Good day everyone and welcome to the Liberty Interactive Corporation Second Quarter Conference Call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Courtnee Ulrich, Vice President of Investor Relations. Please go ahead ma’am.

Thank you. Before we begin we’d like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about business strategies, the proposed creation of the [Technical Difficulty] tracking stocks, the proposed spin-off of Liberty TripAdvisor Holdings, the pending provide commerce transaction, market potential, future financial performance, new service and product launches and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including without limitation, possible changes in market acceptance of new products or services, our ability to satisfy the conditions to both the proposed creation of the QVC Group tracking stock and the proposed spin-off, Liberty’s ability to complete the pending provides commerce transaction, competitive issues, regulatory issues and continued access to capital on terms acceptable to Liberty Interactive. These forward-looking statements speak only as of the date of this call and Liberty Interactive expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Interactive’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. On today’s call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA. The required definitions and reconciliations, preliminary note and Schedules 1 through 3 three can be found at the end of this presentation. And now I’d like to introduce Greg Maffei, Liberty’s President and CEO.

Good morning. Thank you for joining us. Today speaking on the call besides myself we will have Liberty Interactive’s Chief Financial Officer, Chris Shean; QVC’s CEO, Mike George; and QVC US’s CEO Claire Watts. So looking at Liberty Interactive’s highlights, first the QVC. QVC experienced strong revenue and adjusted OIBDA results across all of the European markets, more solid revenue and adjusted OIBDA in the U.S. and the China joint venture CNR Mall posted excellent revenue growth driven by new and repeat customers and distribution increasing to 81 million homes. I know that many of you may have questions about our structural plans at LINTA. First, let me emphasize as we did in our press release earlier last week that we intend and remain committed to forming a pure QVC Group tracking stock which will consist of QVC and HSN only. The timing on this has been delayed from our initial announcement obviously. But as I said, we are committed and intend to move forward. Second, we are very happy with our recently announced Provide Commerce FTD deal. The combination of the complementary businesses will create a floral and gifting company with annual revenues well over $1 billion and they should be able to build excellent scale together. We’re also pleased with the market’s reaction to this announcement. As we announced last week and this is in line with the structural aspect of the QVC pure play racking stock, we are revaluating the optimal structure of Liberty Digital’s commerce assets. I don’t know exactly when I’ll be to announce or when we'll be able to announce the decision but I expect it will be in the near-term. The e-commerce companies did have a much better quarter on the top-line, but continue to struggle on the bottom-line. Management teams at those companies and we've changed out a few remain focused on operations and executing on their plans for 2014. On the capital market side 2014. On the capital market side, LINTA repurchased $274 million of its stock from May 1st through July 31st. Turning now to Liberty Ventures, we filed an amended S-1 for Liberty TripAdvisor Holdings on July 25th. We hope to have this completed this month but there are some regulatory hurdles we need to clear and the timing of when our financials remain live and don’t go stale and may push us till next month. TripAdvisor from an operating perspective reported excellent second quarter results, solid top-line growth driven by increased click based revenue and a reacceleration in hotel shopper growth. Mobile traffic continues to gain notable share at TripAdvisor. TripAdvisor also announced an agreement to acquire Viator, a leading resource to research and book definition activities that are very complementary with the traffic and people looking for travel worldwide. With that let me turn it over to Chris Shean to discuss the Liberty Interactive financials.

Thanks Greg. Liberty Interactive Group’s revenue increased 4% in the second quarter while adjusted OIBDA was down was down 1%. Liberty Interactive’s ecommerce business’s revenue increased 10% for the quarter and adjusted OIBDA decreased 27%. While Provide, Backcountry and Bodybuilding all increased revenue, the increase came in below anticipated levels due to softness in demand for their products and slightly lower average order values. The decrease in adjusted OIBDA was due to increased technology and personnel costs of these subsidiaries to support anticipated revenue growth which ultimately did not materialize during the quarter, slightly lower product margins, increased packaging cost, increased returns and increased marketing spend. Now let's take a quick look at the liquidity picture. At the end of the quarter, Liberty Interactive Group had attributed cash and liquid investments of $703 million and $5.2 billion in principal amount of attributed debt. QVC’s total debt to adjusted OIBDA ratio as is defined in its credit agreement was approximately 2.1 times as compared to a maximum allowable leverage of 3.5 times. Now, with that I’ll hand the call over to Mike George for additional QVC commentary.

Thank you, Chris. We were pleased with the sales momentum across most of our markets in Q2. We drove continued strong results in the UK, improved our revenue trend compared to Q1 in both the U.S. and Italy, achieved our best performance in Germany in almost three years and grow our China's joint venture 27%. While these gains were partially offset by poor performance in Japan, where we experienced a significant sales fall-off driven by the VAT increase that went into effect April 1st. We also achieved good results in our digital platforms, mobile commerce remained strong up 47% to now represent 40% of all global ecommerce orders, and overall ecommerce represented 43% of U.S. revenue up from 42% last year and 39% of global revenue up from 37% last year. And we expanded our television presence as well picking up 14 million additional homes for QVC Plus, our second channel in the U.S. effective July 1st. And in the UK, we launched our QVC Extra channel on the DTT platform, platform extending its reach by an additional 8 million homes. And we recently announced our leadership team for QVC France and have begun preparing for an anticipated Q2, 2015 launch. Now turning to the results by market. In the U.S. revenue increased 3% with strong growth across most categories. Adjusted OIBDA grew 2% with gains in product margins due to the mix shift away from consumer electronics and sports fashion offset by some expense pressures especially higher spend in online marketing and some investments in technology eCommerce and global market expansion activities. Our Japan business struggled throughout the quarter. I had warned on our May call that the VAT increased on April 1st drove a substantial pullback in discretionary consumer spending in the market, leading to a significant shortfall…

Thank you Mike. QVC U.S. saw strength in home and garden, kitchen and cook, apparel and accessories categories while experiencing continued softness in the electronics category. Our product margins saw impressive growth in the quarter as we experienced strong margin increases in accessories and jewelry, as well as the decline of electronics in the mix. Our unit growth of 3% is the highest since Q3, 2010 and marked our fourth consecutive quarter of unit growth. Our home division was driven by positive results in cooking and dining including our food business, cleaning and floor care and lastly fitness. In The Kitchen With David with QVC's Resident Foodie David Venable continues to drive big audience on air and on our digital platforms, hoping to generate great sales results from brands like Vitamix, Masterbuilt and Cooks essentials. New innovations from Dyson, Shark and Lori Greiner contributed strong results in cleaning floor care. And our fitness business saw great momentum with the very popular fit set. Apparel and accessories also generated a solid quarter. The customer responded well to several fashion day events with successful brands like LOGO by Lori Goldstein, our proprietary brands Denim & Company and [Julie] as well (inaudible) Vionic with Orthaheel and Skechers. For the second year our customers responded to our beauty with benefits event in partnership with the Cosmetic Executive Women. QVC generated more than a $1 million for cancers and careers as part of our ongoing commitment to promote the success and wellness of women to the power of relationship. With high engagement across multiple QVC platforms, the cancer and careers website received more than 3 times their weekly average site visits. We continued to explore ways to further engage customers with compelling content and a unique experience across all of our platforms. In June, we offered A Day of Vicenza Style live from Italy which generated strong engagement with program host Lisa Robertson, most notably to the social and video content. We utilized our second channel QPlus offered three hours of live programming of the event as well as QVC.com for a webcast of the event. Both of these saw high viewership from our customers. Overall, we’re continuing to see strength in the viewership on QVC Plus which provides us an additional broadcast channel to reach new customers and expand our audience and creatively counterprogram our main channel. The July contract that we signed with DISH brings our QVC Plus homes to approximately 47 million homes. And with that I’ll turn it back to Chris.

Thanks Claire. Let’s take a quick look at the liquidity picture over at Liberty Ventures Group. At the end of the quarter, the group had attributed cash and liquid investments of $1.9 billion and $2.4 billion in principal amount of attributed debt, which includes $721 million of TripAdvisor cash and liquid investments on the cash side and $350 million of their debt facilities. The value of the public equity method securities and other public holdings attributed to the group was $2.3 billion and $1.1 billion respectively at the end of the quarter. Now with that I’ll hand it back to Greg.

Well, thank you to Mike, Claire, and Chris. And to the audience we appreciate, your continued interest in Liberty Interactive. And with that I’d like to open it up for questions, operator?

Thank you. (Operator Instructions). And we'll take our first question from Eric Sheridan with UBS.

Thank you for taking the next question. When you look at the potential for the e-commerce tracker in the QVC spin, I guess with nothing announced today, did want to understand sort of what options you might be looking at or sort of issues you’re trying to work through as you examine all the different routes you didn’t go there? Thank you.

Well, we’re probably almost as good speculating on what we could do as you are. But you can imagine tracking it another way, you can imagine a sale; you can imagine a sponsored spin, we're pretty good at coming up with ideas. And I'm not really going to tip on my hands on any of them today because we haven’t made a decision. So the goal first and foremost is to get a pure QVC, HSN and then secondarily to find the right home for those digital commerce assets and organize them in a way that we think that gives them the best chance of success.

Great. Thanks.

We'll take our next question from Jason Bazinet with Citi.

I just had two quick questions; at least the first one is for Mr. Maffei and also the answer the second one. In your prepared remarks regarding the Trip spin out of Liberty Ventures. You suggested you expect to complete it in August or September; and I didn’t know if that was complete the S-1 or that's actually a complete spin of Trip?

I'm going to let our General Counsel explain the intricacy here.

They will be completing the entire spin within August or September.

Okay.

But depending on getting some things completed, while the numbers are not stale. So that's the issue.

Okay. And then my second question is on Liberty Interactive, maybe this is for Mr. George. The SG&A line seemed a bit elevated at least relative to our forecast in the quarter, was there anything special about that or are we just bad modelers? Thanks.

Nothing really out of the ordinary; we did have some investments in a few areas; we ramped up our online marketing somewhat; we are testing some new approaches to invest in online marketing; and we have some investments in looking at some potential market expansion opportunities, some things we are doing on the technology front. So not one single issue, some of it is a little bit of timing of one when expenses hit in the year. So our general goal is to continue to manage this business in a way that we can get OIBDA margins to expand slightly faster than revenue. And so we are kind of still on that overall path but we did have a few bumps in the quarter, but nothing -- not one big thing driving it.

Thank you very much.

We will go next to Matt Nemer with Wells Fargo Securities.

Thanks so much, good afternoon. So just following up on that last question, Mike, can you talk a little bit more to the expense pressure in online marketing, is that overall marketing costs that are getting more expensive or is it more related to the things that you are testing?

Little more the latter but let may be ask Claire to talk a little bit about some of the initiatives in the U.S. on online marketing where more the pressure is coming from.

Yes, happy to do that. So two things are happening with online marketing: One, as the digital piece of our business becomes greater and greater percent, online marketing is growing with that in ratio but we have also been doing some experimental outreach in new channels beyond our typical paid and SEM. So affiliate expansion, comparison shopping expansion, et cetera, et cetera. And some of those are working and some of them have not returned quite at the rate that we expected, so we continue to push it that to find the right balance.

Okay, that's helpful. Thank you. And then secondly for Mike, could you give us a little bit of a road map as to where when we should start to see some France start up expense in the P&L?

Yes. So, certainly if you look back at kind of our experience in Italy that's probably a decent indicator of the pattern than you are likely to see in France. So there is a little bit of expense in this quarter, but not significant. I think you'll see expenses wrapping up as we go through this year and start to bring on staff and incur other expenses. So, we're not giving a precise number, I think you are going to see let's say in the order of $8 million to $10 million of expenses over the back half of this year.

Okay, great. And then just lastly for Greg, I'm just curious as we look at the digital commerce assets, they struggled a little bit from a profit standpoint. Is there a common theme among them or is this more sort of company specific issues at each?

A little of each probably, I can think that in some cases you have seen company specific issues, but general there are also some trends. We need to build scale, we are in a niche oriented products in general. But the power of transparency and internet that’s increasing scope of our competitors has meant that in the general the trend as we need to build scale and I think you see the FTD transaction is an attempt to do that and we’re considering other ideas of how build scale in that space.

Great, very helpful. Thanks so much.

We’ll go next to Barton Crockett with FBR Capital Markets.

Okay, great. Thanks for taking the question. On the $350 million from the Trip, that you said would be used for repurchase, you highlighted that that could be used Interactive or at Ventures, but you don’t have an authorization at Ventures, you’re leading both of these possibilities, is it more likely in your mind to be one or the other or is it truly an open question who get to?

From a pure allowable standpoint either party can use it and therefore we created optionality around either. It is our practice we tend to report our share repurchases at quarter end and we probably unlikely to tip our hand. We haven’t bought back any at Ventures that’s a fact and we have bought back quite a lot at LINTA which will effectively be QVC. So you can make your own judgments.

Okay, great. And then turning to QVC, I was wondering if you can talk about clear perhaps what the market expansion versus market share dynamics are. Are you guys launching QVC-2 to and over the air expansion into more homes, are you growing the market or are you taking share from others like AHS what do you think?

Yes, thank you for your question. What we’ve seen is a little bit of both. So we are very careful about how we gauge our mentality to our main channel and we have been pleased with both QVC Plus and OTA it has performed as we modeled. And then we do see pretty consistently that our QPlus our second channel does create a share pressure on other competitors in the TV shopping space, so a little bit of both going on.

Okay, great. Thank you.

We'll take our next question from Alex Fuhrman with Craig Hallum.

Great, thanks for taking my question. I was hoping you can talk a little bit about the programming content strategy at QVC, it seems like over the course of the year it’s been a lot of format that in both a lot of different products some different categories on the show, particularly the morning top show format. I was wondering if you could talk to that at bring more vendors and more brands into the platform. Is that kind of a new ongoing way to work with a wide range or brands and vendors within a given period of time and kind of related to that. As your customer base continues to migrate a little bit more online, you search to add more vendors. Has your percentage of business has been turning offline is that deviated or continue to move higher in the quarter?

Claire, do you want to take those questions?

Sure, happy to do that Mike. So our programming strategy evolved every year, but I would say remained pretty consistent to the success formula which is both to combined sort of (inaudible) discovery, so a concept of new product and different categories, our customers love it for that. But also we've learned that there is certain static programming where a customer can make an appointment and those with expect is also been successful. So we pushed at hard both of those but they're pretty to the formula works for a long time. And as far as online yes, our business for several years now has continue to see more of our sales coming to the digital platform, our media, our channel still drive a lot of that activity or we've learned how to integrate the experience but we do continue to see more of our business moving to online year-after-year.

Great. That’s helpful. Thank you very much.

We will take our next question from [James Brackley with Buckingham Research].

Hey thanks for taking the question. Can you just give us a little color on what remains in what is now I guess or could potentially be Liberty Digital just how much the EBITDA impact of the departure of the Provide Flowers business would be and any color about how the revenue split separate from among the major product lines there? And also are there any tax implications associated with the sale and any other tax implications associated with any of the other businesses in terms of limitations on selling them there currently, recent moment allocated to Liberty Digital? Thanks.

James that’s a broad question a hell a lot of this I will try and take the easy ones. The FTB transaction with the time it was struck was just a little under our basis then somewhere it actually closes where it traded initially is over our basis we have a slight gain. So that will be very much dependent on how much cash gets generated in the interim at provide and what its balance sheet looks like because we get some sweeps on that, that were in capital adjustments, where the FTB stock price closes when the deal closes, where does the stock price trades rather. On the magnitude I will give you a percentage, it was roughly about historically and had some challenges this year because of the poor weather around Valentines Day it’s in the 38% to 42% of the EBITDA something like that of the whole entity. And that’s moved around a little some of the other things have been more volatile. This year it will be lower than that percentage, historically it might have been the case it was a little lower in back and like ‘11, because some of the other business was very stronger, but it's done pretty well in ‘12 and ‘13. So, it would have been in the low 40%. Because I don't believe we give pulled out the guidance directly for the totality of the businesses. So, I'm not going to begin by doing that today. But I'm just going to give you the range. As far as the other big drivers in there, the biggest businesses after provide which was the biggest would be by EBITDA would be CommerceHub and Bodybuilding which are roughly the same size. And they would be slightly smaller, 5% or 10% smaller contributors than Provide. The basis in a lot of those businesses is very low basis in some CommerceHub, I think is a very low basis, Bodybuilding has a fairly low basis, Backcountry has a slightly higher basis compared to probably it.

Great. Thank you.

We'll go next to Matthew Harrigan with Wunderlich Securities.

Thank you. I've got one more or less windy question and then a couple of follow ups. If you look at the jd.com prospectus, one of the consultancies had Chinese internet sales going mid to high 20s for the next four or five years. I think that the TV market as you outlined at your QVC Analyst Day is only about 2% of those numbers and it's very nascent. And I know that the boundaries emerge overtime especially in Asia. But do you think that forgetting about your share, do you think you can grow at that type of rate, I mean you kind of have a loss small numbers working for you and increasingly your business is going to be a little bit more or like theirs, a lot more of social media and communal, the analyst point?

It's a little early to say, we are very bullish in total of that, the potential in China initially growing really with the kind of classic TV shopping model and then over time layering on ecommerce model. So if I were to separate those two things, we clearly benefit today by the big growth in carriage which is bringing a lot of new customers to our channel. Although we’ve been very pleased to see a lot of new customer additions that is from the carriage we’ve added, recently but even the carriage that we added over the last few years. So, we see a lot of room to grow TV homes, get more carriage and continue to bring in new customers off of both existing and new carriage. I hope that, that in fuel some growth for. The long-term coupled with increasing repeat purchase rate, the whole ecommerce side is really untapped right now for us. We do only about 2% of our business in China, its transacted online, and I think in what’s still a fairly in mature market for both TV shopping and eCommerce, I think customers draw a fairly kind of hard distinction in their mind between the two formats, you don’t see the kind of blending of the two as we’ve seen in our other markets around the world. So it’s an area that we’re going to really turn our attention to and figure out if there are some ways to add really meaningful incremental growth through eCommerce on top of the core TV platform but on that front I would say again early days, a lot to figure to, but we think at least over the midterm we’ve got a lot of runway just in continuing to expand the engagement through the TV platform.

And then just actually just one other when you look at Europe I mean there was some laggard economy so they actually have some pretty comp retailers like Spain. Yes, I think I asked you once before, that how you would look at the French retailing market relative to Germany or Italy, I mean the consumer behavior can really vary as you point it out with Germany on the fashion and the returns. But can you point out any quotes or any comments on the French retail market. I mean obviously you got all those big luxury houses, I don't know how much that affects QVC's perception among the consumer but just if you have any incremental thoughts?

Yes, I don't know that I have a lot to add. I don’t think the presence of the big luxury houses as a meaningful impact on us one way or the other. It's clearly a market that is stronger in e-commerce I would say, not as strong as some markets but relatively strong in e-commerce and much stronger than Italy. So we think that's an incremental positive for our business. It is fully market oriented towards nameplates and prestige brands. And there really hasn't been the availability in any kind of a home shopping environment, TV shopping environment of better quality product. So we just think coming in, not necessary playing at the high luxury end but just playing in sort of better invest, the beauty as an example which is typically not been available in a video format, I think those are things we can do in a differentiated way. So we’re bullish about the market, it is a consumer oriented market but early days. I think we've learned that you can have a lot of pre-conceptions going into a market. And once you're in, you need to do a lot of rapid adjustment to see what works. But we think sort of the underlying fundamentals look promising to us.

Thanks for taking my questions.

We'll go next to Victor Anthony with Topeka Capital Markets.

Yes, thanks. For Greg, just one question, HSN, if you could update us on your thinking about the ownership. And I know in the past you’ve expressed the satisfaction with the capital structure. And I think the market understands there is opportunity for them to address that pretty soon? And second on maybe if you could just -- I think this is for Claire, what’s behind the continued weakness in electronics and any chance of that improvement over the next several quarters? Thanks.

So, I think you’ve seen at where HSN has -- I think its stock has been relatively weaker. And I think one of our views is they are in the same marketplace, we are which isn’t always easy but it has not helped their performance by their capital structure which is in our judgment way too unlevered from a financial perspective. I think we made that case in the past; I think that remains our view. That having been said, we are -- we sit with 38% of the company; we are happy with that position; in general, we’ve done well with it. We’ve done some -- taken some actions to synthetically create leverage, exchange what we did and we’ll see what actions they take going forward.

And just…

Claire, do you want to address, yes, go ahead. Sorry. Go ahead, Claire.

Sure. from the electronics category, the weakness in the first half of the year has really been two fold, one is our lack of innovation coming from the industry, so no real newness in tablets or computers or televisions. That’s one reason and the other is that the lack of inventory that typically even in a non-innovative state, we have been able to create a lot of value for our customers through opportunities in the market and it just hasn’t existed. As we look forward, I would say we are cautiously optimistic about some opportunities, we’ve seen both the introduction of tablet and also Android growth and now the Bing book is something that we think could create some opportunities for us, but we are planning it cautiously at this point.

Okay, thanks. Just a quick follow-up, Greg, when you say the timing has been delayed for the QVC Group tracker, should we still expect this to occur in 2014?

Well, I'm not prepared to make any announcement anyway today, that would be our hope and goal, but I'm not prepared to lock down any timing.

Okay. Thank you very much.

Great.

We'll take our final question from Ben Mogil with Stifel.

Hi, good afternoon. Thanks for taking my question. If you’ve touched upon this earlier, I do apologize. Over churn rate increase in the U.S., is it just a mix shift or is there anything sort of deeper going on?

Claire, do you want to take that?

Sure Mike. In the U.S., the churn rate is a mix issue.

And so from an inventory perspective, do you think to sort of bleed a little bit into 3Q, I'm not asking to give guidance, but just from a directional perspective or is it sort of contained if you will to 2Q?

Well, what I would say is that the category is that we think strength will most likely continue in the third quarter.

Okay, great. Thank you very much.

There are no further questions at this time. I'd like to turn it back to our speakers for any additional or closing remarks.

No, I think we're good. Thank you, operator. Thank you everyone for joining our call and thank you for your continued interest in Liberty Interactive.