Liberty Media Corporation Provides Third Quarter Supplemental
Financial Information and 2003 Guidance Important Notice: Liberty
Media Corporation ("Liberty") (NYSE: L, LMC.B) President and CEO,
Robert Bennett, will discuss Liberty's supplemental financial
information and guidance in a conference call which will begin at
12:00 p.m. (ET) November 14, 2003. The call can be accessed by
dialing (719) 457-2662 at least 10 minutes prior to the start time.
Replays of the conference call can be accessed from 3:00 p.m. (ET)
on November 14, 2003 through 5:00 p.m. (ET) November 21, 2003, by
dialing (719) 457-0820 plus the pass code 781939#. The call will
also be broadcast live across the internet. To access the web cast
go to http://www.libertymedia.com/investor_relations/default.htm.
Links to this press release will also be available on the Liberty
Media web site. ENGLEWOOD, Colo., Nov. 13 /PRNewswire-FirstCall/ --
Liberty filed its Form 10-Q with the Securities and Exchange
Commission for the quarter ended September 30, 2003. The following
release is being provided to supplement the information provided to
investors in Liberty's Form 10-Q as filed with the SEC. This
information is not meant to serve as a release of financial results
for Liberty. For information regarding Liberty's financial results,
investors should refer to Liberty's financial statements included
in its Form 10-Q. As a supplement to Liberty's consolidated
statements of operations, the following is a presentation of
financial information for certain of Liberty's privately held
assets including: -- QVC, Inc., a consolidated, 98% owned
subsidiary of Liberty; -- Starz Encore Group LLC ("SEG"), a
consolidated, wholly-owned subsidiary of Liberty; -- Discovery
Communications, Inc. ("DCI" or "Discovery"); Jupiter
Telecommunications Co., Ltd. ("J-COM"); and Jupiter Programming
Co., Ltd. ("JPC"), each a privately held equity affiliate of
Liberty. The following tables and comments compare financial
information for the three months ended September 30, 2003 to the
same period for 2002. Operating expense, as defined by Liberty and
used in the following tables, consists of operating, selling,
general and administrative expenses and excludes depreciation,
amortization, stock compensation and other non-cash charges taken
into account in determining operating income. Operating cash flow,
as defined by Liberty and used in the following tables, represents
revenue less operating expense. Please see page 15 and Schedule 1
at the end of this document for a discussion of SEC rules and
guidance regarding non-GAAP measures and actions taken by Liberty
to comply with those rules and guidance, as well as for
reconciliations for the appropriate periods in 2003 and 2002 of
operating cash flow to operating income for each identified entity.
The selected financial information presented for each of the equity
affiliates listed above was obtained directly from those
affiliates. Liberty does not control the decision-making processes
or business management practices of its equity affiliates.
Accordingly, Liberty is reliant on the management of these
affiliates and their independent accountants to provide accurate
financial information prepared in accordance with generally
accepted accounting principles that Liberty uses in the application
of the equity method. As a result, Liberty makes no representations
as to whether such information presented on a stand-alone basis has
been prepared in accordance with GAAP. Liberty is not aware,
however, of any errors in or possible misstatements of the
financial information provided to it by its equity affiliates that
would have a material effect on Liberty's consolidated financial
statements. Further, Liberty could not, among other things, cause
any noncontrolled affiliate to distribute to Liberty its
proportionate share of the revenue or operating cash flow of such
affiliate. QVC, INC. On September 17, 2003, Liberty announced that
it had completed its previously announced acquisition of Comcast
Corporation's approximate 56.5% ownership stake in QVC, Inc. QVC is
now 98% owned by Liberty with the remainder owned by members of the
QVC management team. At closing, Liberty delivered to Comcast
approximately 218 million shares of Liberty Media Series A common
stock, a three-year note payable in the amount of $4.0 billion and
$1.35 billion in cash. QVC, Inc. Summary Financial Information Q3
03 Q3 02 (amounts in millions) Revenue: Domestic $901 850
International 252 158 Total Revenue 1,153 1,008 Operating Expense:
Domestic 695 670 International 224 153 Total Operating Expense 919
823 Operating Cash Flow: Domestic 206 180 International 28 5 Total
Operating Cash Flow $234 185 Operating Income $191 158 Net Cash
$624 66 -- QVC's revenue and operating cash flow increased by 14%
and 26%, respectively. -- QVC's domestic revenue increased 6% and
operating cash flow increased 14%. The domestic revenue increase
was attributed to increased sales volume primarily in the areas of
apparel and accessories. The domestic operations shipped more than
22.5 million units during the quarter, an increase of 9.5%. The
average selling price declined 4.9% from $45.00 to $42.78. Gross
margins remained flat at 36.9%, however, through the benefits of
scale economics and cost control efforts, domestic operating cash
flow margins increased 170 basis points, of which 50 basis points
can be attributed to one-time expenses that occurred in the prior
year. -- QVC's international operations experienced positive
results for the quarter due to a combination of greater sales to
existing subscribers, new subscriber growth and favorable foreign
currency exchange rates. Revenue from international operations
increased 59% as a result of strong performance from each of the
international divisions. The average number of international
subscribers during the third quarter increased from 40.8 million to
47.1 million or 15%. Fueled by the increase in sales and higher
gross margin, the operating cash flow of the international
operations increased from $5 million to $28 million and each of the
international divisions is operating cash flow positive. The
international cash flow margin increased from 3.1% to 11.1%.
Excluding the effect of exchange rates, QVC's international revenue
growth was 48% and international operating cash flow growth was
427%. QVC - FY '03 Guidance The following estimates assume
primarily, among other factors, that the product mix remains
materially consistent with that experienced in the first nine
months of 2003, continued international growth and a continuation
of the improving sales trend from the third quarter. For full year
2003 versus 2002, QVC operating results are expected to increase as
follows: -- Revenue by high single digits %; Operating cash flow by
low double digits %. -- Operating income by mid single digits %.
STARZ ENCORE GROUP LLC Liberty owned 100% of SEG at September 30,
2003. The principal services of SEG are the STARZ!, Encore and
Thematic Multiplex premium movie services. Starz Encore Group LLC
Summary Financial Information Q3 03 Q3 02 (amounts in millions)
Revenue $217 243 Operating Expense 145 144 Operating Cash Flow $72
99 Operating Income $126 80 Outstanding Debt $333 420 Total
Subscription Units 143.7 131.8 As further described in Liberty's
Form 10-Q, Starz Encore was a party to litigation with Comcast
Corporation regarding the affiliation agreement between AT&T
Broadband (now known as Comcast Cable Holdings, LLC, "Comcast Cable
Holdings") and Starz Encore (the "1997 Affiliation Agreement"). On
September 23, 2003, Starz Encore and Comcast announced that they
had entered into a multi-year agreement for the carriage of the
STARZ! and Encore movie services on all Comcast owned and operated
cable systems (including those of Comcast Cable Holdings). This
agreement resolves all of the litigation that was pending between
Starz Encore and Comcast with respect to the 1997 Affiliation
Agreement. Under the new multi-year affiliation agreement, which
expires at the end of 2010, Comcast will pay SEG based on per
subscriber rates rather than the flat fee arrangement prescribed by
the Comcast Cable Holdings affiliation agreement. These payment
terms are retroactive to November 18, 2002. The new agreement also
includes provisions for the distribution of new SEG products in
select Comcast systems and provisions for co-operative marketing
efforts between Comcast and SEG. The new agreement does not allow
the programming pass-through provisions that were included in the
1997 affiliation agreement. -- SEG revenue decreased by 11% and
operating expense was essentially flat. Operating cash flow
decreased by 27%. -- The decrease in revenue was due to a $32
million decrease in revenue from Comcast partially offset by an
increase in revenue from other distributors. The reduction in
revenue from Comcast was the result of a lower effective
per-subscriber fee under the new affiliation agreement and a
decrease in STARZ! subscribers in the Comcast systems. --
Subscription units continue to grow, however revenue decreased due
to a disproportionate increase in units of the lower priced
Thematic Multiplex channels. Total subscription units increased by
9% due to a 14% increase in Thematic Multiplex units and a 2%
increase in Encore units partially offset by a 10% decrease in
STARZ! units. -- While SEG experienced growth in total subscription
units as compared to the prior year, total subscription units have
remained relatively flat since March 31, 2003. This trend reflects
reduced demand for SEG's services as well as subscriber losses in
digital packages where SEG's services are often included. SEG has
signed a new agreement with Comcast and continues to negotiate with
the other multichannel television distributors to obtain more
favorable channel packaging and to increase promotional efforts.
However, no assurance can be given that these negotiations will be
successful. -- Operating expense was essentially flat as increases
in programming license fees were partially offset by decreases in
affiliate marketing support and national branding activity due to
the reduced number of co-operative promotions by certain
multichannel distributors discussed above. The increase in
programming license fees was due to an increase in the number of
exhibitions of output product relative to less expensive library
product. -- SEG reduced its outstanding bank debt by $87 million to
$333 million compared to September 30, 2002. STARZ ENCORE - FY '03
Guidance Note that SEG recognizes revenue from Comcast Cable
Holdings at rates applicable under the new Comcast Cable Holding's
affiliation agreement. The following estimates assume, among other
factors, that SEG continues to experience growth in total
subscription units with a product mix that is consistent with that
experienced during the first nine months of 2003. For full year
2003 versus 2002, SEG operating results are expected as follows: --
Revenue and operating cash flow to decrease by mid single digits %.
-- Operating income to increase by approximately 10%. DISCOVERY
COMMUNICATIONS, INC. Liberty owned 50% of DCI as of September 30,
2003. The results below give effect to certain year-end audit
adjustments affecting the third quarter of 2002. Discovery
Communications, Inc. Summary Financial Information Q3 03 Q3 02
(amounts in millions) Revenue: Discovery Networks U.S. $326 272
Discovery Networks International 107 86 International Ventures 15
10 Consumer Products & Other* 26 26 Total Revenue 474 394
Operating Expense: Discovery Networks U.S. 210 179 Discovery
Networks International 86 74 International Ventures 19 18 Consumer
Products & Other* 43 45 Total Operating Expense 358 316
Operating Cash Flow (Deficit): Discovery Networks U.S. 116 93
Discovery Networks International 21 12 International Ventures (4)
(8) Consumer Products & Other* (17) (19) Total Operating Cash
Flow $116 78 Operating Income $78 29 Outstanding Debt $2,486 2,398
* Includes all Intercompany Eliminations. During the third quarter
of 2003, ratings continued to be strong across all Discovery
Networks. DCI also began to see ratings improvement for Discovery
Channel, U.S. as a result of programming and marketing investment
and a strong new schedule. TLC's Trading Spaces franchise had the
highest rated program in the network's history with its $100K
special episode. DCI signed cross platform advertising partnerships
with Kraft Foods North America and Home Depot. Discovery also
advanced a number of its business objectives, including the
re-launch of its newest network in the United States, FIT TV, a new
cable network targeting the business opportunity in the fitness
category for both mind and body. Total revenue and operating
expenses increased 20% and 13%, respectively. Total DCI operating
cash flow increased 49%, driven by an increase in gross advertising
revenue of 23% and an increase in gross affiliate revenue of 13%.
DCI's affiliated networks now reach more than 974 million
cumulative worldwide subscribers. DCI - Discovery Networks U.S.:
Discovery Channel, TLC, Animal Planet, Travel Channel, Discovery
Health Channel, FIT TV, Discovery Kids Channel, BBC-America
Representation, The Science Channel, Discovery Times Channel,
Discovery Home & Leisure Channel, Discovery Wings Channel,
Discovery en Espanol, Discovery HD Theater and online initiatives.
-- Domestic Networks now reach approximately 548 million cumulative
subscribing households. Domestic Networks revenue increased by 20%
due to increases in both affiliate and advertising revenue.
Operating expenses increased 17% due to increases in programming
and marketing expenses. Operating cash flow increased by 25% to
$116 million. -- Net advertising revenue increased 24% due to
growth in the overall advertising market and a 12% increase in
prime time audience delivery. -- Net affiliate revenue increased
14% as aggregate subscribers increased by 10%. Net affiliate
revenue grew at a faster rate than subscription units primarily due
to an increase in paying subscribers and higher per subscriber
rates as compared to the prior year. These revenues were net of
launch support amortization and other items of $37 million and $35
million for the quarters ended September 30, 2003 and 2002,
respectively. Excluding the effects of launch support amortization,
gross affiliate revenues increased 12% for the quarter. --
Operating expenses increased 17% due to increases in programming,
marketing and sales related expenses. The increase in programming
and marketing expenses was due to an increased level of investment
that helped to drive ratings growth. DCI - Discovery Networks
International: Discovery Channels in Europe, Latin America, Asia,
India, Germany, Italy/Africa and Kids-Latin America, Travel &
Adventure-Latin America, Health-Latin America, Discovery Home &
Leisure UK, Showcase Europe, Travel & Adventure Asia, Animal
Planet-United Kingdom and Health Channel-United Kingdom. --
International Networks now reach approximately 301 million
cumulative subscribing households. International Networks revenue
increased by 24% due to increases in both affiliate and advertising
revenue and favorable exchange rates. Operating expenses increased
16% and operating cash flow increased by 75% to $21 million.
Excluding the effect of exchange rates, revenue increased by 13%,
operating expenses increased 7% and operating cash flow increased
50%. -- Net advertising revenue increased 20% driven by positive
developments in advertising sales and subscriber growth in all
International regions, with Latin America and Asia showing
improvements. -- Net affiliate revenue increased by 13% as
aggregate subscribers increased by 37%. Subscription units grew at
a faster rate than revenue primarily due to a disproportionate
increase in subscribers of recently launched networks and certain
networks in Asia where the majority are currently in a free
contract period or have lower subscription fee rates than other
International channels. DCI - International Ventures: Consolidated
BBC/DCI Joint Venture Networks (Animal Planet networks in Europe,
Asia, Latin America, People + Arts Latin America and Spain). --
International Ventures revenue increased by 50% due to strong
subscriber growth in the UK and Europe. The operating cash flow
deficit improved by 50% from $8 million to $4 million.
International Ventures now reach over 125 million cumulative
subscribing households. DCI - Consumer Products: The principal
components of Discovery Consumer Products include a proprietary
retail business comprised of a nationwide chain of 138 Discovery
Channel stores, mail-order catalogs, an on-line shopping site, a
global licensing and strategic partnerships business, and a
supplementary education business reaching over 35 million students
and 80,000 classrooms in the U.S. -- Operating cash flow deficit
improved by $2 million or 11% primarily due to an increase in gross
margin resulting from sales of the newly introduced higher margin
products, combined with reductions in store operating costs and
other overhead. DCI - Outstanding Debt: DCI's outstanding debt
(including capital leases, letters of credit, and other notes
payable) increased by $88 million compared to September 30, 2002.
The increase was primarily due to additional borrowings for the
funding of start-up businesses, debt service costs and
acquisitions. DCI - FY '03 Guidance Adjusted Upward The following
estimates assume primarily, among other factors, continuation of
the positive trend in the domestic advertising sales market,
stabilization of certain Latin American economies, continued growth
in international distribution and continued economic uncertainty in
the national retail environment. For full year 2003 versus 2002,
DCI operating results are expected to increase as follows: DCI
consolidated : -- Revenue by mid teens %; Operating cash flow by
high 20s %. -- Operating income by high 70s %. Discovery Networks
U.S.: -- Revenue by high teens %; Operating cash flow by low to mid
teens %. Discovery Networks International: -- Revenue by low to mid
teens %; Operating cash flow by approximately 50%. Notes: BBC/DCI
Joint Ventures - Consolidated: The equity in the assets of the
British Broadcasting Corporation/DCI joint ventures are
predominantly held 50/50 by DCI and BBC. Exceptions involve
participants related to the local market in which a specific
network operates. Where DCI exercises control of BBC/DCI joint
ventures, DCI consolidates financial results into International
Ventures. Until such assets reach breakeven, 100% of the economic
interests are consolidated. After DCI has fully recouped prior
investment, the economic interests will match the equity interests
and will be accounted for under the equity method. BBC/DCI Joint
Ventures - Equity Affiliates: DCI accounts for its interests in
remaining joint ventures, including interests in Discovery Channel
Canada, Discovery Channel Japan, Animal Planet Canada, Animal
Planet Japan, and Joint Venture Programming, as equity method
investments. The operating results of these entities are not
reflected in the results presented above. Other Joint Ventures -
Discovery Times Channel, Discovery Health Channel, Animal Planet
(US) - Consolidated: DCI owns a 50% interest in Discovery Times
Channel, a 72% interest in The Health Channel and a 60% interest in
Animal Planet (US). These ventures are controlled by DCI and
therefore DCI consolidates the revenues and operating expenses of
the ventures as part of Discovery Networks U.S. Due to certain
contractual redemption rights of the outside partners in the
ventures, no losses of these ventures are allocated to the outside
partners. Upon expiration of these rights, the economic interests
will approximate the equity interests. JUPITER TELECOMMUNICATIONS
CO., LTD. Jupiter Telecommunications Co., Ltd. Summary Financial
Information Q3 03 Q3 02 (amounts in millions) Revenue 314 248
Operating Expense 203 186 Operating Cash Flow 111 62 Operating
Income (Loss) 30 (1) Outstanding Debt (1) 2,232 2,378 Managed
Subscriber Data (000s): Cable 1,483 1,373 High Speed Data 591 463
Telephony 496 300 Homes Receiving Service (2) 1,698 1,524 (1)
Includes shareholder debt of $1,290 million and $617 million,
respectively, at September 2003 and 2002. (2) Represents the number
of households subscribing to at least one J-COM broadband service.
J-COM: Liberty owned 45% of J-COM at September 30, 2003. J-COM is
Japan's largest multiple system operator (MSO) based on the number
of customers served. J-COM and its subsidiaries provide cable
television, high-speed Internet access and telephony services in
Japan. Managed subscriber data includes all consolidated
subsidiaries as well as equity affiliates that are managed by
J-COM. -- J-COM's revenue increased 27%, operating expenses
increased 9% and operating cash flow increased 79%. Excluding the
effect of exchange rates, revenue increased by 23%, operating
expenses increased 6% and operating cash flow increased 71%. --
Revenue increased 27% due to increased distribution in all three
services and substantial growth in Internet and telephony revenue.
Managed cable subscribers increased 8%, Internet services
subscribers increased 28% and telephony subscribers increased 65%.
Average monthly revenue per household receiving at least one
service increased 10% to $58. -- Operating cash flow at J-COM
increased 79% due to the revenue increases combined with margin
improvements associated with increased scale. -- J-COM served
approximately 1.7 million homes at September 30, 2003, an increase
of 11%, and services per household (total revenue generating units
divided by total households served) rose from 1.40 to 1.51. --
Penetration of homes taking at least one service increased from
26.4% to 28.6%. -- Approximately 39% of J-COM's customers
subscribed to more than one service at September 30, 2003, which
translated into approximately 668,000 homes with multiple services.
The triple play service option (taking all three services
available) has steadily increased to 12% of J-COM's homes
subscribing to all three services at September 30, 2003 compared to
8% at September 30, 2002. J-COM -- FY '03 Guidance Adjusted Upward
The following estimates assume continued subscriber growth, a
product mix that is consistent with that experienced during the
first nine months of 2003 and continued cost control efforts,
including programming costs. For full year 2003 versus 2002, J-COM
operating results, excluding the effect of exchange rates, are
expected to increase as follows: -- Revenue by approximately 20%;
Operating cash flow by 75 -- 80%. -- Operating income from an
operating loss of $34 million in 2002 to operating income of
$89-107 million in 2003. JUPITER PROGRAMMING CO., LTD. Jupiter
Programming Co., Ltd. Summary Financial Information Q3 03 Q3 02
(amounts in millions) Revenue 100 74 Operating Expense 86 64
Operating Cash Flow 14 10 Operating Income 11 7 Outstanding Debt
(1) 57 58 Cumulative Subscribers (000s) (2) 41,222 33,018 (1)
Includes shareholder debt of $17 million and $16 million,
respectively, at September 2003 and 2002. (2) Includes subscribers
at all consolidated and equity owned JPC channels. Shop Channel
subscribers are stated on a full-time equivalent basis. JPC:
Liberty owned 50% of JPC at September 30, 2003. JPC is the largest
multi-channel pay television programming and content provider in
Japan based upon the number of subscribers receiving the channels.
JPC currently owns, operates or invests in 15 channels. In August
2003, JPC acquired a 35% interest in the action/adventure channel,
AXN Japan, which had approximately three million subscribers at
September 30, 2003. -- JPC's revenue increased 35%, operating
expenses increased 34% and operating cash flow increased 40%.
Excluding the effect of exchange rates, revenue increased by 32%,
operating expenses increased 30% and operating cash flow increased
42%. -- JPC's revenue increased 35% largely due to the increase in
retail sales at Shop Channel and in subscription and advertising
revenues at the other channels. Shop Channel was the largest
contributor generating an additional $20 million in revenue versus
the comparable period in 2002. This increase was driven by a 22%
increase in full- time equivalent ("FTE") homes at quarter end and
an increase in sales per FTE home of 13%. Subscribers at other
channels grew by 13% at CSN, 13% at Golf Network, 14% at J-Sky
Sports, 11% at Discovery and 19% at Animal Planet. -- JPC's
operating cash flow increased 40% due to the revenue increase,
partially offset by increased cost of goods sold, fulfillment,
telemarketing, programming and general and administrative expenses.
JPC -- FY '03 Guidance Adjusted Upward The following estimates
assume continued subscriber growth across all programming services,
increases in sales per home at Shop Channel and gross margins that
are consistent with historical margins. For full year 2003 versus
2002, JPC operating results, excluding the effect of exchange
rates, are expected to increase as follows: -- Revenue by
approximately 35%; Operating cash flow by low 30s %. -- Operating
income by low 40s %. SUMMARY OF CASH AND LONG-TERM DEBT The
following is a summary of Liberty's cash and long-term debt as of
September 30, 2003 and June 30, 2003. 09/30/03 06/30/03 (amounts in
millions) Cash and Cash Related Investments: Liberty Corporate Cash
$2,399 3,287 Corporate Short-term Investments 232 199 Corporate
Long-term Marketable Securities (1) 1,300 1,166 Total Corporate
Cash and Liquid Investments 3,931 4,652 Cash and Liquid Investments
of Subsidiaries (2) 898 275 Total Cash and Liquid Investments 4,829
4,927 Less: Short and Long-term Securities (1,567) (1,398)
Consolidated Cash Balance (GAAP) $3,262 3,529 Debt: Senior Notes
and Debentures (3) $8,338 3,488 Senior Exchangeable Debentures (4)
4,766 4,796 Bank Debt 250 250 Total Corporate Debt 13,354 8,534
Debt of Subsidiaries 1,090 1,178 Total Corporate and Subsidiary
Debt 14,444 9,712 Less: Unamortized Discount Attributable to Call
Option Obligation (2,533) (2,576) Unamortized Discount (25) (22)
Consolidated Debt Balance (GAAP) $11,886 7,114 (1) Represents
long-term liquid cash equivalents which are included in investments
in available-for-sale securities and other cost investments in
Liberty's consolidated balance sheet. (2) Includes $20 million and
$15 million of short-term and $15 million and $18 million of
long-term securities held by subsidiaries at September 30, 2003 and
June 30, 2003, respectively. (3) Represents face amount of Senior
Notes and Debentures with no reduction for the unamortized
discount. (4) Represents face amount of Senior Exchangeable
Debentures, with no reduction for the unamortized discount
attributable to the embedded call option obligation. The above
presentation is provided to separately identify parent-only cash
and liquid investments and debt information from our consolidated
cash and debt balances. Liberty's Total Corporate Cash and Liquid
Investments decreased by $721 million to $3.9 billion and Total
Corporate Debt increased by $4.8 billion to $13.4 billion compared
to June 30, 2003. The net changes in corporate cash and liquid
investments and in corporate debt were primarily the result of cash
used and debt issued in Liberty's acquisition of Comcast
Corporation's approximate 56.5% ownership stake in QVC, Inc.
SUMMARY OF SIGNIFICANT PUBLIC ASSETS (amounts in millions) Market
Value at 9/30/03 The News Corporation Limited $6,331
IAC/InterActiveCorp $4,593 UnitedGlobalCom, Inc. $1,864 Other
$7,397 SUMMARY OF EQUITY DERIVATIVES Liberty has entered into
equity collars, narrow-band collars, put-spread collars, written
put and call options and other financial instruments to manage
market risk associated with its investments in certain marketable
securities. The estimated fair value of these financial instruments
at September 30, 2003 was $3,209 million. Outstanding Shares At
September 30, 2003, there were approximately 2.903 billion
outstanding shares of L and LMC.B and 82 million shares of L and
LMC.B reserved for issuance pursuant to warrants and employee stock
options. At September 30, 2003, approximately 77% of the options to
purchase L and LMC.B shares had a strike price that was higher than
the closing stock price. Exercise of these options, as well as all
other warrants and options to purchase L and LMC.B shares, would
result in aggregate proceeds of approximately $984 million. OTHER
EVENTS: Liberty Announces Acquisition of UnitedGlobalCom, Inc.
Class B Common Shares On August 19, 2003, Liberty announced that it
had agreed to acquire all of the outstanding shares of Class B
common stock of UnitedGlobalCom, Inc. (NASDAQ:UCOMA) (United) from
United's founding shareholders. Liberty will exchange 12.6 million
shares of its Series A common stock for 8.2 million shares of
United's Class B common stock as well as a cash payment of
approximately 50% of the sellers' tax liabilities arising from the
sale. On closing of this transaction, Liberty will have ownership
of approximately 75% of United's common stock representing
approximately 96% of the voting power of United's shares and
Liberty designees will comprise a majority of United's board of
directors. Liberty Completes Acquisition of QVC, Inc. On September
17, 2003, Liberty announced that it had completed its previously
announced acquisition of Comcast Corporation's approximate 56.5%
ownership stake in QVC, Inc. QVC is now 98% owned by Liberty. At
closing, Liberty delivered to Comcast approximately 218 million
shares of Liberty Media Series A common stock and a three-year note
payable in the amount of $4.0 billion. Liberty also delivered cash
in the amount of $1.35 billion, which was funded with the proceeds
from the September 12, 2003 sale of Liberty's 3.5% Senior Notes due
in 2006. Liberty's Senior Notes have an effective interest rate of
LIBOR + 45 basis points, after taking into consideration interest
rate swaps, and the note payable to Comcast bears interest at LIBOR
+ 150 basis points. The shares of common stock and the note payable
to Comcast have been registered under the Securities Act of 1933.
UnitedGlobalCom, Inc. Commences An Offer for Outstanding Shares of
UGC Europe, Inc. On October 6, 2003, United commenced an offer to
exchange 9.0 shares of its Class A common stock for each share of
UGC Europe, Inc. (UGCE) it did not already own. On November 12,
2003, United amended the exchange ratio to offer 10.3 shares of its
Class A common stock for each share of UGCE common stock. As a
condition of the offer, United must own at least 90% of UGCE upon
consummation of the exchange offer and United has committed to
effect a short- form merger following the completion of the
exchange offer. In connection with the exchange offer, as amended,
Liberty has agreed to limit the exercise of its preemptive rights
such that Liberty will not increase its ownership percentage of
United's capital stock beyond the lower of 55% (or in limited
circumstances, 60%) and its then-current ownership percentage.
Certain statements in this press release may constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other
important factors that could cause the actual results, performance
or achievements of the privately held assets of Liberty Media
Corporation included herein or industry results, to differ
materially from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such
risks, uncertainties and other factors include, among others: the
risks and factors described in the publicly filed documents of
Liberty Media Corporation, including the most recently filed Form
10-Q of Liberty Media Corporation; general economic and business
conditions and industry trends including in the advertising and
retail markets; spending on domestic and foreign advertising; the
continued strength of the industries in which such privately held
assets operate; continued consolidation of the broadband
distribution industry; uncertainties inherent in proposed business
strategies and development plans; rapid technological changes;
future financial performance, including availability, terms and
deployment of capital; availability of qualified personnel; the
development and provision of programming for new television and
telecommunications technologies; changes in, or the failure or the
inability to comply with, government regulation, including, without
limitation, regulations of the Federal Communications Commission,
and adverse outcomes from regulatory proceedings; adverse outcomes
in pending litigation; changes in the nature of key strategic
relationships with partners and joint ventures; competitor
responses to such privately held assets' products and services, and
the overall market acceptance of such products and services,
including acceptance of the pricing of such products and services;
and threatened terrorist attacks and ongoing military action,
including armed conflict in the Middle East and other parts of the
world. These forward-looking statements speak only as of the date
of this Release. Liberty Media Corporation 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 Corporation's expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based. NON-GAAP FINANCIAL MEASURES The
Securities and Exchange Commission ("SEC") has issued rules and
guidance regarding the use by registrants of non-GAAP financial
measures. Under these new rules, a non-GAAP financial measure is
defined generally as a numerical measure of a registrant's
historical or future financial performance, financial position or
cash flow that: -- excludes amounts, or are subject to adjustments
that have the effect of excluding amounts, that are included in the
most directly comparable measure calculated and presented in
accordance with GAAP; or -- includes amounts, or is subject to
adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated
and presented. The rules and guidance require, among other things,
a quantitative reconciliation (to the extent available without
unreasonable efforts in the case of forward-looking information) of
the differences between the non-GAAP financial measure used with
the most directly comparable GAAP financial measure. A statement of
the reason why the registrant's management believes that
presentation of the non-GAAP financial measure provides useful
information to investors is required, as is a statement, if
material, of any additional purposes for which the registrant's
management uses the non-GAAP financial measure. This press release
includes a presentation of operating cash flow, which is a non-GAAP
financial measure, for each of the privately held assets of Liberty
included herein together with a reconciliation of that non-GAAP
measure to the privately held asset's operating income. Liberty
defines operating cash flow as revenue less "operating expense,"
which Liberty defines as operating, selling, general and
administrative expenses. Operating expense, as defined by Liberty,
excludes depreciation, amortization, stock compensation and other
non-cash charges taken into account with operating expense in
computing operating income in accordance with GAAP. Liberty's
management uses revenue and operating cash flow as a measure of
operating performance and for purposes of making decisions about
allocating resources to its subsidiaries and affiliates, and
believes the presentation of operating cash flow is helpful
information for investors when presented in conjunction with
operating income. Because operating cash flow is used as a measure
of operating performance, Liberty views operating income as the
most directly comparable GAAP measure. Operating cash flow is not
meant to replace or supercede operating income or any other GAAP
measure, but rather to supplement the information to present
investors with the same information as Liberty's management
considers in assessing the results of operations and performance of
its assets. The rules on non-GAAP financial measures were released
by the SEC in January 2003 and are relatively new. We, in common
with other registrants, are still in the process of interpreting
the rules and monitoring developments and guidance by the SEC to
ensure continued compliance. While we believe that the presentation
in this press release complies with the SEC's rules, we can give no
assurance that we will be able to provide the same or comparable
measures in future press releases or announcements. LIBERTY MEDIA
CORPORATION SCHEDULE 1 The following table provides a
reconciliation, for our largest consolidated subsidiaries and
certain of our large equity affiliates, of operating cash flow to
operating income calculated in accordance with GAAP for the three
month periods ended September 30, 2003 and 2002. Company QVC SEG
DCI J-COM JPC Ownership % 98.2% 100% 50.0% 45.2% 50.0% (amounts in
millions) Three months ended September 30, 2003 Operating Cash Flow
$234 72 116 111 14 Depreciation and amortization (43) (21) (30)
(81) (3) Stock compensation expense (1) -- 75 (8) -- -- Other
non-cash charges -- -- -- -- -- Operating Income $191 126 78 30 11
Three months ended September 30, 2002 Operating Cash Flow $185 99
78 62 10 Depreciation and amortization (27) (17) (25) (63) (3)
Stock compensation expense (1) -- (2) (24) -- -- Other non-cash
charges -- -- -- -- -- Operating Income (Loss) $158 80 29 (1) 7 (1)
SEG and DCI stock compensation expense represents amounts pursuant
to phantom stock appreciation rights plans. DATASOURCE: Liberty
Media Corporation CONTACT: Mike Erickson of Liberty Media
Corporation, +1-877-772-1518
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