Liberty Broadband Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Information

Segment Information

6 Months Ended

Jun. 30, 2019

(8) 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 or losses represent 10% or more of Liberty Broadband’s annual pre-tax earnings (losses).

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, a non-GAAP measure, 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 by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. 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 six months ended June 30, 2019, Liberty Broadband has identified the following consolidated company and equity method investment as its reportable segments:

●

Skyhook—a wholly owned subsidiary of the Company that provides the Precision Location Solution (a location determination service) and Geospatial Insights product (a location intelligence and data insights service).

●

Charter—an equity method investment 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 included in our Annual Report on Form 10-K for the year ended December 31, 2018. 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 June 30,
	2019			2018
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
		(amounts in thousands)
Skyhook	$	3,747	(876)	3,371	(1,023)
Charter		11,347,000	4,123,000	10,854,000	4,022,000
Corporate and other		—	(3,298)	—	(1,753)
		11,350,747	4,118,826	10,857,371	4,019,224
Eliminate equity method affiliate		(11,347,000)	(4,123,000)	(10,854,000)	(4,022,000)
Consolidated Liberty Broadband	$	3,747	(4,174)	3,371	(2,776)


	Six months ended June 30,
	2019			2018
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
	(amounts in thousands)
Skyhook	$	7,205	(2,069)	15,162	5,076
Charter		22,553,000	8,183,000	21,511,000	7,846,000
Corporate and other		—	(5,222)	—	(3,292)
		22,560,205	8,175,709	21,526,162	7,847,784
Eliminate equity method affiliate		(22,553,000)	(8,183,000)	(21,511,000)	(7,846,000)
Consolidated Liberty Broadband	$	7,205	(7,291)	15,162	1,784

Other Information


	June 30, 2019
	Total		Investments	Capital
	assets		in affiliates	expenditures
	(amounts in thousands)
Skyhook	$	22,765	—	50
Charter		146,085,000	—	3,262,000
Corporate and other		12,084,404	12,023,742	—
		158,192,169	12,023,742	3,262,050
Eliminate equity method affiliate		(146,085,000)	—	(3,262,000)
Consolidated Liberty Broadband	$	12,107,169	12,023,742	50

The following table provides a reconciliation of consolidated segment Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:


	Three months ended			Six months
	June 30,			ended June 30,
	2019		2018	2019	2018
		(amounts in thousands)
Consolidated segment Adjusted OIBDA	$	(4,174)	(2,776)	(7,291)	1,784
Stock-based compensation		(2,523)	(1,396)	(5,139)	(2,801)
Depreciation and amortization		(469)	(899)	(937)	(1,808)
Operating income (loss)		(7,166)	(5,071)	(13,367)	(2,825)
Interest expense		(6,342)	(6,035)	(12,885)	(11,072)
Share of earnings (loss) of affiliates, net		45,400	32,911	80,249	42,213
Gain (loss) on dilution of investment in affiliate		(16,322)	(5,205)	(57,725)	(31,962)
Realized and unrealized gains (losses) on financial instruments, net		—	(2,019)	—	(2,019)
Other, net		406	193	829	418
Earnings (loss) before income taxes	$	15,976	14,774	(2,899)	(5,247)