Liberty(FWONK) - 2021 Q2 - Quarterly Report

Part I – Financial Information Financial Statements This section presents Liberty Media's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and equity, with detailed notes on accounting policies and segment information Condensed Consolidated Balance Sheets Total assets increased to $45.7 billion, driven by cash, while total liabilities grew to $26.1 billion due to long-term debt, resulting in a slight equity decrease to $19.0 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Balance Sheet Item | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $45,654 | $44,004 | | Cash and cash equivalents | $3,935 | $2,831 | | Goodwill | $19,247 | $19,218 | | Total Liabilities | $26,071 | $24,403 | | Total current liabilities | $5,440 | $4,490 | | Long-term debt | $17,420 | $16,686 | | Total Equity | $19,008 | $19,601 | Condensed Consolidated Statements of Operations Q2 2021 total revenue surged to $2.88 billion, yielding $417 million net earnings, a significant turnaround from a $326 million net loss in Q2 2020, with H1 net earnings at $301 million Key Operating Results (in millions, except per share data) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $2,876 | $1,909 | $5,130 | $3,922 | | Sirius XM Holdings revenue | $2,159 | $1,874 | $4,217 | $3,826 | | Formula 1 revenue | $501 | $24 | $681 | $63 | | Operating Income | $622 | $214 | $764 | $460 | | Net Earnings (Loss) to Stockholders | $417 | ($326) | $301 | ($402) | Diluted EPS Attributable to Liberty Stockholders | Stock Group | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Liberty SiriusXM | $1.00 | ($0.28) | $0.96 | $0.28 | | Liberty Braves | $0.39 | ($0.75) | ($0.65) | ($1.22) | | Liberty Formula One | $0.24 | ($0.86) | $0.04 | ($2.34) | Condensed Consolidated Statements of Cash Flows H1 2021 operating cash flow increased to $1.24 billion, investing activities used $754 million, and financing provided $650 million, leading to a $1.13 billion net cash increase Six-Month Cash Flow Summary (in millions) | Cash Flow Activity | H1 2021 | H1 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,235 | $869 | | Net cash used in investing activities | ($754) | ($203) | | Net cash provided by financing activities | $650 | $2,069 | | Net increase in cash | $1,129 | $2,725 | Notes to Condensed Consolidated Financial Statements Detailed notes explain accounting policies, tracking stock structure, debt, equity investments, contingencies like SXM-7 failure, segment information, and COVID-19 impacts - The company's significant subsidiaries include Sirius XM Holdings Inc., Delta Topco Limited (Formula 1), and Braves Holdings, LLC, with Live Nation Entertainment, Inc. as its most significant equity method investment[43] - The COVID-19 pandemic caused significant disruptions in 2020, delaying Formula 1 and Major League Baseball seasons and suspending Live Nation events, though no asset value revisions are currently anticipated[46][47] Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial condition and operations across Liberty SiriusXM, Liberty Braves, and Liberty Formula One, highlighting COVID-19 recovery, segment performance, liquidity, and capital resources - Consolidated revenue increased by $967 million in Q2 2021 and $1,208 million in H1 2021 year-over-year, driven by increases across Formula 1, Sirius XM Holdings, and Braves Holdings[240] - Consolidated operating income rose by $408 million in Q2 2021 and $304 million in H1 2021, reflecting improved operating results at Sirius XM Holdings, Formula 1, and Braves Holdings[241] Reconciliation of Operating Income to Adjusted OIBDA (in millions) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Operating income (loss) | $622 | $214 | $764 | $460 | | Depreciation and amortization | $268 | $266 | $532 | $533 | | Stock-based compensation | $60 | $45 | $123 | $112 | | Impairment, restructuring and acquisition costs | ($137) | $24 | $108 | $24 | | Adjusted OIBDA | $813 | $549 | $1,527 | $1,113 | Results of Operations—Businesses This section details key business performance, with Sirius XM showing subscriber and advertising growth, Formula 1 revenue surging from resumed races, and Braves Holdings benefiting from fan attendance Sirius XM Holdings Revenue Breakdown (in millions) | Segment | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Sirius XM Revenue | $1,642 | $1,538 | $3,258 | $3,121 | | Subscriber revenue | $1,508 | $1,453 | $2,989 | $2,910 | | Advertising revenue | $45 | $25 | $87 | $69 | | Pandora Revenue | $517 | $336 | $959 | $705 | | Subscriber revenue | $133 | $125 | $263 | $253 | | Advertising revenue | $384 | $211 | $696 | $452 | | Total Revenue | $2,159 | $1,874 | $4,217 | $3,826 | Formula 1 Operating Results (in millions) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $501 | $24 | $681 | $63 | | Adjusted OIBDA | $66 | ($16) | $132 | ($48) | | Operating Income (Loss) | ($36) | ($122) | ($69) | ($259) | | Number of Events | 7 | 0 | 8 | 0 | Braves Holdings Operating Results (in millions) | Metric | Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $216 | $11 | $232 | $33 | | Baseball revenue | $204 | $5 | $211 | $17 | | Development revenue | $12 | $6 | $21 | $16 | | Adjusted OIBDA | $54 | ($26) | $34 | ($51) | | Operating Income | $32 | ($30) | ($5) | ($73) | | Home Games | 42 | 0 | 42 | 0 | Quantitative and Qualitative Disclosures about Market Risk The company faces market risks from stock price fluctuations and interest rate changes, managing debt with fixed and variable rates, and preparing for the LIBOR transition to alternative reference rates - The company is exposed to interest rate risk through its variable rate debt tied to LIBOR, acknowledging the planned phase-out and intending to incorporate alternative reference rates like SOFR into its debt facilities[326] - As of June 30, 2021, the fair value of marketable equity securities was $413 million, with a hypothetical 10% decline in market price reducing this value by approximately $41 million[328] Debt Composition as of June 30, 2021 (in millions) | Group | Variable Rate Debt (Principal) | Weighted Avg Rate | Fixed Rate Debt (Principal) | Weighted Avg Rate | | :--- | :--- | :--- | :--- | :--- | | Liberty SiriusXM Group | $875 | 2.1% | $13,252 | 3.8% | | Braves Group | $277 | 1.6% | $417 | 3.4% | | Formula One Group | $831 | 3.5% | $2,617 | 4.8% | Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during Q2 2021 - Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[330] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2021[331] Part II — Other Information Legal Proceedings This section refers to Note 10 of the financial statements for updates on legal proceedings, including pre-1972 sound recording litigation and Copyright Royalty Board matters - For updates on legal proceedings, the report directs readers to Note 10 in the financial statements, which covers topics such as pre-1972 sound recording litigation and Copyright Royalty Board proceedings[332][183][188] Unregistered Sales of Equity Securities and Use of Proceeds The company details Q2 2021 share repurchase activity, exclusively for Liberty SiriusXM common stock, with approximately $808 million remaining under authorization Share Repurchase Activity (Q2 2021) | Period | Total Shares Purchased | Avg Price (LSXMA) | Avg Price (LSXMK) | Remaining Authorization (millions) | | :--- | :--- | :--- | :--- | :--- | | April 2021 | 799,851 | $45.68 | $46.13 | $907 | | May 2021 | 1,118,361 | $42.26 | $42.65 | $860 | | June 2021 | 1,144,874 | $45.25 | $44.68 | $808 | | Total | 3,063,086 | | | | - No repurchases of Liberty Braves or Liberty Formula One common stock were made during the three months ended June 30, 2021[334] Exhibits This section lists exhibits filed with the Quarterly Report, including officer certifications, Section 1350 certification, unaudited tracking stock financial information, and XBRL data files - Exhibits filed with the report include CEO and CFO certifications, unaudited financial information for the tracking stock groups, and interactive data files (XBRL)[338]