Annual report pursuant to Section 13 and 15(d)

Basis of Presentation

v2.4.0.6
Basis of Presentation
 12 Months Ended
Dec. 31, 2012
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis Of Presentation
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Liberty Interactive Corporation (formerly known as Liberty Media Corporation) and its controlled subsidiaries (collectively, "Liberty" or the "Company" unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation.
Liberty, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries in North America, Europe and Asia.
On December 11, 2012, we acquired approximately 4.8 million additional shares of common stock of TripAdvisor, Inc. ("TripAdvisor") (an additional 4% equity ownership interest), for $300 million, along with the right to control the vote of the shares of TripAdvisor's common stock and class B common stock we own. Following the transaction we own approximately 22% of the equity and 57% of the total votes of all classes of TripAdvisor common stock. As we now control TripAdvisor we applied the applicable purchase accounting guidance and recorded a gain on the acquisition of $800 million on our ownership interest held prior to the transaction, recognized in the gain (loss) on transactions, net line in the consolidated statements of operations. The fair value of our ownership interest previously held and the fair value of the noncontrolling interest was determined based on the trading price of TripAdvisor common shares on the last trading day prior to our transaction. Additionally, the noncontrolling interest includes the fair value of TripAdvisor's fully vested options outstanding at the date of acquisition. Following the transaction date TripAdvisor is a consolidated subsidiary with a 78% noncontrolling interest accounted for in equity and the consolidated statements of operations.

Initial purchase price allocation for TripAdvisor is as follows (amounts in millions):
Fair value of ownerhsip interest held prior to transaction
$
1,004

Controlling interest acquired
300

Noncontrolling interest
4,341

 
$
5,645

 
 
Cash and cash equivalents
$
411

Receivables
116

Other assets
233

Goodwill
3,649

Tradenames
1,800

Intangible assets subject to amortization
1,195

Debt
(417
)
Other liabilities assumed
(151
)
Deferred tax liabilities
(1,191
)
 
$
5,645



The initial purchase price allocation is subject to change upon receipt of the final valuation analysis for TripAdvisor as the transaction was completed so close to December 31, 2012. The primary balances still subject to analysis are the goodwill, tradenames and other intangibles subject to amortization.
The Pro Forma summarized unaudited balance sheets and statements of operation of Liberty were prepared utilizing the historical financial statements of TripAdvisor, giving effect to purchase accounting related adjustments made at the time of acquisition and excluding the impact of the gain, as if the transaction discussed above occurred for the Balance Sheet data as of such date and for the Statement of Operations data as if it had occurred on January 1, 2010, are as follows:
Summary Balance Sheet Data:
 
December 31, 2011
 
amounts in millions
(unaudited)
Current assets
3,398

Investments in equity method affiliates
951

Intangibles not subject to amortization
13,945

Intangibles subject to amortization
3,404

Other assets
2,426

Total assets
24,124

Long-term debt
5,230

Other liabilities
7,211

Noncontrolling interests in equity of subsidiaries
4,479

Equity
7,204

Summary Operations Data:
 
Years ended December 31,
 
2012
 
2011
 
2010
 
amounts in millions
(unaudited)
Revenue
$
10,781

 
10,253

 
9,417

Operating income (loss)
$
1,230

 
1,177

 
1,055

Income tax (expense) benefit
$
(415
)
 
(359
)
 
(107
)
Net earnings (loss) from continuing operations
$
877

 
623

 
802

Less earnings (loss) attributable to the noncontrolling interests
$
126

 
81

 
18

Net Earnings (loss) from continuing operations attributable to Liberty shareholders:
 
 
 
 
 
 
Liberty Capital common stock
NA

 
10

 
28

 
Liberty Starz common stock
NA

 
—

 
—

 
Liberty Interactive Corporation common stock
$
304

 
532

 
756

 
Liberty Interactive common stock
$
212

 
NA

 
NA

 
Liberty Ventures common stock
$
235

 
NA

 
NA

 
 
$
751

 
542

 
784

 
 
 
 
 
 
 
Pro Forma basic net earnings (loss) attributable to Liberty shareholders per common share (note 3):
 
 
 
 
 
 
Liberty Capital common stock
NA

 
0.12

 
0.31

 
Liberty Starz common stock
NA

 
—

 
—

 
Liberty Interactive Corporation common stock
$
0.54

 
0.89

 
1.27

 
Liberty Interactive common stock
$
0.39

 
NA

 
NA

 
Liberty Ventures common stock
$
7.12

 
NA

 
NA

 
 
 
 
 
 
 
Pro Forma diluted net earnings (loss) attributable to Liberty shareholders per common share (note 3):
 
 
 
 
 
 
Liberty Capital common stock
NA

 
0.12

 
0.30

 
Liberty Starz common stock
NA

 
—

 
—

 
Liberty Interactive Corporation common stock
$
0.54

 
0.88

 
1.25

 
Liberty Interactive common stock
$
0.38

 
NA

 
NA

 
Liberty Ventures common stock
$
7.12

 
NA

 
NA



This Pro Forma information is not representative of Liberty's future financial position, future results of operations or future cash flows nor does it reflect what Liberty's financial position, results of operations or cash flows would have been as if the transaction had happened previously and Liberty controlled TripAdvisor during the periods presented.