UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33982

QURATE RETAIL, INC.

(Exact name of Registrant as specified in its charter)

incorporation or organization)	Identification No.)
State of Delaware (State or other jurisdiction of incorporation or organization)	84-1288730 (I.R.S. Employer Identification No.)

12300 Liberty Boulevard Englewood, Colorado (Address of principal executive offices)	80112 (Zip Code)

Registrant's telephone number, including area code: (720) 875-5300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Series A common stock	QRTEA	The Nasdaq Stock Market LLC
Series B common stock	QRTEB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

The number of outstanding shares of Qurate Retail, Inc.'s common stock as of July 31, 2019 was:


Series A common stock		388,568,534
Series B common stock		29,332,431

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


	June 30,		December 31,
	2019		2018
	amounts in millions
Assets
Current assets:
Cash and cash equivalents	$	519	653
Trade and other receivables, net of allowance for doubtful accounts of $120 million and $117 million, respectively		1,295	1,835
Inventory, net		1,516	1,474
Other current assets		203	224
Total current assets		3,533	4,186
Investments in equity securities		99	96
Property and equipment, net		1,339	1,322
Intangible assets not subject to amortization (note 6):
Goodwill		7,021	7,017
Trademarks		3,895	3,895
		10,916	10,912
Intangible assets subject to amortization, net (note 6)		1,069	1,058
Other assets, at cost, net of accumulated amortization		765	267
Total assets	$	17,721	17,841

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)


	June 30,		December 31,
	2019		2018
	amounts in millions,
	except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	861	1,204
Accrued liabilities		949	1,182
Current portion of debt, including $1,175 million and $990 million measured at fair value (note 7)		1,175	1,410
Other current liabilities		187	155
Total current liabilities		3,172	3,951
Long-term debt, including $415 million and $344 million measured at fair value (note 7)		6,283	5,963
Deferred income tax liabilities		1,900	1,925
Other liabilities		725	258
Total liabilities		12,080	12,097
Equity
Stockholders' equity:
Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued		—	—
Series A Qurate Retail common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 394,049,417 shares at June 30, 2019 and 409,901,058 shares at December 31, 2018		4	4
Series B Qurate Retail common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,338,790 shares at June 30, 2019 and 29,248,343 shares at December 31, 2018		—	—
Series C Qurate Retail common stock, $.01 par value. Authorized 400,000,000 shares; no shares issued		—	—
Additional paid-in capital		—	—
Accumulated other comprehensive earnings (loss), net of taxes		(64)	(55)
Retained earnings		5,583	5,675
Total stockholders' equity		5,523	5,624
Noncontrolling interests in equity of subsidiaries		118	120
Total equity		5,641	5,744
Commitments and contingencies (note 9)
Total liabilities and equity	$	17,721	17,841

See accompanying notes to condensed consolidated financial statements.

I-4

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations

(unaudited)


	Three months ended			Six months ended
	June 30,			June 30,
	2019		2018	2019		2018
	amounts in millions
Total revenue, net	$	3,111	3,233		6,196	6,463
Operating costs and expenses:
Cost of retail sales (exclusive of depreciation shown separately below)		1,996	2,050		4,019	4,143
Operating expense		197	238		393	466
Selling, general and administrative, including stock-based compensation and transaction related costs (note 3)		424	428		849	880
Depreciation and amortization		158	159		311	322
		2,775	2,875		5,572	5,811
Operating income (loss)		336	358		624	652
Other income (expense):
Interest expense		(93)	(96)		(189)	(194)
Share of earnings (losses) of affiliates, net		(23)	(46)		(68)	(60)
Realized and unrealized gains (losses) on financial instruments, net (note 5)		(113)	20		(194)	119
Other, net		(7)	8		(15)	19
		(236)	(114)		(466)	(116)
Earnings (loss) from continuing operations before income taxes		100	244		158	536
Income tax (expense) benefit		30	(46)		38	(82)
Earnings (loss) from continuing operations		130	198		196	454
Earnings (loss) from discontinued operations, net of taxes		—	—		—	141
Net earnings (loss)		130	198		196	595
Less net earnings (loss) attributable to the noncontrolling interests		12	11		23	24
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	118	187		173	571

Net earnings (loss) attributable to Qurate Retail, Inc. shareholders:
Qurate Retail common stock (note 1)	$	118	187		173	329
Liberty Ventures common stock (note 1)		—	—		—	242
	$	118	187		173	571

See accompanying notes to condensed consolidated financial statements.

I-5

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements Of Operations (Continued)

(unaudited)


	Three months ended			Six months ended
	June 30,			June 30,
	2019		2018	2019		2018
Basic net earnings (losses) from continuing operations attributable to Qurate Retail, Inc. shareholders per common share (note 4):
Series A and Series B Qurate Retail common stock	$	0.28	0.40		0.40	0.70
Series A and Series B Liberty Ventures common stock	$	NA	NA		NA	1.17
Diluted net earnings (losses) from continuing operations attributable to Qurate Retail, Inc. shareholders per common share (note 4):
Series A and Series B Qurate Retail common stock	$	0.28	0.40		0.40	0.69
Series A and Series B Liberty Ventures common stock	$	NA	NA		NA	1.16

Basic net earnings (losses) attributable to Qurate Retail, Inc. shareholders per common share (note 4):
Series A and Series B Qurate Retail common stock	$	0.28	0.40		0.40	0.70
Series A and Series B Liberty Ventures common stock	$	NA	NA		NA	2.81
Diluted net earnings (losses) attributable to Qurate Retail, Inc. shareholders per common share (note 4):
Series A and Series B Qurate Retail common stock	$	0.28	0.40		0.40	0.69
Series A and Series B Liberty Ventures common stock	$	NA	NA		NA	2.78

See accompanying notes to condensed consolidated financial statements.

I-6

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements Of Comprehensive Earnings (Loss)

(unaudited)


	Three months ended			Six months ended
	June 30,			June 30,
	2019		2018	2019	2018
	amounts in millions
Net earnings (loss)	$	130	198	196	595
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		15	(96)	8	(25)
Recognition of previously unrealized losses (gains) on debt, net		—	16	—	16
Share of other comprehensive earnings (losses) of equity affiliates		—	(2)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		8	(27)	(14)	(32)
Other comprehensive earnings (loss)		23	(109)	(6)	(42)
Comprehensive earnings (loss)		153	89	190	553
Less comprehensive earnings (loss) attributable to the noncontrolling interests		15	7	26	27
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	138	82	164	526

See accompanying notes to condensed consolidated financial statements.

I-7

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements Of Cash Flows

(unaudited)


	Six months ended
	June 30,
	2019		2018
	amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	196	595
Adjustments to reconcile net earnings to net cash provided by operating activities:
(Earnings) loss from discontinued operations		—	(141)
Depreciation and amortization		311	322
Stock-based compensation		37	46
Share of (earnings) losses of affiliates, net		68	60
Realized and unrealized (gains) losses on financial instruments, net		194	(119)
Deferred income tax expense (benefit)		(21)	(1)
Other, net		9	24
Changes in operating assets and liabilities
Current and other assets		568	469
Payables and other liabilities		(769)	(544)
Net cash provided (used) by operating activities		593	711
Cash flows from investing activities:
Investments in and loans to cost and equity investees		(76)	(50)
Capital expenditures		(167)	(98)
Other investing activities, net		(124)	(58)
Net cash provided (used) by investing activities		(367)	(206)
Cash flows from financing activities:
Borrowings of debt		1,909	2,502
Repayments of debt		(1,912)	(2,381)
GCI Liberty Split-Off		—	(475)
Repurchases of Qurate Retail common stock		(296)	(493)
Withholding taxes on net settlements of stock-based compensation		(8)	(21)
Indemnification payment from GCI Liberty, Inc.		—	133
Other financing activities, net		(53)	(21)
Net cash provided (used) by financing activities		(360)	(756)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		1	4
Net increase (decrease) in cash, cash equivalents and restricted cash		(133)	(247)
Cash, cash equivalents and restricted cash at beginning of period		660	912
Cash, cash equivalents and restricted cash at end of period	$	527	665

The following table reconciles cash, cash equivalents and restricted cash reported in our condensed consolidated balance sheets to the total amount presented in our condensed consolidated statements of cash flows:


		June 30,	December 31,
		2019	2018
	in millions
Cash and cash equivalents	$	519	653
Restricted cash included in other current assets		8	7
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows	$	527	660

See accompanying notes to condensed consolidated financial statements.

I-8

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement Of Equity

(unaudited)



	Stockholders' Equity
			Common stock			Accumulated
			Qurate		Additional	other		Noncontrolling
	Preferred		Retail		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity
	amounts in millions
Balance at January 1, 2019	$	—	4	—	—	(55)	5,675	120	5,744
Net earnings (loss)		—	—	—	—	—	173	23	196
Other comprehensive income (loss)		—	—	—	—	(9)	—	3	(6)
Stock compensation		—	—	—	37	—	—	—	37
Series A Qurate Retail stock repurchases		—	—	—	(296)	—	—	—	(296)
Distribution to noncontrolling interest		—	—	—	—	—	—	(28)	(28)
Other		—	—	—	(6)	—	—	—	(6)
Reclassification		—	—	—	265	—	(265)	—	—
Balance at June 30, 2019	$	—	4	—	—	(64)	5,583	118	5,641



	Stockholders' Equity
			Common stock			Accumulated
			Qurate		Additional	other		Noncontrolling
	Preferred		Retail		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity
	amounts in millions
Balance at March 31, 2019	$	—	4	—	—	(84)	5,533	109	5,562
Net earnings (loss)		—	—	—	—	—	118	12	130
Other comprehensive income (loss)		—	—	—	—	20	—	3	23
Stock compensation		—	—	—	18	—	—	—	18
Series A Qurate Retail stock repurchases		—	—	—	(86)	—	—	—	(86)
Distribution to noncontrolling interest		—	—	—	—	—	—	(6)	(6)
Reclassification		—	—	—	68	—	(68)	—	—
Balance at June 30, 2019	$	—	4	—	—	(64)	5,583	118	5,641

See accompanying notes to condensed consolidated financial statements.

I-9

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement Of Equity

(unaudited)



	Stockholders' Equity
			Common stock					Accumulated
			Qurate		Liberty		Additional	other		Noncontrolling
	Preferred		Retail		Ventures		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity
	amounts in millions
Balance at January 1, 2018	$	—	5	—	1	—	1,043	(133)	9,068	99	10,083
Net earnings (loss)		—	—	—	—	—	—	—	571	24	595
Other comprehensive income (loss)		—	—	—	—	—	—	(45)	—	3	(42)
Stock compensation		—	—	—	—	—	46	—	—	—	46
Series A Qurate Retail stock repurchases		—	—	—	—	—	(493)	—	—	—	(493)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	—	(23)	(23)
Cumulative effect of accounting change		—	—	—	—	—	—	76	(70)	—	6
GCI Liberty Split-Off		—	—	—	—	—	(4,362)	—	—	11	(4,351)
Other		—	—	—	(1)	—	(19)	—	—	—	(20)
Reclassification		—	—	—	—	—	3,785	—	(3,785)	—	—
Balance at June 30, 2018	$	—	5	—	—	—	—	(102)	5,784	114	5,801



	Stockholders' Equity
			Common stock					Accumulated
			Qurate		Liberty		Additional	other		Noncontrolling
	Preferred		Retail		Ventures		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity
	amounts in millions
Balance at March 31, 2018	$	—	5	—	—	—	—	3	5,853	107	5,968
Net earnings (loss)		—	—	—	—	—	—	—	187	11	198
Other comprehensive income (loss)		—	—	—	—	—	—	(105)	—	(4)	(109)
Stock compensation		—	—	—	—	—	23	—	—	—	23
Series A Qurate Retail stock repurchases		—	—	—	—	—	(276)	—


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited)		I-3
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements Of Operations (unaudited)		I-5
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements Of Comprehensive Earnings (Loss) (unaudited)		I-7
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements Of Cash Flows (unaudited)		I-8
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements Of Equity (unaudited)		I-9
QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)		I-11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		I-28
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		I-40
Item 4. Controls and Procedures.		I-41

PART II—OTHER INFORMATION		II-1
Item 1. Legal Proceedings		II-1
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		II-1
Item 6. Exhibits		II-2

SIGNATURES		II-3