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EXHIBIT 99.1
LIBERTY MEDIA CORPORATION
FOR IMMEDIATE RELEASE
August 14, 2003
Important Notice: Liberty Media Corporation ("Liberty") (NYSE: L, LMC.B)
President and CEO, Robert Bennett, will discuss Liberty's supplemental
financial information and guidance in a conference call which will begin at
5:00 p.m. (ET) today. The call can be accessed by dialing (913) 981-4900 at
least 10 minutes prior to the start time. Replays of the conference call can
be accessed from 8:00 p.m. (ET) on August 14, 2003 through 5:00 p.m (ET)
August 21, 2003, by dialing (719) 457-0820 plus the pass code 556459#. The
call will also be broadcast live across the internet. To access the web cast
go to http://www.libertymedia.com/investor_relations/default.htm. Links to
the press release will also be available on the Liberty Media web site.
LIBERTY MEDIA CORPORATION PROVIDES SECOND QUARTER
SUPPLEMENTAL FINANCIAL INFORMATION AND 2003 GUIDANCE
Englewood, Colorado - On August 13, 2003, Liberty filed its Form 10-Q with
the Securities and Exchange Commission for the quarter ended June 30, 2003.
The following release is being provided to supplement the information
provided to investors in Liberty's Form 10-Q as filed with the SEC. This
information is not meant to serve as a release of financial results for
Liberty. For information regarding Liberty's financial results, investors
should refer to Liberty's financial statements included in its Form 10-Q.
Liberty owns interests in a broad range of video programming, broadband
distribution, interactive technology services and communications businesses.
Liberty and its affiliated companies operate in the United States, Europe,
South America and Asia with some of the world's most recognized and respected
brands.
As a supplement to Liberty's consolidated statements of operations, the
following is a presentation of financial information for certain of Liberty's
privately held assets including:
- - Starz Encore Group LLC ("SEG"), a consolidated, wholly-owned subsidiary
of Liberty;
- - QVC, Inc., an equity affiliate of Liberty in which we have agreed to
purchase Comcast Corporation's ownership interest;
- - Discovery Communications, Inc. ("DCI" or "Discovery"); Jupiter
Telecommunications Co., Ltd. ("J-COM"); and Jupiter Programming Co., Ltd.
("JPC"), each a privately held equity affiliate of Liberty.
The following tables and comments compare financial information for the three
months ended June 30, 2003 to the same period for 2002. Operating expense,
as defined by Liberty and used in the following tables, consists of
operating, selling, general and administrative expenses and excludes
depreciation, amortization, stock compensation and certain non-cash charges
taken into account in determining operating income. Operating cash flow, as
defined by Liberty and used in the following tables, represents revenue less
operating expense. Please see Schedule 1 for reconciliations of the
appropriate periods in 2003 and 2002 of operating cash flow to operating
income for each identified entity. Liberty management utilizes revenue and
operating cash flow, as defined by Liberty, for purposes of making decisions
about allocating resources to Liberty's subsidiaries and affiliates and
assessing their performance. Liberty believes that certain non-GAAP
measures, when presented in conjunction with comparable GAAP measures, may be
useful in that they provide the reader with the same information used by
management. Operating cash flow should not be considered a replacement for
operating income, net income, cash flows or any other measure of performance
or liquidity under GAAP. See page 16 for a discussion of recent SEC rules
and guidance regarding non-GAAP measures and actions taken by Liberty to
comply with those rules and guidance.
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NOTE: The selected financial information presented for each of the equity
affiliates listed above was obtained directly from those affiliates. Liberty
does not control the decision-making processes or business management
practices of its equity affiliates. Accordingly, Liberty is reliant on the
management of these affiliates and their independent accountants to provide
accurate financial information prepared in accordance with generally accepted
accounting principles that Liberty uses in the application of the equity
method. As a result, Liberty makes no representations as to whether such
information presented on a stand-alone basis has been prepared in accordance
with GAAP. Liberty is not aware, however, of any errors in or possible
misstatements of the financial information provided to it by its equity
affiliates that would have a material effect on Liberty's consolidated
financial statements. Further, Liberty could not, among other things, cause
any noncontrolled affiliate to distribute to Liberty its proportionate share
of the revenue or operating cash flow of such affiliate.
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STARZ ENCORE GROUP LLC
Liberty owned 100% of SEG at June 30, 2003. The principal services of SEG
are the STARZ!, Encore and Thematic Multiplex premium movie services.
<Table>
STARZ ENCORE GROUP LLC
Summary Financial Information
Q2 03 Q2 02
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(amounts in millions)
Revenue $225 237
Operating Expense 135 162
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OPERATING CASH FLOW $ 90 75
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OPERATING INCOME $ 52 56
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OUTSTANDING DEBT $ 369 420
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TOTAL SUBSCRIPTION UNITS 142.4 125.6
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</Table>
As is more fully described in Liberty's Form 10-Q, following the business
combination involving AT&T Broadband, Comcast Holdings and Comcast
Corporation, Comcast Corporation caused AT&T Broadband to stop making
payments under AT&T Broadband's affiliation agreement with SEG and instead to
begin making lower payments pursuant to Comcast Holdings' agreement with SEG.
SEG is vigorously contesting Comcast Corporation's claims, vigorously
prosecuting its own claims and believes that it will succeed in obtaining a
judgment against Comcast Corporation. However, because both actions are at
an early stage, it is not possible to predict with a high degree of certainty
the outcome of either action, and there can be no assurance that those
actions will ultimately be resolved in favor of SEG. As a result, pursuant
to SEC Staff Accounting Bulletin No. 101, SEG did not recognize $24 million
of revenue, representing the difference between the rates prescribed in the
AT&T Broadband affiliation agreement and the amounts paid by Comcast for the
three months ended June 30, 2003.
- - SEG revenue decreased by 5% and operating expense decreased by 17%.
Operating cash flow increased by 20%.
- - The decrease in revenue was primarily due to the Comcast dispute. The
$24 million of unrecognized revenue associated with the AT&T agreement was
offset by $12 million of additional revenue from other distributors. Total
subscription units increased by 13% due to a 19% increase in Thematic
Multiplex units and a 4% increase in Encore units partially offset by a 5%
decrease in STARZ! units.
- - While SEG experienced growth in Encore and Thematic Multiplex units as
compared to the prior year, Starz and Encore units have declined since
March 31, 2003. The sequential decline is due in part to the dispute with
Comcast described above, as well as the impact of promotional efforts on
the part of certain satellite direct-to-home distributors and cable
operators to sell other premium movie services to their customers instead
of SEG's services. SEG is negotiating with these multichannel television
distributors to obtain more favorable channel packaging and to increase
promotional efforts. However, no assurance can be given that these
negotiations will be successful.
- - The decrease in operating expense was primarily due to decreases in
affiliate marketing support and national branding activity due to the
reduced number of co-operative promotions by certain multichannel
distributors discussed above. Bad debt expense also decreased resulting
from the $10 million reserve recorded in the second quarter of 2002
related to the bankruptcy filing of Adelphia Communications Corporation.
These decreases were partially offset by an increase in programming
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license fees resulting from an increase in the number of exhibitions of
output product relative to less expensive library product.
- - SEG reduced its outstanding bank debt by $51 million compared to
June 30, 2002.
STARZ ENCORE - FY '03 GUIDANCE ADJUSTED DOWNWARD
The following estimates assume primarily, among other factors, that we
continue to recognize revenue at rates applicable under the Comcast Holding's
affiliation agreement and that we continue to experience growth in total
subscription units with a product mix that is consistent with that
experienced during the first half of 2003.
For full year 2003 versus 2002, SEG operating results are expected to
decrease as follows:
- - Revenue, operating cash flow and operating income to decrease by mid
single digits %.
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DISCOVERY COMMUNICATIONS, INC.
Liberty owned 50% of DCI as of June 30, 2003. The results below give effect
to certain year-end audit adjustments affecting second quarter of 2002.
<Table>
DISCOVERY COMMUNICATIONS, INC.
Summary Financial Information
Q2 03 Q2 02
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(amounts in millions)
REVENUE:
Discovery Networks U.S. $ 352 281
Discovery Networks International 99 89
International Ventures 14 14
Consumer Products & Other* 25 33
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TOTAL REVENUE 490 417
OPERATING EXPENSE:
Discovery Networks U.S. 210 173
Discovery Networks International 79 77
International Ventures 18 25
Consumer Products & Other* 42 53
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TOTAL OPERATING EXPENSE 349 328
OPERATING CASH FLOW (DEFICIT):
Discovery Networks U.S. 142 108
Discovery Networks International 20 12
International Ventures (4) (11)
Consumer Products & Other* (17) (20)
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TOTAL OPERATING CASH FLOW $ 141 89
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OPERATING INCOME $ 96 37
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OUTSTANDING DEBT $2,510 2,241
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</Table>
* INCLUDES ALL INTERCOMPANY ELIMINATIONS.
During the second quarter, U.S. advertising sales showed strong performance
compared to the challenging marketplace of a year earlier. DCI is also
beginning to see solid ratings improvement for Discovery Channel, U.S. as a
result of programming investment and a strong new schedule. Total DCI
operating cash flow increased 58%, driven by an increase in gross advertising
revenue of 22% and an increase in gross affiliate revenue of 16%. Total
revenue and operating expenses increased 18% and 6%, respectively. DCI's
affiliated networks now reach more than 962 million cumulative worldwide
subscribers.
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DCI - DISCOVERY NETWORKS U.S.: Discovery Channel, TLC, Animal Planet, Travel
Channel, Discovery Health Channel, The Health Network, Discovery Kids
Channel, BBC-America Representation, The Science Channel, Discovery Times
Channel, Discovery Home & Leisure Channel, Discovery Wings Channel, Discovery
en Espanol, Discovery HD Theater and online initiatives.
- - Domestic Networks now reach approximately 540 million cumulative
subscribing households. Domestic Networks revenue increased by 25% due to
increases in both affiliate and advertising revenue. Operating expenses
increased 21% due to increases in programming, marketing and sales related
expenses. Operating cash flow increased by 31% to $142 million.
- - Net advertising revenue increased 24% due to growth in the overall
advertising market and a 3% increase in prime time audience delivery.
- - Net affiliate revenue increased 26% as aggregate subscribers increased
by 12%. Net affiliate revenue grew at a faster rate than subscription
units primarily due to an increase in paying subs and higher rates as
compared to the prior quarter. These revenues were net of launch support
amortization and other items of $36 million and $34 million for the
quarters ended June 30, 2003 and 2002, respectively. Excluding the effects
of launch support amortization, gross affiliate revenues increased 21% for
the quarter.
- - Operating expenses increased 21% due to increases in programming,
marketing and sales related expenses. The increase in programming and
marketing expenses was due to an increased level of investment to support
ratings growth. Sales related expenses increased due to the favorable
advertising sales trends.
DCI - DISCOVERY NETWORKS INTERNATIONAL: Discovery Channels in Europe, Latin
America, Asia, India, Germany, Italy/Africa and Kids-Latin America, Travel &
Adventure-Latin America, Health-Latin America, Discovery Home & Leisure UK,
Showcase Europe, Travel & Adventure Asia, Animal Planet-United Kingdom and
Health Channel-United Kingdom.
- - International Networks now reach over 295 million cumulative subscribing
households. International Networks revenue increased by 11% due to
increases in both affiliate and advertising revenue. Operating expenses
increased 3% and operating cash flow increased by 67% to $20 million.
- - Net advertising revenue increased 16% driven by positive developments in
advertising sales and subscriber growth in all International regions, with
Latin America and Asia showing improvements.
- - Net affiliate revenue increased by 10% as aggregate subscribers
increased by 38%. Subscription units grew at a faster rate than revenue
primarily due to a disproportionate increase in subscribers of recently
launched networks and certain networks in Asia where the majority are
currently in a free contract period or have lower subscription fee rates
than other International channels.
DCI - INTERNATIONAL VENTURES: Consolidated BBC/DCI Joint Venture Networks
(Animal Planet networks in Europe, Asia, Latin America, People + Arts Latin
America and Spain).
- - International Ventures revenue remained unchanged for the quarter. The
operating cash flow deficit improved by 64%, from $11 million to $4
million. International Ventures now reach over 127 million cumulative
subscribing households.
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DCI - CONSUMER PRODUCTS: The principal components of Discovery Consumer
Products include a proprietary retail business comprised of a nationwide
chain of 143 Discovery Channel stores, mail-order catalogs, an on-line
shopping site, a global licensing and strategic partnerships business, and a
supplementary education business reaching over 35 million students and 80,000
classrooms in the U.S.
- - Operating cash flow deficit improved by $3 million or 15% primarily due
to an increase in gross margin resulting from sales of the newly introduced
higher margin products, combined with reductions in store operating costs
and other overhead.
DCI - OUTSTANDING DEBT: DCI's outstanding debt (including capital leases,
letters of credit, and other notes payable) increased by $269 million
compared to June 30, 2002. The increase was primarily due to additional
borrowings for the funding of start-up businesses as well as payments
relating to the acquisition of the Health Network.
DCI - FY '03 GUIDANCE ADJUSTED UPWARD
The following estimates assume primarily, among other factors, continuation
of the positive trend in the domestic advertising sales market, stabilization
of certain Latin American economies, continued growth in international
distribution and continued economic uncertainty in the national retail
environment.
For full year 2003 versus 2002, DCI operating results are expected to
increase as follows:
DCI consolidated :
- - Revenue by mid teens %; Operating cash flow by mid 20s %.
- - Operating income by approximately 50%.
Discovery Networks U.S.:
- - Revenue by mid to high teens %; Operating cash flow by approximately 10 %.
Discovery Networks International:
- - Revenue by mid to high single digits %; Operating cash flow by mid to high
20s %.
Notes:
BBC/DCI JOINT VENTURES - CONSOLIDATED:
The equity in the assets of the British Broadcasting Corporation/DCI joint
ventures are predominantly held 50/50 by DCI and BBC. Exceptions involve
participants related to the local market in which a specific network
operates. Where DCI exercises control of BBC/DCI joint ventures, DCI
consolidates financial results into International Ventures. Until such
assets reach breakeven, 100% of the economic interests are consolidated.
After DCI has fully recouped prior investment, the economic interests will
match the equity interests and will be accounted for under the equity method.
BBC/DCI JOINT VENTURES - EQUITY AFFILIATES:
DCI accounts for its interests in remaining joint ventures, including
interests in Discovery Channel Canada, Discovery Channel Japan, Animal Planet
Canada, Animal Planet Japan, and Joint Venture Programming, as equity method
investments. The operating results of these entities are not reflected in
the results presented above.
OTHER JOINT VENTURES: DISCOVERY TIMES CHANNEL, DISCOVERY HEALTH CHANNEL,
ANIMAL PLANET (US) - CONSOLIDATED
DCI owns a 50% interest in Discovery Times Channel, a 72% interest in The
Health Channel and a 60% interest in Animal Planet (US). These ventures are
controlled by DCI and therefore DCI consolidates the revenues and operating
expenses of the ventures as part of Discovery Networks U.S. Due to certain
contractual redemption rights of the outside partners in the ventures, no
losses of these ventures are allocated to the outside partners. Upon
expiration of these rights, the economic interests will approximate the
equity interests.
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QVC, INC.
Liberty owned approximately 42% of QVC as of June 30, 2003. As described
later, effective June 30, 2003, Liberty and Comcast reached an agreement
pursuant to which Liberty will acquire Comcast's 56% ownership stake in QVC,
Inc. for $7.9 billion. If this transaction is consummated as currently
contemplated, Liberty will own approximately 98% of QVC's outstanding shares
and QVC will become a consolidated subsidiary of Liberty.
<Table>
QVC, INC.
Summary Financial Information
Q2 03 Q2 02
------ -----
amounts in millions
REVENUE:
Domestic $ 862 844
International 239 146
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TOTAL REVENUE 1,101 990
OPERATING EXPENSE:
Domestic 666 652
International 216 144
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TOTAL OPERATING EXPENSE 882 796
OPERATING CASH FLOW (DEFICIT):
Domestic 196 192
International 23 2
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TOTAL OPERATING CASH FLOW $ 219 194
------ -----
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OPERATING INCOME $ 185 165
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OUTSTANDING DEBT $ - 185
------ -----
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</Table>
- - QVC's revenue and operating cash flow increased by 11% and 13%,
respectively.
- - QVC's domestic revenue and operating cash flow increased 2%. Although
the Company shipped 5.4% more units than the prior year, the average
selling price declined 2.7% from $43.07 to $41.90. A minor decline in the
gross margin of the domestic operations was offset by greater cost control
to maintain its operating cash flow margin at 22.7%.
- - QVC's international operations experienced positive results for the
quarter due to a combination of strong subscriber growth and a weakening
U.S. dollar. Revenue from international operations increased 64% due to
strong performances from each of the international divisions. Excluding
the effect of exchange rates, QVC's international revenue growth was 43%.
Fueled by the increase in sales and higher gross margin, the operating cash
flow of the international operations increased from $2 million to
$23 million.
- - QVC paid off substantially all of its outstanding debt as of the end of the
first quarter of 2003. At June 30, 2003, QVC's operations had generated a
cash and cash equivalents balance of $508 million.
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QVC - FY '03 GUIDANCE REMAINS UNCHANGED
The following estimates assume primarily, among other factors, that the
product mix remains consistent with that experienced in the first half of
2003, continued international growth and a stronger domestic economic
environment for the second half of 2003 compared to last year.
For full year 2003 versus 2002, QVC operating results are expected to
increase as follows:
- - Revenue by high single digits %; Operating cash flow by low double
digits %.
- - Operating income by low double digits %.
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JAPANESE BUSINESSES
Liberty owned 45% of J-COM and 50% of JPC at June 30, 2003. The following
tables reflect each of J-COM's and JPC's consolidated results which are
reported in Japanese Yen and are translated into U.S. Dollars at a
convenience exchange rate of 119.72 (exchange rate at June 30, 2003). The
foreign currency exchange rate utilized in GAAP reporting was 118.99.
JUPITER TELECOMMUNICATIONS CO., LTD.
<Table>
JUPITER TELECOMMUNICATIONS CO., LTD.
Summary Financial Information
Q2 03 Q2 02
------- ----- ------- -----
(amounts in millions)
Yen US $ Yen US $
Revenue 34,958 292 27,574 230
Operating Expense 23,088 193 21,526 180
------- ----- ------- -----
OPERATING CASH FLOW 11,870 99 6,048 50
------- ----- ------- -----
------- ----- ------- -----
OPERATING INCOME (LOSS) 3,287 27 (1,601) (13)
------- ----- ------- -----
------- ----- ------- -----
OUTSTANDING DEBT (1) 261,719 2,186 281,202 2,349
MANAGED SUBSCRIBER DATA (000S):
Cable 1,454 1,320
High Speed Data 561 420
Telephony 446 250
Homes Receiving Service (2) 1,654 1,453
</Table>
(1) INCLUDES SHAREHOLDER DEBT OF Y150 BILLION AND Y69 BILLION ($1,251
MILLION AND $580 MILLION), RESPECTIVELY, AT JUNE 2003 AND 2002.
(2) REPRESENTS THE NUMBER OF HOUSEHOLDS SUBSCRIBING TO AT LEAST ONE J-COM
BROADBAND SERVICE.
J-COM: J-COM is Japan's largest multiple system operator (MSO) based on the
number of customers served. J-COM and its subsidiaries provide cable
television, high-speed Internet access and telephony services in Japan.
Managed subscriber data includes all consolidated subsidiaries as well as
equity affiliates that are managed by J-COM.
- - Revenue increased 27% due to increased distribution in all three
services and substantial growth in Internet and telephony revenue.
Managed cable subscribers increased 10%, Internet services subscribers
increased 34% and telephony subscribers increased 78%. Average monthly
revenue per household receiving at least one service ("ARPH") increased
10% to Y6,684 or $56.
- - Operating cash flow at J-COM increased 96% due to the revenue increases
combined with margin improvements associated with increased scale.
- - J-COM served approximately 1.65 million homes at June 30, 2003, an
increase of 14%, and services per household (total revenue generating units
divided by total households served) rose from 1.37 to 1.49. Penetration of
homes taking at least one service increased from 25% to over 28%.
- - Approximately 38% of J-COM's customers subscribed to more than one
service at June 30, 2003, which translated into approximately 626,000 homes
with multiple services. The triple play service option (taking all three
services available) made strong headway with 11% of J-COM's homes
subscribing to all three services at June 30, 2003.
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J-COM - FY '03 GUIDANCE ADJUSTED UPWARD
The following estimates assume continued subscriber growth, a product mix
that is consistent with that experienced during the first half of 2003 and
continued cost control efforts, including programming costs.
For full year 2003 versus 2002, J-COM operating results are expected to
increase as follows:
- - Revenue by mid to high teens %; Operating cash flow by 70 - 75%.
- - Operating income from an operating loss of Y4 billion ($34 million) in
2002 to operating income of Y8-10 billion ($68-85 million) in 2003.
JUPITER PROGRAMMING CO., LTD.
<Table>
JUPITER PROGRAMMING CO., LTD.
Summary Financial Information
Q2 03 Q2 02
------- ----- ------- -----
(amounts in millions)
Yen US $ Yen US $
Revenue 11,970 100 8,610 72
Operating Expense 10,446 87 7,428 62
------- ----- ------- -----
OPERATING CASH FLOW 1,524 13 1,182 10
------- ----- ------- -----
------- ----- ------- -----
OPERATING INCOME 1,228 10 904 8
------- ----- ------- -----
------- ----- ------- -----
OUTSTANDING DEBT 6,668 56 7,166 60
CUMULATIVE SUBSCRIBERS (000S) (1) 37,230 32,134
</Table>
(1) INCLUDES SUBSCRIBERS AT ALL CONSOLIDATED AND EQUITY OWNED JPC CHANNELS.
SHOP CHANNEL SUBSCRIBERS ARE STATED ON A FULL-TIME EQUIVALENT BASIS.
JPC: JPC is the largest multi-channel pay television programming and content
provider in Japan based upon the number of subscribers receiving the
channels. JPC currently owns, operates or invests in 14 channels.
- - JPC's revenue increased 39% largely due to the increase in retail sales
at Shop Channel and in subscription and advertising revenues at the other
channels. Shop Channel was by far the largest contributor generating an
additional $23 million in revenue versus the comparable period in 2002.
This increase was driven by a 23% increase in full-time equivalent ("FTE")
homes at quarter end and an increase in sales per FTE home of 15%.
Subscribers at other channels grew by 17% at CSN, 18% at Golf Network and
21% at J-Sky Sports.
- - JPC's operating cash flow increased 29% due to the revenue increases,
partially offset by increased cost of goods sold, fulfillment,
telemarketing, programming and general and administrative expenses.
JPC - FY '03 GUIDANCE ADJUSTED UPWARD
The following estimates assume continued subscriber growth across all
programming services, increases in sales per home at Shop Channel and gross
margins that are consistent with historical margins.
For full year 2003 versus 2002, JPC operating results are expected to
increase as follows:
- - Revenue by approximately 30%; Operating cash flow by high 20s %.
- - Operating income by low 20s %.
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SUMMARY OF CASH AND LONG-TERM DEBT
A summary of Liberty's cash and long-term debt as of June 30, 2003 and March
31, 2003 is as follows:
<Table>
06/30/03 03/31/03
-------- --------
(amounts in millions)
CASH AND CASH RELATED INVESTMENTS:
Liberty Corporate Cash $ 3,287 3,241
Corporate Short-term Investments 199 124
Corporate Long-term Marketable Securities (1) 1,166 347
-------- --------
TOTAL CORPORATE CASH AND LIQUID INVESTMENTS 4,652 3,712
Cash and Liquid Investments of Subsidiaries (2) 275 251
-------- --------
TOTAL CASH AND LIQUID INVESTMENTS 4,927 3,963
LESS: SHORT AND LONG-TERM SECURITIES (1,398) (501)
-------- --------
CONSOLIDATED CASH BALANCE (GAAP) $ 3,529 3,462
-------- --------
-------- --------
DEBT:
Senior Notes and Debentures (3) $ 3,488 2,488
Senior Exchangeable Debentures (4) 4,796 4,546
Bank Debt 250 300
-------- --------
TOTAL CORPORATE DEBT 8,534 7,334
Debt of Subsidiaries 1,178 1,318
-------- --------
TOTAL CORPORATE AND SUBSIDIARY DEBT 9,712 8,652
LESS: UNAMORTIZED DISCOUNT ATTRIBUTABLE
TO CALL OPTION OBLIGATION (2,576) (2,537)
UNAMORTIZED DISCOUNT (22) (18)
-------- --------
CONSOLIDATED DEBT BALANCE (GAAP) $ 7,114 6,097
-------- --------
-------- --------
</Table>
(1) REPRESENTS LONG-TERM LIQUID CASH EQUIVALENTS WHICH ARE INCLUDED IN
INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES AND OTHER COST INVESTMENTS
IN LIBERTY'S CONSOLIDATED BALANCE SHEET.
(2) INCLUDES $15 MILLION AND $15 MILLION OF SHORT-TERM AND $18 MILLION AND
$15 MILLION OF LONG-TERM SECURITIES HELD BY SUBSIDIARIES AT JUNE 30, 2003
AND MARCH 31, 2003, RESPECTIVELY.
(3) REPRESENTS FACE AMOUNT OF SENIOR NOTES AND DEBENTURES WITH NO REDUCTION
FOR THE UNAMORTIZED DISCOUNT.
(4) REPRESENTS FACE AMOUNT OF SENIOR EXCHANGEABLE DEBENTURES, WITH NO
REDUCTION FOR THE UNAMORTIZED DISCOUNT ATTRIBUTABLE TO THE EMBEDDED CALL
OPTION OBLIGATION.
The above presentation is provided to separately identify parent-only cash
and liquid investments and debt information from our consolidated cash and
debt balances.
Liberty's Total Corporate Cash and Liquid Investments increased by $940
million to $4.7 billion and Total Corporate Debt increased by $1.2 billion to
$8.5 billion compared to March 31, 2003. The increase in corporate cash was
primarily due to proceeds from the issuance of $1.0 billion of 5.7% senior
notes and the issuance of $250 million of senior exchangeable debentures that
are exchangeable into shares of AOL Time Warner, Inc. common stock pursuant
to the exercise of the underwriters over allotment option. The increase in
corporate cash was also attributable to proceeds from the settlement of News
Corporation collars and the sale of shares of News Corporation common stock.
Cash proceeds were partially offset by the exercise of approximately $1.1
billion of preemptive rights related to InterActiveCorp (f.k.a. USA
Interactive, Inc.).
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SUMMARY OF LIBERTY'S OWNERSHIP OF SIGNIFICANT PUBLIC ASSETS
<Table>
SHARES HELD SHARE PRICE
TICKER SYMBOL 6/30/03(1) 8/13/03 MARKET VALUE
- ------------- ----------- ----------- ------------
NWS.A 223.9 $27.60 $6,178.5
IACI 136.6 34.73 4,744.1
AOL (2) 171.2 15.37 2,631.1
UCOMA 305.0 6.10 1,860.5
PCS (3) 184.2 5.35 985.5
VIA.B (4) 15.2 42.42 644.0
MOT (5) 68.3 9.27 633.1
V (6) 37.4 17.26 645.5
CD 26.4 17.25 455.4
IDT 10.3 17.48 180.0
LSTTA / LSTTB (7) 42.5 2.25 95.6
OPTV 32.8 2.14 70.2
Other 223.0
AMOUNTS IN MILLIONS, EXCEPT SHARE PRICES.
</Table>
(1) Represents common share equivalents, assuming all applicable conversions
and exchanges, unless otherwise noted.
(2) Includes 100.5 million shares underlying Liberty's 0.75% Senior
Exchangeable Debentures due 2023, which have an initial exchange price
of $17.42 per AOL share and may be tendered by the holder on March 30, 2008,
March 30, 2013 or March 30, 2018.
(3) Excludes 12.6 million warrants exercisable at $12.01 per share that
expire November 13, 2003 and preferred convertible shares (face amount $123
million) that convert into 8.0 million common shares. Includes 19.9 million
shares underlying Liberty's 4% Senior Exchangeable Debentures due 2029,
which have an initial exchange price of $43.58 per Sprint PCS Group share.
Includes 13.6 million shares underlying Liberty's 3.75% Senior Exchangeable
Debentures due 2030, which have an initial exchange price of $59.61 per
Sprint PCS Group share.
(4) Includes 14.3 million shares underlying Liberty's 3.25% Senior
Exchangeable Debentures due 2031, which have an initial exchange price of
$53.86 per VIA.B share.
(5) Includes 22.1 million shares underlying Liberty's 3.5% Senior
Exchangeable Debentures due 2031, which have an initial exchange price of
$27.16 per Motorola share. Excludes 8.0 million shares pledged as
collateral against an 8.0 million share Motorola short position.
(6) Liberty owns 37.4 million ordinary shares of Vivendi Universal S.A. which
is the equivalent of 37.4 million ADS's.
(7) Excludes $150 million face amount of nonconvertible preferred stock of
Liberty Satellite & Technology, Inc. and $150 million face amount of
convertible preferred stock, convertible at a price of $88.40.
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<Page>
SUMMARY OF LIBERTY'S EQUITY DERIVATIVES
The following table includes cashless collars, put spread collars and narrow
band collars. Effective December 31, 2002, none of these instruments are
considered hedges for GAAP reporting purposes.
<Table>
NUMBER OF
UNDERLYING WTD. AVG. WTD. AVG. WTD. AVG. WTD. AVG.
SHARES LOWER PUT/ FLOOR/ CEILING/ AVG. YRS.
SECURITY HEDGING INSTRUMENT 6/30/03 SHARE (2) SHARE SHARE TO MATURITY
- -------- ------------------ ---------- ---------- --------- --------- -----------
AOL EQUITY COLLARS 36,100 N/A $ 47 $ 96 2.1
AOL PUT OPTION (1) 36,100 $40 N/A N/A 2.1
AOL PUT SPREAD (2) 21,538 28 49 118 1.7
------- ---- ----- -----
Total AOL 57,638 36 48 104
NWS.A PUT OPTION 6,916 20 N/A N/A 2.3
PCS EQUITY COLLARS 139,421 N/A 24 40 5.5
MOT EQUITY COLLARS 43,886 N/A 27 55 0.9
CD EQUITY COLLARS 25,123 N/A 19 33 2.1
VIA.B EQUITY COLLARS 928 N/A 47 92 11.9
PCLN EQUITY COLLARS 521 N/A 223 549 2.1
SHARE AMOUNTS ARE STATED IN THOUSANDS
</Table>
(1) Represents AOL puts that were sold during the first quarter of 2002 with
an exercise price of approximately $40 per share.
(2) Put spread collars provide the counterparty with a put option that gives
it the right to require Liberty to purchase the underlying securities at a
price that is lower than Liberty's put price. The inclusion of the
secondary put option allows Liberty to secure a higher call option price
while maintaining net zero cost to enter into the collar.
OUTSTANDING SHARES
At June 30, 2003, there were approximately 2.685 billion outstanding shares
of L and LMC.B and 77 million shares of L and LMC.B reserved for issuance
pursuant to warrants and employee stock options. At June 30, 2003,
approximately 74% of the options to purchase L and LMC.B shares had a strike
price that was higher than the closing stock price. Exercise of these
options, as well as all other warrants and options to purchase L and LMC.B
shares, would result in aggregate proceeds of approximately $902 million.
OTHER EVENTS:
LIBERTY TO ACQUIRE QVC, INC.
Effective June 30, 2003, Liberty and Comcast reached an agreement pursuant to
which Liberty will acquire Comcast's 56% ownership stake in QVC, Inc. for
$7.9 billion. This agreement supercedes the buy-sell process initiated by
Liberty earlier this year under the QVC stockholders' agreement between
Liberty and Comcast. On July 11, 2003, Liberty gave notice to Comcast that
consideration for Liberty's acquisition will be in the form of approximately
218 million shares of its Series A common stock (valued at $11.71 per share)
representing 7.5% of the shares of Liberty common stock outstanding (after
giving effect to that issuance). The remainder of the purchase price will be
paid in the form of a three-year note bearing interest at LIBOR plus 1.5%.
The values of the shares and the note to be delivered to Comcast are
approximately $2.6 billion and $5.3 billion, respectively.
If this transaction is consummated as currently contemplated, Liberty will
own approximately 98% of QVC's outstanding shares and QVC will become a
controlled subsidiary of Liberty. The remaining shares are held by members
of the QVC management team. Liberty has received approval for this
14
<Page>
transaction from the Federal Trade Commission, however, the transaction
remains subject to the receipt of other regulatory approvals and customary
closing conditions. Liberty expects the transaction to close during the
fourth quarter of this year.
TRUEPOSITION SIGNS MULTI-YEAR AGREEMENT WITH T-MOBILE
On July 23, 2003, T-Mobile USA, Inc. and TruePosition, Inc., a subsidiary of
Liberty and a leading provider of location-based technologies, announced a
multi-year agreement to provide TruePosition's enhanced 911 solution to the
T-Mobile national wireless network. The T-Mobile USA agreement will bring
TruePosition's E911 services to a significant number of wireless users in the
United States.
T-Mobile will be deploying TruePosition's Finder(TM) technology as part of its
commitment to meeting the Federal Communication Commission's (FCC) Enhanced
911 (E911) Phase II mandate. The FCC requires all wireless carriers to
provide designated public safety agencies with location information for 911
calls. For carriers using network-based technologies, such as
TruePosition's, the FCC E911 Phase II mandate calls for wireless carriers to
provide accuracy data to 100 meters for 67 percent of calls and 300 meters
for 95 percent of calls.
T-Mobile operates an all-digital, national wireless network based on the
globally dominant GSM (Global System for Mobile Communications) technology.
TruePosition's E911 solution will provide T-Mobile customers the ability to
be located with greater accuracy in accordance with the FCC's E911 Phase II
guidelines and will be available nationally based on local public safety
agency's requests.
CERTAIN STATEMENTS IN THIS PRESS RELEASE MAY CONSTITUTE "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER IMPORTANT FACTORS THAT COULD CAUSE THE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF LIBERTY MEDIA CORPORATION AND
SUBSIDIARIES OR INDUSTRY RESULTS, TO DIFFER MATERIALLY FROM ANY FUTURE
RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH
FORWARD-LOOKING STATEMENTS. SUCH RISKS, UNCERTAINTIES AND OTHER FACTORS
INCLUDE, AMONG OTHERS: THE RISKS AND FACTORS DESCRIBED IN THE PUBLICLY FILED
DOCUMENTS OF LIBERTY MEDIA CORPORATION, INCLUDING THE MOST RECENTLY FILED
FORM 10-Q OF LIBERTY MEDIA CORPORATION; GENERAL ECONOMIC AND BUSINESS
CONDITIONS AND INDUSTRY TRENDS INCLUDING IN THE ADVERTISING AND RETAIL
MARKETS; THE CONTINUED STRENGTH OF THE INDUSTRIES IN WHICH WE OPERATE;
CONTINUED CONSOLIDATION OF THE BROADBAND DISTRIBUTION INDUSTRY; UNCERTAINTIES
INHERENT IN PROPOSED BUSINESS STRATEGIES AND DEVELOPMENT PLANS; RAPID
TECHNOLOGICAL CHANGES; FUTURE FINANCIAL PERFORMANCE, INCLUDING AVAILABILITY,
TERMS AND DEPLOYMENT OF CAPITAL; AVAILABILITY OF QUALIFIED PERSONNEL; CHANGES
IN, OR THE FAILURE OR THE INABILITY TO COMPLY WITH, GOVERNMENT REGULATION,
INCLUDING, WITHOUT LIMITATION, REGULATIONS OF THE FEDERAL COMMUNICATIONS
COMMISSION, AND ADVERSE OUTCOMES FROM REGULATORY PROCEEDINGS; ADVERSE
OUTCOMES IN PENDING LITIGATION; CHANGES IN THE NATURE OF KEY STRATEGIC
RELATIONSHIPS WITH PARTNERS AND JOINT VENTURES; COMPETITOR RESPONSES TO
LIBERTY MEDIA CORPORATION'S PRODUCTS AND SERVICES, AND THE OVERALL MARKET
ACCEPTANCE OF SUCH PRODUCTS AND SERVICES, INCLUDING ACCEPTANCE OF THE PRICING
OF SUCH PRODUCTS AND SERVICES. THESE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS
OF THE DATE OF THIS RELEASE. LIBERTY MEDIA CORPORATION EXPRESSLY DISCLAIMS
ANY OBLIGATION OR UNDERTAKING TO DISSEMINATE ANY UPDATES OR REVISIONS TO ANY
FORWARD-LOOKING STATEMENT CONTAINED HEREIN TO REFLECT ANY CHANGE IN LIBERTY
MEDIA CORPORATION'S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGE IN EVENTS,
CONDITIONS OR CIRCUMSTANCES ON WHICH ANY SUCH STATEMENT IS BASED.
Contact: Mike Erickson 877-772-1518
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<Page>
NON-GAAP FINANCIAL MEASURES
The Securities and Exchange Commission ("SEC") recently issued new rules and
guidance regarding the use by registrant's of non-GAAP financial measures.
Under these new rules, a non-GAAP financial measure is defined generally as a
numerical measure of a registrant's historical or future financial
performance, financial position or cash flow that:
- - excludes amounts, or are subject to adjustments that have the effect of
excluding amounts, that are included in the most directly comparable
measure calculated and presented in accordance with GAAP; or
- - includes amounts, or is subject to adjustments that have the effect of
including amounts, that are excluded from the most directly comparable
measure so calculated and presented.
The new rules and guidance require, among other things, a quantitative
reconciliation (to the extent available without unreasonable efforts in the
case of forward-looking information) of the differences between the non-GAAP
financial measure used with the most directly comparable GAAP financial
measure. A statement of the reason why the registrant's management believes
that presentation of the non-GAAP financial measure provides useful
information to investors is required, as is a statement, if material, of any
additional purposes for which the registrant's management uses the non-GAAP
financial measure.
This press release includes a presentation of operating cash flow, which is a
non-GAAP financial measure, for each of the privately held assets of Liberty
included herein together with a reconciliation of that non-GAAP measure to
the privately held asset's operating income. Liberty defines operating cash
flow as revenue less "operating expense," which Liberty defines as operating,
selling, general and administrative expenses. Operating expense, as defined
by Liberty, excludes depreciation, amortization, stock compensation and
certain non-cash charges taken into account with operating expense in
computing operating income in accordance with GAAP.
Liberty's management uses revenue and operating cash flow as a measure of
operating performance and for purposes of making decisions about allocating
resources to its subsidiaries and affiliates, and believes the presentation
of operating cash flow is helpful information for investors when presented in
conjunction with operating income. Because operating cash flow is used as a
measure of operating performance, Liberty views operating income as the most
directly comparable GAAP measure. Operating cash flow is not meant to
replace or supercede operating income or any other GAAP measure, but rather
to supplement the information to present investors with the same information
as Liberty's management considers in assessing the results of operations and
performance of its assets.
The new rules on non-GAAP financial measures were released by the SEC in
January 2003. We, in common with other registrants, are still in the process
of interpreting the rules and monitoring developments and guidance by the SEC
to ensure continued compliance. While we believe that the presentation in
this press release complies with the new rules, we can give no assurance that
we will be able to provide the same or comparable measures in future press
releases or announcements.
16
<Page>
LIBERTY MEDIA CORPORATION
SCHEDULE 1
The following table provides a reconciliation, for our largest consolidated
subsidiary and certain of our large equity affiliates, of operating cash flow
to operating income calculated in accordance with GAAP for the three month
periods ended June 30, 2003 and 2002.
<Table>
SEG DCI QVC J-COM JPC
--- --- --- ----- ---
(amounts in millions)
THREE MONTHS ENDED JUNE 30, 2003
OPERATING CASH FLOW $90 141 219 99 13
Depreciation and amortization 17 31 34 72 3
Stock compensation expense (1) 21 14 - - -
--- --- --- --- ---
OPERATING INCOME $52 96 185 27 10
--- --- --- --- ---
--- --- --- --- ---
THREE MONTHS ENDED JUNE 30, 2002
OPERATING CASH FLOW $75 89 194 50 10
Depreciation and amortization 17 28 29 63 2
Stock compensation expense (1) 2 24 - - -
--- --- --- --- ---
OPERATING INCOME (LOSS) $56 37 165 (13) 8
--- --- --- --- ---
--- --- --- --- ---
</Table>
(1) SEG AND DCI STOCK COMPENSATION EXPENSE REPRESENTS AMOUNTS PURSUANT TO
PHANTOM STOCK APPRECIATION RIGHTS PLANS.
17