| Investments In Affiliates Accounted For Using The Equity Method |
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 March 31, 2012 and the carrying amount at December 31, 2011:
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March 31, 2012 |
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December 31, 2011 |
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Percentage
ownership
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Market
value (level 1)
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Carrying
amount
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Carrying
amount
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dollars in millions |
Expedia, Inc. (a) |
27 |
% |
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$ |
1,157 |
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$ |
616 |
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|
621 |
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TripAdvisor, Inc. (b) |
26 |
% |
|
1,235 |
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|
197 |
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|
184 |
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HSN, Inc. |
34 |
% |
|
761 |
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|
229 |
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|
217 |
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Other |
various |
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N/A |
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110 |
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113 |
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$ |
1,152 |
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|
1,135 |
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(a) |
Liberty entered into a forward sales contract on 12 million shares of Expedia common stock in March 2012 at a per share forward price of $34.316. The forward contract is settleable in October 2012 in stock, net-share settlement or cash, at the election of Liberty. Liberty delivered 12 million shares of Expedia as collateral under the forward contract. The carrying value of the shares, held as collateral by the counterparty, was $214 million and the fair value was $401 million as of March 31, 2012.
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(b) |
In May 2012, Liberty sold approximately 8.5 million shares of TripAdvisor, Inc. for cash proceeds of $338 million.
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The following table presents Liberty's share of earnings (losses) of affiliates:
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Three months
ended
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March 31, |
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2012 |
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2011 |
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amounts in millions |
Expedia (1) |
$ |
(2 |
) |
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13 |
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TripAdvisor, Inc. (1) |
11 |
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— |
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HSN, Inc. |
15 |
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13 |
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Other |
(13 |
) |
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(6 |
) |
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$ |
11 |
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20 |
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(1) |
During the fourth quarter of 2011 Expedia, Inc. completed the pro-rata split-off of TripAdvisor, Inc., its wholly owned subsidiary. As of the TripAdvisor, Inc. split-off date, the Company had a 26% economic ownership interest in each of Expedia, Inc. and TripAdvisor, Inc. and, through ownership of class B common stock with 10 votes per share, had an approximate 58% voting interest in each respective company. Through a stockholders agreement, Liberty has given Barry Diller, Chairman and Senior Executive Officer of both companies, the right to vote all of the common stock owned by Liberty. Through a governance agreement, Liberty has the right to nominate up to 20% of the board members for each entity and currently two members on each company's 10 member board were nominated by Liberty. Through Liberty's board representation, it was determined that the Company has significant influence over each respective company and continues to apply the equity method of accounting as a result. |
Expedia
Summarized unaudited financial information for Expedia is as follows:
Expedia Consolidated Balance Sheets
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March 31, 2012 |
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December 31, 2011 |
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amounts in millions |
Current assets |
$ |
2,585 |
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2,274 |
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Property and equipment, net |
344 |
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320 |
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Goodwill |
2,889 |
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2,877 |
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Intangible assets |
739 |
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744 |
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Other assets |
261 |
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290 |
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Total assets |
$ |
6,818 |
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6,505 |
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Current liabilities |
$ |
3,002 |
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2,553 |
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Deferred income taxes |
288 |
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280 |
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Long-term debt |
1,249 |
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1,249 |
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Other liabilities |
123 |
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118 |
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Noncontrolling interest |
107 |
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105 |
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Equity |
2,049 |
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2,200 |
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Total liabilities and equity |
$ |
6,818 |
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6,505 |
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Expedia Consolidated Statements of Operations
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Three months ended |
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March 31, |
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2012 |
|
2011 |
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amounts in millions |
Revenue |
$ |
816 |
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|
728 |
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Cost of revenue |
(200 |
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|
(176 |
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Gross profit |
616 |
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|
552 |
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Selling, general and administrative expenses |
(564 |
) |
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(509 |
) |
Amortization |
(3 |
) |
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(6 |
) |
Restructuring charges and other |
— |
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|
(2 |
) |
Operating income |
49 |
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|
35 |
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Interest expense |
(21 |
) |
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(23 |
) |
Other income (expense), net |
(1 |
) |
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(3 |
) |
Income tax (expense) benefit |
(5 |
) |
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(3 |
) |
Income from continuing operations |
22 |
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6 |
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Earnings (loss) from discontinued operations |
(24 |
) |
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46 |
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Net earnings (loss) |
(2 |
) |
|
52 |
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Less net earnings (loss) attributable to noncontrolling interests |
(1 |
) |
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— |
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Net earnings (loss) attributable to Expedia, Inc. shareholders |
$ |
(3 |
) |
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52 |
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