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

9 Months Ended

Sep. 30, 2018

(9) 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 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, 2018, 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. 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,
	2018			2017
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
		(amounts in thousands)
Skyhook	$	3,518	(683)	3,430	(980)
Charter		10,892,000	3,933,000	10,458,000	3,674,000
Corporate and other		—	(1,515)	—	(2,366)
		10,895,518	3,930,802	10,461,430	3,670,654
Eliminate equity method affiliate		(10,892,000)	(3,933,000)	(10,458,000)	(3,674,000)
Consolidated Liberty Broadband	$	3,518	(2,198)	3,430	(3,346)


	Nine months ended September 30,
	2018			2017
			Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA
	(amounts in thousands)
Skyhook	$	18,680	4,393	9,643	(6,839)
Charter		32,403,000	11,779,000	30,979,000	10,946,000
Corporate and other		—	(4,807)	—	(5,423)
		32,421,680	11,778,586	30,988,643	10,933,738
Eliminate equity method affiliate		(32,403,000)	(11,779,000)	(30,979,000)	(10,946,000)
Consolidated Liberty Broadband	$	18,680	(414)	9,643	(12,262)

Other Information


	September 30, 2018
	Total		Investments	Capital
	assets		in affiliates	expenditures
	(amounts in thousands)
Skyhook	$	25,286	—	35
Charter		146,085,000	—	6,692,000
Corporate and other		12,057,388	11,977,368	—
		158,167,674	11,977,368	6,692,035
Eliminate equity method affiliate		(146,085,000)	—	(6,692,000)
Consolidated Liberty Broadband	$	12,082,674	11,977,368	35

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


	Three months			Nine months
	ended September 30,			ended September 30,
	2018		2017	2018	2017
		(amounts in thousands)
Consolidated segment Adjusted OIBDA	$	(2,198)	(3,346)	(414)	(12,262)
Stock-based compensation		(1,397)	(1,499)	(4,198)	(4,376)
Depreciation and amortization		(501)	(942)	(2,309)	(2,844)
Operating income (loss)		(4,096)	(5,787)	(6,921)	(19,482)
Interest expense		(5,967)	(5,518)	(17,039)	(14,899)
Dividend and interest income		167	422	585	1,219
Share of earnings (loss) of affiliates, net		84,739	(5,280)	126,952	25,109
Realized and unrealized gains (losses) on financial instruments, net		5,678	2,675	3,659	5,026
Gain (loss) on dilution of investment in affiliate		(3,203)	(3,718)	(35,165)	(42,515)
Other, net		83	9	83	11
Earnings (loss) before income taxes	$	77,401	(17,197)	72,154	(45,531)