Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.3.0.814
Segment Information
 9 Months Ended
Sep. 30, 2015
Segment Information  
Segment Information

(11) Segment Information

Liberty Broadband identifies its reportable segments as (A) those consolidated companies that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Liberty Broadband’s annual pre-tax earnings.

Liberty Broadband evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA. In addition, Liberty Broadband reviews nonfinancial measures such as subscriber growth.

Liberty Broadband defines Adjusted OIBDA as revenue less operating expenses and selling, general and administrative expenses (excluding stock-based compensation). Liberty Broadband 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 analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, 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 earnings, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Liberty Broadband generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the nine months ended September 30, 2015, Liberty Broadband has identified the following consolidated subsidiary and equity method investment as its reportable segments:

·

TruePosition—a wholly-owned subsidiary of the Company that develops and markets technology for locating wireless phones and other wireless devices on a cellular network, enabling wireless carriers and government agencies to provide public safety E-9-1-1 services domestically and services in support of national security and law enforcement worldwide. In addition, TruePosition acquired Skyhook in 2014, which operates a global location network providing hybrid wireless positioning technology and contextual location intelligence solutions worldwide.

·

Charter—an equity method investment of the Company that is one of the largest providers of cable services in the United States, offering a variety of entertainment, information and communications solutions to residential and commercial customers.

Liberty Broadband’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 consolidated companies are the same as those described in the Company’s summary of significant accounting policies in the Company’s annual financial statements. We have included amounts attributable to Charter in the tables below. Although Liberty Broadband owns less than 100% of the outstanding shares of Charter, 100% of the Charter amounts are included in the schedule below and subsequently eliminated in order to reconcile the account totals to the Liberty Broadband condensed consolidated financial statements.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended  September 30,

 

 

 

2015

 

2014

 

 

 

 

 

 

Adjusted

 

 

 

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

 

(amounts in thousands)

 

TruePosition

    

$
15,225

    
5,618

    
17,445

    
3,033

 

Charter

 

 
2,450,000

 
831,000

 
2,287,000

 
767,000

 

Corporate and other

 

 

 —

 
(3,059)

 

 —

 

 —

 

 

 

 
2,465,225

 
833,559

 
2,304,445

 
770,033

 

Eliminate equity method affiliate

 

 
(2,450,000)

 
(831,000)

 
(2,287,000)

 
(767,000)

 

Consolidated Liberty Broadband

 

$
15,225

 
2,559

 
17,445

 
3,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

2015

 

2014

 

 

 

 

 

Adjusted

 

 

 

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

(amounts in thousands)

 

TruePosition

    

$
41,186

    
5,681

    
51,512

    
(5,252)

 

Charter

 

 
7,242,000

 
2,429,000

 
6,748,000

 
2,303,000

 

Corporate and other

 

 

—

 
(9,139)

 

—

 

 —

 

 

 

 
7,283,186

 
2,425,542

 
6,799,512

 
2,297,748

 

Eliminate equity method affiliate

 

 
(7,242,000)

 
(2,429,000)

 
(6,748,000)

 
(2,303,000)

 

Consolidated Liberty Broadband

 

$
41,186

 
(3,458)

 
51,512

 
(5,252)

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015

 

 

 

Total

 

Investments

 

Capital

 

 

 

assets

 

in affiliates

 

expenditures

 

 

 

(amounts in thousands)

 

TruePosition

    

$
166,496

    

—

    
2,616

 

Charter

 

 
36,873,000

 

—

 
1,292,000

 

Corporate and other

 

 
3,445,021

 
2,432,487

 

—

 

 

 

 
40,484,517

 
2,432,487

 
1,294,616

 

Eliminate equity method affiliate

 

 
(36,873,000)

 

 —

 
(1,292,000)

 

Consolidated Liberty Broadband

 

$
3,611,517

 
2,432,487

 
2,616

 

The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months

 

Nine months

 

 

 

ended September 30,

 

ended September 30,

 

 

 

2015

 

2014

 

2015

    

2014

 

 

 

 

(amounts in thousands)

 

Consolidated segment Adjusted OIBDA

    

$
2,559

    
3,033

    
(3,458)

    
(5,252)

 

Stock-based compensation

 

 
(1,451)

 
(190)

 
(4,782)

 
(735)

 

Depreciation and amortization

 

 
(820)

 
(2,479)

 
(4,920)

 
(6,583)

 

Net gain on legal settlement

 

 

 —

 
6,000

 
60,505

 
6,000

 

Interest expense

 

 
(1,816)

 

 —

 
(5,496)

 

 —

 

Dividend and interest income

 

 
605

 
1,228

 
1,871

 
4,231

 

Share of earnings (loss) of affiliates

 

 
(3,999)

 
(34,542)

 
(65,747)

 
(95,968)

 

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

 

 
(23,116)

 
(12,532)

 
(12,091)

 
23,745

 

Gain (loss) on dilution of investment in affiliate

 

 
(851)

 
(10,953)

 
(2,113)

 
(61,162)

 

Other, net

 

 
10

 
8

 
34

 
(60)

 

Earnings (loss) before income taxes

 

$
(28,879)

 
(50,427)

 
(36,197)

 
(135,784)