Liberty Media believes Adjusted OIBDA is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business' performance or indicative of ongoing business trends. 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 Media 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 Media's management considers in assessing the results of operations and performance of its assets.
The following table provides a reconciliation of Adjusted OIBDA for Liberty Media to operating income (loss) calculated in accordance with GAAP for the three months ended June 30, 2022 and June 30, 2023, respectively.
QUARTERLY SUMMARY
(amounts in millions) 2Q22 2Q23
---- ------
Liberty SiriusXM Group
Operating income $472 $452
Depreciation and amortization 152 154
Stock compensation expense 50 46
Legal settlements and reserves -- 24
Impairment, restructuring and acquisition costs,
net of recoveries(a) 1 18
--- ---
Adjusted OIBDA $675 $694
=== ===
Formula One Group
Operating income $ 49 $ 52
Depreciation and amortization 93 84
Stock compensation expense 4 5
--- ---
Adjusted OIBDA $146 $141
=== ===
Braves Group
Operating income $ 35 $ 19
Depreciation and amortization 17 19
Stock compensation expense 3 3
Impairment, restructuring and acquisition costs,
net of recoveries(a) -- 1
--- ---
Adjusted OIBDA $ 55 $ 42
=== ===
Liberty Media Corporation (Consolidated)
Operating income $556 $523
Depreciation and amortization 262 257
Stock compensation expense 57 54
Legal settlements and reserves -- 24
Impairment, restructuring and acquisition costs,
net of recoveries(a) 1 19
--- ---
Adjusted OIBDA $876 $877
=== ===
(a) During the three months ended June 30, 2023, SiriusXM recorded
impairments primarily related to terminated software projects of $10
million, severance and other related costs of $5 million and a
cost-method investment impairment of $2 million. During the three
months ended June 30, 2023, Braves Holdings recorded $1 million of
charges associated with hurricane damage to the Braves' spring training
facility located in North Port, Florida. These charges have been
excluded from adjusted OIBDA.
SCHEDULE 2
This press release also includes a presentation of adjusted EBITDA of SiriusXM, which is a non-GAAP financial measure used by SiriusXM, together with a reconciliation to SiriusXM's stand-alone net income, as determined under GAAP. SiriusXM defines adjusted EBITDA as net income before interest expense, income tax expense and depreciation and amortization. SiriusXM adjusts EBITDA to exclude the impact of other expense (income) as well as certain other charges discussed below. Adjusted EBITDA is a non-GAAP financial measure that excludes or adjusts for (if applicable): (i) loss on extinguishment of debt, (ii) share-based payment expense, (iii) impairment, restructuring and acquisition costs, (iv) legal settlements/reserves and (v) other significant operating expense (income) that do not relate to the on-going performance of SiriusXM's business. SiriusXM believes adjusted EBITDA is a useful measure of the underlying trend of its operating performance, which provides useful information about its business apart from the costs associated with its capital structure and purchase price accounting. SiriusXM believes investors find this non-GAAP financial measure useful when analyzing past operating performance with current performance and comparing SiriusXM's operating performance to the performance of other communications, entertainment and media companies. SiriusXM believes investors use adjusted EBITDA to estimate current enterprise value and to make investment decisions. As a result of large capital investments in SiriusXM's satellite radio system, its results of operations reflect significant charges for depreciation expense. SiriusXM believes the exclusion of share-based payment expense is useful as it is not directly related to the operational conditions of its business. SiriusXM also believes the exclusion of impairment, restructuring and acquisition related costs, to the extent they occur during the period, is useful as they are significant expenses not incurred as part of its normal operations for the period.
Adjusted EBITDA has certain limitations in that it does not take into account the impact to SiriusXM's consolidated statements of comprehensive income of certain expenses, including share-based payment expense. SiriusXM endeavors to compensate for the limitations of the non-GAAP measure presented by also providing the comparable GAAP measure with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measure. Investors that wish to compare and evaluate SiriusXM's operating results after giving effect for these costs, should refer to net income as disclosed in SiriusXM's unaudited consolidated statements of comprehensive income. Since adjusted EBITDA is a non-GAAP financial performance measure, SiriusXM's calculation of adjusted EBITDA may be susceptible to varying calculations; may not be comparable to other similarly titled measures of other companies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. The reconciliation of net income to the adjusted EBITDA is calculated as follows:
Unaudited
----------------------------------
For the Three Months Ended
June 30,
----------------------------------
2022 2023
---------------- ----------------
($ in millions)
Net income: $ 292 $ 310
Add back items excluded from
Adjusted EBITDA:
Legal settlements and reserves -- 24
Impairment, restructuring and
acquisition costs(a) 1 18
Share-based payment expense 47 42
Depreciation and amortization 135 139
Interest expense 104 107
Other (income) expense 4 --
Income tax expense 96 62
---- ---------- --- ---------
Adjusted EBITDA $ 679 $ 702
==== ========== === =========
(a) During the three months ended June 30, 2023, SiriusXM recorded
impairments primarily related to terminated software projects of $10
million, severance and other related costs of $5 million and a
cost-method investment impairment of $2 million. These charges have
been excluded from adjusted OIBDA.
SCHEDULE 3
This press release also includes a presentation of free cash flow of SiriusXM, which is a non-GAAP financial measure used by SiriusXM, together with a reconciliation to SiriusXM's stand-alone cash flow provided by operating activities, as determined under GAAP. SiriusXM's free cash flow is derived from cash flow provided by operating activities plus insurance recoveries on its satellites, net of additions to property and equipment and purchases of other investments. Free cash flow is a metric that SiriusXM's management and board of directors use to evaluate the cash generated by its operations, net of capital expenditures and other investment activity. In a capital intensive business, with significant investments in satellites, SiriusXM looks at its operating cash flow, net of these investing cash outflows, to determine cash available for future subscriber acquisition and capital expenditures, to repurchase or retire debt, to acquire other companies and to evaluate its ability to return capital to stockholders. SiriusXM excludes from free cash flow certain items that do not relate to the on-going performance of
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