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Exhibit 99.1
Attributed Financial Information for Tracking Stock Groups
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 on-line commerce, including our subsidiaries, QVC, Inc., Provide Commerce, Inc., BuySeasons, Inc. and Backcountry.com, Inc. and our interests in IAC/InterActiveCorp and Expedia, Inc. Our Liberty Entertainment common stock is intended to reflect the separate performance of our Entertainment Group which includes our wholly-owned subsidiaries Starz Entertainment, LLC, FUN Technologies, Inc, and three regional sports television networks, our approximate 48% ownership interest in The DIRECTV Group, Inc., as well as other minority equity interests in GSN, LLC and WildBlue Communications, Inc. Our Liberty Capital common stock is intended to reflect the separate performance of our Capital Group which is comprised of all of our assets and businesses not attributed to the Interactive Group or the Entertainment Group.
The following tables present our assets, liabilities, revenue, expenses and cash flows as of and for the three months ended March 31, 2008 and 2007. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Interactive Group, the Entertainment Group and the Capital Group, respectively. The financial information should be read in conjunction with our unaudited condensed consolidated financial statements for the three months ended March 31, 2008 included in this Quarterly Report on Form 10-Q. The attributed financial information presented in the tables has been prepared assuming the Reclassification had been completed as of January 1, 2007.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Interactive Group, the Entertainment Group and the Capital 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, Liberty Entertainment common stock and Liberty Capital 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, Liberty Entertainment common stock and Liberty Capital common stock does not affect the rights of our creditors or creditors of our subsidiaries.
1
SUMMARY ATTRIBUTED FINANCIAL DATA
Interactive Group
| | March 31, 2008 | December 31, 2007 | |||
|---|---|---|---|---|---|
| | amounts in millions | ||||
| Summary balance sheet data: | |||||
| Current assets | $ | 2,922 | 2,921 | ||
| Cost investments | $ | 1,849 | 2,044 | ||
| Equity investments | $ | 1,320 | 1,311 | ||
| Total assets | $ | 19,148 | 19,326 | ||
| Long-term debt, including current portion | $ | 7,661 | 7,177 | ||
| Long-term deferred income tax liabilities | $ | 2,434 | 2,670 | ||
| Attributed net assets | $ | 7,288 | 7,530 | ||
| | Three months ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| | 2008 | 2007 | ||||||
| | amounts in millions | |||||||
| Summary operations data: | ||||||||
| Revenue | $ | 1,950 | 1,771 | |||||
| Cost of sales | (1,238 | ) | (1,110 | ) | ||||
| Operating expenses | (180 | ) | (164 | ) | ||||
| Selling, general and administrative expenses(1) | (136 | ) | (128 | ) | ||||
| Depreciation and amortization | (139 | ) | (125 | ) | ||||
| Operating income | 257 | 244 | ||||||
| Interest expense | (121 | ) | (114 | ) | ||||
| Other income (expense), net | (18 | ) | 28 | |||||
| Income tax benefit (expense) | 14 | (60 | ) | |||||
| Minority interests in earnings of subsidiaries | (7 | ) | (7 | ) | ||||
| Net earnings | $ | 125 | 91 | |||||
- (1)
- Includes stock-based compensation of $5 million and $13 million for the three months ended March 31, 2008 and 2007, respectively.
2
SUMMARY ATTRIBUTED FINANCIAL DATA
Entertainment Group
| | March 31, 2008 | December 31, 2007 | |||
|---|---|---|---|---|---|
| | amounts in millions | ||||
| Summary balance sheet data: | |||||
| Current assets | $ | 1,781 | 793 | ||
| Cost investments | $ | 5 | 10,652 | ||
| Equity investments | $ | 11,052 | 249 | ||
| Total assets | $ | 15,344 | 13,808 | ||
| Long-term debt, including current portion | $ | 439 | 473 | ||
| Long-term deferred income tax liabilities | $ | 1,749 | 3,521 | ||
| Attributed net assets | $ | 12,807 | 9,457 | ||
| | Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|---|
| | 2008 | 2007 | |||||
| | amounts in millions | ||||||
| Summary operations data: | |||||||
| Revenue | $ | 310 | 280 | ||||
| Operating expenses | (187 | ) | (175 | ) | |||
| Selling, general and administrative expenses(1) | (49 | ) | (44 | ) | |||
| Depreciation and amortization | (12 | ) | (11 | ) | |||
| Operating income | 62 | 50 | |||||
| Gain on dispositions, net | 3,667 | — | |||||
| Other income, net | 34 | 18 | |||||
| Income tax benefit (expense) | 1,740 | (21 | ) | ||||
| Minority interests in losses of subsidiaries | — | 2 | |||||
| Net earnings | $ | 5,503 | 49 | ||||
- (1)
- Includes stock-based compensation of $7 million and $8 million for the three months ended March 31, 2008 and 2007, respectively.
3
SUMMARY ATTRIBUTED FINANCIAL DATA
Capital Group
| | March 31, 2008 | December 31, 2007 | |||
|---|---|---|---|---|---|
| | amounts in millions | ||||
| Summary balance sheet data: | |||||
| Current assets | $ | 2,633 | 2,759 | ||
| Cost investments | $ | 3,433 | 4,873 | ||
| Total assets | $ | 10,502 | 12,679 | ||
| Long-term debt, including current portion | $ | 3,902 | 4,065 | ||
| Long-term deferred income tax liabilities | $ | 1,769 | 2,267 | ||
| Attributed net assets | $ | 1,993 | 2,599 | ||
| | Three months ended March 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| | 2008 | 2007 | ||||||
| | amounts in millions | |||||||
| Summary operations data: | ||||||||
| Revenue | $ | 91 | 72 | |||||
| Operating expenses | (74 | ) | (65 | ) | ||||
| Selling, general and administrative expenses(1) | (80 | ) | (37 | ) | ||||
| Depreciation and amortization | (26 | ) | (15 | ) | ||||
| Operating loss | (89 | ) | (45 | ) | ||||
| Interest expense | (38 | ) | (31 | ) | ||||
| Realized and unrealized gains (losses) on financial instruments, net | (243 | ) | 352 | |||||
| Other income, net | 52 | 31 | ||||||
| Income tax benefit (expense) | 152 | (121 | ) | |||||
| Minority interests in losses (earnings) of subsidiaries | (5 | ) | 1 | |||||
| Earnings (loss) from continuing operations | (171 | ) | 187 | |||||
| Earnings from discontinued operations, net of taxes | — | 42 | ||||||
| Net earnings (loss) | $ | (171 | ) | 229 | ||||
- (1)
- Includes stock-based compensation of $4 million and $1 million for the three months ended March 31, 2008 and 2007, respectively.
4
BALANCE SHEET INFORMATION
March 31, 2008
(unaudited)
| | Attributed (note 1) | | | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Interactive Group | Entertainment Group | Capital Group | Eliminations | Consolidated Liberty | ||||||||
| | amounts in millions | ||||||||||||
| Assets | |||||||||||||
| Current assets: | |||||||||||||
| Cash and cash equivalents | $ | 646 | 981 | 2,259 | — | 3,886 | |||||||
| Trade and other receivables, net | 992 | 237 | 168 | — | 1,397 | ||||||||
| Inventory, net | 1,022 | — | — | — | 1,022 | ||||||||
| Program rights | — | 488 | — | — | 488 | ||||||||
| Financial instruments | 10 | — | 23 | — | 33 | ||||||||
| Current deferred tax assets | 191 | 68 | — | (259 | ) | — | |||||||
| Other current assets | 61 | 7 | 183 | — | 251 | ||||||||
| Total current assets | 2,922 | 1,781 | 2,633 | (259 | ) | 7,077 | |||||||
| Investments in available-for-sale securities and other cost investments (note 2) | 1,849 | 5 | 3,433 | — | 5,287 | ||||||||
| Long-term financial instruments | 2 | — | 1,908 | — | 1,910 | ||||||||
| Investments in affiliates, accounted for using the equity method (note 3) | 1,320 | 11,052 | 244 | — | 12,616 | ||||||||
| Property and equipment, net | 1,116 | 128 | 158 | — | 1,402 | ||||||||
| Goodwill | 5,964 | 1,749 | 428 | — | 8,141 | ||||||||
| Trademarks | 2,490 | 7 | 18 | — | 2,515 | ||||||||
| Intangible assets subject to amortization, net | 3,441 | 171 | 298 | — | 3,910 | ||||||||
| Other assets, at cost, net of accumulated amortization | 44 | 451 | 1,382 | — | 1,877 | ||||||||
| Total assets | $ | 19,148 | 15,344 | 10,502 | (259 | ) | 44,735 | ||||||
| Liabilities and Equity | |||||||||||||
| Current liabilities: | |||||||||||||
| Accounts payable | $ | 493 | 7 | 21 | — | 521 | |||||||
| Accrued interest | 64 | 2 | 32 | — | 98 | ||||||||
| Other accrued liabilities | 614 | 141 | 113 | — | 868 | ||||||||
| Intergroup payable (receivable) | 45 | (22 | ) | (23 | ) | — | — | ||||||
| Financial instruments | 30 | 8 | 769 | — | 807 | ||||||||
| Current portion of debt (note 4) | 23 | 116 | 40 | — | 179 | ||||||||
| Accrued stock compensation | 17 | 179 | 6 | — | 202 | ||||||||
| Current deferred tax liabilities | — | — | 471 | (259 | ) | 212 | |||||||
| Other current liabilities | 27 | 8 | 141 | — | 176 | ||||||||
| Total current liabilities | 1,313 | 439 | 1,570 | (259 | ) | 3,063 | |||||||
| Long-term debt (note 4) | 7,638 | 323 | 3,862 | — | 11,823 | ||||||||
| Long-term financial instruments | 152 | — | 2 | — | 154 | ||||||||
| Deferred income tax liabilities (note 6) | 2,434 | 1,749 | 1,769 | — | 5,952 | ||||||||
| Other liabilities | 212 | 26 | 1,297 | — | 1,535 | ||||||||
| Total liabilities | 11,749 | 2,537 | 8,500 | (259 | ) | 22,527 | |||||||
| Minority interests in equity of subsidiaries | 111 | — | 9 | — | 120 | ||||||||
| Equity/Attributed net assets | 7,288 | 12,807 | 1,993 | — | 22,088 | ||||||||
| Total liabilities and equity | $ | 19,148 | 15,344 | 10,502 | (259 | ) | 44,735 | ||||||
5
STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS) INFORMATION
Three months ended March 31, 2008
(unaudited)
| | Attributed (note 1) | | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Interactive Group | Entertainment Group | Capital Group | Consolidated Liberty | |||||||||||
| | amounts in millions | ||||||||||||||
| Revenue: | |||||||||||||||
| Net retail sales | $ | 1,950 | — | — | 1,950 | ||||||||||
| Communications and programming services | — | 310 | 91 | 401 | |||||||||||
| 1,950 | 310 | 91 | 2,351 | ||||||||||||
| Operating costs and expenses: | |||||||||||||||
| Cost of sales | 1,238 | — | — | 1,238 | |||||||||||
| Operating | 180 | 187 | 74 | 441 | |||||||||||
| Selling, general and administrative, including stock-based compensation (notes 1 and 5) | 136 | 49 | 80 | 265 | |||||||||||
| Depreciation and amortization | 139 | 12 | 26 | 177 | |||||||||||
| 1,693 | 248 | 180 | 2,121 | ||||||||||||
| Operating income (loss) | 257 | 62 | (89 | ) | 230 | ||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense | (121 | ) | (7 | ) | (38 | ) | (166 | ) | |||||||
| Dividend and interest income | 6 | 3 | 50 | 59 | |||||||||||
| Share of earnings (losses) of affiliates, net | 12 | 43 | (10 | ) | 45 | ||||||||||
| Realized and unrealized losses on financial instruments, net | (37 | ) | (5 | ) | (243 | ) | (285 | ) | |||||||
| Gains on dispositions, net | — | 3,667 | 15 | 3,682 | |||||||||||
| Other, net | 1 | — | (3 | ) | (2 | ) | |||||||||
| (139 | ) | 3,701 | (229 | ) | 3,333 | ||||||||||
| Earnings (loss) before income taxes and minority interests | 118 | 3,763 | (318 | ) | 3,563 | ||||||||||
| Income tax benefit (note 6) | 14 | 1,740 | 152 | 1,906 | |||||||||||
| Minority interests in earnings of subsidiaries | (7 | ) | — | (5 | ) | (12 | ) | ||||||||
| Net earnings (loss) | $ | 125 | 5,503 | (171 | ) | 5,457 | |||||||||
| Other comprehensive earnings (loss), net of taxes: | |||||||||||||||
| Foreign currency translation adjustments | 85 | — | (3 | ) | 82 | ||||||||||
| Unrealized holding losses arising during the period | (331 | ) | (314 | ) | — | (645 | ) | ||||||||
| Recognition of previously unrealized gains on available-for-sale securities, net | — | (2,273 | ) | — | (2,273 | ) | |||||||||
| Change in fair value of cash flow hedges | (48 | ) | — | — | (48 | ) | |||||||||
| Other comprehensive loss | (294 | ) | (2,587 | ) | (3 | ) | (2,884 | ) | |||||||
| Comprehensive earnings (loss) | $ | (169 | ) | 2,916 | (174 | ) | 2,573 | ||||||||
6
STATEMENT OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS) INFORMATION
Three months ended March 31, 2007
(unaudited)
| | Attributed (note 1) | | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Interactive Group | Entertainment Group | Capital Group | Consolidated Liberty | |||||||||||
| | amounts in millions | ||||||||||||||
| Revenue: | |||||||||||||||
| Net retail sales | $ | 1,771 | — | — | 1,771 | ||||||||||
| Communications and programming services | — | 280 | 72 | 352 | |||||||||||
| 1,771 | 280 | 72 | 2,123 | ||||||||||||
| Operating costs and expenses: | |||||||||||||||
| Cost of sales | 1,110 | — | — | 1,110 | |||||||||||
| Operating | 164 | 175 | 65 | 404 | |||||||||||
| Selling, general and administrative, including stock-based compensation (notes 1 and 5) | 128 | 44 | 37 | 209 | |||||||||||
| Depreciation and amortization | 125 | 11 | 15 | 151 | |||||||||||
| 1,527 | 230 | 117 | 1,874 | ||||||||||||
| Operating income (loss) | 244 | 50 | (45 | ) | 249 | ||||||||||
| Other income (expense): | |||||||||||||||
| Interest expense | (114 | ) | (5 | ) | (31 | ) | (150 | ) | |||||||
| Dividend and interest income | 11 | 29 | 35 | 75 | |||||||||||
| Share of earnings (losses) of affiliates, net | 15 | 5 | (11 | ) | 9 | ||||||||||
| Realized and unrealized gains (losses) on financial instruments, net | 2 | (10 | ) | 352 | 344 | ||||||||||
| Gains on dispositions, net | — | — | 6 | 6 | |||||||||||
| Other, net | — | (1 | ) | 1 | — | ||||||||||
| (86 | ) | 18 | 352 | 284 | |||||||||||
| Earnings from continuing operations before income taxes and minority interests | 158 | 68 | 307 | 533 | |||||||||||
| Income tax expense (note 6) | (60 | ) | (21 | ) | (121 | ) | (202 | ) | |||||||
| Minority interests in losses (earnings) of subsidiaries | (7 | ) | 2 | 1 | (4 | ) | |||||||||
| Earnings from continuing operations | 91 | 49 | 187 | 327 | |||||||||||
| Earnings from discontinued operations, net of taxes | — | — | 42 | 42 | |||||||||||
| Net earnings | $ | 91 | 49 | 229 | 369 | ||||||||||
| Other comprehensive earnings (loss), net of taxes: | |||||||||||||||
| Foreign currency translation adjustments | 12 | — | (1 | ) | 11 | ||||||||||
| Unrealized holding gains (losses) arising during the period | 17 | 588 | (330 | ) | 275 | ||||||||||
| Recognition of previously unrealized gains on available-for-sale securities, net | — | — | (4 | ) | (4 | ) | |||||||||
| Other comprehensive earnings (loss) | 29 | 588 | (335 | ) | 282 | ||||||||||
| Comprehensive earnings (loss) | $ | 120 | 637 | (106 | ) | 651 | |||||||||
7
STATEMENT OF CASH FLOWS INFORMATION
Three months ended March 31, 2008
(unaudited)
| | Attributed (note 1) | | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Interactive Group | Entertainment Group | Capital Group | Consolidated Liberty | |||||||||||
| | amounts in millions | ||||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net earnings (loss) | $ | 125 | 5,503 | (171 | ) | 5,457 | |||||||||
| Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities: | |||||||||||||||
| Depreciation and amortization | 139 | 12 | 26 | 177 | |||||||||||
| Stock-based compensation | 5 | 7 | 4 | 16 | |||||||||||
| Cash payments for stock-based compensation | (1 | ) | (10 | ) | (1 | ) | (12 | ) | |||||||
| Share of losses (earnings) of affiliates, net | (12 | ) | (43 | ) | 10 | (45 | ) | ||||||||
| Realized and unrealized losses on financial instruments, net | 37 | 5 | 243 | 285 | |||||||||||
| Gains on disposition of assets, net | — | (3,667 | ) | (15 | ) | (3,682 | ) | ||||||||
| Minority interests in earnings of subsidiaries | 7 | — | 5 | 12 | |||||||||||
| Intergroup tax allocation | 41 | 21 | (62 | ) | — | ||||||||||
| Intergroup tax payments | (22 | ) | (8 | ) | 30 | — | |||||||||
| Other intergroup cash transfers, net | (69 | ) | (31 | ) | 100 | — | |||||||||
| Deferred income tax benefit | (68 | ) | (1,763 | ) | (272 | ) | (2,103 | ) | |||||||
| Other noncash charges, net | 2 | — | 17 | 19 | |||||||||||
| Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||||||||||
| Current assets | 151 | (18 | ) | (59 | ) | 74 | |||||||||
| Payables and other current liabilities | (247 | ) | (12 | ) | 85 | (174 | ) | ||||||||
| Net cash provided (used) by operating activities | 88 | (4 | ) | (60 | ) | 24 | |||||||||
| Cash flows from investing activities: | |||||||||||||||
| Cash proceeds from dispositions | — | — | 15 | 15 | |||||||||||
| Net proceeds from settlement of financial instruments | — | — | 12 | 12 | |||||||||||
| Cash received in exchange transactions | — | 465 | — | 465 | |||||||||||
| Capital expended for property and equipment | (35 | ) | (1 | ) | (18 | ) | (54 | ) | |||||||
| Net sales of short term investments | — | — | 67 | 67 | |||||||||||
| Investments in and loans to cost and equity investees | (339 | ) | — | (48 | ) | (387 | ) | ||||||||
| Net decrease in restricted cash | — | — | 140 | 140 | |||||||||||
| Other investing activities, net | 5 | (11 | ) | (13 | ) | (19 | ) | ||||||||
| Net cash provided (used) by investing activities | (369 | ) | 453 | 155 | 239 | ||||||||||
| Cash flows from financing activities: | |||||||||||||||
| Borrowings of debt | 468 | — | 634 | 1,102 | |||||||||||
| Repayments of debt | (3 | ) | (1 | ) | (494 | ) | (498 | ) | |||||||
| Repurchases of Liberty common stock | (75 | ) | — | — | (75 | ) | |||||||||
| Intergroup cash transfers | — | 450 | (450 | ) | — | ||||||||||
| Other financing activities, net | (40 | ) | (7 | ) | (14 | ) | (61 | ) | |||||||
| Net cash provided (used) by financing activities | 350 | 442 | (324 | ) | 468 | ||||||||||
| Effect of foreign currency rates on cash | 20 | — | — | 20 | |||||||||||
| Net increase (decrease) in cash and cash equivalents | 89 | 891 | (229 | ) | 751 | ||||||||||
| Cash and cash equivalents at beginning of period | 557 | 90 | 2,488 | 3,135 | |||||||||||
| Cash and cash equivalents at end period | $ | 646 | $ | 981 | 2,259 | 3,886 | |||||||||
8
STATEMENT OF CASH FLOWS INFORMATION
Three months ended March 31, 2007
(unaudited)
| | Attributed (note 1) | | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Interactive Group | Entertainment Group | Capital Group | Consolidated Liberty | |||||||||||
| | amounts in millions | ||||||||||||||
| Cash flows from operating activities: | |||||||||||||||
| Net earnings | $ | 91 | 49 | 229 | 369 | ||||||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||||||
| Earnings from discontinued operations | — | — | (42 | ) | (42 | ) | |||||||||
| Depreciation and amortization | 125 | 11 | 15 | 151 | |||||||||||
| Stock-based compensation | 13 | 8 | 1 | 22 | |||||||||||
| Cash payments for stock-based compensation | (18 | ) | — | (2 | ) | (20 | ) | ||||||||
| Share of losses (earnings) of affiliates, net | (15 | ) | (5 | ) | 11 | (9 | ) | ||||||||
| Realized and unrealized losses (gains) on financial instruments, net | (2 | ) | 10 | (352 | ) | (344 | ) | ||||||||
| Gains on disposition of assets, net | — | — | (6 | ) | (6 | ) | |||||||||
| Minority interests in earnings (losses) of subsidiaries | 7 | (2 | ) | (1 | ) | 4 | |||||||||
| Intergroup tax payments | (68 | ) | — | 68 | — | ||||||||||
| Other intergroup cash transfers, net | 4 | — | (4 | ) | — | ||||||||||
| Deferred income tax expense (benefit) | (24 | ) | 5 | 183 | 164 | ||||||||||
| Other noncash charges, net | 1 | — | 6 | 7 | |||||||||||
| Changes in operating assets and liabilities, net of the effects of acquisitions: | |||||||||||||||
| Current assets | 120 | (49 | ) | (56 | ) | 15 | |||||||||
| Payables and other current liabilities | (121 | ) | (11 | ) | 27 | (105 | ) | ||||||||
| Net cash provided by operating activities | 113 | 16 | 77 | 206 | |||||||||||
| Cash flows from investing activities: | |||||||||||||||
| Cash proceeds from dispositions | — | — | 121 | 121 | |||||||||||
| Net proceeds from settlement of derivatives | — | — | 76 | 76 | |||||||||||
| Cash paid for acquisitions, net of cash acquired | — | — | (6 | ) | (6 | ) | |||||||||
| Capital expended for property and equipment | (82 | ) | (1 | ) | (4 | ) | (87 | ) | |||||||
| Net purchases of short term investments | — | — | (172 | ) | (172 | ) | |||||||||
| Investments in and loans to cost and equity investees | — | — | (39 | ) | (39 | ) | |||||||||
| Other investing activities, net | — | 16 | (3 | ) | 13 | ||||||||||
| Net cash provided (used) by investing activities | (82 | ) | 15 | (27 | ) | (94 | ) | ||||||||
| Cash flows from financing activities: | |||||||||||||||
| Borrowings of debt | 129 | — | 2 | 131 | |||||||||||
| Repayments of debt | (178 | ) | — | (151 | ) | (329 | ) | ||||||||
| Repurchases of Liberty common stock | (34 | ) | — | — | (34 | ) | |||||||||
| Intergroup cash transfers, net | — | (67 | ) | 67 | — | ||||||||||
| Other financing activities, net | (11 | ) | — | (8 | ) | (19 | ) | ||||||||
| Net cash used by financing activities | (94 | ) | (67 | ) | (90 | ) | (251 | ) | |||||||
| Effect of foreign currency rates on cash | 2 | — | — | 2 | |||||||||||
| Net cash provided to discontinued operations: | |||||||||||||||
| Cash provided by operating activities | — | — | 10 | 10 | |||||||||||
| Cash used by investing activities | — | — | (9 | ) | (9 | ) | |||||||||
| Cash provided by financing activities | — | — | — | — | |||||||||||
| Change in available cash held by discontinued operations | — | — | (1 | ) | (1 | ) | |||||||||
| Net cash provided to discontinued operations | — | — | — | — | |||||||||||
| Net decrease in cash and cash equivalents | (61 | ) | (36 | ) | (40 | ) | (137 | ) | |||||||
| Cash and cash equivalents at beginning of period | 946 | 91 | 2,070 | 3,107 | |||||||||||
| Cash and cash equivalents at end period | $ | 885 | $ | 55 | 2,030 | 2,970 | |||||||||
9
Notes to Attributed Financial Information
(unaudited)
- (1)
- The assets attributed to our Interactive Group include our consolidated subsidiaries QVC, Inc., Provide Commerce, Inc., BuySeasons, Inc., Backcountry.com, Inc. and Bodybuilding.com, LLC, and our interests in IAC/InterActiveCorp, GSI Commerce, Inc. and Expedia, Inc. Accordingly, the accompanying attributed financial information for the Interactive Group includes our investments in IAC/InterActiveCorp, Expedia and GSI, as well as the assets, liabilities, revenue, expenses and cash flows of QVC, Provide, BuySeasons, Backcountry and Bodybuilding. 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 Capital Group are described in note 4 below. In addition, we have allocated certain corporate general and administrative expenses among the Interactive Group, the Entertainment Group and the Capital Group as described in note 5 below.
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.
The Entertainment Group consists of our subsidiaries Starz Entertainment, LLC, FUN Technologies, Inc and three regional sports television networks, our minority equity interests in The DIRECTV Group, Inc., GSN, LLC and WildBlue Communications, Inc. and approximately $965 million of cash and cash equivalents. Accordingly, the accompanying attributed financial information for the Entertainment Group includes these investments and the assets, liabilities, revenue, expenses and cash flows of these consolidated subsidiaries. We have also attributed $551 million principal amount of our publicly traded debt to the Entertainment Group.
The Entertainment Group focuses primarily on programming and communications 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 Entertainment Group.
The Capital Group consists of all of our businesses not included in the Interactive Group or the Entertainment Group, including our consolidated subsidiaries Starz Media, LLC, Atlanta National League Baseball Club, Inc., Leisure Arts, Inc., TruePosition, Inc. and WFRV and WJMN Television Station, Inc. and certain cost and equity investments. Accordingly, the accompanying attributed financial information for the Capital Group includes these investments and the assets, liabilities, revenue, expenses and cash flows of these consolidated subsidiaries. In addition, we have attributed to the Capital Group all of our notes and debentures (and related interest expense) that have not been attributed to the Interactive Group or the Entertainment Group. See note 4 below for the debt obligations attributed to the Capital Group.
Any businesses that we may acquire in the future that are not attributed to the Interactive Group or the Entertainment Group will be attributed to the Capital Group.
While we believe the allocation methodology described above is reasonable and fair to each group, we may elect to change the allocation methodology in the future. In the event we elect to transfer assets or businesses from one group to the other, such transfer would be made on a fair value basis and would be accounted for as a short-term loan unless our board of directors determines to account for it as a long-term loan or through an inter-group interest.
10
Notes to Attributed Financial Information (Continued)
(unaudited)
- (2)
- Investments in available-for-sale securities and other cost investments are summarized as follows:
| | March 31, 2008 | December 31, 2007 | ||||||
|---|---|---|---|---|---|---|---|---|
| | amounts in millions | |||||||
| Interactive Group | ||||||||
| IAC/InterActiveCorp | $ | 1,728 | 1,863 | |||||
| Other | 121 | 181 | ||||||
| Total attributed Interactive Group | 1,849 | 2,044 | ||||||
| Entertainment Group | ||||||||
| News Corporation | — | 10,647 | ||||||
| Other | 5 | 5 | ||||||
| Total attributed Entertainment Group | 5 | 10,652 | ||||||
| Capital Group | ||||||||
| Time Warner Inc. ("Time Warner")(a) | 1,440 | 1,695 | ||||||
| Sprint Nextel Corporation(a) | 585 | 1,150 | ||||||
| Motorola, Inc.(a) | 688 | 1,187 | ||||||
| Viacom, Inc. | 301 | 333 | ||||||
| Embarq Corporation(a) | 175 | 216 | ||||||
| Other available-for-sale equity securities(a) | 82 | 104 | ||||||
| Other available-for-sale debt securities | 130 | 156 | ||||||
| Other cost investments and related receivables | 32 | 32 | ||||||
| Total attributed Capital Group | 3,433 | 4,873 | ||||||
| Consolidated Liberty | $ | 5,287 | 17,569 | |||||
- (a)
- Includes shares pledged as collateral for share borrowing arrangements.
- (3)
- Included in the Interactive Group's and the Entertainment Group's equity method investments are our investments in IAC and DIRECTV, respectively. The following table presents information regarding these investments:
| | March 31, 2008 | Share of earnings three months ended March 31, | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | Percentage ownership | Carrying value | | |||||||||||
| | Fair value | 2008 | 2007 | |||||||||||
| | dollar amounts in millions | |||||||||||||
| DIRECTV | 41 | % | $ | 10,795 | $ | 11,662 | $ | 36 | $ | — | ||||
| Expedia | 24 | % | $ | 1,310 | $ | 1,515 | $ | 12 | $ | 7 | ||||
11
Notes to Attributed Financial Information (Continued)
(unaudited)
- (4)
- Debt attributed to the Interactive Group, the Entertainment Group and the Capital Group is comprised of the following:
| | March 31, 2008 | ||||||
|---|---|---|---|---|---|---|---|
| | Outstanding principal | Carrying value | |||||
| | amounts in millions | ||||||
| Interactive Group | |||||||
| 7.875% Senior Notes due 2009 | $ | 670 | 669 | ||||
| 7.75% Senior Notes due 2009 | 233 | 234 | |||||
| 5.7% Senior Notes due 2013 | 803 | 801 | |||||
| 8.5% Senior Debentures due 2029 | 500 | 495 | |||||
| 8.25% Senior Debentures due 2030 | 902 | 895 | |||||
| QVC bank credit facilities | 4,489 | 4,489 | |||||
| Other subsidiary debt | 78 | 78 | |||||
| Total Interactive Group debt | 7,675 | 7,661 | |||||
| Entertainment Group | |||||||
| 3.25% Exchangeable Senior Debentures due 2031 | 551 | 385 | |||||
| Subsidiary debt | 54 | 54 | |||||
| Total Entertainment Group debt | 605 | 439 | |||||
| Capital Group | |||||||
| 3.125% Exchangeable Senior Debentures due 2023 | 1,264 | 1,256 | |||||
| 4% Exchangeable Senior Debentures due 2029 | 869 | 469 | |||||
| 3.75% Exchangeable Senior Debentures due 2030 | 810 | 399 | |||||
| 3.5% Exchangeable Senior Debentures due 2031 | 499 | 355 | |||||
| Liberty bank facility | 750 | 750 | |||||
| Other parent debt | 625 | 625 | |||||
| Subsidiary debt | 48 | 48 | |||||
| Total Capital Group debt | 4,865 | 3,902 | |||||
| Total debt | $ | 13,145 | 12,002 | ||||
- (5)
- Cash and stock-based compensation expense for our corporate employees has been allocated among the Interactive Group, the Entertainment Group and the Capital Group based on the estimated percentage of time spent providing services for each group. Other general and administrative expenses are 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 Capital Group to the Interactive Group and the Entertainment Group, including stock-based compensation, are as follows:
| | Three months ended March 31, | ||||
|---|---|---|---|---|---|
| | 2008 | 2007 | |||
| | amounts in millions | ||||
| Interactive Group | $ | 6 | 3 | ||
| Entertainment Group | $ | 1 | 3 | ||
12
Notes to Attributed Financial Information (Continued)
(unaudited)
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)
- We have accounted for income taxes for the Interactive Group, the Entertainment Group and the Capital Group in the accompanying attributed financial information in a manner similar to a stand-alone company basis. To the extent this methodology differs from our tax sharing policy, differences have been reflected in the attributed net assets of the groups.
- (7)
- The Liberty Interactive common stock, the Liberty Entertainment common stock and the Liberty Capital common stock have voting and conversion rights under our amended 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, will be 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 vote as a single class. In certain limited circumstances, the board may elect to seek the approval of only the holders of common stock related to our Interactive Group, our Entertainment Group or our Capital Group.
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 one of our other groups.
13
Attributed Financial Information for Tracking Stock Groups