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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to                

Commission File Number 001-36713

LIBERTY BROADBAND CORPORATION

(Exact name of Registrant as specified in its charter)

State of Delaware

47-1211994

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12300 Liberty Boulevard
Englewood, Colorado

80112

(Address of principal executive offices)

(Zip Code)

Registrant's telephone number, including area code: (720875-5700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Series A common stock

LBRDA

The Nasdaq Stock Market LLC

Series C common stock

LBRDK

The Nasdaq Stock Market LLC

Series A Cumulative Redeemable preferred stock

LBRDP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes     No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes     No 

The number of outstanding shares of Liberty Broadband Corporation’s common stock as of July 31, 2021 was:

Series A

Series B

Series C

Liberty Broadband Corporation common stock

26,498,671

2,546,048

152,776,743

Table of Contents

Part I - Financial Information

f

Page No

Item 1. Financial Statements

LIBERTY BROADBAND CORPORATION Condensed Consolidated Balance Sheets (unaudited)

I-2

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Operations (unaudited)

I-4

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)

I-5

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited)

I-6

LIBERTY BROADBAND CORPORATION Condensed Consolidated Statements of Equity (unaudited)

I-7

LIBERTY BROADBAND CORPORATION Notes to Condensed Consolidated Financial Statements (unaudited)

I-9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-28

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-42

Item 4. Controls and Procedures

I-43

Part II - Other Information

Item 1. Legal Proceedings

II-1

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-1

Item 6. Exhibits

II-2

SIGNATURES

II-3

I-1

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)

June 30,

December 31,

2021

2020

 

amounts in thousands

 

Assets

    

    

    

    

Current assets:

Cash and cash equivalents

$

219,241

 

1,417,802

Trade and other receivables, net of allowance for doubtful accounts of $1,741 and $10, respectively

233,571

349,256

Other current assets

 

66,237

 

79,453

Total current assets

 

519,049

 

1,846,511

Investment in Charter, accounted for using the equity method (note 5)

 

14,947,277

 

16,178,939

Property and equipment, net

1,046,634

1,098,512

Intangible assets not subject to amortization

Goodwill

764,686

745,577

Cable certificates

550,000

560,000

Other

36,500

21,500

Intangible assets subject to amortization, net (note 6)

606,656

674,049

Tax sharing receivable

108,602

94,549

Other assets, net

 

195,653

 

151,487

Total assets

$

18,775,057

 

21,371,124

See accompanying notes to the condensed consolidated financial statements.

I-2

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

June 30,

December 31,

2021

2020

 

amounts in thousands,

 

except share amounts

Liabilities and Equity

Current liabilities:

Accounts payable and accrued liabilities

$

216,508

 

97,933

Deferred revenue

 

30,488

 

24,926

Current portion of debt, including $27,250 and $26,350 measured at fair value, respectively (note 7)

31,939

31,026

Indemnification obligation (note 4)

385,212

344,643

Other current liabilities

64,726

113,234

Total current liabilities

 

728,873

 

611,762

Long-term debt, net, including $1,434,549 and $1,445,775 measured at fair value, respectively (note 7)

3,710,090

4,785,207

Obligations under finance leases and tower obligations, excluding current portion

90,630

92,840

Long-term deferred revenue

37,236

39,649

Deferred income tax liabilities

1,991,624

1,977,643

Preferred stock (note 8)

202,615

202,917

Other liabilities

183,937

146,687

Total liabilities

 

6,945,005

 

7,856,705

Equity

Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 26,498,671 and 26,495,249 at June 30, 2021 and December 31, 2020, respectively

265

265

Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,546,048 and 2,549,470 at June 30, 2021 and December 31, 2020, respectively

25

25

Series C common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 155,067,969 and 167,480,926 at June 30, 2021 and December 31, 2020, respectively

1,551

1,675

Additional paid-in capital

8,530,684

10,319,754

Accumulated other comprehensive earnings, net of taxes

 

11,870

 

15,436

Retained earnings

 

3,273,980

 

3,165,504

Total stockholders' equity

11,818,375

13,502,659

Non-controlling interests

11,677

11,760

Total equity

 

11,830,052

 

13,514,419

Commitments and contingencies (note 10)

 

 

Total liabilities and equity

$

18,775,057

 

21,371,124

See accompanying notes to the condensed consolidated financial statements.

I-3

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended 

Six months ended

 

June 30,

June 30,

 

2021

    

2020

    

2021

2020

 

amounts in thousands, except per share amounts

Revenue

$

242,284

4,114

488,818

8,218

Operating costs and expenses

Operating, including stock-based compensation (note 9)

67,104

2,524

136,282

 

4,992

Selling, general and administrative, including stock-based compensation and transaction costs (note 9)

110,398

10,930

214,871

 

19,348

Depreciation and amortization

66,874

492

130,636

 

985

Litigation settlement

110,000

244,376

13,946

591,789

 

25,325

Operating income (loss)

(2,092)

(9,832)

(102,971)

 

(17,107)

Other income (expense):

Interest expense (including amortization of deferred loan fees)

(28,734)

(5,131)

(61,877)

(10,992)

Share of earnings (losses) of affiliates (note 5)

248,848

158,128

437,827

 

219,810

Gain (loss) on dilution of investment in affiliate (note 5)

(14,538)

(46,001)

(96,753)

 

(105,326)

Realized and unrealized gains (losses) on financial instruments, net (note 4)

(125,064)

(25,716)

 

Other, net

22,720

28

14,594

 

191

Earnings (loss) before income taxes

101,140

97,192

165,104

 

86,576

Income tax (expense) benefit

(44,926)

(24,978)

(56,711)

 

(22,204)

Net earnings (loss)

56,214

72,214

108,393

64,372

Less net earnings (loss) attributable to the non-controlling interests

(42)

(83)

Net earnings (loss) attributable to Liberty Broadband shareholders

$

56,256

72,214

108,476

 

64,372

Basic net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2)

$

0.30

0.40

0.57

0.35

Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 2)

$

0.30

0.39

0.56

0.35

See accompanying notes to the condensed consolidated financial statements.

I-4

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

Three months ended 

Six months ended

 

June 30,

June 30,

 

2021

    

2020

    

2021

2020

 

amounts in thousands

 

Net earnings (loss)

    

$

56,214

72,214

108,393

    

64,372

Other comprehensive earnings (loss), net of taxes:

Comprehensive earnings (loss) attributable to debt credit risk adjustments

(3,727)

(3,566)

 

Other comprehensive earnings (loss), net of taxes

(3,727)

(3,566)

Comprehensive earnings (loss)

52,487

72,214

104,827

 

64,372

Less comprehensive earnings (loss) attributable to the non-controlling interests

(42)

(83)

Comprehensive earnings (loss) attributable to Liberty Broadband shareholders

$

52,529

72,214

104,910

 

64,372

See accompanying notes to the condensed consolidated financial statements.

I-5

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

Six months ended

June 30,

 

2021

2020

 

amounts in thousands

 

Cash flows from operating activities:

    

    

    

    

Net earnings (loss)

$

108,393

 

64,372

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization

 

130,636

 

985

Stock-based compensation

 

20,435

 

3,734

Litigation settlement

110,000

Share of (earnings) losses of affiliate, net

 

(437,827)

 

(219,810)

(Gain) loss on dilution of investment in affiliate

 

96,753

 

105,326

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

 

25,716

 

Deferred income tax expense (benefit)

 

(17,968)

 

22,204

Other, net

 

(1,682)

 

625

Changes in operating assets and liabilities:

Current and other assets

 

137,407

 

(72)

Payables and other liabilities

 

(60,406)

 

6,938

Net cash provided by (used in) operating activities

 

111,457

 

(15,698)

Cash flows from investing activities:

Capital expenditures

(50,099)

(35)

Exercise of preemptive right to purchase Charter shares

(14,910)

Cash received for Charter shares repurchased by Charter

1,762,555

Other investing activities, net

1,762

Net cash provided by (used in) investing activities

1,714,218

(14,945)

Cash flows from financing activities:

Borrowings of debt

716,684

Repayments of debt, finance leases and tower obligations

(1,781,459)

Repurchases of Liberty Broadband common stock

(1,957,030)

Other financing activities, net

 

(1,942)

 

(1,919)

Net cash provided by (used in) financing activities

 

(3,023,747)

 

(1,919)

Net increase (decrease) in cash, cash equivalents and restricted cash

(1,198,072)

 

(32,562)

Cash, cash equivalents and restricted cash, beginning of period

1,433,292

49,724

Cash, cash equivalents and restricted cash, end of period

$

235,220

17,162

The following table reconciles cash and cash equivalents and restricted cash reported in the accompanying condensed consolidated balance sheets to the total amount presented in the accompanying condensed consolidated statement of cash flows:

June 30,

December 31,

2021

2020

amounts in thousands

Cash and cash equivalents

$

219,241

1,417,802

Restricted cash included in other current assets

15,979

15,490

Total cash and cash equivalents and restricted cash at end of period

$

235,220

1,433,292

See accompanying notes to the condensed consolidated financial statements.

I-6

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Equity

(unaudited)

Accumulated

Noncontrolling

Additional

other

interest in

Common stock

paid-in

comprehensive

Retained

equity of

Series A

  

Series B

  

Series C

  

capital

earnings

earnings

subsidiaries

Total equity

amounts in thousands

Balance at January 1, 2021

    

$

265

25

1,675

10,319,754

    

15,436

    

3,165,504

11,760

    

13,514,419

Net earnings (loss)

 

 

108,476

(83)

 

108,393

Other comprehensive loss

(3,566)

(3,566)

Stock-based compensation

20,271

20,271

Issuance of common stock upon exercise of stock options

924

924

Withholding taxes on net share settlements of stock-based compensation

(2,866)

(2,866)

Series C Liberty Broadband stock repurchases

(124)

(1,956,906)

(1,957,030)

Noncontrolling interest activity at Charter and other

149,507

149,507

Balance at June 30, 2021

$

265

25

1,551

8,530,684

 

11,870

 

3,273,980

11,677

 

11,830,052

Accumulated

Noncontrolling

 

Additional

other

interest in

 

Common stock

paid-in

comprehensive

Retained

equity of

 

Series A

  

Series B

  

Series C

  

capital

earnings

earnings

subsidiaries

Total equity

 

amounts in thousands

 

Balance at March 31, 2021

$

265

25

1,627

9,563,275

 

15,597

 

3,217,724

11,719

 

12,810,232

Net earnings (loss)

56,256

(42)

56,214

Other comprehensive loss

(3,727)

(3,727)

Stock-based compensation

10,412

10,412

Issuance of common stock upon exercise of stock options

773

773

Withholding taxes on net share settlements of stock-based compensation

(235)

(235)

Series C Liberty Broadband stock repurchases

(76)

(1,218,543)

(1,218,619)

Noncontrolling interest activity at Charter and other

175,002

175,002

Balance at June 30, 2021

$

265

25

1,551

8,530,684

11,870

3,273,980

11,677

11,830,052

See accompanying notes to the condensed consolidated financial statements.

I-7

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Equity (continued)

(unaudited)

Accumulated

Additional

other

Common stock

paid-in

comprehensive

Retained

Series A

  

Series B

  

Series C

  

capital

earnings

earnings

Total equity

amounts in thousands

Balance at January 1, 2020

$

265

25

1,529

7,890,084

8,158

2,767,885

10,667,946

Net earnings (loss)

64,372

64,372

Stock-based compensation

3,705

3,705

Issuance of common stock upon exercise of stock options

1

25

26

Withholding taxes on net share settlements of stock-based compensation

(2,121)

(2,121)

Noncontrolling interest activity at Charter

(13,194)

(13,194)

Balance at June 30, 2020

$

265

25

1,530

7,878,499

8,158

2,832,257

10,720,734

Accumulated

 

Additional

other

 

Common stock

paid-in

comprehensive

Retained

 

Series A

  

Series B

  

Series C

  

capital

earnings

earnings

Total equity

 

amounts in thousands

 

Balance at March 31, 2020

    

$

265

25

1,530

7,876,950

8,158

2,760,043

10,646,971

Net earnings (loss)

 

72,214

72,214

Stock-based compensation

1,900

1,900

Issuance of common stock upon exercise of stock options

23

23

Withholding taxes on net share settlements of stock-based compensation

(177)

(177)

Noncontrolling interest activity at Charter

(197)

(197)

Balance at June 30, 2020

$

265

25

1,530

7,878,499

8,158

2,832,257

10,720,734

See accompanying notes to the condensed consolidated financial statements.

I-8

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Liberty Broadband Corporation and its controlled subsidiaries (collectively, "Liberty Broadband," the "Company," “us,” “we,” or “our” unless the context otherwise requires).  Liberty Broadband Corporation is primarily comprised of a wholly owned subsidiary, GCI Holdings, LLC (“GCI Holdings”) (as of December 18, 2020) and an equity method investment in Charter Communications, Inc. (“Charter”).  

On December 18, 2020, pursuant to the Agreement and Plan of Merger, dated as of August 6, 2020, entered into by GCI Liberty, Inc. (“GCI Liberty”), Liberty Broadband, Grizzly Merger Sub 1, LLC, a wholly owned subsidiary of Liberty Broadband (“Merger LLC”), and Grizzly Merger Sub 2, Inc., a wholly owned subsidiary of Merger LLC (“Merger Sub”), Merger Sub merged with and into GCI Liberty (the “First Merger”), with GCI Liberty surviving the First Merger as an indirect wholly owned subsidiary of Liberty Broadband (the “Surviving Corporation”), and immediately following the First Merger, GCI Liberty (as the Surviving Corporation in the First Merger) merged with and into Merger LLC (the “Upstream Merger”, and together with the First Merger, the “Combination”), with Merger LLC surviving the Upstream Merger as a wholly owned subsidiary of Liberty Broadband.

As a result of the Combination, each holder of a share of Series A common stock and Series B common stock of GCI Liberty received 0.58 of a share of Series C common stock and Series B common stock, respectively, of Liberty Broadband.  Additionally, each holder of a share of Series A Cumulative Redeemable Preferred Stock of GCI Liberty (“GCI Liberty Preferred Stock”) received one share of newly issued Liberty Broadband Series A Cumulative Redeemable Preferred Stock (“Liberty Broadband Preferred Stock”), which has substantially identical terms to GCI Liberty’s former Series A Cumulative Redeemable Preferred Stock, including a mandatory redemption date of March 9, 2039. Cash was paid in lieu of issuing fractional shares of Liberty Broadband stock in the Combination. No shares of Liberty Broadband stock were issued with respect to shares of GCI Liberty capital stock held by (i) GCI Liberty as treasury stock, (ii) any of GCI Liberty’s wholly owned subsidiaries or (iii) Liberty Broadband or its wholly owned subsidiaries.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2020, 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, 2020. 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 its affiliates, (ii) non-recurring fair value measurements of non-financial instruments and (iii) accounting for income taxes to be its most significant estimates.

In December 2019, Chinese officials reported a novel coronavirus outbreak (“COVID-19”). COVID-19 has since spread through China and internationally. On March 11, 2020, the World Health Organization assessed COVID-19 as a global pandemic, causing many countries throughout the world to take aggressive actions, including imposing travel restrictions and stay-at-home orders, closing public attractions and restaurants, and mandating social distancing practices, which has caused a significant disruption to most sectors of the economy.

I-9

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

We are not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require us to update our estimates or judgments or revise the carrying value of our assets or liabilities.  Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the condensed consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements.

Through a number of prior years’ transactions, including the Combination, Liberty Broadband has acquired an interest in Charter.  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

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, and to distribute subscription rights to acquire shares of Liberty Broadband’s common stock (the “Broadband Spin-Off”).  In connection with the Broadband Spin-Off, Liberty (for accounting purposes a related party of the Company) and Liberty Broadband entered into certain agreements in order to govern certain of the ongoing relationships between the two companies and to provide for an orderly transition, including a services agreement and a facilities sharing agreement.  Under the facilities sharing agreement, Liberty Broadband shares office space with Liberty and related amenities at Liberty’s corporate headquarters. Liberty Broadband will reimburse Liberty for direct, out-of-pocket expenses incurred by Liberty in providing these services which will be negotiated semi-annually.

Pursuant to the services agreement, Liberty provides Liberty Broadband with general and administrative services including legal, tax, accounting, treasury and investor relations support.  In December 2019, the Company entered into an amendment to the services agreement with Liberty in connection with Liberty’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s President and Chief Executive Officer. Under the amended services agreement, components of his compensation would either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., GCI Liberty, and Qurate Retail, Inc. (“Qurate Retail”) (collectively, the “Service Companies”) or reimbursed to Liberty, in each case, based on allocations among Liberty and the Service Companies set forth in the amended services agreement, currently set at 18% for the Company but subject to adjustment on an annual basis upon the occurrence of certain events. Following the Combination, GCI Liberty no longer participates in the services agreement arrangement.

Additionally, in connection with a prior transaction, GCI Liberty and Qurate Retail (for accounting purposes a related party of the Company) entered into a tax sharing agreement, which was assumed by Liberty Broadband as a result of the Combination.  The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Qurate Retail and Liberty Broadband and other agreements related to tax matters.

Under these various agreements, amounts reimbursable to Liberty were approximately $3.1 million and $1.0 million for the three months ended June 30, 2021 and 2020, respectively, and $6.6 million and $2.2 million for the six months ended June 30, 2021 and 2020, respectively.  Liberty Broadband had a tax sharing receivable with Qurate Retail of $108.6 million and $119.0 million as of June 30, 2021 and December 31, 2020, respectively, of which zero and $24.4 million was in Other current assets as of June 30, 2021 and December 31, 2020, respectively.

I-10

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(2) Earnings Attributable to Liberty Broadband Stockholders Per Common 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.  Excluded from diluted EPS for the three months ended June 30, 2021 and 2020 are 694 thousand and 5 thousand potential common shares, respectively, because their inclusion would have been antidilutive.  Excluded from diluted EPS for the six months ended June 30, 2021 and 2020 are 694 thousand and 5 thousand potential common shares, respectively, because their inclusion would have been antidilutive.

Liberty Broadband Common Stock

Three months

Three months

Six months

Six months

 

ended

ended

ended

ended

    

June 30, 2021

    

June 30, 2020

    

June 30, 2021

    

June 30, 2020

 

(numbers of shares in thousands)

Basic WASO

 

187,902

 

181,925

 

191,150

 

181,914

Potentially dilutive shares (1)

 

1,766

 

921

 

1,723

 

913

Diluted WASO

 

189,668

 

182,846

 

192,873

 

182,827

(1)   Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.

(3) Acquisition

On December 18, 2020, the Company completed the Combination with GCI Liberty.  The Company accounted for the Combination using the acquisition method of accounting.  

The following details the acquisition consideration as of December 18, 2020 (amounts in thousands), which is primarily based on level 1 inputs:

Fair value of newly issued Liberty Broadband Series C and B common stock 1

$

9,695,184

Fair value of newly issued Liberty Broadband Preferred Stock 2

202,944

Fair value of share-based payment replacement awards 3

104,683

Total fair value of consideration

10,002,811

Less: Fair value of Liberty Broadband shares attributable to share repurchase 4

(6,738,609)

Total fair value of consideration attributable to business combination

3,264,202

Less: Fair value of newly issued Liberty Broadband Preferred Stock2

(202,944)

Less: Fair value of share-based payment replacement awards accounted for as liability awards

(1,309)

Total fair value of acquisition consideration to be allocated

$

3,059,949

(1)The fair value of newly issued Series C and B Liberty Broadband common stock was calculated by multiplying (i) the outstanding shares of GCI Liberty Series A and B common stock as of December 18, 2020, (ii) the exchange ratio of 0.580 and (iii) the closing share price of Liberty Broadband Series C and B common stock on December 18, 2020. Liberty Broadband issued 61.3 million shares of Series C common stock and 98 thousand shares of Series B common stock.

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(2)The fair value of the newly issued Liberty Broadband Preferred Stock was calculated by multiplying (i) the outstanding shares of GCI Liberty Preferred Stock as of December 18, 2020 and (ii) the closing share price of GCI Liberty Preferred Stock on December 18, 2020.  The GCI Liberty Preferred Stock was converted on a one to one ratio into Liberty Broadband Preferred Stock.  

(3)This amount represents the fair value of share-based payment replacement awards.

(4)GCI Liberty owned approximately 42.7 million shares of Liberty Broadband Series C common stock.  The acquisition of Liberty Broadband Series C common stock is accounted for as a share repurchase by Liberty Broadband.  This amount was calculated by multiplying (i) the number of shares of Liberty Broadband Series C common stock owned by GCI Liberty as of December 18, 2020 and (ii) the closing share price of Liberty Broadband Series C common stock on December 18, 2020.

The application of the acquisition method resulted in the assignment of purchase price to the GCI Liberty assets acquired and liabilities assumed based on preliminary estimates of their acquisition date fair values (primarily level 3). The determination of the fair values of the acquired assets and liabilities (and the determination of estimated lives of depreciable tangible and identifiable intangible assets) requires significant judgment.

The preliminary acquisition purchase price allocation for GCI Liberty is as follows (amounts in thousands):

Cash and cash equivalents including restricted cash

    

$

592,240

Receivables

 

339,061

Property and equipment

 

1,108,588

Goodwill

 

758,189

Investment in Charter

3,493,677

Intangible assets not subject to amortization

 

586,500

Intangible assets subject to amortization

 

638,855

Other assets

 

302,570

Deferred revenue

 

(60,292)

Debt, including obligations under tower and finance leases

 

(2,772,147)

Indemnification liability

(336,141)

Deferred income tax liabilities

 

(1,018,993)

Preferred stock

 

(202,944)

Non-controlling interest

 

(11,771)

Other liabilities

 

(357,443)

$

3,059,949

Goodwill is calculated as the excess of the consideration transferred over the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, value associated with future customers, continued innovation and non-contractual relationships. Amortizable intangible assets of $638.9 million were acquired and are comprised of customer relationships with a weighted average useful life of approximately 14 years and right-to-use assets with a weighted average useful life of approximately 12 years. Approximately $134.3 million of the acquired goodwill will be deductible for income tax purposes. As of June 30, 2021, the valuation related to the acquisition of GCI Liberty is not final, and the acquisition price allocation is preliminary and subject to revision.  The primary areas of our acquisition price allocation that changed from the initial allocation relate to an increase to property and equipment of $3.5 million, an increase to goodwill of $19.1 million, an increase to intangible assets not subject to amortization of $5.0 million, a decrease to intangible assets subject to amortization of $35.0 million and an increase to deferred income tax liabilities of $7.4 million. The primary areas of the acquisition price allocation that are not yet finalized are related to property and equipment, intangible assets, liabilities, deferred income tax liabilities, and discount rates used to determine the fair value of intangible assets.  

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

The unaudited pro forma revenue, net earnings and basic and diluted net earnings per common share of Liberty Broadband, prepared utilizing the historical financial statements of Liberty Broadband, giving effect to acquisition accounting related adjustments made at the time of acquisition, as if the acquisition discussed above occurred on January 1, 2019, are as follows:

Three months ended 

Six months ended 

June 30, 2020

June 30, 2020

amounts in thousands,

except per share amounts

Revenue

$

227,380

465,763

Net earnings (loss)

$

(5,269)

7,049

Net earnings (loss) attributable to Liberty Broadband shareholders

$

(5,243)

7,100

Basic net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share

$

(0.03)

0.04

Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share

$

(0.03)

0.04

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