Exhibit 99.1
Unaudited Attributed Financial Information for Tracking Stock Groups
During November 2015, Liberty Media Corporation’s (“Liberty”) board of directors authorized management to pursue a reclassification of the Company’s common stock into three new tracking stock groups, one to be designated as the Liberty Braves tracking stock, one to be designated as the Liberty Media tracking stock and one to be designated as the Liberty SiriusXM tracking stock (the “Recapitalization”), and to cause to be distributed subscription rights related to the Liberty Braves tracking stock following the creation of the new tracking stocks. The Recapitalization was completed on April 15, 2016 and the newly issued shares commenced trading or quotation in the regular way on the Nasdaq Global Select Market or the OTC Markets, as applicable, on Monday, April 18, 2016. Shortly following the completion of the second closing of the acquisition of Formula 1 on January 23, 2017, the Liberty Media Group was renamed the Liberty Formula One Group. Historical information of the Liberty Media Group and Liberty Media common stock is referred to herein as the Formula One Group and Liberty Formula One common stock, respectively.
The following tables present our assets and liabilities as of December 31, 2018 and December 31, 2017 and revenue, expenses and cash flows for the years ended December 31, 2018, 2017, and 2016. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Liberty SiriusXM Group, Braves Group and the Formula One Group, respectively. The financial information should be read in conjunction with our consolidated financial statements for the year ended December 31, 2018 included in this Annual Report on Form 10-K.
The attributed financial information presented herein has been prepared assuming this attribution had been completed as of January 1, 2014. However, this attribution of historical financial information does not purport to be what actual results and balances would have been if such attribution had actually occurred and been in place during these periods. Therefore, the attributed net earnings (losses) presented in the unaudited attributed financial information are not the same as the net earnings (losses) reflected in the Liberty consolidated financial statements included in this Annual Report on Form 10-K. The net earnings (losses) attributed to the Liberty SiriusXM common stock, Liberty Braves common stock and Liberty Formula One common stock for purposes of those financial statements only relates to the period after the Recapitalization.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Liberty SiriusXM Group, Braves Group and the Formula One Group, our tracking stock capital structure does not affect the ownership or the respective legal title to our assets or responsibility for our liabilities. We and our subsidiaries are each responsible for our respective liabilities. Holders of Liberty SiriusXM common stock, Liberty Braves common stock and Liberty Formula One common stock are holders of our common stock and are subject to risks associated with an investment in our company and all of our businesses, assets and liabilities. The issuance of Liberty SiriusXM common stock, Liberty Braves common stock and Liberty Formula One common stock does not affect the rights of our creditors.
1
SUMMARY ATTRIBUTED FINANCIAL DATA
Liberty SiriusXM Group
Summary Balance Sheet Data:
|
|
December 31, |
|
December 31, |
||
|
|
2018 |
|
2017 |
||
|
|
amounts in millions |
||||
Cash and cash equivalents |
|
$ |
91 |
|
|
615 |
Investments in affiliates, accounted for using the equity method |
|
$ |
629 |
|
|
672 |
Intangible assets not subject to amortization |
|
$ |
23,781 |
|
|
23,778 |
Intangible assets subject to amortization, net |
|
$ |
942 |
|
|
972 |
Total assets |
|
$ |
28,292 |
|
|
28,530 |
Deferred revenue |
|
$ |
1,932 |
|
|
1,882 |
Long-term debt, including current portion |
|
$ |
7,858 |
|
|
7,496 |
Deferred tax liabilities |
|
$ |
1,673 |
|
|
1,447 |
Attributed net assets |
|
$ |
10,599 |
|
|
10,861 |
Noncontrolling interest |
|
$ |
5,108 |
|
|
5,615 |
Summary Statement of Operations Data:
|
|
|
Years ended December 31, |
||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
||||
Revenue |
|
$ |
5,771 |
|
5,425 |
|
5,014 |
Cost of subscriber services (1) |
|
$ |
(2,308) |
|
(2,102) |
|
(1,994) |
Subscriber acquisition costs |
|
$ |
(470) |
|
(499) |
|
(513) |
Other operating expenses (1) |
|
$ |
(123) |
|
(113) |
|
(82) |
Selling, general and administrative expense (1) |
|
$ |
(881) |
|
(812) |
|
(761) |
Operating income (loss) |
|
$ |
1,620 |
|
1,547 |
|
1,352 |
Interest expense |
|
$ |
(388) |
|
(356) |
|
(342) |
Income tax (expense) benefit |
|
$ |
(241) |
|
466 |
|
(341) |
Net earnings (loss) attributable to noncontrolling interests |
|
$ |
328 |
|
535 |
|
244 |
Earnings (loss) attributable to Liberty stockholders |
|
$ |
676 |
|
1,124 |
|
413 |
(1) |
Includes stock-based compensation expense as follows: |
|
|
|
Years ended December 31, |
||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
||||
Cost of subscriber services |
|
$ |
37 |
|
36 |
|
30 |
Other operating expenses |
|
|
17 |
|
16 |
|
13 |
Selling, general and administrative expense |
|
|
102 |
|
98 |
|
85 |
|
|
$ |
156 |
|
150 |
|
128 |
2
Braves Group
Summary Balance Sheet Data:
|
|
December 31, |
|
December 31, |
|
||
|
|
2018 |
|
2017 |
|
||
|
|
amounts in millions |
|
||||
Cash and cash equivalents |
|
$ |
107 |
|
|
132 |
|
Property and equipment, net |
|
$ |
1,041 |
|
|
1,099 |
|
Investments in affiliates, accounted for using the equity method |
|
$ |
92 |
|
|
145 |
|
Intangible assets not subject to amortization |
|
$ |
323 |
|
|
323 |
|
Intangible assets subject to amortization, net |
|
$ |
37 |
|
|
49 |
|
Total assets |
|
$ |
1,805 |
|
|
1,866 |
|
Deferred revenue |
|
$ |
54 |
|
|
51 |
|
Long-term debt, including current portion |
|
$ |
491 |
|
|
662 |
|
Deferred tax liabilities |
|
$ |
69 |
|
|
62 |
|
Attributed net assets |
|
$ |
446 |
|
|
413 |
|
Summary Statement of Operations Data:
|
|
|
Years ended December 31, |
||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
||||
Revenue |
|
$ |
442 |
|
386 |
|
262 |
Selling, general and administrative expense (1) |
|
$ |
(118) |
|
(151) |
|
(67) |
Operating income (loss) |
|
$ |
1 |
|
(113) |
|
(61) |
Share of earnings (losses) of affiliates, net |
|
$ |
12 |
|
78 |
|
9 |
Income tax (expense) benefit |
|
$ |
15 |
|
36 |
|
17 |
Earnings (loss) attributable to Liberty stockholders |
|
$ |
5 |
|
(25) |
|
(62) |
(1) |
Includes stock-based compensation of $11 million, $48 million, and $9 million for the years ended December 31, 2018, 2017 and 2016, respectively. |
3
Formula One Group
Summary Balance Sheet Data:
|
|
December 31, |
|
December 31, |
|
||
|
|
2018 |
|
2017 |
|
||
|
|
amounts in millions |
|
||||
Cash and cash equivalents |
|
$ |
160 |
|
|
282 |
|
Investments in debt and equity securities |
|
$ |
303 |
|
|
526 |
|
Investments in affiliates, accounted for using the equity method |
|
$ |
920 |
|
|
933 |
|
Intangible assets not subject to amortization |
|
$ |
3,956 |
|
|
3,956 |
|
Intangible assets subject to amortization, net |
|
$ |
4,736 |
|
|
5,171 |
|
Total assets |
|
$ |
10,957 |
|
|
11,802 |
|
Long-term debt, including current portion |
|
$ |
5,039 |
|
|
5,796 |
|
Attributed net assets |
|
$ |
5,550 |
|
|
5,669 |
|
Summary Statement of Operations Data:
|
|
|
Years ended December 31, |
||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
||||
Revenue |
|
$ |
1,827 |
|
1,783 |
|
— |
Cost of Formula 1 revenue |
|
$ |
1,273 |
|
1,219 |
|
— |
Selling, general and administrative expense (1) |
|
$ |
(204) |
|
(199) |
|
(58) |
Legal settlement |
|
$ |
— |
|
— |
|
511 |
Operating income (loss) |
|
$ |
(110) |
|
(40) |
|
443 |
Interest expense |
|
$ |
(192) |
|
(220) |
|
(19) |
Share of earnings (losses) of affiliates, net |
|
$ |
17 |
|
(3) |
|
(8) |
Realized and unrealized gains (losses) on financial instruments, net |
|
$ |
43 |
|
(72) |
|
36 |
Income tax (expense) benefit |
|
$ |
50 |
|
561 |
|
(171) |
Earnings (loss) attributable to Liberty stockholders |
|
$ |
(150) |
|
255 |
|
329 |
(1) |
Includes stock-based compensation of $25 million, $32 million, and $13 million for the years ended December 31, 2018, 2017, and 2016, respectively. |
4
BALANCE SHEET INFORMATION
December 31, 2018
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Inter-Group |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Eliminations |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
91 |
|
107 |
|
160 |
|
— |
|
358 |
|
Trade and other receivables, net |
|
|
233 |
|
21 |
|
110 |
|
— |
|
364 |
|
Other current assets |
|
|
191 |
|
129 |
|
40 |
|
— |
|
360 |
|
Total current assets |
|
|
515 |
|
257 |
|
310 |
|
— |
|
1,082 |
|
Intergroup interest in the Braves Group (note 1) |
|
|
— |
|
— |
|
226 |
|
(226) |
|
— |
|
Investments in debt and equity securities (note 1) |
|
|
967 |
|
8 |
|
303 |
|
— |
|
1,278 |
|
Investments in affiliates, accounted for using the equity method (note 1) |
|
|
629 |
|
92 |
|
920 |
|
— |
|
1,641 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, at cost |
|
|
2,450 |
|
1,137 |
|
178 |
|
— |
|
3,765 |
|
Accumulated depreciation |
|
|
(1,112) |
|
(96) |
|
(88) |
|
— |
|
(1,296) |
|
|
|
|
1,338 |
|
1,041 |
|
90 |
|
— |
|
2,469 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets not subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
14,250 |
|
180 |
|
3,956 |
|
— |
|
18,386 |
|
FCC licenses |
|
|
8,600 |
|
— |
|
— |
|
— |
|
8,600 |
|
Other |
|
|
931 |
|
143 |
|
— |
|
— |
|
1,074 |
|
|
|
|
23,781 |
|
323 |
|
3,956 |
|
— |
|
28,060 |
|
Intangible assets subject to amortization, net |
|
|
942 |
|
37 |
|
4,736 |
|
— |
|
5,715 |
|
Other assets |
|
|
120 |
|
47 |
|
416 |
|
— |
|
583 |
|
Total assets |
|
$ |
28,292 |
|
1,805 |
|
10,957 |
|
(226) |
|
40,828 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Intergroup payable (receivable) (note 4) |
|
$ |
(4) |
|
(21) |
|
25 |
|
— |
|
— |
|
Accounts payable and accrued liabilities |
|
|
854 |
|
29 |
|
233 |
|
— |
|
1,116 |
|
Current portion of debt (note 1) |
|
|
3 |
|
14 |
|
— |
|
— |
|
17 |
|
Deferred revenue |
|
|
1,932 |
|
54 |
|
93 |
|
— |
|
2,079 |
|
Other current liabilities |
|
|
15 |
|
8 |
|
9 |
|
— |
|
32 |
|
Total current liabilities |
|
|
2,800 |
|
84 |
|
360 |
|
— |
|
3,244 |
|
Long-term debt (note 1) |
|
|
7,855 |
|
477 |
|
5,039 |
|
— |
|
13,371 |
|
Deferred income tax liabilities (note 3) |
|
|
1,673 |
|
69 |
|
(91) |
|
— |
|
1,651 |
|
Redeemable intergroup interest (note 1) |
|
|
— |
|
226 |
|
— |
|
(226) |
|
— |
|
Other liabilities |
|
|
257 |
|
511 |
|
96 |
|
— |
|
864 |
|
Total liabilities |
|
|
12,585 |
|
1,367 |
|
5,404 |
|
(226) |
|
19,130 |
|
Equity / Attributed net assets |
|
|
10,599 |
|
446 |
|
5,550 |
|
— |
|
16,595 |
|
Noncontrolling interests in equity of subsidiaries |
|
|
5,108 |
|
(8) |
|
3 |
|
— |
|
5,103 |
|
Total liabilities and equity |
|
$ |
28,292 |
|
1,805 |
|
10,957 |
|
(226) |
|
40,828 |
|
5
BALANCE SHEET INFORMATION
December 31, 2017
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Inter-Group |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Eliminations |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
615 |
|
132 |
|
282 |
|
— |
|
1,029 |
|
Trade and other receivables, net |
|
|
242 |
|
32 |
|
84 |
|
— |
|
358 |
|
Other current assets |
|
|
207 |
|
56 |
|
93 |
|
— |
|
356 |
|
Total current assets |
|
|
1,064 |
|
220 |
|
459 |
|
— |
|
1,743 |
|
Intergroup interest in the Braves Group (note 1) |
|
|
— |
|
— |
|
202 |
|
(202) |
|
— |
|
Investments in debt and equity securities (note 1) |
|
|
580 |
|
8 |
|
526 |
|
— |
|
1,114 |
|
Investments in affiliates, accounted for using the equity method (note 1) |
|
|
672 |
|
145 |
|
933 |
|
— |
|
1,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, at cost |
|
|
2,274 |
|
1,150 |
|
172 |
|
— |
|
3,596 |
|
Accumulated depreciation |
|
|
(927) |
|
(51) |
|
(77) |
|
— |
|
(1,055) |
|
|
|
|
1,347 |
|
1,099 |
|
95 |
|
— |
|
2,541 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets not subject to amortization |
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
14,247 |
|
180 |
|
3,956 |
|
— |
|
18,383 |
|
FCC licenses |
|
|
8,600 |
|
— |
|
— |
|
— |
|
8,600 |
|
Other |
|
|
931 |
|
143 |
|
— |
|
— |
|
1,074 |
|
|
|
|
23,778 |
|
323 |
|
3,956 |
|
— |
|
28,057 |
|
Intangible assets subject to amortization, net |
|
|
972 |
|
49 |
|
5,171 |
|
— |
|
6,192 |
|
Other assets |
|
|
117 |
|
22 |
|
460 |
|
— |
|
599 |
|
Total assets |
|
$ |
28,530 |
|
1,866 |
|
11,802 |
|
(202) |
|
41,996 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Intergroup payable (receivable) (note 4) |
|
$ |
9 |
|
(39) |
|
30 |
|
— |
|
— |
|
Accounts payable and accrued liabilities |
|
|
934 |
|
58 |
|
258 |
|
— |
|
1,250 |
|
Current portion of debt (note 1) |
|
|
755 |
|
13 |
|
— |
|
— |
|
768 |
|
Deferred revenue |
|
|
1,882 |
|
51 |
|
8 |
|
— |
|
1,941 |
|
Other current liabilities |
|
|
3 |
|
8 |
|
9 |
|
— |
|
20 |
|
Total current liabilities |
|
|
3,583 |
|
91 |
|
305 |
|
— |
|
3,979 |
|
Long-term debt (note 1) |
|
|
6,741 |
|
649 |
|
5,796 |
|
— |
|
13,186 |
|
Deferred income tax liabilities (note 3) |
|
|
1,447 |
|
62 |
|
(31) |
|
— |
|
1,478 |
|
Redeemable intergroup interest (note 1) |
|
|
— |
|
202 |
|
— |
|
(202) |
|
— |
|
Other liabilities |
|
|
283 |
|
435 |
|
61 |
|
— |
|
779 |
|
Total liabilities |
|
|
12,054 |
|
1,439 |
|
6,131 |
|
(202) |
|
19,422 |
|
Equity / Attributed net assets |
|
|
10,861 |
|
413 |
|
5,669 |
|
— |
|
16,943 |
|
Noncontrolling interests in equity of subsidiaries |
|
|
5,615 |
|
14 |
|
2 |
|
— |
|
5,631 |
|
Total liabilities and equity |
|
$ |
28,530 |
|
1,866 |
|
11,802 |
|
(202) |
|
41,996 |
|
6
STATEMENT OF OPERATIONS INFORMATION
December 31, 2018
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
Subscriber revenue |
|
$ |
4,594 |
|
— |
|
— |
|
4,594 |
|
Formula 1 revenue |
|
|
— |
|
— |
|
1,827 |
|
1,827 |
|
Other revenue |
|
|
1,177 |
|
442 |
|
— |
|
1,619 |
|
Total revenue |
|
|
5,771 |
|
442 |
|
1,827 |
|
8,040 |
|
Operating costs and expenses, including stock-based compensation (note 2): |
|
|
|
|
|
|
|
|
|
|
Cost of subscriber services (exclusive of depreciation shown separately below): |
|
|
|
|
|
|
|
|
|
|
Revenue share and royalties |
|
|
1,394 |
|
— |
|
— |
|
1,394 |
|
Programming and content |
|
|
406 |
|
— |
|
— |
|
406 |
|
Customer service and billing |
|
|
382 |
|
— |
|
— |
|
382 |
|
Other |
|
|
126 |
|
— |
|
— |
|
126 |
|
Cost of Formula 1 revenue |
|
|
— |
|
— |
|
1,273 |
|
1,273 |
|
Subscriber acquisition costs |
|
|
470 |
|
— |
|
— |
|
470 |
|
Other operating expenses |
|
|
123 |
|
247 |
|
— |
|
370 |
|
Selling, general and administrative |
|
|
881 |
|
118 |
|
204 |
|
1,203 |
|
Depreciation and amortization |
|
|
369 |
|
76 |
|
460 |
|
905 |
|
|
|
|
4,151 |
|
441 |
|
1,937 |
|
6,529 |
|
Operating income (loss) |
|
|
1,620 |
|
1 |
|
(110) |
|
1,511 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(388) |
|
(26) |
|
(192) |
|
(606) |
|
Share of earnings (losses) of affiliates, net |
|
|
(11) |
|
12 |
|
17 |
|
18 |
|
Unrealized gain/(loss) on inter-group interest |
|
|
— |
|
(24) |
|
24 |
|
— |
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(1) |
|
(2) |
|
43 |
|
40 |
|
Other, net |
|
|
25 |
|
35 |
|
18 |
|
78 |
|
|
|
|
(375) |
|
(5) |
|
(90) |
|
(470) |
|
Earnings (loss) before income taxes |
|
|
1,245 |
|
(4) |
|
(200) |
|
1,041 |
|
Income tax (expense) benefit (note 3) |
|
|
(241) |
|
15 |
|
50 |
|
(176) |
|
Net earnings (loss) |
|
|
1,004 |
|
11 |
|
(150) |
|
865 |
|
Less net earnings (loss) attributable to the noncontrolling interests |
|
|
328 |
|
6 |
|
— |
|
334 |
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
676 |
|
5 |
|
(150) |
|
531 |
|
7
STATEMENT OF OPERATIONS INFORMATION
December 31, 2017
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
Subscriber revenue |
|
$ |
4,473 |
|
— |
|
— |
|
4,473 |
|
Formula 1 revenue |
|
|
— |
|
— |
|
1,783 |
|
1,783 |
|
Other revenue |
|
|
952 |
|
386 |
|
— |
|
1,338 |
|
Total revenue |
|
|
5,425 |
|
386 |
|
1,783 |
|
7,594 |
|
Operating costs and expenses, including stock-based compensation (note 2): |
|
|
|
|
|
|
|
|
|
|
Cost of subscriber services (exclusive of depreciation shown separately below): |
|
|
|
|
|
|
|
|
|
|
Revenue share and royalties |
|
|
1,210 |
|
— |
|
— |
|
1,210 |
|
Programming and content |
|
|
388 |
|
— |
|
— |
|
388 |
|
Customer service and billing |
|
|
385 |
|
— |
|
— |
|
385 |
|
Other |
|
|
119 |
|
— |
|
— |
|
119 |
|
Cost of Formula 1 revenue |
|
|
— |
|
— |
|
1,219 |
|
1,219 |
|
Subscriber acquisition costs |
|
|
499 |
|
— |
|
— |
|
499 |
|
Other operating expenses |
|
|
113 |
|
281 |
|
— |
|
394 |
|
Selling, general and administrative |
|
|
812 |
|
151 |
|
199 |
|
1,162 |
|
Depreciation and amortization |
|
|
352 |
|
67 |
|
405 |
|
824 |
|
|
|
|
3,878 |
|
499 |
|
1,823 |
|
6,200 |
|
Operating income (loss) |
|
|
1,547 |
|
(113) |
|
(40) |
|
1,394 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(356) |
|
(15) |
|
(220) |
|
(591) |
|
Share of earnings (losses) of affiliates, net |
|
|
29 |
|
78 |
|
(3) |
|
104 |
|
Unrealized gain/(loss) on inter-group interest |
|
|
— |
|
(15) |
|
15 |
|
— |
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(16) |
|
— |
|
(72) |
|
(88) |
|
Other, net |
|
|
(11) |
|
3 |
|
16 |
|
8 |
|
|
|
|
(354) |
|
51 |
|
(264) |
|
(567) |
|
Earnings (loss) before income taxes |
|
|
1,193 |
|
(62) |
|
(304) |
|
827 |
|
Income tax (expense) benefit (note 3) |
|
|
466 |
|
36 |
|
561 |
|
1,063 |
|
Net earnings (loss) |
|
|
1,659 |
|
(26) |
|
257 |
|
1,890 |
|
Less net earnings (loss) attributable to the noncontrolling interests |
|
|
535 |
|
(1) |
|
2 |
|
536 |
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
1,124 |
|
(25) |
|
255 |
|
1,354 |
|
8
STATEMENT OF OPERATIONS INFORMATION
December 31, 2016
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
Subscriber revenue |
|
$ |
4,194 |
|
— |
|
— |
|
4,194 |
|
Other revenue |
|
|
820 |
|
262 |
|
— |
|
1,082 |
|
Total revenue |
|
|
5,014 |
|
262 |
|
— |
|
5,276 |
|
Operating costs and expenses, including stock-based compensation (note 2): |
|
|
|
|
|
|
|
|
|
|
Cost of subscriber services (exclusive of depreciation shown separately below): |
|
|
|
|
|
|
|
|
|
|
Revenue share and royalties |
|
|
1,109 |
|
— |
|
— |
|
1,109 |
|
Programming and content |
|
|
354 |
|
— |
|
— |
|
354 |
|
Customer service and billing |
|
|
387 |
|
— |
|
— |
|
387 |
|
Other |
|
|
144 |
|
— |
|
— |
|
144 |
|
Subscriber acquisition costs |
|
|
513 |
|
— |
|
— |
|
513 |
|
Other operating expenses |
|
|
82 |
|
224 |
|
— |
|
306 |
|
Selling, general and administrative |
|
|
761 |
|
67 |
|
58 |
|
886 |
|
Legal settlement, net |
|
|
— |
|
— |
|
(511) |
|
(511) |
|
Depreciation and amortization |
|
|
312 |
|
32 |
|
10 |
|
354 |
|
|
|
|
3,662 |
|
323 |
|
(443) |
|
3,542 |
|
Operating income (loss) |
|
|
1,352 |
|
(61) |
|
443 |
|
1,734 |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(342) |
|
(1) |
|
(19) |
|
(362) |
|
Share of earnings (losses) of affiliates, net |
|
|
13 |
|
9 |
|
(8) |
|
14 |
|
Unrealized gain/(loss) on inter-group interest |
|
|
— |
|
(27) |
|
27 |
|
— |
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
— |
|
1 |
|
36 |
|
37 |
|
Other, net |
|
|
(25) |
|
— |
|
21 |
|
(4) |
|
|
|
|
(354) |
|
(18) |
|
57 |
|
(315) |
|
Earnings (loss) before income taxes |
|
|
998 |
|
(79) |
|
500 |
|
1,419 |
|
Income tax (expense) benefit (note 3) |
|
|
(341) |
|
17 |
|
(171) |
|
(495) |
|
Net earnings (loss) |
|
|
657 |
|
(62) |
|
329 |
|
924 |
|
Less net earnings (loss) attributable to the noncontrolling interests |
|
|
244 |
|
— |
|
— |
|
244 |
|
Net earnings (loss) attributable to Liberty stockholders |
|
$ |
413 |
|
(62) |
|
329 |
|
680 |
|
9
STATEMENT OF CASH FLOWS INFORMATION
December 31, 2018
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
1,004 |
|
11 |
|
(150) |
|
865 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
369 |
|
76 |
|
460 |
|
905 |
|
Stock-based compensation |
|
|
156 |
|
11 |
|
25 |
|
192 |
|
Share of (earnings) loss of affiliates, net |
|
|
11 |
|
(12) |
|
(17) |
|
(18) |
|
Unrealized (gains) losses on intergroup interest, net |
|
|
— |
|
24 |
|
(24) |
|
— |
|
Realized and unrealized (gains) losses on financial instruments, net |
|
|
1 |
|
2 |
|
(43) |
|
(40) |
|
Noncash interest expense |
|
|
(8) |
|
5 |
|
2 |
|
(1) |
|
Losses (gains) on dilution of investment in affiliate |
|
|
— |
|
— |
|
1 |
|
1 |
|
Loss on early extinguishment of debt |
|
|
— |
|
— |
|
1 |
|
1 |
|
Deferred income tax expense (benefit) |
|
|
231 |
|
(1) |
|
(63) |
|
167 |
|
Intergroup tax allocation |
|
|
22 |
|
(14) |
|
(8) |
|
— |
|
Intergroup tax (payments) receipts |
|
|
(20) |
|
35 |
|
(15) |
|
— |
|
Other charges (credits), net |
|
|
2 |
|
(20) |
|
1 |
|
(17) |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
(4) |
|
8 |
|
(35) |
|
(31) |
|
Payables and other liabilities |
|
|
21 |
|
(22) |
|
133 |
|
132 |
|
Net cash provided (used) by operating activities |
|
|
1,785 |
|
103 |
|
268 |
|
2,156 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Cash proceeds from dispositions of investments |
|
|
— |
|
155 |
|
244 |
|
399 |
|
Investments in equity method affiliates and debt and equity securities |
|
|
(405) |
|
— |
|
(9) |
|
(414) |
|
Repayment of loans and other cash receipts from equity method affiliates and debt and equity securities |
|
|
14 |
|
— |
|
— |
|
14 |
|
Capital expended for property and equipment |
|
|
(356) |
|
(33) |
|
(14) |
|
(403) |
|
Other investing activities, net |
|
|
(9) |
|
37 |
|
6 |
|
34 |
|
Net cash provided (used) by investing activities |
|
|
(756) |
|
159 |
|
227 |
|
(370) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
2,795 |
|
123 |
|
699 |
|
3,617 |
|
Repayments of debt |
|
|
(2,431) |
|
(317) |
|
(1,309) |
|
(4,057) |
|
Series C Liberty SiriusXM stock repurchases |
|
|
(466) |
|
— |
|
— |
|
(466) |
|
Subsidiary shares repurchased by subsidiary |
|
|
(1,314) |
|
— |
|
— |
|
(1,314) |
|
Cash dividends paid by subsidiary |
|
|
(59) |
|
— |
|
— |
|
(59) |
|
Taxes paid in lieu of shares issued for stock-based compensation |
|
|
(127) |
|
— |
|
(3) |
|
(130) |
|
Other financing activities, net |
|
|
50 |
|
(18) |
|
(3) |
|
29 |
|
Net cash provided (used) by financing activities |
|
|
(1,552) |
|
(212) |
|
(616) |
|
(2,380) |
|
Effect of foreign exchange rates on cash, cash equivalents and restricted cash |
|
|
— |
|
— |
|
(1) |
|
(1) |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(523) |
|
50 |
|
(122) |
|
(595) |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
625 |
|
140 |
|
282 |
|
1,047 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
102 |
|
190 |
|
160 |
|
452 |
|
10
STATEMENT OF CASH FLOWS INFORMATION
December 31, 2017
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
1,659 |
|
(26) |
|
257 |
|
1,890 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
352 |
|
67 |
|
405 |
|
824 |
|
Stock-based compensation |
|
|
150 |
|
48 |
|
32 |
|
230 |
|
Share of (earnings) loss of affiliates, net |
|
|
(29) |
|
(78) |
|
3 |
|
(104) |
|
Unrealized (gains) losses on intergroup interest, net |
|
|
— |
|
15 |
|
(15) |
|
— |
|
Realized and unrealized (gains) losses on financial instruments, net |
|
|
16 |
|
— |
|
72 |
|
88 |
|
Noncash interest expense |
|
|
7 |
|
3 |
|
6 |
|
16 |
|
Losses (gains) on dilution of investment in affiliate |
|
|
— |
|
— |
|
(3) |
|
(3) |
|
Loss on early extinguishment of debt |
|
|
35 |
|
5 |
|
8 |
|
48 |
|
Deferred income tax expense (benefit) |
|
|
(492) |
|
2 |
|
(574) |
|
(1,064) |
|
Intergroup tax allocation |
|
|
(6) |
|
(39) |
|
45 |
|
— |
|
Intergroup tax (payments) receipts |
|
|
4 |
|
15 |
|
(19) |
|
— |
|
Other charges (credits), net |
|
|
(4) |
|
18 |
|
(10) |
|
4 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
30 |
|
(57) |
|
77 |
|
50 |
|
Payables and other liabilities |
|
|
127 |
|
(15) |
|
(359) |
|
(247) |
|
Net cash provided (used) by operating activities |
|
|
1,849 |
|
(42) |
|
(75) |
|
1,732 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Cash proceeds from dispositions of investments |
|
|
— |
|
5 |
|
16 |
|
21 |
|
Net cash paid for the acquisition of Formula 1 |
|
|
— |
|
— |
|
(1,647) |
|
(1,647) |
|
Investments in equity method affiliates and debt and equity securities |
|
|
(851) |
|
(2) |
|
(9) |
|
(862) |
|
Capital expended for property and equipment |
|
|
(288) |
|
(219) |
|
(10) |
|
(517) |
|
Other investing activities, net |
|
|
(115) |
|
(5) |
|
(12) |
|
(132) |
|
Net cash provided (used) by investing activities |
|
|
(1,254) |
|
(221) |
|
(1,662) |
|
(3,137) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
4,553 |
|
544 |
|
1,600 |
|
6,697 |
|
Repayments of debt |
|
|
(3,216) |
|
(218) |
|
(1,673) |
|
(5,107) |
|
Proceeds from issuance of Series C Liberty Formula One common stock |
|
|
— |
|
— |
|
1,938 |
|
1,938 |
|
Subsidiary shares repurchased by subsidiary |
|
|
(1,409) |
|
— |
|
— |
|
(1,409) |
|
Cash dividends paid by subsidiary |
|
|
(60) |
|
— |
|
— |
|
(60) |
|
Taxes paid in lieu of shares issued for stock-based compensation |
|
|
(100) |
|
(30) |
|
(5) |
|
(135) |
|
Other financing activities, net |
|
|
(35) |
|
— |
|
(13) |
|
(48) |
|
Net cash provided (used) by financing activities |
|
|
(267) |
|
296 |
|
1,847 |
|
1,876 |
|
Effect of foreign exchange rates on cash, cash equivalents and restricted cash |
|
|
— |
|
— |
|
4 |
|
4 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
328 |
|
33 |
|
114 |
|
475 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
297 |
|
107 |
|
168 |
|
572 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
625 |
|
140 |
|
282 |
|
1,047 |
|
11
STATEMENT OF CASH FLOWS INFORMATION
December 31, 2016
(unaudited)
|
|
|
Attributed (note 1) |
|
|
|
||||
|
|
Liberty |
|
|
|
|
|
|
|
|
|
|
SiriusXM |
|
Braves |
|
Formula One |
|
Consolidated |
|
|
|
|
Group |
|
Group |
|
Group |
|
Liberty |
|
|
|
|
amounts in millions |
|
|||||||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
657 |
|
(62) |
|
329 |
|
924 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
312 |
|
32 |
|
10 |
|
354 |
|
Stock-based compensation |
|
|
128 |
|
9 |
|
13 |
|
150 |
|
Share of (earnings) loss of affiliates, net |
|
|
(13) |
|
(9) |
|
8 |
|
(14) |
|
Unrealized (gains) losses on intergroup interest, net |
|
|
— |
|
27 |
|
(27) |
|
— |
|
Realized and unrealized (gains) losses on financial instruments, net |
|
|
— |
|
(1) |
|
(36) |
|
(37) |
|
Noncash interest expense |
|
|
6 |
|
5 |
|
— |
|
11 |
|
Loss on early extinguishment of debt |
|
|
24 |
|
— |
|
— |
|
24 |
|
Deferred income tax expense (benefit) |
|
|
332 |
|
1 |
|
94 |
|
427 |
|
Intergroup tax allocation |
|
|
(13) |
|
(19) |
|
32 |
|
— |
|
Intergroup tax (payments) receipts |
|
|
7 |
|
7 |
|
(14) |
|
— |
|
Other charges (credits), net |
|
|
21 |
|
11 |
|
(2) |
|
30 |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
|
|
Current and other assets |
|
|
59 |
|
(17) |
|
(17) |
|
25 |
|
Payables and other liabilities |
|
|
184 |
|
105 |
|
(12) |
|
277 |
|
Net cash provided (used) by operating activities |
|
|
1,704 |
|
89 |
|
378 |
|
2,171 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
|
Cash proceeds from dispositions of investments |
|
|
— |
|
— |
|
62 |
|
62 |
|
Investments in equity method affiliates and debt and equity securities |
|
|
— |
|
(20) |
|
(764) |
|
(784) |
|
Repayment of loans and other cash receipts from equity method affiliates and debt and equity securities |
|
|
— |
|
— |
|
48 |
|
48 |
|
Capital expended for property and equipment |
|
|
(206) |
|
(360) |
|
(2) |
|
(568) |
|
Purchases of short term investments and other marketable securities |
|
|
— |
|
— |
|
(258) |
|
(258) |
|
Sales of short term investments and other marketable securities |
|
|
— |
|
— |
|
273 |
|
273 |
|
Other investing activities, net |
|
|
(4) |
|
(33) |
|
— |
|
(37) |
|
Net cash provided (used) by investing activities |
|
|
(210) |
|
(413) |
|
(641) |
|
(1,264) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
|
Borrowings of debt |
|
|
1,847 |
|
460 |
|
438 |
|
2,745 |
|
Repayments of debt |
|
|
(1,471) |
|
(276) |
|
(2) |
|
(1,749) |
|
Intergroup (payments) receipts |
|
|
58 |
|
16 |
|
(74) |
|
— |
|
Subsidiary shares repurchased by subsidiary |
|
|
(1,674) |
|
— |
|
— |
|
(1,674) |
|
Braves Rights Offering |
|
|
— |
|
203 |
|
— |
|
203 |
|
Cash dividends paid by subsidiary |
|
|
(16) |
|
— |
|
— |
|
(16) |
|
Taxes paid in lieu of shares issued for stock-based compensation |
|
|
(47) |
|
— |
|
(11) |
|
(58) |
|
Other financing activities, net |
|
|
(16) |
|
15 |
|
4 |
|
3 |
|
Net cash provided (used) by financing activities |
|
|
(1,319) |
|
418 |
|
355 |
|
(546) |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
175 |
|
94 |
|
92 |
|
361 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
122 |
|
13 |
|
76 |
|
211 |
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
297 |
|
107 |
|
168 |
|
572 |
|
12
Notes to Attributed Financial Information (Continued)
(unaudited)
(1) |
As discussed above and in note 2 the accompanying consolidated financial statements, on April 15, 2016 Liberty completed a recapitalization of Liberty Media Corporation’s (“Liberty” or the “Company”) common stock into three new tracking stock groups, one designated as the Liberty Braves common stock, one designated as the Liberty Media common stock and one designated as the Liberty SiriusXM common stock (the “Recapitalization”). Upon completion of the Second Closing of the acquisition of Formula 1 on January 23, 2017, as discussed below, the Liberty Media Group was renamed the Liberty Formula One Group (the “Formula One Group”). |
A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. While the Liberty SiriusXM Group, Braves Group and Formula One Group have separate collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Therefore, the Liberty SiriusXM Group, Braves Group and Formula One Group do not represent separate legal entities, but rather represent those businesses, assets and liabilities that have been attributed to each respective group. Holders of tracking stock have no direct claim to the group's stock or assets and therefore, do not own, by virtue of their ownership of a Liberty tracking stock, any equity or voting interest in a company, such as Sirius XM Holdings Inc. (“SIRIUS XM”), Formula 1 or Live Nation Entertainment, Inc. (“Live Nation”), in which Liberty holds an interest and that is attributed to a Liberty tracking stock group, such as the Liberty SiriusXM Group or the Formula One Group. Holders of tracking stock are also not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.
The Liberty SiriusXM Group is comprised of our consolidated subsidiary, SIRIUS XM, corporate cash, investments in debt securities, Liberty’s 2.125% Exchangeable Senior Debentures and a margin loan obligation incurred by a wholly-owned special purpose subsidiary of Liberty. On February 1, 2019, SIRIUS XM acquired Pandora Media, Inc. (“Pandora”). See note 7 to the accompanying consolidated financial statements for information related to SIRIUS XM’s acquisition of Pandora. As of December 31, 2018, the Liberty SiriusXM Group has cash and cash equivalents of approximately $91 million, which includes $54 million of subsidiary cash.
The Braves Group is comprised of our consolidated subsidiary, Braves Holdings, LLC (“Braves Holdings”), which indirectly owns the Atlanta Braves Major League Baseball Club (“ANLBC”) and certain assets and liabilities associated with ANLBC’s stadium and mixed use development project (the “Development Project”) and cash. As of December 31, 2018, the Braves Group has cash and cash equivalents of approximately $107 million, which includes $40 million of subsidiary cash. Additionally, as discussed below, the Formula One Group retains an intergroup interest in the Braves Group. See note 2 to the accompanying consolidated financial statements for information regarding the Series C Liberty Braves common stock rights offering.
The Formula One Group is comprised of all of the businesses, assets and liabilities of Liberty other than those specifically attributed to the Liberty SiriusXM Group or the Braves Group, including, as of December 31, 2018, Liberty’s interests in Formula 1 and Live Nation, an intergroup interest in the Braves Group as well as Liberty’s 1.375% Cash Convertible Notes due 2023 and related financial instruments, Liberty’s 1% Cash Convertible Notes due 2023, Liberty’s 2.25% Exchangeable Senior Debentures due 2046 and Liberty’s 2.25% Exchangeable Senior Debentures due 2048. On September 7, 2016 Liberty, through its indirect wholly owned subsidiary Liberty GR Cayman Acquisition Company, entered into two definitive stock purchase agreements relating to the acquisition of Delta Topco Limited (“Delta Topco”), the parent company of Formula 1, a global motorsports business. The transactions contemplated by the first purchase agreement were completed on September 7, 2016 and provided for the acquisition of slightly less than a 20% minority stake in Formula 1 on an undiluted basis. On October 27, 2016, under the terms of the first purchase agreement, Liberty acquired an additional incremental equity interest of Delta Topco, maintaining Liberty’s investment in Delta Topco on an undiluted basis and increasing slightly to 19.1% on a fully diluted basis. Liberty’s interest in Delta Topco and by extension Formula 1 is attributed to the Formula One Group. Liberty acquired 100% of the fully diluted equity interests of Delta Topco, other than a nominal number of shares held by certain Formula 1 teams, in a closing under the second purchase agreement (and following the unwind of the first purchase agreement) on January 23, 2017 (the “Second Closing”). Liberty’s acquired interest in Formula 1, along with existing Formula 1 cash and debt (which is non-recourse to Liberty), was attributed to the Formula One Group upon completion
13
Notes to Attributed Financial Information (Continued)
(unaudited)
of the Second Closing. As of December 31, 2018, the Formula One Group has cash and cash equivalents of approximately $160 million, which includes $30 million of subsidiary cash.
As part of the Recapitalization, the Formula One Group initially held a 20% intergroup interest in the Braves Group. As a result of the rights offering, the number of notional shares underlying the intergroup interest was adjusted to 9,084,940, representing a 15.1% intergroup interest in the Braves Group as of December 31, 2018. The intergroup interest is a quasi-equity interest which is not represented by outstanding shares of common stock; rather, the Formula One Group has an attributed value in the Braves Group which is generally stated in terms of a number of shares of stock issuable to the Formula One Group with respect to its interest in the Braves Group. Each reporting period, the notional shares representing the intergroup interest are marked to fair value. The change in fair value is recorded in the Unrealized gain (loss) on intergroup interest line item in the unaudited attributed consolidated statements of operations. The Formula One Group’s intergroup interest is reflected in the Investment in intergroup interest line item, and the Braves Group liability for the intergroup interest is reflected in the Redeemable intergroup interest line item in the unaudited attributed consolidated balance sheets. Both accounts are presented as noncurrent, as there are currently no plans for the settlement of the intergroup interest. Appropriate eliminating entries are recorded in the Company’s consolidated financial statements.
As the notional shares underlying the intergroup interest are not represented by outstanding shares of common stock, such shares have not been officially designated Series A, B or C Liberty Braves common stock. However, Liberty has assumed that the notional shares (if and when issued) would be comprised of Series C Liberty Braves common stock in order to not dilute voting percentages. Therefore, the market price of Series C Liberty Braves common stock is used for the quarterly mark-to-market adjustment through the unaudited attributed consolidated statements of operations.
The intergroup interest will remain outstanding until the redemption of the outstanding interest, at the discretion of the Company’s board of directors, through transfer of securities, cash and/or other assets from the Braves Group to the Formula One Group.
For information relating to investments in available for sale securities and other cost investments, investments in affiliates accounted for using the equity method and debt, see notes 7, 8 and 10, respectively, of the accompanying consolidated financial statements.
(2) |
Cash compensation expense for our corporate employees is allocated among the Liberty SiriusXM Group, Braves Group and the Formula One Group based on the estimated percentage of time spent providing services for each group. On an annual basis estimated time spent will be determined through an interview process and a review of personnel duties unless transactions significantly change the composition of companies and investments in either respective group which would require a timelier reevaluation of estimated time spent. Other general and administrative expenses are charged directly to the groups whenever possible and are otherwise allocated based on estimated usage or some other reasonably determined methodology. Following the Recapitalization, stock compensation related to each tracking stock is calculated based on actual awards outstanding. |
While we believe that this allocation method is reasonable and fair to each group, we may elect to change the allocation methodology or percentages used to allocate general and administrative expenses in the future.
(3) |
We have accounted for income taxes for the Liberty SiriusXM Group, the Braves Group and the Formula One Group in the accompanying attributed financial information in a manner similar to a stand-alone company basis. To the extent this methodology differs from our tax sharing policy, differences have been reflected in the attributed net assets of the respective groups. |
14
Notes to Attributed Financial Information (Continued)
(unaudited)
Liberty SiriusXM Group
Income tax benefit (expense) consists of:
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
|
|||||
Current: |
|
|
|
|
|
|
|
|
Federal |
|
$ |
(22) |
|
4 |
|
12 |
|
State and local |
|
|
12 |
|
(30) |
|
(21) |
|
Foreign |
|
|
— |
|
— |
|
— |
|
|
|
|
(10) |
|
(26) |
|
(9) |
|
Deferred: |
|
|
|
|
|
|
|
|
Federal |
|
|
(235) |
|
511 |
|
(302) |
|
State and local |
|
|
4 |
|
(19) |
|
(30) |
|
Foreign |
|
|
— |
|
— |
|
— |
|
|
|
|
(231) |
|
492 |
|
(332) |
|
Income tax benefit (expense) |
|
$ |
(241) |
|
466 |
|
(341) |
|
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 21% for the year ended December 31, 2018 and 35% for both of the years ended December 31, 2017 and 2016 as a result of the following:
|
|
Years ended December 31, |
|
|||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
|
|||||
Computed expected tax benefit (expense) |
|
$ |
(262) |
|
(418) |
|
(349) |
|
State and local income taxes, net of federal income taxes |
|
|
22 |
|
(40) |
|
(37) |
|
Foreign income taxes, net of federal income taxes |
|
|
(1) |
|
— |
|
— |
|
Dividends received deductions |
|
|
(3) |
|
36 |
|
9 |
|
Taxable dividends not recognized for book purposes |
|
|
(25) |
|
(45) |
|
(11) |
|
Federal tax credits |
|
|
27 |
|
22 |
|
67 |
|
Change in valuation allowance affecting tax expense |
|
|
(14) |
|
(4) |
|
1 |
|
Change in tax rate due to Tax Act |
|
|
(8) |
|
888 |
|
— |
|
Deductible stock-based compensation |
|
|
37 |
|
35 |
|
(7) |
|
Other, net |
|
|
(14) |
|
(8) |
|
(14) |
|
Income tax benefit (expense) |
|
$ |
(241) |
|
466 |
|
(341) |
|
15
Notes to Attributed Financial Information (Continued)
(unaudited)
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:
|
|
December 31, |
|
|||
|
|
2018 |
|
2017 |
|
|
|
|
amounts in millions |
|
|||
Deferred tax assets: |
|
|
|
|
|
|
Tax loss and credit carryforwards |
|
$ |
951 |
|
689 |
|
Accrued stock compensation |
|
|
84 |
|
78 |
|
Other accrued liabilities |
|
|
— |
|
52 |
|
Deferred revenue |
|
|
523 |
|
500 |
|
Other future deductible amounts |
|
|
10 |
|
10 |
|
Deferred tax assets |
|
|
1,568 |
|
1,329 |
|
Valuation allowance |
|
|
(67) |
|
(53) |
|
Net deferred tax assets |
|
|
1,501 |
|
1,276 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
Investments |
|
|
22 |
|
23 |
|
Fixed assets |
|
|
226 |
|
198 |
|
Intangible assets |
|
|
2,484 |
|
2,494 |
|
Discount on debt |
|
|
17 |
|
8 |
|
Other future taxable amounts |
|
|
425 |
|
— |
|
Deferred tax liabilities |
|
|
3,174 |
|
2,723 |
|
Net deferred tax liabilities |
|
$ |
1,673 |
|
1,447 |
|
Braves Group
Income tax benefit (expense) consists of:
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
|
|||||
Current: |
|
|
|
|
|
|
|
|
Federal |
|
$ |
14 |
|
36 |
|
18 |
|
State and local |
|
|
— |
|
2 |
|
— |
|
Foreign |
|
|
— |
|
— |
|
— |
|
|
|
|
14 |
|
38 |
|
18 |
|
Deferred: |
|
|
|
|
|
|
|
|
Federal |
|
|
9 |
|
3 |
|
(1) |
|
State and local |
|
|
(8) |
|
(5) |
|
— |
|
Foreign |
|
|
— |
|
— |
|
— |
|
|
|
|
1 |
|
(2) |
|
(1) |
|
Income tax benefit (expense) |
|
$ |
15 |
|
36 |
|
17 |
|
16
Notes to Attributed Financial Information (Continued)
(unaudited)
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 21% for the year ended December 31, 2018 and 35% for both of the years ended December 31, 2017 and 2016 as a result of the following:
|
|
Years ended December 31, |
|
|||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
|
|||||
Computed expected tax benefit (expense) |
|
$ |
1 |
|
22 |
|
27 |
|
State and local income taxes, net of federal income taxes |
|
|
(4) |
|
3 |
|
2 |
|
Federal tax credits |
|
|
3 |
|
— |
|
— |
|
Change in valuation allowance affecting tax expense |
|
|
5 |
|
(6) |
|
(2) |
|
Change in tax rate due to Tax Act |
|
|
11 |
|
25 |
|
— |
|
Other, net |
|
|
(1) |
|
(8) |
|
(10) |
|
Income tax benefit (expense) |
|
$ |
15 |
|
36 |
|
17 |
|
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:
|
|
December 31, |
|
|||
|
|
2018 |
|
2017 |
|
|
|
|
amounts in millions |
|
|||
Deferred tax assets: |
|
|
|
|
|
|
Tax loss and credit carryforwards |
|
$ |
3 |
|
8 |
|
Accrued stock compensation |
|
|
2 |
|
2 |
|
Other accrued liabilities |
|
|
102 |
|
114 |
|
Other future deductible amounts |
|
|
12 |
|
13 |
|
Deferred tax assets |
|
|
119 |
|
137 |
|
Valuation allowance |
|
|
(3) |
|
(8) |
|
Net deferred tax assets |
|
|
116 |
|
129 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
Investments |
|
|
7 |
|
19 |
|
Fixed assets |
|
|
131 |
|
126 |
|
Intangible assets |
|
|
38 |
|
46 |
|
Other future taxable amounts |
|
|
9 |
|
— |
|
Deferred tax liabilities |
|
|
185 |
|
191 |
|
Net deferred tax liabilities |
|
$ |
69 |
|
62 |
|
17
Notes to Attributed Financial Information (Continued)
(unaudited)
Liberty Formula One Group
Income tax benefit (expense) consists of:
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
|||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
|
|||||
Current: |
|
|
|
|
|
|
|
|
Federal |
|
$ |
(6) |
|
(2) |
|
(69) |
|
State and local |
|
|
1 |
|
(2) |
|
(8) |
|
Foreign |
|
|
(8) |
|
(9) |
|
— |
|
|
|
|
(13) |
|
(13) |
|
(77) |
|
Deferred: |
|
|
|
|
|
|
|
|
Federal |
|
|
(2) |
|
64 |
|
(85) |
|
State and local |
|
|
2 |
|
3 |
|
(9) |
|
Foreign |
|
|
63 |
|
507 |
|
— |
|
|
|
|
63 |
|
574 |
|
(94) |
|
Income tax benefit (expense) |
|
$ |
50 |
|
561 |
|
(171) |
|
Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 21% for the year ended December 31, 2018 and 35% for both of the years ended December 31, 2017 and 2016 as a result of the following:
|
|
Years ended December 31, |
|
|||||
|
|
2018 |
|
2017 |
|
2016 |
|
|
|
|
amounts in millions |
|
|||||
Computed expected tax benefit (expense) |
|
$ |
42 |
|
107 |
|
(175) |
|
State and local income taxes, net of federal income taxes |
|
|
— |
|
— |
|
(11) |
|
Foreign income taxes, net of federal income taxes |
|
|
23 |
|
88 |
|
— |
|
Dividends received deductions |
|
|
1 |
|
2 |
|
2 |
|
Change in valuation allowance affecting tax expense |
|
|
(53) |
|
222 |
|
— |
|
Change in tax rate due to Tax Act |
|
|
(11) |
|
16 |
|
— |
|
Settlements with tax authorities |
|
|
43 |
|
253 |
|
— |
|
Deductible stock-based compensation |
|
|
1 |
|
5 |
|
8 |
|
Income tax reserves |
|
|
— |
|
(22) |
|
— |
|
Non-deductible / Non-taxable interest |
|
|
— |
|
(60) |
|
— |
|
Write-off of tax attributes |
|
|
— |
|
(42) |
|
— |
|
Other, net |
|
|
4 |
|
(8) |
|
5 |
|
Income tax benefit (expense) |
|
$ |
50 |
|
561 |
|
(171) |
|
18
Notes to Attributed Financial Information (Continued)
(unaudited)
The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:
|
|
December 31, |
|
|||
|
|
2018 |
|
2017 |
|
|
|
|
amounts in millions |
|
|||
Deferred tax assets: |
|
|
|
|
|
|
Tax loss and credit carryforwards |
|
$ |
401 |
|
320 |
|
Accrued stock compensation |
|
|
11 |
|
8 |
|
Other accrued liabilities |
|
|
9 |
|
9 |
|
Deferred revenue |
|
|
— |
|
2 |
|
Discount on debt |
|
|
— |
|
34 |
|
Other future deductible amounts |
|
|
3 |
|
1 |
|
Deferred tax assets |
|
|
424 |
|
374 |
|
Valuation allowance |
|
|
(104) |
|
(51) |
|
Net deferred tax assets |
|
|
320 |
|
323 |
|
Deferred tax liabilities: |
|
|
|
|
|
|
Investments |
|
|
— |
|
68 |
|
Fixed assets |
|
|
2 |
|
2 |
|
Intangible Assets |
|
|
168 |
|
220 |
|
Discount on debt |
|
|
59 |
|
— |
|
Other |
|
|
— |
|
2 |
|
Deferred tax liabilities |
|
|
229 |
|
292 |
|
Net deferred tax (assets) liabilities |
|
$ |
(91) |
|
(31) |
|
(4) |
There was an intergroup arrangement regarding AT&T Inc. (“AT&T”) shares held by the Formula One Group that were pledged as collateral pursuant to a loan at the Braves Group. Following the Recapitalization, the Company’s board of directors approved an amount payable by the Braves Group to pay the Formula One Group in order to reflect the credit support provided by the assets of the Formula One Group used as collateral for the credit facility obligations of the Braves Group. The amount of this obligation was determined and paid quarterly in arrears, based on the average share price of AT&T (previously Time Warner, Inc.) common stock each period. This inter-group arrangement was recorded through the Intergroup payable (receivable) line item in the consolidated attributed balance sheets and through the Interest expense line item in the consolidated attributed statements of operations and eliminated in consolidation. There were no AT&T shares pledged as collateral as of December 31, 2018. |
The intergroup balances as December 31, 2018 and December 31, 2017 also include the impact of the timing of certain tax benefits. Per the tracking stock tax sharing policies, consolidated income taxes arising from the Liberty SiriusXM Group in periods prior to the Recapitalization were not subject to tax sharing and were allocated to the Formula One Group. As such, the balance of the Intergroup tax payable between the Liberty SiriusXM Group and the Formula One Group was zero at the effective date of the Recapitalization and is accounted for going forward beginning on such date.
(5) |
The Liberty SiriusXM common stock, Liberty Braves common stock and Liberty Formula One common stock have voting and conversion rights under our restated charter. Following is a summary of those rights. Holders of Series A common stock of each group will be entitled to one vote per share, and holders of Series B common stock of each group will be entitled to ten votes per share. Holders of Series C common stock of each group will be entitled to 1/100th of a vote per share in certain limited cases and will otherwise not be entitled to vote. In general, holders of Series A and Series B common stock will vote as a single class. In certain limited circumstances, the board may elect to seek the approval of the holders of only Series A and Series B Liberty SiriusXM common stock, Series A and Series B Liberty Braves common stock, or the approval of the holders of only Series A and Series B Liberty Formula One common stock. |
19
Notes to Attributed Financial Information (Continued)
(unaudited)
At the option of the holder, each share of Series B common stock of each group will be convertible into one share of Series A common stock of the same group. At the discretion of our board, the common stock related to one group may be converted into common stock of the same series that is related to another other group.
20