Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 16, 2017 | |
Entity Registrant Name | Liberty Broadband Corp | |
Entity Central Index Key | 1,611,983 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Series A common stock | ||
Entity Common Stock, Shares Outstanding | 26,301,479 | |
Series B common stock | ||
Entity Common Stock, Shares Outstanding | 2,455,179 | |
Series C common stock | ||
Entity Common Stock, Shares Outstanding | 153,089,705 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 135,425 | $ 205,728 |
Trade and other receivables, net | 2,233 | 878 |
Derivative instruments | 49,019 | |
Other current assets | 4,319 | 2,794 |
Total current assets | 141,977 | 258,419 |
Investment in Charter, accounted for using the equity method | 9,326,871 | 9,315,253 |
Property and equipment, net | 425 | 710 |
Goodwill | 6,497 | 6,497 |
Intangible assets subject to amortization, net | 6,063 | 8,596 |
Other assets, at cost, net of accumulated amortization | 61 | 1,485 |
Total assets | 9,481,894 | 9,590,960 |
Current liabilities: | ||
Accounts payable and accrued liabilities | 4,963 | 7,931 |
Deferred revenue | 6,684 | 2,171 |
Current portion of debt | 400,000 | |
Other current liabilities | 553 | 2,014 |
Total current liabilities | 12,200 | 412,116 |
Debt | 496,975 | 198,512 |
Deferred income tax liabilities | 497,414 | 504,644 |
Deferred revenue | 3,765 | 2,596 |
Other liabilities | 1,305 | |
Total liabilities | 1,011,659 | 1,117,868 |
Equity | ||
Additional paid-in capital | 7,952,316 | 7,945,883 |
Accumulated other comprehensive earnings, net of taxes | 8,290 | 7,656 |
Retained earnings | 507,811 | 517,736 |
Total equity | 8,470,235 | 8,473,092 |
Commitments and contingencies | ||
Total liabilities and equity | 9,481,894 | 9,590,960 |
Series A common stock | ||
Equity | ||
Common stock | 262 | 262 |
Total equity | 262 | 262 |
Series B common stock | ||
Equity | ||
Common stock | 25 | 25 |
Total equity | 25 | 25 |
Series C common stock | ||
Equity | ||
Common stock | 1,531 | 1,530 |
Total equity | $ 1,531 | $ 1,530 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Paranthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Preferred Stock | ||
Preferred stock par value | $ 0.01 | $ 0.01 |
Preferred stock shares authorized | 50,000,000 | 50,000,000 |
Preferred shares issued | 0 | 0 |
Series A common stock | ||
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares, Issued | 26,301,387 | 26,251,533 |
Common Stock, Shares, Outstanding | 26,301,387 | 26,251,533 |
Series B common stock | ||
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 18,750,000 | 18,750,000 |
Common Stock, Shares, Issued | 2,455,179 | 2,467,509 |
Common Stock, Shares, Outstanding | 2,455,179 | 2,467,509 |
Series C common stock | ||
Common stock par value | $ 0.01 | $ 0.01 |
Common stock shares authorized | 500,000,000 | 500,000,000 |
Common Stock, Shares, Issued | 153,089,705 | 153,019,547 |
Common Stock, Shares, Outstanding | 153,089,705 | 153,019,547 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Revenue | $ 3,430 | $ 20,616 | $ 9,643 | $ 27,413 |
Operating costs and expenses | ||||
Operating, including stock-based compensation | 646 | 782 | 1,968 | 2,099 |
Selling, general and administrative, including stock-based compensation | 6,189 | 9,855 | 18,099 | 27,792 |
Research and development, including stock-based compensation | 1,440 | 2,384 | 6,214 | 8,040 |
Depreciation and amortization | 942 | 971 | 2,844 | 2,935 |
Total operating costs and expenses | 9,217 | 13,992 | 29,125 | 40,866 |
Operating income (loss) | (5,787) | 6,624 | (19,482) | (13,453) |
Other income (expense): | ||||
Interest Expense | (5,518) | (4,090) | (14,899) | (10,547) |
Dividend and interest income | 422 | 190 | 1,219 | 4,697 |
Share of earnings (losses) of affiliates | (5,280) | 19,046 | 25,109 | 570,178 |
Realized and unrealized gains (losses) on financial instruments, net | 2,675 | 5,026 | 92,990 | |
Gain (loss) on dilution of investment in affiliate | (3,718) | (16,331) | (42,515) | 760,074 |
Other, net | 9 | 5 | 11 | 112 |
Net earnings (loss) before income taxes | (17,197) | 5,444 | (45,531) | 1,404,051 |
Income tax benefit (expense) | 7,333 | (1,655) | 18,245 | (532,349) |
Net earnings (loss) attributable to Liberty Broadband shareholders | $ (9,864) | $ 3,789 | $ (27,286) | $ 871,702 |
Earnings Per Share, Basic | $ (0.05) | $ 0.02 | $ (0.15) | $ 6.13 |
Earnings Per Share, Diluted | $ (0.05) | $ 0.02 | $ (0.15) | $ 6.10 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Earnings (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Consolidated Statements of Comprehensive Earnings (Loss) | ||||
Net earnings (loss) | $ (9,864) | $ 3,789 | $ (27,286) | $ 871,702 |
Other comprehensive earnings (loss), net of taxes: | ||||
Unrealized holding gains (losses) arising during the period | (221) | |||
Share of other comprehensive earnings (loss) of equity affiliates | 260 | 247 | 634 | 811 |
Other | (1,839) | |||
Other comprehensive earnings (loss), net of taxes | 260 | 247 | 634 | (1,249) |
Comprehensive earnings (loss) attributable to Liberty Broadband shareholders | $ (9,604) | $ 4,036 | $ (26,652) | $ 870,453 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net earnings (loss) | $ (27,286) | $ 871,702 |
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 2,844 | 2,935 |
Stock-based compensation | 4,376 | 4,582 |
Share of (earnings) losses of affiliates | (25,109) | (570,178) |
(Gain) loss on dilution of investment in affiliate | 42,515 | (760,074) |
Realized and unrealized (gains) losses on financial instruments, net | (5,026) | (92,990) |
Deferred Income Tax Expense (Benefit) | (18,259) | 533,626 |
Other, net | 1,080 | 112 |
Changes in operating assets and liabilities: | ||
Current and other assets | (1,455) | 7,954 |
Payables and other liabilities | 2,724 | (2,702) |
Net cash provided (used) by operating activities | (23,596) | (5,033) |
Cash flows from investing activities: | ||
Capital expended for property and equipment | (27) | (154) |
Purchases of short term investments and other marketable securities | (155,444) | |
Sales of short term investments and other marketable securities | 164,458 | |
Investment in equity method affiliate | (5,000,000) | |
Other investing activities, net | 14 | 453 |
Net cash provided (used) by investing activities | (13) | (4,990,687) |
Cash flows from financing activities: | ||
Borrowings of debt | 500,000 | 200,000 |
Repayments of debt | (600,000) | |
Cash received from issuance of Series C Liberty Broadband common stock | 4,400,000 | |
Payments from issuances of financial instruments | (101,638) | |
Proceeds from settlements of financial instruments | 155,683 | |
Other financing activities, net | (739) | (318) |
Net cash provided (used) by financing activities | (46,694) | 4,599,682 |
Net increase (decrease) in cash | (70,303) | (396,038) |
Cash and cash equivalents, beginning of period | 205,728 | 655,079 |
Cash and cash equivalents, end of period | $ 135,425 | $ 259,041 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Equity - 9 months ended Sep. 30, 2017 - USD ($) $ in Thousands | Series A common stock | Series B common stock | Series C common stock | Additional Paid In Capital | Accumulated other comprehensive earnings | Retained earnings | Total |
Balance at Dec. 31, 2016 | $ 262 | $ 25 | $ 1,530 | $ 7,945,883 | $ 7,656 | $ 517,736 | $ 8,473,092 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net earnings (loss) | (27,286) | (27,286) | |||||
Other comprehensive earnings | 634 | 634 | |||||
Stock-based compensation | 4,017 | 4,017 | |||||
Issuance of common stock upon exercise of stock options | 1 | 2,416 | 2,417 | ||||
Balance at Sep. 30, 2017 | $ 262 | $ 25 | $ 1,531 | $ 7,952,316 | $ 8,290 | 507,811 | 8,470,235 |
Increase (Decrease) in Stockholders' Equity | |||||||
Cumulative effect of accounting change at Charter | Accounting Standards Update 2016-09 | $ 17,361 | $ 17,361 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
Basis of Presentation | |
Basis of Presentation | (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 Series C common stock (the “Broadband Spin-Off”). At the time of the Broadband Spin-Off, Liberty Broadband was comprised of (i) Liberty’s former interest in Charter Communications, Inc. (“Legacy Charter”), (ii) Liberty’s former wholly-owned subsidiary TruePosition, Inc., (iii) Liberty’s former minority equity investment in Time Warner Cable, Inc. (“Time Warner Cable”), (iv) certain deferred tax liabilities, as well as liabilities related to Time Warner Cable written call options and (v) initial indebtedness, pursuant to margin loans entered into prior to the completion of the Broadband Spin-Off. These financial statements refer to the combination of the aforementioned subsidiary, investments, and financial instruments as “Liberty Broadband,” “the Company,” “us,” “we” and “our” in the notes to the condensed consolidated financial statements. On May 18, 2016, Time Warner Cable merged with Legacy Charter (the “Time Warner Cable Merger”). In connection with the Time Warner Cable Merger, Legacy Charter underwent a corporate reorganization, resulting in CCH I, LLC (“Charter”), a former subsidiary of Legacy Charter, becoming the new publicly traded parent company. Also on May 18, 2016, the previously announced acquisition of Bright House Networks, LLC from Advance/Newhouse Partnership (“A/N”) by Charter (the “Bright House Transaction”) was completed. In connection with the Time Warner Cable Merger and Bright House Transaction, Liberty Broadband entered into certain agreements with Legacy Charter, Charter (for accounting purposes a related party of the Company), Liberty Interactive Corporation (“Liberty Interactive,” for accounting purposes a related party of the Company) and Time Warner Cable. As a result of the Time Warner Cable Merger and Bright House Transaction (collectively, the “Transactions”), Liberty Broadband exchanged its shares of Time Warner Cable for shares of Charter and purchased additional shares of Charter. As a result, and pursuant to proxy agreements entered into with Liberty Interactive and A/N, Liberty Broadband controls 25.01% of the aggregate voting power of Charter. See note 4 for additional detail regarding these transactions and corresponding agreements. The Company’s wholly owned subsidiary, Skyhook Holding, Inc. (formerly known as TruePosition, Inc.), was originally incorporated to provide technology for locating wireless phones and other mobile devices through a passive network overlay system using its patented U-TDOA technology (“U-TDOA service”). In February 2014, Skyhook Holding, Inc. acquired 100% of the outstanding common shares of Skyhook Wireless, Inc., which operates a global location network containing billions of geolocated Wi-Fi access points and cell towers that serve as the reference infrastructure for providing location services. In 2015, one of Skyhook Holding, Inc.’s customers, a wireless carrier utilizing the legacy U-TDOA service which accounted for approximately 80% - 90% of consolidated revenue at the time, gave notice that it planned to discontinue use of the U-TDOA service and did not intend to renew its contract, which expired on December 31, 2015. The loss of this customer had a material adverse effect on Skyhook Holding, Inc.’s business. As a result of the loss of this wireless carrier customer, further changes in the regulatory environment and a shift in the overall market for the legacy U-TDOA service, Skyhook Holding, Inc. ceased making further investment in its U-TDOA products. In 2016, Skyhook Holding, Inc. and Skyhook Wireless, Inc. combined operations in order to focus on the development and sale of the suite of location and context products, and are referred to collectively herein as “Skyhook.” The accompanying (a) condensed consolidated balance sheet as of December 31, 2016, 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, 2016. 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 (i) the application of the equity method of accounting for investments in affiliates, (ii) the fair value of non-financial instruments, (iii) the fair value of financial instruments, (iv) revenue recognition and (v) accounting for income taxes to be its most significant estimates . In February 2016, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance on lease accounting. This guidance requires a company to recognize lease assets and lease liabilities arising from operating leases in the statement of financial position. The new guidance also simplifies the accounting for sale and leaseback transactions. The amendments in this update are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted. We plan to adopt this guidance on January 1, 2019. Companies are required to use a modified retrospective approach to adopt this guidance. The Company is currently working with its consolidated subsidiary, Skyhook, to evaluate the impact of the adoption of this new guidance on our consolidated financial statements, including identifying the population of leases, evaluating technology solutions and collecting lease data. In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company anticipates adopting this guidance under the modified retrospective transition method. Skyhook has substantially completed the review of its revenue arrangements and does not currently expect that the adoption of the new standard will have a material impact on its financial position or results of operations. Additionally, Charter, which is accounted for as an equity method investment, has substantially completed its review of its revenue arrangements and does not currently expect that the adoption of the new standard will have a material impact on its financial position or results of operations. 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 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. 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 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. Among other things, pursuant to the tax sharing agreement, Liberty Broadband has agreed to indemnify Liberty, subject to certain limited exceptions, for losses and taxes resulting from the Broadband Spin-Off to the extent such losses or taxes result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by Liberty Broadband (applicable to actions or failures to act by Liberty Broadband and its subsidiaries following the completion of the Broadband Spin-Off). Pursuant to the services agreement, Liberty provides Liberty Broadband with general and administrative services including legal, tax, accounting, treasury and investor relations support. 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 and for costs that will be negotiated semi-annually. Under these various agreements, approximately $814 thousand and $661 thousand was reimbursable to Liberty for the three months ended September 30, 2017 and 2016, respectively, and $2.4 million was reimbursable to Liberty for the nine months ended September 30, 2017 and 2016, respectively. |
Earnings (loss) per Share
Earnings (loss) per Share | 9 Months Ended |
Sep. 30, 2017 | |
Earnings (loss) per Share | |
Earnings (loss) per Share | (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, 2017 September 30, 2016 September 30, 2017 September 30, 2016 (numbers of shares in thousands) Basic WASO 181,846 181,621 181,795 142,170 Potentially dilutive shares (1) 1,485 970 1,369 666 Diluted WASO 183,331 182,591 183,164 142,836 ________ (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. |
Investment in Charter Accounted
Investment in Charter Accounted for Using the Equity Method | 9 Months Ended |
Sep. 30, 2017 | |
Investments in Affiliates Accounted for Using the Equity Method | |
Investments in Affiliates Accounted for Using the Equity Method | (4) Investment in Charter Accounted for Using the Equity Method In May 2013, Liberty acquired approximately 26.9 million shares of Legacy Charter common stock and approximately 1.1 million warrants to purchase shares of Legacy Charter common stock for approximately $2.6 billion, which represented an approximate 27% beneficial ownership (including the warrants on an as if converted basis) in Legacy Charter at the time of purchase and price per share of $95.50. Liberty funded the purchase with a combination of cash on hand of approximately $1.2 billion and new margin loan arrangements. Liberty allocated the purchase price between the shares of common stock and the warrants acquired in the transaction by determining the fair value of the publicly traded warrants and allocating the remaining balance to the shares acquired, which resulted in an initial excess basis in the investment of $2,532 million. The investment in Legacy Charter is accounted for as an equity method affiliate based on the ownership interest obtained and the board seats held by individuals appointed by Liberty. During May 2014, Liberty purchased 897 thousand Legacy Charter shares for approximately $124.5 million. During November 2014, subsequent to the Broadband Spin-Off, Liberty Broadband exercised all of its outstanding warrants to purchase shares of Legacy Charter common stock for approximately $52 million. On May 18, 2016, the Time Warner Cable Merger was completed, which resulted in Legacy Charter and Time Warner Cable becoming wholly owned subsidiaries of Charter. Also on May 18, 2016, the previously announced Bright House Transaction was completed. In connection with these transactions, Legacy Charter underwent a corporate reorganization, resulting in Charter, a former subsidiary of Legacy Charter, becoming the new publicly traded parent company. In connection with the Time Warner Cable Merger and the Bright House Transaction, Liberty Broadband completed the previously announced transactions described below: Transactions Completed in Connection with the Time Warner Cable Merger Charter Investment Agreement On May 18, 2016, Liberty Broadband completed its previously announced investment in Charter in accordance with the investment agreement dated May 23, 2015 by and among Liberty Broadband, Legacy Charter and Charter (the “Charter Investment Agreement”). Pursuant to the Charter Investment Agreement, immediately following the consummation of the Time Warner Cable Merger, Liberty Broadband purchased from Charter $4.3 billion of shares of Charter Class A common stock, par value $0.001 per share, at a price per share of $195.70 following adjustment by the applicable exchange ratio. As a result, Liberty Broadband received approximately 22.0 million shares of Charter Class A common stock. Liberty Broadband funded its purchase of these shares of Charter Class A common stock with proceeds from the issuance of Liberty Broadband Series C common stock. Charter Contribution Agreement Also on May 18, 2016, shares of Time Warner Cable common stock held by Liberty Broadband and Liberty Interactive were exchanged, in a tax-free transaction, for shares of Charter Class A common stock which resulted in each of Liberty Broadband and Liberty Interactive receiving one share of Charter Class A common stock for each share of Time Warner Cable common stock so exchanged. In the exchange, Liberty Broadband received approximately 2.4 million shares of Charter Class A common stock, with a fair value of $531.9 million. Liberty Interactive Proxy Agreement Pursuant to the Proxy and Right of First Refusal Agreement, dated May 23, 2015, as amended (the “Liberty Interactive Proxy Agreement”), by and between Liberty Broadband and Liberty Interactive, Liberty Interactive granted Liberty Broadband an irrevocable proxy to vote all shares of Charter common stock owned beneficially or of record by Liberty Interactive following the closing of the Time Warner Cable Merger, for a five year term subject to extension upon the mutual agreement of both parties, subject to certain limitations. So long as the Liberty Interactive Proxy Agreement is in effect, Liberty Broadband also has a right of first refusal (“ROFR”) to purchase all or a portion of any shares of Charter common stock which Liberty Interactive proposes to transfer, subject to certain limitations. Transactions Completed in Connection with the Bright House Transaction Second Amended and Restated Stockholders Agreement On May 18, 2016, pursuant to the Stockholders Agreement, upon the closing of the Bright House Transaction, Liberty Broadband purchased from Charter approximately 3.7 million additional shares of Charter Class A common stock at a price per share of $191.33 following adjustment by the applicable exchange ratios, for an aggregate purchase price of $700 million. Liberty Broadband funded its $700 million purchase in shares of Charter through cash on hand and margin loan draws, as discussed in note 6. Proxy and Right of First Refusal Agreement In connection with the Bright House Transaction, on May 18, 2016, A/N and Liberty Broadband entered into a proxy and right of first refusal agreement, as amended (“A/N Proxy”), pursuant to which A/N granted Liberty Broadband a five-year proxy to vote shares of Charter held by A/N, capped at a number of shares representing 7% of the voting power of Charter’s outstanding shares. As a result of the A/N Proxy and the Liberty Interactive Proxy Agreement, Liberty Broadband controls 25.01% of the aggregate voting power of Charter following the completion of the Time Warner Cable Merger and the Bright House Transaction and is Charter’s largest stockholder. 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 Class B Common Stock into Charter shares) or Charter shares, in each case, constituting either (i) shares representing the first 7.0% of the outstanding voting power of Charter held by A/N or (ii) shares representing the last 7.0% of the outstanding voting power of Charter held by A/N, Liberty Broadband will have a ROFR to purchase all or a portion of any such securities A/N proposes to transfer. The purchase price per share for any securities sold to Liberty Broadband pursuant to the ROFR will be the volume-weighted average price of Charter shares for the two trading day period before the notice of a proposed sale by A/N, payable in cash. Certain transfers are permitted to affiliates of A/N, subject to the transferee entity entering into an agreement assuming the transferor’s obligations under the A/N Proxy. Investment in Charter For discussion purposes the term “Charter” will be used to discuss both our previous and current holdings in Legacy Charter and Charter. It is noted that the ticker symbol for the Class A common stock of each of Legacy Charter and Charter are the same, and that in connection with the Time Warner Cable Merger, Legacy Charter underwent a corporate reorganization, resulting in Charter, a former subsidiary of Legacy Charter, becoming the new publicly traded parent company. As of September 30, 2017, the carrying value of Liberty Broadband’s ownership in Charter was approximately $9,327 million. The market value of Liberty Broadband’s ownership in Charter as of September 30, 2017 was approximately $19,651 million, which represented an approximate economic ownership of 22% of the outstanding equity of Charter as of that date. The excess basis is $2,100 million as of September 30, 2017 and has been allocated within memo accounts used for equity accounting purposes as follows (amounts in millions): Property and equipment $ 174 Customer relationships 346 Franchise fees 1,170 Trademarks 29 Goodwill 1,046 Debt (20) Deferred income tax liability (645) $ 2,100 Upon acquisition, Liberty Broadband ascribed remaining useful lives of 7 years and 13 years to property and equipment and customer relationships, respectively, and indefinite lives to franchise fees, trademarks and goodwill. The excess basis of outstanding debt is amortized over the contractual period using the effective interest rate method. The increase in excess basis for the nine months ended September 30, 2017, was primarily due to Charter’s share buyback program. The Company’s Share of earnings (losses) of affiliates line item in the accompanying condensed consolidated statements of operations includes expenses of $15.3 million and $18.5 million, net of related taxes, for the three months ended September 30, 2017 and 2016, respectively, and expenses of $44.0 million and $23.2 million, net of related taxes, for the nine months ended September 30, 2017 and 2016, respectively, due to the amortization of the excess basis related to assets with identifiable useful lives and debt. The Company had a dilution loss of $3.7 million and $16.3 million during the three months ended September 30, 2017 and 2016, respectively, and a dilution loss of $42.5 million and a dilution gain of $760.1 million during the nine months ended September 30, 2017 and 2016, respectively. The dilution gain for the nine months ended September 30, 2016 is primarily attributable to Liberty Broadband’s investment basis in Charter at a price per share below the new equity issued in the Time Warner Cable Merger. The dilution losses during the other periods presented are attributable to stock option exercises by employees and other third parties at prices below Liberty Broadband’s book basis per share. Accounting Change Charter adopted Accounting Standards Update (“ASU”) 2016-09 on January 1, 2017. Upon adoption of ASU 2016-09, Charter recognized excess tax benefits of approximately $136 million in deferred tax assets that were previously not recognized in a cumulative-effect adjustment to retained earnings. The impact of this entry on the Company’s equity is reflected in the line item Cumulative effect of accounting change at Charter in the accompanying condensed consolidated statement of equity. Summarized unaudited financial information for Charter is as follows (amounts in millions): Charter condensed consolidated balance sheets September 30, 2017 December 31, 2016 Current assets $ 4,132 3,300 Property and equipment, net 33,300 32,963 Goodwill 29,554 29,509 Intangible assets, net 79,905 81,924 Other assets 1,337 1,371 Total assets $ 148,228 149,067 Current liabilities 10,419 9,572 Deferred income taxes 26,576 26,665 Long-term debt 66,064 59,719 Other liabilities 2,591 2,745 Equity 42,578 50,366 Total liabilities and shareholders’ equity $ 148,228 149,067 Charter condensed consolidated statements of operations Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Revenue $ 10,458 10,037 30,979 18,728 Cost and expenses: Operating costs and expenses (excluding depreciation and amortization) (6,703) (6,482) (19,857) (12,157) Depreciation and amortization (2,701) (2,437) (7,846) (4,412) Other operating expenses, net (145) (207) (374) (776) (9,549) (9,126) (28,077) (17,345) Operating income 909 911 2,902 1,383 Interest expense, net (788) (724) (2,250) (1,771) Other income (expense), net (3) 79 (55) 429 Income tax benefit (expense) (26) (16) (99) 3,135 Net income (loss) 92 250 498 3,176 Less: Net income attributable to noncontrolling interests (44) (61) (156) (108) Net income (loss) attributable to Charter shareholders $ 48 189 342 3,068 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Other Intangible Assets | |
Goodwill and Other Intangible Assets | (5) Goodwill and Other Intangible Assets There were no changes in the carrying amount of goodwill during the nine months ended September 30, 2017. Intangible assets subject to amortization are comprised of the following (amounts in thousands): September 30, 2017 December 31, 2016 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Acquired patents $ 10,823 (9,633) 1,190 10,823 (8,450) 2,373 Customer relationships 10,213 (6,463) 3,750 10,213 (5,440) 4,773 Tradename 2,838 (1,809) 1,029 2,838 (1,528) 1,310 Capitalized software 857 (763) 94 850 (710) 140 $ 24,731 (18,668) 6,063 24,724 (16,128) 8,596 Skyhook’s patents are amortized straight-line over three and a half years and Skyhook’s tradename and customer relationship are amortized straight-line over five and a half years. Capitalized software intangible assets are amortized over three to five years. Amortization expense was $842 thousand and $850 thousand for the three months ended September 30, 2017 and 2016, respectively, and $2.5 million and $2.6 million for the nine months ended September 30, 2017 and 2016, respectively. The estimated future amortization expense for the next five years related to intangible assets with definite lives as of September 30, 2017 is as follows (amounts in thousands): Remainder of 2017 $ 841 2018 $ 2,575 2019 $ 1,776 2020 $ 871 2021 $ — |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Debt Disclosure [Text Block] | (6) Debt Outstanding debt at September 30, 2017 and December 31, 2016 is summarized as follows: September 30, 2017 December 31, 2016 (amounts in thousands) 2014 Margin Loans $ — 400,000 2016 Margin Loans — 200,000 2017 Margin Loans 500,000 — Deferred loan costs (3,025) (1,488) $ Less debt classified as current — (400,000) Total long-term debt $ 2014 Margin Loans On October 30, 2014, in connection with and prior to the effectiveness of the Broadband Spin-Off, a wholly-owned special purpose subsidiary of the Company (“BroadbandSPV”) entered into two margin loan agreements (the “2014 Margin Loan Agreements”) with each of the lenders party thereto. The 2014 Margin Loan Agreements permitted BroadbandSPV, subject to certain funding conditions, to borrow term loans up to an aggregate principal amount equal to $400 million (the “2014 Margin Loans”). The maximum borrowing capacity of $400 million under the 2014 Margin Loan Agreements was outstanding at December 31, 2016. The maturity date of the 2014 Margin Loans was October 30, 2017, accordingly the debt was classified as current as of December 31, 2016. Borrowings under the 2014 Margin Loan Agreements bore interest at the three-month LIBOR rate plus a per annum spread of 1.55%, and had an unused commitment fee of 0.25% per annum based on the average daily unused portion of the 2014 Margin Loans. Interest was payable quarterly in arrears beginning on December 31, 2014. On August 31, 2017, the outstanding borrowings of $400 million were repaid, as discussed below. 2016 Margin Loans On March 21, 2016, a wholly-owned special purpose subsidiary of the Company (“Cheetah 5”), entered into two margin loan agreements (the “2016 Margin Loan Agreements” and together with the 2014 Margin Loan Agreements, the “Margin Loan Agreements”) with each of the lenders party thereto. The 2016 Margin Loan Agreements permitted Cheetah 5, subject to certain funding conditions, to borrow initial term loans up to an aggregate principal amount equal to $200 million and delayed draw loans (the “Draw Loans”) up to an aggregate principal amount equal to $100 million, for an aggregate total of $300 million (collectively the “2016 Margin Loans”). Cheetah 5 had borrowed $200 million as of December 31, 2016 and had $100 million available to be drawn until September 21, 2017. The maturity date of the 2016 Margin Loans was March 21, 2018, accordingly the debt was classified as noncurrent as of December 31, 2016. Borrowings under the 2016 Margin Loans bore interest at the applicable LIBOR rate plus 2.10% per annum and had an unused commitment fee of 0.5% per annum based on the average daily unused portion of the Draw Loans. Interest was payable quarterly in arrears beginning on March 31, 2016. The proceeds of the 2016 Margin Loans were used for the Company’s additional investment in Charter during May 2016, as discussed in note 4. On August 31, 2017, the outstanding borrowings of $200 million were repaid, as discussed below. 2017 Margin Loan Facility On August 31, 2017, a bankruptcy remote wholly owned subsidiary of the Company (“SPV”), entered into a multi-draw margin loan credit facility (the “2017 Margin Loan Facility” and, the credit agreement governing such facility, the “2017 Margin Loan Agreement”) with Bank of America, N.A and the lenders thereunder. SPV is permitted, subject to certain funding conditions, to borrow term loans up to an aggregate principal amount equal to $1.0 billion. SPV will also have the ability from time to time to request additional loans in an aggregate principal amount of up to $1.0 billion on an uncommitted basis subject to certain conditions. SPV had borrowed $500 million as of September 30, 2017 and had $500 million available to be drawn until August 31, 2018. The maturity date of the loans under the 2017 Margin Loan Agreement is August 30, 2019 (except for any incremental loans incurred thereunder to the extent SPV and the incremental lenders agree to a later maturity date). Accordingly, the debt is classified as noncurrent as of September 30, 2017. Borrowings under the 2017 Margin Loan Agreement bear interest at the three-month LIBOR rate plus a per annum spread of 1.5%, unless it is unlawful for the applicable lender to fund or maintain loans based on LIBOR or there are material restrictions on the applicable lender to do so, in which case borrowings under the 2017 Margin Loan Agreement will either (a) bear interest at 0.5% plus the higher of (i) the federal funds rate plus ½ of 1%, (ii) the prime rate and (iii) LIBOR plus 1% for each day during such period or (b) be prepaid. Borrowings outstanding under these margin loans bore interest at a rate of 2.74% per annum at September 30, 2017. Interest is payable quarterly in arrears beginning on September 29, 2017. SPV used available cash and a portion of the proceeds of the loans under the 2017 Margin Loan Facility to repay the Margin Loan Agreements. Borrowings may also be used for distribution as a dividend or a return of capital, for the purchase of margin stock and for general corporate purposes. The 2017 Margin Loan Agreement contains various affirmative and negative covenants that restrict the activities of SPV (and, in some cases, the Company and its subsidiaries with respect to shares of Charter owned by the Company and its subsidiaries). The 2017 Margin Loan Agreement does not include any financial covenants. The 2017 Margin Loan Agreement also contains restrictions related to additional indebtedness and events of default customary for margin loans of this type. SPV’s obligations under the 2017 Margin Loan Agreement are secured by first priority liens on a portion of the Company’s ownership interest in Charter, sufficient for SPV to meet the loan to value requirements under the 2017 Margin Loan Agreement. The 2017 Margin Loan Agreement indicates that no lender party shall have any voting rights with respect to the shares transferred, except to the extent that a lender party buys any shares in a sale or other disposition made pursuant to the terms of the loan agreements. As of September 30, 2017, approximately 6.8 million shares of Charter with a value of $2.5 billion were pledged as collateral pursuant to the 2017 Margin Loan Agreement. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2017 | |
Stock-Based Compensation | |
Stock-Based Compensation | (7) Stock-Based Compensation Liberty Broadband grants, to certain of its directors, employees and employees of its subsidiaries, restricted stock and stock options to purchase shares of its common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date. Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation for the three and nine months ended September 30, 2017 and 2016 (amounts in thousands): Three months Nine months ended ended September 30, September 30, 2017 2016 2017 2016 Operating expense $ 3 4 5 2 Selling, general and administrative 1,429 1,596 4,032 4,363 Research and development 67 136 339 217 $ 1,499 1,736 4,376 4,582 Liberty Broadband – Grants of Stock Options There were no options to purchase shares of Series A, Series B or Series C common stock granted during the nine months ended September 30, 2017. The Company calculates the GDFV for all of its equity classified awards and any subsequent remeasurement of its liability classified awards using the Black-Scholes Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. Since Liberty Broadband common stock has not traded on the stock market for a significant length of time, the volatility used in the calculation for Awards is based on a blend of the historical volatility of Liberty Broadband and Charter common stock and the implied volatility of publicly traded Liberty Broadband and Charter options; as the most significant asset within Liberty Broadband, the volatility of Charter was considered in the overall volatility of Liberty Broadband. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject option. Liberty Broadband – Outstanding Awards The following tables present the number and weighted average exercise price (“WAEP”) of Awards to purchase Liberty Broadband common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the Awards. Weighted average remaining Aggregate contractual intrinsic Series A WAEP life value (in thousands) (in years) (in millions) Outstanding at January 1, 2017 454 $ 32.47 Granted — $ — Exercised (49) $ 26.85 Forfeited/cancelled — $ — Outstanding at September 30, 2017 405 $ 33.15 2.2 $ 25 Exercisable at September 30, 2017 402 $ 33.06 2.2 $ 25 Weighted average remaining Aggregate contractual intrinsic Series C WAEP life value (in thousands) (in years) (in millions) Outstanding at January 1, 2017 2,467 $ 42.45 Granted — $ — Exercised (94) $ 27.08 Forfeited/cancelled — $ — Outstanding at September 30, 2017 2,373 $ 43.06 5.4 $ 124 Exercisable at September 30, 2017 851 $ 33.59 2.3 $ 52 As of September 30, 2017 , the total unrecognized compensation cost related to unvested Awards was approximately $11 million . Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2 years. As of September 30, 2017, Liberty Broadband reserved 2.8 million shares of Series A and Series C common stock for issuance under exercise privileges of outstanding stock Awards. Skyhook Equity Incentive Plans Skyhook issued 3.3 million phantom stock appreciation rights (“PARs”) and no phantom stock units (“PSUs”) during the nine months ended September 30, 2017. As of September 30, 2017, the fair value of outstanding PARs and PSUs was approximately $2.4 million. As of September 30, 2017, $1.6 million (Level 3) is included in Other current liabilities in the accompanying condensed consolidated balance sheet for the fair value of Skyhook’s vested long-term incentive plan obligations. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | (8) Commitments and Contingencies Leases Skyhook leases various properties under operating leases expiring at various times through 2018. Skyhook’s two principal facilities are under lease through December 2017 and December 2019, respectively. Including amounts due to Liberty under the facilities sharing agreement, the Company’s total rental expense was $368 thousand and $452 thousand for each of the three months ended September 30, 2017 and 2016, respectively, and $890 thousand and $1.0 million for each of the nine months ended September 30, 2017 and 2016, respectively. General Litigation In the ordinary course of business, the Company and its consolidated subsidiary are parties to legal proceedings and claims involving alleged infringement of third-party intellectual property rights, defamation, and other claims, including infringement of the intellectual property rights of the Company and its consolidated subsidiary by third parties. Although it is reasonably possible that the Company may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements. Indemnification Claims In the normal course of business, Skyhook provides indemnification to certain customers against specified claims that might arise against those customers from the use of Skyhook’s products. To date, Skyhook has not made any significant reimbursements to any of its customers for any losses related to these indemnification provisions. However, four such claims are currently pending. Skyhook is unable to estimate the maximum potential impact of these indemnification provisions on its future results of operations, although Skyhook’s liabilities in certain of those arrangements are customarily limited in various respects, including monetarily. Accordingly, no accrual was recorded related to indemnification claims as of September 30, 2017 or December 31, 2016. Certain Risks and Concentrations The Skyhook business is subject to certain risks and concentrations including dependence on relationships with its customers. The Company’s largest customers, that accounted for greater than 10% of revenue, aggregated 57% and 85% of total revenue for the three months ended September 30, 2017 and 2016, respectively, and 57% and 64% of total revenue for the nine months ended September 30, 2017 and 2016, respectively. Off-Balance Sheet Arrangements Liberty Broadband did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on the Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information | |
Segment Information | (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 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, 2017, Liberty Broadband has identified the following consolidated subsidiary and equity method investment as its reportable segments: · Skyhook—a wholly owned subsidiary of the Company that provides a Wi-Fi based location platform focused on providing positioning technology and contextual location intelligence solutions. · 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, 2017 2016 Adjusted Adjusted Revenue OIBDA Revenue OIBDA (amounts in thousands) Skyhook $ 3,430 (980) 20,616 11,422 Charter 10,458,000 3,674,000 10,037,000 3,429,000 Corporate and other — (2,366) — (2,091) 10,461,430 3,670,654 10,057,616 3,438,331 Eliminate equity method affiliate (10,458,000) (3,674,000) (10,037,000) (3,429,000) Consolidated Liberty Broadband $ 3,430 (3,346) 20,616 9,331 Nine months ended September 30, 2017 2016 Adjusted Adjusted Revenue OIBDA Revenue OIBDA (amounts in thousands) Skyhook $ 9,643 (6,839) 27,413 1,234 Charter 30,979,000 10,946,000 18,728,000 5,963,000 Corporate and other — (5,423) — (7,170) 30,988,643 10,933,738 18,755,413 5,957,064 Eliminate equity method affiliate (30,979,000) (10,946,000) (18,728,000) (5,963,000) Consolidated Liberty Broadband $ 9,643 (12,262) 27,413 (5,936) Other Information September 30, 2017 Total Investments Capital assets in affiliates expenditures (amounts in thousands) Skyhook $ 26,136 — 27 Charter 148,228,000 — 6,096,000 Corporate and other 9,455,758 9,326,871 — 157,709,894 9,326,871 6,096,027 Eliminate equity method affiliate (148,228,000) — (6,096,000) Consolidated Liberty Broadband $ 9,481,894 9,326,871 27 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, 2017 2016 2017 2016 (amounts in thousands) Consolidated segment Adjusted OIBDA $ (3,346) 9,331 (12,262) (5,936) Stock-based compensation (1,499) (1,736) (4,376) (4,582) Depreciation and amortization (942) (971) (2,844) (2,935) Operating income (loss) (5,787) 6,624 (19,482) (13,453) Interest expense (5,518) (4,090) (14,899) (10,547) Dividend and interest income 422 190 1,219 4,697 Share of earnings (loss) of affiliates (5,280) 19,046 25,109 570,178 Realized and unrealized gains (losses) on financial instruments, net 2,675 — 5,026 92,990 Gain (loss) on dilution of investment in affiliate (3,718) (16,331) (42,515) 760,074 Other, net 9 5 11 112 Earnings (loss) before income taxes $ (17,197) 5,444 (45,531) 1,404,051 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies | |
Schedule of weighted average number of shares | Liberty Broadband Common Stock Three months Three months Nine months Nine months ended ended ended ended September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 (numbers of shares in thousands) Basic WASO 181,846 181,621 181,795 142,170 Potentially dilutive shares (1) 1,485 970 1,369 666 Diluted WASO 183,331 182,591 183,164 142,836 ________ (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. |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Assets and Liabilities Measured at Fair Value | |
Schedule of assets and liabilities measured at fair value | September 30, 2017 December 31, 2016 Quoted prices Significant Quoted prices Significant in active other in active other markets for observable markets for observable identical assets inputs identical assets inputs Description Total (Level 1) (Level 2) Total (Level 1) (Level 2) (amounts in thousands) Cash equivalents $ 134,574 134,574 — 198,011 198,011 — Derivative instruments (1) $ — — — 49,019 — 49,019 _________________________ (1) As of December 31, 2016, the Company had an outstanding zero-strike call option on 704,908 shares of Liberty Broadband Series C common stock which expired in March 2017. The Company prepaid a premium of $47.9 million in December 2016. Liberty Broadband exercised its option to settle the contract in cash in March 2017 for cash proceeds of $50.0 million. The Company accounted for the zero-strike call option as a financial instrument asset due to its settlement provisions. Subsequent to September 30, 2017, the Company entered into another zero-strike call option on 527,156 shares of Liberty Broadband Series C common stock. The Company prepaid a premium of $47.7 million in October 2017. |
Schedule of fair value inputs | Volatility Interest rate Dividend yield |
Schedule of realized and unrealized gains (losses) on financial instruments | Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 (amounts in thousands) Time Warner Cable investment (1) $ — — — 92,990 Derivative instruments (2) 2,675 — 5,026 — $ 2,675 — 5,026 92,990 (1) As discussed in note 4, Time Warner Cable merged with Charter on May 18, 2016. Therefore the Company no longer has an investment in Time Warner Cable as of May 18, 2016 , and the unrealized gain (loss) related to our investment in Time Warner Cable is recorded through this date. In connection with the merger, the Company exchanged, in a tax-free transaction, its shares of Time Warner Cable for shares of Charter Class A common stock . (2) As of December 31, 2016, the Company had an outstanding zero-strike call option on 704,908 shares of Liberty Broadband Series C common stock which the Company exercised in March 2017. In April 2017, the Company entered into another zero-strike call option on 600,242 shares of Liberty Broadband Series C common stock. The Company prepaid a premium of $50.0 million in April 2017. Upon expiration in June 2017, the call option was rolled into a new zero-strike call option on 600,242 shares of Liberty Broadband Series C common stock. Liberty Broadband exercised its option to settle the contract in cash in August 2017 for cash proceeds of $53.8 million. The Company realized gains on the options outstanding and settled during the three and nine months ended September 30, 2017. |
Investment in Charter Account18
Investment in Charter Accounted for Using the Equity Method (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments in Affiliates Accounted for Using the Equity Method | |
Schedule of allocation of excess basis within memo accounts used for equity accounting purposes | The excess basis is $2,100 million as of September 30, 2017 and has been allocated within memo accounts used for equity accounting purposes as follows (amounts in millions): Property and equipment $ 174 Customer relationships 346 Franchise fees 1,170 Trademarks 29 Goodwill 1,046 Debt (20) Deferred income tax liability (645) $ 2,100 |
Summary of financial information for Charter | Summarized unaudited financial information for Charter is as follows (amounts in millions): Charter condensed consolidated balance sheets September 30, 2017 December 31, 2016 Current assets $ 4,132 3,300 Property and equipment, net 33,300 32,963 Goodwill 29,554 29,509 Intangible assets, net 79,905 81,924 Other assets 1,337 1,371 Total assets $ 148,228 149,067 Current liabilities 10,419 9,572 Deferred income taxes 26,576 26,665 Long-term debt 66,064 59,719 Other liabilities 2,591 2,745 Equity 42,578 50,366 Total liabilities and shareholders’ equity $ 148,228 149,067 Charter condensed consolidated statements of operations Three months ended Nine months ended September 30, September 30, 2017 2016 2017 2016 Revenue $ 10,458 10,037 30,979 18,728 Cost and expenses: Operating costs and expenses (excluding depreciation and amortization) (6,703) (6,482) (19,857) (12,157) Depreciation and amortization (2,701) (2,437) (7,846) (4,412) Other operating expenses, net (145) (207) (374) (776) (9,549) (9,126) (28,077) (17,345) Operating income 909 911 2,902 1,383 Interest expense, net (788) (724) (2,250) (1,771) Other income (expense), net (3) 79 (55) 429 Income tax benefit (expense) (26) (16) (99) 3,135 Net income (loss) 92 250 498 3,176 Less: Net income attributable to noncontrolling interests (44) (61) (156) (108) Net income (loss) attributable to Charter shareholders $ 48 189 342 3,068 |
Goodwill and Other Intangible19
Goodwill and Other Intangible Assets (Table) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Other Intangible Assets | |
Schedule of intangible assets subject to amortization | Intangible assets subject to amortization are comprised of the following (amounts in thousands): September 30, 2017 December 31, 2016 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount Acquired patents $ 10,823 (9,633) 1,190 10,823 (8,450) 2,373 Customer relationships 10,213 (6,463) 3,750 10,213 (5,440) 4,773 Tradename 2,838 (1,809) 1,029 2,838 (1,528) 1,310 Capitalized software 857 (763) 94 850 (710) 140 $ 24,731 (18,668) 6,063 24,724 (16,128) 8,596 |
Schedule of estimated future amortization expense for the next five years related to intangible assets with definite lives | The estimated future amortization expense for the next five years related to intangible assets with definite lives as of September 30, 2017 is as follows (amounts in thousands): Remainder of 2017 $ 841 2018 $ 2,575 2019 $ 1,776 2020 $ 871 2021 $ — |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Description of Business | |
Schedule of debt | September 30, 2017 December 31, 2016 (amounts in thousands) 2014 Margin Loans $ — 400,000 2016 Margin Loans — 200,000 2017 Margin Loans 500,000 — Deferred loan costs (3,025) (1,488) $ Less debt classified as current — (400,000) Total long-term debt $ |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Schedule of stock-based compensation expense | Included in the accompanying condensed consolidated statements of operations are the following amounts of stock-based compensation for the three and nine months ended September 30, 2017 and 2016 (amounts in thousands): Three months Nine months ended ended September 30, September 30, 2017 2016 2017 2016 Operating expense $ 3 4 5 2 Selling, general and administrative 1,429 1,596 4,032 4,363 Research and development 67 136 339 217 $ 1,499 1,736 4,376 4,582 |
Series A common stock | |
Schedule of stock awards activity | Weighted average remaining Aggregate contractual intrinsic Series A WAEP life value (in thousands) (in years) (in millions) Outstanding at January 1, 2017 454 $ 32.47 Granted — $ — Exercised (49) $ 26.85 Forfeited/cancelled — $ — Outstanding at September 30, 2017 405 $ 33.15 2.2 $ 25 Exercisable at September 30, 2017 402 $ 33.06 2.2 $ 25 |
Series C common stock | |
Schedule of stock awards activity | Weighted average remaining Aggregate contractual intrinsic Series C WAEP life value (in thousands) (in years) (in millions) Outstanding at January 1, 2017 2,467 $ 42.45 Granted — $ — Exercised (94) $ 27.08 Forfeited/cancelled — $ — Outstanding at September 30, 2017 2,373 $ 43.06 5.4 $ 124 Exercisable at September 30, 2017 851 $ 33.59 2.3 $ 52 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Information | |
Schedule of performance measures | Three months ended September 30, 2017 2016 Adjusted Adjusted Revenue OIBDA Revenue OIBDA (amounts in thousands) Skyhook $ 3,430 (980) 20,616 11,422 Charter 10,458,000 3,674,000 10,037,000 3,429,000 Corporate and other — (2,366) — (2,091) 10,461,430 3,670,654 10,057,616 3,438,331 Eliminate equity method affiliate (10,458,000) (3,674,000) (10,037,000) (3,429,000) Consolidated Liberty Broadband $ 3,430 (3,346) 20,616 9,331 Nine months ended September 30, 2017 2016 Adjusted Adjusted Revenue OIBDA Revenue OIBDA (amounts in thousands) Skyhook $ 9,643 (6,839) 27,413 1,234 Charter 30,979,000 10,946,000 18,728,000 5,963,000 Corporate and other — (5,423) — (7,170) 30,988,643 10,933,738 18,755,413 5,957,064 Eliminate equity method affiliate (30,979,000) (10,946,000) (18,728,000) (5,963,000) Consolidated Liberty Broadband $ 9,643 (12,262) 27,413 (5,936) |
Schedule of segment reporting information | September 30, 2017 Total Investments Capital assets in affiliates expenditures (amounts in thousands) Skyhook $ 26,136 — 27 Charter 148,228,000 — 6,096,000 Corporate and other 9,455,758 9,326,871 — 157,709,894 9,326,871 6,096,027 Eliminate equity method affiliate (148,228,000) — (6,096,000) Consolidated Liberty Broadband $ 9,481,894 9,326,871 27 |
Schedule of reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes | Three months Nine months ended September 30, ended September 30, 2017 2016 2017 2016 (amounts in thousands) Consolidated segment Adjusted OIBDA $ (3,346) 9,331 (12,262) (5,936) Stock-based compensation (1,499) (1,736) (4,376) (4,582) Depreciation and amortization (942) (971) (2,844) (2,935) Operating income (loss) (5,787) 6,624 (19,482) (13,453) Interest expense (5,518) (4,090) (14,899) (10,547) Dividend and interest income 422 190 1,219 4,697 Share of earnings (loss) of affiliates (5,280) 19,046 25,109 570,178 Realized and unrealized gains (losses) on financial instruments, net 2,675 — 5,026 92,990 Gain (loss) on dilution of investment in affiliate (3,718) (16,331) (42,515) 760,074 Other, net 9 5 11 112 Earnings (loss) before income taxes $ (17,197) 5,444 (45,531) 1,404,051 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | May 18, 2016 | Feb. 28, 2014 |
Voting interest acquired (as a percent) | 25.01% | ||||||
Accounting Standards Update 2016-09 | |||||||
Cumulative effect of accounting change at Charter | $ 17,361 | $ 17,361 | |||||
Liberty | |||||||
Related Party Transaction, Amounts of Transaction | $ 814 | $ 661 | $ 2,400 | $ 2,400 | |||
Skyhook | Skyhook Wireless, Inc. | |||||||
Voting interest acquired (as a percent) | 100.00% | ||||||
Customer concentration | Revenue | |||||||
Concentration Risk, Percentage | 57.00% | 85.00% | 57.00% | 64.00% | |||
Customer concentration | Revenue | Minimum | Skyhook | |||||||
Concentration Risk, Percentage | 80.00% | ||||||
Customer concentration | Revenue | Maximum | Skyhook | |||||||
Concentration Risk, Percentage | 90.00% |
Earnings (loss) per Share (Deta
Earnings (loss) per Share (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings (loss) per Share | ||||
Basic WASO | 181,846 | 181,621 | 181,795 | 142,170 |
Potentially dilutive shares | 1,485 | 970 | 1,369 | 666 |
Diluted WASO | 183,331 | 182,591 | 183,164 | 142,836 |
Assets and Liabilities Measur25
Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | Oct. 03, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | Aug. 31, 2017 | Apr. 30, 2017 | Mar. 31, 2017 |
Level 2 input | ||||||
Volatility | 21.10% | |||||
Interest rate | 1.30% | |||||
Dividend yield | 0.00% | |||||
Zero-strike call option | ||||||
Assets and Liabilities Measured at Fair Value | ||||||
Derivative premium paid | $ 47,700 | |||||
Derivative settlement proceeds | $ 53,800 | $ 50,000 | ||||
Zero-strike call option | Call Option | ||||||
Assets and Liabilities Measured at Fair Value | ||||||
Derivative underlying share amount | 527,156 | 704,908 | 600,242 | |||
Derivative premium paid | $ (47,900) | $ (50,000) | ||||
Total | ||||||
Assets and Liabilities Measured at Fair Value | ||||||
Derivative Asset | 49,019 | |||||
Total | Recurring | ||||||
Assets and Liabilities Measured at Fair Value | ||||||
Cash equivalents | $ 134,574 | 198,011 | ||||
Quoted prices in active markets for identical assets (Level 1) | Recurring | ||||||
Assets and Liabilities Measured at Fair Value | ||||||
Cash equivalents | $ 134,574 | 198,011 | ||||
Significant other observable inputs (Level 2) | ||||||
Assets and Liabilities Measured at Fair Value | ||||||
Derivative Asset | $ 49,019 |
Assets and Liabilities Measur26
Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Realized and Unrealized Gains (Losses) on Financial Instruments | |||
Realized and unrealized gains (losses) | $ 2,675 | $ 5,026 | $ 92,990 |
Zero-strike call option | |||
Realized and Unrealized Gains (Losses) on Financial Instruments | |||
Realized and unrealized gains (losses) | $ 2,675 | $ 5,026 | |
Time Warner Cable | Investment and financial instruments [member] | |||
Realized and Unrealized Gains (Losses) on Financial Instruments | |||
Realized and unrealized gains (losses) | $ 92,990 |
Investments in Charter Accounte
Investments in Charter Accounted for Using the Equity Method (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | May 18, 2016 | Nov. 30, 2014 | May 31, 2014 | May 31, 2013 | Sep. 30, 2017 | Dec. 31, 2016 |
Investments in affiliates accounted for using the Equity Method | ||||||
Business Acquisition, Percentage of Voting Interests Acquired | 25.01% | |||||
Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Number of shares of common shares acquired | 22,000 | |||||
Share Price | $ 195.70 | |||||
Cash paid to acquire equity method investments | $ 4,300 | |||||
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ 2,100 | |||||
Cash paid to exercise warrants | $ 52 | |||||
Common stock par value | $ 0.001 | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 25.01% | |||||
Liberty | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Number of shares of common shares acquired | 897 | 26,900 | ||||
Number of warrants acquired | 1,100 | |||||
Purchase price of equity method investments | $ 124.5 | $ 2,600 | ||||
Beneficial ownership percentage | 27.00% | |||||
Share Price | $ 95.50 | |||||
Cash paid to acquire equity method investments | $ 1,200 | |||||
Equity Method Investment, Difference Between Carrying Amount and Underlying Equity | $ 2,532 | |||||
A/N | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Maximum percentage of New Charter shares that may be voted by proxy | 7.00% | |||||
A/N | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Proxy voting period | 5 years | |||||
Trading days before proposed sale of A/N | 2 days | |||||
first | A/N | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Maximum percentage of New Charter shares that may be voted by proxy | 7.00% | |||||
last | A/N | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Maximum percentage of New Charter shares that may be voted by proxy | 7.00% | |||||
Bright House Transaction | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Number of shares of common shares acquired | 3,700 | |||||
Purchase price of equity method investments | $ 700 | |||||
Share Price | $ 191.33 | |||||
Time Warner Cable Exchange | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Number of shares of common shares acquired | 2,400 | |||||
Fair value of shares acquired | $ 531.9 | |||||
Share exchange ratio | 1 | |||||
Time Warner Cable Exchange | Liberty Interactive | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Share exchange ratio | 1 | |||||
Series C common stock | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Common stock par value | $ 0.01 | $ 0.01 | ||||
Series A common stock | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Common stock par value | $ 0.01 | $ 0.01 |
Investments in Charter Accoun28
Investments in Charter Accounted for Using the Equity Method (Details) - USD ($) $ in Thousands | Jan. 02, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Investments in affiliates accounted for using the Equity Method | ||||||
Carrying value of equity method investment | $ 9,326,871 | $ 9,326,871 | $ 9,315,253 | |||
Excess basis allocation within memo accounts | ||||||
Share of (earnings) loses of affiliates, net | (5,280) | $ 19,046 | 25,109 | $ 570,178 | ||
Gain (loss) on dilution of investment in affiliate | (3,718) | (16,331) | (42,515) | 760,074 | ||
Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Carrying value of equity method investment | 9,327,000 | 9,327,000 | ||||
Market value of equity method investment | $ 19,651,000 | $ 19,651,000 | ||||
Ownership percentage | 22.00% | 22.00% | ||||
Excess basis allocation within memo accounts | ||||||
Property and equipment | $ 174,000 | $ 174,000 | ||||
Customer relationships | 346,000 | 346,000 | ||||
Franchise fees | 1,170,000 | 1,170,000 | ||||
Trademarks | 29,000 | 29,000 | ||||
Goodwill | 1,046,000 | 1,046,000 | ||||
Debt | (20,000) | (20,000) | ||||
Deferred income tax liability | (645,000) | (645,000) | ||||
Total | 2,100,000 | 2,100,000 | ||||
Excess basis amortization of debt and intangible assets | (15,300) | (18,500) | (44,000) | (23,200) | ||
Gain (loss) on dilution of investment in affiliate | $ (3,700) | $ (16,300) | $ (42,500) | $ 760,100 | ||
Charter | Customer relationships | ||||||
Excess basis allocation within memo accounts | ||||||
Useful lives of customer relationships | 13 years | |||||
Charter | Property, Plant and Equipment | ||||||
Excess basis allocation within memo accounts | ||||||
Useful lives of property and equipment | 7 years | |||||
Accounting Standards Update 2016-09 | Charter | ||||||
Investments in affiliates accounted for using the Equity Method | ||||||
Excess Tax Benefit from Share-based Compensation, Operating Activities | $ 136,000 |
Investments in Charter Accoun29
Investments in Charter Accounted for Using the Equity Method (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Charter consolidated balance sheet | |||||
Current assets | $ 4,132,000 | $ 4,132,000 | $ 3,300,000 | ||
Property and equipment, net | 33,300,000 | 33,300,000 | 32,963,000 | ||
Goodwill | 29,554,000 | 29,554,000 | 29,509,000 | ||
Intangible assets, net | 79,905,000 | 79,905,000 | 81,924,000 | ||
Other assets | 1,337,000 | 1,337,000 | 1,371,000 | ||
Total assets | 148,228,000 | 148,228,000 | 149,067,000 | ||
Current liabilities | 10,419,000 | 10,419,000 | 9,572,000 | ||
Deferred income taxes | 26,576,000 | 26,576,000 | 26,665,000 | ||
Long-term debt | 66,064,000 | 66,064,000 | 59,719,000 | ||
Other liabilities | 2,591,000 | 2,591,000 | 2,745,000 | ||
Equity | 42,578,000 | 42,578,000 | 50,366,000 | ||
Total liabilities and shareholders' equity | 148,228,000 | 148,228,000 | $ 149,067,000 | ||
Charter | |||||
Charter consolidated statement of operations | |||||
Revenue | 10,458,000 | $ 10,037,000 | 30,979,000 | $ 18,728,000 | |
Operating costs and expenses | (6,703,000) | (6,482,000) | (19,857,000) | (12,157,000) | |
Depreciation and amortization | (2,701,000) | (2,437,000) | (7,846,000) | (4,412,000) | |
Other operating expenses | (145,000) | (207,000) | (374,000) | (776,000) | |
Total operating costs and expenses | (9,549,000) | (9,126,000) | (28,077,000) | (17,345,000) | |
Operating income | 909,000 | 911,000 | 2,902,000 | 1,383,000 | |
Interest expense, net | (788,000) | (724,000) | (2,250,000) | (1,771,000) | |
Other income (expense), net | (3,000) | 79,000 | (55,000) | 429,000 | |
Income tax benefit (expense), net | (26,000) | (16,000) | (99,000) | 3,135,000 | |
Net income (loss) | 92,000 | 250,000 | 498,000 | 3,176,000 | |
Less: Net income attributable to noncontrolling interests | (44,000) | (61,000) | (156,000) | (108,000) | |
Net income (loss) attributable to Charter shareholders | $ 48,000 | $ 189,000 | $ 342,000 | $ 3,068,000 |
Goodwill and Other Intangible30
Goodwill and Other Intangible Assets (Details) - USD ($) $ in Thousands | Jan. 01, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Non-amortizable intangible assets | ||||||
Goodwill increase (decrease) | $ 0 | |||||
Amortizable intangible assets | ||||||
Gross Carrying Amount | $ 24,731 | 24,731 | $ 24,724 | |||
Accumulated Amortization | (18,668) | (18,668) | (16,128) | |||
Net Carrying Amount | 6,063 | 6,063 | 8,596 | |||
Amortization expense | 842 | $ 850 | 2,500 | $ 2,600 | ||
Estimated future amortization expense | ||||||
Remainder of 2017 | 841 | 841 | ||||
2,018 | 2,575 | 2,575 | ||||
2,019 | 1,776 | 1,776 | ||||
2,020 | 871 | 871 | ||||
Patents | ||||||
Amortizable intangible assets | ||||||
Gross Carrying Amount | 10,823 | 10,823 | 10,823 | |||
Accumulated Amortization | (9,633) | (9,633) | (8,450) | |||
Net Carrying Amount | 1,190 | 1,190 | 2,373 | |||
Patents | Skyhook | ||||||
Amortizable intangible assets | ||||||
Useful life | 3 years 6 months | |||||
Tradename | ||||||
Amortizable intangible assets | ||||||
Gross Carrying Amount | 2,838 | 2,838 | 2,838 | |||
Accumulated Amortization | (1,809) | (1,809) | (1,528) | |||
Net Carrying Amount | 1,029 | 1,029 | 1,310 | |||
Capitalized software | ||||||
Amortizable intangible assets | ||||||
Gross Carrying Amount | 857 | 857 | 850 | |||
Accumulated Amortization | (763) | (763) | (710) | |||
Net Carrying Amount | 94 | 94 | 140 | |||
Capitalized software | Skyhook | Minimum | ||||||
Amortizable intangible assets | ||||||
Useful life | 3 years | |||||
Capitalized software | Skyhook | Maximum | ||||||
Amortizable intangible assets | ||||||
Useful life | 5 years | |||||
Customer relationships | ||||||
Amortizable intangible assets | ||||||
Gross Carrying Amount | 10,213 | 10,213 | 10,213 | |||
Accumulated Amortization | (6,463) | (6,463) | (5,440) | |||
Net Carrying Amount | $ 3,750 | $ 3,750 | $ 4,773 | |||
Tradename and customer relationship | Skyhook | ||||||
Amortizable intangible assets | ||||||
Useful life | 5 years 6 months |
Debt (Details)
Debt (Details) $ in Thousands | Aug. 31, 2017USD ($) | Mar. 21, 2016USD ($)item | Oct. 30, 2014USD ($)item | Aug. 31, 2017USD ($) | Sep. 30, 2017USD ($)shares | Dec. 31, 2016USD ($) |
Debt disclosures | ||||||
Long-term Debt, Current Maturities | $ (400,000) | |||||
Deferred loan costs | $ (3,025) | (1,488) | ||||
Total Long-term and Short-term debt | 496,975 | 598,512 | ||||
Long-term Debt | 496,975 | 198,512 | ||||
Repayments of debt | $ 600,000 | |||||
Margin Loan Agreements | Charter | ||||||
Debt disclosures | ||||||
Number of common shares pledged as collateral | shares | 6,800,000 | |||||
Value of pledged collateral | $ 2,500,000 | |||||
2017 Margin Loan Agreement | ||||||
Debt disclosures | ||||||
Long-term Debt, Gross | $ 500,000 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 2.74% | |||||
BroadbandSPV | Margin Loan Agreements | ||||||
Debt disclosures | ||||||
Long-term Debt, Gross | $ 400,000 | $ 400,000 | ||||
BroadbandSPV | Margin Loan Agreements | Three-month LIBOR | ||||||
Debt disclosures | ||||||
Interest rate basis | three-month LIBOR | |||||
Basis spread on variable rate | 1.55% | |||||
BroadbandSPV | Margin Loan Agreements | Term loan | ||||||
Debt disclosures | ||||||
Unused commitment fee percentage | 0.25% | |||||
BroadbandSPV | Margin Loan Agreements | ||||||
Debt disclosures | ||||||
Number of debt agreements | item | 2 | |||||
Maximum borrowing capacity | $ 400,000 | |||||
BroadbandSPV | 2014 Margin Loan Agreement | ||||||
Debt disclosures | ||||||
Long-term Debt, Current Maturities | (400,000) | |||||
Repayments of debt | 400,000 | |||||
Cheetah 5 | Margin Loan Agreements | ||||||
Debt disclosures | ||||||
Long-term Debt, Gross | 200,000 | |||||
Number of debt agreements | item | 2 | |||||
Maximum borrowing capacity | $ 300,000 | |||||
Cheetah 5 | Margin Loan Agreements | LIBOR | ||||||
Debt disclosures | ||||||
Interest rate basis | LIBOR | |||||
Basis spread on variable rate | 2.10% | |||||
Cheetah 5 | Margin Loan Agreements | Term loan | ||||||
Debt disclosures | ||||||
Maximum borrowing capacity | 200,000 | |||||
Cheetah 5 | Margin Loan Agreements | Draw loan | ||||||
Debt disclosures | ||||||
Maximum borrowing capacity | $ 100,000 | |||||
Unused commitment fee percentage | 0.50% | |||||
Remaining borrowing capacity | 100,000 | $ 100,000 | ||||
Cheetah 5 | 2016 Margin Loan Agreement | ||||||
Debt disclosures | ||||||
Long-term Debt, Gross | $ 200,000 | |||||
Repayments of debt | 200,000 | |||||
SPV | 2017 Margin Loan Agreement | ||||||
Debt disclosures | ||||||
Long-term Debt, Gross | $ 500,000 | |||||
Maximum borrowing capacity | 1,000,000 | 1,000,000 | ||||
Additional allowed borrowing capacity | $ 1,000,000 | $ 1,000,000 | ||||
Remaining borrowing capacity | $ 500,000 | |||||
Basis spread on variable rate | 0.50% | |||||
SPV | 2017 Margin Loan Agreement | LIBOR | ||||||
Debt disclosures | ||||||
Interest rate basis | LIBOR | |||||
Basis spread on variable rate | 1.00% | |||||
SPV | 2017 Margin Loan Agreement | Three-month LIBOR | ||||||
Debt disclosures | ||||||
Interest rate basis | three-month LIBOR | |||||
Basis spread on variable rate | 1.50% | |||||
SPV | 2017 Margin Loan Agreement | Federal Funds Rate | ||||||
Debt disclosures | ||||||
Basis spread on variable rate | 0.50% |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock Based Compensation | ||||
Allocated Share-based Compensation Expense | $ 1,499 | $ 1,736 | $ 4,376 | $ 4,582 |
Fair value assumptions | ||||
Dividend rate | 0.00% | |||
Options | ||||
Unrecognized compensation cost options | $ 11,000 | $ 11,000 | ||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years | |||
Common Stock, Capital Shares Reserved for Future Issuance | 2,800,000 | 2,800,000 | ||
2014 Plan | Awards | Series A common stock | ||||
Options | ||||
Outstanding beginning balance (in shares) | 454,000 | |||
Exercised (in shares) | (49,000) | |||
Outstanding ending balance (in shares) | 405,000 | 405,000 | ||
Number of awards exercisable (in shares) | 402,000 | 402,000 | ||
WAEP Outstanding beginning balance (in dollars per share) | $ 32.47 | |||
WAEP options exercised (in dollars per share) | 26.85 | |||
WAEP Outstanding ending balance (in dollars per share) | $ 33.15 | 33.15 | ||
WAEP options exercisable (in dollars per share) | $ 33.06 | $ 33.06 | ||
Weighted average remaining contractual life outstanding | 2 years 2 months 12 days | |||
Weighted average remaining contractual life exercisable | 2 years 2 months 12 days | |||
Aggregate intrinsic value outstanding | $ 25,000 | $ 25,000 | ||
Aggregate intrinsic value exercisable | $ 25,000 | $ 25,000 | ||
2014 Plan | Awards | Series C common stock | ||||
Options | ||||
Outstanding beginning balance (in shares) | 2,467,000 | |||
Exercised (in shares) | (94,000) | |||
Outstanding ending balance (in shares) | 2,373,000 | 2,373,000 | ||
Number of awards exercisable (in shares) | 851,000 | 851,000 | ||
WAEP Outstanding beginning balance (in dollars per share) | $ 42.45 | |||
WAEP options exercised (in dollars per share) | 27.08 | |||
WAEP Outstanding ending balance (in dollars per share) | $ 43.06 | 43.06 | ||
WAEP options exercisable (in dollars per share) | $ 33.59 | $ 33.59 | ||
Weighted average remaining contractual life outstanding | 5 years 4 months 24 days | |||
Weighted average remaining contractual life exercisable | 2 years 3 months 18 days | |||
Aggregate intrinsic value outstanding | $ 124,000 | $ 124,000 | ||
Aggregate intrinsic value exercisable | 52,000 | $ 52,000 | ||
2014 Plan | Options | ||||
Options | ||||
Options granted (in shares) | 0 | |||
Operating expense | ||||
Stock Based Compensation | ||||
Allocated Share-based Compensation Expense | 3 | 4 | $ 5 | 2 |
Selling, general and administrative | ||||
Stock Based Compensation | ||||
Allocated Share-based Compensation Expense | 1,429 | 1,596 | 4,032 | 4,363 |
Research and development | ||||
Stock Based Compensation | ||||
Allocated Share-based Compensation Expense | 67 | $ 136 | $ 339 | $ 217 |
Skyhook | LTIPs | PARs | ||||
Options | ||||
Grants (in shares) | 3,300,000 | |||
Skyhook | LTIPs | PSUs | ||||
Options | ||||
Grants (in shares) | 0 | |||
Skyhook | LTIPs | PARs and PSUs | ||||
Options | ||||
Fair value of outstanding grants | 2,400 | $ 2,400 | ||
Other Current Liabilities | LTIPs | Level 3 | ||||
Options | ||||
Fair value of outstanding grants | $ 1,600 | $ 1,600 |
Stock-Based Compensation (Det33
Stock-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock-Based Compensation | ||||
Stock-based compensation | $ 1,499 | $ 1,736 | $ 4,376 | $ 4,582 |
Operating expense | ||||
Stock-Based Compensation | ||||
Stock-based compensation | 3 | 4 | 5 | 2 |
Selling, general and administrative | ||||
Stock-Based Compensation | ||||
Stock-based compensation | 1,429 | 1,596 | 4,032 | 4,363 |
Research and development | ||||
Stock-Based Compensation | ||||
Stock-based compensation | $ 67 | $ 136 | $ 339 | $ 217 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Skyhook $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)facility | Sep. 30, 2016USD ($) | |
Leases | ||||
Rental expense | $ | $ 368 | $ 452 | $ 890 | $ 1,000 |
Number of facilities | facility | 2 |
Commitments and Contingencies35
Commitments and Contingencies (Details) - Skyhook - Indemnification claim $ in Thousands | Sep. 30, 2017USD ($)item | Dec. 31, 2016USD ($) |
General Litigation | ||
Number of claims | item | 4 | |
Loss Contingency Accrual | $ | $ 0 | $ 0 |
Commitments and Contingencies36
Commitments and Contingencies (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | Customer concentration | ||||
Certain Risks and Concentrations | ||||
Concentration Risk, Percentage | 57.00% | 85.00% | 57.00% | 64.00% |
Segment Information (Details)
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment information | |||||
Revenue | $ 3,430 | $ 20,616 | $ 9,643 | $ 27,413 | |
Property and equipment, net | 425 | 425 | $ 710 | ||
Adjusted OIBDA | (3,346) | 9,331 | (12,262) | (5,936) | |
Total assets | 9,481,894 | 9,481,894 | 9,590,960 | ||
Investments in affiliates | 9,326,871 | 9,326,871 | $ 9,315,253 | ||
Capital expenditures | 27 | ||||
Operating segments | |||||
Segment information | |||||
Revenue | 10,461,430 | 10,057,616 | 30,988,643 | 18,755,413 | |
Adjusted OIBDA | 3,670,654 | 3,438,331 | 10,933,738 | 5,957,064 | |
Total assets | 157,709,894 | 157,709,894 | |||
Investments in affiliates | 9,326,871 | 9,326,871 | |||
Capital expenditures | 6,096,027 | ||||
Operating segments | Skyhook | |||||
Segment information | |||||
Revenue | 3,430 | 20,616 | 9,643 | 27,413 | |
Adjusted OIBDA | (980) | 11,422 | (6,839) | 1,234 | |
Total assets | 26,136 | 26,136 | |||
Capital expenditures | 27 | ||||
Operating segments | Charter | |||||
Segment information | |||||
Revenue | 10,458,000 | 10,037,000 | 30,979,000 | 18,728,000 | |
Adjusted OIBDA | 3,674,000 | 3,429,000 | 10,946,000 | 5,963,000 | |
Total assets | 148,228,000 | 148,228,000 | |||
Capital expenditures | 6,096,000 | ||||
Corporate and other | |||||
Segment information | |||||
Adjusted OIBDA | (2,366) | (2,091) | (5,423) | (7,170) | |
Total assets | 9,455,758 | 9,455,758 | |||
Investments in affiliates | 9,326,871 | 9,326,871 | |||
Eliminate equity method affiliate | |||||
Segment information | |||||
Revenue | (10,458,000) | (10,037,000) | (30,979,000) | (18,728,000) | |
Adjusted OIBDA | (3,674,000) | $ (3,429,000) | (10,946,000) | $ (5,963,000) | |
Total assets | $ (148,228,000) | (148,228,000) | |||
Capital expenditures | $ (6,096,000) |
Segment Information (Details)38
Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes | ||||
Combined segment Adjusted OIBDA | $ (3,346) | $ 9,331 | $ (12,262) | $ (5,936) |
Stock-based compensation | (1,499) | (1,736) | (4,376) | (4,582) |
Depreciation and amortization | (942) | (971) | (2,844) | (2,935) |
Operating income (loss) | (5,787) | 6,624 | (19,482) | (13,453) |
Interest expense | (5,518) | (4,090) | (14,899) | (10,547) |
Dividend and interest income | 422 | 190 | 1,219 | 4,697 |
Share of (earnings) loses of affiliates, net | (5,280) | 19,046 | 25,109 | 570,178 |
Realized and unrealized gains (losses) on financial instruments, net | 2,675 | 5,026 | 92,990 | |
Gain (loss) on dilution of investment in affiliate | (3,718) | (16,331) | (42,515) | 760,074 |
Other, net | 9 | 5 | 11 | 112 |
Net earnings (loss) before income taxes | $ (17,197) | $ 5,444 | $ (45,531) | $ 1,404,051 |