lmca_Current folio_10Q

Table of Contents

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

 

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2019

OR

 

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from                to                

Commission File Number 001-35707

LIBERTY MEDIA CORPORATION

(Exact name of Registrant as specified in its charter)

 

 

 

 

State of Delaware

 

37-1699499

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

12300 Liberty Boulevard
Englewood, Colorado

 

80112

(Address of principal executive offices)

 

(Zip Code)

 

Registrant's telephone number, including area code: (720) 875-5400

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

Title of each class

Trading Symbol

Name of each exchange on which registered

Series A Liberty SiriusXM Common Stock

LSXMA

The Nasdaq Stock Market LLC

Series B Liberty SiriusXM Common Stock

LSXMB

The Nasdaq Stock Market LLC

Series C Liberty SiriusXM Common Stock

LSXMK

The Nasdaq Stock Market LLC

Series A Liberty Braves Common Stock

BATRA

The Nasdaq Stock Market LLC

Series C Liberty Braves Common Stock

BATRK

The Nasdaq Stock Market LLC

Series A Liberty Formula One Common Stock

FWONA

The Nasdaq Stock Market LLC

Series C Liberty Formula One Common Stock

FWONK

The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒    No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

 

Large accelerated filer ☒

 

Accelerated filer ☐

 

Non-accelerated filer ☐

 

Smaller reporting company ☐

 

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the Registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐    No ☒

The number of outstanding shares of Liberty Media Corporation's common stock as of April 30, 2019 was:

 

 

 

 

 

 

 

 

 

 

 

Series A

 

Series B

 

Series C

 

Liberty SiriusXM common stock

 

102,868,921

 

9,821,531

 

206,986,548

 

Liberty Braves common stock

 

10,251,309

 

981,860

 

39,776,088

 

Liberty Formula One common stock

 

25,684,311

 

2,453,485

 

202,990,600

 

 

 

 

 

 


 

Table of Contents

 

Table of Contents

 

 

 

 

Part I – Financial Information

 

Item 1. Financial Statements 

 

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited) 

I-3

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited) 

I-5

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited) 

I-7

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited) 

I-8

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited) 

I-9

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited) 

I-11

 

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-41

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

I-58

 

Item 4. Controls and Procedures

I-59

 

 

 

Part II — Other Information 

 

 

Item 1. Legal Proceedings

II-1

 

Item 1A. Risk Factors

II-2

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-14

 

Item 6. Exhibits

II-15

 

 

 

SIGNATURES 

II-16

 

 

 

 

I-2


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

 

 

 

 

 

 

 

March 31, 2019

    

December 31, 2018

 

 

amounts in millions

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

633

 

358

 

Trade and other receivables, net

 

728

 

364

 

Other current assets

 

371

 

360

 

Total current assets

 

1,732

 

1,082

 

Investments in debt and equity securities (note 7)

 

787

 

1,278

 

Investments in affiliates, accounted for using the equity method (note 8)

 

1,641

 

1,641

 

 

 

 

 

 

 

Property and equipment, at cost

 

3,562

 

3,765

 

Accumulated depreciation

 

(1,357)

 

(1,296)

 

 

 

2,205

 

2,469

 

Intangible assets not subject to amortization (note 9):

 

 

 

 

 

Goodwill

 

19,927

 

18,386

 

FCC licenses

 

8,600

 

8,600

 

Other

 

1,405

 

1,074

 

 

 

29,932

 

28,060

 

Intangible assets subject to amortization, net (note 9)

 

6,367

 

5,715

 

Other assets

 

1,246

 

583

 

Total assets

$

43,910

 

40,828

 

 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable and accrued liabilities

$

1,347

 

1,116

 

Current portion of debt

 

13

 

17

 

Deferred revenue

 

2,499

 

2,079

 

Other current liabilities

 

102

 

32

 

Total current liabilities

 

3,961

 

3,244

 

Long-term debt, including $2,664 million and $2,487 million measured at fair value at March 31, 2019 and December 31, 2018, respectively (note 10)

 

14,026

 

13,371

 

Deferred income tax liabilities

 

1,750

 

1,651

 

Other liabilities

 

978

 

864

 

Total liabilities

 

20,715

 

19,130

 

 

(Continued)

 

See accompanying notes to condensed consolidated financial statements.

I-3


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

 

 

 

 

 

 

 

 

    

March 31, 2019

    

December 31, 2018

 

 

 

amounts in millions,

 

 

 

except share amounts

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued

 

 

 —

 

 —

 

Series A Liberty SiriusXM common stock, $.01 par value. Authorized 2,000,000,000 shares; issued and outstanding 102,866,343 shares at March 31, 2019 and 102,809,736 shares at December 31, 2018  (note 2)

 

 

 1

 

 1

 

Series A Liberty Braves common stock, $.01 par value. Authorized 200,000,000 shares; issued and outstanding 10,248,506 shares at March 31, 2019 and 10,244,591 shares at December 31, 2018 (note 2)

 

 

 —

 

 —

 

Series A Liberty Formula One common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 25,675,346 shares at March 31, 2019 and 25,675,346 shares at December 31, 2018 (note 2)

 

 

 —

 

 —

 

Series B Liberty SiriusXM common stock, $.01 par value. Authorized 75,000,000 shares; issued and outstanding 9,821,531 shares at March 31, 2019 and December 31, 2018 (note 2)

 

 

 —

 

 —

 

Series B Liberty Braves common stock, $.01 par value. Authorized 7,500,000 shares; issued and outstanding 981,860 shares at March 31, 2019 and December 31, 2018 (note 2)

 

 

 —

 

 —

 

Series B Liberty Formula One common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,453,485 shares at March 31, 2019 and  December 31, 2018 (note 2)

 

 

 —

 

 —

 

Series C Liberty SiriusXM common stock, $.01 par value. Authorized 2,000,000,000 shares; issued and outstanding 207,632,108 shares at March 31, 2019 and 213,130,922 shares at December 31, 2018 (note 2)

 

 

 2

 

 2

 

Series C Liberty Braves common stock, $.01 par value. Authorized 200,000,000 shares; issued and outstanding 39,768,174 shares at March 31, 2019 and 39,740,215 shares at December 31, 2018  (note 2)

 

 

 —

 

 —

 

Series C Liberty Formula One common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 202,984,567 shares at March 31, 2019 and 202,887,872 shares at December 31, 2018 (note 2)

 

 

 2

 

 2

 

Additional paid-in capital

 

 

3,261

 

2,984

 

Accumulated other comprehensive earnings (loss), net of taxes

 

 

(43)

 

(38)

 

Retained earnings

 

 

13,484

 

13,644

 

Total stockholders' equity

 

 

16,707

 

16,595

 

Noncontrolling interests in equity of subsidiaries

 

 

6,488

 

5,103

 

Total equity

 

 

23,195

 

21,698

 

Commitments and contingencies (note 12)

 

 

 

 

 

 

Total liabilities and equity

 

$

43,910

 

40,828

 

 

 

See accompanying notes to condensed consolidated financial statements.

I-4


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2019

    

2018

 

 

 

amounts in millions,

 

 

 

except per share amounts

 

Revenue:

 

 

 

 

 

 

SIRIUS XM Holdings revenue

 

$

1,744

 

1,375

 

Formula 1 revenue

 

 

246

 

114

 

Other revenue

 

 

22

 

28

 

Total revenue

 

 

2,012

 

1,517

 

Operating costs and expenses, including stock-based compensation (note 4):

 

 

 

 

 

 

Cost of services (exclusive of depreciation shown separately below):

 

 

 

 

 

 

Revenue share and royalties

 

 

492

 

310

 

Programming and content

 

 

106

 

101

 

Customer service and billing

 

 

113

 

94

 

Other

 

 

37

 

29

 

Cost of Formula 1 revenue

 

 

148

 

81

 

Subscriber acquisition costs

 

 

108

 

123

 

Other operating expense

 

 

82

 

71

 

Selling, general and administrative

 

 

402

 

265

 

Acquisition and other related costs (note 3)

 

 

76

 

 —

 

Depreciation and amortization

 

 

248

 

216

 

 

 

 

1,812

 

1,290

 

Operating income (loss)

 

 

200

 

227

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(159)

 

(150)

 

Share of earnings (losses) of affiliates, net (note 8)

 

 

(20)

 

(8)

 

Realized and unrealized gains (losses) on financial instruments, net (note 6)

 

 

(98)

 

153

 

Other, net

 

 

 8

 

 6

 

 

 

 

(269)

 

 1

 

Earnings (loss) before income taxes

 

 

(69)

 

228

 

Income tax (expense) benefit

 

 

(58)

 

(15)

 

Net earnings (loss)

 

 

(127)

 

213

 

Less net earnings (loss) attributable to the noncontrolling interests

 

 

31

 

82

 

Net earnings (loss) attributable to Liberty stockholders

 

$

(158)

 

131

 

 

 

 

 

 

 

 

Net earnings (loss) attributable to Liberty stockholders:

 

 

 

 

 

 

Liberty SiriusXM common stock

 

$

61

 

200

 

Liberty Braves common stock

 

 

(71)

 

(52)

 

Liberty Formula One common stock

 

 

(148)

 

(17)

 

 

 

$

(158)

 

131

 

(Continued)

See accompanying notes to condensed consolidated financial statements.

I-5


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Continued)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

 

2019

    

2018

 

Basic net earnings (loss) attributable to Liberty stockholders per common share
(notes 3 and 6):

 

 

 

 

 

 

Series A, B and C Liberty SiriusXM common stock

 

 

0.19

 

0.60

 

Series A, B and C Liberty Braves common stock

 

 

(1.39)

 

(1.02)

 

Series A, B and C Liberty Formula One common stock

 

 

(0.64)

 

(0.07)

 

Diluted net earnings (loss) attributable to Liberty stockholders per common share
(notes 3 and 6):

 

 

 

 

 

 

Series A, B and C Liberty SiriusXM common stock

 

 

0.19

 

0.59

 

Series A, B and C Liberty Braves common stock

 

 

(1.39)

 

(1.02)

 

Series A, B and C Liberty Formula One common stock

 

 

(0.64)

 

(0.07)

 

 

See accompanying notes to condensed consolidated financial statements.

I-6


 

Table of Contents

 

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2019

    

2018

 

 

 

amounts in millions

 

Net earnings (loss)

 

$

(127)

 

213

 

Other comprehensive earnings (loss), net of taxes:

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

 9

 

 4

 

Credit risk on fair value debt instruments gains (losses)

 

 

(13)

 

(2)

 

Unrealized holding gains (losses) arising during the period

 

 

 2

 

(2)

 

Share of other comprehensive earnings (loss) of equity affiliates

 

 

 —

 

(9)

 

Comprehensive earnings (loss)

 

 

(129)

 

204

 

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

 

34

 

79

 

Comprehensive earnings (loss) attributable to Liberty stockholders

 

$

(163)

 

125

 

 

 

 

 

 

 

 

Comprehensive earnings (loss) attributable to Liberty stockholders:

 

 

 

 

 

 

Liberty SiriusXM common stock

 

$

67

 

198

 

Liberty Braves common stock

 

 

(69)

 

(55)

 

Liberty Formula One common stock

 

 

(161)

 

(18)

 

 

 

$

(163)

 

125

 

 

See accompanying notes to condensed consolidated financial statements.

I-7


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2019

    

2018

 

 

 

amounts in millions

 

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings

 

$

(127)

 

213

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

248

 

216

 

Stock-based compensation

 

 

86

 

46

 

Share of (earnings) loss of affiliates, net

 

 

20

 

 8

 

Realized and unrealized (gains) losses on financial instruments, net

 

 

98

 

(153)

 

Noncash interest expense (benefit)

 

 

 2

 

 —

 

Deferred income tax expense (benefit)

 

 

54

 

20

 

Other, net

 

 

 3

 

17

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Current and other assets

 

 

(19)

 

(97)

 

Payables and other liabilities

 

 

284

 

354

 

Net cash provided (used) by operating activities

 

 

649

 

624

 

Cash flows from investing activities:

 

 

 

 

 

 

Investments in equity method affiliates and debt and equity securities

 

 

(11)

 

(393)

 

Cash proceeds from sale of investments

 

 

72

 

 9

 

Cash received from Pandora acquisition

 

 

313

 

 —

 

Capital expended for property and equipment

 

 

(113)

 

(89)

 

Other investing activities, net

 

 

(7)

 

49

 

Net cash provided (used) by investing activities

 

 

254

 

(424)

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings of debt

 

 

913

 

1,317

 

Repayments of debt

 

 

(741)

 

(1,154)

 

Series C Liberty SiriusXM stock repurchases

 

 

(222)

 

(31)

 

Subsidiary shares repurchased by subsidiary

 

 

(576)

 

(309)

 

Cash dividends paid by subsidiary

 

 

(19)

 

(15)

 

Taxes paid in lieu of shares issued for stock-based compensation

 

 

(40)

 

(28)

 

Other financing activities, net

 

 

 —

 

50

 

Net cash provided (used) by financing activities

 

 

(685)

 

(170)

 

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash

 

 

 1

 

 2

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

219

 

32

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

452

 

1,047

 

Cash, cash equivalents and restricted cash at end of period

 

$

671

 

1,079

 

 

The following table reconciles cash and cash equivalents and restricted cash reported in our condensed consolidated balance sheets to the total amount presented in our condensed consolidated statements of cash flows:

 

 

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

 

2019

    

2018

 

 

 

amounts in millions

 

Cash and cash equivalents

 

$

633

 

358

 

Restricted cash included in other current assets

 

 

14

 

70

 

Restricted cash included in other assets

 

 

24

 

24

 

Total cash and cash equivalents and restricted cash at end of period

 

$

671

 

452

 

See accompanying notes to condensed consolidated financial statements.

 

I-8


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)

Three Months ended March 31, 2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

Accumulated

    

 

    

Noncontrolling

    

 

 

 

 

 

 

 

Additional

 

other

 

 

 

interest in

 

 

 

 

 

Preferred

 

Liberty Sirius XM

 

Liberty Braves

 

Liberty Formula One

 

Paid-in

 

comprehensive

 

Retained

 

equity of

 

Total

 

 

    

Stock

    

Series A

    

Series B

    

Series C

    

Series A

    

Series B

    

Series C

 

Series A

    

Series B

    

Series C

    

Capital

    

earnings (loss)

    

earnings

    

subsidiaries

    

equity

 

 

 

amounts in millions

 

Balance at January 1, 2019

 

$

 —

 

 1

 

 —

 

 2

 

 —

 

 —

 

 —

 

 —

 

 —

 

 2

 

2,984

 

(38)

 

13,644

 

5,103

 

21,698

 

Net earnings

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(158)

 

31

 

(127)

 

Other comprehensive earnings (loss)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(5)

 

 —

 

 3

 

(2)

 

Cumulative effect of accounting change (note 11)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(2)

 

 —

 

(2)

 

Stock-based compensation

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

66

 

 —

 

 —

 

23

 

89

 

Withholding taxes on net share settlements of stock-based compensation

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(40)

 

 —

 

 —

 

 —

 

(40)

 

Issuance of stock upon exercise of stock options

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 3

 

 —

 

 —

 

 —

 

 3

 

Series C Liberty SiriusXM stock repurchases

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(222)

 

 —

 

 —

 

 —

 

(222)

 

Subsidiary shares issued as consideration in subsidiary acquisition

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

657

 

 —

 

 —

 

1,698

 

2,355

 

Equity component of subsidiary convertible note

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

68

 

68

 

Shares repurchased by subsidiary

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(164)

 

 —

 

 —

 

(440)

 

(604)

 

Shares issued by subsidiary

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(21)

 

 —

 

 —

 

21

 

 —

 

Dividends paid by subsidiary

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(19)

 

(19)

 

Other, net

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(2)

 

 —

 

 —

 

 —

 

(2)

 

Balance at March 31, 2019

 

$

 —

 

 1

 

 —

 

 2

 

 —

 

 —

 

 —

 

 —

 

 —

 

 2

 

3,261

 

(43)

 

13,484

 

6,488

 

23,195

 

 

See accompanying notes to condensed consolidated financial statements.

I-9


 

Table of Contents

 

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)

Three Months ended March 31, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

    

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

 

Accumulated

    

 

    

Noncontrolling

    

 

 

 

 

 

 

 

Additional

 

other

 

 

 

interest in

 

 

 

 

 

Preferred

 

Liberty Sirius XM

 

Liberty Braves

 

Liberty Formula One

 

Paid-in

 

comprehensive

 

Retained

 

equity of

 

Total

 

 

    

Stock

    

Series A

    

Series B

    

Series C

    

Series A

    

Series B

    

Series C

 

Series A

    

Series B

    

Series C

    

Capital

    

earnings (loss)

    

earnings

    

subsidiaries

    

equity

 

 

 

amounts in millions

 

Balance at January 1, 2018

 

$

 —

 

 1

 

 —

 

 2

 

 —

 

 —

 

 —

 

 —

 

 —

 

 2

 

3,892

 

(35)

 

13,081

 

5,631

 

22,574

 

Net earnings

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

131

 

82

 

213

 

Other comprehensive earnings (loss)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(6)

 

 —

 

(3)

 

(9)

 

Cumulative effect of accounting change

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 2

 

39

 

 4

 

45

 

Stock-based compensation

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

32

 

 —

 

 —

 

 9

 

41

 

Withholding taxes on net share settlements of stock-based compensation

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(28)

 

 —

 

 —

 

 —

 

(28)

 

Series C Liberty SiriusXM stock repurchases

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(31)

 

 —

 

 —

 

 —

 

(31)

 

Shares repurchased by subsidiary

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(80)

 

 —

 

 —

 

(215)

 

(295)

 

Shares issued by subsidiary

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(13)

 

 —

 

 —

 

13

 

 —

 

Dividends paid by subsidiary

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(15)

 

(15)

 

Purchase of noncontrolling interest

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(9)

 

 —

 

 —

 

(9)

 

(18)

 

Other, net

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 1

 

 —

 

(4)

 

 1

 

(2)

 

Balance at March 31, 2018

 

$

 —

 

 1

 

 —

 

 2

 

 —

 

 —

 

 —

 

 —

 

 —

 

 2

 

3,764

 

(39)

 

13,247

 

5,498

 

22,475

 

See accompanying notes to condensed consolidated financial statements.

 

I-10


 

Table of Contents

LIBERTY MEDIA CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1)   Basis of Presentation

The accompanying condensed consolidated financial statements include all the accounts of Liberty Media Corporation and its controlled subsidiaries ("Liberty," the "Company," "we," "us," or "our" unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated.

Liberty, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the media, communications and entertainment industries globally. Liberty’s significant subsidiaries include SIRIUS XM Holdings Inc. ("SIRIUS XM Holdings"), Delta Topco Limited (the parent company of Formula 1) (“Delta Topco”) and Braves Holdings, LLC ("Braves Holdings"). Our most significant investment accounted for under the equity method is Live Nation Entertainment, Inc. ("Live Nation"). 

The accompanying (a) condensed consolidated balance sheet as of December 31, 2018, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. The results of operations for any interim period are not necessarily indicative of results for the full year. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Liberty's Annual Report on Form 10-K for the year ended December 31, 2018.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers (i) fair value measurement of non-financial instruments, (ii) accounting for income taxes and (iii) the determination of the useful life of SIRIUS XM Holdings’ broadcast/transmission system to be its most significant estimates.

Liberty holds investments that are accounted for using the equity method. Liberty does not control the decision making process or business management practices of these affiliates. Accordingly, Liberty relies on management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that the Company uses in the application of the equity method. In addition, Liberty relies on audit reports that are provided by the affiliates' independent auditors on the financial statements of such affiliates. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a material effect on Liberty's condensed consolidated financial statements.

Liberty has entered into certain agreements with Qurate Retail, Inc. (“Qurate Retail”), Liberty TripAdvisor Holdings, Inc., Liberty Broadband Corporation (“Liberty Broadband”), Liberty Expedia Holdings and GCI Liberty, Inc. (“GCI Liberty”), all of which are separate publicly traded companies, in order to govern relationships between the companies. None of these entities has any stock ownership, beneficial or otherwise, in any of the others (except that GCI Liberty owns shares of Liberty Broadband’s Series C non-voting common stock). These agreements include Reorganization Agreements (in the case of Qurate Retail and Liberty Broadband only), Services Agreements, Facilities Sharing Agreements and Tax Sharing Agreements (in the case of Liberty Broadband only).

The Reorganization Agreements provide for, among other things, provisions governing the relationships between Liberty and the applicable counterparty, including certain cross-indemnities. Pursuant to the Services Agreements, Liberty