Unaudited Attributed Financial Information for Tracking Stock Groups
The following tables present our assets and liabilities as of March 31, 2015, revenue and expenses for the three months ended March 31, 2015 and 2014 and cash flows for the three months ended March 31, 2015 and 2014. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the QVC 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 2015 included in this Quarterly Report on Form 10-Q.
As discussed in note 2 to the accompanying condensed consolidated financial statements, on October 3, 2014, the QVC Group (referred to as the “Interactive Group” prior to the reattribution) attributed to the Ventures Group its Digital Commerce companies (defined below), which were valued at $1.5 billion, and approximately $1 billion in cash. In return, Liberty Interactive common stock shareholders received a dividend of approximately 67.7 million shares of Liberty Ventures common stock, or 0.14217 of a Liberty Ventures share for each share of Liberty Interactive 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. The reattributed Digital Commerce companies were comprised of Liberty’s consolidated subsidiaries Backcountry.com, Bodybuilding.com, LLC, Provide Commerce, Inc. (“Provide”), CommerceHub, Evite.com and Right Start (collectively, the “Digital Commerce” companies). Following the reattribution, the name of the Interactive Group is now referred to as the QVC Group. Other than the issuance of Liberty Ventures shares in the fourth quarter of 2014, the reattribution had no consolidated impact on Liberty. The reattribution is reflected in Liberty’s condensed consolidated financial statements and attributed financial information on a prospective basis, with October 1, 2014 used as a proxy for the date of the reattribution.
Additionally, as discussed in note 2 and note 8 of the accompanying condensed consolidated financial statements, Liberty’s former wholly-owned subsidiary, Provide, was included in the Digital Commerce companies prior to the sale to FTD Companies, Inc. (“FTD”) on December 31, 2014, in exchange for cash and shares of FTD common stock representing approximately 35% of the combined company. Subsequent to this transaction, the Company’s interest in FTD, accounted for under the equity method, is included in the Digital Commerce companies. Given Liberty’s significant continuing involvement with FTD, Provide is not presented as a discontinued operation in the Company’s condensed consolidated financial statements.
As of March 31, 2015, our Liberty Interactive common stock is intended to reflect the separate performance of our QVC Group which, subsequent to the reattribution, is comprised of our consolidated subsidiary, QVC, Inc. (“QVC”) and our approximate 38% interest in HSN, Inc. As of March 31, 2015, our Liberty Ventures common stock is intended to reflect the separate performance of our Ventures Group which, subsequent to the reattribution, consists of our Digital Commerce businesses and our interests in equity method investments of Expedia, Inc., FTD, Interval Leisure Group, Inc. and LendingTree, Inc. and available-for-sale securities Time Warner Inc. and Time Warner Cable Inc.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the QVC 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
QVC Group
|
|
|
|
|
|
|
|
|
|
|
March 31, 2015 |
|
December 31, 2014 |
|
|
|
|
|
amounts in millions |
|
|||
|
Summary balance sheet data: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
530 |
|
422 |
|
|
Trade and other receivables, net |
|
$ |
836 |
|
1,196 |
|
|
Inventory |
|
$ |
966 |
|
882 |
|
|
Investments in affiliates, accounted for using the equity method |
|
$ |
193 |
|
375 |
|
|
Total assets |
|
$ |
12,481 |
|
13,012 |
|
|
Long-term debt |
|
$ |
5,740 |
|
5,851 |
|
|
Deferred income tax liabilities |
|
$ |
936 |
|
1,033 |
|
|
Net assets attributable to Liberty Interactive common stock shareholders |
|
$ |
4,231 |
|
4,280 |
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|||
|
|
March 31, |
|
|||
|
|
2015 |
|
2014 |
|
|
|
|
amounts in millions |
|
|||
|
Summary operations data: |
|
|
|
|
|
|
Revenue |
$ |
1,938 |
|
2,434 |
|
|
Cost of sales |
|
1,221 |
|
1,556 |
|
|
Operating expenses |
|
169 |
|
213 |
|
|
Selling, general and administrative expenses (1) |
|
159 |
|
253 |
|
|
Depreciation and amortization |
|
152 |
|
162 |
|
|
Operating income (loss) |
|
237 |
|
250 |
|
|
Interest expense |
|
(75) |
|
(76) |
|
|
Share of earnings (losses) of affiliates, net |
|
24 |
|
21 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
(10) |
|
1 |
|
|
Other income (expense), net |
|
8 |
|
1 |
|
|
Income tax benefit (expense) |
|
(24) |
|
(73) |
|
|
Net earnings (loss) from continuing operations |
|
160 |
|
124 |
|
|
Net earnings (loss) from discontinued operations |
|
— |
|
(4) |
|
|
Net earnings (loss) |
|
160 |
|
120 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
9 |
|
10 |
|
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders |
$ |
151 |
|
110 |
|
|
(1) |
Includes stock-based compensation of $12 million and $24 million for the three months ended March 31, 2015 and 2014, respectively. |
2
SUMMARY ATTRIBUTED FINANCIAL DATA (Continued)
Ventures Group
|
|
|
|
|
|
|
|
|
|
|
March 31, 2015 |
|
December 31, 2014 |
|
|
|
|
|
amounts in millions |
|
|||
|
Summary balance sheet data: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,820 |
|
1,884 |
|
|
Investments in available-for-sale securities and other cost investments |
|
$ |
1,232 |
|
1,220 |
|
|
Investments in affiliates, accounted for using the equity method |
|
$ |
1,226 |
|
1,258 |
|
|
Total assets |
|
$ |
5,726 |
|
5,828 |
|
|
Long-term debt, including current portion |
|
$ |
2,172 |
|
1,254 |
|
|
Deferred income tax liabilities, including current portion |
|
$ |
1,999 |
|
1,987 |
|
|
Net assets attributable to Liberty Ventures common stock shareholders |
|
$ |
1,378 |
|
1,393 |
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|||
|
|
|
March 31, |
|
|||
|
|
|
2015 |
|
2014 |
|
|
|
|
|
amounts in millions |
|
|||
|
Summary operations data: |
|
|
|
|
|
|
|
Revenue |
|
$ |
276 |
|
— |
|
|
Cost of sales |
|
|
194 |
|
— |
|
|
Operating, including stock-based compensation |
|
|
22 |
|
— |
|
|
Selling, general and administrative expenses (1) |
|
|
45 |
|
3 |
|
|
Depreciation and amortization |
|
|
16 |
|
1 |
|
|
Operating income (loss) |
|
|
(1) |
|
(4) |
|
|
Interest expense |
|
|
(20) |
|
(19) |
|
|
Share of earnings (losses) of affiliates, net |
|
|
(21) |
|
(23) |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
6 |
|
(26) |
|
|
Other, net |
|
|
7 |
|
6 |
|
|
Income tax benefit (expense) |
|
|
21 |
|
33 |
|
|
Net earnings (loss) from continuing operations |
|
|
(8) |
|
(33) |
|
|
Net earnings (loss) from discontinued operations |
|
|
— |
|
23 |
|
|
Net earnings (loss) |
|
|
(8) |
|
(10) |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
— |
|
18 |
|
|
Net earnings (loss) attributable to Liberty Interactive Corporation shareholders |
|
$ |
(8) |
|
(28) |
|
|
(1) |
Includes stock-based compensation of $3 million and $1 million for the three months ended March 31, 2015 and 2014, respectively. |
3
March 31, 2015
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|
|
|||
|
|
|
QVC |
|
Ventures |
|
Inter-group |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Eliminations |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||||
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
530 |
|
1,820 |
|
— |
|
2,350 |
|
|
Trade and other receivables, net |
|
|
836 |
|
31 |
|
— |
|
867 |
|
|
Inventory, net |
|
|
966 |
|
153 |
|
— |
|
1,119 |
|
|
Short-term marketable securities |
|
|
9 |
|
851 |
|
— |
|
860 |
|
|
Other current assets |
|
|
269 |
|
11 |
|
(205) |
|
75 |
|
|
Total current assets |
|
|
2,610 |
|
2,866 |
|
(205) |
|
5,271 |
|
|
Investments in available-for-sale securities and other cost investments (note 2) |
|
|
4 |
|
1,232 |
|
— |
|
1,236 |
|
|
Investments in affiliates, accounted for using the equity method (note 3) |
|
|
193 |
|
1,226 |
|
— |
|
1,419 |
|
|
Property and equipment, net |
|
|
971 |
|
67 |
|
— |
|
1,038 |
|
|
Intangible assets not subject to amortization |
|
|
7,576 |
|
268 |
|
— |
|
7,844 |
|
|
Intangible assets subject to amortization, net |
|
|
1,061 |
|
61 |
|
— |
|
1,122 |
|
|
Other assets, at cost, net of accumulated amortization |
|
|
66 |
|
6 |
|
— |
|
72 |
|
|
Total assets |
|
$ |
12,481 |
|
5,726 |
|
(205) |
|
18,002 |
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Intergroup payable (receivable) (note 7) |
|
$ |
47 |
|
(47) |
|
— |
|
— |
|
|
Accounts payable |
|
|
554 |
|
85 |
|
— |
|
639 |
|
|
Accrued liabilities |
|
|
543 |
|
48 |
|
— |
|
591 |
|
|
Current portion of debt (note 4) |
|
|
8 |
|
931 |
|
— |
|
939 |
|
|
Current deferred tax liabilities |
|
|
— |
|
1,196 |
|
(205) |
|
991 |
|
|
Other current liabilities |
|
|
163 |
|
73 |
|
— |
|
236 |
|
|
Total current liabilities |
|
|
1,315 |
|
2,286 |
|
(205) |
|
3,396 |
|
|
Long-term debt (note 4) |
|
|
5,740 |
|
1,241 |
|
— |
|
6,981 |
|
|
Deferred income tax liabilities |
|
|
936 |
|
803 |
|
— |
|
1,739 |
|
|
Other liabilities |
|
|
169 |
|
12 |
|
— |
|
181 |
|
|
Total liabilities |
|
|
8,160 |
|
4,342 |
|
(205) |
|
12,297 |
|
|
Equity/Attributed net assets (liabilities) |
|
|
4,231 |
|
1,378 |
|
— |
|
5,609 |
|
|
Noncontrolling interests in equity of subsidiaries |
|
|
90 |
|
6 |
|
— |
|
96 |
|
|
Total liabilities and equity |
|
$ |
12,481 |
|
5,726 |
|
(205) |
|
18,002 |
|
|
|
|
|
|
|
|
|
|
|
|
|
4
STATEMENT OF OPERATIONS INFORMATION
Three months ended March 31, 2015
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
QVC |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
Net retail sales |
|
$ |
1,938 |
|
276 |
|
2,214 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
1,221 |
|
194 |
|
1,415 |
|
|
Operating, including stock-based compensation (note 5) |
|
|
169 |
|
22 |
|
191 |
|
|
Selling, general and administrative, including stock-based compensation (note 5) |
|
|
159 |
|
45 |
|
204 |
|
|
Depreciation and amortization |
|
|
152 |
|
16 |
|
168 |
|
|
|
|
|
1,701 |
|
277 |
|
1,978 |
|
|
Operating income (loss) |
|
|
237 |
|
(1) |
|
236 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(75) |
|
(20) |
|
(95) |
|
|
Share of earnings (losses) of affiliates, net (note 3) |
|
|
24 |
|
(21) |
|
3 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(10) |
|
6 |
|
(4) |
|
|
Other, net |
|
|
8 |
|
7 |
|
15 |
|
|
|
|
|
(53) |
|
(28) |
|
(81) |
|
|
Earnings (loss) before income taxes |
|
|
184 |
|
(29) |
|
155 |
|
|
Income tax benefit (expense) |
|
|
(24) |
|
21 |
|
(3) |
|
|
Net earnings (loss) |
|
|
160 |
|
(8) |
|
152 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
9 |
|
— |
|
9 |
|
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
151 |
|
(8) |
|
143 |
|
|
|
|
|
|
|
|
|
|
|
5
STATEMENT OF OPERATIONS INFORMATION
Three months ended March 31, 2014
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
QVC |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
Net retail sales |
|
$ |
2,434 |
|
— |
|
2,434 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and expenses: |
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
1,556 |
|
— |
|
1,556 |
|
|
Operating, including stock-based compensation |
|
|
213 |
|
— |
|
213 |
|
|
Selling, general and administrative, including stock-based compensation (note 5) |
|
|
253 |
|
3 |
|
256 |
|
|
Depreciation and amortization |
|
|
162 |
|
1 |
|
163 |
|
|
|
|
|
2,184 |
|
4 |
|
2,188 |
|
|
Operating income (loss) |
|
|
250 |
|
(4) |
|
246 |
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(76) |
|
(19) |
|
(95) |
|
|
Share of earnings (losses) of affiliates, net (note 3) |
|
|
21 |
|
(23) |
|
(2) |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
1 |
|
(26) |
|
(25) |
|
|
Other, net |
|
|
1 |
|
6 |
|
7 |
|
|
|
|
|
(53) |
|
(62) |
|
(115) |
|
|
Earnings (loss) from continuing operations before income taxes |
|
|
197 |
|
(66) |
|
131 |
|
|
Income tax benefit (expense) |
|
|
(73) |
|
33 |
|
(40) |
|
|
Net earnings (loss) from continuing operations |
|
|
124 |
|
(33) |
|
91 |
|
|
Earnings (loss) from discontinued operations, net of taxes |
|
|
(4) |
|
23 |
|
19 |
|
|
Net earnings (loss) |
|
|
120 |
|
(10) |
|
110 |
|
|
Less net earnings (loss) attributable to noncontrolling interests |
|
|
10 |
|
18 |
|
28 |
|
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
110 |
|
(28) |
|
82 |
|
6
STATEMENT OF CASH FLOWS INFORMATION
Three months ended March 31, 2015
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
QVC |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
160 |
|
(8) |
|
152 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
152 |
|
16 |
|
168 |
|
|
Stock-based compensation |
|
|
12 |
|
3 |
|
15 |
|
|
Cash payments for stock based compensation |
|
|
— |
|
(2) |
|
(2) |
|
|
Excess tax benefit from stock based compensation |
|
|
(13) |
|
— |
|
(13) |
|
|
Share of (earnings) losses of affiliates, net |
|
|
(24) |
|
21 |
|
(3) |
|
|
Cash receipts from return on equity investments |
|
|
7 |
|
6 |
|
13 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
10 |
|
(6) |
|
4 |
|
|
Deferred income tax (benefit) expense |
|
|
(79) |
|
25 |
|
(54) |
|
|
Other, net |
|
|
(9) |
|
1 |
|
(8) |
|
|
Intergroup tax allocation |
|
|
47 |
|
(47) |
|
— |
|
|
Intergroup tax (payments) receipts |
|
|
(6) |
|
6 |
|
— |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
238 |
|
20 |
|
258 |
|
|
Payables and other current liabilities |
|
|
(268) |
|
(42) |
|
(310) |
|
|
Net cash provided (used) by operating activities |
|
|
227 |
|
(7) |
|
220 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Cash paid for acquisitions |
|
|
— |
|
(20) |
|
(20) |
|
|
Investments in and loans to cost and equity investees |
|
|
(1) |
|
(44) |
|
(45) |
|
|
Cash receipts from returns of equity investments |
|
|
200 |
|
— |
|
200 |
|
|
Capital expended for property and equipment |
|
|
(31) |
|
(13) |
|
(44) |
|
|
Purchases of short term and other marketable securities |
|
|
(54) |
|
(233) |
|
(287) |
|
|
Sales of short term and other marketable securities |
|
|
66 |
|
247 |
|
313 |
|
|
Other investing activities, net |
|
|
(44) |
|
— |
|
(44) |
|
|
Net cash provided (used) by investing activities |
|
|
136 |
|
(63) |
|
73 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
351 |
|
180 |
|
531 |
|
|
Repayments of debt |
|
|
(466) |
|
(176) |
|
(642) |
|
|
Repurchases of Liberty common stock |
|
|
(123) |
|
— |
|
(123) |
|
|
Minimum withholding taxes on net settlements of stock-based compensation |
|
|
(12) |
|
1 |
|
(11) |
|
|
Excess tax benefit from stock-based compensation |
|
|
13 |
|
— |
|
13 |
|
|
Other financing activities, net |
|
|
(8) |
|
1 |
|
(7) |
|
|
Net cash provided (used) by financing activities |
|
|
(245) |
|
6 |
|
(239) |
|
|
Effect of foreign currency rates on cash |
|
|
(10) |
|
— |
|
(10) |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
108 |
|
(64) |
|
44 |
|
|
Cash and cash equivalents at beginning of period |
|
|
422 |
|
1,884 |
|
2,306 |
|
|
Cash and cash equivalents at end period |
|
$ |
530 |
|
1,820 |
|
2,350 |
|
|
|
|
|
|
|
|
|
|
|
7
STATEMENT OF CASH FLOWS INFORMATION
Three months ended March 31, 2014
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributed (note 1) |
|
|
|
|||
|
|
|
QVC |
|
Ventures |
|
Consolidated |
|
|
|
|
|
Group |
|
Group |
|
Liberty |
|
|
|
|
|
amounts in millions |
|
|||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
120 |
|
(10) |
|
110 |
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
(Earnings) loss from discontinued operations |
|
|
4 |
|
(23) |
|
(19) |
|
|
Depreciation and amortization |
|
|
162 |
|
1 |
|
163 |
|
|
Stock-based compensation |
|
|
24 |
|
1 |
|
25 |
|
|
Cash payments for stock based compensation |
|
|
(3) |
|
(1) |
|
(4) |
|
|
Excess tax benefit from stock-based compensation |
|
|
(8) |
|
— |
|
(8) |
|
|
Share of losses (earnings) of affiliates, net |
|
|
(21) |
|
23 |
|
2 |
|
|
Cash receipts from return on equity investments |
|
|
5 |
|
5 |
|
10 |
|
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(1) |
|
26 |
|
25 |
|
|
Deferred income tax (benefit) expense |
|
|
(49) |
|
17 |
|
(32) |
|
|
Other, net |
|
|
1 |
|
(1) |
|
— |
|
|
Intergroup tax allocation |
|
|
50 |
|
(50) |
|
— |
|
|
Intergroup tax (payments) receipts |
|
|
(225) |
|
225 |
|
— |
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
175 |
|
1 |
|
176 |
|
|
Payables and other current liabilities |
|
|
(54) |
|
3 |
|
(51) |
|
|
Net cash provided (used) by operating activities |
|
|
180 |
|
217 |
|
397 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Cash proceeds from dispositions |
|
|
— |
|
25 |
|
25 |
|
|
Investments in and loans to cost and equity investees |
|
|
— |
|
(18) |
|
(18) |
|
|
Capital expended for property and equipment |
|
|
(41) |
|
— |
|
(41) |
|
|
Purchases of short term and other marketable securities |
|
|
— |
|
(106) |
|
(106) |
|
|
Sales of short term and other marketable securities |
|
|
— |
|
68 |
|
68 |
|
|
Other investing activities, net |
|
|
(9) |
|
1 |
|
(8) |
|
|
Net cash provided (used) by investing activities |
|
|
(50) |
|
(30) |
|
(80) |
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
1,551 |
|
— |
|
1,551 |
|
|
Repayments of debt |
|
|
(1,347) |
|
(5) |
|
(1,352) |
|
|
Repurchases of Liberty Interactive common stock |
|
|
(213) |
|
— |
|
(213) |
|
|
Minimum withholding taxes on net settlements of stock-based compensation |
|
|
(6) |
|
(2) |
|
(8) |
|
|
Excess tax benefit from stock-based compensation |
|
|
8 |
|
— |
|
8 |
|
|
Intergroup receipts (payments), net |
|
|
2 |
|
(2) |
|
— |
|
|
Other financing activities, net |
|
|
(35) |
|
(2) |
|
(37) |
|
|
Net cash provided (used) by financing activities |
|
|
(40) |
|
(11) |
|
(51) |
|
|
Net cash provided (used) by discontinued operations: |
|
|
|
|
|
|
|
|
|
Operating |
|
|
(6) |
|
135 |
|
129 |
|
|
Investing |
|
|
(1) |
|
(153) |
|
(154) |
|
|
Financing |
|
|
— |
|
(13) |
|
(13) |
|
|
Change in available cash held by discontinued operations |
|
|
1 |
|
31 |
|
32 |
|
|
Net cash provided (used) by discontinued operations |
|
|
(6) |
|
— |
|
(6) |
|
|
Effect of foreign currency rates on cash |
|
|
— |
|
— |
|
— |
|
|
Net increase (decrease) in cash and cash equivalents |
|
|
84 |
|
176 |
|
260 |
|
|
Cash and cash equivalents at beginning of period |
|
|
595 |
|
307 |
|
902 |
|
|
Cash and cash equivalents at end period |
|
$ |
679 |
|
483 |
|
1,162 |
|
|
|
|
|
|
|
|
|
|
|
8
Notes to Attributed Financial Information
(unaudited)
|
(1) |
At March 31, 2015, the QVC Group is comprised of our consolidated subsidiary, QVC, and our approximate 38% interest in HSN, Inc., accounted for under the equity method. Accordingly, the accompanying attributed financial information for the QVC Group includes the foregoing investment, as well as the assets, liabilities, revenue, expenses and cash flows of QVC. We have also attributed certain of our debt obligations (and related interest expense) to the QVC Group based upon a number of factors, including the cash flow available to the QVC Group and its ability to pay debt service and our assessment of the optimal capitalization for the QVC Group. The specific debt obligations attributed to each of the QVC Group and the Ventures Group are described in note 4 below. In addition, we have allocated certain corporate general and administrative expenses among the QVC Group and the Ventures Group as described in note 5 below. |
At March 31, 2015, the QVC Group is primarily focused on our merchandise-focused televised shopping programs, Internet and mobile application 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 QVC Group.
At March 31, 2015, the Ventures Group consists of all of our businesses not included in the QVC Group including our Digital Commerce businesses and interests in equity method investments of Expedia, Inc., Interval Leisure Group, Inc., FTD and LendingTree, 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 as well as the assets, liabilities, revenue, expenses and cash flows of the Digital Commerce businesses. 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 QVC 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: |
|
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
|
|
|
|
2015 |
|
2014 |
|
|
|
|
|
amounts in millions |
|
|||
|
QVC Group |
|
|
|
|
|
|
|
Other |
|
$ |
4 |
|
4 |
|
|
Total QVC Group |
|
|
4 |
|
4 |
|
|
Ventures Group |
|
|
|
|
|
|
|
Time Warner Inc. |
|
|
371 |
|
375 |
|
|
Time Warner Cable Inc. |
|
|
803 |
|
815 |
|
|
Other |
|
|
58 |
|
30 |
|
|
Total Ventures Group |
|
|
1,232 |
|
1,220 |
|
|
Consolidated Liberty |
|
$ |
1,236 |
|
1,224 |
|
9
Notes to Attributed Financial Information
(unaudited)
|
(3) |
The following table presents information regarding certain equity method investments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of earnings (losses) |
|
||
|
|
|
March 31, 2015 |
|
Three months ended |
|
||||||||
|
|
|
Percentage |
|
Carrying |
|
Market |
|
March 31, |
|
||||
|
|
|
ownership |
|
value |
|
value |
|
2015 |
|
2014 |
|
||
|
|
|
dollar amounts in millions |
|
||||||||||
|
QVC Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HSN, Inc. |
|
38 |
% |
|
$ |
146 |
|
1,366 |
|
25 |
|
22 |
|
|
Other |
|
various |
|
|
|
47 |
|
NA |
|
(1) |
|
(1) |
|
|
Total QVC Group |
|
|
|
|
|
193 |
|
|
|
24 |
|
21 |
|
|
Ventures Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expedia, Inc. |
|
18 |
% |
|
|
496 |
|
2,197 |
|
4 |
|
(6) |
|
|
FTD (1) |
|
35 |
% |
|
|
350 |
|
305 |
|
(2) |
|
NA |
|
|
Other |
|
various |
|
|
|
380 |
|
NA |
|
(23) |
|
(17) |
|
|
Total Ventures Group |
|
|
|
|
|
1,226 |
|
|
|
(21) |
|
(23) |
|
|
Consolidated Liberty |
|
|
|
|
$ |
1,419 |
|
|
|
3 |
|
(2) |
|
|
(1) |
As previously discussed, on December 31, 2014, Liberty announced the closing of the acquisition by FTD of Provide, which was one of Liberty’s wholly-owned Digital Commerce businesses. Under the terms of the transaction, Liberty received approximately 10.2 million shares of FTD common stock representing approximately 35% of the combined company and approximately $145 million in cash. Subsequent to completion of the transaction, Liberty accounts for FTD as an equity-method affiliate based on the ownership level and board representation. |
10
Notes to Attributed Financial Information
(unaudited)
|
(4) |
Debt attributed to the QVC Group and the Ventures Group is comprised of the following: |
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2015 |
|
||||
|
|
|
Outstanding |
|
Carrying |
|
||
|
|
|
principal |
|
value |
|
||
|
|
|
amounts in millions |
|
||||
|
QVC Group |
|
|
|
|
|
|
|
|
8.5% Senior Debentures due 2029 |
|
$ |
287 |
|
|
285 |
|
|
8.25% Senior Debentures due 2030 |
|
|
504 |
|
|
501 |
|
|
1% Exchangeable Senior Debentures due 2043 |
|
|
346 |
|
|
400 |
|
|
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 |
|
|
450 |
|
|
450 |
|
|
Other subsidiary debt |
|
|
65 |
|
|
65 |
|
|
Total QVC Group debt |
|
|
5,702 |
|
|
5,748 |
|
|
Ventures Group |
|
|
|
|
|
|
|
|
4% Exchangeable Senior Debentures due 2029 |
|
|
438 |
|
|
292 |
|
|
3.75% Exchangeable Senior Debentures due 2030 |
|
|
438 |
|
|
293 |
|
|
3.5% Exchangeable Senior Debentures due 2031 |
|
|
351 |
|
|
331 |
|
|
0.75% Exchangeable Senior Debentures due 2043 |
|
|
850 |
|
|
1,186 |
|
|
Subsidiary level notes and facilities |
|
|
70 |
|
|
70 |
|
|
Total Ventures Group debt |
|
|
2,147 |
|
|
2,172 |
|
|
Total consolidated Liberty debt |
|
$ |
7,849 |
|
|
7,920 |
|
|
Less current maturities |
|
|
|
|
|
(939) |
|
|
Total long-term debt |
|
|
|
|
$ |
6,981 |
|
|
(5) |
Cash compensation expense for our corporate employees is allocated between the QVC 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 QVC Group to the Ventures Group were determined to be $4 million and $2 million for the three months ended March 31, 2015 and 2014, 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
11 |
Notes to Attributed Financial Information
(unaudited)
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 QVC Group to the Ventures Group.
12