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Table of Contents

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 March 31, 2024

OR

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: (720875-5300

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 April 30, 2024 was:

Series A common stock

387,931,205

Series B common stock

8,927,840

Table of Contents

Table of Contents

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-9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-22

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

I-34

Item 4. Controls and Procedures.

I-34

PART II—OTHER INFORMATION

II-1

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-1

Item 5. Other Information

II-1

Item 6. Exhibits

II-2

SIGNATURES

II-3

I-2

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

    

March 31,

    

December 31,

 

2024

2023

amounts in millions

Assets

Current assets:

Cash and cash equivalents

$

1,102

 

1,121

Trade and other receivables, net of allowance for credit losses of $99 million and $102 million, respectively

 

980

 

1,308

Inventory, net

 

1,134

 

1,044

Other current assets

 

170

 

209

Total current assets

 

3,386

 

3,682

Property and equipment, net

 

496

 

512

Intangible assets not subject to amortization (note 5):

Goodwill

 

3,141

 

3,164

Trademarks

 

2,698

 

2,698

 

5,839

 

5,862

Intangible assets subject to amortization, net (note 5)

 

495

 

526

Operating lease right-of-use assets

629

635

Other assets, at cost, net of accumulated amortization

 

136

 

151

Total assets

$

10,981

 

11,368

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

March 31,

December 31,

 

2024

2023

 

amounts in millions,

 

except share amounts

 

Liabilities and Equity

    

    

    

    

Current liabilities:

Accounts payable

$

789

 

895

Accrued liabilities

 

715

 

983

Current portion of debt, $354 million and $219 million measured at fair value (note 6)

 

939

 

642

Other current liabilities

 

100

 

97

Total current liabilities

 

2,543

 

2,617

Long-term debt (note 6)

 

4,552

 

4,698

Deferred income tax liabilities

 

1,504

 

1,531

Preferred stock (note 7)

1,272

1,270

Operating lease liabilities

617

615

Other liabilities

 

142

 

148

Total liabilities

 

10,630

 

10,879

Equity

Stockholders' equity:

Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 387,931,205 shares at March 31, 2024 and 383,047,720 shares at December 31, 2023

 

4

 

4

Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,927,840 shares at March 31, 2024 and 8,700,380 shares at December 31, 2023

 

 

Series C common stock, $.01 par value. Authorized 4,000,000,000 shares; no shares issued

Additional paid-in capital

 

107

 

99

Accumulated other comprehensive earnings (loss), net of taxes

 

(51)

 

86

Retained earnings

 

195

 

196

Total stockholders' equity

 

255

 

385

Noncontrolling interests in equity of subsidiaries

 

96

 

104

Total equity

 

351

 

489

Commitments and contingencies (note 8)

Total liabilities and equity

$

10,981

 

11,368

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

 

March 31,

 

    

2024

    

2023

 

amounts in millions, except per share amounts

 

Total revenue, net

$

2,342

 

2,644

Operating costs and expenses:

Cost of goods sold (exclusive of depreciation shown separately below)

 

1,511

 

1,809

Operating expense

 

180

 

194

Selling, general and administrative, including stock-based compensation (note 2)

 

408

 

478

Depreciation and amortization

 

99

 

100

Gain on sale of assets and leaseback transactions (note 8)

(1)

(113)

 

2,197

 

2,468

Operating income (loss)

 

145

 

176

Other income (expense):

Interest expense

 

(117)

 

(94)

Dividend and interest income

12

11

Realized and unrealized gains (losses) on financial instruments, net (note 4)

 

(7)

 

(32)

Other, net

 

(2)

 

4

 

(114)

 

(111)

Earnings (loss) before income taxes

 

31

 

65

Income tax (expense) benefit

 

(23)

 

(32)

Net earnings (loss)

8

33

Less net earnings (loss) attributable to the noncontrolling interests

 

9

 

13

Net earnings (loss) attributable to Qurate Retail, Inc. shareholders

$

(1)

 

20

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):

$

 

0.05

Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):

$

 

0.05

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

 

March 31,

 

    

2024

    

2023

 

amounts in millions

 

Net earnings (loss)

$

8

 

33

Other comprehensive earnings (loss), net of taxes:

Foreign currency translation adjustments

 

(44)

 

20

Recognition of previously unrealized losses (gains) on debt, net

(19)

Credit risk on fair value debt instruments gains (loss)

(99)

129

Other comprehensive earnings (loss)

 

(143)

 

130

Comprehensive earnings (loss)

 

(135)

 

163

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

3

 

12

Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders

$

(138)

 

151

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)

Three months ended

 

March 31,

 

    

2024

    

2023

 

amounts in millions

 

Cash flows from operating activities:

Net earnings (loss)

$

8

 

33

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization

 

99

 

100

Stock-based compensation

 

16

 

16

Realized and unrealized (gains) losses on financial instruments, net

 

7

 

32

Gain on sale of assets and sale leaseback transactions

(1)

(113)

Gain on insurance proceeds, net of fire related costs

(17)

Insurance proceeds received for operating expenses and business interruption losses

37

Deferred income tax expense (benefit)

 

(2)

 

(2)

Other, net

 

4

 

9

Changes in operating assets and liabilities

Decrease (increase) in accounts receivable

 

313

 

294

Decrease (increase) in inventory

(94)

25

Decrease (increase) in prepaid expenses and other assets

45

48

(Decrease) increase in trade accounts payable

(101)

(167)

(Decrease) increase in accrued and other liabilities

(268)

(279)

Net cash provided (used) by operating activities

 

26

 

16

Cash flows from investing activities:

Capital expenditures

 

(40)

 

(54)

Expenditures for television distribution rights

(2)

(38)

Cash proceeds from dispositions of investments

6

1

Proceeds from sale of fixed assets

6

198

Insurance proceeds received for fixed asset loss

18

Payments for settlements of financial instruments

(179)

Proceeds from settlements of financial instruments

167

Other investing activities, net

(1)

(1)

Net cash provided (used) by investing activities

 

(31)

 

112

Cash flows from financing activities:

Borrowings of debt

 

1,570

 

677

Repayments of debt

 

(1,555)

 

(803)

Dividends paid to noncontrolling interest

 

(11)

 

(12)

Dividends paid to common shareholders

(4)

(7)

Indemnification agreement settlement

24

Other financing activities, net

(2)

(1)

Net cash provided (used) by financing activities

 

(2)

 

(122)

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

 

(12)

 

4

Net increase (decrease) in cash, cash equivalents and restricted cash

 

(19)

 

10

Cash, cash equivalents and restricted cash at beginning of period

 

1,136

 

1,285

Cash, cash equivalents and restricted cash at end of period

$

1,117

 

1,295

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:

March 31,

December 31,

2024

2023

in millions

Cash and cash equivalents

$

1,102

1,121

Restricted cash included in other current assets

15

15

Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows

$

1,117

1,136

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, 2024

$

4

99

86

196

104

489

Net earnings (loss)

 

(1)

9

8

Other comprehensive earnings (loss)

 

(137)

(6)

(143)

Stock-based compensation

9

9

Distribution to noncontrolling interest

(11)

(11)

Withholding taxes on net share settlements of stock-based compensation

(2)

(2)

Other

1

1

Balance at March 31, 2024

$

4

107

(51)

195

96

351

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, 2023

$

4

53

18

337

113

525

Net earnings (loss)

 

20

13

33

Other comprehensive earnings (loss)

 

131

(1)

130

Stock-based compensation

14

14

Distribution to noncontrolling interest

(12)

(12)

Withholding taxes on net share settlements of stock-based compensation

(1)

(1)

Other

1

1

2

Balance at March 31, 2023

$

4

67

149

358

113

691

See accompanying notes to condensed consolidated financial statements.

I-8

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. 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. (“CBI”), and other cost 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 and CBI, 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, 2023, 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, 2023 (the “2023 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.    

Qurate Retail has entered into certain agreements with Liberty Media Corporation ("LMC"), 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”) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty 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 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). Following a merger between Liberty Broadband Corporation (“Liberty Broadband”) and GCI Liberty, Liberty Broadband has assumed the tax sharing agreement.

In December 2019, the Company entered into an amended services agreement. Under the amended services agreement, components of LMC’s Chief Executive Officer’s compensation are either paid directly to him or reimbursed to LMC, in each case, based on allocations set forth in the amended services agreement, currently set at 10% for the Company but subject to adjustment on an annual basis and upon the occurrence of certain events.

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

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Qurate Retail with certain general and administrative services including legal, tax, accounting, treasury, information technology, cybersecurity 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 $3 million and $2 million was reimbursable to LMC for the three months ended March 31, 2024 and 2023, respectively. Qurate Retail had a cumulative tax sharing payable to LMC and Liberty Broadband in the amount of approximately $16 million as of both March 31, 2024 and December 31, 2023, included in other liabilities in the condensed consolidated balance sheets. 

Zulily, LLC (“Zulily”) was a wholly owned subsidiary of Qurate Retail until its divestiture on May 24, 2023. Qurate Retail recognized a loss on the divestiture of $64 million in the second quarter of 2023.  Zulily is included in Corporate and other through May 23, 2023 and is not presented as a discontinued operation as the disposition did not represent a strategic shift that had a major effect on Qurate Retail’s operations and financial results.

Included in revenue in the accompanying condensed consolidated statements of operations is $192 million for the three months ended March 31, 2023 related to Zulily. Included in net earnings (loss) in the accompanying condensed consolidated statement of operations is a loss of $35 million for the three months ended March 31, 2023 related to Zulily.

(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 RSAs) 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.

Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $16 million of stock-based compensation during both of the three months ended March 31, 2024 and 2023.

Qurate Retail—RSUs

During the three months ended March 31, 2024 and in connection with their employment agreements, Qurate Retail granted 3.7 million performance-based, stock-settled RSUs of Series A Qurate Retail common stock (“QRTEA”) to our President and Chief Executive Officer and 296 thousand performance-based, stock-settled RSUs of Series B Qurate Retail common stock (“QRTEB”) to our Chairman of the Board.  Such RSUs had a GDFV of $1.23 per share and $5.01 per share, respectively, and vest one year from the month of grant, subject to the satisfaction of certain performance objectives.

The following table presents the number of cash-settled RSUs granted by the Company during the three months ended March 31, 2024:

Three months ended

March 31, 2024

RSUs Granted (000's)

QRTEA time-based RSUs, subsidiary employees (1)

20,945

QRTEA performance-based RSUs, subsidiary employees (2)

20,305

QRTEA performance-based RSUs, Qurate Retail employees (3)

921

(1)Grants mainly vest equally over three years.
(2)Grants vest equally over three years, subject to the satisfaction of certain performance objectives.
(3)Grants vest one year from the month of grant, subject to the satisfaction of certain performance objectives.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

For cash-settled RSUs, the liability and compensation expense related to such awards is adjusted at the end of each reporting period based on the closing market price of QRTEA on the last trading day of the quarter.

For awards that are performance-based, performance objectives, which are subjective, are considered in determining the timing and amount of compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The probability of satisfying the performance objectives is assessed at the end of each reporting period.

Qurate Retail—Outstanding Awards

The following tables present the number and weighted average exercise price ("WAEP") of the options to purchase Qurate Retail common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the options.

    

    

    

Weighted

    

Aggregate

 

average

intrinsic

Series A

remaining

value

(000's)

WAEP

life

(millions)

Options outstanding at January 1, 2024

 

23,530

$

7.72

Granted

 

$

Exercised

 

$

Forfeited/Cancelled

 

(2,849)

$

10.87

Options outstanding at March 31, 2024

 

20,681

$

7.29

 

2.5

years

$

Options exercisable at March 31, 2024

 

18,333

$

7.13

 

2.4

years

$

    

    

    

Weighted

    

Aggregate

 

average

intrinsic

Series B

remaining

value

(000's)

WAEP

life

(millions)

Options outstanding at January 1, 2024

 

723

$

12.35

Granted

 

$

Exercised

 

$

Forfeited/Cancelled

$

Options outstanding at March 31, 2024

 

723

$

12.35

 

0.6

years

$

Options exercisable at March 31, 2024

 

723

$

12.35

 

0.6

years

$

The following table presents the number and weighted average GDFV of stock-settled RSUs granted to certain officers, employees and directors of the Company.

Weighted

Weighted

Series A

Average

Series B

Average

(000's)

GDFV

(000's)

GDFV

RSUs outstanding at January 1, 2024

 

14,691

$

3.30

353

$

5.51

Granted

 

3,739

$

1.23

296

$

5.01

Vested

 

(5,612)

$

3.73

(353)

$

4.85

Forfeited/Cancelled

 

(1,115)

$

2.15

$

RSUs outstanding at March 31, 2024

 

11,703

$

2.54

296

$

5.01

 

As of March 31, 2024, Qurate Retail also had 1.1 million QRTEB RSAs outstanding with a GDFV of $13.65 per share.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

As of March 31, 2024, the total unrecognized compensation cost related to unvested Awards was approximately $90 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.7 years.

As of March 31, 2024, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately 20.7 million shares of QRTEA and 0.7 million shares of QRTEB.

(3)   Earnings (Loss) Per Common Share

Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding ("WASO") for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.

Excluded from diluted EPS for the three months ended March 31, 2024 and 2023 are 21 million and 30 million potential common shares, respectively, because their inclusion would have been antidilutive.  

Qurate Retail Common Stock

    

Three months ended

March 31,

2024

2023

number of shares in millions

Basic WASO

 

392

383

Potentially dilutive shares

 

1

1

Diluted WASO

 

393

384

(4)   Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

The Company's assets and liabilities measured at fair value are as follows:

Fair Value Measurements at

Fair Value Measurements at

 

March 31, 2024

December 31, 2023

 

    

    

Quoted

    

    

    

Quoted

    

 

prices

prices

 

in active

Significant

in active

Significant

 

markets for

other

markets for

other

 

identical

observable

identical

observable

 

assets

inputs

assets

inputs

 

Description

Total

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

 

amounts in millions

 

Cash equivalents

$

820

 

820

 

 

726

 

726

 

Debt

$

354

 

 

354

 

219

 

 

219

The majority of the Company's Level 2 financial assets and liabilities are primarily debt instruments and derivative instruments with quoted market prices that are not considered to be traded on "active markets," as defined in GAAP. The fair values for such instruments are derived from a typical model using observable market data as the significant inputs.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:

Three months ended

 

March 31,

 

    

2024

    

2023

 

amounts in millions

 

Equity securities

(2)

(3)

Exchangeable senior debentures

 

(5)

 

(31)

Other financial instruments

2

$

(7)

 

(32)

The Company has elected to account for its exchangeable debt using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statement of operations are primarily due to market factors primarily driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss).  During the three months ended March 31, 2023, the Company recognized $25 million of previously unrecognized gains, which was recognized through realized and unrealized gains (losses) on financial instruments, net on the condensed consolidated statement of operations. The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk was a loss of $129 million and a gain of $169 million for the three months ended March 31, 2024 and 2023, respectively.  The cumulative change was a gain of $410 million as of March 31, 2024, net of the recognition of previously unrecognized gains and losses.

(5)   Intangible Assets

Goodwill

Changes in the carrying amount of goodwill are as follows:

    

QxH

QVC Int'l

CBI

    

Total

 

amounts in millions

 

Balance at January 1, 2024

$

2,367

785

12

 

3,164

Foreign currency translation adjustments

 

(23)

 

(23)

Balance at March 31, 2024

$

2,367

762

12

 

3,141

Intangible Assets Subject to Amortization

Amortization expense for intangible assets with finite useful lives was $77 million and $74 million for the three months ended March 31, 2024 and 2023, respectively. Based on its amortizable intangible assets as of March 31, 2024, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions):

Remainder of 2024

    

$

215

2025

$

171

2026

$

103

2027

$

8

2028

$

I-13

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

(6)   Long-Term Debt

Debt is summarized as follows:

Outstanding

 

principal at

Carrying value

 

    

March 31, 2024

    

March 31, 2024

    

December 31, 2023

 

amounts in millions

 

Corporate level debentures

8.5% Senior Debentures due 2029

$

287

 

286

 

286

8.25% Senior Debentures due 2030

 

505

 

503

 

503

4% Exchangeable Senior Debentures due 2029

352

162

101

3.75% Exchangeable Senior Debentures due 2030

428

192

118

Subsidiary level notes and facilities

QVC 4.85% Senior Secured Notes due 2024

 

 

 

423

QVC 4.45% Senior Secured Notes due 2025

586

585

585

QVC 4.75% Senior Secured Notes due 2027

575

575

575

QVC 4.375% Senior Secured Notes due 2028

500

500

500

QVC 5.45% Senior Secured Notes due 2034

400

399