Market Overview

Liberty Media Corporation Reports Second Quarter 2018 Financial Results

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Liberty Media Corporation ("Liberty Media" or "Liberty") (NASDAQ: LSXMA,
LSXMB, LSXMK, FWONA, FWONK, BATRA, BATRK) today reported second quarter
2018 results. Highlights include(1):

  • Attributed to Liberty SiriusXM Group
    • SiriusXM reported strong second quarter 2018 results
      • Added 483,000 net new self-pay subscribers in the quarter
      • Second quarter revenue climbed 6% to $1.4 billion
      • Net income grew 45% to $292 million in the quarter; diluted
        EPS climbed 49% to $0.06
      • Adjusted EBITDA(2) grew 4% to $543 million
      • Operating cash flow climbed 20% to $579 million; free cash flow(2)
        climbed 17% to $486 million
      • SiriusXM increased 2018 guidance for self-pay subscribers,
        revenue and adjusted EBITDA(2) on July 25th
    • Liberty Media's ownership of SiriusXM stood at 70.5% as of July 23rd
    • From May 1st through July 31st,
      repurchased 3.6 million LSXMK shares at an average price per share
      of $45.45 and total cash consideration of $161 million
  • Attributed to Formula One Group
    • Entered into multi-year agreement with Amazon Web Services Inc.
      ("AWS") under which AWS has become an Official Technology Provider
      and global sponsor for F1
    • Extended the Belgian Grand Prix
    • Repaid $125 million of F1 debt during the quarter
  • Attributed to Braves Group
    • thyssenkrupp Elevator announced planned development of North
      American headquarters, high-rise test tower and innovation complex
      in Battery Atlanta
    • Progressing on sale of residential portion of Battery Atlanta
    • Braves record 61-49 as of August 7th, second in NL East
      division

"It's been an exciting season for F1 with four different winners over
twelve Grands Prix. We look forward to the season starting back up in
Belgium at the end of August," said Greg Maffei, Liberty Media President
and CEO. "Live Nation achieved spectacular results as all the business
units continue their solid growth. SiriusXM also posted an outstanding
quarter, notably with churn down to 1.6%. At the Braves, The Battery
announced the planned development of thyssenkrupp's North American
Headquarters and continues with the sale of the residential assets."

Unless otherwise noted, the following discussion compares financial
information for the three months ended June 30, 2018 to the same period
in 2017.

LIBERTY SIRIUSXM GROUP – The following table provides the
financial results attributed to Liberty SiriusXM Group for the second
quarter of 2018. In the second quarter, approximately $12 million of
corporate level selling, general and administrative expense (including
stock-based compensation expense) was allocated to the Liberty SiriusXM
Group.

 
               
2Q17 2Q18 % Change
amounts in millions
Liberty SiriusXM Group  
Revenue
SiriusXM $ 1,348   $ 1,432     6   %
Total Liberty SiriusXM Group $ 1,348   $ 1,432     6   %
Operating Income (Loss)
SiriusXM 402 344 (14 ) %
Corporate and other   (10 )   (11 )   (10 ) %
Total Liberty SiriusXM Group $ 392   $ 333     (15 ) %
Adjusted OIBDA
SiriusXM 519 542 4 %
Corporate and other   (3 )   (6 )   (100 ) %
Total Liberty SiriusXM Group $ 516   $ 536     4   %
 

The increase in Liberty SiriusXM Group revenue was primarily driven by
an increase in SiriusXM's daily weighted average number of subscribers.
Revenue growth at Liberty SiriusXM Group was partially offset by the
impact of the adoption of a new revenue recognition accounting standard,
as described in detail in Liberty Media's Form 10-Q for the quarter
ended June 30, 2018. Operating income declined, primarily driven by a
$69 million charge related to a legal settlement at SiriusXM for sound
recordings for the period from January 1, 2007 through December 31,
2017. Adjusted OIBDA(2) increased primarily attributable to
revenue growth at SiriusXM.

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 second quarter results on July 25, 2018. For additional
detail on SiriusXM's financial results for the second 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.

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

FORMULA ONE GROUP – The following table provides the financial
results attributed to the Formula One Group for the second quarter of
2018. In the second quarter, the Formula One Group incurred
approximately $6 million of corporate level selling, general and
administrative expense (including stock-based compensation expense).

"The 2018 season continues to excite with unpredictable outcomes and a
varied group of podium finishers," said Chase Carey, Formula 1 Chairman
and CEO. "We successfully returned to France, at the Paul Ricard
Circuit, for the first time since 1990 and hosted our second fan
festival for 2018. We made progress across many fronts as we entered
into an exciting global sponsorship agreement with AWS, renewed global
sponsorship deals, renewed the Belgian Grand Prix and continued to
expand on our digital content offerings."

 
           
2Q17 2Q18
amounts in millions
Formula One Group
Revenue
Formula 1 $ 616   $ 585  
Total Formula One Group $ 616   $ 585  
Operating Income (Loss)
Formula 1 $ 45 $ 14
Corporate and other   (12 )   (8 )
Total Formula One Group $ 33   $ 6  
Adjusted OIBDA
Formula 1 $ 164 $ 134
Corporate and other   (9 )   (6 )
Total Formula One Group $ 155   $ 128  
 

The following table provides the operating results of Formula 1 ("F1").

Pro Forma F1 Operating Results

 
             
2Q17 2Q18 % Change
amounts in millions
Primary Formula 1 revenue $ 527 $ 491 (7 ) %
Other Formula 1 revenue   89     94   6   %
Total Formula 1 revenue $ 616 $ 585 (5 ) %
Operating expenses (excluding stock-based compensation included
below):
Team payments (330 ) (307 ) 7 %
Other cost of Formula 1 revenue   (85 )   (106 ) (25 ) %
Cost of Formula 1 revenue $ (415 ) $ (413 ) %
Selling, general and administrative expenses   (32 )(1)   (38 ) (19 ) %
Adjusted OIBDA $

169

(1)

$ 134 (21 ) %
Stock-based compensation (9 ) (5 ) 44 %
Depreciation and Amortization   (115 )   (115 )   %
Operating income $ 45   $ 14   (69 ) %
 

Number of races in period

  7     7  
(1)     The second quarter of 2017 includes an adjustment related to
transaction costs that reduced SG&A by $5 million. Excluding this
adjustment, F1's pro forma adjusted OIBDA in the second quarter of
2017 was $164 million.
 

Primary F1 revenue is comprised of (i) race promotion fees, (ii)
broadcasting fees and (iii) advertising and sponsorship fees.

Broadcast revenue decreased due to the impact of slightly lower
proportionate recognition of season-based income during the quarter (7/21
races in the second quarter of 2018 compared to 7/20 races
in the second quarter of 2017). Race promotion and advertising and
sponsorship revenue decreased in the second quarter primarily due to
differing events on the calendar, with one additional European race
taking place in the second quarter of 2018 (France) compared to one
additional flyaway event taking place in the second quarter of 2017
(Russia), partially offset by fee inflation in underlying contracts.
Typically, flyaway races such as the Russian Grand Prix carry a higher
promotion fee than European races.

Advertising and sponsorship revenue was impacted by the adoption of the
new revenue recognition accounting standard (ASC 606), which accelerated
the recognition of certain elements of fees related to F1's Global
Partner and Official Supplier contracts. These fee elements were
previously recognized pro-rata with the race calendar, but the majority
are now being recognized evenly over the calendar year and others over a
smaller number of specific events. This change provided a modest
tailwind to advertising and sponsorship revenue in the second quarter of
2018 but will be neutral on a full calendar year basis.

Other F1 revenue increased during the second quarter primarily due to
the sale of F2 component parts to competing F2 teams as 2018 marks the
start of the next three year vehicle cycle for the championship.

Operating income and adjusted OIBDA(2) decreased in the
second quarter. Cost of F1 revenue decreased modestly, driven by reduced
team payments due to the pro rata recognition of such payments during
the season, partially offset by increased costs associated with
providing component parts to F2 teams and costs associated with
increased fan engagement activities, freight, technical activities and
digital media. Selling, general and administrative expense increased
primarily as a result of increased marketing and research costs and
foreign exchange movements.

F1's total net debt to covenant OIBDA ratio, as defined in F1's credit
facilities for covenant calculations, was approximately 7.3x as of June
30, 2018, as compared to a maximum allowable leverage ratio of 8.75x.

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 and an intergroup interest in the Braves Group. There are
approximately 9.1 million notional shares of the Braves Group underlying
the Formula One Group's 15.1% intergroup interest as of July 31, 2018.

BRAVES GROUP - The following table provides the financial results
attributed to the Braves Group for the second quarter of 2018. In the
second quarter, approximately $2 million of corporate level selling,
general and administrative expense (including stock-based compensation
expense) was allocated to the Braves Group.

 
           
2Q17 2Q18
amounts in millions
Braves Group
Revenue
Corporate and other $ 176   $ 182
Total Braves Group $ 176   $ 182
Operating Income (Loss)
Corporate and other   (3 )   35
Total Braves Group $ (3 ) $ 35
Adjusted OIBDA
Corporate and other   27     63
Total Braves Group $ 27   $ 63
 

The following table provides the operating results of Braves Holdings,
LLC ("Braves").

 

Braves Operating Results

             
2Q17 2Q18 % Change
amounts in millions
Baseball revenue $ 173 $ 172 (1 ) %
Development revenue   3     10   233   %
Total revenue 176 182 3 %
Operating expenses (excluding stock-based compensation included
below):
Other operating expenses (126 ) (95 ) 25 %
Selling, general and administrative expenses   (22 )   (23 ) (5 ) %
Adjusted OIBDA $ 28 $ 64 129 %
Stock-based compensation (5 ) (4 ) 20 %
Depreciation and Amortization   (24 )   (23 ) 4   %
Operating income (loss) $ (1 ) $ 37   3,800   %
 
Number of home game openings in period 40 37
Baseball revenue per home game $ 4.3   $ 4.6  
 

Baseball revenue is comprised of (i) ballpark operations, (ii) local and
national broadcast rights and (iii) licensing and other shared MLB
revenue streams. Development revenue is derived from the Battery Atlanta
mixed-use facilities and primarily includes rental income.

Baseball revenue per game grew due to increased ticket sales with better
attendance and higher concessions per turnstile. Total baseball revenue
in the second quarter decreased due to fewer home games in 2018 compared
to the same period in 2017. Development revenue was nominal in the
second quarter of 2017 as the project was still ramping.

Operating income and adjusted OIBDA(2) increased, primarily
driven by higher revenue and reduced operating expense from lower player
salaries due to the acceleration of player salary expense in previous
quarters as a result of released and injured players. Selling, general
and administrative expense was relatively flat in the second quarter.

The Formula One Group holds an approximate 15.1% intergroup interest in
the Braves Group as of July 31, 2018. Assuming the issuance of the
shares underlying the intergroup interest held by the Formula One Group,
the Braves Group outstanding share count as of July 31, 2018 would have
been 60 million.

The businesses and assets attributed to the Braves Group consist
primarily of Liberty Media's subsidiary the Braves, which indirectly
owns the Atlanta Braves Major League Baseball Club, six minor league
baseball clubs and certain assets and liabilities associated with the
Braves' ballpark and mixed-use development project.

Share Repurchases

From May 1, 2018 through July 31, 2018, Liberty Media repurchased
approximately 3.6 million Series C Liberty SiriusXM shares (Nasdaq: LSXMK) at an average cost per share of $45.45 for total cash
consideration of $161.4 million. The total remaining repurchase
authorization for Liberty Media is approximately $1.0 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 12:15 p.m. (E.D.T.) on August 8, 2018. 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 and free cash flow (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 June 30, 2018.

 

Fair Value of Corporate Public Holdings

 
(amounts in millions)       3/31/2018   6/30/2018
Liberty SiriusXM Group
iHeart Debt(1) $ 519 $ 505
Total Liberty SiriusXM Group(2) $ 519 $ 505
Formula One Group
Live Nation Investment(3) $ 2,935 3,383
Other Public Holdings(4)   471   259
Total Formula One Group $ 3,406 $ 3,642
Braves Group   N/A   N/A
Total Liberty Media $ 3,925 $ 4,147

____________________________

(1)     Liberty has purchased $660 million in aggregate principal amount of
iHeart bonds to-date.
(2) SiriusXM's investment in Pandora excluded from public holdings
presented above.
(3) 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 condensed consolidated
balance sheet at $743 million and $751 million as of March 31, 2018
and June 30, 2018, respectively.
(4) Represents the carrying value of other public holdings which are
accounted for at fair value. Reduction in fair value in the second
quarter of 2018 primarily driven by acquisition of Time Warner Inc.
("TWX") by AT&T Inc. ("AT&T"). Excludes Braves Group intergroup
interest.
 

Cash and Debt

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

 
(amounts in millions)       3/31/2018   6/30/2018
Cash and Cash Equivalents Attributable to:
Liberty SiriusXM Group(1) $ 658 $ 174
Formula One Group(2) 270 198
Braves Group 114   113  
Total Liberty Consolidated Cash and Cash Equivalents (GAAP) $ 1,042   $ 485  
 
Debt:
SiriusXM senior notes(3) $ 6,500 $ 6,500
2.125% exchangeable senior debentures due 2048(4) 400 400
Margin loans 750 450
Other subsidiary debt(5)   375     8  
Total Attributed Liberty SiriusXM Group Debt $ 8,025   $ 7,358  
Unamortized discount, fair market value adjustment and deferred loan
costs
  (69 )   (66 )
Total Attributed Liberty SiriusXM Group Debt (GAAP) $ 7,956   $ 7,292  
 
1.375% cash convertible notes due 2023(4) 1,000 1,000
1% cash convertible notes due 2023(4) 450 450
2.25% exchangeable senior debentures due 2046(4) 445 216
Live Nation margin loan 350 350
Formula 1 bank loan 3,102 2,977
Other corporate level debt   34     34  
Total Attributed Formula One Group Debt $ 5,381   $ 5,027  
Fair market value adjustment   177     326  
Total Attributed Formula One Group Debt (GAAP) $ 5,558   $ 5,353  
Formula 1 leverage(6) 6.8x 7.3x
 
Atlanta Braves debt   603     629  
Total Attributed Braves Group Debt $ 603   $ 629  
Deferred loan costs   (4 )   (4 )
Total Attributed Braves Group Debt (GAAP) $ 599   $ 625  
       
Total Liberty Media Corporation Debt (GAAP) $ 14,113   $ 13,270  

_____________________________________________________________

(1)     Includes $79 million and $64 million of cash and liquid investments
held at SiriusXM as of March 31, 2018 and June 30, 2018,
respectively.
(2) Includes $140 million and $89 million of cash and liquid investments
held at Formula 1 as of March 31, 2018 and June 30, 2018,
respectively.
(3) Outstanding principal amount of Senior Notes with no reduction for
the net unamortized discount.
(4) Face amount of the cash convertible notes and exchangeable
debentures with no fair market value adjustment.
(5) Includes SiriusXM revolving credit facility and capital leases.
(6)

Net debt to covenant OIBDA ratio of F1 operating business as
defined in F1's credit facilities for covenant calculations.

 

Total cash and liquid investments attributed to Liberty SiriusXM Group
decreased $484 million during the quarter. Cash from operations at
SiriusXM was more than offset by debt repayment and return of capital at
both Liberty SiriusXM Group and SiriusXM. Included in the cash and
liquid investments balance attributed to Liberty SiriusXM Group at June
30, 2018 is $64 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 balances.

Total debt attributed to Liberty SiriusXM Group decreased $667 million
during the quarter primarily due to the repayment of SiriusXM's
revolving credit facility and repayment of a portion Liberty SiriusXM's
margin loan.

Total cash and liquid investments attributed to the Formula One Group
decreased $72 million during the quarter, primarily as a result of debt
repayments and interest and tax payments, which were partially offset by
cash from operations.

Total debt attributed to Formula One Group decreased $354 million during
the quarter primarily as a result of debt repayment. During the second
quarter, F1 repaid $125 million under its revolving credit facility.
Liberty Media also repaid a portion of its 2.25% exchangeable senior
debentures due 2046 (attributed to the Formula One Group) in connection
with the acquisition of TWX by AT&T. On June 22, 2018, Liberty Media
paid to bondholders an extraordinary additional distribution of
$514.1295 per $1,000 original principal amount of debentures, which is
attributable to the cash consideration of $53.75 per share paid to
former holders of common stock of TWX in connection with the
acquisition. The reference shares attributable to each $1,000 original
principal of debentures now consists of 13.7452 shares of common stock
of AT&T (NYSE:T). The principal amount of 2.25% debentures outstanding
as of June 30, 2018 is $216 million.

Total cash and liquid investments attributed to the Braves Group was
flat in the quarter as increased cash from operations and net borrowing
was offset by capital expenditures related to the mixed-use development.

Total debt attributed to the Braves Group increased by $26 million
primarily as a result of the refinancing of certain of its mixed-use
debt facilities.

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 12:15 p.m. (E.D.T.) on August 8, 2018. The call
can be accessed by dialing (888) 394-8218 or (323) 794-2149, passcode
2089509 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, plans for the Battery Atlanta and the associated
mixed-use development, the continuation of our stock repurchase plan 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

June 30, 2018 (unaudited)

 
      Attributed  
Liberty     Formula  
SiriusXM Braves One Intergroup Consolidated
Group Group Group Eliminations Liberty
amounts in millions
Assets
Current assets:
Cash and cash equivalents $ 174 113 198 485
Trade and other receivables, net 247 67 114 428
Other current assets   170   89   155     414  
Total current assets   591   269   467     1,327  
Intergroup interest in the Braves Group 235 (235 )
Investments in debt and equity securities 1,103 8 318 1,429
Investments in affiliates, accounted for using the equity method 642 97 920 1,659
 
Property and equipment, at cost 2,341 1,234 180 3,755
Accumulated depreciation   (1,019 ) (78 ) (86 )   (1,183 )
  1,322   1,156   94     2,572  
 
Intangible assets not subject to amortization
Goodwill 14,247 180 3,956 18,383
FCC licenses 8,600 8,600
Other   931   143       1,074  
  23,778   323   3,956     28,057  
Intangible assets subject to amortization, net 957 42 4,953 5,952
Other assets   121   44   646     811  
Total assets $ 28,514   1,939   11,589   (235 ) 41,807  
 
Liabilities and Equity
Current liabilities:
Intergroup payable (receivable) $ (39 ) 39
Accounts payable and accrued liabilities 997 56 176 1,229
Current portion of debt 4 14 18
Deferred revenue 1,935 97 355 2,387
Other current liabilities   4   8   9     21  
Total current liabilities   2,940   136   579     3,655  
Long-term debt 7,288 611 5,353 13,252
Deferred income tax liabilities 1,569 68 (86 ) 1,551
Redeemable intergroup interest 235 (235 )
Other liabilities   283   508   93     884  
Total liabilities   12,080   1,558   5,939   (235 ) 19,342  
Equity / Attributed net assets 10,864 376 5,648 16,888
Noncontrolling interests in equity of subsidiaries   5,570   5   2     5,577  
Total liabilities and equity $ 28,514   1,939   11,589   (235 ) 41,807  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF OPERATIONS

Three months ended June 30, 2018 (unaudited)

 
        Attributed  
Liberty     Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Revenue:
Subscriber revenue $ 1,139 1,139
Formula 1 revenue 585 585
Other revenue   293 182 475
Total revenue 1,432 182 585 2,199
Operating costs and expenses, including stock-based compensation:
Cost of subscriber services (exclusive of depreciation shown
separately below):
Revenue share and royalties 404 404
Programming and content(1) 105 105
Customer service and billing(1) 95 95
Other(1) 33 33
Cost of Formula 1 revenue 414 414
Subscriber acquisition costs 119 119
Other operating expenses(1) 27 94 121
Selling, general and administrative(1) 224 30 49 303
Depreciation and amortization   92 23 116 231
  1,099 147 579 1,825
Operating income (loss) 333 35 6 374
Other income (expense):
Interest expense (99) (7) (47) (153)
Share of earnings (losses) of affiliates, net (1) 3 20 22
Realized and unrealized gains (losses) on financial instruments, net 62 (4) 58
Unrealized gains (losses) on intergroup interest (28) 28
Other, net   12 1 8 21
  (26) (31) 5 (52)
Earnings (loss) from continuing operations before income taxes 307 4 11 322
Income tax (expense) benefit   (59) (7) (1) (67)
Net earnings (loss) 248 (3) 10 255
Less net earnings (loss) attributable to the noncontrolling interests   83 (1) 1 83
Net earnings (loss) attributable to Liberty stockholders $ 165 (2) 9 172
 
(1) Includes stock-based compensation expense as follows:
Programming and content 10 10
Customer service and billing 1 1
Other 2 2
Other operating expenses 4 4
Selling, general and administrative   25 5 6 36
Stock compensation expense $ 42 5 6 53
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF OPERATIONS

Three months ended June 30, 2017 (unaudited)

 
      Attributed  
Liberty     Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Revenue:
Subscriber revenue $ 1,111 1,111
Formula 1 revenue 616 616
Other revenue   237   176     413  
Total revenue 1,348 176 616 2,140
Operating costs and expenses, including stock-based compensation:
Cost of subscriber services (exclusive of depreciation shown
separately below):
Revenue share and royalties 293 293
Programming and content(1) 96 96
Customer service and billing(1) 95 95
Other(1) 30 30
Cost of Formula 1 revenue 414 414
Subscriber acquisition costs 126 126
Other operating expenses(1) 27 126 153
Selling, general and administrative(1) 202 29 57 288
Depreciation and amortization   87   24   112   223  
  956   179   583   1,718  
Operating income (loss) 392 (3 ) 33 422
Other income (expense):
Interest expense (85 ) (2 ) (62 ) (149 )
Share of earnings (losses) of affiliates, net (5 ) 1 20 16
Realized and unrealized gains (losses) on financial instruments, net (49 ) (49 )
Unrealized gains (losses) on intergroup interest (3 ) 3
Other, net   (7 ) 2   1   (4 )
  (97 ) (2 ) (87 ) (186 )
Earnings (loss) from continuing operations before income taxes 295 (5 ) (54 ) 236
Income tax (expense) benefit   (110 ) 3   27   (80 )
Net earnings (loss) 185 (2 ) (27 ) 156
Less net earnings (loss) attributable to the noncontrolling interests   62       62  
Net earnings (loss) attributable to Liberty stockholders $ 123   (2 ) (27 ) 94  
 
(1) Includes stock-based compensation expense as follows:
Programming and content 7 7
Customer service and billing 1 1
Other 1 1
Other operating expenses 3 3
Selling, general and administrative   25   6   10   41  
Stock compensation expense $ 37   6   10   53  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Six months ended June 30, 2018 (unaudited)

 
      Attributed  
Liberty     Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Cash flows from operating activities:
Net earnings (loss) $ 530 (55 ) (7 ) 468
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 181 39 227 447
Stock-based compensation 82 5 12 99
Share of (earnings) loss of affiliates, net (6 ) (8 ) (14 )
Unrealized (gains) losses on intergroup interest, net 33 (33 )
Realized and unrealized (gains) losses on financial instruments, net (120 ) (91 ) (211 )
Noncash interest expense (benefit) (8 ) 2 (6 )
Deferred income tax expense (benefit) 123 (2 ) (49 ) 72
Intergroup tax allocation 1 3 (4 )
Other charges (credits), net 14 2 16
Changes in operating assets and liabilities
Current and other assets 1 (3 ) (97 ) (99 )
Payables and other liabilities   163   37   296   496  
Net cash provided (used) by operating activities   953   67   248   1,268  
Cash flows from investing activities:
Investments in equity method affiliates and debt and equity
securities
(395 ) (4 ) (399 )
Cash proceeds from sale of investments 243 243
Capital expended for property and equipment (174 ) (14 ) (3 ) (191 )
Other investing activities, net   3   36   8   47  
Net cash provided (used) by investing activities   (566 ) 22   244   (300 )
Cash flows from financing activities:
Borrowings of debt 1,171 123 289 1,583
Repayments of debt (1,388 ) (180 ) (850 ) (2,418 )
Series C Liberty SiriusXM stock repurchases (218 ) (218 )
Subsidiary shares repurchased by subsidiary (334 ) (334 )
Cash dividends paid by subsidiary (29 ) (29 )
Taxes paid in lieu of shares issued for stock-based compensation (79 ) (2 ) (81 )
Other financing activities, net   50     (4 ) 46  
Net cash provided (used) by financing activities   (827 ) (57 ) (567 ) (1,451 )
Effect of foreign exchange rate changes on cash, cash equivalents
and restricted cash
(1 ) (1 )
Net increase (decrease) in cash, cash equivalents and restricted cash (440 ) 32 (76 ) (484 )
Cash, cash equivalents and restricted cash at beginning of period   625   140   282   1,047  
Cash, cash equivalents and restricted cash at end of period $ 185   172   206   563  
 
 

LIBERTY MEDIA CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Six months ended June 30, 2017 (unaudited)

 
      Attributed  
Liberty     Formula
SiriusXM Braves One Consolidated
Group Group Group Liberty
amounts in millions
Cash flows from operating activities:
Net earnings (loss) $ 374 (51 ) (123 ) 200
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 177 26 184 387
Stock-based compensation 71 8 18 97
Share of (earnings) loss of affiliates, net 2 (4 ) (10 ) (12 )
Unrealized (gains) losses on intergroup interest, net 31 (31 )
Realized and unrealized (gains) losses on financial instruments, net 61 61
Noncash interest expense (benefit) 3 1 2 6
Deferred income tax expense (benefit) 215 23 (62 ) 176
Intergroup tax allocation (9 ) (33 ) 42
Intergroup tax payments 4 15 (19 )
Other charges (credits), net 2 (3 ) (3 ) (4 )
Changes in operating assets and liabilities
Current and other assets (15 ) (51 ) 29 (37 )
Payables and other liabilities   (39 ) 24   (120 ) (135 )
Net cash provided (used) by operating activities   785   (14 ) (32 ) 739  
Cash flows from investing activities:
Investments in equity affiliates and debt and equity securities (434 ) (2 ) (6 ) (442 )
Cash proceeds from the sale of investments 5 1 6
Net cash paid for the acquisition of Formula 1 (1,647 ) (1,647 )
Capital expended for property and equipment (119 ) (145 ) (2 ) (266 )
Other investing activities, net   (114 ) 5   (10 ) (119 )
Net cash provided (used) by investing activities   (667 ) (137 ) (1,664 ) (2,468 )
Cash flows from financing activities:
Borrowings of debt 980 214 1,403 2,597
Repayments of debt (376 ) (42 ) (1,373 ) (1,791 )
Proceeds from issuance of Series C Liberty Formula One common stock 1,938 1,938
Subsidiary shares repurchased by subsidiary (784 ) (784 )
Cash dividends paid by subsidiary (30 ) (30 )
Taxes paid in lieu of shares issued for stock-based compensation (29 ) (3 ) (32 )
Other financing activities, net   7     1   8  
Net cash provided (used) by financing activities   (232 ) 172   1,966   1,906  
Effect of foreign exchange rates on cash, cash equivalents and
restricted cash
5 5
Net increase (decrease) in cash, cash equivalents and restricted cash (114 ) 21 275 182
Cash, cash equivalents and restricted cash at beginning of period   297   107   168   572  
Cash, cash equivalents and restricted cash at end of period $ 183   128   443   754  
 

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 June 30, 2017 and June 30, 2018, respectively.

 

QUARTERLY SUMMARY

       
(amounts in millions) 2Q17 2Q18
Liberty SiriusXM Group
Revenue $ 1,348 $ 1,432
 
Adjusted OIBDA 516 536
Depreciation and amortization (87 ) (92 )
Stock compensation expense (37 ) (42 )
Legal settlements and reserves(1)       (69 )
Operating Income $ 392   $ 333  
 
Formula One Group
Revenue $ 616 $ 585
 
Adjusted OIBDA 155 128
Depreciation and amortization (112 ) (116 )
Stock compensation expense   (10 )   (6 )
Operating Income (Loss) $ 33   $ 6  
 
Braves Group
Revenue $ 176 $ 182
 
Adjusted OIBDA 27 63
Depreciation and amortization (24 ) (23 )
Stock compensation expense   (6 )   (5 )
Operating Income (Loss) $ (3 ) $ 35  
 
Liberty Media Corporation (Consolidated)
Revenue $ 2,140 $ 2,199
 
Adjusted OIBDA 698 727
Depreciation and amortization (223 ) (231 )
Stock compensation expense (53 ) (53 )
Legal settlements and reserves       (69 )
Operating Income $ 422   $ 374  

______________________________________________

(1)     During the second quarter of 2018, SiriusXM recorded a $69 million
charge related to a legal settlement that resolved all outstanding
claims, including ongoing audits, under its statutory license for
sound recordings for the period from January 1, 2007 through
December 31, 2017.
 

SCHEDULE 2

This press release also includes a presentation of adjusted EBITDA of
SiriusXM, 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 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
SiriusXM's business. SiriusXM believes adjusted EBITDA is a useful
measure of the underlying trend of its operating performance, which
provides useful information about its 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 its current enterprise value
and to make investment decisions. As a result 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 its
business. SiriusXM also believes the exclusion of the legal settlements
and reserves related to the historical use of sound recordings, loss on
extinguishment of debt 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 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 operating results after giving effect for
these costs, should refer to net income as disclosed in SiriusXM's
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
the adjusted EBITDA is calculated as follows:

 
  Unaudited
For the Three Months Ended
June 30,
2017   2018
($ in thousands)
Net income: $ 202,109 $ 292,352
Add back items excluded from Adjusted EBITDA:
Purchase price accounting adjustments:
Revenues 1,813 1,813
Sound recording legal settlements and reserves(1) 69,144
Share-based payment expense 30,251 36,215
Depreciation and amortization 73,519 74,623
Interest expense 82,794 86,917
Other (income) expense 11,937 (88,212 )
Income tax expense   119,513   70,570  
Adjusted EBITDA $ 521,936 $ 543,422  

________________________________

(1)    

During the second quarter of 2018, SiriusXM recorded a $69 million
charge related to a legal settlement that resolved all outstanding
claims, including ongoing audits, under its statutory license for
sound recordings for the period from January 1, 2007 through
December 31, 2017.

 

SCHEDULE 3

This press release also includes a presentation of free cash flow of
SiriusXM, which is a non-GAAP financial measure used by SiriusXM,
together with a reconciliation to SiriusXM's stand-alone cash flow
provided by operating activities, as determined under GAAP. SiriusXM's
free cash flow is derived from cash flow provided by operating
activities, net of additions to property and equipment and restricted
and other investment activity. Free cash flow is a metric that
SiriusXM's management and board of directors use to evaluate the cash
generated by its operations, net of capital expenditures and other
investment activity. In a capital intensive business, with significant
investments in satellites, SiriusXM looks at its operating cash flow,
net of these investing cash outflows, to determine cash available for
future subscriber acquisition and capital expenditures, to repurchase or
retire debt, to acquire other companies and to evaluate its ability to
return capital to stockholders. SiriusXM excludes from free cash flow
certain items that do not relate to the on-going performance of its
business, such as cash outflows for acquisitions, strategic investments
and net loan activity with related parties. SiriusXM believes free cash
flow is an indicator of the long-term financial stability of its
business. Free cash flow, which is reconciled to "Net cash provided by
operating activities," is a Non-GAAP financial measure. This measure can
be calculated by deducting amounts under the captions "Additions to
property and equipment" and deducting or adding Restricted and other
investment activity from "Net cash provided by operating activities"
from the unaudited consolidated statements of cash flows. Free cash flow
should be used in conjunction with other GAAP financial performance
measures and may not be comparable to free cash flow measures presented
by other companies. Free cash flow should be viewed as a supplemental
measure rather than an alternative measure of cash flows from operating
activities, as determined in accordance with GAAP. Free cash flow is
limited and does not represent remaining cash flows available for
discretionary expenditures due to the fact that the measure does not
deduct the payments required for debt maturities. SiriusXM believes free
cash flow provides useful supplemental information to investors
regarding its current cash flow, along with other GAAP measures (such as
cash flows from operating and investing activities), to determine its
financial condition, and to compare its operating performance to other
communications, entertainment and media companies. Free cash flow is
calculated as follows:

 
      Unaudited
For the Three Months Ended
June 30,
2017   2018
($ in thousands)
Cash flow information
Net cash provided by operating activities $ 483,211 $ 579,418
Net cash used in investing activities $ (606,862 ) $ (99,313 )
Net cash used in financing activities $ (63,667 ) $ (494,447 )
Free cash flow
Net cash provided by operating activities $ 483,211 $ 579,418
Additions to property and equipment (66,152 ) (92,868 )
Purchases of restricted and other investments   (334 )   (307 )
Free cash flow $ 416,725   $ 486,243  
 

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