Liberty Broadband Corporation Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Segment Information

Segment Information

12 Months Ended

Dec. 31, 2018

(12) 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 cost of sales, 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 year ended December 31, 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. For periods in which Liberty Broadband owned Charter shares and warrants, 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 consolidated financial statements.

Performance Measures


	Years ended December 31,
	2018			2017		2016
			Adjusted		Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA	Revenue	OIBDA
	amounts in thousands
Skyhook	$	22,256	3,161	13,092	(9,496)	30,586	(2,681)
Charter		43,634,000	15,824,000	41,581,000	14,955,000	29,003,000	9,607,000
Corporate and other		—	(6,689)	—	(6,920)	—	(8,761)
		43,656,256	15,820,472	41,594,092	14,938,584	29,033,586	9,595,558
Eliminate equity method affiliate		(43,634,000)	(15,824,000)	(41,581,000)	(14,955,000)	(29,003,000)	(9,607,000)
Consolidated Liberty Broadband	$	22,256	(3,528)	13,092	(16,416)	30,586	(11,442)

Other Information


	December 31, 2018				December 31, 2017
	Total		Investments	Capital	Total	Investments	Capital
	assets		in affiliates	expenditures	assets	in affiliates	expenditures
	amounts in thousands
Skyhook	$	21,763	—	41	24,481	—	70
Charter		146,130,000	—	9,125,000	146,623,000	—	8,681,000
Corporate and other		12,076,674	12,004,376	—	11,907,308	11,835,613	—
		158,228,437	12,004,376	9,125,041	158,554,789	11,835,613	8,681,070
Eliminate equity method affiliate		(146,130,000)	—	(9,125,000)	(146,623,000)	—	(8,681,000)
Consolidated Liberty Broadband	$	12,098,437	12,004,376	41	11,931,789	11,835,613	70

Revenue by Geographic Area


	Years ended December 31,
	2018		2017	2016
	amounts in thousands
United States	$	19,946	10,315	27,806
Other countries		2,310	2,777	2,780
	$	22,256	13,092	30,586

The following table provides a reconciliation of segment Adjusted OIBDA to Operating income (loss) and earnings (loss) from continuing operations before income taxes:


	Years ended December 31,
	2018		2017	2016
	amounts in thousands
Consolidated segment Adjusted OIBDA	$	(3,528)	(16,416)	(11,442)
Stock-based compensation		(5,707)	(5,292)	(5,713)
Depreciation and amortization		(2,779)	(3,770)	(4,005)
Operating income (loss)		(12,014)	(25,478)	(21,160)
Interest expense		(23,302)	(19,570)	(14,956)
Dividend and interest income		881	1,449	5,020
Share of earnings (loss) of affiliates, net		166,146	2,508,991	641,544
Realized and unrealized gains (losses) on financial instruments, net		3,659	3,098	94,122
Gain (loss) on dilution of investment in affiliate		(43,575)	(17,872)	770,766
Other, net		82	(18)	336
Earnings (loss) from continuing operations before income taxes	$	91,877	2,450,600	1,475,672