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 

 

 

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

 

 

(18)

 

 

(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

 

 

 

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)

 

 

 

 

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

 

 

 

 

18 

 

19 

 

Income tax benefit (expense)

 

 

14 

 

 

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


 

 

BALANCE SHEET INFORMATION

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 

 

 

 

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)

 

 

 

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 

 

 

234 

 

Depreciation and amortization

 

 

166 

 

 —

 

166 

 

 

 

 

2,083 

 

 

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

 

 

 

16 

 

18 

 

Other, net

 

 

(46)

 

 

(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

 

 

 

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 

 

 

229 

 

Impairment of long-lived assets

 

 

19 

 

 —

 

19 

 

Depreciation and amortization

 

 

154 

 

 —

 

154 

 

 

 

 

2,023 

 

 

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

 

 

 —

 

 

 

 

 

 

(76)

 

36 

 

(40)

 

Earnings (loss) before income taxes

 

 

126 

 

31 

 

157 

 

Income tax benefit (expense)

 

 

(38)

 

 

(35)

 

Net earnings (loss) from continuing operations

 

 

88 

 

34 

 

122 

 

Net earnings (loss) from discontinued operations, net of taxes

 

 

(3)

 

12 

 

 

Net earnings (loss)

 

 

85 

 

46 

 

131 

 

Less net earnings (loss) attributable to noncontrolling interests

 

 

 

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

 

 

 

 —

 

 

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

 

 

 

(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 

 

 

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)

 

 

(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

 

 

 

 —

 

 

Loss on extinguishment of debt

 

 

48 

 

 —

 

48 

 

Deferred income tax (benefit) expense

 

 

(146)

 

79 

 

(67)

 

Other, net

 

 

 

 

 

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 

 

 

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

 

 

 

368 

 

371 

 

Change in available cash held by discontinued operations

 

 

 

(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 

 

 

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)

 

 

(25)

 

Cash receipts from return on equity investments

 

 

11 

 

14 

 

25 

 

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

 

 

 

48 

 

49 

 

Gains (losses) on dispositions of assets

 

 

 —

 

 

 

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

 

 

 

 —

 

 

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

 

$

 

 

Total Interactive Group

 

 

 

 

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