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FOR IMMEDIATE RELEASE
March 15, 2004
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 11:00 a.m.
(ET) March 15, 2004. The call can be accessed by dialing (913) 981-4901 at least
10 minutes prior to the start time. Replays of the conference call can be
accessed from 2:00 p.m. (ET) on March 15, 2004 through 5:00 p.m (ET) March 22,
2004, by dialing (719) 457-0820 plus the pass code 566114#. 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 this press
release will also be available on the Liberty Media web site.
LIBERTY MEDIA CORPORATION PROVIDES FOURTH QUARTER AND FULL YEAR
SUPPLEMENTAL FINANCIAL INFORMATION AND 2004 GUIDANCE
Englewood, Colorado - On March 15, 2004, Liberty filed its Form 10-K with the
Securities and Exchange Commission for the year ended December 31, 2003. The
following release is being provided to supplement the information provided to
investors in Liberty's Form 10-K 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-K.
As a supplement to Liberty's consolidated statements of operations, the
following is a presentation of financial information on a stand-alone basis for
certain of Liberty's privately held assets including:
o QVC, Inc., a consolidated, 98% owned subsidiary of Liberty;
o Starz Encore Group LLC ("SEG"), a consolidated, wholly-owned subsidiary of
Liberty;
o 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 and twelve months ended December 31, 2003 to the same period for 2002.
Three month comparisons are referenced by "Q/Q", and twelve month comparisons
are referenced by "Y/Y." Operating expense, as defined by Liberty and used in
the following tables, consists of cost of sales, operating, and selling, general
and administrative expenses (excluding stock compensation). Operating cash flow,
as defined by Liberty and used in the following tables, represents revenue less
operating expense. Excluded in determining operating cash flow are depreciation,
amortization, stock compensation and other non-cash charges taken into account
in determining operating income. Please see page 15 and Schedule 1 at the end of
this document for a discussion of SEC rules and guidance regarding non-GAAP
measures and actions taken by Liberty to comply with those rules and guidance,
as well as for reconciliations for the applicable periods in 2003 and 2002 of
operating cash flow to operating income, as determined under GAAP, for each
identified entity.
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 relies on the management of these
affiliates and their independent auditors 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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QVC
On September 17, 2003, Liberty announced that it had completed its previously
announced acquisition of Comcast Corporation's approximate 57% ownership stake
in QVC, Inc. QVC is now 98% owned by Liberty with the remainder owned by members
of the QVC management team.
<Table>
<Caption>
QVC, INC.
Summary Financial Information
Q4 03 Q4 02 2003 2002
------ ----- ------ -----
(amounts in millions)
REVENUE:
Domestic $1,233 1,163 $3,845 3,705
International 340 214 1,044 657
------ ----- ------ -----
TOTAL REVENUE 1,573 1,377 4,889 4,362
------ ----- ------ -----
OPERATING EXPENSE:
Domestic 941 896 2,957 2,875
International 284 194 919 626
------ ----- ------ -----
TOTAL OPERATING EXPENSE 1,225 1,090 3,876 3,501
------ ----- ------ -----
OPERATING CASH FLOW:
Domestic 292 267 888 830
International 56 20 125 31
------ ----- ------ -----
TOTAL OPERATING CASH FLOW $ 348 287 $1,013 861
====== ===== ====== =====
OPERATING INCOME $ 229 248 $ 785 737
====== ===== ====== =====
NET CASH $ 905 274
====== ======
</Table>
o QVC's revenue and operating cash flow increased 14% and 21% Q/Q and 12% and
18% Y/Y, respectively.
o QVC's domestic revenue and operating cash flow increased 6% and 9% Q/Q and
4% and 7% Y/Y, respectively. The domestic revenue increase resulted from
increased sales volume primarily in the areas of apparel and accessories
for both periods. The domestic operations shipped approximately 31.3
million units during the quarter, an increase of 15%, and approximately
97.2 million units during the year, an increase of 9%. The average selling
price declined 8.8% from $44.48 to $40.55 Q/Q and 5.7% from $44.64 to
$42.09 Y/Y. Gross margins decreased slightly to 35.6% for the quarter and
36.5% for the year, however, through the benefits of scale economics and
cost control efforts, domestic operating cash flow margins increased 70
basis points in both periods.
o QVC's international operations experienced very strong results for the
quarter due to a combination of greater sales to existing subscribers, new
subscriber growth and favorable foreign currency exchange rates. Revenue
from international operations increased 59% for both periods as a result of
strong performance from each of the international divisions. The average
number of international subscribers increased from 42.6 million to 48.9
million, or 15%, Q/Q and increased from 40.3 million to 46.5 million, or
15%, Y/Y. Increased sales and higher gross margin helped the international
operations increase operating cash flow from $20 million to $56 million, or
180%, Q/Q and from $31 million to $125 million, or four-fold Y/Y. The
international cash flow margin increased from 9.3% to 16.5% Q/Q and from
4.7% to 12.0% Y/Y. Excluding the effect of exchange rates, the increase in
QVC's international revenue and operating cash flow was 41% and 147% Q/Q
and 42% and 257% Y/Y, respectively.
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QVC - FY '04 GUIDANCE
The following estimates assume primarily, among other factors, that the product
mix remains materially consistent with that experienced in 2003, foreign
currency exchange rates remain constant, continued international growth and
domestic sales trends consistent with that experienced in the second half of
2003.
For full year 2004 versus 2003, QVC operating results are expected to increase
as follows:
o Revenue by high single digits %; Operating cash flow by high single digits
%.
o Operating income will decrease by high teens %.
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STARZ ENCORE GROUP LLC
Liberty owned 100% of SEG at December 31, 2003. The principal services of SEG
are the STARZ!, Encore and Thematic Multiplex premium movie services.
<Table>
<Caption>
STARZ ENCORE GROUP LLC
Summary Financial Information
Q4 03 Q4 02 2003 2002
----- ----- ----- ----
(amounts in millions)
Revenue $ 235 228 $ 906 945
Operating Expense 136 126 538 574
----- --- ----- ---
OPERATING CASH FLOW $ 99 102 $ 368 371
===== === ===== ===
OPERATING INCOME (LOSS) $ (2) 84 $ 266 297
===== === ===== ===
OUTSTANDING DEBT $ 23 375
===== =====
TOTAL SUBSCRIPTION UNITS 151.0 135.9
===== =====
</Table>
o SEG's revenue increased by 3% and operating cash flow decreased by 3% Q/Q.
SEG's revenue and operating cash flow decreased by 4% and 1% Y/Y,
respectively.
o The increase in revenue Q/Q is primarily due to fees received for
distribution of co-produced films and revenue resulting from the settlement
of certain affiliate audits. The decrease in revenue Y/Y is primarily due
to a lower effective per-subscriber fee under the Comcast affiliation
agreement for the acquired AT&T systems and a decrease in STARZ!
subscription units. The decrease in STARZ! subscription units is due to the
negative effects of changes in marketing efforts and packaging of STARZ!
that Comcast implemented prior to the execution of the 2003 Comcast
Affiliation Agreement.
o The decrease in revenue from Comcast is partially offset by an 8% increase
in revenue from other distribution partners. Total subscription units
increased 11% at December 31, 2003 as compared to December 31, 2002.
Substantially all of the increase in subscription units is attributable to
Starz Encore's Thematic Multiplex service, which has lower subscription
rates than the other Starz Encore services.
o Operating expenses increased 8% Q/Q primarily due to higher programming and
marketing costs associated with a high profile LORD OF THE RINGS weekend in
the fourth quarter of 2003. These increases were partially offset by a $17
million reversal of accruals related to prior periods. Operating expenses
decreased by 6% Y/Y, however, due to lower affiliate marketing support and
national branding as a result of very little marketing with Comcast for the
first nine months of the year.
o The decrease in operating cash flow Q/Q is due to the increases in
operating expenses. The decrease in operating cash flow Y/Y is due to the
Y/Y revenue decline partially offset by lower operating expenses.
o SEG's outstanding bank debt was paid off in the fourth quarter of 2003 as
part of Liberty's debt reduction plan. The $23 million debt balance at
December 31, 2003 represents capital leases.
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STARZ ENCORE - FY '04 GUIDANCE
The following estimates assume, among other factors, that SEG continues to
experience positive trends under the new Comcast affiliation agreement, SEG's
customers continue to see growth in digital subscribers consistent with that
experienced historically, the timing of receipt of output product from the
studios does not materially change, and that Starz subscription units reverse
prior trend and begin to increase. These estimates further assume that SEG's
2004 programming costs increase between $175 million and $190 million over
amounts expensed in 2003.
For full year 2004 versus 2003, SEG operating results are expected as follows:
o Revenue between $940 and $965 million.
o Operating cash flow between $185 and $210 million.
o Operating income between $125 and $150 million.
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DISCOVERY COMMUNICATIONS, INC.
Liberty owned 50% of DCI as of December 31, 2003.
<Table>
<Caption>
DISCOVERY COMMUNICATIONS, INC.
Summary Financial Information
Q4 03 Q4 02(1) 2003 2002(1)
------- -------- ------- -------
(amounts in millions)
REVENUE:
Discovery Networks U.S. $ 374 321 $ 1,351 1,121
Discovery Networks International 120 105 416 358
International Ventures 16 14 58 51
Consumer Products & Other(2) 94 106 170 187
------- --- ------- -----
TOTAL REVENUE 604 546 1,995 1,717
------- --- ------- -----
OPERATING EXPENSE:
Discovery Networks U.S. 257 201 864 704
Discovery Networks International 90 87 329 307
International Ventures 23 24 76 86
Consumer Products & Other(2) 83 93 218 241
------- --- ------- -----
TOTAL OPERATING EXPENSE 453 405 1,487 1,338
------- --- ------- -----
OPERATING CASH FLOW (DEFICIT):
Discovery Networks U.S. 117 120 487 417
Discovery Networks International 30 18 87 51
International Ventures (7) (10) (18) (35)
Consumer Products & Other(2) 11 13 (48) (54)
------- --- ------- -----
TOTAL OPERATING CASH FLOW $ 151 141 $ 508 379
======= === ======= ===
OPERATING INCOME $ 103 77 $ 314 169
======= === ======= ===
OUTSTANDING DEBT $ 2,352 2,348
======= =======
</Table>
(1) CERTAIN PRIOR PERIOD AMOUNTS HAVE BEEN RECLASSIFIED.
(2) INCLUDES ALL INTERCOMPANY ELIMINATIONS.
Total Q/Q revenue and operating expenses increased 11% and 12%, respectively
while total Y/Y revenue and operating expenses increased 16% and 11%
respectively. Total DCI operating cash flow increased 7% Q/Q and 34% Y/Y, driven
by an increase in gross advertising revenue of 20% Q/Q and 23% Y/Y, and an
increase in gross affiliate revenue of 10% Q/Q and 12% Y/Y offset by programming
and marketing investments. DCI's affiliated networks now reach more than one
billion cumulative worldwide subscribers.
6
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DCI - DISCOVERY NETWORKS U.S.: Discovery Channel, TLC, Animal Planet, Travel
Channel, Discovery Health Channel, FIT TV, 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.
o Domestic Networks now reach approximately 625 million cumulative
subscribers. Domestic Networks revenue increased by 17% Q/Q and 21% Y/Y due
to increases in both affiliate and advertising revenue. Operating expenses
increased 28% Q/Q and 23% Y/Y due to increases in programming, marketing
and sales related expenses. Operating cash flow decreased by 3% to $117
million Q/Q due to programming and marketing investments but increased 17%
Y/Y to $487 million due to increased revenue.
o Net advertising revenue increased 19% Q/Q and 23% Y/Y due to growth in the
overall advertising market and increases in both total day and prime time
audience delivery.
o Net affiliate revenue increased 7% Q/Q and 16% Y/Y as aggregate subscribers
increased by 20% Y/Y. Subscription units grew at a faster rate than net
affiliate revenue primarily due to a disproportionate increase in
subscribers of certain networks where a large number of subscribers are
currently in a free contract period or have lower subscription fee rates
than other channels. This revenue was net of launch support amortization
and other items of $41 million and $33 million for the quarters ended
December 31, 2003 and 2002, respectively and $150 million and $139 million
for the years ended December 31, 2003 and 2002, respectively. Excluding the
effects of launch support amortization, gross affiliate revenues increased
11% for the quarter and 13% for the year.
o Operating expenses increased 28% Q/Q and 23% Y/Y 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 that helped drive ratings growth.
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.
o International Networks now reach approximately 310 million cumulative
subscribers. International Networks revenue increased by 14% Q/Q and 16%
Y/Y due to increases in both affiliate and advertising revenue and
favorable exchange rates. Operating expenses increased 3% Q/Q and 7% Y/Y
while operating cash flow increased by 67% to $30 million Q/Q and 71% to
$87 million Y/Y. Excluding the effect of exchange rates, revenue increased
by 7% Q/Q and 9% Y/Y, operating expenses decreased 1% Q/Q and increased 3%
Y/Y, and operating cash flow increased 50% Q/Q and 46% Y/Y.
o Net advertising revenue increased 19% Q/Q and 21% Y/Y driven by positive
developments in advertising sales and subscriber growth in all
International regions.
o Net affiliate revenue increased by 6% Q/Q and 9% Y/Y as aggregate
subscribers increased by 30% Y/Y. 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.
7
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DCI - INTERNATIONAL VENTURES: Consolidated BBC/DCI Joint Venture Networks
(Animal Planet networks in Europe, Asia, Latin America, People + Arts Latin
America and Spain).
o International Ventures revenue increased by 14% Q/Q and 14% Y/Y due to
strong subscriber growth in the UK and Europe. The operating cash flow
deficit improved by 30% Q/Q from $10 million to $7 million and 49% Y/Y from
$35 million to $18 million. International Ventures now reach over 130
million cumulative subscribers
DCI - CONSUMER PRODUCTS AND OTHER: The principal components of Discovery
Consumer Products include a proprietary retail business comprised of a
nationwide chain of 120 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.
o Operating cash flow declined by $2 million or 15% Q/Q and the operating
cash flow deficit improved by $6 million or 11% Y/Y primarily due to an
increase in licensing revenues, e-commerce sales, and the closure of
underperforming stores.
DCI - OUTSTANDING DEBT: DCI's outstanding debt (including capital leases and
other notes payable) remained relatively unchanged from December 31, 2002.
Increases due to additional borrowings for the funding of start-up businesses,
debt service costs and acquisitions were offset by lower capital expenditures,
improvements in working capital and overall increases in operating cash flow.
DCI - FY '04 GUIDANCE
The following estimates assume primarily, among other factors, a stable
advertising market (as compared to 2003) continued growth in international
distribution, and a stable national retail environment (as compared to 2003).
For full year 2004 versus 2003, DCI consolidated operating results are expected
to increase as follows:
Revenue by high teens %; Operating cash flow by high 20s %. Operating income by
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.
8
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JUPITER TELECOMMUNICATIONS CO., LTD.
Liberty owned 45% of J-COM at December 31, 2003. 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.
<Table>
<Caption>
J-COM
Summary Financial Information
Q4 03 Q4 02 2003 2002
------ ----- ------ -----
(amounts in millions)
Revenue $ 352 270 $1,233 931
Operating Expense 222 202 804 720
------ --- ------ -----
OPERATING CASH FLOW $ 130 68 $ 429 211
====== === ====== =====
OPERATING INCOME (LOSS) $ 37 (2) $ 114 (29)
====== === ====== =====
OUTSTANDING DEBT(1) $2,379 2,448
====== =====
MANAGED SUBSCRIBER DATA (000S):
Cable 1,527 1,423
High Speed Data 633 504
Telephony 555 350
Homes Receiving Service(2) 1,755 1,591
</Table>
(1) INCLUDES SHAREHOLDER DEBT OF $1,395 MILLION AND $682 MILLION, RESPECTIVELY,
AT DECEMBER 31, 2003 AND 2002.
(2) REPRESENTS THE NUMBER OF HOUSEHOLDS SUBSCRIBING TO AT LEAST ONE J-COM
BROADBAND SERVICE.
o J-COM's revenue increased 30% Q/Q and 32% Y/Y, operating expenses increased
10% Q/Q and 12% Y/Y and operating cash flow increased 91% Q/Q and 103% Y/Y.
Excluding the effect of exchange rates, revenue increased by 18% Q/Q and
23% Y/Y, operating expenses were flat Q/Q and increased 4% Y/Y and
operating cash flow increased 73% Q/Q and 88% Y/Y.
o Revenue increases were due to increased distribution in all three services
and substantial growth in Internet and telephony revenue. Managed cable
subscribers increased 7%, Internet services subscribers increased 26% and
telephony subscribers increased 59%. Average monthly revenue per household
receiving at least one service increased 10% to $58.
o Operating cash flow at J-COM increased due to the revenue increases
combined with margin improvements associated with increased scale.
o J-COM served approximately 1.8 million homes at December 31, 2003, an
increase of 10%, and services per household (total revenue generating units
divided by total households served) rose from 1.43 to 1.55. Penetration of
homes taking at least one service increased from 27.4% to 29.4%.
o Approximately 41% of J-COM's customers subscribed to more than one service
at December 31, 2003, which translated into approximately 721,000 homes
with multiple services. The triple play service option (taking all three
services available) has steadily increased to 13.6% of J-COM's homes at
December 31, 2003 compared to 8.7% at December 31, 2002. Nearly 100% of
J-COM's network operates at 750 MHz capacity.
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J-COM - FY '04 GUIDANCE
The following estimates assume continued subscriber growth, foreign currency
exchange rates remain constant, a product mix that is consistent with that
experienced during 2003 and continued cost control efforts, including
programming costs.
For full year 2004 versus 2003, J-COM operating results, excluding the effect of
exchange rates, are expected to increase as follows:
o Revenue by low teens %; Operating cash flow by high teens %.
o Operating income by approximately 45%.
JUPITER PROGRAMMING CO., LTD.
Liberty owned 50% of JPC at December 31, 2003. 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 or has investments in
15 channels.
<Table>
<Caption>
JUPITER PROGRAMMING CO., LTD.
Summary Financial Information
Q4 03 Q4 02 2003 2002
------- ----- ------- ------
(amounts in millions)
Revenue $ 126 84 $ 412 274
Operating Expense 107 75 358 242
------- -- ------- ------
OPERATING CASH FLOW $ 19 9 $ 54 32
======= == ======= ======
OPERATING INCOME $ 16 8 $ 44 23
======= == ======= ======
OUTSTANDING DEBT(1) $ 61 57
======= ======
CUMULATIVE SUBSCRIBERS (000S)(2) 41,610 34,245
</Table>
(1) INCLUDES SHAREHOLDER DEBT OF $19 MILLION AND $17 MILLION, RESPECTIVELY, AT
DECEMBER 31, 2003 AND 2002.
(2) INCLUDES SUBSCRIBERS AT ALL CONSOLIDATED AND EQUITY OWNED JPC CHANNELS.
SHOP CHANNEL SUBSCRIBERS ARE STATED ON A FULL-TIME EQUIVALENT BASIS.
o JPC's revenue increased 50% Q/Q and 50% Y/Y, operating expenses increased
43% Q/Q and 48% Y/Y and operating cash flow increased 111% Q/Q and 69% Y/Y.
Excluding the effect of exchange rates, revenue increased by 36% Q/Q and
39% Y/Y, operating expenses increased 31% Q/Q and 37% Y/Y and operating
cash flow increased 78% Q/Q and 58% Y/Y.
o JPC's revenue increased largely due to the increase in retail sales at Shop
Channel and in subscription and advertising revenues at the other channels.
Shop Channel, which is 70% owned by JPC, was the largest contributor
generating an additional $30 million during the quarter and $98 million
during the year in revenue versus the comparable periods in 2002. This
increase was driven by a 17% increase in full-time equivalent ("FTE") homes
and an increase of 14% in sales per FTE. Subscribers at other channels grew
by 11% at CSN, 11% at Golf Network, 13% at J-Sky Sports, 11% at Discovery
and 18% at Animal Planet.
o JPC's operating cash flow increased due to the revenue increase, partially
offset by increased cost of goods sold, fulfillment, telemarketing,
programming and general and administrative expenses.
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JPC - FY '04 GUIDANCE
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 2004 versus 2003, JPC operating results, excluding the effect of
exchange rates, are expected to increase as follows:
Revenue by mid-teens %; Operating cash flow by approximately 25% - 30%.
Operating income by approximately 30%.
11
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SUMMARY OF CASH AND LONG-TERM DEBT
The following is a summary of Liberty's cash and long-term debt as of December
31, 2003 and September 30, 2003.
<Table>
<Caption>
12/31/2003 09/30/2003
---------- ----------
(amounts in millions)
CASH AND CASH RELATED INVESTMENTS:
Liberty Corporate Cash $ 1,866 2,399
Corporate Short-term Investments 254 232
Corporate Long-term Marketable Securities(1) 239 1,300
-------- ------
TOTAL CORPORATE CASH AND LIQUID INVESTMENTS 2,359 3,931
Cash and Liquid Investments of Subsidiaries(2) 1,223 898
-------- ------
TOTAL CASH AND LIQUID INVESTMENTS 3,582 4,829
LESS: SHORT AND LONG-TERM SECURITIES (519) (1,567)
-------- ------
CONSOLIDATED CASH BALANCE (GAAP) $ 3,063 3,262
======== ======
DEBT:
Senior Notes and Debentures(3) $ 7,138 8,338
Senior Exchangeable Debentures(4) 4,638 4,766
Bank Debt -- 250
-------- ------
TOTAL CORPORATE DEBT 11,776 13,354
Debt of Subsidiaries 258 1,090
-------- ------
TOTAL CORPORATE AND SUBSIDIARY DEBT 12,034 14,444
LESS: UNAMORTIZED DISCOUNT ATTRIBUTABLE
TO CALL OPTION OBLIGATIONS (2,411) (2,533)
UNAMORTIZED DISCOUNT (24) (25)
-------- ------
CONSOLIDATED DEBT BALANCE (GAAP) $ 9,599 11,886
======== ======
</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 $11 MILLION AND $20 MILLION OF SHORT-TERM AND $15 MILLION AND $15
MILLION OF LONG-TERM SECURITIES HELD BY SUBSIDIARIES AT DECEMBER 31, 2003
AND SEPTEMBER 30, 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 decreased by $1.6 billion
to $2.4 billion and Total Corporate Debt decreased by $1.6 billion to $11.8
billion compared to September 30, 2003. The decreases in Corporate Cash and
Liquid Investments and Corporate Debt were due to the repayment of debt,
including $832 million of subsidiaries' debt. The debt payments were made as
part of Liberty's debt reduction plan that was announced on November 20, 2003.
Liberty's Corporate Cash and Liquid Investments was also affected by the
proceeds from the unwinding of certain equity collars and sale of common stock
related to Liberty's investments in Vivendi, News Corp., Cendant and certain
other investments partially offset by the purchase of News Corp. ordinary ADSs.
12
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SUMMARY OF SIGNIFICANT PUBLIC ASSETS
<Table>
<Caption>
(AMOUNTS IN MILLIONS) Market Value at
12/31/03
---------------
The News Corporation Limited $7,633
IAC/InterActiveCorp $4,697
UnitedGlobalCom, Inc. $2,607
Other $7,018
</Table>
SUMMARY OF EQUITY DERIVATIVES
Liberty has entered into equity collars, narrow-band collars, put-spread
collars, written put and call options and other financial instruments to manage
market risk associated with its investments in certain marketable securities.
The estimated fair value of these financial instruments at December 31, 2003 was
$2,622 million.
OUTSTANDING SHARES
At December 31, 2003, there were approximately 2.887 billion outstanding shares
of L and LMC.B and 84 million shares of L and LMC.B reserved for issuance
pursuant to warrants and employee stock options. At December 31, 2003,
approximately 69% 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 $1,056 million.
OTHER EVENTS:
LIBERTY COMPLETES SHARE EXCHANGE AGREEMENT WITH MAGNESS GROUP
On March 4, 2004, Liberty completed its previously announced transaction with
parties related to the Bob Magness family pursuant to which those parties
exchanged all of their 96 million shares of Liberty Media Series B common stock
for 105 million shares of Liberty Media Series A common stock. The acquisition
by Liberty of Series B shares in the transaction reduced Mr. Malone's percentage
voting power in Liberty from approximately 43% to approximately 28%. Mr. Malone
beneficially owns approximately 90% of the Series B shares outstanding after
completion of this transaction.
LIBERTY ACQUIRES 9.15% VOTING INTEREST IN NEWS CORPORATION
On January 21, 2004, Liberty reported that it had acquired a 9.15% voting
interest in The News Corporation Limited. After giving effect to a number of
transactions, Liberty now owns 48 million News Corp. ordinary ADSs (NWS Voting
ADSs) and 210.8 million News Corp. preferred limited voting ADSs (NWS.A
Non-Voting ADSs), for a total equity interest of approximately 17%. Currently,
Liberty is the largest shareholder in News Corp. and has the second largest
voting stake. During the past year, Liberty has increased its ownership in News
Corp. by 26.8 million ADSs. In increasing its equity stake, Liberty effectively
converted 21.2 million Non-Voting ADSs and $693 million in cash for 48 million
Voting ADSs, taking into account proceeds from sales and unwinding of collars on
Non-Voting ADSs.
LIBERTY COMPLETES ACQUISITION OF CONTROLLING INTEREST IN UNITEDGLOBALCOM
On January 5, 2004, Liberty announced that it had acquired all of the
outstanding shares of Class B common stock of UnitedGlobalCom, Inc. ("United")
from United's founding shareholders. All of United's holders of its 8,198,016
outstanding shares of Class B common stock have transferred their Class
13
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B shares to Liberty in exchange for 12,576,968 shares of Liberty Media Series A
Common Stock and a cash payment of approximately $13 million.
In January 2004, Liberty purchased an additional 18.3 million shares of United
Class A common stock pursuant to certain pre-emptive rights granted to Liberty
pursuant to our standstill agreement with United. In addition, in January 2004,
United initiated a rights offering pursuant to which holders of each of United's
Class A, Class B and Class C common stock received .28 transferable subscription
rights to purchase a like class of common stock for each share of common stock
owned by them on January 21, 2004. As a holder of United Class A, Class B and
Class C common stock, Liberty participated in the rights offering and exercised
its rights for a total cash purchase price of $565 million. Subsequent to these
transactions, Liberty owns approximately 55% of United's common stock
representing approximately 92% of the voting power of United's shares.
LIBERTY ANNOUNCES $4.5 BILLION DEBT REDUCTION PLAN
On November 20, 2003, Liberty announced that it will implement a significant
debt reduction program. The plan called for a reduction of $2.5 billion of
consolidated debt before year-end, which was achieved, and another $2.0 billion
over the next two years.
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 THE PRIVATELY HELD ASSETS OF LIBERTY MEDIA
CORPORATION INCLUDED HEREIN 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; SPENDING ON DOMESTIC AND
FOREIGN ADVERTISING; THE CONTINUED STRENGTH OF THE INDUSTRIES IN WHICH SUCH
PRIVATELY HELD ASSETS 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; THE DEVELOPMENT AND PROVISION OF
PROGRAMMING FOR NEW TELEVISION AND TELECOMMUNICATIONS TECHNOLOGIES; 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 SUCH PRIVATELY HELD ASSETS'
PRODUCTS AND SERVICES, AND THE OVERALL MARKET ACCEPTANCE OF SUCH PRODUCTS AND
SERVICES, INCLUDING ACCEPTANCE OF THE PRICING OF SUCH PRODUCTS AND SERVICES; AND
THREATENED TERRORIST ATTACKS AND ONGOING MILITARY ACTION, INCLUDING ARMED
CONFLICT IN THE MIDDLE EAST AND OTHER PARTS OF THE WORLD. 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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NON-GAAP FINANCIAL MEASURES
The Securities and Exchange Commission ("SEC") has issued rules and guidance
regarding the use by registrants 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:
o 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
o 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 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, determined under GAAP. Liberty defines
operating cash flow as revenue less "operating expense," which Liberty defines
as cost of sales, operating expenses, selling, general and administrative
expenses (excluding stock compensation). Operating cash flow, as defined by
Liberty, excludes depreciation, amortization, stock compensation and other
non-cash charges taken into account 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 rules on non-GAAP financial measures were released by the SEC in January
2003 and are relatively new. 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 SEC's rules, we can give no
assurance that we will be able to provide the same or comparable measures in
future press releases or announcements.
15
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LIBERTY MEDIA CORPORATION
SCHEDULE 1
The following table provides a reconciliation, for our largest consolidated
subsidiaries and certain of our large equity affiliates, of operating cash flow
to operating income calculated in accordance with GAAP for the three and twelve
month periods ended December 31, 2003 and 2002.
<Table>
<Caption>
Company QVC SEG DCI J-COM JPC
Ownership % 98.2% 100% 50.0% 45.2% 50.0%
------- ----- ----- ----- -----
(amounts in millions)
THREE MONTHS ENDED DECEMBER 31, 2003
OPERATING CASH FLOW $ 348 99 151 130 19
Depreciation and amortization (114) (20) (32) (93) (3)
Stock compensation expense(1) (5) 76 (16) -- --
Other non-cash charges -- (157) -- -- --
------- ----- ----- ----- -----
OPERATING INCOME $ 229 (2) 103 37 16
======= ===== ===== ===== =====
THREE MONTHS ENDED DECEMBER 31, 2002
OPERATING CASH FLOW $ 287 102 141 68 9
Depreciation and amortization (37) (18) (51) (70) (1)
Stock compensation expense(1) (2) -- (13) -- --
Other non-cash charges -- -- -- -- --
------- ----- ----- ----- -----
OPERATING INCOME (LOSS) $ 248 84 77 (2) 8
======= ===== ===== ===== =====
YEAR ENDED DECEMBER 31, 2003
OPERATING CASH FLOW $ 1,013 368 508 429 54
Depreciation and amortization (222) (75) (120) (314) (10)
Stock compensation expense(1) (6) 130 (74) (1) --
Other non-cash charges -- (157) -- -- --
------- ----- ----- ----- -----
OPERATING INCOME $ 785 266 314 114 44
======= ===== ===== ===== =====
YEAR ENDED DECEMBER 31, 2002
OPERATING CASH FLOW $ 861 371 379 211 32
Depreciation and amortization (119) (69) (113) (240) (9)
Stock compensation expense(1) (5) (5) (97) -- --
Other non-cash charges -- -- -- -- --
------- ----- ----- ----- -----
OPERATING INCOME (LOSS) $ 737 297 169 (29) 23
======= ===== ===== ===== =====
</Table>
(1) SEG AND DCI STOCK COMPENSATION EXPENSE REPRESENTS AMOUNTS PURSUANT TO
PHANTOM STOCK APPRECIATION RIGHTS PLANS.
16