Exhibit 99.2
Liberty Interactive Corporation
Condensed Pro Forma Consolidated Financial Statements
(unaudited)
Introduction
On November 4, 2016, Liberty Interactive Corporation (“Liberty”, “Liberty Interactive” or the “Company”) completed the split-off (the “Split-Off”) of Liberty Expedia Holdings, Inc. (‘‘Expedia Holdings’’). Expedia Holdings is comprised of, among other things, Liberty’s interest in Expedia, Inc. (“Expedia”) (15.8% equity interest and 52.4% voting interest as of June 30, 2016), Liberty’s wholly-owned subsidiary Bodybuilding.com, LLC (“Bodybuilding”), corporate level cash and cash equivalents of $50 million and $350 million in indebtedness. The Split-Off was accomplished by the redemption of (i) 0.4 of each outstanding share of Liberty’s Series A Liberty Ventures common stock for 0.4 of a share of Expedia Holdings Series A common stock at 5:00 p.m., New York City time, on November 4, 2016 (such date and time, the “Redemption Date”) and (ii) 0.4 of each outstanding share of Liberty’s Series B Liberty Ventures common stock for 0.4 of a share of Expedia Holdings Series B common stock on the Redemption Date.
The following unaudited condensed pro forma consolidated financial statements have been prepared giving effect to the Split-Off as if it occurred as of June 30, 2016 for the condensed pro forma consolidated balance sheets and January 1, 2015 for the condensed pro forma consolidated statements of operation. The unaudited condensed pro forma consolidated financial statements do not purport to represent what Liberty’s financial position actually would have been had the Split-Off occurred on the dates indicated or to project Liberty’s operating results for any future period.
Liberty views Expedia and Bodybuilding as separate components and evaluated them separately for discontinued operations presentation. Based on a quantitative analysis, the split-off of Liberty’s interest in Expedia represents a strategic shift that has a major effect on Liberty’s operations, primarily due to prior year one-time gains on transactions recognized by Expedia. Accordingly, Liberty intends to present its interest in Expedia as a discontinued operation. The split-off of Bodybuilding does not have a major effect on Liberty’s historical results nor is it expected to have a major effect on Liberty’s future operations. The spilt-off of Bodybuilding does not represent a strategic shift in Liberty’s operations. Accordingly, Liberty does not intend to present Bodybuilding as a discontinued operation.
The unaudited condensed pro forma consolidated financial statements should be read in conjunction with the publicly available information of Liberty, including the Form 10-K, as filed on February 26, 2016 with the Securities and Exchange Commission (the “SEC”).
Liberty Interactive Corporation
Condensed Pro Forma Consolidated Balance Sheet
June 30, 2016
|
|
|
Liberty |
|
Less: Liberty |
|
Liberty |
| |
|
|
|
amounts in millions |
| |||||
|
Assets |
|
|
|
|
|
|
| |
|
Cash and cash equivalents |
|
$ |
510 |
|
2 |
|
508 |
|
|
Other current assets |
|
2,204 |
|
52 |
|
2,152 |
| |
|
Investments in available-for-sale securities and other cost investments |
|
1,770 |
|
— |
|
1,770 |
| |
|
Investments in affiliates, accounted for using the equity method |
|
1,525 |
|
888 |
|
637 |
| |
|
Investment in Liberty Broadband measured at fair value |
|
2,561 |
|
— |
|
2,561 |
| |
|
Property and equipment, net |
|
1,230 |
|
27 |
|
1,203 |
| |
|
Intangible assets not subject to amortization |
|
9,524 |
|
77 |
|
9,447 |
| |
|
Intangible assets subject to amortization, net |
|
1,313 |
|
24 |
|
1,289 |
| |
|
Other assets, at cost, net of accumulated amortization |
|
56 |
|
4 |
|
52 |
| |
|
Total assets |
|
$ |
20,693 |
|
1,074 |
|
19,619 |
|
|
|
|
|
|
|
|
|
| |
|
Liabilities and Equity |
|
|
|
|
|
|
| |
|
Current liabilities |
|
3,214 |
|
39 |
|
3,175 |
| |
|
Long-term debt |
|
6,440 |
|
24 |
|
6,416 |
| |
|
Deferred income tax liabilities |
|
3,757 |
|
289 |
|
3,468 |
| |
|
Other liabilities |
|
288 |
|
72 |
|
216 |
| |
|
Total liabilities |
|
13,699 |
|
424 |
|
13,275 |
| |
|
|
|
|
|
|
|
|
| |
|
Total stockholders’ equity |
|
6,892 |
|
650 |
|
6,242 |
| |
|
Noncontrolling interests in equity of subsidiaries |
|
102 |
|
— |
|
102 |
| |
|
Total equity |
|
6,994 |
|
650 |
|
6,344 |
| |
|
|
|
|
|
|
|
|
| |
|
Total liabilities and equity |
|
$ |
20,693 |
|
1,074 |
|
19,619 |
|
Liberty Interactive Corporation
Condensed Pro Forma Consolidated Statement of Operations
Six Months ended June 30, 2016
|
|
|
Liberty Interactive |
|
Less: Liberty |
|
Liberty Interactive |
| |
|
|
|
amounts in millions |
| |||||
|
Total revenue, net |
|
$ |
5,073 |
|
228 |
|
4,845 |
|
|
Operating costs and expenses: |
|
|
|
|
|
|
| |
|
Cost of sales (exclusive of depreciation shown separately below) |
|
3,247 |
|
171 |
|
3,076 |
| |
|
Operating |
|
347 |
|
16 |
|
331 |
| |
|
Selling, general and administrative, including stock-based compensation |
|
602 |
|
24 |
|
578 |
| |
|
Depreciation and amortization |
|
438 |
|
10 |
|
428 |
| |
|
|
|
4,634 |
|
221 |
|
4,413 |
| |
|
Operating income |
|
439 |
|
7 |
|
432 |
| |
|
Other income (expense): |
|
|
|
|
|
|
| |
|
Interest expense |
|
(185 |
) |
(1 |
) |
(184 |
) | |
|
Share of earnings (losses) of affiliates, net |
|
(21 |
) |
(22 |
) |
1 |
| |
|
Realized and unrealized gains (losses) on financial instruments, net |
|
336 |
|
— |
|
336 |
| |
|
Gains (losses) on dispositions, net |
|
9 |
|
— |
|
9 |
| |
|
Other, net |
|
126 |
|
(3 |
) |
129 |
| |
|
|
|
265 |
|
(26 |
) |
291 |
| |
|
Earnings (loss) before income taxes |
|
704 |
|
(19 |
) |
723 |
| |
|
Income tax (expense) benefit |
|
(246 |
) |
10 |
|
(256 |
) | |
|
Net earnings (loss) |
|
458 |
|
(9 |
) |
467 |
| |
|
Less net earnings (loss) attributable to the noncontrolling interests |
|
19 |
|
— |
|
19 |
| |
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders |
|
$ |
439 |
|
(9 |
) |
448 |
|
|
|
|
|
|
|
|
|
| |
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders: |
|
|
|
|
|
|
| |
|
QVC Group common stock |
|
$ |
217 |
|
— |
|
217 |
|
|
Liberty Ventures common stock |
|
222 |
|
(9 |
) |
231 |
| |
|
|
|
$ |
439 |
|
(9 |
) |
448 |
|
|
|
|
|
|
|
|
|
| |
|
Basic net earnings (losses) attributable to Liberty Interactive Corporation shareholders per common share: |
|
|
|
|
|
|
| |
|
Series A and Series B QVC Group common stock |
|
$ |
0.45 |
|
|
|
0.45 |
|
|
Series A and Series B Liberty Ventures common stock |
|
$ |
1.56 |
|
|
|
2.72 |
|
|
Diluted net earnings (losses) attributable to Liberty Interactive Corporation shareholders per common share: |
|
|
|
|
|
|
| |
|
Series A and Series B QVC Group common stock |
|
$ |
0.44 |
|
|
|
0.44 |
|
|
Series A and Series B Liberty Ventures common stock |
|
$ |
1.55 |
|
|
|
2.69 |
|
|
|
|
|
|
|
|
|
| |
|
QVC Group common stock |
|
|
|
|
|
|
| |
|
Basic |
|
482 |
|
|
|
482 |
| |
|
Diluted |
|
488 |
|
|
|
488 |
| |
|
|
|
|
|
|
|
|
| |
|
Liberty Ventures common stock |
|
|
|
|
|
|
| |
|
Basic |
|
142 |
|
|
|
85 |
| |
|
Diluted |
|
143 |
|
|
|
86 |
| |
Liberty Interactive Corporation
Condensed Pro Forma Consolidated Statement of Operations
Year ended December 31, 2015
|
|
|
Liberty Interactive |
|
Less: Liberty |
|
Liberty Interactive |
| |
|
|
|
amounts in millions |
| |||||
|
Total revenue, net |
|
$ |
9,989 |
|
464 |
|
9,525 |
|
|
Operating costs and expenses: |
|
|
|
|
|
|
| |
|
Cost of sales (exclusive of depreciation shown separately below) |
|
6,393 |
|
351 |
|
6,042 |
| |
|
Operating |
|
699 |
|
32 |
|
667 |
| |
|
Selling, general and administrative, including stock-based compensation |
|
1,078 |
|
50 |
|
1,028 |
| |
|
Depreciation and amortization |
|
703 |
|
21 |
|
682 |
| |
|
|
|
8,873 |
|
454 |
|
8,419 |
| |
|
Operating income |
|
1,116 |
|
10 |
|
1,106 |
| |
|
Other income (expense): |
|
|
|
|
|
|
| |
|
Interest expense |
|
(360 |
) |
(1 |
) |
(359 |
) | |
|
Share of earnings (losses) of affiliates, net |
|
(60 |
) |
117 |
|
(177 |
) | |
|
Realized and unrealized gains (losses) on financial instruments, net |
|
114 |
|
— |
|
114 |
| |
|
Gains (losses) on dispositions, net |
|
110 |
|
— |
|
110 |
| |
|
Gains (losses) on dilution of investments in affiliates |
|
314 |
|
320 |
|
(6 |
) | |
|
Other, net |
|
19 |
|
(2 |
) |
21 |
| |
|
|
|
137 |
|
434 |
|
(297 |
) | |
|
Earnings (loss) before income taxes |
|
1,253 |
|
444 |
|
809 |
| |
|
Income tax (expense) benefit |
|
(342 |
) |
(163 |
) |
(179 |
) | |
|
Net earnings (loss) |
|
911 |
|
281 |
|
630 |
| |
|
Less net earnings (loss) attributable to the noncontrolling interests |
|
42 |
|
— |
|
42 |
| |
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders |
|
$ |
869 |
|
281 |
|
588 |
|
|
|
|
|
|
|
|
|
| |
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders: |
|
|
|
|
|
|
| |
|
QVC Group common stock |
|
$ |
640 |
|
— |
|
640 |
|
|
Liberty Ventures common stock |
|
229 |
|
281 |
|
(52 |
) | |
|
|
|
$ |
869 |
|
281 |
|
588 |
|
|
|
|
|
|
|
|
|
| |
|
Basic net earnings (losses) attributable to Liberty Interactive Corporation shareholders per common share: |
|
|
|
|
|
|
| |
|
Series A and Series B QVC Group common stock |
|
$ |
1.35 |
|
|
|
1.35 |
|
|
Series A and Series B Liberty Ventures common stock |
|
$ |
1.61 |
|
|
|
(0.61 |
) |
|
Diluted net earnings (losses) attributable to Liberty Interactive Corporation shareholders per common share: |
|
|
|
|
|
|
| |
|
Series A and Series B QVC Group common stock |
|
$ |
1.33 |
|
|
|
1.33 |
|
|
Series A and Series B Liberty Ventures common stock |
|
$ |
1.60 |
|
|
|
(0.61 |
) |
|
|
|
|
|
|
|
|
| |
|
QVC Group common stock |
|
|
|
|
|
|
| |
|
Basic |
|
475 |
|
|
|
475 |
| |
|
Diluted |
|
481 |
|
|
|
481 |
| |
|
|
|
|
|
|
|
|
| |
|
Liberty Ventures common stock |
|
|
|
|
|
|
| |
|
Basic |
|
142 |
|
|
|
85 |
| |
|
Diluted |
|
143 |
|
|
|
86 |
| |
Liberty Interactive Corporation
Notes to Condensed Pro Forma Consolidated Financial Statements
(unaudited)
(1) Represents the historical financial position and results of operations of Liberty. Such amounts were derived from the historical consolidated financial statements of Liberty Interactive Corporation as filed on Form 10-K on February 26, 2016 and on Form 10-Q on August 5, 2016, respectively.
(2) Represents the historical financial position and results of operations of Liberty. Such amounts were derived from the historical consolidated financial statements of Liberty Expedia Holdings, Inc. as filed on Form S-4 as amended on September 30, 2016.