UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact name of Registrant as specified in its charter)
State of | ||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated Filer ☐ | Non-accelerated Filer ☐ | Smaller Reporting Company | Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes
The number of outstanding shares of Liberty Broadband Corporation’s common stock as of October 31, 2020 was:
Series A | Series B | Series C | ||||
Liberty Broadband Corporation Common Stock | ||||||
Table of Contents
Part I - Financial Information
I-1
LIBERTY BROADBAND CORPORATION
Condensed Consolidated Balance Sheets
(unaudited)
September 30, | December 31, |
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2020 | 2019 |
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(amounts in thousands) |
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Assets |
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Current assets: | ||||||
Cash and cash equivalents | $ | |
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Other current assets |
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Total current assets |
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Investment in Charter, accounted for using the equity method (note 4) |
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Other assets |
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Total assets | $ | |
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Liabilities and Equity | ||||||
Current liabilities: | ||||||
Accounts payable and accrued liabilities | $ | |
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Deferred revenue and other current liabilities |
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Total current liabilities |
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Debt, including $ | | | ||||
Deferred income tax liabilities | | | ||||
Other liabilities | | | ||||
Total liabilities | |
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Equity | ||||||
Preferred stock, $ | ||||||
Series A common stock, $ | | | ||||
Series B common stock, $ | | | ||||
Series C common stock, $ | | | ||||
Additional paid-in capital | | | ||||
Accumulated other comprehensive earnings, net of taxes |
| ( |
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Retained earnings |
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Total equity |
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Commitments and contingencies (note 7) | ||||||
Total liabilities and equity | $ | |
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See accompanying notes to the condensed consolidated financial statements.
I-2
LIBERTY BROADBAND CORPORATION
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended | Nine months ended |
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September 30, | September 30, |
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2020 |
| 2019 |
| 2020 | 2019 |
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(amounts in thousands, except per share amounts) | ||||||||||
Revenue: | ||||||||||
Software sales | $ | | | | | |||||
Service | | — | | — | ||||||
Total revenue | | | | | ||||||
Operating costs and expenses | ||||||||||
Operating, including stock-based compensation (note 6) | | | |
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Selling, general and administrative, including stock-based compensation (note 6) | | | |
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Depreciation and amortization | | | |
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| | |
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Operating income (loss) | ( | ( | ( |
| ( | |||||
Other income (expense): | ||||||||||
Interest expense | ( | ( | ( | ( | ||||||
Share of earnings (losses) of affiliates (note 4) | | | |
| | |||||
Gain (loss) on dilution of investment in affiliate (note 4) | ( | ( | ( |
| ( | |||||
Realized and unrealized gains (losses) on financial instruments, net (note 3) | ( | ( | ( |
| ( | |||||
Other, net | | | |
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Net earnings (loss) before income taxes | | | |
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Income tax benefit (expense) | ( | ( | ( |
| ( | |||||
Net earnings (loss) attributable to Liberty Broadband shareholders | $ | | | |
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Basic net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2) | $ | | | | | |||||
Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2) | $ | | | | |
See accompanying notes to the condensed consolidated financial statements.
I-3
LIBERTY BROADBAND CORPORATION
Condensed Consolidated Statements of Comprehensive Earnings (Loss)
(unaudited)
Three months ended | Nine months ended |
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September 30, | September 30, |
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2020 |
| 2019 |
| 2020 | 2019 |
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(amounts in thousands) |
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Net earnings (loss) |
| $ | | | |
| | |||
Other comprehensive earnings (loss), net of taxes: | ||||||||||
Comprehensive earnings (loss) attributable to debt credit risk adjustments | ( | — | ( |
| — | |||||
Other comprehensive earnings (loss), net of taxes | ( | — | ( |
| — | |||||
Comprehensive earnings (loss) attributable to Liberty Broadband shareholders | $ | | | |
| |
See accompanying notes to the condensed consolidated financial statements.
I-4
LIBERTY BROADBAND CORPORATION
Condensed Consolidated Statements of Cash Flows
(unaudited)
Nine months ended | ||||||
September 30, |
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2020 | 2019 |
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(amounts in thousands) |
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Cash flows from operating activities: |
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Net earnings (loss) | $ | |
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Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||||||
Depreciation and amortization |
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Stock-based compensation |
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Share of (earnings) losses of affiliates, net |
| ( |
| ( | ||
(Gain) loss on dilution of investment in affiliate |
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Realized and unrealized (gains) losses on financial instruments, net |
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Deferred income tax expense (benefit) |
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Other, net |
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Changes in operating assets and liabilities: | ||||||
Current and other assets |
| |
| ( | ||
Payables and other liabilities |
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Net cash provided (used) by operating activities |
| ( |
| ( | ||
Cash flows from investing activities: | ||||||
Capital expended for property and equipment |
| ( |
| ( | ||
Exercise of preemptive right to purchase Charter shares | ( | — | ||||
Net cash provided (used) by investing activities |
| ( |
| ( | ||
Cash flows from financing activities: | ||||||
Borrowings of debt | | | ||||
Repurchases of Liberty Broadband common stock | ( | |||||
Payments from issuances of financial instruments | — | ( | ||||
Payment to former parent under tax sharing agreement related to net settlement of Awards | — | ( | ||||
Taxes paid in lieu of shares issued for stock-based compensation | ( | — | ||||
Other financing activities, net | ( | | ||||
Net cash provided (used) by financing activities |
| |
| ( | ||
Net increase (decrease) in cash |
| |
| ( | ||
Cash, cash equivalents and restricted cash, beginning of period |
| |
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Cash, cash equivalents and restricted cash, end of period | $ | |
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See accompanying notes to the condensed consolidated financial statements.
I-5
LIBERTY BROADBAND CORPORATION
Condensed Consolidated Statements of Equity
(unaudited)
Accumulated | ||||||||||||||||||
Additional | other | |||||||||||||||||
Preferred | Common stock | paid-in | comprehensive | Retained | ||||||||||||||
Stock | Series A |
| Series B |
| Series C |
| capital | earnings | earnings | Total equity | ||||||||
(amounts in thousands) | ||||||||||||||||||
Balance at January 1, 2020 |
| $ | — | | | | |
| |
| |
| | |||||
Net earnings (loss) |
| — | — | — | — | — |
| — |
| |
| | ||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | ||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||
Issuance of common stock upon exercise of stock options | — | — | — | | | — | — | | ||||||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | — | ( | — | — | ( | ||||||||||
Series C Liberty Broadband stock repurchases | — | — | — | ( | ( | — | — | ( | ||||||||||
Noncontrolling interest activity at Charter | — | — | — | — | ( | — | — | ( | ||||||||||
Balance at September 30, 2020 | $ | — | | | | |
| ( |
| |
| |
Accumulated |
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Additional | other |
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Preferred | Common stock | paid-in | comprehensive | Retained |
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Stock | Series A |
| Series B |
| Series C |
| capital | earnings | earnings | Total equity |
| |||||||
(amounts in thousands) |
| |||||||||||||||||
Balance at June 30, 2020 | $ | — | | | | | | | | |||||||||
Net earnings (loss) | — | — | — | — | — | — | | | ||||||||||
Other comprehensive loss | — | — | — | — | — | ( | — | ( | ||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||
Series C Liberty Broadband stock repurchases | — | — | — | ( | ( | — | — | ( | ||||||||||
Noncontrolling interest activity at Charter | — | — | — | — | ( | — | — | ( | ||||||||||
Balance at September 30, 2020 | $ | — | | | | | ( | | |
See accompanying notes to the condensed consolidated financial statements.
I-6
LIBERTY BROADBAND CORPORATION
Condensed Consolidated Statements of Equity (continued)
(unaudited)
Accumulated | ||||||||||||||||||
Additional | other | |||||||||||||||||
Preferred | Common stock | paid-in | comprehensive | Retained | ||||||||||||||
Stock | Series A |
| Series B |
| Series C |
| capital | earnings | earnings | Total equity | ||||||||
(amounts in thousands) | ||||||||||||||||||
Balance at January 1, 2019 | $ | — | | | | | | | | |||||||||
Net earnings (loss) | — | — | — | — | — | — | | | ||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||
Issuance of common stock upon exercise of stock options | — | | — | | | — | — | | ||||||||||
Tax sharing arrangement with former parent | — | — | — | — | ( | — | — | ( | ||||||||||
Noncontrolling interest activity at Charter | — | — | — | — | ( | — | — | ( | ||||||||||
Balance at September 30, 2019 | $ | — | | | | | | | |
Accumulated |
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Additional | other |
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Preferred | Common stock | paid-in | comprehensive | Retained |
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Stock | Series A |
| Series B |
| Series C |
| capital | earnings | earnings | Total equity |
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(amounts in thousands) |
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Balance at June 30, 2019 | $ | — | | | | |
| |
| |
| | ||||||
Net earnings (loss) | — | — | — | — | — | — | | | ||||||||||
Stock-based compensation | — | — | — | — | | — | — | | ||||||||||
Issuance of common stock upon exercise of stock options | — | — | — | — | | — | — | | ||||||||||
Noncontrolling interest activity at Charter | — | — | — | — | ( | — | — | ( | ||||||||||
Balance at September 30, 2019 | $ | — | | | | | | | |
See accompanying notes to the condensed consolidated financial statements.
I-7
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
(1) Basis of Presentation
During May 2014, the board of directors of Liberty Media Corporation and its subsidiaries (“Liberty”) authorized management to pursue a plan to spin-off to its stockholders common stock of a wholly-owned subsidiary, Liberty Broadband Corporation (“Liberty Broadband” or the “Company”), and to distribute subscription rights to acquire shares of Liberty Broadband’s common stock (the “Broadband Spin-Off”). These financial statements refer to Liberty Broadband Corporation as “Liberty Broadband,” “the Company,” “us,” “we” and “our” in the notes to the condensed consolidated financial statements.
Through a number of prior years’ transactions, Liberty Broadband has acquired an interest in Charter Communications, Inc. (“Charter”). Pursuant to proxy agreements with GCI Liberty, Inc. (“GCI Liberty”) and Advance/Newhouse Partnership (“A/N”), Liberty Broadband controls
The Company’s wholly owned subsidiary, Skyhook Holding, Inc. (“Skyhook”), focuses on the development and sale of Skyhook’s device-based location technology. Skyhook markets and sells
The accompanying (a) condensed consolidated balance sheet as of December 31, 2019, which has been derived from audited financial statements, and (b) interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Liberty Broadband's Annual Report on Form 10-K for the year ended December 31, 2019. All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers the application of the equity method of accounting for investments in affiliates and accounting for income taxes to be its most significant estimates.
In December 2019, Chinese officials reported a novel coronavirus outbreak (“COVID-19”). COVID-19 has since spread through China and internationally. On March 11, 2020, the World Health Organization assessed COVID-19 as a global pandemic, causing many countries throughout the world to take aggressive actions, including imposing travel restrictions and stay-at-home orders, closing public attractions and restaurants, and mandating social distancing practices.
We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities. Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements.
Liberty Broadband holds an investment in Charter that is accounted for using the equity method. Liberty Broadband does not control the decision making process or business management practices of this affiliate. Accordingly, Liberty Broadband relies on the management of this affiliate to provide it with accurate financial information prepared in accordance with GAAP that the Company uses in the application of the equity method. In addition, Liberty Broadband relies on audit
I-8
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
reports that are provided by the affiliate's independent auditor on the financial statements of such affiliate. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliate that would have a material effect on Liberty Broadband's condensed consolidated financial statements.
On August 6, 2020, Liberty Broadband and GCI Liberty entered into a definitive merger agreement under which Liberty Broadband agreed to acquire all of the outstanding shares of GCI Liberty in a stock-for-stock merger (the “Combination”). Under the terms of the merger agreement each holder of Series A and B common stock of GCI Liberty will receive
Spin-Off Arrangements
Following the Broadband Spin-Off, Liberty and Liberty Broadband operate as separate, publicly traded companies, and neither has any stock ownership, beneficial or otherwise, in the other. In connection with the Broadband Spin-Off, Liberty (for accounting purposes a related party of the Company) and Liberty Broadband entered into certain agreements in order to govern certain of the ongoing relationships between the two companies after the Broadband Spin-Off and to provide for an orderly transition. These agreements include a reorganization agreement, a services agreement, a facilities sharing agreement and a tax sharing agreement.
The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the Broadband Spin-Off, certain conditions to the Broadband Spin-Off and provisions governing the relationship between Liberty Broadband and Liberty with respect to and resulting from the Broadband Spin-Off. The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Liberty and Liberty Broadband and other agreements related to tax matters. Pursuant to the services agreement, Liberty provides Liberty Broadband with general and administrative services including legal, tax, accounting, treasury and investor relations support. See below for a description of an amendment to the services agreement in December 2019. Under the facilities sharing agreement, Liberty Broadband shares office space with Liberty and related amenities at Liberty’s corporate headquarters. Liberty Broadband will reimburse Liberty for direct, out-of-pocket expenses incurred by Liberty in providing these services which will be negotiated semi-annually. Under these various agreements, amounts reimbursable to Liberty were approximately $
In December 2019, the Company entered into an amendment to the services agreement with Liberty in connection with Liberty’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s President and Chief Executive Officer. Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., GCI Liberty, and Qurate Retail, Inc. (collectively, the “Service Companies”) or reimbursed to Liberty, in each case, based on allocations among Liberty and the Service Companies set forth in the amended services agreement, currently set at
I-9
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
(2) Earnings (Loss) per Share
Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) attributable to Liberty Broadband shareholders by the weighted average number of common shares outstanding (“WASO”) for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. The basic and diluted EPS calculations are based on the following weighted average number of shares of outstanding common stock.
Liberty Broadband Common Stock | |||||||||
Three months | Three months | Nine months | Nine months |
| |||||
ended | ended | ended | ended | ||||||
| September 30, 2020 |
| September 30, 2019 |
| September 30, 2020 |
| September 30, 2019 |
| |
(numbers of shares in thousands) | |||||||||
Basic WASO |
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Potentially dilutive shares (1) |
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Diluted WASO |
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(1) Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.
(3) Assets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.
The Company’s assets and (liabilities) measured at fair value are as follows:
September 30, 2020 | December 31, 2019 |
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Quoted prices | Significant | Quoted prices | Significant |
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in active | other | in active | other |
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markets for | observable | markets for | observable |
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identical assets | inputs | identical assets | inputs |
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Description | Total | (Level 1) | (Level 2) | Total | (Level 1) | (Level 2) |
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(amounts in thousands) |
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Cash equivalents | $ | | | — | | | — | |||||||
Exchangeable senior debentures | $ | |
| — |
| |
| — |
| — |
| — |
The Company’s exchangeable senior debentures are debt instruments with quoted market value prices that are not considered to be traded on “active markets”, as defined in GAAP, and are reported in the foregoing table as Level 2 fair value.
Other Financial Instruments
The carrying amounts of other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, and accrued and other current liabilities, which approximate fair value due to the short maturity
I-10
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
of these instruments as reported on our condensed consolidated balance sheets. The carrying value of our long-term debt under the Margin Loan Facility (as defined in note 5 to the accompanying condensed consolidated financial statements) bears interest at a variable rate and therefore is also considered to approximate fair value.
Realized and Unrealized Gains (Losses) on Financial Instruments
Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:
Three months ended | Nine months ended |
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September 30, | September 30, |
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2020 | 2019 | 2020 | 2019 |
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(amounts in thousands) |
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Derivative instruments (1) | $ | — | ( | — | ( | ||||||
Exchangeable senior debentures (2) | ( | NA | ( | NA | |||||||
$ | ( | ( | ( |
| ( |
(1) | In September 2019, the Company entered into a zero-strike call option on |
(2) | The Company has elected to account for its exchangeable senior debentures entered into in August 2020 using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statements of operations are primarily due to market factors driven by changes in the fair value of the underlying shares into which debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive income. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk before tax was a loss of $ |
(4) Investment in Charter Accounted for Using the Equity Method
Through a number of prior years’ transactions, Liberty Broadband has acquired an interest in Charter. The investment in Charter is accounted for as an equity method affiliate based on our voting and ownership interest and the board seats held by individuals appointed by Liberty Broadband. As of September 30, 2020, the carrying and market value of Liberty Broadband’s ownership in Charter was approximately $
Pursuant to proxy agreements with GCI Liberty and A/N (the “GCI Liberty Proxy” and “A/N Proxy”, respectively), Liberty Broadband has an irrevocable proxy to vote certain shares of Charter common stock owned beneficially or of record by GCI Liberty and A/N, for a
Liberty Broadband’s overall voting interest (
Liberty Broadband’s equity ownership in Charter (on a fully diluted basis) is capped at the greater of
I-11
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
Additionally, so long as the A/N Proxy is in effect, if A/N proposes to transfer common units of Charter Communications Holdings, LLC (which units are exchangeable into Charter shares and which will, under certain circumstances, result in the conversion of certain shares of Charter class B common stock into Charter shares) or Charter shares, in each case, constituting either (i) shares representing the first
During the nine months ended September 30, 2020, Liberty Broadband exercised its preemptive right to purchase an aggregate of approximately
Investment in Charter
The excess basis in our investment in Charter of $
September 30, | December 31, | ||||
2020 | 2019 | ||||
Property and equipment |
| $ | | | |
Customer relationships |
| | | ||
Franchise fees |
| | | ||
Trademarks |
| | | ||
Goodwill |
| | | ||
Debt |
| ( | ( | ||
Deferred income tax liability |
| ( | ( | ||
$ | | |
Property and equipment and customer relationships have weighted average remaining useful lives of approximately
The Company had a dilution loss of $
I-12
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)
Summarized unaudited financial information for Charter is as follows (amounts in millions):
Charter condensed consolidated balance sheets
| September 30, 2020 | December 31, 2019 |
| |||
Current assets | $ | | | |||
Property and equipment, net |
| | | |||
Goodwill |
| | | |||
Intangible assets, net |
| | | |||
Other assets |
| | | |||
Total assets | $ | | | |||
Current liabilities | | | ||||
Deferred income taxes |
| | | |||
Long-term debt |
| | | |||
Other liabilities |
| | | |||
Equity |
| | | |||
Total liabilities and shareholders’ equity | $ | | |
Charter condensed consolidated statements of operations
Three months ended |
| Nine months ended | ||||||
September 30, | September 30, | |||||||
2020 | 2019 | 2020 | 2019 | |||||
Revenue | $ | | | | | |||
Cost and expenses: | ||||||||
Operating costs and expenses (excluding depreciation and amortization) |
| | | | | |||
Depreciation and amortization |
| | | | | |||
Other operating (income) expenses, net |
| | | | | |||
| | | | |||||
Operating income | | | | | ||||
Interest expense, net |
| ( | ( | ( | ( | |||
Other income (expense), net | ( | ( | ( | ( | ||||
Income tax benefit (expense) |
| ( | ( | ( | ( | |||
Net income (loss) | | | | | ||||
Less: Net income attributable to noncontrolling interests | ( | ( | ( | ( | ||||
Net income (loss) attributable to Charter shareholders | $ | | | | |
I-13
LIBERTY BROADBAND CORPORATION
Notes to Condensed Consolidated Financial Statements
(unaudited)