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 September 30, 2020



☐	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
8.0% Series A Cumulative Redeemable Preferred Stock	QRTEP	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 October 31, 2020 was:


Series A common stock		387,844,870
Series B common stock		29,376,619

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


	September 30,		December 31,
	2020		2019

	amounts in millions
Assets
Current assets:
Cash and cash equivalents	$	1,044	673
Trade and other receivables, net of allowance for doubtful accounts of $147 million and $129 million, respectively		1,142	1,854
Inventory, net		1,481	1,413
Other current assets		702	636
Total current assets		4,369	4,576
Property and equipment, net		1,282	1,351
Intangible assets not subject to amortization (note 5):
Goodwill		6,601	6,576
Trademarks		3,168	3,168
		9,769	9,744
Intangible assets subject to amortization, net (note 5)		799	955
Other assets, at cost, net of accumulated amortization		573	679
Total assets	$	16,792	17,305

(continued)

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)


	September 30,		December 31,
	2020		2019

	amounts in millions,
	except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	1,147	1,091
Accrued liabilities		1,101	1,173
Current portion of debt, including $1,682 million and $1,557 million measured at fair value (note 6)		1,682	1,557
Other current liabilities		226	180
Total current liabilities		4,156	4,001
Long-term debt (note 6)		5,184	5,855
Deferred income tax liabilities		1,744	1,716
Preferred stock (note 7)		1,248	—
Other liabilities		753	761
Total liabilities		13,085	12,333
Equity
Stockholders' equity:
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 387,810,463 shares at September 30, 2020 and 386,691,461 shares at December 31, 2019		4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,376,619 shares at September 30, 2020 and 29,278,424 shares at December 31, 2019		—	—
Series C common stock, $.01 par value. Authorized 400,000,000 shares; no shares issued		—	—
Additional paid-in capital		27	—
Accumulated other comprehensive earnings (loss), net of taxes		16	(55)
Retained earnings		3,531	4,891
Total stockholders' equity		3,578	4,840
Noncontrolling interests in equity of subsidiaries		129	132
Total equity		3,707	4,972
Commitments and contingencies (note 8)
Total liabilities and equity	$	16,792	17,305

See accompanying notes to condensed consolidated financial statements.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)


	Three months ended			Nine months ended
	September 30,			September 30,
	2020		2019	2020		2019

	amounts in millions
Total revenue, net	$	3,383	3,089		9,725	9,285
Operating costs and expenses:
Cost of retail sales (exclusive of depreciation shown separately below)		2,178	2,026		6,328	6,045
Operating expense		203	200		605	593
Selling, general and administrative, including stock-based compensation (note 2)		455	424		1,323	1,273
Depreciation and amortization		141	146		427	457
Impairment of intangible assets		—	1,020		—	1,020
		2,977	3,816		8,683	9,388
Operating income (loss)		406	(727)		1,042	(103)
Other income (expense):
Interest expense		(98)	(93)		(290)	(282)
Share of earnings (losses) of affiliates, net		(32)	(36)		(96)	(104)
Realized and unrealized gains (losses) on financial instruments, net (note 4)		(12)	(45)		(127)	(239)
Gains (losses) on transactions, net		223	—		224	(1)
Other, net		(65)	(4)		(65)	(18)
		16	(178)		(354)	(644)
Earnings (loss) before income taxes		422	(905)		688	(747)
Income tax (expense) benefit		(70)	150		(111)	188
Net earnings (loss)		352	(755)		577	(559)
Less net earnings (loss) attributable to the noncontrolling interests		14	15		39	38
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	338	(770)		538	(597)

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.81	(1.85)		1.29	(1.40)
Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.80	(1.85)		1.28	(1.40)

See accompanying notes to condensed consolidated financial statements.

I-5

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)


	Three months ended			Nine months ended
	September 30,			September 30,
	2020		2019	2020	2019

	amounts in millions
Net earnings (loss)	$	352	(755)	577	(559)
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		49	(37)	45	(29)
Recognition of previously unrealized losses (gains) on debt, net		—	—	(1)	—
Comprehensive earnings (loss) attributable to debt credit risk adjustments		(68)	5	31	(9)
Other comprehensive earnings (loss)		(19)	(32)	75	(38)
Comprehensive earnings (loss)		333	(787)	652	(597)
Less comprehensive earnings (loss) attributable to the noncontrolling interests		16	14	43	40
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	317	(801)	609	(637)

See accompanying notes to condensed consolidated financial statements.

I-6

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine months ended
	September 30,
	2020		2019

	amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	577	(559)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		427	457
Impairment of intangible assets		—	1,020
Stock-based compensation		46	54
Share of (earnings) losses of affiliates, net		96	104
Realized and unrealized (gains) losses on financial instruments, net		127	239
(Gains) losses on transactions, net		(224)	1
Deferred income tax expense (benefit)		19	(165)
Other, net		52	10
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		720	575
Decrease (increase) in inventory		(63)	(209)
Decrease (increase) in prepaid expenses and other assets		69	53
(Decrease) increase in trade accounts payable		52	(192)
(Decrease) increase in accrued and other liabilities		(43)	(478)
Net cash provided (used) by operating activities		1,855	910
Cash flows from investing activities:
Investments in and loans to cost and equity investees		(88)	(109)
Capital expenditures		(165)	(249)
Expenditures for television distribution rights		(41)	(128)
Cash proceeds from dispositions of investments		269	—
Net cash provided (used) by investing activities		(25)	(486)
Cash flows from financing activities:
Borrowings of debt		1,300	2,215
Repayments of debt		(2,077)	(2,179)
Repurchases of Qurate Retail common stock		—	(392)
Withholding taxes on net settlements of stock-based compensation		(3)	(6)
Dividends paid to noncontrolling interest		(46)	(34)
Dividends paid to common shareholders		(626)	—
Other financing activities, net		(12)	(72)
Net cash provided (used) by financing activities		(1,464)	(468)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		5	(3)
Net increase (decrease) in cash, cash equivalents and restricted cash		371	(47)
Cash, cash equivalents and restricted cash at beginning of period		681	660
Cash, cash equivalents and restricted cash at end of period	$	1,052	613

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:


		September 30,	December 31,
		2020	2019

	in millions
Cash and cash equivalents	$	1,044	673
Restricted cash included in other current assets		8	8
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows	$	1,052	681

See accompanying notes to condensed consolidated financial statements.

I-7

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		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, 2020	$	—	4	—	—	(55)	4,891	132	4,972
Net earnings (loss)		—	—	—	—	—	538	39	577
Other comprehensive earnings (loss)		—	—	—	—	71	—	4	75
Stock compensation		—	—	—	44	—	—	—	44
Distribution to noncontrolling interest		—	—	—	—	—	—	(46)	(46)
Distribution of dividends to common shareholders		—	—	—	—	—	(1,898)	—	(1,898)
Other		—	—	—	(17)	—	—	—	(17)
Balance at September 30, 2020	$	—	4	—	27	16	3,531	129	3,707



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		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 June 30, 2020	$	—	4	—	25	37	5,091	129	5,286
Net earnings (loss)		—	—	—	—	—	338	14	352
Other comprehensive earnings (loss)		—	—	—	—	(21)	—	2	(19)
Stock compensation		—	—	—	17	—	—	—	17
Distribution to noncontrolling interest		—	—	—	—	—	—	(16)	(16)
Distribution of dividends to common shareholders		—	—	—	—	—	(1,898)	—	(1,898)
Other		—	—	—	(15)	—	—	—	(15)
Balance at September 30, 2020	$	—	4	—	27	16	3,531	129	3,707

I-8

Table of Contents



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		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)		—	—	—	—	—	(597)	38	(559)
Other comprehensive earnings (loss)		—	—	—	—	(40)	—	2	(38)
Stock compensation		—	—	—	54	—	—	—	54
Series A Qurate Retail stock repurchases		—	—	—	(392)	—	—	—	(392)
Distribution to noncontrolling interest		—	—	—	—	—	—	(34)	(34)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(6)	—	—	—	(6)
Reclassification		—	—	—	344	—	(344)	—	—
Balance at September 30, 2019	$	—	4	—	—	(95)	4,734	126	4,769



	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 June 30, 2019	$	—	4	—	—	(64)	5,583	118	5,641
Net earnings (loss)		—	—	—	—	—	(770)	15	(755)
Other comprehensive income (loss)		—	—	—	—	(31)	—	(1)	(32)
Stock compensation		—	—	—	17	—	—	—	17
Series A Qurate Retail stock repurchases		—	—	—	(96)	—	—	—	(96)
Distribution to noncontrolling interest		—	—	—	—	—	—	(6)	(6)
Reclassification		—	—	—	79	—	(79)	—	—
Balance at September 30, 2019	$	—	4	—	—	(95)	4,734	126	4,769

See accompanying notes to condensed consolidated financial statements.

I-9

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Qurate Retail, Inc. (formerly named Liberty Interactive Corporation, prior to the GCI Liberty Split-Off defined and described below) and its controlled subsidiaries (collectively, "Qurate Retail," the "Company," “Consolidated Qurate Retail,” “us,” “we,” or “our” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. Qurate Retail is made up of wholly-owned subsidiaries QVC, Inc. (“QVC”), which includes HSN, Inc. (“HSN”), Cornerstone Brands, Inc. (“Cornerstone”), Zulily, LLC (“Zulily”), and other cost and equity method investments.

Qurate Retail is primarily engaged in the video and online commerce industries in North America, Europe and Asia. The businesses of the Company’s wholly-owned subsidiaries, QVC, Cornerstone and Zulily, are seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2019, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Qurate Retail's Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 10-K”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Qurate Retail considers (i) fair value measurements, (ii) accounting for income taxes, and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.

In December 2019, a new coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China and has subsequently spread across the globe causing a global pandemic, impacting all countries where Qurate Retail operates. As a result of the spread of the virus, certain local governmental agencies have imposed travel restrictions, local quarantines or stay at home restrictions to contain the spread, which has caused a significant disruption to most sectors of the economy.

As a result of COVID-19, management increased the amounts of certain estimated reserves, including but not limited to, uncollectible receivables and inventory obsolescence for the three and nine months ended September 30, 2020. Other than these changes, management is not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require the Company to update our estimates or judgments or revise the carrying value of our assets or liabilities. Management’s estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements.

Qurate Retail has entered into certain agreements with Liberty Media Corporation ("LMC") (for accounting purposes, a related party of the Company), a separate publicly traded company. These agreements include a reorganization agreement, services agreement and facilities sharing agreement. As a result of certain corporate transactions, LMC and Qurate Retail may have obligations to each other for certain tax related matters. Neither Qurate Retail nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with a split-off transaction that occurred in the first quarter of 2018 (the “GCI Liberty Split-Off”), Qurate Retail and GCI Liberty, Inc. (“GCI Liberty”) (for accounting purposes, a related party of the Company) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty has agreed to indemnify Qurate Retail for taxes and tax-related losses resulting from the GCI Liberty Split-Off to the extent such taxes or tax-related losses (i) result primarily from, individually or in the aggregate, the breach of certain restrictive covenants

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

made by GCI Liberty (applicable to actions or failures to act by GCI Liberty and its subsidiaries following the completion of the GCI Liberty Split-Off), or (ii) result from Section 355(e) of the Internal Revenue Code applying to the GCI Liberty Split-Off as a result of the GCI Liberty Split-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of GCI Liberty (or any successor corporation).

In December 2019, the Company entered into an amendment to the services agreement in connection with LMC’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s Chairman of the Board (the “Chairman”). Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., GCI Liberty, and Liberty Broadband Corporation (collectively, the “Service Companies”) or reimbursed to LMC, in each case, based on allocations among LMC and the Service Companies set forth in the amended services agreement, currently set at 19% for the Company.

The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between Qurate Retail and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides Qurate Retail with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. Qurate Retail reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for Qurate Retail's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Qurate Retail. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with Qurate Retail. Under these various agreements, approximately $2 million was reimbursable to LMC for both the three months ended September 30, 2020 and 2019, and $7 million and $5 million was reimbursable to LMC for the nine months ended September 30, 2020 and 2019, respectively. Qurate Retail had a tax sharing payable with LMC and GCI Liberty in the amount of approximately $125 million and $95 million as of September 30, 2020 and December 31, 2019, respectively, included in Other liabilities in the condensed consolidated balance sheets.

On August 21, 2020, Qurate Retail announced that an authorized committee of its Board of Directors had declared a special dividend (the “Special Dividend”) on each outstanding share of its Series A and Series B common stock consisting of (i) cash in the amount of $1.50 per common share, for an aggregate cash dividend of approximately $633 million, and (ii) 0.03 shares of newly issued 8.0% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Preferred Stock”), having an initial liquidation price of $100 per share of Preferred Stock, with cash paid in lieu of fractional shares. The distribution ratio for the Preferred Stock portion of the Special Dividend was equivalent to $3.00 in initial liquidation preference per common share, for an aggregate issuance of approximately $1.3 billion aggregate liquidation preference. The dividend was distributed on September 14, 2020 to holders of record of Qurate Retail’s Series A and Series B common stock. Holders of the Preferred Stock are entitled to receive quarterly cash dividends at a fixed rate of 8.0% per year on a cumulative basis, beginning December 15, 2020 and thereafter on each of March 15, June 15, September 15 and December 15 during the term. The Preferred Stock is non-voting, except in limited circumstances as required by law, and subject to a mandatory redemption on March 15, 2031.

During the three and nine months ended September 30, 2020 the Company recognized a gain as a result of the sale of one of its alternative energy investments. The Company received total cash consideration of $272 million and recorded a gain of $224 million on the sale.

(2) Stock-Based Compensation

The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock (“RSAs”), restricted stock units (“RSUs”) and options to purchase shares of the Company’s common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

In connection with the Special Dividend, holders of RSAs and RSUs of Series A Qurate Retail common stock (“QRTEA”) outstanding at the close of business on the record date received:

a special cash dividend in the amount of $1.50 per share for each QRTEA RSA and RSU so held (“Cash Dividend”), and

ii.

a special dividend of 0.03 shares of newly issued Preferred Stock for each QRTEA RSA and RSU so held, with cash distributed in lieu of fractional shares. The Preferred Stock dividend related to QRTEA RSAs and RSUs was issued in the form of Preferred Stock RSAs and RSUs, corresponding to the original grant of either RSAs or RSUs.

The Cash Dividend for RSA holders was paid upon distribution. The Cash Dividend for RSU holders along with the Preferred Stock RSAs and RSUs are subject to the same vesting schedules as those applicable to the corresponding original QRTEA RSAs and RSUs.

Also in connection with the Special Dividend, holders of outstanding stock options and stock appreciation rights (“SARs”) to purchase shares of QRTEA or Series B Qurate Retail common stock (“QRTEB” and together with QRTEA, “QRTEA/B”) on the record date were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the stock options and SARs were granted. The adjustment to the exercise price and the number of shares subject to the original stock option or SAR award preserved:

the pre-Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

ii.

the pre-Special Dividend ratio of the exercise price to the market price of the corresponding original QRTEA/B stock option or SAR.

Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $19 million and $17 million of stock-based compensation during the three months ended September 30, 2020 and 2019, respectively, and $46 million and $54 million of stock-based compensation during the nine months ended September 30, 2020 and 2019, respectively.

The following table presents the number and weighted average GDFV of options granted by the Company during the nine months ended September 30, 2020:


	Nine months ended
	September 30, 2020
	Options Granted (000's)	Weighted Average GDFV

Series A Qurate Retail common stock, QVC and HSN employees (1)	4,166	$	1.94
Series A Qurate Retail common stock, Zulily employees (1)	618	$	1.94
Series A Qurate Retail common stock, Qurate Retail employees (2)	84	$	4.65

(1)

Grants vest semi-annually over four years.

(2)

Grants vest between three and four years.

During the nine months ended September 30, 2020, Qurate Retail granted to employees 9.8 million RSUs of QRTEA. The Series A RSUs had a GDFV of $4.66 per share and generally vest annually over four years. In connection with our Chairman’s employment agreement, during the nine months ended September 30, 2020, Qurate Retail granted 584 thousand performance-based RSUs of QRTEA to the Chairman. The Series A RSUs had a GDFV of $4.44 per share at the time they were granted and will cliff vest one year from the month of grant, subject to the satisfaction of certain performance objectives. During the nine months ended September 30, 2020, Qurate Retail also granted 725 thousand performance-based RSUs of QRTEA to its CEO. The Series A RSUs had a GDFV of $4.44 per share at the time they were granted and will cliff vest one year from the month of grant, subject to the satisfaction of certain performance objectives. Performance objectives, which are subjective, are considered in determining the timing and amount of compensation

I-12


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-6
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)		I-7
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited)		I-8
QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)		I-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		I-24
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		I-38
Item 4. Controls and Procedures.		I-38

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