptions of, our company with respect to periods prior to May 10, 2018 relate to Old
GCI Liberty, and references to, and descriptions of, our company with respect to periods after May 10, 2018
relate to GCI Liberty. Old GCI Liberty was named General Communication, Inc. prior to February 20, 2018.

1

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

1

THE ANNUAL MEETING

ELECTRONIC DELIVERY

Registered stockholders may elect to receive future notices and proxy materials by e-mail. To sign up for
electronic delivery, go to www.computershare.com/investor. Stockholders who hold shares through a bank,
brokerage firm or other nominee may sign up for electronic delivery when voting by Internet at
www.proxyvote.com, by following the prompts. Also, stockholders who hold shares through a bank, brokerage
firm or other nominee may sign up for electronic delivery by contacting their nominee. Once you sign up, you
will not receive a printed copy of the notices and proxy materials, unless you request them. If you are a
registered stockholder, you may suspend electronic delivery of the notices and proxy materials at any time by
contacting our transfer agent, Computershare, at (866) 367-6355 (outside the United States (781) 575-2879).
Stockholders who hold shares through a bank, brokerage firm or other nominee should contact their nominee
to suspend electronic delivery.

TIME, PLACE AND DATE

The annual meeting of stockholders is to be held at 8:00 a.m., local time, on June 25, 2018, at the corporate
offices of GCI Liberty, 12300 Liberty Boulevard, Englewood, Colorado 80112, telephone (720) 875-5900.

PURPOSE

At the annual meeting, you will be asked to consider and vote on each of the following:

•

•

•

the election of directors proposal, to elect John C. Malone, Gregory B. Maffei, Ronald A. Duncan,
Gregg L. Engles, Donne F. Fisher, Richard R. Green and Sue Ann Hamilton to serve as members of our
board in the classes indicated under ‘‘Proposal 1—The Election of Directors Proposal,’’ until their
respective successors are elected and qualified, for the applicable term prescribed in our certificate of
incorporation, or their earlier resignation or removal;

the auditors ratification proposal, to ratify the selection of KPMG LLP as our independent auditors for the
fiscal year ending December 31, 2018; and

the incentive plan proposal, to approve the GCI Liberty, Inc. 2018 Omnibus Incentive Plan.

You may also be asked to consider and vote on such other business as may properly come before the annual
meeting, although we are not aware at this time of any other business that might come before the annual
meeting.

QUORUM

In order to conduct the business of the annual meeting, a quorum must be present. This means that the
holders of at least a majority of the aggregate voting power represented by the shares of our capital stock
outstanding on the record date and entitled to vote at the annual meeting must be represented at the annual
meeting either in person or by proxy. For purposes of determining a quorum, your shares will be included as
represented at the meeting even if you indicate on your proxy that you abstain from voting. If a broker, who is
a record holder of shares, indicates on a form of proxy that the broker does not have discretionary authority to
vote those shares on a particular proposal or proposals, or if those shares are voted in circumstances in which
proxy authority is defective or has been withheld, those shares (broker non-votes) will nevertheless be treated
as present for purposes of determining the presence of a quorum. See ‘‘—Voting Procedures for Shares Held
in Street Name—Effect of Broker Non-Votes’’ below.

WHO MAY VOTE

Holders of shares of GLIBA, GLIBB and GLIBP, as recorded in our stock register as of 5:00 p.m., New York
City time, on May 14, 2018 (such date and time, the record date for the annual meeting), will be entitled to
notice of the annual meeting and to vote at the annual meeting or any adjournment or postponement thereof.

2 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

2

THE ANNUAL MEETING

VOTES REQUIRED

Each director nominee who receives a plurality of the combined voting power of the outstanding shares of our
capital stock present in person or represented by proxy at the annual meeting and entitled to vote on the
election of directors at the annual meeting, voting together as a single class, will be elected to the office.

Approval of each of the auditors ratification proposal and the incentive plan proposal requires the affirmative
vote of a majority of the combined voting power of the outstanding shares of our capital stock that are present
in person or by proxy, and entitled to vote at the annual meeting, voting together as a single class.

VOTES YOU HAVE

At the annual meeting, holders of shares of GLIBA will have one vote per share, holders of shares of GLIBB
will have ten votes per share, and holders of shares of GLIBP will have one-third of one vote per share, in
each case, that our records show are owned as of the record date.

RECOMMENDATION OF OUR BOARD OF
DIRECTORS

Our board of directors has unanimously approved
each of the proposals and recommends that you vote
‘‘FOR’’ the election of each director nominee and
‘‘FOR’’ each of the auditors ratification proposal and
the incentive plan proposal.

SHARES OUTSTANDING

As of the record date, an aggregate of approximately 104,554,000 shares of GLIBA, 4,449,000 shares of
GLIBB and 7,251,000 shares of GLIBP were issued and outstanding and entitled to vote at the annual meeting.

NUMBER OF HOLDERS

There were, as of the record date, 1,917, 61 and 895 record holders of GLIBA, GLIBB and GLIBP, respectively
(which amounts do not include the number of stockholders whose shares are held of record by banks, brokers
or other nominees, but include each such institution as one holder).

VOTING PROCEDURES FOR RECORD HOLDERS

Holders of record of GLIBA, GLIBB and GLIBP as of the record date may vote in person at the annual
meeting, by telephone or through the Internet. Alternatively, they may give a proxy by completing, signing,
dating and returning the proxy card by mail. Instructions for voting by using the telephone or the Internet are
printed on the proxy voting instructions attached to the proxy card. In order to vote through the Internet, holders
should have their proxy cards available so they can input the required information from the proxy card, and log
onto the Internet website address shown on the proxy card. When holders log onto the Internet website
address, they will receive instructions on how to vote their shares. The telephone and Internet voting
procedures are designed to authenticate votes cast by use of a personal identification number, which will be
provided to each voting stockholder separately. Unless subsequently revoked, shares of our capital stock
represented by a proxy submitted as described herein and received at or before the annual meeting will be
voted in accordance with the instructions on the proxy.

YOUR VOTE IS IMPORTANT. It is recommended that you vote by proxy even if you plan to attend the annual
meeting. You may change your vote at the annual meeting.

If you submit a properly executed proxy without indicating any voting instructions as to a proposal enumerated
in the Notice of Annual Meeting of Stockholders, the shares represented by the proxy will be voted ‘‘FOR’’ the
election of each director nominee and ‘‘FOR’’ each of the auditors ratification proposal and the incentive plan
proposal.

3

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

3

If you submit a proxy indicating that you abstain from voting as to a proposal, it will have no effect on the
election of directors proposal and will have the same effect as a vote ‘‘AGAINST’’ each of the other proposals.

If you do not submit a proxy or you do not vote in person at the annual meeting, your shares will not be
counted as present and entitled to vote for purposes of determining a quorum, and your failure to vote will have
no effect on determining whether any of the proposals are approved (if a quorum is present).

VOTING PROCEDURES FOR SHARES HELD IN STREET NAME

General. If you hold your shares in the name of a broker, bank or other nominee, you should follow the
instructions provided by your broker, bank or other nominee when voting your shares or to grant or revoke a
proxy. The rules and regulations of the New York Stock Exchange and The Nasdaq Stock Market LLC
(Nasdaq) prohibit brokers, banks and other nominees from voting shares on behalf of their clients with respect
to numerous matters, including, in our case, all of the proposals described in this proxy statement other than
the auditors ratification proposal. Accordingly, to ensure your shares held in street name are voted on these
matters, we encourage you to provide promptly specific voting instructions to your broker, bank or other
nominee.

Effect of Broker Non-Votes. Broker non-votes are counted as shares of our capital stock present and entitled
to vote for purposes of determining a quorum but will have no effect on any of the proposals. You should follow
the directions your broker, bank or other nominee provides to you regarding how to vote your shares of GLIBA,
GLIBB or GLIBP or how to change your vote or revoke your proxy.

REVOKING A PROXY

If you submitted a proxy prior to the start of the annual meeting, you may change your vote by voting in person
at the annual meeting or by delivering a signed proxy revocation or a new signed proxy with a later date to
GCI Liberty, Inc., Proxy Services, c/o Computershare Investor Services, P.O. Box 505008, Louisville,
Kentucky 40233-9814. Any signed proxy revocation or later-dated proxy must be received before the start of
the annual meeting. In addition, you may change your vote through the Internet or by telephone (if you
originally voted by the corresponding method) not later than 2:00 a.m., New York City time, on June 25, 2018.

Your attendance at the annual meeting will not, by itself, revoke a prior vote or proxy from you.

If your shares are held in an account by a broker, bank or other nominee, you should contact your nominee to
change your vote or revoke your proxy.

SOLICITATION OF PROXIES

We are soliciting proxies by means of our proxy statement and our annual report (together, the proxy
materials) on behalf of our board of directors. In addition to this mailing, our employees may solicit proxies
personally or by telephone. We pay the cost of soliciting these proxies. We also reimburse brokers and other
nominees for their expenses in sending paper proxy materials to you and getting your voting instructions.

If you have any further questions about voting or attending the annual meeting, please contact GCI Liberty
Investor Relations at (833) 618-8602.

OTHER MATTERS TO BE VOTED ON AT THE ANNUAL MEETING

Our board of directors is not currently aware of any business to be acted on at the annual meeting other than
that which is described in the Notice of Annual Meeting of Stockholders and this proxy statement. If, however,
other matters are properly brought to a vote at the annual meeting, the persons designated as proxies will have
discretion to vote or to act on these matters according to their best judgment. In the event there is a proposal
to adjourn or postpone the annual meeting, the persons designated as proxies will have discretion to vote on
that proposal.

4 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

4

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS

The following table sets forth information concerning shares of our capital stock beneficially owned by each
person or entity known by us to own more than five percent of the outstanding shares of each series of our
capital stock. All of such information is based on publicly available filings, unless otherwise known to us from
other sources.

Unless otherwise indicated, the security ownership information is given as of March 31, 2018 and, in the case
of percentage ownership information, is based upon (1) 104,549,667 shares of GLIBA, (2) 4,455,208 shares of
GLIBB and (3) 7,251,398 shares of GLIBP, in each case, outstanding on that date, assuming the conversion
on a one-for-one basis of shares of Old GCI Liberty capital stock for shares of our capital stock pursuant to the
Reincorporation Merger. The percentage voting power is presented in the table below on an aggregate basis
for all shares of our capital stock. References in this section to GLIBA, GLIBB and GLIBP with respect to dates
prior to the completion of the Reincorporation Merger on May 10, 2018 refer to Old GCI Liberty’s Class A
common stock, Class B common stock and Series A Cumulative Redeemable Preferred Stock, respectively.
Fractional shares of Old GCI Liberty were rounded to the nearest share.

Name and Address of Beneficial Owner

Title of
Series or
Class

John C. Malone

c/o GCI Liberty, Inc.
12300 Liberty Boulevard
Englewood, CO 80112

Gregory B. Maffei

c/o GCI Liberty, Inc.
12300 Liberty Boulevard
Englewood, CO 80112

Ronald A. Duncan

c/o GCI Liberty, Inc.
12300 Liberty Boulevard
Englewood, CO 80112

John W. Stanton and Theresa E. Gillespie

155 108th Avenue, N.E., Suite 400
Bellevue, WA 98004

The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355

Black Rock, Inc.

40 East 52nd Street
New York, NY 10022

Dimensional Fund Advisors LP

Palisades West, Building One
6300 Bee Cave Road
Austin, TX 78746

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

Amount and
Nature of
Beneficial
Ownership

607,021(1)
4,021,175(1)
10(1)

1,807,099(1)
689,396(1)

—

1,499,734(1)

—

476,107(1)

1,689,009(2)

—

536,193(3)

7,739,903(4)

—

408,485(4)

5,877,605(5)

—

762,153(5)

2,214,734(6)
5,186(6)
414,060(6)

Percent of
Series
(%)

*
90.3
*

1.7
14.1
—

1.4
—
6.6

1.6
—
7.4

7.4
—
5.6

5.6
—
10.5

2.1
*
5.7

Voting
Power
(%)

26.9

5.5

1.1

1.2

5.2

4.0

1.6

5

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

5

Name and Address of Beneficial Owner

T. Rowe Price Associates, Inc.

100 E. Pratt Street
Baltimore, MD 21202

FPR Partners LLC

199 Fremont Street, Suite 2500
San Francisco, CA 94105

Title of
Series or
Class

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

Amount and
Nature of
Beneficial
Ownership

7,298,786(7)

—
4,058(7)

8,108,508(8)

—
—

Percent of
Series
(%)

7.0
—
*

7.8
—
—

Voting
Power
(%)

4.8

5.4

*

(1)

Less than one percent

Information with respect to shares of GCI Liberty capital stock beneficially owned by Mr. Malone, who is the Chairman of the
Board and a director of GCI Liberty, Mr. Maffei, who is the President and Chief Executive Officer and a director of GCI
Liberty, and Mr. Duncan, who is a director of GCI Liberty, is also set forth in ‘‘—Security Ownership of Management’’ below.

(2) Based on Amendment No. 8 to the Report on Schedule 13D, filed March 12, 2018, by John W. Stanton and Theresa E.

Gillespie (Stanton and Gillespie), which states that, with respect to GLIBA, Stanton and Gillespie have shared voting and
shared dispositive power over 1,689,009 shares.

(3) Based on the Report on Schedule 13D, filed March 12, 2018, by Stanton and Gillespie, which states that, with respect to
GLIBP, Stanton and Gillespie have shared voting power over 536,193 shares and shared dispositive power over 536,193
shares.

(4) Based on Form 13F, filed February 14, 2018, by The Vanguard Group (Vanguard), which states that, (i) with respect to

Qurate Retail’s Series A Liberty Ventures common stock, par value $0.01 per share (LVNTA), Vanguard has sole investment
discretion over 6,406,801 shares, shared investment discretion over 46,374 shares, sole voting power over 42,197 shares and
shared voting power over 10,297 shares, and (ii) with respect to Old GCI Liberty’s Class A common stock, no par value,
which traded on Nasdaq prior to February 22, 2018 (GNCMA), Vanguard has sole investment discretion over 1,991,800
shares, shared investment discretion over 50,625 shares, sole voting power over 50,725 shares and shared voting power
over 2,100 shares. As a result of the Transactions (and based on the 13F), Vanguard has, (i) with respect to GLIBA, sole
investment discretion over 7,661,635 shares, shared investment discretion over 78,268 shares, sole voting power over 74,154
shares and shared voting power over 11,620 shares, and (ii) with respect to GLIBP, sole investment discretion over 398,360
shares, shared investment discretion over 10,125 shares, sole voting power over 10,145 shares and shared voting power
over 420 shares.

(5) Based on Form 13F, filed February 9, 2018, by Black Rock, Inc. (Black Rock), which states that, (i) with respect to LVNTA,
Black Rock has sole investment discretion over 3,476,822 shares and sole voting power over 3,176,752 shares and (ii) with
respect to GNCMA, Black Rock has sole investment discretion over 3,810,767 shares and sole voting power over 3,752,553
shares. As a result of the Transactions (and based on the 13F), Black Rock has, (i) with respect to GLIBA, sole investment
discretion over 5,877,605 shares and sole voting power over 5,540,860 shares, and (ii) with respect to GLIBP, sole
investment discretion over 762,153 shares and sole voting power over 750,511 shares.

(6) Based on Form 13F, filed February 12, 2018, by Dimensional Fund Advisors LP (Dimensional), which states that, (i) with

respect to LVNTA, Dimensional has shared investment discretion over 910,444 shares and sole voting power over 852,839
shares, (ii) with respect to Qurate Retail’s Series B Liberty Ventures common stock, par value $0.01 per share, Dimensional
has sole investment discretion and sole voting power over 5,186 shares, and (iii) with respect to GNCMA, Dimensional has
sole investment discretion over 2,070,302 shares and sole voting power over 1,974,747 shares. As a result of the
Transactions, Dimensional has, (i) with respect to GLIBA, sole investment discretion over 1,304,290 shares, shared
investment discretion over 910,444 shares and sole voting power over 2,096,930 shares, (ii) with respect to GLIBB, sole
investment discretion and sole voting power over 5,186 shares and (iii) with respect to GLIBP, sole investment discretion over
414,060 shares and sole voting power over 394,949 shares.

(7) Based on Form 13F, filed February 14, 2018, by T. Rowe Price Associates, Inc. (T. Rowe), which states, (i) with respect to

LVNTA, T. Rowe has sole investment discretion over 7,286,003 shares and sole voting power over 1,501,862 shares and
(ii) with respect to GNCMA, has sole investment discretion over 20,290 shares and sole voting power over 9,570 shares. As a
result of the Transactions (and based on the 13F), T. Rowe has, (i) with respect to GLIBA, sole investment discretion over
7,298,786 shares and sole voting power over 1,507,891 shares, and (ii) with respect to GLIBP, sole investment discretion
over 4,058 shares and sole voting power over 1,914 shares.

(8) Based on Form 13F, filed February 14, 2018, by FPR Partners, LLC (FPR), which states that FPR has sole investment

discretion and sole voting power over 8,108,508 LVNTA shares. As a result of the Transactions, FPR has sole investment
discretion and sole voting power over 8,108,508 GLIBA shares.

SECURITY OWNERSHIP OF MANAGEMENT

The following table sets forth information with respect to the ownership by each of GCI Liberty’s current
directors and executive officers, the Named Executive Officers (as defined herein) and by all of GCI Liberty’s

6 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

6

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

current directors and executive officers as a group of shares of GLIBA, GLIBB, and GLIBP. The security
ownership information with respect to the shares of our capital stock is given as of March 9, 2018 for the
Named Executive Officers and as of March 31, 2018 for GCI Liberty’s current directors and executive officers,
and, in the case of percentage ownership information, is based upon (1) 104,549,667 shares of GLIBA,
(2) 4,455,208 shares of GLIBB and (3) 7,251,398 shares of GLIBP, in each case, outstanding on that date,
assuming the conversion on a one-for-one basis of shares of Old GCI Liberty capital stock for shares of our
capital stock pursuant to the Reincorporation Merger. The percentage voting power is presented in the table
below on an aggregate basis for all shares of our capital stock. References in this section to GLIBA, GLIBB
and GLIBP with respect to dates prior to the consummation of the Reincorporation Merger on May 10, 2018
refer to Old GCI Liberty’s Class A common stock, Class B common stock and Series A Cumulative
Redeemable Preferred Stock, respectively. Fractional shares of Old GCI Liberty are rounded to the nearest
share.

Shares of restricted stock that have been granted pursuant to GCI Liberty’s incentive plans are included in the
outstanding share numbers, for purposes of the table below. Shares of capital stock issuable upon exercise or
conversion of options, warrants and convertible securities that were exercisable or convertible on or within
60 days after March 31, 2018 are deemed to be outstanding and to be beneficially owned by the person
holding the options, warrants or convertible securities for the purpose of computing the percentage ownership
of that person and for the aggregate percentage owned by the directors and executive officers as a group, but
are not treated as outstanding for the purpose of computing the percentage ownership of any other individual
person. For purposes of the following presentation, beneficial ownership of shares of GLIBB, though convertible
on a one-for-one basis into shares of GLIBA, are reported as beneficial ownership of GLIBB only, and not as
beneficial ownership of GLIBA. So far as is known, the persons indicated below have sole voting and
dispositive power with respect to the shares indicated as owned by them, except as otherwise stated in the
notes to the table.

The number of shares indicated as owned by the persons in the table includes interests in shares held by the
Liberty Media 401(k) Savings Plan as of March 31, 2018. The shares held by the trustee of the Liberty Media
401(k) Savings Plan for the benefit of these persons are voted as directed by such persons.

Name

John C. Malone

Chairman of the Board and
Director

Gregory B. Maffei
President, Chief Executive
Officer and Director

Ronald A. Duncan
Director, President and
Chief Executive Officer,
GCI Holdings, LLC

Gregg L. Engles

Director

Donne F. Fisher

Director

Title of
Series or
Class

Amount and Nature of
Beneficial Ownership
(in thousands)

Percent of
Series
(%)

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

607(1)(2)
4,021(1)(3)
**

1,807(4)(5)(6)
689(5)
—

1,500(7)
—
476(7)

—
—
—

57
**
8

*
90.3
*

1.7
14.1
—

1.4
—
6.6

—
—
—

*
*
*

Voting
Power
(%)

26.9

5.5

1.1

—

*

7

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

7

Title of
Series or
Class

Amount and Nature of
Beneficial Ownership
(in thousands)

Percent of
Series
(%)

Voting
Power
(%)

Name

Richard R. Green

Director

Sue Ann Hamilton

Director

Richard N. Baer

Chief Legal Officer

Mark D. Carleton

Chief Financial Officer

Albert E. Rosenthaler

Chief Corporate Development
Officer

Peter J. Pounds

Former Senior Vice President,
Chief Financial Officer and
Secretary of Old GCI Liberty

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

Martin E. Cary

GLIBA
Former Senior Vice President and GLIBB
General Manager—Business of
GLIBP
Old GCI Liberty

Gregory E. Chapados

Former President and Chief
Operating Officer of Old GCI
Liberty

Tina M. Pidgeon

Former Senior Vice President,
Chief Compliance Officer,
General Counsel and
Governmental Affairs of
Old GCI Liberty

All directors and executive officers
(as a group (10 persons))

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

GLIBA
GLIBB
GLIBP

**(8)
—
—

**
—
—

18(5)
—
—

50(5)
—
—

95(4)(5)
—
—

118
—
37

97
—
31

333(9)
—
106(9)

106
—
34

*

*

*

*

*

*

*

*

*

*
—
—

*
—
—

*
—
—

*
—
—

*
—
—

*
—
*

*
—
*

*
—
*

*
—
*

4.134(1)(2)(4)(5)(6)(7)(8)(9)
4,711(1)(3)(5)
484(7)(9)

3.9
96.2
6.7

32.8

*

**

(1)

(2)

Less than one percent

Less than 1,000 shares

Includes 79,243 GLIBA shares and 123,847 GLIBB shares held by Mrs. Malone, as to which shares Mr. Malone has
disclaimed beneficial ownership.

Includes (i) 410,146 GLIBA shares pledged to Fidelity Brokerage Services, LLC (Fidelity) in connection with a margin loan
facility extended by Fidelity and (ii) 117,600 GLIBA shares pledged to Merrill Lynch, Pierce, Fenner & Smith Incorporated
(Merrill Lynch) in connection with margin loan facilities extended by Merrill Lynch.

8 GCI LIBERTY, INC. 2018 PROXY STATEMENT

8

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(3)

Includes 66,683 GLIBB shares held by two trusts which are managed by an independent trustee, of which the beneficiaries
are Mr. Malone’s adult children and in which Mr. Malone has no pecuniary interest. Mr. Malone retains the right to substitute
assets held by the trusts and has disclaimed beneficial ownership of the shares held by the trusts.

(4)

Includes shares held in the Liberty Media 401(k) Savings Plan as follows:

Gregory B. Maffei

Albert E. Rosenthaler

Total

GLIBA

870

1,845

2,715

(5)

Includes beneficial ownership of shares that may be acquired upon exercise of, or which relate to, stock options exercisable
within 60 days after March 31, 2018.

Richard N. Baer
Mark D. Carleton
Gregory B. Maffei
Albert E. Rosenthaler

Total

GLIBA

2,659
30,418
873,998
44,111

951,186

GLIBB

—
—
443,001
—

443,001

(6)

(7)

(8)

(9)

Includes 574,210 GLIBA shares held by a grantor retained annuity trust.

Includes the following: (a) 1,833 shares of GLIBA and 582 shares of GLIBP allocated to Mr. Duncan under the Employee
Stock Purchase Plan adopted by Old GCI Liberty in January 1987 (the GCI 401(k) Plan), formerly known as the Stock
Purchase Plan; (b) 1,419,021 shares of GLIBA and 450,484 shares of GLIBP to which Mr. Duncan has a direct pecuniary
interest (and for which 1,310,755 shares of GLIBA and 416,111 shares of GLIBP are pledged as security); (c) 12,600 shares
of GLIBA and 4,000 shares of GLIBP held by Missy, LLC, which is 25% owned by Mr. Duncan, 25% owned by Dani
Bowman, Mr. Duncan’s wife, 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; (d) 9,450 shares of GLIBA and 3,000 shares of
GLIBP 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 and (e) 56,830 shares of GLIBA and 18,041 shares of GLIBP held by Dani Bowman, of
which Mr. Duncan disclaims beneficial ownership. Does not include 40,195 shares of GLIBA and 12,760 shares of GLIBP
held by Amanda Miller, with respect to which Mr. Duncan disclaims beneficial ownership (Ms. Miller is Mr. Duncan’s
daughter).

Includes 354 shares of GLIBA held by Dr. Green’s spouse.

Includes 8,009 GLIBA shares and 2,543 GLIBP shares held under the GCI 401(k) Plan.

CHANGES IN CONTROL

We know of no arrangements, including any pledge by any person of our securities, the operation of which
may at a subsequent date result in a change in control of our company.

9

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

9

PROPOSALS OF OUR BOARD

The following proposals will be presented at the annual meeting by our board of directors.

PROPOSAL 1—THE ELECTION OF DIRECTORS PROPOSAL

BOARD OF DIRECTORS

Our board of directors currently consists of seven directors. Our directors, whose terms will expire at the 2018
annual meeting, are John C. Malone, Gregory B. Maffei, Ronald A. Duncan, Gregg L. Engles, Donne F. Fisher,
Richard R. Green and Sue Ann Hamilton. These directors are nominated for election to our board to serve as
directors in the classes and for the terms described below, and we have been informed that each of these
directors is willing to serve as a director of our company. If any nominee should decline election or should
become unable to serve as a director of our company for any reason before election at the annual meeting,
votes will be cast by the persons appointed as proxies for a substitute nominee, if any, designated by the
board of directors.

The director nominees are being nominated for election to our board of directors to serve in the following
classes, effective upon their respective election to our board of directors:

Class I
John C. Malone
Richard R. Green
—

Class II
Ronald A. Duncan
Donne F. Fisher
—

Class III
Gregory B. Maffei
Sue Ann Hamilton
Gregg L. Engles

The term of office of the Class I directors who are elected at the annual meeting will expire at the annual
meeting of our stockholders in 2019. The term of office of the Class II directors who are elected at the annual
meeting will expire at the annual meeting of our stockholders in 2020. The term of office of the Class III
directors who are elected at the annual meeting will expire at the annual meeting of our stockholders in 2021.
Commencing with the election of directors at the 2019 annual meeting of our stockholders, at each annual
meeting of our stockholders, the successors of that class of directors whose term expires at that meeting will
be elected to hold office for a term expiring at the annual meeting of our stockholders held in the third year
following the year of their election. The directors of each class will hold office until the expiration of the term of
such class and their respective successors are elected and qualified or until such director’s earlier death,
resignation or removal.

The following lists the nominees for election as directors at the annual meeting and includes as to each person
how long such person has been a director of our company, such person’s professional background, other
public company directorships and other factors considered in the determination that such person possesses the
requisite qualifications and skills to serve as a member of our board of directors. The number of shares of our
capital stock beneficially owned by each director is set forth in this proxy statement under the caption ‘‘Security
Ownership of Certain Beneficial Owners and Management—Security Ownership of Management.’’

Nominees for Election as Class I Directors

John C. Malone

•

•

•

Age: 77

Chairman of the Board of our company.

Professional Background: Mr. Malone has served as the Chairman of the Board of our company since
March 2018. He served as Chairman of the Board of Qurate Retail, including its predecessor, from its
inception in 1994 until March 2018 and served as Qurate Retail’s Chief Executive Officer from August
2005 to February 2006. Mr. Malone served as Chairman of the Board of Tele-Communications, Inc. (TCI)

10

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

10

PROPOSAL 1—THE ELECTION OF DIRECTORS PROPOSAL

from November 1996 until March 1999, when it was acquired by AT&T Corp., and as Chief Executive
Officer of TCI from January 1994 to March 1997.

•

Other Public Company Directorships: Mr. Malone has served as (i) Chairman of the Board of Liberty Media
Corporation (Liberty Media) (including its predecessor) since August 2011 and as a director since
December 2010, (ii) the Chairman of the Board of Liberty Broadband Corporation (Liberty Broadband)
since November 2014, (iii) the Chairman of the Board of Liberty Global plc (LGP) since June 2013, having
previously served as Chairman of the Board of Liberty Global, Inc. (LGI), LGP’s predecessor, from June
2005 to June 2013, Chairman of the Board of LGI’s predecessor, Liberty Media International, Inc. (LMI)
from March 2004 to June 2005 and a director of UnitedGlobalCom, Inc., now a subsidiary of LGP, from
January 2002 to June 2005, (iv) a director of Discovery, Inc. (Discovery), which was formerly known as
Discovery Communications, Inc. (Discovery Communications), since September 2008, and a director of
Discovery Communications’ predecessor Discovery Holding Company (DHC), from May 2005 to September
2008 and as Chairman of the Board from March 2005 to September 2008, (v) a director of Charter
Communications, Inc. (Charter) since May 2013, (vi) a director of Lions Gate Entertainment Corp. since
March 2015, (vii) Chairman of the Board of Liberty Expedia Holdings, Inc. (Liberty Expedia) since
November 2016, (viii) a director of Liberty Latin America Ltd. since December 2017 and (ix) a director of
Qurate Retail (including its predecessor) since 1994 and served as Chairman of the Board of Qurate Retail
(including its predecessor) from 1994 to March 2018. Previously, he served as (i) a director of Expedia, Inc.
from December 2012 to December 2017, having previously served as a director from August 2005 to
November 2012, (ii) the Chairman of the Board of Liberty TripAdvisor Holdings, Inc. (Liberty TripAdvisor)
from August 2014 to June 2015, (iii) a director of Sirius XM Holdings Inc. (Sirius XM) from April 2009 to
May 2013, (iv) a director of Ascent Capital Group, Inc. from January 2010 to September 2012, (v) a director
of Live Nation Entertainment, Inc. (Live Nation) from January 2010 to February 2011, (vi) Chairman of the
Board of DIRECTV and its predecessors from February 2008 to June 2010 and (vii) a director of
IAC/InterActive Corp from May 2006 to June 2010.

•

Board Membership Qualifications: Mr. Malone, as President of TCI, co-founded Qurate Retail’s former
parent company and is considered one of the preeminent figures in the media and telecommunications
industry. He is well known for his sophisticated problem solving and risk assessment skills.

Richard R. Green

•

•

•

•

•

Age: 80

A director of our company.

Professional Background: Dr. Green has served as a director of our company since March 2018. For over
20 years, Dr. Green served as President and Chief Executive Officer of CableLabs(cid:3) before retiring in
December 2009. Prior to joining CableLabs(cid:3), he was a senior vice president at PBS from 1984 through
1988, and served as a director of CBS’s Advanced Television Technology Laboratory from 1980 through
1983. Dr. Green is a Professor of Engineering and Director of the Center of Technology and Innovation at
the University of Denver. He also serves as a director of Jones/NCTI, a Jones Knowledge Company,
which is a workforce performance solutions company for individuals and broadband companies.

Other Public Company Directorships: Dr. Green has served as a director of Liberty Broadband since
November 2014 and a director of LGP and its predecessors since December 2008. He has also served
as a director of Shaw Communications, Inc., a telecommunications company based in Canada, since
2010.

Board Membership Qualifications: Dr. Green brings to our board his extensive professional and executive
background and his particular knowledge and experience in the complex and rapidly changing field of
technology for broadband communications services, which contributes to our company’s evaluation of
technological initiatives and challenges and strengthens the board’s collective qualifications, skills and
attributes.

11

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

11

Nominees for Election as Class II Directors

Ronald A. Duncan

•

•

•

•

•

Age: 65

A director of our company.

Professional Background: Mr. Duncan is a co-founder of our predecessor, Old GCI Liberty, and has
served as a director on our board, including the board of our predecessor, since 1979. Mr. Duncan has
served as the President and Chief Executive Officer of our subsidiary, GCI Holdings, LLC (GCI Holdings)
since March 2018. Mr. Duncan served as Chief Executive Officer of our predecessor from January 1989
to March 2018 and as its President from January 1989 to August 2017.

Other Public Company Directorships: None.

Board Membership Qualifications: Mr. Duncan brings to our board significant financial and operational
experience in the telecommunications industry as the co-founder of our predecessor and its former chief
executive officer and President.

Donne F. Fisher

•

•

•

•

•

Age: 79

A director of our company.

Professional Background: Mr. Fisher has served as a director of our company since March 2018, as a
director of our predecessor from 1980 to December 2005 and as Chairman of the Board of our
predecessor from June 2002 to December 2005. Mr. Fisher has served as President of Fisher Capital
Partners, Ltd., a venture capital partnership, since December 1991. Mr. Fisher also served in various
positions at TCI from 1968 to 1996 including as Executive Vice President of TCI from January 1994 to
January 1996 and served as a consultant to TCI, including its successors AT&T Broadband LLC and
Comcast Corporation, from 1996 to December 2005.

Other Public Company Directorships: Mr. Fisher served as a director of Liberty Broadband from
November 2014 to June 2015 and served as a director of Liberty Media (including its predecessor) from
September 2011 to June 2015. Mr. Fisher served as a director of our predecessor from 1980 to
December 2005, as a director of LMI from May 2004 to June 2005 and as a director of Qurate Retail from
October 2001 to September 2011. Mr. Fisher was also Chairman of the Board of our predecessor from
June 2002 to December 2005.

Board Membership Qualifications: Mr. Fisher brings extensive industry experience to our board and a
critical perspective on its business, having held several executive positions over many years with TCI,
having previously served as a director of Qurate Retail, Liberty Media, Liberty Broadband and our
predecessor. In addition, Mr. Fisher’s financial expertise includes a focus on venture capital investment,
which is different from the focus of our other board members and helpful to our board in formulating
investment objectives and determining the growth potential of businesses both within our company and
those that the board evaluates for investment purposes.

Nominees for Election as Class III Directors

Gregory B. Maffei

•

•

•

Age: 57

Chief Executive Officer, President and a director of our company.

Professional Background: Mr. Maffei has served as a director and the President and Chief Executive
Officer of our company since March 2018. He has served as the President and Chief Executive Officer of
Liberty Media (including its predecessor) since May 2007, Liberty TripAdvisor since July 2013 and Liberty
Broadband since June 2014. He has served as the Chairman of the Board of Qurate Retail (including its
predecessor), since March 2018, and as a director of Qurate Retail (including its predecessor) since
November 2005, and he served as the President and Chief Executive Officer of Qurate Retail (including

12 GCI LIBERTY, INC. 2018 PROXY STATEMENT

12

PROPOSAL 1—THE ELECTION OF DIRECTORS PROPOSAL

•

•

its predecessor) from February 2006 to March 2018, having served as its CEO-Elect from November 2005
through February 2006. Prior thereto, Mr. Maffei served as President and Chief Financial Officer of Oracle
Corporation (Oracle), Chairman, President and Chief Executive Officer of 360networks Corporation
(360networks), and Chief Financial Officer of Microsoft Corporation (Microsoft).

Other Public Company Directorships: Mr. Maffei has served as (i) a director of Liberty Media (including its
predecessor) since May 2007, (ii) a director of Liberty TripAdvisor since July 2013 and as its Chairman of
the Board since June 2015, (iii) a director of Liberty Broadband since June 2014 and (iv) Chairman of the
Board of Qurate Retail since March 2018 and a director of Qurate Retail (including its predecessor) since
November 2005. He has served as (i) the Chairman of the Board of Sirius XM since April 2013 and as a
director since March 2009, (ii) the Chairman of the Board of Live Nation since March 2013 and as a
director since February 2011, (iii) the Chairman of the Board of TripAdvisor, Inc. since February 2013,
(iv) a director of Charter since May 2013, (v) a director of Zillow Group, Inc. since February 2015, having
previously served as a director of its predecessor, Zillow, Inc., from May 2005 to February 2015 and
(vi) the Chairman of the Board of Pandora Media, Inc. since September 2017. Mr. Maffei served as
(i) Chairman of the Board of Starz from January 2013 until its acquisition by Lions Gate Entertainment
Corp. in December 2016, (ii) a director of Barnes & Noble, Inc. from September 2011 to April 2014, (iii) a
director of Electronic Arts, Inc. from June 2003 to July 2013 and (iv) a director of DIRECTV and its
predecessors from February 2008 to June 2010.

Board Membership Qualifications: Mr. Maffei brings to our board significant financial and operational
experience based on his current senior policy making positions at our company, Liberty Media, Qurate
Retail, Liberty TripAdvisor, and Liberty Broadband and his previous executive positions at Oracle,
360networks and Microsoft. In addition, Mr. Maffei has extensive public company board experience. He
provides our board with an executive leadership perspective on the strategic planning for, and operations
and management of, large public companies and risk management principles.

Sue Ann Hamilton

•

•

•

•

•

Age: 57

A director of our company.

Professional Background: As Principal of the consultancy Hamilton Media LLC (Hamilton Media),
Ms. Hamilton advises and represents major media and technology companies. In this role, she serves as
Executive Vice President—Distribution and Business Development for AXS TV LLC, a partnership
between founder Mark Cuban, AEG, Ryan Seacrest Media, Creative Artists Agency and CBS, and she
represents The Mark Cuban Companies/Radical Ventures as board observer for Philo, Inc., a privately
held technology company. Prior to launching Hamilton Media, from 2003 until 2007, she served as
Executive Vice President—Programming and Senior Vice President—Programming for Charter, the cable
and internet service provider. Before her work at Charter, she held numerous management positions at
AT&T Broadband LLC and its predecessor, TCI, dating back to 1993. Prior to her career in technology,
media, and telecommunications, she was a partner at Chicago-based law firm Kirkland & Ellis,
specializing in complex commercial transactions. She received her J.D. degree from Stanford Law School,
where she was Associate Managing Editor of the Stanford Law Review and Editor of the Stanford Journal
of International Law. She is a magna cum laude graduate of Carleton College in Northfield, Minnesota.

Other Public Company Directorships: Ms. Hamilton has served as a director of FTD since December
2014.

Board Membership Qualifications: As a result of her extensive management experience, Ms. Hamilton
brings to our board significant leadership, oversight and consulting skills, as well as experience in the
media, technology and legal fields.

13

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

13

Gregg L. Engles

•

•

•

•

•

Age: 60

A director of our company.

Professional Background: Mr. Engles has served as a director of our company since March 2018. He has
served as a partner of Capitol Peak Partners since he founded it in August 2017. He previously served as
(i) Chairman of the Board and Chief Executive Officer of The WhiteWave Foods Company (WhiteWave)
from October 2012 until its acquisition by Danone in April 2017 and (ii) Chief Executive Officer of Dean
Foods Company, WhiteWave’s former parent company, from April 1996 until WhiteWave’s initial public
offering in October 2012.

Other Public Company Directorships: Mr. Engles has served as a director of Liberty Expedia since
November 2016. Mr. Engles previously served as a director and Chairman of the Board of Dean Foods
Company from April 1996 to July 2013, except when he served as its Vice-Chairman from January 2002
to May 2002. He also served as a director of Treehouse Foods, Inc. from June 2005 to May 2008.

Board Membership Qualifications: Mr. Engles offers our board significant operational experience gained
through his senior leadership positions at WhiteWave and other large public companies. He provides our
board with executive leadership perspective on the operations and management of public companies,
which will assist our board in evaluating strategic opportunities.

VOTE AND RECOMMENDATION

A plurality of the combined voting power of the outstanding shares of our capital stock present in person or
represented by proxy at the annual meeting and entitled to vote on the election of directors at the annual
meeting, voting together as a single class, is required to elect each of John C. Malone, Gregory B. Maffei,
Ronald A. Duncan, Gregg L. Engles, Donne F. Fisher, Richard R. Green and Sue Ann Hamilton as a member
of our board of directors.

15MAY201821432024

Our board of directors unanimously recommends a vote
‘‘FOR’’ the election of each nominee to our board of directors.

14 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

14

PROPOSAL 2—THE AUDITORS RATIFICATION PROPOSAL

We are asking our stockholders to ratify the selection of KPMG LLP as our independent auditors for the fiscal
year ending December 31, 2018.

Even if the selection of KPMG LLP is ratified, the audit committee of our board of directors in its discretion may
direct the appointment of a different independent accounting firm at any time during the year if our audit
committee determines that such a change would be advisable. In the event our stockholders fail to ratify the
selection of KPMG LLP, our audit committee will consider it as a direction to select other auditors for the year
ending December 31, 2018.

A representative of KPMG LLP is expected to be available to answer appropriate questions at the annual
meeting and will have the opportunity to make a statement if he or she so desires.

CHANGE IN INDEPENDENT AUDITORS

Grant Thornton LLP (GT) was Old GCI Liberty’s independent registered public accounting firm for the fiscal
year ended December 31, 2017. On March 9, 2018, GT was replaced as our independent registered public
accounting firm by KPMG LLP. The replacement of GT and approval of the appointment of KPMG LLP as our
independent registered public accounting firm was approved by the audit committee of our board of directors
on March 9, 2018 in connection with the closing of the Transactions and on May 11, 2018 following the
completion of the Reincorporation Merger. For accounting purposes, the Transactions are treated as a reverse
acquisition and, as such, the historical financial statements of the accounting acquirer, which will be audited by
KPMG LLP for the fiscal years ended December 31, 2015, 2016 and 2017, have become our historical
financial statements.

GT’s audit report on Old GCI Liberty’s financial statements for the fiscal years ended December 31, 2016 and
2017, did not contain an adverse opinion or disclaimer of opinion, nor was it qualified as to audit scope or
accounting principles. During the fiscal years ended December 31, 2016 and 2017, (a) there were no
‘‘disagreements’’ (as described in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between us
and GT on any matter of accounting principles or practices, financial statement disclosure or auditing scope or
procedures, which disagreements, if not resolved to GT’s satisfaction, would have caused GT to make
reference in connection with GT’s opinion to the subject matter of the disagreement; and (b) there were no
‘‘reportable events’’ as the term is described in Item 304(a)(1)(v) of Regulation S-K.

We provided GT with a copy of the disclosures made in a Current Report on Form 8-K filed with the SEC on
March 14, 2018 and requested that GT furnish us with a letter addressed to the Securities and Exchange
Commission (SEC) stating whether they agree with the above statements. The letter is filed as Exhibit 16.1 to
that Current Report on Form 8-K.

During the two most recent fiscal years and the interim periods preceding the engagement, and through the
date of this proxy statement, neither we nor anyone on our behalf has previously consulted with KPMG LLP
regarding either (a) the application of accounting principles to a specified transaction, either completed or
proposed; or the type of audit opinion that might be rendered on our financial statements, and neither a written
report nor oral advice was provided to us that KPMG LLP concluded was an important factor considered by us
in reaching a decision as to the accounting, auditing or financial reporting issue; or (b) any matter that was
either the subject of a disagreement (as defined in paragraph 304(a)(1)(iv) of Regulation S-K and the related
instructions thereto) or a reportable event (as described in paragraph 304(a)(1)(v) of Regulation S-K).

A representative of GT is expected to be available to answer appropriate questions at the annual meeting and
will have the opportunity to make a statement if he or she so desires.

15

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

15

AUDIT FEES AND ALL OTHER FEES

The following table presents fees for professional audit services rendered by GT for the audit of Old GCI
Liberty’s consolidated financial statements for 2017 and 2016 and fees billed for other services rendered by
GT.

Audit fees(1)
Audit related fees(2)

Audit and audit related fees

Tax fees(3)

Total fees

2017

$1,435,101
134,750

1,569,851
124,693

$1,694,544

2016

1,406,817
28,875

1,435,692
148,397

1,584,089

(1) Consists of fees for Old GCI Liberty’s annual financial statement audit, quarterly financial statement reviews, reviews of other

filings by the company with the SEC, audit of Old GCI Liberty’s 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 Form S-4 filings and the 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 Old GCI Liberty’s state and federal income tax returns and consultation on various tax advice

and tax planning matters.

Our audit committee has considered whether the provision of services by KPMG LLP to our company other
than auditing is compatible with KPMG LLP maintaining its independence and believes that the provision of
such other services is compatible with KPMG LLP maintaining its independence.

POLICY ON PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF
INDEPENDENT AUDITOR

All services provided by our independent auditor during 2017 were approved in accordance with the terms of
Old GCI Liberty’s pre-approval policy that was in place during 2017, which provided as follows:

•

•

all audit services provided by our external accountant had to be pre-approved by our audit committee;
and

with respect to non-audit services, the audit committee could choose any of the following options for
approving such services (i) the full audit committee could consider each non-audit service, (ii) the audit
committee could designate one of its members to approve a non-audit service, with that member reporting
approvals to the full committee, or (iii) the audit committee could pre-approve categories of non-audit
services, and if this option was chosen, the categories had to be specific enough to ensure both of the
following (x) the audit committee knew exactly what it was approving and could determine the effect of
such approval on auditor independence and (y) management would not find it necessary to decide
whether a specific service fell within a category of pre-approved non-audit service.

VOTE AND RECOMMENDATION

The affirmative vote of a majority of the combined voting power of the outstanding shares of our capital stock
that are present in person or by proxy, and entitled to vote at the annual meeting, voting together as a single
class, is required to approve the auditors ratification proposal.

15MAY201821432024

Our board of directors unanimously recommends a vote
‘‘FOR’’ the auditors ratification proposal.

16 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

16

PROPOSAL 3—INCENTIVE PLAN PROPOSAL

The following is a description of the material provisions of the GCI Liberty, Inc. 2018 Omnibus Incentive Plan
(the 2018 incentive plan). The summary that follows is not intended to be complete, and we refer you to the
copy of the 2018 incentive plan set forth as Annex A to this proxy statement for a complete statement of its
terms and provisions.

KEY FEATURES OF THE 2018 INCENTIVE PLAN

•

•

•

•

•

No Discounted Options or SARs. Stock options and stock appreciation rights (SARs) may not be
granted with an exercise price below fair market value.

Dividend Equivalents. Only an award of restricted stock units (RSUs) may include dividend equivalents.
With respect to a performance-based award, dividend equivalents may only be paid to the extent the
underlying award is actually paid.

Limited Terms for Options and SARs. The term for stock options and SARs granted under the 2018
incentive plan is limited to ten years.

No Transferability. Awards generally may not be transferred, except as permitted by will or the laws of
descent and distribution or pursuant to a domestic relations order, unless otherwise provided for in an
award agreement.

Award Limitations. In any calendar year, no employee or independent contractor may be granted
awards relating to more than 1.5 million shares of our common stock or cash awards in excess of
$10 million and no nonemployee director may be granted awards having a value that would be in excess
of $3 million on the date of grant.

GCI LIBERTY, INC. 2018 OMNIBUS INCENTIVE PLAN

Our board determined to adopt the 2018 incentive plan in connection with the Transactions. If the 2018
incentive plan is approved, it will be the only incentive plan under which awards will be made, and no additional
awards will be made under the General Communication, Inc. Amended and Restated 1986 Stock Option Plan
(Stock Option Plan). In addition, only the eight million shares reserved under the 2018 incentive plan (as
described below) will be available for grant. The 2018 incentive plan is structured as an omnibus plan under
which awards may be made to our company’s officers, employees, independent contractors and nonemployee
directors and employees of Liberty Media or Qurate Retail providing services to us. A summary of certain terms
of the 2018 incentive plan is set forth below.

The 2018 incentive plan is administered by the compensation committee of our board of directors, other than
awards granted to nonemployee directors which may be administered by our full board of directors or the
compensation committee. The 2018 incentive plan is designed to provide additional remuneration to eligible
officers and employees of our company, our nonemployee directors and independent contractors and
employees of Liberty Media or Qurate Retail providing services to us and to encourage their investment in our
capital stock, thereby increasing their proprietary interest in our business. The 2018 incentive plan is also
intended to (1) attract persons of exceptional ability to become our officers and employees, and (2) induce
directors, independent contractors and employees of Liberty Media or Qurate Retail providing services to us to
provide services to us. Such persons will be eligible to participate in and may be granted awards under the
2018 incentive plan. The number of individuals who will receive awards under the 2018 incentive plan will vary
from year to year and will depend on various factors, such as the number of promotions and our hiring needs
during the year and exceptional or extraordinary performance. Although we cannot predict the number of future
award recipients, we estimate that there will be approximately four nonemployee directors of our company and
500 employees of our company (including employees of GCI Holdings and its subsidiaries) who will be eligible
to receive awards under the 2018 incentive plan. We do not currently anticipate granting any awards under the
2018 incentive plan to independent contractors of our company. For the avoidance of doubt, employees and

17

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

17

nonemployee directors of any of our affiliates may not participate in the 2018 incentive plan based solely upon
their status at any such affiliate.

Under the 2018 incentive plan, the compensation committee may grant non-qualified stock options, SARs,
restricted shares, RSUs, cash awards, performance awards or any combination of the foregoing (as used in
this description of the 2018 incentive plan, collectively, awards). The maximum number of shares of our
common stock with respect to which awards may be granted under the 2018 incentive plan is 8 million shares,
subject to anti-dilution and other adjustment provisions of the 2018 incentive plan. With limited exceptions, no
employee or independent contractor will be granted in any calendar year awards under the 2018 incentive plan
covering more than 1.5 million shares of our common stock, subject to anti-dilution and other adjustment
provisions of the 2018 incentive plan. In addition, no employee or independent contractor may receive payment
for cash awards during any calendar year aggregating in excess of $10 million. No nonemployee director may
be granted during any calendar year awards having a value (as determined on the grant date of such award)
that would be in excess of $3 million.

Shares of our common stock issuable pursuant to awards made under the 2018 incentive plan will be made
available from either authorized but unissued shares of our common stock or shares of our common stock that
we have issued but reacquired, including shares purchased in the open market. Shares of our common stock
that are subject to (i) any award granted under the 2018 incentive plan that expires, terminates or is cancelled
or annulled for any reason without having been exercised, (ii) any award of any SARs granted under the 2018
incentive plan the terms of which provide for settlement in cash, and (iii) any award of restricted shares or
RSUs granted under the 2018 incentive plan that shall be forfeited prior to becoming vested, will once again be
available for issuance under the 2018 incentive plan. Shares of our common stock that are (i) not issued or
delivered as a result of the net settlement of an outstanding option or SAR, (ii) used to pay the purchase price
or withholding taxes relating to an outstanding award, or (iii) repurchased in the open market with the proceeds
of an option purchase price will not again be made available for issuance under the 2018 incentive plan.

Subject to the provisions of the 2018 incentive plan, the compensation committee is authorized to establish,
amend and rescind such rules and regulations as it deems necessary or advisable for the proper administration
of the 2018 incentive plan and to take such other action in connection with or in relation to the 2018 incentive
plan as it deems necessary or advisable.

Unless otherwise determined by the compensation committee and expressly provided for in an agreement,
awards are not transferrable except as permitted by will or the laws of descent and distribution or pursuant to a
domestic relations order.

Stock Options. Non-qualified stock options awarded under the 2018 incentive plan will entitle the holder to
purchase a specified number of shares of a series of our common stock at a specified exercise price subject to
the terms and conditions of the applicable option grant. The exercise price of an option awarded under the
2018 incentive plan may be no less than the fair market value of the shares of the applicable series of our
common stock as of the day the option is granted. The term of an option may not exceed ten years; however,
if the term of an option expires when trading in our common stock is prohibited by law or our company’s policy,
the option will expire on the 30th day after the expiration of such prohibition. The compensation committee will
determine, and each individual award agreement will provide, (1) the series and number of shares of our
common stock subject to the option, (2) the per share exercise price, (3) whether that price is payable in cash,
by check, by promissory note, in whole shares of any series of our common stock, by the withholding of shares
of our common stock issuable upon exercise of the option, by cashless exercise, or any combination of the
foregoing, (4) other terms and conditions of exercise, (5) restrictions on transfer of the option and (6) other
provisions not inconsistent with the 2018 incentive plan. Dividend equivalents will not be paid with respect to
any stock options.

Stock Appreciation Rights. A SAR awarded under the 2018 incentive plan entitles the recipient to receive a
payment in stock or cash equal to the excess of the fair market value (on the day the SAR is exercised) of a
share of the applicable series of our common stock with respect to which the SAR was granted over the base
price specified in the grant. A SAR may be granted to an option holder with respect to all or a portion of the
shares of our common stock subject to a related stock option (a tandem SAR) or granted separately to an
eligible person (a free standing SAR). Tandem SARs are exercisable only at the time and to the extent that
the related stock option is exercisable. Upon the exercise or termination of the related stock option, the related

18 GCI LIBERTY, INC. 2018 PROXY STATEMENT

18

PROPOSAL 3—INCENTIVE PLAN PROPOSAL

tandem SAR will be automatically cancelled to the extent of the number of shares of our common stock with
respect to which the related stock option was so exercised or terminated. The base price of a tandem SAR is
equal to the exercise price of the related stock option. Free standing SARs are exercisable at the time and
upon the terms and conditions provided in the relevant award agreement. The term of a free standing SAR
may not exceed ten years; however, if the term of a free standing SAR expires when trading in our common
stock is prohibited by law or our company’s policy, the free standing SAR will expire on the 30th day after the
expiration of such prohibition. The base price of a free standing SAR may be no less than the fair market value
of a share of the applicable series of our common stock as of the day the SAR is granted. Dividend
equivalents will not be paid with respect to any SARs.

Restricted Shares and RSUs. Restricted shares are shares of our common stock that become vested and
may be transferred upon completion of the restriction period. The compensation committee will determine, and
each individual award agreement will provide, (1) the price, if any, to be paid by the recipient of the restricted
shares, (2) whether dividends or distributions paid with respect to restricted shares will be retained by us during
the restriction period (retained distributions), (3) whether the holder of the restricted shares may be paid a
cash amount any time after the shares become vested, (4) the vesting date or vesting dates (or basis of
determining the same) for the award and (5) other terms and conditions of the award. The holder of an award
of restricted shares, as the registered owner of such shares, may vote the shares.

A RSU is a unit evidencing the right to receive, in specified circumstances, one share of the specified series of
our common stock, or, in the discretion of the company, its cash equivalent, subject to a restriction period or
forfeiture conditions. The compensation committee will be authorized to award RSUs based upon the fair
market value of shares of any series of our common stock under the 2018 incentive plan. The compensation
committee will determine, and each individual award agreement will provide, the terms, conditions, restrictions,
vesting requirements and payment rules for awards of RSUs, including whether the holder will be entitled to
dividend equivalent payments with respect to the RSUs. RSUs will be issued at the beginning of the restriction
period and holders will not be entitled to shares of our common stock covered by RSU awards until such
shares are issued to the holder at the end of the restriction period.

Upon the applicable vesting date, all or the applicable portion of restricted shares or RSUs will vest, any
retained distributions or unpaid dividend equivalents with respect to the restricted shares or RSUs will vest to
the extent that the awards related thereto have vested, and any cash amount to be received by the holder with
respect to the restricted shares or RSUs will become payable, all in accordance with the terms of the individual
award agreement. The compensation committee may permit a holder to elect to defer delivery of any restricted
shares or RSUs that become vested and any related cash payments, retained distributions or dividend
equivalents, provided that such deferral elections are made in accordance with Section 409A of the Internal
Revenue Code of 1986, as amended (the Code).

Cash Awards. The compensation committee will also be authorized to provide for the grant of cash awards
under the 2018 incentive plan. A cash award is a bonus paid in cash that may be based upon the attainment
of one or more performance goals over a performance period established by the compensation committee. The
terms, conditions and limitations applicable to any cash awards will be determined by the compensation
committee.

Performance Awards. At the discretion of the compensation committee, any of the above-described awards
may be designated as a performance award. All cash awards shall be designated as performance awards.
Performance awards are contingent upon performance measures applicable to a particular period, as
established by the compensation committee and set forth in individual agreements, based upon any one or
more of the following business criteria:

•

•

•

•

increased revenue;

net income measures (including income after capital costs and income before or after taxes);

stock price measures (including growth measures and total stockholder return);

price per share of our common stock;

19

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

19

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

market share;

earnings per share (actual or targeted growth);

earnings before interest, taxes, depreciation and amortization (EBITDA);

operating income before depreciation and amortization (OIBDA);

economic value added (or an equivalent metric);

market value added;

debt to equity ratio;

cash flow measures (including cash flow return on capital, cash flow return on tangible capital, net cash
flow and net cash flow before financing activities);

return measures (including return on equity, return on average assets, return on capital, risk-adjusted
return on capital, return on investors’ capital and return on average equity);

operating measures (including operating income, funds from operations, cash from operations, after-tax
operating income, sales volumes, production volumes and production efficiency);

expense measures (including overhead cost and general and administrative expense);

margins;

stockholder value;

total stockholder return;

proceeds from dispositions;

total market value; and

corporate values measures (including ethics compliance, environmental and safety).

Performance measures may apply to the award recipient, to one or more business units, divisions or
subsidiaries of our company or an applicable sector of our company, or to our company as a whole. Goals may
also be based on performance relative to a peer group of companies. A performance measure need not be
based upon an increase or positive result under a particular business criterion and could include, for example,
maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific
business criteria). If the compensation committee determines that the performance award may be granted and
administered in a manner that preserves the deductibility of the compensation resulting from such award in
accordance with Section 162(m) of the Code and the compensation committee determines, in its discretion,
that the award should be designed accordingly, then the compensation committee will follow procedures
necessary to allow such award to achieve this result. For more information on Section 162(m) of the Code and
the repeal of the qualified performance-based compensation exception, see ‘‘—U.S. Federal Income Tax
Consequences of Awards Granted under the 2018 Incentive Plan—Certain Tax Code Limitations on
Deductibility’’ below.

Awards Generally. Awards under the 2018 incentive plan may be granted either individually, in tandem or in
combination with each other. Where applicable, the securities underlying, or relating to, awards granted under
the 2018 incentive plan may be shares of our common stock as provided in the relevant grant. The closing
price of GLIBA shares was $43.56, as of May 16, 2018. The closing price of GLIBB shares was $43.50 on
May 7, 2018, the last day on which a sale occurred. Under certain conditions, including the occurrence of
certain approved transactions, a board change or a control purchase (all as defined in the 2018 incentive plan),
options and SARs will become immediately exercisable, and the restrictions on restricted shares and RSUs will
lapse, unless individual agreements state otherwise or the compensation committee determines in connection
with an approved transaction that the vesting and exercisability of awards will not accelerate because action
has been taken to provide for a substantially equivalent substitute award. At the time an award is granted, the
compensation committee will determine, and the relevant agreement will provide for, any vesting or early
termination, upon a holder’s termination of employment or service with our company, of any unvested options,
SARs, RSUs or restricted shares and the period during which any vested options and SARs must be

20 GCI LIBERTY, INC. 2018 PROXY STATEMENT

20

PROPOSAL 3—INCENTIVE PLAN PROPOSAL

exercised. Unless otherwise provided in the relevant agreement, (1) no option or SAR may be exercised after
its scheduled expiration date (however, if the term of an option or SAR expires when trading in our common
stock is prohibited by law or our company’s insider trading policy, then the term of such option or SAR shall
expire on the 30th day after the expiration of such prohibition), (2) if the holder’s service terminates by reason
of death or disability (as defined in the 2018 incentive plan), his or her options or SARs shall remain
exercisable for a period of at least one year following such termination (but not later than the scheduled
expiration date) and (3) any termination of the holder’s service for ‘‘cause’’ (as defined in the 2018 incentive
plan) will result in the immediate termination of all options and SARs and the forfeiture of all rights to any
restricted shares, RSUs, retained distributions, unpaid dividend equivalents and related cash amounts held by
such terminated holder. If a holder’s service terminates due to death or disability, options and SARs will
become immediately exercisable, and the restrictions on restricted shares and RSUs will lapse and become
fully vested, unless individual agreements state otherwise.

Adjustments. The number and kind of shares of our common stock that may be awarded or otherwise made
subject to awards under the 2018 incentive plan, the number and kind of shares of our common stock covered
by outstanding awards and the purchase or exercise price and any relevant appreciation base with respect to
any of the foregoing will be subject to appropriate adjustment as the compensation committee deems equitable,
in its sole discretion, in the event (1) we subdivide the outstanding shares of any series of our common stock
into a greater number of shares of such series of common stock, (2) we combine the outstanding shares of any
series of our common stock into a smaller number of shares of such series of common stock or (3) there is a
stock dividend, extraordinary cash dividend, reclassification, recapitalization, reorganization, stock redemption,
split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase any series of our
common stock, or any other similar corporate event (including mergers or consolidations, other than approved
transactions (as defined in the 2018 incentive plan) for which other provisions are made pursuant to the 2018
incentive plan). In addition, in the event of a merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the compensation committee has the discretion to (i) provide, prior to the
transaction, for the acceleration of vesting and exercisability, or lapse of restrictions, with respect to the awards,
or in the case of a cash merger, termination of unexercised awards, or (ii) cancel such awards and deliver cash
to holders based on the fair market value of such awards as determined by the compensation committee, in a
manner that is in compliance with the requirements of Section 409A of the Code. If the purchase price of
options or the base price of SARs, as applicable, is greater than the fair market value of such options or SARs,
the options or SARs may be canceled for no consideration.

Amendment and Termination. The 2018 incentive plan will terminate on the fifth anniversary of the plan’s
effective date (which is March 9, 2018) unless earlier terminated by the compensation committee. The
compensation committee may suspend, discontinue, modify or amend the 2018 incentive plan at any time prior
to its termination, except that outstanding awards may not be amended to reduce the purchase or base price of
outstanding options or SARs. However, before an amendment may be made that would adversely affect a
participant who has already been granted an award, the participant’s consent must be obtained.

U.S. FEDERAL INCOME TAX CONSEQUENCES OF AWARDS GRANTED UNDER THE
2018 INCENTIVE PLAN

The following is a summary of the U.S. federal income tax consequences that generally will arise with respect
to awards granted under the 2018 incentive plan and with respect to the sale of any shares of our common
stock acquired under the 2018 incentive plan. This general summary does not purport to be complete, does not
describe any state, local or non-U.S. tax consequences, and does not address issues related to the tax
circumstances of any particular recipient of an award under the 2018 incentive plan.

Non-Qualified Stock Options; SARs. Holders will not recognize taxable income upon the grant of a
non-qualified stock option or a SAR. Upon the exercise of a non-qualified stock option or a SAR, the holder will
recognize ordinary income (subject to withholding, if applicable) in an amount equal to the excess of (1) the fair
market value on the date of exercise of the shares received over (2) the exercise price or base price (if any) he
or she paid for the shares. The holder will generally have a tax basis in any shares of our common stock

21

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

21

received pursuant to the exercise of a SAR, or pursuant to the cash exercise of a non-qualified stock option,
that equals the fair market value of such shares on the date of exercise. The disposition of the shares of our
common stock acquired upon exercise of a non-qualified stock option will ordinarily result in capital gain or
loss. We are entitled to a deduction in an amount equal to the income recognized by the holder upon the
exercise of a non-qualified stock option or SAR.

Cash Awards; RSUs; Restricted Shares. A holder will recognize ordinary compensation income upon receipt
of cash pursuant to a cash award or, if earlier, at the time such cash is otherwise made available for the holder
to draw upon it, and we will have a corresponding deduction for federal income tax purposes, subject to certain
limits on deductibility discussed below. A holder will not have taxable income upon the grant of a RSU but
rather will generally recognize ordinary compensation income at the time the award is settled in an amount
equal to the fair market value of the shares received, at which time we will have a corresponding deduction for
federal income tax purposes, subject to certain limits on deductibility discussed below.

Generally, a holder will not recognize taxable income upon the grant of restricted shares, and we will not be
entitled to any federal income tax deduction upon the grant of such award. The value of the restricted shares
will generally be taxable to the holder as compensation income in the year or years in which the restrictions on
the shares of common stock lapse. Such value will equal the fair market value of the shares on the date or
dates the restrictions terminate. A holder, however, may elect pursuant to Section 83(b) of the Code to treat
the fair market value of the shares subject to the restricted share award on the date of such grant as
compensation income in the year of the grant of the restricted share award. The holder must make such an
election pursuant to Section 83(b) of the Code within 30 days after the date of grant. If such an election is
made and the holder later forfeits the restricted shares to us, the holder will not be allowed to deduct, at a later
date, the amount such holder had earlier included as compensation income. In any case, we will receive a
deduction for federal income tax purposes corresponding in amount to the amount of compensation included in
the holder’s income in the year in which that amount is so included, subject to certain limits on deductibility
discussed below.

A holder who is an employee will be subject to withholding for federal, and generally for state and local, income
taxes at the time the holder recognizes income under the rules described above with respect to the cash or the
shares of our common stock received pursuant to awards. Dividends that are received by a holder prior to the
time that the restricted shares are taxed to the holder under the rules described in the preceding paragraph are
taxed as additional compensation, not as dividend income. The tax basis of a holder in the shares of our
common stock received will equal the amount recognized by the holder as compensation income under the
rules described in the preceding paragraph, and the holder’s holding period in such shares will commence on
the date income is so recognized.

Certain Tax Code Limitations on Deductibility. In order for us to deduct the amounts described above, such
amounts must constitute reasonable compensation for services rendered or to be rendered and must be
ordinary and necessary business expenses. The ability to obtain a deduction for awards under the 2018
incentive plan could also be limited by Section 280G of the Code, which provides that certain excess parachute
payments made in connection with a change in control of an employer are not deductible. The ability to obtain
a deduction for amounts paid under the 2018 incentive plan could also be affected by Section 162(m) of the
Code, which limits the deductibility, for U.S. federal income tax purposes, of compensation paid to certain
employees to $1 million during any taxable year. Following the enactment of the Tax Cuts and Jobs Act of
2017, beginning with the 2018 calendar year, the executives potentially affected by the limitations of
Section 162(m) of the Code has been expanded and there is no longer any exception for qualified
performance-based compensation. The transition rules in effect for binding contracts in effect on November 2,
2017 provides that performance-based awards will maintain their exemption from the $1 million annual
deduction limitation for so long as such contracts are not materially modified, even though the compensation
deduction for such awards would not occur until after 2017. However, portions of the compensation we pay to
the named executive officers may not be deductible due to the application of Section 162(m) of the Code. Our
compensation committee believes that the lost deduction on compensation payable in excess of the $1 million
limitation for the named executive officers is not material relative to the benefit of being able to attract and
retain talented management.

22 GCI LIBERTY, INC. 2018 PROXY STATEMENT

22

PROPOSAL 3—INCENTIVE PLAN PROPOSAL

Code Section 409A. Section 409A of the Code generally provides that any deferred compensation
arrangement must satisfy specific requirements, both in operation and in form, regarding (1) the timing of
payment, (2) the advance election of deferrals, and (3) restrictions on the acceleration of payment. Failure to
comply with Section 409A of the Code may result in the early taxation (plus interest) to the participant of
deferred compensation and the imposition of a 20% penalty on the participant on such deferred amounts
included in the participant’s income. We intend to structure awards under the 2018 incentive plan in a manner
that is designed to be exempt from or comply with Section 409A of the Code.

NEW PLAN BENEFITS

Due to the nature of the 2018 incentive plan and the discretionary authority afforded the compensation
committee in connection with the administration thereof, we cannot determine or predict the value, number or
type of awards to be granted pursuant to the 2018 incentive plan.

Prior to the date of this proxy statement, we have granted awards of stock options under the 2018 incentive
plan to purchase 4,848 shares of GLIBA to Donne F. Fisher, a nonemployee director, and 1,555 RSUs to each
of Gregg L. Engles, Richard R. Green and Sue Ann Hamilton, each of whom is a nonemployee director, with
respect to shares of GLIBA, which results in 7,990,487 shares of our common stock being available for future
grants. The exercise price of the stock options granted to Donne F. Fisher under the 2018 incentive plan is
$42.99 per share, and these options have a term of seven years.

VOTE AND RECOMMENDATION

The affirmative vote of a majority of the combined voting power of the outstanding shares of our capital stock
that are present in person or by proxy, and entitled to vote at the annual meeting, voting together as a single
class, is required to approve the 2018 incentive plan proposal.

15MAY201821432024

Our board of directors unanimously recommends a vote
‘‘FOR’’ the approval of the GCI Liberty, Inc. 2018 Omnibus
Incentive Plan.

23

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

23

MANAGEMENT AND GOVERNANCE MATTERS

EXECUTIVE OFFICERS

The following lists the executive officers of our company (other than Gregory B. Maffei, our President and Chief
Executive Officer, and John C. Malone, our Chairman of the Board, who also serve as directors of our
company and who are listed under ‘‘Proposal 1—The Election of Directors Proposal’’), their ages and a
description of their business experience, including positions held with our company. All positions referenced in
the table below with our company include, where applicable, positions with our predecessors.

Name

Richard N. Baer
Age: 61

Albert E. Rosenthaler
Age: 58

Mark D. Carleton
Age: 57

Positions

Mr. Baer has served as Chief Legal Officer of our company since March
2018, Qurate Retail, Liberty Media, Liberty TripAdvisor and Liberty
Broadband since January 2016 and Liberty Expedia since March 2016. He
previously served as Senior Vice President and General Counsel of Qurate
Retail and Liberty Media from January 2013 to December 2015, Liberty
TripAdvisor from July 2013 to December 2015 and Liberty Broadband from
June 2014 to December 2015. Previously, Mr. Baer served as Executive
Vice President and Chief Legal Officer of UnitedHealth Group Incorporated
from May 2011 to December 2012. He served as Executive Vice President
and General Counsel of Qwest Communications International Inc. from
December 2002 to April 2011 and Chief Administrative Officer from August
2008 to April 2011.

Mr. Rosenthaler has served as Chief Corporate Development Officer of our
company since March 2018, and Qurate Retail, Liberty Media, Liberty
TripAdvisor, Liberty Broadband and Liberty Expedia since October 2016. He
previously served as Chief Tax Officer of, Qurate Retail, Liberty Media,
Liberty TripAdvisor and Liberty Broadband from January 2016 to September
2016 and Liberty Expedia from March 2016 to September 2016. He
previously served as a Senior Vice President of Qurate Retail (including its
predecessor) from April 2002 to December 2015, Liberty Media (including its
predecessor) from May 2007 to December 2015, Liberty TripAdvisor from
July 2013 to December 2015 and Liberty Broadband from June 2014 to
December 2015.

Mr. Carleton has served as Chief Financial Officer of our company since
March 2018. He previously served as Treasurer of our company from March
2018 to May 2018. He has also served as Chief Financial Officer of Qurate
Retail, Liberty Media and Liberty Broadband since October 2016. He
previously served as Chief Development Officer of Qurate Retail, Liberty
Media, Liberty Broadband and Liberty TripAdvisor from January 2016 to
September 2016, as a Senior Vice President of Qurate Retail from
November 2014 to December 2015, Liberty Media from January 2013 to
December 2015 and Liberty Broadband from October 2014 to December
2015, and as a Senior Vice President of predecessors of Liberty Media from
December 2003 to January 2013. Prior to that time, Mr. Carleton served as
a partner at KPMG LLP.

Our executive officers will serve in such capacities until their respective successors have been duly elected and
have been qualified, or until their earlier death, resignation, disqualification or removal from office. There is no
family relationship between any of our executive officers or directors, by blood, marriage or adoption.

24

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

24

MANAGEMENT AND GOVERNANCE MATTERS

During the past ten years, none of our directors and executive officers has had any involvement in such legal
proceedings as would be material to an evaluation of his or her ability or integrity.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended (the Exchange Act), requires our executive
officers and directors, and persons who own more than ten percent of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC. Officers, directors and greater
than ten-percent stockholders are required by SEC regulation to furnish us with copies of all Section 16 forms
they file.

Based solely on a review of the copies of the Forms 3, 4 and 5 and amendments to those forms furnished to
us during our most recent fiscal year and written representations made to us by our executive officers and
directors, we believe that, during the year ended December 31, 2017, all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten-percent beneficial owners were met, except that
Mr. Martin E. Cary inadvertently filed one late Form 4 to report a sale that occurred on January 3, 2017.
Mr. Gregory F. Chapados inadvertently filed one late Form 4 to report a sale that occurred on January 9, 2017.
Additionally, Ms. Tina M. Pidgeon informed us that her financial adviser engaged in transactions for her
account, pursuant to an investment strategy she approved for the purposes of protecting against a decline in
the value of her shares of Old GCI Liberty’s common stock, which should have been reported on Forms 4. On
April 25, 2017, May 22, 2017, July 10, 2017, July 24, 2017, and November 24, 2017, Ms. Pidgeon made
Form 4 filings reporting all such transactions.

CODE OF ETHICS

We have adopted a code of business conduct and ethics that applies to all of our employees, directors and
officers, which constitutes our ‘‘code of ethics’’ within the meaning of Section 406 of the Sarbanes-Oxley Act.
Our code of business conduct and ethics is available on our website at www.gciliberty.com.

DIRECTOR INDEPENDENCE

It is our policy that a majority of the members of our board of directors be independent of our management.
For a director to be deemed independent, our board of directors must affirmatively determine that the director
has no direct or indirect material relationship with us. To assist our board of directors in determining which of
our directors qualify as independent for purposes of Nasdaq rules as well as applicable rules and regulations
adopted by the SEC, the nominating and corporate governance committee of our board of directors follows
Nasdaq’s corporate governance rules on the criteria for director independence.

Our board of directors has determined that each of Gregg L. Engles, Donne F. Fisher, Richard R. Green and
Sue Ann Hamilton qualifies as an independent director of our company.

On March 9, 2018, in connection with the Transactions, all of the members of Old GCI Liberty’s board of
directors as of immediately prior to the completion of the Transactions (the Legacy Board), other than
Ronald A. Duncan, resigned from the board of Old GCI Liberty and new individuals were appointed to the
board. The Legacy Board believed that each of its members satisfied the definition of an ‘‘Independent
Director,’’ with the exception of Mr. Duncan. The term ‘‘Independent Director’’ as used by the Legacy Board
meant an individual, other than one of Old GCI Liberty’s executive officers or employees, and other than any
other individual having a relationship which in the opinion of the board would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director. Accordingly, the Legacy Board believed,
in the case of all board members other than Mr. Duncan, that each of them was an individual having a
relationship which did not interfere with the exercise of independent judgment in carrying out the member’s
director responsibilities to Old GCI Liberty. In addition, the Legacy Board believed that the members of the
Legacy Board audit committee were each an independent director as the term is defined in the Nasdaq
corporate listing standards and were independent as defined by Rule 10A-3(b)(1) under the Exchange Act.

25

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

25

BOARD COMPOSITION

As described above under ‘‘Proposal 1—The Election of Directors Proposal,’’ our board is comprised of
directors with a broad range of backgrounds and skill sets, including in media and telecommunications, venture
capital and technology. Our board is also chronologically diverse with our members’ ages spanning three to
four decades. For more information on our policies with respect to board candidates, see ‘‘—Committees of the
Board of Directors—Nominating and Corporate Governance Committee’’ below.

BOARD LEADERSHIP STRUCTURE

Our board has separated the positions of Chairman of the Board and Chief Executive Officer (principal
executive officer). John C. Malone, one of our largest stockholders, holds the position of Chairman of the
Board, leads our board and board meetings and provides strategic guidance to our Chief Executive Officer.
Gregory B. Maffei, our President, holds the position of Chief Executive Officer, leads our management team
and is responsible for driving the performance of our company. We believe this division of responsibility
effectively assists our board in fulfilling its duties.

BOARD ROLE IN RISK OVERSIGHT

The board as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the
relevant board committees. Our audit committee oversees management of financial risks and risks relating to
potential conflicts of interest. Our compensation committee oversees the management of risks relating to our
compensation arrangements with senior officers. Our nominating and corporate governance committee
oversees risks associated with the independence of the board. These committees then provide reports
periodically to the full board. The oversight responsibility of the board and its committees is enabled by
management reporting processes that are designed to provide visibility to the board about the identification,
assessment and management of critical risks. These areas of focus include strategic, operational, financial and
reporting, succession and compensation, legal and compliance, and other risks. Our management reporting
processes include regular reports from our Chief Executive Officer, which are prepared with input from our
senior management team, and also include input from our Internal Audit group.

COMMITTEES OF THE BOARD OF DIRECTORS

Executive Committee

Our board of directors has established an executive committee, whose members are John C. Malone and
Gregory B. Maffei. Except as specifically prohibited by the General Corporation Law of the State of Delaware,
the executive committee may exercise all the powers and authority of our board of directors in the
management of our business and affairs, including the power and authority to authorize the issuance of shares
of our capital stock.

Compensation Committee

Our board of directors has established a compensation committee, whose chairperson is Sue Ann Hamilton
and whose other members are Gregg L. Engles and Richard R. Green. Stephen M. Brett, Bridget L. Baker,
Jerry A. Edgerton, Stephen R. Mooney and James M. Schneider had also served as members of the
compensation committee during their tenure on the Legacy Board. See ‘‘—Director Independence’’ above.

The compensation committee reviews and approves corporate goals and objectives relevant to the
compensation of our Chief Executive Officer and our other executive officers. The compensation committee
also reviews and approves the compensation of our Chief Executive Officer, Chief Legal Officer, Chief Financial
Officer and Chief Corporate Development Officer, and oversees the compensation of the chief executive
officers of our non-public operating subsidiaries. For a description of Old GCI Liberty’s past processes and
policies for consideration and determination of executive compensation, including the role of the Chief
Executive Officer and outside consultants in determining or recommending amounts and/or forms of
compensation, see ‘‘Executive Compensation—Compensation Discussion and Analysis.’’

26 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

26

MANAGEMENT AND GOVERNANCE MATTERS

Our board of directors has adopted a written charter for the compensation committee, which is available on our
website at www.gciliberty.com.

Compensation Committee Interlocks and Insider Participation

No member of our compensation committee during 2017 is or has been an officer or employee of our
company, or has engaged in any related party transaction in which our company was a participant.

Nominating and Corporate Governance Committee

Our board of directors has established a nominating and corporate governance committee, whose chairman is
Richard R. Green and whose other members are Gregg L. Engles and Sue Ann Hamilton. See ‘‘—Director
Independence’’ above. All of the members of the Legacy Board other than Ronald A. Duncan had also served
as members of the nominating & corporate governance committee during their tenure on the Legacy Board.
See ‘‘—Director Independence’’ above.

The nominating and corporate governance committee identifies individuals qualified to become board members
consistent with criteria established or approved by our board of directors from time to time, identifies director
nominees for upcoming annual meetings, develops corporate governance guidelines applicable to our company
and oversees the evaluation of our board and management.

Prior to the completion of the Reincorporation Merger, the procedures by which our shareholders could
recommend candidates for director to our board of directors were governed by the restated articles of
incorporation and bylaws of Old GCI Liberty and Alaska law, and we amended these procedures to comply
with the General Corporation Law of Delaware, our restated certificate of incorporation and bylaws upon
completion of the Reincorporation Merger.

The nominating and corporate governance committee will consider candidates for director recommended by
any stockholder provided that such recommendations are properly submitted. Eligible stockholders wishing to
recommend a candidate for nomination as a director should send the recommendation in writing to the
Corporate Secretary, GCI Liberty, Inc., 12300 Liberty Boulevard, Englewood, Colorado 80112. Stockholder
recommendations must be made in accordance with our bylaws, as discussed under ‘‘Stockholder Proposals’’
below, and contain the following information:

•

•

•

the name and address of the proposing stockholder and the beneficial owner, if any, on whose behalf the
nomination is being made, and documentation indicating the number of shares of our capital stock owned
beneficially and of record by such person and the holder or holders of record of those shares, together
with a statement that the proposing stockholder is recommending a candidate for nomination as a
director;

the candidate’s name, age, business and residence addresses, principal occupation or employment,
business experience, educational background and any other information relevant in light of the factors
considered by the nominating and corporate governance committee in making a determination of a
candidate’s qualifications, as described below;

a statement detailing any relationship, arrangement or understanding between the proposing stockholder
and/or beneficial owner(s), if different, and any other person(s) (including their names) under which the
proposing stockholder is making the nomination and any affiliates or associates (as defined in Rule 12b-2
of the Exchange Act) of such proposing stockholder(s) or beneficial owner (each a Proposing Person);

27

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

27

•

•

•

•

•

•

•

a statement detailing any relationship, arrangement or understanding that might affect the independence
of the candidate as a member of our board of directors;*

any other information that would be required under SEC rules in a proxy statement soliciting proxies for
the election of such candidate as a director;

a representation as to whether the Proposing Person intends (or is part of a group that intends) to deliver
any proxy materials or otherwise solicit proxies in support of the director nominee;*

a representation by each Proposing Person who is a holder of record of our capital stock as to whether
the notice is being given on behalf of the holder of record and/or one or more beneficial owners, the
number of shares held by any beneficial owner along with evidence of such beneficial ownership and that
such holder of record is entitled to vote at the annual stockholders meeting and intends to appear in
person or by proxy at the annual stockholders meeting at which the person named in such notice is to
stand for election;

a written consent of the candidate to be named in the proxy statement and to serve as a director, if
nominated and elected;

a representation as to whether the Proposing Person has received any financial assistance, funding or
other consideration from any other person regarding the nomination (a Stockholder Associated Person)
(including the details of such assistance, funding or consideration);* and

a representation as to whether and the extent to which any hedging, derivative or other transaction has
been entered into with respect to our company within the last six months by, or is in effect with respect to,
the Proposing Person, any person to be nominated by the proposing stockholder or any Stockholder
Associated Person, the effect or intent of which transaction is to mitigate loss to or manage risk or benefit
of share price changes for, or increase or decrease the voting power of, the Proposing Person, its
nominee, or any such Stockholder Associated Person.

*

Indicates a change in our procedures to recommend candidates for director as discussed above.

In connection with its evaluation, the nominating and corporate governance committee may request additional
information from the proposing stockholder and the candidate. The nominating and corporate governance
committee has sole discretion to decide which individuals to recommend for nomination as directors.

To be nominated to serve as a director, a nominee need not meet any specific minimum criteria. However, the
nominating and corporate governance committee believes that nominees for director should possess the
highest personal and professional ethics, integrity, values and judgment and should be committed to the
long-term interests of our stockholders. When evaluating a potential director nominee, including one
recommended by a stockholder, the nominating and corporate governance committee will take into account a
number of factors, including, but not limited to, the following:

•

•

•

•

•

•

independence from management;

his or her unique background, including education, professional experience and relevant skill sets;

judgment, skill, integrity and reputation;

existing commitments to other businesses as a director, executive or owner;

personal conflicts of interest, if any; and

the size and composition of the existing board of directors, including whether the potential director
nominee would positively impact the composition of the board by bringing a new perspective or viewpoint
to the board of directors.

The nominating and corporate governance committee does not assign specific weights to particular criteria and
no particular criterion is necessarily applicable to all prospective nominees. The nominating and corporate
governance committee does not have a formal policy with respect to diversity; however, our board and the
nominating and corporate governance committee believe that it is important that our board members represent
diverse viewpoints.

28 GCI LIBERTY, INC. 2018 PROXY STATEMENT

28

MANAGEMENT AND GOVERNANCE MATTERS

When seeking candidates for director, the nominating and corporate governance committee may solicit
suggestions from incumbent directors, management, stockholders and others. After conducting an initial
evaluation of a prospective nominee, the nominating and corporate governance committee will interview that
candidate if it believes the candidate might be suitable to be a director. The nominating and corporate
governance committee may also ask the candidate to meet with management. If the nominating and corporate
governance committee believes a candidate would be a valuable addition to our board of directors, it may
recommend to the full board that candidate’s nomination and election.

In connection with the completion of the Transactions and pursuant to the GCI Reorganization Agreement,
Ronald A. Duncan continued on our board. The remainder of our board was recommended by Qurate Retail
pursuant to the GCI Reorganization Agreement and each of John C. Malone, Gregory B. Maffei, Gregg L.
Engles, Donne F. Fisher, Richard R. Green and Sue Ann Hamilton was appointed to our board, effective
March 9, 2018, following a vote of the Legacy Board and will stand for election this year.

Prior to nominating an incumbent director for re-election at an annual meeting of stockholders, the nominating
and corporate governance committee will consider the director’s past attendance at, and participation in,
meetings of the board of directors and its committees and the director’s formal and informal contributions to the
various activities conducted by the board and the board committees of which such individual is a member.

The members of our nominating and corporate governance committee have determined that John C. Malone,
Gregory B. Maffei, Ronald A. Duncan, Gregg L. Engles, Donne F. Fisher, Richard R. Green and Sue Ann
Hamilton, who are nominated for election at the annual meeting, continue to be qualified to serve as directors
of our company and such nominations were approved by the entire board of directors.

Our board of directors has adopted a written charter for the nominating and corporate governance committee.
Our board of directors has also adopted corporate governance guidelines, which were developed by the
nominating and corporate governance committee. The charter and the corporate governance guidelines are
available on our website at www.gciliberty.com.

Audit Committee

Our board of directors has established an audit committee, whose chairman is Gregg L. Engles and whose
other members are Richard R. Green and Sue Ann Hamilton. Scott M. Fisher, William P. Glasgow and
Stephen R. Mooney had also served as members of the audit committee during their tenure on the Legacy
Board. See ‘‘—Director Independence’’ above.

Our board of directors has determined that Mr. Engles is an ‘‘audit committee financial expert’’ under applicable
SEC rules and regulations. The audit committee reviews and monitors the corporate financial reporting and the
internal and external audits of our company. The committee’s functions include, among other things:

•

•

•

•

•

•

•

appointing or replacing our independent auditors;

reviewing and approving in advance the scope and the fees of our annual audit and reviewing the results
of our audits with our independent auditors;

reviewing and approving in advance the scope and the fees of non-audit services of our independent
auditors;

reviewing compliance with and the adequacy of our existing major accounting and financial reporting
policies;

reviewing our management’s procedures and policies relating to the adequacy of our internal accounting
controls and compliance with applicable laws relating to accounting practices;

confirming compliance with applicable SEC and stock exchange rules; and

preparing a report for our annual proxy statement.

Our board of directors has adopted a written charter for the audit committee, which is available on our website
at www.gciliberty.com.

29

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

29

Audit Committee Information

Each member of the audit committee is an independent director as determined by our board of directors, based
on the listing standards of Nasdaq. Each member of the audit committee also satisfies the SEC’s
independence requirements for members of audit committees. Our board of directors has determined that
Mr. Engles is an ‘‘audit committee financial expert’’ under applicable SEC rules and regulations.

The audit committee reviews our financial reporting process on behalf of our board of directors. Management
has primary responsibility for establishing and maintaining adequate internal controls, for preparing financial
statements and for the public reporting process. Our independent auditor, KPMG LLP, is responsible for
expressing opinions on the conformity of our audited consolidated financial statements with U.S. generally
accepted accounting principles. Our independent auditor also expressed its opinion as to the effectiveness of
our internal control over financial reporting.

The Legacy Board’s audit committee reviewed and discussed with management and GT Old GCI Liberty’s most
recent audited consolidated financial statements, as well as management’s assessment of the effectiveness of
Old GCI Liberty’s internal control over financial reporting and GT’s evaluation of the effectiveness of Old GCI
Liberty’s internal control over financial reporting. The Legacy Board’s audit committee also discussed with GT
the matters required to be discussed by the Public Company Accounting Oversight Board Auditing Standard
No. 1301, Communications with Audit Committees, including that firm’s judgment about the quality of Old GCI
Liberty’s accounting principles, as applied in its financial reporting.

GT provided the Legacy Board’s audit committee with the written disclosures and the letter required by the
applicable requirements of the Public Company Accounting Oversight Board regarding GT’s communications
with the audit committee concerning independence, and the audit committee discussed with GT that firm’s
independence from the company and its subsidiaries.

Based on the reviews, discussions and other considerations referred to above, the Legacy Board’s audit
committee recommended to Old GCI Liberty’s board of directors that the audited financial statements be
included in the company’s Annual Report on Form 10-K for the year ended December 31, 2017 (the 2017
Form 10-K), which was filed on February 28, 2018 with the SEC.

The Members of the Audit Committee for the periods indicated

Stephen R. Mooney (2012 - March 2018)
Scott M. Fisher (2012 - March 2018)
William P. Glasgow (2012 - March 2018)
Gregg L. Engles (March 2018 - Present)
Richard R. Green (March 2018 - Present)
Sue Ann Hamilton (March 2018 - Present)

As indicated in the preceding three paragraphs, the Legacy Board’s audit committee was responsible for and
took the actions described in the preceding three paragraphs. All of such actions took place prior to the
completion of the Transactions. In connection with the Transactions, all of the members of the Legacy Board,
other than Ronald A. Duncan, resigned from the board of Old GCI Liberty (including the members of the audit
committee), and new individuals were appointed to the board (including the audit committee). The disclosure in
the preceding three paragraphs is being provided in response to the requirements of Item 407(d)(3) of
Regulation S-K.

Other

Our board of directors, by resolution, may from time to time establish other committees of our board of
directors, consisting of one or more of our directors. Any committee so established will have the powers
delegated to it by resolution of our board of directors, subject to applicable law.

BOARD MEETINGS

During 2017, there were eight meetings of the full Legacy Board, no meeting of the Legacy Board’s executive
committee, two meetings of the Legacy Board’s compensation committee, one meeting of the Legacy Board’s

30 GCI LIBERTY, INC. 

2018 PROXY STATEMENT

30

MANAGEMENT AND GOVERNANCE MATTERS

nominating, corporate governance committee and four meetings of the Legacy Board’s audit committee. All of
the Legacy Board’s members with the exception of Mr. Zinterhofer attended at least 75% of his or her board
and committee meetings in 2017.

DIRECTOR ATTENDANCE AT ANNUAL MEETINGS

Our board of directors encourages all members of the board to attend each annual meeting of our
stockholders. All of the ten directors then serving on the Legacy Board attended Old GCI Liberty’s 2017 annual
meeting of stockholders.

STOCKHOLDER COMMUNICATION WITH DIRECTORS

Our stockholders may send communications to our board of directors or to individual directors by mail
addressed to our board of directors or to an individual director c/o GCI Liberty, Inc., 12300 Liberty Boulevard,
Englewood, Colorado 80112. All such communications from stockholders will be forwarded to our directors on a
timely basis.

EXECUTIVE SESSIONS

In 2017, the independent directors of our company, then serving, met at four executive sessions without
management participation.

Any interested party who has a concern regarding any matter that it wishes to have addressed by our
independent directors, as a group, at an upcoming executive session may send its concern in writing
addressed to independent directors of GCI Liberty, c/o GCI Liberty, Inc., 12300 Liberty Boulevard, Englewood,
Colorado 80112. The current independent directors of our company are Gregg L. Engles, Donne F. Fisher,
Richard R. Green and Sue Ann Hamilton.

31

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

31

EXECUTIVE COMPENSATION

This section sets forth information relating to, and an analysis and discussion of, compensation paid by Old
GCI Liberty to the following persons (who we collectively refer to as the Named Executive Officers):

•

•

•

•

•

Ronald A. Duncan, the former Chief Executive Officer of Old GCI Liberty;

Peter J. Pounds, the former Senior Vice President, Chief Financial Officer and Secretary of Old GCI
Liberty;

Martin E. Cary, the former Senior Vice President and General Manager—Business of Old GCI Liberty;

Gregory F. Chapados, the former President and Chief Operating Officer of Old GCI Liberty; and

Tina M. Pidgeon, the former Senior Vice President, Chief Compliance Officer, General Counsel and
Governmental Affairs of Old GCI Liberty.

The Named Executive Officers were executive officers of Old GCI Liberty during the year ended, and as of,
December 31, 2017 as well as prior to the completion of the Transactions. On March 9, 2018, in connection
with the completion of the Transactions, (i) substantially all of the members of the Legacy Board (including the
members of its compensation committee (the Legacy CC)) resigned from the board of Old GCI Liberty and
were replaced by the current members of our board and (ii) each individual who was an executive officer of Old
GCI Liberty, including the Named Executive Officers, immediately prior to the completion of the Transactions
was replaced by Messrs. Maffei, Carleton, Baer and Rosenthaler, who now serve as our executive officers. The
descriptions in this section with respect to the Named Executive Officers and the Legacy CC refer to such
former executive officers and members of the compensation committee of Old GCI Liberty prior to the
completion of the Transactions. Further, references to Old GCI Liberty refer to Old GCI Liberty prior to the
completion of the Transactions (including under its prior name, General Communication, Inc.). We expect that
our compensation program for the year ending December 31, 2018 will differ significantly from the 2017
compensation program of Old GCI Liberty, which is described in this section. See ‘‘—Compensation Discussion
and Analysis—Changes for 2018—Services Agreement.’’

COMPENSATION DISCUSSION AND ANALYSIS

Compensation Overview

Compensation of the Named Executive Officers and directors during 2017 was subject to processes and
procedures carried out through the Legacy CC (the Compensation Program). This compensation discussion
and analysis (Compensation Discussion and Analysis) addresses the material elements of the
Compensation Program as applied to the Named Executive Officers.

Principles of the Compensation Program

The Compensation Program was based upon the following principles (Compensation Principles):

•

•

•

•

•

Compensation was related to performance and had to cause alignment of interests of executive officers
with the long-term interests of Old GCI Liberty’s shareholders.

Compensation targets had to take into consideration competitive market conditions and provide incentives
for superior performance by Old GCI Liberty.

Actual compensation had to take into consideration Old GCI Liberty’s and the executive officer’s
performance over the prior year and the long-term, and Old GCI Liberty’s resources.

Compensation was based upon both qualitative and quantitative factors.

Compensation had to enable Old GCI Liberty to attract and retain management necessary to cause Old
GCI Liberty to succeed.

32

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

32

EXECUTIVE COMPENSATION

Process

Overview

The Legacy CC reviewed and approved the base salary, incentive and other compensation of Old GCI Liberty’s
former Chief Executive Officer and senior executive officers, including the Named Executive Officers. The
analyses and recommendations of Old GCI Liberty’s Chief Executive Officer on these matters could be
considered by the Legacy CC in its deliberations and approvals.

Other elements of executive compensation and benefits as described in this section were also reviewed by the
Legacy CC on a regular basis.

Implementation

Discussions on executive compensation and benefits made by the Legacy CC were guided by the
Compensation Principles. The elements of compensation as described later in this section were believed by the
Legacy CC to be integral and necessary parts of the Compensation Program.

The Legacy CC concluded that each individual segment of each element of executive compensation was
generally consistent with one or more of the Compensation Principles. The Legacy CC further concluded the
amount of compensation provided by the segment was reasonable, primarily based upon a comparison of the
compensation amounts and segments Old GCI Liberty provided when compared to those offered by other
similar companies in its industry and market.

Old GCI Liberty’s process for determining executive compensation and benefits did not involve a precise and
identifiable formula or link between each element and the Compensation Principles. However, it took into
consideration market practice and information provided by its management. Furthermore, it was based upon
the relationship of compensation as would be paid and financial performance of Old GCI Liberty. It was also
the result of discussion among the Legacy CC members and management. Ultimately it was based upon the
judgment of the Legacy CC.

Each year the Legacy CC reviewed elements of compensation for each of Old GCI Liberty’s senior executive
officers including, for 2017, the Named Executive Officers. The Legacy CC believed it had created a framework
for an effective Compensation Program. The Legacy CC modified the Compensation Program at its discretion
to continue its effectiveness for motivating the senior executive officers and aligning their interests with the
long-term interests of Old GCI Liberty’s shareholders. Old GCI Liberty did not compare its compensation to a
peer group since 2010.

Elements of 2017 Executive Compensation

Overview

For 2017, the elements of compensation in the Compensation Program were as follows:

•

•

•

•

•

Base Salary;

Old GCI Liberty’s Incentive Compensation Bonus Plan (Incentive Compensation Plan);

Stock Option Plan;

Perquisites; and

Retirement and Welfare Benefits.

As of December 31, 2017, there were no compensatory plans or arrangements providing for payments to any
of the Named Executive Officers in conjunction with any termination of employment or other working
relationship of such an officer with Old GCI Liberty (including without limitation, resignation, severance,
retirement or constructive termination of employment of the officer). Furthermore, as of that date, there were no
such plans or arrangements providing for payments to any of the Named Executive Officers in conjunction with
a change of control of Old GCI Liberty or a change in such an officer’s responsibilities to Old GCI Liberty.

33

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

33

However, in the event of a change in control, the options and restricted stock of the Named Executive Officers
could vest. See ‘‘—Potential Payments upon Termination or Change-in-Control.’’

Old GCI Liberty had no requirements with respect to security ownership by its officers or directors, and it had
no policies regarding hedging the economic risk of ownership of its equity. Executive officers were invited to
provide their input with respect to their compensation to the Legacy CC primarily through Old GCI Liberty’s
former Chief Executive Officer.

A Named Executive Officer participating in the Compensation Program in 2017 could, under terms of the
corresponding Incentive Compensation Plan agreement with Old GCI Liberty and pursuant to Old GCI Liberty’s
deferred compensation plan, elect to defer a significant portion of that compensation. In this instance, the
Named Executive Officer became Old GCI Liberty’s unsecured creditor. See ‘‘—Nonqualified Deferred
Compensation.’’

Base Salary

Effective January 1, 2017, based upon the process previously described in this section, the base salaries
reported in the Summary Compensation Table (see ‘‘—Summary Compensation Table’’) were approved by the
Legacy CC.

Mr. Duncan’s base salary reflects cash compensation of $925,000 per year. Mr. Duncan’s duties remained
unchanged during 2017.

Mr. Pounds’ base salary reflects cash compensation of $400,000 per year. Mr. Pounds’ duties remained
unchanged during 2017.

Mr. Cary’s base salary reflects cash compensation of $200,000 per year. Mr. Cary’s base salary increased in
2017 from $160,000 to $200,000 to compensate him for additional responsibilities acquired when he was
promoted in 2016. His duties remained unchanged during 2017.

Mr. Chapados’ base salary reflects cash compensation of $450,000 per year. During 2017, Mr. Chapados was
appointed as President of Old GCI Liberty.

Ms. Pidgeon’s base salary reflects cash compensation of $325,000 per year. Ms. Pidgeon’s duties remained
unchanged during 2017.

Incentive Compensation Plan

A portion of the Company’s compensation to each Named Executive Officer in 2017 related to, and was
contingent upon, the officer’s performance and Old GCI Liberty’s financial performance and resources.

Old GCI Liberty’s board approved an Incentive Compensation Plan for the Named Executive Officers
(Messrs. Duncan, Pounds, Chapados, and Cary and Ms. Pidgeon) to create a framework that aligned the
interests of the executive officers with the long-term interests of Old GCI Liberty’s shareholders.

The Legacy CC first determined the targeted annual incentive compensation for each of them. Incentive
compensation was paid out in the form of 50% cash and 50% restricted stock grants that would vest 100% at
the end of three years, unless otherwise determined by the Legacy CC based on the individual circumstances
of each of the Named Executive Officers. Therefore, the incentive compensation was designed to encourage
the focus of these executives on long-term performance. Discretionary annual cash bonuses were intended to
reward short-term performance and to make senior executive compensation packages competitive with
comparable executive positions in other companies.

34 GCI LIBERTY, INC. 2018 PROXY STATEMENT

34

Incentive Compensation.
for the Named Executive Officers:

 The following table provides a summary of the 2017 incentive compensation targets

EXECUTIVE COMPENSATION

Name
Ronald A. Duncan(1)
Peter J. Pounds(2)

Martin E. Cary
Gregory F. Chapados(2)

Tina M. Pidgeon

Adjusted
EBITDA
($)

402,580

102,375

97,500

270,619

90,000

Discretionary
($)

1,610,321

352,625

552,500

932,131

510,000

Total 2017
Incentive
Compensation
Plan Target
($)

2,012,901

455,000

650,000

1,202,750

600,000

(1) Mr. Duncan’s incentive compensation target was $150,495 lower than what was disclosed in Old GCI Liberty’s 2017 Proxy

Statement filed with the SEC on May 16, 2017 due to lower actual Adjusted EBITDA from the estimate used in the Proxy
Statement. As disclosed in the 2017 Proxy Statement, Mr. Duncan’s final incentive compensation target was 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 was paid out in the form of 50% cash and 50% restricted stock grants that would vest at the end of
two years. The number of shares issued to Mr. Pounds and Mr. Chapados was determined by dividing the 50% of Incentive
Compensation for shares by the price of Old GCI Liberty’s Class A shares on December 31, 2012, which was $9.59. This
arrangement was in place for Mr. Pounds and Mr. Chapados through 2017.

The following is a description of what each of these incentive compensation targets are and how they were
measured.

 The Adjusted EBITDA goal was intended to focus the Named Executive Officers on

Adjusted EBITDA.
increasing Adjusted EBITDA. Adjusted EBITDA for purposes of this goal was defined as earnings plus imputed
interest on financed devices and the cash received in excess of revenue recognized for long-term roaming
arrangements before net interest expense, income taxes, depreciation and amortization expense, loss on
extinguishment of debt, share-based compensation expense, accretion expense, loss attributable to
non-controlling interest resulting from Old GCI Liberty transactions relating to a new markets tax credit program
with US Bancorp, gains and impairment losses on equity and cost method investments, and other non-cash
adjustments. The goal would be achieved by Old GCI Liberty recording Adjusted EBITDA that was equal to the
Adjusted EBITDA target.

The target for this metric was $321.4 million in 2017 for the Named Executive Officers who would earn their
Target Incentive Compensation for this goal if the metric was achieved. In the case of the Named Executive
Officers, the incentive compensation earned would be increased or decreased from the Target Incentive
Compensation by 5% for each $1 million that the actual Adjusted EBITDA was above or below the Adjusted
EBITDA metric.

 The Legacy Board took various factors into account when deciding on the payout of the

Discretionary.
discretionary portion of the plan applying to the Named Executive Officers. These factors included, but were not
limited to, leadership, crisis management, succession planning, strategic planning, risk management, special
projects, and financial reporting.

The following table summarizes the 2017 incentive compensation achieved by the Named Executive Officers,
each of whom participated in this plan. The 2017 incentive compensation was paid 50% in cash and 50% in
the form of restricted stock grants that would vest at the end of three years after the grant date with the

35

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

35

exception of Mr. Duncan who was paid 75% in cash and 25% in the form of restricted stock grants; the
majority of the cash portion was paid in 2017:

Goals

Adjusted EBITDA Goal—Target Incentive

Ronald A.
Duncan

Peter J. Martin E. Gregory F.
Chapados
Pounds

Cary

Tina M.
Pidgeon

Compensation

$ 402,580

$102,375

$ 97,500

$270,619

$ 90,000

Adjusted EBITDA Goal Achievement(1)

16.8%

16.8%

16.8%

16.8%

16.8%

2017 Adjusted EBITDA Incentive Compensation

Earned

Discretionary
Discretionary Achievement(2)

2017 Discretionary Incentive Compensation

$

67,533

$ 17,173

$ 16,356

$ 45,396

$ 15,098

$1,610,321

$352,625

$552,500

$932,131

$510,000

77.1%

120.1%

89.0%

93.6%

93.6%

Earned

$1,241,463

$423,393

$491,998

$872,599

$477,302

2017 Incentive Compensation Earned

$1,308,996

$440,566

$508,354

$917,995

$492,400

(1) The Adjusted EBITDA for this 2017 goal was $321.4 million for Old GCI Liberty. The Named Executive Officers would earn

their Target Incentive Compensation for this goal if Old GCI Liberty had Adjusted EBITDA equal to the metric. The Target
Incentive Compensation would be increased or decreased by 5% for each $1 million that the actual Adjusted EBITDA is
above or below the metric. For 2017, the actual Adjusted EBITDA for purposes of this goal was $304.8 million resulting in
actual Adjusted EBITDA that was $16.6 million below the metric, therefore, the earned Incentive Compensation for the
Adjusted EBITDA goal was decreased by 83%.

(2) The Legacy CC considered the following factors regarding the Discretionary Achievement of the Named Executive Officers.

With regard to Mr. Duncan, the Legacy CC took into account his efforts to secure certain revenue streams, his support of
company procurement efforts, and his leadership for efforts to reinforce the Company’s culture. With regard to Mr. Pounds,
the Legacy CC considered his leadership in regards to leading an initiative to achieve savings through a procurement
initiative, team development and succession planning, and his support for other corporate initiatives. With regard to Mr. Cary,
the Legacy CC considered, among other things, his efforts to secure certain revenue streams, his support of Old GCI
Liberty’s procurement initiative, and his leadership of key initiatives within Old GCI Liberty’s business. With regard to
Mr. Chapados, the Legacy CC considered, among other things, his leadership of key company initiatives including reinforcing
Old GCI Liberty’s culture, risk management, his support of Old GCI Liberty’s procurement initiative, and team development.
With regard to Ms. Pidgeon, the Legacy CC considered her leadership in revenue assurance efforts, corporate risk
management, supporting Old GCI Liberty’s initiatives, and team development.

Stock Option Plan

Awards, if granted to the Named Executive Officers, were granted pursuant to terms of the Stock Option Plan.
Awards, if granted, were granted contemporaneously with the approval of the Legacy CC, typically early in the
year in question or late in the previous year as described above. See ‘‘—Elements of Compensation—Incentive
Compensation Plan.’’

Old GCI Liberty adopted the Stock Option Plan in 1986. It was subsequently amended from time to time. Under
the Stock Option Plan, Old GCI Liberty was authorized to grant awards and options to purchase shares of
GNCMA to selected officers, directors and other employees of, and consultants or advisors to, Old GCI Liberty
and its subsidiaries. Old GCI Liberty did not issue any stock options after 2010. The selection of grantees for
awards under the plan was made by the Legacy CC.

The number of shares of GNCMA allocated to the Stock Option Plan was 15.7 million shares. The number of
shares for which options or awards could be granted was subject to adjustment upon the occurrence of stock
dividends, stock splits, mergers, consolidations and certain other changes in corporate structure or
capitalization. As of December 31, 2017, 1.2 million shares had been granted subject to vesting, 6.9 million
share grants had vested, 8.7 million shares had been issued upon the exercise of options under the plan,
2.3 million shares had been repurchased by the plan and 1.2 million shares remained available for additional
grants under the plan.

36 GCI LIBERTY, INC. 2018 PROXY STATEMENT

36

EXECUTIVE COMPENSATION

Restricted stock awards granted under the Stock Option Plan could be subject to vesting conditions based
upon service or performance criteria as the Legacy CC could specify. These specifications could include
attainment of one or more performance targets. Shares acquired pursuant to such an award could not be
transferred by the participant until vested. Unless otherwise provided by the Legacy CC, a participant would
forfeit any shares of restricted stock where the restrictions had not lapsed prior to the participant’s termination
of service with Old GCI Liberty. Participants holding restricted stock would have the right to vote the shares
and to receive dividends paid, if any. However, those dividends or other distributions paid in shares would be
subject to the same restrictions as the original award.

The Legacy CC selected each grantee and the time of grant of an option or award and determined the terms
of each grant, including the number of shares covered by each grant and the exercise price. In selecting a
participant, as well as in determining these other terms and conditions of each grant, the Legacy CC took into
consideration such factors as it deemed, in its sole discretion, relevant in connection with accomplishing the
purpose of the plan.

Under the Stock Option Plan, Old GCI Liberty’s authority to modify or amend the plan was subject to prior
approval of its shareholders only in cases of increasing the number of shares of its stock allocated to, and
available and reserved for, issuance under the plan, changing the class of persons eligible to receive incentive
stock options or where shareholder approval was required under applicable law, regulation or rule.

Subject to these limitations, Old GCI Liberty could terminate or amend the Stock Option Plan at any time.
However, no termination or amendment could affect any outstanding option or award unless expressly provided
by the Legacy CC. In any event, no termination or amendment of the plan could adversely affect an
outstanding option or award without the consent of the participant unless necessary to comply with applicable
law, regulation or rule.

With limited exception, no maximum or minimum existed with regard to the amount, either in dollars or in
numbers, of options that could be exercised in any year, either by a single optionee or by all optionees under
the Stock Option Plan. At the 2002 annual meeting, Old GCI Liberty’s shareholders approved an amendment to
the plan placing a limitation on accumulated grants of options of not more than 500,000 shares of GNCMA per
optionee per year.

With these exceptions, there were no fixed limitations on the number or amount of securities being offered,
other than the practical limitations imposed by the number of employees eligible to participate in the plan and
the total number of shares of stock authorized and available for granting under the plan. Shares covered by
options which terminated or expired for any reason prior to their exercise were available for grant of new
options pursuant to the plan.

Perquisites

Old GCI Liberty provided certain perquisites to the Named Executive Officers. The Legacy CC believed these
perquisites were reasonable and appropriate and consistent with Old GCI Liberty’s awareness of perquisites
offered by similar publicly traded companies. The perquisites assisted in attracting and retaining the Named
Executive Officers and, in the case of certain perquisites, promoted health, safety and efficiency of the Named
Executive Officers. These perquisites were as follows:

• Use of Company Aircraft.

Old GCI Liberty permitted employees, including the Named Executive
Officers, to use Company aircraft for personal travel for themselves and their guests. Such travel
generally was limited to a space available basis on flights that were otherwise business-related. Where a
Named Executive Officer, or a guest of that officer, flew on a space available basis, the additional variable
cost to the Company (such as fuel, catering, and landing fees) was 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 occured 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 was
non-deductible by Old GCI Liberty under the Internal Revenue Code, the value of that lost deduction is

37

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

37

included in the Summary Compensation Table entry for that Named Executive Officer. When employees,
including the Named Executive Officers, used company aircraft for such travel they were attributed with
taxable income in accordance with regulations pursuant to the Internal Revenue Code. Old GCI Liberty
did not ‘‘gross up’’ or reimburse an employee for taxes he or she owed 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 ‘‘—Summary Compensation Table.’’

• Enhanced Long-Term Disability Benefit.

Old GCI Liberty provided the Named Executive Officers and

other senior executive officers with an enhanced long-term disability benefit. This benefit provided 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 its employees was capped at
$5,000 per month.

• Enhanced Short-Term Disability Benefit.

Old GCI Liberty provided the Named Executive Officers and

other senior executive officers with an enhanced short-term disability benefit. This benefit provided a
supplemental replacement income benefit of 662⁄3% of average monthly compensation, capped at $2,300
per week. The normal replacement income benefit applying to other of its employees was capped at
$1,150 per week.

• Miscellaneous.

Aside from benefits offered to its employees generally, Old GCI Liberty provided

miscellaneous other benefits to its Named Executive Officers including the following (see ‘‘—Summary
Compensation Table—Components of ‘All Other Compensation’’’):

• Success Sharing.

 An incentive program offered to all of Old GCI Liberty’s employees that shared 15%

of the excess Adjusted EBITDA over the highest previous year (Success Sharing).

• Board Fees.

Provided to Mr. Duncan as one of Old GCI Liberty’s directors. The Legacy CC believed

that it was appropriate to provide such board fees to Mr. Duncan given the additional oversight
responsibilities and the accompanying liability incumbent upon members of the board. In determining
the appropriate amount of overall compensation payable to Mr. Duncan in his capacity as Chief
Executive Officer, the Legacy CC took into account any such board fees that were payable to
Mr. Duncan. This monitoring of Mr. Duncan’s overall compensation package for services rendered as
Chief Executive Officer and as a director was done to ensure that Mr. Duncan was not being doubly
compensated for the same services rendered to Old GCI Liberty.

Retirement and Welfare Benefits

GCI 401(k) Plan.
 In January 1987, Old GCI Liberty adopted the GCI 401(k) Plan qualified under Section 401 of
the Internal Revenue Code of 1986. The GCI 401(k) Plan provided for acquisition of Old GCI Liberty’s Class A
common stock (and later, Class A-1 common stock) at market value as well as various mutual funds. Old GCI
Liberty could match a percentage of the employees’ contributions up to certain limits. Named Executive Officers
could, along with its employees generally, participate in the GCI 401(k) Plan in which Old GCI Liberty could
provide matching contributions in accordance with the terms of the plan.

As of December 31, 2017, there remained 4.1 million shares of Old GCI Liberty’s former Class A and
0.5 million shares of Old GCI Liberty’s former Class B common stock allocated to the GCI 401(k) Plan and
available for issuance by Old GCI Liberty or otherwise acquisition by the plan for the benefit of participants in
the plan.

Deferred Compensation Arrangements.
compensation arrangements specifically fashioned to the needs of the officer and us (Deferred Compensation
Arrangements). During 2017, none of our Named Executive Officers participated in Deferred Compensation
Arrangements.

 Old GCI Liberty offers to our executive officers deferred

Welfare Benefits.
 With the exception of the enhanced long-term and short-term disability benefits described
previously, Old GCI Liberty provided to the Named Executive Officers the same health and welfare benefits
provided generally to all other employees at the same general premium rates as charged to those employees.
The cost of the health and welfare programs was subsidized by Old GCI Liberty for all eligible employees
including the Named Executive Officers.

38 GCI LIBERTY, INC. 2018 PROXY STATEMENT

38

EXECUTIVE COMPENSATION

Performance Rewarded

The Compensation Program was, in large part, designed to reward individual performance. What constituted
performance varied from officer to officer, depending upon the nature of the officer’s responsibilities. Consistent
with the Compensation Program, Old GCI Liberty identified key business metrics and established defined
targets related to those metrics for each Named Executive Officer. In the case of each Named Executive
Officer, the targets were regularly reviewed by management, from time to time, and provided an immediate and
clear picture of performance and enabled management to respond quickly to both potential problems as well as
potential opportunities. The Compensation Program also was used to establish and track corresponding
applicable targets for individual management employees.

In 2017, the Compensation Program was used in the development of each Named Executive Officer’s
individual performance goals and established incentive compensation targets. The Legacy CC evaluated the
performance of each of the executive officers and the financial performance of Old GCI Liberty and awarded
incentive compensation as described above. See ‘‘—Compensation Discussion and Analysis—Elements of
Compensation—Incentive Compensation Plan.’’

The Legacy CC increased Mr. Pounds’ total incentive compensation plan target for 2018 from $455,000 to
$535,000. The increase to Mr. Pounds’ Incentive Compensation was to replace compensation that was
previously granted in the form of a retention restricted stock award.

Timing of Equity Awards

Overview. Timing of equity awards under the Director Compensation Plan (as defined in ‘‘Director
Compensation’’ below) and equity awards under the Compensation Program varied with the plan or portion of
that program. However, Old GCI Liberty did not, and it had not in the past, timed its release of material
nonpublic information for purposes of affecting the value of equity compensation. Timing issues and its grant
policy are described further below.

Director Compensation Plan. As a part of the Director Compensation Plan, Old GCI Liberty granted awards
of its common stock to board members, including those persons who were also be serving as one or more of
our executive officers. Mr. Duncan, a board member and Named Executive Officer, had been granted such
awards in the past. These awards were made annually in June of each year in accordance with the terms of
the Director Compensation Plan. The awards were made through the Stock Option Plan. See ‘‘—Compensation
Discussion and Analysis—Elements of Compensation—Stock Option Plan.’’

Incentive Compensation Plan. As a part of the Compensation Program, from time to time, Old GCI Liberty
granted awards in its GNCMA shares to its executive officers, including the Named Executive Officers. In
particular, awards were granted in conjunction with the agreements that Old GCI Liberty entered into with
Named Executive Officers pursuant to the Incentive Compensation Plan. The grants of such awards were
typically made early in the year at the time its board finalized the prior year incentive compensation plan
payouts for each of the Named Executive Officers. All such awards were granted through the Stock Option
Plan. See ‘‘—Compensation Discussion and Analysis—Elements of Compensation—Incentive Compensation
Plan’’ and ‘‘—Elements of Compensation—Stock Option Plan.’’

Stock Option Plan. As a part of the Compensation Program, from time to time, Old GCI Liberty granted
stock awards in its GNCMA shares to its executive officers. In all cases, regardless of the identity of the
grantee, the timing, amount and other terms of the grant of awards under our Stock Option Plan were
determined in the sole discretion of the Legacy CC. See ‘‘—Compensation Discussion and Analysis—Elements
of Compensation—Stock Option Plan.’’

Grant Policy. Under the grant policy, all approved grants were granted effective the date they were approved
by the Legacy CC and were priced at the market value at the close of trading on that date. The terms of the
award were then communicated to the recipient within a reasonable time period.

39

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

39

Deductibility of Executive Compensation

In determining the amount and form of compensation granted to executive officers, including the Named
Executive Officers, Old GCI Liberty took into consideration both tax treatment and accounting treatment of the
compensation. Tax and accounting treatment for various forms of compensation is subject to changes in, and
changing interpretations of, applicable laws, regulations, rulings and other factors that were not within Old GCI
Liberty’s control. As a result, tax and accounting treatment is only one of several factors that Old GCI Liberty
took into account in designing the previously described elements of compensation.

Nonqualified Deferred Compensation Plans

From time to time, Old GCI Liberty entered into deferred compensation arrangements with certain of its
executive officers. These arrangements were negotiated with individual officers on a case-by-case basis. The
Named Executive Officers did not participate in a deferred compensation arrangement with Old GCI Liberty
during 2017.

Changes for 2018

In connection with the Transactions, each individual who was an executive officer of Old GCI Liberty, including
the Named Executive Officers, immediately prior to the completion of the Transactions was replaced by
Messrs. Maffei, Carleton, Baer and Rosenthaler, who now serve as our executive officers. Such persons
continue to serve as our executive officers.

Services Agreement

Also in connection with the Transactions, we entered into the services agreement with Liberty Media in March
2018 (the Services Agreement), pursuant to which Liberty Media provides to our company certain
administrative and management services, and we pay Liberty Media a monthly management fee, the amount of
which is subject to semi-annual review (and at least an annual review by our compensation committee). As a
result, employees, including our executive officers, who provide services to our company pursuant to the
Services Agreement, are not separately compensated by our company other than with respect to equity awards
with respect to our common stock.

40 GCI LIBERTY, INC. 2018 PROXY STATEMENT

40

SUMMARY COMPENSATION TABLE

As of December 31, 2017, Old GCI Liberty did not have employment agreements with any of its Named
Executive Officers. The following table summarizes total compensation paid or earned by each Named
Executive Officer for fiscal years 2017, 2016 and 2015. The process followed by the Legacy CC in establishing
total compensation for each Named Executive Officer as set forth in the table is described above. See
‘‘—Compensation Discussion and Analysis.’’

Nonequity
Incentive
Plan

Compensation Awards(2)

Stock

($)

($)

981,747

833,632

1,096,999

184,899

206,982

235,888

1,188,789(5)
1,118,454(6)
1,269,909(7)

468,134(5)
1,845,581(8)
365,456(8)

254,177

711,699

812,393(5)
1,754,254(10)

458,998

511,768

530,748

369,300

409,415

486,519

1,144,786(5)
1,020,883(6)
757,863(7)

154,755(5)
158,682(6)
228,024(11)

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)

Option
Awards(2)
($)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

All Other
Compensation
($)(3)

127,840

83,000

83,000

25,000

18,279

20,437

Total
($)

3,223,376

2,960,086

3,374,908

1,113,417

2,476,122

1,028,198

19,000

60,190

1,285,570

2,802,001

22,000

22,279

24,437

22,000

21,279

23,437

2,075,784

2,012,243

1,771,411

871,055

931,926

1,094,970

Name and Principal
Position

Ronald A. Duncan(4)

Former Chief Executive

Officer of Old GCI Liberty

Year

2017

2016

2015

Salary
($)

Bonus
($)(1)

925,000

925,000

925,000

—

—

—

Peter J. Pounds

2017

400,000

35,384

Former Senior Vice President, 2016

Chief Financial Officer and

2015

400,000

400,000

5,280

6,417

Secretary of Old GCI Liberty

Martin E. Cary

2017

200,000

—

Former Senior Vice President 2016
and General Manager—
Business of Old GCI Liberty(9)

Gregory F. Chapados

Former President and Chief

Operating Officer of Old GCI

Liberty

Tina M. Pidgeon

2017

2016

2015

2017

Former Senior Vice President, 2016

Chief Compliance Officer,

2015

General Counsel and

Governmental Affairs of Old

GCI Liberty

160,000

115,858

450,000

450,000

450,000

—

7,313

8,363

325,000

325,000

325,000

—

17,550

31,990

(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 GNCMA, 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 2015, Mr. Duncan received $183,650 in compensation for service on Old GCI Liberty’s 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
Old GCI Liberty’s board in the form of $65,000 in director fees and a stock award valued at $111,300. In 2017, Mr. Duncan
received $347,300 in compensation for service on Old GCI Liberty’s board in the form of $65,000 in director fees and a stock
award valued at $282,300.

(5) The Stock Awards granted during 2017 were for the Named Executive Officer’s performance during 2016.

(6) The Stock Awards granted during 2016 were for the Named Executive Officer’s performance during 2015.

(7) The Stock Awards granted during 2015 were for the Named Executive Officer’s performance during 2014.

(8)

In 2016, Mr. Pounds received a stock award with a grant date fair value of $458,831 for his performance during 2015 and 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 2015 acquisition of certain interests in The Alaska Wireless Network, LLC and

41

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

41

Alaska Communications Systems Group, Inc. (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 2017 and 2016 as he was not a Named Executive Officer in 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 2015, Ms. Pidgeon received a stock award with a grant date fair value of $179,496 for her performance during 2014 and a

stock award with a grant date fair value of $48,528 for her performance related to the Wireless Acquisition.

The amounts reported under the ‘‘All Other Compensation’’ column are comprised of the following:

Use of

Use of

Company Company

Name

Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

Board Success

Leased

Retreat

GCI 401(k) Fees Sharing(2) Aircraft(3) Facilities(4) Miscellaneous Total

Year Plan(1)($)

2017
2016
2015

2017
2016
2015

2017
2016

2017
2016
2015

2017
2016
2015

18,000
18,000
18,000

18,000
18,000
18,000

18,000
18,000

18,000
18,000
18,000

18,000
18,000
18,000

($)

($)

($)

65,000
65,000
65,000

—
—
—

—
—
279
—
— 2,437

—
—
—

—
—
—

—
—

—
279

—
41,911

—
—
—
279
— 2,437

—
—
—
279
— 2,437

—
—
—

—
—
—

($)

44,840
—
—

7,000
—
—

—
—

—
—
—

—
—
—

($)

—
—
—

—
—
—
1,000(5)
—
4,000(5)
4,000(5)
4,000(5)
4,000(5)
3,000(5)
3,000(5)

($)

127,840
83,000
83,000

25,000
18,279
20,437

19,000
60,190

22,000
22,279
24,437

22,000
21,279
23,437

(1) Amounts were contributions by Old GCI Liberty matching each employee’s contribution. Matching contributions by Old GCI

Liberty under the GCI 401(k) Plan were available to each of its full-time employees with over one year of service. During
2017, 2016 and 2015, the match was based upon the lesser of $18,000 or 10% of the employee’s salary and the total of the
employee’s pre-tax and post-tax contributions to the plan. See ‘‘—Compensation Discussion and Analysis—Elements of
Compensation—Retirement and Welfare Benefits—GCI 401(k) Plan.’’

(2) See ‘‘—Compensation Discussion and Analysis—Elements of Compensation—Perquisites.’’

(3) The value of use of Old GCI Liberty leased aircraft is shown at the variable cost to Old GCI Liberty.

(4) The allocated cost of using Old GCI Liberty’s remote fishing retreat for personal guests or family members.

(5) Compensation for attending certain management meetings.

Pay Ratio Disclosure

In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act
(Dodd-Frank Act), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s
annual total compensation to the total annual compensation of the principal executive officer (PEO). Old GCI
Liberty’s PEO as of December 31, 2017 was Ronald A. Duncan.

To determine the median employee, a listing was prepared of all active employees as of December 31, 2017
including the following:

•

•

Full-time employees;

Part-time employees;

42 GCI LIBERTY, INC. 2018 PROXY STATEMENT

42

EXECUTIVE COMPENSATION

•

•

•

Temporary employees;

Seasonal employees; and

Any contractors paid W-2 wages.

Old GCI Liberty used gross wages from W-2s to determine the median employee and for the wages used to
calculate the ratio. W-2 wages include base salary, bonus payments, the value of realized equity awards, paid
commissions, and taxable fringe benefits. Old GCI Liberty did not annualize wages and salaries for employees
who were not employed for all of 2017.

For 2017, the total compensation for Old GCI Liberty’s PEO was $3,223,376 and its median employee’s pay
was $68,563. As a result, the pay ratio of its CEO to the median employee for 2017 was 47.01 to 1.

GRANTS OF PLAN-BASED AWARDS

The following table displays specific information on grants of options, awards and non-equity incentive plan
awards under our Compensation Program and, in addition, in the case of Mr. Duncan, our Director
Compensation Plan, made to Named Executive Officers during 2017.

Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards

Estimated Future Payouts
Under Equity Incentive Plan
Awards

All
All
Other
Other
Option
Stock
Awards:
Awards:
Number
Number
of
of
Shares
Securities
of Stock Underlying

Name

Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

Grant
Date

03/01/17

06/01/17

03/01/17

03/01/17

03/01/17

03/01/17

Threshold Target Maximum Threshold Target Maximum or Units
(#)

($)

(#)

($)

(#)

($)

(#)

Options
(#)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

42,860(2)

7,500(3)

22,134(2)

38,411(2)

54,127(2)

7,317(2)

—

—

—

—

—

—

Grant
Date Fair
Value of
Stock
and
Option
Awards(1)
($)

906,489

282,300

468,134

812,393

1,144,786

154,755

Exercise
or Base
Price of
Option
Awards
($/Sh)

—

—

—

—

—

—

(1) Computed in accordance with FASB ASC Topic 718.

(2) Represents the 50% portion of the 2016 incentive compensation paid in the form of restricted stock grants under the Incentive

Compensation Plan that were not granted until 2017. 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 the Director Compensation Plan. See ‘‘Director

Compensation.’’

43

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

43

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table displays specific information on restricted stock that has not vested for each of the Named
Executive Officers and outstanding as of December 31, 2017. Vesting of these awards varies for the Named
Executive Officers as described in the footnotes to the table.

Option Awards

Stock Awards

Equity
Incentive

Equity
Incentive
Plan Awards:

Plan Awards: Market or

Number of Payout Value
of Unearned
Unearned
Shares,
Shares,
Units or
Units or

Other Rights Other Rights

Market
Number of
Value of
Shares or Shares or
Units of
Units of
Stock
Stock
that Have
That Have

That Have
Exercise Expiration Not Vested Not Vested Not Vested

Option

Date

(#)

($)

—
—

—
—
—
—

—
—
—

—
—
—

—
—
—

55,460(1)
42,860(1)

3,333(2)
25,266(1)
22,134(1)
75,000(3)

6,745(1)
38,411(1)
75,000(3)

60,000(4)
56,216(1)
54,127(1)

90,000(5)
8,738(1)
7,317(1)

2,164,049(1)
1,672,397(1)

130,054(2)
985,879(1)
863,669(1)
2,926,500(3)

263,190(1)
1,498,797(1)
2,926,500(3)

2,341,200(4)
2,193,548(1)
2,112,036(1)

3,511,800(5)
340,957(1)
285,509(1)

(#)

—
—

—
—
—
—

—
—
—

—
—
—

—
—
—

That Have
Not Vested
($)

—
—

—
—
—
—

—
—
—

—
—
—

—
—
—

Number of
Securities
Underlying

Number of
Securities
Underlying
Unexercised Unexercised Option
Options (#)
Exercisable Unexercisable Price ($)

Options (#)

—
—

—
—
—
—

—
—
—

—
—
—

—
—
—

—
—

—
—
—
—

—
—
—

—
—
—

—
—
—

—
—

—
—
—
—

—
—
—

—
—
—

—
—
—

Name

Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

(1) Restricted stock vests on November 30, 2018.

(2) Restricted stock vests on February 6, 2018.

(3) Restricted stock vests on November 30, 2021.

(4) Restricted stock vests 30,000 shares on each of January 1, 2018 and 2019.

(5) Restricted stock vests 45,000 shares on each of January 1, 2018 and 2019.

44

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

44

OPTION EXERCISES AND STOCK VESTED

The following table displays specific information on each vesting of restricted stock, on an aggregate basis, for
each of the Named Executive Officers during 2017:

EXECUTIVE COMPENSATION

Name

Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

Option Awards

Stock Awards

Number of
Shares
Acquired on
Exercise (#)

Value
Realized on
Exercise
($)

Number of
Shares
Acquired on
Vesting (#)

Value
Realized on
Vesting
($)

—
—

—
—
—

—
—

—
—

—
—
—

—
—

—
—
—

—
—

—
—

—
—
—

79,070

7,500(1)

3,155,684
282,300

1,666
18,434
50,000

6,746
7,795

30,000
52,051

135,000
1,666
12,328

31,904
735,701
1,984,000

269,233
311,098

615,300
2,077,355

2,768,850
31,904
492,010

(1) This stock award relates to Mr. Duncan’s service as one of Old GCI Liberty’s directors.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

As of December 31, 2017, there were no compensatory plans or arrangements providing for payments to any
of the Named Executive Officers in conjunction with any termination of employment or other working
relationship of such an officer with Old GCI Liberty (including without limitation, resignation, severance,
retirement or constructive termination of employment of the officer). Furthermore, as of December 31, 2017,
there were no such plans or arrangements providing for payments to any of the Named Executive Officers in
conjunction with a change of control of Old GCI Liberty or a change in such an officer’s responsibilities to Old
GCI Liberty. However, the outstanding restricted stock awards for each of our Named Executive Officers would
vest upon his or her disability, planned retirement or death, or could vest upon a change-in-control of the
Company. See ‘‘Outstanding Equity Awards at Fiscal Year-End’’ for the value of such restricted stock awards
as of December 31, 2017.

45

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

45

DIRECTOR COMPENSATION

The following table sets forth certain information concerning the cash and non-cash compensation earned by
Old GCI Liberty’s directors (Director Compensation Plan), each for services as a director during the year
ended December 31, 2017:

Name(1)

Stephen M. Brett

Bridget L. Baker

Jerry A. Edgerton

Scott M. Fisher

William P. Glasgow

Mark W. Kroloff

Stephen R. Mooney

James M. Schneider

Eric L. Zinterhofer

Fees
Earned
or Paid
in Cash Awards(2) Awards Compensation Compensation Compensation
($)

Option Incentive Plan

Earnings ($)

Non-Equity

All Other

Stock

($)

($)

($)

($)

Change in
Pension Value
and
Nonqualified
Deferred

106,250

282,300

98,750

282,300

65,000

282,300

65,000

282,300

65,000

282,300

65,000

282,300

90,000

282,300

98,750

282,300

65,000

282,300

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

5,000

10,000

1,221

16,000

9,127

8,254

1,127

2,000

2,254

Total
($)

393,550

391,050

348,521

363,300

356,427

355,554

373,427

383,050

349,554

(1) Compensation to Mr. Duncan as a director is described elsewhere in this report. See ‘‘Executive Compensation’’ and

‘‘Executive Compensation—Compensation Discussion and Analysis.’’

(2) Each director received a grant award of 7,500 shares of GNCMA on June 1, 2017 (the grant date). The value of the shares

on the date of grant was $37.64 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.

Old GCI Liberty’s initial Director Compensation Plan was adopted in 2004 by its board to acknowledge and
compensate, from time to time, directors on the board for ongoing dedicated service. During 2017, the Director
Compensation Plan provided for $65,000 per year for all directors with the exception of Mr. Mooney, Audit
Committee chair, who received an additional $25,000 per year (paid quarterly). During 2017, the board
appointed a special committee of independent directors to analyze the GCI Reorganization Agreement and
Transactions with Qurate Retail. The board provided compensation of $41,250 to Mr. Brett and $33,750 each
to Ms. Baker and Mr. Schneider for their work serving on the special committee.

During 2017, the stock compensation portion of the Director Compensation Plan consisted of a grant of
7,500 shares of GNCMA to a director for a year of service, or a portion of a year of service. Because the
shares would vest upon award, they were subject to taxation based upon the then fair market value of the
vested shares.

In addition to the Director Compensation Plan, during 2017 the directors’ families used Old GCI Liberty’s
company retreat facilities and aircraft to transport their families to the retreat facilities. The compensation
attributed to the directors for that use is included in ‘‘All Other Compensation’’ in the table above. During 2017,
Old GCI Liberty’s board received no other direct compensation for serving on the board and its committees.
However, they were reimbursed for travel and out-of-pocket expenses incurred in connection with attendance at
meetings of Old GCI Liberty’s board and its committees.

46

GCI LIBERTY, INC. 2018 PROXY STATEMENT

46

EQUITY COMPENSATION PLAN INFORMATION

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table sets forth, as of the end of 2017, information on equity compensation plans approved by
Old GCI Liberty’s shareholders. The information is focused on outstanding options, warrants and rights; the
only such plan is our Stock Option Plan as approved by Old GCI Liberty’s shareholders.

EQUITY COMPENSATION PLAN INFORMATION

Plan category

Equity compensation plans approved by
security holders:

Stock Option Plan

Old GCI Liberty Class A common stock
Old GCI Liberty Class B common stock

Total

Old GCI Liberty Class A common stock

Old GCI Liberty Class B common stock

Number of securities to
be issued upon
exercise of
outstanding options,
warrants and rights

Weighted-average
exercise price of
outstanding options,
warrants and rights
($)

6.93
—

1,000
—

1,000

—

Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in the
second column)

1,159,766(1)

1,159,766

(1) As described above under ‘‘Proposal 3—Incentive Plan Proposal,’’ our board will not make any additional

awards under the Stock Option Plan if the 2018 incentive plan is approved by our stockholders.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Under our Code of Business Conduct and Ethics and Corporate Governance Guidelines, if a director or
executive officer has an actual or potential conflict of interest (which includes being a party to a proposed
‘‘related party transaction’’ (as defined in Item 404 of Regulation S-K)), the director or executive officer should
promptly inform the person designated by our board to address such actual or potential conflicts. No related
party transaction may be effected by our company without the approval of the audit committee of our board or
another independent body of our board designated to address such actual or potential conflicts.

Stanton Shareholdings, Registration Rights Agreement

As of December 31, 2017, John W. Stanton and Theresa E. Gillespie, husband and wife (collectively,
Stantons), continued to be significant shareholders of Old GCI Liberty’s Class B common stock, which had
previously been quoted on the OTC Markets. As of that date, neither the Stantons nor the Stantons’ affiliates
were Old GCI Liberty’s directors, officers, nominees for election as directors, or members of the immediate
family of such directors, officers, or nominees. We are a party to a registration rights agreement (the Stanton
Registration Rights Agreement) with the Stantons pursuant to which the Stantons have two demand
registrations and incidental registration rights with respect to the Stantons’ GLIBA and GLIBP shares (and any
securities issued in exchange thereof or in respect thereof) if Rule 144 is not available for the sale of such
securities by the Stantons. The basic terms of the Stanton Registration Rights Agreement are as follows. If we
propose to register any of our securities under the Securities Act of 1933, as amended (the Securities Act),
for our own account or for the account of one or more of our shareholders, we must notify the Stantons of that
intent. In addition, we must allow the Stantons an opportunity to include the holder’s shares (Stanton
Registerable Shares) in that registration.

Under the Stanton Registration Rights Agreement, the Stantons also have the right, under certain
circumstances, to require us to register all or any portion of the Stanton Registerable Shares under the

47

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

47

Securities Act. The agreement is subject to certain limitations and restrictions, including our right to limit the
number of Stanton Registerable Shares included in the registration. Generally, we are required to pay all
registration expenses in connection with each registration of Stanton Registerable Shares pursuant to this
agreement.

The Stanton Registration Rights Agreement specifically states we are not required to effect any registration on
behalf of the Stantons regarding Stanton Registerable Shares if the request for registration covers an
aggregate number of Stanton Registerable Shares having a market value of less than $1.5 million. The
agreement further states we are not required to effect such a registration for the Stantons where we have at
that point previously filed two registration statements with the SEC, or where the registration would require us
to undergo an interim audit or prepare and file with the SEC sooner than otherwise required financial
statements relating to the proposed transaction. Finally, the agreement states we are not required to effect
such a registration when in the opinion of our legal counsel a registration is not required in order to permit
resale under Rule 144 as adopted by the SEC pursuant to the Exchange Act.

The Stanton Registration Rights Agreement provides that the first demand for registration by the Stantons must
be for no less than 15% of the total number of Stanton Registerable Shares. However, the Stantons may take
the opportunity to require us to include the Stanton Registerable Shares as incidental to a registered offering
proposed by us.

Duncan Leases

Old GCI Liberty entered into a long-term capital lease agreement in 1991 with the wife of Old GCI Liberty’s
Chief Executive Officer for property occupied by it. The leased asset was capitalized in 1991 at the owner’s
cost of $900,000 and the related obligation was recorded. The lease agreement was amended in April 2008
and Old GCI Liberty’s 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. The property consists of a
building presently occupied by us. As of December 31, 2017, the payments on the lease were $27,132 per
month. They continue at that rate through September 2018 at which time they will increase to $28,732 per
month.

In January 2001 Old GCI Liberty entered into an aircraft operating lease agreement with a company owned by
Old GCI Liberty’s Chief Executive Officer. 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, Old GCI Liberty 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.

Searchlight Note and Derivative Financial Instrument

Searchlight Capital L.P. (Searchlight) became a related party as of February 2, 2015 when, as part of the
Wireless Acquisition, Old GCI Liberty sold an unsecured promissory note to Searchlight in the principal amount
of $75.0 million that was scheduled to mature on February 2, 2023 and bore interest at a rate of 7.5% per year
(the Searchlight Note). The Searchlight Note had provided that we could not prepay the Searchlight Note prior
to February 2, 2019. On July 13, 2015, Old GCI Liberty amended the Searchlight transaction documents to
permit Searchlight to pledge the Searchlight Note and related stock appreciation rights, subject to a right to
redeem the Searchlight Note for 50% of its then current outstanding balance in the event a lender attempts to
enforce its rights with respect to such pledged collateral.

In conjunction with the Searchlight Note, Old GCI Liberty had entered into a stock appreciation rights
agreement pursuant to which it issued to Searchlight three million stock appreciation rights which entitled
Searchlight to receive, upon exercise, an amount payable at Old GCI Liberty’s election in either cash or shares
of GNCMA equal in value to the excess of the fair market value of a share of GNCMA on the date of exercise
over the price of $13.00.

On March 9, 2018, in connection with the closing of the Transactions, we prepaid the principal amount of the
Searchlight Note, together with accrued and unpaid interest, and terminated the Searchlight Note with the
consent of Searchlight. On March 9, 2018, we also made a payment to Searchlight of approximately
$80 million in connection with the cancellation of the stock appreciation rights issued to Searchlight and
terminated the securityholders agreement with Searchlight.

48 GCI LIBERTY, INC. 2018 PROXY STATEMENT

48

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Eric L. Zinterhofer is a founding partner and affiliate of Searchlight and was a director of Old GCI Liberty in
2017 and 2018 until his resignation on March 9, 2018 in connection with the completion of the Transactions.

Relationships Between GCI Liberty and Qurate Retail and/or Liberty Media Following the Transactions

Upon completion of the Transactions, Qurate Retail and GCI Liberty operated independently, and neither had
any ownership interest in the other. In order to govern certain of the ongoing relationships between Qurate
Retail and/or Liberty Media (or their respective subsidiaries), on the one hand, and GCI Liberty, on the other
hand, after the Transactions and to provide mechanisms for an orderly transition, Qurate Retail and/or Liberty
Media (or their respective subsidiaries), on the one hand, and GCI Liberty, on the other hand, entered into
certain agreements, the terms of which are summarized below.

In addition to the agreements described below, Qurate Retail and/or Liberty Media may enter into, from time to
time, agreements and arrangements with GCI Liberty and certain of its related entities, in connection with, and
in the ordinary course of, its business.

Tax Sharing Agreement

On March 9, 2018, we and Qurate Retail entered into a tax sharing agreement, which generally allocates
taxes, tax benefits, tax items, and tax-related losses between us and Qurate Retail in a manner consistent with
the tax sharing policies of Qurate Retail in effect prior to the split-off, with taxes, tax benefits, tax items, and
tax-related losses attributable to the assets, liabilities and activities of Qurate Retail’s former QVC Group (and
former Interactive Group) being allocated to Qurate Retail and taxes, tax benefits, tax items, and tax-related
losses attributable to the assets, liabilities and activities of Qurate Retail’s former Ventures Group being
allocated to us.

In addition, the tax sharing agreement includes special allocation provisions, some of which are not addressed
by the former Qurate Retail tax sharing policies, related to the manner in which certain taxes, tax-related
losses, and other tax items will be allocated between us and Qurate Retail. Among other matters, these special
rules include the manner in which any taxes or tax-related losses arising from the split-off and certain related
restructuring transactions, as well as from prior transactions that have been effected by Qurate Retail and its
subsidiaries (including the split-off of Liberty Expedia Holdings, Inc. on November 4, 2016 (the LEXE Split-Off),
the spin-off of CommerceHub, Inc. on July 22, 2016 (the CHUB Spin-Off), and the spin-off of Liberty
TripAdvisor Holdings, Inc. on August 27, 2014 (the LTRIP Spin-Off)), will be allocated between the parties and
provides restrictive covenants intended to preserve the tax-free treatment of these transactions. Under the tax
sharing agreement, Qurate Retail will be allocated any taxes and tax-related losses that result from the split-off
and certain related restructuring transactions, except that we will be allocated any such taxes or tax-related
losses that (i) result primarily from, individually or in the aggregate, our breach of any of our restrictive
covenants in the tax sharing agreement or (ii) result from Section 355(e) of the Code applying to the split-off as
a result of the split-off being part of a plan (or series of related transactions) pursuant to which one or more
persons acquire a 50% or greater interest (by vote or value) in our stock. Further, we will be allocated any
taxes and tax-related losses that result from the LEXE Split-Off, the CHUB Spin-off, and the LTRIP Spin-Off,
except that Qurate Retail will be allocated any such taxes or tax-related losses that result primarily from,
individually or in the aggregate, its breach of any of its restrictive covenants in the tax sharing agreement.

The parties must indemnify each other for taxes and losses allocated to them under the tax sharing agreement
and for taxes and losses arising from a breach by them of their respective covenants and obligations under the
tax sharing agreement. The tax sharing agreement also provides for the agreements between the parties
related to the filing of tax returns, control of tax audits, cooperation on tax matters, retention of tax records, and
other tax matters.

This summary is qualified by reference to the full text of the Tax Sharing Agreement, which is filed as
Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on March 14, 2018.

Indemnification Agreement

In connection with the Transactions, Qurate Retail, Liberty LLC, Old GCI Liberty and the other party thereto,
entered into the Indemnification Agreement, pursuant to which, and subject to certain exceptions, GCI Liberty
will indemnify and hold harmless Qurate Retail and Liberty LLC, their subsidiaries, and certain related persons

49

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

49

specified therein (the LIC Indemnified Parties) from and against any losses incurred by such parties to the
extent arising out of or resulting from (i) the assets of Old GCI Liberty and its subsidiaries immediately prior to
the closing of the contribution of assets and liabilities attributed to Ventures Group to GCI Liberty on March 9,
2018, in exchange for a controlling equity interest in GCI Liberty (the contribution), (ii) the assets contributed
to Old GCI Liberty pursuant to the contribution (together with (i), the Company Assets), (iii) the conduct of the
businesses of the Company Assets, (iv) (a) the liabilities of Old GCI Liberty and its subsidiaries immediately
prior to the closing of the contribution and (b) the liabilities assumed by Old GCI Liberty pursuant to the
contribution, and (v) any breach of, or failure to perform or comply with, any covenant, undertaking or obligation
of Old GCI Liberty or any of its subsidiaries under the Indemnification Agreement. The Indemnification
Agreement also provides that, except under specified circumstances, Qurate Retail and Liberty LLC will (jointly
and severally) indemnify and hold harmless GCI Liberty, its subsidiaries and certain related persons specified
therein from and against any losses incurred by such parties arising out of or resulting from (i) the conduct of
the businesses of the assets held by Qurate Retail and its subsidiaries immediately prior to the closing of the
contribution, other than the contributed Ventures Group assets (the LIC Retained Assets), (ii) the LIC
Retained Assets, (iii) the liabilities held by Qurate Retail and its subsidiaries immediately prior to the closing of
the contribution, other than the assumed liabilities, and (iv) any breach of, or failure to perform or comply with,
any covenant, undertaking or obligation of Qurate Retail or any of its subsidiaries under the Indemnification
Agreement.

Pursuant to the Indemnification Agreement, GCI Liberty has agreed to indemnify Liberty LLC for certain
payments made to a holder of Liberty LLC 1.75% exchangeable debentures due 2046 (the Liberty Charter
Exchangeable Debentures) that exercises its exchange right under the terms of the debentures on or before
October 5, 2023 (the Exchange Indemnity). The Exchange Indemnity, which is supported by a negative
pledge in favor of Qurate Retail on the referenced shares that underlie the Liberty Charter Exchangeable
Debentures, will not apply to any Liberty Charter Exchangeable Debentures purchased by Liberty LLC, as
described below. Also, within six months of the split-off, Qurate Retail, Liberty LLC and GCI Liberty will
cooperate, and reasonably assist each other, with respect to the commencement and consummation of one or
more privately negotiated transactions, a tender offer or other purchase transactions (each, a Purchase Offer)
whereby Liberty LLC will offer to purchase the Liberty Charter Exchangeable Debentures on terms and
conditions (including maximum offer price) reasonably acceptable to GCI Liberty. GCI Liberty will indemnify
Liberty LLC for each Liberty Charter Exchangeable Debenture repurchased by Liberty LLC in a Purchase Offer
for an amount by which the purchase price for such debenture exceeds the amount of cash reattributed with
respect to such purchased Liberty Charter Exchangeable Debenture net of certain tax benefits, if any,
attributable to such Liberty Charter Exchangeable Debenture (the Repurchase Indemnity). GCI Liberty’s
Exchange Indemnity obligation and the number of shares subject to the negative pledge will be ratably reduced
as to any Liberty Charter Exchangeable Debentures purchased in a Purchase Offer in connection with the
Repurchase Indemnity.

Furthermore, GCI Liberty will indemnify and reimburse the LIC Indemnified Parties and hold each of them
harmless against any and all other losses to which such LIC Indemnified Party may become subject arising out
of, resulting from or in connection with any claim, litigation, investigation or proceeding relating to a Purchase
Offer or any other agreement, document, instrument or transaction related thereto.

This summary is qualified by reference to the full text of the Indemnification Agreement, which is filed as
Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on March 14, 2018.

Services Agreement

In connection with the Transactions, Old GCI Liberty entered into a Services Agreement with Liberty Media,
pursuant to which Liberty Media provides GCI Liberty with specified services, including:

•

•

•

insurance administration and risk management services;

other services typically performed by Liberty Media’s legal, investor relations, tax, accounting and internal
audit departments; and

such other services as Liberty Media may obtain from its officers, employees and consultants in the
management of its own operations that GCI Liberty may from time to time request or require.

In addition, Liberty Media provides to GCI Liberty certain technical and information technology services,
including management information systems, computer, data storage, network and telecommunications services.

50 GCI LIBERTY, INC. 2018 PROXY STATEMENT

50

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

GCI Liberty pays Liberty Media an agreed-upon annual services fee under the Services Agreement, which is
currently $7 million. GCI Liberty also reimburses Liberty Media for direct out-of-pocket costs incurred by Liberty
Media for third party services provided to GCI Liberty. Liberty Media and GCI Liberty will evaluate all charges
for reasonableness semi-annually and make adjustments to these charges as the parties mutually agree upon.

The Services Agreement will continue in effect until the close of business on the third anniversary of the
split-off, unless earlier terminated (1) by GCI Liberty at any time on at least 30 days’ prior written notice, (2) by
Liberty Media upon written notice to GCI Liberty following a change in control or certain bankruptcy or
insolvency-related events affecting GCI Liberty or (3) by GCI Liberty, upon written notice to Liberty Media,
following certain changes in control of Liberty Media or Liberty Media being the subject of certain bankruptcy or
insolvency-related events.

This summary is qualified by reference to the full text of the Services Agreement, which is filed as a form of
which is filed as exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on March 14, 2018.

Facilities Sharing Agreement

In connection with the split-off, Old GCI Liberty entered into a facilities sharing agreement with Liberty Media
and Liberty Property Holdings, Inc. (LPH), a wholly-owned subsidiary of Liberty Media, pursuant to which,
following the split-off, GCI Liberty shares office facilities with Qurate Retail and Liberty Media located at
12300 Liberty Boulevard, Englewood, Colorado. GCI Liberty pays a sharing fee for use of the office based on a
comparable fair market rental rate and an estimate of the usage of the office facilities by or on behalf of GCI
Liberty. The sharing fees payable to Liberty Media for the year ending December 31, 2018 are expected to be
approximately $2 million. The Facilities Sharing Agreement will continue in effect until the close of business on
the third anniversary of the split-off, unless earlier terminated (1) by GCI Liberty at any time on at least
30 days’ prior written notice, (2) by LPH upon written notice to GCI Liberty following a default by GCI Liberty of
any of its material obligations under the Facilities Sharing Agreement, which default remains unremedied for
30 days after written notice of such default is provided, (3) by GCI Liberty upon written notice to LPH, following
certain changes in control of Liberty Media or Liberty Media being the subject of certain bankruptcy or
insolvency-related events or (4) by LPH upon written notice to GCI Liberty, following certain changes in control
of GCI Liberty or GCI Liberty being the subject of certain bankruptcy or insolvency-related events.

This summary is qualified by reference to the full text of the Facilities Sharing Agreement, which is filed as
exhibit 10.4 to our Current Report on Form 8-K filed with the SEC on March 14, 2018.

Aircraft Time Sharing Agreements

Prior to the completion of the split-off, Old GCI Liberty (Lessee) entered into three aircraft time sharing
agreements with Liberty Media or one or more of its wholly-owned subsidiaries (individually, the Aircraft Time
Sharing Agreement, or collectively, the Aircraft Time Sharing Agreements) for each of three aircraft owned
by Liberty Media or in which a wholly owned subsidiary of Liberty Media owns a fractional interest. Each
Aircraft Time Sharing Agreement provides that Liberty Media or its subsidiaries will lease the aircraft to Lessee
and provide or arrange for a fully qualified flight crew for all operations on a periodic, non-exclusive time
sharing basis. Lessee will pay Liberty Media or its subsidiaries an amount equal to the actual expenses of each
flight conducted under each Aircraft Time Sharing Agreement to the maximum extent permitted under Federal
Aviation Administration rules (which GCI Liberty estimates will be a de minimis amount for the first year under
the Aircraft Time Sharing Agreements). Such expenses may include fuel, oil, lubricants and other additives
(plus an additional charge of 100% thereof), travel expenses of the crew, hanger and tie down costs, insurance
obtained for a specific flight, landing fees, airport taxes and similar assessments, customs and similar fees,
in-flight food and beverage costs, ground transportation, flight planning and weather contact services. The
Aircraft Time Sharing Agreements will continue in effect until the close of business on the first anniversary of
the split-off, and then will be automatically renewed on a month-to-month basis, unless terminated earlier by
either party upon at least 30 days’ prior written notice.

This summary is qualified by reference to the full text of the Aircraft Time Sharing Agreements, which are filed
as exhibits 10.5 and 10.6 to our Current Report on Form 8-K filed with the SEC on March 14, 2018.

51

GCI LIBERTY, INC. 

2018 PROXY STATEMENT

51

STOCKHOLDER PROPOSALS

This proxy statement relates to our annual meeting of stockholders for the calendar year 2018 which will take
place on June 25, 2018. Based solely on the date of our 2018 annual meeting and the date of this proxy
statement, (i) a stockholder proposal must be submitted in writing to our Corporate Secretary and received at
our executive offices at 12300 Liberty Boulevard, Englewood, Colorado 80112, by the close of business on
January 24, 2019 in order to be eligible for inclusion in our proxy materials for the annual meeting of
stockholders for the calendar year 2019 (the 2019 annual meeting), and (ii) a stockholder proposal, or any
nomination by stockholders of a person or persons for election to the board of directors, must be received at
our executive offices at the foregoing address not earlier than March 27, 2019 and not later than April 26, 2019
to be considered for presentation at the 2019 annual meeting. We currently anticipate that the 2019 annual
meeting will be held during the second quarter of 2019. If the 2019 annual meeting takes place more than
30 days before or 30 days after June 25, 2019 (the anniversary of the 2018 annual meeting), a stockholder
proposal, or any nomination by stockholders of a person or persons for election to the board of directors, will
instead be required to be received at our executive offices at the foregoing address not later than the close of
business on the tenth day following the first day on which notice of the date of the 2019 annual meeting is
communicated to stockholders or public disclosure of the date of the 2019 annual meeting is made, whichever
occurs first, in order to be considered for presentation at the 2019 annual meeting.

All stockholder proposals for inclusion in our proxy materials will be subject to the requirements of the proxy
rules adopted under the Exchange Act, our charter and bylaws and Delaware law.

ADDITIONAL INFORMATION

We file periodic reports, proxy materials and other information with the SEC. You may read and copy any
document that we file at the Public Reference Room of the SEC at 100 F Street, N.E., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC
at (800) SEC-0330. You may also inspect such filings on the Internet website maintained by the SEC at
www.sec.gov. Additional information can also be found on our website at www.gciliberty.com. (Information
contained on any website referenced in this proxy statement is not incorporated by reference in this proxy
statement.) If you would like to receive a copy of the 2017 Form 10-K, or any of the exhibits listed
therein, please call or submit a request in writing to Investor Relations, GCI Liberty, Inc., 12300 Liberty
Boulevard, Englewood, Colorado 80112, Tel. No. (833) 618-8602, and we will provide you with the 2017
Form 10-K without charge, or any of the exhibits listed therein upon the payment of a nominal fee
(which fee will be limited to the expenses we incur in providing you with the requested exhibits).

52

GCI LIBERTY, INC. 2018 PROXY STATEMENT

52

Annex A

GCI LIBERTY, INC.
2018 OMNIBUS INCENTIVE PLAN

ARTICLE I

PURPOSE OF PLAN; EFFECTIVE DATE

1.1

Purpose. The  purpose  of  the  Plan  is  to  promote  the  success  of  the  Company  by  providing  a
method  whereby  (i)  eligible  officers  and  employees  of  the  Company  and  its  Subsidiaries,  (ii)  directors  and
independent contractors, and (iii) employees of Liberty Media Corporation or Liberty Interactive Corporation, in each
case, providing services to the Company and its Subsidiaries, may be awarded additional remuneration for services
rendered and may be encouraged to invest in capital stock of the Company, thereby increasing their proprietary
interest in the Company’s businesses, encouraging them to remain in the employ or service of the Company or its
Subsidiaries, and increasing their personal interest in the continued success and progress of the Company and its
Subsidiaries. The Plan is also intended to aid in (i) attracting Persons of exceptional ability to become officers and
employees of the Company and its Subsidiaries and (ii) inducing directors, independent contractors, or employees of
Liberty Media Corporation or Liberty Interactive Corporation to agree to provide services to the Company and its
Subsidiaries.

1.2

Effective Date. The Plan shall be effective as of March 9, 2018 (the ‘‘Effective Date’’).

ARTICLE II

DEFINITIONS

2.1

Certain  Defined  Terms. Capitalized  terms  not  defined  elsewhere  in  the  Plan  shall  have  the

following meanings (whether used in the singular or plural):

‘‘Account’’ has the meaning ascribed thereto in Section 8.2.

‘‘Affiliate’’ of the Company means any corporation, partnership or other business association that,
directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common
control with the Company.

‘‘Agreement’’  means  a  stock  option  agreement,  stock  appreciation  rights  agreement,  restricted
shares agreement, restricted stock units agreement, cash award agreement or an agreement evidencing
more than one type of Award, specified in Section 10.5, as any such Agreement may be supplemented or
amended from time to time.

‘‘Approved Transaction’’ means any transaction in which the Board (or, if approval of the Board is
not required as a matter of law, the stockholders of the Company) shall approve (i) any consolidation or
merger of the Company, or binding share exchange, pursuant to which shares of Common Stock of the
Company would be changed or converted into or exchanged for cash, securities, or other property, other
than any such transaction in which the common stockholders of the Company immediately prior to such
transaction have the same proportionate ownership of the Common Stock of, and voting power with respect
to, the surviving corporation immediately after such transaction, (ii) any merger, consolidation or binding
share  exchange  to  which  the  Company  is  a  party  as  a  result  of  which  the  Persons  who  are  common
stockholders of the Company immediately prior thereto have less than a majority of the combined voting
power of the outstanding capital stock of the Company ordinarily (and apart from the rights accruing under
special  circumstances)  having  the  right  to  vote  in  the  election  of  directors  immediately  following  such
merger, consolidation or binding share exchange, (iii) the adoption of any plan or proposal for the liquidation
or dissolution of the Company, or (iv) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all, or substantially all, of the assets of the Company.

A-1

‘‘Award’’ means a grant of Options, SARs, Restricted Shares, Restricted Stock Units, Performance

Awards, Cash Awards and/or cash amounts under the Plan.

‘‘Board’’ means the Board of Directors of the Company.

‘‘Board  Change’’  means,  during  any  period  of  two  consecutive  years,  individuals  who  at  the
beginning of such period constituted the entire Board cease for any reason to constitute a majority thereof
unless the election, or the nomination for election, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the beginning of the period.

‘‘Cash Award’’ means an Award made pursuant to Section 9.1 of the Plan to a Holder that is paid
solely on account of the attainment of one or more Performance Objectives that have been pre-established
by the Committee.

‘‘Code’’  means  the  Internal  Revenue  Code  of  1986,  as  amended  from  time  to  time,  or  any
successor statute or statutes thereto. Reference to any specific Code section shall include any successor
section.

‘‘Committee’’ means the committee of the Board appointed pursuant to Section 3.1 to administer

the Plan.

‘‘Common  Stock’’  means  each  or  any  (as  the  context  may  require)  series  of  the  Company’s

common stock.

‘‘Company’’ means GCI Liberty, Inc., a Delaware corporation.

‘‘Control Purchase’’ means any transaction (or series of related transactions) in which any person
(as such term is defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act), corporation or other entity
(other than the Company, any Subsidiary of the Company or any employee benefit plan sponsored by the
Company or any Subsidiary of the Company or any Exempt Person (as defined below)) shall become the
‘‘beneficial owner’’ (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 20% or more of the combined voting power of the then outstanding
securities  of  the  Company  ordinarily  (and  apart  from  the  rights  accruing  under  special  circumstances)
having  the  right  to  vote  in  the  election  of  directors  (calculated  as  provided  in  Rule  13d-3(d)  under  the
Exchange Act in the case of rights to acquire the Company’s securities), other than in a transaction (or
series of related transactions) approved by the Board. For purposes of this definition, ‘‘Exempt Person’’
means each of (a) the Chairman of the Board, the President and each of the directors of the Company as of
the Effective Date, and (b) the respective family members, estates and heirs of each of the Persons referred
to  in  clause  (a)  above  and  any  trust  or  other  investment  vehicle  for  the  primary  benefit  of  any  of  such
Persons or their respective family members or heirs. As used with respect to any Person, the term ‘‘family
member’’ means the spouse, siblings and lineal descendants of such Person.

‘‘Director Award Limitation’’ has the meaning ascribed thereto in Section 4.1.

‘‘Disability’’  means  the  inability  to  engage  in  any  substantial  gainful  activity  by  reason  of  any
medically determinable physical or mental impairment which can be expected to result in death or which
has lasted or can be expected to last for a continuous period of not less than 12 months.

‘‘Dividend Equivalents’’ means, with respect to Restricted Stock Units, to the extent specified by
the Committee only, an amount equal to all dividends and other distributions (or the economic equivalent
thereof) which are payable to stockholders of record during the Restriction Period on a like number and kind
of  shares  of  Common  Stock.  Notwithstanding  any  provision  of  the  Plan  to  the  contrary,  Dividend
Equivalents with respect to a Performance Award may only be paid to the extent the Performance Award is
actually paid to the Holder.

A-2

‘‘Domestic Relations Order’’ means a domestic relations order as defined by the Code or Title I of

the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.

‘‘Equity Security’’ shall have the meaning ascribed to such term in Section 3(a)(11) of the Exchange
Act, and an equity security of an issuer shall have the meaning ascribed thereto in Rule 16a-1 promulgated
under the Exchange Act, or any successor Rule.

‘‘Exchange Act’’ means the Securities Exchange Act of 1934, as amended from time to time, or any
successor statute or statutes thereto. Reference to any specific Exchange Act section shall include any
successor section.

‘‘Fair Market Value’’ of a share of any series of Common Stock on any day means (i) for Option and
SAR exercise transactions effected on any third-party incentive award administration system provided by
the Company, the current high bid price of a share of any series of Common Stock as reported on the
consolidated transaction reporting system on the principal national securities exchange on which shares of
such series of Common Stock are listed on such day or if such shares are not then listed on a national
securities exchange, then as quoted by OTC Markets Group Inc., (ii) for the purpose of determining the tax
withholding  due  upon  the  vesting  or  settlement  of  Restricted  Shares  or  Restricted  Stock  Units  and  the
related purpose of valuing shares withheld from such Awards to satisfy tax withholding obligations, the
closing price for a share of such series of Common Stock on the trading day next preceding the day that
such Award vests as reported on the consolidated transaction reporting system for the principal national
securities exchange on which shares of such series of Common Stock are listed on such day or if such
shares are not then listed on a national securities exchange, then as quoted by OTC Markets Group Inc., or
(iii) for all other purposes under the Plan, the closing price of a share of such series of Common Stock on
such day (or if such day is not a trading day, on the next preceding trading day) all as reported on the
consolidated transaction reporting system for the principal national securities exchange on which shares of
such series of Common Stock are listed on such day or if such shares are not then listed on a national
securities exchange, then as quoted by OTC Markets Group Inc. If for any day the Fair Market Value of a
share of the applicable series of Common Stock is not determinable by any of the foregoing means, or if
there is insufficient trading volume in the applicable series of Common Stock on such trading day, then the
Fair Market Value for such day shall be determined in good faith by the Committee on the basis of such
quotations and other considerations as the Committee deems appropriate.

‘‘Free Standing SAR’’ has the meaning ascribed thereto in Section 7.1.

‘‘Holder’’ means a Person who has received an Award under the Plan.

‘‘Nonemployee Director’’ means an individual who is a member of the Board and who is neither an

officer nor an employee of the Company or any Subsidiary.

‘‘Option’’ means a stock option granted under Article VI.

‘‘Performance Award’’ means an Award made pursuant to Article IX of the Plan to a Holder that is

subject to the attainment of one or more Performance Objectives.

‘‘Performance Objective’’ means a standard established by the Committee to determine in whole or

in part whether a Performance Award shall be earned.

‘‘Person’’  means  an  individual,  corporation,  limited  liability  company,  partnership,  trust,

incorporated or unincorporated association, joint venture or other entity of any kind.

‘‘Plan’’ means this GCI Liberty, Inc. 2018 Omnibus Incentive Plan.

‘‘Restricted  Shares’’  means  shares  of  any  series  of  Common  Stock  awarded  pursuant  to

Section 8.1.

A-3

‘‘Restricted Stock Unit’’ means a unit evidencing the right to receive in specified circumstances one
share of the specified series of Common Stock or, in the discretion of the Company, the equivalent value in
cash, which right may be subject to a Restriction Period or forfeiture provisions.

‘‘Restriction Period’’ means a period of time beginning on the date of each Award of Restricted

Shares or Restricted Stock Units and ending on the Vesting Date with respect to such Award.

‘‘Retained Distribution’’ has the meaning ascribed thereto in Section 8.3.

‘‘SARs’’ means stock appreciation rights, awarded pursuant to Article VII, with respect to shares of

any specified series of Common Stock.

‘‘Section 409A’’ has the meaning ascribed thereto in Section 10.17.

‘‘Subsidiary’’ of a Person means any present or future subsidiary (as defined in Section 424(f) of
the Code) of such Person or any business entity in which such Person owns, directly or indirectly, 50% or
more  of  the  voting,  capital  or  profits  interests.  An  entity  shall  be  deemed  a  subsidiary  of  a  Person  for
purposes  of  this  definition  only  for  such  periods  as  the  requisite  ownership  or  control  relationship  is
maintained.

‘‘Tandem SARs’’ has the meaning ascribed thereto in Section 7.1.

‘‘Vesting  Date,’’  with  respect  to  any  Restricted  Shares  or  Restricted  Stock  Units  awarded
hereunder, means the date on which such Restricted Shares or Restricted Stock Units cease to be subject
to a risk of forfeiture, as designated in or determined in accordance with the Agreement with respect to such
Award of Restricted Shares or Restricted Stock Units pursuant to Article VIII. If more than one Vesting Date
is designated for an Award of Restricted Shares or Restricted Stock Units, reference in the Plan to a Vesting
Date in respect of such Award shall be deemed to refer to each part of such Award and the Vesting Date for
such  part.  The  Vesting  Date  for  a  particular  Award  will  be  established  by  the  Committee  and,  for  the
avoidance of doubt, may be contemporaneous with the date of grant.

ARTICLE III

ADMINISTRATION

3.1

Committee. The Plan shall be administered by the Compensation Committee of the Board unless
a different committee is appointed by the Board. The Committee shall be comprised of not less than two Persons.
The Board may from time to time appoint members of the Committee in substitution for or in addition to members
previously  appointed,  may  fill  vacancies  in  the  Committee  and  may  remove  members  of  the  Committee.  The
Committee shall select one of its members as its chairman and shall hold its meetings at such times and places as it
shall deem advisable. A majority of its members shall constitute a quorum and all determinations shall be made by a
majority of such quorum. Any determination reduced to writing and signed by all of the members shall be as fully
effective as if it had been made by a majority vote at a meeting duly called and held.

3.2

Powers. The Committee shall have full power and authority to grant to eligible Persons Options
under Article VI of the Plan, SARs under Article VII of the Plan, Restricted Shares under Article VIII of the Plan,
Restricted Stock Units under Article VIII of the Plan, Cash Awards under Article IX of the Plan and/or Performance
Awards under Article IX of the Plan, to determine the terms and conditions (which need not be identical) of all Awards
so granted, to interpret the provisions of the Plan and any Agreements relating to Awards granted under the Plan and
to supervise the administration of the Plan. The Committee in making an Award may provide for the granting or
issuance of additional, replacement or alternative Awards upon the occurrence of specified events, including the
exercise of the original Award. The Committee shall have sole authority in the selection of Persons to whom Awards
may be granted under the Plan and in the determination of the timing, pricing and amount of any such Award, subject
only  to  the  express  provisions  of  the  Plan.  In  making  determinations  hereunder,  the  Committee  may  take  into
account the nature of the services rendered by the respective employees, officers, independent contractors and

A-4

Nonemployee  Directors,  their  present  and  potential  contributions  to  the  success  of  the  Company  and  its
Subsidiaries, and such other factors as the Committee in its discretion deems relevant.

3.3

Interpretation. The Committee is authorized, subject to the provisions of the Plan, to establish,
amend and rescind such rules and regulations as it deems necessary or advisable for the proper administration of
the Plan and to take such other action in connection with or in relation to the Plan as it deems necessary or advisable.
Each action and determination made or taken pursuant to the Plan by the Committee, including any interpretation or
construction of the Plan, shall be final and conclusive for all purposes and upon all Persons. No member of the
Committee shall be liable for any action or determination made or taken by such member or the Committee in good
faith with respect to the Plan.

3.4

Awards to Nonemployee Directors. The Board shall have the same powers as the Committee
with respect to awards to Nonemployee Directors and may exercise such powers in lieu of action by the Committee.

ARTICLE IV

SHARES SUBJECT TO THE PLAN

4.1

Number of Shares. Subject to the provisions of this Article IV, the maximum number of shares of
Common Stock with respect to which Awards may be granted during the term of the Plan shall be 8,000,000 shares.
Shares of Common Stock will be made available from the authorized but unissued shares of the Company or from
shares reacquired by the Company, including shares purchased in the open market. The shares of Common Stock
subject to (i) any Award granted under the Plan that shall expire, terminate or be cancelled or annulled for any reason
without having been exercised (or considered to have been exercised as provided in Section 7.2), (ii) any Award of
any SARs granted under the Plan the terms of which provide for settlement in cash, and (iii) any Award of Restricted
Shares or Restricted Stock Units granted under the Plan that shall be forfeited prior to becoming vested (provided
that the Holder received no benefits of ownership of such Restricted Shares or Restricted Stock Units other than
voting  rights  and  the  accumulation  of  Retained  Distributions  and  unpaid  Dividend  Equivalents  that  are  likewise
forfeited) shall again be available for purposes of the Plan. Notwithstanding the foregoing, the following shares of
Common Stock may not again be made available for issuance as Awards under the Plan: (a) shares of Common
Stock  not  issued  or  delivered  as  a  result  of  the  net  settlement  of  an  outstanding  Option  or  SAR,  (b)  shares  of
Common Stock used to pay the purchase price or withholding taxes related to an outstanding Award, or (c) shares of
Common Stock repurchased on the open market with the proceeds of an Option purchase price. Except for Awards
described in Section 10.1, no Person may be granted in any calendar year Awards covering more than 1.5 million
shares of Common Stock (as such amount may be adjusted from time to time as provided in Section 4.2). No Person
shall  receive  payment  for  Cash  Awards  during  any  calendar  year  aggregating  in  excess  of  $10  million.  No
Nonemployee Director may be granted during any calendar year Awards having a value determined on the date of
grant in excess of $3 million (the ‘‘Director Award Limitation’’). Awards granted to Nonemployee Directors shall only
be subject to the Director Award Limitation.

4.2

Adjustments.

(a)

If the Company subdivides its outstanding shares of any series of Common Stock into a
greater number of shares of such series of Common Stock (by stock dividend, stock split, reclassification,
or otherwise) or combines its outstanding shares of any series of Common Stock into a smaller number of
shares  of  such  series  of  Common  Stock  (by  reverse  stock  split,  reclassification,  or  otherwise)  or  if  the
Committee  determines 
that  any  stock  dividend,  extraordinary  cash  dividend,  reclassification,
recapitalization,  reorganization,  stock  redemption,  split-up,  spin-off,  combination,  exchange  of  shares,
warrants  or  rights  offering  to  purchase  such  series  of  Common  Stock  or  other  similar  corporate  event
(including  mergers  or  consolidations  other  than  those  which  constitute  Approved  Transactions,
adjustments with respect to which shall be governed by Section 10.1(b)) affects any series of Common
Stock so that an adjustment is required to preserve the benefits or potential benefits intended to be made
available under the Plan, then the Committee, in such manner as the Committee, in its sole discretion,
deems equitable and appropriate, shall make such adjustments to any or all of (i) the number and kind of
shares  of  stock  which  thereafter  may  be  awarded,  optioned  or  otherwise  made  subject  to  the  benefits
contemplated by the Plan, (ii) the number and kind of shares of stock subject to outstanding Awards, and

A-5

(iii) the purchase or exercise price and the relevant appreciation base with respect to any of the foregoing,
provided, however, that the number of shares subject to any Award shall always be a whole number. The
Committee  may,  if  deemed  appropriate,  provide  for  a  cash  payment  to  any  Holder  of  an  Award  in
connection with any adjustment made pursuant to this Section 4.2.

(b)

Notwithstanding  any  provision  of  the  Plan  to  the  contrary,  in  the  event  of  a  corporate
merger,  consolidation,  acquisition  of  property  or  stock,  separation,  reorganization  or  liquidation,  the
Committee shall be authorized, in its discretion, (i) to provide, prior to the transaction, for the acceleration of
the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a
cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of
such transaction, or (ii) to cancel any such Awards and to deliver to the Holders cash in an amount that the
Committee shall determine in its sole discretion is equal to the fair market value of such Awards on the date
of such event, which in the case of Options or SARs shall be the excess of the Fair Market Value (as
determined  in  sub-section  (ii)  of  the  definition  of  such  term)  of  Common  Stock  on  such  date  over  the
purchase price of the Options or the base price of the SARs, as applicable. For the avoidance of doubt, if
the purchase price of the Options or base price of the SARs, as applicable, is greater than such Fair Market
Value, the Options or SARs may be canceled for no consideration pursuant to this section.

(c)

No adjustment or substitution pursuant to this Section 4.2 shall be made in a manner that

results in noncompliance with the requirements of Section 409A, to the extent applicable.

ARTICLE V

ELIGIBILITY

5.1

General. The Persons who shall be eligible to participate in the Plan and to receive Awards under
the Plan shall be such Persons who are employees (including officers) of, or Nonemployee Directors, independent
contractors or employees of Liberty Media Corporation or Liberty Interactive Corporation providing services to, the
Company or its Subsidiaries as the Committee shall select. Awards may be made to employees, Nonemployee
Directors or independent contractors who hold or have held Awards under the Plan or any similar or other awards
under any other plan of the Company or any of its Affiliates.

ARTICLE VI

STOCK OPTIONS

6.1

Grant of Options. Subject to the limitations of the Plan, the Committee shall designate from time
to time those eligible Persons to be granted Options, the time when each Option shall be granted to such eligible
Persons, the series and number of shares of Common Stock subject to such Option, and, subject to Section 6.2, the
purchase price of the shares of Common Stock subject to such Option.

6.2

Option Price. The price at which shares may be purchased upon exercise of an Option shall be
fixed by the Committee and may be no less than the Fair Market Value of the shares of the applicable series of
Common Stock subject to the Option as of the date the Option is granted.

6.3

Term  of  Options. Subject  to  the  provisions  of  the  Plan  with  respect  to  death,  retirement  and
termination  of  employment  or  service,  the  term  of  each  Option  shall  be  for  such  period  as  the  Committee  shall
determine as set forth in the applicable Agreement; provided that such term may not exceed ten years. However, if
the term of an Option expires when trading in the Common Stock is prohibited by law or the Company’s insider
trading policy, then the term of such Option shall expire on the 30th day after the expiration of such prohibition.

A-6

6.4

Exercise of Options. An Option granted under the Plan shall become (and remain) exercisable
during  the  term  of  the  Option  to  the  extent  provided  in  the  applicable  Agreement  and  the  Plan  and,  unless  the
Agreement otherwise provides, may be exercised to the extent exercisable, in whole or in part, at any time and from
time to time during such term; provided, however, that subsequent to the grant of an Option, the Committee, at any
time before complete termination of such Option, may accelerate the time or times at which such Option may be
exercised in whole or in part (without reducing the term of such Option).

6.5

Manner of Exercise.

(a)

Form of Payment. An Option shall be exercised by written notice to the Company upon
such terms and conditions as the Agreement may provide and in accordance with such other procedures
for the exercise of Options as the Committee may establish from time to time. The method or methods of
payment  of  the  purchase  price  for  the  shares  to  be  purchased  upon  exercise  of  an  Option  and  of  any
amounts  required  by  Section  10.9  shall  be  determined  by  the  Committee  and  may  consist  of  (i)  cash,
(ii) check, (iii) promissory note (subject to applicable law), (iv) whole shares of any series of Common Stock,
(v) the withholding of shares of the applicable series of Common Stock issuable upon such exercise of the
Option, (vi) the delivery, together with a properly executed exercise notice, of irrevocable instructions to a
broker  to  deliver  promptly  to  the  Company  the  amount  of  sale  or  loan  proceeds  required  to  pay  the
purchase price, or (vii) any combination of the foregoing methods of payment, or such other consideration
and  method  of  payment  as  may  be  permitted  for  the  issuance  of  shares  under  the  Delaware  General
Corporation Law. The permitted method or methods of payment of the amounts payable upon exercise of
an Option, if other than in cash, shall be set forth in the applicable Agreement and may be subject to such
conditions as the Committee deems appropriate.

(b)

Value of Shares. Unless otherwise determined by the Committee and provided in the
applicable Agreement, shares of any series of Common Stock delivered in payment of all or any part of the
amounts payable in connection with the exercise of an Option, and shares of any series of Common Stock
withheld for such payment, shall be valued for such purpose at their Fair Market Value as of the exercise
date.

(c)

Issuance of Shares. The Company shall effect the transfer of the shares of Common
Stock purchased under the Option as soon as practicable after the exercise thereof and payment in full of
the purchase price therefor and of any amounts required by Section 10.9, and within a reasonable time
thereafter, such transfer shall be evidenced on the books of the Company. Unless otherwise determined by
the  Committee  and  provided  in  the  applicable  Agreement,  (i)  no  Holder  or  other  Person  exercising  an
Option shall have any of the rights of a stockholder of the Company with respect to shares of Common
Stock subject to an Option granted under the Plan until due exercise and full payment has been made, and
(ii) no adjustment shall be made for cash dividends or other rights for which the record date is prior to the
date of such due exercise and full payment.

ARTICLE VII

SARS

7.1

Grant of SARs. Subject to the limitations of the Plan, SARs may be granted by the Committee to
such eligible Persons in such numbers, with respect to any specified series of Common Stock, and at such times
during the term of the Plan as the Committee shall determine. A SAR may be granted to a Holder of an Option
(hereinafter called a ‘‘related Option’’) with respect to all or a portion of the shares of Common Stock subject to the
related Option (a ‘‘Tandem SAR’’) or may be granted separately to an eligible Person (a ‘‘Free Standing SAR’’).
Subject to the limitations of the Plan, SARs shall be exercisable in whole or in part upon notice to the Company upon
such terms and conditions as are provided in the Agreement.

7.2

Tandem SARs. A Tandem SAR may be granted either concurrently with the grant of the related
Option or at any time thereafter prior to the complete exercise, termination, expiration or cancellation of such related
Option. Tandem SARs shall be exercisable only at the time and to the extent that the related Option is exercisable
(and may be subject to such additional limitations on exercisability as the Agreement may provide) and in no event

A-7

after the complete termination or full exercise of the related Option. Upon the exercise or termination of the related
Option, the Tandem SARs with respect thereto shall be canceled automatically to the extent of the number of shares
of Common Stock with respect to which the related Option was so exercised or terminated. Subject to the limitations
of the Plan, upon the exercise of a Tandem SAR and unless otherwise determined by the Committee and provided in
the applicable Agreement, (i) the Holder thereof shall be entitled to receive from the Company, for each share of the
applicable series of Common Stock with respect to which the Tandem SAR is being exercised, consideration (in the
form determined as provided in Section 7.4) equal in value to the excess of the Fair Market Value of a share of the
applicable series of Common Stock with respect to which the Tandem SAR was granted on the date of exercise over
the  related  Option  purchase  price  per  share,  and  (ii)  the  related  Option  with  respect  thereto  shall  be  canceled
automatically to the extent of the number of shares of Common Stock with respect to which the Tandem SAR was so
exercised.

7.3

Free Standing SARs. Free Standing SARs shall be exercisable at the time, to the extent and
upon the terms and conditions set forth in the applicable Agreement. The base price of a Free Standing SAR may be
no less than the Fair Market Value of the applicable series of Common Stock with respect to which the Free Standing
SAR was granted as of the date the Free Standing SAR is granted. Subject to the limitations of the Plan, upon the
exercise of a Free Standing SAR and unless otherwise determined by the Committee and provided in the applicable
Agreement, the Holder thereof shall be entitled to receive from the Company, for each share of the applicable series
of  Common  Stock  with  respect  to  which  the  Free  Standing  SAR  is  being  exercised,  consideration  (in  the  form
determined  as  provided  in  Section  7.4)  equal  in  value  to  the  excess  of  the  Fair  Market  Value  of  a  share  of  the
applicable  series  of  Common  Stock  with  respect  to  which  the  Free  Standing  SAR  was  granted  on  the  date  of
exercise over the base price per share of such Free Standing SAR. The term of a Free Standing SAR may not
exceed  ten  years.  However,  if  the  term  of  a  Free  Standing  SAR  expires  when  trading  in  the  Common  Stock  is
prohibited by law or the Company’s insider trading policy, then the term of such Free Standing SAR shall expire on
the 30th day after the expiration of such prohibition.

7.4

Consideration. The consideration to be received upon the exercise of a SAR by the Holder shall
be paid in cash, shares of the applicable series of Common Stock with respect to which the SAR was granted (valued
at Fair Market Value on the date of exercise of such SAR), a combination of cash and such shares of the applicable
series of Common Stock or such other consideration, in each case, as provided in the Agreement. No fractional
shares of Common Stock shall be issuable upon exercise of a SAR, and unless otherwise provided in the applicable
Agreement, the Holder will receive cash in lieu of fractional shares. Unless the Committee shall otherwise determine,
to the extent a Free Standing SAR is exercisable, it will be exercised automatically for cash on its expiration date.

7.5

Limitations. The applicable Agreement may provide for a limit on the amount payable to a Holder
upon exercise of SARs at any time or in the aggregate, for a limit on the number of SARs that may be exercised by
the Holder in whole or in part for cash during any specified period, for a limit on the time periods during which a Holder
may exercise SARs, and for such other limits on the rights of the Holder and such other terms and conditions of the
SAR, including a condition that the SAR may be exercised only in accordance with rules and regulations adopted
from time to time, as the Committee may determine. Unless otherwise so provided in the applicable Agreement, any
such  limit  relating  to  a  Tandem  SAR  shall  not  restrict  the  exercisability  of  the  related  Option.  Such  rules  and
regulations may govern the right to exercise SARs granted prior to the adoption or amendment of such rules and
regulations as well as SARs granted thereafter.

7.6

Exercise. For purposes of this Article VII, the date of exercise of a SAR shall mean the date on
which the Company shall have received notice from the Holder of the SAR of the exercise of such SAR (unless
otherwise determined by the Committee and provided in the applicable Agreement).

ARTICLE VIII

RESTRICTED SHARES AND RESTRICTED STOCK UNITS

8.1

Grant of Restricted Shares. Subject to the limitations of the Plan, the Committee shall designate
those eligible Persons to be granted Awards of Restricted Shares, shall determine the time when each such Award
shall be granted, and shall designate (or set forth the basis for determining) the Vesting Date or Vesting Dates for
each  Award  of  Restricted  Shares,  and  may  prescribe  other  restrictions,  terms  and  conditions  applicable  to  the

A-8

vesting of such Restricted Shares in addition to those provided in the Plan. The Committee shall determine the price,
if any, to be paid by the Holder for the Restricted Shares; provided, however, that the issuance of Restricted Shares
shall be made for at least the minimum consideration necessary to permit such Restricted Shares to be deemed fully
paid and nonassessable. All determinations made by the Committee pursuant to this Section 8.1 shall be specified in
the Agreement.

8.2

Issuance of Restricted Shares. An Award of Restricted Shares shall be registered in a book entry
account (the ‘‘Account’’) in the name of the Holder to whom such Restricted Shares shall have been awarded. During
the Restriction Period, the Account, any statement of ownership representing the Restricted Shares that may be
issued during the Restriction Period and any securities constituting Retained Distributions shall bear a restrictive
legend to the effect that ownership of the Restricted Shares (and such Retained Distributions), and the enjoyment of
all  rights  appurtenant  thereto,  are  subject  to  the  restrictions,  terms  and  conditions  provided  in  the  Plan  and  the
applicable Agreement.

8.3

Restrictions with Respect to Restricted Shares. During the Restriction Period, Restricted Shares
shall constitute issued and outstanding shares of the applicable series of Common Stock for all corporate purposes.
The Holder will have the right to vote such Restricted Shares, to receive and retain such dividends and distributions,
as the Committee may designate, paid or distributed on such Restricted Shares, and to exercise all other rights,
powers and privileges of a Holder of shares of the applicable series of Common Stock with respect to such Restricted
Shares; except, that, unless otherwise determined by the Committee and provided in the applicable Agreement,
(i) the Holder will not be entitled to delivery of the Restricted Shares until the Restriction Period shall have expired
and unless all other vesting requirements with respect thereto shall have been fulfilled or waived; (ii) the Company or
its designee will retain custody of the Restricted Shares during the Restriction Period as provided in Section 8.2;
(iii) other than such dividends and distributions as the Committee may designate, the Company or its designee will
retain custody of all distributions (‘‘Retained Distributions’’) made or declared with respect to the Restricted Shares
(and such Retained Distributions will be subject to the same restrictions, terms and vesting, and other conditions as
are applicable to the Restricted Shares) until such time, if ever, as the Restricted Shares with respect to which such
Retained  Distributions  shall  have  been  made,  paid  or  declared  shall  have  become  vested,  and  such  Retained
Distributions shall not bear interest or be segregated in a separate account; (iv) the Holder may not sell, assign,
transfer, pledge, exchange, encumber or dispose of the Restricted Shares or any Retained Distributions or such
Holder’s interest in any of them during the Restriction Period; and (v) a breach of any restrictions, terms or conditions
provided in the Plan or established by the Committee with respect to any Restricted Shares or Retained Distributions
will cause a forfeiture of such Restricted Shares and any Retained Distributions with respect thereto.

8.4

Grant  of  Restricted  Stock  Units. Subject  to  the  limitations  of  the  Plan,  the  Committee  shall
designate those eligible Persons to be granted Awards of Restricted Stock Units, the value of which is based, in
whole or in part, on the Fair Market Value of the shares of any specified series of Common Stock. Subject to the
provisions of the Plan, including any rules established pursuant to Section 8.5, Awards of Restricted Stock Units
shall be subject to such terms, restrictions, conditions, vesting requirements and payment rules as the Committee
may  determine  in  its  discretion,  which  need  not  be  identical  for  each  Award.  Such  Awards  may  provide  for  the
payment of cash consideration by the Person to whom such Award is granted or provide that the Award, and any
shares of Common Stock to be issued in connection therewith, if applicable, shall be delivered without the payment
of cash consideration; provided, however, that the issuance of any shares of Common Stock in connection with an
Award of Restricted Stock Units shall be for at least the minimum consideration necessary to permit such shares to
be deemed fully paid and nonassessable. The determinations made by the Committee pursuant to this Section 8.4
shall be specified in the applicable Agreement.

8.5

Restrictions  with  Respect  to  Restricted  Stock  Units. Any  Award  of  Restricted  Stock  Units,
including any shares of Common Stock which are part of an Award of Restricted Stock Units, may not be assigned,
sold, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued or, if later, the
date provided by the Committee at the time of the Award. A breach of any restrictions, terms or conditions provided in
the Plan or established by the Committee with respect to any Award of Restricted Stock Units will cause a forfeiture
of such Restricted Stock Units and any Dividend Equivalents with respect thereto.

8.6

Issuance of Restricted Stock Units. Restricted Stock Units shall be issued at the beginning of the
Restriction Period, shall not constitute issued and outstanding shares of the applicable series of Common Stock, and

A-9

the Holder shall not have any of the rights of a stockholder with respect to the shares of Common Stock covered by
such an Award of Restricted Stock Units, in each case until such shares shall have been issued to the Holder at the
end of the Restriction Period. If and to the extent that shares of Common Stock are to be issued at the end of the
Restriction Period, the Holder shall be entitled to receive Dividend Equivalents with respect to the shares of Common
Stock  covered  thereby  either  (i)  during  the  Restriction  Period  or  (ii)  in  accordance  with  the  rules  applicable  to
Retained Distributions, as the Committee may specify in the Agreement.

8.7

Cash Payments.

In connection with any Award of Restricted Shares or Restricted Stock Units, an
Agreement may provide for the payment of a cash amount to the Holder of such Awards at any time after such
Awards  shall  have  become  vested.  Such  cash  amounts  shall  be  payable  in  accordance  with  such  additional
restrictions, terms and conditions as shall be prescribed by the Committee in the Agreement and shall be in addition
to any other salary, incentive, bonus or other compensation payments which such Holder shall be otherwise entitled
or eligible to receive from the Company.

8.8

Completion of Restriction Period. On the Vesting Date with respect to each Award of Restricted
Shares or Restricted Stock Units and the satisfaction of any other applicable restrictions, terms and conditions, (i) all
or the applicable portion of such Restricted Shares or Restricted Stock Units shall become vested, (ii) any Retained
Distributions  with  respect  to  such  Restricted  Shares  and  any  unpaid  Dividend  Equivalents  with  respect  to  such
Restricted Stock Units shall become vested to the extent that the Awards related thereto shall have become vested,
and (iii) any cash amount to be received by the Holder with respect to such Restricted Shares or Restricted Stock
Units shall become payable, all in accordance with the terms of the applicable Agreement. Any such Restricted
Shares, Restricted Stock Units, Retained Distributions and any unpaid Dividend Equivalents that shall not become
vested shall be forfeited to the Company, and the Holder shall not thereafter have any rights (including dividend and
voting rights) with respect to such Restricted Shares, Restricted Stock Units, Retained Distributions and any unpaid
Dividend Equivalents that shall have been so forfeited. The Committee may, in its discretion, provide that the delivery
of any Restricted Shares, Restricted Stock Units, Retained Distributions and unpaid Dividend Equivalents that shall
have  become  vested,  and  payment  of  any  related  cash  amounts  that  shall  have  become  payable  under  this
Article VIII, shall be deferred until such date or dates as the recipient may elect. Any election of a recipient pursuant
to the preceding sentence shall be filed in writing with the Committee in accordance with such rules and regulations,
including any deadline for the making of such an election, as the Committee may provide, and shall be made in
compliance with Section 409A.

ARTICLE IX

CASH AWARDS AND PERFORMANCE AWARDS

9.1

Cash  Awards.

In  addition  to  granting  Options,  SARs,  Restricted  Shares  and  Restricted  Stock
Units, the Committee shall, subject to the limitations of the Plan, have authority to grant to eligible Persons Cash
Awards. Each Cash Award shall be subject to such terms and conditions, restrictions and contingencies, if any, as
the Committee shall determine. Restrictions and contingencies limiting the right to receive a cash payment pursuant
to  a  Cash  Award  shall  be  based  upon  the  achievement  of  single  or  multiple  Performance  Objectives  over  a
performance period established by the Committee. The determinations made by the Committee pursuant to this
Section 9.1 shall be specified in the applicable Agreement.

9.2

Designation  as  a  Performance  Award. The  Committee  shall  have  the  right  to  designate  any
Award of Options, SARs, Restricted Shares or Restricted Stock Units as a Performance Award. All Cash Awards
shall be designated as Performance Awards.

9.3

Performance Objectives. The grant or vesting of a Performance Award shall be subject to the
achievement of Performance Objectives over a performance period established by the Committee based upon one
or  more  of  the  following  business  criteria  that  apply  to  the  Holder,  one  or  more  business  units,  divisions  or
Subsidiaries of the Company or the applicable sector of the Company, or the Company as a whole, and if so desired
by  the  Committee,  by  comparison  with  a  peer  group  of  companies:  increased  revenue;  net  income  measures
(including  income  after  capital  costs  and  income  before  or  after  taxes);  stock  price  measures  (including  growth
measures and total stockholder return); price per share of Common Stock; market share; earnings per share (actual
or  targeted  growth);  earnings  before  interest,  taxes,  depreciation  and  amortization  (EBITDA);  operating  income

A-10

before  depreciation  and  amortization  (OIBDA);  economic  value  added  (or  an  equivalent  metric);  market  value
added; debt to equity ratio; cash flow measures (including cash flow return on capital, cash flow return on tangible
capital, net cash flow and net cash flow before financing activities); return measures (including return on equity,
return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on
average  equity);  operating  measures  (including  operating  income,  funds  from  operations,  cash  from  operations,
after-tax  operating  income,  sales  volumes,  production  volumes  and  production  efficiency);  expense  measures
(including overhead cost and general and administrative expense); margins; stockholder value; total stockholder
return; proceeds from dispositions; total market value and corporate values measures (including ethics compliance,
environmental and safety). Unless otherwise stated, such a Performance Objective need not be based upon an
increase or positive result under a particular business criterion and could include, for example, maintaining the status
quo or limiting economic losses (measured, in each case, by reference to specific business criteria). The Committee
shall have the authority to determine whether the Performance Objectives and other terms and conditions of the
Award are satisfied, and the Committee’s determination as to the achievement of Performance Objectives relating to
a Performance Award shall be made in writing.

9.4

Section 162(m) of the Code. Notwithstanding the foregoing provisions, if the Committee intends
for a Performance Award to be granted and administered in a manner designed to preserve the deductibility of the
compensation resulting from such Award in accordance with Section 162(m) of the Code, then the Performance
Objectives  for  such  particular  Performance  Award  relative  to  the  particular  period  of  service  to  which  the
Performance Objectives relate shall be established by the Committee in writing (i) no later than 90 days after the
beginning of such period and (ii) prior to the completion of 25% of such period.

9.5

Waiver of Performance Objectives. The Committee shall have no discretion to modify or waive
the Performance Objectives or conditions to the grant or vesting of a Performance Award unless such Award is not
intended  to  qualify  as  qualified  performance-based  compensation  under  Section  162(m)  of  the  Code  and  the
relevant Agreement provides for such discretion.

ARTICLE X

GENERAL PROVISIONS

10.1

Acceleration of Awards.

(a)

Death or Disability.

If a Holder’s employment or service shall terminate by reason of
death or Disability, notwithstanding any contrary waiting period, installment period, vesting schedule or
Restriction Period in any Agreement or in the Plan, unless the applicable Agreement provides otherwise:
(i)  in  the  case  of  an  Option  or  SAR,  each  outstanding  Option  or  SAR  granted  under  the  Plan  shall
immediately become exercisable in full in respect of the aggregate number of shares covered thereby; (ii) in
the case of Restricted Shares, the Restriction Period applicable to each such Award of Restricted Shares
shall be deemed to have expired and all such Restricted Shares and any related Retained Distributions
shall become vested and any related cash amounts payable pursuant to the applicable Agreement shall be
adjusted in such manner as may be provided in the Agreement; and (iii) in the case of Restricted Stock
Units, the Restriction Period applicable to each such Award of Restricted Stock Units shall be deemed to
have  expired  and  all  such  Restricted  Stock  Units  and  any  unpaid  Dividend  Equivalents  shall  become
vested and any related cash amounts payable pursuant to the applicable Agreement shall be adjusted in
such manner as may be provided in the Agreement.

(b)

Approved  Transactions;  Board  Change;  Control  Purchase.

In  the  event  of  any
Approved Transaction, Board Change or Control Purchase, notwithstanding any contrary waiting period,
installment  period,  vesting  schedule  or  Restriction  Period  in  any  Agreement  or  in  the  Plan,  unless  the
applicable  Agreement  provides  otherwise:  (i)  in  the  case  of  an  Option  or  SAR,  each  such  outstanding
Option or SAR granted under the Plan shall become exercisable in full in respect of the aggregate number
of shares covered thereby; (ii) in the case of Restricted Shares, the Restriction Period applicable to each
such Award of Restricted Shares shall be deemed to have expired and all such Restricted Shares and any
related Retained Distributions shall become vested and any related cash amounts payable pursuant to the
applicable Agreement shall be adjusted in such manner as may be provided in the Agreement; and (iii) in

A-11

the case of Restricted Stock Units, the Restriction Period applicable to each such Award of Restricted Stock
Units  shall  be  deemed  to  have  expired  and  all  such  Restricted  Stock  Units  and  any  unpaid  Dividend
Equivalents  shall  become  vested  and  any  related  cash  amounts  payable  pursuant  to  the  applicable
Agreement shall be adjusted in such manner as may be provided in the Agreement, in each case effective
upon  the  Board  Change  or  Control  Purchase  or  immediately  prior  to  consummation  of  the  Approved
Transaction. The effect, if any, on a Cash Award of an Approved Transaction, Board Change or Control
Purchase  shall  be  prescribed  in  the  applicable  Agreement.  Notwithstanding  the  foregoing,  unless
otherwise provided in the applicable Agreement, the Committee may, in its discretion, determine that any or
all outstanding Awards of any or all types granted pursuant to the Plan will not vest or become exercisable
on an accelerated basis in connection with an Approved Transaction if effective provision has been made
for  the  taking  of  such  action  which,  in  the  opinion  of  the  Committee,  is  equitable  and  appropriate  to
substitute a new Award for such Award or to assume such Award and to make such new or assumed
Award,  as  nearly  as  may  be  practicable,  equivalent  to  the  old  Award  (before  giving  effect  to  any
acceleration of the vesting or exercisability thereof), taking into account, to the extent applicable, the kind
and amount of securities, cash or other assets into or for which the applicable series of Common Stock may
be changed, converted or exchanged in connection with the Approved Transaction.

10.2

Termination of Employment or Service.

(a)

General.

If a Holder’s employment or service shall terminate prior to an Option or SAR
becoming exercisable or being exercised (or deemed exercised, as provided in Section 7.2) in full, or during
the  Restriction  Period  with  respect  to  any  Restricted  Shares  or  any  Restricted  Stock  Units,  then  such
Option  or  SAR  shall  thereafter  become  or  be  exercisable,  and  the  Holder’s  rights  to  any  unvested
Restricted Shares, Retained Distributions and related cash amounts and any unvested Restricted Stock
Units, unpaid Dividend Equivalents and related cash amounts shall thereafter vest, in each case solely to
the extent provided in the applicable Agreement; provided, however, that, unless otherwise determined by
the Committee and provided in the applicable Agreement, (i) no Option or SAR may be exercised after the
scheduled expiration date thereof; (ii) if the Holder’s employment or service terminates by reason of death
or Disability, the Option or SAR shall remain exercisable for a period of at least one year following such
termination (but not later than the scheduled expiration of such Option or SAR); and (iii) any termination of
the  Holder’s  employment  or  service  for  cause  will  be  treated  in  accordance  with  the  provisions  of
Section 10.2(b). The effect on a Cash Award of the termination of a Holder’s employment or service for any
reason, other than for cause, shall be prescribed in the applicable Agreement. For the avoidance of doubt,
in the discretion of the Committee, an Award may provide that a Holder’s service shall be deemed to have
continued for purposes of the Award while a Holder provides services to the Company, any Subsidiary, or
any former affiliate of the Company or any Subsidiary.

(b)

Termination  for  Cause.

If  a  Holder’s  employment  or  service  with  the  Company  or  a
Subsidiary of the Company shall be terminated by the Company or such Subsidiary for ‘‘cause’’ during the
Restriction Period with respect to any Restricted Shares or Restricted Stock Units or prior to any Option or
SAR becoming exercisable or being exercised in full or prior to the payment in full of any Cash Award (for
these  purposes,  ‘‘cause’’  shall  have  the  meaning  ascribed  thereto  in  any  employment  or  consulting
agreement  to  which  such  Holder  is  a  party  or,  in  the  absence  thereof,  shall  include  insubordination,
dishonesty, incompetence, moral turpitude, other misconduct of any kind and the refusal to perform such
Holder’s duties and responsibilities for any reason other than illness or incapacity; provided, however, that if
such termination occurs within 12 months after an Approved Transaction or Control Purchase or Board
Change,  termination  for  ‘‘cause’’  shall  mean  only  a  felony  conviction  for  fraud,  misappropriation,  or
embezzlement),  then,  unless  otherwise  determined  by  the  Committee  and  provided  in  the  applicable
Agreement, (i) all Options and SARs and all unpaid Cash Awards held by such Holder shall immediately
terminate,  and  (ii)  such  Holder’s  rights  to  all  Restricted  Shares,  Restricted  Stock  Units,  Retained
Distributions,  any  unpaid  Dividend  Equivalents  and  any  related  cash  amounts  shall  be  forfeited
immediately

(c)

Miscellaneous. The  Committee  may  determine  whether  any  given  leave  of  absence
constitutes a termination of employment or service; provided, however, that for purposes of the Plan, (i) a
leave of absence, duly authorized in writing by the Company for military service or sickness, or for any other

A-12

purpose approved by the Company if the period of such leave does not exceed 90 days, and (ii) a leave of
absence in excess of 90 days, duly authorized in writing by the Company provided the employee’s right to
reemployment  is  guaranteed  either  by  statute  or  contract,  shall  not  be  deemed  a  termination  of
employment. Unless otherwise determined by the Committee and provided in the applicable Agreement,
Awards made under the Plan shall not be affected by any change of employment or service so long as the
Holder continues to be an employee, director or independent contractor of the Company.

10.3

Right of Company to Terminate Employment or Service. Nothing contained in the Plan or in any
Award, and no action of the Company or the Committee with respect thereto, shall confer or be construed to confer
on any Holder any right to continue in the employ or service of the Company or any of its Subsidiaries or interfere in
any way with the right of the Company or any Subsidiary of the Company to terminate the employment or service of
the Holder at any time, with or without cause, subject, however, to the provisions of any employment or consulting
agreement between the Holder and the Company or any Subsidiary of the Company, or in the case of a director, to
the charter and bylaws, as the same may be in effect from time to time.

10.4

Nonalienation of Benefits. Except as set forth herein, no right or benefit under the Plan shall be
subject  to  anticipation,  alienation,  sale,  assignment,  hypothecation,  pledge,  exchange,  transfer,  garnishment,
encumbrance  or  charge,  and  any  attempt  to  anticipate,  alienate,  sell,  assign,  hypothecate,  pledge,  exchange,
transfer, garnish, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be
liable for or subject to the debts, contracts, liabilities or torts of the Person entitled to such benefits.

10.5

Written Agreement. Each Award under the Plan shall be evidenced by a written agreement, in
such form as the Committee shall approve from time to time in its discretion, specifying the terms and provisions of
such Award which may not be inconsistent with the provisions of the Plan; provided, however, that if more than one
type of Award is made to the same Holder, such Awards may be evidenced by a single Agreement with such Holder.
Each grantee of an Option, SAR, Restricted Shares, Restricted Stock Units or Performance Award (including a Cash
Award)  shall  be  notified  promptly  of  such  grant,  and  a  written  Agreement  shall  be  promptly  delivered  by  the
Company. Any such written Agreement may contain (but shall not be required to contain) such provisions as the
Committee deems appropriate to insure that the penalty provisions of Section 4999 of the Code will not apply to any
stock or cash received by the Holder from the Company. Any such Agreement may be supplemented or amended
from time to time as approved by the Committee as contemplated by Section 10.7(b).

10.6

Nontransferability. Unless otherwise determined by the Committee and expressly provided for
in an Agreement, Awards are not transferable (either voluntarily or involuntarily), before or after a Holder’s death,
except as follows: (a) during the Holder’s lifetime, pursuant to a Domestic Relations Order, issued by a court of
competent jurisdiction, that is not contrary to the terms and conditions of the Plan or any applicable Agreement, and
in a form acceptable to the Committee; or (b) after the Holder’s death, by will or pursuant to the applicable laws of
descent and distribution, as may be the case. Any person to whom Awards are transferred in accordance with the
provisions of the preceding sentence shall take such Awards subject to all of the terms and conditions of the Plan and
any applicable Agreement.

10.7

Termination and Amendment.

(a)

General. Unless  the  Plan  shall  theretofore  have  been  terminated  as  hereinafter
provided, no Awards may be made under the Plan on or after the fifth anniversary of the Effective Date. The
Plan  may  be  terminated  at  any  time  prior  to  such  date  and  may,  from  time  to  time,  be  suspended  or
discontinued or modified or amended if such action is deemed advisable by the Committee.

(b)

Modification. No termination, modification or amendment of the Plan may, without the
consent of the Person to whom any Award shall theretofore have been granted, adversely affect the rights
of such Person with respect to such Award. No modification, extension, renewal or other change in any
Award granted under the Plan shall be made after the grant of such Award, unless the same is consistent
with the provisions of the Plan. With the consent of the Holder and subject to the terms and conditions of the
Plan  (including  Section  10.7(a)),  the  Committee  may  amend  outstanding  Agreements  with  any  Holder,
including any amendment which would (i) accelerate the time or times at which the Award may be exercised
and/or  (ii)  extend  the  scheduled  expiration  date  of  the  Award.  Without  limiting  the  generality  of  the

A-13

foregoing,  the  Committee  may,  but  solely  with  the  Holder’s  consent  unless  otherwise  provided  in  the
Agreement, agree to cancel any Award under the Plan and grant a new Award in substitution therefor,
provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such
new  Award  is  made.  Nothing  contained  in  the  foregoing  provisions  of  this  Section  10.7(b)  shall  be
construed to prevent the Committee from providing in any Agreement that the rights of the Holder with
respect to the Award evidenced thereby shall be subject to such rules and regulations as the Committee
may, subject to the express provisions of the Plan, adopt from time to time or impair the enforceability of any
such provision.

10.8

Government  and  Other  Regulations. The  obligation  of  the  Company  with  respect  to  Awards
shall be subject to all applicable laws, rules and regulations and such approvals by any governmental agencies as
may be required, including the effectiveness of any registration statement required under the Securities Act of 1933,
and the rules and regulations of any securities exchange or association on which the Common Stock may be listed or
quoted. For so long as any series of Common Stock are registered under the Exchange Act, the Company shall use
its reasonable efforts to comply with any legal requirements (i) to maintain a registration statement in effect under the
Securities Act of 1933 with respect to all shares of the applicable series of Common Stock that may be issuable, from
time to time, to Holders under the Plan and (ii) to file in a timely manner all reports required to be filed by it under the
Exchange Act. Notwithstanding any other provision in the Plan to the contrary, if, at the time of vesting or exercise of
an Award that would otherwise require the Company to issue shares of Common Stock, the Company is prohibited
by applicable law from settling such Award in Common Stock, then the Committee may, in its sole discretion, settle
such Awards in cash, by payment to the Holder of an amount in cash equal to the then Fair Market Value of the
shares otherwise deliverable upon such vesting or exercise, less the amount of any applicable exercise or purchase
price.

10.9

Withholding. The  Company’s  obligation  to  deliver  shares  of  Common  Stock  or  pay  cash  in
respect  of  any  Award  under  the  Plan  shall  be  subject  to  applicable  federal,  state  and  local  tax  withholding
requirements. Federal, state and local withholding tax due at the time of an Award, upon the exercise of any Option
or SAR or upon the vesting of, or expiration of restrictions with respect to, Restricted Shares or Restricted Stock
Units or the satisfaction of the Performance Objectives applicable to a Performance Award, as appropriate, may, in
the discretion of the Committee, be paid in shares of Common Stock already owned by the Holder or through the
withholding of shares otherwise issuable to such Holder, upon such terms and conditions (including the conditions
referenced in Section 6.5) as the Committee shall determine. For the avoidance of doubt, the Committee may, in its
discretion, allow for the tax withholding in respect of any Award up to the maximum withholding rate applicable to the
Holder. If the Holder shall fail to pay, or make arrangements satisfactory to the Committee for the payment to the
Company of, all such federal, state and local taxes required to be withheld by the Company, then the Company shall,
to the extent permitted by law, have the right to deduct from any payment of any kind otherwise due to such Holder an
amount equal to any federal, state or local taxes of any kind required to be withheld by the Company with respect to
such Award.

10.10

Nonexclusivity of the Plan. The adoption of the Plan by the Board shall not be construed as
creating  any  limitations  on  the  power  of  the  Board  to  adopt  such  other  incentive  arrangements  as  it  may  deem
desirable, including the granting of stock options and the awarding of stock and cash otherwise than under the Plan,
and such arrangements may be either generally applicable or applicable only in specific cases.

10.11

Exclusion  from  Other  Plans. By  acceptance  of  an  Award,  unless  otherwise  provided  in  the
applicable  Agreement,  each  Holder  shall  be  deemed  to  have  agreed  that  such  Award  is  special  incentive
compensation that will not be taken into account, in any manner, as salary, compensation or bonus in determining
the amount of any payment under any pension, retirement or other employee benefit plan, program or policy of the
Company or any Subsidiary of the Company. In addition, each beneficiary of a deceased Holder shall be deemed to
have  agreed  that  such  Award  will  not  affect  the  amount  of  any  life  insurance  coverage,  if  any,  provided  by  the
Company on the life of the Holder which is payable to such beneficiary under any life insurance plan of the Company
or any Subsidiary of the Company.

10.12

Unfunded Plan. Neither the Company nor any Subsidiary of the Company shall be required to
segregate any cash or any shares of Common Stock which may at any time be represented by Awards, and the Plan
shall constitute an ‘‘unfunded’’ plan of the Company. Except as provided in Article VIII with respect to Awards of

A-14

Restricted Shares and except as expressly set forth in an Agreement, no Holder shall have voting or other rights with
respect  to  the  shares  of  Common  Stock  covered  by  an  Award  prior  to  the  delivery  of  such  shares.  Neither  the
Company nor any Subsidiary of the Company shall, by any provisions of the Plan, be deemed to be a trustee of any
shares  of  Common  Stock  or  any  other  property,  and  the  liabilities  of  the  Company  and  any  Subsidiary  of  the
Company to any Holder pursuant to the Plan shall be those of a debtor pursuant to such contract obligations as are
created by or pursuant to the Plan, and the rights of any Holder, former service provider or beneficiary under the Plan
shall be limited to those of a general creditor of the Company or the applicable Subsidiary of the Company, as the
case may be. In its sole discretion, the Board may authorize the creation of trusts or other arrangements to meet the
obligations  of  the  Company  under  the  Plan,  provided,  however,  that  the  existence  of  such  trusts  or  other
arrangements is consistent with the unfunded status of the Plan.

10.13
the State of Delaware.

Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of

10.14

Accounts. The delivery of any shares of Common Stock and the payment of any amount in
respect of an Award shall be for the account of the Company or the applicable Subsidiary of the Company, as the
case  may  be,  and  any  such  delivery  or  payment  shall  not  be  made  until  the  recipient  shall  have  paid  or  made
satisfactory arrangements for the payment of any applicable withholding taxes as provided in Section 10.9.

10.15

Legends. Any  statement  of  ownership  evidencing  shares  of  Common  Stock  subject  to  an
Award shall bear such legends as the Committee deems necessary or appropriate to reflect or refer to any terms,
conditions  or  restrictions  of  the  Award  applicable  to  such  shares,  including  any  to  the  effect  that  the  shares
represented thereby may not be disposed of unless the Company has received an opinion of counsel, acceptable to
the Company, that such disposition will not violate any federal or state securities laws.

10.16

Company’s Rights. The grant of Awards pursuant to the Plan shall not affect in any way the
right or power of the Company to make reclassifications, reorganizations or other changes of or to its capital or
business structure or to merge, consolidate, liquidate, sell or otherwise dispose of all or any part of its business or
assets.

10.17

Section 409A. The Plan and the Awards made hereunder are intended to be (i) ‘‘stock rights’’
exempt  from  Section  409A  of  the  Code  (‘‘Section  409A’’)  pursuant  to  Treasury  Regulations  §  1.409A-1(b)(5),
(ii) ‘‘short-term deferrals’’ exempt from Section 409A or (iii) payments which are deferred compensation and paid in
compliance with Section 409A, and the Plan and each Agreement shall be interpreted and administered accordingly.
Any  adjustments  of  Awards  intended  to  be  ‘‘stock  rights’’  exempt  from  Section  409A  pursuant  to  Treasury
Regulations § 1.409A-1(b)(5) shall be conducted in a manner so as not to constitute a grant of a new stock right or a
change in the time and form of payment pursuant to Treasury Regulations §1.409A-1(b)(5)(v). In the event an Award
is  not  exempt  from  Section  409A,  (x)  payment  pursuant  to  the  relevant  Agreement  shall  be  made  only  on  a
permissible payment event or at a specified time in compliance with Section 409A, (y) no accelerated payment shall
be  made  pursuant  to  Section  10.1(b)  unless  the  Board  Change,  Approved  Transaction  or  Control  Purchase
constitutes  a  ‘‘change  in  control  event’’  under  Treasury  Regulations  §1.409A-3(i)(5)  or  otherwise  constitutes  a
permissible payment event under Section 409A and (z) no amendment or modification of such Award may be made
except  in  compliance  with  the  anti-deferral  and  anti-acceleration  provisions  of  Section  409A.  No  deferrals  of
compensation otherwise payable under the Plan or any Award shall be allowed, whether at the discretion of the
Company or the Holder, except in a manner consistent with the requirements of Section 409A. If a Holder is identified
by the Company as a ‘‘specified employee’’ within the meaning of Code Section 409A(a)(2)(B)(i) on the date on
which  such  Holder  has  a  ‘‘separation  from  service’’  (other  than  due  to  death)  within  the  meaning  of  Treasury
Regulation § 1.409A-1(h), any Award payable or settled on account of a separation from service that is deferred
compensation subject to Section 409A shall be paid or settled on the earliest of (1) the first business day following
the expiration of six months from the Holder’s separation from service, (2) the date of the Holder’s death, or (3) such
earlier date as complies with the requirements of Section 409A.

10.18

In addition to its other powers hereunder, the Committee has the
authority to suspend (i) the exercise of Options or SARs and (ii) any other transactions under the Plan as it deems
necessary or appropriate for administrative reasons.

Administrative Blackouts.

A-15

10.19

Clawback Policy. Notwithstanding any other provisions in this Plan, any Award shall be subject
to recovery or clawback by the Company under any clawback policy adopted by the Company in accordance with
SEC regulations or other applicable law, as amended or superseded from time to time.

10.20

Stock Ownership Guidelines. Any Award shall be subject to any applicable stock ownership

guidelines adopted by the Company, as amended or superseded from time to time.

A-16

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

 ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

or

 TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 

1934

For the transition period from             to           

Commission File No. 001-38385

GCI LIBERTY, INC.
(Exact name of registrant as specified in its charter)

State of Alaska
(State or other jurisdiction of
incorporation or organization)

2550 Denali Street
Suite 1000
Anchorage, Alaska

(Address of principal executive
offices)

92-0072737
(I.R.S Employer
Identification No.)

99503
(Zip Code)

Registrant’s telephone number, including area code: (907) 868-5600
Securities registered pursuant to Section 12(b) of the Act:  Class A-1 common stock
Securities registered pursuant to Section 12(g) of the Act:  Class B-1 common stock  

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities 
Act.

Yes 

   No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the 
Securities Act. 

Yes 

   No 

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

   No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if 
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 
(section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was 
required to submit and post such files).

Yes 

   No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405 of 
this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive 

1

  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this 
Form 10-K. 

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended 
transition period for complying with any new or revised financial accounting standards provided pursuant to Section 
13(a) of the Exchange Act. 

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

   No 

The aggregate market value of the voting stock held by non-affiliates of the registrant, computed by reference to the 
average high and low prices of such stock as of the close of trading as of the last business day of the registrant’s 
most recently completed second fiscal quarter of June 30, 2017 was $533,981,114. Shares of voting stock held by 
each officer and director and by each person who owns 5% or more of the outstanding voting stock (as publicly 
reported by such persons pursuant to Section 13 and Section 16 of the Exchange Act) have been excluded in that 
such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive 
determination for other purposes.

The number of shares outstanding of the registrant’s common stock as of February 23, 2018, was:

Class A-1 common stock – 32,848,000 shares; and
Class B-1 common stock – 3,047,000 shares.

2

 
 
GCI LIBERTY, INC.
2017 ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS

Cautionary Statement Regarding Forward-Looking Statements

Item 1.

Item 1A.

Item 1B.

Item 2.

Item 3.

Item 4.

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Item 9B.

Item 10.
Item 11.

Item 12.

Item 13.

Item 14.

Part I

Part II

Part III

Part IV

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Market for the Registrant’s Common Equity, Related Stockholder Matters and 

Issuer Purchases of Equity Securities

Selected Financial Data

Management’s Discussion and Analysis of Financial Condition and Results of 

Operations

Quantitative and Qualitative Disclosures About Market Risk

Consolidated Financial Statements and Supplementary Data

Changes In and Disagreements With Accountants on Accounting and Financial 

Disclosure

Controls and Procedures

Other Information

Directors, Executive Officers and Corporate Governance
Executive Compensation

Security Ownership of Certain Beneficial Owners and Management and Related 

Stockholder Matters

Certain Relationships and Related Transactions, and Director Independence

Principal Accountant Fees and Services

Item 15.

Exhibits, Consolidated Financial Statement Schedules

SIGNATURES

3

Page
No.

4

4

15

27

27

27

27

27

30

30

43

43

43

43

44

45
50

66

68

70

73

123

Cautionary Statement Regarding Forward-Looking Statements

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

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

Item 1. Business

Part I

General
In this Annual Report, “we,” “us,” “our,” "GCI," "GCI Liberty," and “the Company” refer to GCI Liberty, Inc. and its 
direct and indirect subsidiaries.  Prior to February 20, 2018, we were known as General Communication, Inc.  On 
February 20, 2018, the Comissioner of the Department of Commerce, Community and Economic Development of 
the State of Alaska accepted for filing the amended and restated Articles of Incorporation that were approved by our 
shareholders at a special meeting held on February 2, 2018.  The name change is a result of the Transactions 
described in "Part 1 - Item 1. Business - Narrative Description of our Business - Development of our Business 
During the Past Fiscal Year."  Additionally, as of February 20, 2018, our Class A common stock and Class B 
common stock were reclassified into Class A-1 common stock and Class B-1 common stock, respectively.  

GCI was incorporated in 1979 under the laws of the State of Alaska and has its principal executive offices at 2550 
Denali Street, Suite 1000, Anchorage, AK 99503-2781 (telephone number 907-868-5600).

GCI is primarily a holding company and together with its direct and indirect subsidiaries, is a diversified 
communications provider with operations primarily in the State of Alaska.

Availability of Reports and Other Information
Our Internet website address is www.gci.com.  The information on our website is not incorporated by reference in 
this annual report on Form 10-K.  We make available, free of charge, access to our Annual Report on Form 10-K, 
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statement on Schedule 14A and 
amendments to those materials filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange 
Act of 1934 as soon as reasonably practicable after we electronically submit such material to the SEC.

Narrative Description of our Business

4

 
 
General
We are the largest Alaska-based communications provider as measured by revenues. 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 under our GCI brand. Due to the unique nature of the 
markets we serve, including harsh winter weather and remote geographies, our customers rely extensively on our 
systems to meet their communication and entertainment needs. 

Since our founding in 1979 as a competitive long distance provider, we have consistently expanded our product 
portfolio and facilities to become the leading integrated communication services provider in our markets. Our 
facilities include redundant and geographically diverse digital undersea fiber optic cable systems linking our Alaska 
terrestrial networks to the networks of other carriers in the lower 48 contiguous states.  We operate the only 
statewide wireless network. 

For the year ended December 31, 2017, we generated consolidated revenues of $919.2 million.  We ended the 
period with 219,400 wireless subscribers and 134,800 cable modem subscribers.

Development of our Business During the Past Fiscal Year
Transaction with Liberty Interactive Corporation.  On April 4, 2017, General Communication, Inc., Liberty Interactive 
Corporation, a Delaware corporation (“Liberty”) and Liberty Interactive LLC, a Delaware limited liability company 
and a direct wholly-owned subsidiary of Liberty (“Liberty LLC”), entered into an Agreement and Plan of 
Reorganization (as may be amended from time to time, the “Reorganization Agreement” and the transactions 
contemplated thereby, the “Transactions”). Pursuant to the Reorganization Agreement, General Communication, 
Inc. amended and restated its articles of incorporation resulting in General Communication, Inc. being renamed GCI 
Liberty, Inc. and a reclassification and auto conversion of its common stock. Following these events, Liberty will 
acquire GCI through a reorganization in which certain interests, assets and liabilities of the Liberty Ventures Group 
(“Liberty Ventures”) will be contributed to GCI Liberty in exchange for a controlling interest in GCI Liberty.  The 
assets to be contributed to GCI Liberty are expected to include Liberty’s equity interests in Liberty Broadband and 
Charter Communications, Inc. along with certain other equity interests, together with the operating business of 
Evite, Inc. and certain other assets and liabilities, in exchange for (a) the issuance to Liberty LLC of (i) a number of 
shares of GCI Liberty Class A Common Stock and a number of shares of GCI Liberty Class B Common Stock equal 
to the number of outstanding shares of Series A Liberty Ventures common stock and Series B Liberty Ventures 
common stock outstanding on the closing date of the contribution, respectively, and (ii) cash, and (b) the 
assumption by GCI Liberty of certain liabilities attributed to Liberty Ventures.

Following the contribution and acquisition of GCI Liberty, Liberty will then effect a tax-free separation of its 
controlling interest in GCI Liberty to the holders of Liberty Ventures common stock in full redemption of all 
outstanding shares of such stock.  As a result of the Transactions, holders of GCI common stock (regardless of 
class) each will receive (i) 0.63 of a share of GCI Liberty Class A common stock and (ii) 0.20 of a share of new GCI 
Liberty Series A Cumulative Redeemable preferred stock in exchange for each share of their existing GCI common 
stock. The exchange ratios were determined based on total consideration of $32.50 per share in respect of each 
share of existing GCI common stock, comprised of $27.50 per share in GCI Liberty Class A common stock and 
$5.00 per share in newly issued GCI Liberty Series A Cumulative Redeemable preferred stock, based upon a 
Liberty Ventures reference price of $43.65 (with no premium paid for shares of GCI Class B common stock) and an 
initial liquidation price of $25.00 per share of GCI Liberty Series A Cumulative Redeemable preferred stock.  The 
GCI Liberty Series A Cumulative Redeemable preferred stock will accrue dividends at an initial rate of 5% per 
annum (which would increase to 7% in connection with a future reincorporation of GCI Liberty in Delaware) and will 
be redeemable upon the 21st anniversary of the closing. The closing of the Transactions are expected to be 
consummated on March 9, 2018, subject to the satisfaction of customary closing conditions.

You should see “Part I — Item 1. Business — Regulation” for additional regulatory developments.

Business Strategy
We intend to grow the company using the following strategies:

Expand Our Product Portfolio and Footprint in Alaska. Throughout our history, we have successfully added and 
expect to continue to add new products to our product portfolio.  We have a demonstrated history of new product 
evaluation, development and deployment for our customers, and we continue to assess revenue-enhancing 

5

opportunities that create value for our customers.  Where feasible and where economic analysis supports 
geographic expansion of our network coverage, we are currently pursuing or expect to pursue opportunities to 
increase the scale of our facilities, enhance our ability to serve our existing customers’ needs and attract new 
customers.  Additionally, due to the unique market conditions in Alaska, we, and in some cases our customers, 
participate in several federal (and to a lesser extent locally) subsidized programs designed to financially support the 
implementation and purchase of telecommunications services like ours in high cost areas.  With these programs we 
have been able to expand our network into previously undeveloped areas of Alaska and, for the first time, offer 
comprehensive communications services in many rural parts of the state where we would not otherwise be able to 
construct facilities within appropriate return-on-investment requirements.

Make Strategic Acquisitions.  We have a history of making and integrating acquisitions of telecommunications 
providers and other providers of complementary services.  Our management team will continue to actively pursue 
and make investments that we believe fit with our strategy and networks and that enhance earnings.

Maximize Sales Opportunities. We sell new and enhanced services and products to our existing customer base to 
achieve increased revenues and penetration of our services.  Through close coordination of our customer service 
and sales and marketing efforts, our customer service representatives suggest to our customers other services they 
can purchase or enhanced versions of services they already purchase.  Many calls into our customer service 
centers or visits into one of our retail stores result in sales of additional services and products.

Deliver Industry Leading Customer Service. We have positioned ourselves as a customer service leader in the 
Alaska communications market.  We operate our own customer service department and have empowered our 
customer service representatives to handle most service issues and questions on a single call.  We prioritize our 
customer services to expedite handling of our most valuable customers’ issues, particularly for our largest 
commercial customers.  We believe our integrated approach to customer service, including service set-up, 
programming various network databases with the customer’s information, installation, and ongoing service, allows 
us to provide a customer experience that fosters customer loyalty.

Leverage Communications Operations. We continue to expand and evolve our integrated network for the delivery of 
our services.  Our bundled strategy and integrated approach to serving our customers creates efficiencies of scale 
and maximizes network utilization.  By offering multiple services, we are better able to leverage our network assets 
and increase returns on our invested capital.  We periodically evaluate our network assets and continually monitor 
technological developments that we can potentially deploy to increase network efficiency and performance.

We operate our business under a single reportable segment. Effective in the first quarter of 2017, we reassessed 
and reorganized our management and internal reporting structures in order to make our operations more efficient, 
which triggered an analysis of our reportable segments.  As a result of our assessment, we merged our former 
Wireless and Wireline segments into one operating segment.  We realigned our external financial reporting to 
support this change. Our chief operating decision maker assesses our financial performance as follows: 
•  Capital expenditure decisions are based on the support they provide to all revenue streams
•  Revenues are managed on the basis of specific customers and customer groups 
•  Costs are generally managed and assessed by function and generally support the organization across all 

customer groups or revenue streams

•  Profitability is assessed at the consolidated level

Prior to 2017, we operated our business under two reportable segments - Wireline and Wireless. As a result of the 
reorganization of our reporting structure, assets, including goodwill, and liabilities were reassigned to a single 
reporting unit.

6

Services and Products
We offer services and products to two major customer groups as follows:

Services and Products

Consumer

Business

Customer Group

Wireless

Retail

Wholesale

Data:

Internet

Data networks

  Managed services

Video

Voice:

Long-distance

Local access

X

X

X

X

X

X

X

X

X

X

X

X

X

•  Consumer - We offer a full range of retail wireless, data, video, and voice services to residential customers.
•  Business - We offer a full range of wireless, data, video, voice, and managed services to businesses, 

governmental entities, and educational institutions, wholesale data, voice, and wireless services to common 
carrier customers, and regulated voice services to residential and commercial customers in rural 
communities primarily in Southwest Alaska.

Sales and Marketing
We offer our services directly to consumer and business customers through our call center, direct mail advertising, 
television advertising, Internet advertising, local media advertising, and through our retail stores.  Our sales efforts 
are primarily directed toward increasing the number of subscribers we serve, selling bundled services, and 
generating incremental revenues through product and feature up-sell opportunities.  We sell our managed services, 
wholesale data, voice, and wireless services, and data services to rural schools and health organizations through 
direct contact marketing.

Our sales and marketing strategy hinges on our ability to leverage (i) our unique position as an integrated provider 
of multiple communications, data and video services, (ii) our well-recognized and respected brand names in the 
Alaskan marketplace and (iii) our leading market positions in the services and products we offer.  By continuing to 
pursue a marketing strategy that takes advantage of these characteristics, we believe we can increase our 
customer market penetration and retention rates, increase our share of our customers’ aggregate voice, video, data 
and wireless services expenditures and managed services expenditures, and achieve continued growth in revenues 
and operating cash flow.

Facilities
We operate a modern, competitive communications network providing switched and dedicated voice and broadband 
services.  Our fiber network employs digital transmission technology over our fiber optic facilities within Alaska and 
between Alaska and the lower 48 states.

We serve many rural and remote Alaska locations solely via satellite communications. Each of our satellite 
transponders is backed up on alternate spacecraft with multiple backup transponders. We operate a hybrid fiber 

7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
optic cable and digital microwave system (“TERRA”) linking Anchorage with the Bristol Bay, Yukon-Kuskokwim, and 
northwest regions of the state. 

We own and operate a statewide network providing voice and data services to the urban and rural communities of 
Alaska. Our statewide wireless network provides 4G LTE data service, EVDO, 3G UMTS/HSPA+, 2G CDMA, and 
2G GSM/EDGE service. We continue to expand and upgrade these services to provide a modern network for 
Alaska. We own and operate Wi-Fi access points that create a Wi-Fi network branded as TurboZone in Anchorage, 
Fairbanks, Juneau, Kenai-Soldotna, Matanuska-Susitna Valley, and other areas of the State ("TurboZone").
Our dedicated Internet access and Internet protocol data services are delivered to an Ethernet port located at the 
service end-point.  Our management platform continuously monitors the network and service end-points for 
performance. The availability and quality of service, as well as statistical information on traffic loading, are 
continuously monitored for quality assurance.  The management platform has the capability to remotely access 
network elements and service end-points, permitting changes in configuration without the need to physically be at 
the service end-point.  This management platform allows us to offer network monitoring and management services 
to businesses and governmental entities.

Our video businesses are located throughout Alaska and serve the majority of the population. Our facilities include 
hybrid-fiber-coax plant and head-end distribution equipment. The majority of our locations on the fiber routes are 
served from head-end distribution equipment in Anchorage.  All of our cable systems are completely digital.

Competition
We operate in intensely competitive industries and compete with a number of companies that provide a broad range 
of communication, entertainment, and information products and services. Technological changes are further 
intensifying and complicating the competitive landscape and consumer behavior. 

Retail Wireless Services and Products Competition
We compete with AT&T, Verizon, and other community or regional-based wireless providers, and resellers of those 
services in Anchorage and other markets.  Regulatory policies favor robust competition in wireless 
markets.  Wireless local number portability helps to maintain a high level of competition in the industry because it 
allows subscribers to switch carriers without having to change their telephone numbers.

The communications industry continues to experience significant technological changes, as evidenced by the 
increasing pace of improvements in the capacity and quality of digital technology, shorter cycles for new products 
and enhancements and changes in consumer preferences and expectations.  Accordingly, we expect competition in 
the wireless communications industry to continue to be dynamic and intense as a result of the development of new 
technologies, services and products.

The national wireless carriers with whom we compete, AT&T and Verizon, have resources that are greater than 
ours.  These companies have significantly greater capital, financial, marketing, human capital, distribution and other 
resources than we do.  Specifically, as a regional wireless carrier we may not have immediate access to some 
wireless handsets that are available to these national wireless carriers. 

We compete for customers based principally upon price, service bundles, the services and enhancements offered, 
network quality, customer service, billing services, statewide network coverage and capacity, TurboZone, the type of 
wireless handsets offered, and perceived quality, reliability and availability.  Our ability to compete successfully will 
depend, in part, on our marketing efforts and our ability to anticipate and respond to various competitive factors 
affecting the industry.

Data Services and Products Competition
The Internet industry is highly competitive, rapidly evolving and subject to constant technological 
change.  Competition is based upon price, service bundles, the services and enhancements offered, the 
technologies used, customer service, billing services, and perceived quality, reliability and availability.  We compete 
with other providers some of which are headquartered outside of Alaska and have substantially greater financial, 
technical and marketing resources than we do.

We expect to continue to provide, at reasonable prices and in competitive bundles, a greater variety of data services 
than are available through other alternative delivery sources.  Additionally, we believe we offer superior technical 

8

performance and speed, and responsive community-based customer service.  Increased competition, however, may 
adversely affect our market share and results of operations from our data services product offerings.

Presently, there are a number of competing companies in Alaska that actively sell and maintain data and voice 
communications systems.  Our ability to integrate communications networks and data communications equipment 
has allowed us to maintain our market position based on customer support services rather than price competition 
alone.  These services are blended with other transport products into unique customer solutions, including managed 
services and outsourcing.

Video Services and Products Competition
Our video systems face competition from services and devices that offer distribution of movies, television shows 
and other video programming, using alternative methods such as Internet video streaming and direct broadcast 
satellite ("DBS").  Our video systems also face competition from potential overbuilds of our existing cable 
systems.  The extent to which our video systems are competitive depends, in part, upon our ability to provide quality 
programming and other services at competitive prices.

Internet video streaming is a major source of competition for our video services.  Additionally, some online video 
services produce or acquire their own original content.  However, as a major Internet-provider ourselves, the 
competition may result in additional data service subscriber revenue to the extent we grow average Internet 
revenue per subscriber.

The DBS industry is another major source of competition for our video services.  Two major companies, AT&T-
owned DIRECTV and DISH DBS Corporation, are currently offering high-power DBS services in Alaska.

Competitive forces may be counteracted by offering subscribers expanded programming.  We have retransmission 
agreements with various broadcasters and provide for the uplink/downlink of their signals into certain of our 
systems, and local programming for our customers.  Additionally, our ownership of television stations provides us 
the opportunity to create unique content for our subscribers.

Video systems generally operate pursuant to franchises granted on a non-exclusive basis.  The 1992 Cable Act 
gives local franchising authorities jurisdiction over basic video service rates and equipment in the absence of 
“effective competition.”  The 1992 Cable Act also prohibits franchising authorities from unreasonably denying 
requests for additional franchises and permits franchising authorities to operate video systems.  Well-financed 
businesses from outside the video industry may become competitors for franchises or providers of competing 
services.

We expect to continue to provide, at reasonable prices and in competitive bundles, a greater variety of video 
services than are available off-air or through other alternative delivery sources.  Additionally, we believe we offer 
superior technical performance and responsive community-based customer service.  Increased competition, 
however, may adversely affect our market share and results of operations from our video services product offerings.

Voice Services and Products Competition
Our most significant competition for local access and long-distance comes from wireless substitution and voice over 
Internet protocol services.  Wireless local number portability allows consumers to retain the same phone number as 
they change service providers allowing for interchangeable and portable fixed-line and wireless numbers.  A 
growing number of consumers now use wireless service as their primary voice phone service for local calling.  We 
also compete against Incumbent Local Exchange Carriers ("ILECs"), long-distance resellers and certain smaller 
rural local telephone companies for local access and long-distance.  We have competed by offering what we believe 
is excellent customer service and by providing desirable bundles of services.

See “Regulation — Wireline Voice Services and Products” below for more information.

Seasonality
Our services and products do not exhibit significant seasonality.  Our ability to implement construction projects is 
hampered during the winter months because of cold temperatures, snow and short daylight hours.

9

Major Customer
We had no major customer in 2017 and 2016.  Verizon was a major customer in 2015.

Environmental Regulations
We undertake activities that may, under certain circumstances, affect the environment. Accordingly, they may be 
subject to federal, state, and local laws designed to preserve or protect the environment, including the Clean Water 
Act and the Emergency Planning and Community Right-to-Know Act.  The FCC, Bureau of Land Management, U.S. 
Forest Service, U.S. Fish and Wildlife Service, U.S. Army Corps of Engineers, Bureau of Indian Affairs, and National 
Park Service are among the federal agencies required by the National Environmental Policy Act of 1969 and 
National Historic Preservation Act to consider the environmental impact of actions they authorize, including facility 
construction.

The principal effect of our facilities on the environment would be in the form of construction of facilities and networks 
at various locations in Alaska and between Alaska, Washington, and Oregon.  Our facilities have been constructed 
in accordance with federal, state and local building codes and zoning regulations whenever and wherever 
applicable.  We obtain federal, state, and local permits, as required, for our projects and operations.  We are 
unaware of any material violations of federal, state or local regulations or permits.

Patents, Trademarks, and Licenses
We do not hold franchises (with the exception of video services as described below) or concessions for 
communications services or local access services.  We hold a number of federally registered service marks used by 
our business.  We own two utility patents issued in 2017 pertaining to device diagnostics and network connectivity.  
The Communications Act of 1934, as amended, gives the FCC the authority to license and regulate the use of the 
electromagnetic spectrum for radio communications.  We hold licenses for our satellite and microwave transmission 
facilities for provision of long-distance services.  We hold various licenses for spectrum and broadcast television 
use.  These licenses may be revoked and license renewal applications may be denied for cause.  However, we 
expect these licenses to be renewed in due course when, at the end of the license period, a renewal application will 
be filed.

We hold licenses for earth stations that are generally licensed for fifteen years.  The FCC also issues a single 
blanket license for a large number of technically identical earth stations.  Our operations may require additional 
licenses in the future.

We are certified through the Regulatory Commission of Alaska ("RCA") to provide local, long distance, and video 
service by Certificates of Public Convenience and Necessity (“CPCN”). These CPCNs are nonexclusive certificates 
defining each authorized service area.  Although CPCNs have no stated expiration date, they may be revoked due 
to cause.

Regulation
Our businesses are subject to substantial government regulation and oversight.  The following summary of 
regulatory issues does not purport to describe all existing and proposed federal, state, and local laws and 
regulations, or judicial and regulatory proceedings that affect our businesses.  Existing laws and regulations are 
reviewed frequently by legislative bodies, regulatory agencies, and the courts and are subject to change.  We 
cannot predict at this time the outcome of any present or future consideration of proposed changes to governing 
laws and regulations.

Wireless Services and Products
General. The FCC regulates the licensing, construction, interconnection, operation, acquisition, and transfer of 
wireless network systems in the United States pursuant to the Communications Act.  As wireless licensees, we are 
subject to regulation by the FCC, and must comply with certain build-out and other license conditions, as well as 
with the FCC’s specific regulations governing wireless services.  The FCC does not currently regulate rates for 
services offered by commercial mobile radio service providers (the official legal description for wireless service 
providers).

Commercial mobile radio service wireless systems are subject to Federal Aviation Administration and FCC 
regulations governing the location, lighting, construction, modification, and registration of antenna structures on 
which our antennas and associated equipment are located and are also subject to regulation under federal 

10

environmental laws and the FCC’s environmental regulations, including limits on radio frequency radiation from 
wireless handsets and antennas.

Universal Service. The High Cost Program of the Universal Service Fund ("USF") pays Eligible Telecommunications 
Carriers ("ETCs") to support the provision of facilities-based wireless telephone service in high cost areas. A 
wireless carrier may seek ETC status so that it can receive support from the USF.  Under FCC regulations and RCA 
orders, we are an authorized ETC for purposes of providing wireless telephone service in Anchorage, Juneau, 
Fairbanks, the Matanuska-Susitna Valley, and other small areas throughout Alaska. Without ETC status, we would 
not qualify for USF support in these areas or other rural areas where we propose to offer facilities-based wireless 
telephone services, and our net cost of providing wireless telephone services in these areas would be materially 
adversely affected.

On August 31, 2016, the FCC published the Alaska High Cost Order.  Per the Alaska High Cost Order, as of 
January 1, 2017, Remote high cost support payments to Alaska High Cost participants are 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.  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 mandated that as of January 1, 2017, Urban high cost support for 2017 
and 2018 would 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.

On April 27, 2016, the FCC released a Third Report and Order to reform and modernize the USF’s Lifeline program 
("Lifeline Order").  The Lifeline program is administered by the Universal Service Administrative Company ("USAC") 
and is designed to ensure that quality telecommunications services are available to low-income customers at just, 
reasonable, and affordable rates.  The Lifeline Order adopted several reforms, including incentivizing and 
sometimes requiring broadband providers to offer fixed and/or mobile broadband service to Lifeline subscribers.  
The Lifeline Order also limited the number of federal programs that confer Lifeline eligibility, and made small 
changes to the requirement for annual recertification of all Lifeline subscribers.  Failure to correctly judge eligibility 
and recertify Lifeline subscribers could materially adversely affect our Lifeline revenues and/or increase our costs in 
the form of FCC fines for failure to comply with Lifeline rules. 

Interconnection.  We have completed negotiations and the RCA has approved current direct wireless 
interconnection agreements with all of the major Alaska ILECs.  These are in addition to indirect interconnection 
arrangements utilized elsewhere.

See “Description of Our Business — Regulation — Wireline Voice Services and Products — Regulatory Regime 
Applicable to IP-based Networks” for more information.

Emergency 911. The FCC has imposed rules requiring carriers to provide emergency 911 services, including 
enhanced 911 (“E911”) services that provide to local public safety dispatch agencies the caller’s phone number and 
approximate location. Providers are required to transmit the geographic coordinates of the customer’s location, 
either by means of network-based or handset-based technologies, within accuracy parameters revised by the FCC, 
to be implemented over a phase-in period.  Due to Alaska’s relatively low population and low cell-site densities, we 
have excluded certain areas from E911 coverage where cell triangulation is not feasible, pursuant to FCC rule.  We 
have also filed for a waiver, which remains pending, for remaining areas where triangulation may be technically 
feasible, but where the cell-site densities are insufficient to reach the FCC’s standard. The FCC also imposed 
requirements to allow users to text-to-911 if the local public safety dispatch agency requests and is able to receive 
such texts.  We have developed a text-to-911 technical solution and have certified to the FCC that we are now 
capable of meeting the FCC requirements. Providers may not demand cost recovery as a condition of providing 
E911, although they are permitted to negotiate cost recovery if it is not mandated by the state or local governments.

State and Local Regulation. While the Communications Act generally preempts state and local governments from 
regulating the entry of, and the rates charged by, wireless carriers, it also permits a state to petition the FCC to allow 
it to impose commercial mobile radio service rate regulation when market conditions fail to adequately protect 
customers and such service is a replacement for a substantial portion of the telephone wireline exchange service 
within a state. No state currently has such a petition on file, and all prior efforts have been rejected. 

11

In addition, the Communications Act does not expressly preempt the states from regulating the “terms and 
conditions” of wireless service.  Several states have invoked this “terms and conditions” authority to impose or 
propose various consumer protection regulations on the wireless industry. State attorneys general have also 
become more active in enforcing state consumer protection laws against sales practices and services of wireless 
carriers. States also may impose their own universal service support requirements on wireless and other 
communications carriers, similar to the contribution requirements that have been established by the FCC.

States have become more active in attempting to impose new taxes and fees on wireless carriers, such as gross 
receipts taxes. Where successful, these taxes and fees are generally passed through to customers and result in 
higher costs to customers.

At the local level, wireless facilities typically are subject to zoning and land use regulation. Neither local nor state 
governments may categorically prohibit the construction of wireless facilities in any community or take actions, such 
as indefinite moratoria, which have the effect of prohibiting construction. Pursuant to Section 6409(a) of the Middle 
Class Tax Relief Act of 2012, state and local governments are further constrained in their regulation of changes to 
existing wireless infrastructure.  Nonetheless, securing state and local government approvals for new antenna 
structures has been and is likely to continue to be difficult, lengthy and costly.

Data Services and Products
General. There is no one entity or organization that governs the global operation of the Internet. Each facilities-
based network provider that is interconnected with the global Internet controls operational aspects of their own 
network. Certain functions, such as IP addressing, domain name routing, and the definition of the TCP/IP protocol, 
are coordinated by an array of quasi-governmental, intergovernmental, and non-governmental bodies. The legal 
authority of these bodies is not precisely defined.

The vast majority of users connect to the Internet over facilities of existing communications carriers. Those 
communications carriers are subject to varying levels of regulation at both the federal and state level. Thus, non-
Internet-specific regulatory decisions exercise a significant influence over the economics of the Internet market.

Many aspects of the coordination and regulation of Internet activities and the underlying networks over which those 
activities are conducted are evolving. Internet-specific and non-Internet-specific changes in the regulatory 
environment, including changes that affect communications costs or increase competition from ILECs or other 
communications services providers, could adversely affect our costs and the prices at which we sell Internet-based 
services.

On February 26, 2015, the FCC adopted an order reclassifying Internet service as a telecommunications service 
under Title II of the Communications Act.  This order prohibited broadband providers from blocking or throttling most 
lawful public Internet traffic, from engaging in paid prioritization of that traffic, and from unreasonably interfering with 
or disadvantaging end users' and edge providers’ ability to send traffic to, from, and among each other.  The order 
also strengthened the FCC’s transparency rules, which require accurate and truthful service disclosures, sufficient 
for consumers to make informed choices, for example, about speed, price and fees, latency, and network 
management practices.  The order allowed broadband providers to engage in reasonable network management, 
including using techniques to address traffic congestion.  These rules applied equally to wired and wireless 
broadband services.  The order refrained from applying rate regulation and tariff requirements on broadband 
services.  On January 4, 2018, the FCC released an order that returned to a Title I classification of Internet service 
and eliminated many of the requirements described above.  There are various efforts in Congress, through the 
federal courts of appeal, and through state legislation to re-impose the rules adopted in 2015.  While we do not 
believe that the 2015 FCC order conflicts with our existing practices or offerings, the re-imposition of that regulatory 
framework would impose regulatory burdens, likely would increase our costs, and could adversely affect the manner 
and price of providing service.

Rural Health Care Program. The USF Rural Health Care ("RHC") Program subsidizes the rates for services 
provided to rural health care providers.  For the funding year that ran from July 1, 2016 through June 30, 2017, 
USAC received requests for funds that exceeded the funding available for the RHC Program.  USAC allocated the 
funding on a pro-rata basis to rural health care providers who submitted their funding requests during a certain 
period.  We provide services to rural health care providers who were impacted by the pro-rata allocation and as a 
result certain of our customers did not receive the full subsidy that was expected under the program. Under the 
program rules, we are forbidden from lowering our rates for services previously provided, however, the FCC 

12

published an order on June 30, 2017 to assist eligible remote Alaska rural health care providers by allowing Alaska 
service providers, such as us, to retroactively lower their rates, or effectively giving a credit against amounts owed, 
for services provided.  Based on these specific circumstances, we decided to retroactively lower our rates to these 
customers pursuant to the FCC waiver, and as a result we reduced revenue by $5.5 million during the year ended 
December 31, 2017, to aid our rural health care provider customers who were impacted by the pro-rata allocation.  

The FCC issued an Order and Notice of Proposed Rulemaking (“NPRM”) on December 18, 2017 and announced 
that requests for funds has exceeded the amount available for the funding year that runs from July 1, 2017 through 
June 30, 2018 (“FY2017”). The Order specifically addresses relief if a FY2017 proration is needed and directs 
USAC to use unused RHC program funding available at the time of proration to lower or eliminate the proration 
factor first for all qualifying funding requests from non-consortia health care providers.  All of our customers in the 
FY2017 and included in our December 31, 2017 accounts receivable are non-consortia health care providers. The 
FCC and USAC have given no guidance as to the amount of unused funding available, thus we cannot predict the 
amount of any such shortfall.

The NPRM seeks comment about potential reforms to the RHC program to address future program shortfalls. We 
cannot predict at this time what changes, if any, that the FCC will adopt or the impact of any such changes.

Schools and Libraries Program.  In 2014, the FCC adopted orders modernizing the USF Schools and Libraries 
Program ("E-Rate").  These orders, among other things, increased the annual E-Rate cap by approximately $1.5 
billion, designated funds for internal connections within schools and libraries, and eliminated funding for certain 
legacy services, such as voice, to increase the availability of 21st century connectivity to support digital learning in 
schools nationwide.  These orders did not have a material effect on the overall E-Rate support available to our 
schools and libraries customers, and therefore did not materially affect our revenue from such customers.

Video Services and Products
General. Because video communications systems use local streets and rights-of-way, they generally are operated 
pursuant to franchises (which can take the form of certificates, permits or licenses) granted by a municipality or 
other state or local government entity. The RCA is the franchising authority for all of Alaska. We believe that we 
have generally met the terms of our franchises, which do not require periodic renewal, and have provided quality 
levels of service. Military franchise requirements also affect our ability to provide video services to military bases.

Must Carry/Retransmission Consent. The 1992 Cable Act contains broadcast signal carriage requirements that 
allow local commercial television broadcast stations to elect once every three years to require a cable system to 
carry the station, subject to certain exceptions, or to negotiate for “retransmission consent” to carry the station.

The FCC has adopted rules to require cable operators to carry the digital programming streams of broadcast 
television stations. Further, the FCC has declined to require any cable operator to carry multiple digital programming 
streams from a single broadcast television station, but should the FCC change this policy, we would be required to 
devote additional cable capacity to carrying broadcast television programming streams, a step that could require the 
removal of other programming services.

Pole Attachments. The Communications Act requires the FCC to regulate the rates, terms and conditions imposed 
by public utilities for cable systems’ use of utility pole and conduit space unless state authorities can demonstrate 
that they adequately regulate pole attachment rates. In the absence of state regulation, the FCC administers pole 
attachment rates on a formula basis. This formula governs the maximum rate certain utilities may charge for 
attachments to their poles and conduit by companies providing communications services, including cable operators. 
The RCA, however, does not use the federal formula and instead has adopted its own formula that has been in 
place since 1987. This formula could be subject to further revisions upon petition to the RCA.  In addition, in 2011, 
the FCC adopted an order to rationalize different pole attachment rates among types of services, and on November 
17, 2015, took further steps to bring telecommunications and cable pole attachment rates into parity. Though the 
general purpose of the rule changes was to ensure pole attachment rates as low and as uniform as possible, we do 
not expect the rules to have an immediate impact on the terms under which we access poles.  We cannot predict 
the likelihood of the RCA changing its formula, adopting the federal formula, or relinquishing its oversight of pole 
attachments to the FCC, any of which could increase the cost of our operations. 

Copyright. Cable television systems are subject to federal copyright licensing covering carriage of television and 
radio broadcast signals. In exchange for filing certain reports and contributing a percentage of their revenues to a 

13

federal copyright royalty pool that varies depending on the size of the system, the number of distant broadcast 
television signals carried, and the location of the cable system, cable operators can obtain blanket permission to 
retransmit copyrighted material included in broadcast signals. The possible modification or elimination of this 
compulsory copyright license is the subject of continuing legislative review.  We cannot predict the outcome of this 
legislative review, which could adversely affect our ability to obtain desired broadcast programming. Copyright 
clearances for non-broadcast programming services are arranged through private negotiations.

Wireline Voice Services and Products
General. As an interexchange carrier, we are subject to regulation by the FCC and the RCA as a non-dominant 
provider of interstate, international, and intrastate long-distance services.  As a state-certificated competitive local 
exchange carrier, we are subject to regulation by the FCC and the RCA as a non-dominant provider of local 
communications services.  Military franchise requirements also affect our ability to provide communications services 
to military bases.

Universal Service. The USF pays ETCs to support the provision of facilities-based wireline telephone service in high 
cost areas. Under FCC regulations and RCA orders, we are an authorized ETC for purposes of providing wireline 
local exchange service in Anchorage, Juneau, Fairbanks, the Matanuska-Susitna Valley, and other small areas 
throughout Alaska. Without ETC status, we would not qualify for USF support in these areas or other rural areas 
where we propose to offer facilities-based wireline telephone services, and our net cost of providing local telephone 
services in these areas would be materially adversely affected.  See “Description of Our Business - Regulation - 
Wireless Services and Products - Universal Service” for information on USF reform.

Rural Exemption and Interconnection. A Rural Telephone Company is exempt from compliance with certain material 
interconnection requirements under Section 251(c) of the 1996 Telecom Act, including the obligation to negotiate 
Section 251(b) and (c) interconnection requirements in good faith, unless and until a state regulatory commission 
lifts such “rural exemption” or otherwise finds it not to apply.  All ILECs in Alaska are Rural Telephone Companies 
except Alaska Communications Systems Group, Inc.'s (“ACS”) in its Anchorage study area.  We participated in 
numerous proceedings regarding the rural exemptions of various ILECs in order to achieve the necessary 
interconnection agreements with the remaining ILECs. In other cases the interconnection agreements were reached 
by negotiation without regard to the implications of the ILEC’s rural exemption.

We have completed negotiation and/or arbitration of the necessary interconnection provisions and the RCA has 
approved current wireline Interconnection Agreements between GCI and all of the major ILECs.  We have entered 
all of the major Alaskan markets with local access services.

See “Description of Our Business — Competition — Voice Services and Products Competition” for more 
information.

Access Charges and Other Regulated Fees. The FCC regulates the fees that local telephone companies charge 
long-distance companies for access to their local networks.  In 2011, the FCC released rules to restructure and 
reduce over time originating interstate access charges, along with a proposal to adopt similar reforms applicable to 
terminating interstate access charges.  The details of implementation in general and between different classes of 
technology continue to be addressed, and could affect the economics of some aspects of our business.  We cannot 
predict at this time the impact of this implementation or future implementation of adopted reforms, but we do not 
expect it to have a material adverse impact on our operations.

Unbundled Network Elements. The ability to obtain unbundled network elements ("UNEs") is an important element 
of our local access services business. We cannot predict the extent to which existing FCC rules governing access to 
and pricing for UNEs will be changed in the face of additional legal action and the impact of any further rule 
modifications that are yet to be determined by the FCC. Moreover, the future regulatory classification of services 
that are transmitted over facilities may impact the extent to which we will be permitted access to such 
facilities.  Changes to the applicable regulations could result in a change in our cost of serving new and existing 
markets.  On July 7, 2017, ACS filed a petition in which it asked the FCC to regulate us as an ILEC pursuant to 
section 251(h)(2) of the Communications Act, including the requirement to provide competitors with access to 
unbundled network elements.  We cannot predict at this time the outcome of this proceeding.  However, grant of the 
petition in its entirety may subject us to regulatory burdens that could materially impact our costs. 

14

Local Regulation. We may be required to obtain local permits for street opening and construction permits to install 
and expand our networks. Local zoning authorities often regulate our use of towers for microwave and other 
communications sites. We also are subject to general regulations concerning building codes and local licensing. 
The Communications Act requires that fees charged to communications carriers be applied in a competitively 
neutral manner, but there can be no assurance that ILECs and others with whom we will be competing will bear 
costs similar to those we will bear in this regard.

Regulatory Regime Applicable to IP-based Networks. In 2014, the FCC adopted an order calling for experiments to 
examine how best to accelerate the technological and regulatory transitions from traditional TDM-based networks to 
IP-based technologies.  Although no entity has proposed conducting a technology transition experiment in our 
service territory in response to the FCC’s 2014 order, additional proposals for experiments are possible.  We cannot 
predict whether additional proposals for experiments might be submitted to the FCC nor any resulting proceedings 
or their effect on us.  The FCC also has other open dockets through which it might make changes to the regulatory 
regime applicable to IP-based networks.  A change in regulatory obligation or classification that interferes with our 
ability to exchange traffic with other providers, that raises the cost of doing so, or that adversely affects eligibility for 
USF support could materially affect our net cost of and revenue from providing local services. 

Financial Information about our Foreign and Domestic Operations and Export Sales
We do not have significant foreign operations or export sales.  We conduct our operations throughout the  
contiguous United States and Alaska and believe that any subdivision of our operations into distinct geographic 
areas would not be meaningful.

Company-Sponsored Research
We have not expended material amounts during the last three fiscal years on company-sponsored research 
activities.

Employees
We employed 2,208 persons as of December 31, 2017, and we are not subject to any collective bargaining 
agreements with our employees. We believe our future success will depend upon our continued ability to attract and 
retain highly skilled and qualified employees. We believe that relations with our employees are satisfactory.

Other
No material portion of our business is subject to renegotiation of profits or termination of contracts at the election of 
the federal government.

Item 1A. Risk Factors.

Factors That May Affect Our Business and Future Results

Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also 
materially and adversely affect our business operations.  Any of the following risks could materially and adversely 
affect our business, financial position, results of operations or liquidity.

We face competition that may reduce our market share and harm our financial performance.

There is substantial competition in the telecommunications and entertainment industries.  Through mergers, various 
service integration strategies, and business alliances, major providers are striving to strengthen their competitive 
positions.  We face increased wireless services competition from national carriers in the Alaska market and 
increasing video services competition from DBS providers and over-the-top content providers who are often able to 
offer more flexible subscription packages and exclusive content.

We expect competition to increase as a result of the rapid development of new technologies, services and 
products.  We cannot predict which of many possible future technologies, products or services will be important to 
maintain our competitive position or what expenditures will be required to develop and provide these technologies, 
products or services.  Our ability to compete successfully will depend on marketing and on our ability to anticipate 
and respond to various competitive factors affecting the industry, including new services that may be introduced, 
changes in consumer preferences, economic conditions and pricing strategies by competitors.  To the extent we do 

15

not keep pace with technological advances or fail to timely respond to changes in competitive factors in our industry 
and in our markets, we could lose market share or experience a decline in our revenue and net income. Competitive 
conditions create a risk of market share loss and the risk that customers shift to less profitable lower margin 
services.  Competitive pressures also create challenges for our ability to grow new businesses or introduce new 
services successfully and execute our business plan.  We also face the risk of potential price cuts by our 
competitors that could materially adversely affect our market share and gross margins.

Our wholesale customers including our major roaming customers may construct facilities in locations where they 
contract with us to use our network to provide service on their behalf.  We would experience a decline in revenue 
and net income if any of our wholesale customers constructed or expanded their existing networks in places where 
service is provided on our network. Some of our wholesale customers have greater access to financial, technical, 
and other resources than we do. We expect to continue to offer competitive alternatives to such customers in order 
to retain significant traffic on our network. We cannot predict whether such negotiations will be successful. Our 
inability to negotiate such contracts could have a material adverse effect on our business, financial condition and 
results of operations.

For more information about competition, see the section titled “Competition” included in “Part 1 — Item 1 — 
Business — Description of our Business.”

If we experience low or negative rates of subscriber acquisition or high rates of turnover, our financial 
performance will be impaired.

We are in the business of selling communications and entertainment services to subscribers, and our economic 
success is based on our ability to retain current subscribers and attract new subscribers. If we are unable to retain 
and attract subscribers, our financial performance will be impaired.  Our rates of subscriber acquisition and turnover 
are affected by a number of competitive factors including the size of our service areas, network performance and 
reliability issues, our device and service offerings, subscribers’ perceptions of our services, and customer care 
quality. Managing these factors and subscribers’ expectations is essential in attracting and retaining subscribers. 
Although we have implemented programs to attract new subscribers and address subscriber turnover, we cannot 
assure you that these programs or our strategies to address subscriber acquisition and turnover will be successful. 
A high rate of turnover or low or negative rate of new subscriber acquisition would reduce revenues and increase 
the total marketing expenditures required to attract the minimum number of subscribers required to sustain our 
business plan which, in turn, could have a material adverse effect on our business, financial condition and results of 
operations.

We may be unable to obtain or maintain the roaming services we need from other carriers to remain 
competitive.

Some of our competitors have national networks that enable them to offer nationwide coverage to their subscribers 
at a lower cost than we can offer. The networks we operate do not, by themselves, provide national coverage and 
we must pay fees to other carriers who provide roaming services to us. We currently rely on roaming agreements 
with several carriers for the majority of our roaming services.

The FCC requires commercial mobile radio service providers to provide roaming, upon request, for voice and SMS 
text messaging services on just, reasonable and non-discriminatory terms.  The FCC also requires carriers to offer 
data roaming services.  The rules do not provide or mandate any specific mechanism for determining the 
reasonableness of roaming rates for voice, SMS text messaging or data services and require that roaming 
complaints be resolved on a case-by-case basis, based on a non-exclusive list of factors that can be taken into 
account in determining the reasonableness of particular conduct or rates.  If we were to lose the benefit of one or 
more key roaming or wholesale agreements unexpectedly, we may be unable to obtain similar replacement 
agreements and as a result may be unable to continue providing nationwide voice and data roaming services for 
our customers or may be unable to provide such services on a cost-effective basis.  Our inability to obtain new or 
replacement roaming services on a cost-effective basis may limit our ability to compete effectively for wireless 
customers, which may increase our turnover and decrease our revenues, which in turn could materially adversely 
affect our business, financial condition and results of operations.

16

Our business is subject to extensive governmental legislation and regulation.  Applicable legislation and 
regulations and changes to them could adversely affect our business, financial position, results of 
operations or liquidity.

Wireless Services. The licensing, construction, operation, sale and interconnection arrangements of wireless 
communications systems are regulated by the FCC and, depending on the jurisdiction, state and local regulatory 
agencies.  In particular, the FCC imposes significant regulation on licensees of wireless spectrum with respect to:

•  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.

Although the Communications Act of 1934, as amended, preempts state and local regulation of market entry and 
the rates charged by commercial mobile radio service providers, states may exercise authority over such things as 
certain billing practices and consumer-related issues.  These regulations could increase the costs of our wireless 
operations.  The FCC grants wireless licenses for terms of generally ten years that are subject to renewal and 
revocation. FCC rules require all wireless licensees to meet certain build-out requirements and substantially comply 
with applicable FCC rules and policies and the Communications Act of 1934, as amended, in order to retain their 
licenses.  Failure to comply with FCC requirements in a given license area could result in revocation of the license 
for that license area.  There is no guarantee that our licenses will be renewed.

Commercial mobile radio service providers must implement E911 capabilities in accordance with FCC rules.  While 
we believe that we are currently in compliance with such FCC rules, the failure to deploy E911 service consistent 
with FCC requirements could subject us to significant fines.

We use tower facilities for the provision of our wireless services.  The FCC, together with the Federal Aviation 
Administration, also regulates tower marking and lighting. In addition, tower construction is affected by federal, state 
and local statutes addressing zoning, environmental protection and historic preservation.  The FCC requires local 
notice in any community in which an applicant is seeking FCC Antenna Structure Registration to build a 
tower.  Local notice provides members of the community with an opportunity to comment on or challenge the tower 
construction for environmental reasons.  This rule could cause delay for certain tower construction projects.

Internet Services. In 2015, the FCC adopted an order reclassifying Internet service as a telecommunications 
service under Title II of the Communications Act. The order prohibited broadband providers from blocking or 
throttling most lawful public Internet traffic, from engaging in paid prioritization of that traffic, and from unreasonably 
interfering with or disadvantaging end users' and edge providers' ability to send traffic to, from, and among each 
other.  The order also strengthened the FCC's transparency rules, which require accurate and truthful service 
disclosures, sufficient for consumers to make informed choices, for example, about speed, price and fees, latency, 
and network management practices.  The order allowed broadband providers to engage in reasonable network 
management, including using techniques to address traffic congestion. The new rules applied equally to wired and 
wireless broadband services. The order refrained from imposing rate regulation or tariff requirements on broadband 
services. 

On January 4, 2018, the FCC released an order that returned to a Title I classification of Internet service and 
eliminated many of the requirements described above.  There are various efforts in Congress, through the federal 
courts of appeal, and through state legislation to re-impose the rules adopted in 2015.  We cannot predict whether 
the FCC will re-impose the 2015 rules, but if it did, it is possible that the FCC could interpret or apply those rules in 
a way that has a material adverse effect on our business, financial position, results of operations, or liquidity.

Video Services. The cable television industry is subject to extensive regulation at various levels, and many aspects 
of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals.  It is 
possible that rate reductions or refunds of previously collected fees may be required of us in the future. 

Other existing federal regulations, currently the subject of judicial, legislative, and administrative review, could 
change, in varying degrees, the manner in which video systems operate. Neither the outcome of these proceedings 
nor their impact on the cable television industry in general, or on our activities and prospects in the cable television 
business in particular, can be predicted at this time. There can be no assurance that future regulatory actions taken 

17

 
by Congress, the FCC or other federal, state or local government authorities will not have a material adverse effect 
on our business, financial position, results of operations or liquidity.

Local Access Services. Our success in the local telephone market depends on our continued ability to obtain 
interconnection, access and related services from local exchange carriers on terms that are reasonable and that are 
based on the cost of providing these services. Our local telephone services business faces the risk of unfavorable 
changes in regulation or legislation or the introduction of new regulations. Our ability to provide service in the local 
telephone market depends on our negotiation or arbitration with local exchange carriers to allow interconnection to 
the carrier’s existing local telephone network (in some Alaska markets at cost-based rates), to establish dialing 
parity, to obtain access to rights-of-way, to resell services offered by the local exchange carrier, and in some cases, 
to allow the purchase, at cost-based rates, of access to unbundled network elements. Future negotiations or 
arbitration proceedings with respect to new or existing markets could result in a change in our cost of serving these 
markets via the facilities of the ILEC or via wholesale offerings.

For more information about Regulations affecting our operations, see “Part 1 —Item 1 — Business — Regulation.”

Loss of our ETC status would disqualify us for USF support.

The USF pays support to ETCs to support the provision of facilities-based wireline and wireless telephone service in 
high cost areas.  If we were to lose our ETC status in any of the study areas where we are currently an authorized 
ETC whether due to legislative or regulatory reform or our failure to comply with applicable laws and regulations, we 
would be ineligible to receive USF support for providing service in that area.  Loss of our ETC status could have an 
adverse effect on our business, financial position, results of operations or liquidity.

Revenues and accounts receivable from USF support may be reduced or lost.

We receive support from each of the various USF programs: high cost, low income, rural health care, and schools 
and libraries.  This support was 26%, 24%, and 19% of our revenue for the years ended December 31, 2017, 2016 
and 2015, respectively.  We had USF net receivables of $131.8 million and $100.5 million at December 31, 2017 
and 2016, respectively.  The programs are subject to change by regulatory actions taken by the FCC or legislative 
actions.  Changes to any of the USF programs that we participate in could result in a material decrease in revenue 
and accounts receivable, which could have an adverse effect on our business, financial position, results of 
operations or liquidity.

Additionally, the USF RHC Program subsidizes the rates for services provided to rural health care providers. USAC 
received requests for support that exceeded the available RHC Program funding for the first time in the funding year 
that ran from July 1, 2016 through June 30, 2017. We expect that the support requests will continue to exceed the 
program's annual cap for the funding year ending June 30, 2018 and possibly subsequent funding years. We 
provide services to rural health care providers who may be impacted by funding caps and as a result may not 
receive the full subsidy that was expected under the program. We cannot predict the impact of future RHC Program 
funding caps but they may negatively affect our financial position, results of operations, or liquidity.

See “Description of Our Business — Regulation — Wireless Services and Products — Universal Service” and 
“Description of Our Business — Regulation — Wireline Voice Services and Products — Universal Service” for more 
information.

We may not meet our performance plan milestones under the Alaska High Cost Order.

As an ETC, we receive support from the USF to support the provision of wireline local access and wireless service 
in high cost areas. On August 31, 2016, the FCC published the Alaska High Cost Order which requires us to submit 
to the FCC a performance plan with five-year and ten-year commitments.  If we are unable to meet the final 
performance plan milestones approved by the FCC we will be required to repay 1.89 times the average amount of 
support per location received over the ten-year term for the relevant number of locations that we failed to deploy to, 
plus ten percent of our total Alaska High Cost Order support received over the ten-year term. Inability to meet our 
performance plan milestones could have an adverse effect on our business, financial position, results of operations 
or liquidity.

18

We may lose USF high cost support if another carrier adds 4G LTE service in an area where we currently 
provide 4G LTE service.  

Under the Alaska High Cost Order, the FCC adopted a process for revisiting after five years whether and to what 
extent there is duplicative support for 4G LTE service in rural Alaska and to take steps to eliminate such duplicative 
support levels in the second half of the ten-year term.  As a result, if another carrier builds 4G LTE service in an 
area where we are the sole provider and the FCC decides to redistribute the support then our high cost support may 
be reduced which could have an adverse effect on our business, financial position, results of operations or liquidity.

Programming expenses for our video services are increasing, which could adversely affect our business.

We expect programming expenses for our video services to continue to increase in the foreseeable future.  The 
multichannel video provider industry has continued to experience an increase in the cost of programming, especially 
sports programming and costs to retransmit local broadcast stations. As our contracts with content providers expire, 
there can be no assurance that they will be renewed on acceptable terms or that they will be renewed at all, in 
which case we may be unable to provide such content as part of our video services and our business could be 
adversely affected. If we add programming to our video services or if we choose to distribute existing programming 
to our customers through additional delivery platforms, we may incur increased programming expenses.  If we are 
unable to raise our customers’ rates or offset such programming cost increases through the sale of additional 
services, the increasing cost of programming could have an adverse impact on our business, financial condition, or 
results of operations.  

The decline in our voice services’ results of operations, which include long-distance and local access 
services, may accelerate.

We expect our voice services’ results of operations, which include long-distance and local access services, will 
continue to decline.  As competition from wireless carriers, such as ourselves, increases we expect our long-
distance and local access services' subscribers and revenues will continue to decline and the rate of decline may 
accelerate.

We may not be able to satisfy the requirements of our participation in a New Markets Tax Credit ("NMTC") 
program for funding our TERRA project.

We have entered into five separate arrangements under the NMTC program with US Bancorp to help fund various 
phases of our TERRA project. In connection with the NMTC transactions we received proceeds which were 
restricted for use on TERRA. The NMTCs are subject to 100% recapture of the tax credit 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.  We have agreed to indemnify US Bancorp for any 
loss or recapture of its $65.8 million in NMTCs plus interest and penalties until such time as our obligation to deliver 
tax benefits is relieved.  Our obligation to deliver tax benefits is relieved in various stages from August 2018 through 
December 2024. Non-compliance with applicable requirements could result in projected tax benefits not being 
realized by US Bancorp and could have an adverse effect on our financial position, results of operations or liquidity.

Failure to stay abreast of new technology could affect our ability to compete in the industry.

We test and deploy various new technologies and support systems intended to enhance our competitiveness and 
increase the utility of our services.  As our operations grow in size and scope, we must continuously improve and 
upgrade our systems and infrastructure while maintaining or improving the reliability and integrity of our systems 
and infrastructure.  The emergence of alternative platforms such as mobile or tablet computing devices and the 
emergence of niche competitors who may be able to optimize products, services or strategies for such platforms will 
require new investment in technology.  We may not successfully complete the rollout of new technology and related 
features or services in a timely manner, and they may not be widely accepted by our customers or may not be 
profitable, in which case we could not recover our investment in the technology.  There can be no assurance that we 
will be able to compete with advancing technology or introduce new technologies and systems as quickly as we 
would like or in a cost effective manner.  Deployment of technology supporting new service offerings may also 
adversely affect the performance or reliability of our networks with respect to both the new and existing 
services.  Any resulting customer dissatisfaction could affect our ability to retain customers and may have an 
adverse effect on our financial position, results of operations, or liquidity. In addition to introducing new technologies 

19

and offerings, we must phase out outdated and unprofitable technologies and services.  If we are unable to do so on 
a cost-effective basis, we could experience reduced profits.

Our business is geographically concentrated in Alaska and is impacted by the economic conditions in 
Alaska.

We offer products and services to customers primarily throughout Alaska.  Because of this geographic 
concentration, growth of our business and operations depends upon economic conditions in Alaska.  The economy 
of Alaska is dependent upon the oil industry, state government spending, United States military spending, 
investment earnings and tourism. Prolonged periods of low oil prices will adversely impact the Alaska economy, 
which in turn could have an adverse impact on the demand for our products and services and on our results of 
operations and financial condition.  Oil prices have continued to remain low which has put significant pressure on 
the Alaska state government budget since the majority of its revenues come from the oil industry. While the Alaska 
state government has significant reserves that we believe will help fund the state government for the next couple of 
years, major structural budgetary reforms will need to be implemented in order to offset the impact of lower oil 
prices.

The Alaska economy is in a recession that started in late 2015. While it is difficult for us to predict the future impact 
of the continuing recession on our business, these conditions have had an adverse impact on our business and 
could continue to adversely affect the affordability of and demand for some of our products and services and cause 
customers to shift to lower priced products and services or to delay or forgo purchases of our products and 
services.  Additionally, our customers may not be able to obtain adequate access to credit, which could affect their 
ability to make timely payments to us.  If that were to occur, we could be required to increase our allowance for 
doubtful accounts, and the number of days outstanding for our accounts receivable could increase. If the recession 
continues, it could continue to negatively affect our business including our financial position, results of operations, or 
liquidity, as well as our ability to service debt, pay other obligations and enhance shareholder returns.

The customer base in Alaska is limited and we have already achieved significant market penetration with respect to 
our service offerings in Anchorage and other locations in Alaska.  We may not be able to continue to increase our 
share of the existing markets for our services, and no assurance can be given that the Alaskan economy will grow 
and increase the size of the markets we serve or increase the demand for the services we offer.  The markets in 
Alaska for wireless and wireline telecommunications and video services are unique and distinct within the United 
States due to Alaska’s large geographical size, its sparse population located in a limited number of clusters, and its 
distance from the rest of the United States.  The expertise we have developed in operating our businesses in Alaska 
may not provide us with the necessary expertise to successfully enter other geographic markets.

Natural or man-made disasters or terrorist attacks could have an adverse effect on our business.

Our technical infrastructure (including our communications network infrastructure and ancillary functions supporting 
our network such as service activation, billing and customer care) is vulnerable to damage or interruption from 
technology failures, power surges or outages, natural disasters, fires, human error, terrorism, intentional wrongdoing 
or similar events. As a communications provider, there is an increased risk that our technological infrastructure may 
be targeted in connection with terrorism or cyberattacks, either as a primary target, or as a means of facilitating 
additional attacks on other targets.  

In addition, earthquakes, floods, fires and other unforeseen natural disasters or events could materially disrupt our 
business operations or our provision of service in one or more markets.  Costs we incur to restore, repair or replace 
our network or technical infrastructure, as well as costs associated with detecting, monitoring or reducing the 
incidence of unauthorized use, may be substantial and increase our cost of providing service.  Any failure in or 
interruption of systems that we or third parties maintain to support ancillary functions, such as billing, point of sale, 
inventory management, customer care and financial reporting, could materially impact our ability to timely and 
accurately record, process and report information important to our business.  If any of the above events were to 
occur, we could experience higher churn, reduced revenues and increased costs, any of which could harm our 
reputation and have a material adverse effect on our business, financial condition or results of operations.

Additionally, our insurance may not be adequate to cover the costs associated with a natural disaster or terrorist 
attack.

20

Cyberattacks or other network disruptions could have an adverse effect on our business.

Cyberattacks against our technological infrastructure or breaches of network information technology may cause 
equipment failures, disruption of our operations, and potentially unauthorized access to confidential customer data.  
Cyberattacks, which include the use of malware, computer viruses, and other means for service disruption or 
unauthorized access to confidential customer data, have increased in frequency, scope, and potential harm for 
businesses in recent years.  It is possible for such cyberattacks to go undetected for an extended period of time, 
increasing the potential harm to our customers, our assets, and our reputation.

To date, we have not been subject to cyberattacks or network disruptions that individually or in the aggregate, have 
been material to our operations or financial condition.  Nevertheless, we engage in a variety of preventive measures 
at an increased cost to us, in order to reduce the risk of cyberattacks and safeguard our infrastructure and 
confidential customer information. Such measures include, but are not limited to the following industry best 
practices: application whitelisting, anti-malware, message and spam filtering, encryption, advanced firewalls, threat 
detection, and URL filtering.  Despite these preventive and detective actions, our efforts may be insufficient to repel 
a major cyberattack or network disruption in the future. 

Some of the most significant risks to our information technology systems, networks, and infrastructure include:

•  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.

If hackers or cyberthieves gain improper access to our technology systems, networks, or infrastructure, they may be 
able to access, steal, publish, delete, misappropriate, modify or otherwise disrupt access to confidential customer 
data.  Moreover, additional harm to customers could be perpetrated by third parties who are given access to the 
confidential customer data.  A network disruption (including one resulting from a cyberattack) could cause an 
interruption or degradation of service as well as permit access, theft, publishing, deletion, misappropriation, or 
modification to or of confidential customer data.  Due to the evolving techniques used in cyberattacks to disrupt or 
gain unauthorized access to technology networks, we may not be able to anticipate or prevent such disruption or 
unauthorized access.

The costs imposed on us as a result of a cyberattack or network disruption could be significant.  Among others, 
such costs could include increased expenditures on cyber security measures, litigation, fines, and sanctions, lost 
revenues from business interruption, and damage to the public’s perception regarding our ability to provide a secure 
service.  As a result, a cyberattack or network disruption could have a material adverse effect on our business, 
financial condition, and operating results.

Increases in data usage on our wired and wireless networks may cause network capacity limitations, 
resulting in service disruptions, reduced capacity or slower transmission speeds for our customers.

Video streaming services and peer-to-peer file sharing applications use significantly more bandwidth than traditional 
Internet activity such as web browsing and email.  As use of these services continues to grow, our customers will 
likely use more bandwidth than in the past. Additionally, new wireless handsets and devices may place a higher 
demand for data on our wireless network. If this occurs, we could be required to make significant capital 
expenditures to increase network capacity in order to avoid service disruptions, service degradation or slower 
transmission speeds for our customers. Alternatively, we could choose to implement network management practices 
to reduce the network capacity available to bandwidth-intensive activities during certain times in market areas 
experiencing congestion, which could negatively affect our ability to retain and attract customers in affected areas. 
While we believe demand for these services may drive customers to pay for faster speeds, competitive or regulatory 
constraints may preclude us from recovering the costs of the necessary network investments which could result in 
an adverse impact to our business, financial condition, and operating results.

21

Prolonged service interruptions or system failures could affect our business.

We rely heavily on our network equipment, communications providers, data and software to support all of our 
functions.  We rely on our networks and the networks of others for substantially all of our revenues. We are able to 
deliver services and serve our customers only to the extent that we can protect our network systems against 
damage from power or communication failures, computer viruses, natural disasters, unauthorized access and other 
disruptions.  While we endeavor to provide for failures in the network by providing back-up systems and procedures, 
we cannot guarantee that these back-up systems and procedures will operate satisfactorily in an emergency.  
Disruption to our billing systems due to a failure of existing hardware and backup protocols could have an adverse 
effect on our revenue and cash flow. Should we experience a prolonged failure, it could seriously jeopardize our 
ability to continue operations.  In particular, should a significant service interruption occur, our ongoing customers 
may choose a different provider, and our reputation may be damaged, reducing our attractiveness to new 
customers.

If failures occur in our undersea fiber optic cable systems or our TERRA facilities and its extensions, our 
ability to immediately restore the entirety of our service may be limited and we could incur significant 
costs.

Our communications facilities include undersea fiber optic cable systems that carry a large portion of our traffic to 
and from the contiguous lower 48 states, one of which provides an alternative geographically diverse backup 
communication facility to the other.  Our facilities also include TERRA and its extensions some of which are 
unringed, operating in a remote environment and are at times difficult to access for repairs.  Damage to an 
undersea fiber optic cable system or TERRA and its extensions could result in significant unplanned expense.  If a 
failure of both sides of the ring of our undersea fiber optic facilities or our ringed TERRA facility and its unringed 
extensions occurs and we are not able to secure alternative facilities, some of the communications services we offer 
to our customers could be interrupted, which could have a material adverse effect on our business, financial 
position, results of operations or liquidity.   

If a failure occurs in our satellite communications systems, our ability to immediately restore the entirety of 
our service may be limited.

Our communications facilities include satellite transponders that we use to serve many rural and remote Alaska 
locations.  Each of our C-band and Ku-band satellite transponders is backed up using on-board transponder 
redundancy.  In the event of a complete spacecraft failure the services are restored using capacity on other 
spacecraft that are held in reserve.  If a failure of our satellite transponders occurs and we are not able to secure 
alternative facilities, some of the communications services we offer to our customers could be interrupted which 
could have a material adverse effect on our business, financial position, results of operations or liquidity.

We depend on a limited number of third-party vendors to supply communications equipment.  If we do not 
obtain the necessary communications equipment, we will not be able to meet the needs of our customers.

We depend on a limited number of third-party vendors to supply wireless, Internet, video and other telephony-
related equipment.  If our providers of this equipment are unable to timely supply the equipment necessary to meet 
our needs or provide them at an acceptable cost, we may not be able to satisfy demand for our services and 
competitors may fulfill this demand.  Due to the unique characteristics of the Alaska communications markets (i.e., 
remote locations, rural, satellite-served, low density populations, and our leading edge services and products), in 
many situations we deploy and utilize specialized, advanced technology and equipment that may not have a large 
market or demand.  Our vendors may not succeed in developing sufficient market penetration to sustain continuing 
production and may fail.  Vendor bankruptcy, or acquisition without continuing product support by the acquiring 
company, may require us to replace technology before its otherwise useful end of life due to lack of on-going vendor 
support and product development.

The suppliers and vendors on which we rely may also be subject to litigation with respect to technology on which we 
depend, including litigation involving claims of patent infringement.  Such claims have been growing rapidly in the 
communications industry.  We are unable to predict whether our business will be affected by any such litigation.  We 
expect our dependence on key suppliers to continue as they develop and introduce more advanced generations of 
technology.  The failure of our key suppliers to provide products or product support could have a material adverse 
effect on our business, financial position, and results of operations.

22

We do not have insurance to cover certain risks to which we are subject, which could lead to the 
occurrence of uninsured liabilities.

As is typical in the communications industry, we are self-insured for damage or loss to certain of our transmission 
facilities, including our buried, undersea and above-ground fiber optic cable systems.  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.

We are in the process of transferring our customer billing systems to a new third-party vendor. Any 
unanticipated difficulties, disruption or significant delays could have adverse operational, financial and 
reputational effects on our business.

We are currently implementing a new customer billing system, which involves moving to a new third-party billing 
services vendor and platform in 2018.  The implementation may cause major system or business disruptions or we 
may fail to implement the new billing system in a timely or effective manner. In addition, the third-party billing 
services vendor may experience errors, cyber-attacks or other operational disruptions that could negatively impact 
us and over which we may have limited control. Interruptions and/or failure of this new billing services system could 
disrupt our operations and impact our ability to provide or bill for our services, retain customers, or attract new 
customers, and negatively impact overall customer experience. Any occurrence of the foregoing could cause 
material adverse effects on our operations and financial condition, material weaknesses in our internal control over 
financial reporting and reputational damage.

Our significant debt and lease obligations could adversely affect our business.

We have and will continue to have a significant amount of debt and lease obligations including capital, operating, 
and the tower obligation (see Note 2 included in "Part II - Item 8 - Consolidated Financial Statements and 
Supplementary Data" for additional information).  Our high level of debt and lease obligations could have important 
consequences, including the following:

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;
•  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.

• 

We will require a significant amount of cash to service our debt and to meet other obligations.  Our ability 
to generate cash depends on many factors beyond our control.  If we are unable to meet our future capital 
needs it may be necessary for us to curtail, delay or abandon our business growth plans.  If we incur 
significant additional indebtedness to fund our plans, it could cause a decline in our credit rating and could 
increase our borrowing costs or limit our ability to raise additional capital.

We will continue to require a significant amount of cash to satisfy our debt service requirements and to meet other 
obligations.  Our ability to make payments on and to refinance our debt and to fund planned capital expenditures 
and acquisitions will depend on our ability to generate cash and to arrange additional financing in the future.  These 
abilities are subject to, among other factors, our credit rating, our financial performance, general economic 
conditions, prevailing market conditions, the state of competition in our market, the outcome of certain legislative 
and regulatory issues and other factors that may be beyond our control.  Our business may not generate sufficient 

23

cash flow from operations and future borrowings may not be available to us in an amount sufficient to enable us to 
pay our debt or to fund our other liquidity needs.  We may need to refinance all or a portion of our debt on or before 
maturity.  We may not be able to refinance any of our debt on commercially reasonable terms or at all.

The terms of our debt obligations impose restrictions on us that may affect our ability to successfully 
operate our business and our ability to make payments on the debt obligations.

The indentures governing our Senior Notes and/or the credit agreements governing our Senior Credit Facility and 
other loans contain various covenants that could materially and adversely affect our ability to finance our future 
operations or capital needs and to engage in other business activities that may be in our best interest.

All of these covenants may restrict our ability to expand or to pursue our business strategies.  Our ability to comply 
with these covenants may be affected by events beyond our control, such as prevailing economic conditions and 
changes in regulations, and if such events occur, we cannot be sure that we will be able to comply.  A breach of 
these covenants could result in a default under the indentures and/or the credit agreements.  If there were an event 
of default under the indentures and/or the credit agreements, holders of such defaulted debt could cause all 
amounts borrowed under these instruments to be due and payable immediately.  Additionally, if we fail to repay the 
debt under the Senior Credit Facility when it becomes due, the lenders under the Senior Credit Facility could 
proceed against certain of our assets and capital stock of our subsidiaries that we have pledged to them as 
security.  Our assets or cash flow may not be sufficient to repay borrowings under our outstanding debt instruments 
in the event of a default thereunder.

When our Senior Credit Facility and Senior Notes mature, we may not be able to refinance or replace one or 
both.

When our Senior Credit Facility and Senior Notes mature, we will likely need to refinance them and may not be able 
to do so on favorable terms or at all. If we are able to refinance maturing indebtedness, the terms of any refinancing 
or alternate credit arrangements may contain terms and covenants that restrict our financial and operating flexibility.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations 
to increase significantly.

Our borrowings under our Senior Credit Facility are at variable rates of interest and expose us to interest rate risk. If 
interest rates increase, our debt service obligations on the variable rate indebtedness could increase even though 
the amount borrowed remained the same, and our net income and cash flow could decrease. 

In order to manage our exposure to interest rate risk, in the future, we may enter into derivative financial 
instruments, typically interest rate swaps and caps, involving the exchange of floating for fixed rate interest 
payments. If we are unable to enter into interest rate swaps, it may adversely affect our cash flow and may impact 
our ability to make required principal and interest payments on our indebtedness.

Any significant impairment of our indefinite-lived intangible assets would lead to a decrease in our assets 
and a reduction in our net operating performance.

We had $530.8 million of indefinite-lived intangible assets at December 31, 2017, consisting of goodwill of $242.3 
million, cable certificates of $191.6 million, wireless licenses of $93.8 million and broadcast licenses of $3.1 
million.  Goodwill represents the excess of cost over fair value of net assets acquired in connection with business 
acquisitions. Our cable certificates represent agreements with government entities to construct and operate a video 
business.  Our wireless licenses are from the FCC and give us the right to provide wireless service within a certain 
geographical area.  Our broadcast licenses represent permission to use a portion of the radio frequency spectrum in 
a given geographical area for broadcasting purposes.  

If we make changes in our business strategy or if market or other conditions adversely affect our operations, we 
may be forced to record an impairment charge, which would lead to a decrease in our assets and a reduction in our 
net operating performance.  Our indefinite-lived intangible assets are tested annually for impairment during the 
fourth quarter and at any time upon the occurrence of certain events or substantive changes in circumstances that 
indicate the assets might be impaired.  If the testing performed indicates that impairment has occurred, we are 
required to record an impairment charge for the difference between the carrying value and the fair value of the 

24

goodwill and/or the indefinite-lived intangible assets, as appropriate, in the period in which the determination is 
made.  The testing of goodwill and indefinite-lived intangible assets for impairment requires us to make significant 
estimates about our future performance and cash flows, as well as other assumptions.  These estimates can be 
affected by numerous factors, including changes in economic, industry or market conditions, changes in underlying 
business operations, future operating performance, changes in competition, or changes in technologies.  Any 
changes to key assumptions, or actual performance compared with those assumptions, about our business and its 
future prospects or other assumptions could affect the fair value, resulting in an impairment charge.

Our ability to use net operating loss carryforwards to reduce future tax payments could be negatively 
impacted if there is an “ownership change” as defined under Section 382 of the Internal Revenue Code.

At December 31, 2017, we have tax net operating loss carryforwards of $371.2 million for U.S. federal income tax 
purposes and, under the Internal Revenue Code, we may carry forward these net operating losses in certain 
circumstances to offset any current and future taxable income and thus reduce our federal income tax liability, 
subject to certain requirements and restrictions. If we experience an “ownership change,” as defined in Section 382 
of the Internal Revenue Code and related Treasury regulations at a time when our market capitalization is below a 
certain level, our ability to use the net operating loss carryforwards could be substantially limited. This limit could 
impact the timing of the usage of the net operating loss carryforwards, thus accelerating cash tax payments or 
causing net operating loss carryforwards to expire prior to their use, which could affect the ultimate realization of 
that deferred tax asset.

Concerns about health/safety risks associated with wireless equipment may reduce the demand for our 
wireless services.

We do not manufacture devices or other equipment sold by us, and we depend on our suppliers to provide defect-
free and safe equipment. Suppliers are required by applicable law to manufacture their devices to meet certain 
governmentally imposed safety criteria. However, even if the devices we sell meet the regulatory safety criteria, we 
could be held liable with the equipment manufacturers and suppliers for any harm caused by products we sell if 
such products are later found to have design or manufacturing defects. We cannot guarantee that we will be fully 
protected against all losses associated with a product that is found to be defective.

Portable communications devices have been alleged to pose health risks, including cancer, due to radio frequency 
emissions from these devices.  Purported class actions and other lawsuits have been filed from time to time against 
other wireless companies seeking not only damages but also remedies that could increase the cost of doing 
business.  We cannot be sure of the outcome of any such cases or that the industry will not be adversely affected 
by litigation of this nature or public perception about health risks.  The actual or perceived risk of mobile 
communications devices could adversely affect us through a reduction in subscribers.  Further research and studies 
are ongoing, with no linkage between health risks and mobile phone use established to date by a credible public 
source.  However, we cannot be sure that additional studies will not demonstrate a link between radio frequency 
emissions and health concerns.

Additionally, there are safety risks associated with the use of wireless devices while operating vehicles or 
equipment.  Concerns over any of these risks and the effect of any legislation, rules or regulations that have been 
and may be adopted in response to these risks could limit our ability to sell our wireless services.

A significant percentage of our voting securities are owned by a small number of shareholders and these 
shareholders can control shareholder decisions on very important matters.

As of December 31, 2017, our executive officers and directors and their affiliates owned 15% of our combined 
outstanding common stock, representing 25% of the combined voting power of that stock.  These shareholders can 
significantly influence, if not control, our management policy and all fundamental corporate actions, including 
mergers, substantial acquisitions and dispositions, and election of directors to the Board.

25

We expect to incur significant costs and expenses in connection with the Transactions.

We expect to incur certain nonrecurring costs in connection with the consummation of the Transactions 
contemplated by the Reorganization Agreement, including advisory, legal and other transaction costs.  A majority of 
these costs have already been incurred or will be incurred regardless of whether the Transactions are completed.  
While many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present 
time, we continue to assess the magnitude of these costs, and additional unanticipated costs may be incurred in 
connection with the Transactions.  Although we expect that the realization of benefits related to the Transactions will 
offset such costs and expenses over time, no assurances can be made that this net benefit will be achieved in the 
near term, or at all.

Additionally, the inputs that impact the estimate of value of our derivative stock appreciation rights have been 
impacted and may continue to be impacted by the Transactions with Liberty which could adversely affect our 
financial position or results of operations.

The announcement and pendency of the Transactions could divert the attention of management and cause 
disruptions in our business, which could have an adverse effect on our business and financial results. 

Liberty and GCI are unaffiliated companies that are currently operated independently of each other. Our 
management may be required to divert a disproportionate amount of attention away from their respective day-to-day 
activities and operations, and devote time and effort to consummating the Transactions.  The risks, and adverse 
effects, of such disruptions and diversions could be exacerbated by a delay in the completion of the Transactions.  
These factors could adversely affect our financial position or results of operations, regardless of whether the 
Transactions are completed. 

We are subject to contractual restrictions while the Transactions are pending, which could adversely affect 
our business.

The Reorganization Agreement imposes certain restrictive interim covenants on us.  For instance, the consent of 
Liberty is required in respect of, among other things, amendments to our organizational documents, share 
repurchases, certain actions relating to material contracts, certain employee benefit changes, limitations on capital 
expenditures and limitations on dispositions, payments of dividends, and certain issuances of shares of our 
common stock.  These restrictions may prevent us from taking certain actions before the closing of the Transactions 
or the termination of the Reorganization Agreement, including making certain acquisitions or otherwise pursuing 
certain business opportunities, or making certain changes to our capital stock, that our board of directors may deem 
beneficial.

Failure to complete the Transactions could negatively impact our stock price, future business, and financial 
results.

If the Transactions are not completed for any reason, we may be subject to numerous risks, including the following:
•  We may experience negative reactions from the financial markets, including negative impacts on the price 

of our common stock, or from customers, regulators, and employees;

•  We may be required to pay Liberty a termination fee in connection with the termination of the 

Reorganization Agreement under certain circumstances;

•  We may experience reputational harm due to the adverse perception of any failure to successfully complete 

the Transactions; and

•  We may experience harm to our business due to the following: (i) operating under the restrictions on the 
conduct of our business set forth in the Reorganization Agreement, (ii) having our management divert 
attention away from their respective day-to-day activities and operations and devoting time and effort to 
consummating the Transactions and (iii) incurring significant costs, including advisory, legal and other 
transaction costs, each as explained above, without realizing any of the benefits of having completed the 
Transactions.

In addition, we could be subject to the cost of litigation related to any dispute regarding an alleged failure of a 
closing condition or any related enforcement proceeding commenced against us to perform our obligations under 
the Reorganization Agreement or any of the other transaction documents, as well as any judgment potentially 

26

sustained against us in any such action.  All of these risks, expenses and contingencies could adversely affect our 
financial position and results of operation.

Item 1B. Unresolved Staff Comments.
Not applicable.

Item 2. Properties
Our properties do not lend themselves to description by location of principal units.  The majority of our properties 
are located in Alaska.  

We lease most of our executive, corporate and administrative facilities and business offices.  Our operating, 
executive, corporate and administrative properties are in good condition.  We consider our properties suitable and 
adequate for our present needs and they are being fully utilized.

Our properties consist primarily of undersea and terrestrial fiber optic cable networks, switching equipment, satellite 
transponders and earth stations, microwave radio, cable and wire facilities, cable head-end equipment, wireless 
towers and equipment, coaxial distribution networks, connecting lines (aerial, underground and buried cable), 
routers, servers, transportation equipment, computer equipment, general office equipment, land, land 
improvements, landing stations and other buildings.  See Note 5 included in “Part II — Item 8 — Consolidated 
Financial Statements and Supplementary Data” for more information on our properties. Substantial amounts of our 
properties are located on or in leased real property or facilities.  Substantially all of our properties secure our Senior 
Credit Facility.  See Note 7 included in “Part II — Item 8 — Consolidated Financial Statements and Supplementary 
Data” for more information on our Senior Credit Facility.

Item 3. Legal Proceedings
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.

Item 4. Mine Safety Disclosures
Not Applicable.

Part II

Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and 
Issuer Purchases of Equity Securities

Market Information for Common Stock
Shares of GCI’s Class A-1 common stock are traded on the Nasdaq Global Select MarketSM under the symbol 
GNCMA.

Shares of GCI’s Class B-1 common stock are traded on the OTCQX market under the symbol GNCMB.  Each share 
of Class B-1 common stock is convertible, at the option of the holder, into one share of Class A-1 common stock.

27

 
The following table sets forth the high and low sales price for our common stock for the periods indicated.  Market 
price data for Class A-1 shares was obtained from the Nasdaq Stock Market System quotation system.  Market 
price data for Class B-1 shares was obtained from reported Over-the-Counter Bulletin Board service market 
transactions.  The prices represent prices between dealers, do not include retail markups, markdowns, or 
commissions, and do not necessarily represent actual transactions.

2017

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

2016

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Class A-1

Class B-1

High

Low

High

Low

$

$

$

$

$

$

$

$

22.34

38.39

43.63

42.95

20.23

18.75

17.25
19.55

17.50

20.35

35.79

38.52

16.41

14.12

12.26

13.44

20.85

38.05

43.08

42.46

19.40

16.95

13.55

16.50

20.65

31.61

36.08

39.00

17.70

16.95

13.55

15.50

Holders
As of December 31, 2017, there were 1,988 holders of record of our Class A-1 common stock and 261 holders of 
record of our Class B-1 common stock (amounts do not include the number of shareholders whose shares are held 
of record by brokers, but do include the brokerage house as one shareholder).

Dividends
We have never paid cash dividends on our common stock, and we have no present intention of doing so. Payment 
of cash dividends in the future, if any, will be determined by our Board of Directors in light of our earnings, financial 
condition and other relevant considerations.  Our existing debt agreements contain provisions that limit payment of 
dividends on common stock, other than stock dividends (see Note 7 included in “Part II — Item 8 — Consolidated 
Financial Statements and Supplementary Data” for more information).

Stock Transfer Agent and Registrar
Computershare is our stock transfer agent and registrar.

Performance Graph
The following graph includes a line graph comparing the yearly percentage change in our cumulative total 
shareholder return on our Class A-1 common stock during the five-year period 2013 through 2017.  This return is 
measured by dividing (1) the sum of (a) the cumulative amount of dividends for the measurement period (assuming 
dividend reinvestment, if any) and (b) the difference between our share price at the end and the beginning of the 
measurement period, by (2) the share price at the beginning of that measurement period.  This line graph is 
compared in the following graph with two other line graphs during that five-year period, i.e., a market index and a 
peer index.

The market index is the Center for Research in Securities Price Index for the Nasdaq Stock Market for United 
States companies.  It presents cumulative total returns for a broad based equity market assuming reinvestment of 
dividends and is based upon companies whose equity securities are traded on the Nasdaq Stock Market.  The peer 
index is the Center for Research in Securities Price Index for Nasdaq Telecommunications Stock.  It presents 
cumulative total returns for the equity market in the telecommunications industry segment assuming reinvestment of 
dividends and is based upon companies whose equity securities are traded on the Nasdaq Stock Market.  The line 
graphs represent annual index levels derived from compounding daily returns.

In constructing each of the line graphs in the following graph, the closing price at the beginning point of the five-year 
measurement period has been converted into a fixed investment, stated in dollars, in our Class A-1 common stock 
(or in the stock represented by a given index, in the cases of the two comparison indexes), with cumulative returns 

28

for each subsequent fiscal year measured as a change from that investment.  Data for each succeeding fiscal year 
during the five-year measurement period are plotted with points showing the cumulative total return as of that 
point.  The value of a shareholder’s investment as of each point plotted on a given line graph is the number of 
shares held at that point multiplied by the then prevailing share price.

Our Class B-1 common stock is traded on the OTCQX Market on a more limited basis.  Therefore, comparisons 
similar to those previously described for the Class A-1 common stock are not directly available.  However, the 
performance of Class B-1 common stock may be analogized to that of the Class A-1 common stock in that the 
Class B-1 common stock is readily convertible into Class A-1 common stock upon request to us.

Prepared by Zacks Investment Research, Inc.  All indexes used with permission.  All rights reserved.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS PERFORMANCE GRAPH FOR GCI, 
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 12/31/12

FYE 12/31/13

FYE 12/31/14

FYE 12/31/15

FYE 12/31/16

FYE 12/31/17

100.00

116.27

143.38

206.26

202.82

406.88

100.00

139.38

160.72

173.11

190.07

203.16

100.00

145.01

152.49

147.88

169.11

196.34

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, 2012.

29

Item 6. Selected Financial Data
The following table presents selected historical information relating to financial condition and results of operations 
over the past five years.

$

$

$

$

$

$

(Amounts in thousands except per
share amounts)

Revenues

Income (loss) before income taxes

Net income (loss)

Net income (loss) attributable to non-
controlling interest

Net income (loss) attributable to GCI
common stockholders

Basic net income (loss) attributable
to GCI per common share

Diluted net income (loss) attributable
to GCI per common share

Total assets

Long-term debt, including
current portion and net of
unamortized discount and deferred
loan fees

Obligations under capital leases,
including current portion

Tower obligation, excluding current
portion

Total GCI stockholders’ equity

Dividends declared per common
share

Years Ended December 31,

2017

2016

2015

2014

2013

919,204

(66,148)

(24,722)

933,812
1,069

(4,136)

978,534

(27,213)

(25,866)

910,198

69,273

59,244

811,648

42,684

31,727

(476)

(469)

159

51,687

22,321

(24,246)

(3,667)

(26,025)

7,557

9,406

(0.70)

(0.10)

(0.70)
$
$ 2,093,500

(0.15)
2,065,939

(0.69)

(0.69)

0.18

0.18

0.23

0.23

1,966,940

1,992,761

1,961,536

$ 1,382,048

1,336,772

1,332,738

1,027,061

1,037,462

$

$

$

$

50,316

59,647

68,359

76,456

74,605

93,606
9,166

87,653

22,719

—

—

—

88,263

167,356

157,144

—

—

—

—

—

The Selected Financial Data should be read in conjunction with “Part II — Item 7 — Management’s Discussion and 
Analysis of Financial Condition and Results of Operations.”

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of 
Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our 
consolidated financial statements, which have been prepared in accordance with accounting principles generally 
accepted in the United States of America (“GAAP”). The preparation of these financial statements requires us to 
make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of 
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period. On an on-going basis, we evaluate our estimates and judgments, including 
those described in Note 1 in the "Notes to Consolidated Financial Statements" included in Part IV of of this annual 
report on Form 10-K. We base our estimates and judgments on historical experience and on various other factors 
that are believed to be reasonable under the circumstances, the results of which form the basis for making 
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual 
results may differ from these estimates under different assumptions or conditions. See also our “Cautionary 
Statement Regarding Forward-Looking Statements.”

The following discussion and analysis of financial condition and results of operations should be read in conjunction 
with our consolidated financial statements and supplementary data as presented in Part IV of this Form 10-K.

Update on Economic Conditions

30

We offer wireless and wireline telecommunication services, data services, video services, and managed services to 
customers primarily throughout Alaska.  Because of this geographic concentration, growth of our business and 
operations depends upon economic conditions in Alaska.  The economy of Alaska is dependent upon the oil
industry, state government spending, United States military spending, investment earnings and tourism.  Prolonged 
periods of low oil prices adversely impacts the Alaska economy, which in turn can have an adverse impact on the 
demand for our products and services and on our results of operations and financial condition.  

Oil prices have continued to remain low which has put significant pressure on the Alaska state government budget 
since the majority of its revenues have historically come from the oil industry. While the Alaska state government 
has significant reserves that we believe will help fund the state government for the next couple of years, major 
structural budgetary reforms will need to be implemented in order to offset the impact of lower oil prices. 

The Alaska economy is in a recession that started in late 2015. While it is difficult for us to predict the future impact 
of the continuing recession on our business, these conditions have had an adverse impact on our business and 
could continue to adversely affect the affordability of and demand for some of our products and services and cause 
customers to shift to lower priced products and services or to delay or forgo purchases of our products and 
services.  Additionally, our customers may not be able to obtain adequate access to credit, which could affect their 
ability to make timely payments to us.  If that were to occur, we could be required to increase our allowance for 
doubtful accounts, and the number of days outstanding for our accounts receivable could increase. If the recession 
continues, it could continue to negatively affect our business including our financial position, results of operations, or 
liquidity, as well as our ability to service debt, pay other obligations and enhance shareholder returns.  

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

Major Developments
On April 4, 2017, General Communication, Inc., Liberty and Liberty LLC, entered into an Agreement and Plan of 
Reorganization (as may be amended from time to time, the “Reorganization Agreement” and the transactions 
contemplated thereby, the “Transactions”). Pursuant to the Reorganization Agreement, General Communication, 
Inc. amended and restated its articles of incorporation resulting in General Communication, Inc. being renamed GCI 
Liberty, Inc. and a reclassification and auto conversion of its common stock. Following these events, Liberty will 
acquire GCI through a reorganization in which certain interests, assets and liabilities of the Liberty Ventures will be 
contributed to GCI Liberty in exchange for a controlling interest in GCI Liberty.  The assets to be contributed to GCI 
Liberty are expected to include Liberty's equity interests in Liberty Broadband and Charter Communications, Inc. 
along with certain other equity interests, together with the operating business of Evite, Inc. and certain other assets 
and liabilities, in exchange for (a) the issuance to Liberty LLC of (i) a number of shares of GCI Liberty Class A 
Common Stock and a number of shares of GCI Liberty Class B Common Stock equal to the number of outstanding 
shares of Series A Liberty Ventures common stock and Series B Liberty Ventures common stock outstanding on the 
closing date of the contribution, respectively, and (ii) cash, and (b) the assumption by GCI Liberty of certain liabilities 
attributed to Liberty Ventures.

Following the contribution and acquisition of GCI Liberty, Liberty will then effect a tax-free separation of its 
controlling interest in GCI Liberty to the holders of Liberty Ventures common stock in full redemption of all 
outstanding shares of such stock.  As a result of the Transactions, holders of GCI common stock (regardless of 
class) each will receive (i) 0.63 of a share of GCI Liberty Class A common stock and (ii) 0.20 of a share of new GCI 
Liberty Series A Cumulative Redeemable preferred stock in exchange for each share of their existing GCI common 
stock. The exchange ratios were determined based on total consideration of $32.50 per share in respect of each 
share of existing GCI common stock, comprised of $27.50 per share in GCI Liberty Class A common stock and 
$5.00 per share in newly issued GCI Liberty Series A Cumulative Redeemable preferred stock, based upon a 
Liberty Ventures reference price of $43.65 (with no premium paid for shares of GCI Class B common stock) and an 
initial liquidation price of $25.00 per share of GCI Liberty Series A Cumulative Redeemable preferred stock.  The 
GCI Liberty Series A Cumulative Redeemable preferred stock will accrue dividends at an initial rate of 5% per 
annum (which would increase to 7% in connection with a future reincorporation of GCI Liberty in Delaware) and will 

31

be redeemable upon the 21st anniversary of the closing. The closing of the Transactions are expected to be 
consummated on March 9, 2018, subject to the satisfaction of customary closing conditions.

In the third quarter of 2016, we received $90.8 million for the initial closing to sell to Vertical Bridge Towers II, LLC 
(“Vertical Bridge”) the majority of our urban wireless rooftop and  tower sites ("Tower Transaction").  Additionally, we 
entered into a Master Lease Agreement with Vertical Bridge to lease collocation space on communications towers 
and facilities that were sold to Vertical Bridge.  We sold additional tower sites to Vertical Bridge in 2017 for total 
consideration of $6.8 million.

The USF RHC Program subsidizes the rates for services provided to rural health care providers. USAC received 
requests for support that exceeded the available RHC Program funding for the first time in the funding year that ran 
from July 1, 2016 through June 30, 2017. We expect that the support requests will continue to exceed the program's 
annual cap for the funding year ending June 30, 2018 and possibly subsequent funding years. We provide services 
to rural health care providers who may be impacted by funding caps and as a result may not receive the full subsidy 
that was expected under the program. We cannot predict the impact of future RHC Program funding caps but they 
may negatively affect our financial position, results of operations, or liquidity.

In August 2016, the FCC published the Alaska High Cost Order which mandates that Urban high cost support will 
end at the beginning of 2019.  We recognized $9.9 million for Urban high cost support in 2017 and expect to 
recognize $9.9 million in 2018 and $0 in 2019.

In February 2015, we purchased ACS' interest in The Alaska Wireless Network, LLC ("AWN") and substantially all 
the assets of ACS and its affiliates related to ACS’s wireless operations (“Acquired ACS Assets”) (collectively the 
"Wireless Acquisition"). Under the terms of the agreement, we transfered to ACS a cash payment of $293.2 million 
excluding working capital adjustments and agreed to terminate or amend certain agreements related to the use of 
ACS network assets that were included as part of the original transaction that closed in July 2013. The Acquired 
ACS Assets included 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. 
Following the close of the Wireless Acquisition, AWN is a wholly owned subsidiary and we are entitled to 100% of 
the future cash flows from AWN. We funded the purchase with a $275.0 million Term Loan B under our Senior 
Credit Facility and a $75.0 million unsecured promissory note from Searchlight Capital, L.P. ("Searchlight").

32

Results of Operations

Revenues
The components of revenue are as follows (amounts in thousands):

Consumer1
Wireless

Data

Video

Voice
Business2
Wireless

Data
Video

Voice

2017

2016

2015

$ 167,733

177,801

199,862

140,196

130,213

107,305

115,074

26,734

30,110

(11)%

145,757
99,609

23,783

104,614

308,480
18,039

51,189

105,355

151,710

296,202
20,102

269,472
18,819

60,117

63,274

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

(6)%

4 %

(7)%

(1)%

4 %
(10)%

(15)%

(2)%

(11)%

8 %

(7)%

(11)%

(31)%

10 %
7 %

(5)%

(5)%

Total revenue

$ 919,204

933,812

978,534

1  Includes revenues from sales to residential customers and, for 2017, also includes sales to small business customers.
2  Includes revenues from sales to businesses, governmental entities, educational and medical institutions, and common carrier customers and 

for 2016 and 2015 includes sales to small business customers.

33

 
 
 
 
Selected key performance indicators follow:

Consumer

Data:
Cable modem subscribers1
Video:
Basic subscribers2 
Homes passed

Voice:
Total local access lines in service3 

Business
Data:
Cable modem subscribers1 
Voice:
Total local access lines in service3
Consumer and Business Combined

Wireless
Consumer wireless lines in service4
Business wireless lines in service4
Total wireless lines in service

2017

2016

2015

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

124,900

129,500

129,000

(4)%

— %

97,200

107,600

113,900

252,500

250,800

251,900

(10)%

1 %

(6)%

— %

48,900

53,400

55,200

(8)%

(3)%

9,900

10,100

9,600

(2)%

5 %

38,500

41,100

41,800

(6)%

(2)%

196,800
22,600

198,600

201,900

23,900

25,900

219,400

222,500

227,800

(1)%

(5)%

(1)%

(2)%

(8)%

(2)%

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.  On January 1, 2017, we transferred 
3,100 small business cable modem subscribers from Business to Consumer. We adjusted the previously reported subscriber numbers as of 
December 31, 2016 and 2015 for the number of subscribers that were transferred on January 1, 2017 and for database cleanup in preparation 
for our new billing system.
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.  On January 1, 2017, we transferred 500 small business basic subscribers from Business to Consumer.  We adjusted the 
previously reported subscriber numbers as of December 31, 2016 and 2015 for the number of subscribers that were transferred on January 1, 
2017 and for database cleanup in preparation for our new billing system.
3 A local access line in service is defined as a revenue generating circuit or channel connecting a customer to the public switched telephone 
network.  On January 1, 2017, we transferred 4,800 small business local access lines from Business to Consumer.  We adjusted the previously 
reported subscriber numbers as of December 31, 2016 and 2015 for the number of subscribers that were transferred on January 1, 2017.
4 A wireless line in service is defined as a revenue generating wireless device.  On January 1, 2017, we transferred 3,700 small business 
wireless lines from Business to Consumer.  We adjusted the previously reported subscriber numbers as of December 31, 2016 and 2015 for 
the number of subscribers that were transferred on January 1, 2017.

Consumer
The recession in Alaska has impacted our ability to increase our number of subscribers and customers cutting back 
on the services the receive from us, which have impacted our revenues.  

The items contributing to the decrease in wireless revenue for 2017 and 2016 include:

•  A $6.5 million or 9% and $15.9 million or 18% decrease in plan fee revenue in 2017 and 2016, respectively, 

primarily due to discounts given to customers who finance or bring their own device and a decrease in the 
number of subscribers primarily due to the recession in Alaska, and

•  A $4.9 million or 16% and $2.4 million or 7% decrease in equipment sales revenue in 2017 and 2016, 

respectively.  The decrease in equipment sales revenue in 2017 was primarily due to the absence of the 
adjustment explained in the following discussion.  The decrease in equipment sales revenue in 2016 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 the guarantee liability) that was recorded in the third 
quarter of 2016.  Based on a review of historical information, we determined that our customers were not 
trading their devices in as early and frequently as originally estimated.  Additionally, we found that we were 

34

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
able to resell the used handsets for prices higher than originally estimated. Based on this new information, 
we determined that it was appropriate to reduce the guarantee liability recorded for financed devices in our 
Upgrade Now program.  The decreases in 2017 and 2016 were also partially due to a decrease in the 
number of wireless devices sold.

The increase in data revenue in 2017 is primarily due to subscribers' selection of plans that offer higher speeds and 
higher usage limits and revenue from small business subscribers transferred from our Business customer group.  
The increase was partially offset by a decrease in the overall number of subscribers.  The increase in data revenue 
in 2016 is primarily due to a $12.8 million or 11% increase in cable modem revenue for 2016 due to an increase in 
the average number of subscribers and our subscribers’ selection of plans that offer higher speeds and higher 
usage limits.  

Consumer video revenue faces challenges as more customers choose to have their video content delivered via the 
Internet. However, as a major Internet-provider ourselves, this selection may result in additional data service 
revenue to the extent we grow average Internet revenue per subscriber.

We expect Consumer voice revenue to continue to decrease due to a growing number of customers using wireless 
service as their primary voice phone service for local and long distance calling.

Business
The recession in Alaska has had an impact on both the number of businesses in Alaska as well as the services that 
business customers have chosen.  The decrease in the number of businesses and services have impacted our 
revenues and we expect it to continue impacting us until the recession in Alaska ends.

Business data revenue is comprised of monthly recurring charges for data services and charges billed on a time 
and materials basis largely for personnel providing on-site customer support.  This latter category can vary 
significantly based on project activity. This revenue faces challenges due to the decline in oil prices which negatively 
impacts certain of our customers.

The increase in data revenue in 2017 and 2016 is primarily due to a $5.8 million or 2% and $32.4 million or 15% 
increase, respectively, in data transport and storage revenue due to new customers and increased purchases by 
our existing customers. The increase in data revenue in 2017 was also partially due to a $6.8 million or 17% 
increase in time and materials revenue primarily due to an acquisition that was completed during the first quarter of 
2017.  

The increases in data revenue for 2017 were partially offset by decreases due to rate compression and a $5.5 
million reduction of revenue recorded during 2017 as a result of a credit we provided to certain of our rural health 
care provider customers. For the funding year that ran from July 1, 2016 through June 30, 2017, USAC received 
requests for funds that exceeded the funding available for the RHC Program. USAC allocated the funding on a pro-
rata basis to rural health care providers who submitted their funding requests during a certain period. We provide 
services to rural health care providers who were impacted by the pro-rata allocation and as a result certain of our 
customers did not receive the full subsidy that was expected under the program. Under the program rules, we are 
forbidden from lowering our rates for services previously provided, however, the FCC published an order on June 
30, 2017 to assist eligible remote Alaska rural health care providers by allowing Alaska service providers, such as 
us, to retroactively lower their rates, or effectively giving a credit against amounts owed, for services provided. 
Based on these specific circumstances, we decided to retroactively lower our rates to these customers pursuant to 
the FCC waiver, and as a result we reduced revenue by $5.5 million during 2017, to aid our rural health care 
provider customers who were impacted by the pro-rata allocation. 

The increases in data revenue for 2016 were partially offset by a $5.3 million or 11% decrease in time and materials 
revenue due to a decrease in special project work for 2016.

The decrease in wireless revenue in 2016 is primarily due to the following:

•  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, and

•  A $6.1 million or 36% decrease in plan fee revenue primarily due to discounts given to customers who 

finance or bring their own device and a decrease in subscribers.

35

Business voice revenue continues to face competition and rate compression and to a lesser extent the substitution 
of wireless devices.  

Cost of Goods Sold
Cost of Goods Sold are as follows (amounts in thousands):

2017

2016

2015

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

Cost of Goods Sold

$ 280,200

302,578

322,338

(7)%

(6)%

The individually significant items contributing to the 2017 and 2016 decreases in Cost of Goods Sold include:

•  A $10.7 million or 16% decrease in wireless Cost of Goods Sold for 2017 primarily due to savings from a 

decrease in tariff rates, the migration of circuits to our own facilities, and a reduction of tower related costs 
due to our sales of towers in the third quarter of 2016,

•  A $15.6 million or 27% decrease in wireless device Cost of Goods Sold for 2016 primarily due to a decrease 

in the number of handsets sold,

•  A $7.1 million or 20% decrease in time and materials Cost of Goods Sold for 2017 due to process 

efficiencies partially offset by an increase due to an acquisition that was completed during the first quarter of 
2017,

•  A $4.6 million or 11% decrease in time and materials Cost of Goods Sold for 2016 primarily due to a 

reduction in special project work, 

•  A $3.9 million or 5% decrease in video distribution and programming costs in 2017 primarily due to a 

decrease in subscribers,

•  A $3.2 million or 12% and $3.3 million or 11% decrease in voice Cost of Goods Sold for 2017 and 2016, 

respectively, primarily due to a decrease in minutes, a decrease in the number of local access lines, and the 
movement of more traffic to our own facilities.

We expect to face continued increases in programming costs that may require us to drop certain channels or 
increase the rates paid by our customers that may result in a loss of additional video customers.

Selling, General and Administrative Expenses
Selling, general and administrative expenses are as follows (amounts in thousands):

2017

2016

2015

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

Selling, general and administrative expenses

$ 370,639

358,356

338,379

3%

6%

Individually significant items contributing to the increases in selling, general and administrative expenses include:

•  A $15.5 million increase in transaction costs related to the Transactions with Liberty in 2017,
•  A $6.4 million increase in share-based compensation for 2017 primarily due to an increase in our stock 

price, 

•  A $4.0 million and $11.5 million increase in labor and health insurance costs for 2017 and 2016, 

respectively, and

•  A $8.0 million increase in the use of contract labor for 2016.

The increases discussed above are partially offset by the following items:

•  The absence of $2.4 million for costs in 2016 to support a campaign to encourage public action related to 

the State of Alaska budget, and

•  The absence of $9.0 million for costs related to the acquisition of ACS' wireless subscribers and its non-

controlling interest in AWN for 2016.

As a percentage of total revenues, selling, general and administrative expenses were 40%, 38%, and 35% of 
revenue for 2017, 2016, and 2015, respectively. The 2017 increase in selling, general and administrative expenses 
as a percentage of total revenues is primarily due to the costs related to the Transactions with Liberty.  The 2016 

36

 
increase in selling, general and administrative expenses as percentage of total revenues is primarily due to 
increases in labor and contract labor costs without corresponding increases in revenue due to spending on our 
billing system conversion.

Depreciation and Amortization Expense
Depreciation and amortization expense follows (amounts in thousands):

2017

2016

2015

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

Depreciation and amortization expense

$ 197,115

193,775

181,767

2%

7%

The increases in 2017 and 2016 are primarily due to new assets placed in service in those years partially offset by 
assets which became fully depreciated during those years.

Software Impairment Charge
Software impairment charge decreased $29.8 million or 100% in 2016 primarily due to the absence of an 
impairment charge recorded in 2015 as discussed below.

During the years ended December 31, 2013 and 2014, we internally developed computer software to replace our 
wireless, Internet, video, local service, and long distance customer billing systems.  In early 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 in early 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 2015 by 
recording an expense which is included in Software Impairment Charge in our Consolidated Statements of 
Operations.  Subsequently we signed a contract with an established billing solution provider and a multi-year 
implementation is in process.  

In early 2015, we reassessed our plans for our internally developed machine-to-machine billing system and decided 
to no longer market this system to third parties.  Accordingly we recognized an impairment of $7.1 million during 
2015 by recording an expense which is included in Software Impairment Charge in our Consolidated Statements of 
Operations.

In late 2015, we evaluated user management software we purchased in 2014 and determined that we would not be 
able to use the software.  Accordingly we recognized an impairment of $1.0 million during 2015 by recording an 
expense which is included in Software Impairment Charge in our Consolidated Statement of Operations.

Other Expense, Net
Other expense, net of other income, follows (amounts in thousands):  

2017

2016

2015

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

Other expense, net

$ 137,398

78,034

133,924

76%

(42)%

Items contributing to the increase in 2017 include:

•  A $51.8 million increase in 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 $5.0 million increase in interest expense due to increased borrowings during 2017, and
•  The absence of a $3.2 million gain recorded in 2016 for adjusting to fair value assets that were included in 

the consideration paid to acquire a fiber system.

37

 
 
Items contributing to the decrease in 2016 include:

•  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 $14.3 million change from an unrealized loss in 2015 to an unrealized gain recorded in 2016 for adjusting 
to fair value a derivative instrument where we issued 3.0 million stock appreciation rights to an affiliate of 
Searchlight.

Income Tax (Expense) Benefit

2017

2016

2015

Percentage
Change 
2017 vs.
2016

Percentage
Change 
2016 vs.
2015

Income tax (expense) benefit

Effective income tax rate

$ 41,426

(5,205)

1,847

(896)%

382%

63%

487%

7%

The income tax benefit for 2017 was primarily a result of the enactment of the Tax Cuts & Jobs Act (“Tax Reform”) in 
December 2017.  The primary provisions of Tax Reform impacting us are the reduction to the U.S. corporate income 
tax rate from 35% to 21% and temporary 100% bonus depreciation for certain assets.  The change in the tax law 
required us to remeasure existing net deferred tax liabilities using the lower rate in the year of enactment resulting 
in an income tax benefit of $41.6 million for 2017 to reflect these changes. 

Partially off-setting the impact of Tax Reform on our effective income tax rate in 2017 and primarily impacting our 
effective income tax rates for 2016 and 2015 was the volatility of our income (loss) before income taxes and 
permanent differences.  The primary driver of our permanent difference volatility in 2017, 2016 and 2015 was the 
unrealized gain (loss) recorded for adjusting to fair value a derivative instrument where we issued 3.0 million stock 
appreciation rights to an affiliate of Searchlight.

At December 31, 2017, we have income tax net operating loss carryforwards of $371.2 million that will begin 
expiring in 2020 if not utilized. We have recorded deferred tax assets of $104.6 million associated with income tax 
net operating losses that were generated from 2000 to 2017 and that expire from 2020 to 2037.

Tax benefits associated with recorded deferred tax assets are considered to be more likely than not realizable 
through future reversals of existing temporary differences and future taxable income exclusive of reversing 
temporary differences and carryforwards. The amount of deferred tax assets considered realizable, however, could 
be reduced if estimates of future taxable income during the carryforward period are reduced which would result in 
additional income tax expense.  We estimate that our effective annual income tax rate for financial statement 
purposes will be (15%) to (20%) in the year ending December 31, 2018.  The effective income tax rate is expected 
to be much higher due to an increase in the pretax book income amount and the relative impact that the expected 
tax adjustments have on that pretax income amount.

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

In the first and fourth quarters of 2017, we entered into additional financing arrangements under the NMTC 
program, which provided $6.6 million in net cash to help fund the continued expansion of our TERRA network (see 
Note 14 included in "Part II - Item 8 - Consolidated Financial Statements and Supplementary Data" for additional 
information). 

38

 
In the fourth quarter of 2016, we amended our Senior Credit Facility.  The amended Senior Credit Facility provided a 
$215.0 million Term Loan A, a $245.9 million Term Loan B, and a $200.0 million revolving credit facility, with a $50.0 
million sub-limit for standby letters of credit.  The borrowings under the Term Loan A and revolving credit facility are 
scheduled to mature on November 17, 2021, and the Term Loan B is scheduled to mature on February 2, 2022; 
provided that, if the 2021 Senior Notes are not refinanced by December 3, 2020, then all of the loans under the 
Senior Credit Facility become due on such date.  We paid $4.1 million in fees associated with the amendment.

As discussed above in the General Overview section, in the third quarter of 2016 we received $90.8 million for the 
Tower Transaction.

In the first quarter of 2016, we entered into new long-term roaming and backhaul agreements with our largest 
roaming partners. The revenue recognized for these contracts was determined by calculating the cumulative 
minimum cash payments and recognizing the amount evenly over the life of the contracts. In the early years of the 
contracts, the cash received is in excess of the revenue recognized resulting in a significant increase in long-term 
deferred revenue; in the later years the cash received will be less than the revenue recognized and will lower long-
term deferred revenue.

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

To fund the purchase from ACS, we used proceeds from our Senior Credit Facility.  We also sold an unsecured 
promissory note to Searchlight in the principal amount of $75.0 million that will mature on February 2, 2023 and will 
bear interest at a rate of 7.5% per year ("Searchlight Note"). A portion of the proceeds from the Searchlight Note 
were used to finance the Wireless Acquisition and the remainder was used for general corporate purposes. 
Additionally, we entered into a stock appreciation rights agreement pursuant to which we issued to Searchlight three 
million stock appreciation rights which entitles Searchlight to receive, upon exercise, an amount payable at our 
election in either cash or shares of GCI's Class A-1 common stock equal in value to the excess of the fair market 
value of a share of GCI Class A-1 common stock on the date of exercise over the price of $13.00.

In the second quarter of 2015, we closed on the issuance of $450.0 million of new 6.875% Senior Notes due 2025 
("2025 Notes") at an issue price of 99.105% issued by our wholly owned subsidiary, GCI, Inc. The net proceeds of 
the offering were used to retire our existing 2019 Notes.  We paid closing costs totaling $7.9 million in connection 
with the offering. 

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

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

Investing Activities
Net cash used for investing activities consists primarily of cash paid for capital expenditures.  Our most significant 
recurring investing activity has been capital expenditures and we expect that this will continue in the future.  A 
significant portion of our capital expenditures is based on the level of customer growth and the technology being 
deployed.

Our cash expenditures for property and equipment, including construction in progress, totaled $189.4 million and 
$194.5 million during 2017 and 2016, respectively.  Depending on available opportunities and the amount of cash 
flow we generate during 2018, we expect our 2018 capital expenditures to total approximately $170.0 million. This 
estimate is based on purchases in 2018 regardless of the timing of cash payments.

39

Financing Activities
Net cash provided by financing activities in 2017 consists primarily of borrowings from our Senior Credit Facility, net 
of payments partially offset by repurchases of our stock.  Net cash provided by financing activities in 2016 consists 
primarily of cash received from the Tower Transaction partially offset by repurchases of our stock, payments on our 
Senior Credit Facility, net of borrowings, and costs paid for the amendment to our Senior Credit Facility. Our 
borrowings fluctuate from year to year based on our liquidity needs.  We may use excess cash to make optional 
repayments on our debt or repurchase our common stock depending on various factors, such as market conditions.

Available Borrowings Under Senior Credit Facility
We had a $100.0 million outstanding balance and $21.0 million in letters of credit under the $200.0 million Senior 
Credit Facility Revolver at December 31, 2017, which leaves $79.0 million available for borrowing as of 
December 31, 2017.

Debt Covenants
We are subject to covenants and restrictions applicable to our $325.0 million in aggregate principal amount of 
6.75% Senior Notes due 2021 (“2021 Notes”), our 2025 Notes, Senior Credit Facility, and Wells Fargo note 
payable.  We are in compliance with the covenants, and we believe that neither the covenants nor the restrictions in 
our indentures or loan documents will limit our ability to operate our business.

Share Repurchases
GCI’s Board of Directors has authorized a common stock buyback program for the repurchase of GCI common 
stock in order to reduce the outstanding shares of common stock.  During 2017 we repurchased 0.2 million shares 
of GCI common stock under the stock buyback program at a cost of $4.0 million excluding shares withheld to cover 
employee tax liabilities resulting from the vesting of restricted stock awards.  We have temporarily suspended the 
buyback program due to the Reorganization Agreement that we entered into with Liberty.

Schedule of Certain Known Contractual Obligations
The following table details future projected payments associated with certain known contractual obligations as of 
December 31, 2017 (amounts in thousands):

Long-term debt

Interest on long-term debt

Capital lease obligations, including

interest

Tower obligations, including interest

Operating lease commitments
Purchase obligations

Total contractual obligations

Payments Due by Period

Total
$ 1,415,631
432,551

60,097
188,150

174,087

55,134
$ 2,325,650

Less Than 1
Year

2,989

80,813

13,440

7,465

48,409

55,134

1 to 3 Years

4 to 5 Years

6,040

161,281

876,418

118,307

26,909

15,382

65,859
—

17,337

16,003

31,521
—

208,250

275,471

1,059,586

More Than 5
Years

530,184

72,150

2,411

149,300

28,298
—

782,343

Long-term debt listed in the table above includes principal payments on our 2021 and 2025 Notes, Senior Credit 
Facility, Searchlight Note, and the Wells Fargo note payable.  Interest on the amounts outstanding under our Senior 
Credit Facility and Wells Fargo note payable are based on variable rates.  We used the current rate paid on our 
Senior Credit Facility to estimate our future interest payments. Our 2021 Notes require semi-annual interest 
payments of $11.0 million through June 2021 and our 2025 Notes require semi-annual interest payments of $15.5 
million through April 2025.  Our Searchlight Note requires annual interest payments of $5.6 million through February 
2023.  For a discussion of our long-term debt see Note 7 in the accompanying “Notes to Consolidated Financial 
Statements.”

Capital lease obligations consist primarily of our obligation to lease transponder capacity on Galaxy 18.  For a 
discussion of our capital and operating leases, see Note 15 in the accompanying “Notes to Consolidated Financial 
Statements.”

40

Tower obligations consist of our obligation to Vertical Bridge for the Master Lease Agreement that we entered into 
as part of the Tower Transaction.

Purchase obligations include cancelable open purchase orders for goods and services for capital projects and 
normal operations, which are not included in our Consolidated Balance Sheets at December 31, 2017, because the 
goods had not been received or the services had not been performed at December 31, 2017.

Off-Balance Sheet Arrangements
We have not created, and are not party to, any special-purpose and off-balance sheet entities for the purpose of 
raising capital, incurring debt or operating parts of our business that are not consolidated into our financial 
statements. We do not have any arrangements or relationships with entities that are not consolidated into our 
financial statements that are reasonably likely to materially affect our liquidity or the availability of our capital 
resources.

Recently Issued Accounting Pronouncements
See Note 1 included in “Part II — Item 8 — Consolidated Financial Statements and Supplementary Data” for 
recently issued accounting pronouncements.

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

Those policies and estimates considered to be critical for the year ended December 31, 2017 are described below.

Allowance for Doubtful Receivables
We record expense to maintain an allowance for doubtful receivables for estimated losses that result from the 
failure or inability of our customers to make required payments. When determining the allowance, we consider 
the probability of recoverability based on past experience, economic data, and changes in our collections 
processes. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of 
the aged accounts and installment receivable balances with reserves generally increasing as the receivable 
ages. Accounts receivable may be fully reserved when specific collection issues are known to exist, such as 
pending bankruptcy or catastrophes. 

Valuation of Derivative Stock Appreciation Rights
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-1 common stock equal in value to the 
excess of the fair market value of a share of GCI Class A-1 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 

41

holder behavior. The lattice model uses highly subjective assumptions and the use of other reasonable 
assumptions could provide different results that could have a material effect on our results of operations.

Impairment and Useful Lives of Intangible Assets
We had $530.8 million of indefinite-lived intangible assets at December 31, 2017, consisting of goodwill of 
$242.3 million, cable certificates of $191.6 million, wireless licenses of $93.8 million and broadcast licenses of 
$3.1 million.  

Goodwill represents the excess of cost over fair value of net assets acquired in connection with a business 
acquisition.  We have determined that our reporting unit is the same as our reportable segment.  Our cable 
certificates represent agreements with government entities to construct and operate a video business.  The 
value of our cable certificates is derived from the economic benefits we receive from the right to solicit new 
customers and to market new services.  The amount we have recorded for cable certificates is from cable 
system acquisitions. Our wireless licenses are from the FCC and give us the right to provide wireless service 
within a certain geographical area.  The amount we have recorded is from acquisitions of wireless companies 
and auctions of wireless spectrum.  Our broadcast licenses are from the FCC and give us the right to broadcast 
television stations within a certain geographical area. The amount we have recorded for broadcast licenses is 
from broadcast television station acquisitions. 

We assess our indefinite-lived intangible assets including goodwill for impairment on an annual basis during the 
fourth quarter using October 31 as a measurement date unless circumstances require a more frequent 
measurement.   When evaluating our indefinite-lived intangible assets for impairment, we may first perform an 
assessment qualitatively to determine whether it is more likely than not that the carrying amount exceeds its fair 
value, referred to as a “step zero” approach. If, based on the review of the qualitative factors, we determine it is 
not more likely than not that the fair value of one of our indefinite-lived intangible assets is less than its carrying 
value, we would bypass the two-step impairment test. Events and circumstances we consider in performing the 
“step zero” qualitative assessment include macro-economic conditions, market and industry conditions, internal 
forecasts, share price fluctuations, and operational stability and overall financial performance. 

For goodwill, if we conclude that it is more likely than not that a reporting unit's fair value is less than its carrying 
amount, we would perform the first step (“step one”) of the two-step impairment test and calculate the estimated 
fair value of the reporting unit by using discounted cash flow valuation models and by comparing our reporting 
units to guideline publicly-traded companies. These methods require estimates of our future revenues, profits, 
capital expenditures, working capital, and other relevant factors, as well as selecting appropriate guideline 
publicly-traded companies for each reporting unit. We estimate these amounts by evaluating historical trends, 
current budgets, operating plans, industry data, and other relevant factors. Using assumptions that are different 
from those used in our estimates, but in each case reasonable, could produce significantly different results and 
materially affect the determination of fair value and/or impairment for our indefinite-lived intangible assets. 

For 2017 and 2016, we performed a step zero qualitative analysis for our annual assessment of impairment for 
goodwill and our indefinite-lived intangible assets. After evaluating and weighing all relevant events and 
circumstances, we concluded that it is not more likely than not that the fair value of our reporting unit or 
indefinite-lived intangible assets were less than their carrying amounts. Consequently, we did not perform a step 
one quantitative analysis in 2017 or 2016.

Valuation Allowance for Net Operating Loss Deferred Tax Assets
Our income tax policy provides for deferred income taxes to show the effect of temporary differences between 
the recognition of revenue and expenses for financial and income tax reporting purposes and between the tax 
basis of assets and liabilities and their reported amounts in the financial statements.  Significant management 
judgment is required in developing our provision for income taxes, including the determination of deferred tax 
assets and liabilities and any valuation allowances that may be required against the deferred tax assets.  We 
have not recorded a valuation allowance on the deferred tax assets as of December 31, 2017, based on 
management’s belief that future reversals of existing temporary differences and estimated future taxable income 
exclusive of reversing temporary differences and carryforwards will, more likely than not, be sufficient to realize 
the benefit of these assets over time.  In the event that actual results differ from these estimates or if our 
historical trends change, we may be required to record a valuation allowance on deferred tax assets, which 
could have a material adverse effect in our consolidated financial position or results of operations.

42

Other significant accounting policies, not involving the same level of measurement uncertainties as those discussed 
above, are nevertheless important to an understanding of the financial statements. A complete discussion of our 
significant accounting policies can be found in Note 1 in the accompanying “Notes to Consolidated Financial 
Statements.”

Regulatory Developments
See “Part I — Item 1. Business — Regulation” for more information about regulatory developments affecting us.

Inflation
We do not believe that inflation has a significant effect on our operations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We are exposed to various types of market risk in the normal course of business, including the impact of interest 
rate changes and adjustments to the fair value of our derivative stock appreciation rights liability. Market risk is the 
potential loss arising from adverse changes in market rates and prices.  We do not hold or issue financial 
instruments for trading purposes.  

Interest Rate Risk
Our Senior Credit Facility and Wells Fargo note payable carry interest rate risk.  Our Senior Credit Facility consists 
of a term loan, Term Loan B, and revolving credit facility. Amounts borrowed under the term loan bear interest at 
London Interbank Offered Rate (“LIBOR”) plus 3.00% or less depending upon our Total Leverage Ratio (as defined 
in the Senior Credit Facility agreement).  Amounts borrowed under the Term Loan B bear interest at LIBOR plus 
2.25%. Amounts borrowed under the Wells Fargo note payable bear interest at LIBOR plus 2.25%. Should the 
LIBOR rate change, our interest expense will increase or decrease accordingly.  As of December 31, 2017, we have 
borrowed $565.6 million subject to interest rate risk.  On this amount, each 1% increase in the LIBOR interest rate 
would result in $5.7 million of additional gross interest cost on an annualized basis.  All of our other material 
borrowings have a fixed interest rate.

Other Market Risk
As our derivative stock appreciation rights are subject to fair value liability accounting, we revalue the instrument at 
each reporting date and recognize changes in the fair value of the derivative liability as a component of Other 
Income (Expense) included in our Consolidated Statements of Operations. The earnings effect of the fair value 
adjustment at each reporting date is sensitive to changes in our stock price. At December 31, 2017, a $1.00 
increase in our stock price used as an input to determine the fair value of our stock appreciation rights would result 
in recognition of $3.0 million of additional derivative instrument unrealized loss.
Item 8. Consolidated Financial Statements and Supplementary Data

Our consolidated financial statements are filed under this Item, beginning on page 73.  Our supplementary data is 
filed under Item 7, beginning on page 30.

Item 9. Changes In and Disagreements With Accountants on Accounting and Financial 
Disclosure
None.

Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be 
disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 (“Exchange Act”) is 
recorded, processed, summarized, accumulated and communicated to our management, including our principal 
executive and financial officers, to allow timely decisions regarding required financial disclosure, and reported as 
specified in the SEC’s rules and forms.  As of the end of the period covered by this Annual Report on Form 10-K, we 
carried out an evaluation of the effectiveness of the design and operation of our “disclosure controls and 
procedures” (as defined in Exchange Act Rule 13a - 15(e)) under the supervision and with the participation of our 
management, including our Chief Executive Officer and our Chief Financial Officer.  Based on that evaluation and 
as described below under “Management’s Report on Internal Control Over Financial Reporting," our management, 
including our Chief Executive Officer and our Chief Financial Officer, concluded that our disclosure controls and 
procedures were effective as of December 31, 2017.

43

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

Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, 
as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our 
management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of 
the effectiveness of our internal control over financial reporting based on the framework in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) in 2013.

Based on our evaluation of the effectiveness of our internal control over financial reporting, our management 
concluded that as of December 31, 2017, we maintained effective internal control over financial reporting.

Grant Thornton LLP, our independent registered public accounting firm, has issued an audit report on our internal 
control over financial reporting as of December 31, 2017, which is included in Item 8 of this Form 10-K.

Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) 
of the Exchange Act) identified in connection with the evaluation of our controls performed during the quarter ended 
December 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control 
over financial reporting.

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

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

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

Item 9B. Other Information
None.

44

 
Item 10. Directors, Executive Officers and Corporate Governance

Identification

Part III

As of December 31, 2017, our board consisted of ten director positions, divided into three classes of directors 
serving staggered three-year terms.

A director on our board is elected at an annual meeting of shareholders and serves until the earlier of his or her 
resignation or removal, or his or her successor is elected and qualified.  Our executive officers generally are 
appointed at our board's meeting immediately preceding each annual meeting of shareholders and serve at the 
discretion of the board.

The following table sets forth certain information about our directors and executive officers as of December 31, 
2017:

Name
Stephen M. Brett1
Ronald A. Duncan1
Peter J. Pounds

Age Position

77 Chairman, Director

65 Chief Executive Officer and Director

44 Senior Vice President, Chief Financial Officer, and Secretary

G. Wilson Hughes

72 Executive Vice President

William C. Behnke

60 Senior Vice President

Martin E. Cary

53 Senior Vice President and General Manager, GCI Business

Gregory F. Chapados

60 President and Chief Operating Officer

Paul E. Landes

59 Senior Vice President and General Manager, GCI Consumer

Tina M. Pidgeon

49 Senior Vice President, Chief Compliance Officer, General Counsel and Government

Affairs

59 Director

57 Director

51 Director

75 Director

Bridget L. Baker1
Jerry A. Edgerton1
Scott M. Fisher1
William P. Glasgow1
Mark W. Kroloff1
Stephen R. Mooney1
James M. Schneider1
Eric L. Zinterhofer1
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 2020 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.

60 Director

58 Director

65 Director

46 Director

The board, when considering whether directors have the experience, qualifications, attributes or skills, taken as a 
whole, to enable the board to satisfy its oversight responsibilities effectively in light of the Company's business and 
structure, focused primarily on each person's background and experience.  We believe that the Company's directors 
have backgrounds that, when combined, provide us with a board equipped to direct us through an ever challenging 
course in the segments of the telecommunication business in which we are involved.  Attributes of members of our 
board include experience in entrepreneurial, video service, telecommunication, technological and financial aspects 
of companies similar to, as well as much larger than, us.

In particular, our board considered important the following regarding its members.  With regard to Mr. Brett, our 
board considered his telecommunications and cable experience, as well as his over 40 year experience as a 
corporate lawyer.  With regard to Ms. Baker, our board considered her experience with broadcast and cable 
networks.  With regards to Messrs. Fisher and Glasgow, our board considered the broad backgrounds of these 
individuals in finance and their operational experience with cable companies.  With regards to Messrs. Edgerton 

45

and Mooney, our board considered the extensive experience and expertise of these individuals in business 
development in the telecommunications industry and their financial knowledge.  Our board also considered the 
broad perspective brought by Mr. Kroloff's experience in operating diverse businesses throughout Alaska as well as 
his experience as a lawyer.  With regard to Mr. Schneider, our board considered his significant financial and 
accounting experience including his time spent as Chief Financial Officer of a large public company. With regard to 
Mr. Zinterhofer, our board considered his experience as an investor in cable, fiber, wireless, and satellite 
companies.

Our board also considered the many years of experience with the Company represented by Mr. Duncan, our Chief 
Executive Officer.  He has been with the Company since he co-founded it.

Many of our directors, including Messrs. Edgerton, Glasgow, Kroloff, Mooney and Schneider, were initially proposed 
for nomination by (or, in the case of Mr. Kroloff, through a request from Mr. Duncan to) holders of significant 
amounts of Company shares.  Our board has retained each of these directors, even after the shareholders have 
exited the Company or no longer have retained a right to nominate a director, due to the valued expertise our board 
feels they provide as members.

Stephen M. Brett.  Mr. Brett has served as Chairman of our board since June 2005 and as a director on our board 
since January 2001.  He has been of counsel to Sherman & Howard, L.L.C., a law firm, since January 2001.  He 
was Senior Executive Vice President for AT&T Broadband from March 1999 to April 2000.  In addition, Mr. Brett 
serves as director for Liberty Expedia Holdings, Inc. His present term as a director on our board expires at the time 
of our 2018 annual meeting.

Ronald A. Duncan.  Mr. Duncan is a co-founder of the Company and has served as a director on our board since 
1979.  Mr. Duncan has served as our Chief Executive Officer since August 2017.  Prior to that, he served as our 
President and Chief Executive Officer from January 1989 to August 2017.  His present term as director on the board 
expires at the time of our 2018 annual meeting.

Peter J. Pounds.  Mr. Pounds became our Chief Financial Officer and one of our Senior Vice Presidents effective 
January 1, 2014.  Prior to that he served as Vice President, Finance since 2009.

G. Wilson Hughes.  Mr. Hughes has served as an Executive Vice President since January 1, 2017.  Prior to that he 
served as the Chief Executive Officer of The Alaska Wireless Network, LLC from July 22, 2013 to January 1, 2017.  
Prior to that he served as our Executive Vice President – Wireless from June 4, 2012 to July 22, 2013.  Prior to that, 
he served as our Executive Vice President and General Manager from June 1991 to June 4, 2012.

William C. Behnke.  Mr. Behnke has served as one of our Senior Vice Presidents since January 2001.

Martin E. Cary.  Mr. Cary has served as one of our Senior Vice Presidents and as General Manager, GCI Business 
since April 2016.  Prior to that, he served as our Vice President – General Manager, Managed Broadband Services 
from September 2004 to April 2016.

Gregory F. Chapados.  Mr. Chapados has served as our President and Chief Operating Officer since August 2017.  
Priort to that he served as our Executive Vice President and Chief Operating Officer from June 2012 to August 
2017.  Prior to that, he served as one of our Senior Vice Presidents from June 2006 to June 2012.

Paul E. Landes.  Mr. Landes has served as one of our Senior Vice Presidents and as General Manager, GCI 
Consumer since December 2010.  Prior to that, he served as our Vice President and General Manager, Consumer 
Services from September 2005 to December 2010.

Tina M. Pidgeon.  Ms. Pidgeon has served as our Senior Vice President, Chief Compliance Officer, General 
Counsel and Government Affairs, since September 2010.  Prior to that, she served as our Vice President, Federal 
Regulatory Affairs from January 2003 to September 2010.

Bridget L. Baker.  Ms. Baker has served as a director on our board since July 2013.  Since January 2013, she has 
been a Principal of Baker Media, Inc., an entertainment and media consulting firm that she founded.  From 2006 to 
2012, Ms. Baker was NBCUNIVERSAL's president of content distribution where she was responsible for the 

46

company's multi-billion dollar subscription revenue business across the cable, satellite, and telecommunications 
industry. Her present term as a director on our board expires at the time of our 2020 annual meeting.

Jerry A. Edgerton.  Mr. Edgerton has served as a director on our board since June 2004.  Since January 2013, he 
has been Chief Executive Officer of Cumulus Solutions, Inc., a provider of visual collaboration tools. From 
September 2011 to December 2012, he was President of Global Services for iNETWORKS Group, Inc., a 
comprehensive telecommunications solutions provider.  From July 2009 to August 2011, he was President of 
Government Markets for Core 180, a network integrator for large governmental and commercial customers.  From 
November 2007 to May 2009, he was Chief Executive Officer for Command Information, Inc., a next generation 
Internet service company.  From April 2007 to October 2007, Mr. Edgerton was an advisor on matters affecting the 
telecommunications industry as well as the U.S. government.  Prior to that and from January 2006 to April 2007, he 
was Group President of Verizon Federal.  Prior to that and from November 1996, he was Senior Vice President – 
Government Markets for MCI Communications Corporation, an affiliate of MCI, which was later acquired by Verizon 
Communications, Inc.  His present term as a director on our board expires at the time of our 2020 annual meeting.

Scott M. Fisher.  Mr. Fisher has served on our board since December 2005.  From 1998 to the present, he has 
been a partner of Fisher Capital Partners, Ltd., a private equity and real estate investment company located in 
Denver, Colorado.  During that time, Fisher Capital owned and operated Peak Cablevision, a multiple system cable 
television operator with approximately 120,000 subscribers.  At Peak Cablevision, Mr. Fisher was responsible for 
television programming and corporate development.  Mr. Fisher serves on the advisory boards of several private 
companies.  His present term as director on our board expires at the time of our 2019 annual meeting.

William P. Glasgow.  Mr. Glasgow has served as a director on our board since 1996.  From 2000 to the present Mr. 
Glasgow has been acting as President for the operating and investing entities of Prime IX Investment's group of 
companies of which he has been involved for thirty years.  His present term as a director on our board expires at 
the time of our 2019 annual meeting.

Mark W. Kroloff.  Mr. Kroloff has served as a director on our board since February 2009.  Since January 2010, he 
has been a principal at First Alaskan Capital Partners, LLC, an investment firm.  From May 2005 to December 2009, 
he was Senior Executive Vice President and Chief Operating Officer of Arctic Slope Regional Corporation, an 
Alaska Native regional corporation formed pursuant to the Alaska Native Claims Settlement Act.  From 2001 to April 
2005, Mr. Kroloff was Chief Operating Officer of Cook Inlet Region, Inc., also an Alaska Native regional 
corporation.  He also serves on the board of directors of Trilogy International Partners, Inc.  Mr. Kroloff's present 
term as a director on our board expires at the time of our 2020 annual meeting.

Stephen R. Mooney.  Mr. Mooney has served as a director on our board since January 1999.  He has been a 
Partner at Chessiecap Securities, Inc., an investment bank specializing in technology and telecommunications 
services based in Maryland since 2012.  From April 2010 to 2012, Mr. Mooney was a Managing Director with the 
McClean Group, LLC, a national financial advisory services firm.  From February 2008 to November 2009, Mr. 
Mooney was Vice President, Business Development for Affiliated Computer Services, Inc., a global information 
technology and business process outsourcing company.  From January 2006 to September 2007, he was Executive 
Director, Business Development of VerizonBusiness, a unit of Verizon.  Prior to that, he was Vice President, 
Corporate Development and Treasury Services at MCI beginning in 2002.  His present term as a director on our 
board expires at the time of our 2018 annual meeting.

James M. Schneider.  Mr. Schneider has served as a director on our board since July 1994.  He has been 
Chairman of Frontier Bancshares, Inc. since February 2007.  Prior to that, Mr. Schneider had been Senior Vice 
President and Chief Financial Officer for Dell, Inc. from March 2000 to February 2007.  Prior to that, he was Senior 
Vice President – Finance for Dell Computer Corporation from September 1998 to March 2000.  From 2012 to the 
present Mr. Schneider has been an Operating Partner for Lead Edge Capital.  His present term as a director on our 
board expires at the time of our 2019 annual meeting.

Eric L. Zinterhofer. Mr. Zinterhofer has served as a director on our board since March 4, 2015. Mr. Zinterhofer is a 
Founding Partner of Searchlight Capital Partners. Prior to co-founding Searchlight, Mr. Zinterhofer was co-head of 
the media and telecommunications investment platform at Apollo Management, L.P. Mr. Zinterhofer has been an 
active cable investor over the last 15 years in companies such as Charter Communications, Liberty Cablevision 
Puerto Rico, Unity Media, Cablecom and Primacom. Mr. Zinterhofer is also an active investor in the fiber, wireless 
and satellite sectors, having invested in Integra Telecom, IPCS, Spectrasite and Dish TV India. In addition, Mr. 

47

Zinterhofer serves as a director for Charter Communications (Chairman) and Hemisphere Media Group. His present 
term as a director on our board expires at the time of our 2018 annual meeting.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires executive officers and directors and persons who beneficially own more 
than 10% of the outstanding common stock to file initial reports of ownership on Form 3 and reports of changes in 
ownership on Forms 4 and 5 with the SEC. Executive officers, directors, and greater than 10% beneficial owners 
are required by SEC regulations to furnish us with copies of all Section 16(a) forms that they file.

Based solely on a review of the copies of such forms furnished to us, each of our directors, officers and beneficial 
owners of more than 10% of the outstanding common stock filed all forms required by Section 16 of the Exchange 
Act in 2017 on a timely basis, except that Mr. Cary inadvertently failed to file a Form 4 with the SEC for transactions 
that occurred on January 3, 2017.  The filing to report the transaction was made on January 9, 2017. Mr. Chapados 
inadvertently failed to file a Form 4 with the SEC for transactions that occurred on January 9, 2017, however, the 
filing to report the transactions was made on January 12, 2017.  Mr. Hughes inadvertently failed to file a Form 4 with 
the SEC for transactions that occurred on March 31, 2017, however, the filing to report the transactions was made 
on April 5, 2017.  

Additionally, Ms. Pidgeon informed us that her financial adviser engaged in transactions for her account, pursuant to 
an investment strategy she approved for the purposes of protecting against a decline in the value of her shares of 
our common stock, which should have been reported on Forms 4.  On April 25, 2017, May 22, 2017, July 10, 2017, 
July 24, 2017, and November 24, 2017, Ms. Pidgeon made Form 4 filings reporting all such transactions.  

Code of Business Conduct and Ethics

Our current Code of Business Conduct and Ethics ("Ethics Code"), was adopted by our board in 2013.  It applies to 
all of our officers, directors and employees.  The Ethics Code takes as its basis a set of business principles adopted 
by our board several years ago.  It also builds upon the basic requirements for a code of ethics as required by 
federal securities law and rules adopted by the SEC.

Through our Ethics Code, we reaffirm our course of business conduct and ethics as based upon key values and 
characteristics and through adherence to a clear code of ethical conduct.  Our Ethics Code promotes honest and 
ethical conduct, including ethical handling of actual or apparent conflicts of interest between personal and 
professional relationships of our employees.  It also promotes full, fair, accurate, timely and understandable 
disclosure in our reports and documents filed with, or submitted to, the SEC and other public communications made 
by us.  Our Ethics Code further promotes compliance with applicable governmental laws, rules and regulations, 
internal reporting of violations of the code to appropriate persons as identified in the code and accountability for 
adherence to the code.

A copy of our Ethics Code is displayed on our Internet website at www.gci.com.  Except for the Ethics Code, and 
any other documents specifically incorporated herein, no information contained on the Company’s website shall be 
incorporated by reference in this Form 10-K.

No Change in Nominating Procedure

There were no changes made during 2017 to the procedure by which our shareholders may recommend nominees 
to our board.

Litigation and Regulatory Matters

We were, as of December 31, 2017, involved in various lawsuits, billing disputes, legal proceedings, and regulatory 
matters that have arisen from time to time in the normal course of business.  These actions are discussed in more 
detail elsewhere in this report.  See "Part I – Item 3 – Legal Proceedings."  However, as of that date, our board was 
unaware of any legal proceedings in which one or more of our directors, officers, affiliates or owners of record or 
beneficially of more than 5% of any class of our voting securities, or any associates of the previously listed persons 
were parties adverse to us or any of our subsidiaries.  Furthermore, as of that date, our board was unaware of any 

48

 
events occurring during the past 10 years materially adverse to an evaluation of the ability or integrity of any 
director, person nominated to become a director or executive officer of the Company.

In December 2010, Mr. Schneider settled charges brought against him by the SEC for actions that allegedly took 
place when he was the chief financial officer at Dell, Inc.  Mr. Schneider is no longer employed by Dell, Inc.  He 
settled the charges and consented to the issuance of an SEC administrative order without admitting or denying the 
SEC's findings, with limited exceptions.  The limited exceptions are acknowledgment of the SEC's jurisdiction over 
Mr. Schneider and the subject matter of the SEC proceedings brought against him, and the SEC findings with 
respect to litigation involving that company and certain of its senior executive officers including Mr. Schneider.  The 
court in that litigation entered an order permanently enjoining Mr. Schneider, by consent, from future violations of 
specified provisions of federal securities law.  Mr. Schneider paid, as specified in the court's order, $3.0 million as a 
civil money penalty and $83,096 in disgorgement of ill-gotten gains, as well as $38,640 in prejudgment interest.  In 
the settlement with the SEC, Mr. Schneider consented to his suspension from appearing or practicing before the 
SEC as an accountant for at least five years.  Mr. Schneider filed an application for reinstatement to appear or 
practice as an accountant before the SEC as a preparer or reviewer of a public company's financial statements. 
That application for reinstatement was approved by the SEC on July 22, 2016.

 Audit Committee, Audit Committee Financial Expert

We have a board audit committee ("Audit Committee") comprised of several members of our board, i.e., Messrs. 
Mooney (Chair), Fisher, and Glasgow.

Our Audit Committee is governed by, and carries out its responsibilities under, an Audit Committee Charter, as 
adopted and amended from time to time by our board ("Audit Committee Charter").  The charter sets forth the 
purpose of the Audit Committee and its membership prerequisites and operating principles.  It also requires our 
Audit Committee to select our independent, registered, public accounting firm to provide for us accounting and audit 
services ("External Accountant") and sets forth other primary responsibilities.  A copy of our Audit Committee 
Charter is available to our shareholders on our Internet website: www.gci.com.

The Nasdaq corporate governance listing standards require that at least one member of our Audit Committee must 
have past employment experience in finance or accounting, requisite professional certification in accounting, or 
comparable experience or background which results in the individual's "financial sophistication."  This financial 
sophistication may derive from the person being or having been a chief executive officer, chief financial officer or 
other senior officer with financial oversight responsibilities.

Our board believes that Messrs. Fisher, Glasgow and Mooney, are audit committee financial experts ("Audit 
Committee Financial Experts") and also meet the Nasdaq requirements for financial sophistication.  Our board 
further believes that Messrs. Fisher, Glasgow and Mooney are each an independent director as the term is defined 
in the Nasdaq Stock Market corporate listing standards (to which the Company is subject), i.e., an individual other 
than one of our executive officers or employees or any other individual having a relationship which in the opinion of 
our board would interfere in carrying out the responsibilities of a director ("Independent Director") and are 
independent as defined by Rule 10A-3(b)(1) under the Exchange Act.

Under the SEC's rules, an Audit Committee Financial Expert is defined as a person who has all of the following 
attributes:

•  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.

49

The Audit Committee Charter specifies how one may determine whether a person has acquired the attributes of an 
Audit Committee Financial Expert.  They are one or more of the following:

•  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.

Our Audit Committee acts on behalf of our board and generally carries out specific duties including the following, all 
of which are described in detail in our Audit Committee Charter:

•  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.

Item 11. Executive Compensation

Compensation Discussion and Analysis

Overview –

Compensation of our executive officers and directors during 2017 was subject to processes and procedures carried 
out through our Compensation Committee ("Compensation Program").  This compensation discussion and analysis 
("Compensation Discussion and Analysis") addresses the material elements of our Compensation Program as 
applied to our Chief Executive Officer, our Chief Financial Officer, and to each of our three other most highly 

50

compensated executive officers other than the Chief Executive Officer and Chief Financial Officer who were serving 
as executive officers as of December 31, 2017.  All five of these officers are identified in the Summary 
Compensation Table ("Named Executive Officers").  See "Part III – Item 11 – Executive Compensation:  Summary 
Compensation Table."

Both the Compensation Committee and the Company believe that the compensation paid to the Named Executive 
Officers under our Compensation Program is fair, reasonable, competitive and consistent with our Compensation 
Principles.  See "Part III – Item 11 – Compensation Discussion and Analysis: Principles of the Compensation 
Program."

Our Compensation Committee is composed of Messrs. Brett, Edgerton (Chair), Mooney, Schneider, and Ms. 
Baker.  All of the members of the committee are considered by our board to be Independent Directors.

The charter of the Compensation Committee guides decisions regarding our Compensation Program, the aspects of 
which are described elsewhere in this report.  See "Part III – Item 11 – Compensation Discussion and 
Analysis:  Process."  A copy of our Compensation Committee Charter is available to our shareholders on our 
Internet website: www.gci.com.

Our Charter of the Compensation Committee sets forth the scope of authority of our Compensation Committee and 
requires the committee to carry out the following:

•  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.

In carrying out its duties, our Compensation Committee may accept for review and inclusion in its annual review 
with our board, recommendations from our Chief Executive Officer as to expected performance and compensation 
of, and the criteria on which compensation is based for, executive officers.  See "Part III – Item 11 – Compensation 
Discussion and Analysis:  Process."

Principles of the Compensation Program –

Our Compensation Program is based upon the following principles ("Compensation Principles"):

•  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.

51

•  Compensation must enable the Company to attract and retain management necessary to cause the Company 

to succeed.

Process –

Overview.  Our Compensation Committee reviews and approves the base salary, incentive and other compensation 
of our Chief Executive Officer and senior executive officers, including the Named Executive Officers.  The analyses 
and recommendations of the Chief Executive Officer on these matters may be considered by our Compensation 
Committee in its deliberations and approvals.

Other elements of executive compensation and benefits as described in this section are also reviewed by our 
Compensation Committee on a regular basis.

Implementation.  Discussions on executive compensation and benefits made by the Compensation Committee 
have been guided by our Compensation Principles.  The elements of compensation as described later in this 
section are believed by the Compensation Committee to be integral and necessary parts of the Compensation 
Program.

Our Compensation Committee has concluded that each individual segment of each element of executive 
compensation continues generally to be consistent with one or more of our Compensation Principles.  Our 
Compensation Committee has further concluded the amount of compensation provided by the segment is 
reasonable, primarily based upon a comparison of the compensation amounts and segments we provide when 
compared to those offered by other similar companies in our industry and in our market.

Our process for determining executive compensation and benefits does not involve a precise and identifiable 
formula or link between each element and our Compensation Principles.  However, it takes into consideration 
market practice and information provided by our management.  Furthermore, it is based upon the relationship of 
compensation as shall be paid and financial performance of the Company.  It is also the result of discussion among 
our Compensation Committee members and management.  Ultimately it is based upon the judgment of our 
Compensation Committee.

Each year our Compensation Committee reviews elements of compensation for each of our senior executive 
officers including, for 2017, the Named Executive Officers.  The Compensation Committee believes it has created a 
framework for an effective Compensation Program.  The Compensation Committee modifies the Compensation 
Program at its discretion to continue its effectiveness for motivating the senior executive officers and aligning their 
interests with the long-term interests of our shareholders.  We have not compared our compensation to a peer 
group since 2010.  We do not currently benchmark our executive compensation against other peer group 
companies.

Elements of Compensation –

Overview.  For 2017, the elements of compensation in our Compensation Program were as follows:

•  Base Salary.

• 

Incentive Compensation Bonus Plan ("Incentive Compensation Plan").

•  Stock Option Plan.

•  Perquisites.

•  Retirement and Welfare Benefits.

As of December 31, 2017, there were no compensatory plans or arrangements providing for payments to any of the 
Named Executive Officers in conjunction with any termination of employment or other working relationship of such 
an officer with us (including without limitation, resignation, severance, retirement or constructive termination of 
employment of the officer).  Furthermore, as of that date, there were no such plans or arrangements providing for 
payments to any of the Named Executive Officers in conjunction with a change of control of us or a change in such 
an officer's responsibilities to us.  However, in the event of a change in control, the options and restricted stock of 

52

our Named Executive Officers could vest.  See "Part III – Item 11 – Executive Compensation:  Potential Payments 
upon Termination or Change-in-Control."

The Company has no requirements with respect to security ownership by its officers or directors, and it has no 
policies regarding hedging the economic risk of ownership of Company equity.  Executive officers are invited to 
provide their input with respect to their compensation to the Compensation Committee primarily through our Chief 
Executive Officer.

A Named Executive Officer participating in the Compensation Program could, under terms of the corresponding 
Incentive Compensation Plan agreement with us and pursuant to our Deferred Compensation Plan, elect to defer a 
significant portion of that compensation.  In this instance, the Named Executive Officer becomes our unsecured 
creditor.  See "Part III – Item 11 – Nonqualified Deferred Compensation."

Base Salary.  Effective January 1, 2017, based upon the process previously described in this section, the base 
salaries reported in the Summary Compensation Table (see "Part III – Item 11 – Executive 
Compensation:  Summary Compensation Table") were approved by the Compensation Committee.

Mr. Duncan's base salary reflects cash compensation of $925,000 per year.  Mr. Duncan's duties remained 
unchanged during 2017.

Mr. Pounds' base salary reflects cash compensation of $400,000 per year.  Mr. Pounds' duties remained unchanged 
during 2017.

Mr. Cary's base salary reflects cash compensation of $200,000 per year.  Mr. Cary's base salary increased in 2017 
from $160,000 to $200,000 to compensate him for additional responsibilities acquired when he was promoted in 
2016.  His duties remained unchanged during 2017.

Mr. Chapados' base salary reflects cash compensation of $450,000 per year.  During 2017, Mr. Chapados was 
appointed as President of GCI.

Ms. Pidgeon's base salary reflects cash compensation of $325,000 per year.  Ms. Pidgeon's duties remained 
unchanged during 2017.

Incentive Compensation Plan.  Overview – A portion of the Company's compensation to each Named Executive 
Officer relates to, and is contingent upon, the officer's performance and our financial performance and resources.

Our board approved an Incentive Compensation Plan for our Named Executive Officers (Messrs. Duncan, Pounds, 
Chapados, and Cary and Ms. Pidgeon) to create a framework that aligns the interests of our executive officers with 
the long-term interests of our shareholders.

The Compensation Committee first determined the targeted annual incentive compensation for each of 
them.  Incentive compensation is paid out in the form of 50% cash and 50% restricted stock grants that vest 100% 
at the end of three years, unless otherwise determined by the Compensation Committee based on the individual 
circumstances of each of the Named Executive Officers.  Therefore, the incentive compensation is designed to 
encourage the focus of these executives on long-term performance.  Discretionary annual cash bonuses are 
intended to reward short-term performance and to make our senior executive compensation packages competitive 
with comparable executive positions in other companies.

53

Incentive Compensation.  The following table provides a summary of the 2017 incentive compensation targets for 
the Four Named Executive Officers:

Name
Ronald A. Duncan1
Peter J. Pounds2
Martin E. Cary
Gregory F. Chapados2
Tina M. Pidgeon

Adjusted 
EBITDA
($)

Discretionary
($)

Total 2017 
Incentive 
Compensation 
Plan Target
($)

404,032

102,375

97,500

270,619

90,000

1,616,130

2,020,162

352,625

552,500

932,131

510,000

455,000

650,000

1,202,750

600,000

1  Mr. Duncan's incentive compensation target is $150,495 lower than what was disclosed in the 2017 Proxy 
Statement filed with the SEC on May 16, 2017 due to lower actual Adjusted EBITDA from the estimate used in the 
Proxy Statement.  As disclosed in the 2017 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 two 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.

The following is a description of what each of these incentive compensation targets are and how they are 
measured.

Adjusted EBITDA.  The Adjusted EBITDA goal is intended to focus the Named Executive Officers on increasing 
Adjusted EBITDA.  Adjusted EBITDA for purposes of this goal is defined as earnings plus imputed interest on 
financed devices and the cash received in excess of revenue recognized for long-term roaming arrangements 
before net interest expense, income taxes, depreciation and amortization expense, loss on extinguishment of debt, 
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, and other non-cash 
adjustments. The goal is achieved by the Company recording Adjusted EBITDA that is equal to the Adjusted 
EBITDA target.

The target for this metric was $321.4 million in 2017 for the Named Executive Officers who would earn their Target 
Incentive Compensation for this goal if the metric was achieved.  In the case of the Named Executive Officers, the 
incentive compensation earned is increased or decreased from the Target Incentive Compensation by 5% for each 
$1 million that the actual Adjusted EBITDA is above or below the Adjusted EBITDA metric.

Discretionary.   The board will take various factors into account when deciding on the payout of the discretionary 
portion of the plan applying to the Named Executive Officers.  These factors include, but are not limited to, 
leadership, crisis management, succession planning, strategic planning, risk management, special projects, and 
financial reporting.

54

The following table summarizes the 2017 incentive compensation achieved by the Named Executive Officers, each 
of whom participated in this plan.  The 2017 incentive compensation was paid 50% in cash and 50% in the form of 
restricted stock grants that will vest at the end of three years after the grant date with the exception of Mr. Duncan 
who was paid 75% in cash and 25% in the form of restricted stock grants; the majority of the cash portion was paid 
in 2017:

Ronald A.
Duncan

Peter J.
Pounds

Martin E.
Cary

Gregory F.
Chapados

Tina M.
Pidgeon

Goals

Adjusted EBITDA Goal – Target Incentive

Compensation

Adjusted EBITDA Goal Achievement1

16.8 %

16.8 %

16.8 %

16.8 %

2017 Adjusted EBITDA Incentive

Compensation Earned

$

67,533

$ 17,173

$ 16,356

$

45,396

$ 402,580

$ 102,375

$ 97,500

$ 270,619

$

$

90,000

16.8 %

15,098

Discretionary

Discretionary Achievement2

2017 Discretionary Incentive Compensation

Earned

$ 1,610,321

$ 352,625

$ 552,500

$ 932,131

$ 510,000

77.1 %

120.1 %

89.0 %

93.6 %

93.6 %

$ 1,241,463

$ 423,393

$ 491,998

$ 872,599

$ 477,302

2017 Incentive Compensation Earned

$ 1,308,996

$ 440,566

$ 508,354

$ 917,995

$ 492,400

1  The Adjusted EBITDA for this 2017 goal was $321.4 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 2017, the actual 
Adjusted EBITDA for purposes of this goal was $304.8 million resulting in actual Adjusted EBITDA that was $16.6 million below the metric, 
therefore, the earned Incentive Compensation for the Adjusted EBITDA goal was decreased by 83%.

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 efforts to secure certain revenue streams, his 
support of company procurement efforts, and his leadership for efforts to reinforce the Company's culture.  With regard to Mr. Pounds, the 
Compensation Committee considered his leadership in regards to leading an initiative to achieve savings through a procurement initiative, 
team development and succession planning, and his support for other corporate initiatives.  With regard to Mr. Cary, the Compensation 
Committee considered, among other things, his efforts to secure certain revenue streams, his support of the Company's procurement 
initiative, and his leadership of key initiatives within GCI Business.  With regard to Mr. Chapados, the Compensation Committee considered, 
among other things, his leadership of key company initiatives including reinforcing the Company's culture, risk management, his support of 
the Company's procurement initiative, and team development.  With regard to Ms. Pidgeon, the Compensation Committee considered her 
leadership in revenue assurance efforts, corporate risk management, supporting the Company's initiatives, and team development.

Stock Option Plan.  Awards, if granted to the Named Executive Officers, were granted pursuant to terms of our 
Stock Option Plan.  Awards, if granted, were granted contemporaneously with the approval of the Compensation 
Committee, typically early in the year in question or late in the previous year as described above.  See "Part III – 
Item 11 – Compensation Discussion and Analysis:  Elements of Compensation – Incentive Compensation Plan."

We adopted our stock option plan in 1986.  It has been subsequently amended from time to time and presently is 
our Stock Option Plan, i.e., our Amended and Restated 1986 Stock Option Plan.  Under our Stock Option Plan, we 
are authorized to grant awards and options to purchase shares of Class A-1 common stock to selected officers, 
directors and other employees of, and consultants or advisors to, the Company and its subsidiaries.  We have not 
issued any stock options since 2010.  The selection of grantees for awards under the plan is made by our 
Compensation Committee.

The number of shares of Class A-1 common stock allocated to the Stock Option Plan is 15.7 million shares.  The 
number of shares for which options or awards may be granted is subject to adjustment upon the occurrence of 
stock dividends, stock splits, mergers, consolidations and certain other changes in corporate structure or 
capitalization.  As of December 31, 2017, 1.2 million shares had been granted subject to vesting, 6.9 million share 
grants had vested, 8.7 million shares had been issued upon the exercise of options under the plan, 2.3 million 
shares had been repurchased by the plan and 1.2 million shares remained available for additional grants under the 
plan.

Restricted stock awards granted under the Stock Option Plan may be subject to vesting conditions based upon 
service or performance criteria as the Compensation Committee may specify.  These specifications may include 
attainment of one or more performance targets.  Shares acquired pursuant to such an award may not be transferred 
by the participant until vested.  Unless otherwise provided by the Compensation Committee, a participant will forfeit 

55

any shares of restricted stock where the restrictions have not lapsed prior to the participant's termination of service 
with us.  Participants holding restricted stock will have the right to vote the shares and to receive dividends paid, if 
any.  However, those dividends or other distributions paid in shares will be subject to the same restrictions as the 
original award.

Our Compensation Committee selects each grantee and the time of grant of an option or award and determines the 
terms of each grant, including the number of shares covered by each grant and the exercise price.  In selecting a 
participant, as well as in determining these other terms and conditions of each grant, our Compensation Committee 
takes into consideration such factors as it deems, in its sole discretion, relevant in connection with accomplishing 
the purpose of the plan.

Under our Stock Option Plan, our authority to modify or amend the plan is subject to prior approval of our 
shareholders only in cases of increasing the number of shares of our stock allocated to, and available and reserved 
for, issuance under the plan, changing the class of persons eligible to receive incentive stock options or where 
shareholder approval is required under applicable law, regulation or rule.

Subject to these limitations, the Company may terminate or amend the Stock Option Plan at any time.  However, no 
termination or amendment may affect any outstanding option or award unless expressly provided by the 
Compensation Committee.  In any event, no termination or amendment of the plan may adversely affect an 
outstanding option or award without the consent of the participant unless necessary to comply with applicable law, 
regulation or rule.

With limited exception, no maximum or minimum exists with regard to the amount, either in dollars or in numbers, of 
options that may be exercised in any year, either by a single optionee or by all optionees under our Stock Option 
Plan.  At the 2002 annual meeting, our shareholders approved an amendment to the plan placing a limitation on 
accumulated grants of options of not more than 500,000 shares of Class A-1 common stock per optionee per year.

With these exceptions, there are no fixed limitations on the number or amount of securities being offered, other than 
the practical limitations imposed by the number of employees eligible to participate in the plan and the total number 
of shares of stock authorized and available for granting under the plan.   Shares covered by options which have 
terminated or expired for any reason prior to their exercise are available for grant of new options pursuant to the 
plan.

Perquisites.  The Company provides certain perquisites to its Named Executive Officers.  The Compensation 
Committee believes these perquisites are reasonable and appropriate and consistent with our awareness of 
perquisites offered by similar publicly traded companies.  The perquisites assist in attracting and retaining the 
Named Executive Officers and, in the case of certain perquisites, promote health, safety and efficiency of our 
Named Executive Officers.  These perquisites are as follows:

•  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."

56

•  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.

Retirement and Welfare Benefits – GCI 401(k) Plan.  In January 1987, 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-1 common stock at market value as well as various mutual funds. We may 
match a percentage of the employees' contributions up to certain limits. Named Executive Officers may, along with 
our employees generally, participate in our GCI 401(k) Plan in which we may provide matching contributions in 
accordance with the terms of the plan.

As of December 31, 2017, there remained 4.1 million shares of Class A-1 and 0.5 million shares of Class B-1 
common stock allocated to our GCI 401(k) Plan and available for issuance by us or otherwise acquisition by the 
plan for the benefit of participants in the plan.

– Deferred Compensation Arrangements.  The Company offers to our executive officers deferred compensation 
arrangements specifically fashioned to the needs of the officer and us ("Deferred Compensation 
Arrangements").  During 2017, none of our Named Executive Officers participated in Deferred Compensation 
Arrangements.

– Welfare Benefits.  With the exception of the enhanced long-term and short-term disability benefits described 
previously, the Company provided to the Named Executive Officers the same health and welfare benefits provided 
generally to all other employees of the Company at the same general premium rates as charged to those 
employees.  The cost of the health and welfare programs is subsidized by the Company for all eligible employees 
including the Named Executive Officers.

Performance Rewarded –

Our Compensation Program is, in large part, designed to reward individual performance.  What constitutes 
performance varies from officer to officer, depending upon the nature of the officer's responsibilities.  Consistent with 
the Compensation Program, the Company identified key business metrics and established defined targets related to 
those metrics for each Named Executive Officer.  In the case of each Named Executive Officer, the targets were 
regularly reviewed by management, from time to time, and provided an immediate and clear picture of performance 
and enabled management to respond quickly to both potential problems as well as potential opportunities.  The 

57

Compensation Program also was used to establish and track corresponding applicable targets for individual 
management employees.

In 2017, the Compensation Program was used in the development of each Named Executive Officer's individual 
performance goals and established incentive compensation targets.  The Compensation Committee evaluated the 
performance of each of the executive officers and the financial performance of the Company and awarded incentive 
compensation as described above.  See "Part III – Item 11 – Compensation Discussion and Analysis:  Elements of 
Compensation – Incentive Compensation Plan."

Our Compensation Committee increased Mr. Pounds' total incentive compensation plan target for 2018 from 
$455,000 to $535,000.  The increase to Mr. Pounds' Incentive Compensation is to replace compensation that was 
previously granted in the form of a retention restricted stock award.   

Timing of Equity Awards –

Overview.  Timing of equity awards under our Director Compensation Plan and equity awards under our 
Compensation Program varies with the plan or portion of that program.  However, the Company does not, and has 
not in the past, timed its release of material nonpublic information for purposes of affecting the value of equity 
compensation.  Timing issues and our grant policy are described further below.

Director Compensation Plan.  As a part of the Director Compensation Plan, we grant awards of our common stock 
to board members, including those persons who may also be serving as one or more of our executive officers.  Mr. 
Duncan, a board member and Named Executive Officer, has been granted such awards in the past.  These awards 
are made annually in June of each year in accordance with the terms of the Director Compensation Plan.  The 
awards are made through our Stock Option Plan.  See "Part III – Item 11 – Compensation Discussion and 
Analysis:  Elements of Compensation – Stock Option Plan."

Incentive Compensation Plan.  As a part of our Compensation Program, from time to time, we grant awards in our 
Class A-1 common stock to our executive officers, including the Named Executive Officers.  In particular, awards 
are granted in conjunction with the agreements that we enter into with Named Executive Officers pursuant to our 
Incentive Compensation Plan.  The grants of such awards are typically made early in the year at the time our board 
finalizes the prior year incentive compensation plan payouts for each of the Named Executive Officers.  All such 
awards are granted through the Stock Option Plan.  See "Part III – Item 11 – Compensation Discussion and 
Analysis:  Elements of Compensation – Incentive Compensation Plan" and "– Elements of Compensation – Stock 
Option Plan."

Stock Option Plan.  As a part of our Compensation Program, from time to time, we grant stock awards in our Class 
A-1 common stock to our executive officers.  In all cases, regardless of the identity of the grantee, the timing, 
amount and other terms of the grant of awards under our Stock Option Plan are determined in the sole discretion of 
our Compensation Committee.  See "Part III – Item 11 – Compensation Discussion and Analysis:  Elements of 
Compensation – Stock Option Plan."

Grant Policy.  Under our grant policy, all approved grants are granted effective the date they were approved by the 
committee and are priced at the market value at the close of trading on that date.  The terms of the award are then 
communicated to the recipient within a reasonable time period.

Tax and Accounting Treatment of Executive Compensation –

In determining the amount and form of compensation granted to executive officers, including the Named Executive 
Officers, the Company takes into consideration both tax treatment and accounting treatment of the 
compensation.  Tax and accounting treatment for various forms of compensation is subject to changes in, and 
changing interpretations of, applicable laws, regulations, rulings and other factors not within the Company's 
control.  As a result, tax and accounting treatment is only one of several factors that the Company takes into 
account in designing the previously described elements of compensation.

58

Compensation Policies and Practices in Relation to Our Risk Management –

At the direction of our board, Company management has reviewed our compensation policies, plans and practices 
to determine whether they create incentives or encourage behavior that is reasonably likely to have a materially 
adverse effect on the Company.  This effort included a review of our various employee compensation plans and 
practices as described elsewhere in this report.  See "Part III – Item 11 – Compensation Discussion and Analysis: 
Process."

The purpose of the review was to evaluate risks and the internal controls we have implemented to manage those 
risks.  The controls include multiple performance metrics, corporate-wide financial measures, statutory clawbacks 
on equity awards, and board and board committee oversight and approvals.

In completing this review, our board and management believe risks created by our compensation policies, plans and 
practices that create incentives likely to have a material adverse effect on us are remote.

Pay Ratio Disclosure Rule - 

In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-
Frank Act"), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee's annual total 
compensation to the total annual compensation of the principal executive officer ("PEO").  Our PEO Is Ronald A. 
Duncan. 

To determine the median employee, a listing was prepared of all active employees as of December 31, 2017 
including the following:

•  Full-time employees
•  Part-time employees
•  Temporary employees
•  Seasonal employees
•  Any contractors paid W-2 wages

We used gross wages from the W-2 to determine the median employee and for the wages used to calculate the 
ratio.  W-2 wages include base salary, bonus payments, the value of realized equity awards, paid commissions, and 
taxable fringe benefits.  We did not annualize wages and salaries for employees who were not employed for all of 
2017.

For 2017, the total compensation for our PEO was $3,223,376 and our median employee's pay was $68,563.  As a 
result, the pay ratio of our CEO to the median employee for 2017 was 47.01 to 1.

Shareholder Advisory Votes on Executive Compensation

At our 2017 annual meeting, our shareholders adopted a non-binding proposal pertaining to executive 
compensation of our Named Executive Officers.  Our board anticipates placing before our shareholders a proposal 
on executive compensation at our 2020 annual shareholder meeting.

Our board views decisions as to compensation of Company named executive officers, including but not limited to 
those for 2017, as its responsibility.  Our board takes this responsibility seriously and has gone to considerable 
effort to establish and implement a process for determining executive compensation as described elsewhere in this 
report.  See "Part III – Item 11 – Compensation Discussion and Analysis."

Our board carefully considers all proposals from our shareholders.  However, in light of its responsibilities to the 
Company, our board may or may not follow the advice of those shareholder votes.

Our board contemplates next placing before our shareholders a proposal dealing with the frequency of shareholder 
advisory votes on executive compensation of our named executive officers during our 2020 annual shareholder 
meeting.

59

Executive Compensation

Summary Compensation Table –

As of December 31, 2017, the Company did not have employment agreements with any of the Named Executive 
Officers.  The following table summarizes total compensation paid or earned by each Named Executive Officer for 
fiscal years 2017, 2016 and 2015.  The process followed by the Compensation Committee in establishing total 
compensation for each Named Executive Officer as set forth in the table is described elsewhere in this report.  See 
"Part III – Item 11 – Compensation Discussion and Analysis."

Summary Compensation Table

Nonequity 
Incentive 
Plan
Compen-
sation
($)

Stock
Awards2
($)

Option 
Awards2
($)

Change in 
Pension Value 
and 
Nonqualified 
Deferred 
Compensation 
Earnings
($)

Year

Salary
($)

Bonus
($)1

2017 925,000

2016 925,000

—

—

981,747

1,188,7895

833,632

1,118,4546

2015 925,000

— 1,096,999

1,269,9097

2017 400,000

35,384

184,899

2016 400,000

5,280

206,982

2015 400,000

6,417

235,888

2017 200,000

—

254,177

468,1345

1,845,5818

365,4568

812,3935

2016 160,000

115,858

711,699

1,754,25410

2017 450,000

—

458,998

1,144,7865

2016 450,000

7,313

511,768

1,020,8836

2015 450,000

8,363

530,748

2017 325,000

—

369,300

2016 325,000

17,550

409,415

2015 325,000

31,990

486,519

757,8637

154,7555

158,6826

228,02411

—

—

—
—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

All Other 
Compensation
($)3

Total
($)

127,840 3,223,376

83,000 2,960,086

83,000 3,374,908

25,000 1,113,417

18,279 2,476,122

20,437 1,028,198

19,000 1,285,570

60,190 2,802,001

22,000 2,075,784

22,279 2,012,243

24,437 1,771,411

22,000

871,055

21,279

931,926

23,437 1,094,970

Name and
Principal Position
Ronald A. Duncan4
  Chief Executive Officer

Peter J. Pounds
  Senior Vice President,
  Chief Financial Officer
  and Secretary

Martin E. Cary
  Senior Vice President and 
  General Manager -
  Business9
Gregory F. Chapados
  President and Chief 
  Operating Officer

Tina M. Pidgeon
  Senior Vice President,
  Chief Compliance Officer,
  General Counsel and
  Governmental Affairs

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-1 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 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.  In 2017, Mr. Duncan received $347,300 in compensation for service on our board in the form of $65,000 
in director fees and a stock award valued at $282,300.  
5  The Stock Awards granted during 2017 were for the Named Executive Officer's performance during 2016.
6  The Stock Awards granted during 2016 were for the Named Executive Officer's performance during 2015.
7  The Stock Awards granted during 2015 were for the Named Executive Officer's performance during 2014.  
8  In 2016, Mr. Pounds received a stock award with a grant date fair value of $458,831 for his performance during 2015 and 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 2017 and 2016 as he was not a Named Executive Officer in 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 2015, Ms. Pidgeon received a stock award with a grant date fair value of $179,496 for her performance during 2014 and a stock award 
with a grant date fair value of $48,528 for her performance related to the Wireless Acquisition.

60

The amounts reported under the "All Other Compensation" column are comprised of the following:

Name
Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

Components of "All Other Compensation"

Stock 
Purchase
Plan1
($)

Year

Board
Fees
($)

Success 
Sharing2
($)

Use of 
Company 
Leased
Aircraft3
($)

Use of 
Company 
Retreat 
Facilities4
($)

Miscellaneous
($)

Total
($)

2016

2016

2015

2017

2016

2015

2017

2016

2017

2016

2015

2017

2016

2015

18,000

18,000

65,000
65,000

18,000

65,000

18,000

18,000

18,000

18,000

18,000

18,000

18,000

18,000

18,000

18,000

18,000

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

279

2,437

—

279

—

279
2,437

—

279
2,437

—

—

—

—

—

—

—

41,911

—

—

—

—

—

—

44,840

—

—

7,000

—

—

—

—

—

—

—

—

—

—

— 127,840

— 83,000

— 83,000

— 25,000

— 18,279

— 20,437

1,0005

19,000

— 60,190

4,0005
4,0005
4,0005
4,0005
3,0005
3,0005

22,000

22,279

24,437

22,000

21,279

23,437

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 2017, 
2016 and 2015, the match was based upon the lesser of $18,000 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  The allocated cost of using the Company's remote fishing retreat for personal guests or family members.
5  Compensation for attending certain management meetings.

61

Grants of Plan-Based Awards Table –

The following table displays specific information on grants of options, awards and non-equity incentive plan awards 
under our Compensation Program and, in addition, in the case of Mr. Duncan, our Director Compensation Plan, 
made to Named Executive Officers during 2017.

Grants of Plan-Based Awards

Estimated Future Payouts Under
Non-Equity Incentive Plan 
Awards

Estimated Future Payouts Under
Equity Incentive Plan Awards

Name

Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Grant Date

03/01/17

06/01/17

03/01/17

03/01/17

Gregory F. Chapados 03/01/17

Tina M. Pidgeon

03/01/17

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

 All Other
 Stock
Awards:
Number of
Shares
of Stock
or Units (#)
42,8602
7,5003
22,1342
38,4112
54,1272
7,3172

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
($)

---

---

---

---

---

---

---

---

---

---

---

---

906,489

282,300

468,134

812,393

1,144,786

154,755

1  Computed in accordance with FASB ASC Topic 718.

2  Represents the 50% portion of the 2016 incentive compensation paid in the form of restricted stock grants  under our Incentive 
Compensation Plan that were not granted until 2017.  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."

62

Outstanding Equity Awards at Fiscal Year-End Table –

The following table displays specific information on unexercised options, stock that has not vested and equity 
incentive plan awards for each of the Named Executive Officers and outstanding as of December 31, 2017.  Vesting 
of these options and awards varies for the Named Executive Officers as described in the footnotes to the table.

Outstanding Equity Awards at Fiscal Year-End

Option Awards

Stock Awards

Name

Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F.
Chapados

Tina M. Pidgeon

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 (#)

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

55,460 1
42,860 1
3,333 2
25,266 1
22,134 1
75,000 3
6,745 1
38,411 1
75,000 3
60,000 4
56,216 1
54,127 1
90,000 5
8,738 1
7,317 1

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 ($)

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

Market
Value of
Shares or
Units of
Stock that
Have Not
Vested ($)
2,164,049 1
1,672,397 1
130,054 2
985,879 1
863,669 1
2,926,500 3
263,190 1
1,498,797 1
2,926,500 3
2,341,200 4
2,193,548 1
2,112,036 1
3,511,800 5
340,957 1
285,509 1

1  Restricted stock vests on November 30, 2018.
2  Restricted stock vests on February 6, 2018.
3  Restricted stock vests on November 30, 2021.
4  Restricted stock vests 30,000 shares on each of January 1, 2018 and 2019.
5  Restricted stock vests 45,000 shares on each of January 1, 2018 and 2019.

63

Option Exercises and Stock Vested Table –

The following table displays specific information on each exercise of stock options, stock appreciation rights, and 
similar instruments, and each vesting of stock, including restricted stock, restricted stock units and similar 
instruments on an aggregate basis, for each of the Named Executive Officers during 2017:

Option Exercises and Stock Vested

Option Awards

Stock Awards

Name
Ronald A. Duncan

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

Number of 
Shares
Acquired 
on 
Exercise 
(#)

Value 
Realized 
on 
Exercise
($)

Number of 
Shares
Acquired 
on Vesting 
(#)

Value 
Realized 
on Vesting
($)

3,155,684

282,300

31,904

735,701

1,984,000

269,233

311,098

615,300

2,077,355

79,070
7,500 1
1,666

18,434

50,000

6,746

7,795

30,000

52,051

135,000

2,768,850

1,666

12,328

31,904

492,010

---

---

---

---

---

---

---

---
---

---

---

---

---

---

---

---

---

---

---

---
---

---

---

---

1  This stock award relates to Mr. Duncan's service as one of our directors.

Potential Payments upon Termination or Change-in-Control –

As of December 31, 2017, there were no compensatory plans or arrangements providing for payments to any of the 
Named Executive Officers in conjunction with any termination of employment or other working relationship of such 
an officer with us (including without limitation, resignation, severance, retirement or constructive termination of 
employment of the officer).  Furthermore, as of December 31, 2017, there were no such plans or arrangements 
providing for payments to any of the Named Executive Officers in conjunction with a change of control of us or a 
change in such an officer's responsibilities to us.  However, the outstanding options and awards for each of our 
Named Executive Officers would vest upon his or her disability, planned retirement or death, or could vest upon a 
change-in-control of the Company.

Nonqualified Deferred Compensation

Deferred Compensation Arrangements –

We have, from time to time, entered into Deferred Compensation Arrangements with certain of our executive 
officers.  These arrangements are negotiated with individual officers on a case-by-case basis.  Our Named 
Executive Officers did not participate in a Deferred Compensation Arrangement with us during 2017.

Compensation Committee Interlocks and Insider Participation

Our Compensation Committee is composed of four members of our board as identified elsewhere in this report.  All 
of these members served on the committee during all of 2017.  See "Part III – Item 11 – Compensation Discussion 
and Analysis:  Overview."  The relationships of them to us are described elsewhere in this report.  See "Part III – 
Item 10 – Identification," "Part III – Item 12 – Principal Shareholders" and "Part III – Item 13 – Certain Transactions."

64

Compensation Committee Report

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and 
Analysis.  Based upon that review and discussion, the Compensation Committee recommended to our board that 
the Compensation Discussion and Analysis be included in our 2017 annual report.

Compensation Committee
Jerry A. Edgerton, Chair
Bridget L. Baker
Stephen M. Brett
Stephen R. Mooney
James M. Schneider

Director Compensation

The following table sets forth certain information concerning the cash and non-cash compensation earned by our 
directors ("Director Compensation Plan"), each for services as a director during the year ended December 31, 2017:

2017 Director Compensation1

Fees
Earned
or
Paid in
Cash
($)
106,250

98,750

65,000

65,000

65,000

65,000

90,000

98,750

65,000

Stock
Awards2
($)
282,300

282,300

282,300

282,300

282,300

282,300

282,300

282,300

282,300

Option
Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

Change in
Pension
Value and
 Nonqualified
Deferred
Compensation
Earnings
($)

All Other
Compensation
($)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

5,000

1,000

1,221

16,000

9,127

8,254

1,127

2,000

2,254

Total
($)

393,550

382,050

348,521

363,300

356,427

355,554

373,427

383,050

349,554

Name

Stephen M. Brett

Bridget L. Baker

Jerry A. Edgerton

Scott M. Fisher

William P. Glasgow

Mark W. Kroloff

Stephen R. Mooney

James M. Schneider

Eric L. Zinterhofer

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-1 common stock on June 1, 2017 (the 
grant date).  The value of the shares on the date of grant was $37.64 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.

Our initial Director Compensation Plan was adopted in 2004 by our board to acknowledge and compensate, from 
time to time, directors on the board for ongoing dedicated service.  During 2017, the Director Compensation Plan 
provided for $65,000 per year for all Directors with the exception of Mr. Mooney, Audit Committee chair, who 
received an additional $25,000 per year (paid quarterly).  During 2017, the board appointed a special committee of 
independent directors to analyze the Reorganization Agreement and Transactions with Liberty.  The board provided 
compensation of $41,250 to Mr. Brett and $33,750 each to Ms. Baker and Mr. Schneider for their work serving on 
the special committee.  

During 2017, the stock compensation portion of our Director Compensation Plan consisted of a grant of 7,500 
shares of Class A-1 common stock to a director for a year of service, or a portion of a year of service.  Because the 
shares vest upon award, they are subject to taxation based upon the then fair market value of the vested shares.

65

In addition to our Director Compensation Plan, during 2017 the directors' families used our company retreat facilities 
and aircraft to transport their families to the retreat facilities.  The compensation attributed to the directors for that 
use is included in "All Other Compensation" in the table above.  During 2017, our board received no other direct 
compensation for serving on the board and its committees. However, they were reimbursed for travel and out-of-
pocket expenses incurred in connection with attendance at meetings of our board and its committees.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related 
Stockholder Matters

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth, as of the end of 2017, information on equity compensation plans approved by our 
shareholders and separately such plans not approved by our shareholders.  The information is focused on 
outstanding options, warrants and rights; the only such plan is our Stock Option Plan as approved by our 
shareholders.

Equity Compensation Plan Information

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)

1,000
1,000

6.93
6.93

1,159,766
1,159,766

Plan category

Equity compensation
plans approved by
security holders

Total:

Ownership of Company

Principal Shareholders –

The following table sets forth, as of December 31, 2017 (unless otherwise noted), certain information regarding the 
beneficial ownership of our Class A-1 common stock and Class B-1 common stock by each of the following:

•  Each person known by us to own beneficially 5% or more of the outstanding shares of Class A-1 

common stock or Class B-1 common stock.

•  Each of our directors.

•  Each of the Named Executive Officers.

•  All of our executive officers and directors as a group.

All information with respect to beneficial ownership has been furnished to us by the respective shareholders.

Name of
Beneficial Owner1
Stephen M. Brett

Ronald A. Duncan

Title of
Class2
Class A-1

Class B-1

Class A-1

Class B-1

Amount and
Nature of
Beneficial
Ownership
(#)

97,750
—

1,098,986 3
1,174,918 3

66

% of Total Shares 
Outstanding
 (Class A & B)2

% Combined
Voting
Power
(Class A & B)2

% of Class

*
—

3.3

38.5

*

6.3

*

20.3

Bridget L. Baker

Jerry A. Edgerton

Scott M. Fisher

William P. Glasgow

Mark W. Kroloff

Stephen R. Mooney

James M. Schneider

Peter J. Pounds

Martin E. Cary

Gregory F. Chapados

Tina M. Pidgeon

Black Rock, Inc.
55 East 52nd Street
New York, New York 10055

Dimensional Fund Advisors LP
Palisades West, Building One
6300 Bee Cave Road
Austin, Texas 78746
GCI 401(k) Plan
2550 Denali St., Ste. 1000
Anchorage, Alaska 99503
Gary Magness
c/o Raymond L. Sutton, Jr.
303 East 17th Ave., Ste 1100
Denver, Colorado 80203-1264
Searchlight ALX, L.P.
745 5th Avenue - 27th Floor
New York, New York 10151

John W. Stanton and
Theresa E. Gillespie
155 108th Avenue., N.E.,
Suite 450
Bellevue, Washington 98004
The Vanguard Group, Inc.
100 Vanguard Blvd
Malvern, Pennsylvania 19355
All Directors and Executive
Officers As a Group
(17 Persons)

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

Class A-1

Class B-1

35,000 4
—
61,750 5
—

598,050 6

—
51,594 7
—

66,100
—

56,400
—

53,892
—

167,894
—

147,050

—

489,136 8

—

180,108
—

3,810,767 9

—

Class A-1

2,070,302 10

Class B-1

—

Class A-1

1,620,331

Class B-1

Class A-1

22,471

—

Class B-1

334,704

Class A-1

1,735,161

Class B-1

—

Class A-1

1,244,497

Class B-1

1,436,469

Class A-1

2,042,425 11

Class B-1

Class A-1

Class B-1

—

4,320,841 12
1,177,613 12

*
—

*
—

1.8

—

*
—

*
—

*
—

*
—

*
—

*

—

1.5
—

*
—

11.6
—

6.3

—

4.9

*

*

11

5.3

3.8

47.1

6.2
—

12.6

38.6

*

*

1.7

*

*

*

*

*

*

1.4

*

10.6

5.8

4.6

*

4.8

7.5

5.7

14.8

*

*

*

*

*

*

*

*

*

*

*

6.0

3.3

2.9

5.3

2.7

24.6

3.2

25.1

*  Represents beneficial ownership of less than 1% of the corresponding class or series of stock.

67

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, 2017 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-1 or B-1 common stock.  The Class A-1 
shares do not include the number of Class B-1 shares owned although the Class B-1 shares are convertible on 
a share-per-share basis into Class A-1 shares.

2  "Title of Class" includes our Class A-1 common stock and Class B-1 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-1 common stock and Class 
B-1 common stock, and the voting power for Class B-1 common stock (10 votes per share) is factored into the 
calculation of that combined voting power.

3  Includes the following: (a) 1,904 shares of Class A-1 common stock allocated to Mr. Duncan under the Issuer’s 
GCI 401(k) Plan, formerly known as the Stock Purchase Plan; (b) 1,062,082 shares of Class A-1 common stock 
and 1,174,918 shares of Class B-1 common stock to which Mr. Duncan has a pecuniary interest (and for which 
968,618 shares of Class A-1 common stock and 1,116,917 shares of Class B-1 common stock are pledged as 
security); (c) 20,000 shares of Class A-1 common stock held by Missy, LLC, which is 25% owned by Mr. 
Duncan, 25% owned by Dani Bowman, Mr. Duncan’s wife, and 50% owned by a trust of which Amanda Miller, 
Mr. Duncan’s daughter, is the 50% beneficiary and for which Mr. Duncan is the General Manager and has voting 
and dispositive power; (d) 15,000 shares of Class A-1 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. Does not include the following: (i) 18,560 shares of Class A-1 common stock or 8,242 shares of Class 
B-1 common stock held by Ms. Miller, with respect to which Mr. Duncan disclaims beneficial ownership; (ii) 
37,000 shares of Class A-1 common stock held by the Amanda Miller Trust, with respect to which Mr. Duncan 
disclaims beneficial ownership; (iii) 63,186 shares of Class A-1 common stock or 27,020 shares of Class B-1 
common stock held by Dani Bowman of which Mr. Duncan disclaims beneficial ownership.

4  Includes 5,000 shares of Class A-1 common stock pledged as security.
5  Includes 54,250 shares of Class A-1 common stock pledged as security.
6  Includes 525,200 shares of Class A-1 common stock owned by Fisher Capital Partners, Ltd. of which Mr. Fisher 

is a partner.

7  Does not include 158 shares of Class A-1 common stock owned by a daughter of Mr. Glasgow.  Mr. Glasgow 

disclaims any beneficial ownership of the shares held by his daughter.

8  Includes 11,708 shares of Class A-1 common stock allocated to Mr. Chapados under the GCI 401(k) Plan, as of 

December 31, 2017. Includes 307,085 shares of Class A-1 common stock pledged as security.

9 As disclosed in Schedule 13G filed with the SEC on January 19, 2018, Black Rock, Inc. has sole voting power for 

3,752,553 shares of Class A-1 common stock and sole dispositive power for 3,810,767 shares of Class A-1 
common stock.

10 As disclosed in Schedule 13G filed with the SEC on February 9, 2018, Dimensional Fund Advisors LP has sole 
voting power for 1,974,747 shares of Class A-1 common stock and sole dispositive power for 2,070,302 shares 
of Class A-1 common stock.

11 As disclosed in Schedule 13G filed with the SEC on February 9, 2018, The Vanguard Group, Inc. has sole 

voting power of 50,725 shares of Class A-1 common stock, shared voting power for 2,100 shares of Class A-1 
common stock, shared dispositive power for 50,625 shares of Class A-1 common stock and sole dispositive 
power for 1,991,800 shares of Class A-1 common stock.

12 Includes 113,127 shares of Class A-1 common stock allocated to such persons under the GCI 401(k) Plan.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Transactions

Transactions with Related Persons –

Stanton Shareholdings, Registration Rights Agreement.  As of December 31, 2017, John W. Stanton and 
Theresa E. Gillespie, husband and wife (collectively, "Stantons"), continued to be significant shareholders of our 
Class B-1 common stock.  As of that date, neither the Stantons nor the Stantons' affiliates were our directors, 
officers, nominees for election as directors, or members of the immediate family of such directors, officers, or 
nominees.

68

We are a party to a registration rights agreement ("Stanton Registration Rights Agreement") with the Stantons 
regarding all unregistered shares the Stantons hold in our Class B-1 common stock and any shares of our Class 
A-1 common stock resulting from conversion of that Class B-1 common stock to Class A-1 common stock.  The 
basic terms of the Stanton Registration Rights Agreement are as follows.  If we propose to register any of our 
securities under the Securities Act of 1933, as amended ("Securities Act") for our own account or for the account of 
one or more of our shareholders, we must notify the Stantons of that intent.  In addition, we must allow the Stantons 
an opportunity to include the holder's shares ("Stanton Registerable Shares") in that registration.

Under the Stanton Registration Rights Agreement, the Stantons also have the right, under certain circumstances, to 
require us to register all or any portion of the Stanton Registerable Shares under the Securities Act.  The agreement 
is subject to certain limitations and restrictions, including our right to limit the number of Stanton Registerable 
Shares included in the registration.  Generally, we are required to pay all registration expenses in connection with 
each registration of Stanton Registerable Shares pursuant to this agreement.

The Stanton Registration Rights Agreement specifically states we are not required to effect any registration on 
behalf of the Stantons regarding Stanton Registerable Shares if the request for registration covers an aggregate 
number of Stanton Registerable Shares having a market value of less than $1.5 million.  The agreement further 
states we are not required to effect such a registration for the Stantons where we have at that point previously filed 
two registration statements with the SEC, or where the registration would require us to undergo an interim audit or 
prepare and file with the SEC sooner than otherwise required financial statements relating to the proposed 
transaction.  Finally, the agreement states we are not required to effect such a registration when in the opinion of 
our legal counsel a registration is not required in order to permit resale under Rule 144 as adopted by the SEC 
pursuant to the Exchange Act.

The Stanton Registration Rights Agreement provides that the first demand for registration by the Stantons must be 
for no less than 15% of the total number of Stanton Registerable Shares.  However, the Stantons may take the 
opportunity to require us to include the Stanton Registerable Shares as incidental to a registered offering proposed 
by us.

Duncan Leases.  We entered into a long-term capital lease agreement in 1991 with the wife of GCI’s CEO for 
property occupied by us.  The leased asset was capitalized in 1991 at the owner’s cost of $900,000 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.  The property consists of a building presently occupied by us.  As of December 31, 2017, the 
payments on the lease were $27,132 per month.  They continue at that rate through September 2018 at which time 
they will increase to $28,732 per month.

In January 2001 we entered into an aircraft operating lease agreement with a company owned by GCI’s 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.

Searchlight Note and Derivative Financial Instrument.  On February 2, 2015 as part of the Wireless Acquisition, 
we sold the Searchlight Note. We may not prepay the Searchlight Note prior to February 2, 2019.  On July 13, 2015, 
we amended the Searchlight transaction documents to permit Searchlight to pledge the Searchlight Note and 
related stock appreciation rights, subject to our right to redeem the Searchlight Note for 50% of its then current 
outstanding balance in the event a lender attempts to enforce its rights with respect to such pledged collateral.

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

Searchlight became a related party as of February 2, 2015, see Notes 7(c), 9, and 13 included in "Part II - Item 8 - 
Consolidated Financial Statements and Supplementary Data" for additional information.

69

Review Procedure for Transactions with Related Persons –

The following describes our policies and procedures for the review, approval or ratification of transactions in which 
we are to be a participant and where the amount involved in each instance exceeds $120,000 and in which any 
related person had or is to have a direct or indirect material interest ("Related Transactions").  Here, we use the 
term "related person" to mean any person who is one of our directors, a nominee for director, an immediate family 
member of one of our directors or executive officers, any person who is a holder of five percent or more of a class of 
our common stock, or any immediate family member of such a holder.

A related person who is one of our officers, directors or employees ("Employee") is subject to our Ethics Code.  The 
Ethics Code requires the Employee to act in the best interest of the Company and to avoid situations which may 
conflict with this obligation.  The code specifically provides that a conflict of interest occurs when an Employee's 
private interest interferes in any way with our interest.  In the event an Employee suspects such a conflict, or even 
an appearance of conflict, he or she is urged by the Ethics Code to report the matter to an appropriate 
authority.  The Ethics Code, Nominating and Corporate Governance Committee Charter and the Audit Committee 
Charter define that authority as being our Chief Financial Officer, the Nominating and Corporate Governance 
Committee, the Audit Committee (in the context of suspected illegal or unethical behavior-related violations 
pertaining to accounting, or internal controls on accounting or audit matters), or the Employee's supervisor within 
the Company, as the case may be.

The Ethics Code further provides that an Employee is prohibited from taking a personal interest in a business 
opportunity discovered through use of corporate position, information or property that properly belongs to us.  The 
Ethics Code also provides that an Employee must not compete with, and in particular, must not use corporate 
position, information, or property for personal gain or to compete with, us.

The Ethics Code provides that any waiver of its provisions for our executive officers and directors may be made only 
by our board and must be promptly disclosed to our shareholders.  This disclosure must include an identification of 
the person who received the waiver, the date of the grant of the waiver by our board, and a brief description of the 
circumstances and reasons under which it was given.

The Ethics Code is silent as to the treatment of immediate family members of our Employees, holders of five 
percent or more of a class of our stock, or the immediate family members of them.  We consider such Related 
Transactions with such persons on a case-by-case basis, if at all, by analogy to existing procedures as above 
described pertaining to our Employees.

The leases described previously were entered into prior to the establishment of the Ethics Code.

Director Independence

The term Independent Director as used by us is an individual, other than one of our executive officers or employees, 
and other than any other individual having a relationship which in the opinion of our board would interfere with the 
exercise of independent judgment in carrying out the responsibilities of a director.  See "Part III – Item 10 – Audit 
Committee, Audit Committee Financial Expert."

Mr. Brett, our Chairman of the Board, while in that capacity an officer under our Bylaws and responsible for the 
conduct of our board meetings and shareholder meetings when present, is considered by our board to have no 
greater influence on our affairs or authority to act on behalf of us than any of the non-executive directors on our 
board.

Our board believes each of its members satisfies the definition of an Independent Director, with the exception of Mr. 
Duncan who is an officer and employee of the Company.  That is, in the case of all other board members, our board 
believes each of them is an individual having a relationship which does not interfere with the exercise of 
independent judgment in carrying out the member's director responsibilities to us.

Item 14. Principal Accountant Fees and Services

70

Pre-Approval Policies and Procedures

We have established as policy, through the adoption of the Audit Committee Charter that, before our External 
Accountant is engaged by us to render audit services, the engagement must be approved by the Audit Committee.

Our Audit Committee Charter provides that our Audit Committee is directly responsible for appointment, 
compensation, retention, oversight, qualifications and independence of our External Accountant.  Also under our 
Audit Committee Charter, all audit services provided by our External Accountant must be pre-approved by the Audit 
Committee.

Our pre-approval policies and procedures with respect to Non-Audit Services include as a part of the Audit 
Committee Charter that the Audit Committee may choose any of the following options for approving such services:

•  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.

The Audit Committee's pre-approval of Non-Audit Services may be waived under specific provisions of the Audit 
Committee Charter.  The prerequisites for waiver are as follows: (1) the aggregate amount of all Non-Audit Services 
constitutes not more than 5% of the total amount of revenue paid by us to our External Accountant during the fiscal 
year in which those services are provided; (2) the service is originally thought to be a part of an audit by our 
External Accountant; (3) the service turns out to be a Non-Audit Service; and (4) the service is promptly brought to 
the attention of the Audit Committee and approved prior to completion of the audit by the committee or by one or 
more members of the committee who are members of our board to whom authority to grant such approvals has 
been delegated by the committee.

During 2017, there were no waivers of our Audit Committee pre-approval policy.

71

Fees and Services
The aggregate fees billed to us by our External Accountant in each of these categories for each of 2017 and 2016 
are set forth as follows:

External Accountant Auditor Fees

Type of Fees
Audit Fees1
Audit-Related Fees2
Tax Fees3
All Other Fees4
Total

2017

2016

$ 1,435,101

1,406,817

134,750

124,693

—

28,875

148,397

—

$ 1,694,544

1,584,089

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 Form S-4 filings and the 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.

All of the services described above were approved in conformity with the Audit Committee's pre-approval policy.

72

Item 15. Exhibits, Consolidated Financial Statement Schedules

Part IV

(1)  Consolidated Financial Statements

Page No.

Included in Part II of this Report:

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets, December 31, 2017 and 2016

Consolidated Statements of Operations, years ended December 31, 2017, 2016 and 2015

Consolidated Statements of Stockholders’ Equity, years ended December 31, 2017, 2016 and 
2015

Consolidated Statements of Cash Flows, years ended December 31, 2017, 2016 and 2015

Notes to Consolidated Financial Statements

(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.

(3) Exhibits

74

76

78

79

80

81

116

73

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
GCI Liberty, Inc.

Opinion on the financial statements 
We have audited the accompanying consolidated balance sheets of GCI Liberty, Inc. (an Alaska corporation) and 
subsidiaries (the “Company”) as of December 31, 2017 and 2016, and the related consolidated statements of 
operations, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2017, 
and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements 
present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and 
the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017, 
in conformity with accounting principles generally accepted in the United States of America. 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United 
States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on 
criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring 
Organizations of the Tredway Commission (“COSO”), and our report dated February 28, 2018 expressed an 
unqualified opinion.

Basis for opinion 
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an 
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with 
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal 
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the 
PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan 
and perform the audit to obtain reasonable assurance about whether the financial statements are free of material 
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of 
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that 
respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and 
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and 
significant estimates made by management, as well as evaluating the overall presentation of the financial 
statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ GRANT THORNTON LLP

We have served as the Company’s auditor since 2009. 

Seattle, Washington
February 28, 2018

74

Report of Independent Registered Public Accounting Firm

Board of Directors and Shareholders
GCI Liberty, Inc.

Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of GCI Liberty, Inc. (an Alaska corporation) and 
subsidiaries (the “Company”) as of December 31, 2017, based on criteria established in the 2013 Internal Control-
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 
(“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial 
reporting as of December 31, 2017, based on criteria established in the 2013 Internal Control-Integrated Framework 
issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United 
States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 
31, 2017, and our report dated February 28, 2018 expressed an unqualified opinion on those financial statements.

Basis for opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for 
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying 
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on 
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm 
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the 
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission 
and the PCAOB. 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and 
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting 
was maintained in all material respects. Our audit included obtaining an understanding of internal control over 
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and 
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we 
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

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

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may 
become inadequate because of changes in conditions, or that the degree of compliance with the policies or 
procedures may deteriorate.

/s/ GRANT THORNTON LLP

Seattle, Washington 
February 28, 2018

75

GCI LIBERTY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

Current assets:

Cash and cash equivalents

ASSETS

Receivables

Less allowance for doubtful receivables

Net receivables

Prepaid expenses

Inventories

Other current assets

Total current assets

Property and equipment

Less accumulated depreciation

Net property and equipment

Goodwill

Cable certificates

Wireless licenses

Other intangible assets, net of amortization

Other assets

Total other assets

Total assets

See accompanying notes to consolidated financial statements.

December 31,

2017

2016

$

15,622

19,297

188,580

3,992

184,588

21,206

12,996

71

184,296

4,407

179,889

18,599

11,945

167

234,483

229,897

2,754,667

1,599,956

1,154,711

2,614,875

1,452,957

1,161,918

242,264

191,635

93,753

75,697

100,957

704,306

239,263

191,635

92,347

74,444

76,435

674,124

$ 2,093,500

2,065,939

76

Continued

GCI LIBERTY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)

(Amounts in thousands)

LIABILITIES AND STOCKHOLDERS’ EQUITY

December 31,

2017

2016

Current liabilities:

Current maturities of obligations under long-term debt, capital leases, and tower

obligations

Accounts payable

Deferred revenue

Accrued payroll and payroll related obligations

Accrued liabilities

Accrued interest (including $5,132 to a related party at December 31, 2017 and 

2016)

Subscriber deposits

Total current liabilities

$

13,972

54,073

38,047

32,044

14,147

13,975

1,271

167,529

13,229

72,937

37,618

30,305

14,729

13,926

917

183,661

Long-term debt, net (including $58,731 and $56,640 due to a related party at 
December 31, 2017 and 2016, respectively)

1,379,059

1,333,446

Obligations under capital leases, excluding current maturities (including $1,702 and 
$1,769 due to a related party at December 31, 2017 and 2016, respectively)

Long-term deferred revenue

Tower obligations

Deferred income taxes

Derivative stock appreciation rights with related party

Other liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Common stock (no par):

Class A-1. Authorized 100,000 shares; issued 32,924 and 32,668 shares at 
December 31, 2017 and 2016, respectively; outstanding 32,898 and 32,642 
shares at December 31, 2017 and 2016, respectively

Class B-1. Authorized 10,000 shares; issued and outstanding 3,052 and 
3,153 shares at December 31, 2017 and 2016, respectively; convertible on a 
share-per-share basis into Class A-1 common stock

Less cost of 26 Class A-1 common shares held in treasury at December 31, 
2017 and 2016

Paid-in capital

Retained earnings (deficit)

Total GCI Liberty, Inc. stockholders' equity

Non-controlling interests

Total stockholders’ equity

40,288

138,022

93,606

90,571

78,330

60,093

50,316

135,877

87,653

137,982

29,700

54,056

2,047,498

2,012,691

—

—

2,578

2,663

(249)

19,133

(12,296)

9,166

36,836

46,002

(249)

3,237

17,068

22,719

30,529

53,248

Total liabilities and stockholders’ equity

$ 2,093,500

2,065,939

See accompanying notes to consolidated financial statements.

77

GCI LIBERTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2017, 2016, AND 2015

(Amounts in thousands, except per share amounts)

2017

2016

2015

Revenues:

Non-related party

Related party

Total revenues

Cost of goods sold (exclusive of depreciation and amortization
shown separately below):

Non-related party

Related party

Total cost of goods sold

Selling, general and administrative expenses

Non-related party

Related party

$

919,204

933,812

—

—

919,204

933,812

973,251

5,283

978,534

280,200

302,578

321,457

—

—

881

280,200

302,578

322,338

370,639

358,356

337,839

—

—

540

Total selling, general and administrative expenses

370,639

358,356

338,379

Depreciation and amortization expense

Software impairment charge

Operating income

197,115

193,775

—

71,250

—

79,103

181,767

29,839

106,211

Other income (expense):

Interest expense (including amortization of deferred loan fees)

Related party interest expense

Derivative instrument unrealized income (loss) with related party

Loss on extinguishment of debt

Impairment of equity method investment

Other

Other expense, net

Income (loss) before income taxes

Income tax (expense) benefit

Net loss

Net income (loss) attributable to non-controlling interests

Net loss attributable to GCI Liberty, Inc.

Basic net loss attributable to GCI Liberty, Inc. common stockholders
per Class A-1 common share

Basic net loss attributable to GCI Liberty, Inc. common stockholders
per Class B-1 common share

Diluted net loss attributable to GCI Liberty, Inc. common
stockholders per Class A-1 common share

Diluted net loss attributable to GCI Liberty, Inc. common
stockholders per Class B-1 common share

See accompanying notes to consolidated financial statements.

78

(83,341)

(7,716)

(48,630)

(649)

—

2,938

(78,628)

(7,455)

3,120

(640)

—

5,569

(78,786)

(6,602)

(11,160)

(27,700)

(12,593)

2,917

(137,398)

(78,034)

(133,924)

(66,148)

41,426

(24,722)

(476)

(24,246)

(0.70)

(0.70)

(0.70)

(0.70)

$

$

$

$

$

1,069

(5,205)

(4,136)

(469)

(3,667)

(0.10)

(0.10)

(0.15)

(0.15)

(27,713)

1,847

(25,866)

159

(26,025)

(0.69)

(0.69)

(0.69)

(0.69)

GCI LIBERTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(Amounts in thousands)

Shares of
Class A-1
and B-1
Common
Stock

Class 
A-1
Common
Stock

Class 
B-1
Common
Stock

Class 
A-1
and B-1
Shares
Held in
Treasury

Paid-in
Capital

Retained
Earnings 
(Deficit)

Non-
controlling
Interests

Total
Stockholders’
Equity

Balances at January 1, 2015

41,157

$ 13,617

2,668

(249)

26,773

124,547

299,866

Net income (loss)

—

—

Common stock repurchases and retirements

(3,317)

(34,469)

Shares issued under stock option plan

Issuance of restricted stock awards

Share-based compensation expense

Distribution to non-controlling interest

Investment by non-controlling interest

Non-controlling interest acquisition

Other

Balances at December 31, 2015

Net loss

219

688

—

—

—

—

—

38,747

—

474

20,374

—

—

—

—

4

—

—

Common stock repurchases and retirements

(3,733)

(196)

Issuance of restricted stock awards

Share-based compensation expense

Non-controlling interest acquisition

Other

Balances at December 31, 2016

Cumulative effect of ASU 2016-09 adoption

Net loss

Common stock repurchases and retirements

Issuance of restricted stock awards

Share-based compensation expense

Conversion of Class B-1 to Class A-1 shares

Investment by non-controlling interest

Non-controlling interest acquisition

Other

790

—

—

17

35,821

—

—

(456)

609

—

—

—

—

2

Balances at December 31, 2017

35,976

$

See accompanying notes to consolidated financial statements.

—

—

—

196

—

—

—

(13)

—

—

—

—

—

13

—

(271,521)

(281,803)

467,222

(25,866)

(53,774)

474

—

10,744

(765)

3,209

(180)

119,261

(4,136)

(58,679)

—

11,051

(14,445)

196

53,248

7,095

(24,722)

(12,293)

—

16,939

—

6,783

(1,138)

90

46,002

—

—

—

—

—

—

—

—

(4)

—

—

—

—

—

—

—

—

—

—

—

—

(20,374)

10,744

—

—

(10,282)

(230)

(26,025)

(19,305)

—

—

—

—

—

—

—

159

—

—

—

—

(765)

3,209

50

2,664

(249)

6,631

79,217

30,998

—

—

—

—

—

(1)

—

—

—

—

—

—

—

—

—

11,051

(14,445)

—

(3,667)

(58,483)

—

—

—

1

(469)

—

—

—

—

—

2,663

(249)

3,237

17,068

30,529

—

—

—

—

—

(85)

—

—

—

—

—

—

—

—

—

—

—

—

18

—

—

—

16,939

—

—

(1,138)

77

7,077

(24,246)

(12,280)

—

—

85

—

—

—

—

(476)

—

—

—

—

6,783

—

—

2,578

(249)

19,133

(12,296)

36,836

79

GCI LIBERTY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2017, 2016 AND 2015

(Amounts in thousands)

Cash flows from operating activities:

Net loss

2017

2016

2015

$

(24,722)

(4,136)

(25,866)

Adjustments to reconcile net loss to net cash provided by operating

activities:

Depreciation and amortization expense

Unrealized (gain) loss on derivative instrument with related party

Deferred income tax expense (benefit)

Share-based compensation expense

Loss on extinguishment of debt

Software impairment charge

Impairment of equity method investment

Other noncash income and expense items

Change in operating assets and liabilities

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of property and equipment

Restricted cash, net

Purchases of other assets and intangible assets

Grant proceeds

Proceeds from the sale of investment

Purchase of businesses, net of cash received

Purchase of KKCC assets

Purchase of investments

Note receivable issued to an equity method investee

Other

197,115

48,630

(41,426)

17,453

649

—

—

13,112

(24,270)

186,541

193,775

(3,120)

5,205

11,043

640

—

—

11,696

(14,827)

200,276

181,767

11,160

(1,847)

10,902

27,700

29,839

12,593

16,142

(8,435)

253,955

(189,366)

(194,478)

(176,235)

(14,532)

(12,952)

2,188

591

(6,802)

—

—

—

—

175

(17,486)

1,527

—

—

(19,700)

(1,800)

—

4,599

65

(13,955)

14,007

7,551

(12,736)

—

—

(3,000)

(4,760)

Net cash used for investing activities

(220,873)

(227,163)

(189,063)

Cash flows from financing activities:

Borrowing on Senior Credit Facility

Repayment of debt, capital lease, and tower obligations

Purchase of treasury stock to be retired

Proceeds from Tower Transactions

Investment by non-controlling interest

Payment of debt issuance costs

Issuance of 2025 Notes

Purchase of non-controlling interests

Issuance of Searchlight note payable and derivative stock appreciation

rights with related party

Payment of bond call premium

Distribution to non-controlling interest

Other

Net cash provided by (used for) financing activities

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

See accompanying notes to consolidated financial statements.

80

127,000

(95,122)

(12,293)

6,839

6,783

(2,563)

—

—

—

—

—

13

30,657

(3,675)

19,297

15,622

125,000

(132,205)

(58,679)

90,795

—

(5,451)

—

—

—

—

—

196

19,656

(7,231)

26,528

19,297

295,000

(494,982)

(53,774)

—

—

(13,979)

445,973

(282,505)

75,000

(20,244)

(4,932)

677

(53,766)

11,126

15,402

26,528

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(1)   Business and Summary of Significant Accounting Principles

In the following discussion, GCI Liberty, Inc. (“GCI”) and its direct and indirect subsidiaries are referred to as 
“we,” “us” and “our.”  Prior to February 20, 2018, we were known as General Communication, Inc.  On 
February 20, 2018, the Commissioner of the Department of Commerce, Community and Economic 
Development of the State of Alaska accepted for filing the amended and restated Articles of Incorporation that 
were approved by our shareholders at a special meeting held on February 2, 2018.  The name change is a 
result of the Transactions described in Note 15 of this Form 10-K.  Additionally, as of February 20, 2018, our 
Class A common stock and Class B common stock were reclassified into Class A-1 common stock and Class 
B-1 common stock, respectively. 

(a)  Business

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.

(b)  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 seven variable interest 
entities (“VIEs”) for which we are the primary beneficiary after providing certain loans and 
guarantees.  These VIEs are as follows:
• 
• 
• 
• 
• 
• 
• 

Terra GCI Investment Fund, LLC (“TIF”)
Terra GCI 2 Investment Fund, LLC (“TIF 2”) 
Terra GCI 2-USB Investment Fund, LLC (“TIF 2-USB”) 
Terra GCI 3 Investment Fund, LLC (“TIF 3”)
Twain Investment Fund 210, LLC ("TIF 4")
Terra GCI 5 Investment Fund 1, LLC ("TIF 5-1") 
Terra GCI 5 Investment Fund 2, LLC ("TIF 5-2")  

We also include in our consolidated financial statements non-controlling interests in consolidated 
subsidiaries for which our ownership is less than 100 percent.  All significant intercompany transactions 
between non-regulated affiliates of our company are eliminated.  Intercompany transactions generated 
between regulated and non-regulated affiliates of our company are not eliminated in consolidation.

(c)  Non-controlling Interests

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

(d)  Acquisitions

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 included 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 accounted for the AWN NCI Acquisition as the acquisition of a non-controlling interest in accordance 

81

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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):

Total consideration transferred to ACS

Allocation of consideration between wireless assets and non-controlling interest acquired:

AWN non-controlling interest

Property and equipment
Other intangible assets

Total consideration

$

304,838

$

303,831

746
261

$

304,838

We 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 was recognized as additional paid-in 
capital in our Consolidated Statement of Stockholders' Equity. The impact of the AWN NCI Acquisition is 
summarized in the following table (amounts in thousands):

Reduction of non-controlling interest

Increase in deferred tax assets

Additional paid-in capital

Fair value of consideration paid for acquisition of equity interest

$

$

268,364

8,445

27,022
303,831

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

82

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(e)  Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update 
("ASU") No. 2014-09, Revenue from Contracts with Customers. This 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. In December 2016, the FASB issued ASU 2016-20 which 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. In September 2017, the FASB issued ASU 2017-13 which allows certain public 
business entities to use the non-public business entities effective dates to adopt ASU 2014-09. In 
November 2017, the FASB issued ASU 2017-14 which supersedes ASC 605-10-S25-1 (Staff Accounting 
Bulletin ("SAB") Topic 13) as a result of SEC SAB No. 116 and adding ASC 606-10-S25-1 as a result of 
SEC Release No. 33-10403.

The standard permits the use of either the retrospective or cumulative effect transition method. We will 
use the modified retrospective method to adopt this standard. We have completed our assessment of 
revenues earned with the exception of our roaming contracts.  We are still completing our quantitative 
assessment of costs to obtain contracts.  Upon adoption, we may recognize a cumulative increase to 
retained earnings of up to $33.3 million as of January 1, 2018 to adjust revenue for roaming contracts and 
costs to obtain contracts.  We will have additional revenue recognition disclosures upon adoption of the 
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. In January 2018, the 
FASB issued ASU 2018-01 which amends Topic 842 to include a practical expedient for transitioning land 
easements that were not previously accounted for as leases to Topic 842. 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 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 

83

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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. The adoption of 
this guidance is not expected to have a material effect on our statement of cash flows.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted 
Cash. This update provides guidance on the presentation of restricted cash or restricted cash equivalents 
in the statement of cash flows. ASU 2016-08 is effective for annual and interim preporting periods 
beginning after December 15, 2017, and interim periods within those fiscal years. Upon adoption of this 
standard, we will include restricted cash with total cash in our Consolidated Statements of Cash Flows.

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment. The 
update eliminates step 2 of the goodwill impairment test. Instead, an entity should perform its annual, or 
interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. 
An entity should recognize an impairment charge for the amount by which the carrying amount exceeds 
the reporting unit’s fair value, with the maximum impairment being the total value of goodwill allocated to 
the reporting unit. ASU 2017-04 is effective for fiscal years, and interim periods within those years, 
beginning after December 15, 2017. The adoption of this guidance is not expected to have a material 
effect on our financial position or results of operations.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718) — Scope 
of Modification Accounting. ASU 2017-09 applies to entities that change the terms or conditions of a 
share-based payment award. The FASB adopted ASU 2017-09 to provide clarity and reduce diversity in 
practice as well as cost and complexity when applying the guidance in Topic 718, Compensation—Stock 
Compensation, to the modification of the terms and conditions of a share-based payment award. The 
amendments provide guidance on determining which changes to the terms and conditions of share-based 
payment awards require an entity to apply modification accounting under Topic 718. Effective for all 
entities for annual periods, including interim periods within those annual periods, beginning after 
December 15, 2017. The adoption of this guidance is not expected to have a material effect on our 
financial position or results of operations.

(f)  Recently Adopted Accounting Pronouncements

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 requires all excess tax benefits to be recorded in 
income even if they have not yet been realized. ASU 2016-09 also provides an election to account for 
forfeitures as they occur as opposed to estimating the amount of forfeitures. We adopted ASU 2016-09 as 
of January 1, 2017 on a modified retrospective basis. We have elected to account for forfeitures as they 
occur. As a result of adoption of this standard, we have recorded a $7.1 million adjustment to Retained 
Earnings (Deficit) as of January 1, 2017.

(g)  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.

(h)  Earnings per Common Share

We compute net loss attributable to GCI per share of Class A-1 and Class B-1 common stock using the 
“two class” method.  Therefore, basic net loss per share is computed by dividing net loss applicable to 
common stockholders by the weighted average number of common shares outstanding during the 

84

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

period.  Diluted net loss per share is computed by dividing net loss by the weighted average number of 
common and dilutive common equivalent shares outstanding during the period. The computation of the 
dilutive net loss per share of Class A-1 common stock assumes the conversion of Class B-1 common 
stock to Class A-1 common stock, while the dilutive net loss per share of Class B-1 common stock does 
not assume the conversion of those shares. The computation of the dilutive net loss per share of Class 
A-1 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-1 common shares, Class B-1 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-1 and Class B-1 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.

(i)  Common Stock

We have a common stock buyback program to repurchase GCI's common stock. The cost of the 
repurchased common stock reduces Retained Earnings (Deficit) in our Consolidated Balance Sheets and 
is constructively retired when purchased. 

(j)  Redeemable Preferred Stock

We have 1,000,000 shares of preferred stock authorized with no shares issued and outstanding at years 
ended December 31, 2017, 2016 and 2015.

(k)  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.  

(l)  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.

(m)  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 

85

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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. Customers with a credit profile which carries a higher risk are 
required to make a down payment for equipment financed through Upgrade Now.

(n) 

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.

(o)  Property and Equipment

Property and equipment is stated at cost. Construction costs of facilities are capitalized. Equipment 
financed under a capital lease 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, 2017, that 
management intends to place in service during 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:

Asset Category

Telephony transmission equipment and distribution facilities
Fiber optic cable systems

Cable transmission equipment and distribution facilities

Support equipment and systems
Transportation equipment

Property and equipment under capital leases

Buildings

Customer premise equipment

Studio equipment

Asset Lives

5-20 years
15-25 years

5-30 years

3-20 years
5-13 years

12-20 years

25 years

2-20 years

10-15 years

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.

(p) 

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 

86

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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.

(q) 

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, 2017 and 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.  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, 2017 and 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 as a result of our Step One impairment test in 2015. These estimates and assumptions 
have a significant impact on our analysis.  If it is determined that a goodwill impairment is more likely than 
not, we use the quantitative two-step process.  

We completed our annual goodwill and intangibles review and no impairment charge was recorded for the 
years ended December 31, 2017, 2016 and 2015.

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, 2017 and 2016.

(r)  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.

87

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(s)  Other Assets

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, 
Universal Service Fund ("USF") high cost receivables, and other long-term non-trade accounts 
receivable.

(t) 

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. 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, 2017 and 2016.

(u)  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.  Following is a reconciliation of the beginning 
and ending aggregate carrying amounts of our liability for asset retirement obligations (amounts in 
thousands):

Balance at December 31, 2015

Liability incurred

Revisions in estimated cash flows, including adjustment from Tower

Transaction (Note 2)

Accretion expense

Liability settled

Balance at December 31, 2016

Liability incurred

Revisions in estimated cash flows

Accretion expense
Liability settled

Balance at December 31, 2017

$

$

35,060

1,580

3,368

1,229

(82)

41,155

4,655

(85)

1,772
(163)
47,334

During the years ended December 31, 2017 and 2016, we recorded additional capitalized costs of $4.7 
million and $4.9 million, respectively, in Property and Equipment.

88

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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.

(v)  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.

(w)  Revenue Recognition

All revenues are recognized when the earnings process is complete. Revenue recognition is as follows:
•  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-
front activation fee charged to the customer does not meet the criteria as a separate unit of 
accounting, we allocate the additional arrangement consideration received from the activation fee to 
the handset (the delivered item) to the extent that the aggregate handset and activation fee 
proceeds do not exceed the fair value of the handset. Any activation fees not allocated to the 
handset would be deferred upon activation and recognized as service revenue on a straight-line 
basis over the expected customer relationship period,

•  We offer new and existing wireless customers the option to participate in Upgrade Now, a program 

that is described above in Note 1(m) 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(ag) 
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 

89

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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.

Universal Service Fund 
As an Eligible Telecommunications Carrier ("ETC"), we receive support from the 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 a 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 are 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 applied 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. 

90

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 mandated 
that as of January 1, 2017, Urban high cost support for 2017 and 2018 would 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 applied 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 2019 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 $62.9 million, $64.1 million and $66.2 
million for the years ended December 31, 2017, 2016 and 2015, respectively.  At December 31, 2017, we 
have $41.0 million in high cost accounts receivable.

Rural Health Care (“RHC”) Program
For the funding year that ran from July 1, 2016 through June 30, 2017, USAC received requests for funds 
that exceeded the funding available for the RHC Program.  USAC allocated the funding on a pro-rata 
basis to rural health care providers who submitted their funding requests during a certain period.  We 
provide services to rural health care providers who were impacted by the pro-rata allocation and as a 
result certain of our customers did not receive the full subsidy that was expected under the program. 
Under the program rules, we are forbidden from lowering our rates for services previously provided, 
however, the Federal Communications Commission ("FCC") published an order on June 30, 2017 to 
assist eligible remote Alaska rural health care providers by allowing Alaska service providers, such as us, 
to retroactively lower their rates, or effectively giving a credit against amounts owed, for services 
provided.  Based on these specific circumstances, we decided to retroactively lower our rates to these 
customers pursuant to the FCC waiver, and as a result we reduced revenue by $5.5 million during the 
year ended December 31, 2017, to aid our rural health care provider customers who were impacted by 
the pro-rata allocation.

(x)  Advertising Expense

We expense advertising costs in the period during which the first advertisement appears. Advertising 
expenses were $5.5 million, $7.0 million and $5.7 million for the years ended December 31, 2017, 2016 
and 2015, respectively.

(y)  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 

91

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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.

(z) 

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. We capitalized interest costs of $5.7 million, $3.7 million and $3.0 million during the years ended 
December 31, 2017, 2016 and 2015, respectively.

(aa)  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.

(ab)  Comprehensive Loss

Total comprehensive loss was equal to net loss during the years ended December 31, 2017, 2016 and 
2015.

(ac)  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.  The fair value of restricted stock awards is determined based on 
the number of shares granted and the quoted price of GCI's common stock.  Share-based compensation 
expense 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 an operating cash flow.

(ad)  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.

(ae)  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, 2017, and 2016, 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.

92

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(af)  Software Capitalization Policy

Internally used software, whether developed or purchased and installed as is, 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. 

We have Software as a Service ("SaaS") arrangements which are accounted for as service agreements, 
and are not capitalized. Internal and other third party costs for SaaS arrangements are expensed as 
incurred. Data migration costs for such arrangements are expensed consistent with the same type of 
costs for internally developed and modified software. Additionally, configuration costs paid to the vendor 
are recorded as a prepaid expense and expensed over the term of the SaaS arrangement.

(ag)  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 seven VIEs.  We have guaranteed the delivery of $65.8 
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.

93

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(ah)  Classification of Taxes Collected from Customers

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

Surcharges reported gross

$

3,226

3,849

5,058

Years Ended December 31,

2017

2016

2015

(ai)  Reclassifications

Reclassifications have been made to the prior years' consolidated financial statements to conform to 
classifications used in the current year.

(2)  Tower Sale and Leaseback

In August 2016, March 2017, and July 2017, we sold to Vertical Bridge Towers II, LLC (“Vertical Bridge”) tower  
sites in exchange for net proceeds of $90.8 million, $3.7 million, and $3.1 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 reduced our asset retirement obligation related to the Tower Sites by $3.4 million as of December 31, 2016.

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 long-
term financial obligations (“Tower Obligations”) in the amount of the net proceeds received and recognize 
interest on the Tower Obligations at a rate of 7.1% using the effective interest method. The Tower Obligations 
are 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):

December 31,
2017

December 31,
2016

Property and equipment, net (1)
Tower obligations(2)
(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.

19,094 $

93,606 $

$

$

18,792

87,653

94

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Future minimum payments related to the Tower Obligations, including expected renewals and excluding 
deferred transaction costs, are summarized below (amounts in thousands):

Years ending December 31,

Total

2018

2019

2020

2021

2022

2023 and thereafter

Total minimum payments

Less amount representing interest

Tower obligations

$

$

7,465

7,615

7,767

7,922

8,081

149,300

188,150

91,978

96,172

(3)  Consolidated Statements of Cash Flows Supplemental Disclosures

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

Year ended December 31,

2017

2016

2015

(Increase) decrease in accounts receivable, net
Increase in prepaid expenses

(Increase) decrease in inventories

(Increase) decrease in other current assets
Increase in other assets

Decrease in accounts payable
Increase in deferred revenues

Increase (decrease) in accrued payroll and payroll related
obligations

Increase (decrease) in accrued liabilities

Increase in accrued interest
Increase (decrease) in subscriber deposits

Increase (decrease) in long-term deferred revenue
Increase (decrease) in components of other long-term liabilities

$

(4,277)
(2,590)

(1,051)

109
(10,419)

(1,735)
429

1,579

(583)

49
354

(5,355)
(780)

Total change in operating assets and liabilities

$

(24,270)

27,453
(6,180)

(623)

(38)
(47,105)

(135)
2,446

(979)

(8,031)

271
(325)

18,649
(230)

(14,827)

(4,230)
(632)

5,710

24
(11,491)

(5,579)
1,743

(1,469)

8,192

7,001
(448)

(8,561)
1,305

(8,435)

The following items are for the years ended December 31, 2017, 2016 and 2015 (amounts in thousands):

Net cash paid or received:

2017

2016

2015

Interest paid, net of amounts capitalized

$

90,998

84,546

76,796

The following items are non-cash investing and financing activities for the years ended December 31, 2017, 
2016 and 2015 (amounts in thousands):

Non-cash additions for purchases of property and equipment

$

Asset retirement obligation additions to property and equipment $

Non-cash consideration for KKCC assets
Non-cash consideration for Wireless Acquisition

$
$

20,630

4,655

—
—

36,854

4,948

13,993
—

26,799

2,048

—
23,326

2017

2016

2015

95

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(4)  Receivables and Allowance for Doubtful Receivables

Receivables consist of the following at December 31, 2017 and 2016 (amounts in thousands):

Trade

Other

Total receivables

2017

2016

$

$

187,000

1,580

188,580

182,993

1,303

184,296

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 26%, 24%, and 19% of our 
revenue for the years ended December 31, 2017, 2016 and 2015, respectively.  We had USF net receivables 
of $131.8 million and $100.5 million at December 31, 2017 and 2016, respectively. 

Changes in the allowance for doubtful receivables during the years ended December 31, 2017, 2016 and 2015 
are summarized below (amounts in thousands):

Description

December 31, 2017
December 31, 2016

December 31, 2015

Additions

Balance at
beginning of
year

Charged to
costs and
expenses

Charged to
other
accounts

$
$

$

4,407

3,630

4,542

5,800
8,516

6,359

—
—

—

Deductions

Write-offs
net of
recoveries

6,215
7,739

7,271

Balance at
end of year

3,992
4,407

3,630

96

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(5)  Net Property and Equipment 

Net property and equipment consists of the following at December 31, 2017 and 2016 (amounts in thousands):

Land and buildings
Telephony transmission equipment and distribution facilities

Cable transmission equipment and distribution facilities

Studio equipment

Support equipment and systems

Transportation equipment
Customer premise equipment

Fiber optic cable systems

Construction in progress

Less accumulated depreciation
Less accumulated amortization on property and equipment under capital

leases

Net property and equipment

2017

$

119,553
1,402,610

2016

114,966
1,271,425

285,665

14,825

299,511

23,468
152,731

353,291

103,013

231,539

15,456

290,209

23,674
158,513

351,460

157,633

2,754,667

1,541,264

2,614,875

1,385,620

58,692

67,337

$ 1,154,711

1,161,918

Gross property and equipment under capital leases

$

112,495

112,495

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 $14.1 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):

Allocation of consideration to assets acquired and liabilities assumed:

Property and equipment

Deferred taxes

Deferred revenue

Total consideration

$

$

49,794

(12,211)

(3,815)

33,768

(6) 

Intangible Assets and Goodwill
As of October 31, 2017, 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, 2017.  The 
remaining useful lives of our cable certificates, wireless licenses, broadcast licenses and goodwill were 
evaluated as of October 31, 2017, 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, 
2017.  

97

  
GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Other Intangible Assets subject to amortization include the following at December 31, 2017 and 2016 (amounts 
in thousands):

Software license fees

Rights to use

Customer relationships

Right-of-way

Trade name

Less accumulated amortization

Net other intangible assets

2017

2016

$

87,989

45,114

4,221

784

252

80,839

45,114

1,530

784

—

138,360

128,267

62,663

75,697

$

53,823

74,444

Changes in Goodwill and Other Intangible Assets are as follows (amounts in thousands):

Balance at December 31, 2015

Asset additions
Amortization expense

Balance at December 31, 2016

Additions from acquisitions
Asset additions

Amortization expense
Asset deletions

Balance at December 31, 2017

Goodwill
$ 239,263

—
—

239,263

3,001
—

—
—

$ 242,264

Other
Intangible
Assets

69,290

17,601
(12,447)

74,444

2,943
11,546

(13,164)
(72)

75,697

Amortization expense for definite-life intangible assets for the years ended December 31, 2017, 2016 and 
2015 follow (amounts in thousands):

Years Ended December 31,

2017

2016

2015

Amortization expense

$

13,164

12,447

10,442

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 12.8 years.

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

Years Ending December 31,

2018

2019
2020
2021
2022

$

$
$
$
$

12,695

10,234
8,188
5,855
3,829

98

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(7)  Long-Term Debt

Long-term debt consists of the following (amounts in thousands):

Issue Date

Interest Rate

Principal Payments Maturity Date

2017

2016

December 31,

Senior Credit Facility
- Term Loan B

November
17, 2016

LIBOR plus
2.25%

Senior Credit Facility
- Term Loan A

November
17, 2016

Senior Credit Facility
- Revolver

November
17, 2016

LIBOR plus 
applicable margin2
LIBOR plus 
applicable margin2

0.25% of the
original principal
due quarterly

Due at maturity

Due at maturity

2025 Notes

2021 Notes

Searchlight note

Wells Fargo note

Total Debt

April 1,
2015

May 20,
2011

February 2,
2015

June 30,
2014

6.875%

Due at maturity

6.75%

Due at maturity

7.5%

Due at maturity

LIBOR plus
2.25%

Monthly
installments

Less unamortized discount

Less unamortized deferred loan fees

Less current portion of long-term debt

Long-term debt, net

February 2, 
20221
November 
17, 20211
November 
17, 20211
April 15, 
20253
June 1, 
20214
February 2, 
20235

$ 242,583

245,187

215,000

215,000

100,000

55,000

450,000

450,000

325,000

325,000

75,000

75,000

July 15, 2029

8,048

8,596

1,415,631

1,373,783

19,466

14,117

2,989

21,878

15,133

3,326

$1,379,059

1,333,446

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

During 2017, we amended our Senior Credit Facility. We paid loan fees and other expenses of $0.5 million
that were expensed immediately in our Consolidated Statements of Operations for the year ended December 
31, 2017 and $0.4 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, 2017 as part of this amendment.

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 $100.0 million outstanding balance and $21.0 million in letters of credit under the $200.0 million 
Senior Credit Facility Revolver at December 31, 2017, which leaves $79.0 million available for borrowing 
as of December 31, 2017.

(b)  2025 Notes and 2021 Notes

Interest on the notes is payable semi-annually in arrears. 

In April 2017, we amended our 2025 Notes and 2021 Notes (the "Notes") due to the Reorganization 
Agreement that we entered into with Liberty (see Note 15). We paid $1.9 million in fees in connection with 

99

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

the amendment to the Notes that were deferred and are being amortized over the remaining life of the 
Notes.

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.

(c)  Searchlight Note

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-1 common 
stock equal in value to the excess of the fair market value of a share of GCI Class A-1 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.

(d)  Covenants

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 Notes' 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 Notes' indentures. 

We were in compliance with all covenants required by our notes and Senior Credit Facility as of 
December 31, 2017.

100

 
GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Maturities of long-term debt as of December 31, 2017 are as follows (amounts in thousands):

Years ending December 31,

2018

2019

2020

2021

2022

2023 and thereafter

Total debt

Less unamortized discount

Less unamortized deferred loan fees

Less current portion of long-term debt

Long-term debt, net

$

2,989

3,010

3,030

643,053

233,365

530,184

1,415,631

19,466

14,117

2,989

$ 1,379,059

(8) 

Income Taxes
Income tax (expense) benefit consists of the following (amounts in thousands):

Deferred tax (expense) benefit:

Federal taxes
State taxes

Years Ended December 31,

2017

2016

2015

$

$

41,531
(105)

41,426

(4,452)
(753)

(5,205)

1,360
487

1,847

Income tax benefit for the year ending December 31, 2017 was recognized primarily as a result of the 
enactment of the Tax Cuts & Jobs Act (“Tax Reform”) in December 2017. The primary provisions of Tax Reform 
affecting us are the reduction to the U.S. corporate income tax rate from 35% to 21% and temporary 100% 
bonus depreciation for certain assets. The change in the tax law required us to remeasure existing net 
deferred tax liabilities using the lower rate in the year of enactment resulting in an income tax benefit of $41.6 
million to reflect these changes in the year ending December 31, 2017. There were no specific impacts of Tax 
Reform that could not be reasonably estimated which we accounted for under prior law.

101

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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):

Years Ended December 31,

2017

2016

2015

“Expected” statutory tax (expense) benefit

Tax reform rate change

$

23,152

41,626

Nondeductible unrealized loss on derivative instrument with

related party

Employee's excess tax benefit for stock based compensation

Nondeductible officer compensation

Nondeductible transaction costs
Nondeductible entertainment expenses

Nondeductible original issue discount

Nondeductible lobbying expenses
State income taxes, net of federal (expense) benefit
Impact of non-controlling interest attributable to non-tax paying

entity

Other, net

(17,021)

3,397

(3,074)

(2,760)
(1,141)

(850)

(345)
(105)

—

(1,453)
41,426

$

(374)

—

1,092

—

(1,424)

—
(1,029)

(773)

(1,192)
(753)

—

(752)
(5,205)

9,699

—

(3,906)

—

(1,906)

—
(1,059)

(660)

(442)
487

220

(586)
1,847

The tax effects of temporary differences that give rise to significant portions of deferred tax assets and 
liabilities at December 31, 2017 and 2016 are summarized below (amounts in thousands):

2017

2016

Deferred tax assets:

Net operating loss carryforwards

Deferred revenue for financial reporting purposes
Asset retirement obligations in excess of amounts recognized for tax

purposes

Compensated absences accrued for financial reporting purposes

Share-based compensation expense for financial reporting purposes in

excess of amounts recognized for tax purposes

Accounts receivable, principally due to allowance for doubtful receivables
Workers compensation and self-insurance health reserves, principally due to

accrual for financial reporting purposes

Alternative minimum tax credits

Deferred compensation expense for tax purposes in excess of amounts

recognized for financial reporting purposes

Other

Total deferred tax assets

Deferred tax liabilities:

Plant and equipment, principally due to differences in depreciation

Intangible assets

Other

Total deferred tax liabilities
Net deferred tax liabilities

$

104,617

44,853

13,328
2,825

2,629

1,023

1,523

1,735

1,370

5,671

179,574

192,413

77,455

277
270,145
90,571

$

$

$

111,236

59,993

16,808
3,505

3,393

1,965

1,705

1,735

1,687

11,515

213,542

245,118

106,061

345
351,524
137,982

At December 31, 2017, we have tax net operating loss carryforwards of $371.2 million that will begin expiring 
in 2020 if not utilized.  Our utilization of remaining acquired net operating loss carryforwards is subject to 

102

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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):

Years ending December 31,

Federal

State

2020
2021

2022

2023

2024

2025
2026

2027

2028

2029

2031
2033

2034
2035

2036

2037
Total tax net operating loss carryforwards

$

$

1,530
29,615

14,081

3,968

722

1,536
663

1,010

39,879

46,537

104,101
5,073

38,561
13,415

282

70,195
371,168

1,505
27,814

13,850

3,903

710

1,511
652

993

39,226

45,756

102,639
4,968

37,312
12,743

268

66,850
360,700

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 2013 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, 
2017, 2016 and 2015, and accordingly, we did not recognize any interest expense.  Additionally, we recorded 
no penalties during the years ended December 31, 2017, 2016 and 2015.

We adopted ASU 2016-09 as of January 1, 2017 on a modified retrospective basis. As a result of this adoption, 
we have recorded a $7.1 million adjustment to Retained Earnings (Deficit) as of January 1, 2017. We recorded 
an excess tax benefit generated from stock based compensation during the year ended December 31, 2017 of 
$3.4 million. We did not record any excess tax benefit generated from stock based compensation during the 
years ended December 31, 2016 and 2015, since we were in a net operating loss carryforward position and 
the income tax deduction would not yet reduce income taxes payable.

103

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(9)  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, 2017 and 2016 are as 
follows (amounts in thousands):

December 31, 2017

Assets:

Level 1 (1)

Level 2 (2)

Level 3 (3)

Total

Deferred compensation plan assets (mutual funds) $

1,323

Liabilities:

Derivative stock appreciation rights

$

—

—

—

—

1,323

78,330

78,330

December 31, 2016

Assets:

Level 1 (1)

Level 2 (2)

Level 3 (3)

Total

Deferred compensation plan assets (mutual funds) $

1,477

Liabilities:

Derivative stock appreciation rights

$

—

—

—

—

1,477

29,700

29,700

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

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

The fair value of our derivative stock appreciation rights was determined using a lattice-based valuation model 
(see the section "Derivative Financial 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, 2017 and 2016 are as follows (amounts in thousands):

December 31, 2017

December 31, 2016

Carrying
Amount

Fair Value

Carrying
Amount

Fair Value

Current and long-term debt

$ 1,382,048

1,458,106

1,336,772

1,393,865

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-1 common stock equal in value to the 
excess of the fair market value of a share of GCI Class A-1 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 

104

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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, and the impact of a change of control (please see Note 15 for additional information 
regarding a change of control contingency).  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, 2017 and 2016:

Contractual term (in years)

Volatility

Risk-free interest rate

Stock Price

2017

2016

1.1 - 5.1

25% to 37.5%

1.3 to 2.2%

$

39.02 $

2.1 - 6.1

37.5%

2.1%

19.45

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 years ended December 31, 2017, 
2016, and 2015:

Fair Value Measurement Using Level 3 Inputs

Balance at January 1, 2015
Issuance

Fair value adjustment at end of period, included in Other Income (Expense)

Balance at December 31, 2015
Fair value adjustment at end of period, included in Other Income (Expense)

Balance at December 31, 2016

Fair value adjustment at end of period, included in Other Income (Expense)

Balance at December 31, 2017

(10)  Stockholders’ Equity

Derivative Stock
Appreciation Rights

$

$

$

$

—
21,660

11,160

32,820
(3,120)

29,700

48,630

78,330

Common Stock
GCI’s Class A-1 and Class B-1 common stock are identical in all respects, except that each share of Class A-1 
common stock has one vote per share and each share of Class B-1 common stock has ten votes per share. 
Each share of Class B-1 common stock outstanding is convertible, at the option of the holder, into one share of 
Class A-1 common stock.

GCI’s Board of Directors has authorized a common stock buyback program for the repurchase of GCI’s Class 
A-1 and Class B-1 common stock in order to reduce the outstanding shares of Class A-1 and Class B-1 
common stock.  We have temporarily suspended the buyback program due to the Reorganization Agreement 
that we entered into with Liberty (see Note 15)

During the years ended December 31, 2017, 2016 and 2015 we repurchased 0.2 million, 3.5 million, and 3.0 
million shares, respectively, of our Class A-1 common stock under the stock buyback program at a cost of $4.0 

105

 
GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

million, $55.2 million and $47.4 million, respectively.  Under this program we are currently authorized to make 
up to $61.2 million of repurchases as of December 31, 2017.  

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-1 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 1.2 million shares 
available for grant under the Stock Option Plan at December 31, 2017.

A summary of nonvested restricted stock award activity under the Stock Option Plan for the year ended 
December 31, 2017, follows (share amounts in thousands):

Nonvested at January 1, 2016

Granted

Vested
Forfeited

Nonvested at December 31, 2016

Weighted
Average
Grant Date
Fair Value

Shares

1,465 $
607 $

(894) $
(5) $

1,173 $

14.41
23.24

16.22
18.48

17.58

The weighted average grant date fair value of awards granted during the years ended December 31, 2017, 
2016, and 2015 were $23.24, $17.87 and $15.06, respectively.  The total fair value of awards vesting during 
the years ended December 31, 2017, 2016, and 2015 were $29.9 million, $13.5 million and $17.0 million, 
respectively. We have recorded share-based compensation expense of $17.5 million, $11.0 million, and $10.9 
million for the years ended December 31, 2017, 2016, and 2015, 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 $11.3 million as of December 31, 2017.  We 
expect to recognize share-based compensation expense over a weighted average period of 1.6 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-1 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, $11.0 million and $9.8 million for the years ended 
December 31, 2017, 2016 and 2015, respectively.  We used cash to fund all of our employer-matching 
contributions during the years ended December 31, 2017, 2016 and 2015.

106

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(11)  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):

Year Ended December 31,
2017

Class A-1

Class B-1

Basic net loss per share:

Numerator:

Undistributed loss allocable to common stockholders

(22,074)

(2,172)

Denominator:

Weighted average common shares outstanding

31,344

3,083

Basic net loss attributable to GCI common stockholders per common
share

$

(0.70)

(0.70)

Diluted net loss per share:
Numerator:

Undistributed loss allocable to common stockholders for basic
computation

$

(22,074)

(2,172)

Reallocation of undistributed loss as a result of conversion of Class B-1
to Class A-1 shares

(2,172)

—

Net loss adjusted for allocation of undistributed earnings and effect
of contracts that may be settled in cash or shares

$

(24,246)

(2,172)

Denominator:

Number of shares used in basic computation

Conversion of Class B-1 to Class A-1 common shares outstanding

Number of shares used in per share computation

31,344

3,083
34,427

3,083

—
3,083

Diluted net loss attributable to GCI common stockholders per
common share

$

(0.70)

(0.70)

107

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Years Ended December 31,

2016

2015

Class A-1

Class B-1

Class A-1

Class B-1

Basic net loss per share:

Numerator:

Undistributed loss allocable to common

stockholders

Denominator:

Weighted average common shares
outstanding

Basic net loss attributable to GCI
common stockholders per common
share

Diluted net loss per share:

Numerator:

Undistributed loss allocable to common
stockholders for basic computation
Reallocation of undistributed loss as a
result of conversion of Class B-1 to Class
A-1 shares

Reallocation of undistributed loss as a
result of conversion of dilutive securities

Effect of derivative instrument that may
be settled in cash or shares

Effect of share based compensation that
may be settled in cash or shares

Net loss adjusted for allocation
of undistributed loss and effect
of contracts that may be settled in cash
or shares

Denominator:

Number of shares used in basic
computation

Conversion of Class B-1 to Class A-1
common shares outstanding

Effect of derivative instrument that may
settled in cash or shares

Effect of share based compensation that
may be settled in cash or shares

Number of shares used in per share
computation

Diluted net loss attributable to GCI
common stockholders per common
share

$

(3,343)

(324)

(23,858)

(2,167)

32,526

3,154

34,764

3,157

$

(0.10)

(0.10)

(0.69)

(0.69)

$

(3,343)

(324)

(23,858)

(2,167)

(324)

—

(1,837)

(5)

—

(2,167)

(154)

—

—

—

—

—

—

—

—

—

$

(5,509)

(478)

(26,025)

(2,167)

32,526

3,154

34,764

3,157

3,154

612

26

—

—

—

3,157

—

—

—

—

—

36,318

3,154

37,921

3,157

$

(0.15)

(0.15)

(0.69)

(0.69)

Weighted average shares associated with outstanding securities for the years ended December 31, 2017, 
2016 and 2015 which have been excluded from the computations of diluted EPS, because the effect of 

108

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

including these securities would have been anti-dilutive, consist of the following (shares, in thousands):

Years Ended December 31,

2017

2016

2015

Derivative instrument that may be settled in cash or shares

1,870

Shares associated with unexercised stock options

Share-based compensation that may be settled in cash or
shares

Total excluded

(12)  Industry Segments Data

1

26

1,897

—

3

—

3

724

108

26

858

We operate our business under a single reportable segment. Effective in the first quarter of 2017, we 
reassessed and reorganized our management and internal reporting structures in order to make our operations 
more efficient, which triggered an analysis of our reportable segments.  As a result of our assessment, we 
merged our former Wireless and Wireline segments into one operating segment.  We realigned our external 
financial reporting to support this change. Our chief operating decision maker assesses our financial 
performance as follows: 
•  Capital expenditure decisions are based on the support they provide to all revenue streams
•  Revenues are managed on the basis of specific customers and customer groups 
•  Costs are generally managed and assessed by function and generally support the organization across all 

customer groups or revenue streams

•  Profitability is assessed at the consolidated level

Prior to 2017, we operated our business under two reportable segments - Wireline and Wireless. As a result of 
the reorganization of our reporting structure, assets, including goodwill, and liabilities were reassigned to a 
single reporting unit.

Revenues summarized by customer and service type for the years ended December 31, 2017, 2016, and 2015 
follows (amounts in thousands):

2017

2016

2015

Consumer

Business

Total

Consumer

Business

Total

Consumer

Business

Total

Revenues

  Wireless

  Data

  Video

  Voice

    Total

167,733

104,614

272,347

177,801

105,355

283,156

199,862

151,710

351,572

145,757

308,480

454,237

140,196

296,202

436,398

130,213

269,472

399,685

99,609

23,783

18,039

117,648

107,305

20,102

127,407

115,074

18,819

133,893

51,189

74,972

26,734

60,117

86,851

30,110

63,274

93,384

436,882

482,322

919,204

452,036

481,776

933,812

475,259

503,275

978,534

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.

We had no major customers for the years ended December 31, 2017 and 2016. We earned revenues from a 
major customer, net of discounts, of $130.8 million or 13% of total consolidated revenues for the year ended 
December 31, 2015.

(13)  Related Party Transactions

On July 11, 2016, we repurchased 1,000,000 shares of our Class A-1 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-1 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 

109

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 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 
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. We also have 
long-term capacity exchange agreements with ACS for which no money is exchanged.

(14)  Variable Interest Entities

New Markets Tax Credit Entities
We have entered into several arrangements under the NMTC program with US Bancorp to help fund various 
projects that extended terrestrial broadband service for the first time to rural Northwestern Alaska communities 
via a high capacity hybrid fiber optic and microwave network.  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.

Each of the transactions has an investment fund, which is a special purpose entity created to effect the 
financing arrangement.  In each of the transactions, we loaned money to the investment fund and US Bancorp 
invested money in the investment fund.  The investment fund would then contribute the funds from our loan 
and US Bancorp's investment to a CDE.  The CDE, in turn, would loan the funds to our wholly owned 
subsidiary, Unicom, Inc. ("Unicom") as partial financing for the projects.  

US Bancorp 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 the projects.  Restricted cash of 
$15.4 million and $0.9 million was held by Unicom at December 31, 2017, and 2016, respectively, and is 
included in our Consolidated Balance Sheets.  We completed construction of the projects partially funded by 
these transactions.

These transactions include put/call provisions whereby we may be obligated or entitled to repurchase US 
Bancorp’s interests in the investment funds. We believe that US Bancorp will exercise the put options at the 
end of the compliance periods for each of the transactions.  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, 2017.  The value attributed 
to the put/calls is nominal.

We have determined that each of the investment funds are VIEs.  The consolidated financial statements of 
each of the investment funds include the CDEs.  The ongoing activities of the VIEs – collecting and remitting 

110

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 $165.9 million and $121.2 million, respectively, as of 
December 31, 2017, and $140.9 million and $104.2 million, respectively as of December 31, 2016.

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.

The following table summarizes the key terms of each of the NMTC transactions:

Financing
Arrangement

Investment
Funds

Transaction
Date

Loan
Amount

NMTC #1

TIF

August 30,
2011

NMTC #2

TIF 2 &
TIF 2-USB

October 3,
2012

NMTC #3

TIF 3

NMTC #4

TIF 4

December
11, 2012

March 21,
2017

$58.3
million

$37.7
million

$8.2
million

$6.7
million

NMTC #5

TIF 5-1
and TIF
5-2

December
22, 2017

$10.4
million

Interest
Rate on
Loan to
Investment
Fund

1%

1%

1%

1%

1%

Maturity
Date

August 30,
2041

October 2,
2042

December
10, 2042

March 21,
2040

December
22, 2047

US
Bancorp
Investment

Loan to
Unicom

Interest Rate
on Loan(s) to
Unicom

Expected Put
Option
Exercise

$22.4
million

$17.5
million

$3.8
million

$3.3
million

$5.1
million

$76.8
million

$55.2
million

$12.0
million

$9.8
million

$14.7
million

1% to 3.96% August 2018

0.71% to
0.77%

1.35%

October 2019

December
2019

0.73%

March 2024

0.67% to
1.24%

December
2024

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.  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.

(15)  Commitments and Contingencies

On April 4, 2017, General Communication, Inc., Liberty Interactive Corporation, a Delaware corporation 
(“Liberty”) and Liberty Interactive LLC, a Delaware limited liability company and a direct wholly-owned 
subsidiary of Liberty (“Liberty LLC”), entered into an Agreement and Plan of Reorganization (as may be 
amended from time to time, the “Reorganization Agreement” and the transactions contemplated thereby, the 
“Transactions”). Pursuant to the Reorganization Agreement, General Communication, Inc. amended and 
restated its articles of incorporation resulting in General Communication, Inc. being renamed GCI Liberty, Inc. 
and a reclassification and auto conversion of its common stock. Following these events, Liberty will acquire 

111

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

GCI through a reorganization in which certain interests, assets and liabilities of the Liberty Ventures Group 
(“Liberty Ventures”) will be contributed to GCI Liberty in exchange for a controlling interest in GCI Liberty.  The 
assets to be contributed to GCI Liberty are expected to include Liberty’s equity interests in Liberty Broadband 
and Charter Communications, Inc. along with certain other equity interests, together with the operating 
business of Evite, Inc. and certain other assets and liabilities, in exchange for (a) the issuance to Liberty LLC 
of (i) a number of shares of GCI Liberty Class A Common Stock and a number of shares of GCI Liberty Class 
B Common Stock equal to the number of outstanding shares of Series A Liberty Ventures common stock and 
Series B Liberty Ventures common stock outstanding on the closing date of the contribution, respectively, and 
(ii) cash, and (b) the assumption by GCI Liberty of certain liabilities attributed to Liberty Ventures.

Following the contribution and acquisition of GCI Liberty, Liberty will then effect a tax-free separation of its 
controlling interest in GCI Liberty to the holders of Liberty Ventures common stock in full redemption of all 
outstanding shares of such stock.  As a result of the Transactions, holders of GCI common stock (regardless of 
class) each will receive (i) 0.63 of a share of GCI Liberty Class A common stock and (ii) 0.20 of a share of new 
GCI Liberty Series A Cumulative Redeemable preferred stock in exchange for each share of their existing GCI 
stock. The exchange ratios were determined based on total consideration of $32.50 per share in respect of 
each share of existing GCI common stock, comprised of $27.50 per share in GCI Liberty Class A common 
stock and $5.00 per share in newly issued GCI Liberty Series A Cumulative Redeemable preferred stock, 
based upon a Liberty Ventures reference price of $43.65 (with no premium paid for shares of GCI Class B 
common stock) and an initial liquidation price of $25.00 per share of GCI Liberty Series A Cumulative 
Redeemable preferred stock. The GCI Liberty Series A Cumulative Redeemable preferred stock will accrue 
dividends at an initial rate of 5% per annum (which would increase to 7% in connection with a future 
reincorporation of GCI Liberty in Delaware) and will be redeemable upon the 21st anniversary of the closing. 
The closing of the Transactions are expected to be consummated on March 9, 2018, subject to the satisfaction 
of customary closing conditions. 

On April 12, 2017, we announced that our wholly owned subsidiary, GCI, Inc., was soliciting consents from the 
holders of its outstanding Notes to effect certain amendments to the indentures governing the Notes (the 
“Indentures”) to facilitate the Transactions, upon the terms and subject to the conditions set forth in the 
Consent Solicitation Statement, dated April 12, 2017, and the related Letter of Consent. The consent 
solicitation expired on April 24, 2017 and we received consents from holders of: (a) $312,418,000 in aggregate 
principal amount of the 2021 Notes, representing 96.13% of the total principal amount outstanding of the 2021 
Notes, and (b) $443,538,000 in aggregate principal amount of the 2025 Notes, representing 98.56% of the 
total principal amount outstanding of the 2025 Notes. The consent of holders of at least a majority in aggregate 
principal amount of a series of Notes then outstanding was required to approve the proposed amendment with 
respect to that series of Notes.  

On April 26, 2017, we paid to the tabulation agent for the benefit of registered holders of Notes as of the record 
date for the Consent Solicitation that validly delivered (and did not validly revoke) a properly completed letter of 
consent  (a “Consent”) on or prior to the expiration date (x) with respect to the proposed amendment relating to 
the 2021 Notes, an aggregate consent fee of $812,500 payable to the holders of 2021 Notes, on a pro rata 
basis, who validly delivered (and did not validly revoke) a properly completed Consent and (y) with respect to 
the proposed amendment relating to the 2025 Notes, an aggregate consent fee of $1,125,000 payable to the 
holders of 2025 Notes, on a pro rata basis, who validly delivered (and did not validly revoke) a properly 
completed Consent.  The proposed amendments will be effected by supplemental indentures to the 
Indentures.  

We believe the Transactions will result in a change of control for the Searchlight stock appreciation rights that 
will result in us settling that instrument in cash.

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 $58.8 million, $58.9 
million and $51.5 million for the years ended December 31, 2017, 2016 and 2015, respectively.

112

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

Capital Leases as Lessee
We entered into a long-term capital lease agreement in 1991 with the wife of GCI’s President 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):

Years ending December 31:

Operating

Capital

2018

2019

2020

2021

2022

2023 and thereafter

Total minimum lease payments

Less amount representing interest
Less current maturity of obligations under capital leases

$

$

48,409

38,293

27,566

19,806

11,715

28,298
174,087

Long-term obligations under capital leases, excluding current maturity

$

13,440

13,450

13,459

12,044

5,293

2,411
60,097

9,781
10,028

40,288

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, 2017, we were self-insured for losses and liabilities related to health and welfare 
claims up to $750,000 per incident per year above which third party insurance applied.  A reserve of $4.8 
million and $4.0 million are recorded at December 31, 2017 and 2016, 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 $3.2 million and $2.9 million are recorded at 
December 31, 2017 and 2016, 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.

Tribal Mobility Fund I Grant

113

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

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 $16.8 million, $0 
million and $13.8 million in 2017, 2016, and 2015, respectively, and expect to receive $10.8 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.

(16)  Software Impairment

During the years ended December 31, 2013 and 2014, we internally developed computer software to replace 
our wireless, Internet, video, local service, and long distance customer billing systems.  In early 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 in early 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.  

In early 2015, we reassessed our plans for our internally developed machine-to-machine billing system and 
decided to no longer market this system to third parties.  Accordingly, we recognized an impairment of $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.

In late 2015, we evaluated user management software we purchased in 2014 and determined that we would 
not be able to use the software.  Accordingly we recognized an impairment of $1.0 million during the year 
ended December 31, 2015 by recording an expense which is included in Software Impairment Charge in our 
Consolidated Statement of Operations.

(17)  Selected Quarterly Financial Data (Unaudited)

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 
2017 and 2016 (amounts in thousands, except per share amounts):

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

2017
Total revenues

Operating income
Net income (loss)

Net income (loss) attributable to GCI

Basic net income (loss) attributable to GCI per
common share

Diluted net income (loss) attributable to GCI per
common share

2016

Total revenues

Operating income
Net income (loss)
Net income (loss) attributable to GCI
Basic net income (loss) attributable to GCI per
common share

Diluted net income (loss) attributable to GCI per
common share

$

$
$

$

$

$

$

$
$
$

$

$

114

228,115
15,346

(55,246)

(55,129)

(1.60)

(1.60)

231,098
20,019

982
1,099

0.03

224,346

231,214

235,529

11,031
(9,000)

(8,882)

24,174
(8,849)

(8,731)

(0.26)

(0.25)

(0.26)

(0.25)

20,699
48,373

48,496

1.35

1.19

233,766

236,655

232,293

19,531
3,298
3,415

0.09

26,368
7,827
7,943

0.21

0.14

13,185
(16,243)
(16,124)

(0.47)

(0.47)

(0.04)

(0.01)

GCI LIBERTY, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

(18) Subsequent Events

On February 2, 2018, we held a special shareholder meeting where our shareholders approved the 
Transactions with Liberty.  On February 20, 2018, the Commissioner of the Department of Commerce, 
Community and Economic Development of the State of Alaska accepted for filing the amended and restated 
Articles of Incorporation that were approved by our shareholders at the special meeting held on February 2, 
2018.

On February 28, 2018, we amended our Senior Credit Facility to increase the revolving credit facility from 
$200.0 million to $300.0 million.  Additionally, we increased the maximum secured leverage ratio permitted 
under the Senior Credit Facility from 3.00:1.00 to 3.50:1.00.

115

Item 15(b). Exhibits

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

Exhibit
No.

2.1

Description
Agreement and Plan of Reorganization, dated as of April 4, 2017, 
by and among Liberty Interactive Corporation, Liberty Interactive 
LLC and General Communication, Inc.

Where Located

Incorporated by reference to
Exhibit 2.1 to Form 8-K/A filed by
the Company on May 1, 2017

2.2

2.3

3.1

3.2

4.1

4.2

4.3

4.4

4.5

Amendment No. 1 dated as of July 19, 2017, to the Agreement 
and Plan of Reorganization by and among Liberty Interactive 
Corporation, Liberty Interactive LLC, and General Communication, 
Inc. as of April 4, 2017

Amendment No. 2 to Reorganization Agreement, dated as of 
November 8, 2017, by and among Liberty Interactive Corporation, 
Liberty Interactive LLC and General Communication, Inc.

Form of Amended and Restated Articles of Incorporation of GCI 
Liberty, Inc.

Amended and Restated Bylaws of the Company dated August 21, 
2017

General Communication, Inc. Amended and Restated 1986 Stock 
Option Plan

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

Unsecured Promissory Note Due 2023 entered into as of July 13, 
2015 by and between General Communication, Inc. and 
Searchlight ALX, LTD

Amended and Restated Stock Appreciation Rights Agreement 
entered into as of July 13, 2015 by and between General 
Communication, Inc. and Searchlight ALX, LTD

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

10.1

The GCI Special Non-Qualified Deferred Compensation Plan1

10.2

Lease Agreement dated September 30, 1991 between RDB 
Company and General Communication, Inc. *

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
September 30, 2017 filed
November 2, 2017.

Incorporated by reference to the
Company's Report on Form 8-K
for the period November 8, 2017
filed November 9, 2017.
Incorporated by reference to
Exhibit 3.1 to Amendment No. 3 to
the Company's Registration
Statement on Form S-4, filed on
December 27, 2017 (File No.
333-219619).

Incorporated by reference to the
Company’s Report on Form 8-K
for the period August 21, 2017
filed August 23, 2017.

Incorporated by reference to the
Company’s Annual Report on
Form 10-K for the year ended
December 31, 2014 filed March 5,
2015.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2015.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2015.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2015.

Incorporated by reference to the
Company's Report on Form 8-K
for the period September 7, 2016
filed September 8, 2016.

Incorporated by reference to the
Company’s Annual Report on
Form 10-K for the year ended
December 31, 1995.

116

Exhibit
No.

10.3

Description

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.

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

Aircraft lease agreement between GCI Communication Corp., and 
Alaska corporation and 560 Company, Inc., an Alaska corporation, 
dated as of January 22, 2001

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

Full-time Transponder Capacity Agreement with PanAmSat 
Corporation dated March 31, 2006 #

Registration Rights Agreement dated as of March 5, 2007 
between General Communication, Inc. and John W. Stanton and 
Theresa E. Gillespie

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.

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 #

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 #

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 #

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 #
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 #

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 #

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 #

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 #

Where Located
Incorporated by reference to the
Company’s Annual Report on
Form 10-K for the year ended
December 31, 2002.

Incorporated by reference to the
Company’s Annual Report on
Form 10-K for the year ended
December 31, 2002.

Incorporated by reference to the
Company’s Annual Report on
Form 10-K for the year ended
December 31, 2002.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
March 31, 2006.

Incorporated by reference to
Exhibit 3 of the Schedule 13D
dated March 5, 2007 filed on
March 12, 2007.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
March 31, 2008.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.
Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2009.

117

Exhibit
No.
10.17

10.18

Description

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

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 25, 2010 # 

10.19

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 

10.20

10.21

10.22

10.23

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 

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 # 

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 # 

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 #

10.24

Indenture dated as of May 20, 2011 between GCI, Inc. and Union 
Bank, N.A., as trustee

10.25

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

Where Located
Incorporated by reference to the
Company's Report on Form 8-K
for the period January 29, 2010
filed February 3, 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.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2010, filed March
15, 2011.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2010, filed March
15, 2011.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2010, filed March
15, 2011.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2010, filed March
15, 2011.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2010, filed March
15, 2011.

Incorporated by reference to GCI,
Inc.'s Report on Form 8-K for the
period May 20, 2011 filed May 25,
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.

Incorporated by reference to the
Company's Report on Form 8-K
for the period August 30, 2011
filed September 6, 2011.

10.26

10.27

10.28

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

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.

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.

118

Exhibit
No.
10.29

10.30

10.31

10.32

10.33

Description

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  #

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  #

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  #

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 #

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 #

10.34

Broadband Initiatives Program Loan/Grant and Security 
Agreement between United Utilities, Inc. and The United States of 
America dated June 1, 2010

10.35

10.36

10.37

Nineteenth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated March 20, 2014 #

Twentieth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated August 11, 2014 # 

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 

10.38

Twenty-First Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated February 26, 2015 # 

10.39

Indenture dated as of April 1, 2015 between GCI, Inc. and MUFG 
Union Bank, N.A., as trustee

10.40

Twenty-Second Amendment to the Full-Time Transponder 
Capacity Agreement (Pre-Launch) between Intelsat Corporation 
and GCI Communication Corp. dated August 11, 2014 #

Where Located
Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2012, filed March
8, 2013.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2012, filed March
8, 2013.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ended
December 31, 2012, filed March
8, 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.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
September 30, 2013 filed
November 8, 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.

Incorporated by reference to the
Company’s Quarterly Report on
Form 10-Q for the period ended
March 31, 2014 filed May 8, 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.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ending
December 31, 2014 filed March 5,
2015.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
March 31, 2015 filed May 8, 2015.

Incorporated by reference to GCI,
Inc.'s Report on Form 8-K for the
period April 1, 2015 filed April 6,
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.

119

Exhibit
No.
10.41

First Amendment to the Fourth Amended and Restated Credit 
Agreement dated as of August 3, 2015

Description

10.42

Twenty-Third Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated July 27, 2015 # 

10.43

Twenty-Fourth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated September 2, 2015 # 

10.44

Twenty-Fifth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated December 31, 2015 #

10.45

Second Amendment to the Fourth Amended and Restated Credit 
Agreement dated as of February 12, 2016

10.46

Twenty-Sixth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated March 7, 2016 #

10.47

Twenty-Seventh Amendment to the Full-Time Transponder 
Capacity Agreement (Pre-Launch) between Intelsat Corporation 
and GCI Communication Corp. dated June 17, 2016 #

10.48

Master Lease Agreement among The Alaska Wireless Network, 
LLC, AWN Tower Company, LLC and General Communication, 
Inc. dated August 1, 2016

10.49

Third Amendment to the Fourth Amended and Restated Credit 
Agreement dated as of November 17, 2016

10.50

Fourth Amendment to the Fourth Amended and Restated Credit 
Agreement dated as of November 17, 2016

10.51

Twenty-Eighth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication Corp. dated October 31, 2016 #

10.52

Voting Agreement, dated as of April 4, 2017, by and among 
Liberty Interactive Corporation, General Communication, Inc., and 
John C. Malone and Leslie Malone

Where Located
Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
June 30, 2015 filed August 5,
2015.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
September 30, 2015 filed
November 5, 2015.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
September 30, 2015 filed
November 5, 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.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ending
December 31, 2015 filed March 3,
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.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
June 30, 2016 filed August 3,
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.

Incorporated by reference to the
Company's Report on Form 8-K
for the period November 17, 2016
filed November 23, 2016.

Incorporated by reference to the
Company's Report on Form 8-K
for the period November 17, 2016
filed November 23, 2016.

Incorporated by reference to the
Company's Annual Report on
Form 10-K for the year ending
December 31, 2016 filed March 2,
2017.
Incorporated by reference to
Exhibit 10.1 to the Company’s
Current Report on Form 8-K/A
filed May 1, 2017

120

Exhibit
No.
10.53

10.54

10.55

10.56

Description

Voting Agreement, dated as of April 4, 2017, by and among 
Liberty Interactive Corporation, General Communication, Inc., and 
John W. Stanton and Theresa E. Gillespie

Voting Agreement, dated as of April 4, 2017, by and among 
Liberty Interactive Corporation, General Communication, Inc., and 
Ronald A. Duncan and Dani Bowman

Where Located

Incorporated by reference to
Exhibit 10.2 to the Company’s
Current Report on Form 8-K/A
filed May 1, 2017

Incorporated by reference to
Exhibit 10.3 to the Company’s
Current Report on Form 8-K/A
filed May 1, 2017

Supplemental Indenture, dated as of April 28, 2017, between GCI, 
Inc. and MUFG Union Bank, N.A., as Trustee (6.75% Senior 
Notes)

Incorporated by reference to
Exhibit 4.1 to Form 8-K filed by
the Company on May 2, 2017.

Supplemental Indenture, dated as of April 28, 2017, between GCI, 
Inc. and MUFG Union Bank, N.A., as Trustee (6.875% Senior 
Notes)

Incorporated by reference to
Exhibit 4.2 to Form 8-K filed by
the Company on May 2, 2017.

10.57

Fifth Amendment to the Fourth Amended and Restated Credit 
Agreement dated as of May 3, 2017

10.58

Twenty-Ninth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication, Corp. dated April 28, 2017 #

10.59

Sixth Amendment to the Fourth Amended and Restated Credit 
Agreement dated as of August 14, 2017

10.60

Thirtieth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication, Corp. dated June 15, 2017 # 

10.61

Thirty-First Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication, Corp. dated June 30, 2017 # 

10.62

Thirty-Second Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication, Corp. dated July 31, 2017 #

10.63

10.64

10.65

14.1
21.1

23.1

Thirty-Third Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication, Corp. dated October 4, 2017 # *

Thirty-Fourth Amendment to the Full-Time Transponder Capacity 
Agreement (Pre-Launch) between Intelsat Corporation and GCI 
Communication, Corp. dated December 29, 2017 # *

Description of Incentive Compensation Plan for Named Executive 
Officers1 *

Code Of Business Conduct and Ethics *

Subsidiaries of the Registrant  *

Consent of Grant Thornton LLP (Independent Public Accountant 
for Company) *

121

Incorporated by reference to the
Company's Report on Form 8-K
for the period May 3, 2017 filed
May 9, 2017.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
June 30, 2017 filed August 3,
2017.

Incorporated by reference to the
Company's Report on Form 8-K
for the period August 14, 2017
filed August 18, 2017.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
September 30, 2017 filed
November 2, 2017.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
September 30, 2017 filed
November 2, 2017.

Incorporated by reference to the
Company's Quarterly Report on
Form 10-Q for the period ended
September 30, 2017 filed
November 2, 2017.

“Executive Compensation” in Part
III of this Annual Report on Form
10-K for the year ending
December 31, 2017.

Exhibit
No.

31.1

31.2

32.1

32.2

101

#

*
1

Description

Where Located

Chief Executive Officer Certification Pursuant to Section 302 of 
the Sarbanes-Oxley Act of 2002 *

Chief Financial Officer Certification Pursuant to Section 302 of the 
Sarbanes-Oxley Act of 2002 *

Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley 
Act of 2002 *

Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley 
Act of 2002 *

The following materials from GCI Liberty, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 2017, formatted in
XBRL (eXtensible Business Reporting Language): (i)
Consolidated Balance Sheets as of December 31, 2017 and 2016;
(ii) Consolidated Statements of Operations for the years ended
December 31, 2017, 2016 and 2015; (iii) Consolidated Statements
of Stockholders' Equity for the years ended December 31, 2017,
2016 and 2015; (iv) Consolidated Statements of Cash Flows for
the years ended December 31, 2017, 2016 and 2015; 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.

Constitute management contracts or compensatory plans.

122

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has 

duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GCI LIBERTY, INC.

Date: February 28, 2018

By:

/s/ Ronald A. Duncan

Ronald A. Duncan, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by 

the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature

/s/ Stephen M. Brett
Stephen M. Brett

/s/ Ronald A. Duncan
Ronald A. Duncan

/s/ Bridget L. Baker

Bridget L. Baker

Chairman of Board and Director

Title

Chief Executive Officer and Director
(Principal Executive Officer)

Director

/s/ Jerry A. Edgerton

Director

Jerry A. Edgerton

/s/ Scott M. Fisher

Scott M. Fisher

/s/ William P. Glasgow
William P. Glasgow

/s/ Mark W. Kroloff

Mark W. Kroloff

/s/ Stephen R. Mooney
Stephen R. Mooney

/s/ James M. Schneider
James M. Schneider

Eric L. Zinterhofer

/s/ Peter J. Pounds
Peter J. Pounds

/s/ Lynda L. Tarbath
Lynda L. Tarbath

Director

Director

Director

Director

Director

Director

Senior Vice President, Chief Financial
Officer, and Secretary
(Principal Financial Officer)

Vice President, Chief Accounting
Officer (Principal Accounting Officer)

123

Date

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

February 28, 2018

ADDITIONAL INFORMATION
As described in our Proxy Statement for our 2018 Annual Meeting of Stockholders, on
March 9, 2018, GCI Liberty, Inc. (formerly General Communication, Inc.) completed the
previously announced transactions with Liberty Interactive Corporation (now known as
Qurate Retail, Inc.). As part of these transactions, Liberty Interactive Corporation and its
subsidiary Liberty Interactive LLC contributed to GCI Liberty their entire equity interests in
Liberty Broadband Corporation, Charter Communications, Inc., and LendingTree, Inc., the
Evite, Inc. operating business and certain other assets and liabilities (collectively,
‘‘HoldCo’’). This contribution was treated as a reverse acquisition under the acquisition
method of accounting in accordance with accounting principles generally accepted in the
United States. For accounting purposes, HoldCo is considered to have acquired GCI
Liberty in the contribution based upon the fact that in exchange for the contribution of
certain assets and liabilities, Liberty Interactive Corporation received a controlling interest in
the combined company of GCI Liberty. Accordingly, effective as of March 9, 2018, the
historical financial statements of HoldCo became the historical financial statements of
GCI Liberty.

We are providing our stockholders with the following audited combined financial statements
of HoldCo in addition to our company’s Annual Report on Form 10-K for the year ended
December 31, 2017 because we believe they are helpful to our stockholders in
understanding the historical financial statements as a result of the transactions described
above, even though our Form 10-K includes the information relating to our company as it
existed on December 31, 2017.

Further, in connection with the transactions described above, all of the members of GCI
Liberty’s board of directors, other than Ronald A. Duncan, and GCI Liberty’s executive
officers as of immediately prior to the completion of the transactions resigned and new
individuals were appointed to the board of directors and as executive officers. Information
regarding the new directors is contained under the heading ‘‘Proposal 1–The Election of
Directors Proposal’’ in our Proxy Statement for our 2018 Annual Meeting of Stockholders
and information regarding the new executive officers is contained under the heading
‘‘Management and Governance Matters – Executive Officers’’ in our Proxy Statement for
our 2018 Annual Meeting of Stockholders. Also, in connection with the transaction
described above, there was a change in the accountants of GCI Liberty, as described
under the heading ‘‘Proposal 2–The Auditors Ratification Proposal – Change in
Independent Auditors’’ in our Proxy Statement for our 2018 Annual Meeting of
Stockholders.

Report of Independent Registered Public Accounting Firm 

To the Stockholders and Board of Directors 
Liberty Interactive Corporation: 

Opinion on the Combined Financial Statements 

We have audited the accompanying combined balance sheets of Liberty Interactive Corporation’s and Liberty 

Interactive LLC’s entire equity interests in Liberty Broadband Corporation, Charter Communications, Inc., and 
LendingTree, Inc., the Evite, Inc. operating business and certain other assets and liabilities (collectively “HoldCo”) as of 
December 31, 2017 and 2016, the related combined statements of operations, comprehensive earnings (loss), cash 
flows, and equity for each of the years in the three-year period ended December 31, 2017, and the related notes 
(collectively, the combined financial statements). In our opinion, the combined financial statements present fairly, in all 
material respects, the financial position of HoldCo as of December 31, 2017 and 2016, and the results of its operations 
and its cash flows for each of the years in the three-year period ended December 31, 2017, in conformity with 
U.S. generally accepted accounting principles. 

Basis for Opinion 

These combined financial statements are the responsibility of HoldCo’s management. Our responsibility is to 

express an opinion on these combined financial statements based on our audits. We are a public accounting firm 
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be 
independent with respect to HoldCo in accordance with the U.S. federal securities laws and the applicable rules and 
regulations of the Securities and Exchange Commission and the PCAOB. 

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing 
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit 
to obtain reasonable assurance about whether the combined financial statements are free of material misstatement, 
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of 
the combined financial statements, whether due to error or fraud, and performing procedures that respond to those risks. 
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the combined 
financial statements. Our audits also included evaluating the accounting principles used and significant estimates made 
by management, as well as evaluating the overall presentation of the combined financial statements. We believe that our 
audits provide a reasonable basis for our opinion. 

/s/ KPMG LLP 

We have served as HoldCo’s auditor since 2017. 

Denver, Colorado 
April 5, 2018 

F-1 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HoldCo 

Combined Balance Sheets 

December 31, 2017 and 2016 

2017 

2016 

amounts in thousands 

Assets 
Current assets: 

Cash and cash equivalents .....................................................................................  
Other current assets ................................................................................................  
Total current assets .............................................................................................  
Investments in available-for-sale securities and other cost investments (note 4) ......  
Investments in affiliates, accounted for using the equity method (note 5) ..................  
Investment in Liberty Broadband measured at fair value (note 5) ..............................  
Other assets ................................................................................................................  
Total assets ..........................................................................................................  
Liabilities and Equity ...................................................................................................  
Current liabilities ..........................................................................................................  
Deferred income tax liabilities (note 6) ........................................................................  
Taxes payable (note 6) ...............................................................................................  
Other liabilities .............................................................................................................  
Total liabilities ......................................................................................................  
Equity ..........................................................................................................................  
Parent’s investment .....................................................................................................  
Retained earnings .......................................................................................................  
Noncontrolling interests in equity of subsidiaries ........................................................  
Total equity ..........................................................................................................  
Commitments and contingencies (note 8) ..................................................................  
Total liabilities and equity .....................................................................................  

  $ 

  $ 

  $ 

573,210  
8,068  
581,278  
1,803,064  
114,655  
3,634,786  
38,430  
6,172,213  

10,465  
643,426  
1,198,315  
95,971  
1,948,177  

2,305,440  
1,914,963  
3,633  
4,224,036  

487,163  
39,866  
527,029  
1,546,615  
31,493  
3,161,444  
34,195  
5,300,776  

4,530  
777,092  
925,715  
757  
1,708,094  

2,398,452  
1,190,568  
3,662  
3,592,682  

  $ 

6,172,213  

5,300,776  

See accompanying notes to combined financial statements. 

F-2 

 
 
 
 
 
 
 
 
 
 
 
  
  
 
  
  
 
 
 
 
 
 
 
  
  
 
 
 
 
 
  
  
 
 
 
 
 
  
  
 
 
HoldCo 

Combined Statements of Operations 

Years ended December 31, 2017, 2016 and 2015 

Total revenue, net ...........................................................................  
Operating costs and expenses: 

Operating expense ......................................................................  
Selling, general and administrative, including stock-based 

compensation (note 2) .............................................................  
Depreciation and amortization .....................................................  

Operating income (loss) ..................................................................  
Other income (expense): 

Share of earnings (losses) of affiliates, net (note 5) ....................  
Realized and unrealized gains (losses) on financial instruments, 
net (note 3) ...............................................................................  
Gains (losses) on transactions, net .............................................  
Other, net .....................................................................................  

Earnings (loss) from continuing operations before income taxes ...  
Income tax (expense) benefit (note 6) .........................................  
Net earnings (loss) ..........................................................................  

Less net earnings (loss) attributable to the noncontrolling 

interests ...................................................................................  
Net earnings (loss) attributable to HoldCo shareholders ................  
Unaudited Pro Forma basic net earnings (loss) attributable to 

Series A and Series B HoldCo shareholders per common share 
(note 2): 

2017 

2016 
amounts in thousands, 
except per share amounts 

2015 

23,817  

11,541  

64,621  
3,252  
79,414  
(55,597 ) 

22,552  

11,702  

43,041  
2,964  
57,707  
(35,155 ) 

20,307  

6,961  

39,381  
2,499  
48,841  
(28,534 ) 

7,001  

11,831  

2,142  

637,164  
6  
2,461  
646,632  
591,035  
133,522  
724,557  

1,309,365  
(1,100 ) 
31,873  
1,351,969  
1,316,814  
(496,245 ) 
820,569  

  $ 

(29 ) 
724,586  

(114 ) 
820,683  

179,699  
—  
18,385  
200,226  
171,692  
(60,982 ) 
110,710  

(3 ) 
110,713  

8.41  

9.53  

1.29  

See accompanying notes to combined financial statements. 

F-3 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
HoldCo 

Combined Statements of Comprehensive Earnings (Loss) 

Years ended December 31, 2017, 2016 and 2015 

Net earnings (loss)  .........................................................................  
Other comprehensive earnings (loss), net of taxes  ................  
Comprehensive earnings (loss)  .....................................................  

  $ 

724,557  
—  
724,557  

820,569  
—  
820,569  

110,710  
—  
110,710  

Less comprehensive earnings (loss) attributable to the  

noncontrolling interests  ...........................................................  

(29 ) 

(114 ) 

(3 ) 

Comprehensive earnings (loss) attributable to HoldCo 

shareholders  ...........................................................................  

  $ 

724,586  

820,683  

110,713  

2017 

2016 
amounts in thousands 

2015 

See accompanying notes to combined financial statements. 

F-4 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HoldCo 

Combined Statements of Cash Flows 

Years ended December 31, 2017, 2016 and 2015 

Cash flows from operating activities: 

Net earnings (loss) ......................................................................  
Adjustments to reconcile net earnings to net cash provided by  

operating activities: 
Depreciation and amortization .................................................  
Stock-based compensation .....................................................  
Cash payments for stock-based compensation .......................  
Share of (earnings) losses of affiliates, net .............................  
(Gain) loss on dilution of investment in affiliates .....................  
Realized and unrealized (gains) losses on financial  

instruments, net ....................................................................  
(Gains) losses on transactions, net .........................................  
Deferred income tax expense (benefit)....................................  
Intergroup tax (payments) receipts ..........................................  
Other noncash charges (credits), net ......................................  
Changes in operating assets and liabilities .............................  
Current and other assets ......................................................  
Payables and other liabilities ................................................  
Net cash provided (used) by operating activities .............  

Cash flows from investing activities: 

Cash proceeds from dispositions of investments ........................  
Investment in and loans to cost and equity investees .................  
Capital expended for property and equipment ............................  
Purchases of short term investments and other marketable 

securities ..................................................................................  
Sales of short term investments and other marketable securities
 .................................................................................................  
Investment in Liberty Broadband .................................................  
Other investing activities, net ......................................................  
Net cash provided (used) by investing activities ......................  

Cash flows from financing activities: 

Withholding taxes on net share settlements of stock-based 

compensation ...........................................................................  
Intergroup (payments) receipts, net ............................................  
Contributions from (distributions to) parent, net ..........................  
Equity transactions related to BCY Holdings ...............................  
Other financing activities, net ......................................................  
Net cash provided (used) by financing activities .....................  
Net increase (decrease) in cash and cash equivalents .......  
Cash and cash equivalents at beginning of period ..............  
Cash and cash equivalents at end of period ........................  

2017 

2016 
amounts in thousands 

2015 

  $ 

724,557  

820,569  

110,710  

3,252  
26,583  
(32 ) 
(7,001 ) 
884  

(637,164 ) 
(6 ) 
(133,522 ) 
287,763  
194  

31,772  
7,584  
304,864  

2,180  
(76,815 ) 
(3,488 ) 

2,964  
16,128  
—  
(11,831 ) 
(19,235 ) 

(1,309,365 ) 
1,100  
496,820  
294,708  
91  

5,881  
(5,605 ) 
292,225  

—  
—  
(2,642 ) 

2,499  
11,024  
(60 ) 
(2,142 ) 
1,715  

(179,699 ) 
—  
60,983  
159,901  
(16 ) 

(1,261 ) 
476  
164,130  

—  
—  
(3,337 ) 

—  

(264,703 ) 

(1,185,569 ) 

—  
—  
26  
(78,097 ) 

1,161,596  
(2,400,000 ) 
14  
(1,505,735 ) 

1,165,846  
—  
—  
(23,060 ) 

(27,793 ) 
37,140  
(146,680 ) 
—  
(3,387 ) 
(140,720 ) 
86,047  
487,163  
573,210  

(1,450 ) 
(30,602 ) 
(272,195 ) 
—  
3,439  
(300,808 ) 
(1,514,318 ) 
2,001,481  
487,163  

(5,499 ) 
(4,322 ) 
(176,177 ) 
194,439  
5,859  
14,300  
155,370  
1,846,111  
2,001,481  

  $ 

Supplemental disclosure to the combined statements of cash flows: 

Cash paid for interest ......................................................................  
Cash received for taxes ..................................................................  

  $ 
  $ 

6  

287,763   $ 

—  
294,708  

114  
159,901  

2017 

2016 
amounts in thousands 

2015 

See accompanying notes to combined financial statements. 

F-5 

 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HoldCo 

Combined Statements of Equity 

Years ended December 31, 2017, 2016 and 2015 

Parent’s 
investment 

Retained 
Earnings 

Noncontrolling 
interest in 
equity of 
Combined 
company 

Balance at January 1, 2015 ...................................................  
Net earnings .......................................................................  
Stock-based compensation ................................................  
Minimum withholding taxes on net share settlements  

  $  2,626,958  
—  
11,009  

amounts in thousands 
237,098  
110,713  
—  

(5,499 ) 
5,859  

—  
—  

—  
(3 ) 
—  

—  
—  

of stock-based compensation .........................................  
Option exercises .................................................................  
Equity transactions with parent related to sale on non-group 
company .........................................................................  
Intergroup (payments) receipts ..........................................  
Contributions from (distributions to) parent, net .................  
Other ...................................................................................  
Balance at December 31, 2015..............................................  
Net earnings .......................................................................  
Cumulative effect of accounting change (note 2) ...............  
Stock-based compensation ................................................  
Withholding taxes on net share settlements of stock-based 
compensation ..................................................................  
Option exercises .................................................................  
Intergroup (payments) receipts ..........................................  
Contributions from (distributions to) parent, net .................  
Other ...................................................................................  
Balance at December 31, 2016..............................................  
Net earnings .......................................................................  
Stock-based compensation ................................................  
Withholding taxes on net share settlements of stock-based 
compensation ..................................................................  
Option exercises .................................................................  
Intergroup (payments) receipts ..........................................  
Contributions from (distributions to) parent, net .................  
Other ...................................................................................  
Balance at December 31, 2017..............................................  

223,956  
(4,322 ) 
(176,177 ) 
3,066  
  $  2,684,850  
—  
—  
14,906  

(1,450 ) 
3,439  
(30,602 ) 
(272,195 ) 
(496 ) 
  $  2,398,452  
—  
26,243  

(27,793 ) 
613  
37,140  
(146,680 ) 
17,465  
  $  2,305,440  

—  
—  
—  
—  
347,811  
820,683  
21,576  
—  

—  
—  
—  
—  
498  
1,190,568  
724,586  
—  

—  
—  
—  
—  
(191 ) 
1,914,963  

3,776  
—  
—  
3  
3,776  
(114 ) 
—  
—  

—  
—  
—  
—  
—  
3,662  
(29 ) 
—  

—  
—  
—  
—  
—  
3,633  

Total 
equity 

2,864,056  
110,710  
11,009  

(5,499 ) 
5,859  

227,732  
(4,322 ) 
(176,177 ) 
3,069  
3,036,437  
820,569  
21,576  
14,906  

(1,450 ) 
3,439  
(30,602 ) 
(272,195 ) 
2  
3,592,682  
724,557  
26,243  

(27,793 ) 
613  
37,140  
(146,680 ) 
17,274  
4,224,036  

See accompanying notes to combined financial statements. 

F-6 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HoldCo 

Notes to Combined Financial Statements 

December 31, 2017, 2016 and 2015 

(1) Basis of Presentation 

On April 4, 2017, Liberty Interactive Corporation (Liberty Interactive) entered into an Agreement and Plan of 

Reorganization (as amended, the reorganization agreement and the transactions contemplated thereby, the 
Transactions) with General Communication, Inc. (GCI), an Alaska corporation, and Liberty Interactive LLC, a Delaware 
limited liability company and a direct wholly-owned subsidiary of Liberty Interactive (LI LLC). Pursuant to the 
reorganization agreement, GCI effected a restatement of its articles of incorporation (which resulted in GCI being 
renamed GCI Liberty, Inc. (GCI Liberty)) and a reclassification and auto conversion of its common stock. Following these 
events, Liberty Interactive acquired GCI Liberty on March 9, 2018 through a reorganization in which certain Liberty 
Interactive interests, assets and liabilities, were contributed to GCI Liberty in exchange for a controlling interest in GCI 
Liberty. Liberty Interactive and LI LLC contributed to GCI Liberty its entire equity interest in Liberty Broadband Corporation 
(Liberty Broadband), Charter Communications, Inc. (Charter), and LendingTree, Inc. (LendingTree), the Evite, Inc. 
(Evite) operating business and certain other assets and liabilities (collectively, HoldCo), in exchange for (a) the issuance 
to LI LLC of a number of shares of GCI Liberty Class A Common Stock and a number of shares of GCI Liberty Class B 
Common Stock equal to the number of outstanding shares of Series A Liberty Ventures common stock and Series B 
Liberty Ventures common stock on March 9, 2018, respectively, (b) cash and (c) the assumption of certain liabilities by 
GCI Liberty. 

The contribution was treated as a reverse acquisition under the acquisition method of accounting in accordance 

with generally accepted accounting principles in the United States (GAAP). For accounting purposes, Liberty Interactive is 
considered to have acquired GCI Liberty in the contribution based, among other considerations, upon the fact that in 
exchange for the contribution of certain assets and liabilities of Liberty Interactive, including HoldCo, Liberty Interactive 
received a controlling interest in the combined company of GCI Liberty. 

Following the contribution and acquisition of GCI Liberty, Liberty Interactive then effected a tax-free separation of 

its controlling interest in the combined company, GCI Liberty, to the holders of Liberty Ventures common stock in full 
redemption of all outstanding shares of such stock (the HoldCo Split-Off), in which each outstanding share of Series A 
Liberty Ventures common stock was redeemed for one share of GCI Liberty Class A common stock and each outstanding 
share of Series B Liberty Ventures common stock was redeemed for one share of GCI Liberty Class B common stock. 

The accompanying combined financial statements have been prepared in accordance with GAAP and represent a 

combination of the historical financial information of, as of December 31, 2017, Liberty Interactive’s non-controlling 
interests in Liberty Broadband, Charter and Lending Tree along with Liberty Interactive’s controlling interest in Evite and 
certain other assets and liabilities. These financial statements refer to the combination of the aforementioned subsidiary 
and investments as the Company, us, we and our in these notes to the combined financial statements. The HoldCo 
Split-Off is expected to be accounted for at historical cost due to the pro rata nature of the distribution to holders of Liberty 
Ventures common stock. All significant intercompany accounts and transactions have been eliminated in the combined 
financial statements. 

F-7 

 
 
 
 
 
 
 
 
 
Split-off from Liberty Interactive 

Following the HoldCo Split-Off, Liberty Interactive and GCI Liberty operate as separate, publicly traded companies, and 

neither have any stock ownership, beneficial or otherwise, in the other. In connection with the HoldCo Split-Off, Liberty 
Interactive, Liberty Media Corporation (Liberty Media) and GCI Liberty entered into certain agreements in order to govern 
certain of the ongoing relationships between the companies after the HoldCo Split-Off and to provide for an orderly transition. 
These agreements include an indemnification agreement, a services agreement, a facilities sharing agreement and a tax sharing 
agreement. 

The reorganization agreement provides for, among other things, the principal corporate transactions (including the 

internal restructuring) required to effect the HoldCo Split-Off, certain conditions to the HoldCo Split-Off and provisions governing 
the relationship between GCI Liberty and Liberty Interactive with respect to and resulting from the HoldCo Split-Off. The tax 
sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Liberty Interactive and 
GCI Liberty and other agreements related to tax matters. Pursuant to the services agreement, Liberty Media will provide GCI 
Liberty with general and administrative services including legal, tax, accounting, treasury and investor relations support. Under 
the facilities sharing agreement, GCI Liberty will share office space with Liberty Interactive and Liberty Media and related 
amenities at their corporate headquarters. GCI Liberty will reimburse Liberty Media for direct, out-of-pocket expenses incurred 
by Liberty Media in providing these services and for costs that will be negotiated semi-annually. 

Pursuant to the indemnification agreement, GCI Liberty has agreed to indemnify LI LLC against any payments made by 

LI LLC with respect to any of LI LLC’s 1.75% exchangeable debentures due 2046 (the 1.75% Exchangeable Debentures) 
through October 5, 2023 for the amount by which (x) the exchange value exceeds (y) the sum of the adjusted principal amount 
of such 1.75% Exchangeable Debentures plus the amount of certain tax benefits attributable to such 1.75% Exchangeable 
Debentures so exchanged. Within six months of the HoldCo Split-Off, Liberty Interactive, LI LLC and GCI Liberty will cooperate 
with, and reasonably assist each other with respect to, the commencement and consummation of a purchase offer (the 
Purchase Offer) whereby LI LLC will offer to purchase, either pursuant to privately negotiated transactions or a tender offer, the 
1.75% Exchangeable Debentures on terms and conditions (including maximum offer price) reasonably acceptable to GCI 
Liberty. GCI Liberty will indemnify LI LLC (using, in part, funds borrowed under the $1 billion margin loan agreement described 
below) for each 1.75% Exchangeable Debenture repurchased by LI LLC in the Purchase Offer in an amount equal to the 
difference between (x) the purchase price paid by LI LLC to acquire such 1.75% Exchangeable Debenture in the Purchase Offer 
and (y) the sum of the amount of cash reattributed with respect to such purchased 1.75% Exchangeable Debenture in the 
reattribution plus the amount of certain tax benefits attributable to such 1.75% Exchangeable Debenture so purchased. GCI 
Liberty’s indemnity obligation with respect to payments made upon a holder’s exercise of its exchange right will be eliminated as 
to any 1.75% Exchangeable Debentures purchased in the Purchase Offer. An indemnity obligation will be recorded upon 
completion of the HoldCo Split-Off. 

In addition, Liberty Interactive and GCI Liberty have agreed to indemnify each other with respect to certain potential 

losses in respect of the HoldCo Split-Off. 

On December 29, 2017, Broadband Holdco, LLC, a wholly owned subsidiary of Liberty Interactive, entered into a 

margin loan agreement with an availability of $1 billion with various lender parties. Approximately 42.7 million shares of Liberty 
Broadband Series C common stock held by Liberty Interactive with a value of $3.6 billion were pledged by Broadband Holdco, 
LLC as collateral for the loan as of December 31, 2017. This margin loan has a term of two years and bears interest at a rate of 
LIBOR plus 1.85% and contains an undrawn commitment fee of 0.75% per annum. As of December 31, 2017 there were no 
outstanding borrowings on the margin loan. Deferred loan costs incurred on the margin loan are reflected in Other assets in the 
combined balance sheet as of December 31, 2017. 

(2) Summary of Significant Accounting Policies 

Cash and Cash Equivalents 

Cash equivalents consist of investments which are readily convertible into cash and have maturities of three months or 

less at the time of acquisition. Financial instruments, which potentially subject the Company to concentration of credit risk, 
consist primarily of cash and cash equivalents and corporate debt securities. The Company maintains some cash and cash 
equivalents balances with financial institutions that are in excess of Federal Deposit Insurance Corporation insurance limits. 

Investments 

All marketable equity and debt securities held by the Company are classified as available-for-sale (AFS) and are carried 

at fair value generally based on quoted market prices. GAAP permits entities to choose to measure many financial instruments, 
such as AFS securities, and certain other items at fair value and to recognize the changes in fair value of such instruments in the 
entity’s statements of operations (the fair value option). Liberty Interactive had previously entered into economic hedges for 
certain of its non-strategic AFS securities (although such instruments were not accounted for as fair value hedges by the 

F-8 

 
 
 
 
 
 
 
 
 
 
Company). Changes in the fair value of these economic hedges were reflected in the Company’s statements of operations 
as unrealized gains (losses). Liberty Interactive originally elected the fair value option for those of its AFS securities which 
it considered to be non-strategic (Fair Value Option Securities), including Liberty Interactive’s historical investment in 
Time Warner Cable Inc. (TWC). As described in note 5, Liberty Interactive’s shares of TWC were exchanged for shares of 
Charter. The Company’s accounting treatment for the investment in Charter is consistent with Liberty Interactive’s 
accounting treatment. Changes in the fair value of Fair Value Option Securities, as determined by quoted market prices, 
are reported in realized and unrealized gains (losses) on financial instruments in the accompanying combined statements 
of operations. The total value of AFS securities for which the Company has elected the fair value option aggregated 
$1,800.2 million and $1,542.8 million as of December 31, 2017 and 2016, respectively. 

Other investments in which the Company’s ownership interest is less than 20%, unless the Company has the 

ability to exercise significant influence, and that are not considered marketable securities are carried at cost. 

For those investments in affiliates in which the Company has the ability to exercise significant influence, the equity 
method of accounting is used, except in situations where the fair value option has been selected. Under the equity method 
of accounting, the investment, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or 
losses of the affiliate as they occur rather than as dividends or other distributions are received. Losses are limited to the 
extent of the Company’s investment in, advances to and commitments for the investee. In the event the Company is 
unable to obtain accurate financial information from an equity affiliate in a timely manner, the Company records its share 
of earnings or losses of such affiliate on a lag. 

Changes in the Company’s proportionate share of the underlying equity of an equity method investee, which 

result from the issuance of additional equity securities by such equity investee, are recognized in the statements of 
operations through the Other, net line item. To the extent there is a difference between our ownership percentage in the 
underlying equity of an equity method investee and our carrying value, such difference is accounted for as if the equity 
method investee were a consolidated subsidiary. 

The Company continually reviews its equity investments and its AFS securities which are not Fair Value Option 

Securities to determine whether a decline in fair value below the carrying value is other than temporary. The primary 
factors the Company considers in its determination are the length of time that the fair value of the investment is below the 
Company’s carrying value; the severity of the decline; and the financial condition, operating performance and near term 
prospects of the investee. In addition, the Company considers the reason for the decline in fair value, be it general market 
conditions, industry specific or investee specific; analysts’ ratings and estimates of 12 month share price targets for the 
investee; changes in stock price or valuation subsequent to the balance sheet date; and the Company’s intent and ability 
to hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in fair value is 
deemed to be other than temporary, the carrying value of the security is written down to fair value. In situations where the 
fair value of an investment is not evident due to a lack of a public market price or other factors, the Company uses its best 
estimates and assumptions to arrive at the estimated fair value of such investment. The Company’s assessment of the 
foregoing factors involves considerable management judgment and accordingly, actual results may differ materially from 
the Company’s estimates and judgments. Writedowns for AFS securities which are not Fair Value Option Securities would 
be included in the combined statements of operations as other than temporary declines in fair values of investments. 
Writedowns for equity method investments would be included in share of earnings (losses) of affiliates. 

In January 2016, the FASB issued new accounting guidance that is intended to improve the recognition and 
measurement of financial instruments. The new guidance requires equity investments with readily determinable fair values 
(except those accounted for under the equity method of accounting or those that result in consolidation) to be measured 
at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity 
investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The new 
standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2017, with early 
adoption permitted under certain circumstances. The Company does not expect this new guidance will have a material 
impact to its combined financial statements or related disclosures. 

Revenue Recognition 

Service revenue is recognized when the applicable criteria are met: persuasive evidence of an arrangement 

exists, services have been rendered, the price is fixed and determinable and collectability is reasonably assured. 

In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new 

guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of 
promised goods or services to customers. This new guidance also requires additional disclosure about the nature, 
amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments 
and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the 

F-9 

 
 
 
 
 
 
 
 
FASB issued additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued 
further guidance which clarifies the identification of performance obligations and the implementation guidance for 
licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes 
effective and permits the use of either a full retrospective or modified retrospective transition method. The Company will 
adopted this new guidance under the modified retrospective method effective as of January 1, 2018 and the adoption is 
not expected to have a material impact on its combined financial statements. 

Advertising Costs 

Advertising costs generally are expensed as incurred. Advertising expense aggregated $1.7 million, $2.0 million 
and $2.6 million for the years ended December 31, 2017, 2016 and 2015, respectively. Advertising costs are reflected in 
the selling, general and administrative, including stock-based compensation line item in our combined statements of 
operations. 

Stock-Based Compensation 

As more fully described in note 7, Liberty Interactive has granted to its directors, employees and employees of its 

subsidiaries options, restricted stock and stock appreciation rights relating to shares of Liberty Ventures common stock 
(Awards). Liberty Interactive measures the cost of employee services received in exchange for an Award of equity 
instruments (such as stock options and restricted stock) based on the grant-date fair value of the Award, and recognizes 
that cost over the period during which the employee is required to provide service (usually the vesting period of the 
Award). Liberty Interactive measures the cost of employee services received in exchange for an Award of liability 
instruments (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, 
and remeasures the fair value of the Award at each reporting date. 

Stock compensation expense was $26.6 million, $16.1 million and $11.0 million for the years ended 

December 31, 2017, 2016 and 2015, respectively, included in selling, general and administrative expense in the 
accompanying combined statements of operations. 

In March 2016, the FASB issued new guidance which simplifies several aspects of the accounting for share-

based payment award transactions, including the income tax consequences, forfeitures, classification of awards as either 
equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company for 
fiscal years and interim periods beginning after December 15, 2016, with early application permitted. The Company 
adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax 
deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has 
elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant 
to the new guidance, excess tax benefits are classified as an operating activity on the combined statements of cash flows. 
The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. For tax benefits 
that were not previously recognized and for adjustments to compensation cost based on actual forfeitures, the Company 
recorded a cumulative-effect adjustment in retained earnings as of January 1, 2016. 

Income Taxes 

The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities 
are recognized for the future tax consequences attributable to differences between the financial statement carrying value 
amounts and income tax bases of assets and liabilities and the expected benefits of utilizing net operating loss and tax 
credit carryforwards. The deferred tax assets and liabilities are calculated using enacted tax rates in effect for each taxing 
jurisdiction in which the Company operates for the year in which those temporary differences are expected to be 
recovered or settled. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it more 
likely than not such net deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of an 
enacted change in tax rates is recognized in income in the period that includes the enactment date. 

When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes 
interest expense from the first period the interest would begin accruing according to the relevant tax law. Such interest 
expense is included in interest expense in the accompanying combined statements of operations. Any accrual of penalties 
related to underpayment of income taxes on uncertain tax positions is included in other income (expense) in the 
accompanying combined statements of operations. 

F-10 

 
 
 
 
 
 
 
 
 
 
In October 2016, the FASB issued new accounting guidance which requires an entity to recognize at the 
transaction date the income tax consequences of intercompany asset transfers. The guidance is effective for fiscal years, 
and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. The 
Company does not expect this new guidance will have a material impact on its combined financial statements or related 
disclosures. 

Pro Forma Earnings per Share (EPS) 

Unaudited pro forma earnings (loss) per common share for all periods presented is computed by dividing net 

earnings (loss) for the respective period by 86,141,970 common shares, which is the total number of shares of Series A 
and Series B Liberty Ventures common stock outstanding at December 31, 2017, which is being used as a proxy for the 
outstanding shares of the Company as of December 31, 2017. 

Estimates 

The preparation of financial statements in conformity with GAAP requires management to make estimates and 

assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the 
reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 
The Company considers (i) recurring and non-recurring fair value measurements and (ii) accounting for income taxes to 
be its most significant estimates. 

The Company has investments that are accounted for using the equity method. The Company does not control 
the decision making process or business management practices of these affiliates. Accordingly, the Company relies on 
management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that the 
Company uses in the application of the equity method. In addition, the Company relies on audit reports that are provided 
by the affiliates’ independent auditors on the financial statements of such affiliates. The Company is not aware, however, 
of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a 
material effect on the Company’s combined financial statements. 

New Accounting Pronouncements Not Yet Adopted 

In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new 

guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance 
also simplifies the accounting for sale and leaseback transactions. The new standard, to be applied via a modified 
retrospective transition approach, is effective for the Company for fiscal years and interim periods beginning after 
December 15, 2018, with early adoption permitted. The Company is currently working with Evite to evaluate the impact of 
the adoption of this new guidance on our combined financial statements, including identifying the population of leases, 
evaluating technology solutions and collecting lease data. 

(3) Assets and Liabilities Measured at Fair Value 

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to 
valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active 
markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 
inputs, other than quoted market prices included within Level 1, are observable for the asset or liability, either directly or 
indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring 
assets or liabilities measured at fair value that would be considered Level 3. 

F-11 

 
 
 
 
 
 
 
 
 
 
 
The Company’s assets and liabilities measured at fair value are as follows: 

Description 

Total 

December 31, 2017 
Quoted 
prices 
in active 
markets 
for identical 
assets 
(Level 1) 

Significant 
other 
observable 
inputs 
(Level 2) 

Total 
amounts in thousands 

December 31, 2016 

Quoted prices 
in active 
markets 
for identical 
assets 
(Level 1) 

Significant 
other 
observable 
inputs 
(Level 2) 

Cash equivalents  .......................  
Available-for-sale securities  ......  
Investment in Liberty  

  $  570,526  
  $ 1,800,208  

570,526  
1,800,208  

—  
—  

475,812  
1,542,791  

475,812  
1,542,791  

Broadband  .............................  
Variable Forward  .......................  

  $ 3,634,786  
94,807  
  $ 

3,634,786  
—  

—  
94,807  

3,161,444  
—  

3,161,444  
—  

—  
—  

—  
—  

On June 6, 2017, Liberty Interactive purchased 450,000 LendingTree shares and executed a 2-year variable 

forward with respect to 642,850 LendingTree shares. The variable forward was executed at the LendingTree closing price 
on June 6, 2017 of $170.70 per share and has a floor price of $128.03 per share and a cap price of $211.67 per share. 
The liability associated with this instrument is included in the Other liabilities line item in the combined balance sheets. 

The fair value of Level 2 derivative liabilities were derived from a Black-Scholes-Merton model using observable 

market data as the significant inputs. 

Realized and Unrealized Gains (Losses) on Financial Instruments 

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the 

following: 

Fair Value Option Securities—AFS .........  
Fair Value Option Securities—Liberty 

Broadband............................................  
Variable Forward .....................................  

2017 

Years ended December 31, 
2016 
amounts in thousands 

2015 

  $ 

258,629  

547,921  

179,699  

473,342  
(94,807 ) 
637,164  

761,444  
NA  
1,309,365  

  $ 

NA  
NA  
179,699  

(4) Investments in Available-for-Sale Securities and Other Cost Investments 

Investments in AFS securities, the majority of which are considered Fair Value Option Securities and other cost 

investments, are summarized as follows: 

Charter ..................................................................................  
Other investments.................................................................  

December 31, 
2017 

December 31, 
2016 

amounts in thousands 

  $ 

  $ 

1,800,208  
2,856  
1,803,064  

1,542,791  
3,824  
1,546,615  

F-12 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(5) Investments in Affiliates Accounted for Using the Equity Method 

The Company’s investment in LendingTree is accounted for using the equity method. As of December 31, 2017, 
the Company’s ownership interest in LendingTree was approximately 27%, which represents a market value of $1,097.6 
million. The carrying value of the investment in LendingTree was $114.7 milion and $31.5 million as of December 31, 
2017 and 2016, respectively. In connection with the variable forward transaction entered into on June 6, 2017, as 
described in note 3, the Company purchased 450,000 shares of LendingTree for $76.8 million. The Company’s share of 
LendingTree’s earnings was $7.0 million, $11.8 million and $2.1 million for the years ended December 31, 2017, 2016 and 
2015, respectively. 

Investment in Liberty Broadband 

On May 18, 2016, Liberty Interactive completed a $2.4 billion investment in Liberty Broadband Series C non-
voting shares (for accounting purposes a related party of the Company) in connection with the merger of Charter and 
TWC. The proceeds of this investment were used by Liberty Broadband to fund, in part, its acquisition of $5 billion of stock 
in the new public parent company, Charter, of the combined enterprises. Liberty Interactive, along with third party 
investors, all of whom invested on the same terms as Liberty Interactive, purchased newly issued shares of Liberty 
Broadband Series C common stock at a per share price of $56.23, which was determined based upon the fair value of 
Liberty Broadband’s net assets on a sum-of-the parts basis at the time the investment agreements were executed 
(May 2015). Liberty Interactive, as part of the merger described above, exchanged, in a tax-free transaction, its shares of 
TWC common stock for shares of Charter Class A common stock, on a one-for-one basis, and Liberty Interactive has 
granted to Liberty Broadband a proxy and a right of first refusal with respect to the shares of Charter Class A common 
stock held by Liberty Interactive following the exchange. 

As of December 31, 2017, the Company has a 23.5% economic ownership interest in Liberty Broadband. Due to 

overlapping boards of directors and management, the Company has been deemed to have significant influence over 
Liberty Broadband for accounting purposes, even though the Company does not have any voting rights. The Company 
has elected to apply the fair value option for its investment in Liberty Broadband (Level 1) as it is believed that investors 
value this investment based on the trading price of Liberty Broadband. The Company recognizes changes in the fair value 
of its investment in Liberty Broadband in realized and unrealized gains (losses) on financial instruments, net in the 
combined statements of operations. Summarized financial information for Liberty Broadband is as follows: 

Current assets ....................................................................................  
Investment in Charter, accounted for using the equity method ..........  
Other assets .......................................................................................  
Total assets .....................................................................................  
Long-term debt, including current portion ...........................................  
Deferred income tax liabilities .............................................................  
Other liabilities ....................................................................................  
Equity ..................................................................................................  
Total liabilities and shareholders’ equity .........................................  

Revenue .............................................................................................  
Operating expenses, net .............................................................  
Operating income (loss) .....................................................................  
Share of earnings (losses) of affiliates ............................................  
Gain (loss) on dilution of investment in affiliate ..............................  
Realized and unrealized gains (losses) on financial instruments, net
 .....................................................................................................  
Other income (expense), net ..........................................................  
Income tax benefit (expense) .............................................................  
Net earnings (loss) ..............................................................................  

F-13 

December 31, 

2017 

2016 

amounts in thousands 

84,054  
11,835,613  
12,122  
11,931,789  
497,370  
932,593  
14,925  
10,486,901  
11,931,789  

258,419  
9,315,253  
17,288  
9,590,960  
598,512  
504,644  
14,712  
8,473,092  
9,590,960  

Years ended December 31, 

2017 

2016 

amounts in thousands 

13,092  
(38,570 ) 
(25,478 ) 
2,508,991  
(17,872 ) 

3,098  
(18,139 ) 
(416,933 ) 
2,033,667  

30,586  
(51,746 ) 
(21,160 ) 
641,544  
770,766  

94,122  
(9,600 ) 
(558,369 ) 
917,303  

  $ 

  $ 

  $ 

  $ 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(6) Income Taxes 

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the 
Tax Cuts and Jobs Act (the Tax Act). The Tax Act makes broad and complex changes to the U.S. tax code, including, but 
not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) bonus depreciation that 
will allow for full expensing of qualified property; (3) creating a new limitation on deductible interest expense; 
(4) eliminating the corporate alternative minimum tax (AMT) and changing how existing AMT credits can be realized; 
(5) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after 
December 31, 2017; (6) limitations on the deductibility of certain executive compensation; and (7) requiring a one-time 
transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years. The SEC issued 
guidance on accounting for the tax effects of the Tax Act. The Company must reflect the income tax effects of those 
aspects of the Tax Act for which the accounting is known. To the extent that a company’s accounting for certain income 
tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional 
estimate in the financial statements and the Tax Act provides a measurement period that should not extend beyond one 
year from the Tax Act enactment date. If a company cannot determine a provisional estimate to be included in the 
financial statements, it should continue to apply the tax laws that were in effect immediately before the enactment of the 
Tax Act. 

The corporate rate reduction was applied to our inventory of deferred tax assets and deferred tax liabilities which 

resulted in the net tax benefit in the period ending December 31, 2017. This net tax benefit is a provisional estimate. 

The Company, as combined, was included in the federal combined income tax return of Liberty Interactive during 

the periods presented. The tax provision included in these financial statements has been prepared on a stand-alone 
basis, as if the Company was not part of the consolidated Liberty group. The taxes payable balance on the date of the 
HoldCo Split-Off will be eliminated through an equity contribution from Liberty Interactive to the Company. 

Income tax benefit (expense) consists of: 

Current: 

Federal ....................................................  
State and local .........................................  

Deferred: 

Federal ....................................................  
State and local .........................................  

  $ 

Income tax benefit (expense) .....................  

  $ 

2017 

Years ended December 31, 
2016 
amounts in thousands 

2015 

—  
—  
—  

—  
575  
575  

160,150  
(26,628 ) 
133,522  
133,522  

(436,260 ) 
(60,560 ) 
(496,820 ) 
(496,245 ) 

—  
1  
1  

(53,479 ) 
(7,504 ) 
(60,983 ) 
(60,982 ) 

Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 

35% as a result of the following: 

2017 

Years ended December 31, 
2016 
amounts in thousands 

2015 

Computed expected tax benefit (expense) .....................................  
State and local income taxes, net of federal income taxes .............  
Dividends received deductions .......................................................  
Change in valuation allowance affecting tax expense ....................  
Change in tax rate due to Tax Act ..................................................  
Deductible stock compensation ......................................................  
Other, net ........................................................................................  
Income tax benefit (expense) ..........................................................  

  $ 

  $ 

(206,862 ) 
(17,001 ) 
—  
(384 ) 
347,979  
14,116  
(4,326 ) 
133,522  

(460,885 ) 
(38,991 ) 
1,969  
—  
—  
1,700  
(38 ) 
(496,245 ) 

(60,092 ) 
(4,877 ) 
4,019  
—  
—  
—  
(32 ) 
(60,982 ) 

For the year ended December 31, 2017, the most significant reconciling item is a net tax benefit for the effect of 

the change in the U.S. federal corporate tax rate from 35% to 21% on deferred taxes. 

F-14 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
 
 
 
 
 
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense was higher than the U.S. statutory tax rate of 35% in 2016 due to state tax expense related 

to unrealized gains on the Company’s investments. Income tax expense was slightly higher than the U.S. statutory tax 
rate of 35% in 2015 due to state taxes partially offset by the receipt of taxable dividends that are subject to a dividends 
received deduction. 

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and 

deferred income tax liabilities are presented below: 

December 31, 

2017 

2016 

amounts in thousands 

Deferred tax assets: 

Net operating and capital loss carryforwards .................  
Accrued stock compensation ..........................................  
Other accrued liabilities ..................................................  
Other future deductible amounts ....................................  
Deferred tax assets.........................................................  
Valuation allowance ....................................................  
Net deferred tax assets ..................................................  

  $ 

Deferred tax liabilities: 

Investments ....................................................................  
Intangible assets .............................................................  
Other ...............................................................................  
Deferred tax liabilities .....................................................  
Net deferred tax liabilities ............................................  

  $ 

48,898  
6,999  
362  
63  
56,322  
(433 ) 
55,889  

697,393  
1,892  
30  
699,315  
643,426  

44,146  
11,662  
527  
540  
56,875  
(49 ) 
56,826  

830,894  
3,024  
—  
833,918  
777,092  

During the year ended December 31, 2017, there was a $384 thousand increase in the Company’s valuation 

allowance that affected tax expense. 

At December 31, 2017, HoldCo had net operating losses (on a tax effected basis) for income tax purposes 

aggregating approximately $48.9 million. $45.4 million of these net operating losses are allocable to Liberty Interactive 
and will be treated as an equity distribution to Liberty Interactive upon completion of the HoldCo Split-Off. Of the 
remaining $3.5 million of net operating losses, $3.2 million are limited under IRC Section 382 and will begin to expire in 
2028 and beyond if not utilized to reduce domestic income tax liabilities in future periods. These net operating losses are 
expected to be utilized prior to expiration. 

As of December 31, 2017, the Company had not recorded tax reserves related to unrecognized tax benefits for 

uncertain tax positions. 

As of December 31, 2017, Liberty Interactive’s tax years prior to 2014 are closed for federal income tax purposes, 

and the Internal Revenue Service (IRS) has completed its examination of Liberty Interactive’s 2014 tax year. Liberty 
Interactive’s 2015, 2016 and 2017 tax years are being examined currently as part of the IRS’s Compliance Assurance 
Process program. Various states are currently examining Liberty Interactive’s prior years’ state income tax returns. 

(7) Stock-Based Compensation 

Liberty Interactive—Incentive Plans 

Liberty Interactive has granted to certain directors, officers, employees and consultants of Liberty Interactive stock 

options to purchase shares of Liberty Ventures common stock pursuant to applicable incentive plans in place at Liberty 
Interactive. Each holder of an outstanding option to purchase shares of Liberty Ventures common stock on the date of the 
HoldCo Split-Off (an original Ventures option award) will receive a converted option to purchase an equivalent number 
of shares of the corresponding series of GCI Liberty common stock, at an exercise price equivalent to the original 
Ventures option award exercise price. 

F-15 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
  
  
 
 
 
 
 
 
 
 
 
 
 
 
Liberty Interactive—Grants 

December 31, 2017 ............................................  
Granted options(1)(2) ......................................  
December 31, 2016 ............................................  
Granted options(1)(2) ......................................  
December 31, 2015 ............................................  
Granted options (1)(2) .....................................  

Liberty Ventures 

Series A 

Series B 

Awards 
(000’s) 

Grant Date 
Fair Value 

Awards 
(000’s) 

Grant Date 
Fair Value 

188   $ 

16.52  

269   $ 

15.41  

114   $ 

12.25  

209   $ 

12.48  

683   $ 

18.10  

135   $ 

16.94  

(1) 

(2) 

Options to purchase Series A Liberty Ventures common stock vest between three and five years for employees 
and in one year for directors. 

Options to purchase Series B Liberty Ventures common stock were awarded to the CEO, and cliff vested in their 
respective grant year for grants made in 2017 and 2016. The grant made in 2015 cliff vested in March 2016. 

Liberty Interactive also granted 16 thousand and 13 thousand performance-based restricted stock units of 

Series B Liberty Ventures common stock during the years ended December 31, 2016 and December 31, 2015, 
respectively, to the CEO of Liberty Interactive in connection with our CEO’s employment agreement. The restricted stock 
units had a fair value of $38.79 per share and $42.33 per share, respectively. The restricted stock units granted in 2016 
cliff vested in one year, subject to the satisfaction of certain performance obligations. The restricted stock units granted in 
2015 cliff vested in March 2016 based on an amount determined by the compensation committee. 

In connection with the Option Exchange (see below), Liberty Interactive granted 946 thousand and 1.1 million 
options to purchase shares of Series A Liberty Ventures common stock and Series B Liberty Ventures common stock, 
respectively.  Such options had an incremental weighted average GDFV of $8.53 and $6.94, respectively. 

During the fourth quarter of 2017, Liberty Interactive entered into a series of transactions with certain of its 
officers, associated with certain outstanding stock options, in order to recognize tax deductions in the current year versus 
future years (the Option Exchange).  On December 26, 2017 (the Grant Date), pursuant to the approval of the 
Compensation Committee of its Board of Directors, Liberty Interactive effected the acceleration of (i) each unvested in-
the-money option to acquire shares of LVNTA and (ii) each unvested in-the-money option to acquire shares of LVNTB, in 
each case, held by certain of its officers (collectively, the Eligible Optionholders).  Following this acceleration, also on 
the Grant Date, each Eligible Optionholder exercised, on a net settled basis, all of his outstanding in-the-money vested 
and unvested options to acquire LVNTA shares and LVNTB shares (the Eligible Options), and: 

  with respect to each vested Eligible Option, Liberty Interactive granted the Eligible Optionholder a vested 
new option with substantially the same terms and conditions as the exercised vested Eligible Option, 
except that the exercise price for the new option is, in the case of options to acquire shares of LVNTA, the 
closing price on the Grant Date per LVNTA share, as applicable, and, in the case of options to acquire 
shares of LVNTB, the fair market value on the Grant Date of the LVNTB shares as determined pursuant 
to the incentive plan under which the awards were granted; and 

  with respect to each unvested Eligible Option: 

 

 

in satisfaction of the exercise, on a net settled basis, of the unvested Eligible Options, Liberty 
Interactive granted the Eligible Optionholder a number of restricted LVNTA or LVNTB shares (the 
Restricted Shares) with a vesting schedule identical to that of the unvested Eligible Options so 
exercised, and the Eligible Optionholder made an election under Section 83(b) of the Internal 
Revenue Code with respect to such Restricted Shares; and 

Liberty Interactive granted the Eligible Optionholder a new option (the Unvested New Option) to 
acquire the same series of common stock and with substantially the same terms and conditions, 
including with respect to vesting and expiration, as the unvested Eligible Option exercised as set forth 
above, except that the number of LVNTA or LVNTB shares subject to such Unvested New Option is 
equal to the number of shares subject to the unvested Eligible Option minus the number of Restricted 

F-16 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
 
  
  
  
  
 
 
  
  
  
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares received upon exercise of such unvested Eligible Option. The exercise price of such new 
option is, in the case of a LVNTA option, the closing price on the Grant Date per share of LVNTA, or, 
in the case of a LVNTB option, the fair market value on the Grant Date of the LVNTB shares as 
determined pursuant to the incentive plan under which the Unvested New Options were granted. 

The Option Exchange was considered a modification under ASC 718 — Stock Compensation, with the following 
impacts on compensation expense.  The unamortized value of the unvested Eligible Options that were exercised, which 
was $13.5 million for LVNTA and LVNTB combined, will be expensed over the vesting period of the Restricted Shares 
attributable to the exercise of those options.  The grant of new vested options resulted in incremental compensation 
expense in the fourth quarter of 2017 of $9.2 million for LVNTA and LVNTB combined.  The grant of Unvested New 
Options resulted in incremental compensation expense totaling $6.4 million for LVNTA and LVNTB combined, which will 
be amortized over the vesting periods of those options. 

Liberty Interactive has calculated the grant-date fair value for all of its equity classified awards using the Black-
Scholes-Merton Model. Liberty Interactive estimates the expected term of the Awards based on historical exercise and 
forfeiture data. For grants made in 2017, 2016 and 2015, the range of expected terms was 2.0 to 6.7 years. The volatility 
used in the calculation for Awards is based on the historical volatility of Liberty Interactive’s stocks and the implied 
volatility of publicly traded Liberty Interactive options. Liberty Interactive uses a zero dividend rate and the risk-free rate for 
Treasury Bonds with a term similar to that of the subject options. 

The following table presents the range of volatilities used by Liberty Interactive in the Black-Scholes-Merton 

Model for the 2017, 2016 and 2015 Liberty Ventures grants. 

2017 grants ....................................................................................................  
Liberty Ventures options ............................................................................  
2016 grants ....................................................................................................  
Liberty Ventures options ............................................................................  
2015 grants ....................................................................................................  
Liberty Ventures options ............................................................................  

Volatility 

25.9% - 28.9%   

30.6% - 30.6%   

30.6% - 42.4%   

Liberty Interactive—Outstanding Awards 

The following table presents the number and weighted average exercise price (WAEP) of the Awards to purchase 

Liberty Ventures common stock granted to certain officers, employees and directors of Liberty Interactive, as well as the 
weighted average remaining life and aggregate intrinsic value of the Awards. 

Liberty Ventures 

Series A 

Weighted 
average 
remaining 
life 

Awards 
(000’s) 

  WAEP 

Aggregate 
intrinsic 
value 
  (in thousands)   

Awards 
(000’s) 

  WAEP 

Series B 

Weighted 
average 
remaining 
life 

Aggregate 
intrinsic 
value 
  (in thousands)   

Outstanding at  

January 1, 2017 .........  
Granted ......................  
Exercised ...................  
Forfeited/Cancelled ...  
Option Exchange, 

Exercised ...............  

Option Exchange, 

1,974   $  22.18  
188   $  55.42  
(451 )  $  16.69  
(12 )  $  38.50  

(975 )  $  20.99  

Granted ..................  

946   $  55.96  

Outstanding at 

987   $  35.02  
269   $  52.39  
—   $  —  
—   $  —  

(1,256 )  $  38.74  

1,080   $  56.38  

December 31, 2017 ...  

1,670   $  47.12   2.6 years   $ 

13,808  

1,080   $  56.38   4.7 years   $ 

Exercisable at  

December 31, 2017 ...  

1,273   $  47.45   2.0 years   $ 

10,268  

443   $  56.38   2.0 years   $ 

—  

—  

As of December 31, 2017, the total unrecognized compensation cost related to unvested Liberty Interactive 

Awards was approximately $24.2 million. Such amount will be recognized in the combined statements of operations over 
a weighted average period of approximately 1.6 years. 

F-17 

 
 
 
 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
 
  
  
  
  
 
  
  
  
  
 
  
  
  
  
 
  
  
  
  
 
  
  
  
  
 
 
 
Liberty Interactive—Exercises 

The aggregate intrinsic value of all options exercised during the years ended December 31, 2017, 2016 and 2015 

was $15.6 million, $6.6 million and $25.5 million, respectively. 

Liberty Interactive—Restricted Stock 

Liberty Interactive had approximately 252 thousand unvested restricted shares of Liberty Ventures common stock 

held by certain directors, officers and employees of Liberty Interactive as of December 31, 2017. These Series A and 
Series B unvested restricted shares of Liberty Ventures had a weighted average grant-date fair value of $50.46 per share. 

The aggregate fair value of all restricted shares of Liberty Interactive common stock that vested during the years 

ended December 31, 2017, 2016 and 2015 was $2.3 million, $1.3 million and $3.5 million, respectively. 

(8) Commitments and Contingencies 

Operating Leases 

Liberty Interactive leases business offices and uses certain equipment under lease arrangements. Rental 

expense under such arrangements amounted to $1.7 million, $1.1 million and $1.7 million for the years ended 
December 31, 2017, 2016 and 2015, respectively. A summary of future minimum lease payments under noncancelable 
operating leases as of December 31, 2017 follows (amounts in thousands): 

Years ending December 31: 
2018 ..................................................................................................................  
2019 ..................................................................................................................  
2020 ..................................................................................................................  
2021 ..................................................................................................................  
2022 ..................................................................................................................  
Thereafter .........................................................................................................  

  $ 
  $ 
  $ 
  $ 
  $ 
  $ 

951  
953  
922  
793  
352  
—  

It is expected that in the normal course of business, leases that expire generally will be renewed or replaced by 

leases on other properties; thus, it is anticipated that future lease commitments will not be less than the amount shown for 
2017. 

Litigation 

Liberty Interactive has contingent liabilities related to legal and tax proceedings and other matters arising in the 
ordinary course of business. Although it is reasonably possible Liberty Interactive may incur losses upon conclusion of 
such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that 
amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying 
combined financial statements. 

(9) Information About the Company’s Operating Segments 

The Company, through its interests in subsidiaries and other companies, is primarily engaged in the on-line 
commerce and broadband communications services industries. The Company identifies its reportable segments as 
(A) those combined companies that represent 10% or more of its combined annual revenue, annual Adjusted OIBDA or 
total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of the Company’s 
annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment 
presentation. 

The Company evaluates performance and makes decisions about allocating resources to its operating segments 

based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of 
units shipped and revenue or sales per customer equivalent. In addition, the Company reviews nonfinancial measures 
such as unique website visitors, conversion rates and active customers, as appropriate. 

The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general 

and administrative expenses (excluding stock-based compensation). The Company believes this measure is an important 
indicator of the operational strength and performance of its businesses, including each business’s ability to service debt 
and fund capital expenditures. In addition, this measure allows management to view operating results and perform 

F-18 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This 
measure of performance excludes depreciation and amortization, stock-based compensation, certain purchase 
accounting adjustments, separately reported litigation settlements and restructuring and impairment charges that are 
included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered 
in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and 
other measures of financial performance prepared in accordance with GAAP. 

For the year ended December 31, 2017, the Company has identified the following subsidiary as its reportable 

segment: 

  Evite—a wholly owned subsidiary, that provides an online invitation and social event planning service on the 

Web. Evite offers a free private sharing feed in every invitation that allows users to share photos and 
conversations before, during and after an event. Evite also provides free thank you notes, instant gifting, one-
click donations and video content. 

For presentation purposes the Company is providing financial information for Liberty Broadband. While the 

Company’s equity method investment in Liberty Broadband does not meet the reportable segment threshold defined 
above, the Company believes that the inclusion of such information is relevant to users of these financial statements. 

 

Liberty Broadband—an equity method affiliate of the Company, accounted for at fair value, that has a non-
controlling interest in Charter, and a wholly-owned subsidiary, Skyhook Wireless, Inc. (Skyhook). Charter is 
the second largest cable operator in the United States and a leading broadband communications services 
company providing video, Internet and voice services. Skyhook provides a Wi-Fi based location platform 
focused on providing positioning technology and contextual location intelligence solutions. 

Liberty Interactive’s operating segments are strategic business units that offer different products and services. 

They are managed separately because each segment requires different technologies, distribution channels and marketing 
strategies. The accounting policies of the segments that are also combined subsidiaries are the same as those described 
in the Company’s summary of significant accounting policies. 

Performance Measures 

Evite .................................................  
Liberty Broadband ...........................  
Corporate and other ........................  

Eliminate equity method affiliate .........  

Other Information 

2017 

Adjusted 
OIBDA 

  Revenue 

Years ended December 31, 
2016 

  Revenue 

Adjusted 
OIBDA 
amounts in thousands 

2015 

Adjusted 
OIBDA 

  Revenue 

  $  23,817  
13,092  
—  
36,909  
(13,092 ) 
  $  23,817  

1,187  
(16,416 ) 
(26,949 ) 
(42,178 ) 
16,416  
(25,762 ) 

22,552  
30,586  
—  
53,138  
(30,586 ) 
22,552  

1,548  
(11,442 ) 
(17,611 ) 
(27,505 ) 
11,442  
(16,063 ) 

20,307  
NA  
—  
20,307  
NA  
20,307  

784  
NA  
(15,795 ) 
(15,011 ) 
NA  
(15,011 ) 

Total 
assets 

December 31, 2017 
Investments 
in affiliates 

Capital 
expenditures 

Total 
assets 
amounts in thousands 

December 31, 2016 
Investments 
in affiliates 

Capital 
expenditures   

Evite ...........................................  
Liberty Broadband ......................  
Corporate and other ...................  

Eliminate equity method affiliate  

—  
 $ 
42,982  
11,835,613  
  11,931,789  
114,655  
  6,129,231  
  18,104,002  
11,950,268  
  (11,931,789 )  (11,835,613 ) 
114,655  
 $  6,172,213  

3,488  
70  
—  
3,558  
(70 ) 
3,488  

44,409  
9,590,960  
5,256,367  
14,891,736  
(9,590,960 ) 
  5,300,776  

—  
9,315,253  
31,493  
9,346,746  
(9,315,253 ) 
31,493  

2,642  
267  
—  
2,909  
(267 ) 
2,642  

F-19 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table provides a reconciliation of segment Adjusted OIBDA to operating income and earnings (loss) 

from continuing operations before income taxes: 

2017 

Years ended December 31, 
2016 
amounts in thousands 

2015 

Combined segment Adjusted OIBDA ..............................................  
Stock-based compensation .........................................................  
Depreciation and amortization .....................................................  
Operating income ............................................................................  
Share of earnings (loss) of affiliates, net .....................................  
Realized and unrealized gains (losses) on financial instruments, 
net ............................................................................................  
Gains (losses) on transactions, net .............................................  
Other, net .....................................................................................  
Earnings (loss) from continuing operations before income taxes ...  

  $ 

  $ 

(25,762 ) 
(26,583 ) 
(3,252 ) 
(55,597 ) 
7,001  

637,164  
6  
2,461  
591,035  

(16,063 ) 
(16,128 ) 
(2,964 ) 
(35,155 ) 
11,831  

1,309,365  
(1,100 ) 
31,873  
1,316,814  

(15,011 ) 
(11,024 ) 
(2,499 ) 
(28,534 ) 
2,142  

179,699  
—  
18,385  
171,692  

F-20 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ELECTRONIC DELIVERY

We encourage GCI Liberty  stockholders to
voluntarily elect to receive future proxy and annual
report materials electronically.

•

•

If you are a registered stockholder, please visit
www.envisionreports.com/GCIL for simple
instructions.
Beneficial stockholders can opt for e-delivery at
www.proxyvote.com
nominee.
 Faster 

 or by contacting their

 Economical 

 Convenient

 Cleaner 

SCAN THIS QR CODE

•

•

•

to vote using your mobile device

to sign up for e-delivery

to download annual meeting materials

CO2

OUR ENVIRONMENT

GCI Liberty believes in working to keep our
environment cleaner and healthier. We are
proud to have our headquarters
overlooking the Colorado Rockies. Every
day, GCI Liberty takes steps to preserve
the natural beauty of the surroundings that
we are privileged to enjoy.

Combined with your adoption of

electronic delivery of proxy materials, we
can ideally reduce the impact on the
environment by:

Using approximately 56 fewer tons of
wood, or 357 fewer trees

Using approximately 490 million fewer
BTUs, or the equivalent of the amount
of energy used by 6 homes for one
full year

Using approximately 84,513 fewer
pounds of greenhouse gases, including
carbon dioxide, or the equivalent of 8
automobiles running for one year

Saving approximately 341,479 gallons
of water, or the equivalent of
approximately 13 swimming pools

Saving approximately 29,296 pounds of
solid waste

Reducing hazardous air pollutants by
approximately 42 pounds

Environmental impact estimates calculated
using the Environmental Paper Network
Paper Calculator. For more information visit
www.papercalculator.org.

2018 ANNUAL MEETING OF STOCKHOLDERS

Monday, June 25, 2018

8:00 a.m. Local time

Corporate Offices of GCI Liberty, Inc.
12300 Liberty Boulevard
Englewood, Colorado 80112

www.gciliberty.com

12076