Attributed Financial Information for Tracking Stock Groups
Our Liberty Interactive common stock is intended to reflect the separate performance of our Interactive Group which is comprised of our businesses engaged in video and on-line commerce, including our subsidiaries, QVC, Inc., Provide Commerce, Inc., Backcountry.com, Inc., Bodybuilding.com, LLC and BuySeasons, Inc. and our interests in IAC/InterActiveCorp, Expedia, Inc., HSN, Inc., Interval Leisure Group, Inc., Ticketmaster and Tree.com, Inc. Our Liberty Entertainment common stock is intended to reflect the separate performance of our Entertainment Group which includes our wholly-owned subsidiaries Starz Entertainment, LLC, FUN Sports, and Liberty Sports Group, our interest in The DIRECTV Group, Inc., as well as other minority equity interests in GSN, LLC and WildBlue Communications, Inc. Our Liberty Capital common stock is intended to reflect the separate performance of our Capital Group which is comprised of all of our assets and businesses not attributed to the Interactive Group or the Entertainment Group.
The following tables present our assets, liabilities, revenue, expenses and cash flows as of and for the nine months ended September 30, 2009 and 2008. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Interactive Group, the Entertainment Group and the Capital Group, respectively. The financial information should be read in conjunction with our unaudited condensed consolidated financial statements for the nine months ended September 30, 2009 included in this Quarterly Report on Form 10-Q. The attributed financial information presented in the tables has been prepared assuming the Reclassification had been completed as of January 1, 2008.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Interactive Group, the Entertainment Group and the Capital Group, our tracking stock structure does not affect the ownership or the respective legal title to our assets or responsibility for our liabilities. We and our subsidiaries are each responsible for our respective liabilities. Holders of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock are holders of our common stock and are subject to risks associated with an investment in our company and all of our businesses, assets and liabilities. The issuance of Liberty Interactive common stock, Liberty Entertainment common stock and Liberty Capital common stock does not affect the rights of our creditors or creditors of our subsidiaries.
1
SUMMARY ATTRIBUTED FINANCIAL DATA
Interactive Group
|
September 30, 2009 |
December 31, 2008 |
|||||
---|---|---|---|---|---|---|---|
|
amounts in millions |
||||||
Summary balance sheet data: |
|||||||
Current assets |
$ | 3,047 | 3,282 | ||||
Cost investments |
$ | 903 | 739 | ||||
Equity investments |
$ | 860 | 901 | ||||
Total assets |
$ | 17,217 | 17,487 | ||||
Long-term debt, including current portion |
$ | 6,295 | 7,131 | ||||
Long-term deferred income tax liabilities |
$ | 1,952 | 1,999 | ||||
Attributed net assets |
$ | 6,589 | 6,303 |
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2009 | 2008 | 2009 | 2008 | ||||||||||
|
amounts in millions |
|||||||||||||
Summary operations data: |
||||||||||||||
Revenue |
$ | 1,827 | 1,798 | 5,594 | 5,702 | |||||||||
Cost of sales |
(1,182 | ) | (1,179 | ) | (3,573 | ) | (3,645 | ) | ||||||
Operating expenses |
(172 | ) | (173 | ) | (519 | ) | (534 | ) | ||||||
Selling, general and administrative expenses(1) |
(140 | ) | (142 | ) | (437 | ) | (425 | ) | ||||||
Depreciation and amortization |
(139 | ) | (143 | ) | (421 | ) | (418 | ) | ||||||
Operating income |
194 | 161 | 644 | 680 | ||||||||||
Interest expense |
(147 | ) | (122 | ) | (353 | ) | (365 | ) | ||||||
Other than temporary declines in fair value of investments |
| (440 | ) | | (440 | ) | ||||||||
Other expense, net |
(57 | ) | (38 | ) | (159 | ) | (27 | ) | ||||||
Income tax benefit (expense) |
13 | 164 | (41 | ) | 111 | |||||||||
Net earnings (loss) |
3 | (275 | ) | 91 | (41 | ) | ||||||||
Less net earnings attributable to the noncontrolling interests |
9 | 8 | 26 | 25 | ||||||||||
Net earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | (6 | ) | (283 | ) | 65 | (66 | ) | ||||||
2
SUMMARY ATTRIBUTED FINANCIAL DATA
Entertainment Group
|
September 30, 2009 |
December 31, 2008 |
|||||
---|---|---|---|---|---|---|---|
|
amounts in millions |
||||||
Summary balance sheet data: |
|||||||
Current assets |
$ | 1,416 | 1,631 | ||||
Equity investments |
$ | 13,840 | 13,366 | ||||
Total assets |
$ | 16,314 | 16,322 | ||||
Long-term debt, including current portion |
$ | 1,937 | 2,033 | ||||
Long-term deferred income tax liabilities |
$ | 1,737 | 1,735 | ||||
Attributed net assets |
$ | 12,507 | 12,180 |
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2009 | 2008 | 2009 | 2008 | ||||||||||
|
amounts in millions |
|||||||||||||
Summary operations data: |
||||||||||||||
Revenue |
$ | 369 | 362 | 1,105 | 1,031 | |||||||||
Operating expenses |
(234 | ) | (238 | ) | (651 | ) | (664 | ) | ||||||
Selling, general and administrative expenses(1) |
(69 | ) | (65 | ) | (207 | ) | (187 | ) | ||||||
Depreciation and amortization |
(7 | ) | (12 | ) | (27 | ) | (36 | ) | ||||||
Operating income |
59 | 47 | 220 | 144 | ||||||||||
Gains (losses) on dispositions, net |
| (2 | ) | (54 | ) | 3,664 | ||||||||
Share of earnings of affiliates, net |
124 | 116 | 316 | 314 | ||||||||||
Other income (expense), net |
(180 | ) | 82 | (217 | ) | (20 | ) | |||||||
Income tax benefit (expense) |
(1 | ) | (96 | ) | (33 | ) | 1,611 | |||||||
Net earnings |
$ | 2 | 147 | 232 | 5,713 | |||||||||
3
SUMMARY ATTRIBUTED FINANCIAL DATA
Capital Group
|
September 30, 2009 | December 31, 2008 | |||||
---|---|---|---|---|---|---|---|
|
amounts in millions |
||||||
Summary balance sheet data: |
|||||||
Current assets |
$ | 4,134 | 2,973 | ||||
Cost investments |
$ | 3,283 | 2,118 | ||||
Total assets |
$ | 9,548 | 8,361 | ||||
Long-term debt, including current portion |
$ | 3,852 | 3,063 | ||||
Long-term deferred income tax liabilities |
$ | 560 | 1,166 | ||||
Attributed net assets |
$ | 1,069 | 1,121 |
|
Three months ended September 30, |
Nine months ended September 30, |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
2009 | 2008 | 2009 | 2008 | ||||||||||
|
amounts in millions |
|||||||||||||
Summary operations data: |
||||||||||||||
Revenue |
$ | 171 | 218 | 495 | 483 | |||||||||
Operating expenses |
(146 | ) | (171 | ) | (381 | ) | (383 | ) | ||||||
Selling, general and administrative expenses(1) |
(99 | ) | (140 | ) | (218 | ) | (296 | ) | ||||||
Depreciation and amortization |
(20 | ) | (24 | ) | (62 | ) | (78 | ) | ||||||
Impairment of long-lived assets |
| (34 | ) | | (34 | ) | ||||||||
Operating loss |
(94 | ) | (151 | ) | (166 | ) | (308 | ) | ||||||
Interest expense |
(29 | ) | (43 | ) | (102 | ) | (124 | ) | ||||||
Realized and unrealized gains (losses) on financial instruments, net |
(98 | ) | 14 | (58 | ) | (188 | ) | |||||||
Gains (losses) on dispositions, net |
(17 | ) | | 96 | 15 | |||||||||
Other income, net |
20 | 29 | 82 | 81 | ||||||||||
Income tax benefit |
86 | 39 | 57 | 215 | ||||||||||
Net loss |
(132 | ) | (112 | ) | (91 | ) | (309 | ) | ||||||
Less net earnings attributable to the noncontrolling interests |
| | | 4 | ||||||||||
Net loss attributable to Liberty Media Corporation shareholders |
$ | (132 | ) | (112 | ) | (91 | ) | (313 | ) | |||||
4
BALANCE SHEET INFORMATION
September 30, 2009
(unaudited)
|
Attributed (note 1) | |
|
|||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Inter-group eliminations |
Consolidated Liberty |
|||||||||||||
|
amounts in millions |
|||||||||||||||||
Assets |
||||||||||||||||||
Current assets: |
||||||||||||||||||
Cash and cash equivalents |
$ | 816 | 577 | 2,923 | | 4,316 | ||||||||||||
Trade and other receivables, net |
912 | 247 | 74 | | 1,233 | |||||||||||||
Inventory, net |
1,106 | | | | 1,106 | |||||||||||||
Program rights |
| 518 | | | 518 | |||||||||||||
Financial instruments |
| | 1,036 | | 1,036 | |||||||||||||
Current deferred tax assets |
135 | 68 | | (203 | ) | | ||||||||||||
Other current assets |
78 | 6 | 101 | | 185 | |||||||||||||
Total current assets |
3,047 | 1,416 | 4,134 | (203 | ) | 8,394 | ||||||||||||
Investments in available-for-sale securities and other cost investments (note 2) |
903 | 2 | 3,283 | | 4,188 | |||||||||||||
Investments in affiliates, accounted for using the equity method (note 3) |
860 | 13,840 | 278 | | 14,978 | |||||||||||||
Property and equipment, net |
1,013 | 113 | 137 | | 1,263 | |||||||||||||
Goodwill |
5,900 | 368 | 201 | | 6,469 | |||||||||||||
Trademarks |
2,492 | 2 | 14 | | 2,508 | |||||||||||||
Intangible assets subject to amortization, net |
2,923 | 121 | 196 | | 3,240 | |||||||||||||
Other assets, at cost, net of accumulated amortization |
79 | 452 | 1,305 | | 1,836 | |||||||||||||
Total assets |
$ | 17,217 | 16,314 | 9,548 | (203 | ) | 42,876 | |||||||||||
Liabilities and Equity |
||||||||||||||||||
Current liabilities: |
||||||||||||||||||
Accounts payable |
$ | 584 | 8 | 28 | | 620 | ||||||||||||
Accrued interest |
44 | | 16 | | 60 | |||||||||||||
Other accrued liabilities |
535 | 207 | 147 | | 889 | |||||||||||||
Intergroup payable (receivable) |
(24 | ) | (103 | ) | 127 | | | |||||||||||
Intergroup notes (note 1) |
510 | (255 | ) | (255 | ) | | | |||||||||||
Financial instruments |
117 | 25 | 865 | | 1,007 | |||||||||||||
Current portion of debt (note 4) |
725 | 752 | 1,538 | | 3,015 | |||||||||||||
Accrued stock compensation |
20 | 205 | 7 | | 232 | |||||||||||||
Current deferred tax liabilities |
| | 1,618 | (203 | ) | 1,415 | ||||||||||||
Other current liabilities |
112 | 5 | 31 | | 148 | |||||||||||||
Total current liabilities |
2,623 | 844 | 4,122 | (203 | ) | 7,386 | ||||||||||||
Long-term debt (note 4) |
5,570 | 1,185 | 2,314 | | 9,069 | |||||||||||||
Long-term financial instruments |
169 | 32 | 9 | | 210 | |||||||||||||
Deferred income tax liabilities (note 6) |
1,952 | 1,737 | 560 | | 4,249 | |||||||||||||
Other liabilities |
196 | 9 | 1,473 | | 1,678 | |||||||||||||
Total liabilities |
10,510 | 3,807 | 8,478 | (203 | ) | 22,592 | ||||||||||||
Equity/Attributed net assets |
6,589 | 12,507 | 1,069 | | 20,165 | |||||||||||||
Noncontrolling interests in equity of subsidiaries |
118 | | 1 | | 119 | |||||||||||||
Total liabilities and equity |
$ | 17,217 | 16,314 | 9,548 | (203 | ) | 42,876 | |||||||||||
5
STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS) INFORMATION
Three months ended September 30, 2009
(unaudited)
|
Attributed (note 1) | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Consolidated Liberty |
||||||||||||||
|
amounts in millions |
|||||||||||||||||
Revenue: |
||||||||||||||||||
Net retail sales |
$ | 1,827 | | | 1,827 | |||||||||||||
Communications and programming services |
| 369 | 171 | 540 | ||||||||||||||
|
1,827 | 369 | 171 | 2,367 | ||||||||||||||
Operating costs and expenses: |
||||||||||||||||||
Cost of sales |
1,182 | | | 1,182 | ||||||||||||||
Operating |
172 | 234 | 146 | 552 | ||||||||||||||
Selling, general and administrative, including stock-based compensation (notes 1 and 5) |
140 | 69 | 99 | 308 | ||||||||||||||
Depreciation and amortization |
139 | 7 | 20 | 166 | ||||||||||||||
|
1,633 | 310 | 265 | 2,208 | ||||||||||||||
Operating income (loss) |
194 | 59 | (94 | ) | 159 | |||||||||||||
Other income (expense): |
||||||||||||||||||
Interest expense |
(147 | ) | (18 | ) | (29 | ) | (194 | ) | ||||||||||
Dividend and interest income |
1 | 1 | 23 | 25 | ||||||||||||||
Intergroup interest income (expense) |
(8 | ) | 4 | 4 | | |||||||||||||
Share of earnings (losses) of affiliates, net |
36 | 124 | (22 | ) | 138 | |||||||||||||
Realized and unrealized losses on financial instruments, net |
(67 | ) | (161 | ) | (98 | ) | (326 | ) | ||||||||||
Gains (losses) on dispositions, net |
3 | | (17 | ) | (14 | ) | ||||||||||||
Other, net |
(22 | ) | (6 | ) | 15 | (13 | ) | |||||||||||
|
(204 | ) | (56 | ) | (124 | ) | (384 | ) | ||||||||||
Earnings (loss) before income taxes |
(10 | ) | 3 | (218 | ) | (225 | ) | |||||||||||
Income tax benefit (expense) (note 6) |
13 |
(1 |
) |
86 |
98 |
|||||||||||||
Net earnings (loss) |
3 | 2 | (132 | ) | (127 | ) | ||||||||||||
Less net earnings attributable to the noncontrolling interests |
9 | | | 9 | ||||||||||||||
Net earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | (6 | ) | 2 | (132 | ) | (136 | ) | ||||||||||
Net earnings (loss) |
$ | 3 | 2 | (132 | ) | (127 | ) | |||||||||||
Other comprehensive earnings (loss), net of taxes: |
||||||||||||||||||
Foreign currency translation adjustments |
41 | | 1 | 42 | ||||||||||||||
Unrealized holding gains arising during the period |
143 | | 20 | 163 | ||||||||||||||
Recognition of previously unrealized gains on available-for-sale securities, net |
(1 | ) | | (1 | ) | (2 | ) | |||||||||||
Share of other comprehensive earnings of equity affiliates |
| 21 | | 21 | ||||||||||||||
Other |
(3 | ) | | | (3 | ) | ||||||||||||
Other comprehensive earnings |
180 | 21 | 20 | 221 | ||||||||||||||
Comprehensive earnings (loss) |
183 | 23 | (112 | ) | 94 | |||||||||||||
Less comprehensive earnings attributable to the noncontrolling interests |
17 | | | 17 | ||||||||||||||
Comprehensive earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | 166 | 23 | (112 | ) | 77 | ||||||||||||
6
STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS) INFORMATION
Three months ended September 30, 2008
(unaudited)
|
Attributed (note 1) | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Consolidated Liberty |
||||||||||||||
|
amounts in millions |
|||||||||||||||||
Revenue: |
||||||||||||||||||
Net retail sales |
$ | 1,798 | | | 1,798 | |||||||||||||
Communications and programming services |
| 362 | 218 | 580 | ||||||||||||||
|
1,798 | 362 | 218 | 2,378 | ||||||||||||||
Operating costs and expenses: |
||||||||||||||||||
Cost of sales |
1,179 | | | 1,179 | ||||||||||||||
Operating |
173 | 238 | 171 | 582 | ||||||||||||||
Selling, general and administrative, including stock-based compensation (notes 1 and 5) |
142 | 65 | 140 | 347 | ||||||||||||||
Depreciation and amortization |
143 | 12 | 24 | 179 | ||||||||||||||
Impairment of long-lived assets |
| | 34 | 34 | ||||||||||||||
|
1,637 | 315 | 369 | 2,321 | ||||||||||||||
Operating income (loss) |
161 | 47 | (151 | ) | 57 | |||||||||||||
Other income (expense): |
||||||||||||||||||
Interest expense |
(122 | ) | (25 | ) | (43 | ) | (190 | ) | ||||||||||
Dividend and interest income |
5 | 5 | 28 | 38 | ||||||||||||||
Share of earnings of affiliates, net |
23 | 116 | 2 | 141 | ||||||||||||||
Realized and unrealized gains (losses) on financial instruments, net |
(43 | ) | 106 | 14 | 77 | |||||||||||||
Losses on dispositions, net |
| (2 | ) | | (2 | ) | ||||||||||||
Other than temporary declines in fair value of investments |
(440 | ) | (4 | ) | | (444 | ) | |||||||||||
Other, net |
(23 | ) | | (1 | ) | (24 | ) | |||||||||||
|
(600 | ) | 196 | | (404 | ) | ||||||||||||
Earnings (loss) before income taxes |
(439 | ) | 243 | (151 | ) | (347 | ) | |||||||||||
Income tax benefit (expense) (note 6) |
164 |
(96 |
) |
39 |
107 |
|||||||||||||
Net earnings (loss) |
(275 | ) | 147 | (112 | ) | (240 | ) | |||||||||||
Less net earnings attributable to the noncontrolling interests |
8 | | | 8 | ||||||||||||||
Net earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | (283 | ) | 147 | (112 | ) | (248 | ) | ||||||||||
Net earning (loss) |
$ | (275 | ) | 147 | (112 | ) | (240 | ) | ||||||||||
Other comprehensive earnings (loss), net of taxes: |
||||||||||||||||||
Foreign currency translation adjustments |
(114 | ) | | (1 | ) | (115 | ) | |||||||||||
Unrealized holding losses arising during the period |
(42 | ) | | | (42 | ) | ||||||||||||
Recognition of previously unrealized losses on available-for-sale securities, net |
273 | | | 273 | ||||||||||||||
Share of other comprehensive loss of equity affiliates |
(2 | ) | (2 | ) | | (4 | ) | |||||||||||
Other comprehensive earnings (loss) |
115 | (2 | ) | (1 | ) | 112 | ||||||||||||
Comprehensive earnings (loss) |
(160 | ) | 145 | (113 | ) | (128 | ) | |||||||||||
Less comprehensive earnings attributable to Liberty Media Corporation shareholder |
8 | | | 8 | ||||||||||||||
Comprehensive earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | (168 | ) | 145 | (113 | ) | (136 | ) | ||||||||||
7
STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS) INFORMATION
Nine months ended September 30, 2009
(unaudited)
|
Attributed (note 1) | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Consolidated Liberty |
||||||||||||||
|
amounts in millions |
|||||||||||||||||
Revenue: |
||||||||||||||||||
Net retail sales |
$ | 5,594 | | | 5,594 | |||||||||||||
Communications and programming services |
| 1,105 | 495 | 1,600 | ||||||||||||||
|
5,594 | 1,105 | 495 | 7,194 | ||||||||||||||
Operating costs and expenses: |
||||||||||||||||||
Cost of sales |
3,573 | | | 3,573 | ||||||||||||||
Operating |
519 | 651 | 381 | 1,551 | ||||||||||||||
Selling, general and administrative including stock-based compensation (notes 1 and 5) |
437 | 207 | 218 | 862 | ||||||||||||||
Depreciation and amortization |
421 | 27 | 62 | 510 | ||||||||||||||
|
4,950 | 885 | 661 | 6,496 | ||||||||||||||
Operating income (loss) |
644 | 220 | (166 | ) | 698 | |||||||||||||
Other income (expense): |
||||||||||||||||||
Interest expense |
(353 | ) | (54 | ) | (102 | ) | (509 | ) | ||||||||||
Dividend and interest income |
7 | 2 | 90 | 99 | ||||||||||||||
Intergroup interest income (expense) |
(10 | ) | 5 | 5 | | |||||||||||||
Share of earnings (losses) of affiliates, net |
(47 | ) | 316 | (26 | ) | 243 | ||||||||||||
Realized and unrealized losses on financial instruments, net |
(114 | ) | (235 | ) | (58 | ) | (407 | ) | ||||||||||
Gains on dispositions, net |
| 54 | 96 | 150 | ||||||||||||||
Other, net |
5 | (43 | ) | 13 | (25 | ) | ||||||||||||
|
(512 | ) | 45 | 18 | (449 | ) | ||||||||||||
Earnings (loss) before income taxes |
132 | 265 | (148 | ) | 249 | |||||||||||||
Income tax benefit (expense) (note 6) |
(41 |
) |
(33 |
) |
57 |
(17 |
) |
|||||||||||
Net earnings (loss) |
91 | 232 | (91 | ) | 232 | |||||||||||||
Less net earnings attributable to the noncontrolling interests |
26 | | | 26 | ||||||||||||||
Net earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | 65 | 232 | (91 | ) | 206 | ||||||||||||
Net earnings (loss) |
$ | 91 | 232 | (91 | ) | 232 | ||||||||||||
Other comprehensive earnings (loss), net of taxes: |
||||||||||||||||||
Foreign currency translation adjustments |
21 | | 2 | 23 | ||||||||||||||
Unrealized holding gains arising during the period |
151 | | 33 | 184 | ||||||||||||||
Recognition of previously unrealized gains on available-for-sale securities, net |
| (1 | ) | (1 | ) | (2 | ) | |||||||||||
Share of other comprehensive earnings (loss) of equity affiliates |
(5 | ) | 16 | | 11 | |||||||||||||
Other |
34 | | | 34 | ||||||||||||||
Other comprehensive earnings |
201 | 15 | 34 | 250 | ||||||||||||||
Comprehensive earnings (loss) |
292 | 247 | (57 | ) | 482 | |||||||||||||
Less comprehensive earnings attributable to the noncontrolling interests |
24 |
|
|
24 |
||||||||||||||
Comprehensive earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | 268 | 247 | (57 | ) | 458 | ||||||||||||
8
STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS) INFORMATION
Nine months ended September 30, 2008
(unaudited)
|
Attributed (note 1) | |
||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Consolidated Liberty |
||||||||||||||
|
amounts in millions |
|||||||||||||||||
Revenue: |
||||||||||||||||||
Net retail sales |
$ | 5,702 | | | 5,702 | |||||||||||||
Communications and programming services |
| 1,031 | 483 | 1,514 | ||||||||||||||
|
5,702 | 1,031 | 483 | 7,216 | ||||||||||||||
Operating costs and expenses: |
||||||||||||||||||
Cost of sales |
3,645 | | | 3,645 | ||||||||||||||
Operating |
534 | 664 | 383 | 1,581 | ||||||||||||||
Selling, general and administrative including stock-based compensation (notes 1 and 5) |
425 | 187 | 296 | 908 | ||||||||||||||
Depreciation and amortization |
418 | 36 | 78 | 532 | ||||||||||||||
Impairment of long-lived assets |
| | 34 | 34 | ||||||||||||||
|
5,022 | 887 | 791 | 6,700 | ||||||||||||||
Operating income (loss) |
680 | 144 | (308 | ) | 516 | |||||||||||||
Other income (expense): |
||||||||||||||||||
Interest expense |
(365 | ) | (54 | ) | (124 | ) | (543 | ) | ||||||||||
Dividend and interest income |
18 | 14 | 106 | 138 | ||||||||||||||
Share of earnings (losses) of affiliates, net |
58 | 314 | (21 | ) | 351 | |||||||||||||
Realized and unrealized gains (losses) on financial instruments, net |
(81 | ) | 24 | (188 | ) | (245 | ) | |||||||||||
Gains on dispositions, net |
| 3,664 | 15 | 3,679 | ||||||||||||||
Other than temporary declines in fair value of investments |
(440 | ) | (4 | ) | (1 | ) | (445 | ) | ||||||||||
Other, net |
(22 | ) | | (3 | ) | (25 | ) | |||||||||||
|
(832 | ) | 3,958 | (216 | ) | 2,910 | ||||||||||||
Earnings (loss) before income taxes |
(152 | ) | 4,102 | (524 | ) | 3,426 | ||||||||||||
Income tax benefit (note 6) |
111 |
1,611 |
215 |
1,937 |
||||||||||||||
Net earnings (loss) |
(41 | ) | 5,713 | (309 | ) | 5,363 | ||||||||||||
Less net earnings attributable to the noncontrolling interests |
25 | | 4 | 29 | ||||||||||||||
Net earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | (66 | ) | 5,713 | (313 | ) | 5,334 | |||||||||||
Net earnings (loss) |
$ | (41 | ) | 5,713 | (309 | ) | 5,363 | |||||||||||
Other comprehensive earnings (loss), net of taxes: |
||||||||||||||||||
Foreign currency translation adjustments |
(32 | ) | | (3 | ) | (35 | ) | |||||||||||
Unrealized holding losses arising during the period |
(447 | ) | (312 | ) | (2 | ) | (761 | ) | ||||||||||
Recognition of previously unrealized losses (gains) on available-for-sale securities, net |
273 | (2,273 | ) | | (2,000 | ) | ||||||||||||
Share of other comprehensive loss of equity affiliates |
(1 | ) | (5 | ) | | (6 | ) | |||||||||||
Other |
(1 | ) | | | (1 | ) | ||||||||||||
Other comprehensive loss |
(208 | ) | (2,590 | ) | (5 | ) | (2,803 | ) | ||||||||||
Comprehensive earnings (loss) |
(249 | ) | 3,123 | (314 | ) | 2,560 | ||||||||||||
Less comprehensive earnings attributable to the noncontrolling interests |
30 |
|
4 |
34 |
||||||||||||||
Comprehensive earnings (loss) attributable to Liberty Media Corporation shareholders |
$ | (279 | ) | 3,123 | (318 | ) | 2,526 | |||||||||||
9
STATEMENT OF CASH FLOWS INFORMATION
Nine months ended September 30, 2009
(unaudited)
|
Attributed (note 1) | |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Consolidated Liberty |
||||||||||||
|
amounts in millions |
|||||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net earnings (loss) |
$ | 91 | 232 | (91 | ) | 232 | ||||||||||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: |
||||||||||||||||
Depreciation and amortization |
421 | 27 | 62 | 510 | ||||||||||||
Stock-based compensation |
33 | 60 | 5 | 98 | ||||||||||||
Cash payments for stock based compensation |
(9 | ) | (2 | ) | | (11 | ) | |||||||||
Noncash interest expense |
63 | 52 | | 115 | ||||||||||||
Share of losses (earnings) of affiliates, net |
47 | (316 | ) | 26 | (243 | ) | ||||||||||
Cash receipts from return on equity investments |
| 28 | | 28 | ||||||||||||
Realized and unrealized losses on financial instruments, net |
114 | 235 | 58 | 407 | ||||||||||||
Gains on disposition of assets, net |
| (54 | ) | (96 | ) | (150 | ) | |||||||||
Intergroup tax allocation |
116 | 80 | (196 | ) | | |||||||||||
Intergroup tax payments |
(168 | ) | (121 | ) | 289 | | ||||||||||
Other intergroup cash transfers, net |
| (53 | ) | 53 | | |||||||||||
Deferred income tax benefit |
(162 | ) | (49 | ) | (1 | ) | (212 | ) | ||||||||
Other noncash charges (credits), net |
(7 | ) | 45 | 41 | 79 | |||||||||||
Changes in operating assets and liabilities, net of the effects of acquisitions and dispositions: |
||||||||||||||||
Current and other assets |
183 | (94 | ) | 35 | 124 | |||||||||||
Payables and other current liabilities |
(23 | ) | 62 | 54 | 93 | |||||||||||
Net cash provided by operating activities |
699 | 132 | 239 | 1,070 | ||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Cash proceeds from dispositions |
82 | 65 | 206 | 353 | ||||||||||||
Proceeds from settlement of financial instruments |
7 | 21 | 1,067 | 1,095 | ||||||||||||
Cash paid for acquisitions, net of cash acquired |
(2 | ) | (1 | ) | (1 | ) | (4 | ) | ||||||||
Investments in and loans to cost and equity investees |
(23 | ) | (90 | ) | (705 | ) | (818 | ) | ||||||||
Repayment of loan by equity investee |
| | 409 | 409 | ||||||||||||
Capital expended for property and equipment |
(132 | ) | (10 | ) | (10 | ) | (152 | ) | ||||||||
Net sales of short term investments |
| | 58 | 58 | ||||||||||||
Net decrease (increase) in restricted cash |
(13 | ) | 1 | 75 | 63 | |||||||||||
Other investing activities, net |
(11 | ) | 14 | (25 | ) | (22 | ) | |||||||||
Net cash provided by (used in) investing activities |
(92 | ) | | 1,074 | 982 | |||||||||||
Cash flows from financing activities: |
||||||||||||||||
Borrowings of debt |
1,124 | | 1,970 | 3,094 | ||||||||||||
Intergroup debt borrowings |
510 | (255 | ) | (255 | ) | | ||||||||||
Repayments of debt |
(2,128 | ) | (148 | ) | (1,785 | ) | (4,061 | ) | ||||||||
Repurchases of Liberty common stock |
| | (3 | ) | (3 | ) | ||||||||||
Other financing activities, net |
(124 | ) | 49 | 187 | 112 | |||||||||||
Net cash provided by (used in) financing activities |
(618 | ) | (354 | ) | 114 | (858 | ) | |||||||||
Effect of foreign currency rates on cash |
(5 | ) | (8 | ) | | (13 | ) | |||||||||
Net increase (decrease) in cash and cash equivalents |
(16 | ) | (230 | ) | 1,427 | 1,181 | ||||||||||
Cash and cash equivalents at beginning of period |
832 | 807 | 1,496 | 3,135 | ||||||||||||
Cash and cash equivalents at end period |
$ | 816 | 577 | 2,923 | 4,316 | |||||||||||
10
STATEMENT OF CASH FLOWS INFORMATION
Nine months ended September 30, 2008
(unaudited)
|
Attributed (note 1) | |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Interactive Group |
Entertainment Group |
Capital Group |
Consolidated Liberty |
||||||||||||
|
amounts in millions |
|||||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net earnings (loss) |
$ | (41 | ) | 5,713 | (309 | ) | 5,363 | |||||||||
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: |
||||||||||||||||
Depreciation and amortization |
418 | 36 | 78 | 532 | ||||||||||||
Impairment of long-lived assets |
| | 34 | 34 | ||||||||||||
Stock-based compensation |
25 | 37 | 5 | 67 | ||||||||||||
Cash payments for stock-based compensation |
(9 | ) | (12 | ) | (1 | ) | (22 | ) | ||||||||
Noncash interest expense |
2 | 34 | 1 | 37 | ||||||||||||
Share of losses (earnings) of affiliates, net |
(58 | ) | (314 | ) | 21 | (351 | ) | |||||||||
Realized and unrealized losses (gains) on financial instruments, net |
81 | (24 | ) | 188 | 245 | |||||||||||
Gains on disposition of assets, net |
| (3,664 | ) | (15 | ) | (3,679 | ) | |||||||||
Other than temporary declines in fair value of investments |
440 | 4 | 1 | 445 | ||||||||||||
Intergroup tax allocation |
129 | 44 | (173 | ) | | |||||||||||
Intergroup tax payments |
(189 | ) | (63 | ) | 252 | | ||||||||||
Other intergroup cash transfers, net |
(68 | ) | 3 | 65 | | |||||||||||
Deferred income tax benefit |
(314 | ) | (1,655 | ) | (221 | ) | (2,190 | ) | ||||||||
Other noncash charges, net |
24 | | 53 | 77 | ||||||||||||
Changes in operating assets and liabilities, net of the effects of acquisitions: |
||||||||||||||||
Current and other assets |
116 | (46 | ) | (154 | ) | (84 | ) | |||||||||
Payables and other current liabilities |
(214 | ) | 15 | 50 | (149 | ) | ||||||||||
Net cash provided (used) by operating activities |
342 | 108 | (125 | ) | 325 | |||||||||||
Cash flows from investing activities: |
||||||||||||||||
Cash proceeds from dispositions |
| 6 | 18 | 24 | ||||||||||||
Net proceeds from settlement of financial instruments |
| | 12 | 12 | ||||||||||||
Cash received in exchange transactions |
| 465 | | 465 | ||||||||||||
Cash paid for acquisitions, net of cash acquired |
(69 | ) | (7 | ) | (1 | ) | (77 | ) | ||||||||
Investments in and loans to cost and equity investees |
(340 | ) | (1,996 | ) | (213 | ) | (2,549 | ) | ||||||||
Capital expended for property and equipment |
(100 | ) | (6 | ) | (25 | ) | (131 | ) | ||||||||
Net sales of short term investments |
| | 79 | 79 | ||||||||||||
Reclass of cash to short-term marketable securities |
| | (523 | ) | (523 | ) | ||||||||||
Net decrease in restricted cash |
| | 367 | 367 | ||||||||||||
Other investing activities, net |
15 | (11 | ) | (64 | ) | (60 | ) | |||||||||
Net cash used by investing activities |
(494 | ) | (1,549 | ) | (350 | ) | (2,393 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||||||
Borrowings of debt |
1,455 | 1,977 | 1,226 | 4,658 | ||||||||||||
Repayments of debt |
(274 | ) | (2 | ) | (1,008 | ) | (1,284 | ) | ||||||||
Repurchases of Liberty common stock |
(75 | ) | | (407 | ) | (482 | ) | |||||||||
Intergroup cash transfers, net |
| 450 | (450 | ) | | |||||||||||
Other financing activities, net |
(70 | ) | 2 | (18 | ) | (86 | ) | |||||||||
Net cash provided (used) by financing activities |
1,036 | 2,427 | (657 | ) | 2,806 | |||||||||||
Effect of foreign currency rates on cash |
1 | | | 1 | ||||||||||||
Net increase (decrease) in cash and cash equivalents |
885 | 986 | (1,132 | ) | 739 | |||||||||||
Cash and cash equivalents at beginning of period |
557 | 90 | 2,488 | 3,135 | ||||||||||||
Cash and cash equivalents at end period |
$ | 1,442 | 1,076 | 1,356 | 3,874 | |||||||||||
11
Notes to Attributed Financial Information
(unaudited)
The Interactive Group focuses on video and on-line commerce businesses. Accordingly, we expect that businesses that we may acquire in the future that we believe are complementary to this strategy will also be attributed to the Interactive Group.
The Entertainment Group consists of our subsidiaries Starz Entertainment, LLC, FUN Sports and Liberty Sports Group, our minority equity interests in The DIRECTV Group, Inc., GSN, LLC and WildBlue Communications, Inc. and approximately $311 million of corporate cash and cash equivalents. Accordingly, the accompanying attributed financial information for the Entertainment Group includes these investments and the assets, liabilities, revenue, expenses and cash flows of these consolidated subsidiaries. We have also attributed an equity collar on 98.75 million shares of DIRECTV common stock and $1,888 million of borrowings (as of September 30, 2009) against the put value of such collar to the Entertainment Group.
The Entertainment Group focuses primarily on programming and communications businesses. Accordingly, we expect that businesses we may acquire in the future that we believe are complementary to this strategy will also be attributed to the Entertainment Group.
During the fourth quarter of 2008, the Board of Directors of Liberty approved a plan to redeem a portion of the outstanding shares of Liberty's Entertainment Group tracking stock for all of the outstanding shares of a newly formed subsidiary of Liberty, Liberty Entertainment, Inc. ("LEI"), (the "Redemption"). The Redemption and resulting separation of LEI from Liberty are referred to as the "Split Off."
If the Redemption is completed, Liberty will redeem 90% of the outstanding shares of each series of Liberty Entertainment common stock for 100% of the outstanding shares of the same series of LEI, with cash in lieu of fractional shares, in each case, as of a date to be determined by the board of Liberty (the "Redemption"). Immediately following the Redemption, the holders of Liberty Entertainment common stock will own 100% of the outstanding equity of LEI. At the time of the Split Off, LEI will hold Liberty's interests in DIRECTV (and related collars and debt), Liberty Sports Group and GSN and approximately $80 million in cash. In addition, Liberty and LEI have entered into a revolving credit facility pursuant to which Liberty will provide LEI with up to $300 million principal amount of loans. The Split Off is conditioned on, among other matters, receipt of stockholder approval and receipt of a tax opinion from tax counsel and (x) the satisfaction or waiver of all conditions to the Merger Transaction described below or (y) the
12
Notes to Attributed Financial Information (Continued)
(unaudited)
termination of the Merger Agreement described below. The Split Off and Merger Transaction are expected to occur in the fourth quarter of 2009.
On May 3, 2009, Liberty and LEI entered into an Agreement and Plan of Merger (the "Merger Agreement") with DIRECTV and other parties named therein, pursuant to which, after Liberty completes the Split Off, LEI and DIRECTV will combine under a new parent company ("New DIRECTV") (the "Merger Transaction"). The holders of LEI Series A will be entitled to receive 1.11111 shares of New DIRECTV Class A common stock for each share of LEI Series A common stock held by them (as adjusted pursuant to the Merger Agreement). The Chairman of LEI and certain related persons will receive 1.11111 shares of New DIRECTV Class B common stock for each share of LEI Series B common stock held by them (as adjusted pursuant to the Merger Agreement). All other holders of LEI Series B common stock will be entitled to receive 1.11111 shares of New DIRECTV Class A commons stock for each share of LEI Series B common stock held by them (as adjusted pursuant to the Merger Agreement). The Merger Transaction is subject to certain closing conditions.
Subsequent to the Split Off, the Entertainment Group will be renamed the Starz Group and will be comprised principally of Starz Entertainment and cash.
The Capital Group consists of all of our businesses not included in the Interactive Group or the Entertainment Group, including our consolidated subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc., Leisure Arts, Inc., TruePosition, Inc. and WFRV and WJMN Television Station, Inc. and certain cost and equity investments. Accordingly, the accompanying attributed financial information for the Capital Group includes these investments and the assets, liabilities, revenue, expenses and cash flows of these consolidated subsidiaries. In addition, we have attributed to the Capital Group all of our notes and debentures (and related interest expense) that have not been attributed to the Interactive Group or the Entertainment Group. See note 4 below for the debt obligations attributed to the Capital Group.
Any businesses that we may acquire in the future that are not attributed to the Interactive Group or the Entertainment Group will be attributed to the Capital Group.
While we believe the allocation methodology described above is reasonable and fair to each group, we may elect to change the allocation methodology in the future. In the event we elect to transfer assets or businesses from one group to the other, such transfer would be made on a fair value basis and would be accounted for as a short-term loan unless our board of directors determines to account for it as a long-term loan or through an inter-group interest.
During the second quarter of 2009, each of the Entertainment Group and the Capital Group made intergroup loans to the Interactive Group in the amount of $250 million. Such loans (i) are secured by various public stocks attributed to the Interactive Group, (ii) accrue interest quarterly at the rate of LIBOR plus 500 basis points and (iii) are due June 16, 2010. Subsequent to September 30, 2009, the Interactive Group repaid $50 million of the intergroup loans to each of the Entertainment Group and the Capital Group.
13
Notes to Attributed Financial Information (Continued)
(unaudited)
|
September 30, 2009 |
December 31, 2008 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
|
amounts in millions |
|||||||||
Capital Group |
||||||||||
Time Warner Inc.(a) |
$ | 985 | 1,033 | |||||||
Time Warner Cable Inc.(a) |
370 | | ||||||||
Sprint Nextel Corporation(a) |
307 | 160 | ||||||||
Motorola, Inc.(a) |
446 | 328 | ||||||||
Viacom, Inc. |
213 | 145 | ||||||||
CenturyTel, Inc./Embarq Corporation(a) |
196 | 157 | ||||||||
Other available-for-sale equity securities(a) |
92 | 40 | ||||||||
Other available-for-sale debt securities |
643 | 224 | ||||||||
Other cost investments and related receivables |
31 | 31 | ||||||||
Total attributed Capital Group |
3,283 | 2,118 | ||||||||
Interactive Group |
||||||||||
IAC/InterActiveCorp |
717 | 638 | ||||||||
Other |
186 | 101 | ||||||||
Total attributed Interactive Group |
903 | 739 | ||||||||
Entertainment Group |
||||||||||
Other |
2 | 2 | ||||||||
Total attributed Entertainment Group |
2 | 2 | ||||||||
Consolidated Liberty |
$ | 4,188 | 2,859 | |||||||
|
|
|
|
Share of earnings (losses) nine months ended September 30, |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
September 30, 2009 | ||||||||||||||||
|
Percentage ownership |
Carrying value |
Market value |
||||||||||||||
|
2009 | 2008 | |||||||||||||||
|
dollar amounts in millions |
||||||||||||||||
Interactive Group |
|||||||||||||||||
Expedia |
24 | % | $ | 606 | $ | 1,658 | $ | 47 | $ | 58 | |||||||
Entertainment Group |
|||||||||||||||||
DIRECTV |
57 | % | $ | 13,382 | $ | 15,134 | $ | 304 | $ | 301 | |||||||
Capital Group |
|||||||||||||||||
Sirius |
40 | % | $ | 63 | $ | (a | ) | $ | (14 | ) | $ | |
14
Notes to Attributed Financial Information (Continued)
(unaudited)
|
September 30, 2009 | ||||||||
---|---|---|---|---|---|---|---|---|---|
|
Outstanding principal |
Carrying value |
|||||||
|
amounts in millions |
||||||||
Capital Group |
|||||||||
3.125% Exchangeable Senior Debentures due 2023 |
$ | 1,138 | 1,104 | ||||||
4% Exchangeable Senior Debentures due 2029 |
469 | 241 | |||||||
3.75% Exchangeable Senior Debentures due 2030 |
460 | 216 | |||||||
3.5% Exchangeable Senior Debentures due 2031 |
494 | 306 | |||||||
Liberty bank facility |
750 | 750 | |||||||
Liberty derivative loan |
1,155 | 1,155 | |||||||
Subsidiary debt |
80 | 80 | |||||||
Total attributed Capital Group debt |
4,546 | 3,852 | |||||||
Interactive Group |
|||||||||
5.7% Senior Notes due 2013 |
803 | 801 | |||||||
8.5% Senior Debentures due 2029 |
287 | 284 | |||||||
8.25% Senior Debentures due 2030 |
504 | 501 | |||||||
3.25% Exchangeable Senior Debentures due 2031 |
541 | 301 | |||||||
QVC 7.5% Senior Secured Notes due 2019 |
1,000 | 983 | |||||||
QVC bank credit facilities |
3,235 | 3,235 | |||||||
Other subsidiary debt |
190 | 190 | |||||||
Total attributed Interactive Group debt |
6,560 | 6,295 | |||||||
Entertainment Group |
|||||||||
DIRECTV Collar Loan |
1,888 | 1,888 | |||||||
Subsidiary debt |
49 | 49 | |||||||
Total attributed Entertainment Group debt |
1,937 | 1,937 | |||||||
Total debt |
$ | 13,043 | 12,084 | ||||||
|
Nine months ended September 30, |
||||||
---|---|---|---|---|---|---|---|
|
2009 | 2008 | |||||
|
amounts in millions |
||||||
Interactive Group |
$ | 18 | 16 | ||||
Entertainment Group |
$ | 49 | 15 |
15
Notes to Attributed Financial Information (Continued)
(unaudited)
While we believe that this allocation method is reasonable and fair to each group, we may elect to change the allocation methodology or percentages used to allocate general and administrative expenses in the future.
At the option of the holder, each share of Series B common stock is convertible into one share of Series A common stock of the same group. At the discretion of our board, the common stock related to one group may be converted into common stock of the same series that is related to one of our other groups.
16