| 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 the Company's carrying amount and percentage ownership and market value (level 1) of the more significant investments in affiliates at December 31, 2012, and the carrying amount at December 31, 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012 |
|
December 31, 2011 |
|
Percentage
ownership
|
|
Market
Value
|
|
Carrying
amount
|
|
Carrying
amount
|
|
|
|
dollar amounts in millions |
SIRIUS XM (a)(c) |
49 |
% |
|
$ |
9,372 |
|
|
$ |
2,766 |
|
|
82 |
|
Live Nation (b)(c) |
27 |
% |
|
$ |
469 |
|
|
406 |
|
|
355 |
|
Other |
various |
|
|
N/A |
|
|
169 |
|
|
126 |
|
|
|
|
|
|
|
|
$ |
3,341 |
|
|
563 |
|
The following table presents the Company's share of earnings (losses) of affiliates:
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
2012 |
|
2011 |
|
2010 |
SIRIUS XM(a)(c) |
$ |
1,367 |
|
|
94 |
|
|
(41 |
) |
Live Nation(b)(c) |
(45 |
) |
|
(22 |
) |
|
(34 |
) |
Other |
24 |
|
|
15 |
|
|
(23 |
) |
|
$ |
1,346 |
|
|
87 |
|
|
(98 |
) |
___________________________
|
|
(a) |
During the year ended December 31, 2012, Liberty acquired an additional 312.5 million shares of SIRIUS XM in the open market for $769 million. Additionally, Liberty settled a forward contract and purchased an additional 302.2 million shares of SIRIUS XM for $649 million. SIRIUS XM recognized a 3.0 billion tax benefit during the year ended December 31, 2012. SIRIUS XM recorded the tax benefit as the result of significant positive evidence that a valuation allowance was no longer necessary for its recorded deferred tax assets. The Company recognized its portion of this benefit ($1,229 million) based on our ownership percentage at the time of the recognition of the deferred tax benefit by SIRIUS XM.
|
|
|
(b) |
During June 2011, Liberty acquired an additional 5.5 million shares of Live Nation which increased our ownership percentage above 20% of the outstanding voting shares. Due to the presumption that an entity with an ownership percentage greater than 20% has significant influence absent other factors to rebut that presumption, the Company is accounting for the investment as an equity method affiliate. Additionally, during the year ended December 31, 2012 the Company acquired approximately 11 million shares of Live Nation for $107 million.
|
|
|
(c) |
The Company made the decision, in the fourth quarter of 2012, to start recording its investments in SIRIUS XM and Live Nation on a current basis instead of on a three-month lag as it had been doing since the equity method of accounting had been applied for each investment. The change in accounting requires retrospective application and as such all periods presented above are on a comparable basis and are of the same periods as the Company's year-end. The effects of this change to the applicable prior period balances are illustrated in note 3. |
Sirius XM Radio Inc.
Based on the Company's voting rights and its conclusion that the SIRIUS XM Preferred Stock is in-substance common stock, the Company accounts for its investment in the SIRIUS XM Preferred Stock using the equity method of accounting. Subsequent to year-end the Company acquired additional shares which increased our voting control of SIRIUS XM over 50% and will consolidate the investment in the first quarter of 2013. For further discussion about the the potential impacts to the consolidated financial statements see note 1.
Summarized unaudited financial information for SIRIUS XM is as follows:
SIRIUS XM Consolidated Balance Sheet
|
|
|
|
|
|
|
|
|
December 31, 2012 |
|
December 31, 2011 |
|
amounts in millions |
Current assets |
$ |
1,828 |
|
|
1,277 |
|
Property and equipment, net |
1,572 |
|
|
1,674 |
|
Intangible assets |
2,520 |
|
|
2,574 |
|
Goodwill |
1,815 |
|
|
1,835 |
|
Deferred tax assets |
1,219 |
|
|
— |
|
Other assets |
101 |
|
|
136 |
|
Total assets |
$ |
9,055 |
|
|
7,496 |
|
Current liabilities |
$ |
2,315 |
|
|
2,248 |
|
Deferred tax liabilities |
— |
|
|
1,011 |
|
Long-term debt |
2,222 |
|
|
2,684 |
|
Other liabilities |
478 |
|
|
849 |
|
Stockholders' equity |
4,040 |
|
|
704 |
|
Total liabilities and equity |
$ |
9,055 |
|
|
7,496 |
|
SIRIUS XM Consolidated Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Years ended December 31, |
|
2012 |
|
2011 |
|
2010 |
|
|
|
amounts in millions |
Revenue |
$ |
3,402 |
|
|
$ |
3,015 |
|
|
2,817 |
|
Cost of services |
(1,230 |
) |
|
(1,122 |
) |
|
(1,099 |
) |
Selling, general and administrative expenses |
(1,034 |
) |
|
(949 |
) |
|
(915 |
) |
Restructuring, impairments and related costs |
— |
|
|
— |
|
|
(64 |
) |
Depreciation and amortization |
(266 |
) |
|
(268 |
) |
|
(274 |
) |
Operating income |
872 |
|
|
676 |
|
|
465 |
|
Interest expense |
(265 |
) |
|
(305 |
) |
|
(296 |
) |
Loss on extinguishment of debt |
(133 |
) |
|
(7 |
) |
|
(120 |
) |
Other income (loss), net |
1 |
|
|
77 |
|
|
(1 |
) |
Income tax (expense) benefit |
2,998 |
|
|
(14 |
) |
|
(5 |
) |
Net income attributable to SIRIUS XM stockholders |
$ |
3,473 |
|
|
$ |
427 |
|
|
43 |
|
As of December 31, 2012, the SIRIUS XM Preferred Stock and common stock owned had a market value of $9,372 million based on the value of the common stock (level 1) into which it is convertible.
|