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

Quarterly report pursuant to Section 13 or 15(d)

Industry Segments Data

Industry Segments Data

9 Months Ended

Sep. 30, 2011

Condensed Notes to Interim Consolidated Financial Statements (Unaudited)

Segment Reporting Disclosure Text Block

(7) Industry Segments Data

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

A description of our reportable segments follows:

Consumer - We offer a full range of voice, video, data and wireless services to residential customers.

Network Access - We offer a full range of voice, data and wireless services to common carrier customers.

Commercial - We offer a full range of voice, video, data and wireless services to small businesses, local, national and global businesses, governmental entities and public and private educational institutions.

Managed Broadband - We offer data services to rural school districts, hospitals and health clinics through our SchoolAccess® and ConnectMD® initiatives and managed video conferencing.

Regulated Operations - We offer voice and data services to residential, business, and governmental customers in areas of rural Alaska.

Corporate related expenses including engineering, information technology, accounting, legal and regulatory, human resources, and other general and administrative expenses for the three and nine months ended September 30, 2011 and 2010 are allocated to our segments using segment margin for the years ended December 31, 2010 and 2009, respectively. Bad debt expense for the three and nine months ended September 30, 2011 and 2010 is allocated to our segments using a combination of specific identification and allocations based upon segment revenue for the three and nine months ended September 30, 2011 and 2010, respectively. Corporate related expenses and bad debt expense are specifically identified for our Regulated Operations segment, and therefore are not included in the allocations.

We evaluate performance and allocate resources based on earnings before depreciation and amortization expense, net interest expense, income taxes, share-based compensation expense, accretion expense and non-cash contribution adjustment (“Adjusted EBITDA”). Management believes that this measure is useful to investors and other users of our financial information in evaluating operating profitability as an analytical indicator of income generated to service debt and fund capital expenditures. In addition, multiples of current or projected EBITDA are used to estimate current or prospective enterprise value. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in note 1 in the “Notes to Consolidated Financial Statements” included in Part II of our December 31, 2010 annual report on Form 10-K. Intersegment sales are recorded at cost plus an agreed upon intercompany profit.

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

Summarized financial information for our reportable segments for the three and nine months ended September 30, 2011 and 2010 follows (amounts in thousands):

Three months ended September 30,				Consumer	Network Access	Commercial	Managed Broadband	Regulated Operations	Total Reportable Segments
2011
Revenues:
	Intersegment		$	-	-	1,382	-	4	1,386
	External			89,267	29,467	35,572	17,407	5,990	177,703
		Total revenues	$	89,267	29,467	36,954	17,407	5,994	179,089
Adjusted EBITDA			$	30,373	13,729	9,117	8,844	1,038	63,101

2010
Revenues:
	Intersegment		$	-	(1)	1,386	-	44	1,429
	External			88,713	28,204	35,449	13,548	5,595	171,509
		Total revenues	$	88,713	28,203	36,835	13,548	5,639	172,938
Adjusted EBITDA			$	31,212	15,028	9,125	5,826	1,550	62,741

Nine months ended September 30,				Consumer	Network Access	Commercial	Managed Broadband	Regulated Operations	Total Reportable Segments
2011
Revenues:
	Intersegment		$	-	-	4,207	-	117	4,324
	External			266,238	79,715	101,617	46,041	16,958	510,569
		Total revenues	$	266,238	79,715	105,824	46,041	17,075	514,893
Adjusted EBITDA			$	87,024	37,953	23,180	20,264	2,959	171,380

2010
Revenues:
	Intersegment		$	-	-	4,042	-	132	4,174
	External			256,230	81,499	95,243	36,020	17,262	486,254
		Total revenues	$	256,230	81,499	99,285	36,020	17,394	490,428
Adjusted EBITDA			$	88,420	40,206	23,526	13,888	5,110	171,150

A reconciliation of reportable segment revenues to consolidated revenues follows (amounts in thousands):

			Three Months Ended		Nine Months Ended
			September 30,		September 30,
			2011	2010	2011	2010
Reportable segment revenues		$	179,089	172,938	514,893	490,428
Less intersegment revenues eliminated in consolidation			1,386	1,429	4,324	4,174
	Consolidated revenues	$	177,703	171,509	510,569	486,254

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

			Three Months Ended		Nine Months Ended
			September 30,		September 30,
			2011	2010	2011	2010
Reportable segment Adjusted EBITDA		$	63,101	62,741	171,380	171,150
Less depreciation and amortization expense			(30,702)	(30,288)	(93,054)	(92,234)
Less share-based compensation expense			(384)	(2,250)	(3,224)	(4,696)
Plus other expense			59	-	92	160
Less accretion expense			(190)	-	(456)	-
	Consolidated operating income		31,884	30,203	74,738	74,380
Less other expense, net			(16,715)	(17,661)	(60,597)	(52,933)
	Consolidated income before income tax expense	$	15,169	12,542	14,141	21,447