Liberty(FWONK) - 2022 Q1 - Quarterly Report

Part I – Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Liberty Media Corporation as of March 31, 2022, including balance sheets, statements of operations, cash flows, and detailed notes Condensed Consolidated Balance Sheets Total assets increased slightly to $44.52 billion, driven by cash, while total liabilities rose to $25.99 billion due to long-term debt, and total equity decreased to $17.95 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Assets | $44,519 | $44,351 | | Cash and cash equivalents | $3,286 | $2,814 | | Goodwill | $19,272 | $19,248 | | Total Liabilities | $25,991 | $25,514 | | Total current liabilities | $6,362 | $6,610 | | Long-term debt | $16,467 | $15,699 | | Total Equity | $17,953 | $18,262 | Condensed Consolidated Statements of Operations Q1 2022 saw total revenue of $2.57 billion, operating income of $463 million, and net earnings of $240 million, significantly improving from Q1 2021 Q1 2022 vs. Q1 2021 Statement of Operations (in millions, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total Revenue | $2,569 | $2,254 | | Operating Income | $463 | $142 | | Net Earnings (Loss) Attributable to Liberty Stockholders | $240 | $(116) | | Diluted EPS (Liberty SiriusXM) | $0.82 | $(0.03) | | Diluted EPS (Liberty Braves) | $(0.25) | $(1.13) | | Diluted EPS (Liberty Formula One) | $(0.15) | $(0.20) | Condensed Consolidated Statements of Cash Flows Net cash from operating activities increased to $551 million, investing activities shifted to a $11 million inflow, and financing activities used $164 million in Q1 2022 Cash Flow Summary for Three Months Ended March 31 (in millions) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $551 | $497 | | Net Cash from Investing Activities | $11 | $(716) | | Net Cash from Financing Activities | $(164) | $383 | | Net Increase in Cash | $396 | $162 | Notes to Condensed Consolidated Financial Statements Detailed notes explain tracking stock structure, debt, segment performance, and significant Q1 2021 impairment charges - The company's structure is organized around three tracking stocks: Liberty SiriusXM Group, Liberty Braves Group, and Liberty Formula One Group, which are intended to reflect the economic performance of attributed businesses but are not separate legal entities[49] - Total long-term debt stood at $19.05 billion as of March 31, 2022, an increase from $18.59 billion at year-end 2021[112] - In Q1 2021, the company recorded a $220 million impairment charge for the SXM-7 satellite, which was deemed a total loss, and a $25 million charge for restructuring office leases[160][166] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) This section provides management's perspective on the company's financial condition and results of operations for the first quarter of 2022, detailing segment performance, liquidity, and capital resources Consolidated Operating Results Consolidated revenue grew to $2.57 billion, operating income rose to $463 million, and Adjusted OIBDA increased to $778 million in Q1 2022 Consolidated Operating Results for Q1 (in millions) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $2,569 | $2,254 | | Operating Income | $463 | $142 | | Adjusted OIBDA | $778 | $714 | Other Income and Expense Total other expense significantly decreased to $67 million due to improved affiliate losses and a swing to gains on financial instruments - Share of losses from affiliates improved to a loss of $14 million from a loss of $95 million in the prior year, primarily due to reduced losses at Live Nation as the live entertainment industry recovered from COVID-19 impacts[223][225][226] - Realized and unrealized gains on financial instruments were a net gain of $59 million, compared to a net loss of $49 million in Q1 2021, driven by changes in the fair value of debt and equity securities[223][226] Liquidity and Capital Resources The company maintained strong cash balances across groups, with primary cash uses including debt repayments and stock repurchases Cash and Cash Equivalents by Group (March 31, 2022, in millions) | Group | Cash and Cash Equivalents | | :--- | :--- | | Liberty SiriusXM Group | $710 | | Braves Group | $311 | | Formula One Group | $2,265 | - Primary uses of cash in Q1 2022 included $795 million for debt repayments and over $239 million for stock repurchases, funded by $350 million in margin loan borrowings and dividends from Sirius XM Holdings[240] - Subsequent to quarter-end, a subsidiary committed to purchase land near the Las Vegas Strip for approximately $240 million in support of the 2023 Las Vegas Grand Prix[243] Results of Operations—Businesses Sirius XM saw modest growth, Formula 1 achieved significant revenue and OIBDA growth, and Braves Holdings' revenue increased slightly Segment Adjusted OIBDA for Q1 (in millions) | Segment | 2022 | 2021 | | :--- | :--- | :--- | | Sirius XM Holdings | $690 | $682 | | Formula 1 | $122 | $66 | | Braves Holdings | $(17) | $(20) | Quantitative and Qualitative Disclosures about Market Risk The company manages interest rate risk through debt mix and is transitioning from LIBOR, while also exposed to stock price risk from equity holdings - As of March 31, 2022, the company's debt consisted of approximately $3.2 billion in variable-rate debt and $14.8 billion in fixed-rate debt[300] - The company is managing the transition away from LIBOR, which is the benchmark for its margin loans and various subsidiary credit facilities, and expects to incorporate alternative reference rates like SOFR into its debt agreements[300] - The company holds $162 million in marketable equity securities; a 10% decline in market price would result in a $16 million reduction in value, and its investment in Live Nation would decrease by $819 million with a 10% price drop[303] Controls and Procedures Management concluded disclosure controls were effective as of March 31, 2022, with no material changes to internal controls - The company's executives concluded that disclosure controls and procedures were effective as of March 31, 2022[304] - No material changes were made to internal controls over financial reporting during the first quarter of 2022[305] Part II — Other Information Legal Proceedings The report refers to the 2021 Form 10-K and Note 10 for legal proceedings information and updates - For information on legal proceedings, the report refers to the 2021 Form 10-K and Note 10 of the current financial statements for any updates[307] Risk Factors A new risk factor highlights supply chain issues, including semiconductor shortages and the war in Ukraine, impacting Sirius XM Holdings - A new risk factor was added concerning supply chain issues affecting Sirius XM Holdings[308][309] - These supply chain issues, including semiconductor shortages and the war in Ukraine, could negatively impact new vehicle production, affecting Sirius XM's subscriber acquisition, and delay the supply of essential components for its satellite radios and future satellites[310][311] Share Repurchases The company repurchased shares of Liberty SiriusXM and Liberty Formula One common stock in Q1 2022, with an additional $1 billion authorization in May Share Repurchase Activity for Q1 2022 | Stock Series | Shares Purchased | Average Price Paid | | :--- | :--- | :--- | | Series A Liberty SiriusXM | 2,341,648 | ~$47.50 | | Series C Liberty SiriusXM | 1,849,254 | ~$48.70 | | Series A Liberty Formula One | 665,418 | ~$56.10 | - In May 2022, the Board of Directors authorized an additional $1 billion for the company's common stock repurchase program[312] Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including certifications and XBRL data - The report lists all exhibits filed, including CEO/CFO certifications (31.1, 31.2), Section 1350 certification (32), and unaudited attributed financial information for tracking stock groups (99.1)[317]