Exhibit 99.1

Unaudited Attributed Financial Information for Tracking Stock Groups

The following tables present our assets and liabilities as of September 30, 2016, revenue and expenses for three and nine months ended September 30, 2016 and 2015 and cash flows for the nine months ended September 30, 2016 and 2015. 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 nine months ended September 30, 2016 included in this Quarterly Report on Form 10-Q.

As discussed in note 3 of the accompanying condensed consolidated financial statements, Liberty sold Backcountry.com, Inc. (“Backcountry”) on June 30, 2015.  Backcountry is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on Liberty’s operations and financial results.

As discussed in note 2 of the accompanying condensed consolidated financial statements, on October 1, 2015, Liberty acquired all of the outstanding shares of zulily, inc. (“zulily”) (now known as zulily, llc). zulily is an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched each day.  zulily is attributed to the QVC Group.  

As discussed in note 2 of the accompanying condensed consolidated financial statements, on July 22, 2016, Liberty completed the spin-off (the “Spin-Off”) of its former wholly-owned subsidiary, CommerceHub. CommerceHub is not presented as a discontinued operation as the Spin-Off did not represent a strategic shift that had a major effect on Liberty’s operations and financial results.

The QVC Group common stock is intended to reflect the separate performance of our QVC Group which is comprised of our consolidated subsidiaries, QVC, Inc. (“QVC”) and zulily, and our approximate 38% interest in HSN, Inc. The Liberty Ventures common stock is intended to reflect the separate performance of our Ventures Group which is comprised primarily of our interests in Bodybuilding.com, LLC (“Bodybuilding”), CommerceHub (through July 22, 2016), Evite, Inc. (“Evite”) and Backcountry (through June 30, 2015), interests in Expedia, Inc., FTD Companies, Inc. (“FTD”), LendingTree, Inc. and Liberty Broadband Corporation (“Liberty Broadband”) and available-for-sale securities Charter Communications, Inc., Interval Leisure Group, Inc. and Time Warner Inc. 

As discussed in note 2 of the accompanying condensed consolidated financial statements, on November 4, 2016, Liberty completed the split-off (the “Split-Off”) of Liberty Expedia Holdings, Inc. (“Expedia Holdings”). Expedia Holdings is comprised of, among other things, Liberty’s interest in Expedia, Inc. (approximately 16% equity interest and approximately 52% voting interest as of September 30, 2016), Liberty’s wholly-owned subsidiary Bodybuilding and $350 million in indebtedness.

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 QVC Group 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 QVC Group 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

 

 

 

 

 

 

 

 

 

 

September 30, 2016

 

December 31, 2015

 

 

 

amounts in millions

 

Summary balance sheet data:

    

 

 

    

    

 

Cash and cash equivalents

 

$

348

 

426

 

Trade and other receivables, net

 

$

809

 

1,379

 

Inventory

 

$

1,148

 

945

 

Investments in affiliates, accounted for using the equity method

 

$

226

 

208

 

Total assets

 

$

14,442

 

15,141

 

Long-term debt, including current portion

 

$

6,452

 

6,535

 

Deferred income tax liabilities

 

$

1,145

 

1,359

 

Net assets attributable to QVC Group common stock shareholders

 

$

4,956

 

5,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

September 30,

 

September 30,

 

 

2016

    

2015

    

2016

    

2015

 

 

amounts in millions

 

Summary operations data:

    

 

    

 

    

 

    

 

 

Revenue

$

2,303

 

2,007

 

7,094

 

5,943

 

Cost of sales

 

1,504

 

1,266

 

4,577

 

3,721

 

Operating expenses

 

152

 

144

 

462

 

424

 

Selling, general and administrative expenses (1)

 

261

 

192

 

786

 

571

 

Depreciation and amortization

 

219

 

141

 

642

 

442

 

Operating income (loss)

 

167

 

264

 

627

 

785

 

Interest expense

 

(73)

 

(70)

 

(220)

 

(215)

 

Share of earnings (losses) of affiliates, net

 

8

 

13

 

38

 

46

 

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

 

(6)

 

30

 

(2)

 

28

 

Other income (expense), net

 

6

 

14

 

31

 

(9)

 

Income tax benefit (expense)

 

(32)

 

(89)

 

(161)

 

(193)

 

Net earnings (loss)

 

70

 

162

 

 

313

 

442

 

Less net earnings (loss) attributable to noncontrolling interests

 

9

 

8

 

28

 

25

 

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders

$

61

 

154

 

285

 

417

 


(1)

Includes stock-based compensation of $20 million and $16 million for the three months ended September 30, 2016 and 2015, respectively.

2

 


 

SUMMARY ATTRIBUTED FINANCIAL DATA (Continued)

Ventures Group

 

 

 

 

 

 

 

 

 

September 30, 2016

 

December 31, 2015

 

 

 

amounts in millions

 

Summary balance sheet data:

    

 

    

    

    

 

Cash and cash equivalents

 

$

157

 

2,023

 

Investments in available-for-sale securities and other cost investments

 

$

1,815

 

1,349

 

Investments in affiliates, accounted for using the equity method

 

$

1,319

 

1,433

 

Investment in Liberty Broadband measured at fair value

 

$

3,051

 

 -

 

Total assets

 

$

6,590

 

6,039

 

Long-term debt, including current portion

 

$

1,703

 

2,172

 

Deferred income tax liabilities

 

$

2,733

 

2,143

 

Net assets attributable to Liberty Ventures common stock shareholders

 

$

2,233

 

1,592

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

amounts in millions

 

Summary operations data:

    

 

    

    

    

    

    

    

    

 

Revenue

 

$

109

 

146

 

391

 

676

 

Cost of sales

 

 

71

 

92

 

245

 

461

 

Operating

 

 

13

 

16

 

50

 

62

 

Selling, general and administrative expenses (1)

 

 

29

 

46

 

106

 

149

 

Depreciation and amortization

 

 

6

 

9

 

21

 

37

 

Operating income (loss)

 

 

(10)

 

(17)

 

(31)

 

(33)

 

Interest expense

 

 

(19)

 

(18)

 

(57)

 

(58)

 

Share of earnings (losses) of affiliates, net

 

 

10

 

18

 

(41)

 

75

 

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

 

 

612

 

40

 

944

 

70

 

Gains (losses) on dispositions, net

 

 

 —

 

(1)

 

9

 

110

 

Other, net

 

 

(14)

 

11

 

87

 

20

 

Income tax benefit (expense)

 

 

(171)

 

3

 

(280)

 

(18)

 

Net earnings (loss)

 

 

408

 

36

 

631

 

166

 

Less net earnings (loss) attributable to noncontrolling interests

 

 

 —

 

 —

 

 —

 

8

 

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders

 

$

408

 

36

 

631

 

158

 

 


(1)

Includes stock-based compensation of $— million and $21 million for the three months ended September 30, 2016 and 2015, respectively.

3

 


 

BALANCE SHEET INFORMATION

September 30, 2016

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

    

QVC

    

Ventures

    

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

348

 

157

 

505

 

Trade and other receivables, net

 

 

809

 

39

 

848

 

Inventory, net

 

 

1,148

 

41

 

1,189

 

Other current assets

 

 

149

 

5

 

154

 

Total current assets

 

 

2,454

 

242

 

2,696

 

Investments in available-for-sale securities and other cost investments (note 2)

 

 

4

 

1,815

 

1,819

 

Investments in affiliates, accounted for using the equity method (note 3)

 

 

226

 

1,319

 

1,545

 

Investment in Liberty Broadband measured at fair value (note 3)

 

 

 —

 

3,051

 

3,051

 

Property and equipment, net

 

 

1,185

 

26

 

1,211

 

Intangible assets not subject to amortization

 

 

9,399

 

107

 

9,506

 

Intangible assets subject to amortization, net

 

 

1,120

 

27

 

1,147

 

Other assets, at cost, net of accumulated amortization

 

 

54

 

3

 

57

 

Total assets

 

$

14,442

 

6,590

 

21,032

 

Liabilities and Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Intergroup payable (receivable) (note 7)

 

$

127

 

(127)

 

 —

 

Accounts payable

 

 

724

 

8

 

732

 

Accrued liabilities

 

 

579

 

37

 

616

 

Current portion of debt (note 4)

 

 

13

 

887

 

900

 

Other current liabilities

 

 

157

 

10

 

167

 

Total current liabilities

 

 

1,600

 

815

 

2,415

 

Long-term debt (note 4)

 

 

6,439

 

816

 

7,255

 

Deferred income tax liabilities

 

 

1,145

 

2,733

 

3,878

 

Other liabilities

 

 

180

 

2

 

182

 

Total liabilities

 

 

9,364

 

4,366

 

13,730

 

Equity/Attributed net assets (liabilities)

 

 

4,956

 

2,233

 

7,189

 

Noncontrolling interests in equity of subsidiaries

 

 

122

 

(9)

 

113

 

Total liabilities and equity

 

$

14,442

 

6,590

 

21,032

 

 

4

 


 

STATEMENT OF OPERATIONS INFORMATION

Three months ended September 30, 2016

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

 

QVC

 

Ventures

 

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

Total revenue, net

 

$

2,303

 

109

 

2,412

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales

 

 

1,504

 

71

 

1,575

 

Operating

 

 

152

 

13

 

165

 

Selling, general and administrative, including stock-based compensation (note 5)

 

 

261

 

29

 

290

 

Depreciation and amortization

 

 

219

 

6

 

225

 

 

 

 

2,136

 

119

 

2,255

 

Operating income (loss)

 

 

167

 

(10)

 

157

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(73)

 

(19)

 

(92)

 

Share of earnings (losses) of affiliates, net (note 3)

 

 

8

 

10

 

18

 

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

 

 

(6)

 

612

 

606

 

Gains (losses) on dispositions, net

 

 

 —

 

 —

 

 —

 

Other, net

 

 

6

 

(14)

 

(8)

 

 

 

 

(65)

 

589

 

524

 

Earnings (loss) before income taxes

 

 

102

 

579

 

681

 

Income tax benefit (expense)

 

 

(32)

 

(171)

 

(203)

 

Net earnings (loss)

 

 

70

 

408

 

478

 

Less net earnings (loss) attributable to noncontrolling interests

 

 

9

 

 —

 

9

 

Net earnings (loss) attributable to Liberty stockholders

 

$

61

 

408

 

469

 

 

5

 


 

STATEMENT OF OPERATIONS INFORMATION

Three months ended September 30, 2015

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

    

QVC

    

Ventures

    

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

Total revenue, net

 

$

2,007

 

146

 

2,153

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales

 

 

1,266

 

92

 

1,358

 

Operating

 

 

144

 

16

 

160

 

Selling, general and administrative, including stock-based compensation (note 5)

 

 

192

 

46

 

238

 

Depreciation and amortization

 

 

141

 

9

 

150

 

 

 

 

1,743

 

163

 

1,906

 

Operating income (loss)

 

 

264

 

(17)

 

247

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(70)

 

(18)

 

(88)

 

Share of earnings (losses) of affiliates, net (note 3)

 

 

13

 

18

 

31

 

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

 

 

30

 

40

 

70

 

Gains (losses) on dispositions, net (note 1)

 

 

 —

 

(1)

 

(1)

 

Other, net

 

 

14

 

11

 

25

 

 

 

 

(13)

 

50

 

37

 

Earnings (loss) before income taxes

 

 

251

 

33

 

284

 

Income tax benefit (expense)

 

 

(89)

 

3

 

(86)

 

Net earnings (loss)

 

 

162

 

36

 

198

 

Less net earnings (loss) attributable to noncontrolling interests

 

 

8

 

 —

 

8

 

Net earnings (loss) attributable to Liberty stockholders

 

$

154

 

36

 

190

 

 

6

 


 

STATEMENT OF OPERATIONS INFORMATION

Nine months ended September 30, 2016

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

 

QVC

 

Ventures

 

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

Total revenue, net

 

$

7,094

 

391

 

7,485

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales

 

 

4,577

 

245

 

4,822

 

Operating, including stock-based compensation (note 5)

 

 

462

 

50

 

512

 

Selling, general and administrative, including stock-based compensation (note 5)

 

 

786

 

106

 

892

 

Depreciation and amortization

 

 

642

 

21

 

663

 

 

 

 

6,467

 

422

 

6,889

 

Operating income (loss)

 

 

627

 

(31)

 

596

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(220)

 

(57)

 

(277)

 

Share of earnings (losses) of affiliates, net (note 3)

 

 

38

 

(41)

 

(3)

 

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

 

 

(2)

 

944

 

942

 

Gains (losses) on dispositions, net

 

 

 —

 

9

 

9

 

Other, net

 

 

31

 

87

 

118

 

 

 

 

(153)

 

942

 

789

 

Earnings (loss) before income taxes

 

 

474

 

911

 

1,385

 

Income tax benefit (expense)

 

 

(161)

 

(280)

 

(441)

 

Net earnings (loss)

 

 

313

 

631

 

944

 

Less net earnings (loss) attributable to noncontrolling interests

 

 

28

 

 —

 

28

 

Net earnings (loss) attributable to Liberty stockholders

 

$

285

 

631

 

916

 

 

 

7

 


 

STATEMENT OF OPERATIONS INFORMATION

Nine months ended September 30, 2015

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

    

QVC

    

Ventures

    

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

Total revenue, net

 

$

5,943

 

676

 

6,619

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

Cost of sales

 

 

3,721

 

461

 

4,182

 

Operating, including stock-based compensation

 

 

424

 

62

 

486

 

Selling, general and administrative, including stock-based compensation (note 5)

 

 

571

 

149

 

720

 

Depreciation and amortization

 

 

442

 

37

 

479

 

 

 

 

5,158

 

709

 

5,867

 

Operating income (loss)

 

 

785

 

(33)

 

752

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense

 

 

(215)

 

(58)

 

(273)

 

Share of earnings (losses) of affiliates, net (note 3)

 

 

46

 

75

 

121

 

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

 

 

28

 

70

 

98

 

Gains (losses) on dispositions, net (note 1)

 

 

 —

 

110

 

110

 

Other, net

 

 

(9)

 

20

 

11

 

 

 

 

(150)

 

217

 

67

 

Earnings (loss) before income taxes

 

 

635

 

184

 

819

 

Income tax benefit (expense)

 

 

(193)

 

(18)

 

(211)

 

Net earnings (loss)

 

 

442

 

166

 

608

 

Less net earnings (loss) attributable to noncontrolling interests

 

 

25

 

8

 

33

 

Net earnings (loss) attributable to Liberty stockholders

 

$

417

 

158

 

575

 

 

8

 


 

STATEMENT OF CASH FLOWS INFORMATION

Nine months ended September 30, 2016

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

    

QVC

    

Ventures

    

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

313

 

631

 

944

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

642

 

21

 

663

 

Stock-based compensation

 

 

57

 

18

 

75

 

Cash payments for stock based compensation

 

 

 —

 

(92)

 

(92)

 

Share of (earnings) losses of affiliates, net

 

 

(38)

 

41

 

3

 

Cash receipts from return on equity investments

 

 

21

 

20

 

41

 

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

 

 

2

 

(944)

 

(942)

 

(Gains) losses on dispositions

 

 

 —

 

(9)

 

(9)

 

Deferred income tax (benefit) expense

 

 

(167)

 

588

 

421

 

Other, net

 

 

31

 

(65)

 

(34)

 

Intergroup tax allocation

 

 

301

 

(301)

 

 —

 

Intergroup tax (payments) receipts

 

 

(224)

 

224

 

 —

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Current and other assets

 

 

312

 

37

 

349

 

Payables and other current liabilities

 

 

(357)

 

(27)

 

(384)

 

Net cash provided (used) by operating activities

 

 

893

 

142

 

1,035

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Cash proceeds from dispositions

 

 

 —

 

350

 

350

 

Investments in and loans to cost and equity investees

 

 

 —

 

(67)

 

(67)

 

Capital expended for property and equipment

 

 

(158)

 

(19)

 

(177)

 

Purchases of short term and other marketable securities

 

 

 —

 

(264)

 

(264)

 

Sales of short term and other marketable securities

 

 

12

 

1,162

 

1,174

 

Investment in Liberty Broadband

 

 

 —

 

(2,400)

 

(2,400)

 

Other investing activities, net

 

 

(11)

 

(3)

 

(14)

 

Net cash provided (used) by investing activities

 

 

(157)

 

(1,241)

 

(1,398)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

1,143

 

1,545

 

2,688

 

Repayments of debt

 

 

(1,340)

 

(2,289)

 

(3,629)

 

Repurchases of QVC Group common stock

 

 

(603)

 

 —

 

(603)

 

Withholding taxes on net settlements of stock-based compensation

 

 

(15)

 

(1)

 

(16)

 

Other financing activities, net

 

 

(6)

 

(22)

 

(28)

 

Net cash provided (used) by financing activities

 

 

(821)

 

(767)

 

(1,588)

 

Effect of foreign currency rates on cash

 

 

7

 

 —

 

7

 

Net increase (decrease) in cash and cash equivalents

 

 

(78)

 

(1,866)

 

(1,944)

 

Cash and cash equivalents at beginning of period

 

 

426

 

2,023

 

2,449

 

Cash and cash equivalents at end period

 

$

348

 

157

 

505

 

 

9

 


 

STATEMENT OF CASH FLOWS INFORMATION

Nine months ended September 30, 2015

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Attributed (note 1)

 

 

 

 

    

QVC

    

Ventures

    

Consolidated

 

 

 

Group

 

Group

 

Liberty

 

 

 

amounts in millions

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

442

 

166

 

608

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

442

 

37

 

479

 

Stock-based compensation

 

 

40

 

41

 

81

 

Cash payments for stock based compensation

 

 

 —

 

(11)

 

(11)

 

Share of losses (earnings) of affiliates, net

 

 

(46)

 

(75)

 

(121)

 

Cash receipts from return on equity investments

 

 

21

 

21

 

42

 

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

 

 

(28)

 

(70)

 

(98)

 

(Gains) losses on dispositions

 

 

 —

 

(110)

 

(110)

 

Deferred income tax (benefit) expense

 

 

(103)

 

105

 

2

 

Other, net

 

 

16

 

(1)

 

15

 

Intergroup tax allocation

 

 

90

 

(90)

 

 —

 

Intergroup tax (payments) receipts

 

 

(51)

 

51

 

 —

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

Current and other assets

 

 

(39)

 

4

 

(35)

 

Payables and other current liabilities

 

 

2

 

(51)

 

(49)

 

Net cash provided (used) by operating activities

 

 

786

 

17

 

803

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Cash paid for acquisitions

 

 

 —

 

(20)

 

(20)

 

Cash proceeds from dispositions

 

 

 —

 

271

 

271

 

Investments in and loans to cost and equity investees

 

 

(4)

 

(122)

 

(126)

 

Cash receipts from returns of equity investments

 

 

200

 

50

 

250

 

Capital expended for property and equipment

 

 

(132)

 

(32)

 

(164)

 

Purchases of short term and other marketable securities

 

 

(154)

 

(1,040)

 

(1,194)

 

Sales of short term and other marketable securities

 

 

160

 

1,020

 

1,180

 

Other investing activities, net

 

 

(48)

 

 —

 

(48)

 

Net cash provided (used) by investing activities

 

 

22

 

127

 

149

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Borrowings of debt

 

 

1,470

 

486

 

1,956

 

Repayments of debt

 

 

(1,638)

 

(462)

 

(2,100)

 

Repurchases of QVC Group common stock

 

 

(531)

 

 —

 

(531)

 

Withholding taxes on net settlements of stock-based compensation

 

 

(17)

 

 —

 

(17)

 

Other financing activities, net

 

 

2

 

(18)

 

(16)

 

Net cash provided (used) by financing activities

 

 

(714)

 

6

 

(708)

 

Effect of foreign currency rates on cash

 

 

(4)

 

 —

 

(4)

 

Net increase (decrease) in cash and cash equivalents

 

 

90

 

150

 

240

 

Cash and cash equivalents at beginning of period

 

 

422

 

1,884

 

2,306

 

Cash and cash equivalents at end period

 

$

512

 

2,034

 

2,546

 

 

 

 

 

 

10

 


 

Notes to Attributed Financial Information

(unaudited)

 

 

(1)

At September 30, 2016, the QVC Group is comprised of our consolidated subsidiaries, QVC and zulily, 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 and zulily.  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 September 30, 2016, the QVC Group is primarily comprised of 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 September 30, 2016, the Ventures Group consists of all of our businesses not included in the QVC Group, including Bodybuilding and Evite, interests in Expedia, Inc., FTD, LendingTree, Inc. and Liberty Broadband and available-for-sale securities Charter Communications, Inc., Interval Leisure Group, Inc. and Time Warner Inc. (“Time Warner”). 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 Bodybuilding and Evite. 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.

 

As discussed in note 2 to the accompanying condensed consolidated financial statements, on May 18, 2016, Liberty completed a $2.4 billion investment in Liberty Broadband Corporation (“Liberty Broadband”) in connection with the merger of Charter Communications, Inc. ("Charter") and Time Warner Cable Inc. ("TWC"). The proceeds of this investment were used by Liberty Broadband to fund, in part, its acquisition of $5 billion of stock in the new public parent company (“New Charter”) of the combined enterprises. Liberty, along with third party investors, all of whom invested on the same terms as Liberty, purchased newly issued shares of Liberty Broadband Series C common stock at a per share price of $56.23, which was determined based upon the fair value of Liberty Broadband's net assets on a sum-of-the parts basis at the time the investment agreements were executed. Liberty's investment in Liberty Broadband was funded using cash on hand and is attributed to the Ventures Group.

 

As previously discussed, on October 1, 2015, Liberty acquired all of the outstanding shares of zulily for consideration of approximately $2.3 billion, comprised of $9.375 of cash and 0.3098 newly issued shares of Series A QVC Group common stock for each zulily share, plus cash paid in lieu of any fractional shares. Effective October 1, 2015, zulily is attributed to the QVC Group and we believe that its business is complementary to QVC’s.

 

As previously discussed, Liberty sold Backcountry on June 30, 2015 for aggregate consideration, including assumption of debt, amounts held in escrow, and a noncontrolling interest, of approximately $350 million. The sale resulted in a $105 million gain, which is included in “Gains (losses) on dispositions, net” in the accompanying condensed consolidated statement of operations. 

 

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.

 

11

 


 

Notes to Attributed Financial Information

(unaudited)

 

(2)

Investments in available-for-sale securities, including non-strategic securities, and other cost investments are summarized as follows:

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

 

 

2016

 

2015

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

Other

 

$

4

 

4

 

Total QVC Group

 

 

4

 

4

 

Ventures Group

 

 

 

 

 

 

Charter Communications, Inc. (1)

 

 

1,447

 

NA

 

Interval Leisure Group (2)

 

 

286

 

NA

 

Time Warner Inc. (3)

 

 

2

 

284

 

Time Warner Cable Inc. (1)

 

 

NA

 

994

 

Other

 

 

80

 

71

 

Total Ventures Group

 

 

1,815

 

1,349

 

Consolidated Liberty

 

$

1,819

 

1,353

 

____________________________________________________________________________________________________________________________________________________________

(1)

 As discussed in note 1, in connection with the merger of Charter and TWC, Liberty exchanged, in a tax-free transaction, its shares of TWC common stock for shares of New Charter Class A common stock, on a one-for-one basis, and Liberty has granted to Liberty Broadband a proxy and a right of first refusal with respect to the shares of New Charter Class A common stock held by Liberty in the exchange.

(2)

On May 12, 2016, Interval Leisure Group (“Interval”) completed an acquisition which was accomplished, in part, through the issuance of additional Interval shares.  As a result of the share issuance, Liberty’s ownership interest in Interval was reduced from 28.7% to 12.8%. Prior to the transaction, Interval was accounted for as an equity method investment.  As a result of the transaction, Liberty does not have ability to exercise significant influence.  Accordingly, Interval is classified as available-for-sale and is carried at fair value.

(3)

During the nine months ended September 30, 2016, Liberty sold approximately 4 million shares of Time Warner common stock for proceeds of $341 million.

 

(3)

The following table presents information regarding certain equity method investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share of earnings (losses)

 

 

 

September 30, 2016

 

Three months ended

 

Nine Months Ended

 

 

 

Percentage

 

Carrying

 

Market

 

September 30,

 

September 30,

 

 

 

ownership

    

value

 

value

 

2016

 

2015

 

2016

 

2015

 

 

 

dollar amounts in millions

 

QVC Group

    

    

  

    

 

    

    

    

    

    

  

    

    

    

    

    

 

HSN, Inc.

 

38

%  

 

$

184

 

797

 

9

 

15

 

41

 

52

 

Other

 

various

 

 

 

42

 

NA

 

(1)

 

(2)

 

(3)

 

(6)

 

Total QVC Group

 

 

 

 

 

226

 

 

 

8

 

13

 

38

 

46

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expedia, Inc.

 

16

%  

 

 

922

 

2,755

 

40

 

45

 

18

 

125

 

FTD

 

37

%  

 

 

251

 

210

 

(7)

 

(14)

 

(8)

 

(9)

 

Other

 

various

 

 

 

146

 

NA

 

(23)

 

(13)

 

(51)

 

(41)

 

Total Ventures Group

 

 

 

 

 

1,319

 

 

 

10

 

18

 

(41)

 

75

 

Consolidated Liberty

 

 

 

 

$

1,545

 

 

 

18

 

31

 

(3)

 

121

 

 

12

 


 

Notes to Attributed Financial Information

(unaudited)

 

Investment in Liberty Broadband

 

As discussed in note 2 to the accompanying condensed consolidated financial statements, in connection with the merger of Charter and TWC, on May 18, 2016, Liberty invested $2.4 billion in Liberty Broadband Series C nonvoting shares. As of September 30, 2016, Liberty has a 24% economic ownership interest in Liberty Broadband. Due to overlapping boards of directors and management, Liberty has been deemed to have significant influence over Liberty Broadband even though Liberty does not have any voting rights. Liberty has elected to apply the fair value option for its investment in Liberty Broadband as it is believed that the Company’s investors value this investment based on the trading price of Liberty Broadband. Liberty recognizes changes in the fair value of its investment in Liberty Broadband in realized and unrealized gains (losses) on financial instruments, net in the condensed consolidated statements of operations.

 

(4)

Debt attributed to the QVC Group and the Ventures Group is comprised of the following:

 

 

 

 

 

 

 

 

 

 

 

September 30, 2016

 

 

 

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

 

 

345

 

 

346

 

QVC 3.125% Senior Secured Notes due 2019

 

 

400

 

 

399

 

QVC 5.125% Senior Secured Notes due 2022

 

 

500

 

 

500

 

QVC 4.375% Senior Secured Notes due 2023

 

 

750

 

 

750

 

QVC 4.85% 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

 

 

1,625

 

 

1,625

 

Other subsidiary debt

 

 

178

 

 

178

 

Deferred loan costs

 

 

 

 

 

(30)

 

Total QVC Group debt

 

 

6,489

 

 

6,452

 

Ventures Group

 

 

 

 

 

 

 

4% Exchangeable Senior Debentures due 2029

 

 

436

 

 

291

 

3.75% Exchangeable Senior Debentures due 2030

 

 

436

 

 

273

 

3.5% Exchangeable Senior Debentures due 2031

 

 

337

 

 

313

 

0.75% Exchangeable Senior Debentures due 2043

 

 

2

 

 

6

 

1.75% Exchangeable Senior Debentures due 2046

 

 

750

 

 

794

 

Subsidiary level notes and facilities

 

 

26

 

 

26

 

Total Ventures Group debt

 

 

1,987

 

 

1,703

 

Total consolidated Liberty debt

 

$

8,476

 

 

8,155

 

Less current maturities

 

 

 

 

 

(900)

 

Total long-term debt

 

 

 

 

$

7,255

 

13

 


 

Notes to Attributed Financial Information

(unaudited)

 

 

(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 $12 million and $5 million for the three months ended September 30, 2016 and 2015, respectively, and $29 million and $13 million for the nine months ended September 30, 2016 and 2015, 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 QVC Group 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 QVC Group 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 is 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 intergroup income taxes payable from the QVC Group to the Ventures Group.

 

14