Exhibit 99.1
LIBERTY MEDIA REPORTS SECOND QUARTER FINANCIAL RESULTS
Englewood,
Colorado, August 7, 2009 — Liberty Media Corporation (“Liberty”) (NASDAQ:
LCAPA, LCAPB, LINTA, LINTB, LMDIA, LMDIB) today reported second quarter results
for Liberty Capital group, Liberty Interactive group and Liberty Entertainment
group. Highlights include(1):
· Strong
sequential domestic revenue and adjusted OIBDA(2) growth at QVC
· Starz
Entertainment continued strong revenue and adjusted OIBDA growth
· Grew
revenue at our eCommerce group by 31% and adjusted OIBDA by 56%
· Retired
$1.94 billion face amount of debt on a consolidated basis
· Extended
QVC debt maturities through 2014
· Through
DIRECTV share buyback, Liberty’s economic ownership of DIRECTV increased to 56%,
voting control remains at 48% per a standstill agreement
· Established
the “Media for Liberty Award”
· Added
Ian Gilchrist as an independent member to Liberty Media’s Board of Directors
“During the quarter we experienced strong
operating results at Starz and our eCommerce companies and improved financial performance
at QVC,” stated Greg Maffei, Liberty President and CEO. “Additionally, we continued our focus on
balance sheet management by extending out debt maturities and retiring $1.94
billion of debt at a discount to face.
LIBERTY INTERACTIVE GROUP — Liberty Interactive group’s revenue decreased
1% to $1.9 billion and adjusted OIBDA increased slightly to $412 million for
the second quarter. The decrease in
revenue was due to results at QVC partially offset by favorable results at the
eCommerce companies. The increase in adjusted
OIBDA was due to favorable results at the eCommerce companies.
1
QVC
QVC’s
second quarter consolidated revenue decreased 4% to $1.7 billion and adjusted
OIBDA decreased 4% to $373 million.
Included in the foregoing variances is a $21 million decrease in revenue
related to an immaterial, one-time adjustment to modify QVC’s revenue
recognition policy to an FOB destination model, which is more appropriate given
its history of providing replacements for goods damaged in transit. Such revenue adjustment resulted in an $8
million reduction in Adjusted OIBDA after adjustments to related expenses.
“Our
second quarter results showed significant improvement from the trend
experienced in the last few quarters ,” stated Mike George, QVC President and
CEO. “In the US, second quarter net
revenue decreased 2% compared to the negative 9-12% trend of the prior three
quarters and adjusted OIBDA results showed even stronger relative
improvement. Although we still have some
hard work ahead of us, we see this improved sequential performance as a
positive indication that we are on the right course with our product and
programming initiatives and that our productivity and cost control initiatives
have taken hold. The company continues to invest in strategic infrastructure
initiatives with the roll out of a new internet, CRM and broadcast management
platforms in the next six to twelve months.
In the US, QVC HD is now available in more than 15 million homes — more
than any other home shopping channel.
The company is also excited about its recently announced partnership
with Isaac Mizrahi to offer his premier brand in a compelling programming
format.”
QVC’s
domestic revenue decreased 2% in the second quarter to $1.2 billion and adjusted
OIBDA decreased 3% to $277 million when compared to the second quarter of the
prior year. For the quarter, the mix of
product shifted from the jewelry area to the home products area and to a lesser
extent, the accessories area. The
average selling price for the second quarter decreased 1% from $47.39 to $46.82
and the total number of units sold declined 5% to 26.2 million from 27.6
million. Returns as a percent of gross
product revenue decreased from 20.1% to 17.3% due to the shift in the sales mix
to home products and accessories, which typically have lower return rates. QVC.com sales as a percentage of domestic
sales increased from 24.6% to 27.2% for the second quarter. Adjusted OIBDA margin for the domestic
operations decreased 28 basis points but remained at 24% for the second quarter
primarily due to a lower gross margin percentage. The lower gross margin percentage reflects a
shift in the mix to lower margin home products, particularly electronics, and
lower initial margins in jewelry and apparel.
QVC’s
second quarter international revenue decreased 9% to $527 million including the
impact of unfavorable foreign currency exchange rates in the UK and
Germany. International adjusted OIBDA
decreased 5% in the second quarter to $96 million. Adjusted OIBDA margins increased 80 basis
points in the second quarter from 17.4% to 18.2% primarily due to a favorable
gross margin percentage and decreased
2
fixed
costs across each market. Excluding the
effect of exchange rates, QVC’s international revenue remained flat compared to
the second quarter of the prior year and adjusted OIBDA increased 1%. Revenue
increased 1% in the UK and Germany and decreased 3% in Japan for the second
quarter, excluding the effect of exchange rates.
QVC
Japan’s revenue decreased 3% during the second quarter in local currency due in
part to deteriorating economic conditions.
QVC Japan achieved unit sales growth of 5% but experienced a decline in
the average selling price of 7%. Japan
experienced sales growth primarily in the accessories and apparel categories,
which was more than offset by a decline in the home, health and beauty
categories. QVC Japan’s gross margin
percentage remained relatively stable.
QVC
Germany’s revenue grew 1% in local currency in the second quarter. QVC Germany’s average selling price increased
3% for the second quarter, while units sold decreased 2%. Germany experienced a higher gross margin
percentage for the second quarter primarily due to a favorable obsolescence
provision partially offset by lower initial product margins in the home,
jewelry and accessories product categories.
The accessories category, including beauty products, increased as a
percent of product sold, from 20% to 32% in the second quarter.
QVC
UK’s revenue in local currency grew 1% in the second quarter due to growth in
apparel sales. The UK’s average selling
price increased 9% for the second quarter while units sold decreased 7% for the
quarter.
QVC’s
outstanding bank debt was $4.5 billion of principal at June 30, 2009. Effective June 16, 2009, QVC amended its
bank credit agreements. Concurrent with
these amendments, QVC retired $750 million principal amount of loans. The outstanding bank debt matures in six
tranches between June 2010 and March 2014.
Cash
used to retire the $750 million of loans came from a combination of $250
million in cash from QVC and $500 million in the form of intergroup loans of
$250 million from each of the Entertainment group and the Capital group to the
Interactive group. The intergroup loans
are secured by various public stocks attributed to the Interactive group,
accrue interest quarterly at the rate of LIBOR plus 500 basis points and are
due in June of 2010.
eCommerce Businesses
Liberty
Interactive’s eCommerce businesses, which include Provide Commerce, Backcountry.com,
Bodybuilding.com and BUYSEASONS, had strong financial results in the second quarter. In the aggregate,
3
the
eCommerce businesses increased revenue by 31% to $252 million and adjusted
OIBDA by 56% to $42 million. The
increase in revenue was primarily driven by strong organic growth at all
eCommerce companies combined with two small acquisitions made during 2008. The increase in adjusted OBIDA was primarily
driven by revenue growth.
Share Repurchases
There
were no share repurchases of Liberty Interactive stock during the second
quarter of 2009. Liberty has approximately $740 million
remaining under its Liberty Interactive stock repurchase authorization.
The businesses and assets attributed to
Liberty Interactive group are engaged in, or are ownership interests in
companies that are engaged in, video and on-line commerce, and currently
include Liberty’s subsidiaries QVC, Provide Commerce, Backcountry.com,
Bodybuilding.com and BUYSEASONS and its interests in IAC/InterActiveCorp, HSN,
Ticketmaster Entertainment, Tree.com, Interval Leisure Group, Expedia and GSI
Commerce. Liberty has identified
wholly-owned QVC as the principal operating segment of Liberty Interactive
group.
LIBERTY ENTERTAINMENT GROUP — Liberty
Entertainment group’s revenue increased 2% to $367 million and adjusted
OIBDA increased 44% to $89 million for the quarter. The increase in revenue was primarily driven
by results at Starz Entertainment. The increase in adjusted OIBDA was due to
positive results at Starz Entertainment partially offset by expenses related to
the proposed split-off of Liberty Entertainment, Inc. (LEI).
Starz Entertainment, LLC
Starz
Entertainment’s revenue increased by 8% to $296 million and adjusted OIBDA increased
by 54% to $105 million. The $21 million
increase in revenue was due to a $16 million increase in rates and a $5 million
increase resulting from growth in the average number of subscription units. Starz experienced an average subscription
unit increase of 5% and Encore average subscription units were essentially
flat.
Starz
Entertainment’s operating expenses decreased 5% and SG&A expenses decreased
19% for the quarter. The decrease in
operating expense was primarily due to a reduction in license fees as a result
of a reduction in the percentage of first-run movie exhibitions (which have a
relatively higher cost per title) as compared to the number of library product
exhibitions and lower effective rates, partially offset by higher amortization
of
4
production
costs for original series. The decrease
in SG&A was primarily due to lower sales and marketing expenses and lower
personnel costs.
Starz, LLC, Chairman and CEO Robert B.
Clasen said, “Starz Entertainment had another strong quarter, with adjusted OIBDA
up 54% compared to the same quarter in the prior year. These positive results were tempered by a 3% decline
in Starz subscribers compared to the first quarter, the result of multiple
factors including the general economic conditions. We continue to move
aggressively on our original programming strategy. In the second quarter we announced we will
air a second season of Crash this
fall, a second season of the comedy Party Down
early next year and unveiled a new half-hour comedy, Failure to
Fly, that will premiere next year.
Additionally we began production on the hour-long action adventure
series Spartacus that will run on the Starz
channels in January and which generated wide excitement when we previewed
it at ComiCon and the television critics tour.”
Share Repurchases
There
were no share repurchases of Liberty Entertainment stock during the second
quarter of 2009. Liberty has $1 billion
remaining under its Liberty Entertainment stock repurchase authorization.
The businesses and assets attributed to
Liberty Entertainment group are engaged in, or are ownership interests in
companies that are engaged in, television and internet distribution and
programming, and currently include Liberty’s subsidiaries
Starz Entertainment, Liberty Sports Group, and PicksPal, and its interests in equity
affiliates GSN LLC, WildBlue Communications and DIRECTV. Liberty
has identified Starz Entertainment as the principal operating segment of
Liberty Entertainment group. As
previously noted, Liberty issued the Liberty Entertainment group tracking stock
on March 4, 2008. The assets and businesses attributed to the
Liberty Entertainment group were previously attributed to the Liberty Capital
group. For purposes of presentation, we treat the assets and businesses
attributed to the Liberty Entertainment group as though they had been
attributed to the group since January 1, 2008.
LIBERTY CAPITAL GROUP — Liberty Capital group’s revenue increased
14% to $199 million while adjusted OIBDA improved by $44 million for the
quarter. The increase in revenue was
primarily due to a $25 million increase in television revenue at Starz Media,
including $10 million earned from the exhibition of movies by Starz
Entertainment. The decrease in the
adjusted OIBDA deficit was primarily due to the
5
difference in theatrical and home video
revenue and related expenses associated with films released by Overture Films
in 2008.
Starz,
LLC, Chairman and CEO Robert B. Clasen said “We were pleased with results at
Starz Media which posted positive adjusted OIBDA of $17 million compared to a
loss of $19 million in the same period last year. However, in the theatrical business, results can vary widely from quarter to
quarter depending on the timing and number of releases. We plan to release five films in the second
half of this year — including Paper Heart
which opens today — versus only one in the first half. During the second quarter Sunshine Cleaning finished its theatrical run as the
strongest indie film year to date.”
Share Repurchases
There
were no share repurchases of Liberty Capital stock during the second quarter of
2009. Liberty has approximately $119
million remaining under its Liberty Capital stock repurchase authorization.
The
businesses and assets attributed to Liberty Capital group are all of Liberty’s
businesses and assets other than those attributed to the Liberty Interactive
group and Liberty Entertainment group and include its subsidiaries Starz Media,
TruePosition, Atlanta National League Baseball Club (the owner of the Atlanta
Braves), and its interests in SIRIUS XM, and minority interests in Time Warner,
Time Warner Cable, and Sprint Nextel.
FOOTNOTES
(1) Liberty’s
President and CEO, Gregory B. Maffei, will discuss these highlights and other
matters in Liberty’s earnings conference call which will begin at 11:00 a.m.
(ET) on August 7, 2009. For
information regarding how to access the call, please see “Important Notice” on page 9.
(2) For
a definition of adjusted OIBDA and applicable reconciliations and a definition
of adjusted OIBDA margin, see the accompanying schedules.
NOTES
Liberty
Media Corporation operates and owns interests in a broad range of video and
on-line commerce, media, communications and entertainment businesses.
Those interests are currently attributed to three tracking stock groups:
Liberty Interactive group, Liberty Entertainment group and Liberty Capital group.
Unless
otherwise noted, the foregoing discussion compares financial information for
the three months ended June 30, 2009 to the same period in 2008. Certain prior period amounts have been
reclassified for comparability with the 2009 presentation
The
following financial information is intended to supplement Liberty’s
consolidated statements of operations to be included in its Form 10-Q.
6
Fair
Value of Public Holdings and Derivatives
|
($s in millions and include the
value of derivatives)
|
|
March 31,
2009
|
|
June 30,
2009
|
|
|
InterActiveCorp
|
|
$
|
549
|
|
578
|
|
|
InterActiveCorp
Spin-Off Companies (1)
|
|
248
|
|
484
|
|
|
Expedia
(1)
|
|
629
|
|
1,046
|
|
|
Other
|
|
122
|
|
132
|
|
|
Total Attributed Liberty Interactive Group
|
|
1,548
|
|
2,240
|
|
|
|
|
|
|
|
|
|
DIRECTV
(1)
|
|
12,711
|
|
13,661
|
|
|
Total Attributed Liberty Entertainment Group
|
|
$
|
12,711
|
|
13,661
|
|
|
|
|
|
|
|
|
|
SIRIUS
XM Loans and Investments (2)
|
|
1,336
|
|
1,546
|
|
|
Non
Strategic Public Holdings (3)
|
|
3,785
|
|
4,020
|
|
|
Total Attributed Liberty Capital Group
|
|
$
|
5,121
|
|
5,566
|
|
(1) Represents fair value of
Liberty’s investments in the InterActiveCorp spin-off companies (HSN,
Ticketmaster Entertainment, Interval Leisure Group, and Tree.com), Expedia, and
DIRECTV and associated financial instruments.
In accordance with GAAP, Liberty accounts for these investments using
the equity method of accounting and includes these investments in its
consolidated balance sheet at their historical carrying values.
(2) Represents the fair value of
Liberty’s various debt and equity investments and loans to SIRIUS XM. The fair value of Liberty’s convertible
Preferred Stock is calculated on an as-if-converted basis into common
stock. Liberty’s loans to SIRIUS XM are
reflected at their face amount for both periods presented. In accordance with GAAP, Liberty accounts for
the convertible preferred stock and loans using the equity method of accounting
and includes these in its consolidated balance sheet at their historical
carrying values.
(3) Represents Liberty’s non-strategic
public holdings which are accounted for at fair value including any associated
equity derivatives on such investments.
Also includes the liability associated with borrowed shares which
totaled $387 million and $617 million on March 31, 2009 and June 30,
2009, respectively.
7
Cash and Debt
The following
presentation is provided to separately identify cash and liquid investments and
debt information.
|
(amounts in millions)
|
|
March 31,
2009
|
|
June 30,
2009
|
|
|
Cash and Cash Related Investments Attributable
to:
|
|
|
|
|
|
|
Liberty
Interactive Group
|
|
$
|
939
|
|
946
|
|
|
Liberty
Entertainment Group
|
|
874
|
|
618
|
|
|
Liberty
Capital Group (1)
|
|
2,845
|
|
2,373
|
|
|
Total Liberty Consolidated Cash (GAAP)
|
|
$
|
4,658
|
|
3,937
|
|
|
|
|
|
|
|
|
|
Debt:
|
|
|
|
|
|
|
Senior
Notes and Debentures (2)
|
|
$
|
1,712
|
|
1,711
|
|
|
Senior
Exchangeable Debentures
|
|
541
|
|
541
|
|
|
QVC
Bank Credit Facility
|
|
5,225
|
|
4,477
|
|
|
Other
|
|
70
|
|
68
|
|
|
Total Attributed Liberty Interactive Group Debt
(3)
|
|
7,548
|
|
6,797
|
|
|
Less: Unamortized Discount
|
|
(9
|
)
|
(7
|
)
|
|
Less: Fair Market Value Adjustment
|
|
(343
|
)
|
(324
|
)
|
|
Total Attributed Liberty Interactive Group Debt
(GAAP)
|
|
7,196
|
|
6,466
|
|
|
|
|
|
|
|
|
|
Liberty
Derivative Borrowing
|
|
1,999
|
|
2,016
|
|
|
Other
|
|
50
|
|
50
|
|
|
Total Attributed Liberty Entertainment Group
Debt
|
|
2,049
|
|
2,066
|
|
|
Less: Fair Market Value Adjustment
|
|
—
|
|
—
|
|
|
Total Attributed Liberty Entertainment Group
Debt (GAAP)
|
|
2,049
|
|
2,066
|
|
|
|
|
|
|
|
|
|
Senior
Exchangeable Debentures (4)
|
|
3,438
|
|
2,571
|
|
|
Bank
Credit Facility
|
|
750
|
|
750
|
|
|
Liberty
Derivative Borrowing
|
|
2,263
|
|
1,930
|
|
|
Other
|
|
108
|
|
102
|
|
|
Total Attributed Liberty Capital Group Debt
|
|
6,559
|
|
5,353
|
|
|
Less: Fair Market Value Adjustment
|
|
(1,715
|
)
|
(1,049
|
)
|
|
Total Attributed Liberty Capital Group Debt
(GAAP)
|
|
4,844
|
|
4,304
|
|
|
|
|
|
|
|
|
|
Total Consolidated Liberty Debt (GAAP)
|
|
$
|
14,089
|
|
12,836
|
|
(1) Does not include $538 million
and $505 million of restricted cash on March 31, 2009 and June 30,
2009, respectively, that is reflected in other long-term assets in Liberty’s
condensed consolidated balance sheet. Please
see discussion related to Investment Fund in the footnotes to Liberty’s
condensed consolidated financial statements to be included in its Form 10-Q.
(2) Face amount of Senior Notes
and Debentures with no reduction for the unamortized discount or fair market
value adjustment.
(3) Does not include $500 million
in intergroup loans. Each of the
Entertainment group and Capital group made an intergroup loan to the
Interactive group in the amount of $250 million. Such loans are (i) 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.
(4) Face amount of Senior
Exchangeable Debentures with no reduction for the fair market value adjustment.
Total attributed Liberty Interactive group cash and liquid investments
remained flat compared to March 31, 2009 primarily due to the $750 million
pay down of the QVC credit facility offset by intergroup borrowings from
Liberty Capital group and Liberty Entertainment group and cash flow from QVC
operations. Total attributed Liberty
Interactive group debt decreased $751 million compared to March 31, 2009
due to pay down of the QVC credit facility.
Please see discussion related to QVC’s Amended Credit Agreements in the
footnotes to Liberty’s condensed consolidated financial statements to be
included in its Form 10-Q.
8
Total attributed Liberty Entertainment group cash and liquid
investments decreased $256 million compared to March 31, 2009 primarily
due to a $250 million intergroup loan to Liberty Interactive group and tax
sharing payments to Liberty Capital group partially offset by cash flow from
Starz Entertainment operations. Total
attributed Liberty Entertainment group debt slightly increased compared to March 31,
2009 due to accreted interest expense on the derivative borrowing.
Total attributed Liberty Capital group cash and liquid investments and
short-term investments decreased $472 million compared to March 31, 2009
due to the retirement of $867 million principal amount of exchangeable debt and
$333 million of derivative borrowings (in conjunction with the expiration of a
certain equity derivative, which occurred subsequent to the end of the quarter). Uses of cash also included a $250 million
intergroup loan to Liberty Interactive group and tax payments. These uses of cash were partially offset by
tax sharing payments received from Liberty Interactive group and Liberty
Entertainment group and the sale of shares of common stock of Motorola and
Sprint Nextel Corp. Total attributed
Liberty Capital group debt decreased $1,206 million compared to March 31,
2009 due to the debt retirements mentioned above.
Important Notice: Liberty Media Corporation (NASDAQ:
LCAPA, LCAPB, LINTA, LINTB, LMDIA, LMDIB) President and CEO, Gregory B. Maffei
will discuss Liberty’s earnings release in a conference call which will begin
at 11:00 a.m. (ET) on August 7, 2009.
The call can be accessed by dialing (866) 431-2037 or (719) 325-2200 at
least 10 minutes prior to the start time.
Replays of the conference call can be accessed through 1:00 p.m.
(ET) on August 21, 2009 by dialing (719) 457-0820 or (888) 203-1112 plus
the pass code 4857914#. The call will
also be broadcast live across the Internet and archived on our website. To access the webcast go to http://www.libertymedia.com/events. Links to this press release will also be
available on the Liberty Media web site.
This press release includes
certain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, including statements about financial guidance,
business strategies, market potential, future financial performance, new
service and product launches and other matters that are not historical
facts. These forward-looking statements
involve many risks and uncertainties that could cause actual results to differ
materially from those expressed or implied by such statements, including,
without limitation, possible changes in market acceptance of new products or
services, competitive issues, regulatory issues, continued access to capital on
terms acceptable to Liberty Media, and the completion of the proposed split-off
of a majority of the assets and liabilities of the Liberty Entertainment group
and the related business combination with DIRECTV. These forward looking
statements speak only as of the date of this press release, and Liberty Media
expressly disclaims any obligation or undertaking to disseminate any updates or
revisions to any forward-looking statement contained herein to reflect any
change in Liberty Media’s expectations with regard thereto or any change in
events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents
of Liberty Media, including the most recent Forms 10-Q and 10-K and our Form 8-K
filed July 20, 2009 for additional information about Liberty Media and
about the risks and uncertainties related to Liberty Media’s business which may
affect the statements made in this press release.
Additional
Information
Nothing in this press release
shall constitute a solicitation to buy or an offer to sell shares of Liberty
Entertainment, Inc. (LEI), any of the Liberty Media tracking stocks or
shares of the new company to be issued pursuant to the merger agreement with
DIRECTV. The offer and sale of shares in
the proposed split-off and the related business combination with DIRECTV will
only be made pursuant to one or more effective registration statements. Liberty
stockholders and other investors are urged to read the registration statements
filed (and the amendments thereto to be filed) with the SEC, including the
proxy statement/prospectuses contained therein, because they will contain
important information about these transactions. Copies of the registration
statements and the proxy statement/prospectuses are (and the amendments thereto
will be) available free of charge at the SEC’s website (http://www.sec.gov).
Copies of the filings together with the materials incorporated by reference
therein can also be obtained, without charge, by directing a request to Liberty
Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112,
Attention: Investor Relations, Telephone: (720) 875-5408.
Participants
in a Solicitation
The directors and executive
officers of Liberty and other persons may be deemed to be participants in the
solicitation of proxies in respect of proposals to approve the transactions.
Information regarding the directors and executive officers of each of Liberty,
LEI and the new DIRECTV and other participants in the proxy solicitation and a
description of their respective direct and indirect interests, by security
holdings or otherwise, are available in the proxy materials filed with the SEC.
|
Contact:
|
Courtnee Ulrich
-
|
(720) 875-5420
|
|
|
Heather Oshiro -
|
(720) 875-5433
|
9
SUPPLEMENTAL
INFORMATION
As
a supplement to Liberty’s consolidated statements of operations, to be included
in its Form 10-Q, the following is a presentation of quarterly financial
information and operating metrics on a stand-alone basis for the three largest
privately held businesses (QVC, Starz Entertainment, and Starz Media) owned by
or in which Liberty held an interest on June 30, 2009.
Please see below for the definition of adjusted OIBDA and a discussion
of management’s use of this performance measure. Schedule 2 to this press release provides a reconciliation of adjusted OIBDA for each
identified entity to that entity’s operating income for the same period, as
determined under GAAP.
QUARTERLY SUMMARY
|
(amounts in millions)
|
|
2Q08
|
|
3Q08
|
|
4Q08
|
|
1Q09
|
|
2Q09
|
|
|
Liberty Interactive Group
|
|
|
|
|
|
|
|
|
|
|
|
|
QVC (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
— Domestic
|
|
1,181
|
|
1,073
|
|
1,481
|
|
1,053
|
|
1,157
|
|
|
Revenue
— International
|
|
580
|
|
568
|
|
655
|
|
540
|
|
527
|
|
|
Revenue
— Total
|
|
1,761
|
|
1,641
|
|
2,136
|
|
1,593
|
|
1,684
|
|
|
Adjusted OIBDA — Domestic
|
|
286
|
|
221
|
|
282
|
|
222
|
|
277
|
|
|
Adjusted OIBDA — International
|
|
101
|
|
91
|
|
134
|
|
97
|
|
96
|
|
|
Adjusted OIBDA — Total
|
|
387
|
|
312
|
|
416
|
|
319
|
|
373
|
|
|
Operating
Income
|
|
253
|
|
175
|
|
278
|
|
178
|
|
243
|
|
|
Gross
Margin — Domestic
|
|
37.0
|
%
|
34.3
|
%
|
32.1
|
%
|
34.2
|
%
|
36.6
|
%
|
|
Gross
Margin — International
|
|
37.3
|
%
|
35.7
|
%
|
36.6
|
%
|
37.0
|
%
|
37.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Entertainment Group
|
|
|
|
|
|
|
|
|
|
|
|
|
STARZ ENTERTAINMENT (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
275
|
|
278
|
|
285
|
|
296
|
|
296
|
|
|
Adjusted
OIBDA
|
|
68
|
|
78
|
|
81
|
|
108
|
|
105
|
|
|
Operating
Income (Loss)
|
|
53
|
|
63
|
|
(1,151
|
)
|
95
|
|
92
|
|
|
Subscription
Units — Starz
|
|
17.0
|
|
17.4
|
|
17.7
|
|
18.1
|
|
17.5
|
|
|
Subscription
Units — Encore
|
|
31.3
|
|
31.6
|
|
31.7
|
|
31.9
|
|
31.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Capital Group
|
|
|
|
|
|
|
|
|
|
|
|
|
STARZ MEDIA (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
57
|
|
104
|
|
98
|
|
102
|
|
90
|
|
|
Adjusted
OIBDA
|
|
(19
|
)
|
(82
|
)
|
(64
|
)
|
5
|
|
17
|
|
|
Operating
Income (Loss)
|
|
(22
|
)
|
(86
|
)
|
(260
|
)
|
2
|
|
15
|
|
NON-GAAP FINANCIAL MEASURES
This
press release includes a presentation of adjusted OIBDA, which is a non-GAAP
financial measure, for each of Liberty’s tracking stock groups and each of QVC,
Starz Entertainment and Starz Media together with a reconciliation to that
group’s or entity’s operating income, as determined under GAAP. Liberty defines adjusted OIBDA as revenue
less cost of sales, operating expenses, and selling, general and administrative
expenses (excluding stock and other equity-based compensation) and excludes from
that definition depreciation and amortization and restructuring and impairment
charges that are included in the measurement of operating income pursuant to
GAAP. Further, this press release
includes adjusted OIBDA margin which is also a non-GAAP financial measure. Liberty defines adjusted OIBDA margin as
adjusted OIBDA divided by revenue.
10
Liberty
believes adjusted OIBDA is an important indicator of the operational strength
and performance of its businesses, including the ability to service debt and
fund capital expenditures. In addition,
this measure allows management to view operating results and perform analytical
comparisons and benchmarking between businesses and identify strategies to improve
performance. Because adjusted OIBDA is
used as a measure of operating performance, Liberty views operating income as
the most directly comparable GAAP measure.
Adjusted OIBDA is not meant to replace or supersede operating income or
any other GAAP measure, but rather to supplement such GAAP measures in order to
present investors with the same information that Liberty’s management considers
in assessing the results of operations and performance of its assets. Please see the attached schedules for applicable
reconciliations.
SCHEDULE 1
The following table
provides a reconciliation of adjusted OIBDA for each of Liberty Interactive
group, Liberty Entertainment group, and Liberty Capital group to that group’s
operating income calculated in accordance with GAAP for the three months ended June 30,
2008, September 30, 2008, December 31, 2008, March 31, 2009 and June 30,
2009, respectively.
|
(amounts in millions)
|
|
2Q08
|
|
3Q08
|
|
4Q08
|
|
1Q09
|
|
2Q09
|
|
|
Liberty Interactive Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
410
|
|
312
|
|
432
|
|
341
|
|
412
|
|
|
Depreciation
and Amortization
|
|
(136
|
)
|
(143
|
)
|
(143
|
)
|
(147
|
)
|
(135
|
)
|
|
Stock
Compensation Expense
|
|
(12
|
)
|
(8
|
)
|
(7
|
)
|
(10
|
)
|
(11
|
)
|
|
Impairment
of Long-Lived Assets
|
|
—
|
|
—
|
|
(56
|
)
|
—
|
|
—
|
|
|
Operating Income
|
|
262
|
|
161
|
|
226
|
|
184
|
|
266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Entertainment Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
62
|
|
74
|
|
107
|
|
132
|
|
89
|
|
|
Depreciation
and Amortization
|
|
(12
|
)
|
(12
|
)
|
(12
|
)
|
(11
|
)
|
(9
|
)
|
|
Stock
Compensation Expense
|
|
(15
|
)
|
(15
|
)
|
21
|
|
(17
|
)
|
(23
|
)
|
|
Impairment
of Long-Lived Assets
|
|
—
|
|
—
|
|
(1,262
|
)
|
—
|
|
—
|
|
|
Operating Income (Loss)
|
|
35
|
|
47
|
|
(1,146
|
)
|
104
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Capital Group
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
(40
|
)
|
(89
|
)
|
(106
|
)
|
(32
|
)
|
4
|
|
|
Depreciation
and Amortization
|
|
(28
|
)
|
(24
|
)
|
(23
|
)
|
(20
|
)
|
(22
|
)
|
|
Stock
Compensation Expense
|
|
—
|
|
(1
|
)
|
3
|
|
(1
|
)
|
(1
|
)
|
|
Impairment
of Long-Lived Assets
|
|
—
|
|
—
|
|
(251
|
)
|
—
|
|
—
|
|
|
Operating Loss
|
|
(68
|
)
|
(114
|
)
|
(377
|
)
|
(53
|
)
|
(19
|
)
|
11
The following table
provides a reconciliation of adjusted OIBDA to earnings from continuing
operations before income taxes and minority interest for the three months ended
June 30, 2008 and 2009, respectively.
|
(amounts in millions)
|
|
2008
|
|
2009
|
|
|
Liberty
Interactive Group
|
|
$
|
410
|
|
412
|
|
|
Liberty
Entertainment Group
|
|
62
|
|
89
|
|
|
Liberty
Capital Group
|
|
(40
|
)
|
4
|
|
|
Consolidated adjusted OIBDA
|
|
$
|
432
|
|
505
|
|
|
|
|
|
|
|
|
|
Consolidated
Segment Adjusted OIBDA
|
|
$
|
432
|
|
505
|
|
|
Stock-Based
Compensation
|
|
(27
|
)
|
(35
|
)
|
|
Depreciation
and Amortization
|
|
(176
|
)
|
(166
|
)
|
|
Interest
Expense
|
|
(187
|
)
|
(161
|
)
|
|
Share
of Earnings of Affiliates
|
|
165
|
|
171
|
|
|
Realized
and Unrealized (Losses) on Financial Instruments, net
|
|
(37
|
)
|
163
|
|
|
Gains
(Losses) on Dispositions, net
|
|
(1
|
)
|
166
|
|
|
Other,
net
|
|
41
|
|
78
|
|
|
Earnings Before Income Taxes
|
|
$
|
210
|
|
721
|
|
SCHEDULE 2
The following table
provides a reconciliation of adjusted OIBDA for QVC, Starz Entertainment and
Starz Media to that entity’s operating income calculated in accordance with
GAAP for the three months ended June 30, 2008, September 30, 2008, December 31,
2008, March 31, 2009, and June 30, 2009, respectively.
|
(amounts in millions)
|
|
2Q08
|
|
3Q08
|
|
4Q08
|
|
1Q09
|
|
2Q09
|
|
|
Liberty Interactive Group
|
|
|
|
|
|
|
|
|
|
|
|
|
QVC (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
387
|
|
312
|
|
416
|
|
319
|
|
373
|
|
|
Depreciation
and Amortization
|
|
(129
|
)
|
(135
|
)
|
(135
|
)
|
(137
|
)
|
(127
|
)
|
|
Stock
Compensation Expense
|
|
(5
|
)
|
(2
|
)
|
(3
|
)
|
(4
|
)
|
(3
|
)
|
|
Operating Income
|
|
253
|
|
175
|
|
278
|
|
178
|
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Entertainment Group
|
|
|
|
|
|
|
|
|
|
|
|
|
STARZ ENTERTAINMENT (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
68
|
|
78
|
|
81
|
|
108
|
|
105
|
|
|
Depreciation
and Amortization
|
|
(5
|
)
|
(4
|
)
|
(5
|
)
|
(4
|
)
|
(5
|
)
|
|
Stock
Compensation Expense
|
|
(10
|
)
|
(11
|
)
|
12
|
|
(9
|
)
|
(8
|
)
|
|
Impairment
of Long-Lived Assets
|
|
—
|
|
—
|
|
(1,239
|
)
|
—
|
|
—
|
|
|
Operating Income (Loss)
|
|
53
|
|
63
|
|
(1,151
|
)
|
95
|
|
92
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liberty Capital Group
|
|
|
|
|
|
|
|
|
|
|
|
|
STARZ MEDIA (100%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
OIBDA
|
|
(19
|
)
|
(82
|
)
|
(64
|
)
|
5
|
|
17
|
|
|
Depreciation
and Amortization
|
|
(2
|
)
|
(4
|
)
|
(3
|
)
|
(3
|
)
|
(3
|
)
|
|
Stock
Compensation Expense
|
|
(1
|
)
|
—
|
|
(1
|
)
|
—
|
|
1
|
|
|
Impairment
of Long-Lived Assets
|
|
—
|
|
—
|
|
(192
|
)
|
—
|
|
—
|
|
|
Operating Income (Loss)
|
|
(22
|
)
|
(86
|
)
|
(260
|
)
|
2
|
|
15
|
|
12