Liberty Interactive Corporation Reports Third Quarter 2012 Financial Results

  Liberty Interactive Corporation Reports Third Quarter 2012 Financial Results

Business Wire

ENGLEWOOD, Colo. -- November 06, 2012

Liberty Interactive Corporation (“Liberty”) (Nasdaq: LINTA, LINTB, LVNTA,
LVNTB) today reported third quarter results. Highlights include^(1):

  *Grew consolidated QVC revenue by 2% and adjusted OIBDA^(2) by 6%

       *Grew QVC US revenue by 3% and adjusted OIBDA by 7%
       *QVC.com revenue as a percent of total US revenue increased to 39%, a
         4 point increase
       *Operating income increased 11%

  *Recapitalized our common stock into two tracking stocks, Liberty
    Interactive Group and Liberty Ventures Group

       *Shareholder value creation of $2.6 billion

  *Successfully completed rights offering at Liberty Ventures Group, raising
    $328 million

“QVC continues to produce strong results, especially on a constant currency
basis, despite a challenging macroeconomic environment, and we are pleased
with the performance of our newest market, China,” stated Greg Maffei, Liberty
President and CEO. “We successfully completed the recapitalization of the
company’s common stock into two tracking stocks, which increased shareholder
value by $2.6 billion. Our share repurchases were lower this quarter, as we
were out of the market for six weeks due to the recapitalization. But, we
remain committed to repurchases at the Liberty Interactive Group and the board
of directors has increased our repurchase authorization by $1 billion.”

LIBERTY INTERACTIVE GROUP - Liberty Interactive Group’s revenue increased 3%
to $2.2 billion in the third quarter, adjusted OIBDA increased 5% to $397
million and operating income decreased 14% to $193 million. The increase in
revenue was due to favorable results at QVC and the eCommerce companies. The
increase in adjusted OIBDA for the quarter was due to favorable results at
QVC, which was offset by unfavorable results at the eCommerce companies. The
decrease in operating income for the quarter was primarily due to unfavorable
results at the eCommerce companies and the impairment of goodwill of one of
the eCommerce companies during the quarter.

QVC

QVC's consolidated revenue increased 2% in the third quarter to $1.9 billion.
During the same period, adjusted OIBDA increased 6% to $397 million and
operating income increased 11% to $260 million.

“QVC delivered strong results in the third quarter, with eCommerce continuing
its double digit growth – now accounting for 33% of global revenue," said QVC
President and CEO, Mike George. “With mobile commerce orders up 96% globally,
we see these results as clear confirmation that our strategy to create a
highly immersive digital shopping experience, with strong integration across
TV, PC, tablet and mobile platforms, is not only succeeding, but significantly
outpacing the industry.”

QVC's U.S. revenue increased 3% to $1.2 billion in the third quarter as a
result of strength in cooking and dining, beauty, apparel and accessories
products, partially offset by a decline in electronics. Additionally, average
selling price per unit ("ASP") increased 1% from $54.49 to $55.21 and units
sold increased 1% compared to the prior year third quarter. Gross product
revenue increased 2%; however, U.S. revenue grew 3% overall due to a 14%
increase in shipping and handling revenue due, in part, to a price increase
implemented in the fourth quarter of 2011. Third quarter returns as a percent
of gross product revenue remained relatively flat. In the same period,
eCommerce revenue increased 14% to $479 million and grew to 39% from 35% as a
percentage of total U.S. revenue. Adjusted OIBDA increased 7% to $278 million
and adjusted OIBDA margin^(2) increased 81 basis points. The increase in
adjusted OIBDA margin was primarily due to an improved gross margin as a
result of a favorable net shipping and handling position including warehouse
productivity, as well as lower commissions, credit card and customer service
expenses as a percentage of revenue.

QVC's international revenue decreased 1% in the third quarter to $681 million.
The third quarter results included the negative impact of the strengthening
U.S. Dollar against the Japanese Yen, Euro and U.K. Pound Sterling.
International adjusted OIBDA increased 4% to $119 million and adjusted OIBDA
margin increased 95 basis points in the third quarter.

QVC Japan's revenue grew 9% in local currency in the third quarter primarily
due to increased sales in home, apparel and accessories. QVC Japan's ASP in
local currency decreased 1%, but units sold increased 10% in the third
quarter. QVC Japan's third quarter returns as a percent of gross product
revenue remained relatively flat. QVC Japan's adjusted OIBDA in local currency
increased 12% and adjusted OIBDA margin increased 55 basis points in the third
quarter. The increase in adjusted OIBDA margin was due primarily to lower
warehouse expenses and fixed cost leverage.

QVC Germany's revenue declined 6% in local currency in the third quarter
primarily due to decreased sales in health, apparel and accessories, somewhat
offset by increased sales of beauty products. QVC Germany's ASP in local
currency decreased 4% and units sold declined 4% in the third quarter. QVC
Germany's third quarter returns as a percent of gross product revenue in local
currency improved by 201 basis points and was primarily due to a shift in
product mix from apparel to beauty. QVC Germany's adjusted OIBDA in local
currency increased 2% and adjusted OIBDA margin increased 119 basis points in
the third quarter. The improvement in OIBDA margin was driven by warehouse
productivity, including the positive impact of lower returns processing, as
well as lower commissions and fixed costs.

QVC U.K.'s revenue increased 3% in local currency in the third quarter
primarily due to sales increases in home décor and beauty products. QVC U.K.'s
ASP in local currency increased 1%, while units sold remained relatively flat
for the third quarter. QVC U.K.’s third quarter returns as a percent of gross
product revenue in local currency decreased by 78 basis points primarily due
to a product mix shift to home and beauty products. QVC U.K.’s adjusted OIBDA
in local currency decreased 9% and adjusted OIBDA margin decreased 224 basis
points in the third quarter. The decrease in adjusted OIBDA margin was
primarily due to lower product margins and higher transition and running costs
associated with QVC U.K.’s new headquarters move in June 2012.

QVC Italy continued the trend upward with a 16% sequential revenue growth in
local currency over the second quarter of 2012. QVC Italy’s sales were
primarily from the cooking and dining, beauty and apparel product categories.

On July 4, 2012, QVC entered into a joint venture with China Broadcasting
Corporation, a limited liability company, owned by China National Radio
(“CNR”) for a 49% interest in a CNR subsidiary, CNR Home Shopping Co., Ltd.
(‘‘CNRS’’). CNRS had an 85% growth in revenue over the prior year third
quarter. This joint venture is being accounted for as an equity method
investment, and as a result, QVC reported a $3 million reduction in net income
for the period.

QVC's outstanding bank and bond debt was $3.4 billion at September 30, 2012.
The increase of $1.1 billion from June 30, 2012 was primarily associated with
borrowings to fund the Liberty Ventures Group as part of the Liberty
Interactive Group’s recapitalization of its common stock.

eCommerce Businesses

In the aggregate, Liberty Interactive Group’s eCommerce businesses increased
revenue 13% to $278 million for the third quarter. Adjusted OIBDA decreased
56% to $4 million for the quarter and operating income decreased to a loss of
$56 million. All but one of our eCommerce businesses reported an increase in
revenue for the quarter as a result of increased marketing efforts and
increased conversion resulting from site optimization and broader inventory
offerings. The decrease in adjusted OIBDA was the result of increased spending
in paid search as a percentage of revenue, increased promotional activity to
move seasonal inventory and lower advertising revenue due to pricing and a
shift to mobile applications. The decrease in operating income was primarily
due to an impairment of goodwill at Celebrate Interactive as a result of
continued declining operating results and disappointing third quarter trends.

Share Repurchases

From August 1, 2012 through October 31, 2012, Liberty repurchased
approximately 3.0 million Series A Liberty Interactive shares at an average
cost per share of $18.37 for total cash consideration of $55.9 million. Since
the creation of the Liberty Interactive stock in May 2006, Liberty has
repurchased approximately 175.3 million shares at an average cost per share of
$18.98 for aggregate cash consideration of $3.3 billion. These repurchases
represent approximately 25.0% of the shares outstanding at the time of
creation of the Liberty Interactive stock. On October 30, 2012, the Board of
Directors voted to increase the stock repurchase authorization for the Liberty
Interactive Group by an additional $1.0 billion. Including the newly
authorized amount, the total current repurchase authorization for Liberty
Interactive Group stock is approximately $1.4 billion.

Liberty Interactive Group holds controlling interests in companies that are
engaged in digital commerce, including QVC, Provide Commerce, Backcountry.com,
Bodybuilding.com, Celebrate Interactive, CommerceHub, MotoSport and Right
Start, and also owns interests in HSN and Lockerz.

LIBERTY VENTURES GROUP – As of September 30, 2012 the fair value of the equity
method securities and non-strategic AFS securities attributed to the Liberty
Ventures Group was $3.2 billion and $1.6 billion, respectively. When compared
to the prior quarter, the fair value of Liberty Ventures Group’s equity method
securities increased 1% and AFS securities increased 19%.

Share Repurchases

There were no repurchases of Liberty Ventures Group stock from August 10, 2012
through October 31, 2012. The Liberty Ventures Group does not have an
outstanding stock repurchase authorization at this time.

The businesses and assets attributed to the Liberty Ventures Group are all of
Liberty’s businesses and assets other than those attributed to the Liberty
Interactive Group and include its interests in TripAdvisor, Expedia, and
minority interests in Time Warner and Time Warner Cable.

FOOTNOTES

      Liberty’s President and CEO, Gregory B. Maffei, will discuss these
      highlights and other matters in Liberty’s earnings conference call which
(1)  will begin at 11:00 a.m. (ET) on November 6, 2012. For information
      regarding how to access the call, please see “Important Notice” later in
      this document.
(2)   For a definition of adjusted OIBDA and applicable reconciliations and a
      definition of adjusted OIBDA margin, see the accompanying schedules.

LIBERTY INTERACTIVE GROUP FINANCIAL METRICS
                                                           
(amounts in millions)                    3Q11        3Q12       % Change
Revenue
QVC
US                                       $1,196         1,237         3      %
International                            690        681       -1     %
Total QVC Revenue                        1,886      1,918     2      %
eCommerce businesses                     247        278       13     %
Total Liberty Interactive Group          $2,133     2,196     3      %
Revenue
                                                                      
Adjusted OIBDA
QVC
US                                       $ 259          278           7      %
International                            114        119       4      %
Total QVC Adjusted OIBDA                 373        397       6      %
eCommerce businesses                     9              4             -56    %
Corporate and other                      (4     )    (4    )    0      %
Total Liberty Interactive Group          $378       397       5      %
Adjusted OIBDA
                                                                      
Operating Income
QVC
US                                       $159           173           9      %
International                            75         87        16     %
Total QVC Operating Income               234        260       11     %
eCommerce businesses                     (2     )       (56   )       -2,700 %
Corporate and other                      (7     )    (11   )    -57    %
Total Liberty Interactive Group          $225       193       -14    %
Operating Income
                                                                             

QVC OPERATING METRICS
                                                         
(amounts in millions except          3Q11        3Q12        % Change 
average sale price amounts)
QVC - US^(1)
Revenue                              $1,196          1,237          3        %
Adjusted OIBDA                       $259            278            7        %
Adjusted OIBDA margin                21.66   %       22.47  %       81 bps
Average sale price (ASP)             54.49           55.21          1        %
Units sold                           24.44           24.64          1        %
eCommerce % of US revenue            35.26   %       38.74  %       348 bps
Return rate                          19.91   %       20.05  %       (14) bps
                                                                             
QVC - Japan^(1)
Revenue                              $281            301            7        %
Adjusted OIBDA                       $61             67             10       %
Adjusted OIBDA margin                21.71   %       22.26  %       55 bps
Average sale price (ASP)             ¥6,267          6,215          -1       %
Units sold                           3.81            4.18           10       %
                                                                             
QVC - Germany^(1)
Revenue                              $252            211            -16      %
Adjusted OIBDA                       $40             36             -10      %
Adjusted OIBDA margin                15.87   %       17.06  %       119 bps
Average sale price (ASP)             €36.56          35.23          -4       %
Units sold                           6.45            6.16           -4       %
                                                                             
QVC - UK^(1)
Revenue                              $147            149            1        %
Adjusted OIBDA                       $24             21             -13      %
Adjusted OIBDA margin                16.33   %       14.09  %       (224) bps
Average sale price (ASP)             £27.66          27.91          1        %
Units sold                           3.60            3.61           0        %
                                                                             
QVC - Italy^(1)
Revenue                              $10             20             100      %
Adjusted OIBDA                       ($11    )       (5     )       55       %
Adjusted OIBDA margin                -110.00 %       -25.00 %       NM
Average sale price (ASP)             €31.98          33.01          3        %
Units sold                           0.22            0.54           145      %

(1)  Revenue and adjusted OIBDA change calculated in US dollars, not local
      currency

NOTES

Unless otherwise noted, the foregoing discussion compares financial
information for the three months ended September 30, 2012 to the same period
in 2011.

On September 23, 2011, Liberty completed the split-off of a wholly owned
subsidiary, Liberty Media Corporation ("LMC") (formerly known as Liberty
CapStarz, Inc. and Liberty Splitco, Inc.) (the "Split-Off"). At the time of
the Split-Off, LMC owned all the assets, businesses and liabilities attributed
to the Liberty Capital and Liberty Starz tracking stock groups immediately
prior to the Split-Off. The Split-Off was effected by means of redemption of
all of the Liberty Capital common stock and Liberty Starz common stock of
Liberty for all of the common stock of LMC. This transaction was accounted for
at historical cost due to the pro rata nature of the distribution. The
financial information provided reflects LMC as discontinued operations.
Accordingly, the relevant financial statement balances and activities of the
businesses, assets and liabilities owned by LMC at the time of the Split-off
(for periods prior to the Split-Off) have been excluded from the included
financial information.

Following the Split-Off, Liberty and LMC operate as separate, publicly traded
companies, and neither has any stock ownership, beneficial or otherwise, in
the other. In connection with the Split-Off, Liberty and LMC entered into
certain agreements in order to govern certain of the ongoing relationships
between the two companies after the Split-Off and to provide for an orderly
transition. These agreements include a Reorganization Agreement, a Services
Agreement, a Facilities Sharing Agreement and a Tax Sharing Agreement. Certain
prior period amounts have been reclassified for comparability with the current
presentation.

On August 9, 2012 Liberty Interactive completed the approved recapitalization
of its common stock through the creation of the Liberty Interactive common
stock and Liberty Ventures common stock as tracking stocks. In the
recapitalization, each holder of Liberty Interactive common stock remained a
holder of the same amount and series of Liberty Interactive common stock and
received 0.05 of a share of the corresponding series of Liberty Ventures
common stock, by means of a dividend, with cash issued in lieu of fractional
shares of Liberty Ventures common stock.

In connection with the creation of the Liberty Ventures tracking stock,
Liberty distributed subscription rights to purchase shares of Series A Liberty
Ventures common stock at a per share subscription price of $35.99 for one
share of Series A Liberty Ventures common stock pursuant to a basic
subscription privilege and also entitled the holder to subscribe for
additional shares pursuant to an oversubscription privilege. The rights
offering commenced on September 12, 2012 and expired on October 9, 2012. In
the fourth quarter, approximately 9 million Series A Liberty Ventures shares
were issued in connection with the rights offering resulting in approximately
$328 million of cash proceeds.

The following financial information is intended to supplement Liberty’s
condensed consolidated statements of operations which are included in its Form
10-Q.

Fair Value of Public Holdings

(amounts in millions)                          6/30/2012    9/30/2012
HSN^(1)                                       $ 808          982
Total Attributed Liberty Interactive Group       $ 808          982
                                                               
Expedia^(2)                                      $ 1,664           2,002
TripAdvisor^(2)                                    1,169           861
Interval Leisure Group and Tree.com^(2)            348             358
Non Strategic Public Holdings^(3)                 1,380        1,639
Total Attributed Liberty Ventures Group          $ 4,561        4,860

      Represents fair value of Liberty Interactive Group’s investment in HSN.
      In accordance with GAAP, Liberty Interactive Group accounts for this
(1)  investment using the equity method of accounting and includes this
      investment in its consolidated balance sheet at its historical carrying
      value which aggregated $233 million and $241 million at June 30, 2012
      and September 30, 2012, respectively.
      Represents fair value of Liberty Ventures Group’s investments. In
      accordance with GAAP, Liberty Ventures Group accounts for these
(2)   investments using the equity method of accounting and includes these
      investments in its consolidated balance sheet at their historical
      carrying values which aggregated $927 million and $975 million at June
      30, 2012 and September 30, 2012, respectively.
(3)   Represents Liberty Ventures Group’s non-strategic public holdings which
      are accounted for at fair value.

Cash and Debt

The following presentation is provided to separately identify cash and liquid
investments and debt information.

(amounts in millions)                       6/30/2012     9/30/2012 
Cash and Liquid Investments                                    
Attributable to:
Liberty Interactive Group                      $ 790               558
Liberty Ventures Group                          --            1,235     
Total Liberty Consolidated Cash (GAAP)         $ 790           1,793     
                                                                   
Debt:
Senior notes and debentures^(1)                $ 1,100             1,070
QVC senior notes^(1)                             2,000             2,500
QVC bank credit facility                         302               851
Other                                           118           118       
Total Attributed Liberty Interactive           $ 3,520             4,539
Group Debt
Unamortized discount                            (19       )    (19       )
Total Attributed Liberty Interactive           $ 3,501         4,520     
Group Debt (GAAP)
                                                                   
Senior exchangeable debentures^(2)              2,854         2,852     
Total Attributed Liberty Ventures              $ 2,854             2,852
Group Debt
Fair market value adjustment                    (306      )    (15       )
Total Attributed Liberty Ventures              $ 2,548         2,837     
Group Debt (GAAP)
                                                               
Total Consolidated Liberty Debt (GAAP)         $ 6,049         7,357     

(1)  Face amount of Senior Notes and Debentures with no reduction for the
      unamortized discount or fair market value adjustment.
(2)   Face amount of Senior Exchangeable Debentures with no reduction for the
      unamortized discount or fair market value adjustment.
      

Total cash and liquid investments attributed to the Liberty Interactive Group
decreased $232 million, primarily due to $1,346 million in cash reattributed
to the Liberty Ventures Group, stock repurchases, debt repayments and capital
expenditures. These cash outflows were partially offset by cash flow from
operations at QVC and borrowings of debt at QVC. Total debt attributed to the
Liberty Interactive Group increased by $1,018 million, primarily due to
borrowings on the QVC bank credit facility and new 5.00% senior notes issued
in the third quarter.

Total cash and liquid investments attributed to the Liberty Ventures Group
increased $1,235 million, primarily due to cash reattributed from the Liberty
Interactive Group offset by investing activities. Total debt attributed to the
Liberty Ventures Group decreased by $2 million, primarily due to principal
repayments.

Important Notice: Liberty (Nasdaq: LINTA, LINTB, LVNTA, LVNTB) President and
CEO, Gregory B. Maffei will discuss Liberty’s earnings release in a conference
call which will begin at 11:00 a.m. (ET) on November 6, 2012. The call can be
accessed by dialing (888) 455-2265 or (719) 457-2703 at least 10 minutes prior
to the start time. Replays of the conference call can be accessed until 1:00
p.m. (ET) on November 13, 2012, by dialing (888) 203-1112 or (719) 457-0820
plus the pass code 7834540#. The call will also be broadcast live across the
Internet and archived on our website. To access the webcast go to
http://www.libertyinteractive.com/events. Links to this press release will
also be available on Liberty’s website.

This press release includes certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, including
statements about business strategies, market potential, future financial
prospects, international expansion, new service and product offerings, the
continuation of our stock repurchase program, and other matters that are not
historical facts. These forward-looking statements involve many risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by such statements, including, without limitation,
possible changes in market acceptance of new products or services, competitive
issues, regulatory matters affecting our businesses, continued access to
capital on terms acceptable to Liberty Interactive, and market conditions
conducive to stock repurchases. These forward-looking statements speak only as
of the date of this press release, and Liberty Interactive 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
Interactive’s expectations with regard thereto or any change in events,
conditions or circumstances on which any such statement is based. Please refer
to the publicly filed documents of Liberty Interactive, including the most
recent Forms 10-Q and 10-K, for additional information about Liberty
Interactive and about the risks and uncertainties related to Liberty
Interactive’s business which may affect the statements made in this press
release.

SUPPLEMENTAL INFORMATION

As a supplement to Liberty’s consolidated statements of operations, which are
included in its Form 10-Q, the following is a presentation of quarterly
information and operating metrics on a stand-alone basis for the largest
privately held business (QVC) owned by Liberty at September 30, 2012, which
Liberty has identified as a reportable segment.

Please see below for the definition of adjusted OIBDA and a discussion of why
management believes the presentation of adjusted OIBDA for QVC provides useful
information for investors. Schedule 2 to this press release provides a
reconciliation of adjusted OIBDA for each identified reportable segment to
that segment’s operating income for the same period, as determined under GAAP.

QUARTERLY SUMMARY

(amounts in       3Q11         4Q11       1Q12       2Q12       3Q12
millions)
Liberty
Interactive                                                        
Group
QVC
Revenue – US          $ 1,196         1,792         1,240         1,280         1,237
Revenue –              690       857       692       694       681   
International
Revenue –             $ 1,886     2,649     1,932     1,974     1,918 
Total
Adjusted                259           401           270           315           278
OIBDA – US
Adjusted
OIBDA –                114       178       120       123       119   
International
Adjusted              $ 373       579       390       438       397   
OIBDA – Total
Operating               159           254           171           214           173
income – US
Operating
income –               75        143       87        87        87    
International
Operating
income –              $ 234       397       258       301       260   
Total
Gross margin            35.7  %       34.6  %       35.6  %       37.2  %       36.1  %
– US
Gross margin
–                      36.7  %    37.4  %    37.7  %    38.1  %    37.4  %
International
                                                                                      

NON-GAAP FINANCIAL MEASURES

This press release includes a presentation of adjusted OIBDA, which is a
non-GAAP financial measure, for Liberty, QVC (and certain of its
subsidiaries), and the eCommerce businesses together with a reconciliation to
that entity’s operating income, as determined under GAAP. Liberty defines
adjusted OIBDA as revenue less cost of sales, operating expenses, and selling,
general and administrative expenses (excluding stock and other equity-based
compensation) and excludes from that definition depreciation and amortization
and restructuring and impairment charges that are included in the measurement
of operating income pursuant to GAAP. Further, this press release includes
adjusted OIBDA margin which is also a non-GAAP financial measure. Liberty
defines adjusted OIBDA margin as adjusted OIBDA divided by revenue.

Liberty believes adjusted OIBDA is an important indicator of the operational
strength and performance of its businesses, including each business’ ability
to service debt and fund capital expenditures. In addition, this measure
allows management to view operating results and perform analytical comparisons
and benchmarking between businesses and identify strategies to improve
performance. Because adjusted OIBDA is used as a measure of operating
performance, Liberty views operating income as the most directly comparable
GAAP measure. Adjusted OIBDA is not meant to replace or supersede operating
income or any other GAAP measure, but rather to supplement such GAAP measures
in order to present investors with the same information that Liberty's
management considers in assessing the results of operations and performance of
its assets. Please see the attached schedules for applicable reconciliations.

SCHEDULE 1

The following table provides a reconciliation of Liberty Interactive Group’s
adjusted OIBDA to its operating income calculated in accordance with GAAP for
the three months ended September 30, 2011, December 31, 2011, March 31, 2012,
June 30, 2012 and September 30, 2012, respectively.

QUARTERLY SUMMARY

(amounts in      3Q11        4Q11      1Q12      2Q12      3Q12
millions)
Liberty
Interactive                                                   
Group
Adjusted             $ 378          619          419          455          397
OIBDA
Depreciation
and                    (151 )       (193 )       (143 )       (147 )       (147 )
amortization
Stock
compensation           (2   )       (17  )       (17  )       (18  )       (18  )
expense
Impairment            --       --       --       --       (39  )
of goodwill
Operating            $ 225      409      259      290      193  
Income
                                                                                

SCHEDULE 2

The following table provides a reconciliation of adjusted OIBDA for QVC (and
certain of its subsidiaries) and the eCommerce businesses to that entity or
Group’s operating income (loss) calculated in accordance with GAAP for the
three months ended September 30, 2011, December 31, 2011, March 31, 2012, June
30, 2012 and September 30, 2012, respectively.

QUARTERLY SUMMARY

(amounts in       3Q11        4Q11      1Q12      2Q12      3Q12
millions)
Liberty
Interactive                                                    
Group
QVC Adjusted
OIBDA
QVC US                $ 259          401          270          315          278
                                                                            
QVC Japan               61           78           63           70           67
QVC Germany             40           69           46           39           36
QVC UK                  24           40           20           21           21
QVC Italy              (11  )    (9   )    (9   )    (7   )    (5   )
QVC
International         $ 114      178      120      123      119  
adjusted
OIBDA
                                                                            
Consolidated
QVC adjusted          $ 373          579          390          438          397
OIBDA
Depreciation
and                     (133 )       (176 )       (127 )       (129 )       (129 )
amortization
Stock                  (6   )    (6   )    (5   )    (8   )    (8   )
compensation
Operating             $ 234      397      258      301      260  
Income
                                                                            
eCommerce
Businesses
Adjusted              $ 9            49           34           23           4
OIBDA
Depreciation
and                     (17  )       (17  )       (17  )       (16  )       (18  )
amortization
Stock                   6            (2   )       (2   )       (8   )       (3   )
compensation
Impairment of          --       --       --       --       (39  )
goodwill
Operating             $ (2   )    30       15       (1   )    (56  )
Income (Loss)
                                                                                 

LIBERTY INTERACTIVE CORPORATION

BALANCE SHEET INFORMATION

September 30, 2012 – (unaudited)
                                                            
                           Attributed
                           Interactive  Ventures   Inter-group    Consolidated
                           Group         Group      Eliminations   Liberty
ASSETS                     amounts in millions
Current assets:
Cash and cash              $  558        1,235      --             1,793
equivalents
Trade and other            711           --         --             711
receivables, net
Inventory, net             1,247         --         --             1,247
Other current              260         --       (165    )     95
assets
Total current              2,776       1,235    (165    )     3,846
assets
Investments in
available-for-sale
securities and             3             1,639      --             1,642
other cost
investments
Investments in
affiliates,
accounted for              305           1,004      --             1,309
using the equity
method
Property and               1,207         --         --             1,207
equipment, net
Intangible assets
not subject to             8,493         --         --             8,493
amortization
Intangible assets
subject to                 1,964         --         --             1,964
amortization, net
Other assets, at
cost, net of               82          --       --           82
accumulated
amortization
Total assets               $  14,830   3,878    (165    )     18,543
                                                                   
LIABILITIES AND
EQUITY
Current
liabilities:
Intergroup Payable         $  63         (63    )   --             --
(Receivable)
Accounts payable           640           6          --             646
Accrued                    672           15         --             687
liabilities
Current portion of         300           1,251      --             1,551
debt
Current deferred           --            951        (165    )      786
tax liabilities
Other current              186         288      --           474
liabilities
Total current              1,861       2,448    (165    )     4,144
liabilities
Long-term debt             4,220         1,586      --             5,806
Deferred income            1,382         708        --             2,090
tax liabilities
Other liabilities          221         --       --           221
Total liabilities          7,684       4,742    (165    )     12,261
Equity/Attributed
net assets                 6,995         (864   )   --             6,131
(liabilities)
Noncontrolling
interests in               151         --       --           151
equity of
subsidiaries
Total liabilities          $  14,830   3,878    (165    )     18,543
and equity
                                                                   

LIBERTY INTERACTIVE CORPORATION

STATEMENT OF OPERATIONS INFORMATION

Three months ended September 30, 2012 - (unaudited)
                                                            
                                         Attributed
                                         Interactive   Ventures   Consolidated
                                                                 Liberty
                                         Group         Group
                                         amounts in millions
REVENUE:
Net retail sales                         $  2,196      --         2,196
Cost of sales                            1,407       --       1,407    
Gross profit                             789         --       789      
                                                                           
OPERATING COSTS AND EXPENSES:
Operating                                201           --         201
Selling, general and
administrative, including                209           4          213
stock-based compensation
Impairment of goodwill                   39            --         39
Depreciation and amortization            147         --       147      
                                         596         4        600      
Operating income                         193           (4    )    189
                                                                  
OTHER INCOME (EXPENSE):
Interest expense                         (84       )   (27   )    (111     )
Share of earnings (losses) of            6             37         43
affiliates, net
Realized and unrealized gains
(losses) on financial                    14            (174  )    (160     )
instruments, net
Other, net                               --          (2    )   (2       )
                                         (64       )  (166  )   (230     )
Earnings (loss) before income            129           (170  )    (41      )
taxes
Income tax (expense) benefit             (65       )  80       15       
Net earnings (loss)                      64            (90   )    (26      )
Less net earnings (losses)
attributable to noncontrolling           15          --       15       
interests
Net earnings (loss) attributable         $  49       (90   )   (41      )
to Liberty stockholders
                                                                           

LIBERTY INTERACTIVE CORPORATION

STATEMENT OF OPERATIONS INFORMATION

Three months ended September 30, 2011 - (unaudited)
                                                            
                                         Attributed
                                         Interactive   Ventures   Consolidated
                                                                 Liberty
                                         Group         Group
                                         amounts in millions
REVENUE:
Net retail sales                         $  2,133      --         2,133
Cost of sales                            1,364       --       1,364    
Gross profit                             769         --       769      
                                                                           
OPERATING COSTS AND EXPENSES:
Operating                                209           --         209
Selling, general and
administrative, including                184           1          185
stock-based compensation
Depreciation and amortization            151         --       151      
                                         544         1        545      
Operating income (loss)                  225           (1    )    224
                                                                  
OTHER INCOME (EXPENSE):
Interest expense                         (76       )   (29   )    (105     )
Share of earnings (losses) of            6             56         62
affiliates, net
Realized and unrealized gains
(losses) on financial                    12            (103  )    (91      )
instruments, net
Other, net                               (12       )  3        (9       )
                                         (70       )  (73   )   (143     )
Earnings (loss) before income            155           (74   )    81
taxes
Income tax (expense) benefit             (86       )  30       (56      )
Earnings (loss) from continuing          69            (44   )    25
operations
Earnings (loss) from
discontinued operations, net of          (32       )  --       (32      )
taxes
Net earnings (loss)                      37            (44   )    (7       )
Less net earnings (loss)
attributable to the                      12          --       12       
noncontrolling interests
Net earnings (loss) attributable         $  25       (44   )   (19      )
to Liberty stockholders
                                                                           

LIBERTY INTERACTIVE CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Nine months ended September 30, 2012 – (unaudited)
                                                            
                                         Attributed
                                         Interactive   Ventures   Consolidated
                                                                 Liberty
                                         Group         Group
                                         amounts in millions
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings (loss)                      $    336      (8     )   328
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization            437           --         437
Stock-based compensation                 52            1          53
Cash payments for stock based            (9        )   --         (9       )
compensation
Share of (earnings) losses of            (26       )   (63    )   (89      )
affiliates, net
Cash receipts from return on             8             13         21
equity investments
Realized and unrealized (gains)
losses on financial instruments,         (39       )   377        338
net
(Gains) losses on disposition of         --            (288   )   (288     )
assets, net
Impairment of goodwill                   39            --         39
Deferred income tax (benefit)            (119      )   85         (34      )
expense
Other, net                               11            (33    )   (22      )
Intergroup tax allocation                156           (156   )   --
Changes in operating assets and
liabilities
Current and other assets                 162           --         162
Payables and other current               27          (19    )  8        
liabilities
Net cash provided (used) by              1,035       (91    )  944      
operating activities
                                                                  
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash proceeds from dispositions          --            348        348
Investments in and loans to cost         (60       )   (132   )   (192     )
and equity investees
Capital expended for property            (237      )   --         (237     )
and equipment
Net sales of short term                  46            --         46
investments
Other investing activities, net          (41       )  1        (40      )
Net cash provided (used) by              (292      )  217      (75      )
investing activities
                                                                  
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings of debt                       2,043         --         2,043
Repayments of debt                       (1,123    )   (115   )   (1,238   )
Reattribution of cash between            (1,346    )   1,346      --
groups
Intergroup borrowings (payments)         122           (122   )   --
Repurchases of Liberty common            (690      )   --         (690     )
stock
Other financing activities, net          (30)        --       (30      )
Net cash provided (used) by              (1,024)     1,109    85       
financing activities
                                                                           
Effect of foreign currency rates         (8        )  --       (8       )
on cash
Net increase (decrease) in cash          (289      )   1,235      946
and cash equivalents
Cash and cash equivalents at             847         --       847      
beginning of period
Cash and cash equivalents at end         $    558    1,235    1,793    
period
                                                                           

LIBERTY INTERACTIVE CORPORATION

STATEMENT OF CASH FLOWS INFORMATION

Nine months ended September 30, 2011 - (unaudited)
                                                            
                                         Attributed
                                         Interactive   Ventures   Consolidated
                                                                 Liberty
                                         Group         Group
CASH FLOWS FROM OPERATING                amounts in millions
ACTIVITIES:
Net earnings (loss)                      $   723       (62   )    661
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
(Earnings) loss from                     (378     )    --         (378     )
discontinued operations
Depreciation and amortization            448           --         448
Stock-based compensation                 32            --         32
Cash payments for stock based            (2       )    --         (2       )
compensation
Share of (earnings) losses of            (18      )    (101  )    (119     )
affiliates, net
Cash receipts from return on             --            15         15
equity investments
Realized and unrealized (gains)
losses on financial instruments,         (57      )    118        61
net
Deferred income tax (benefit)            (56      )    (5    )    (61      )
expense
Other, net                               (12      )    8          (4       )
Intergroup tax allocation                (40      )    40         --
Changes in operating assets and
liabilities
Current and other assets                 106           --         106
Payables and other current               (216     )   (27   )   (243     )
liabilities
Net cash provided (used) by              530         (14   )   516      
operating activities
                                                                           
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expended for property            (192     )               (192     )
and equipment
Net sales (purchases) of short           (89      )    --         (89      )
term investments
Other investing activities, net          (21      )   --       (21      )
Net cash provided (used) by              (302     )   --       (302     )
investing activities
                                                                           
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings of debt                       305           (110  )    195
Repayments of debt                       (673     )    --         (673     )
Intergroup borrowings (payments)         (124     )    124        --
Repurchases of Liberty common            (87      )    --         (87      )
stock
Other financing activities, net          (50      )   --       (50      )
Net cash provided (used) by              (629     )   14       (615     )
financing activities
Effect of foreign currency rates         (7       )    --         (7       )
on cash
Net cash provided (used) by
financing activities
Net cash provided by (to)
discontinued operations
Net cash provided (used) by              304           --         304
operating activities
Net cash provided (used) by              (104     )    --         (104     )
investing activities
Net cash provided (used) by              (264     )    --         (264     )
financing activities
Change in available cash held by         15          --       15       
discontinued operations
Net cash provided by (to)                (49      )   --       (49      )
discontinued operations
Net increase (decrease) in cash          (457     )    --         (457     )
and cash equivalents
Cash and cash equivalents at             1,353       --       1,353    
beginning of period
Cash and cash equivalents at end         $ 896       --       896      
period

Contact:

Liberty Interactive Corporation
Courtnee Ulrich, 720-875-5420
 
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