Liberty Media Corporation
Liberty Interactive Corp (Form: 10-Q, Received: 11/08/2016 14:53:06)

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 September 30, 2016

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 001-33982

LIBERTY INTERACTIVE CORPORATION

(Exact name of Registrant as specified in its charter)

 


incorporation or organization)

 


Identification No.)

 

State of Delaware

(State or other jurisdiction of
incorporation or organization)

84-1288730

(I.R.S. Employer
Identification No.)

 

 

12300 Liberty Boulevard
Englewood, Colorado

(Address of principal executive offices)

80112

(Zip Code)

 

Registrant's telephone number, including area code: (720) 875-5300

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☒    No ☐

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

 

 

 

 

 

Large accelerated filer ☒

Accelerated filer ☐

Non-accelerated filer ☐

(do not check if
smaller reporting company)

Smaller reporting company ☐

 

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 Interactive Corporation's common stock as of October 31, 2016 was:

 

 

 

 

 

 

 

 

 

Series A

 

Series B

 

 

 

 

 

 

 

QVC Group

 

437,590,257

 

29,358,638

 

Liberty Ventures

 

135,244,365

 

7,119,929

 

 

 

 

 

 

 

 

 

 


 

Table of Contents

Table of Contents

 

 

 

 

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

    

I-3

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements Of Operations (unaudited)  

 

I-5

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements Of Comprehensive Earnings (Loss) (unaudited)  

 

I-7

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statements Of Cash Flows (unaudited)  

 

I-8

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES Condensed Consolidated Statement Of Equity (unaudited)  

 

I-9

 

 

 

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

 

I-10

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

 

I-29

Item 3. Quantitative and Qualitative Disclosures about Market Risk.  

 

I-43

Item 4. Controls and Procedures.  

 

I-44

 

 

 

PART II—OTHER INFORMATION  

 

II-1

Item 1. Legal Proceedings  

 

II-1

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

 

II-1

Item 6. Exhibits  

 

II-2

 

 

 

SIGNATURES  

 

II-3

EXHIBIT INDEX  

 

II-4

 

 

 

I-2


 

Table of Contents

 

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

 

 

 

 

 

 

 

 

 

 

    

September 30,

    

December 31,

 

 

 

2016

 

2015

 

 

 

amounts in millions

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

505

 

2,449

 

Trade and other receivables, net of allowance for doubtful accounts of $92 million and $87 million, respectively

 

 

848

 

1,443

 

Inventory, net

 

 

1,189

 

1,000

 

Short term marketable securities (note 6)

 

 

 —

 

910

 

Other current assets

 

 

154

 

73

 

Total current assets

 

 

2,696

 

5,875

 

Investments in available-for-sale securities and other cost investments (note 7)

 

 

1,819

 

1,353

 

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

 

 

1,545

 

1,641

 

Investment in Liberty Broadband measured at fair value (note 8)

 

 

3,051

 

 —

 

Property and equipment, at cost

 

 

2,309

 

2,124

 

Accumulated depreciation

 

 

(1,098)

 

(984)

 

 

 

 

1,211

 

1,140

 

Intangible assets not subject to amortization (note 9):

 

 

 

 

 

 

Goodwill

 

 

6,184

 

6,112

 

Trademarks

 

 

3,322

 

3,373

 

 

 

 

9,506

 

9,485

 

Intangible assets subject to amortization, net (note 9)

 

 

1,147

 

1,647

 

Other assets, at cost, net of accumulated amortization

 

 

57

 

39

 

Total assets

 

$

21,032

 

21,180

 

 

(continued)

 

See accompanying notes to condensed consolidated financial statements.

I-3


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

September 30,

 

December 31,

 

 

 

2016

 

2015

 

 

 

amounts in millions,

 

 

 

except share amounts

 

Liabilities and Equity

    

 

    

    

    

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

732

 

762

 

Accrued liabilities

 

 

616

 

784

 

Current portion of debt, including $883 million and $1,193 million measured at fair value (note 10)

 

 

900

 

1,226

 

Other current liabilities

 

 

167

 

328

 

Total current liabilities

 

 

2,415

 

3,100

 

Long-term debt, including $1,140 million and $1,287 million measured at fair value (note 10)

 

 

7,255

 

7,481

 

Deferred income tax liabilities

 

 

3,878

 

3,502

 

Other liabilities

 

 

182

 

222

 

Total liabilities

 

 

13,730

 

14,305

 

Equity

 

 

 

 

 

 

Stockholders' equity (note 11):

 

 

 

 

 

 

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

 

 

 —

 

 —

 

Series A QVC Group common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 438,342,145 shares at September 30, 2016 and 461,379,963 shares at December 31, 2015

 

 

5

 

5

 

Series B QVC Group common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,358,638 shares at September 30, 2016 and 29,218,527 shares at December 31, 2015

 

 

 —

 

 —

 

Series A Liberty Ventures common stock, $.01 par value. Authorized 400,000,000 shares; issued and outstanding 135,238,740 shares at September 30, 2016 and 134,961,466 shares at December 31, 2015

 

 

1

 

1

 

Series B Liberty Ventures common stock, $.01 par value. Authorized 15,000,000 shares; issued and outstanding 7,119,929 shares at September 30, 2016 and 7,092,111 shares at December 31, 2015

 

 

 —

 

 —

 

Additional paid-in capital

 

 

 —

 

370

 

Accumulated other comprehensive earnings (loss), net of taxes

 

 

(198)

 

(215)

 

Retained earnings

 

 

7,381

 

6,626

 

Total stockholders' equity

 

 

7,189

 

6,787

 

Noncontrolling interests in equity of subsidiaries

 

 

113

 

88

 

Total equity

 

 

7,302

 

6,875

 

Commitments and contingencies (note 12)

 

 

 

 

 

 

Total liabilities and equity

 

$

21,032

 

21,180

 

 

See accompanying notes to condensed consolidated financial statements.

I-4


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2016

    

2015

    

2016

    

2015

 

 

 

amounts in millions

 

Total revenue, net

 

$

2,412

 

2,153

 

 

7,485

 

6,619

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

Cost of sales (exclusive of depreciation shown separately below)

 

 

1,575

 

1,358

 

 

4,822

 

4,182

 

Operating

 

 

165

 

160

 

 

512

 

486

 

Selling, general and administrative, including stock-based compensation (note 4)

 

 

290

 

238

 

 

892

 

720

 

Depreciation and amortization

 

 

225

 

150

 

 

663

 

479

 

 

 

 

2,255

 

1,906

 

 

6,889

 

5,867

 

Operating income

 

 

157

 

247

 

 

596

 

752

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(92)

 

(88)

 

 

(277)

 

(273)

 

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

 

 

18

 

31

 

 

(3)

 

121

 

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

 

 

606

 

70

 

 

942

 

98

 

Gains (losses) on dispositions, net (note 3)

 

 

 —

 

(1)

 

 

9

 

110

 

Other, net

 

 

(8)

 

25

 

 

118

 

11

 

 

 

 

524

 

37

 

 

789

 

67

 

Earnings (loss) before income taxes

 

 

681

 

284

 

 

1,385

 

819

 

Income tax (expense) benefit

 

 

(203)

 

(86)

 

 

(441)

 

(211)

 

Net earnings (loss)

 

 

478

 

198

 

 

944

 

608

 

Less net earnings (loss) attributable to the noncontrolling interests

 

 

9

 

8

 

 

28

 

33

 

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders

 

$

469

 

190

 

 

916

 

575

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders:

 

 

 

 

 

 

 

 

 

 

 

QVC Group common stock

 

$

61

 

154

 

 

285

 

417

 

Liberty Ventures common stock

 

 

408

 

36

 

 

631

 

158

 

 

 

$

469

 

190

 

 

916

 

575

 

 

 

 

 

 

 

 

 

 

 

(Continued)

 

 

See accompanying notes to condensed consolidated financial statements.

I-5


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations (Continued)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2016

    

2015

    

2016

    

2015

 

Basic net earnings (losses) attributable to Liberty Interactive Corporation shareholders per common share (note 5):

 

 

 

 

 

 

 

 

 

 

 

Series A and Series B QVC Group common stock

 

$

0.13

 

0.33

 

 

0.59

 

0.89

 

Series A and Series B Liberty Ventures common stock

 

$

2.87

 

0.26

 

 

4.44

 

1.12

 

Diluted net earnings (losses) attributable to Liberty Interactive Corporation shareholders per common share (note 5):

 

 

 

 

 

 

 

 

 

 

 

Series A and Series B QVC Group common stock

 

$

0.13

 

0.33

 

 

0.59

 

0.88

 

Series A and Series B Liberty Ventures common stock

 

$

2.83

 

0.25

 

 

4.38

 

1.10

 

 

See accompanying notes to condensed consolidated financial statements.

 

I-6


 

Table of Contents

 

 

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Comprehensive Earnings (Loss)

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2016

    

2015

    

2016

    

2015

 

 

 

amounts in millions

 

Net earnings (loss)

 

$

478

 

198

 

944

 

608

 

Other comprehensive earnings (loss), net of taxes:

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(3)

 

5

 

36

 

(76)

 

Share of other comprehensive earnings (losses) of equity affiliates

 

 

(2)

 

(4)

 

(7)

 

(19)

 

Other

 

 

 —

 

 —

 

6

 

 —

 

Other comprehensive earnings (loss)

 

 

(5)

 

1

 

35

 

(95)

 

Comprehensive earnings (loss)

 

 

473

 

199

 

979

 

513

 

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

 

11

 

10

 

46

 

33

 

Comprehensive earnings (loss) attributable to Liberty Interactive Corporation shareholders

 

$

462

 

189

 

933

 

480

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive earnings (loss) attributable to Liberty Interactive Corporation shareholders:

 

 

 

 

 

 

 

 

 

 

QVC Group common stock

 

$

56

 

157

 

303

 

341

 

Liberty Ventures common stock

 

 

406

 

32

 

630

 

139

 

 

 

$

462

 

189

 

933

 

480

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

I-7


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements Of Cash Flows

(unaudited)

 

 

 

 

 

 

 

 

 

 

Nine months ended

 

 

 

September 30,

 

 

    

2016

    

2015

 

 

 

amounts in millions

 

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings (loss)

 

$

944

 

608

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

663

 

479

 

Stock-based compensation

 

 

75

 

81

 

Cash payments for stock-based compensation

 

 

(92)

 

(11)

 

Share of (earnings) losses of affiliates, net

 

 

3

 

(121)

 

Cash receipts from returns on equity investments

 

 

41

 

42

 

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

 

 

(942)

 

(98)

 

(Gains) losses on dispositions

 

 

(9)

 

(110)

 

Deferred income tax expense (benefit)

 

 

421

 

2

 

Other, net

 

 

(34)

 

15

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Current and other assets

 

 

349

 

(35)

 

Payables and other liabilities

 

 

(384)

 

(49)

 

Net cash provided (used) by operating activities

 

 

1,035

 

803

 

Cash flows from investing activities:

 

 

 

 

 

 

Cash paid for acquisitions, net of cash acquired

 

 

 —

 

(20)

 

Cash proceeds from dispositions of investments

 

 

350

 

271

 

Investments in and loans to cost and equity investees

 

 

(67)

 

(126)

 

Cash receipts from returns of equity investments

 

 

 —

 

250

 

Capital expended for property and equipment

 

 

(177)

 

(164)

 

Purchases of short term and other marketable securities

 

 

(264)

 

(1,194)

 

Sales of short term and other marketable securities

 

 

1,174

 

1,180

 

Investment in Liberty Broadband

 

 

(2,400)

 

 —

 

Other investing activities, net

 

 

(14)

 

(48)

 

Net cash provided (used) by investing activities

 

 

(1,398)

 

149

 

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings of debt

 

 

2,688

 

1,956

 

Repayments of debt

 

 

(3,629)

 

(2,100)

 

Repurchases of QVC Group common stock

 

 

(603)

 

(531)

 

Withholding taxes on net settlements of stock-based compensation

 

 

(16)

 

(17)

 

Other financing activities, net

 

 

(28)

 

(16)

 

Net cash provided (used) by financing activities

 

 

(1,588)

 

(708)

 

Effect of foreign currency exchange rates on cash

 

 

7

 

(4)

 

Net increase (decrease) in cash and cash equivalents

 

 

(1,944)

 

240

 

Cash and cash equivalents at beginning of period

 

 

2,449

 

2,306

 

Cash and cash equivalents at end of period

 

$

505

 

2,546

 

 

See accompanying notes to condensed consolidated financial statements.

 

I-8


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statement Of Equity

(unaudited)

Nine months ended September 30, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

QVC

 

Liberty

 

Additional

 

other

 

 

 

Noncontrolling

 

 

 

 

 

Preferred

 

Group

 

Ventures

 

paid-in

 

comprehensive

 

Retained

 

interest in equity

 

Total

 

 

  

stock

  

Series A

  

Series B

  

Series A

  

Series B

  

capital

  

earnings (loss)

  

earnings

  

of subsidiaries

  

equity

 

 

 

amounts in millions

 

Balance at January 1, 2016

 

$

 —

 

5

 

 —

 

1

 

 —

 

370

 

(215)

 

6,626

 

88

 

6,875

 

Net earnings (loss)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

916

 

28

 

944

 

Other comprehensive earnings (loss)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

17

 

 —

 

18

 

35

 

Cumulative effect of accounting change (note 1)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

5

 

 —

 

5

 

Stock-based compensation

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

68

 

 —

 

 —

 

 —

 

68

 

Series A QVC Group common stock repurchases

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

(603)

 

 —

 

 —

 

 —

 

(603)

 

Stock issued upon exercise of stock options

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

24

 

 —

 

 —

 

 —

 

24

 

Withholding taxes on net share settlements of stock-based compensation

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

(16)

 

 —

 

 —

 

 —

 

(16)

 

Distribution to noncontrolling interest

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

(21)

 

(21)

 

Reclassification (note 1)

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

166

 

 —

 

(166)

 

 —

 

 —

 

Other

 

 

 —

 

 —

 

 —

 

 —

 

 —

 

(9)

 

 —

 

 —

 

 —

 

(9)

 

Balance at September 30, 2016

 

$

 —

 

5

 

 —

 

1

 

 —

 

 —

 

(198)

 

7,381

 

113

 

7,302

 

 

See accompanying notes to condensed consolidated financial statements.

 

 

 

 

I-9


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

 

Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

(1)   Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Liberty Interactive Corporation and its controlled subsidiaries (collectively, "Liberty" or the "Company" unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation.

Liberty, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries in North America, Europe and Asia.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2015, 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. 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, 2015.

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. Liberty considers (i) fair value measurement, (ii) accounting for income taxes, (iii) assessments of other-than-temporary declines in fair value of its investments and (iv) estimates of retail-related adjustments and allowances to be its most significant estimates.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance on revenue from contracts with customers.  The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. The Company has not yet selected a transition method nor has it determined the effect of the standards on its ongoing financial reporting.

In February 2015, the FASB issued new accounting guidance which amends the consolidation guidance in Accounting Standards Codification Topic 810, Consolidation .  The new guidance requires an entity to reconsider and re-document the basis for certain previous consolidation conclusions.  This guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015.  The Company adopted this guidance during the first quarter of 2016.  The adoption of this guidance did not change the conclusions reached for any previous consolidation analyses.

In July 2015, the FASB issued new accounting guidance that changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The new principle is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method. The new standard is effective for the Company for fiscal years and interim periods beginning after

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

December 15, 2016. The Company has determined there is no significant effect of the standard on its ongoing financial reporting.

In September 2015, the FASB issued new accounting guidance which eliminates the requirement for an acquirer in a business combination to account for measurement-period adjustments retrospectively. Instead, acquirers must recognize measurement-period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts that would have been recorded in previous periods if the accounting had been completed at the acquisition date. The Company adopted this guidance in the first quarter of 2016. The adoption of this guidance did not have a material impact on our condensed consolidated financial statements and related disclosures.

 

In January 2016, the FASB issued new accounting guidance that is intended to improve the recognition and measurement of financial instruments.  The new guidance requires equity investments with readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company has not yet determined the effect of the standard on its ongoing financial reporting.

 

In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance also simplifies the accounting for sale and leaseback transactions. The new standard, to be applied via a modified retrospective transition approach, is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. The Company has not yet determined the effect of the standard on its ongoing financial reporting.

 

In March 2016, the FASB issued new guidance which simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early application permitted. The Company adopted this guidance in the third quarter of 2016 .   In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the condensed consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. For tax benefits that were not previously recognized and for adjustments to compensation cost based on actual forfeitures, the Company has recorded a cumulative-effect adjustment in retained earnings as of January 1, 2016. The presentation changes for excess tax benefits have been applied retrospectively in the condensed consolidated statements of cash flows, resulting in $8 million and $22 million of excess tax benefits for the nine months ended September 20, 2016 and 2015, respectively, reclassified from cash flows from financing activities to cash flows from operating activities.

 

In October 2016, the FASB issued new accounting guidance which requires an entity to recognize at the transaction date the income tax consequences of intercompany asset transfers. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted.  We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. 

 

As a result of repurchases of Series A QVC Group common stock, the Company’s additional paid-in capital balance was in a deficit position as of September 30, 2016.  In order to maintain a zero balance in the additional paid-in capital account, we reclassified the amount of the deficit ($166 million) at September 30, 2016 to retained earnings.

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

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 Liberty 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 Liberty Media Corporation ("LMC"), a separate publicly traded company, neither of which has any stock ownership, beneficial or otherwise, in the other, in order to govern relationships between the companies. These agreements include a Reorganization Agreement, Services Agreement, Facilities Sharing Agreement and Tax Sharing Agreement.

 

The Reorganization Agreement provides for, among other things, provisions governing the relationship between Liberty and LMC, including certain cross-indemnities. Pursuant to the Services Agreement, LMC provides Liberty with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. Liberty reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for Liberty's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Liberty. Under the Facilities Sharing Agreement, LMC shares office space and related amenities at its corporate headquarters with Liberty. Under these various agreements, approximately $2 million and $3 million was reimbursable to LMC for the three months ended September 30, 2016 and 2015 and approximately $8 million was reimbursable to LMC for the both the nine months ended September 30, 2016 and 2015. Additionally, the Tax Sharing Agreement provides for the allocation and indemnification of tax liabilities and benefits between Liberty and LMC and other agreements related to tax matters.

 

(2)   Tracking Stocks

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. Liberty has two tracking stocks—QVC Group common stock and Liberty Ventures common stock, which are intended to track and reflect the economic performance of the QVC Group and the Ventures Group, respectively.

While the QVC Group and the Ventures 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. Holders of tracking stock have no direct claim to the group's stock or assets and are 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 term "QVC Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities that have been attributed to that group. The QVC Group is primarily comprised of our merchandise-focused televised-shopping programs, Internet and mobile application businesses and has attributed to it our wholly-owned subsidiaries, QVC, Inc. (“QVC”) and zulily (defined below) (as of October 1, 2015), and our approximate 38% interest in HSN, Inc., along with cash and certain liabilities that reside with QVC and zulily as well as certain liabilities related to our corporate indebtedness (see note 10) and certain deferred tax liabilities. As of September 30, 2016, the QVC Group has cash and cash equivalents of approximately $348 million, which includes subsidiary cash.

The term "Ventures Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities that have been attributed to that group. The Ventures Group is primarily comprised of our subsidiaries Bodybuilding.com, LLC ("Bodybuilding") (until November 4, 2016), Commerce Technologies, Inc. (d/b/a “CommerceHub”) (until July 22, 2016), Evite, Inc. ("Evite") and Backcountry.com, Inc. (“Backcountry”) (see note 3 for

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

discussion of a disposed business) and interests in Expedia, Inc. (until November 4, 2016), FTD Companies, Inc. (“FTD”), LendingTree, Inc., and Liberty Broadband Corporation (“Liberty Broadband”), available-for-sale securities in Charter Communications, Inc., Interval Leisure Group, Inc. and Time Warner Inc. (“Time Warner”), as well as cash and cash equivalents of approximately $157 million at September 30, 2016. The Ventures Group also has attributed to it certain liabilities related to our Exchangeable Debentures (see note 10) and certain deferred tax liabilities. The Ventures Group is primarily focused on the maximization of the value of these investments and investing in new business opportunities. 

On October 1, 2015, Liberty acquired all of the outstanding shares of zulily, inc. (“zulily”) (now known as zulily, llc) for consideration of approximately $2.3 billion, comprised of $9.375 of cash and 0.3098 newly issued shares of Series A QVC Group common stock for each zulily share, with cash paid in lieu of any fractional shares.  Funding for the $1.2 billion cash portion of the consideration came from cash on hand at zulily and a distribution from QVC funded by a drawdown under its revolving credit facility (see note 10).  zulily is an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched each day.  zulily is attributed to the QVC Group and we believe that its business is complementary to QVC’s. Subsequent to December 31, 2015, the preliminary purchase price allocation was adjusted, resulting in decreases of $50 million to trademarks, $40 million to intangible assets subject to amortization and $33 million to deferred tax liabilities and a corresponding increase of $57 million to goodwill. If these adjustments had been recorded as of the acquisition date, amortization expense would have been approximately $3 million lower for the period ended December 31, 2015. There have been no other significant changes to our purchase price allocation since December 31, 2015. Liberty’s purchase price allocation is final as of September 30, 2016.   

On May 18, 2016, Liberty completed a $2.4 billion investment in Liberty Broadband in connection with the merger of Charter Communications, Inc. ("Charter") and Time Warner Cable Inc. ("TWC"). The proceeds of this investment were used by Liberty Broadband to fund, in part, its acquisition of $5 billion of stock in the new public parent company (“New Charter”) of the combined enterprises. Liberty, along with third party investors, all of whom invested on the same terms as Liberty, purchased newly issued shares of Liberty Broadband Series C common stock at a per share price of $56.23, which was determined based upon the fair value of Liberty Broadband's net assets on a sum-of-the parts basis at the time the investment agreements were executed. Liberty's investment in Liberty Broadband was funded using cash on hand and is attributed to the Ventures Group. See note 8 for additional information related to this investment.

Liberty also exchanged, in a tax-free transaction, its shares of TWC common stock for shares of New Charter Class A common stock, on a one-for-one basis, and Liberty has granted to Liberty Broadband a proxy and a right of first refusal with respect to the shares of New Charter Class A common stock held by Liberty in the exchange.

On July 22, 2016, Liberty completed its previously announced spin-off (the “Spin-Off”) of its former wholly-owned subsidiary CommerceHub.  The Spin-Off was accomplished by the distribution by Liberty of a dividend of (i) 0.1 of a share of CommerceHub’s Series A common stock for each outstanding share of Liberty’s Series A Liberty Ventures common stock as of 5:00 p.m., New York City time, on July 8, 2016 (such date and time, the “Record Date”), (ii) 0.1 of a share of CommerceHub’s Series B common stock for each outstanding share of Liberty’s Series B Liberty Ventures common stock as of the Record Date and (iii) 0.2 of a share of CommerceHub’s Series C common stock for each outstanding share of Series A and Series B Liberty Ventures common stock as of the Record Date, in each case, with cash paid in lieu of fractional shares. This transaction has been recorded at historical cost due to the pro rata nature of the distribution. The IRS completed its review of the Spin-Off and notified Liberty that it agreed with the nontaxable characterization of the Spin-Off.

CommerceHub is included in the Corporate and other segment through July 22, 2016 and is not presented as a discontinued operation as the Spin-Off did not represent a strategic shift that had a major effect on Liberty’s operations and financial results. Included in revenue in the accompanying condensed consolidated statements of operations is $7 million and $20 million for the three months ended September 30, 2016 and 2015, respectively, and $51 million and $59 million for the nine months ended September 30, 2016 and 2015, respectively, related to CommerceHub.  Included in net earnings (loss) in the accompanying condensed consolidated statements of operations are earnings of $4 million and losses

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

of $5 million for the three months ended September 30, 2016 and 2015, respectively, and earnings of $4 million and losses of $6 million for the nine months ended September 30, 2016 and 2015, respectively, related to CommerceHub.  Included in total assets in the accompanying condensed consolidated balance sheets as of December 31, 2015 is $115 million related to CommerceHub.

On November 4, 2016, Liberty completed its previously announced split-off (the “Split-Off”) of its former wholly-owned subsidiary Liberty Expedia Holdings, Inc. (“Expedia Holdings”). Expedia Holdings is comprised of, among other things, Liberty’s interest in Expedia, Inc. (approximately 16% equity interest and approximately 52% voting interest as of September 30, 2016) and Liberty’s wholly-owned subsidiary Bodybuilding. On November 2, 2016, Expedia Holdings borrowed $350 million under a new margin loan and distributed $300 million to Liberty on November 4, 2016. The Split-Off was accomplished by the redemption of (i) 0.4 of each outstanding share of Liberty’s Series A Liberty Ventures common stock for 0.4 of a share of Expedia Holdings Series A common stock at 5:00 p.m., New York City time, on November 4, 2016 (such date and time, the “Redemption Date”) and (ii) 0.4 of each outstanding share of Liberty’s Series B Liberty Ventures common stock for 0.4 of a share of Expedia Holdings Series B common stock on the Redemption Date.

See Exhibit 99.1 to this Quarterly Report on Form 10-Q for unaudited attributed financial information for Liberty's tracking stock groups.

(3) Disposals

On June 30, 2015, Liberty sold Backcountry for aggregate consideration, including assumption of debt, amounts held in escrow, and a noncontrolling interest, of approximately $350 million.  The sale resulted in a $105 million gain, which is included in “Gains (losses) on dispositions, net” in the accompanying condensed consolidated statement of operations. Backcountry is included in the Corporate and other segment through June 30, 2015 and is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on Liberty’s operations and financial results. Included in revenue in the accompanying condensed consolidated statements of operations is $227 million for the nine months ended September 30, 2015, related to Backcountry.  Included in net earnings (loss) in the accompanying condensed consolidated statements of operations are losses of $3 million for the nine months ended September 30, 2015, related to Backcountry. 

(4)   Stock-Based Compensation

The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock, restricted stock units and options to purchase shares of Liberty common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $20 million and $37 million of stock-based compensation during the three months ended September 30, 2016 and 2015, respectively, and $75 million and $81 million during the nine months ended September 30, 2016 and 2015, respectively.

In connection with the Spin-Off of CommerceHub in July 2016, all outstanding Awards with respect to Liberty Ventures common stock as of the Record Date (“Liberty Ventures Award”) were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the equity awards were granted, such that:

I.

A holder of a Liberty Ventures Award who was a member of the board of directors or an officer of Liberty holding the position of Vice President or above received (i) an adjustment to the exercise price (for an award of options to purchase Liberty Ventures common stock (an “Original Ventures Option”)) and the number of shares subject

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

to the Liberty Ventures Award (as so adjusted, an “Adjusted Liberty Ventures Award”) and (ii) a corresponding equity award relating to shares of the corresponding series of CommerceHub common stock, as well as Series C CommerceHub common stock (in each case, a “CommerceHub Award”); and

II.

Each other holder of a Liberty Ventures Award received only an adjustment to the exercise price (for an Original Ventures Option) and the number of shares subject to the Liberty Ventures Award (also referred to as an “Adjusted Liberty Ventures Award”).

The exercise prices of Original Ventures Options and number of shares subject to the Adjusted Liberty Ventures Awards and the CommerceHub Awards were determined based on 1) the exercise prices and number of shares subject to the Liberty Ventures Award, 2) the distribution ratios used in the Spin-Off, 3) the pre-Spin-Off trading price of the Liberty Ventures common stock and 4) the post-Spin-Off trading prices of Liberty Ventures common stock and CommerceHub common stock, such that all of the pre-Spin-Off intrinsic value of the  Liberty Ventures Award was allocated between the Adjusted Liberty Ventures Award and the CommerceHub Award, or fully to the Adjusted Liberty Ventures Award. The adjustment related to the CommerceHub Spin-Off was considered a modification under ASC 718 – Stock Compensation but did not result in incremental compensation expense.

Following the Spin-Off, employees of Liberty may hold Awards in both Liberty Ventures common stock and CommerceHub common stock.  The compensation expense relating to employees of Liberty is recorded at Liberty.

During the nine months ended September 30, 2016, Liberty granted 2.9 million options to QVC employees to purchase shares of Series A QVC Group common stock.  Such options had a weighted average grant-date fair value of $7.84 per share and vest semi-annually over 4 years.

During the nine months ended September 30, 2016, Liberty granted 433 thousand options to zulily employees to purchase shares of Series A QVC Group common stock.  Such options had a weighted average grant-date fair value of $7.57 per share and vest between three to five years.

During the nine months ended September 30, 2016, Liberty granted to Liberty employees 421 thousand options to purchase shares of Series A QVC Group common stock.  Such options had a weighted average grant-date fair value of $8.02 per share and mainly vest 50% each on December 31, 2019 and 2020.

Also during the nine months ended September 30, 2016, Liberty granted to Liberty employees 114 thousand options to purchase shares of Series A Liberty Ventures common stock.  Such options had a weighted average grant-date fair value of $12.25 per share and mainly vest 50% each on December 31, 2019 and 2020.

In connection with our CEO’s employment agreement, during the nine months ended September 30, 2016, Liberty also granted 730 thousand and 209 thousand options of Series B QVC Group common stock and Series B Liberty Ventures common stock, respectively, and 53 thousand and 16 thousand performance-based restricted stock units of Series B QVC Group common stock and Series B Liberty Ventures common stock, respectively.  Such options had a grant-date fair value of $7.47 per share and $12.48 per share, respectively. The restricted stock units had a fair value of $25.11 per share and $38.79 per share, respectively, at the time they were granted. The options vest on December 31, 2016 and the restricted stock units cliff vest in one year, subject to satisfaction of certain performance objectives.  Performance objectives, which are subjective, are considered in determining the timing and amount of the compensation expense recognized. As the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The value of the grant is remeasured at each reporting period.

The Company has calculated the grant-date fair value for all of its equity classified Awards and any subsequent remeasurement of its liability classified and certain performance-based awards using the Black-Scholes-Merton Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. The volatility used in the calculation for Awards is based on the historical volatility of Liberty's stock and the implied volatility of publicly

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

traded Liberty options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

Liberty—Outstanding Awards

The following tables present the number and weighted average exercise price ("WAEP") of the Awards to purchase QVC Group and Liberty Ventures common stock granted to certain officers, employees and directors of the Company.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QVC Group

 

 

    

 

    

 

 

    

Weighted

    

Aggregate

 

 

 

 

 

 

 

 

average

 

intrinsic

 

 

 

Series A

 

 

 

 

remaining

 

value

 

 

 

(000's)

 

WAEP

 

life

 

(millions)

 

Outstanding at January 1, 2016

 

31,482

 

$

19.57

 

 

 

 

 

 

 

Granted

 

3,714

 

$

26.09

 

 

 

 

 

 

 

Exercised

 

(3,646)

 

$

14.08

 

 

 

 

 

 

 

Forfeited/Cancelled

 

(766)

 

$

28.73

 

 

 

 

 

 

 

Outstanding at September 30, 2016

 

30,784

 

$

20.78

 

4.6

years

 

$

70

 

Exercisable at September 30, 2016

 

18,407

 

$

18.08

 

3.5

years

 

$

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QVC Group

 

 

    

 

    

 

 

    

Weighted

    

Aggregate

 

 

 

 

 

 

 

 

average

 

intrinsic

 

 

 

Series B

 

 

 

 

remaining

 

value

 

 

 

(000's)

 

WAEP

 

life

 

(millions)

 

Outstanding at January 1, 2016

 

778

 

$

29.79

 

 

 

 

 

 

 

Granted

 

730

 

$

25.11

 

 

 

 

 

 

 

Exercised

 

 —

 

$

 —

 

 

 

 

 

 

 

Forfeited/Cancelled

 

(19)

 

$

29.41

 

 

 

 

 

 

 

Outstanding at September 30, 2016

 

1,489

 

$

27.50

 

5.9

years

 

$

 —

 

Exercisable at September 30, 2016

 

112

 

$

29.41

 

5.5

years

 

$

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Ventures

 

 

    

 

    

 

 

    

Weighted

    

Aggregate

 

 

 

 

 

 

 

 

average

 

intrinsic

 

 

 

Series A

 

 

 

 

remaining

 

value

 

 

 

(000's)

 

WAEP

 

life

 

(millions)

 

Outstanding at January 1, 2016

 

3,684

 

$

23.29

 

 

 

 

 

 

 

CommerceHub Spin-Off

 

(16)

 

$

24.39

 

 

 

 

 

 

 

Granted

 

114

 

$

37.77

 

 

 

 

 

 

 

Exercised

 

(287)

 

$

19.57

 

 

 

 

 

 

 

Forfeited/Cancelled

 

(1)

 

$

36.80

 

 

 

 

 

 

 

Outstanding at September 30, 2016

 

3,494

 

$

21.93

 

3.6

years

 

$

63

 

Exercisable at September 30, 2016

 

2,663

 

$

17.76

 

2.7

years

 

$

59

 

 

 

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Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Ventures

 

 

    

 

    

 

 

    

Weighted

    

Aggregate

 

 

 

 

 

 

 

 

average

 

intrinsic

 

 

 

Series B

 

 

 

 

remaining

 

value

 

 

 

(000's)

 

WAEP

 

life

 

(millions)

 

Outstanding at January 1, 2016

 

1,542

 

$

38.04

 

 

 

 

 

 

 

CommerceHub Spin-Off

 

(10)

 

$

35.86

 

 

 

 

 

 

 

Granted

 

209

 

$

38.79

 

 

 

 

 

 

 

Exercised

 

 —

 

$

 —

 

 

 

 

 

 

 

Forfeited/Cancelled

 

(20)

 

$

42.33

 

 

 

 

 

 

 

Outstanding at September 30, 2016

 

1,721

 

$

34.75

 

5.4

years

 

$

9

 

Exercisable at September 30, 2016

 

112

 

$

38.63

 

5.5

years

 

$

 —

 

 

As of September 30, 2016, the total unrecognized compensation cost related to unvested Awards was approximately $138 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.9 years.

Other

Certain of the Company's other subsidiaries have stock based compensation plans under which employees and non-employees are granted options or similar stock based awards. Awards made under these plans vest and become exercisable over various terms. During the nine months ended September 30, 2016, approximately $90 million of cash payments were made to settle CommerceHub stock based awards. The awards and compensation recorded, if any, under other subsidiary compensation plans are not significant to Liberty.

 

(5)   Earnings (Loss) Per Common Share

Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.

Series A and Series B QVC Group Common Stock

Excluded from diluted EPS, for the three and nine months ended September 30, 2016 and 2015, are 13 million and 4 million potential common shares, respectively, because their inclusion would be antidilutive.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QVC Group Common Stock

 

 

    

Three months ended

    

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

number of shares in millions

 

Basic EPS

 

473

 

460

 

479

 

467

 

Potentially dilutive shares

 

5

 

6

 

6

 

7

 

Diluted EPS

 

478

 

466

 

485

 

474

 

 

I-17


 

Table of Contents

LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES

 

Notes to Condensed Consolidated Financial Statements

 

(unaudited)

 

Series A and Series B Liberty Ventures Common Stock

 

Excluded from diluted EPS, for the three and nine months ended September 30, 2016 and 2015 are less than a million potential common shares because their inclusion would be antidilutive.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liberty Ventures Common Stock

 

 

    

Three months ended 

    

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

number of shares in millions

 

Basic EPS

 

142

 

141

 

142

 

141

 

Potentially dilutive shares

 

2

 

2

 

2

 

2

 

Diluted EPS

 

144

 

143

 

144

 

143

 

 

 

(6)   Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

The Company's assets and liabilities measured at fair value are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at

 

Fair Value Measurements at

 

 

 

September 30, 2016

 

December 31, 2015

 

 

    

 

 

    

Quoted

    

 

    

 

    

Quoted

    

 

 

 

 

 

 

 

prices

 

 

 

 

 

prices