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 [FEE REQUIRED]
For the fiscal year ended December 31, 2002
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _____ to _____
Commission file number 0-20421
LIBERTY MEDIA 401(k) SAVINGS PLAN
---------------------------------
(Full title of the Plan)
LIBERTY MEDIA CORPORATION
--------------------------------------------------------
(Issuer of the securities held pursuant to the Plan)
12300 Liberty Boulevard
Englewood, Colorado 80112
-------------------------------------------
(Address of its principal executive office)
REQUIRED INFORMATION
FINANCIAL STATEMENTS: PAGE NO.
Independent Auditors' Report 1
Statements of Net Assets Available
for Participant Benefits,
December 31, 2002 and 2001 2
Statements of Changes in Net Assets
Available for Participant Benefits,
Years ended December 31, 2002 and 2001 3 - 4
Notes to Financial Statements,
December 31, 2002 and 2001 5 - 9
Schedule 1 - Schedule H, Line 4i - Schedule of Assets
(Held at End of Year), December 31, 2002 10
Schedule 2 - Schedule H, Line 4a - Schedule of
Nonexempt Transactions, Year ended December 31, 2002 11
Schedule 3 - Schedule H, Line 4j - Schedule of Reportable
Transactions, Year ended December 31, 2002 12
EXHIBITS -
23-Consent of KPMG LLP
99-Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
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 27, 2003
INDEPENDENT AUDITORS' REPORT
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, 2002 and 2001, 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 auditing standards generally accepted
in the United States of America. 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, 2002 and 2001, and the changes in net assets
available for participant benefits for the years then ended in conformity with
accounting principles generally accepted in the United States of America.
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, nonexempt transactions, 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
June 17, 2003
1
LIBERTY MEDIA 401(k) SAVINGS PLAN
Statements of Net Assets Available
for Participant Benefits
December 31, 2002 and 2001
2002 2001
---------- ----------
amounts in thousands
Nonparticipant-directed investments, at fair value-- Liberty Media
Stock Fund (notes 1 and 2) $ 26,281 32,134
Participant-directed investments (notes 1 and 2):
Liberty Media Stock Fund 9115 14,491
Mutual funds 54,117 55,281
Ascent Media Group, Inc. ("Ascent Media Group")
Stock Fund -- 100
---------- ----------
63,232 69,872
---------- ----------
Participant loans (note 2) 2,057 2,038
---------- ----------
Net assets available for participant benefits $ 91,570 104,044
========== ==========
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, 2002
Participant Nonparticipant
Directed Directed
Investments Investments Total
-------------- -------------- --------------
amounts in thousands
Contributions:
Employer $ -- 8,435 8,435
Participant 13,857 -- 13,857
Rollovers 1,361 -- 1,361
-------------- -------------- --------------
15,218 8,435 23,653
-------------- -------------- --------------
Repayments of participant loans (127) 127 --
Investment income (loss):
Net depreciation of fair value of investments (14,343) (11,713) (26,056)
Interest and dividend income 1,097 245 1,342
-------------- -------------- --------------
(13,246) (11,468) (24,714)
-------------- -------------- --------------
Total contributions and net investment income (loss) 1,845 (2,906) (1,061)
Administrative expenses (9) (4) (13)
Loans to participants 207 (207) --
Distributions to participants (8,664) (2,736) (11,400)
-------------- -------------- --------------
Decrease in net assets available for participant benefits (6,621) (5,853) (12,474)
Net assets available for participant benefits:
Beginning of year 71,910 32,134 104,044
-------------- -------------- --------------
End of year $ 65,289 26,281 91,570
============== ============== ==============
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, 2001
Participant Nonparticipant
Directed Directed
Investments Investments Total
-------------- -------------- --------------
amounts in thousands
Contributions:
Employer $ -- 7,258 7,258
Participant 10,919 -- 10,919
Rollovers 4,975 -- 4,975
Mergers with other plans (note 5) 44,092 -- 44,092
-------------- -------------- --------------
59,986 7,258 67,244
-------------- -------------- --------------
Repayments of participant loans (32) 32 --
Investment income (loss):
Net appreciation (depreciation) of
fair value of investments (3,410) 1,817 (1,593)
Interest and dividend income 775 11 786
-------------- -------------- --------------
(2,635) 1,828 (807)
-------------- -------------- --------------
Total contributions and net investment income (loss) 57,319 9,118 66,437
Administrative expenses -- (225) (225)
Loans to participants 363 (363) --
Distributions to participants (5,342) (1,654) (6,996)
-------------- -------------- --------------
Increase in net assets available for participant benefits 52,340 6,876 59,216
Net assets available for participant benefits:
Beginning of year 19,570 25,258 44,828
-------------- -------------- --------------
End of year $ 71,910 32,134 104,044
============== ============== ==============
See accompanying notes to financial statements.
4
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
December 31, 2002 and 2001
(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"). From March 9, 1999 through August 9, 2001, Liberty
was a wholly-owned subsidiary of AT&T Corp. ("AT&T"). Effective
August 10, 2001, AT&T effected the split-off (the "Split Off") of Liberty
pursuant to which Liberty's common stock was recapitalized, and each
outstanding share of AT&T Class A Liberty Media Group common stock and AT&T
Class B Liberty Media Group common stock was redeemed for one share of
Liberty Series A common stock and Liberty Series B common stock,
respectively. In connection with the Split Off, participants' balances in
the AT&T Liberty Media Stock Fund were transferred to the Liberty Media
Stock Fund.
TRUST FUND MANAGED BY FIDELITY MANAGEMENT TRUST COMPANY ("TRUSTEE")
Under the terms of a trust agreement between the Trustee and the Liberty
Plan, 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 stock funds are unitized
funds that are measured in units rather than shares. The unitized stock
funds consist mostly of stock with an insignificant amount of cash or cash
equivalents. The per share fair values used for investments in common stock
are as follows:
December 31,
------------------
2002 2001
-------- -------
Liberty Series A common stock $ 8.94 14.00
Ascent Media Group Class A common stock N/A 6.94
The foregoing prices are the closing market prices of the common stocks 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 "first-in, first-out" method.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded as earned on an accrual basis.
(continued)
5
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
INCOME TAXES
The Internal Revenue Service (the "IRS") has determined and informed
Liberty by a letter dated March 1, 2001, 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 not aware of any course of action or series
of events that have occurred that might adversely affect the Liberty Plan's
qualified status.
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
Effective March 2, 1999 the Liberty Plan was created as a spin-off of the
TCI 401(k) Stock Plan. 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 its 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, other than employees of Ascent Media Group and its eligible
subsidiaries, 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, make matching contributions equal to 100% of
participant contributions, up to a maximum match of 10% of eligible
compensation. Participants who are employees of Ascent Media Group may
contribute up to 75% of their compensation, as defined, on a pre-tax basis
or up to 15% of their compensation on an after-tax basis, to the Liberty
Plan. Ascent Media Group may make matching contributions equal to $.50 for
each $1.00 contributed by the participant up to 6% of eligible
compensation. All participant contributions and employer matching
contributions are subject to limitations as determined annually by
(continued)
6
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
the IRS. Employee pre-tax contributions and combined employee/employer
contributions per participant were limited to $11,000 and $40,000,
respectively, in 2002 and $10,500 and $35,000 respectively in 2001.
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. Employer contributions are invested in the
Liberty Media Stock Fund. Employee contributions may be invested in any
investments in the Liberty Plan, including the Liberty Media Stock Fund.
Liberty reserves the right to change the matching contribution amount at
any time.
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 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, as described in note 5, 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 5.25% to 10.5% at December 31, 2002.
Principal and interest are paid ratably through monthly payroll deductions.
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 $216,000 and $233,000 during 2002 and 2001,
respectively. Unused forfeitures aggregated $398,000 and $245,000 at
December 31, 2002 and 2001, respectively. Participant contributions are
always fully vested.
INVESTMENT OPTIONS
As of December 31, 2002, the Liberty Plan has eighteen investment options
including seventeen mutual funds and one unitized stock fund: a money
market mutual fund, two growth and income mutual funds, four growth mutual
funds, two income mutual funds, a global growth mutual fund, an
international growth mutual fund, six asset allocation funds based on
target retirement dates, and the Liberty Media Stock Fund. The Ascent Media
Group common stock was transferred into the Liberty Plan upon completion of
the merger of certain Ascent Media Group retirement plans in June 2001 (see
note 5). In 2002, the Ascent Media Group common stock was converted to
Liberty Series A common stock. Plan participants may change investment
options and contribution percentages on a daily basis.
(continued)
7
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
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
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, as described
in note 5, vest according to the terms specified in the Subsidiary 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.
(3) INVESTMENTS
The fair value of individual investments that represent 5% or more of the
Liberty Plan's net assets at December 31, 2002 and 2001 are as follows:
Fair value at
December 31,
------------------------------
Investment 2002 2001
------------------------------------------ ------------- -------------
amounts in thousands
Liberty Media Stock Fund $ 35,396 46,625
Janus Worldwide 5,078 5,958
Fidelity Magellan 18,981 26,052
Fidelity Equity Income 6,200 6,187
Fidelity Investment Grade Bond Fund 7,160 4,997
Fidelity Retirement Money Market 15,615 12,087
(4) LIBERTY RIGHTS OFFERING
During the fourth quarter of 2002, Liberty completed a rights offering
pursuant to which existing shareholders, including the Liberty Plan and the
Liberty Plan participants, received .04 transferable subscription rights to
purchase shares of Liberty Series A common stock for each share of common
stock held by them at the close of business on October 31, 2002. Liberty
Plan participants could elect to exercise the rights attributable to the
common stock in their accounts, or they could sell those rights through
November 25, 2002. Because the rights were not "qualifying employer
(continued)
8
LIBERTY MEDIA 401(k) SAVINGS PLAN
Notes to Financial Statements
securities" under ERISA, the distribution of the rights to the Liberty Plan
was a prohibited transaction under ERISA. The Liberty Plan has requested a
prohibited transaction individual exemption from the Department of Labor
(the "DOL"), and expects that the DOL will respond during 2003. The Liberty
Plan is not aware of any circumstances that would preclude the DOL from
issuing the requested exemption.
(5) MERGERS WITH OTHER PLANS
During 2001, the Liberty Plan merged with retirement plans of certain
Liberty subsidiaries resulting in aggregate transfers of $44,092,000. These
transfers resulted from the following transactions:
During 2000 and 2001, Ascent Media Group completed several acquisitions.
Effective May 1, 2001, employees of Ascent Media Group and certain of the
companies acquired by Ascent Media Group were eligible to participate in
the Liberty Plan. Effective June 1, 2001, assets from the acquired
companies' respective retirement plans ("Subsidiary Plans") were merged
into the Liberty Plan. The amount of such assets merged into the Liberty
Plan, including participant loan balances of $1,133,000, aggregated
$38,518,000.
Effective May 24, 2001, the Ascent Entertainment Group 401(k) Plan was
merged into the Liberty Plan. Assets merged into the Liberty Plan
aggregated $5,574,000, including $391,000 of participant loans.
(6) AT&T WIRELESS GROUP STOCK
Effective July 9, 2001, AT&T effected the spin-off of the AT&T Wireless
Group ("Wireless") into a separate public company. In connection with the
Wireless spin-off, holders of AT&T common stock, including shares held by
the AT&T Stock Fund, received .3218 of a share of Wireless stock for each
share of AT&T common stock owned. Such Wireless stock was subsequently
exchanged for Liberty Series A common stock by the Liberty Plan.
(7) PARTIAL PLAN TERMINATION
Effective May 25, 2001, and as a result of a merger transaction between a
subsidiary of Liberty and an unaffiliated third party, a partial plan
termination occurred. In connection therewith, employees of such
subsidiary, who were active participants in the Liberty Plan on May 25,
2001 (the "Subsidiary Employees"), were terminated from the Liberty Plan.
The Subsidiary Employees became fully vested in their employer
contributions upon the partial plan termination.
9
SCHEDULE 1
LIBERTY MEDIA 401(k) SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets (Held at End of Year)
December 31, 2002
Identity of Description of investment
Issuer including par value Fair value
---------------- ----------------------------- -------------------
amounts in thousands
Janus Janus Worldwide $ 5,078
Liberty Media Corporation Series A common stock, par value
$.01 per share (historical cost
basis - $34,619,000) 35,396
Fidelity Fidelity Magellan 18,981
Fidelity Fidelity Equity Income 6,200
Fidelity Fidelity Investment Grade Bond 7,160
Fidelity Fidelity Retirement Money Market 15,615
Barron Barron Growth Fund 184
Pacific Investment PIMCO High Yield Fund -
Management Co. Administrative Class 26
Fidelity Fidelity Overseas Fund 35
Fidelity Fidelity Blue Chip Growth Fund 143
Fidelity Fidelity Low-Priced Stock Fund 268
Spartan Spartan 500 Index Fund 129
Fidelity Fidelity Freedom Income Fund 5
Fidelity Fidelity Freedom 2000 Fund 27
Fidelity Fidelity Freedom 2010 Fund 111
Fidelity Fidelity Freedom 2020 Fund 135
Fidelity Fidelity Freedom 2030 Fund 19
Fidelity Fidelity Freedom 2040 Fund 1
Participant loans Interest rates ranging from 5.25%
to 10.5% 2,057
-----------
$ 91,570
===========
All investments are held by Fidelity Management Trust Company, Inc., which
is a party-in-interest. Liberty Media Corporation is the plan sponsor, which is
a party-in-interest.
See accompanying independent auditors' report.
10
SCHEDULE 2
LIBERTY MEDIA 401(k) SAVINGS PLAN
Schedule H, Line 4a - Schedule of Nonexempt Transactions
Year Ended December 31, 2002
Description of transactions
including maturity date,
Identity of Relationship to plan employer rate of interest collateral,
party involved or other party-in-interest par or maturity value
--------------------------------- ------------------------------------------- ------------------------------
Liberty Media 401(k) Plan Sponsor (1)
Savings Plan
Liberty Media Corporation Employer (2)
(1) An unintentional delay by a subsidiary of Liberty in submitting a certain
2002 employee contribution in the amount of $896.67 to the trustee resulted
in a prohibited transaction. Effectively a loan from the Liberty Plan to a
subsidiary of Liberty, this amount was remitted to the trustee later than
allowed by Department of Labor regulations. Liberty has reimbursed the
Liberty Plan $85 for lost earnings and interest thereon in 2003.
(2) During the fourth quarter of 2002, Liberty completed a rights offering
pursuant to which existing shareholders, including the Liberty Plan and the
Liberty Plan participants, received .04 transferable subscription rights to
purchase shares of Liberty Series A common stock for each share of common
stock held by them at the close of business on October 31, 2002. Liberty
Plan participants could elect to exercise the rights attributable to the
common stock in their accounts, or they could sell those rights through
November 25, 2002. Because the rights were not "qualifying employer
securities" under ERISA, the distribution of the rights to the Liberty Plan
was a prohibited transaction under ERISA. The Liberty Plan has requested a
prohibited transaction individual exemption from the DOL, and expects that
the DOL will respond during 2003. The Liberty Plan is not aware of any
circumstances that would preclude the DOL from issuing the requested
exemption.
See accompanying independent auditors' report.
11
SCHEDULE 3
LIBERTY MEDIA 401(k) SAVINGS PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
Year Ended December 31, 2002
amounts in thousands
Identity of Description Purchase Selling Cost of Net gain
party involved of asset Price Price Asset or (loss)
-------------- --------------------------- ------------- ------------- -------- -----------
Liberty Media Liberty Series A common $ 8,435 -- -- --
Corporation * stock, par value $.01
per share
*Denotes party-in-interest
See accompanying independent auditors' report.
12
EXHIBIT INDEX
Shown below are the exhibits which are filed or furnished as a part of this
Report -
23-Consent of KPMG LLP
99-Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002