EXHIBIT 99.1 ATTRIBUTED FINANCIAL INFORMATION FOR TRACKING STOCK GROUPS On May 9, 2006, we completed a restructuring and recapitalization pursuant to which we issued two new tracking stocks, one ("Liberty Interactive Stock") intended to reflect the separate performance of our businesses engaged in video and on-line commerce, including our subsidiaries, QVC, Inc., Provide Commerce, Inc. and BuySeasons, Inc. and our interests in IAC/InterActiveCorp and Expedia, Inc., the second ("Liberty Capital Stock") intended to reflect the separate performance of all of our assets and businesses not attributed to the Interactive Group. Each share of our existing Series A and Series B common stock was exchanged for .25 of a share of the same series of Liberty Interactive Stock and .05 of a share of the same series of Liberty Capital Stock. The following tables present our assets, liabilities, revenue, expenses and cash flows as of and for the three and nine months ended September 30, 2006 and 2005. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Interactive Group and the Capital Group, respectively. The financial information is derived from our unaudited financial statements for the nine months ended September 30, 2006 included in this Quarterly Report on Form 10-Q. The attributed financial information presented in the tables has been prepared assuming the restructuring had been completed as of January 1, 2005. Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Interactive Group and the Capital Group, the restructuring does not affect the ownership or the respective legal title to our assets or responsibility for our liabilities. We and our subsidiaries each continue to be responsible for our respective liabilities. Holders of Liberty Interactive common stock and Liberty Capital common stock are holders of our common stock and continue to be subject to risks associated with an investment in our company and all of our businesses, assets and liabilities. The issuance of Liberty Interactive Stock and Liberty Capital Stock does not affect the rights of our creditors or creditors of our subsidiaries. 1 SUMMARY ATTRIBUTED FINANCIAL DATA INTERACTIVE GROUP Summary balance sheet data:
SEPTEMBER 30, DECEMBER 31, 2006 2005 -------------- ------------- AMOUNTS IN MILLIONS Current assets...................................... $ 2,819 2,716 Cost investments.................................... $ 1,991 2,084 Equity investments.................................. $ 1,341 1,229 Total assets........................................ $19,025 18,338 Long-term debt, including current portion........... $ 6,337 5,327 Deferred income tax liabilities..................... $ 3,075 3,104 Attributed net assets............................... $ 8,078 8,231
Summary operations data:
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2006 2005 2006 2005 -------- -------- -------- -------- AMOUNTS IN MILLIONS Revenue..................................................... $ 1,693 1,475 5,016 4,418 Cost of goods sold.......................................... (1,063) (942) (3,117) (2,778) Operating expenses.......................................... (142) (129) (415) (388) Selling, general and administrative expenses (1)............ (116) (109) (406) (337) Depreciation and amortization............................... (122) (117) (367) (346) ------- ------ ------ ------ Operating income........................................ 250 178 711 569 Interest expense............................................ (108) (93) (298) (274) Other income, net........................................... 25 29 95 5 Income tax expense.......................................... (45) (39) (167) (129) Minority interests in earnings of subsidiaries.............. (8) (8) (26) (36) ------- ------ ------ ------ Earnings before cumulative effect of accounting change.... 114 67 315 135 Cumulative effect of accounting change, net of taxes........ -- -- (87) -- ------- ------ ------ ------ Net earnings............................................ $ 114 67 228 135 ======= ====== ====== ======
- ------------------------ (1) Includes stock-based compensation of $(7) million and $10 million for the three months ended September 30, 2006 and 2005, respectively; and $37 million and $35 million for the nine months ended September 30, 2006 and 2005, respectively. 2 SUMMARY ATTRIBUTED FINANCIAL DATA CAPITAL GROUP Summary balance sheet data:
SEPTEMBER 30, DECEMBER 31, 2006 2005 -------------- ------------- AMOUNTS IN MILLIONS Current assets...................................... $ 3,042 2,580 Cost investments.................................... $18,271 16,413 Total assets........................................ $26,747 23,750 Long-term debt, including current portion........... $ 2,615 2,423 Deferred income tax liabilities..................... $ 6,594 5,624 Attributed net assets............................... $12,308 10,889
Summary operations data:
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2006 2005 2006 2005 -------- -------- -------- -------- AMOUNTS IN MILLIONS Revenue..................................................... $ 410 375 1,177 1,092 Operating expenses.......................................... (285) (270) (826) (767) Selling, general and administrative expenses (1)............ (99) (59) (238) (186) Depreciation and amortization............................... (47) (46) (135) (141) ----- ---- ----- ----- Operating loss.......................................... (21) -- (22) (2) Interest expense............................................ (69) (56) (187) (170) Realized and unrealized gains (losses) on derivative instruments, net.......................................... (78) (346) 74 185 Gain (losses) on dispositions, net.......................... 25 1 352 (400) Other income (expense), net................................. 51 (28) 137 31 Income tax benefit (expense)................................ 36 272 (78) 239 Minority interests in losses of subsidiaries................ 5 3 13 8 ----- ---- ----- ----- Earnings (loss) from continuing operations................ (51) (154) 289 (109) Earnings (loss) from discontinued operations, net of taxes..................................................... -- (7) -- 27 Cumulative effect of accounting change, net of taxes........ -- -- (2) -- ----- ---- ----- ----- Net earnings (loss)..................................... $ (51) (161) 287 (82) ===== ==== ===== =====
- ------------------------ (1) Includes stock-based compensation of $3 million and $5 million for the three months ended September 30, 2006 and 2005, respectively; and $12 million and $(3) million for the nine months ended September 30, 2006 and 2005, respectively. 3 BALANCE SHEET INFORMATION SEPTEMBER 30, 2006
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP ELIMINATIONS LIBERTY ----------- -------- ------------ ------------ AMOUNTS IN MILLIONS ASSETS Current assets: Cash and cash equivalents........................ $ 910 1,687 -- 2,597 Trade and other receivables, net................. 747 441 -- 1,188 Inventory, net................................... 905 -- -- 905 Derivative instruments (note 2).................. 16 212 -- 228 Current deferred tax assets...................... 183 -- (150) 33 Other current assets............................. 58 702 -- 760 ------- ------ ------ ------ Total current assets........................... 2,819 3,042 (150) 5,711 ------- ------ ------ ------ Investments in available-for-sale securities and other cost investments (note 3).................. 1,991 18,271 -- 20,262 Long-term derivative instruments (note 2).......... -- 1,306 -- 1,306 Investments in affiliates, accounted for using the equity method.................................... 1,341 484 -- 1,825 Property and equipment, net........................ 848 422 -- 1,270 Goodwill........................................... 5,742 2,054 -- 7,796 Trademarks......................................... 2,442 24 -- 2,466 Intangible assets subject to amortization, net..... 3,816 220 -- 4,036 Other assets, at cost, net of accumulated amortization..................................... 26 924 -- 950 ------- ------ ------ ------ Total assets................................... $19,025 26,747 (150) 45,622 ======= ====== ====== ====== LIABILITIES AND EQUITY Current liabilities: Accounts payable................................. $ 531 64 -- 595 Accrued liabilities.............................. 664 481 -- 1,145 Intergroup payable (receivable).................. (25) 25 -- -- Derivative instruments (note 2).................. -- 1,880 -- 1,880 Current portion of debt (note 4)................. 15 4 -- 19 Current deferred tax liabilities................. -- 150 (150) -- Other current liabilities........................ 34 140 -- 174 ------- ------ ------ ------ Total current liabilities...................... 1,219 2,744 (150) 3,813 ------- ------ ------ ------ Long-term debt (note 4)............................ 6,322 2,611 -- 8,933 Long-term derivative instruments (note 2).......... 11 1,136 -- 1,147 Deferred income tax liabilities (note 7)........... 3,075 6,594 -- 9,669 Other liabilities.................................. 225 1,161 -- 1,386 ------- ------ ------ ------ Total liabilities.............................. 10,852 14,246 (150) 24,948 Minority interests in equity of subsidiaries....... 95 193 -- 288 Equity/Attributed net assets....................... 8,078 12,308 20,386 ------- ------ ------ ------ Total liabilities and equity................... $19,025 26,747 (150) 45,622 ======= ====== ====== ======
4 STATEMENT OF OPERATIONS INFORMATION THREE MONTHS ENDED SEPTEMBER 30, 2006
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP LIBERTY ----------- -------- ------------ AMOUNTS IN MILLIONS Revenue: Net sales from electronic retailing....................... $1,693 -- 1,693 Communications and programming services................... -- 410 410 ------ ---- ----- 1,693 410 2,103 ------ ---- ----- Operating costs and expenses: Cost of sales--electronic retailing services.............. 1,063 -- 1,063 Operating................................................. 142 285 427 Selling, general and administrative (including stock-based compensation of $(7) million and $3 million for Interactive Group and Capital Group, respectively) (notes 5 and 6)......................................... 116 99 215 Depreciation and amortization............................. 122 47 169 ------ ---- ----- 1,443 431 1,874 ------ ---- ----- Operating income (loss)................................. 250 (21) 229 Other income (expense): Interest expense.......................................... (108) (69) (177) Dividend and interest income.............................. 10 62 72 Share of earnings (losses) of affiliates, net............. 8 (5) 3 Realized and unrealized gains (losses) on financial instruments, net........................................ 5 (78) (73) Gains on dispositions of assets, net...................... -- 25 25 Nontemporary declines in fair value of investments........ -- (4) (4) Other, net................................................ 2 (2) -- ------ ---- ----- (83) (71) (154) ------ ---- ----- Earnings (loss) from continuing operations before income taxes and minority interests.......................... 167 (92) 75 Income tax benefit (expense) (note 7)....................... (45) 36 (9) Minority interests in losses (earnings) of subsidiaries..... (8) 5 (3) ------ ---- ----- Net earnings (loss)..................................... $ 114 (51) 63 ====== ==== =====
5 STATEMENT OF OPERATIONS INFORMATION THREE MONTHS ENDED SEPTEMBER 30, 2005
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP LIBERTY ----------- -------- ------------ AMOUNTS IN MILLIONS Revenue: Net sales from electronic retailing....................... $1,475 -- 1,475 Communications and programming services................... -- 375 375 ------ ---- ----- 1,475 375 1,850 ------ ---- ----- Operating costs and expenses: Cost of sales--electronic retailing services.............. 942 -- 942 Operating................................................. 129 270 399 Selling, general and administrative (including stock-based compensation of $10 million and $5 million for Interactive Group and Capital Group, respectively (notes 5 and 6)................................................ 109 59 168 Depreciation and amortization............................. 117 46 163 ------ ---- ----- 1,297 375 1,672 ------ ---- ----- Operating income........................................ 178 -- 178 Other income (expense): Interest expense.......................................... (93) (56) (149) Dividend and interest income.............................. 10 46 56 Share of earnings (losses) of affiliates, net............. 7 (3) 4 Realized and unrealized gains (losses) on derivative instruments, net........................................ 14 (346) (332) Gains on dispositions, net................................ -- 1 1 Nontemporary declines in fair value of investments........ -- (68) (68) Other, net................................................ (2) (3) (5) ------ ---- ----- (64) (429) (493) ------ ---- ----- Earnings (loss) from continuing operations before income taxes and minority interests.......................... 114 (429) (315) Income tax benefit (expense) (note 7)....................... (39) 272 233 Minority interests in losses (earnings) of subsidiaries..... (8) 3 (5) ------ ---- ----- Earnings (loss) from continuing operations.............. 67 (154) (87) Loss from discontinued operations, net of taxes............. -- (7) (7) ------ ---- ----- Net earnings (loss)..................................... $ 67 (161) (94) ====== ==== =====
6 STATEMENT OF OPERATIONS INFORMATION NINE MONTHS ENDED SEPTEMBER 30, 2006
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP LIBERTY ----------- -------- ------------ AMOUNTS IN MILLIONS Revenue: Net sales from electronic retailing....................... $5,016 -- 5,016 Communications and programming services................... -- 1,177 1,177 ------ ----- ----- 5,016 1,177 6,193 ------ ----- ----- Operating costs and expenses: Cost of sales--electronic retailing services.............. 3,117 -- 3,117 Operating................................................. 415 826 1,241 Selling, general and administrative (including stock-based compensation of $37 million and $12 million for Interactive Group and Capital Group, respectively) (notes 5 and 6)......................................... 406 238 644 Depreciation and amortization............................. 367 135 502 ------ ----- ----- 4,305 1,199 5,504 ------ ----- ----- Operating income (loss)................................. 711 (22) 689 Other income (expense): Interest expense.......................................... (298) (187) (485) Dividend and interest income.............................. 29 140 169 Share of earnings of affiliates, net...................... 29 3 32 Realized and unrealized gains on financial instruments, net..................................................... 22 74 96 Gains on dispositions of assets, net...................... -- 352 352 Nontemporary declines in fair value of investments........ -- (4) (4) Other, net................................................ 15 (2) 13 ------ ----- ----- (203) 376 173 ------ ----- ----- Earnings from continuing operations before income taxes and minority interests................................ 508 354 862 Income tax expense (note 7)................................. (167) (78) (245) Minority interests in losses (earnings) of subsidiaries..... (26) 13 (13) ------ ----- ----- Earnings from continuing operations..................... 315 289 604 Cumulative effect of accounting change, net of taxes........ (87) (2) (89) ------ ----- ----- Net earnings............................................ $ 228 287 515 ====== ===== =====
7 STATEMENT OF OPERATIONS INFORMATION NINE MONTHS ENDED SEPTEMBER 30, 2005
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP LIBERTY ----------- -------- ------------ AMOUNTS IN MILLIONS Revenue: Net sales from electronic retailing....................... $4,418 -- 4,418 Communications and programming services................... -- 1,092 1,092 ------ ----- ----- 4,418 1,092 5,510 ------ ----- ----- Operating costs and expenses: Cost of sales--electronic retailing services.............. 2,778 -- 2,778 Operating................................................. 388 767 1,155 Selling, general and administrative (including stock-based compensation of $35 million and ($3) million for Interactive Group and Capital Group, respectively (notes 5 and 6)................................................ 337 186 523 Depreciation and amortization............................. 346 141 487 ------ ----- ----- 3,849 1,094 4,943 ------ ----- ----- Operating income (loss)................................. 569 (2) 567 Other income (expense): Interest expense.......................................... (274) (170) (444) Dividend and interest income.............................. 28 93 121 Share of earnings of affiliates, net...................... 5 10 15 Realized and unrealized gains (losses) on derivative instruments, net........................................ (37) 185 148 Gains (losses) on dispositions, net....................... 40 (400) (360) Nontemporary declines in fair value of investments........ -- (68) (68) Other, net................................................ (31) (4) (35) ------ ----- ----- (269) (354) (623) ------ ----- ----- Earnings (loss) from continuing operations before income taxes and minority interests.......................... 300 (356) (56) Income tax benefit (expense) (note 7)....................... (129) 239 110 Minority interests in losses (earnings) of subsidiaries..... (36) 8 (28) ------ ----- ----- Earnings (loss) from continuing operations.............. 135 (109) 26 Earnings from discontinued operations, net of taxes......... -- 27 27 ------ ----- ----- Net earnings (loss)..................................... $ 135 (82) 53 ====== ===== =====
8 STATEMENT OF CASH FLOWS INFORMATION NINE MONTHS ENDED SEPTEMBER 30, 2006
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP LIBERTY ----------- -------- ------------ AMOUNTS IN MILLIONS Cash flows from operating activities: Net earnings.............................................. $ 228 287 515 Adjustments to reconcile net earnings to net cash provided by operating activities: Cumulative effect of accounting change.................. 87 2 89 Depreciation and amortization........................... 367 135 502 Stock-based compensation................................ 37 12 49 Payments of stock-based compensation.................... (105) (4) (109) Noncash interest expense................................ 3 78 81 Share of earnings of affiliates, net.................... (29) (3) (32) Realized and unrealized gains on financial instruments, net................................................... (22) (74) (96) Gains on disposition of assets, net..................... -- (352) (352) Nontemporary declines in fair value of investments...... -- 4 4 Minority interests in earnings (losses) of subsidiaries.......................................... 26 (13) 13 Deferred income tax expense (benefit)................... (112) 13 (99) Other noncash charges (credits), net.................... (13) 44 31 Changes in operating assets and liabilities, net of the effects of acquisitions: Current assets........................................ (66) (149) (215) Payables and other current liabilities................ (164) 430 266 ------ ----- ------ Net cash provided by operating activities........... 237 410 647 ------ ----- ------ Cash flows from investing activities: Cash proceeds from dispositions........................... -- 925 925 Net proceeds from settlement of derivatives............... -- 330 330 Cash paid for acquisitions, net of cash acquired.......... (436) (430) (866) Capital expended for property and equipment............... (170) (64) (234) Net sales (purchases) of short term investments........... 23 (11) 12 Investments in and loans to cost and equity investees..... (5) (173) (178) Repurchases of subsidiary common stock.................... (314) (3) (317) Other investing activities, net........................... (9) 67 58 ------ ----- ------ Net cash provided (used) by investing activities.... (911) 641 (270) ------ ----- ------ Cash flows from financing activities: Borrowings of debt........................................ 2,376 1 2,377 Repayments of debt........................................ (1,381) (2) (1,383) Repurchases of Liberty common stock....................... (731) -- (731) Intergroup cash transfers, net............................ 293 (293) -- Other financing activities, net........................... 71 (71) -- ------ ----- ------ Net cash provided (used) by financing activities.... 628 (365) 263 ------ ----- ------ Effect of foreign currency rates on cash.................... 11 -- 11 ------ ----- ------ Net increase (decrease) in cash and cash equivalents....................................... (35) 686 651 Cash and cash equivalents at beginning of period.... 945 1,001 1,946 ------ ----- ------ Cash and cash equivalents at end period............. $ 910 1,687 2,597 ====== ===== ======
9 STATEMENT OF CASH FLOWS INFORMATION NINE MONTHS ENDED SEPTEMBER 30, 2005
ATTRIBUTED (NOTE 1) ---------------------- INTERACTIVE CAPITAL CONSOLIDATED GROUP GROUP LIBERTY ----------- -------- ------------ AMOUNTS IN MILLIONS Cash flows from operating activities: Net earnings (loss)....................................... $ 135 (82) 53 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Earnings from discontinued operations................... -- (27) (27) Depreciation and amortization........................... 346 141 487 Stock compensation...................................... 35 (3) 32 Payments of stock compensation.......................... -- (96) (96) Noncash interest expense................................ 2 73 75 Share of earnings of affiliates, net.................... (5) (10) (15) Realized and unrealized losses (gains) on derivative instruments, net...................................... 37 (185) (148) Losses (gains) on disposition of assets, net............ (40) 400 360 Nontemporary declines in fair value of investments...... -- 68 68 Minority interests in earnings (losses) of subsidiaries.......................................... 36 (8) 28 Deferred income tax benefit............................. (133) (171) (304) Other noncash charges, net.............................. 32 54 86 Changes in operating assets and liabilities, net of the effect of acquisitions and dispositions: Current assets........................................ (3) (104) (107) Payables and other current liabilities................ (9) 112 103 ------- ---- ------ Net cash provided by operating activities........... 433 162 595 ------- ---- ------ Cash flows from investing activities: Cash proceeds from dispositions........................... -- 54 54 Premium proceeds from origination of derivatives.......... -- 437 437 Net proceeds from settlement of derivatives............... -- 318 318 Cash paid for acquisitions, net of cash acquired.......... -- (5) (5) Capital expended for property and equipment............... (93) (65) (158) Net purchases of short term investments................... -- (73) (73) Repurchases of subsidiary common stock.................... (52) (10) (62) Other investing activities, net........................... (3) (4) (7) ------- ---- ------ Net cash provided (used) by investing activities.... (148) 652 504 ------- ---- ------ Cash flows from financing activities: Borrowings of debt........................................ 800 61 861 Repayments of debt........................................ (1,399) (60) (1,459) Intergroup cash transfers, net............................ 463 (463) -- Other financing activities, net........................... (10) 72 62 ------- ---- ------ Net cash used by financing activities............... (146) (390) (536) ------- ---- ------ Effect of foreign currency rates on cash.................... (35) -- (35) ------- ---- ------ Net cash provided to discontinued operations: Cash provided by operating activities..................... -- 31 31 Cash used by investing activities......................... -- (47) (47) Cash provided by financing activities..................... -- -- -- Change in available cash held by discontinued operations.............................................. -- (190) (190) ------- ---- ------ Net cash provided to discontinued operations........ -- (206) (206) ------- ---- ------ Net increase in cash and cash equivalents......... 104 218 322 Cash and cash equivalents at beginning of period.......................................... 855 532 1,387 ------- ---- ------ Cash and cash equivalents at end of period........ $ 959 750 1,709 ======= ==== ======
10 NOTES TO ATTRIBUTED FINANCIAL INFORMATION (1) The assets attributed to our Interactive Group as of September 30, 2006 include our 100% interests in QVC, Inc., Provide Commerce, Inc. and BuySeasons, Inc., our approximate 22% interest in IAC/InterActiveCorp and our approximate 20% interests in GSI Commerce, Inc. and Expedia, which we account for as equity affiliates. Accordingly, the accompanying attributed financial information for the Interactive Group includes our investments in IAC/InterActiveCorp, Expedia and GSI, as well as the assets, liabilities, revenue, expenses and cash flows of QVC, Provide and BuySeasons. We have also attributed certain of our debt obligations (and related interest expense) to the Interactive Group based upon a number of factors, including the cash flow available to the Interactive Group and its ability to pay debt service and our assessment of the optimal capitalization for the Interactive Group. The specific debt obligations attributed to each of the Interactive Group and the Capital Group are described in note 4 below. In addition, we have allocated certain corporate general and administrative expenses between the Interactive Group and the Capital Group as described in note 5 below. The Interactive Group will focus on video and on-line commerce businesses. Accordingly, we expect that businesses that we may acquire in the future that we believe are complementary to this strategy will also be attributed to the Interactive Group. The Capital Group consists of all of our businesses not included in the Interactive Group, including our consolidated subsidiaries Starz Entertainment, LLC, FUN Technologies, Inc., TruePosition, Inc., Starz Media, LLC, On Command Corporation and OpenTV Corp. and our cost and equity investments in GSN, LLC, WildBlue Communications, Inc. and others. Accordingly, the accompanying attributed financial information for the Capital Group includes these investments and the assets, liabilities, revenue, expenses and cash flows of these consolidated subsidiaries. In addition, we have attributed to the Capital Group all of our notes and debentures (and related interest expense) that have not been attributed to the Interactive Group. See note 4 below for the debt obligations attributed to the Capital Group. Any businesses that we may acquire in the future that are not attributed to the Interactive Group will be attributed to the Capital Group. While we believe the allocation methodology described above is reasonable and fair to each group, we may elect to change the allocation methodology in the future. In the event we elect to transfer assets or businesses from one group to the other, such transfer would be made on a fair value basis and would be accounted for as a short-term loan unless our board of directors determines to account for it as a long-term loan or through an inter-group interest. (2) Derivative instruments attributed to the Interactive Group are comprised of total return bond swaps and interest rate swaps that are related to the parent company debt attributed to the Interactive Group. (3) The carrying value and unrealized holding gains as of September 30, 2006 of cost investments attributed to the Interactive Group are presented below:
UNREALIZED CARRYING HOLDING VALUE GAINS -------- ---------- AMOUNTS IN MILLIONS IAC/InterActiveCorp...................................... $1,991 426 ====== ===
11 NOTES TO ATTRIBUTED FINANCIAL INFORMATION (4) Debt attributed to the Interactive Group and the Capital Group is comprised of the following:
SEPTEMBER 30, 2006 ---------------------- OUTSTANDING CARRYING PRINCIPAL VALUE ----------- -------- AMOUNTS IN MILLIONS Interactive Group 7.875% Senior Notes due 2009.......................... $ 670 667 7.75% Senior Notes due 2009........................... 234 234 5.7% Senior Notes due 2013............................ 802 800 8.5% Senior Debentures due 2029....................... 500 495 8.25% Senior Debentures due 2030...................... 902 895 QVC bank credit facility.............................. 3,175 3,175 Other subsidiary debt................................. 71 71 ------- ----- Total Interactive Group debt........................ 6,354 6,337 ------- ----- Capital Group 4% Senior Exchangeable Debentures due 2029............ 869 254 3.75% Senior Exchangeable Debentures due 2030......... 810 233 3.5% Senior Exchangeable Debentures due 2031.......... 600 237 3.25% Senior Exchangeable Debentures due 2031......... 551 118 0.75% Senior Exchangeable Debentures due 2023......... 1,750 1,615 Subsidiary debt....................................... 158 158 ------- ----- Total Capital Group debt............................ 4,738 2,615 ------- ----- Total debt.............................................. $11,092 8,952 ======= =====
(5) Cash compensation expense for our corporate employees has been allocated between the Interactive Group and the Capital Group based on the estimated percentage of time spent providing services for each group. Stock-based compensation expense for our corporate employees has been allocated between the Interactive Group and the Capital Group based on the compensation derived from the equity awards for the respective tracking stock. Other general and administrative expenses are charged directly to the groups whenever possible and are otherwise allocated based on estimated usage or some other reasonably determined methodology. Amounts allocated from the Capital Group to the Interactive Group for the nine months ended September 30, 2006 and 2005 were $10 million and $3 million, respectively. While we believe that this allocation method is reasonable and fair to each group, we may elect to change the allocation methodology or percentages used to allocate general and administrative expenses in the future. (6) Prior to January 1, 2006, we accounted for compensation expense related to stock options and stock appreciation rights pursuant to the recognition and measurement provisions of Accounting Principles Board Opinion No. 25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" ("APB Opinion No. 25"). Compensation was recognized based upon the percentage of the options that were vested and the difference between the market price of the underlying common stock and the exercise price of the options at the balance sheet date. The following tables for the three and nine months ended September 30, 2005 illustrate the effect on earnings from continuing operations if we had applied the fair value recognition provisions of Statement of Financial Accounting Standards No. 123, "ACCOUNTING FOR STOCK-BASED COMPENSATION," ("Statement 123") to our options. Compensation expense for SARs and options 12 NOTES TO ATTRIBUTED FINANCIAL INFORMATION with tandem SARs is the same under APB Opinion No. 25 and Statement 123. Accordingly, no pro forma adjustment for such awards is included in the following table.
THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, 2005 2005 -------------- -------------- AMOUNTS IN MILLIONS Interactive Group Earnings from continuing operations, as reported....................................... $ 67 135 Add stock-based compensation as determined under the intrinsic value method, net of taxes........................................ -- 1 Deduct stock-based compensation as determined under the fair value method, net of taxes.... (11) (18) ----- ---- Pro forma earnings from continuing operations.... $ 56 118 ===== ==== Capital Group Loss from continuing operations, as reported..... $(154) (109) Add stock-based compensation as determined under the intrinsic value method, net of taxes........................................ 1 2 Deduct stock-based compensation as determined under the fair value method, net of taxes.... (18) (28) ----- ---- Pro forma loss from continuing operations........ $(171) (135) ===== ====
(7) We have accounted for income taxes for the Interactive Group and the Capital Group in the accompanying attributed financial information in a manner similar to a stand-alone company basis. To the extent this methodology differs from our tax sharing policy, differences have been reflected in the attributed net assets of the groups. (8) The Liberty Interactive Stock and the Liberty Capital Stock have voting and conversion rights under our amended charter. Following is a summary of those rights. Holders of Series A common stock of each group are entitled to one vote per share and holders of Series B common stock of each group are entitled to ten votes per share. Holders of Series C common stock of each group, if issued, will be entitled to 1/100th of a vote per share in certain limited cases and will otherwise not be entitled to vote. In general, holders of Series A and Series B common stock vote as a single class. In certain limited circumstances, the board may elect to seek the approval of the holders of only Series A and Series B Liberty Interactive Stock or the approval of the holders of only Series A and Series B Liberty Capital Stock. At the option of the holder, each share of Series B common stock is convertible into one share of Series A common stock of the same group. At the discretion of our board, Liberty Interactive Stock may be converted into Liberty Capital Stock at any time following the first anniversary of the restructuring. In addition, following certain group dispositions and subject to certain limitations, Liberty Capital Stock may be converted into Liberty Interactive Stock, and Liberty Interactive Stock may be converted into Liberty Capital Stock. 13