UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2004
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _____ to _____
Commission file number 0-20421
LIBERTY MEDIA 401(k) SAVINGS PLAN
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(Full title of the Plan)
LIBERTY MEDIA CORPORATION
-----------------------------------------------------------------
(Issuer of the securities held pursuant to the Plan)
12300 Liberty Boulevard
Englewood, Colorado 80112
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(Address of its principal executive office)
REQUIRED INFORMATION
FINANCIAL STATEMENTS: PAGE NO.
Report of Independent Registered Public Accounting Firm 1
Statements of Net Assets Available
for Participant Benefits,
December 31, 2004 and 2003 2
Statements of Changes in Net Assets
Available for Participant Benefits,
Years ended December 31, 2004 and 2003 3 - 4
Notes to Financial Statements,
December 31, 2004 and 2003 5 - 10
Schedule 1 - Schedule H, Line 4i - Schedule of Assets
(Held at End of Year), December 31, 2004 11
Schedule 2 - Schedule H, Line 4j - Schedule of Reportable
Transactions, Year ended December 31, 2004 12
EXHIBIT -
23-Consent of KPMG LLP
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
members of the Plan Committee have duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
LIBERTY MEDIA 401(k) SAVINGS PLAN
(Name of Plan)
By /s/ Robert R. Bennett
------------------------------------
Robert R. Bennett
Member of Plan Committee
June 2, 2005
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Plan Committee
Liberty Media 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for
participant benefits of the Liberty Media 401(k) Savings Plan (the Liberty Plan)
as of December 31, 2004 and 2003, and the related statements of changes in net
assets available for participant benefits for the years then ended. These
financial statements are the responsibility of the Liberty Plan's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for participant benefits of the
Liberty Plan as of December 31, 2004 and 2003, and the changes in net assets
available for participant benefits for the years then ended in conformity with
U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets
(held at end of year) and reportable transactions are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. These supplemental schedules are the
responsibility of the Liberty Plan's management. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
KPMG LLP
Denver, Colorado
May 20, 2005
1
LIBERTY MEDIA 401(k) SAVINGS PLAN
Statements of Net Assets Available
for Participant Benefits
December 31, 2004 and 2003
2004 2003
--------- -------
amounts in thousands
Contributions Receivable:
Participant $ -- 241
Employer -- 83
--------- -------
-- 324
--------- -------
Investments, at fair value:
Liberty Media Stock Fund (notes 1 and 2) 48,999 54,078
Liberty Media International Stock Fund (note 1) 10,164 --
Mutual funds 97,661 72,176
--------- -------
156,824 126,254
--------- -------
Participant loans (note 2) 2,084 2,146
--------- -------
Payable for required distributions of excess
contributions (1,517) --
--------- -------
Net assets available for participant benefits $ 157,391 128,724
========= =======
See accompanying notes to financial statements.
2
LIBERTY MEDIA 401(k) SAVINGS PLAN
Statement of Changes in Net Assets Available
for Participant Benefits
Year ended December 31, 2004
amounts in thousands
Contributions:
Employer $ 8,657
Participant 15,969
Rollovers 7,197
---------
31,823
---------
Net investment income:
Net appreciation in fair value of investments 11,826
Interest and dividend income 2,495
---------
14,321
---------
Total contributions and net investment income 46,144
Transfer of assets (note 4) (2,714)
Administrative expenses (512)
Distributions to participants (14,251)
---------
Increase in net assets available for participant benefits 28,667
Net assets available for participant benefits:
Beginning of year 128,724
---------
End of year $ 157,391
=========
See accompanying notes to financial statements.
3
LIBERTY MEDIA 401(k) SAVINGS PLAN
Statement of Changes in Net Assets Available
for Participant Benefits
Year ended December 31, 2003
Participant Nonparticipant
Directed Directed
Investments Investments Total
----------- -------------- --------
amounts in thousands
Contributions:
Employer $ -- 8,674 8,674
Participant 13,939 -- 13,939
Rollovers 743 -- 743
----------- -------------- --------
14,682 8,674 23,356
----------- -------------- --------
Repayments of participant loans (208) 208 --
Net investment income:
Net appreciation in fair value of
investments 11,560 9,327 20,887
Interest and dividend income 1,205 23 1,228
----------- -------------- --------
12,765 9,350 22,115
----------- -------------- --------
Total contributions and net investment income 27,239 18,232 45,471
Administrative expenses (39) (4) (43)
Loans to participants 346 (346) --
Distributions to participants (6,176) (2,098) (8,274)
----------- -------------- --------
Increase in net assets available for
participant benefits 21,370 15,784 37,154
Net assets available for participant benefits:
Beginning of year 65,289 26,281 91,570
----------- -------------- --------
End of year $ 86,659 42,065 128,724
=========== ============== ========
See accompanying notes to financial statements.
4
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2004 and 2003
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements of the Liberty Media 401(k) Savings
Plan (the "Liberty Plan") have been prepared on the accrual basis and
present the net assets available for participant benefits and the changes
in those net assets. The sponsor of the Liberty Plan is Liberty Media
Corporation ("Liberty").
TRUST FUND MANAGED BY FIDELITY MANAGEMENT TRUST COMPANY ("TRUSTEE")
Under the terms of a trust agreement between Liberty and the Trustee, the
Trustee manages a trust fund on behalf of the Liberty Plan and has been
granted authority concerning purchases and sales of investments for the
trust fund. The Trustee may invest up to 100% of the assets of the Liberty
Plan in employer securities without regard to any fiduciary requirement to
diversify Liberty Plan assets. Additionally, the Liberty Plan is allowed to
invest in non-employer securities.
INVESTMENTS
Investments are reflected in the accompanying financial statements at fair
value. Fair value represents the closing prices for those securities having
readily available market quotations, and fair value as determined by the
Trustee with respect to other securities.
The Liberty Media Stock Fund and the Liberty Media International Stock Fund
are unitized funds that are measured in units rather than shares. The
Liberty Media Stock Fund consists mostly of Liberty Series A common stock
with an insignificant amount of cash or cash equivalents. The per share
fair values used for investments in Liberty Series A common stock at
December 31, 2004 and 2003 are $10.98 and $11.89, respectively. The Liberty
Media International Stock Fund consists mostly of Liberty Media
International, Inc. ("LMI") Series A common stock with an insignificant
amount of cash or cash equivalents. The per share fair value used for
investments in LMI Series A common stock at December 31, 2004 is $46.23.
The foregoing prices are the closing market prices of Liberty Series A
common stock and LMI Series A common stock on those dates. Changes in
market values after the Liberty Plan's year end are not reflected in the
accompanying financial statements.
Securities and investment transactions are accounted for on the trade date.
Distributions are priced at fair value and are accounted for when shares
are transferred by the Trustee to participants. The cost basis of such
shares distributed is determined using the average cost method. Dividend
income is recorded on the ex-dividend date. Income from other investments
is recorded as earned on an accrual basis.
INCOME TAXES
The Internal Revenue Service (the "IRS") has determined and informed
Liberty by a letter dated March 1, 2001 (the "IRS Determination Letter"),
that the Liberty Plan and related trust are designed in accordance with
applicable sections of the Internal Revenue Code ("IRC"). Once qualified,
the Liberty Plan is required to operate in conformity with the IRC to
maintain its qualification. The Liberty Plan administrator is
(continued)
5
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
not aware of any course of action or series of events that have occurred
that might adversely affect the Liberty Plan's qualified status. As of the
date of this report, Liberty has filed with the IRS an application for
determination of the qualified status of the Liberty Plan with respect to
certain amendments to the Liberty Plan adopted since the date of the IRS
Determination Letter.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of additions and deductions during the reporting period. Actual
results could differ significantly from those estimates.
PLAN EXPENSES
Any employer contribution amounts forfeited may be used to pay plan
expenses except for any fees related to loans, which are paid by
participants. Any additional administrative expenses of the Liberty Plan
are paid by Liberty.
(2) DESCRIPTION OF THE LIBERTY PLAN
The following description of the Liberty Plan is provided for general
information purposes only. Participants should refer to the plan document
for more complete information.
GENERAL
The Liberty Plan is a defined contribution plan sponsored by Liberty, which
enables participating employees of Liberty and its qualifying subsidiaries
to receive an interest in Liberty and to receive benefits upon retirement.
Employees of Liberty and certain 80% or more owned subsidiaries who are at
least 18 years of age and (i) have worked at least three consecutive months
or (ii) have completed one year of service (as defined in the Liberty Plan
document) are eligible to participate in the Liberty Plan.
CONTRIBUTIONS
Participants may make (i) pre-tax contributions to the Liberty Plan of up
to 75% of their compensation, as defined or (ii) after-tax contributions up
to 10% of their compensation. Liberty and its subsidiaries, other than
Ascent Media Group and On Command Corporation, may make matching
contributions equal to 100% of participant contributions, up to a maximum
match of 10% of eligible compensation. Ascent Media Group may make matching
contributions equal to $.50 for each $1.00 contributed by the participants
up to a maximum match of 3% of eligible compensation. On Command
Corporation may make matching contributions equal to $.50 for each $1.00
contributed by the participants up to a maximum match of 4% of eligible
compensation. All participant contributions and employer matching
contributions are subject to limitations as determined annually by the IRS.
Employee pre-tax contributions and combined employee/employer contributions
per participant were limited to $13,000 and $41,000, respectively, in 2004
and $12,000 and $40,000 respectively in 2003. Catch-up contributions, as
defined in the Economic Growth and Tax Relief Reconciliation Act of 2001,
are permitted for those eligible employees and are not matched by the
employer.
(continued)
6
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
Through December 31, 2003, employer contributions were invested only in the
Liberty Media Stock Fund. Beginning January 1, 2004, participants who are
fully vested in their employer contributions can direct the employer
contributions to any investment in the Liberty Plan. Employer contributions
for participants who are not fully vested continue to be invested in the
Liberty Media Stock Fund only. Employee contributions may be invested in
any investments in the Liberty Plan, including the Liberty Media Stock
Fund. Liberty and its subsidiaries reserve the right to change the matching
contribution amounts at any time.
NONPARTICIPANT-DIRECTED INVESTMENTS
Due to the change in 2004 noted above with respect to the investment of
vested employer contributions, the accompanying statement of changes in net
assets available for participant benefits for the year ended December 31,
2004, does not present activity based on participant-directed and
nonparticipant-directed investments. Plan information, including
information regarding participant-directed and nonparticipant-directed
investments, about the significant components of the changes in net assets
relating to the Liberty Media Stock Fund for the year ended December 31,
2004, is as follows (amounts in thousands):
Balance at January 1, 2004 $ 54,078
Contributions
Employer 7,856
Participant 1,298
Rollovers 284
Interest income 24
Transfer to LMI Stock Fund (8,595)
Net appreciation in fair value of stock fund 4,195
Net forfeiture credit 18
Distributions to participants (4,532)
Exchanges out and transfer of assets (5,209)
Net loan activity (191)
Administrative expenses (227)
------------
Balance at December 31, 2004 $ 48,999
============
ROLLOVERS
Participants may elect to rollover amounts from other qualified plans or
individual retirement accounts into the Liberty Plan provided that certain
conditions are met.
PARTICIPANT LOANS
Participants may borrow from their fund accounts a minimum of $1,000 up to
the lesser of $50,000 or 50% of their vested account balance. Loans, other
than those transferred from other plans, must be repaid within five years
and bear interest at a rate equal to the prime rate in effect on the first
day of the calendar quarter in which the loan is originated plus 1%. Loans
transferred from other plans retain the repayment terms and interest rates
in effect at the time of transfer. Loans are secured by the vested balance
in the participant's account, and bear interest at rates ranging from 5% to
10.5% at December 31, 2004. Principal and interest are paid ratably through
monthly payroll deductions.
(continued)
7
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
FORFEITURES
Forfeitures of employer contributions (due to participants' termination
prior to full vesting) are first used to pay Liberty Plan expenses, with
any excess used to reduce Liberty's future matching contributions.
Forfeitures aggregated approximately $291,000 and $274,000 during 2004 and
2003, respectively. Unused forfeitures aggregated approximately $148,000
and $787,000 at December 31, 2004 and 2003, respectively.
INVESTMENT OPTIONS
As of December 31, 2004, the Liberty Plan has twenty investment options
including eighteen mutual funds and two unitized stock funds. The mutual
funds are comprised of a money market mutual fund, two growth and income
mutual funds, three growth mutual funds, one small cap value mutual fund,
one small cap growth mutual fund, two income mutual funds, a global growth
mutual fund, an international growth mutual fund and six asset allocation
funds based on target retirement dates. Plan participants may change
investment options and contribution percentages on a daily basis.
BENEFIT PAYMENTS
Distributions from the Liberty Plan may be made to a participant upon
death, total disability, financial hardship or termination of employment.
Distributions and other withdrawals are processed on a daily basis.
VESTING
Participant contributions are always fully vested. Participants acquire a
vested right in employer matching contributions, other than employer
contributions transferred from other plans, as follows:
Vesting
Years of Service Percentage
---------------- ----------
Less than 1 0%
1 year 33%
2 years 66%
3 years 100%
Employer matching contributions transferred from other plans vest according
to the terms specified in the transferor plans.
PLAN TERMINATION
Although Liberty has not expressed any intent to terminate the Liberty
Plan, it may do so at any time, subject to the provisions of ERISA. The
Liberty Plan provides for full and immediate vesting of all participant
rights upon termination of the Liberty Plan.
RISKS AND UNCERTAINTIES
The Liberty Plan invests in various investment securities. Investment
securities are exposed to various risks such as interest rate, market,
and credit risks. Due to the level of risk associated with certain
investment securities, it is at least reasonably possible that changes
in the values of investment securities will occur in the near term and
that such changes could materially affect participants' account balances
and the amounts reported in the statement of the net assets available for
participant benefits.
(continued)
8
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
(3) INVESTMENTS
The fair value of individual investments that represent 5% or more of the
Liberty Plan's net assets at December 31, 2004 and 2003 are as follows:
Fair value at
December 31,
--------------------
Investment 2004 2003
--------------------------------------------- -------- ------
amounts in thousands
Liberty Media Stock Fund $48,999 54,078
Liberty Media International Stock Fund $10,164 --
Templeton Foreign A $ 8,833 6,490
Fidelity Magellan * $21,291 22,676
Fidelity Equity Income $11,888 9,367
Fidelity Investment Grade Bond $ 7,632 7,047
Fidelity Retirement Money Market $20,192 17,797
----------
* Subsequent to the year ended December 31, 2004, the
Liberty Plan committee removed the Fidelity Magellan
mutual fund as an investment option.
During 2004, the Liberty Plan's investments (including gains and losses
on investments bought and sold, as well as held during the year)
appreciated in value as follows (amounts in thousands)
Liberty Media Stock Fund $ 4,195
Liberty Media International Stock Fund 2,085
Mutual funds 5,546
-------
$11,826
=======
(4) LMI SPIN OFF
Effective June 7, 2004, Liberty effected the spin off (the "Spin Off") of
its international subsidiary, LMI, by means of a distribution to Liberty's
shareholders of all of the shares of common stock of LMI. Each Liberty
shareholder, including the Liberty Media Stock Fund, received .05 shares of
LMI Series A common stock for each share of Liberty Series A common stock
held. In connection with the Spin Off, the Liberty Plan was amended to
allow participants to invest in a unitized stock fund which holds LMI
Series A common stock.
Liberty's subsidiary located in Puerto Rico (the "Puerto Rico Subsidiary")
was included in the Spin Off and is now a subsidiary of LMI. In connection
with the Spin Off, all participant accounts of employees and former
employees of the Puerto Rico Subsidiary were transferred out of the Liberty
Plan into the Liberty Media 401(k) Savings Plan - Puerto Rico. Aggregate
amounts transferred were $2,714,000.
(5) LMI RIGHTS OFFERING
During the third quarter of 2004, LMI completed a rights offering pursuant
to which existing shareholders, including the Liberty Plan, received .20
transferable subscription rights to purchase shares of LMI Series A common
stock for each share of LMI Series A common stock held by them at the close
of business on July 26, 2004. Liberty Plan participants could use available
cash in their Liberty Plan account to exercise the rights attributable to
the LMI Series A common stock in their accounts, or they could sell those
rights through August 23, 2004.
(6) SUBSEQUENT EVENT
Subsequent to December 31, 2004, Liberty's Board of Directors approved a
resolution authorizing the spin-off (the "DHC Spin Off") of a newly formed
subsidiary, Discovery Holding Company ("DHC"). DHC's assets will be
comprised of Liberty's 100% ownership interest in Ascent Media Group, Inc.
and Liberty's 50% ownership interest in Discovery
(continued)
9
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
Communications, Inc. The DHC Spin Off, which will be effected as a tax-free
distribution of DHC's shares to Liberty's shareholders, is expected to
occur in the second quarter of 2005, subject to, among other things, the
receipt of a favorable tax opinion and regulatory and other third party
approvals. Upon completion of this transaction, DHC will be a separate
publicly traded company. If the DHC Spin Off is completed as currently
contemplated, shareholders of Liberty, including the Liberty Plan, would
receive .10 shares of DHC Series A common stock for each share of Liberty
Series A common stock held.
10
SCHEDULE 1
LIBERTY MEDIA 401(k) SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2004
Identity of Description of investment
issuer including par value Fair value
-------------------------- ---------------------------------------- --------------------
amounts in thousands
Liberty Media Corporation Stock Fund, Series A common stock, par
value $.01 per share (historical cost
basis - $33,725,596) $ 48,999
Liberty Media
International, Inc. Stock Fund, Series A common stock, par
value $.01 per share (historical cost
$6,077,586) 10,164
Templeton Templeton Foreign A 8,833
Spartan Spartan 500 Index Fund 5,299
Pacific Investment Management Co. PIMCO High Yield Fund - Administrative
Class 1,370
Pacific Investment Management Co. PIMCO NFJ Small Cap Value 790
Baron Baron Growth 5,460
Fidelity Fidelity Magellan 21,291
Fidelity Fidelity Equity Income 11,888
Fidelity Fidelity Investment Grade Bond 7,632
Fidelity Fidelity Retirement Money Market 20,192
Fidelity Fidelity Overseas 1,608
Fidelity Fidelity Blue Chip Growth 2,491
Fidelity Fidelity Low-Priced Stock 6,234
Fidelity Fidelity Freedom Income 242
Fidelity Fidelity Freedom 2000 264
Fidelity Fidelity Freedom 2010 998
Fidelity Fidelity Freedom 2020 1,658
Fidelity Fidelity Freedom 2030 1,019
Fidelity Fidelity Freedom 2040 392
Participant loans Interest rates ranging from 5.00% to 10.5% 2,084
-----------
$ 158,908
===========
All investments are held by Fidelity Management Trust Company, Inc., which
is a party-in-interest to the Liberty Plan. Liberty Media Corporation is the
plan sponsor, which is a party-in-interest to the Liberty Plan.
See accompanying report of independent registered public accounting firm.
11
SCHEDULE 2
LIBERTY MEDIA 401(k) SAVINGS PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
Year Ended December 31, 2004
amounts in thousands
Identity of Description Purchase Selling Cost of Net gain
party involved of asset Price Price Asset or (loss)
-------------- --------------------------- ------------- ------------- ----------- -------------
Liberty Media Stock Fund, Series A
Corporation * common stock, par value
$.01 per share $ 7,939 -- -- --
*Denotes party-in-interest
See accompanying report of independent registered public accounting firm.
12
EXHIBIT INDEX
Shown below are the exhibits which are filed or furnished as a part of this
Report -
23-Consent of KPMG LLP