Exhibit 99.2

 

Liberty Interactive Corporation and Subsidiaries

Condensed Pro Forma Consolidated Financial Statements

June 30, 2011

(unaudited)

 

On September 23, 2011 Liberty Interactive Corporation (“Liberty”) (formerly known as Liberty Media Corporation) completed a plan to Split-Off the businesses, assets and liabilities attributed to Liberty’s Capital Group tracking stock and to Liberty’s Starz Group tracking stock by redeeming all of the outstanding shares of Liberty’s Capital Group tracking stock and Liberty’s Starz Group tracking stock for all of the outstanding shares of a wholly owned subsidiary, Liberty Media Corporation (formerly known as Liberty CapStarz, Inc. and prior thereto as Liberty Splitco, Inc.) (“Splitco”)  (the “Split-Off”).

 

Splitco holds the businesses, assets and liabilities previously attributed to the Liberty Capital Group and Liberty Starz Group.  Upon the completion of the Split-Off, Splitco and Liberty are separate publicly traded companies and operate independently, with neither company having an ownership interest in the other.

 

At the time of the Split-Off, the common stock of Splitco was divided into two tracking stock groups, with the Splitco Capital Group tracking substantially all of the assets and liabilities that were previously attributed to the Liberty Capital Group and the Splitco Starz Group tracking all of the assets and liabilities that were previously attributed to the Liberty Starz Group.

 

On February 9, 2011, the 3.125% Exchangeable Senior Debentures and the stock into which such debt is exchangeable was reattributed from the Liberty Capital Group to the Liberty Interactive Group (the “TWX Reattribution”).

 

The following unaudited condensed pro forma consolidated balance sheet of Liberty dated as of June 30, 2011 assumes that the Split-Off had been completed as of such date.  The following unaudited condensed pro forma consolidated statements of operations of Liberty for the six months ended June 30, 2011 and 2010 assumes that the Split-Off and the TWX Reattribution had been completed as of January 1, 2010.  The unaudited pro forma results do not purport to be indicative of the results that would have been obtained if such transactions had been completed as of such dates.

 

The Split-Off will be accounted for at historical cost since the Splitco common stock was distributed pro rata to the holders of Liberty Capital Group tracking stock and Liberty Starz Group tracking stock.

 



 

Liberty Interactive Corporation and Subsidiaries

Condensed Pro Forma Consolidated Balance Sheet

June 30, 2011

(unaudited)

 

 

 

 

 

Less:

 

 

 

 

 

Liberty

 

Splitco

 

Liberty

 

 

 

historical

 

historical (1)

 

pro forma

 

 

 

amounts in millions

 

Assets

 

 

 

 

 

 

 

Cash

 

$

3,414

 

2,102

 

1,312

 

Other current assets

 

3,698

 

1,846

 

1,852

 

Cost investments

 

4,244

 

2,983

 

1,261

 

Equity investments

 

1,478

 

460

 

1,018

 

Property and equipment, net

 

1,275

 

231

 

1,044

 

Intangible assets not subject to amortization

 

9,016

 

486

 

8,530

 

Other assets

 

3,453

 

1,119

 

2,334

 

Total assets

 

$

26,578

 

9,227

 

17,351

 

 

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 

 

Current liabilities

 

$

5,096

 

3,075

 

2,021

 

Long-term debt

 

5,957

 

38

 

5,919

 

Deferred tax liabilities

 

2,465

 

 

2,465

 

Other liabilities

 

1,098

 

829

 

269

 

Total liabilities

 

14,616

 

3,942

 

10,674

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

11,866

 

5,290

 

6,576

 

Noncontrolling interest

 

96

 

(5

)

101

 

Total equity

 

11,962

 

5,285

 

6,677

 

 

 

 

 

 

 

 

 

Total liabilities and equity

 

$

26,578

 

9,227

 

17,351

 

 



 

Liberty Interactive Corporation and Subsidiaries

Condensed Pro Forma Consolidated Statement of Operations

Six Months Ended June 30, 2011

(unaudited)

 

 

 

 

 

Less:

 

Add:

 

 

 

 

 

Liberty

 

Splitco

 

TWX

 

Liberty

 

 

 

historical

 

historical (1)

 

Reattribution (2)

 

pro forma

 

 

 

amounts in millions,
except per share amounts

 

Revenue

 

$

5,915

 

1,511

 

 

4,404

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(2,775

)

 

 

(2,775

)

Operating, selling, general and administrative expenses

 

(1,755

)

(924

)

 

(831

)

Depreciation and amortization

 

(338

)

(41

)

 

(297

)

Legal settlement

 

7

 

7

 

 

 

Operating income

 

1,054

 

553

 

 

501

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(227

)

(10

)

(4

)

(221

)

Share of earnings (loss) of affiliates, net

 

7

 

(50

)

 

57

 

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

 

186

 

176

 

(20

)

(10

)

Gains (losses) on dispositions, net

 

(2

)

(2

)

 

 

Other income (expense), net

 

72

 

51

 

 

21

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

 

1,090

 

718

 

(24

)

348

 

Income tax expense

 

(422

)

(298

)

9

 

(115

)

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

668

 

420

 

(15

)

233

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) from continuing operations per common share:

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

2.35

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

3.70

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

0.41

 

 

 

 

 

0.39

 

Diluted earnings (loss) from continuing operations per common share:

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

2.35

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

3.63

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

0.41

 

 

 

 

 

0.38

 

Basic weighted average outstanding common shares:

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

51

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

81

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

599

 

 

 

 

 

599

 

Diluted weighted average outstanding common shares:

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

53

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

83

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

606

 

 

 

 

 

606

 

 



 

Liberty Interactive Corporation and Subsidiaries

Condensed Pro Forma Consolidated Statement of Operations

Six Months Ended June 30, 2010

(unaudited)

 

 

 

 

 

Less:

 

Add:

 

 

 

 

 

Liberty

 

Splitco

 

2010

 

TWX

 

Liberty

 

 

 

historical

 

historical (1)

 

reattribution (3)

 

Reattribution (2)

 

pro forma

 

 

 

 

 

amounts in millions
except per share amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

5,062

 

984

 

 

 

4,078

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

(2,578

)

 

 

 

(2,578

)

Operating, selling, general and administrative expenses

 

(1,631

)

(903

)

 

 

(728

)

Depreciation and amortization

 

(326

)

(46

)

 

 

(280

)

Impairment of long-lived assets

 

 

 

 

 

 

Operating income

 

527

 

35

 

 

 

492

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(344

)

(34

)

(8

)

(18

)

(336

)

Share of earnings (loss) of affiliates, net

 

48

 

(11

)

(2

)

 

57

 

Realized and unrealized gains on financial instruments

 

86

 

54

 

15

 

28

 

75

 

Gains on dispositions, net

 

388

 

24

 

 

 

364

 

Other income (expense), net

 

 

46

 

 

 

(46

)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations before income taxes

 

705

 

114

 

5

 

10

 

606

 

Income tax expense

 

(265

)

(59

)

(2

)

(4

)

(212

)

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from continuing operations

 

$

440

 

55

 

3

 

6

 

394

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) from continuing operations per common share:

 

 

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

2.36

 

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

(0.66

)

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

0.65

 

 

 

 

 

 

 

0.66

 

Diluted earnings (loss) from continuing operations per common share:

 

 

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

2.31

 

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

(0.66

)

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

0.64

 

 

 

 

 

 

 

0.66

 

Basic weighted average outstanding common shares:

 

 

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

50

 

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

95

 

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

595

 

 

 

 

 

 

 

595

 

Diluted weighted average outstanding common shares:

 

 

 

 

 

 

 

 

 

 

 

Series A and Series B Liberty Starz common stock

 

51

 

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Capital common stock

 

95

 

 

 

 

 

 

 

n/a

 

Series A and Series B Liberty Interactive common stock

 

601

 

 

 

 

 

 

 

601

 

 



 

Liberty Interactive Corporation and Subsidiaries

Notes to Condensed Pro Forma Consolidated Financial Statements

June 30, 2011

(unaudited)

 


(1)                            Represents the historical financial position and results of operations of Splitco.  Such amounts were derived from the historical combined financial statements of Splitco as reported in the Quarterly Report on Form 10-Q for the period ending June 30, 2011 as filed with the Securities and Exchange Commission on August 11, 2011.

 

(2)                            The historical combined financial statements of Splitco include some activity for the period that the 3.125% Exchangeable Senior Debentures and the stock into which such debt is exchangeable were attributed to the Liberty Capital Group.  On February 9, 2011, Liberty’s board of directors approved the change in attribution of the 3.125% Exchangeable Debentures and the stock into which such debentures are exchangeable (approximately 5 million shares of Time Warner, Inc., 5 million shares of Time Warner Cable Inc. and 2 million shares of AOL, Inc.) and cash of $264 million from the Liberty Capital Group to the Liberty Interactive Group (“Split-Off Reattribution”).  The “TWX Reattribution” column in the accompanying condensed pro forma consolidated statements of operations is necessary to reflect the Split-Off Reattribution as if it had been completed as of January 1, 2010.

 

(3)                            On February 25, 2010, Liberty made the following changes:  (1) reattributed its 14.6% ownership interest in Live Nation Entertainment, Inc. from the Liberty Interactive Group to the Liberty Capital Group; (2) reattributed $1,421 million in principal amount of Exchangeable Senior Debentures from the Liberty Capital Group to the Liberty Interactive Group; (3) reattributed approximately $830 million in net taxable income to be recognized ratably in tax years 2014 to 2018 from the Liberty Capital Group to the Liberty Interactive Group; and (4) reattributed $807 million in cash from the Liberty Capital Group to the Liberty Interactive Group (the “2010 Reattribution”).  Liberty accounted for the 2010 Reattribution prospectively.  Additionally, the historical combined financial statements of Splitco have been prepared to reflect the 2010 Reattribution on a prospective basis.  Accordingly, the 2010 Reattribution column in the accompanying unaudited condensed pro forma consolidated statements of operations for the six months ended June 30, 2010 is necessary to reflect the 2010 Reattribution as if it had been completed as of January 1, 2010.