Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.5.0.2
Segment Information
 9 Months Ended
Sep. 30, 2016
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, 2016, 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, together with its subsidiary Skyhook, provides a WiFi based location platform focused on providing positioning technology, contextual location intelligence solutions, and 911 services domestically. 

·

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,

 

 

 

2016

 

2015

 

 

 

 

 

 

Adjusted

 

 

 

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

 

(amounts in thousands)

 

TruePosition

    

$
20,616

    
11,422

    
15,225

    
5,618

 

Charter

 

 
10,037,000

 
3,442,000

 
2,450,000

 
831,000

 

Corporate and other

 

 

 —

 
(2,091)

 

 —

 
(3,059)

 

 

 

 
10,057,616

 
3,451,331

 
2,465,225

 
833,559

 

Eliminate equity method affiliate

 

 
(10,037,000)

 
(3,442,000)

 
(2,450,000)

 
(831,000)

 

Consolidated Liberty Broadband

 

$
20,616

 
9,331

 
15,225

 
2,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

2016

 

2015

 

 

 

 

 

Adjusted

 

 

 

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

(amounts in thousands)

 

TruePosition

    

$
27,413

    
1,234

    
41,186

    
5,681

 

Charter

 

 
18,728,000

 
6,496,000

 
7,242,000

 
2,429,000

 

Corporate and other

 

 

—

 
(7,170)

 

—

 
(9,139)

 

 

 

 
18,755,413

 
6,490,064

 
7,283,186

 
2,425,542

 

Eliminate equity method affiliate

 

 
(18,728,000)

 
(6,496,000)

 
(7,242,000)

 
(2,429,000)

 

Consolidated Liberty Broadband

 

$
27,413

 
(5,936)

 
41,186

 
(3,458)

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2016

 

 

 

Total

 

Investments

 

Capital

 

 

 

assets

 

in affiliates

 

expenditures

 

 

 

(amounts in thousands)

 

TruePosition

    

$
53,415

    

—

    
154

 

Charter

 

 
148,897,000

 

—

 
32,247,000

 

Corporate and other

 

 
9,461,985

 
9,233,197

 

—

 

 

 

 
158,412,400

 
9,233,197

 
32,247,154

 

Eliminate equity method affiliate

 

 
(148,897,000)

 

 —

 
(32,247,000)

 

Consolidated Liberty Broadband

 

$
9,515,400

 
9,233,197

 
154

 

 

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,

 

 

 

2016

 

2015

 

2016

    

2015

 

 

 

 

(amounts in thousands)

 

Consolidated segment Adjusted OIBDA

    

$
9,331

    
2,559

    
(5,936)

    
(3,458)

 

Stock-based compensation

 

 
(1,736)

 
(1,451)

 
(4,582)

 
(4,782)

 

Depreciation and amortization

 

 
(971)

 
(820)

 
(2,935)

 
(4,920)

 

Net gain on legal settlement

 

 

 —

 

 —

 

 —

 
60,505

 

Interest expense

 

 
(4,090)

 
(1,816)

 
(10,547)

 
(5,496)

 

Dividend and interest income

 

 
190

 
605

 
4,697

 
1,871

 

Share of earnings (loss) of affiliates

 

 
19,046

 
(3,999)

 
570,178

 
(65,747)

 

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

 

 

 —

 
(23,116)

 
92,990

 
(12,091)

 

Gain (loss) on dilution of investment in affiliate

 

 
(16,331)

 
(851)

 
760,074

 
(2,113)

 

Other, net

 

 
5

 
10

 
112

 
34

 

Earnings (loss) before income taxes

 

$
5,444

 
(28,879)

 
1,404,051

 
(36,197)