Form: 10-Q

Quarterly report pursuant to Section 13 or 15(d)

Documents


Exhibit 99.1


Unaudited Attributed Financial Information for Tracking Stock Groups
Our Liberty Interactive common stock is intended to reflect the separate performance of our Interactive Group which is comprised of our businesses engaged in video and on-line commerce, including our subsidiaries, QVC, Inc., Provide Commerce, Inc., Backcountry.com, Inc., Bodybuilding.com, LLC and Celebrate Interactive Holdings, Inc. and our interest in HSN, Inc. Our Liberty Ventures common stock is intended to reflect the separate performance of our Ventures Group which consists of all of our businesses not included in the Interactive Group including our interest in equity method investments of Expedia, Inc., TripAdvisor, Inc., Interval Leisure Group, Inc. and Tree.com, Inc. and available-for-sale securities Time Warner, Time Warner Cable and AOL.
The following tables present our assets and liabilities as of September 30, 2012 and revenue, expenses and cash flows as of and for the three and nine months ended September 30, 2012 and 2011. The tables further present our assets, liabilities, revenue, expenses and cash flows that are attributed to the Interactive Group and the Ventures Group, respectively, as if those businesses and assets had been attributed to those respective groups at the beginning of each period, for comparative purposes. Therefore, the attributed earnings in the periods presented in the Unaudited Attributed Financial Information Statements are not the same as those reflected in the Liberty Interactive Corporation condensed consolidated financial statements. The earnings attributed to the Liberty Interactive common stock and and Liberty Ventures common stock for purposes of those financial statements only relates to the period after the Liberty Ventures stock was issued. The financial information in this Exhibit should be read in conjunction with our unaudited condensed consolidated financial statements for the nine months ended September 30, 2012 included in this Quarterly Report on Form 10-Q.
Notwithstanding the following attribution of assets, liabilities, revenue, expenses and cash flows to the Interactive Group and the Ventures Group, our tracking stock structure does not affect the ownership or the respective legal title to our assets or responsibility for our liabilities. We and our subsidiaries are each responsible for our respective liabilities. Holders of Liberty Interactive common stock and Liberty Ventures common stock are holders of our common stock and are subject to risks associated with an investment in our company and all of our businesses, assets and liabilities. The issuance of Liberty Interactive common stock and Liberty Ventures common stock does not affect the rights of our creditors or creditors of our subsidiaries.

1

SUMMARY ATTRIBUTED FINANCIAL DATA
Interactive Group
 
September 30, 2012
 
December 31, 2011
 
amounts in millions
Summary balance sheet data:
 
 
 
Current assets
$
2,776

 
3,275

Investments in available-for-sale securities and other cost investments
$
3

 
3

Investments in affiliates, accounted for using the equity method
$
305

 
230

Total assets
$
14,830

 
15,424

Long-term debt
$
4,220

 
3,575

Long-term deferred income tax liabilities
$
1,382

 
1,493

Attributed net assets
$
6,995

 
8,464


 
Three months
ended
 
Nine months
ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
 
amounts in millions
Summary operations data:
 
 
 
 
 
 
 
Revenue
$
2,196

 
2,133

 
6,875

 
6,537

Cost of sales
(1,407
)
 
(1,364
)
 
(4,361
)
 
(4,139
)
Operating expenses
(201
)
 
(209
)
 
(608
)
 
(621
)
Selling, general and administrative expenses (1)
(209
)
 
(184
)
 
(688
)
 
(601
)
Impairment of goodwill
(39
)
 
—

 
(39
)
 
—

Depreciation and amortization
(147
)
 
(151
)
 
(437
)
 
(448
)
Operating income (loss)
193

 
225

 
742

 
728

Interest expense
(84
)
 
(79
)
 
(241
)
 
(247
)
Share of earnings (losses) of affiliates, net
6

 
6

 
26

 
18

Realized and unrealized gains (losses) on financial instruments, net
14

 
12

 
39

 
57

Other income (expense), net
—

 
(9
)
 
(4
)
 
20

Income tax benefit (expense)
(65
)
 
(86
)
 
(226
)
 
(231
)
Earnings (loss) from continuing operations
64

 
69

 
336

 
345

Earnings (loss) from discontinued operations, net of taxes
—

 
(32
)
 
—

 
378

Net earnings (loss)
64

 
37

 
336

 
723

Less net earnings (loss) attributable to noncontrolling interests
15

 
12

 
44

 
34

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders
$
49

 
25

 
292

 
689

______________________________________________
(1)
Includes stock-based compensation of $17 million and $2 million for the three months ended September 30, 2012 and 2011, respectively, and $52 million and $32 million for the nine months ended September 30, 2012 and 2011, respectively.

2

SUMMARY ATTRIBUTED FINANCIAL DATA (Continued)
Ventures Group
 
September 30, 2012
 
December 31, 2011
 
amounts in millions
Summary balance sheet data:
 
 
 
Cash and cash equivalents
$
1,235

 
—

Investments in available-for-sale securities and other cost investments
$
1,639

 
1,165

Investments in affiliates, accounted for using the equity method
$
1,004

 
905

Long-term debt, including current portion
$
2,837

 
2,443

Deferred tax liabilities, including current portion
$
1,659

 
1,559

Attributed net assets (liabilities)
$
(864
)
 
(1,971
)
 
 
Three months
ended
 
Nine months
ended
 
September 30,
 
September 30,
 
2012
 
2011
 
2012
 
2011
 
amounts in millions
Summary operations data:
 
 
 
 
 
 
 
Revenue
$
—

 
—

 
—

 
—

Operating expenses
—

 
—

 
—

 
—

Selling, general and administrative expenses (1)
(4
)
 
(1
)
 
(5
)
 
(3
)
Depreciation and amortization
—

 
—

 
—

 
—

Operating income (loss)
(4
)
 
(1
)
 
(5
)
 
(3
)
Interest expense
(27
)
 
(26
)
 
(83
)
 
(79
)
Share of earnings (losses) of affiliates, net
37

 
56

 
63

 
101

Realized and unrealized gains (losses) on financial instruments, net
(174
)
 
(103
)
 
(377
)
 
(118
)
Gains (losses) on dispositions, net
—

 
—

 
288

 
—

Other, net
(2
)
 
—

 
35

 
(8
)
Income tax benefit (expense)
80

 
30

 
71

 
45

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders
$
(90
)
 
(44
)
 
(8
)
 
(62
)
______________________________________________
(1)
Includes stock-based compensation of $1 million and zero for the three months ended September 30, 2012 and 2011, respectively, and $1 million and zero for the nine months ended September 30, 2012 and 2011, respectively.

3

BALANCE SHEET INFORMATION
September 30, 2012
(unaudited)
 
Attributed (note 1)
 
 
 
 
 
Interactive
Group
 
Ventures Group
 
Inter-group
eliminations
 
Consolidated
Liberty
 
amounts in millions
Assets
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
558

 
1,235

 
—

 
1,793

Trade and other receivables, net
711

 
—

 
—

 
711

Inventory, net
1,247

 
—

 
—

 
1,247

Other current assets
260

 
—

 
(165
)
 
95

Total current assets
2,776

 
1,235

 
(165
)
 
3,846

Investments in available-for-sale securities and other cost investments (note 2)
3

 
1,639

 
—

 
1,642

Investments in affiliates, accounted for using the equity method (note 3)
305

 
1,004

 
—

 
1,309

Property and equipment, net
1,207

 
—

 
—

 
1,207

Intangible assets not subject to amortization, net
8,493

 
—

 
—

 
8,493

Intangible assets subject to amortization, net
1,964

 
—

 
—

 
1,964

Other assets, at cost, net of accumulated amortization
82

 
—

 
—

 
82

Total assets
$
14,830

 
3,878

 
(165
)
 
18,543

Liabilities and Equity
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Intergroup payable (receivable)
$
63

 
(63
)
 
—

 
—

Accounts payable
640

 
6

 
—

 
646

Accrued liabilities
671

 
16

 
—

 
687

Current portion of debt (note 4)
300

 
1,251

 
—

 
1,551

Deferred tax liabilities
—

 
951

 
(165
)
 
786

Other current liabilities
187

 
287

 
—

 
474

Total current liabilities
1,861

 
2,448

 
(165
)
 
4,144

Long-term debt (note 4)
4,220

 
1,586

 
—

 
5,806

Deferred income tax liabilities
1,382

 
708

 
—

 
2,090

Other liabilities
221

 
—

 
—

 
221

Total liabilities
7,684

 
4,742

 
(165
)
 
12,261

Equity/Attributed net assets (liabilities)
6,995

 
(864
)
 
—

 
6,131

Noncontrolling interests in equity of subsidiaries
151

 
—

 
—

 
151

Total liabilities and equity
$
14,830

 
3,878

 
(165
)
 
18,543


4

STATEMENT OF OPERATIONS INFORMATION
Three months ended September 30, 2012
(unaudited)
 
Attributed (note 1)
 
 
 
Interactive Group
 
Ventures Group
 
Consolidated Liberty
 
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 stock-based compensation (note 5)
209

 
4

 
213

Impairment of goodwill
39

 
—

 
39

Depreciation and amortization
147

 
—

 
147

 
596

 
4

 
600

Operating income (loss)
193

 
(4
)
 
189

Other income (expense):
 
 
 
 
 
Interest expense
(84
)
 
(27
)
 
(111
)
Share of earnings (losses) of affiliates, net (note 3)
6

 
37

 
43

Realized and unrealized gains (losses) on financial instruments, net
14

 
(174
)
 
(160
)
Other, net
—

 
(2
)
 
(2
)
 
(64
)
 
(166
)
 
(230
)
Earnings (loss) before income taxes
129

 
(170
)
 
(41
)
Income tax benefit (expense)
(65
)
 
80

 
15

Net earnings (loss)
64

 
(90
)
 
(26
)
Less net earnings (loss) attributable to noncontrolling interests
15

 
—

 
15

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders
$
49

 
(90
)
 
(41
)

5

STATEMENT OF OPERATIONS INFORMATION
Three months ended September 30, 2011
(unaudited)
 
Attributed (note 1)
 
 
 
Interactive Group
 
Ventures Group
 
Consolidated Liberty
 
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 stock-based compensation (note 5)
184

 
1

 
185

Depreciation and amortization
151

 
—

 
151

 
544

 
1

 
545

Operating income (loss)
225

 
(1
)
 
224

Other income (expense):
 

 
 

 
 
Interest expense
(79
)
 
(26
)
 
(105
)
Share of earnings (losses) of affiliates, net (note 3)
6

 
56

 
62

Realized and unrealized gains (losses) on financial instruments, net
12

 
(103
)
 
(91
)
Other, net
(9
)
 
—

 
(9
)
 
(70
)
 
(73
)
 
(143
)
Earnings (loss) from continuing operations before income taxes
155

 
(74
)
 
81

Income tax benefit (expense)
(86
)
 
30

 
(56
)
Earnings (loss) from continuing operations
69

 
(44
)
 
25

Earnings (loss) from discontinued operations, net of taxes
(32
)
 
—

 
(32
)
Net earnings (loss)
37

 
(44
)
 
(7
)
Less net earnings (loss) attributable to noncontrolling interests
12

 
—

 
12

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders
$
25

 
(44
)
 
(19
)

6

STATEMENT OF OPERATIONS INFORMATION
Nine months ended September 30, 2012
(unaudited)
 
Attributed (note 1)
 
 
 
Interactive Group
 
Ventures Group
 
Consolidated Liberty
 
amounts in millions
Revenue:
 
 
 
 
 
Net retail sales
$
6,875

 
—

 
6,875

Cost of sales
4,361

 
—

 
4,361

    Gross Profit
2,514

 
—

 
2,514

Operating costs and expenses:
 
 
 
 
 
Operating
608

 
—

 
608

Selling, general and administrative, including stock-based compensation (note 5)
688

 
5

 
693

Impairment of goodwill
39

 
—

 
39

Depreciation and amortization
437

 
—

 
437

 
1,772

 
5

 
1,777

Operating income (loss)
742

 
(5
)
 
737

Other income (expense):
 

 
 

 
 
Interest expense
(241
)
 
(83
)
 
(324
)
Share of earnings (losses) of affiliates, net (note 3)
26

 
63

 
89

Realized and unrealized gains (losses) on financial instruments, net
39

 
(377
)
 
(338
)
Gains (losses) on dispositions, net
—

 
288

 
288

Other, net
(4
)
 
35

 
31

 
(180
)
 
(74
)
 
(254
)
Earnings (loss) before income taxes
562

 
(79
)
 
483

Income tax benefit (expense)
(226
)
 
71

 
(155
)
Net earnings (loss)
336

 
(8
)
 
328

Less net earnings (loss) attributable to noncontrolling interests
44

 
—

 
44

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders
$
292

 
(8
)
 
284


7

STATEMENT OF OPERATIONS INFORMATION
Nine months ended September 30, 2011
(unaudited)
 
Attributed (note 1)
 
 
 
Interactive Group
 
Ventures Group
 
Consolidated Liberty
 
amounts in millions
Revenue:
 
 
 
 
 
Net retail sales
$
6,537

 
—

 
6,537

Cost of sales
4,139

 
—

 
4,139

    Gross Profit
2,398

 
—

 
2,398

Operating costs and expenses:
 
 
 
 
 
Operating
621

 
—

 
621

Selling, general and administrative, including stock-based compensation (note 5)
601

 
3

 
604

Depreciation and amortization
448

 
—

 
448

 
1,670

 
3

 
1,673

Operating income (loss)
728

 
(3
)
 
725

Other income (expense):
 

 
 

 
 
Interest expense
(247
)
 
(79
)
 
(326
)
Share of earnings (losses) of affiliates, net (note 3)
18

 
101

 
119

Realized and unrealized gains (losses) on financial instruments, net
57

 
(118
)
 
(61
)
Other, net
20

 
(8
)
 
12

 
(152
)
 
(104
)
 
(256
)
Earnings (loss) from continuing operations before income taxes
576

 
(107
)
 
469

Income tax benefit (expense)
(231
)
 
45

 
(186
)
Earnings (loss) from continuing operations
345

 
(62
)
 
283

Earnings (loss) from discontinued operations, net of taxes
378

 
—

 
378

Net earnings (loss)
723

 
(62
)
 
661

Less net earnings (loss) attributable to noncontrolling interests
34

 
—

 
34

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders
$
689

 
(62
)
 
627



8

STATEMENT OF CASH FLOWS INFORMATION
Nine months ended September 30, 2012
(unaudited)
 
Attributed (note 1)
 
 
 
Interactive
Group
 
Ventures Group
 
Consolidated
Liberty
 
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 compensation
(9
)
 
—

 
(9
)
Share of losses (earnings) of affiliates, net
(26
)
 
(63
)
 
(89
)
Cash receipts from return on equity investments
8

 
13

 
21

Realized and unrealized gains (losses) on financial instruments, net
(39
)
 
377

 
338

(Gains) losses on disposition of assets, net
—

 
(288
)
 
(288
)
Impairment of goodwill
39

 
—

 
39

Deferred income tax (benefit) expense
(119
)
 
85

 
(34
)
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 liabilities
27

 
(19
)
 
8

Net cash provided (used) by operating activities
1,035

 
(91
)
 
944

Cash flows from investing activities:
 
 
 
 
 
Cash proceeds from dispositions
—

 
348

 
348

Investments in and loans to cost and equity investees
(60
)
 
(132
)
 
(192
)
Capital expended for property and equipment
(237
)
 
—

 
(237
)
Net sales (purchases) of short term and other marketable securities
46

 
—

 
46

Other investing activities, net
(41
)
 
1

 
(40
)
Net cash provided (used) by investing activities
(292
)
 
217

 
(75
)
Cash flows from financing activities:
 
 
 
 
 
Borrowings of debt
2,043

 
—

 
2,043

Repayments of debt
(1,123
)
 
(115
)
 
(1,238
)
Reattribution of cash between groups
(1,346
)
 
1,346

 
—

Intergroup receipts (payments), net
122

 
(122
)
 
—

Repurchases of Liberty common stock
(690
)
 
—

 
(690
)
Other financing activities, net
(30
)
 
—

 
(30
)
Net cash provided (used) by financing activities
(1,024
)
 
1,109

 
85

Effect of foreign currency rates on cash
(8
)
 
—

 
(8
)
Net increase (decrease) in cash and cash equivalents
(289
)
 
1,235

 
946

Cash and cash equivalents at beginning of period
847

 
—

 
847

Cash and cash equivalents at end period
$
558

 
1,235

 
1,793


9

STATEMENT OF CASH FLOWS INFORMATION
Nine months ended September 30, 2011
(unaudited)
 
Attributed (note 1)
 
 
 
Interactive
Group
 
Ventures Group
 
Consolidated
Liberty
 
amounts in millions
Cash flows from operating activities:
 
 
 
 
 
Net earnings (loss)
$
723

 
(62
)
 
661

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
 
 
(Earnings) loss from discontinued operations
(378
)
 
—

 
(378
)
Depreciation and amortization
448

 
—

 
448

Stock-based compensation
32

 
—

 
32

Cash payments for stock based compensation
(2
)
 
—

 
(2
)
Share of losses (earnings) of affiliates, net
(18
)
 
(101
)
 
(119
)
Cash receipts from return on equity investments
—

 
15

 
15

Realized and unrealized gains (losses) on financial instruments, net
(57
)
 
118

 
61

Deferred income tax (benefit) expense
(56
)
 
(5
)
 
(61
)
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 liabilities
(216
)
 
(27
)
 
(243
)
Net cash provided (used) by operating activities
530

 
(14
)
 
516

Cash flows from investing activities:
 
 
 
 
 
Capital expended for property and equipment
(192
)
 
—

 
(192
)
Net sales (purchases) of short term and other marketable securities
(89
)
 
—

 
(89
)
Other investing activities, net
(21
)
 
—

 
(21
)
Net cash provided (used) by investing activities
(302
)
 
—

 
(302
)
Cash flows from financing activities:
 
 
 
 
 
Borrowings of debt
305

 
(110
)
 
195

Repayments of debt
(673
)
 
—

 
(673
)
Intergroup receipts (payments), net
(124
)
 
124

 
—

Repurchases of Liberty common stock
(87
)
 
—

 
(87
)
Other financing activities, net
(50
)
 
—

 
(50
)
Net cash provided (used) by financing activities
(629
)
 
14

 
(615
)
Effect of foreign currency rates on cash
(7
)
 
—

 
(7
)
Net cash provided by (to) discontinued operations
 
 
 
 
 
Cash provided (used) by operating activities
304

 
—

 
304

Cash provided (used) by investing activities
(104
)
 
—

 
(104
)
Cash provided (used) by financing activities
(264
)
 
—

 
(264
)
Change in available cash held by discontinued operations
15

 
—

 
15

Net cash provided by (to) discontinued operations
(49
)
 
—

 
(49
)
Net increase (decrease) in cash and cash equivalents
(457
)
 
—

 
(457
)
Cash and cash equivalents at beginning of period
1,353

 
—

 
1,353

Cash and cash equivalents at end period
$
896

 
—

 
896



10

Notes to Attributed Financial Information
(unaudited)
(1)
The Interactive Group is comprised of our consolidated subsidiaries QVC, Inc., Provide Commerce, Inc., Backcountry.com, Inc., Bodybuilding.com, LLC and Celebrate Interactive Holdings, Inc. and our interest in HSN, Inc. Accordingly, the accompanying attributed financial information for the Interactive Group includes the foregoing investments, as well as the assets, liabilities, revenue, expenses and cash flows of those consolidated subsidiaries. We have also attributed certain of our debt obligations (and related interest expense) to the Interactive Group based upon a number of factors, including the cash flow available to the Interactive Group and its ability to pay debt service and our assessment of the optimal capitalization for the Interactive Group. The specific debt obligations attributed to each of the Interactive Group and the Ventures Group are described in note 4 below. In addition, we have allocated certain corporate general and administrative expenses among the Interactive Group and the Ventures Group as described in note 5 below.

The Interactive Group focuses on video and on-line commerce businesses. Accordingly, we expect that businesses that we may acquire in the future that we believe are complementary to this strategy will also be attributed to the Interactive Group.

The Ventures Group consists of all of our businesses not included in the Interactive Group including our interest in equity method investments of Expedia, Inc., TripAdvisor, Inc., Interval Leisure Group, Inc. and Tree.com, Inc. and available-for-sale securities Time Warner, Time Warner Cable and AOL. Accordingly, the accompanying attributed financial information for the Ventures Group includes these investments. In addition, we have attributed to the Ventures Group all of our senior exchangeable debentures (and related interest expense). See note 4 below for the debt obligations attributed to the Ventures Group.

Any businesses that we may acquire in the future that we do not attribute to the Interactive Group will be attributed to the Ventures Group.

At the time of issuance of Liberty Ventures common stock, cash of $1,346 million was reattributed to the Ventures Group from the Interactive Group. The Interactive Group borrowed funds under QVC's credit facility in connection with the completion of the recapitalization to have the appropriate amount of cash available to be attributed to each Group.

(2)
Investments in available-for-sale securities, including non-strategic securities, and other cost investments are summarized as follows:
 
September 30, 2012
 
December 31,
2011

 
amounts in millions
Interactive Group
 
 
 
    Other
$
3

 
3

         Total Interactive Group
3

 
3

Ventures Group
 
 
 
    Time Warner Inc.
988

 
787

    Time Warner Cable Inc.
520

 
348

    AOL
70

 
30

Other
61

 
—

         Total Ventures Group
1,639

 
1,165

Consolidated Liberty
$
1,642

 
1,168


11


(3)
The following table presents information regarding certain equity method investments:
 
 
 
 
 
 
 
Share of earnings (losses)
 
September 30, 2012
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
Percentage
ownership
 
Carrying
value
 
Market
value
 
 
2012
 
2011
 
2012
 
2011
 
dollar amounts in millions
 
 
 
 
Interactive Group
 
 
 
 
 
 
 
 
 
 
 
 
 
    HSN, Inc.
36
%
 
$
241

 
982

 
10

 
10

 
34

 
30

    Other
various

 
64

 
N/A

 
(4
)
 
(4
)
 
(8
)
 
(12
)
        Total Interactive Group
 
 
305

 
 
 
6

 
6

 
26

 
18

Ventures Group
 
 
 
 
 
 
 
 
 
 
 
 
 
    Expedia, Inc. (a)(b)
26
%
 
681

 
2,002

 
41

 
56

 
65

 
104

    TripAdvisor, Inc. (a)(c)
18
%
 
199

 
861

 
10

 
—

 
33

 
—

    Other
various

 
124

 
N/A

 
(14
)
 
—

 
(35
)
 
(3
)
        Total Ventures Group
 
 
1,004

 
 
 
37

 
56

 
63

 
101

Consolidated Liberty
 
 
$
1,309

 
 
 
43

 
62

 
89

 
119

___________________________
(a)
During the fourth quarter of 2011 Expedia, Inc. completed the pro-rata split-off of TripAdvisor, Inc. ("TripAdvisor"), its wholly owned subsidiary. As of the TripAdvisor split-off date, the Company had a 26% economic ownership interest in each of Expedia, Inc. and TripAdvisor 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 stockholder's 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. Because of Liberty's board representation, it was determined that the Company has significant influence over each respective company and the Company continues to apply the equity method of accounting to its interests in TripAdvisor. As discussed below, in May 2012, Liberty sold shares of TripAdvisor which decreased Liberty's ownership percentage below 20%. As Liberty's board representation on the TripAdvisor board continues to be 20%, subsequent to the sale of securities discussed above, it was determined that significant influence still exists and the application of the equity method of accounting is appropriate.
(b)
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 may be settled, in October 2012, in stock 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 $236 million and the fair value was $694 million as of September 30, 2012.
(c)
In May 2012, Liberty sold approximately 8.5 million shares of TripAdvisor, Inc. for cash proceeds of $338 million. The sale resulted in a $288 million gain recorded in gain (losses) on dispositions, net in the statement of operations.



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(4)
Debt attributed to the Interactive Group and the Ventures Group is comprised of the following:
 
 
September 30, 2012
 
 
Outstanding
principal
 
Carrying
value
 
 
amounts in millions
Interactive Group
 
 
 
 
5.7% Senior Notes due 2013
$
279

 
278

 
8.5% Senior Debentures due 2029
287

 
285

 
8.25% Senior Debentures due 2030
504

 
501

 
QVC 7.125% Senior Secured Notes due 2017
500

 
500

 
QVC 7.5% Senior Secured Notes due 2019
1,000

 
987

 
QVC 7.375% Senior Secured Notes due 2020
500

 
500

 
QVC 5.125% Senior Secured Notes due 2022
500

 
500

 
QVC Bank Credit Facilities
851

 
851

 
Other subsidiary debt
118

 
118

        Total Interactive Group debt
4,539

 
4,520

Ventures Group
 
 
 
 
3.125% Exchangeable Senior Debentures due 2023
1,138

 
1,586

 
4% Exchangeable Senior Debentures due 2029
469

 
304

 
3.75% Exchangeable Senior Debentures due 2030
460

 
276

 
3.5% Exchangeable Senior Debentures due 2031
371

 
283

 
3.25% Exchangeable Senior Debentures due 2031
414

 
388

        Total Ventures Group debt
2,852

 
2,837

 
Total consolidated Liberty debt
$
7,391

 
7,357


At September 30, 2012, the intergroup payable/(receivable) balance includes a intergroup loan of approximately $30 million. The Ventures group acquired $30 million principal amount of the 5.7% Senior Notes due 2023, on the open market, which are attributed to the Interactive group and has been extinguished on a consolidated basis. The intergroup loan carries an interest rate that is equal to the effective yield on the 5.7% Senior Notes at the time of purchase.
(5)
Cash compensation expense for our corporate employees will be allocated among the Interactive Group and the Ventures Group based on the estimated percentage of time spent providing services for each group. On a semi-annual basis estimated time spent will be determined through an interview process and a review of personnel duties unless transactions significantly change the composition of companies and investments in either respective group which would require a more timely reevaluation of estimated time spent. Other general and administrative expenses will be charged directly to the groups whenever possible and are otherwise allocated based on estimated usage or some other reasonably determined methodology. Amounts allocated from the Interactive Group to the Ventures Group was determined to be $5 million and $3 million for the nine months ended September 30, 2012 and 2011, respectively. We note that stock compensation related to each tracking stock group is determined based on actual options outstanding for each respective tracking stock group.

While we believe that this allocation method is reasonable and fair to each group, we may elect to change the allocation methodology or percentages used to allocate general and administrative expenses in the future.
(6)
The Liberty Interactive Stock and the Liberty Ventures Stock have voting and conversion rights under our restated charter. Following is a summary of those rights. Holders of Series A common stock of each group is entitled to one vote per share, and holders of Series B common stock of each group are entitled to ten votes per share. Holders of Series C common stock of each group, if issued, are entitled to 1/100th of a vote per share in certain limited cases and will otherwise not be entitled to vote. In general, holders of Series A and Series B common stock will vote as a single class. In certain limited circumstances, the board may elect to seek the approval of the holders of only Series A and Series B Liberty Interactive Stock or the approval of the holders of only Series A and Series B Liberty Ventures Stock.


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At the option of the holder, each share of Series B common stock will be convertible into one share of Series A common stock of the same group. At the discretion of our board, the common stock related to one group may be converted into common stock of the same series that is related to the other group.


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