ENGLEWOOD, Colo., Aug. 9 /PRNewswire-FirstCall/ -- Liberty Media
Corporation ("Liberty") (Nasdaq: LCAPA, LCAPB, LINTA, LINTB, LSTZA,
LSTZB) today reported second quarter results for Liberty Capital
group, Liberty Interactive group and Liberty Starz group.
Highlights include(1):
- Achieved adjusted OIBDA(2) margins at QVC US of 25.4%, the
second highest level in QVC's history
- Through a successful tender offer and subsequent open-market
purchases through July 26, 2010,
retired $479 million principal amount
of 5.7% bonds due 2013
- Attained solid viewership of The Pillars of the Earth,
which debuted on Starz in July
- Completed new comprehensive affiliation agreement with Comcast
at Starz Entertainment
- Repurchased $344 million of
Liberty Capital stock, from May 3 through
July 30, 2010, year-to-date purchases represent 10% of the
shares outstanding
- Applied proceeds from the settlement of equity collars to
reduce debt at Liberty Capital by $379
million
- Announced plan to split-off Liberty Capital and Liberty
Starz
- Filed related lawsuit in support of indenture position
- Announced call for entries for 2011 "Media for Liberty"
award
"QVC again displayed their strength in operations and expanded
its operating margin, and Starz made exciting announcements
regarding their original programming," stated Greg Maffei, Liberty
President and CEO. "We significantly reduced debt at
Liberty Interactive and Liberty Capital and continued to repurchase
stock at Liberty Capital. We made progress on our split-off
of Liberty Capital and Liberty Starz, filing our private letter
ruling request with the IRS and a lawsuit seeking to clarify
aspects of our indenture position."
LIBERTY INTERACTIVE GROUP – Liberty Interactive group's
revenue increased 6% to $2.1 billion
and adjusted OIBDA increased 4% to $428
million, while operating income increased 3% to $274 million. The increase in revenue and
adjusted OIBDA was primarily due to favorable results at QVC.
QVC
QVC's consolidated revenue increased 5% in the second quarter to
$1.8 billion and adjusted OIBDA
increased 9% to $403 million.
"QVC delivered strong adjusted OIBDA results for the second
quarter," stated Mike George, QVC
President and CEO. "For the third consecutive quarter, net
revenue in each geographic market grew in local currency. In
addition, our worldwide revenue from new customers grew 14% as we
continue to attract more and more shoppers to our brand. Our
US eCommerce revenue grew 21%, faster than the internet retail
sales index, as we focus on enhancing the shopping experience
across our internet and mobile phone platforms in addition to our
TV platform. We achieved 10% domestic and 9% international
adjusted OIBDA growth in local currency excluding our Italy start up costs of $5 million. QVC Italy is on schedule to
launch this fall. QVC's results are evidence of our continued
focus on providing a compelling and engaging shopping experience
and maintaining strong customer service and loyalty, while also
ensuring tight control over expenses and inventories."
QVC's domestic revenue increased 4% to $1.2 billion and adjusted OIBDA increased 10% to
$303 million compared to the second
quarter 2009. The product mix showed a steady growth in
accessories, apparel and home and a decline in jewelry sales.
The average selling price increased 3% from $46.82 to $48.10 while total units sold increased
2% to 26.7 million. Returns as a percent of gross product
revenue increased from 17.3% to 18.4%. QVC.com sales as a
percentage of domestic sales grew from 27% in the second quarter of
2009 to 32% in the second quarter of 2010. The domestic
adjusted OIBDA margin increased 153 basis points to 25.4% for the
quarter primarily due to lower inventory obsolescence provisions,
lower fixed costs and increased credit card operations income
partially offset by higher bad debt expense.
QVC's international revenue increased 7% in the second quarter
to $565 million including the impact
of unfavorable exchange rates in the UK and Germany and favorable exchange rates in
Japan. International
adjusted OIBDA increased 4% to $100
million and adjusted OIBDA margin decreased 52 basis points
for the quarter. The decline in the adjusted OIBDA margin was
due to the inclusion of $5 million of
costs related to the launch of QVC Italy service in the fourth
quarter of 2010. Excluding the effect of exchange rates,
QVC's international revenue increased 8% and adjusted OIBDA
increased 5%. International adjusted OIBDA, excluding the
effect of exchange rates and Italy
start up operations, increased 9%.
QVC UK's revenue grew 8% in local currency in the second quarter
as increased sales in the apparel and beauty product areas were
offset by declines in the fine jewelry and electronics areas.
Adjusted OIBDA grew by 16% driven primarily by strong gains
in warehouse and customer service operations, and tight fixed cost
management. QVC UK's average selling price in local currency
decreased 2% and units sold increased 11% for the second quarter.
QVC UK experienced a lower gross margin percentage in the
second quarter due primarily to lower initial product margins and
an increased inventory obsolescence provision.
QVC Germany's revenue grew 7% in local currency in the second
quarter. QVC Germany's average selling price in local
currency increased 4% for the second quarter and units sold
increased 2%. QVC Germany experienced a decline of 222 basis
points in gross margin percentage for the quarter primarily due to
an increased obsolescence provision and lower product margins in
the home area due to a mix shift to consumer electronics and the
accessories area.
QVC Japan's revenue grew 10% in local currency in the second
quarter. Adjusted OIBDA grew 14%, driven by a reduction in
carriage commission expenses and improvements in customer service
and warehouse operations. QVC Japan achieved growth of 16% in
units sold for the quarter with the average selling price in local
currency declining 5%. QVC Japan had sales growth in each
product category partially offset by softness in the jewelry
product area. QVC Japan's gross margin percentage was flat
for the second quarter.
QVC recently launched a refinancing of its bank credit agreement
and expects it to close prior to the end of August. The
refinancing was prompted by improved bank markets allowing for
lower pricing and better structural flexibility.
Effective August 2, 2010, upon the
expiration of the existing contract, QVC entered into a new
agreement with GE Money Bank, who provides revolving credit
directly to QVC customers solely for the purchase of merchandise
from QVC. Under the new agreement QVC and GE Money Bank share
the net revenue of the credit card program according to percentages
that vary with the performance of the portfolio and 3 month LIBOR
and are settled monthly. Net revenue includes finance charges
and late fees, less write-offs of uncollectible accounts and other
expenses. The new agreement, which will expire in
August 2015, is substantially
different than the expired agreement, under which QVC retained the
rights to all of the net credit card revenue and paid a fee to GE
Money Bank to service the revolving credit accounts. QVC
estimates operating income (and adjusted OIBDA) would have been
negatively impacted by approximately $20-25
million per year over the previous three years based on the
terms of the new contract as compared to the expired contract.
QVC also recovered its noninterest bearing cash deposit
maintained as collateral under the old agreement with GE Money Bank
in the amount of $501 million.
This deposit had previously been recorded as a component of
accounts receivable. QVC's liquidity and capital resources
have been significantly strengthened due to this increase in cash.
As a result, QVC expects the overall net economics of the new
agreement will not have a material negative impact to its cash
flows as compared to the prior agreement based on the potential
uses for the cash on hand. For example, although there is no
requirement to do so, QVC could reduce its interest expense if it
were to use the additional cash resources to retire a portion of
its existing indebtedness.
eCommerce Businesses
In the aggregate, the eCommerce businesses revenue increased 15%
to $295 million for the quarter.
Overall revenue growth was partially offset by lower
commission revenue earned when customers sign-up for third-party
on-line discount services. In the first quarter of 2010, a
decision was made to change the way these promotions are offered
which reduced the revenue earned in the second quarter by
$11 million. These changes are
expected to continue to adversely impact commission revenue
throughout 2010. Revenue earned from the commissions yielded
significantly higher margins than product sales, and therefore the
reduction in this revenue more negatively impacted adjusted OIBDA
on a percentage basis. Furthermore, during the quarter
increased marketing spend helped grow revenue and new customer
names but negatively impacted adjusted OIBDA margins.
Adjusted OIBDA for the eCommerce businesses decreased 36% to
$28 million for the quarter and
operating income decreased by 74% or $23
million. Additionally, in the second quarter start-up
costs for LOCKERZ and Right Start were incurred with limited
revenue.
Share Repurchases
There were no share repurchases of Liberty Interactive stock
from May 3, 2010 through July 30, 2010. Liberty has approximately
$740 million remaining under its
Liberty Interactive stock repurchase authorization.
The businesses and assets attributed to Liberty Interactive
group are engaged in, or are ownership interests in companies that
are engaged in, video and on-line commerce, and currently include
Liberty's subsidiaries QVC, Provide Commerce, Backcountry.com,
Bodybuilding.com, BUYSEASONS, CommerceHub, LOCKERZ and Right Start,
and its interests in IAC/InterActiveCorp, HSN, Tree.com, Interval
Leisure Group, and Expedia. Liberty has identified
wholly-owned QVC as the principal operating segment of the Liberty
Interactive group.
LIBERTY STARZ GROUP – Liberty Starz group's revenue
increased 4% to $311 million,
adjusted OIBDA decreased 1% to $103
million, and operating income increased 28% for the second
quarter. The increase in revenue was primarily driven by
results at Starz Entertainment. The decrease in adjusted
OIBDA was primarily due to increased amortization and impairments
taken on two original programs, Party Down and
Gravity, which were cancelled during the quarter and an
increase in corporate and other expenses.
Starz Entertainment, LLC
Starz Entertainment's revenue increased 4% to $308 million in the second quarter and Starz and
Encore experienced average subscription unit decreases of 3% and
1%, respectively. Such average subscription decreases are the net
result of increases in subscriptions under consignment agreements
and decreases in subscriptions under fixed-rate agreements which do
not impact revenue.
Adjusted OIBDA increased 2% to $107
million and operating income increased 11% for the second
quarter. Starz Entertainment's operating expenses increased
8% in the quarter primarily due to the increased amortization and
impairments on original programming mentioned above. SG&A
expenses decreased 6% for the quarter as a result of lower costs
associated with marketing of original productions and lower
affiliate marketing efforts.
"Starz Entertainment had another quarter of solid operational
performance with strong quarterly revenue and adjusted OIBDA
results and the second consecutive quarter of subscriber gains for
both Starz and Encore," said Chris
Albrecht, Starz LLC, President and CEO. "The original
series, The Pillars of the Earth, has been a solid performer
for Starz early in the third quarter. With our 2011 original
programming lineup anchored by the Spartacus prequel Gods
of the Arena, Camelot, Torchwood, and the full second season of
Spartacus, we are well positioned for next year."
Share Repurchases
There were no share repurchases of Liberty Starz stock from
May 3, 2010 through July 30, 2010. Liberty has approximately
$447 million remaining under its
Liberty Starz stock repurchase authorization.
The businesses and assets attributed to Liberty Starz group are
primarily engaged in, or are ownership interests in companies that
are focused on video programming businesses and currently include
Liberty's subsidiaries Starz Entertainment and Liberty Sports
Interactive. Liberty has identified Starz Entertainment as
the principal operating segment of the Liberty Starz group.
For purposes of presentation, we treat the assets and
businesses attributed to the Liberty Starz group as though they had
been attributed to the group since January
1, 2009.
LIBERTY CAPITAL GROUP – Liberty Capital group's revenue
increased 1% while the adjusted OIBDA deficit and operating loss
increased by $63 million and
$64 million, respectively, for the
second quarter. The increase in the adjusted OIBDA deficit
was primarily due to the number and timing of films released
theatrically, on home video and through television by Starz Media
and Overture Films and the related marketing expenses associated
with these films. Additionally, during the quarter, Starz
Media recorded an impairment charge of $42
million related to a number of its titles based on lower
theatrical, home video, and television revenue than previously
anticipated.
Chris Albrecht Starz, LLC,
President and CEO said, "For Starz Media, subsequent to the end of
the quarter we were pleased to announce a new agreement with
Relativity Media allowing them to take over the distribution and
marketing of Overture's remaining three films. We continue to
evaluate strategic alternatives for the remainder of Starz Media's
businesses."
Share Repurchases
From May 3, 2010 through
July 30, 2010, Liberty repurchased
8.0 million shares of Series A Liberty Capital common stock at an
average cost per share of $43.11 for
total cash consideration of $344.3
million. Since the reclassification of Liberty Capital
on March 4, 2008 through July 30, 2010, Liberty has repurchased 44.0
million shares at an average cost per share of $20.78 for total cash consideration of
$914.5 million. These
repurchases represent 34.1% of the shares outstanding.
Liberty has approximately $185.5
million remaining under its Liberty Capital stock repurchase
authorization.
The businesses and assets attributed to Liberty Capital group
are all of Liberty's businesses and assets other than those
attributed to the Liberty Interactive group and Liberty Starz group
and include its subsidiaries Starz Media, TruePosition, Atlanta
National League Baseball Club (the owner of the Atlanta Braves),
its interests in SIRIUS XM, and minority interests in Time Warner,
Inc., Time Warner Cable, and Live Nation.
FOOTNOTES
- Liberty's President and CEO, Gregory B.
Maffei, will discuss these highlights and other matters in
Liberty's earnings conference call which will begin at 10:30 a.m. (ET) on August
9, 2010. For information regarding how to access the
call, please see "Important Notice" on page 9.
- For a definition of adjusted OIBDA and applicable
reconciliations and a definition of adjusted OIBDA margin, see the
accompanying schedules.
NOTES
Liberty Media Corporation operates and owns interests in a broad
range of video and on-line commerce, media, communications and
entertainment businesses. Those interests are currently
attributed to three tracking stock groups: Liberty Interactive
group, Liberty Starz group and Liberty Capital group.
Unless otherwise noted, the foregoing discussion compares
financial information for the three months ended June 30, 2010 to the same period in 2009.
Certain prior period amounts have been reclassified for
comparability with the 2010 presentation. During the fourth
quarter of 2009, Liberty completed the split-off of Liberty
Entertainment Inc. (LEI), and as such, the financial results of the
businesses and assets of LEI have been excluded from all periods
presented.
The following financial information is intended to supplement
Liberty's consolidated statements of operations to be included in
its Form 10-Q.
|
|
Fair Value of Public Holdings
and Derivatives
|
|
(amounts in millions and include
the value of derivatives)
|
March 31, 2010
|
June 30, 2010
|
|
InterActiveCorp
|
$ 292
|
281
|
|
InterActiveCorp Spin-Off
Companies (1)
|
813
|
669
|
|
Expedia (1)
|
1,727
|
1,300
|
|
Total Attributed
Liberty Interactive Group
|
$ 2,832
|
2,250
|
|
|
|
|
|
Other
|
1
|
1 (2)
|
|
Total Attributed
Liberty Starz Group
|
$ 1
|
1
|
|
|
|
|
|
SIRIUS XM Debt and Equity
(3)
|
2,701
|
2,857
|
|
Non-Strategic Public Holdings
(4)
|
2,998
|
2,458
|
|
Total Attributed
Liberty Capital Group
|
$ 5,699
|
5,315
|
|
(1) Represents fair value of
Liberty's investments in the InterActiveCorp spin-off companies
(HSN, Interval Leisure Group, and Tree.com), and Expedia. In
accordance with GAAP, Liberty accounts for these investments using
the equity method of accounting and includes these investments in
its consolidated balance sheet at their historical carrying
values.
(2) Excludes $20 million of
marketable securities with an original maturity greater than one
year which are included in cash and liquid investments on the
following schedule as of June 30, 2010.
(3) Represents the fair value of
Liberty's various debt and equity investments in SIRIUS XM.
The fair value of Liberty's convertible preferred stock is
calculated on an as-if-converted basis into common stock. In
accordance with GAAP, Liberty accounts for the convertible
preferred stock using the equity method of accounting and includes
this in its consolidated balance sheet at historical carrying
value.
(4) Represents Liberty's
non-strategic public holdings which are accounted for at fair value
including any associated equity derivatives on such investments.
Also includes the liability associated with borrowed shares
which totaled $913 million and $904 million on March 31, 2010 and
June 30, 2010, respectively.
|
|
|
|
|
|
|
Cash and Debt
The following presentation is provided to separately identify
cash and liquid investments and debt information.
|
|
(amounts in
millions)
|
March 31, 2010
|
June 30, 2010
|
|
Cash and Liquid Investments
Attributable to:
|
|
|
|
Liberty Interactive
Group
|
1,731
|
1,100
|
|
Liberty Starz Group
|
1,005
|
1,083 (1)
|
|
Liberty Capital Group
(3)
|
2,480
|
2,265 (2)
|
|
Total Liberty Consolidated Cash
and Liquid Investments
|
5,216
|
4,448
|
|
|
|
|
|
Less:
|
|
|
|
Short-Term Marketable Securities
– Liberty Starz Group
|
-
|
117
|
|
Long-Term Marketable Securities
– Liberty Starz Group
|
-
|
20
|
|
Short-Term Marketable Securities
– Liberty Capital Group
|
-
|
205
|
|
Total Liberty Consolidated Cash
(GAAP)
|
5,216
|
4,106
|
|
|
|
|
|
Debt:
|
|
|
|
Senior Notes and Debentures
(4)
|
1,594
|
1,165
|
|
Senior Exchangeable Debentures
(5)
|
1,962
|
1,962
|
|
QVC Senior Notes (4)
|
2,000
|
2,000
|
|
QVC Bank Credit
Facility
|
1,996
|
1,825
|
|
Other
|
64
|
71
|
|
Total Attributed Liberty
Interactive Group Debt
|
7,616
|
7,023
|
|
Unamortized Discount
|
(24)
|
(23)
|
|
Fair Market Value
Adjustment
|
(851)
|
(905)
|
|
Total Attributed Liberty
Interactive Group Debt (GAAP)
|
6,741
|
6,095
|
|
|
|
|
|
Other
|
47
|
46
|
|
Total Attributed Liberty Starz
Group Debt (GAAP)
|
47
|
46
|
|
|
|
|
|
Senior Exchangeable Debentures
(5)
|
1,138
|
1,138
|
|
Bank Credit Facility
|
750
|
750
|
|
Liberty Derivative
Borrowing
|
379
|
-
|
|
Other
|
106
|
86
|
|
Total Attributed Liberty Capital
Group Debt
|
2,373
|
1,974
|
|
Fair Market Value
Adjustment
|
73
|
40
|
|
Total Attributed Liberty Capital
Group Debt (GAAP)
|
2,446
|
2,014
|
|
|
|
|
|
Total Consolidated Liberty Debt
(GAAP)
|
9,234
|
8,155
|
|
|
|
|
|
(1) Includes $117 million of
short-term marketable securities and $20 million of marketable
securities with an original maturity greater than one year as of
June 30, 2010, which is reflected in other current assets and
investments in available-for-sale securities, respectively, in
Liberty's condensed consolidated balance sheet.
(2) Includes $205 million of
short-term marketable securities on June 30, 2010, which is
reflected in other current assets in Liberty's condensed
consolidated balance sheet.
(3) Excludes $468 million and
$476 million of restricted cash on March 31, 2010 and June 30,
2010, respectively, associated with the bank credit facility which
is reflected in other long-term assets in Liberty's condensed
consolidated balance sheet.
(4) Face amount of Senior Notes
and Debentures with no reduction for the unamortized discount or
fair market value adjustment.
(5) Face amount of Senior
Exchangeable Debentures with no reduction for the fair market value
adjustment.
|
|
|
|
|
|
|
Total attributed Liberty Interactive group cash decreased
$631 million, primarily due to
$429 million in retirements of Senior
Notes and the retirement of $171
million in bank debt at QVC. Total attributed
Interactive group debt decreased as a result of the repayments
discussed above.
Total attributed Liberty Starz group cash and liquid investments
increased $78 million primarily as a
result of cash flow from operations.
Total attributed Liberty Capital group cash and liquid
investments decreased $215 million,
primarily as a result of $379 million
in repayments of derivative borrowings and $282 million of LCAPA stock repurchases in the
second quarter. These were partially offset by $391 million in proceeds received on the
settlements of derivatives and $144
million in intergroup tax payments received. Total
attributed Liberty Capital group debt decreased primarily due to
the repayment of derivative borrowings discussed above.
Important Notice: Liberty Media Corporation (Nasdaq:
LCAPA, LCAPB, LINTA, LINTB, LSTZA, LSTZB,) President and CEO,
Gregory B. Maffei will discuss
Liberty's earnings release in a conference call which will begin at
10:30 a.m. (ET) on August 9, 2010. The call can be accessed by
dialing (877) 397-0286 or (719) 325-4809 at least 10 minutes prior
to the start time. Replays of the conference call can be
accessed until 1:30 p.m. (ET)
August 16, 2010, by dialing (888)
203-1112 or (719) 457-0820 plus the pass code 4417617#. The
call will also be broadcast live across the Internet and archived
on our website. To access the webcast go to
http://www.libertymedia.com/events. Links to this press
release will also be available on the Liberty Media website.
This press release includes certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements about financial guidance,
business strategies, market potential, future financial
performance, new service and product launches, the pending launch
of QVC Italy, the proposed split-off of our Liberty Capital and
Liberty Starz tracking stock groups and other matters that are not
historical facts. These forward-looking statements involve
many risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by such
statements, including, without limitation, possible changes in
market acceptance of new products or services, competitive issues,
regulatory matters affecting our businesses, continued access to
capital on terms acceptable to Liberty Media, changes in law and
government regulations that may impact the derivative instruments
that hedge certain of our financial risks and the satisfaction of
the conditions to the proposed split-off. These forward looking
statements speak only as of the date of this press release, and
Liberty Media 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's
expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based.
Please refer to the publicly filed documents of Liberty Media,
including the most recent Form 10-Q and 10-K, for additional
information about Liberty Media and about the risks and
uncertainties related to Liberty Media's business which may affect
the statements made in this press release.
Additional Information
Nothing in this press release shall constitute a solicitation
to buy or an offer to sell shares of Liberty Media stock or the
stock of the split-off entity. The offer and sale of shares
in the proposed split-off will only be made pursuant to an
effective registration statement. Stockholders and other investors
are urged to read the registration statement to be filed with the
SEC, including the proxy statement/prospectus to be contained
therein, because it will contain important information about the
transaction. A copy of the registration statement and the
proxy statement/prospectus, once filed, will be available free of
charge at the SEC's website (http://www.sec.gov). Copies of the
proxy statement/prospectus and the filings with the SEC that will
be incorporated by reference in the proxy statement/prospectus can
also be obtained, without charge, by directing a request to Liberty
Media Corporation, 12300 Liberty Boulevard, Englewood, Colorado 80112, Attention: Investor
Relations, Telephone: (720) 875-5408.
Participants in a Solicitation
The directors and executive officers of Liberty Media and
other persons may be deemed to be participants in the solicitation
of proxies in respect of proposals to approve the split-off.
Information regarding Liberty Media's directors and executive
officers, those of the split-off entity and other participants in
the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, will be
available in the proxy materials to be filed with the SEC.
Contact: Courtnee Ulrich (720)
875-5420
SUPPLEMENTAL INFORMATION
As a supplement to Liberty's consolidated statements of
operations, to be included in its Form 10-Q, the following is a
presentation of quarterly financial information and operating
metrics on a stand-alone basis for the three largest privately held
businesses (QVC, Starz Entertainment and Starz Media) owned by
Liberty at June 30, 2010.
Please see below for the definition of adjusted OIBDA and a
discussion of management's use of this performance measure.
Schedule 2 to this press release provides a reconciliation of
adjusted OIBDA for each identified entity to that entity's
operating income for the same period, as determined under GAAP.
|
|
QUARTERLY SUMMARY
|
|
(amounts in
millions)
|
2Q09
|
3Q09
|
4Q09
|
1Q10
|
2Q10
|
|
Liberty Interactive
Group
|
|
|
|
|
|
|
QVC
|
|
|
|
|
|
|
Revenue – Domestic
|
1,152
|
1,093
|
1,672
|
1,156
|
1,193
|
|
Revenue –
International
|
527
|
569
|
751
|
601
|
565
|
|
Revenue – Total
|
1,679
|
1,662
|
2,423
|
1,757
|
1,758
|
|
Adjusted OIBDA –
Domestic
|
275
|
242
|
368
|
261
|
303
|
|
Adjusted OIBDA –
International
|
96
|
99
|
159
|
105
|
100
|
|
Adjusted OIBDA –
Total
|
371
|
341
|
527
|
366
|
403
|
|
Operating Income
|
241
|
208
|
388
|
232
|
270
|
|
Gross Margin –
Domestic
|
36.4%
|
34.7%
|
33.5%
|
35.6%
|
37.3%
|
|
Gross Margin –
International
|
37.6%
|
36.9%
|
37.3%
|
36.6%
|
36.9%
|
|
|
|
|
|
|
|
|
Liberty Starz
Group
|
|
|
|
|
|
|
Starz
Entertainment
|
|
|
|
|
|
|
Revenue
|
296
|
301
|
300
|
305
|
308
|
|
Adjusted OIBDA
|
105
|
93
|
78
|
106
|
107
|
|
Operating Income
|
92
|
78
|
65
|
99
|
102
|
|
Subscription Units –
Starz
|
17.5
|
17.3
|
16.9
|
17.1
|
17.3
|
|
Subscription Units –
Encore
|
31.5
|
30.7
|
30.6
|
31.1
|
31.9
|
|
|
|
|
|
|
|
|
Liberty Capital
Group
|
|
|
|
|
|
|
Starz Media
|
|
|
|
|
|
|
Revenue
|
90
|
56
|
116
|
144
|
84
|
|
Adjusted OIBDA
|
17
|
(71)
|
(44)
|
(7)
|
(54)
|
|
Operating Income
(Loss)
|
15
|
(73)
|
(44)
|
(9)
|
(55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES
This press release includes a presentation of adjusted OIBDA,
which is a non-GAAP financial measure, for each of Liberty's
tracking stock groups and each of QVC (and certain of its
subsidiaries), the eCommerce businesses, Starz Entertainment and
Starz Media together with a reconciliation to that group's or
entity's operating income, as determined under GAAP. Liberty
defines adjusted OIBDA as revenue less cost of sales, operating
expenses, and selling, general and administrative expenses
(excluding stock and other equity-based compensation) and excludes
from that definition depreciation and amortization and
restructuring and impairment charges that are included in the
measurement of operating income pursuant to GAAP. Further,
this press release includes adjusted OIBDA margin which is also a
non-GAAP financial measure. Liberty defines adjusted OIBDA
margin as adjusted OIBDA divided by revenue.
Liberty believes adjusted OIBDA is an important indicator of the
operational strength and performance of its businesses, including
each business' ability to service debt and fund capital
expenditures. In addition, this measure allows management to
view operating results and perform analytical comparisons and
benchmarking between businesses and identify strategies to improve
performance. Because adjusted OIBDA is used as a measure of
operating performance, Liberty views operating income as the most
directly comparable GAAP measure. Adjusted OIBDA is not meant
to replace or supersede operating income or any other GAAP measure,
but rather to supplement such GAAP measures in order to present
investors with the same information that Liberty's management
considers in assessing the results of operations and performance of
its assets. Please see the attached schedules for applicable
reconciliations.
SCHEDULE 1
The following table provides a reconciliation of adjusted OIBDA
for each of Liberty Interactive group, Liberty Starz group, and
Liberty Capital group to that group's operating income calculated
in accordance with GAAP for the three months ended June 30, 2009, September
30, 2009, December 31, 2009,
March 31, 2010 and June 30, 2010, respectively.
|
|
QUARTERLY SUMMARY
|
|
(amounts in
millions)
|
2Q09
|
3Q09
|
4Q09
|
1Q10
|
2Q10
|
|
Liberty Interactive
Group
|
|
|
|
|
|
|
Adjusted OIBDA
|
412
|
345
|
556
|
381
|
428
|
|
Depreciation and
Amortization
|
(135)
|
(139)
|
(145)
|
(141)
|
(139)
|
|
Stock Compensation
Expense
|
(11)
|
(12)
|
(14)
|
(22)
|
(15)
|
|
Operating Income
|
266
|
194
|
397
|
218
|
274
|
|
|
|
|
|
|
|
|
Liberty Starz
Group
|
|
|
|
|
|
|
Adjusted OIBDA
|
104
|
92
|
74
|
103
|
103
|
|
Depreciation and
Amortization
|
(6)
|
(5)
|
(4)
|
(5)
|
(4)
|
|
Stock Compensation
Expense
|
(23)
|
(20)
|
(16)
|
(6)
|
(3)
|
|
Impairment of Long-Lived
Assets
|
--
|
--
|
(5)
|
--
|
--
|
|
Operating Income
|
75
|
67
|
49
|
92
|
96
|
|
|
|
|
|
|
|
|
Liberty Capital
Group
|
|
|
|
|
|
|
Adjusted OIBDA
|
4
|
(71)
|
(76)
|
(43)
|
(59)
|
|
Depreciation and
Amortization
|
(22)
|
(20)
|
(17)
|
(16)
|
(21)
|
|
Stock Compensation
Expense
|
(1)
|
(3)
|
--
|
(11)
|
(3)
|
|
Impairment of Long-Lived
Assets
|
--
|
--
|
(4)
|
--
|
--
|
|
Operating Loss
|
(19)
|
(94)
|
(97)
|
(70)
|
(83)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of adjusted OIBDA
to earnings from continuing operations before income taxes for the
three months ended June 30, 2009 and
2010, respectively.
|
|
(amounts in
millions)
|
Q209
|
Q210
|
|
Liberty Interactive
Group
|
$ 412
|
428
|
|
Liberty Starz Group
|
104
|
103
|
|
Liberty Capital Group
|
4
|
(59)
|
|
Consolidated Adjusted
OIBDA
|
$ 520
|
472
|
|
|
|
|
|
Consolidated Segment Adjusted
OIBDA
|
$ 520
|
472
|
|
Stock-Based
Compensation
|
(35)
|
(21)
|
|
Depreciation and
Amortization
|
(163)
|
(164)
|
|
Interest Expense
|
(143)
|
(174)
|
|
Share of Earnings of Affiliates,
net
|
14
|
39
|
|
Realized and Unrealized Gains
(Losses) on Financial Instruments, net
|
266
|
(81)
|
|
Gains on Dispositions,
net
|
113
|
25
|
|
Other, net
|
81
|
2
|
|
Earnings from Continuing
Operations Before Income Taxes
|
$ 653
|
98
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE 2
The following table provides a reconciliation of adjusted OIBDA
for QVC (and certain of its subsidiaries), the eCommerce
businesses, Starz Entertainment and Starz Media to that entity or
group's operating income (loss) calculated in accordance with GAAP
for the three months ended June 30,
2009, September 30, 2009,
December 31, 2009, March 31, 2010 and June
30, 2010, respectively.
|
|
QUARTERLY SUMMARY
|
|
(amounts in millions)
|
2Q09
|
3Q09
|
4Q09
|
1Q10
|
2Q10
|
|
Liberty Interactive
Group
|
|
|
|
|
|
|
QVC
|
|
|
|
|
|
|
QVC US Adjusted OIBDA
|
275
|
242
|
368
|
261
|
303
|
|
|
|
|
|
|
|
|
QVC UK
|
20
|
23
|
39
|
19
|
22
|
|
QVC Germany
|
33
|
34
|
65
|
42
|
30
|
|
QVC Japan
|
44
|
43
|
57
|
48
|
53
|
|
QVC Italy
|
(1)
|
(1)
|
(2)
|
(4)
|
(5)
|
|
QVC International Adjusted
OIBDA
|
96
|
99
|
159
|
105
|
100
|
|
|
|
|
|
|
|
|
Total QVC Adjusted
OIBDA
|
371
|
341
|
527
|
366
|
403
|
|
Depreciation and
Amortization
|
(127)
|
(129)
|
(134)
|
(129)
|
(129)
|
|
Stock Compensation
Expense
|
(3)
|
(4)
|
(5)
|
(5)
|
(4)
|
|
Operating Income
|
241
|
208
|
388
|
232
|
270
|
|
|
|
|
|
|
|
|
eCommerce
Businesses
|
|
|
|
|
|
|
Adjusted OIBDA
|
44
|
7
|
34
|
18
|
28
|
|
Depreciation and
Amortization
|
(9)
|
(10)
|
(11)
|
(10)
|
(11)
|
|
Stock Compensation
Expense
|
(4)
|
(4)
|
(6)
|
(4)
|
(9)
|
|
Operating Income (Loss)
|
31
|
(7)
|
17
|
4
|
8
|
|
|
|
|
|
|
|
|
Liberty Starz
Group
|
|
|
|
|
|
|
Starz
Entertainment
|
|
|
|
|
|
|
Adjusted OIBDA
|
105
|
93
|
78
|
106
|
107
|
|
Depreciation and
Amortization
|
(5)
|
(3)
|
(4)
|
(4)
|
(4)
|
|
Stock Compensation
Expense
|
(8)
|
(12)
|
(9)
|
(3)
|
(1)
|
|
Operating Income
|
92
|
78
|
65
|
99
|
102
|
|
|
|
|
|
|
|
|
Liberty Capital
Group
|
|
|
|
|
|
|
Starz Media
|
|
|
|
|
|
|
Adjusted OIBDA
|
17
|
(71)
|
(44)
|
(7)
|
(54)
|
|
Depreciation and
Amortization
|
(3)
|
(2)
|
(1)
|
(2)
|
(2)
|
|
Stock Compensation
Expense
|
1
|
--
|
1
|
--
|
1
|
|
Operating Income
(Loss)
|
15
|
(73)
|
(44)
|
(9)
|
(55)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE Liberty Media Corporation
Copyright g. 9 PR Newswire