Liberty Media Corporation
May 9, 2017

Liberty Media Corporation Reports First Quarter 2017 Financial Results

ENGLEWOOD, Colo.--(BUSINESS WIRE)-- Liberty Media Corporation ("Liberty Media" or "Liberty") (NASDAQ: LSXMA, LSXMB, LSXMK, BATRA, BATRK, FWONA, FWONK) today reported first quarter 2017 results. Highlights include(1):

"We were excited to close the acquisition of Formula 1 in January. Chase and the team are off to a great start and we are already seeing the benefits of the energy they are injecting into the sport," said Greg Maffei, Liberty Media President and CEO. "Opening day at SunTrust Park was spectacular for the Braves, and the Battery Atlanta remains on-time and on-budget. SiriusXM delivered another strong quarter of results and grew adjusted EBITDA 14%."

Operating Results
On April 15, 2016, Liberty Media completed the recapitalization (the "Recapitalization") of its common stock into three new tracking stock groups: (i) the Liberty SiriusXM Group, (ii) the Braves Group and (iii) the Formula One Group. For purposes of presentation herein, the assets and liabilities of Liberty Media have been allocated among the three tracking stocks as if the Recapitalization had occurred on January 1, 2016. This is intended to supplement and enhance the information included in our prior period financial statements, but is not intended to provide a comprehensive view of what each tracking stock group's performance would have been had the Recapitalization actually occurred on such date.

Unless otherwise noted, the following discussion compares financial information for the three months ended March 31, 2017 to the same period in 2016.

LIBERTY SIRIUSXM GROUP - The following table provides the financial results attributed to Liberty SiriusXM Group for the first quarter of 2017. In the first quarter, approximately $9 million of corporate level selling, general and administrative expense (including stock-based compensation expense) was allocated to the Liberty SiriusXM Group.

                     
1Q16 1Q17 % Change
amounts in millions  
Liberty SiriusXM Group
Revenue
SiriusXM $ 1,200 $ 1,294     8 %
Total Liberty SiriusXM Group $ 1,200 $ 1,294     8 %
Operating Income (Loss)
SiriusXM 336 381 13 %
Corporate and other     (9 )   NA  
Total Liberty SiriusXM Group $ 336 $ 372     11 %
Adjusted OIBDA
SiriusXM 439 500 14 %
Corporate and other     (4 )   NA  
Total Liberty SiriusXM Group $ 439 $ 496     13 %
 

The increases in Liberty SiriusXM Group revenue, operating income and adjusted OIBDA(2) were primarily attributable to an increase in SiriusXM's daily weighted average number of subscribers and an increase in SiriusXM's average monthly revenue per subscriber due to certain rate increases.

SiriusXM is a separate publicly traded company and additional information about SiriusXM can be obtained through its website and filings with the Securities and Exchange Commission. SiriusXM reported its stand-alone first quarter results on April 27, 2017. For additional detail on SiriusXM's financial results for the first quarter, please see SiriusXM's earnings release posted to their Investor Relations website. For presentation purposes on page one of this release, we include the results of SiriusXM, as reported by SiriusXM, without regard to the purchase accounting adjustments applied by us for purposes of our financial statements. Liberty Media believes the presentation of financial results as reported by SiriusXM is useful to investors as the comparability of those results is best understood in the context of SiriusXM's historical financial presentation. For a reconciliation of revenue, adjusted OIBDA (as defined by Liberty Media) and operating income for SiriusXM's stand-alone operating results as reported by SiriusXM to those results as reported by Liberty Media, see Liberty Media's Form 10-Q for the quarter ended March 31, 2017.

The businesses and assets attributed to Liberty SiriusXM Group consist primarily of Liberty Media's interest in SiriusXM.

BRAVES GROUP - The following table provides the financial results attributed to the Braves Group for the first quarter of 2017. In the first quarter, approximately $1 million of corporate level selling, general and administrative expense (including stock-based compensation expense) was allocated to the Braves Group.

                     
1Q16 1Q17 $ Change
amounts in millions
Braves Group
Revenue
Corporate and other $ 4   $ 5   $ 1
Total Braves Group $ 4   $ 5   $ 1
Operating Income (Loss)
Corporate and other   (43 )   (33 )   10
Total Braves Group $ (43 ) $ (33 ) $ 10
Adjusted OIBDA
Corporate and other   (36 )   (29 )   7
Total Braves Group $ (36 ) $ (29 ) $ 7
 
Number of home games in period       1  
 

The increase in Braves Group revenue in the quarter was primarily attributable to revenue from an exhibition game played at SunTrust Park on March 31, 2017, whereas no games were played during the first quarter of 2016. Losses in operating income and adjusted OIBDA improved compared to the prior year due to a decrease in other operating expenses, primarily driven by the acceleration of player salary expense as a result of released or injured players in 2016, partially offset by costs associated with the ballpark operations and mixed-use project.

The Formula One Group holds an approximate 15.5% intergroup interest in the Braves Group as of April 30, 2017. Assuming the issuance of the shares underlying the intergroup interest held by the Formula One Group, the Braves Group outstanding share count as of April 30, 2017 would have been 58.6 million.

The businesses and assets attributed to the Braves Group consist primarily of Liberty Media's subsidiary Braves Holdings, LLC, which indirectly owns the Atlanta Braves major league baseball team, and certain assets and liabilities associated with its ballpark and mixed-use development project.

FORMULA ONE GROUP - The following table provides the financial results attributed to the Formula One Group for the first quarter of 2017. In the first quarter, the Formula One Group incurred approximately $20 million of corporate level selling, general and administrative expense (including stock-based compensation expense).

"The 2017 season is off to a competitive start, and we are excited for upcoming races in Barcelona and Monaco," said Chase Carey, Formula 1 Chairman and CEO. "Ross, Sean and I appreciate the collaborative relationships we have with the FIA, our teams, promoters and partners and look forward to making F1 even better for the fans."

 
               
1Q16 1Q17
amounts in millions
Formula One Group
Revenue
Formula 1 $ NA $ 96
Corporate and other        
Total Formula One Group $   $ 96  
Operating Income (Loss)
Formula 1 $ NA $ (57 )
Corporate and other   488     (23 )
Total Formula One Group $ 488   $ (80 )
Adjusted OIBDA
Formula 1 $ NA $ 18
Corporate and other   (12 )   (18 )
Total Formula One Group $ (12 ) $  
 

Liberty completed the acquisition of F1 on January 23, 2017. The decrease in Formula One Group operating income in the quarter was primarily attributed to the Vivendi legal settlement received in the prior year (net pre-tax gain of approximately $511 million) and purchase accounting adjustments related to the F1 transaction. From the date of the acquisition, Liberty applied purchase accounting and consolidated the results of F1. Liberty maintained an investment in F1 from September 7, 2016 until January 23, 2017, which was accounted for as a cost investment. For comparison and discussion purposes, the pro forma results of F1 are presented below for the full three months ended March 31, 2017 and 2016, inclusive of purchase accounting adjustments, as if the acquisition of F1 occurred on January 1, 2016. The purchase price allocation related to the F1 business combination and pro forma adjustments are preliminary and have been made available solely for the purpose of providing comparative pro forma condensed consolidated financial information. The financial information below is presented for illustrative purposes only and does not purport to represent what the results of operations of F1 would actually have been had the business combination occurred on January 1, 2016, or to project the results of operations of Liberty for any future periods.

 

Pro Forma F1 Operating Results

             
1Q16 1Q17 % Change
amounts in millions
Primary Formula 1 revenue $ 74 $ 79 7 %
Other Formula 1 revenue   23     18   (22 ) %
Total Formula 1 revenue $ 97 $ 97 %
Operating expenses (excluding stock-based compensation included below):
Team payments (46 ) (47 ) (2 ) %
Other cost of Formula 1 revenue   (26 )   (22 ) 15   %
Cost of Formula 1 revenue $ (72 ) $ (69 ) 4 %
Selling, general and administrative expenses   (19 )   (20 ) (5 ) %
Adjusted OIBDA 6 8 33 %
Stock-based compensation (5 ) %
Depreciation and Amortization   (104 )   (108 ) (4 ) %
Operating income $ (98 ) $ (105 ) (7 ) %
 
Number of races in period   1     1  
 

Primary F1 revenue represents the majority of F1's revenue and is derived from (i) race promotion fees, (ii) broadcasting fees and (iii) advertising & sponsorship fees. Primary F1 revenue increased in the first quarter of 2017 primarily due to contractual rate increases in race promotion fees and advertising & sponsorship. Broadcast revenue also increased due to higher contractual rates and the impact of slightly higher proportionate recognition of season-based income during the quarter (1/20 races in the first quarter of 2017 compared to 1/21 races in the first quarter of 2016), which more than offset the adverse impact of weaker prevailing foreign currency exchange rates used to translate a small number of Pound and Euro-denominated contracts into US dollars. The increase in Primary F1 revenue was partially offset by a reduction in other Formula 1 revenue, largely due to lower required equipment purchases by GP3 series' competing teams for the 2017 season. Operating income decreased primarily due to stock-based compensation related to awards granted to members of F1 management. Adjusted OIBDA increased primarily due to a reduction in operating expenses attributable to lower costs of supplying equipment to GP3 teams, partially offset by modest increases in selling, general and administrative expense as a result of additional headcount following the acquisition by Liberty and team payments due to higher pro rata recognition of full year team payments.

The businesses and assets attributed to the Formula One Group consist of all of Liberty Media's businesses and assets other than those attributed to the Liberty SiriusXM Group and the Braves Group, including Liberty Media's subsidiary F1, its interest in Live Nation, minority equity investments in Time Warner and Viacom and an intergroup interest in the Braves Group. There are approximately 9.1 million notional shares underlying the Formula One Group's 15.5% intergroup interest in the Braves Group.

Share Repurchases

There were no repurchases of Series A or Series C Liberty SiriusXM common stock, Series A or Series C Liberty Braves common stock or Series A or Series C Liberty Formula One common stock from the Recapitalization through April 30, 2017. The total remaining repurchase authorization for Liberty Media is approximately $1.3 billion and can be applied to repurchases of Series A and Series C shares of any of the Liberty Media Corporation tracking stocks.

FOOTNOTES

1)     Liberty Media's President and CEO, Greg Maffei, will discuss these highlights and other matters on Liberty Media's earnings conference call which will begin at 11:45 a.m. (E.D.T.) on May 9, 2017. For information regarding how to access the call, please see "Important Notice" later in this document.
2) For definitions of adjusted OIBDA (as defined by Liberty Media) and adjusted EBITDA (as defined by SiriusXM) and applicable reconciliations see the accompanying schedules.

NOTES

The following financial information with respect to Liberty Media's equity affiliates and available for sale securities is intended to supplement Liberty Media's condensed consolidated balance sheet and statement of operations to be included in its Form 10-Q for the period ended March 31, 2017.

 

Fair Value of Corporate Public Holdings

   
(amounts in millions)   12/31/2016     3/31/2017
Liberty SiriusXM Group $ N/A $ N/A
Braves Group N/A N/A
Formula One Group
Live Nation Equity Method Investment(1) $ 1,853 2,115
Other Public Holdings(2)   489   518
$ 2,342 $ 2,633
Total Liberty Media $ 2,342 $ 2,633
 

________

(1)     Represents the fair value of the equity investment attributed to Formula One Group. In accordance with GAAP, Liberty Media accounts for its investment in the equity of Live Nation using the equity method of accounting and includes it in its consolidated balance sheet at its historical carrying value of $731 million and $721 million as of December 31, 2016 and March 31, 2017, respectively.
(2) Represents the carrying value of other public holdings which are accounted for at fair value.

Cash and Debt
The following presentation is provided to separately identify cash and liquid investments and debt information.

 
(amounts in millions)     12/31/2016   3/31/2017
Cash and Cash Equivalents Attributable to:
Liberty SiriusXM Group(1) $ 287 $ 330
Braves Group 107 115
Formula One Group(2) 168   626  
Total Liberty Consolidated Cash and Cash Equivalents (GAAP) $ 562   $ 1,071  
 
Debt:
SiriusXM senior notes(3) $ 5,500 $ 5,500
Margin loans 250 250
Other subsidiary debt(4)   404     541  
Total Attributed Liberty SiriusXM Group Debt $ 6,154   $ 6,291  
Unamortized discount, fair market value adjustment and deferred loan costs   (47 )   (44 )
Total Attributed Liberty SiriusXM Group Debt (GAAP) $ 6,107   $ 6,247  
 
Liberty 1.375% cash convertible notes due 2023(5) 1,000 1,000
1% cash convertible notes due 2023(5) 450
2.25% exchangeable senior debentures due 2046(5) 445 445
Live Nation margin loan 350
Formula 1 bank loans 3,844
Delta Topco exchangeable notes(5) 351
Other corporate level debt   36     35  
Total Attributed Formula One Group Debt $ 1,481   $ 6,475  
Fair market value adjustment   102     222  
Total Attributed Formula One Group Debt (GAAP) $ 1,583   $ 6,697  
 
Atlanta Braves debt(6)   338     420  
Total Attributed Braves Group Debt $ 338   $ 420  
Deferred loan costs   (10 )   (10 )
Total Attributed Braves Group Debt (GAAP) $ 328   $ 410  
       
Total Liberty Media Corporation Debt (GAAP) $ 8,018   $ 13,354  
 

________

(1)     Includes $214 million and $230 million of cash and liquid investments held at SiriusXM as of December 31, 2016 and March 31, 2017, respectively.
(2) Includes $432 million of cash and liquid investments held at Formula 1 as of March 31, 2017.
(3) Outstanding principal amount of Senior Notes with no reduction for the net unamortized discount.
(4) Includes SiriusXM capital leases and borrowings under the SiriusXM revolving credit facility.
(5) Face amount of the cash convertible notes and exchangeable debentures with no fair market value adjustment.
(6) Includes Atlanta National League Baseball Club, LLC borrowings, Braves Stadium Company, LLC debt to fund the construction of the new ballpark and drawdowns under various credit facilities to fund development costs for the mixed-use development.

Total cash and liquid investments attributed to Liberty SiriusXM Group increased $43 million during the quarter primarily as a result of cash from operations and net debt borrowings, partially offset by stock repurchases, dividends paid to shareholders and capital expenditures at SiriusXM. Included in the cash and liquid investments balance attributed to Liberty SiriusXM Group at March 31, 2017 is $230 million held at SiriusXM. Although SiriusXM is a consolidated subsidiary, it is a separate public company with a significant non-controlling interest, therefore Liberty Media does not have ready access to SiriusXM's cash balance.

Total debt attributed to Liberty SiriusXM Group increased $137 million during the quarter primarily due to borrowings under SiriusXM's revolving credit facility.

Total cash and liquid investments attributed to the Braves Group increased $8 million during the quarter, as capital expenditures related to the construction of the new ballpark and adjacent mixed-use development were more than offset by additional borrowings and other investing activities.

As of March 31, 2017, approximately $653 million had been spent on the new ballpark, of which approximately $378 million of funding was provided by Cobb County and related entities and $275 million provided by the Braves. As of March 31, 2017, approximately $354 million had been spent on the mixed-use development (including $7 million of cost towards future development phases, including purchased land cost, not reflected in the currently forecasted equity contribution towards the mixed-use development), of which approximately $40 million was provided by JV partners' equity. The remaining $307 million was provided by the Braves, of which approximately $188 million was contributed in equity and approximately $119 million in debt.

Total debt attributed to the Braves Group increased by $82 million primarily as a result of additional borrowings for funding the ballpark and mixed-use development.

Total cash and liquid investments attributed to the Formula One Group increased $458 million during the quarter, primarily as a result of the acquisition of F1 and consolidation of F1's cash on the balance sheet, partially offset by the $1.6 billion net cash paid to acquire the controlling interest in F1 on January 23, 2017. This investment was funded by cash on hand, the issuance of Series C Liberty Formula One common stock to third parties and borrowings under new debt instruments, as described below. Additionally, approximately $300 million of cash was used to prepay a portion of F1's second lien term loan, as described below.

Total debt attributed to Formula One Group increased approximately $5 billion primarily as a result of the consolidation of F1's debt on the balance sheet and additional borrowings to fund the cash consideration paid to the selling shareholders of F1, as described below.

On January 20, 2017, in connection with the acquisition of Liberty's controlling interest in F1, Liberty drew $350 million under its previously arranged margin loan with shares of Live Nation and Viacom common stock pledged as collateral. On January 23, 2017, Liberty issued $450 million cash convertible notes at an annual interest rate of 1% that mature on January 30, 2023. Proceeds from both debt instruments were used to partially fund the cash consideration paid to the selling shareholders of F1.

On March 2, 2017, Liberty closed the refinancing of F1's $3.1 billion first lien term loan. The final terms of the refinancing provide for, among other things (i) a reduction in the margin for the USD term loan from 3.75% to 3.25%, with the potential for a further reduction to 3.00% not earlier than six months after closing in the event of certain credit rating requirements being met, and (ii) an extension of the maturity for the USD term loan (previously July 2021). Such extension is to the earlier of February 2024 and six months prior to the maturity of F1's second lien facilities (currently July 2022), unless the second lien facilities are repaid in full (in which case the maturity will be February 2024). Further, given the demand for the USD term loan and the higher interest rate under the syndicated second lien facilities, F1 also prepaid $300 million of the second lien term loan on March 6, 2017 using excess cash on the balance sheet.

Important Notice: Liberty Media Corporation (Nasdaq: LSXMA, LSXMB, LSXMK, FWONA, FWONK, BATRA, BATRK) President and CEO, Greg Maffei, will discuss Liberty Media's earnings release on a conference call which will begin at 11:45 a.m. (E.D.T.) on May 9, 2017. The call can be accessed by dialing (844) 838-8043 or (678) 509-7480 at least 10 minutes prior to the start time. 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 business strategies, market potential, future financial prospects, the expected benefits of the acquisition of F1, the future financial performance of F1's business, the continuation of our stock repurchase plan, the construction of the new stadium for the Atlanta Braves and the associated mixed use development 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, regulatory matters affecting our businesses, the unfavorable outcome of pending or future litigation, the failure to realize benefits of acquisitions, rapid technological and industry change, failure of third parties to perform, changes in consumer protection laws and their enforcement, continued access to capital on terms acceptable to Liberty Media and changes in law and market conditions conducive to stock repurchases. 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 Forms 10-K and 10-Q, 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.

 

LIBERTY MEDIA CORPORATION

BALANCE SHEET INFORMATION

March 31, 2017 (unaudited)

 
      Attributed        
Liberty         Formula
SiriusXM Braves One Intergroup

Consolidated

Group Group Group Eliminations Liberty
amounts in millions
Assets
Current assets:
Cash and cash equivalents $ 330 115 626 1,071
Trade and other receivables, net 234 9 37 280
Other current assets   211   28   118     357  
Total current assets   775   152   781     1,708  
Intergroup interest in the Braves Group 215 (215 )
Investments in available-for-sale securities and other cost investments 8 574 582
Investments in affiliates, accounted for using the equity method 165 48 888 1,101
 
Property and equipment, at cost 2,112 1,051 166 3,329
Accumulated depreciation   (777 ) (14 ) (72 )   (863 )
  1,335   1,037   94     2,466  
 
Intangible assets not subject to amortization
Goodwill 14,165 180 3,968 18,313
FCC licenses 8,600 8,600
Other   930   143       1,073  
  23,695   323   3,968     27,986  
Intangible assets subject to amortization, net 981 72 5,414 6,467
Other assets, at cost, net of accumulated amortization   150   18   552   (28 ) 692  
Total assets $ 27,101   1,658   12,486   (243 ) 41,002  
 
Liabilities and Equity
Current liabilities:
Intergroup payable (receivable) $ (8 ) (56 ) 64
Accounts payable and accrued liabilities 721 118 132 971
Current portion of debt 5 43 48
Deferred revenue 1,857 124 485 2,466
Other current liabilities   3     24     27  
Total current liabilities   2,578   186   748     3,512  
Long-term debt 6,242 410 6,654 13,306
Deferred income tax liabilities 2,073 77 524 (28 ) 2,646
Redeemable intergroup interest 215 (215 )
Other liabilities   286   420   56     762  
Total liabilities   11,179   1,308   7,982   (243 ) 20,226  
Equity / Attributed net assets 10,141 335 4,504 14,980
Noncontrolling interests in equity of subsidiaries   5,781   15       5,796  
Total liabilities and equity $ 27,101   1,658   12,486   (243 ) 41,002  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF OPERATIONS

Three months ended March 31, 2017 (unaudited)

 
    Attributed    
Liberty         Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Revenue:
Subscriber revenue $ 1,078 1,078
Formula 1 revenue 96 96
Other revenue   216   5     221  
Total revenue 1,294 5 96 1,395
Operating costs and expenses, including stock-based compensation:
Cost of subscriber services (exclusive of depreciation shown separately below):
Revenue share and royalties 277 277
Programming and content 96 96
Customer service and billing 97 97
Other 27 27
Cost of Formula 1 revenue 68 68
Subscriber acquisition costs 127 127
Other operating expenses 24 17 41
Selling, general and administrative 184 19 36 239
Depreciation and amortization   90   2   72   164  
  922   38   176   1,136  
Operating income (loss) 372 (33 ) (80 ) 259
Other income (expense):
Interest expense (84 ) (56 ) (140 )
Share of earnings (losses) of affiliates, net 3 3 (10 ) (4 )
Realized and unrealized gains (losses) on financial instruments, net (12 ) (12 )
Unrealized gains (losses) on intergroup interest (28 ) 28
Other, net   6   3   8   17  
  (75 ) (22 ) (42 ) (139 )
Earnings (loss) from continuing operations before income taxes 297 (55 ) (122 ) 120
Income tax (expense) benefit   (108 ) 6   26   (76 )
Net earnings (loss) 189 (49 ) (96 ) 44
Less net earnings (loss) attributable to the noncontrolling interests   65       65  
Net earnings (loss) attributable to Liberty stockholders $ 124   (49 ) (96 ) (21 )
 
 
Programming and content 7 7
Customer service and billing 1 1
Other 1 1
Other operating expenses 4 4
Selling, general and administrative   21   2   8   31  
Stock compensation expense $ 34   2   8   44  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF OPERATIONS

Three months ended March 31, 2016 (unaudited)

 
    Attributed    
Liberty         Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Revenue:
Subscriber revenue $ 1,009 1,009
Other revenue   191   4     195  
Total revenue 1,200 4 1,204
Operating costs and expenses, including stock-based compensation:
Cost of subscriber services (exclusive of depreciation shown separately below):
Revenue share and royalties 252 252
Programming and content 85 85
Customer service and billing 97 97
Other 33 33
Subscriber acquisition costs 132 132
Other operating expenses 19 28 47
Selling, general and administrative 167 14 20 201
Legal settlement, net (511 ) (511 )
Depreciation and amortization   79   5   3   87  
  864   47   (488 ) 423  
Operating income (loss) 336 (43 ) 488 781
Other income (expense):
Interest expense (81 ) (3 ) (84 )
Share of earnings (losses) of affiliates, net 7 2 (21 ) (12 )
Realized and unrealized gains (losses) on financial instruments, net (8 ) (8 )
Other, net   1     6   7  
  (73 ) 2   (26 ) (97 )
Earnings (loss) from continuing operations before income taxes 263 (41 ) 462 684
Income tax (expense) benefit   (102 ) 16   (171 ) (257 )
Net earnings (loss) 161 (25 ) 291 427
Less net earnings (loss) attributable to the noncontrolling interests   63       63  
Net earnings (loss) attributable to Liberty stockholders $ 98   (25 ) 291   364  
 
 
Programming and content 4 4
Customer service and billing 1 1
Other 1 1
Other operating expenses 3 3
Selling, general and administrative   15   2   8   25  
Stock compensation expense $ 24   2   8   34  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Three months ended March 31, 2017 (unaudited)

 

    Attributed    
Liberty         Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Cash flows from operating activities:
Net earnings (loss) $ 189 (49 ) (96 ) 44
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 90 2 72 164
Stock-based compensation 34 2 8 44
Share of (earnings) loss of affiliates, net (3 ) (3 ) 10 4
Unrealized (gains) losses on intergroup interest, net 28 (28 )
Realized and unrealized (gains) losses on financial instruments, net 12 12
Noncash interest expense 2 2
Losses (gains) on dilution of investment in affiliate (2 ) (2 )
Deferred income tax expense (benefit) 107 31 (12 ) 126
Intergroup tax allocation (5 ) (37 ) 42
Other charges (credits), net 4 4
Changes in operating assets and liabilities
Current and other assets (14 ) (15 ) 37 8
Payables and other liabilities   (100 ) 53   44   (3 )
Net cash provided (used) by operating activities   304   12   87   403  
Cash flows from investing activities:
Investments in and loans to cost and equity investees (2 ) (3 ) (5 )
Net cash paid for the acquisition of Formula 1 (1,647 ) (1,647 )
Capital expended for property and equipment (54 ) (102 ) (156 )
Other investing activities, net   (7 ) 18     11  
Net cash provided (used) by investing activities   (61 ) (86 ) (1,650 ) (1,797 )
Cash flows from financing activities:
Borrowings of debt 330 114 1,400 1,844
Repayments of debt (194 ) (32 ) (928 ) (1,154 )
Proceeds from issuance of Series C Formula One common stock 1,550 1,550
Subsidiary shares repurchased by subsidiary (306 ) (306 )
Cash dividends paid by subsidiary (15 ) (15 )
Taxes paid in lieu of shares issued for stock-based compensation (20 ) (2 ) (22 )
Other financing activities, net   5       5  
Net cash provided (used) by financing activities   (200 ) 82   2,020   1,902  
Effect of foreign exchange rate changes on cash and cash equivalents 1 1
Net increase (decrease) in cash and cash equivalents 43 8 458 509
Cash and cash equivalents at beginning of period   287   107   168   562  
Cash and cash equivalents at end of period $ 330   115   626   1,071  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Three months ended March 31, 2016 (unaudited)

 
    Attributed    
Liberty         Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Cash flows from operating activities:
Net earnings (loss) $ 161 (25 ) 291 427
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 79 5 3 87
Stock-based compensation 24 2 8 34
Share of (earnings) loss of affiliates, net (7 ) (2 ) 21 12
Realized and unrealized (gains) losses on financial instruments, net 8 8
Noncash interest expense 2 2
Losses (gains) on dilution of investment in affiliate 2 2
Deferred income tax expense (benefit) 97 (9 ) 26 114
Intergroup tax allocation (1 ) (6 ) 7
Other charges (credits), net 4 1 (4 ) 1
Changes in operating assets and liabilities
Current and other assets (13 ) (12 ) 2 (23 )
Payables and other liabilities   10   76   137   223  
Net cash provided (used) by operating activities   356   30   501   887  
Cash flows from investing activities:
Investments in and loans to cost and equity investees (8 ) (3 ) (11 )
Capital expended for property and equipment (30 ) (37 ) (67 )
Purchases of short term investments and other marketable securities (99 ) (99 )
Sales of short term investments and other marketable securities 53 53
Other investing activities, net   (4 )   3   (1 )
Net cash provided (used) by investing activities   (34 ) (45 ) (46 ) (125 )
Cash flows from financing activities:
Borrowings of debt 330 5 335
Repayments of debt (72 ) (38 ) (1 ) (111 )
Intergroup (payments) receipts 6 70 (76 )
Subsidiary shares repurchased by subsidiary (594 ) (594 )
Taxes paid in lieu of shares issued for stock-based compensation (2 ) (2 ) (4 )
Other financing activities, net     9   4   13  
Net cash provided (used) by financing activities   (332 ) 46   (75 ) (361 )
Net increase (decrease) in cash and cash equivalents (10 ) 31 380 401
Cash and cash equivalents at beginning of period   112   13   76   201  
Cash and cash equivalents at end of period $ 102   44   456   602  
 

NON-GAAP FINANCIAL MEASURES

SCHEDULE 1

This press release includes a presentation of adjusted OIBDA, which is a non-GAAP financial measure, for the Liberty SiriusXM Group, the Braves Group and the Formula One Group, together with reconciliations to operating income, as determined under GAAP. Liberty Media defines adjusted OIBDA as revenue less operating expenses, and selling, general and administrative expenses, excluding all stock based compensation, and excludes from that definition depreciation and amortization, restructuring and impairment charges and separately reported legal settlements that are included in the measurement of operating income pursuant to GAAP.

Liberty Media 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 Media 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 Media's management considers in assessing the results of operations and performance of its assets.

The following table provides a reconciliation of adjusted OIBDA for Liberty Media to operating income calculated in accordance with GAAP for the three months ended March 31, 2016 and March 31, 2017, respectively.

 

QUARTERLY SUMMARY

 
(amounts in millions)     1Q16     1Q17
Liberty SiriusXM Group
Revenue $ 1,200 $ 1,294
 
Adjusted OIBDA 439 496
Depreciation and amortization (79 ) (90 )
Stock compensation expense   (24 )   (34 )
Operating Income $ 336   $ 372  
 
Braves Group
Revenue $ 4 $ 5
 
Adjusted OIBDA (36 ) (29 )
Depreciation and amortization (5 ) (2 )
Stock compensation expense   (2 )   (2 )
Operating Income (Loss) $ (43 ) $ (33 )
 
Formula One Group
Revenue $ $ 96
 
Adjusted OIBDA (12 )
Depreciation and amortization (3 ) (72 )
Legal settlement(1) 511
Stock compensation expense   (8 )   (8 )
Operating Income (Loss) $ 488   $ (80 )
 
Liberty Media Corporation (Consolidated)
Revenue $ 1,204 $ 1,395
 
Adjusted OIBDA 391 467
Depreciation and amortization (87 ) (164 )
Legal settlement(1) 511
Stock compensation expense   (34 )   (44 )
Operating Income $ 781   $ 259  
 

________

(1)     During the first quarter of 2016, Liberty entered into a settlement with Vivendi which resulted in a $775 million payment. Following the payment of a contingency fee to Liberty's legal counsel, as well as amounts payable to Liberty Global plc, an additional plaintiff in the action, Liberty recognized a net pre-tax gain on the legal settlement of approximately $511 million. This settlement resulted in a dismissal of all appeals and mutual releases of the parties.

SCHEDULE 2

This press release also includes a presentation of adjusted EBITDA, which is a non-GAAP financial measure used by SiriusXM, together with a reconciliation to SiriusXM's stand-alone net income, as determined under GAAP. SiriusXM defines adjusted EBITDA as follows: EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization. SiriusXM adjusts EBITDA to exclude the impact of other income as well as certain other charges discussed below. Adjusted EBITDA is one of the primary Non-GAAP financial measures SiriusXM uses to (i) evaluate the performance of its on-going core operating results period over period, (ii) base internal budgets and (iii) compensate management. Adjusted EBITDA is a Non-GAAP financial measure that excludes (if applicable): (i) certain adjustments as a result of the purchase price accounting for the merger of Sirius and XM, (ii) share-based payment expense and (iii) other significant operating expense (income) that do not relate to the on-going performance of the business. SiriusXM believes adjusted EBITDA is a useful measure of the underlying trend of its operating performance, which provides useful information about the business apart from the costs associated with its capital structure and purchase price accounting. SiriusXM believes investors find this Non-GAAP financial measure useful when analyzing past operating performance with current performance and comparing its operating performance to the performance of other communications, entertainment and media companies. SiriusXM believes investors use adjusted EBITDA to estimate current enterprise value and to make investment decisions. Because of large capital investments in SiriusXM's satellite radio system, its results of operations reflect significant charges for depreciation expense. SiriusXM believes the exclusion of share-based payment expense is useful as it is not directly related to the operational conditions of the business. SiriusXM also believes the exclusion of the legal settlements and reserves related to the historical use of sound recordings and loss on disposal of assets, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of the normal operations for the period.

Adjusted EBITDA has certain limitations in that it does not take into account the impact to SiriusXM's statements of comprehensive income of certain expenses, including share-based payment expense and certain purchase price accounting for the merger of Sirius and XM. SiriusXM endeavors to compensate for the limitations of the Non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the Non-GAAP measure. Investors that wish to compare and evaluate SiriusXM's operating results after giving effect for these costs, should refer to net income as disclosed in its unaudited consolidated statements of comprehensive income. Since adjusted EBITDA is a Non-GAAP financial performance measure, SiriusXM's calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to adjusted EBITDA is calculated as follows:

 
    Unaudited
For the Three Months Ended
March 31,
2016       2017  
($ in thousands)
Net income: $ 172,440 $ 207,073
Add back items excluded from Adjusted EBITDA:
Purchase price accounting adjustments:
Revenues 1,813 1,813
Share-based payment expense(1) 23,693 29,446
Depreciation and amortization 67,627 76,704
Interest expense 78,400 81,657
Other income (10,848 ) (8,863 )
Income tax expense   108,242     113,973  
Adjusted EBITDA $ 441,367   $ 501,803  
 

_______

(1)     Allocation of share-based payment expense.

Liberty Media Corporation
Courtnee Chun, 720-875-5420

Source: Liberty Media Corporation

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