Quarterly report pursuant to Section 13 or 15(d)

Investments In Affiliates Accounted For Using The Equity Method

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Investments In Affiliates Accounted For Using The Equity Method
6 Months Ended
Jun. 30, 2011
Investments In Affiliates Accounted For Using The Equity Method  
Investments In Affiliates Accounted For Using The Equity Method

(7)        Investments in Affiliates Accounted for Using the Equity Method

Liberty has various investments accounted for using the equity method.  The following table includes Liberty's carrying amount and percentage ownership of the more significant investments in affiliates at June 30, 2011 and the carrying amount at December 31, 2010:

 

 

 

 

December 31, 

 

                        June 30, 2011                         

       2010       

 

  Percentage 

    Market  

    Carrying  

    Carrying     

 

  ownership  

     Value   

     amount   

     amount     

 

                                          dollar amounts in millions               

Interactive Group

 

 

 

 

Expedia

25%

$        2,007

$            753

              710

Other

various

            N/A

              265

              239

Capital Group

 

 

 

 

SIRIUS XM

40%

$        5,665

                 --

                  5

Live Nation (a)

21%

$           449

              371

                 --

Other

various

            N/A

                89

                86

 

 

 

$          1,478

           1,040

The following table presents Liberty's share of earnings (losses) of affiliates:

 

 

       Three months ended

         Six months ended

 

                June 30,               

                June 30,              

 

       2011    

       2010    

       2011    

      2010     

 

 

amounts in millions

Interactive Group

 

 

 

 

 

Expedia

$              35

               28

               48

               42

 

Other

                  2

                8

                9

               17

 

Capital Group

 

 

 

 

 

SIRIUS XM

                 (1)

                8

               (8)

                --

 

Live Nation (a)

               (22)

                --

              (45)

                --

 

Other

                  1

               (5)

                3

              (11)

 

 

$              15

               39

                7

               48

 

 

                                               

(a)During June 2011, Liberty acquired an additional 5.5 million shares of Live Nation which increased our ownership percentage above 20% of the outstanding voting shares.  Due to the presumption that an entity with an ownership percentage greater than 20% has significant influence and no other factors would rebut that presumption, the Company is accounting for the investment as an equity method affiliate.  The Company has elected to record its share of earnings (loss) for Live Nation on a three-month lag due to timeliness considerations.  Increases in ownership which result in a change to the equity method of accounting generally require retroactive recognition of an investment's share of earnings (loss) in prior periods.  Due to the relative insignificance of our share of losses for Live Nation in previous periods, both quantitatively and qualitatively, the Company has recorded such amounts in the current year.  Approximately $12 million of the losses recorded for the six months ended June 30, 2011 relate to the prior year.

 


 

Expedia

Summarized unaudited financial information for Expedia is as follows:

 

         Expedia Consolidated Balance Sheets

 

 

 

    June 30,     

December 31,

 

       2011       

       2010     

 

 

amounts in millions

 

 

 

 

 

Current assets

$             2,954

            1,702

 

Property and equipment, net

                 318

              277

 

Goodwill

              3,679

            3,642

 

Intangible assets

                 793

              798

 

Other assets

                 301

              232

 

      Total assets

$             8,045

            6,651

 

 

 

 

 

Current liabilities

$             2,998

            1,889

 

Deferred income taxes

                 266

              248

 

Long-term debt

              1,645

            1,645

 

Other liabilities

                 122

              132

 

Noncontrolling interest

                 134

                64

 

Equity

              2,880

            2,673

 

      Total liabilities and equity

$             8,045

            6,651

 

 


          Expedia Consolidated Statements of Operations

 

 

          Six months ended       

 

                 June 30,              

 

       2011    

      2010     

 

amounts in millions

 

 

 

               Revenue

$         1,846

         1,552

               Cost of revenue

             (376)

           (327)

                     Gross profit

           1,470

         1,225

               Selling, general and administrative expenses

          (1,116)

           (902)

               Amortization

              (15)

             (17)

               Restructuring charges and other

                (4)

               --

                     Operating income

              335

            306

 

 

 

               Interest expense

              (62)

             (41)

               Other income (expense), net

                (3)

                3

               Income tax expense

              (77)

             (92)

                     Net earnings

              193

            176

          Net earnings attributable to noncontrolling interests

                (1)

               (2)

          Net earnings attributable to Expedia, Inc.

$            192

            174

Sirius XM Radio Inc.

 

Based on Liberty's voting rights and its conclusion that the SIRIUS XM Preferred Stock is in-substance common stock, Liberty accounts for its investment in the SIRIUS XM Preferred Stock using the equity method of accounting.  Liberty has elected to record its share of earnings (loss) for SIRIUS XM on a three-month lag due to timeliness considerations.  As of March 31, 2011 and 2010 SIRIUS XM had total assets of $7,229 million and $7,740 million, respectively, and total liabilities of $6,930 million and $7,588 million, respectively.  SIRIUS XM's net income attributable to common shareholders was $78 million and $42 million for the three months ended March 31, 2011 and 2010.

 


 

As of June 30, 2011, the SIRIUS XM Preferred Stock had a market value of $5,665 million based on the value of the common stock into which it is convertible.