Annual report pursuant to Section 13 and 15(d)

Information About Liberty's Operating Segments

v3.6.0.2
Information About Liberty's Operating Segments
 12 Months Ended
Dec. 31, 2016
Information About Liberty's Operating Segments  
Information About Liberty's Operating Segments

(19)  Information About Liberty's Operating Segments

Liberty, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. Liberty identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Liberty's annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.

Liberty evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, Liberty reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.

Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). Liberty believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, certain purchase accounting adjustments, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Liberty generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the year ended December 31, 2016, Liberty has identified the following consolidated subsidiaries as its reportable segments:

·

QVC—consolidated subsidiary that markets and sells a wide variety of consumer products in the U.S. and several foreign countries, primarily by means of its televised shopping programs and via the Internet and mobile transactions through its domestic and international websites.

·

zulily – consolidated subsidiary that markets and sells unique products in the U.S. and several foreign countries through flash sales events, primarily through its desktop and mobile websites and mobile applications.

Liberty's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies.  The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the Company's summary of significant accounting policies.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

 

2016

 

2015

 

2014

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

Revenue

 

 OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QVC

 

$
8,682

 
1,840

 
8,743

 
1,894

 
8,801

 
1,910

 

zulily

 

 
1,547

 
112

 
426

 
21

 

NA

 

NA

 

Corporate and other (1)

 

 

 —

 
(16)

 

 —

 
(28)

 
1,227

 
29

 

Inter-segment eliminations

 

 
(10)

 

 —

 

 —

 

 —

 

 —

 

 —

 

Total QVC Group

 

 
10,219

 
1,936

 
9,169

 
1,887

 
10,028

 
1,939

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other (1)

 

 
428

 
3

 
820

 
59

 
471

 
26

 

Total Ventures Group

 

 
428

 
3

 
820

 
59

 
471

 
26

 

Consolidated Liberty

 

$
10,647

 
1,939

 
9,989

 
1,946

 
10,499

 
1,965

 

 

 

(1)

As discussed in note 2, on October 3, 2014, Liberty completed the reattribution from the QVC Group (formerly referred to as the Interactive Group, prior to the reattribution), to the Ventures Group its Digital Commerce businesses. The reattribution of the Digital Commerce businesses is presented on a prospective basis from the date of the reattribution in Liberty’s consolidated financial statements, with October 1, 2014 used as a proxy for the date of the reattribution. Accordingly, Revenue and Adjusted OIBDA attributable to the Digital Commerce businesses are included in the QVC Group for the period through September 30, 2014 and are included in the Ventures Group for the period beginning October 1, 2014.

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2016

 

December 31, 2015

 

 

    

 

 

    

Investments

    

Investment

    

 

    

 

    

Investments

    

 

 

 

 

Total

 

in

 

in Liberty

 

Capital

 

Total

 

in

 

Capital

 

 

 

assets

 

affiliates

 

Broadband

 

expenditures

 

assets

 

affiliates

 

expenditures

 

 

 

amounts in millions

 

QVC Group

    

 

 

    

 

    

 

    

 

    

 

    

 

    

 

 

QVC

 

$
11,545

 
40

 

 —

 
179

 
12,058

 
43

 
215

 

zulily

 

 
2,461

 

 —

 

 —

 
27

 
2,741

 

 —

 
3

 

Corporate and other

 

 
351

 
184

 

 —

 

 —

 
342

 
165

 

 —

 

Total QVC Group

 

 
14,357

 
224

 

 —

 
206

 
15,141

 
208

 
218

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 
5,998

 
357

 
3,161

 
27

 
6,039

 
506

 
40

 

Total Ventures Group

 

 
5,998

 
357

 
3,161

 
27

 
6,039

 
506

 
40

 

Consolidated Liberty

 

$
20,355

 
581

 
3,161

 
233

 
21,180

 
714

 
258

 

 

The following table provides a reconciliation of segment Adjusted OIBDA to operating income and earnings (loss) from continuing operations before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

    

2016

    

2015

    

2014

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$
1,939

 
1,946

 
1,965

 

Stock-based compensation

 

 
(97)

 
(127)

 
(108)

 

Depreciation and amortization

 

 
(874)

 
(703)

 
(669)

 

Operating income

 

 
968

 
1,116

 
1,188

 

Interest expense

 

 
(363)

 
(360)

 
(387)

 

Share of earnings (loss) of affiliates, net

 

 
(68)

 
(178)

 
(19)

 

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

 

 
1,175

 
114

 
(57)

 

Gains (losses) on transactions, net

 

 
9

 
110

 
74

 

Other, net

 

 
131

 
14

 
(24)

 

Earnings (loss) from continuing operations before income taxes

 

$
1,852

 
816

 
775

 

 

Revenue by Geographic Area

Revenue by geographic area based on the location of customers is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

    

2016

    

2015

    

2014

 

 

 

amounts in millions

 

United States

 

$
7,979

 
7,412

 
7,617

 

Japan

 

 
900

 
811

 
912

 

Germany

 

 
866

 
850

 
1,003

 

Other foreign countries

 

 
902

 
916

 
967

 

 

 

$
10,647

 
9,989

 
10,499

 

 

Long-lived Assets by Geographic Area

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

    

2016

    

2015

 

 

 

amounts in millions

 

United States

 

$
694

 
637

 

Japan

 

 
145

 
156

 

Germany

 

 
154

 
173

 

Other foreign countries

 

 
138

 
174

 

 

 

$
1,131

 
1,140