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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 16, 2001
REGISTRATION NO. 333-66034
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-1
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
LIBERTY MEDIA CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 4841 84-1288730
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification code number) Identification No.)
12300 LIBERTY BOULEVARD
ENGLEWOOD, COLORADO 80112
(720) 875-5400
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Copy To:
CHARLES Y. TANABE, ESQ. ROBERT W. MURRAY JR., ESQ.
LIBERTY MEDIA CORPORATION BAKER BOTTS L.L.P.
12300 LIBERTY BOULEVARD 599 LEXINGTON AVENUE
ENGLEWOOD, COLORADO 80112 NEW YORK, NEW YORK 10022-6030
(720) 875-5400 (212) 705-5000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date hereof.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) OFFERING PRICE(1)(2) OFFERING PRICE(1)(2) REGISTRATION FEE(3)
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Series A Common Stock, par value
$.01 per share(5)..............
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Debt Securities..................
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Warrants(6)......................
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Total.......................... $3,000,000,000 $750,000(4)
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(1)There are being registered under this Registration Statement such
indeterminate number of shares of Series A Common Stock, such indeterminate
principal amount of Debt Securities of the Registrant and such indeterminate
number of Warrants of the Registrant, as shall have an aggregate initial
offering price not to exceed $3,000,000,000. If any Debt Securities are
issued at an original issue discount, then the securities registered shall
include such additional Debt Securities as may be necessary such that the
aggregate initial public offering price of all securities issued pursuant to
this Registration Statement will equal $3,000,000,000. Any securities
registered under this Registration Statement may be sold separately or as
units with other securities registered under this Registration Statement. The
proposed maximum initial offering price per unit will be determined, from
time to time, by the Registrant in connection with the issuance by the
Registrant of the securities registered under this Registration Statement.
(2)Estimated solely for the purpose of calculating the registration fee.
(3)Calculated pursuant to Rule 457(o) promulgated under the Securities Act.
(4) Previously paid.
(5)Including such indeterminate number of shares of Series A Common Stock as
may, from time to time, be issued (i) at indeterminate prices, (ii) upon
conversion or exchange of Debt Securities registered hereunder, to the extent
any of such Debt Securities are, by their terms, convertible into Series A
Common Stock or (iii) upon exercise of any Warrants registered hereunder, to
the extent any of such Warrants are, by their terms, exercisable for shares
of Series A Common Stock.
(6)Including such indeterminate number of Warrants as may from time to time to
be issued at indeterminate prices, representing rights to purchase certain
equity securities, including shares of our Series A Common Stock or Debt
Securities registered hereunder.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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EXPLANATORY NOTE
This Post-Effective Amendment No. 1 to Form S-1 on Form S-3 is being filed
to convert the Registration Statement on Form S-1 (No. 333-66034) into a
Registration Statement on Form S-3. The S-1 Registration Statement related to
the offering from time to time of any of the following securities with an
aggregate initial offering price not to exceed $3,000,000,000:
- shares of Series A common stock of the Registrant;
- debt securities of the Registrant; and
- warrants to purchase securities.
The Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3.
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PROSPECTUS
LIBERTY MEDIA CORPORATION
$3,000,000,000
SERIES A COMMON STOCK
DEBT SECURITIES
WARRANTS [LIBERTY LOGO]
From time to time, we may sell any of the following securities with an
aggregate initial offering price not to exceed $3,000,000,000:
- Series A Common Stock
- Debt Securities
- Warrants
We will provide the specific terms of these securities in one or more
supplements to this prospectus. You should read this prospectus and any
prospectus supplement carefully before you invest.
Our Series A common stock is listed on the New York Stock Exchange under
the symbol "LMC.A". The applicable prospectus supplement will contain
information, where applicable, as to any other listing of any securities covered
by the relevant prospectus supplement.
The securities may be sold directly by us to investors, through agents
designated from time to time or to or through underwriters or dealers. See "Plan
of Distribution." If any underwriters are involved in the sale of any securities
in respect of which this prospectus is being delivered, the names of such
underwriters and any applicable commissions or discounts will be set forth in a
prospectus supplement. The net proceeds we expect to receive from such sale also
will be set forth in a prospectus supplement.
This prospectus may not be used to offer or sell any securities unless
accompanied by a prospectus supplement. We urge you to read carefully this
prospectus and the accompanying prospectus supplement, which will describe the
specified terms of the securities being offered, before you make your investment
decision.
INVESTING IN THE SECURITIES INVOLVES RISKS. YOU SHOULD CAREFULLY CONSIDER
THE MATTERS DESCRIBED UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is August 16, 2001.
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PROSPECTUS
TABLE OF CONTENTS
PAGE
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COMPANY SUMMARY............................................. 1
RISK FACTORS................................................ 4
ABOUT THIS PROSPECTUS....................................... 8
USE OF PROCEEDS............................................. 8
DESCRIPTION OF OUR COMMON STOCK............................. 9
DESCRIPTION OF OUR DEBT SECURITIES.......................... 13
DESCRIPTION OF OUR WARRANTS................................. 29
PLAN OF DISTRIBUTION........................................ 31
LEGAL MATTERS............................................... 32
EXPERTS..................................................... 33
WHERE TO FIND MORE INFORMATION.............................. 33
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NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER RSA421-B WITH THE STATE OF NEW HAMPSHIRE, NOR THE
FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE
STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY
DOCUMENT FILED UNDER RSA421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT, NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY
WAY UPON THE MERITS OR A QUALIFICATION OF, OR RECOMMENDED OR GIVEN APPROVAL TO,
ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE
TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION TO THE
CONTRARY WITH THE PROVISIONS OF THIS PARAGRAPH.
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COMPANY SUMMARY
The following is a summary of some of the information contained in this
prospectus. In addition to this summary, we urge you to read the entire
prospectus carefully, including the risks of investing in our securities
discussed under "Risk Factors" and our consolidated financial statements and the
notes thereto included in this prospectus.
OUR COMPANY
We own interests in a broad range of video programming, communications and
Internet businesses in the United States, Europe, South America and Asia with
some of the most recognized and respected brands. These brands include Encore,
STARZ!, Discovery, TV Guide, Fox, USA, QVC, AOL, CNN, TBS, Motorola and Sprint
PCS.
The media, entertainment and communications industries are currently
undergoing tremendous changes due in part to the growth of new distribution
technologies, led by the Internet and the implementation of digital compression.
The growth in distribution technologies has, in turn, created strong demand for
an ever increasing array of multimedia products and services. We are working
with our subsidiaries and business affiliates to extend their established
brands, quality content and networks across multiple distribution platforms to
keep them at the forefront of these ongoing changes.
The following table lists our principal subsidiaries and business
affiliates and our direct equity interests or indirect attributed equity
interests, based upon ownership of capital stock. Our direct or attributed
equity interest in a particular company does not necessarily represent our
voting interest in that company. Our indirect attributed interest is determined
by multiplying our ownership interest in the holder of an equity interest by
that equity holder's ownership interest in the listed subsidiary or business
affiliate. The ownership percentages are approximate, calculated as of May 15,
2001, and, in the case of convertible securities we hold, assume conversion to
common stock by us and, to the extent known by us, other holders. In some cases
our interest is subject to buy/sell procedures, rights of first refusal or other
obligations. See "Business."
ATTRIBUTED
SUBSIDIARY/BUSINESS AFFILIATE OWNERSHIP %
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Starz Encore Group LLC.................................. 100%
Liberty Digital, Inc. .................................. 92%
Discovery Communications, Inc. ......................... 49%
QVC, Inc. .............................................. 42%
Telewest Communications plc............................. 25%
Sprint PCS Group........................................ 21%
USA Networks, Inc. ..................................... 21%
The News Corporation Limited............................ 18%
AOL Time Warner Inc. ................................... 4%
Gemstar-TV Guide International, Inc..................... 4%
Motorola, Inc. ......................................... 4%
Our principal executive offices are located at 12300 Liberty Boulevard,
Englewood, Colorado 80112. Our main telephone number is (720) 875-5400.
SPLIT OFF FROM AT&T CORP.
We were a subsidiary of AT&T Corp. from March 9, 1999 through August 9,
2001. In March 1999, AT&T acquired by merger our parent company, the former
Tele-Communications, Inc., which has since been converted into a limited
liability company and renamed AT&T Broadband, LLC. As part of that merger, AT&T
issued AT&T common stock (NYSE:T) and Class A and Class B Liberty Media Group
common stock. AT&T's Liberty Media Group common stock was a tracking stock
designed to reflect the economic performance of the businesses and assets of
AT&T attributed to the "Liberty Media Group." We were included in the Liberty
Media Group, and our businesses and assets and those of our subsidiaries
constitute all of the businesses and assets formerly attributed to the Liberty
Media Group.
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The split off occurred at 9:00 a.m., New York City time, on August 10,
2001. In the split off, our common stock was recapitalized, and each outstanding
share of AT&T Class A Liberty Media Group tracking stock was redeemed for one
share of our Series A common stock, and each outstanding share of AT&T Class B
Liberty Media Group tracking stock was redeemed for one share of our Series B
common stock. As a result of the split off, we are an independent, publicly
traded company, and our Series A common stock and Series B common stock are
listed on the NYSE under the symbols LMC.A and LMC.B, respectively.
RECENT DEVELOPMENTS
We have agreed in principle to a transaction with Deutsche Telekom AG
pursuant to which we would purchase its entire interest in six of nine regional
cable television companies in Germany. We are negotiating the terms of
definitive agreements pertaining to that transaction. In addition to the
execution of definitive agreements, the transaction will be subject to various
conditions, including approval by antitrust authorities.
BUSINESS STRATEGY
Our business strategy is to maximize our value by (1) working with the
management teams of our existing subsidiaries and business affiliates to grow
their established businesses and create new businesses; (2) identifying and
executing strategic transactions that improve the value or optimize the
efficiency of our assets; and (3) managing our capital structure to maintain
liquidity, reduce risk and preserve a prudent debt structure. Key elements of
our business strategy include the following:
- Promoting the internal growth of our subsidiaries and business
affiliates;
- Maintaining significant involvement in governance;
- Participating with experienced management and strategic partners;
- Executing strategic transactions that optimize the efficiency of our
assets; and
- Participating in financial transactions to optimize our financial
structure.
RISK FACTORS
An investment in the securities involves risks. See "Risk Factors"
beginning on page 4 for a discussion of factors you should carefully consider
before deciding to purchase any of our securities.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of Liberty was 11.95, 11.03, 2.06
and 21.36 for the years ended December 31, 2000, 1998, 1997 and 1996,
respectively, and 5.12 for the two months ended February 28, 1999 and 7.21 for
the six months ended June 30, 2000. The ratio of earnings to fixed charges of
Liberty was less than 1.00 for the ten month period ended December 31, 1999 and
the six month period ended June 30, 2001; thus, earnings available for fixed
charges were inadequate to cover fixed charges for such periods. The amount of
coverage deficiency for the ten month period ended December 31, 1999 was $2,981
million and for the six month period ended June 30, 2001 was $4,126 million. For
the ratio calculations, earnings available for fixed charges consists of
earnings (losses) before income taxes plus fixed charges, distributions from and
losses of less than 50%-owned affiliates with debt not guaranteed by Liberty
(net of earnings not distributed of less than 50%-owned affiliates) and minority
interests in earnings (losses) of consolidated subsidiaries. Fixed charges
consist of:
- interest on debt, including interest related to debt guaranteed by
Liberty of less than 50%-owned affiliates where the investment in such
affiliates results in the recognition of a loss,
- Liberty's proportionate share of interest of 50%-owned affiliates,
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- that portion of rental expense Liberty believes to be representative of
interest (one-third of rental expense), and
- amortization of debt expense.
Liberty has guaranteed the debt of certain less than 50%-owned affiliates
and certain unaffiliated entities in which it has an interest. Fixed charges of
zero relating to such guarantees for the years ended December 31, 2000, 1998,
1997, 1996 and for the two months ended February 28, 1999 and for the ten months
ended December 31, 1999 and for the six months ended June 30, 2001 and 2000 have
not been included in fixed charges because the investment in such entities does
not result in the recognition of a loss and it is not probable that Liberty will
be required to honor the guarantee.
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RISK FACTORS
FACTORS RELATING TO LIBERTY
We depend on a limited number of potential customers for carriage of our
programming services. The cable television and direct-to-home satellite
industries are currently undergoing a period of consolidation. As a result, the
number of potential buyers of our programming services and those of our business
affiliates is decreasing. AT&T's cable television subsidiaries and affiliates,
which as a group comprise one of the two largest operators of cable television
systems in the United States, are collectively the largest single customer of
our programming companies. With respect to some of our programming services and
those of our business affiliates, this is the case by a significant margin. The
existing agreements between AT&T's cable television subsidiaries and affiliates
and the program suppliers owned or affiliated with us were entered into prior to
the TCI merger. There can be no assurance that our owned and affiliated program
suppliers will be able to negotiate renewal agreements with AT&T's cable
television subsidiaries and affiliates. Although AT&T has agreed to extend any
existing affiliation agreement of ours and our affiliates that expires on or
before March 9, 2004 to a date not before March 9, 2009, that agreement is
conditioned on mutual most favored nation terms being offered and the
arrangements being consistent with industry practice.
The liquidity and value of our interests in our business affiliates may be
adversely affected by stockholders agreements and similar agreements to which we
are a party. A significant portion of the equity securities we own is held
pursuant to stockholder agreements, partnership agreements and other instruments
and agreements that contain provisions that affect the liquidity, and therefore
the realizable value, of those securities. Most of these agreements subject the
transfer of the stock, partnership or other interests constituting the equity
security to consent rights or rights of first refusal of the other stockholders
or partners. In certain cases, a change in control of our company or of the
subsidiary holding our equity interest will give rise to rights or remedies
exercisable by other stockholders or partners, such as a right to initiate or
require the initiation of buy/sell procedures. Some of our subsidiaries and
business affiliates are parties to loan agreements that restrict changes in
ownership of the borrower without the consent of the lenders. All of these
provisions will restrict our ability to sell those equity securities and may
adversely affect the price at which those securities may be sold. For example,
in the event buy/sell procedures are initiated at a time when we are not in a
financial position to buy the initiating party's interest, we could be forced to
sell our interest at a price based upon the value established by the initiating
party, and that price might be significantly less than what we might otherwise
obtain.
We do not have the right to manage our business affiliates, which means we
cannot cause those affiliates to operate in a manner that is favorable to
us. We do not have the right to manage the businesses or affairs of any of our
business affiliates in which we have less than a majority voting interest.
Rather, our rights may take the form of representation on the board of directors
or a partners' or similar committee that supervises management or possession of
veto rights over significant or extraordinary actions. The scope of our veto
rights varies from agreement to agreement. Although our board representation and
veto rights may enable us to exercise influence over the management or policies
of an affiliate and enable us to prevent the sale of assets by a business
affiliate in which we own less than a majority voting interest or prevent it
from paying dividends or making distributions to its stockholders or partners,
they do not enable us to cause these actions to be taken.
Our business is subject to risks of adverse government
regulation. Programming services, cable television systems, satellite carriers,
television stations and internet companies are subject to varying degrees of
regulation in the United States by the Federal Communications Commission and
other entities. Such regulation and legislation are subject to the political
process and have been in constant flux over the past decade. In addition,
substantially every foreign country in which we have, or may in the future make,
an investment regulates, in varying degrees, the distribution and content of
programming services and foreign investment in programming companies and
wireline and wireless cable communications, satellite, telephony and Internet
services. Further material changes in the law and regulatory requirements must
be
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anticipated, and there can be no assurance that our business will not be
adversely affected by future legislation, new regulation or deregulation.
We may make significant capital contributions and loans to our subsidiaries
and business affiliates to cover operating losses and fund development and
growth, which could limit the amount of cash available to pay our own financial
obligations or to make acquisitions or investments. The development of video
programming, communications, technology and Internet businesses involves
substantial costs and capital expenditures. As a result, many of our business
affiliates have incurred operating and net losses to date and are expected to
continue to incur significant losses for the foreseeable future. Our results of
operations include our, and our consolidated subsidiaries', share of the net
losses of their affiliates. The share of net losses amounted to $3,311 million
for the first six months of 2001, $3,485 million for calendar year 2000 and $970
million for calendar year 1999.
We may make significant capital contributions and loans to our existing and
future subsidiaries and business affiliates to help cover their operating losses
and fund the development and growth of their respective businesses and assets.
We have assisted, and may in the future assist, our subsidiaries and business
affiliates in their financing activities by guaranteeing bank and other
financial obligations. At June 30, 2001, we had guaranteed various loans, notes
payable, letters of credit and other obligations of certain of our subsidiaries
and business affiliates totaling approximately $2,106 million.
To the extent we make loans and capital contributions to our subsidiaries
and business affiliates or we are required to expend cash due to a default by a
subsidiary or business affiliate of any obligation we guarantee, there will be
that much less cash available to us with which to pay our own financial
obligations or make acquisitions or investments.
If we fail to meet required capital calls to a subsidiary or business
affiliate, we could be forced to sell our interest in that company, our interest
in that company could be diluted or we could forfeit important rights. We are
parties to stockholder and partnership agreements that provide for possible
capital calls on stockholders and partners. Our failure to meet a capital call,
or other commitment to provide capital or loans to a particular company, may
have adverse consequences to us. These consequences may include, among others,
the dilution of our equity interest in that company, the forfeiture of our right
to vote or exercise other rights, the right of the other stockholders or
partners to force us to sell our interest at less than fair value, the forced
dissolution of the company to which we have made the commitment or, in some
instances, a breach of contract action for damages against us. Our ability to
meet capital calls or other capital or loan commitments is subject to our
ability to access cash. See "-- We could be unable in the future to obtain cash
in amounts sufficient to service our financial obligations" below.
We are subject to the risk of possibly becoming an investment
company. Because we are a holding company and a significant portion of our
assets consists of investments in companies in which we own less than a 50%
interest, we run the risk of inadvertently becoming an investment company that
is required to register under the Investment Company Act of 1940. Registered
investment companies are subject to extensive, restrictive and potentially
adverse regulation relating to, among other things, operating methods,
management, capital structure, dividends and transactions with affiliates.
Registered investment companies are not permitted to operate their business in
the manner we operate our business, nor are registered investment companies
permitted to have many of the relationships that we have with our affiliated
companies.
To avoid regulation under the Investment Company Act, we monitor the value
of our investments and structure transactions with an eye toward the Investment
Company Act. As a result, we may structure transactions in a less advantageous
manner than if we did not have Investment Company Act concerns, or we may avoid
otherwise economically desirable transactions due to those concerns. In
addition, events beyond our control, including significant appreciation or
depreciation in the market value of certain of our publicly traded holdings,
could result in our becoming an inadvertent investment company. If we were to
become an inadvertent investment company, we would have one year to divest of a
sufficient amount of investment securities and/or acquire other assets
sufficient to cause us to no longer be an investment company.
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If it were established that we are an unregistered investment company,
there would be a risk, among other material adverse consequences, that we could
become subject to monetary penalties or injunctive relief, or both, in an action
brought by the SEC, that we would be unable to enforce contracts with third
parties or that third parties could seek to obtain rescission of transactions
with us undertaken during the period it was established that we were an
unregistered investment company.
FACTORS RELATING TO OUR SECURITIES
We could be unable in the future to obtain cash in amounts sufficient to
service our financial obligations. Our ability to meet our financial
obligations depends upon our ability to access cash. We are a holding company,
and our sources of cash include our available cash balances, net cash from the
operating activities of our wholly owned subsidiaries, dividends and interest
from our investments, availability under credit facilities and proceeds from
asset sales. Although at June 30, 2001, we had cash and cash equivalents of
approximately $1,787 million and short-term investments of approximately $494
million, there is no requirement in the indentures governing the debt securities
that any of our cash or cash equivalents or proceeds from the sale of any of our
marketable securities be reserved for the payment of our obligations under the
debt securities. We cannot assure you that we will maintain significant amounts
of cash, cash equivalents or marketable securities in the future.
We obtained from our subsidiaries net cash of $15 million in the first six
months of 2001, $5 million in calendar year 2000 and $6 million in calendar year
1999. The ability of our operating subsidiaries to pay dividends or to make
other payments or advances to us depends on their individual operating results
and any statutory, regulatory or contractual restrictions to which they may be
or may become subject. Some of our subsidiaries are subject to loan agreements
that restrict sales of assets and prohibit or limit the payment of dividends or
the making of distributions, loans or advances to stockholders and partners.
We generally do not receive cash, in the form of dividends, loans, advances
or otherwise, from our business affiliates. In this regard, we do not have
sufficient voting control over most of our business affiliates to cause those
companies to pay dividends or make other payments or advances to their partners
or stockholders (including us).
Our holding company structure could restrict access to funds of our
subsidiaries that may be needed to service the debt securities and debt
warrants. Creditors of our subsidiaries have a claim on their assets that is
senior to that of holders of the debt securities and debt warrants. We are a
holding company with no significant assets other than our equity interests in
our subsidiaries and cash, cash equivalents and marketable securities. We are
the only company obligated to make payments under the debt securities and debt
warrants. Our subsidiaries are separate and distinct legal entities and they
have no obligation, contingent or otherwise, to pay any amounts due under the
debt securities and debt warrants or to make any funds available for any of
those payments.
All of the liabilities of our subsidiaries effectively rank senior to the
debt securities and debt warrants. A substantial portion of our consolidated
liabilities consists of liabilities incurred by our subsidiaries. Moreover, the
indentures governing the debt securities do not limit the amount of indebtedness
that may be incurred by our subsidiaries in the future. Our rights and those of
our creditors, including holders of the debt securities and debt warrants, to
participate in the distribution of assets of any subsidiary upon the latter's
liquidation or reorganization will be subject to prior claims of the
subsidiary's creditors, including trade creditors, except to the extent we may
be a creditor with recognized claims against the subsidiary. Where we are a
creditor of a subsidiary, our claims will still be subject to the prior claims
of any secured creditor of that subsidiary and to the claims of any holder of
indebtedness that is senior to our claim. As of June 30, 2001, the aggregate
amount of the total liabilities of our consolidated subsidiaries was
approximately $16.0 billion, of which approximately $11.3 billion was deferred
income taxes.
We may secure future indebtedness of Liberty with the capital stock of our
subsidiaries or other securities, in which case that indebtedness will
effectively rank senior to the debt securities and debt warrants. The
indentures do not restrict our ability to pledge shares of capital stock or
other securities that we own to secure indebtedness. To the extent we pledge
shares of capital stock or other securities to secure indebtedness, the
indebtedness so secured will effectively rank senior to the debt securities and
debt
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warrants to the extent of the value of the shares or other securities pledged.
The indentures also do not restrict the ability of our subsidiaries to pledge
shares of capital stock or other assets that they own to secure indebtedness.
We have entered into bank credit agreements that contain restrictions on
how we finance our operations and operate our business, which could impede our
ability to engage in transactions that would be beneficial for us. We and our
subsidiaries are subject to significant financial and operating restrictions
contained in outstanding credit facilities. These restrictions will affect, and
in some cases significantly limit or prohibit, among other things, our ability
or the ability of our subsidiaries to:
- borrow more funds;
- pay dividends or make other distributions;
- make investments;
- engage in transactions with affiliates; or
- create liens.
The restrictions contained in these credit agreements could have the
following adverse effects on us, among others:
- we could be unable to obtain additional capital in the future to
- fund capital expenditures or acquisitions that could improve the value
of our company;
- permit us to meet our loan and capital commitments to our business
affiliates or allow us to help fund their operating losses or future
development; or
- allow us to conduct necessary corporate activities;
- we could be unable to access the net cash of our subsidiaries to help
meet our own financial obligations;
- we could be unable to invest in companies in which we would otherwise
invest; and
- we could be unable to obtain lower borrowing costs that are available
from secured lenders or engage in advantageous transactions that monetize
our assets.
In addition, some of the credit agreements to which our subsidiaries are a
party require them to maintain financial ratios, including ratios of total debt
to operating cash flow and operating cash flow to interest expense. If we or our
subsidiaries fail to comply with the covenant restrictions contained in the
credit agreements, that could result in a default which accelerates the maturity
of the indebtedness borrowed pursuant to those agreements. Such a default could
also result in indebtedness under other credit agreements and the debt
securities becoming due and payable due to the existence of cross-default or
cross-acceleration provisions of our credit agreements and in the indentures
governing the debt securities.
It may be difficult for a third party to acquire us, even if doing so may
be beneficial to our stockholders. Certain provisions of our restated
certificate of incorporation and bylaws may discourage, delay or prevent a
change in control of our company that a stockholder may consider favorable.
These provisions include the following:
- authorizing the issuance of "blank check" preferred stock that could be
issued by our board of directors to increase the number of outstanding
shares and thwart a takeover attempt;
- classifying our board of directors with staggered three-year terms, which
may lengthen the time required to gain control of our board of directors;
- limiting who may call special meetings of stockholders;
- prohibiting stockholder action by written consent, thereby requiring all
stockholder actions to be taken at a meeting of the stockholders; and
- establishing advance notice requirements for nominations of candidates
for election to the board of directors or for proposing matters that can
be acted upon by stockholders at stockholder meetings.
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Section 203 of the Delaware General Corporation Law and any stock option
plan relating to our common stock may also discourage, delay or prevent a change
in control of our company.
Our stock price may decline significantly because of stock market
fluctuations that affect the prices of the companies in which we invest. The
stock market has recently experienced significant price and volume fluctuations
that have affected the market prices of common stock of Internet and other
technology companies. We have investments in many Internet and technology
companies. If market fluctuations cause the stock price of these companies to
decline, our stock price may decline.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward looking statements concerning future
events that are subject to risks, uncertainties and assumptions. Certain
statements made in this prospectus under the captions entitled "Company Summary"
and "Risk Factors" and elsewhere in this prospectus are forward-looking
statements. These forward-looking statements are based upon our current
expectations and projections about future events. When used in this prospectus,
the words "believe," "anticipate," "intend," "estimate," "expect" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain such words. These forward-looking
statements are subject to risks, uncertainties and assumptions about us and our
subsidiaries and business affiliates, including, among other things, the
following:
- general economic and business conditions and industry trends;
- the continued strength of the industries in which we are involved;
- uncertainties inherent in our proposed business strategies;
- our future financial performance, including availability, terms and
deployment of capital;
- availability of qualified personnel;
- changes in, or our failure or inability to comply with, government
regulations and adverse outcomes from regulatory proceedings;
- changes in the nature of key strategic relationships with partners and
business affiliates;
- rapid technological changes;
- our inability to obtain regulatory or other necessary approvals of any
strategic transactions; and
- social, political and economic situations in foreign countries where we
do business.
You are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this prospectus. In light of
these risks, uncertainties and other assumptions, the forward-looking events
discussed in this prospectus might not occur.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a "shelf" registration process. Under this shelf process, we may,
over the next two years, sell any combination of the securities described in
this prospectus in one or more offerings up to a total dollar amount of
$3,000,000,000.
This prospectus provides you with a general description of the securities
we may offer. Each time we sell securities, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. You should read both this prospectus and any
prospectus supplement together with the additional information described below
under the heading "Where You Can Find More Information."
USE OF PROCEEDS
We will use the net proceeds from the sale of the offered securities for
general corporate purposes or for such other purposes as may be described in any
prospectus supplement.
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DESCRIPTION OF OUR COMMON STOCK
AUTHORIZED CAPITAL STOCK
Our authorized capital stock consists of four billion four hundred fifty
million (4,450,000,000) shares, of which four billion four hundred million
(4,400,000,000) shares are designated common stock, par value $0.01 per share,
and fifty million (50,000,000) shares are designated preferred stock, par value
$0.01 per share. Our common stock is divided into two series. We have authorized
four billion (4,000,000,000) shares of Series A common stock and four hundred
million (400,000,000) shares of Series B common stock. Approximately
2,375,782,000 shares of our Series A common stock and 212,045,000 shares of our
Series B common stock are outstanding, based upon the number of shares of AT&T's
Liberty Media Group tracking stock outstanding as of June 30, 2001, and assuming
our split off from AT&T occurred on that date and no exercise of outstanding
stock options or warrants.
OUR COMMON STOCK
We may offer shares of our Series A common stock pursuant to a prospectus
supplement. The holders of our Series A common stock and Series B common have
equal rights, powers and privileges, except as otherwise described below.
VOTING RIGHTS
The holders of our Series A common stock will be entitled to one vote for
each share held, and the holders of our Series B common stock will be entitled
to ten votes for each share held, on all matters voted on by our stockholders,
including elections of directors. Our charter does not provide for cumulative
voting in the election of directors.
DIVIDENDS
Subject to any preferential rights of any outstanding series of our
preferred stock created by our board from time to time, the holders of our
common stock will be entitled to such dividends as may be declared from time to
time by our board from funds available therefor. Except as otherwise described
under "-- Distributions," whenever a dividend is paid to the holders of one of
our series of common stock, we shall also pay to the holders of the other series
of our common stock an equal per share dividend.
We do not anticipate paying any dividends on our common stock in the
foreseeable future because we expect to retain our future earnings for use in
the operation and expansion of our business. Our payment and amount of
dividends, however, will be subject to the discretion of our board of directors
and will depend, among other things, upon our results of operations, financial
condition, cash requirements, future prospects and other factors which may be
considered relevant by our board of directors.
CONVERSION
Each share of our Series B common stock is convertible, at the option of
the holder, into one share of our Series A common stock. Our Series A common
stock is not convertible.
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DISTRIBUTIONS
Distributions made in shares of our Series A common stock, our Series B
common stock or any other security with respect to our Series A common stock or
Series B common stock may be declared and paid only as follows:
- a share distribution consisting of shares of our Series A common stock
(or securities convertible therefor) to holders of our Series A common
stock and Series B common stock, on an equal per share basis; or
consisting of shares of our Series B common stock (or securities
convertible therefor) to holders of our Series A common stock and Series
B common stock, on an equal per share basis; or consisting of shares of
our Series A common stock (or securities convertible therefor) to holders
of our Series A common stock and, on an equal per share basis, shares of
our Series B common stock (or securities convertible therefore) to
holders of our Series B common stock; and
- a share distribution consisting of shares of any class or series of
securities of us or any other person, other than our Series A common
stock or Series B common stock (or securities convertible therefor),
either on the basis of a distribution of identical securities, on an
equal per share basis, to holders of our Series A common stock and Series
B common stock or on the basis of a distribution of one class or series
of securities to holders of our Series A common stock and another class
or series of securities to holders of our Series B common stock, provided
that the securities so distributed do not differ in any respect other
than their relative voting rights and related differences in designation,
conversion and share distribution provisions, with holders of shares of
Series B common stock receiving the class or series having the higher
relative voting rights, and provided further that if the securities so
distributed constitute capital stock of one of our subsidiaries, such
rights shall not differ to a greater extent than the corresponding
differences in voting rights, designation, conversion and share
distribution provisions between our Series A common stock and Series B
common stock, and provided further in each case that the distribution is
otherwise made on an equal per share basis.
We may not reclassify, subdivide or combine either series of our common
stock without reclassifying, subdividing or combining the other series of our
common stock, on an equal per share basis.
LIQUIDATION AND DISSOLUTION
In the event of our liquidation, dissolution or winding up, after payment
or provision for payment of our debts and liabilities and subject to the prior
payment in full of any preferential amounts to which our preferred stock holders
may be entitled, the holders of our Series A common stock and Series B common
stock will share equally, on a share for share basis, in our assets remaining
for distribution to our common stockholders.
ANTI-TAKEOVER EFFECTS OF PROVISIONS OF OUR RESTATED CERTIFICATE OF INCORPORATION
AND BYLAWS
BOARD OF DIRECTORS
Our restated certificate of incorporation and bylaws provide that, subject
to any rights of the holders of any series of our preferred stock to elect
additional directors, the number of our directors shall not be less than three
and the exact number shall be fixed from time to time by a resolution adopted by
the affirmative vote of 75% of the members of our board then in office. The
members of our board, other than those who may be elected by holders of our
preferred stock, are divided into three classes. Each class consists, as nearly
as possible, of a number of directors equal to one-third of the then authorized
number of board members. The term of office of our Class I directors expires at
the annual meeting of our stockholders in 2002. The term of office of our Class
II directors expires at the annual meeting of our stockholders in 2003. The term
of office of our Class III directors expires at the annual meeting of our
stockholders in 2004. At each annual meeting of our stockholders, the successors
of that class of directors
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whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of our stockholders held in the third year
following the year of their election. The directors of each class will hold
office until their respective successors are elected and qualified.
Our restated certificate of incorporation provides that, subject to the
rights of the holders of any series of our preferred stock, our directors may be
removed from office only for cause upon the affirmative vote of the holders of
at least a majority of the total voting power of our outstanding capital stock
entitled to vote at an election of directors, voting together as a single class.
Our restated certificate of incorporation provides that, subject to the
rights of the holders of any series of our preferred stock, vacancies on our
board resulting from death, resignation, removal, disqualification or other
cause, and newly created directorships resulting from any increase in the number
of directors on our board, shall be filled only by the affirmative vote of a
majority of the remaining directors then in office (even though less than a
quorum) or by the sole remaining director. Any director so elected shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred or to which the new directorship is apportioned, and until that
director's successor shall have been elected and qualified. No decrease in the
number of directors constituting our board shall shorten the term of any
incumbent director, except as may be provided in any certificate of designation
with respect to a series of our preferred stock with respect to any additional
director elected by the holders of the series of our preferred stock.
These provisions would preclude a third party from removing incumbent
directors and simultaneously gaining control of our board by filling the
vacancies created by removal with its own nominees. Under the classified board
provisions described above, it would take at least two elections of directors
for any individual or group to gain control of our board. Accordingly, these
provisions could discourage a third party from initiating a proxy contest,
making a tender offer or otherwise attempting to gain control of us.
NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
Our restated certificate of incorporation provides that, except as
otherwise provided in the terms of any series of preferred stock, any action
required to be taken or which may be taken at any annual meeting or special
meeting of stockholders may not be taken without a meeting and may not be
effected by any consent in writing by such holders. Except as otherwise required
by law and subject to the rights of the holders of any series of our preferred
stock, special meetings of our stockholders for any purpose or purposes may be
called only by our Secretary (1) upon the written request of holders of not less
than 66 2/3% of the total voting power of our outstanding capital stock or (2)
at the request of at least 75% of the members of our board then in office. No
business other than that stated in the notice of special meeting shall be
transacted at any special meeting.
ADVANCE NOTICE PROCEDURES
Our bylaws establish an advance notice procedure for stockholders to make
nominations of candidates for election as directors or to bring other business
before an annual meeting of our stockholder.
All nominations by stockholders shall be made pursuant to timely notice in
proper written form to our Secretary. To be timely, a stockholder's notice shall
be given to our Secretary at our offices: (1) with respect to any election to be
held at an annual meeting of our stockholders which is called for a date that is
within thirty days before or after the anniversary date of the immediately
preceding annual meeting of our stockholders, not less than ninety days in
advance of such meeting nor more than one-hundred twenty days prior to such
anniversary date, and (2) with respect to an election (A) to be held at an
annual meeting of our stockholders which is called for a date that is not thirty
days before or after the anniversary date of the immediately preceding annual
meeting of our stockholders or (B) to be held at a special meeting of our
stockholders for election of directors, not later than the close of business on
the tenth day following the day on which notice of such meeting is mailed to our
stockholders or public disclosure of the date of the meeting was made, whichever
occurred first. The public announcement of an adjournment or postponement of a
meeting of our stockholders does not commence a new time period (or extend any
time
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period) for the giving of any such stockholder notice. However, if the number of
directors to be elected to our board at any meeting is increased, and we do not
make a public announcement naming all of the nominees for director or specifying
the size of the increased board at least one hundred days prior to the
anniversary date of the immediately preceding annual meeting, a stockholder's
notice shall also be considered timely, but only with respect to nominees for
any new positions created by such increase, if it shall be delivered to our
Secretary at our offices not later than the close of business on the tenth day
following the day on which we first make the relevant public announcement.
For other business to be properly requested to be brought before an annual
meeting by one of our stockholders, the stockholder must have given timely
notice of such business in proper written form to our Secretary. To be timely, a
stockholder's notice must be received at our offices (1) in the case of an
annual meeting that is called for a date that is within thirty days before or
after the anniversary date of the immediately preceding annual meeting of our
stockholders, not less than ninety days nor more than one-hundred twenty days
prior to the meeting, and (2) in the case of an annual meeting that is called
for a date that is not within thirty days before or after the anniversary date
of the immediately preceding annual meeting, not later than the close of
business on the tenth day following the day on which notice of the date of the
meeting was communicated to stockholders or public disclosure of the date of the
meeting was made, whichever occurs first. The public announcement of an
adjournment or postponement of a meeting of our stockholders does not commence a
new time period (or extend any time period) for the giving of any such
stockholder notice.
AMENDMENT
Our restated certificate of incorporation provides that, subject to the
rights of the holders of any series of our preferred stock, the affirmative vote
of the holders of at least 66 2/3% of the voting power of our outstanding
capital stock, voting together as a single class, is required to adopt, amend or
repeal any provision of our restated certificate of incorporation or the
addition or insertion of other provisions in the certificate, provided that the
foregoing voting requirement shall not apply to any adoption, amendment, repeal,
addition or insertion (1) as to which the General Corporation Law of Delaware,
as then in effect, does not require the consent of our stockholders or (2) which
at least 75% of the members of our board then in office has approved. Our
restated certificate of incorporation further provides that the affirmative vote
of the holders of at least 66 2/3% of the voting power of our outstanding
capital stock, voting together as a single class, is required to adopt, amend or
repeal any provision of our bylaws, provided that the foregoing voting
requirement shall not apply to any adoption, amendment or repeal approved by the
affirmative vote of not less than 75% of the members of our board then in
office.
TRANSFER AGENT AND REGISTRAR
EquiServe Trust Company, N.A. is the transfer agent and registrar for our
common stock.
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DESCRIPTION OF OUR DEBT SECURITIES
The following is a summary of the general terms of the debt securities. We
will file a prospectus supplement that may contain additional terms when we
issue debt securities. The terms presented here, together with the terms in a
related prospectus supplement, which could be different from the terms described
below, will be a description of the material terms of the debt securities. You
should also read the applicable indenture. We have filed the forms of indenture
with the SEC as an exhibit to the registration statement of which this
prospectus forms a part. All capitalized terms have the meanings specified in
the indentures. The terms and provisions of the debt securities below will most
likely be modified by the documents that set forth the specific terms of the
debt securities issued.
We may issue, from time to time, debt securities, in one or more series,
that will consist of either our senior debt or our subordinated debt. The senior
debt securities we offer will be issued under an indenture entered into between
us and the trustee, which we refer to as the senior indenture. The subordinated
debt securities we offer will be issued under a separate indenture entered into
between us and the trustee, which we refer to as the subordinated indenture.
Debt securities, whether senior or subordinated, may be issued as convertible
debt securities or exchangeable debt securities.
GENERAL
Neither indenture limits the aggregate principal amount of debt securities
that may be issued thereunder. Both indentures provide that Liberty may issue
debt securities from time to time in one or more series and in any currency or
currency unit that we may designate. We may issue debt securities as "discount
securities," which means they may be sold at a discount below their stated
principal amount. These debt securities, as well as other debt securities that
are not issued at a discount, may, for United States federal income tax
purposes, be treated as if they were issued with "original issue discount"
because of interest payment and other characteristics. Special United States
federal income tax considerations applicable to debt securities issued with
original issue discount will be described in more detail in any applicable
prospectus supplement.
The applicable prospectus supplement for a series of debt securities that
we issue will describe, among other things, the following terms of the offered
debt securities:
- the title;
- any limit on the aggregate principal amount;
- whether issued in fully registered form without coupons or in a form
registered as to principal only with coupons or in bearer form with
coupons;
- whether issued in the form of one or more global securities and whether
all or a portion of the principal amount of the debt securities is
represented thereby;
- the price or prices at which the debt securities will be issued;
- the date or dates on which principal is payable;
- the place or places where and the manner in which principal, premium or
interest will be payable and the place or places where the debt
securities may be presented for transfer and, if applicable, conversion
or exchange;
- interest rates, and the dates from which interest, if any, will accrue,
and the dates when interest is payable and the maturity;
- the right, if any, to extend the interest payment periods and the
duration of the extensions;
- our rights or obligations to redeem or purchase the debt securities;
- any sinking fund provisions;
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- conversion or exchange provisions, if any, including conversion or
exchange prices or rates and adjustments thereto;
- the currency or currencies of payment of principal or interest;
- the terms applicable to any debt securities issued at a discount from
their stated principal amount;
- the terms, if any, under which any debt securities will rank junior to
any of our other debt;
- if the amount of payments of principal or interest is to be determined by
reference to an index or formula, or based on a coin or currency other
than that in which the debt securities are stated to be payable, the
manner in which these amounts are determined and the calculation agent,
if any, with respect thereto;
- if other than the entire principal amount of the debt securities when
issued, the portion of the principal amount payable upon acceleration of
maturity as a result of a default on our obligations;
- if applicable, covenants affording holders of debt protection against
changes in our operations, financial condition or transactions involving
us;
- if other than dollars, the coin, currency or currencies in which the
series of debt securities are denominated; and
- any other specific terms of any debt securities.
The applicable prospectus supplement will present United States federal
income tax considerations for holders of any debt securities and the securities
exchange or quotation system on which any debt securities are listed or quoted.
SENIOR DEBT SECURITIES
Payment of the principal of, premium, if any, and interest on senior debt
securities will rank on a parity with all of our other unsecured and
unsubordinated debt.
SUBORDINATED DEBT SECURITIES
Payment of the principal of, premium, if any, interest and any additional
amounts on subordinated debt securities will be subordinated and junior in right
of payment to the prior payment in full of all of our senior debt. For purposes
of the subordinated debt securities, senior debt means the principal of
(premium, if any), interest and any additional amounts on Indebtedness of
Liberty outstanding at any time other than (i) the subordinated debt securities
and (ii) Indebtedness which by its terms is junior in right of payment to other
Indebtedness of Liberty. We will state in the applicable prospectus supplement
relating to any subordinated debt securities the subordination terms of the
subordinated debt securities as well as the aggregate amount of outstanding
Indebtedness, as of the most recent practicable date, that by its terms would be
senior to the subordinated debt securities. The subordinated indenture does not
currently limit senior debt or any other debt secured or unsecured of Liberty or
any Subsidiary. We will state in any prospectus supplement limitations, if any,
on our ability to issue additional senior indebtedness. Upon maturity (by
acceleration or otherwise) of any senior debt, payment in full must be made on
such senior debt (or duly provided for) before any payment is made on the
subordinated debt securities (except payments made in capital stock of Liberty
or in warrants, rights or options to purchase or acquire capital stock of
Liberty, sinking fund payments made in subordinated debt securities acquired by
Liberty before the maturity of such senior debt, and payments made through the
exchange of other debt obligations of Liberty for such subordinated debt
securities in accordance with the terms of such subordinated debt securities,
provided that such debt obligations are subordinated to senior debt at least to
the extent that the subordinated debt securities for which they are exchanged
are so subordinate in accordance with the subordinated indenture). During the
continuance of any default in payment of the principal of, premium, if any,
interest on, or other amounts due on, any senior debt, no payment may be made by
Liberty on the subordinated debt securities (except payments made in capital
stock of Liberty or in warrants, rights or
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options to purchase or acquire capital stock of Liberty, sinking fund payments
made in subordinated debt securities acquired by Liberty before such default and
notice of such default, and payments made through the exchange of other debt
obligations of Liberty for such subordinated debt securities in accordance with
the terms of such subordinated debt securities, provided that such debt
obligations are subordinated to senior debt at least to the extent that the
subordinated debt securities for which they are exchanged are so subordinated in
accordance with the subordinated indenture), unless otherwise provided in a
prospectus supplement. Upon any distribution of assets of Liberty in any
dissolution, winding up, liquidation or reorganization of Liberty, payment of
all amounts due on the subordinated debt securities will be subordinated, to the
extent and in the manner set forth in the subordinated indenture, to the prior
payment in full of all senior debt. Such subordination will not prevent the
occurrence of any Event of Default.
CONVERSION OR EXCHANGE RIGHTS
Debt securities may be convertible into or exchangeable for shares of our
Series A common stock or equity securities of our subsidiaries, affiliates or
other issuers. The terms and conditions of conversion or exchange will be stated
in the applicable prospectus supplement. The terms will include, among others,
the following:
- the conversion or exchange price or rate;
- the conversion or exchange period;
- provisions regarding the convertibility or exchangeability of the debt
securities, including who may convert or exchange;
- events requiring adjustment to the conversion or exchange price or rate;
- provisions affecting conversion or exchange in the event of our
redemption of the debt securities; and
- any anti-dilution provisions, if applicable.
EVENTS OF DEFAULT
As defined in each of the senior indenture and the subordinated indenture,
the term "event of default" means any one of the following events with respect
to any series of senior debt securities or subordinated debt securities:
(1) default in the payment of any interest on any debt security of the
series, or any additional amounts payable with respect thereto, when the
interest becomes or the additional amounts become due and payable, and
continuance of the default for a period of 30 days;
(2) default in the payment of the principal of or any premium on any
debt security of the series, or any additional amounts payable with respect
thereto, when the principal or premium becomes or the additional amounts
become due and payable at their maturity;
(3) failure of Liberty to comply with any of its obligations described
below under "-- Successor Corporation;"
(4) default in the deposit of any sinking fund payment when and as due
by the terms of a debt security of the series;
(5) default in the performance, or breach, of any covenant or warranty
of Liberty in the applicable indenture or the debt securities (other than a
covenant or warranty a default in the performance or the breach of which is
elsewhere in the applicable indenture specifically dealt with or which has
been expressly included in the applicable indenture solely for the benefit
of a series of debt securities other than the relevant series), and
continuance of the default or breach for a period of 60 days after there
has been given, by registered or certified mail, to Liberty by the trustee
or to Liberty and the trustee by the holders of at least 25% in principal
amount of the outstanding debt
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securities of the series, a written notice specifying the default or breach
and requiring it to be remedied and stating that the notice is a "Notice of
Default" under the applicable indenture;
(6) if any event of default as defined in any mortgage, indenture or
instrument under which there may be issued, or by which there may be
secured or evidenced, any Indebtedness of Liberty, whether the Indebtedness
now exists or shall hereafter be created, shall happen and shall result in
Indebtedness in aggregate principal amount (or, if applicable, with an
issue price and accreted original issue discount) in excess of $100 million
becoming or being declared due and payable prior to the date on which it
would otherwise become due and payable, and (i) the acceleration shall not
be rescinded or annulled, (ii) such Indebtedness shall not have been paid
or (iii) Liberty shall not have contested such acceleration in good faith
by appropriate proceedings and have obtained and thereafter maintained a
stay of all consequences that would have a material adverse effect on
Liberty, in each case within a period of 30 days after there shall have
been given, by registered or certified mail, to Liberty by the trustee or
to Liberty and the trustee by the holders of at least 25% in principal
amount of the outstanding debt securities of the series then outstanding, a
written notice specifying the default or breaches and requiring it to be
remedied and stating that the notice is a "Notice of Default" or other
notice as prescribed in the applicable indenture; provided, however, that
if after the expiration of such period, such event of default shall be
remedied or cured by Liberty or be waived by the holders of such
Indebtedness in any manner authorized by such mortgage, indenture or
instrument, then the event of default with respect to such series of debt
securities or by reason thereof shall, without further action by Liberty,
the trustee or any holder of debt securities of such series, be deemed
cured and not continuing;
(7) the entry by a court having competent jurisdiction of:
(a) a decree or order for relief in respect of Liberty or any
Material Subsidiary in an involuntary proceeding under any applicable
bankruptcy, insolvency, reorganization or other similar law and the
decree or order shall remain unstayed and in effect for a period of 60
consecutive days;
(b) a decree or order adjudging Liberty or any Material Subsidiary
to be insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of Liberty or any Material
Subsidiary and the decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(c) a final and non-appealable order appointing a custodian,
receiver, liquidator, assignee, trustee or other similar official of
Liberty or any Material Subsidiary or of any substantial part of the
property of Liberty or any Material Subsidiary or ordering the winding
up or liquidation of the affairs of Liberty;
(8) the commencement by Liberty or any Material Subsidiary of a
voluntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or of a voluntary proceeding seeking to
be adjudicated insolvent or the consent by Liberty or any Material
Subsidiary to the entry of a decree or order for relief in an involuntary
proceeding under any applicable bankruptcy, insolvency, reorganization or
other similar law or to the commencement of any insolvency proceedings
against it, or the filing by Liberty or any Material Subsidiary of a
petition or answer or consent seeking reorganization or relief under any
applicable law, or the consent by Liberty or any Material Subsidiary to the
filing of the petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee or similar official of
Liberty or any Material Subsidiary or any substantial part of the property
of Liberty or any Material Subsidiary or the making by Liberty or any
Material Subsidiary of an assignment for the benefit of creditors, or the
taking of corporate action by Liberty or any Material Subsidiary in
furtherance of any such action; or
(9) any other event of default provided in or pursuant to the
applicable indenture with respect to debt securities of the series.
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If an event of default with respect to debt securities of any series at the
time outstanding (other than an event of default specified in clause (7) or (8)
above) occurs and is continuing, then the trustee or the holders of not less
than 25% in principal amount of the outstanding debt securities of the series
may declare the principal of all the debt securities of the series, or such
lesser amount as may be provided for in the debt securities of the series, to be
due and payable immediately, by a notice in writing to Liberty (and to the
trustee if given by the holders), and upon any declaration the principal or such
lesser amount shall become immediately due and payable. If an event of default
specified in clause (7) or (8) above occurs, all unpaid principal of and accrued
interest on the outstanding debt securities of that series (or such lesser
amount as may be provided for in the debt securities of the series) shall become
and be immediately due and payable without any declaration or other act on the
part of the trustee or any holder of any debt security of that series.
At any time after a declaration of acceleration or automatic acceleration
with respect to the debt securities of any series has been made and before a
judgment or decree for payment of the money due has been obtained by the
trustee, the holders of not less than a majority in principal amount of the
outstanding debt securities of the series, by written notice to Liberty and the
trustee, may rescind and annul the declaration and its consequences if:
(1) Liberty has paid or deposited with the trustee a sum of money
sufficient to pay all overdue installments of any interest on all debt
securities of the series and additional amounts payable with respect
thereto and the principal of and any premium on any debt securities of the
series which have become due otherwise than by the declaration of
acceleration and interest on the debt securities; and
(2) all events of default with respect to debt securities of the
series, other than the non-payment of the principal of, any premium and
interest on, and any additional amounts with respect to debt securities of
the series which shall have become due solely by the acceleration, shall
have been cured or waived.
No rescission shall affect any subsequent default or impair any right
consequent thereon.
FORM, TERM AND DENOMINATION
Unless otherwise indicated in a prospectus supplement, each debt security
will be issued in book-entry form (a "book-entry debt securities") in minimum
denominations of $1,000 and integral multiples thereof, and each book-entry debt
security will be represented by one or more global debt securities in fully
registered form, registered in the name of the depositary or its nominee. Unless
otherwise indicated in a prospectus supplement, the depositary for the debt
securities will be The Depository Trust Company, which is referred to in this
prospectus as "DTC" or the "depositary," or its nominee, and beneficial
interests in the global debt securities will be shown on, and transfers thereof
will be effected only through, records maintained by DTC and its participants.
Relevant information regarding any other depositary will be included in the
applicable prospectus supplement.
So long as the depositary or its nominee is the registered owner of a
global debt security, the depositary or its nominee, as the case may be, will be
the sole holder of the debt securities represented by the global debt security
for all purposes under the indentures. Except as otherwise provided in this
section, the beneficial owners of the global debt securities representing the
debt securities will not be entitled to receive physical delivery of
certificated debt securities and will not be considered the holders of the debt
securities for any purpose under the indentures, and no global debt security
representing the book-entry debt securities will be exchangeable or
transferable. Accordingly, each beneficial owner must rely on the procedures of
the depositary and, if the beneficial owner is not a participant of the
depositary, then the beneficial owner must rely on the procedures of the
participant through which the beneficial owner owns its interest in order to
exercise any rights of a holder under the global debt securities or the
applicable indenture. The laws of some jurisdictions may require that certain
purchasers of debt securities take physical delivery of the debt securities in
certificated form. Such limits and laws may impair the ability to transfer
beneficial interests in a global debt security representing the debt securities.
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Book-entry debt securities will not be exchangeable for debt securities
issued in fully registered form ("certificated debt securities"), unless:
- the depositary notifies Liberty that it is unwilling or unable to
continue as depositary for the global debt securities;
- the depositary ceases to be a clearing agency registered under the
Securities Exchange Act;
- Liberty in its sole discretion determines that the book-entry debt
securities shall be exchangeable for certificated debt securities; or
- there shall have occurred and be continuing an event of default under the
applicable indenture with respect to the debt securities.
Upon any exchange, the certificated debt securities shall be registered in
the names of the beneficial owners of the global debt securities representing
the debt securities, which names shall be provided by the depositary's relevant
participants (as identified by the depositary) to the trustee.
Book-entry debt securities may be transferred or exchanged only through the
depositary. Registration of transfer or exchange of certificated debt securities
will be made at the office or agency, maintained by Liberty for this purpose in
the Borough of Manhattan, The City of New York, currently the office of the
trustee at 101 Barclay Street, New York, N.Y. 10286. Neither Liberty nor the
trustee will charge a service charge for any registration of transfer or
exchange of debt securities, but Liberty may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with the transfer or exchange (other than exchanges pursuant to the applicable
indenture not involving any transfer).
Liberty will make payments of principal and interest on book-entry debt
securities through the trustee to the depositary. In the case of certificated
debt securities, Liberty will pay the principal due on the maturity date in
immediately available funds upon presentation and surrender by the holder of the
securities at the office or agency maintained by Liberty for this purpose at the
Borough of Manhattan, The City of New York, currently the office of the trustee
at 101 Barclay Street, New York, N.Y. 10286. Liberty will pay interest due on
the maturity date of a certificated debt security to the person to whom payment
of the principal will be made. Liberty will pay interest due on a certificated
debt security on any interest payment date other than the maturity date by check
mailed to the address of the holder entitled to the payment as the address shall
appear in the security register of Liberty. Any interest not punctually paid or
duly provided for on a certificated debt security on any interest payment date
other than the maturity date will cease to be payable to the holder of the debt
security as of the close of business on the related record date and may either
be paid (1) to the person in whose name the certificated debt security is
registered at the close of business on a special record date for the payment of
the defaulted interest that is fixed by Liberty, written notice of which will be
given to the holders of the debt securities not less than 30 calendar days prior
to the special record date, or (2) at any time in any other lawful manner.
All moneys paid by Liberty to the trustee or any paying agent for the
payment of principal and interest on any debt security which remains unclaimed
for two years after the principal or interest is due and payable may be repaid
to Liberty and, after that payment, the holder of the debt security will look
only to Liberty for payment.
Information Relating to the Depositary
The following is based on information furnished by the depositary:
The depositary will act as the depositary for the debt securities. The debt
securities will be issued as fully registered debt securities registered in the
name of Cede & Co., which is the depositary's partnership nominee. Fully
registered global debt securities will be issued for the debt securities sold to
initial purchasers and subsequent transferees, directly or indirectly, of such
debt securities, and will be deposited with the depositary.
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The depositary is a limited-purpose trust company organized under the New
York Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. The depositary holds debt securities that its participants deposit with the
depositary. The depositary also facilitates the settlement among participants of
securities transactions, including transfers and pledges, in deposited debt
securities through electronic computerized book-entry changes to participants'
accounts, thereby eliminating the need for physical movement of debt securities
certificates. Direct participants of the depositary include securities brokers
and dealers, including banks, trust companies, clearing corporations and certain
other organizations. The depositary is owned by a number of its direct
participants, including the New York Stock Exchange, Inc., the American Stock
Exchange, Inc., and the National Association of Securities Dealers, Inc. Access
to the depositary's system is also available to indirect participants, which
includes securities brokers and dealers, banks and trust companies that clear
through or maintain a custodial relationship with a direct participant, either
directly or indirectly. The rules applicable to the depositary and its
participants are on file with the SEC.
Purchases of debt securities under the depositary's system must be made by
or through direct participants, which will receive a credit for the debt
securities on the depositary's record. The ownership interest of each beneficial
owner, which is the actual purchaser of each debt security, represented by
global debt securities, is in turn to be recorded on the direct and indirect
participants' records. Beneficial owners will not receive written confirmation
from the depositary of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the direct or indirect participants
through which the beneficial owner entered into the transaction. Transfers of
ownership interests in the global debt securities representing the debt
securities are to be accomplished by entries made on the books of participants
acting on behalf of beneficial owners. Beneficial owners of the global debt
securities representing the debt securities will not receive certificated debt
securities representing their ownership interests therein, except in the event
that use of the book-entry system for the debt securities is discontinued.
To facilitate subsequent transfers, all global debt securities representing
the debt securities which are deposited with, or on behalf of, the depositary
are registered in the name of the depositary's nominee, Cede & Co. The deposit
of global debt securities with, or on behalf of, the depositary and their
registration in the name of Cede & Co. effect no change in beneficial ownership.
The depositary has no knowledge of the actual beneficial owners of the global
debt securities representing the debt securities; the depositary's records
reflect only the identity of the direct participants to whose accounts the debt
securities are credited, which may or may not be the beneficial owners. The
participants will remain responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications by the depositary to direct
participants, by direct participants to indirect participants, and by direct and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Neither the depositary nor Cede & Co. will consent or vote with respect to
the global debt securities representing the debt securities. Under its usual
procedure, the depositary mails an omnibus proxy to Liberty as soon as possible
after the applicable record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
debt securities are credited on the applicable record date (identified in a
listing attached to the omnibus proxy).
Principal and/or interest payments on the global debt securities
representing the debt securities will be made to the depositary. The
depositary's practice is to credit direct participants' accounts on the
applicable payment date in accordance with their respective holdings shown on
the depositary's records unless the depositary has reason to believe that it
will not receive payment on the date. Payments by participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with debt securities held for the accounts of customers in bearer form
or registered in "street
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name," and will be the responsibility of the participant and not of the
depositary, the trustee or Liberty, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payment of principal and/or
interest to the depositary is the responsibility of Liberty or the trustee,
disbursement of the payments to direct participants will be the responsibility
of the depositary, and disbursement of the payments to the beneficial owners
will be the responsibility of direct and indirect participants.
The depositary may discontinue providing its services as securities
depositary with respect to the debt securities at any time by giving reasonable
notice to Liberty or the trustee. Under such circumstances, in the event that a
successor securities depositary is not obtained, certificated debt securities
are required to be printed and delivered.
Liberty may decide to discontinue use of the system of book-entry transfers
through the depositary or a successor securities depositary. In that event,
certificated debt securities will be printed and delivered.
Although the depositary has agreed to the procedures described above in
order to facilitate transfers of interests in the global debt securities among
participants of the depositary, it is under no obligation to perform or continue
to perform these procedures, and these procedures may be discontinued at any
time. Neither the trustee nor Liberty will have any responsibility for the
performance by the depositary or its participants or indirect participants of
their respective obligations under the rules and procedures governing their
operations.
Trading
Beneficial interests in the global debt securities will trade in the
depositary's same-day funds settlement system until maturity or earlier
redemption, and secondary market trading activity in the global debt securities
will therefore settle in immediately available funds, subject in all cases to
the rules and operating procedures of the depositary. Transfers between
participants in the depositary will be effected in the ordinary way in
accordance with the depositary's rules and operating procedures and will be
settled in same-day funds.
The information in this subsection "-- Form, Term and Denomination"
concerning the depositary and its book-entry systems has been obtained from
sources that Liberty believes to be reliable, but Liberty takes no
responsibility for its accuracy.
CERTAIN COVENANTS
The senior indenture provides that the covenants set forth below will be
applicable to Liberty and its Subsidiaries. The subordinated indenture does not
provide for any such covenants.
Limitation on Liens. Liberty will not, and will not permit any Restricted
Subsidiary to, create, incur or assume any Lien, except for Permitted Liens, on
any Principal Property to secure the payment of Funded Indebtedness of Liberty
or any Restricted Subsidiary if, immediately after the creation, incurrence or
assumption of such Lien, the sum of (A) the aggregate outstanding principal
amount of all Funded Indebtedness of Liberty and the Restricted Subsidiaries
that is secured by Liens (other than Permitted Liens) on any Principal Property
and (B) the Attributable Debt relating to any Sale and Leaseback Transaction
which would otherwise be subject to the provisions of clause 2(A)(i) of the
"Limitation on Sale and Leaseback" covenant would exceed 15% of the Consolidated
Asset Value, unless effective provision is made whereby the senior debt
securities (together with, if Liberty shall so determine, any other Funded
Indebtedness ranking equally with the senior debt securities, whether then
existing or thereafter created) are secured equally and ratably with (or prior
to) such Funded Indebtedness (but only for so long as such Funded Indebtedness
is so secured).
The foregoing limitation on Liens shall not apply to the creation,
incurrence or assumption of the following Liens ("Permitted Liens"):
(1) Any Lien which arises out of a judgment or award against Liberty
or any Restricted Subsidiary with respect to which Liberty or such
Restricted Subsidiary at the time shall be
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prosecuting an appeal or proceeding for review (or with respect to which
the period within which such appeal or proceeding for review may be
initiated shall not have expired) and with respect to which it shall have
secured a stay of execution pending such appeal or proceedings for review
or with respect to which Liberty or such Restricted Subsidiary shall have
posted a bond and established adequate reserves (in accordance with
generally accepted accounting principles) for the payment of such judgment
or award;
(2) Liens on assets or property of a person existing at the time such
person is merged into or consolidated with Liberty or any Restricted
Subsidiary or becomes a Restricted Subsidiary; provided, that such Liens
were in existence prior to the contemplation of such merger, consolidation
or acquisition and do not secure any property of Liberty or any Restricted
Subsidiary other than the property and assets subject to the Liens prior to
such merger, consolidation or acquisition;
(3) Liens existing on the date of original issuance of the senior debt
securities;
(4) Liens securing Funded Indebtedness (including in the form of
Capitalized Lease Obligations and purchase money indebtedness) incurred for
the purpose of financing the cost (including without limitation the cost of
design, development, site acquisition, construction, integration,
manufacture or acquisition) of real or personal property (tangible or
intangible) which is incurred contemporaneously therewith or within 60 days
thereafter; provided (i) such Liens secure Funded Indebtedness in an amount
not in excess of the cost of such property (plus an amount equal to the
reasonable fees and expenses incurred in connection with the incurrence of
such Funded Indebtedness) and (ii) such Liens do not extend to any property
of Liberty or any Restricted Subsidiary other than the property for which
such Funded Indebtedness was incurred;
(5) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure the senior debt securities;
(7) Liens granted in favor of Liberty; and
(8) Any Lien in respect of Funded Indebtedness representing the
extension, refinancing, renewal or replacement (or successive extensions,
refinancings, renewals or replacements) of Funded Indebtedness secured by
Liens referred to in clauses (2), (3), (4), (5), (6) and (7) above,
provided that the principal of the Funded Indebtedness secured thereby does
not exceed the principal of the Funded Indebtedness secured thereby
immediately prior to such extension, renewal or replacement, plus any
accrued and unpaid interest or capitalized interest payable thereon,
reasonable fees and expenses incurred in connection therewith, and the
amount of any prepayment premium necessary to accomplish any refinancing;
provided, that such extension, renewal or replacement shall be limited to
all or a part of the property (or interest therein) subject to the Lien so
extended, renewed or replaced (plus improvements and construction on such
property).
Limitation on Sale and Leaseback. Liberty will not, and will not permit
any Restricted Subsidiary to, enter into any Sale and Leaseback Transaction;
provided, that Liberty or any Restricted Subsidiary may enter into a Sale and
Leaseback Transaction if:
(1) the gross cash proceeds of the Sale and Leaseback Transaction are
at least equal to the fair market value, as determined in good faith by the
Board of Directors and set forth in a board resolution delivered to the
trustee, of the Principal Property that is the subject of the Sale and
Leaseback Transaction, and
(2) either
(A) Liberty or the Restricted Subsidiary, as applicable, either (i)
could have incurred a Lien to secure Funded Indebtedness in an amount
equal to the Attributable Debt relating to such Sale and Leaseback
Transaction pursuant to the "Limitation on Liens" covenant, or (ii)
makes effective provision whereby the senior debt securities (together
with, if Liberty shall so
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determine, any other Funded Indebtedness ranking equally with the senior
debt securities, whether then existing or thereafter created) are
secured equally and ratably with (or prior to) the obligations of
Liberty or the Restricted Subsidiary under the lease of the Principal
Property that is the subject of the Sale and Leaseback Transaction, or
(B) within 180 days, Liberty or the Restricted Subsidiary either
(i) applies an amount equal to the fair market value of the Principal
Property that is the subject of the Sale and Leaseback Transaction to
purchase the senior debt securities or to retire other Funded
Indebtedness, or (ii) enters into a bona fide commitment to expend for
the acquisition or improvement of a Principal Property an amount at
least equal to the fair market value of such Principal Property.
Designation of Restricted Subsidiaries. Liberty may designate an
Unrestricted Subsidiary as a Restricted Subsidiary or designate a Restricted
Subsidiary as an Unrestricted Subsidiary at any time, provided that (1)
immediately after giving effect to such designation, Liberty and its Restricted
Subsidiaries would have been permitted to incur at least $1.00 of additional
Funded Indebtedness secured by a Lien pursuant to the "Limitation on Liens"
covenant, (2) no default or event of default shall have occurred and be
continuing, and (3) an Officers' Certificate with respect to such designation is
delivered to the trustee within 75 days after the end of the fiscal quarter of
Liberty in which such designation is made (or, in the case of a designation made
during the last fiscal quarter of Liberty's fiscal year, within 120 days after
the end of such fiscal year), which Officers' Certificate shall state the
effective date of such designation; Liberty has made the initial designation of
all of its Subsidiaries as Restricted Subsidiaries and will deliver the required
Officers' Certificate with respect thereto to the trustee, on or prior to the
date of initial issuance of the senior debt securities.
SUCCESSOR CORPORATION
Liberty may not consolidate with or merge into, or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its assets and
the properties and assets of its Subsidiaries (taken as a whole) to, any entity
or entities (including limited liability companies) unless (1) the successor
entity or entities, each of which shall be organized under the laws of the
United States or a State thereof, shall assume by supplemental indenture all the
obligations of Liberty under the debt securities and the indentures and (2)
immediately after giving effect to the transaction or series of transactions, no
default or event of default shall have occurred and be continuing. Thereafter,
all such obligations of Liberty shall terminate.
CERTAIN DEFINITIONS
The following are certain of the terms defined in the indentures:
"Closing Price" means, with respect to any security on any date of
determination, the closing sale price (or, if no closing sale price is reported,
the last reported sale price) of such security on the NYSE on such date or, if
such security is not listed for trading on the NYSE on such date, as reported in
the composite transactions (or comparable system) for the principal United
States national or regional securities exchange on which such security is so
listed or a recognized international securities exchange, or, if such security
is not listed on a U.S. national or regional securities exchange or on a
recognized international securities exchange, as reported by the Nasdaq Stock
Market, or, if such security is not so reported, the last quoted bid price for
such security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price is not
available, the market value of such security on such date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by Liberty; provided that, (1) with respect to options, warrants and
other rights to purchase Marketable Securities, the Closing Price shall be the
value based on the Closing Price of the underlying Marketable Security minus the
exercise price and (2) with respect to securities exchangeable for or
convertible into Marketable Securities, the Closing Price shall be the Closing
Price of the exchangeable or convertible security or, if it has no Closing
Price, the fully converted value based upon the Closing Price of the underlying
Marketable Security.
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"Indebtedness" of any person means:
(1) any indebtedness of such person (i) for borrowed money or (ii)
evidenced by a note, debenture or similar instrument (including a purchase
money obligation) given in connection with the acquisition of any property
or assets, including securities;
(2) any guarantee by such person of any indebtedness of others
described in the preceding clause (1); and
(3) any amendment, renewal, extension or refunding of any such
indebtedness or guarantee.
"Marketable Securities" means any securities listed on a U.S. national
securities exchange or reported by the Nasdaq Stock Market or listed on a
recognized international securities exchange or traded in the over-the-counter
market and quoted by at least two broker-dealers as reported by the National
Quotation Bureau or similar organization, including as Marketable Securities
options, warrants and other rights to purchase, and securities exchangeable for
or convertible into, Marketable Securities.
"Material Subsidiary" means, at any relevant time, any Subsidiary that
meets any of the following conditions:
(1) Liberty's and its other Subsidiaries' investments in and advances
to the Subsidiary exceed 10% of the total consolidated assets of Liberty
and its Subsidiaries; or
(2) Liberty's and its other Subsidiaries' proportionate share of the
total assets (after intercompany eliminations) of the Subsidiary exceeds
10% of the total consolidated assets of Liberty and its Subsidiaries; or
(3) Liberty's and its other Subsidiaries' proportionate share of the
total revenues (after intercompany eliminations) of the Subsidiary exceeds
10% of the total consolidated revenue of Liberty and its Subsidiaries; or
(4) Liberty's and its other Subsidiaries' equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle of the Subsidiary
exceeds 10% of such income of Liberty and its Subsidiaries;
all as calculated by reference to the then latest fiscal year-end accounts (or
consolidated fiscal year-end accounts, as the case may be) of such Subsidiary
and the then latest audited consolidated fiscal year-end accounts of Liberty and
its Subsidiaries. Based on the 2000 fiscal year-end accounts, as of the date of
this prospectus, the only Material Subsidiaries of Liberty are Starz Encore
Group LLC, Liberty Livewire Corporation and On Command Corporation.
"Nasdaq Stock Market" means The Nasdaq Stock Market, a subsidiary of the
National Association of Securities Dealers, Inc.
"Subsidiary" means any corporation, association, limited liability company,
partnership or other business entity of which a majority of the total voting
power of the capital stock or other interests (including partnership interests)
entitled (without regard to the incurrence of a contingency) to vote in the
election of directors, managers, or trustees thereof is at the time owned,
directly or indirectly, by (i) Liberty, (ii) Liberty and one or more of its
Subsidiaries or (iii) one or more Subsidiaries of Liberty.
"Trading Day" means, with respect to any security the Closing Price of
which is being determined, a day on which there is trading on the principal
United States national or regional securities exchange or recognized
international securities exchange, in the Nasdaq Stock Market or in the
over-the-counter market used to determine such Closing Price.
The following are certain of the terms defined only in the senior
indenture:
"Attributable Debt" in respect of a Sale and Leaseback Transaction means,
at the time of determination, the present value of the obligation of the lessee
for net rental payments during the remaining term of the lease included in such
Sale and Leaseback Transaction including any period for
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which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
generally accepted accounting principles.
"Capitalized Lease Obligation" of any person means any obligation of such
person to pay rent or other amounts under a lease with respect to any property
(whether real, personal or mixed) acquired or leased by such person and used in
its business that is required to be accounted for as a liability on the balance
sheet of such person in accordance with generally accepted accounting principles
and the amount of such Capitalized Lease Obligation shall be the amount so
required to be accounted for as a liability.
"Consolidated Asset Value" shall mean, with respect to any date of
determination, the sum of:
(A) the amount of cash of Liberty and its Restricted Subsidiaries on
the last day of the preceding month, plus the following assets owned by
Liberty and its Restricted Subsidiaries on the last day of the preceding
month that have the indicated ratings and maturities no greater than 270
days:
- the aggregate principal amount of certificates of deposit and bankers'
acceptances rated A/2 or P/2 or higher by the Rating Agencies;
- the aggregate principal amount of participations in loans with
obligors with short-term ratings of A/2 or P/2 or higher by the Rating
Agencies or long-term ratings of Baa1 or BBB+ or higher by the Rating
Agencies;
- the aggregate principal amount of repurchase agreements of securities
issued by the U.S. government or any agency thereof with
counterparties with short-term ratings of A/2 or P/2 or higher by the
Rating Agencies or long-term ratings of Baa1or BBB+ or higher by the
Rating Agencies; and
- the aggregate principal amount at maturity of commercial paper rated
A/2 or P/2 or higher by the Rating Agencies;
(B) the aggregate value of all Marketable Securities owned by Liberty
and its Restricted Subsidiaries based upon the Closing Price of each
Marketable Security on the last day of the preceding month, or if such day
is not a Trading Day, on the immediately preceding Trading Day; and
(C) the arithmetic mean of the aggregate market values (or the
midpoint of a range of values) of the assets of Liberty and its Restricted
Subsidiaries having a value in excess of $200 million, other than the
assets referred to in clauses (A) and (B) above, as of a date within 90
days of the date of determination (or to the extent the research reports
referred to below have not been issued within such 90-day period, as of a
date within 180 days of the date of determination) as evidenced either:
- by research reports issued by three nationally recognized independent
investment banking firms selected by Liberty; or
- if three such research reports have not been issued within 180 days
prior to the date of determination, by an appraisal by two nationally
recognized independent investment banking or appraisal firms retained
by Liberty for this purpose.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's-length transaction, for cash, between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy. Fair market value shall be determined
by the Board of Directors of Liberty acting in good faith evidenced by a board
resolution thereof delivered to the trustee.
"Funded Indebtedness" of any person means, as of the date as of which the
amount thereof is to be determined, without duplication, all Indebtedness of
such person and all Capitalized Lease Obligations of such person, which by the
terms thereof have a final maturity, duration or payment date more than one
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year from the date of determination thereof (including, without limitation, any
balance of such Indebtedness or obligation which was Funded Indebtedness at the
time of its creation maturing within one year from such date of determination)
or which has a final maturity, duration or payment date within one year from
such date of determination but which by its terms may be renewed or extended at
the option of such person for more than one year from such date of
determination, whether or not theretofore renewed or extended; provided,
however, "Funded Indebtedness" shall not include (1) any Indebtedness of Liberty
or any Subsidiary to Liberty or another Subsidiary, (2) any guarantee by Liberty
or any Subsidiary of Indebtedness of Liberty or another Subsidiary, provided
that such guarantee is not secured by a Lien on any Principal Property, (3) any
guarantee by Liberty or any Subsidiary of the Indebtedness of any person
(including, without limitation, a business trust), if the obligation of Liberty
or such Subsidiary under such guaranty is limited in amount to the amount of
funds held by or on behalf of such person that are available for the payment of
such indebtedness, (4) liabilities under interest rate swap, exchange, collar or
cap agreements and all other agreements or arrangements designed to protect
against fluctuations in interest rates or currency exchange rates, and (5)
liabilities under commodity hedge, commodity swap, exchange, collar or cap
agreements, fixed price agreements and all other agreements or arrangements
designed to protect against fluctuations in prices. For purposes of determining
the outstanding principal amount of Funded Indebtedness at any date, the amount
of Indebtedness issued at a price less than the principal amount at maturity
thereof shall be equal to the amount of the liability in respect thereof at such
date determined in accordance with generally accepted accounting principles.
"Lien" means any mortgage, pledge, lien, security interest, or other
similar encumbrance.
"Principal Property" means, as of any date of determination, (a) any cable
system or manufacturing or production facility, including land and buildings and
other improvements thereon and equipment located therein, owned by Liberty or a
Restricted Subsidiary and used in the ordinary course of its business and (b)
any executive offices, administrative buildings, and research and development
facilities, including land and buildings and other improvements thereon and
equipment located therein, of Liberty or a Restricted Subsidiary, other than any
such property which, in the good faith opinion of the Board of Directors, is not
of material importance to the business conducted by Liberty and its Restricted
Subsidiaries taken as a whole.
"Rating Agencies" means (i) Standard & Poors, a division of The McGraw-Hill
Companies, Inc. and (ii) Moody's Investors Service, Inc. and (iii) if S&P or
Moody's or both shall not make a rating publicly available, a nationally
recognized United States securities rating agency or agencies, as the case may
be, selected by Liberty, which shall be substituted for S&P or Moody's or both,
as the case may be.
"Restricted Subsidiary" means, as of any date of determination, a
corporation a majority of whose voting stock is owned by Liberty and/or one or
more Restricted Subsidiaries, which corporation has been, or is then being,
designated a Restricted Subsidiary in accordance with the "Designation of
Restricted Subsidiaries" covenant, unless and until designated an Unrestricted
Subsidiary in accordance with such covenant.
"Sale and Leaseback Transaction" means any arrangement providing for the
leasing to Liberty or a Restricted Subsidiary of any Principal Property (except
for temporary leases for a term, including renewals, of not more than three
years) which has been or is to be sold by Liberty or such Restricted Subsidiary
to the lessor.
"Unrestricted Subsidiary" means, as of any date of determination, any
Subsidiary of Liberty that is not a Restricted Subsidiary.
MODIFICATION AND WAIVER
Modification and amendments of the indentures may be made by Liberty and
the trustee with the consent of the holders of not less than a majority in
aggregate principal amount of the outstanding debt securities of each series
affected thereby; provided, however, that no modification or amendment may,
without the consent of the holder of each outstanding debt security affected
thereby,
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(1) change the stated maturity of the principal of, or any premium or
installment of interest on, or any additional amounts with respect to, any
debt security;
(2) reduce the principal amount of, or the rate (or modify the
calculation of the rate) of interest on, or any additional amounts with
respect to, or any premium payable upon the redemption of, any debt
security;
(3) change the redemption provisions of any debt security or adversely
affect the right of repayment at the option of any holder of any debt
security;
(4) change the place of payment or the coin or currency in which the
principal of, any premium or interest on or any additional amounts with
respect to any debt security is payable;
(5) impair the right to institute suit for the enforcement of any
payment on or after the stated maturity of any debt security (or, in the
case of redemption, on or after the redemption date or, in the case of
repayment at the option of any holder, on or after the date for repayment);
(6) reduce the percentage in principal amount of the outstanding debt
securities, the consent of whose holders is required in order to take
certain actions;
(7) reduce the requirements for quorum or voting by holders of debt
securities as provided in the applicable indenture;
(8) modify any of the provisions in the applicable indenture regarding
the waiver of past defaults and the waiver of certain covenants by the
holders of debt securities except to increase any percentage vote required
or to provide that certain other provisions of the applicable indenture
cannot be modified or waived without the consent of the holder of each debt
security affected thereby; or
(9) modify any of the above provisions.
The holders of at least a majority in aggregate principal amount of the
debt securities of any series may, on behalf of the holders of all debt
securities of the series, waive compliance by Liberty with certain restrictive
provisions of the applicable indenture. The holders of not less than a majority
in aggregate principal amount of the outstanding applicable debt securities of
any series may, on behalf of the holders of all debt securities of the series,
waive any past default and its consequences under the applicable indenture with
respect to the debt securities of the series, except a default:
- in the payment of principal (or premium, if any), or any interest on or
any additional amounts with respect to debt securities of the series; or
- in respect of a covenant or provision of the applicable indenture that
cannot be modified or amended without the consent of the holder of each
debt security of any series.
Under the indentures, Liberty is required to furnish the trustee annually a
statement as to performance by Liberty of certain of its obligations under the
indentures and as to any default in the performance. Liberty is also required to
deliver to the trustee, within five days after becoming aware thereof, written
notice of any event of default or any event which after notice or lapse of time
or both would constitute an event of default.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
Liberty may discharge certain obligations to holders of any series of debt
securities that have not already been delivered to the trustee for cancellation
and that either have become due and payable or will become due and payable
within one year (or scheduled for redemption within one year) by depositing with
the trustee, in trust, funds in U.S. dollars in an amount sufficient to pay the
entire indebtedness on the debt securities with respect to principal (and
premium, if any) and interest to the date of the deposit (if the debt securities
have become due and payable) or to the maturity thereof, as the case may be.
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Each of the indentures provides that, unless the provisions of Section 402
thereof are made inapplicable to the debt securities of or within any series
pursuant to Section 301 thereof, Liberty may elect either:
- to defease and be discharged from any and all obligations with respect to
the debt securities (except for, among other things, the obligation to
pay additional amounts, if any, upon the occurrence of certain events of
taxation, assessment or governmental charge with respect to payments on
the debt securities and other obligations to register the transfer or
exchange of the debt securities, to replace temporary or mutilated,
destroyed, lost or stolen debt securities, to maintain an office or
agency with respect to the debt securities and to hold moneys for payment
in trust) ("defeasance"); or
- to be released from its obligations with respect to the debt securities
under the covenants described under "-- Certain Covenants -- Debt
Securities" above or, if provided pursuant to Section 301 of each
indenture, its obligations with respect to any other covenant, and any
omission to comply with the obligations shall not constitute a default or
an event of default with respect to the debt securities ("covenant
defeasance").
Defeasance or covenant defeasance, as the case may be, shall be conditioned
upon the irrevocable deposit by Liberty with the trustee, in trust, of an amount
in U.S. dollars at stated maturity, or Government Obligations, which is defined
below, or both, applicable to the debt securities which through the scheduled
payment of principal and interest in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
interest on the debt securities on the scheduled due dates therefor.
Such a trust may only be established if, among other things:
- the applicable defeasance or covenant defeasance does not result in a
breach or violation of, or constitute a default under, the applicable
indenture or any other material agreement or instrument to which Liberty
is a party or by which it is bound; and
- Liberty has delivered to the trustee an Opinion of Counsel (as specified
in the applicable indenture) to the effect that the holders of the debt
securities will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of the defeasance or covenant defeasance
and will be subject to U.S. federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if the
defeasance or covenant defeasance had not occurred, and the Opinion of
Counsel, in the case of defeasance, must refer to and be based upon a
letter ruling of the Internal Revenue Service received by Liberty, a
Revenue Ruling published by the Internal Revenue Service or a change in
applicable U.S. federal income tax law occurring after the date of the
applicable indenture.
"Government Obligations" means debt securities which are:
(1) direct obligations of the United States of America or the
government or the governments in the confederation which issued the
currency in which the debt securities of a particular series are payable,
for the payment of which its full faith and credit is pledged; or
(2) obligations of a person controlled or supervised by and acting as
an agency or instrumentality of the United States of America or such other
government or governments, the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United States of
America or such other government or governments,
which, in the case of clauses (1) and (2), are not callable or redeemable
at the option of the issuer or issuers thereof, and shall also include a
depositary receipt issued by a bank or trust company as custodian with
respect to the Government Obligation or a specific payment of interest on
or principal of or any other amount with respect to the Government
Obligation held by the custodian for the account of the holder of the
depositary receipt, provided that (except as required by law) the custodian
is not authorized to make any deduction from the amount payable to the
holder of the
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depositary receipt from any amount received by the custodian with respect
to the Government Obligation or the specific payment of interest on or
principal of or any other amount with respect to the Government Obligation
evidenced by the depositary receipt.
In the event Liberty effects covenant defeasance with respect to any debt
securities and the debt securities are declared due and payable because of the
occurrence of any event of default other than an event of default with respect
to any covenant as to which there has been covenant defeasance, the amount in
the Currency in which the debt securities are payable, and Government
Obligations on deposit with the trustee, will be sufficient to pay amounts due
on the debt securities at the time of the stated maturity but may not be
sufficient to pay amounts due on the debt securities at the time of the
acceleration resulting from the event of default. However, Liberty would remain
liable to make payment of the amounts due at the time of acceleration.
GOVERNING LAW
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
REGARDING THE TRUSTEE
The Bank of New York is the trustee under the senior indenture and is
permitted to engage in other transactions with Liberty and its subsidiaries from
time to time, provided that if the trustee acquires any conflicting interest it
must eliminate the conflict upon the occurrence of an event of default, or else
resign. The trustee named under the subordinated indenture will be listed in a
prospectus supplement.
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DESCRIPTION OF OUR WARRANTS
We may issue warrants for the purchase of our Series A common stock, stock
of a subsidiary, affiliate or other issuer or for our debt securities. Warrants
may be issued independently or together with shares of our Series A common stock
or debt securities offered by any prospectus supplement and may be attached to
or separate from any such offered securities. Each series of warrants will be
issued under a separate warrant agreement to be entered into between us and a
bank or trust company, as warrant agent. The warrant agent will act solely as
our agent in connection with the warrants and will not assume any obligation or
relationship of agency or trust for or with any holders or beneficial owners of
warrants. The following summary of certain provisions of the warrants does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, the provisions of the warrant agreement that will be filed with
the SEC in connection with the offering of any such warrants.
STOCK WARRANTS
The prospectus supplement relating to any particular issue of stock
warrants will describe the terms of the warrants, including the following:
- the title of the warrants;
- the offering price for the warrants, if any;
- the aggregate number of the warrants;
- the designation and terms of the underlying stock purchasable upon
exercise of the warrants;
- if applicable, the designation and terms of the offered securities with
which the warrants are issued and the number of the warrants issued with
each such offered security;
- if applicable, the date from and after which the warrants and any offered
securities issued therewith will be separately transferable;
- the number of shares of stock purchasable upon exercise of a warrant and
the price at which the shares may be purchased upon exercise;
- the date on which the right to exercise the warrants shall commence and
the date on which the right shall expire;
- if applicable, the minimum or maximum amount of the warrants that may be
exercised at any one time;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- the antidilution provisions of the warrants, if any;
- the redemption or call provisions, if any, applicable to such warrants;
and
- any additional terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
DEBT WARRANTS
The prospectus supplement relating to a particular issue of debt warrants
will describe the terms of the debt warrants, including the following:
- the title of the debt warrants;
- the offering price for the debt warrants, if any;
- the aggregate number of the debt warrants;
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- the designation and terms of the debt securities purchasable upon
exercise of the debt warrants;
- if applicable, the designation and terms of the debt securities with
which the debt warrants are issued and the number of such debt warrants
issued with each debt security;
- if applicable, the date from and after which the debt warrants and any
debt securities issued therewith will be separately transferable;
- the principal amount of debt securities purchasable upon exercise of a
debt warrant and the price at which the principal amount of debt
securities may be purchased upon exercise (which price may be payable in
cash, securities, or other property);
- the date on which the right to exercise the debt warrants shall commence
and the date on which the right shall expire;
- if applicable, the minimum or maximum amount of the debt warrants that
may be exercised at any one time;
- information with respect to book-entry procedures, if any;
- the currency or currency units in which the offering price, if any, and
the exercise price are payable;
- if applicable, a discussion of material United States federal income tax
considerations;
- the antidilution provisions of the debt warrants, if any;
- the redemption or call provisions, if any, applicable to such debt
warrants; and
- any additional terms of the debt warrants, including terms, procedures,
and limitations relating to the exchange and exercise of the debt
warrants.
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PLAN OF DISTRIBUTION
We may offer securities (1) through underwriters or dealers, (2) through
agents or (3) directly to one or more purchasers.
SALE THROUGH UNDERWRITERS
If we use underwriters in the sale, such underwriters will acquire the
securities for their own account. The underwriters may resell the securities in
one or more transactions, including negotiated transactions at a fixed public
offering price or at varying prices determined at the time of sale. The
obligations of the underwriters to purchase the securities will be subject to
certain conditions. The underwriters will be obligated to purchase all the
securities of the series offered if any of the securities are purchased. The
underwriters may change from time to time any initial public offering price and
any discounts or concessions allowed or re-allowed or paid to dealers.
SALE THROUGH AGENTS
We may sell offered securities through agents designated by us.
DIRECT SALES
We also may sell offered securities directly. In this case, no underwriters
or agents would be involved.
DELAYED DELIVERY CONTRACTS
We may authorize underwriters or agents to solicit offers by certain
institutions to purchase offered securities pursuant to delayed delivery
contracts, with the following features:
- The contracts provide for purchase of the securities at the public
offering price but at a specified later date.
- Purchase of securities at the closing of such contracts is conditioned
solely on the purchase being permissible under laws applicable to the
purchasing institution.
- The contracts and purchasing institutions are subject to our approval.
We will pay disclosed commissions to underwriters or agents if we accept any
contract. Institutions with which the contracts may be made include, among
others:
- commercial and savings banks;
- insurance companies;
- pension funds;
- investment companies; and
- educational and charitable institutions.
In all cases, the institutions must be approved by us. Unless otherwise set
forth in the applicable prospectus supplement, the obligations of any purchaser
under any contract will not be subject to any conditions except that (i) the
purchase of the securities will not at the time of delivery be prohibited under
the laws of the jurisdiction to which the purchaser is subject and (ii) if the
securities are also being sold to underwriters acting as principals for their
own account, the underwriters will have purchased the securities not sold for
delayed delivery. The underwriters and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
GENERAL INFORMATION
Each prospectus supplement will describe the terms of the securities to
which the prospectus supplement relates, the amount of securities to be offered,
the name or names of any underwriters or agents with whom we have entered into
arrangements with respect to the offer of the securities, the public offering or
purchase price of the securities and the net proceeds we will receive from the
offer. In addition, each prospectus supplement will describe any underwriting
discounts and other items constituting
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underwriters' compensation, any discounts and commissions allowed or paid to
dealers, if any, any commissions allowed or paid to agents, and the securities
exchange or exchanges, if any, on which the securities will be listed.
Any underwriter or agent participating in the distribution of the
securities may be deemed to be an underwriter, as that term is defined in the
Securities Act, of the securities so offered and sold and any discounts or
commissions received by them, and any profit realized by them on the same or
resale of the securities may be deemed to be underwriting discounts and
commissions under the Securities Act.
Certain of any such underwriters and agents including their associates, may
be customers of, engage in transactions with and perform services for us and our
subsidiaries in the ordinary course of business. One or more of our affiliates
may from time to time act as an agent or underwriter in connection with the sale
of the securities to the extent permitted by applicable law. The participation
of any such affiliate in the offer and sale of the securities will comply with
Rule 2720 of the Conduct Rules of the National Association of Securities
Dealers, Inc. regarding the offer and sale of securities of an affiliate.
Under agreements which may be entered into by us, the underwriters, dealers
and agents who participate in the distribution of securities may be entitled to
indemnification by us against, or contribution toward, some liabilities,
including liabilities under the Securities Act.
Except as indicated in the applicable prospectus supplement, the securities
are not expected to be listed on a securities exchange, except for our Series A
common stock, which is listed on the New York Stock Exchange, and any
underwriters or dealers will not be obligated to make a market in securities. We
cannot predict the activity or liquidity of any trading in the securities.
LEGAL MATTERS
Baker Botts L.L.P., New York, New York will pass upon the validity of the
securities offered by this prospectus for us.
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EXPERTS
The consolidated balance sheets of Liberty Media Corporation and
subsidiaries ("New Liberty or Successor") as of December 31, 2000 and 1999, and
the related consolidated statements of operations and comprehensive earnings,
stockholder's equity, and cash flows for the year ended December 31, 2000 and
for the period from March 1, 1999 to December 31, 1999 (Successor periods) and
from January 1, 1999 to February 28, 1999 and for the year ended December 31,
1998 (Predecessor periods) have been incorporated by reference herein in
reliance upon the report, dated February 26, 2001, except as to notes 1 and 2,
which are as of May 7, 2001, of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
In addition the KPMG LLP report contains an explanatory paragraph and
states that effective March 9, 1999, AT&T Corp., the former parent company of
New Liberty, acquired Tele-Communications, Inc., the former parent company of
Old Liberty, in a business combination accounted for as a purchase. As a result
of the acquisition, the consolidated financial information for the periods after
the acquisition is presented on a different cost basis than that for the periods
before the acquisition and, therefore, is not comparable.
The consolidated financial statements of Teligent, Inc. as of December 31,
2000 and 1999 and for each of the three years in the period ended December 31,
2000 and the related financial statement schedule included in Teligent Inc.'s
Annual Report (Form 10-K/A) for the year ended December 31, 2000 and
incorporated by reference in this prospectus and registration statement, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference (which
report contains explanatory paragraphs describing conditions that raise
substantial doubt about Teligent, Inc.'s ability to continue as a going concern
as more fully described in Note 1 to the consolidated financial statements, and
the restatement of the December 31, 2000 consolidated balance sheet to reflect
the classification of Teligent, Inc.'s outstanding debt from a long-term
liability to a current liability). Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
WHERE TO FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the securities being offered by this prospectus.
This prospectus, which forms a part of the registration statement, does not
contain all the information included in the registration statement and the
exhibits thereto, which reference is hereby made. You should refer to the
registration statement, including its exhibits and schedules, for further
information about our company and the securities being offered hereby.
The SEC allows us to "incorporate by reference" information into this
document, which means that we can disclose important information to you by
referring you to other documents. The information incorporated by reference is
an important part of this prospectus, and is deemed to be part of this document
except for any information superceded by this document or any other document
incorporated by reference in this document. Any statement, including financial
statements, contained in our Annual Report on Form 10-K for the year ended
December 31, 2000 shall be deemed to be modified or superseded to the extent
that a statement, including financial statements, contained in this prospectus
or in any other later incorporated document modifies or supersedes that
statement. We incorporate by reference the documents listed below and any future
filings made by us with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934:
- Annual Report on Form 10-K for the year ended December 31, 2000, filed on
March 28, 2001, as amended by the Annual Report on Form 10-K/A for the
year ended December 31, 2000, filed on June 12, 2001.
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- Quarterly Report on Form 10-Q for the three-month period ending March 31,
2001, filed on May 14, 2001, as amended by the Quarterly Report on Form
10-Q/A for the three month period ending March 31, 2001, filed on June 20,
2001.
- Quarterly Report on Form 10-Q for the six-month period ending June 30,
2001, filed on August 14, 2001.
- Current Report on Form 8-K, filed on March 7, 2001.
- Current Report on Form 8-K, filed on June 26, 2001.
- Current Report on Form 8-K, filed on August 14, 2001.
- The consolidated financial statements and related financial statement
schedule of Teligent, as of December 31, 2000 and 1999 and for each of the
years in the three-year period ended December 31, 2000, which appear in
the Annual Report on Form 10-K/A for the year ended December 31, 2000 of
Teligent, Inc., filed on July 5, 2001. On May 21, 2001, Teligent, Inc. and
all of its direct and indirect domestic subsidiaries filed voluntary
petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in the
United States Bankruptcy Court for the Southern District of New York.
On May 7, 2001, certain subsidiaries and assets of AT&T Corp. which had
previously been attributed to AT&T's Liberty Media Group but which had not been
previously held by Liberty Media Corporation were contributed to Liberty Media
Corporation in anticipation of its split off from AT&T. Those subsidiaries and
assets, which constitute only a portion of our overall assets, are being
accounted for in a manner similar to a pooling of interests and, therefore, the
financial statements of Liberty Media Corporation for periods prior to the
contributions have been restated to include the financial position and results
of operations of the contributed assets from the dates of their acquisition by
AT&T. Accordingly, the following information is incorporated by reference from
the Registration Statement on Form S-1 of Liberty Media Corporation,
Registration No. 333-55998, declared effective on June 14, 2001, with respect to
the split off: (1) the information under the captions titled "Capitalization,"
"Selected Financial Information" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and (2) the following financial
statements and notes thereto of Liberty Media Corporation and subsidiaries,
which have been restated to give effect to the aforementioned contribution: (x)
the balance sheets of Liberty Media Corporation as of March 31, 2001 and
December 31, 2000, and the related consolidated statements of operations and
comprehensive earnings, stockholder's equity, and cash flows for the three
months ended March 31, 2001 and 2000; and (y) the balance sheets of Liberty
Media Corporation as of December 31, 2000 and 1999 and the related consolidated
statements of operations and comprehensive earnings, stockholder's equity, and
cash flows for the year ended December 31, 2000, and the period from March 1,
1999 to December 31, 1999 (Successor periods) and from January 1, 1999 to
February 28, 1999 and for the year ended December 31, 1998 (Predecessor
periods).
You may request a copy of these filings at no cost, by writing or
telephoning the office of
Corporate Secretary
Liberty Media Corporation
12300 Liberty Boulevard
Englewood, Colorado 80112
Telephone: 720-875-5400
Our annual, quarterly and special reports and other information are on file
with the SEC. You may read and copy any document that we file at the Public
Reference Room of the SEC at 450 Fifth Street, NW, Washington, D.C. 20549. You
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. You may also inspect our filings at the regional
offices of the SEC located at Citicorp, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, New York, New York 10048 or
over the Internet at the SEC's WEB site at
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http://www.sec.gov. Information contained on any website referenced in this
prospectus is not incorporated by reference in this prospectus.
This prospectus includes information concerning The News Corporation
Limited, AOL Time Warner Inc., Gemstar-TV Guide International, Inc., USA
Networks, Inc., Sprint Corporation, Telewest Communications plc, Motorola Inc.,
IDT Corporation and UnitedGlobalCom, Inc., among other public companies. All of
these companies file reports and other information with the SEC in accordance
with the requirements of the Securities Act and the Securities Exchange Act.
Information incorporated by reference in this prospectus concerning those
companies has been derived from the reports and other information filed by them
with the SEC. Liberty had no part in the preparation of those reports and other
information, nor are they incorporated by reference in this prospectus. You may
read and copy any reports and other information filed by those companies with
the SEC as set forth above.
You should rely only on the information contained or incorporated by
reference in this prospectus or to which we have referred you. We have not
authorized any person to provide you with different information or to make any
representation not contained in this prospectus.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND REGISTRATION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by us in connection with the
transaction being registered. All amounts are estimates except the registration
fee.
Registration fee...................................... $ 750,000
Printing and engraving expenses....................... $ 200,000
Legal fees and expenses............................... $ 100,000
Accounting fees and expenses.......................... $ 25,000
Miscellaneous......................................... $ 20,000
-------------
Total....................................... $ 1,095,000
=============
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") provides,
generally, that a corporation shall have the power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (except actions by or in the right of
the corporation) by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation against all expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person in connection with such action, suit or proceeding if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. A corporation may similarly indemnify such person for
expenses actually and reasonably incurred by such person in connection with the
defense or settlement of any action or suit by or in the right of the
corporation, provided such person acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, in the case of claims, issues and matters as to which such
person shall have been adjudged liable to the corporation, provided that a court
shall have determined, upon application, that, despite the adjudication of
liability but in view of all of the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such court
shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that the certificate of
incorporation may contain a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
may not eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under section 174 of Title 8 of the Delaware
General Corporation Law, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision may eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision became effective.
Article V, Section E of the Restated Certificate of Incorporation, as
amended ("Liberty charter"), of Liberty Media Corporation, a Delaware
corporation ("Liberty"), provides as follows:
1. Limitation On Liability. To the fullest extent permitted by the
DGCL as the same exists or may hereafter be amended, a director of Liberty
shall not be liable to Liberty or any of its stockholders for monetary
damages for breach of fiduciary duty as a director. Any repeal or
modification of this paragraph 1 shall be prospective only and shall not
adversely affect any limitation, right or protection of a director of
Liberty existing at the time of such repeal or modification.
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2. Indemnification.
(a) Right to Indemnification. Liberty shall indemnify and hold
harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is
made or is threatened to be made a party or is otherwise involved in any
action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding") by reason of the fact that he, or a
person for whom he is the legal representative, is or was a director or
officer of Liberty or is or was serving at the request of Liberty as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans, against all
liability and loss suffered and expenses (including attorneys' fees)
reasonably incurred by such person. Such right of indemnification shall
inure whether or not the claim asserted is based upon matters which
antedate the adoption of this Section E. Liberty shall be required to
indemnify or make advances to a person in connection with a proceeding
(or part thereof) initiated by such person only if the proceeding (or
part thereof) was authorized by the board of directors of Liberty.
(b) Prepayment of Expenses. Liberty shall pay the expenses
(including attorneys' fees) incurred by a director or officer in
defending any proceeding in advance of its final disposition, provided,
however, that the payment of expenses incurred by a director or officer
in advance of the final disposition of the proceeding shall be made only
upon receipt of an undertaking by the director or officer to repay all
amounts advanced if it should be ultimately determined that the director
or officer is not entitled to be indemnified under this paragraph or
otherwise.
(c) Claims. If a claim for indemnification or payment of expenses
under this paragraph is not paid in full within 60 days after a written
claim therefor has been received by Liberty, the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such
claim. In any such action, Liberty shall have the burden of proving that
the claimant was not entitled to the requested indemnification or
payment of expenses under applicable law.
(d) Non-Exclusivity of Rights. The rights conferred on any person
by this paragraph shall not be exclusive of any other rights which such
person may have or hereafter acquire under any statute, provision of the
Liberty Charter, Liberty's Bylaws, agreement, vote of stockholders or
resolution of disinterested directors or otherwise.
(e) Other Indemnification. Liberty's obligation, if any, to
indemnify any person who was or is serving at its request as a director,
officer, employee or agent of another corporation, partnership, joint
venture, trust, enterprise or nonprofit entity shall be reduced by any
amount such person may collect as indemnification from such other
corporation, partnership, joint venture, trust, enterprise or nonprofit
entity.
3. Amendment or Repeal. Any amendment, modification or repeal of the
foregoing provisions of this Section E shall not adversely affect any right
or protection hereunder of any person in respect of any act or omission
occurring prior to the time of such amendment, modification or repeal.
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ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits. The following is a complete list of Exhibits filed as part
of this Registration Statement.
EXHIBIT
NO. DOCUMENT
------- --------
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.2 to the
Registration Statement on Form S-1 of Liberty Media
Corporation (File No. 333-55998) as filed on February 21,
2001 (the "Split Off S-1 Registration Statement")).
3.2 Bylaws of the Registrant (incorporated by reference to
Exhibit 3.4 to the Split Off S-1 Registration Statement).
4.1 Specimen certificate for shares of Series A common stock,
par value $.01 per share, of the Registrant (incorporated by
reference to Exhibit 4.1 to the Split Off S-1 Registration
Statement).
4.2 Indenture, dated as of July 7, 1999, between Liberty and The
Bank of New York with respect to the senior debt securities
(incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 of Liberty Media
Corporation (File No. 333-86491) as filed on September 3,
1999).
4.3 Indenture to be entered into between Liberty and The Bank of
New York with respect to subordinated debt securities.*
5.1 Opinion of Baker Botts L.L.P.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG LLP.
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
23.3 Consent of Ernst & Young LLP.
24.1 Power of Attorney.*
25.1 Form T-1 Statement of Eligibility of Trustee.*
---------------
* Previously filed.
(b) Financial Statement Schedules. Schedules not listed above have been
omitted because the information to be set forth therein is not material, not
applicable or is shown in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
Liberty pursuant to the foregoing provisions, or otherwise, Liberty has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Liberty of
expenses incurred or paid by a director, officer or controlling person of
Liberty in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, Liberty will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
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Liberty hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) under the Securities Act
of 1933 if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration
Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(5) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(6)That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the Securities Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Denver, state of
Colorado, on August 16, 2001.
LIBERTY MEDIA CORPORATION
By: /s/ CHARLES Y. TANABE
----------------------------------
Name: Charles Y. Tanabe
Title: Senior Vice President,
General Counsel and Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED:
SIGNATURE TITLE DATE
--------- ----- ----
* Chairman of the Board and August 16, 2001
----------------------------------------------------- Director
John C. Malone
* President, Chief Executive August 16, 2001
----------------------------------------------------- Officer (Principal Executive
Robert R. Bennett Officer) and Director
* Executive Vice President, August 16, 2001
----------------------------------------------------- Chief Operating Officer and
Gary S. Howard Director
* Senior Vice President and August 16, 2001
----------------------------------------------------- Treasurer (Principal
David J.A. Flowers Financial Officer)
* Vice President and Controller August 16, 2001
----------------------------------------------------- (Principal Accounting
Christopher W. Shean Officer)
* Director August 16, 2001
-----------------------------------------------------
Paul A. Gould
* Director August 16, 2001
-----------------------------------------------------
Jerome H. Kern
* Director August 16, 2001
-----------------------------------------------------
Larry E. Romrell
*/s/ ROBERT W. MURRAY JR. August 16, 2001
-----------------------------------------------------
Attorney-in-Fact
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EXHIBIT INDEX
EXHIBIT
NO. DOCUMENT
------- --------
3.1 Restated Certificate of Incorporation of the Registrant
(incorporated by reference to Exhibit 3.2 to the
Registration Statement on Form S-1 of Liberty Media
Corporation (File No. 333-55998) as filed on February 21,
2001 (the "Split Off S-1 Registration Statement")).
3.2 Bylaws of the Registrant (incorporated by reference to
Exhibit 3.4 to the Split Off S-1 Registration Statement).
4.1 Specimen certificate for shares of Series A common stock,
par value $.01 per share, of the Registrant (incorporated by
reference to Exhibit 4.1 to the Split Off S-1 Registration
Statement).
4.2 Indenture, dated as of July 7, 1999, between Liberty and The
Bank of New York with respect to the senior debt securities
(incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-4 of Liberty Media
Corporation (File No. 333-86491) as filed on September 3,
1999).
4.3 Indenture to be entered into between Liberty and the Bank of
New York with respect to the subordinated debt securities.*
5.1 Opinion of Baker Botts L.L.P.
12.1 Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of KPMG LLP.
23.2 Consent of Baker Botts L.L.P. (included in Exhibit 5.1).
23.3 Consent of Ernst & Young LLP.
24.1 Power of Attorney*
25.1 Form T-1 Statement of Eligibility of Trustee.*
---------------
*Previously filed.