Exhibit 99.1
Unaudited Attributed Financial Information for Tracking Stock Groups
As of September 30, 2014, 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 digital commerce, including our subsidiaries, QVC, Inc., Provide Commerce, Inc., Backcountry.com, Inc., Bodybuilding.com, LLC, Evite, Inc., CommerceHub and our interest in HSN, Inc. As of September 30, 2014, our Liberty Ventures common stock is intended to reflect the separate performance of our Ventures Group which consists of all of our businesses not included in the Interactive Group including our interests in equity method investments of Expedia, Inc., Interval Leisure Group, Inc. and Tree.com, Inc. and available-for-sale securities Time Warner Inc. and Time Warner Cable Inc.
The following tables present our assets and liabilities as of September 30, 2014, revenue and expenses for the three and nine months ended September 30, 2014 and 2013 and cash flows for the nine months ended September 30, 2014 and 2013. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Interactive Group and the Ventures Group, respectively. The financial information in this Exhibit should be read in conjunction with our unaudited condensed consolidated financial statements for the nine months ended September 30, 2014 included in this Quarterly Report on Form 10-Q.
As discussed in note 2 to the accompanying financial statements, on October 3, 2014, the Interactive Group attributed to the Ventures Group its Digital Commerce companies, which were valued at $1.5 billion, and approximately $1 billion in cash. In return, Interactive Group shareholders received a dividend of approximately 67.67 million shares of Liberty Ventures common stock, or 0.14217 of a Liberty Ventures share for each share of Interactive Group common stock outstanding on October 13, 2014, the record date of the dividend. The distribution date for the dividend was October 20, 2014, and the Liberty Interactive common stock began trading ex-dividend on October 15, 2014.
Following the reattribution, the name of the Interactive Group is now referred to as the QVC Group. Following the reattribution, the QVC Group has attributed to it Liberty’s subsidiary QVC, Inc. and its approximate 38% interest in HSN, Inc., along with cash and certain liabilities. Other than the issuance of Liberty Ventures shares in the fourth quarter of 2014, the reattribution had no consolidated impact on Liberty. The reattribution will be reflected in the Liberty financial statements in the fourth quarter on a prospective basis.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Interactive Group and the Ventures 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 and Liberty Ventures 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 and Liberty Ventures common stock does not affect the rights of our creditors or creditors of our subsidiaries.
SUMMARY ATTRIBUTED FINANCIAL DATA
Interactive Group
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014 |
|
December 31, 2013 |
|
|
|
|
|
amounts in millions |
|
|||
|
Summary balance sheet data: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
733 |
|
595 |
|
|
Trade and other receivables, net |
|
$ |
797 |
|
1,148 |
|
|
Inventory |
|
$ |
1,279 |
|
1,123 |
|
|
Investments in affiliates, accounted for using the equity method |
|
$ |
372 |
|
343 |
|
|
Total assets |
|
$ |
14,293 |
|
14,862 |
|
|
Long-term debt |
|
$ |
5,390 |
|
5,044 |
|
|
Deferred income tax liabilities |
|
$ |
1,041 |
|
1,208 |
|
|
Net assets attributable to the Interactive Group shareholders |
|
$ |
5,908 |
|
6,378 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
||||||
|
|
September 30, |
|
September 30, |
|
||||||
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
||
|
|
amounts in millions |
|
||||||||
|
Summary operations data: |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
2,330 |
|
2,225 |
|
7,247 |
|
7,026 |
|
|
|
Cost of sales |
|
1,488 |
|
1,423 |
|
4,602 |
|
4,469 |
|
|
|
Operating expenses |
|
203 |
|
203 |
|
633 |
|
611 |
|
|
|
Selling, general and administrative expenses (1) |
|
226 |
|
224 |
|
751 |
|
719 |
|
|
|
Impairment of intangible assets |
|
— |
|
19 |
|
7 |
|
19 |
|
|
|
Depreciation and amortization |
|
166 |
|
154 |
|
493 |
|
463 |
|
|
|
Operating income (loss) |
|
247 |
|
202 |
|
761 |
|
745 |
|
|
|
Interest expense |
|
(80) |
|
(71) |
|
(235) |
|
(224) |
|
|
|
Share of earnings (losses) of affiliates, net |
|
13 |
|
13 |
|
41 |
|
33 |
|
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
2 |
|
(18) |
|
9 |
|
(1) |
|
|
|
Other income (expense), net |
|
(46) |
|
— |
|
(46) |
|
(55) |
|
|
|
Income tax benefit (expense) |
|
(41) |
|
(38) |
|
(190) |
|
(172) |
|
|
|
Net earnings (loss) from continuing operations |
|
95 |
|
88 |
|
340 |
|
326 |
|
|
|
Net earnings (loss) from discontinued operations |
|
(4) |
|
(3) |
|
|
(15) |
|
(12) |
|
|
Net earnings (loss) |
|
91 |
|
85 |
|
|
325 |
|
314 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
8 |
|
8 |
|
27 |
|
33 |
|
|
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders |
$ |
83 |
|
77 |
|
298 |
|
281 |
|
|
|
(1) |
Includes stock-based compensation of $18 million and $22 million for the three months ended September 30, 2014 and 2013, respectively, and $66 million and $75 million for the nine months ended September 30, 2014 and 2013, respectively. |
2
SUMMARY ATTRIBUTED FINANCIAL DATA (Continued)
Ventures Group
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014 |
|
December 31, 2013 |
|
|
|
|
|
amounts in millions |
|
|||
|
Summary balance sheet data: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
873 |
|
307 |
|
|
Investments in available-for-sale securities and other cost investments |
|
$ |
1,157 |
|
1,309 |
|
|
Investments in affiliates, accounted for using the equity method |
|
$ |
899 |
|
894 |
|
|
Total assets |
|
$ |
3,583 |
|
9,984 |
|
|
Long-term debt, including current portion |
|
$ |
2,060 |
|
1,932 |
|
|
Deferred income tax liabilities, including current portion |
|
$ |
1,960 |
|
1,885 |
|
|
Net assets attributable to the Ventures Group shareholders |
|
$ |
(401) |
|
558 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
|||||
|
|
|
September 30, |
|
September 30, |
|
|||||
|
|
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
|
|
|
|
amounts in millions |
|
|||||||
|
Summary operations data: |
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
— |
|
— |
|
— |
|
— |
|
|
Selling, general and administrative expenses (1) |
|
|
8 |
|
5 |
|
17 |
|
15 |
|
|
Depreciation and amortization |
|
|
— |
|
— |
|
— |
|
— |
|
|
Operating income (loss) |
|
|
(8) |
|
(5) |
|
(17) |
|
(15) |
|
|
Interest expense |
|
|
(19) |
|
(18) |
|
(57) |
|
(71) |
|
|
Share of earnings (losses) of affiliates, net |
|
|
23 |
|
16 |
|
(3) |
|
(8) |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
16 |
|
33 |
|
(57) |
|
(48) |
|
|
Other, net |
|
|
8 |
|
5 |
|
18 |
|
19 |
|
|
Income tax benefit (expense) |
|
|
14 |
|
3 |
|
83 |
|
91 |
|
|
Net earnings (loss) from continuing operations |
|
|
34 |
|
34 |
|
(33) |
|
(32) |
|
|
Net earnings (loss) from discontinued operations |
|
|
14 |
|
12 |
|
63 |
|
52 |
|
|
Net earnings (loss) |
|
|
48 |
|
46 |
|
30 |
|
20 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
11 |
|
10 |
|
49 |
|
41 |
|
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders |
|
$ |
37 |
|
36 |
|
(19) |
|
(21) |
|
|
(1) |
Includes stock-based compensation of $2 million and $1 million for the three months ended September 30, 2014 and 2013, respectively, and $5 million and $5 million for the nine months ended September 30, 2014 and 2013, respectively. |
3
September 30, 2014
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Inter-group |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Eliminations |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
733 |
|
873 |
|
— |
|
1,606 |
|
|
Trade and other receivables, net |
|
|
797 |
|
3 |
|
— |
|
800 |
|
|
Inventory, net |
|
|
1,279 |
|
— |
|
— |
|
1,279 |
|
|
Short-term marketable securities |
|
|
16 |
|
651 |
|
— |
|
667 |
|
|
Other current assets |
|
|
256 |
|
— |
|
(169) |
|
87 |
|
|
Total current assets |
|
|
3,081 |
|
1,527 |
|
(169) |
|
4,439 |
|
|
Investments in available-for-sale securities and other cost investments (note 2) |
|
|
4 |
|
1,157 |
|
— |
|
1,161 |
|
|
Investments in affiliates, accounted for using the equity method (note 3) |
|
|
372 |
|
899 |
|
— |
|
1,271 |
|
|
Property and equipment, net |
|
|
1,131 |
|
— |
|
— |
|
1,131 |
|
|
Intangible assets not subject to amortization |
|
|
8,320 |
|
— |
|
— |
|
8,320 |
|
|
Intangible assets subject to amortization, net |
|
|
1,303 |
|
— |
|
— |
|
1,303 |
|
|
Other assets, at cost, net of accumulated amortization |
|
|
82 |
|
— |
|
— |
|
82 |
|
|
Total assets |
|
$ |
14,293 |
|
3,583 |
|
(169) |
|
17,707 |
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Intergroup payable (receivable) (note 7) |
|
$ |
55 |
|
(55) |
|
— |
|
— |
|
|
Accounts payable |
|
|
702 |
|
— |
|
— |
|
702 |
|
|
Accrued liabilities |
|
|
627 |
|
19 |
|
— |
|
646 |
|
|
Current portion of debt (note 4) |
|
|
45 |
|
927 |
|
— |
|
972 |
|
|
Current deferred tax liabilities |
|
|
— |
|
1,173 |
|
(169) |
|
1,004 |
|
|
Other current liabilities |
|
|
163 |
|
— |
|
— |
|
163 |
|
|
Total current liabilities |
|
|
1,592 |
|
2,064 |
|
(169) |
|
3,487 |
|
|
Long-term debt (note 4) |
|
|
5,390 |
|
1,133 |
|
— |
|
6,523 |
|
|
Deferred income tax liabilities |
|
|
1,041 |
|
787 |
|
— |
|
1,828 |
|
|
Other liabilities |
|
|
241 |
|
— |
|
— |
|
241 |
|
|
Total liabilities |
|
|
8,264 |
|
3,984 |
|
(169) |
|
12,079 |
|
|
Equity/Attributed net assets (liabilities) |
|
|
5,908 |
|
(401) |
|
— |
|
5,507 |
|
|
Noncontrolling interests in equity of subsidiaries |
|
|
121 |
|
— |
|
— |
|
121 |
|
|
Total liabilities and equity |
|
$ |
14,293 |
|
3,583 |
|
(169) |
|
17,707 |
|
|
|
|
|
|
|
|
|
|
|
|
|
4
STATEMENT OF OPERATIONS INFORMATION
Three months ended September 30, 2014
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
Net retail sales |
|
$ |
2,330 |
|
— |
|
2,330 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
1,488 |
|
— |
|
1,488 |
|
|
Operating, including stock-based compensation (note 5) |
|
|
203 |
|
— |
|
203 |
|
|
Selling, general and administrative, including stock-based compensation (note 5) |
|
|
226 |
|
8 |
|
234 |
|
|
Depreciation and amortization |
|
|
166 |
|
— |
|
166 |
|
|
|
|
|
2,083 |
|
8 |
|
2,091 |
|
|
Operating income (loss) |
|
|
247 |
|
(8) |
|
239 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(80) |
|
(19) |
|
(99) |
|
|
Share of earnings (losses) of affiliates, net (note 3) |
|
|
13 |
|
23 |
|
36 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
2 |
|
16 |
|
18 |
|
|
Other, net |
|
|
(46) |
|
8 |
|
(38) |
|
|
|
|
|
(111) |
|
28 |
|
(83) |
|
|
Earnings (loss) before income taxes |
|
|
136 |
|
20 |
|
156 |
|
|
Income tax benefit (expense) |
|
|
(41) |
|
14 |
|
(27) |
|
|
Net earnings (loss) from continuing operations |
|
|
95 |
|
34 |
|
129 |
|
|
Net earnings (loss) from discontinued operations, net of taxes |
|
|
(4) |
|
14 |
|
10 |
|
|
Net earnings (loss) |
|
|
91 |
|
48 |
|
139 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
8 |
|
11 |
|
19 |
|
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
83 |
|
37 |
|
120 |
|
|
|
|
|
|
|
|
|
|
|
5
STATEMENT OF OPERATIONS INFORMATION
Three months ended September 30, 2013
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
Net retail sales |
|
$ |
2,225 |
|
— |
|
2,225 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
1,423 |
|
— |
|
1,423 |
|
|
Operating, including stock-based compensation |
|
|
203 |
|
— |
|
203 |
|
|
Selling, general and administrative, including stock-based compensation (note 5) |
|
|
224 |
|
5 |
|
229 |
|
|
Impairment of long-lived assets |
|
|
19 |
|
— |
|
19 |
|
|
Depreciation and amortization |
|
|
154 |
|
— |
|
154 |
|
|
|
|
|
2,023 |
|
5 |
|
2,028 |
|
|
Operating income (loss) |
|
|
202 |
|
(5) |
|
197 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(71) |
|
(18) |
|
(89) |
|
|
Share of earnings (losses) of affiliates, net (note 3) |
|
|
13 |
|
16 |
|
29 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(18) |
|
33 |
|
15 |
|
|
Other, net |
|
|
— |
|
5 |
|
5 |
|
|
|
|
|
(76) |
|
36 |
|
(40) |
|
|
Earnings (loss) before income taxes |
|
|
126 |
|
31 |
|
157 |
|
|
Income tax benefit (expense) |
|
|
(38) |
|
3 |
|
(35) |
|
|
Net earnings (loss) from continuing operations |
|
|
88 |
|
34 |
|
122 |
|
|
Net earnings (loss) from discontinued operations, net of taxes |
|
|
(3) |
|
12 |
|
9 |
|
|
Net earnings (loss) |
|
|
85 |
|
46 |
|
131 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
8 |
|
10 |
|
18 |
|
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
77 |
|
36 |
|
113 |
|
6
STATEMENT OF OPERATIONS INFORMATION
Nine months ended September 30, 2014
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
Net retail sales |
|
$ |
7,247 |
|
— |
|
7,247 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
4,602 |
|
— |
|
4,602 |
|
|
Operating, including stock-based compensation (note 5) |
|
|
633 |
|
— |
|
633 |
|
|
Selling, general and administrative, including stock-based compensation (note 5) |
|
|
751 |
|
17 |
|
768 |
|
|
Impairment of long-lived assets |
|
|
7 |
|
— |
|
7 |
|
|
Depreciation and amortization |
|
|
493 |
|
— |
|
493 |
|
|
|
|
|
6,486 |
|
17 |
|
6,503 |
|
|
Operating income (loss) |
|
|
761 |
|
(17) |
|
744 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(235) |
|
(57) |
|
(292) |
|
|
Share of earnings (losses) of affiliates, net (note 3) |
|
|
41 |
|
(3) |
|
38 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
9 |
|
(57) |
|
(48) |
|
|
Other, net |
|
|
(46) |
|
18 |
|
(28) |
|
|
|
|
|
(231) |
|
(99) |
|
(330) |
|
|
Earnings (loss) before income taxes |
|
|
530 |
|
(116) |
|
414 |
|
|
Income tax benefit (expense) |
|
|
(190) |
|
83 |
|
(107) |
|
|
Net earnings (loss) from continuing operations |
|
|
340 |
|
(33) |
|
307 |
|
|
Net earnings (loss) from discontinued operations, net of taxes |
|
|
(15) |
|
63 |
|
48 |
|
|
Net earnings (loss) |
|
|
325 |
|
30 |
|
355 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
27 |
|
49 |
|
76 |
|
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
298 |
|
(19) |
|
279 |
|
7
STATEMENT OF OPERATIONS INFORMATION
Nine months ended September 30, 2013
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
Net retail sales |
|
$ |
7,026 |
|
— |
|
7,026 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
4,469 |
|
— |
|
4,469 |
|
|
Operating, including stock-based compensation |
|
|
611 |
|
— |
|
611 |
|
|
Selling, general and administrative, including stock-based compensation (note 5) |
|
|
719 |
|
15 |
|
734 |
|
|
Impairment of long-lived assets |
|
|
19 |
|
— |
|
19 |
|
|
Depreciation and amortization |
|
|
463 |
|
— |
|
463 |
|
|
|
|
|
6,281 |
|
15 |
|
6,296 |
|
|
Operating income (loss) |
|
|
745 |
|
(15) |
|
730 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(224) |
|
(71) |
|
(295) |
|
|
Share of earnings (losses) of affiliates, net (note 3) |
|
|
33 |
|
(8) |
|
25 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(1) |
|
(48) |
|
(49) |
|
|
Other, net |
|
|
(55) |
|
19 |
|
(36) |
|
|
|
|
|
(247) |
|
(108) |
|
(355) |
|
|
Earnings (loss) before income taxes |
|
|
498 |
|
(123) |
|
375 |
|
|
Income tax benefit (expense) |
|
|
(172) |
|
91 |
|
(81) |
|
|
Net earnings (loss) from continuing operations |
|
|
326 |
|
(32) |
|
294 |
|
|
Net earnings (loss) from discontinued operations, net of taxes |
|
|
(12) |
|
52 |
|
40 |
|
|
Net earnings (loss) |
|
|
314 |
|
20 |
|
334 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
33 |
|
41 |
|
74 |
|
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
281 |
|
(21) |
|
260 |
|
8
STATEMENT OF CASH FLOWS INFORMATION
Nine months ended September 30, 2014
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
325 |
|
30 |
|
355 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
(Earnings) loss from discontinued operations |
|
|
15 |
|
(63) |
|
(48) |
|
|
Depreciation and amortization |
|
|
493 |
|
— |
|
493 |
|
|
Stock-based compensation |
|
|
66 |
|
5 |
|
71 |
|
|
Cash payments for stock based compensation |
|
|
(13) |
|
(2) |
|
(15) |
|
|
Excess tax benefit from stock based compensation |
|
|
(10) |
|
(1) |
|
(11) |
|
|
Share of (earnings) losses of affiliates, net |
|
|
(41) |
|
3 |
|
(38) |
|
|
Cash receipts from return on equity investments |
|
|
13 |
|
18 |
|
31 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(9) |
|
57 |
|
48 |
|
|
Impairment of intangible assets |
|
|
7 |
|
— |
|
7 |
|
|
Loss on extinguishment of debt |
|
|
48 |
|
— |
|
48 |
|
|
Deferred income tax (benefit) expense |
|
|
(146) |
|
79 |
|
(67) |
|
|
Other, net |
|
|
2 |
|
1 |
|
3 |
|
|
Intergroup tax allocation |
|
|
158 |
|
(158) |
|
— |
|
|
Intergroup tax payments |
|
|
(330) |
|
330 |
|
— |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
166 |
|
(1) |
|
165 |
|
|
Payables and other current liabilities |
|
|
71 |
|
(5) |
|
66 |
|
|
Net cash provided (used) by operating activities |
|
|
815 |
|
293 |
|
1,108 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Cash proceeds from dispositions |
|
|
— |
|
40 |
|
40 |
|
|
Investments in and loans to cost and equity investees |
|
|
(3) |
|
(48) |
|
(51) |
|
|
Capital expended for property and equipment |
|
|
(142) |
|
— |
|
(142) |
|
|
Purchases of short term and other marketable securities |
|
|
(59) |
|
(364) |
|
(423) |
|
|
Sales of short term and other marketable securities |
|
|
43 |
|
315 |
|
358 |
|
|
Other investing activities, net |
|
|
(28) |
|
16 |
|
(12) |
|
|
Net cash provided (used) by investing activities |
|
|
(189) |
|
(41) |
|
(230) |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
3,233 |
|
— |
|
3,233 |
|
|
Repayments of debt |
|
|
(2,910) |
|
(10) |
|
(2,920) |
|
|
Repurchases of Liberty common stock |
|
|
(736) |
|
— |
|
(736) |
|
|
Minimum withholding taxes on net settlements of stock-based compensation |
|
|
(16) |
|
— |
|
(16) |
|
|
Excess tax benefit from stock-based compensation |
|
|
10 |
|
1 |
|
11 |
|
|
Reattribution of subsidiary |
|
|
25 |
|
(25) |
|
— |
|
|
Other financing activities, net |
|
|
(49) |
|
— |
|
(49) |
|
|
Net cash provided (used) by financing activities |
|
|
(443) |
|
(34) |
|
(477) |
|
|
Net cash provided (used) by discontinued operations: |
|
|
|
|
|
|
|
|
|
Operating |
|
|
(20) |
|
293 |
|
273 |
|
|
Investing |
|
|
— |
|
(194) |
|
(194) |
|
|
Financing |
|
|
3 |
|
368 |
|
371 |
|
|
Change in available cash held by discontinued operations |
|
|
3 |
|
(119) |
|
(116) |
|
|
Net cash provided (used) by discontinued operations |
|
|
(14) |
|
348 |
|
334 |
|
|
Effect of foreign currency rates on cash |
|
|
(31) |
|
— |
|
(31) |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
138 |
|
566 |
|
704 |
|
|
Cash and cash equivalents at beginning of period |
|
|
595 |
|
307 |
|
902 |
|
|
Cash and cash equivalents at end period |
|
$ |
733 |
|
873 |
|
1,606 |
|
|
|
|
|
|
|
|
|
|
|
9
STATEMENT OF CASH FLOWS INFORMATION
Nine months ended September 30, 2013
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
Interactive |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
314 |
|
20 |
|
334 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
(Earnings) loss from discontinued operations |
|
|
12 |
|
(52) |
|
(40) |
|
|
Depreciation and amortization |
|
|
463 |
|
— |
|
463 |
|
|
Stock-based compensation |
|
|
75 |
|
5 |
|
80 |
|
|
Cash payments for stock based compensation |
|
|
(8) |
|
— |
|
(8) |
|
|
Excess tax benefit from stock-based compensation |
|
|
(9) |
|
— |
|
(9) |
|
|
Share of losses (earnings) of affiliates, net |
|
|
(33) |
|
8 |
|
(25) |
|
|
Cash receipts from return on equity investments |
|
|
11 |
|
14 |
|
25 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
1 |
|
48 |
|
49 |
|
|
Gains (losses) on dispositions of assets |
|
|
— |
|
1 |
|
1 |
|
|
Impairment of intangible assets |
|
|
19 |
|
— |
|
19 |
|
|
Deferred income tax (benefit) expense |
|
|
(143) |
|
(42) |
|
(185) |
|
|
Other, net |
|
|
59 |
|
11 |
|
70 |
|
|
Intergroup tax allocation |
|
|
49 |
|
(49) |
|
— |
|
|
Intergroup tax payments |
|
|
30 |
|
(30) |
|
— |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
99 |
|
(5) |
|
94 |
|
|
Payables and other current liabilities |
|
|
(373) |
|
40 |
|
(333) |
|
|
Net cash provided (used) by operating activities |
|
|
566 |
|
(31) |
|
535 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Cash proceeds from dispositions |
|
|
— |
|
1,136 |
|
1,136 |
|
|
Investments in and loans to cost and equity investees |
|
|
(4) |
|
(367) |
|
(371) |
|
|
Capital expended for property and equipment |
|
|
(176) |
|
— |
|
(176) |
|
|
Purchases of short term and other marketable securities |
|
|
— |
|
(1,013) |
|
(1,013) |
|
|
Sales of short term and other marketable securities |
|
|
— |
|
454 |
|
454 |
|
|
Other investing activities, net |
|
|
(14) |
|
(3) |
|
(17) |
|
|
Net cash provided (used) by investing activities |
|
|
(194) |
|
207 |
|
13 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
2,867 |
|
843 |
|
3,710 |
|
|
Repayments of debt |
|
|
(2,642) |
|
(2,362) |
|
(5,004) |
|
|
Repurchases of Liberty Interactive common stock |
|
|
(750) |
|
— |
|
(750) |
|
|
Minimum withholding taxes on net settlements of stock-based compensation |
|
|
(22) |
|
— |
|
(22) |
|
|
Excess tax benefit from stock-based compensation |
|
|
9 |
|
— |
|
9 |
|
|
Intergroup receipts (payments), net |
|
|
— |
|
— |
|
— |
|
|
Other financing activities, net |
|
|
(39) |
|
— |
|
(39) |
|
|
Net cash provided (used) by financing activities |
|
|
(577) |
|
(1,519) |
|
(2,096) |
|
|
Net cash provided (used) by discontinued operations: |
|
|
|
|
|
|
|
|
|
Operating |
|
|
(11) |
|
241 |
|
230 |
|
|
Investing |
|
|
(7) |
|
(174) |
|
(181) |
|
|
Financing |
|
|
— |
|
(159) |
|
(159) |
|
|
Change in available cash held by discontinued operations |
|
|
(4) |
|
92 |
|
88 |
|
|
Net cash provided (used) by discontinued operations |
|
|
(22) |
|
— |
|
(22) |
|
|
Effect of foreign currency rates on cash |
|
|
(21) |
|
— |
|
(21) |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
(248) |
|
(1,343) |
|
(1,591) |
|
|
Cash and cash equivalents at beginning of period |
|
|
698 |
|
1,593 |
|
2,291 |
|
|
Cash and cash equivalents at end period |
|
$ |
450 |
|
250 |
|
700 |
|
|
|
|
|
|
|
|
|
|
|
Notes to Attributed Financial Information
(unaudited)
|
(1) |
At September 30, 2014, the Interactive Group is comprised of our consolidated subsidiaries QVC, Inc., Provide Commerce, Inc., Backcountry.com, Inc., Bodybuilding.com, LLC, Evite and CommerceHub and our interest in HSN, Inc. Accordingly, the accompanying attributed financial information for the Interactive Group includes the foregoing investments, as well as the assets, liabilities, revenue, expenses and cash flows of those consolidated subsidiaries. We have also attributed certain of our debt obligations (and related interest expense) to the Interactive Group based upon a number of factors, including the cash flow available to the Interactive Group and its ability to pay debt service and our assessment of the optimal capitalization for the Interactive Group. The specific debt obligations attributed to each of the Interactive Group and the Ventures Group are described in note 4 below. In addition, we have allocated certain corporate general and administrative expenses among the Interactive Group and the Ventures Group as described in note 5 below. |
At September 30, 2014, 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.
At September 30, 2014, the Ventures Group consists of all of our businesses not included in the Interactive Group including our interests in equity method investments of Expedia, Inc., Interval Leisure Group, Inc. and Tree.com, Inc. and available-for-sale securities Time Warner Inc. and Time Warner Cable Inc. Accordingly, the accompanying attributed financial information for the Ventures Group includes these investments. In addition, we have attributed to the Ventures Group all of our senior exchangeable debentures (and related interest expense). See note 4 below for the debt obligations attributed to the Ventures Group.
Any businesses that we may acquire in the future that we do not attribute to the Interactive Group will be attributed to the Ventures Group.
|
(2) |
Investments in available-for-sale securities, including non-strategic securities, and other cost investments are summarized as follows: |
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
|
|
2014 |
|
2013 |
|
|
|
|
|
amounts in millions |
|
|||
|
Interactive Group |
|
|
|
|
|
|
|
Other |
|
$ |
4 |
|
4 |
|
|
Total Interactive Group |
|
|
4 |
|
4 |
|
|
Ventures Group |
|
|
|
|
|
|
|
Time Warner Inc. |
|
|
330 |
|
306 |
|
|
Time Warner Cable Inc. |
|
|
785 |
|
741 |
|
|
Other |
|
|
42 |
|
262 |
|
|
Total Ventures Group |
|
|
1,157 |
|
1,309 |
|
|
Consolidated Liberty |
|
$ |
1,161 |
|
1,313 |
|
10
|
(3) |
The following table presents information regarding certain equity method investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of earnings (losses) |
|
||||||
|
|
|
September 30, 2014 |
|
Three months ended |
|
Six months ended |
|
||||||||||
|
|
|
Percentage |
|
Carrying |
|
Market |
|
September 30, |
|
September 30, |
|
||||||
|
|
|
ownership |
|
value |
|
value |
|
2014 |
|
2013 |
|
2014 |
|
2013 |
|
||
|
|
|
dollar amounts in millions |
|
||||||||||||||
|
Interactive Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HSN, Inc. |
|
38 |
% |
|
$ |
322 |
|
1,228 |
|
15 |
|
15 |
|
46 |
|
46 |
|
|
Other |
|
various |
|
|
|
50 |
|
NA |
|
(2) |
|
(2) |
|
(5) |
|
(13) |
|
|
Total Interactive Group |
|
|
|
|
|
372 |
|
|
|
13 |
|
13 |
|
41 |
|
33 |
|
|
Ventures Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expedia, Inc. |
|
18 |
% |
|
|
501 |
|
2,022 |
|
38 |
|
27 |
|
42 |
|
17 |
|
|
Other |
|
various |
|
|
|
398 |
|
NA |
|
(15) |
|
(11) |
|
(45) |
|
(25) |
|
|
Total Ventures Group |
|
|
|
|
|
899 |
|
|
|
23 |
|
16 |
|
(3) |
|
(8) |
|
|
Consolidated Liberty |
|
|
|
|
$ |
1,271 |
|
|
|
36 |
|
29 |
|
38 |
|
25 |
|
|
(4) |
Debt attributed to the Interactive Group and the Ventures Group is comprised of the following: |
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2014 |
|
||||
|
|
|
Outstanding |
|
Carrying |
|
||
|
|
|
principal |
|
value |
|
||
|
|
|
amounts in millions |
|
||||
|
Interactive Group |
|
|
|
|
|
|
|
|
8.5% Senior Debentures due 2029 |
|
$ |
287 |
|
|
285 |
|
|
8.25% Senior Debentures due 2030 |
|
|
504 |
|
|
501 |
|
|
1% Exchangeable Senior Debentures due 2043 |
|
|
400 |
|
|
414 |
|
|
QVC 7.5% Senior Secured Notes due 2019 |
|
|
— |
|
|
— |
|
|
QVC 3.125% Senior Secured Notes due 2019 |
|
|
400 |
|
|
399 |
|
|
QVC 7.375% Senior Secured Notes due 2020 |
|
|
500 |
|
|
500 |
|
|
QVC 5.125% Senior Secured Notes due 2022 |
|
|
500 |
|
|
500 |
|
|
QVC 4.375% Senior Secured Notes due 2023 |
|
|
750 |
|
|
750 |
|
|
QVC 4.850% Senior Secured Notes due 2024 |
|
|
600 |
|
|
600 |
|
|
QVC 4.45% Senior Secured Notes due 2025 |
|
|
600 |
|
|
599 |
|
|
QVC 5.45% Senior Secured Notes due 2034 |
|
|
400 |
|
|
399 |
|
|
QVC 5.95% Senior Secured Notes due 2043 |
|
|
300 |
|
|
300 |
|
|
QVC Bank Credit Facilities |
|
|
32 |
|
|
32 |
|
|
Other subsidiary debt |
|
|
157 |
|
|
156 |
|
|
Total Interactive Group debt |
|
|
5,430 |
|
|
5,435 |
|
|
Ventures Group |
|
|
|
|
|
|
|
|
4% Exchangeable Senior Debentures due 2029 |
|
|
439 |
|
|
305 |
|
|
3.75% Exchangeable Senior Debentures due 2030 |
|
|
438 |
|
|
293 |
|
|
3.5% Exchangeable Senior Debentures due 2031 |
|
|
355 |
|
|
329 |
|
|
0.75% Exchangeable Senior Debentures due 2043 |
|
|
850 |
|
|
1,133 |
|
|
Total Ventures Group debt |
|
|
2,082 |
|
|
2,060 |
|
|
Total consolidated Liberty debt |
|
$ |
7,512 |
|
|
7,495 |
|
|
Less current maturities |
|
|
|
|
|
(972) |
|
|
Total long-term debt |
|
|
|
|
$ |
6,523 |
|
11
|
(5) |
Cash compensation expense for our corporate employees will be allocated between the Interactive Group and the Ventures Group based on the estimated percentage of time spent providing services for each group. On a semi-annual basis, estimated time spent will be determined through an interview process and a review of personnel duties unless transactions significantly change the composition of companies and investments in either respective group, which would require a more timely reevaluation of estimated time spent. Other general and administrative expenses will be charged directly to the groups whenever possible and are otherwise allocated based on estimated usage or some other reasonably determined methodology. Amounts allocated from the Interactive Group to the Ventures Group were determined to be $6 million and $5 million for the three months ended September 30, 2014 and 2013, respectively, and $12 million and $15 million for the nine months ended September 30, 2014 and 2013, respectively. We note that stock compensation related to each tracking stock group is determined based on actual options outstanding for each respective tracking stock group. |
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.
|
(6) |
The Liberty Interactive common stock and the Liberty Ventures common stock have voting and conversion rights under our restated charter. Following is a summary of those rights. Holders of Series A common stock of each group are entitled to one vote per share, and holders of Series B common stock of each group are entitled to ten votes per share. Holders of Series C common stock of each group, if issued, are entitled to 1/100th of a vote per share in certain limited cases and will otherwise not be entitled to vote. In general, holders of Series A and Series B common stock will vote as a single class. In certain limited circumstances, the board may elect to seek the approval of the holders of only Series A and Series B Liberty Interactive common stock or the approval of the holders of only Series A and Series B Liberty Ventures common stock. |
At the option of the holder, each share of Series B common stock will be 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 the other group.
(7)The intergroup payable (receivable) is primarily attributable to an allocation of intergroup income taxes payable from the Interactive Group to the Ventures Group.
12