10-Q 1 lbrda-20240331x10q.htm 10-Q
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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 March 31, 2024

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 April 30, 2024 was:

Series A

Series B

Series C

Liberty Broadband Corporation common stock

18,235,286

2,023,432

122,589,251

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-8

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-24

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-34

Item 4. Controls and Procedures

I-34

Part II - Other Information

Item 1. Legal Proceedings

II-1

Item 1A. Risk Factors

II-1

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

II-2

Item 5. Other Information

II-3

Item 6. Exhibits

II-3

SIGNATURES

II-4

I-1

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Balance Sheets

(unaudited)

March 31,

December 31,

2024

2023

 

amounts in millions

 

Assets

    

    

    

    

Current assets:

Cash and cash equivalents

$

108

 

158

Trade and other receivables, net of allowance for credit losses of $5 and $5, respectively

186

178

Prepaid and other current assets

 

56

 

94

Total current assets

 

350

 

430

Investment in Charter, accounted for using the equity method (note 4)

 

12,281

 

12,116

Property and equipment, net

1,078

1,053

Intangible assets not subject to amortization

Goodwill

755

755

Cable certificates

550

550

Other

40

40

Intangible assets subject to amortization, net (note 5)

449

461

Other assets, net

 

237

 

236

Total assets

$

15,740

 

15,641

See accompanying notes to the condensed consolidated financial statements.

I-2

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

March 31,

December 31,

2024

2023

 

amounts in millions,

 

except share amounts

Liabilities and Equity

Current liabilities:

Accounts payable and accrued liabilities

$

94

 

86

Deferred revenue

 

29

 

30

Current portion of debt

3

3

Other current liabilities

67

59

Total current liabilities

 

193

 

178

Long-term debt, net, including $1,200 and $1,255 measured at fair value, respectively (note 6)

3,636

3,733

Obligations under tower obligations and finance leases, excluding current portion

81

83

Long-term deferred revenue

77

65

Deferred income tax liabilities

2,255

2,216

Preferred stock (note 7)

201

202

Other liabilities

139

141

Total liabilities

 

6,582

 

6,618

Equity

Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 18,235,286 and 18,233,573 at March 31, 2024 and December 31, 2023, respectively

Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,023,432 and 2,025,232 at March 31, 2024 and December 31, 2023, respectively

Series C common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 122,589,251 and 123,704,814 at March 31, 2024 and December 31, 2023, respectively

1

1

Additional paid-in capital

3,018

3,107

Accumulated other comprehensive earnings (loss), net of taxes

 

35

 

52

Retained earnings

 

6,084

 

5,843

Total stockholders' equity

9,138

9,003

Non-controlling interests

20

20

Total equity

 

9,158

 

9,023

Commitments and contingencies (note 9)

 

 

Total liabilities and equity

$

15,740

 

15,641

See accompanying notes to the condensed consolidated financial statements.

I-3

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended 

 

March 31,

 

2024

    

2023

 

amounts in millions,

except per share amounts

Revenue

$

245

246

Operating costs and expenses:

Operating expense (exclusive of depreciation and amortization shown separately below)

62

62

Selling, general and administrative, including stock-based compensation (note 8)

105

110

Depreciation and amortization

50

58

217

230

Operating income (loss)

28

16

Other income (expense):

Interest expense (including amortization of deferred loan fees)

(51)

(45)

Share of earnings (losses) of affiliate (note 4)

280

248

Gain (loss) on dilution of investment in affiliate (note 4)

(28)

(27)

Realized and unrealized gains (losses) on financial instruments, net (note 3)

76

(114)

Other, net

4

14

Earnings (loss) before income taxes

309

92

Income tax benefit (expense)

(68)

(23)

Net earnings (loss)

241

69

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

Net earnings (loss) attributable to Liberty Broadband shareholders

$

241

69

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

$

1.69

0.47

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

$

1.69

0.47

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

 

March 31,

 

2024

    

2023

 

amounts in millions

 

Net earnings (loss)

    

$

241

69

Other comprehensive earnings (loss), net of taxes:

Credit risk on fair value debt instruments gains (loss)

(17)

50

Other comprehensive earnings (loss), net of taxes

(17)

50

Comprehensive earnings (loss)

224

119

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

Comprehensive earnings (loss) attributable to Liberty Broadband shareholders

$

224

119

See accompanying notes to the condensed consolidated financial statements.

I-5

LIBERTY BROADBAND CORPORATION

Condensed Consolidated Statements of Cash Flows

(unaudited)

Three months ended

March 31,

 

2024

2023

 

amounts in millions

 

Cash flows from operating activities:

    

    

    

    

Net earnings (loss)

$

241

 

69

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

Depreciation and amortization

 

50

 

58

Stock-based compensation

 

7

 

8

Share of (earnings) losses of affiliate, net

 

(280)

 

(248)

(Gain) loss on dilution of investment in affiliate

 

28

 

27

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

 

(76)

 

114

Deferred income tax expense (benefit)

 

44

 

22

Other, net

 

(1)

 

(1)

Changes in operating assets and liabilities:

Current and other assets

 

39

 

(6)

Payables and other liabilities

 

 

(2)

Net cash provided by (used in) operating activities

 

52

 

41

Cash flows from investing activities:

Capital expenditures

(61)

(54)

Grant proceeds received for capital expenditures

15

Cash received for Charter shares repurchased by Charter

81

42

Other investing activities, net

(17)

Net cash provided by (used in) investing activities

18

(12)

Cash flows from financing activities:

Borrowings of debt

20

1,248

Repayments of debt, tower obligations and finance leases

(62)

(1,416)

Repurchases of Liberty Broadband common stock

(89)

(40)

Indemnification payment to Qurate Retail

(24)

Other financing activities, net

 

(1)

 

(3)

Net cash provided by (used in) financing activities

 

(132)

 

(235)

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

(62)

 

(206)

Cash, cash equivalents and restricted cash, beginning of period

176

400

Cash, cash equivalents and restricted cash, end of period

$

114

194

I-6

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:

March 31,

December 31,

2024

2023

amounts in millions

Cash and cash equivalents

$

108

158

Restricted cash included in other current assets

5

16

Restricted cash included in other long-term assets

1

2

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

$

114

176

See accompanying notes to the condensed consolidated financial statements.

I-7

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 (loss)

earnings

subsidiaries

Total equity

amounts in millions

Balance at January 1, 2024

    

$

1

3,107

    

52

    

5,843

20

    

9,023

Net earnings (loss)

 

 

241

 

241

Other comprehensive earnings (loss), net of taxes

(17)

(17)

Stock-based compensation

7

7

Liberty Broadband stock repurchases

(89)

(89)

Noncontrolling interest activity at Charter and other

(7)

(7)

Balance at March 31, 2024

$

1

3,018

 

35

 

6,084

20

 

9,158

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 millions

Balance at January 1, 2023

$

1

3,318

9

5,155

18

8,501

Net earnings (loss)

69

69

Other comprehensive earnings (loss), net of taxes

50

50

Stock-based compensation

8

8

Liberty Broadband stock repurchases

(40)

(40)

Noncontrolling interest activity at Charter and other

(4)

(4)

Balance at March 31, 2023

$

1

3,282

59

5,224

18

8,584

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 GCI Holdings, LLC (“GCI Holdings” or “GCI”), a wholly owned subsidiary, and an equity method investment in Charter Communications, Inc. (“Charter”).

On December 18, 2020, GCI Liberty, Inc. (“GCI Liberty”) was merged with Liberty Broadband (the “Combination”) and Liberty Broadband acquired GCI Holdings.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2023, 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, 2023. 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 affiliate, (ii) non-recurring fair value measurements of non-financial instruments and (iii) accounting for income taxes to be its most significant estimates.

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

As described in note 4, we are participating in Charter’s share buyback program in order to maintain our fully diluted ownership percentage of 26%. The primary use of those proceeds has been to repurchase Liberty Broadband Series A and Series C common stock pursuant to our authorized share repurchase programs. In addition, some of the proceeds were used for debt repayments.

During the three months ended March 31, 2024, we repurchased an aggregate of 1.1 million shares of Liberty Broadband Series C common stock for a total purchase price of $89 million. During the three months ended March 31, 2023, we repurchased 459 thousand shares of Liberty Broadband Series A and Series C common stock for a total purchase price of $40 million. As of March 31, 2024, the amount remaining under the authorized repurchase program is approximately $1,685 million.

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Exchange Agreement with Chairman

On June 13, 2022, Liberty Broadband entered into an Exchange Agreement with its Chairman of the board of directors, John C. Malone, and a revocable trust of which Mr. Malone is the sole trustee and beneficiary (the “JM Trust”) (the “Exchange Agreement”). Under the Exchange Agreement, the JM Trust exchanged 54,247 shares of Liberty Broadband Series B common stock for the same number of Liberty Broadband Series C common stock on January 23, 2023.

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 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. Additionally, in connection with a prior transaction, GCI Liberty and Qurate Retail, Inc. (“Qurate Retail”) 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 the facilities sharing agreement, Liberty Broadband shares office space with Liberty and related amenities at Liberty’s corporate headquarters.

Pursuant to the services agreement, Liberty provides Liberty Broadband with general and administrative services including legal, tax, accounting, treasury, information technology, cybersecurity and investor relations support. Liberty Broadband reimburses Liberty for direct, out-of-pocket expenses incurred by Liberty in providing these services which are negotiated semi-annually, as necessary. Pursuant to the services agreement, in connection with Liberty’s employment arrangement with Gregory B. Maffei, the Company’s President and Chief Executive Officer, components of Mr. Maffei’s compensation are either paid directly to him or reimbursed to Liberty, based on allocations set forth in the services agreement, currently set at 23% for the Company but subject to adjustment on an annual basis and upon the occurrence of certain events.

Under these various agreements, amounts reimbursable to Liberty were approximately $2 million for both the three months ended March 31, 2024 and 2023. Liberty Broadband had a tax sharing receivable with Qurate Retail of approximately $16 million as of both March 31, 2024 and December 31, 2023, included in Other assets in the condensed consolidated balance sheets.

(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

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

of the periods presented. Excluded from diluted EPS for the three months ended March 31, 2024 and 2023 are 3 million and 2 million potential common shares, respectively, because their inclusion would have been antidilutive.

Liberty Broadband Common Stock

Three months

Three months

 

ended

ended

    

March 31, 2024

    

March 31, 2023

 

(numbers of shares in millions)

Basic WASO

 

143

 

146

Potentially dilutive shares (1)

 

 

1

Diluted WASO

 

143

 

147

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

(3) Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.

The Company’s assets and liabilities measured at fair value are as follows:

March 31, 2024

December 31, 2023

 

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 millions

 

Cash equivalents

$

105

105

78

78

Exchangeable senior debentures

$

1,200

1,200

1,255

1,255

The Company’s exchangeable senior debentures are debt instruments with quoted market value prices that are not considered to be traded on “active markets”, as defined in GAAP, and are reported in the foregoing table as Level 2 fair value.

Other Financial Instruments

Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, equity securities, current portion of debt (with the exception of the 1.25% Debentures prior to their redemption in the third quarter of 2023, and the 2.75% Debentures and the 1.75% Debentures prior to their redemption in the first quarter of 2023 (each as defined in note 6)) and long-term debt (with the exception of the 3.125% Debentures (as defined in note 6)). With the exception of long-term debt and preferred stock, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our condensed consolidated balance

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

sheets. The carrying value of the Margin Loan Facility, the Senior Credit Facility and the Wells Fargo Note Payable (each as defined in note 6) all bear interest at a variable rate and therefore are also considered to approximate fair value.

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

Three months ended

 

March 31,

 

2024

2023

 

amounts in millions

 

Exchangeable senior debentures (1)

$

76

(111)

Other

(3)

$

76

(114)

(1)The Company has elected to account for its exchangeable senior debentures using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statements of operations are primarily due to market factors driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive income. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk before tax was a loss of $20 million and a gain of $64 million for the three months ended March 31, 2024 and 2023, respectively. The cumulative change was a gain of $35 million as of March 31, 2024.

(4) Investment in Charter Accounted for Using the Equity Method

Through a number of prior years’ transactions and the Combination, Liberty Broadband has acquired an interest in Charter. The investment in Charter is accounted for as an equity method affiliate based on our voting and ownership interest and the board seats held by individuals appointed by Liberty Broadband. As of March 31, 2024, the carrying and market value of Liberty Broadband’s ownership in Charter was approximately $12.3 billion and $13.4 billion, respectively. We own an approximate 32.0% economic ownership interest in Charter, based on shares of Charter’s Class A common stock issued and outstanding as of March 31, 2024.

Upon the closing of the Time Warner Cable, LLC merger, the Second Amended and Restated Stockholders Agreement, dated as of May 23, 2015, by and among Charter, Liberty Broadband and Advance/Newhouse Partnership, as amended (the “Stockholders Agreement”), became fully effective. Pursuant to the Stockholders Agreement, Liberty Broadband’s equity ownership in Charter (on a fully diluted basis) is capped at the greater of 26% or the voting cap (“Equity Cap”). As of March 31, 2024, due to Liberty Broadband’s voting interest exceeding the current voting cap of 25.01%, our voting control of the aggregate voting power of Charter is 25.01%. Under the Stockholders Agreement, Liberty Broadband has agreed to vote (subject to certain exceptions) all voting securities beneficially owned by it, or over which it has voting discretion or control that are in excess of the voting cap, in the same proportion as all other votes cast by public stockholders of Charter with respect to the applicable matter.

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

In February 2021, Liberty Broadband was notified that its ownership interest, on a fully diluted basis, had exceeded the Equity Cap set forth in the Stockholders Agreement. On February 23, 2021, Charter and Liberty Broadband entered into a letter agreement in order to implement, facilitate and satisfy the terms of the Stockholders Agreement with respect to the Equity Cap. Pursuant to this letter agreement, following any month during which Charter purchases, redeems or buys back shares of its Class A common stock, and prior to certain meetings of Charter’s stockholders, Liberty Broadband will be obligated to sell to Charter, and Charter will be obligated to purchase, such number of shares of Class A common stock as is necessary (if any) to reduce Liberty Broadband’s percentage equity interest, on a fully diluted basis, to the Equity Cap (such transaction, a “Charter Repurchase”). The per share sale price for each share of Charter will be equal to the volume weighted average price paid by Charter in its repurchases, redemptions and buybacks of its common stock (subject to certain exceptions) during the month prior to the Charter Repurchase (or, if applicable, during the relevant period prior to the relevant meeting of Charter stockholders). Under the terms of the letter agreement, Liberty Broadband sold 213,216 and 120,149 shares of Charter Class A common stock to Charter for $81 million and $42 million during the three months ended March 31, 2024 and 2023, respectively, to maintain our fully diluted ownership percentage at 26%.

Investment in Charter

The excess basis in our investment in Charter is allocated within memo accounts used for equity method accounting purposes as follows (amounts in millions):

March 31,

December 31,

2024

2023

Property and equipment, net

    

$

370

403

Customer relationships, net

 

1,979

2,049

Franchise fees

 

3,844

3,843

Trademarks

 

32

29

Goodwill

 

4,012

4,049

Debt

 

(302)

(317)

Deferred income tax liability

 

(1,451)

(1,472)

$

8,484

8,584

Property and equipment and customer relationships have weighted average remaining useful lives of approximately 4 years and 7 years, respectively, and franchise fees, trademarks and goodwill have indefinite lives. The excess basis of outstanding debt is amortized over the contractual period using the straight-line method. The decrease in excess basis for the three months ended March 31, 2024 was primarily due to the Company’s participation in Charter’s share buyback program as well as amortization expense during the period. The Company’s share of earnings (losses) of affiliate line item in the accompanying condensed consolidated statements of operations includes expenses of $72 million and $69 million, net of related taxes, for the three months ended March 31, 2024 and 2023, respectively, due to the amortization of the excess basis related to assets with identifiable useful lives and debt.

The Company had dilution losses of $28 million and $27 million during the three months ended March 31, 2024 and 2023, respectively. The dilution losses for the periods presented were primarily attributable to the exercise of stock options and restricted stock units by employees and other third parties, slightly offset by a gain on dilution related to Charter’s repurchase of Liberty Broadband’s Charter shares during both the three months ended March 31, 2024 and 2023.

I-13

Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Summarized unaudited financial information for Charter is as follows:

Charter condensed consolidated balance sheets

    

March 31, 2024

December 31, 2023

 

amounts in millions

Current assets

$

4,396

4,132

Property and equipment, net

 

40,349

39,520

Goodwill

 

29,668

29,668

Intangible assets, net

 

68,905

69,141

Other assets

 

4,726

4,732

Total assets

$

148,044

147,193

Current liabilities

$

10,926

13,214

Deferred income taxes

 

18,966

18,954

Long-term debt

 

97,965

95,777

Other liabilities

 

4,581

4,530

Equity

 

15,606

14,718

Total liabilities and shareholders’ equity

$

148,044

147,193

Charter condensed consolidated statements of operations

Three months ended

 

March 31,

2024

2023

 

amounts in millions

Revenue

$

13,679

13,653

Cost and expenses:

Operating costs and expenses (excluding depreciation and amortization)

 

8,396

8,511

Depreciation and amortization

 

2,190

2,206

Other operating (income) expense, net

 

(38)

10

10,548

10,727

Operating income

3,131

2,926

Interest expense, net

 

(1,316)

(1,265)

Other income (expense), net

(89)

(104)

Income tax (expense) benefit

 

(446)

(374)

Net income (loss)

1,280

1,183

Less: Net income attributable to noncontrolling interests

(174)

(162)

Net income (loss) attributable to Charter shareholders

$

1,106

1,021

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

(5) Intangible Assets

Intangible Assets Subject to Amortization, net

    

March 31, 2024

    

December 31, 2023

 

Gross

Net

Gross

Net

carrying

Accumulated

carrying

carrying

Accumulated

carrying

 

    

amount

    

amortization

    

amount

    

amount

    

amortization

    

amount

 

amounts in millions

 

Customer relationships

$

515

(142)

373

515

(132)

383

Other amortizable intangible assets

 

159

(83)

76

156

(78)

78

Total

$

674

(225)

449

671

(210)

461

Amortization expense for intangible assets with finite useful lives was $15 million and $16 million for the three months ended March 31, 2024 and 2023, respectively. Amortization expense for amortizable intangible assets for each of the five succeeding fiscal years is estimated to be (amounts in millions):

Remainder of 2024

$

44

2025

$

54

2026

$

51

2027

$

49

2028

$

47

(6) Debt

Debt is summarized as follows:

    

Outstanding

    

    

    

    

 

principal

Carrying value

 

March 31,

March 31,

December 31,

 

        

2024

    

2024

        

2023

 

 

amounts in millions

Margin Loan Facility

$

1,480

 

1,480

 

1,460

3.125% Exchangeable Senior Debentures due 2053

1,265

1,200

1,255

Senior notes

 

600

 

622

 

623

Senior credit facility

 

334

 

334

 

394

Wells Fargo note payable

 

5

 

5

 

5

Deferred financing costs

 

 

(2)

 

(1)

Total debt

$

3,684

 

3,639

 

3,736

Debt classified as current

 

 

(3)

 

(3)

Total long-term debt

$

3,636

 

3,733

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Margin Loan Facility

On May 17, 2023, a bankruptcy remote wholly owned subsidiary of the Company (“SPV”) entered into Amendment No. 7 to Margin Loan Agreement (the “Seventh Amendment”), which amends SPV’s margin loan agreement, dated as of August 31, 2017 (as amended by the Seventh Amendment, the “Margin Loan Agreement”), with a group of lenders. The Margin Loan Agreement provides for (x) a term loan credit facility in an aggregate principal amount of $1.15 billion (the “Term Loan Facility” and proceeds of such facility, the “Term Loans”), (y) a revolving credit facility in an aggregate principal amount of $1.15 billion (the “Revolving Loan Facility” and proceeds of such facility, the “Revolving Loans”; the Revolving Loans, collectively with the Term Loans, the “Loans”) and (z) an uncommitted incremental term loan facility in an aggregate principal amount of up to $200 million (collectively, the “Margin Loan Facility”). No additional borrowings under the Margin Loan Agreement were made in connection with the Seventh Amendment. SPV’s obligations under the Margin Loan Facility are secured by shares of Charter owned by SPV. The Seventh Amendment provided for, among other things, (i) the extension of the scheduled maturity dates to May 12, 2026, (ii) the interest under the Margin Loan Agreement to be determined by reference to the Secured Overnight Financing Rate (“SOFR”) instead of the London Interbank Offered Rate (“LIBOR”), (iii) an increase in the Base Spread (as defined below) applicable to all loans funded under the Margin Loan Agreement and (iv) the removal of certain conditions precedent to the release of pledged shares.

Outstanding borrowings under the Margin Loan Agreement were $1.5 billion and $1.5 billion as of March 31, 2024 and December 31, 2023, respectively. As of March 31, 2024, SPV was permitted to borrow an additional $820 million under the Margin Loan Agreement, subject to certain funding conditions, which may be drawn until five business days prior to the maturity date. The maturity date of the loans under the Margin Loan Agreement is May 12, 2026. Pursuant to the Seventh Amendment, the borrowings under the Margin Loan Agreement will accrue interest at a rate equal to the three-month SOFR rate plus a per annum spread of 1.875% (the “Base Spread”) (unless and until the replacement of such rate as provided for under the Margin Loan Agreement). The Margin Loan Agreement also has a commitment fee equal to 0.50% per annum on the daily unused amount of the Revolving Loans.

Borrowings under the Margin Loan Agreement prior to the Seventh Amendment bore interest at the three-month LIBOR rate plus a per annum spread of 1.5% for the prior period covered in this report.

The 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 Margin Loan Agreement does not include any financial covenants. The Margin Loan Agreement does contain restrictions related to additional indebtedness and events of default customary for margin loans of this type.

SPV’s obligations under the 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 Margin Loan Agreement. The Margin Loan Agreement indicates that no lender party shall have any voting rights with respect to the shares pledged as collateral, 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 agreement. As of March 31, 2024, 19.1 million shares of Charter common stock with a value of $5.5 billion were held in collateral accounts related to the Margin Loan Agreement.

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LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Exchangeable Senior Debentures

On February 28, 2023, the Company closed a private offering of $1,265 million aggregate original principal amount of its 3.125% Exchangeable Senior Debentures due 2053 (the “3.125% Debentures”), including debentures with an aggregate original principal amount of $165 million issued pursuant to the exercise of an option granted to the initial purchasers. Upon an exchange of the 3.125% Debentures, the Company, at its election, may deliver shares of Charter Class A common stock, the value thereof in cash, or any combination of shares of Charter Class A common stock and cash. Initially, 1.8901 shares of Charter Class A common stock are attributable to each $1,000 original principal amount of 3.125% Debentures, representing an initial exchange price of approximately $529.07 for each share of Charter Class A common stock. A total of 2,390,977 shares of Charter Class A common stock are attributable to the 3.125% Debentures. Interest is payable quarterly on March 31, June 30, September 30 and December 31 of each year, commencing June 30, 2023. The 3.125% Debentures may be redeemed by the Company, in whole or in part, on or after April 6, 2026. Holders of the 3.125% Debentures also have the right to require the Company to purchase their 3.125% Debentures on April 6, 2026. The redemption and purchase price will generally equal 100% of the adjusted principal amount of the 3.125% Debentures plus accrued and unpaid interest to the redemption date, plus any final period distribution. As of March 31, 2024, a holder of the 3.125% Debentures does not have the ability to exchange their debentures and, accordingly, the 3.125% Debentures have been classified as long-term debt within the condensed consolidated balance sheet as of March 31, 2024.

The Company used the net proceeds of the offering of the 3.125% Debentures, together with existing cash on hand, to repurchase all of the outstanding 1.75% Exchangeable Senior Debentures due 2046 (the “1.75% Debentures”), all of the outstanding 2.75% Exchangeable Senior Debentures due 2050 (the “2.75% Debentures”) and a significant portion of the outstanding 1.25% Exchangeable Senior Debentures due 2050 (the “1.25% Debentures”). On October 5, 2023, the remaining portion of the 1.25% Debentures were retired at the adjusted principal amount plus accrued interest and, pursuant to a supplemental indenture entered into in February 2023, the Company delivered solely cash to satisfy its obligations.

The Company has elected to account for all of its exchangeable senior debentures at fair value in its condensed consolidated financial statements. Accordingly, changes in the fair value of these instruments are recognized in Realized and unrealized gains (losses) on financial instruments, net in the accompanying condensed consolidated statements of operations. See note 3 for information related to unrealized gains (losses) on debt measured at fair value. The Company reviews the terms of all the debentures on a quarterly basis to determine whether an event has occurred to require current classification on the condensed consolidated balance sheets.

Senior Notes

GCI, LLC is the issuer of $600 million aggregate principal amount of 4.75% senior notes due 2028 (the “Senior Notes”). The Senior Notes were issued by GCI, LLC on October 7, 2020 and are unsecured. Interest on the Senior Notes is payable semi-annually in arrears. The Senior Notes are redeemable at the Company’s option, in whole or in part, at a redemption price defined in the indenture, and accrued and unpaid interest (if any) to the date of redemption. The Senior Notes are stated net of an aggregate unamortized premium of $22 million at March 31, 2024. Such premium is being amortized to interest expense in the accompanying condensed consolidated statements of operations.

Senior Credit Facility

On October 15, 2021, GCI, LLC entered into an Eighth Amended and Restated Credit Agreement which includes a $550 million revolving credit facility, with a $25 million sublimit for standby letters of credit, that matures on October 15, 2026 and a $250 million Term Loan A (the “Term Loan A”) that matures on October 15, 2027. On June 12, 2023, GCI, LLC entered into Amendment No. 1 to the Eighth Amended and Restated Credit Agreement (as amended, the “Senior Credit Facility”) which modified the interest rates to reference SOFR instead of LIBOR.

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Table of Contents

LIBERTY BROADBAND CORPORATION

Notes to Condensed Consolidated Financial Statements

(unaudited)

Following the amendment in June 2023, the revolving credit facility borrowings under the Senior Credit Facility that are alternate base rate loans bear interest at a per annum rate equal to the alternate base rate plus a margin that varies between 0.50% and 1.75% depending on GCI, LLC’s total leverage ratio. The Senior Credit Facility has several leverage ratios defined in the Senior Credit Facility that are referenced throughout. The revolving credit facility borrowings under the Senior Credit Facility that are SOFR loans bear interest at a per annum rate equal to the applicable SOFR plus a Credit Spread Adjustment (as defined in the Senior Credit Facility) plus a margin that varies between 1.50% and 2.75% depending on GCI, LLC’s total leverage ratio. Term Loan A borrowings that are alternate base rate loans bear interest at a per annum rate equal to the alternate base rate plus a margin that varies between 1.00% and 2.25% depending on GCI, LLC’s total leverage ratio. Term Loan A borrowings that are SOFR loans bear interest at a per annum rate equal to the applicable SOFR plus a margin that varies between 2.00% and 3.25% depending on GCI, LLC’s total leverage ratio. Principal payments are due quarterly on the Term Loan A equal to 0.25% of the original principal amount, which may step up to 1.25% of the original principal amount of the Term Loan A depending on GCI, LLC’s secured leverage ratio. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. Any amounts prepaid on the revolving credit facility may be reborrowed. Prior to the amendment in June 2023, all rates indexed to SOFR were previously indexed to LIBOR. The Senior Credit Facility also has a commitment fee that accrues at a per annum rate between