Annual report pursuant to Section 13 and 15(d)

Acquistions

v3.6.0.2
Acquistions
 12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Business Combination Disclosure

 

 

 

(5)  Acquisitions

On October 1, 2015, Liberty acquired zulily for consideration of approximately $2.3 billion, comprised of $9.375 of cash and 0.3098 newly issued shares of QVCA for each zulily share, with cash paid in lieu of any fractional shares.  The fair value of the issued shares was determined based on the trading price of QVCA shares on the last trading day prior to the acquisition. 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 11). zulily is attributed to the QVC Group.  

The final purchase price allocation for zulily is as follows (amounts in millions):

 

 

 

 

 

 

Cash and cash equivalents

 

$
341

 

Property and equipment

 

 
105

 

Other assets

 

 
46

 

Goodwill

 

 
917

 

Trademarks

 

 
870

 

Intangible assets subject to amortization

 

 
790

 

Accounts payable & Accrued liabilities

 

 
(145)

 

Other liabilities assumed

 

 
(65)

 

Deferred tax liabilities

 

 
(607)

 

 

 

$
2,252

 

Intangible assets acquired during 2015 were comprised of customer relationships of $490 million with a weighted average life of approximately 4 years, email lists of $250 million with a weighted average life of approximately 2 years, and capitalized software of $50 million with a weighted average life of approximately 3 years. None of the acquired goodwill is deductible for tax purposes. 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.

Included in net earnings (loss) from continuing operations for the year ended December 31, 2015 is $34 million related to zulily’s operations since the date of acquisition.

The Pro Forma revenue and net earnings from continuing operations of Liberty, prepared utilizing the historical financial statements of zulily, giving effect to purchase accounting related adjustments made at the time of acquisition, as if the transaction discussed above occurred on January 1, 2014, are as follows:

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

 

 

    

2015

    

2014

 

 

 

amounts in millions

 

 

(unaudited)

Revenue

 

$
10,907

 
11,700

 

Net earnings (loss) from continuing operations

 

 
750

 
419

 

The Pro Forma information is not representative of Liberty’s future financial position, future results of operations or future cash flows nor does it reflect what Liberty’s financial position, results of operations or cash flows would have been as if the transaction had happened previously and Liberty controlled zulily during the periods presented.