Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v2.4.0.8
Segment Information
 9 Months Ended
Sep. 30, 2014
Segment Information  
Segment Information

(11) Segment Information

Liberty Broadband identifies its reportable segments as (A) those combined companies that represent 10% or more of its combined 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 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 nine months ended September 30, 2014, Liberty Broadband has identified the following combined company and equity method investment as its reportable segments:

·

TruePosition—a wholly-owned company of the Company that develops and markets technology for locating wireless phones and other wireless devices on a cellular network, enabling wireless carriers and government agencies to provide public safety E-9-1-1 services domestically and services in support of national security and law enforcement worldwide.

·

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 combined companies are the same as those described in the Company’s summary of significant accounting policies in the Company’s annual financial statements.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended  September 30,

 

 

 

 

2014

 

2013

 

 

 

 

 

 

Adjusted

 

 

 

Adjusted

 

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

 

(amounts in thousands)

 

TruePosition

    

$
17,445 

    
3,033 

    
17,627 

    
(1,048)

 

Charter

 

 
2,287,000 

 
750,000 

 
2,118,000 

 
710,000 

 

Corporate and other

 

 

 —

 

 —

 

 —

 

 —

 

 

 

 
2,304,445 

 
753,033 

 
2,135,627 

 
708,952 

 

Eliminate equity method affiliate

 

 
(2,287,000)

 
(750,000)

 
(2,118,000)

 
(710,000)

 

Combined Liberty Broadband

 

$
17,445 

 
3,033 

 
17,627 

 
(1,048)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

2014

 

2013

 

 

 

 

 

 

Adjusted

 

 

 

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

(amounts in thousands)

 

TruePosition

    

$
51,512 

    
(5,252)

    
60,449 

    
2,592 

 

Charter

 

 
6,748,000 

 
2,303,000 

 
6,007,000 

 
2,056,000 

 

Corporate and other

 

 

—

 

—

 

—

 

—

 

 

 

 
6,799,512 

 
2,297,748 

 
6,067,449 

 
2,058,592 

 

Eliminate equity method affiliate

 

 
(6,748,000)

 
(2,303,000)

 
(6,007,000)

 
(2,056,000)

 

Combined Liberty Broadband

 

$
51,512 

 
(5,252)

 
60,449 

 
2,592 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

 

 

Total

 

Investments

 

Capital

 

 

 

assets

 

in affiliates

 

expenditures

 

 

 

(amounts in thousands)

 

TruePosition

    

$
175,302 

    

—

    
1,117 

 

Charter

 

 
20,950,000 

 

—

 
1,678,000 

 

Corporate and other

 

 
2,833,002 

 
2,373,627 

 

—

 

 

 

 
23,958,304 

 
2,373,627 

 
1,679,117 

 

Eliminate equity method affiliate

 

 
(20,950,000)

 

 —

 
(1,678,000)

 

Combined Liberty Broadband

 

$
3,008,304 

 
2,373,627 

 
1,117 

 

 

 

 

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,

 

 

 

2014

 

2013

 

2014

    

2013

 

 

 

 

(amounts in thousands)

 

Combined segment Adjusted OIBDA

    

$
3,033 

    
(1,048)

    
(5,252)

    
2,592 

 

Stock-based compensation

 

 
(190)

 
(367)

 
(735)

 
(1,082)

 

Depreciation and amortization

 

 
(2,479)

 
(1,065)

 
(6,583)

 
(3,374)

 

Gain on legal settlement

 

 
6,000 

 

 —

 
6,000 

 

 —

 

Dividend and interest income

 

 
1,228 

 
1,766 

 
4,231 

 
5,203 

 

Share of earnings (loss) of affiliates, net

 

 
(34,542)

 
(38,400)

 
(95,968)

 
(65,666)

 

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

 

 
(12,532)

 
9,167 

 
23,745 

 
68,029 

 

Gain (loss) on dilution of investment in affiliate

 

 
(10,953)

 
(52,163)

 
(61,162)

 
(55,219)

 

Other, net

 

 
8 

 
(8)

 
(60)

 
(45)

 

Earnings (loss) before income taxes

 

$
(50,427)

 
(82,118)

 
(135,784)

 
(49,562)