Quarterly report pursuant to Section 13 or 15(d)

Information About Liberty's Operating Segments

v3.8.0.1
Information About Liberty's Operating Segments
3 Months Ended
Mar. 31, 2018
Information About Liberty's Operating Segments  
Information About Liberty's Operating Segments

 

(13)   Information About Qurate Retail's Operating Segments

Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and online commerce industries. Qurate Retail 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 Qurate Retail's annual pre-tax earnings.

Qurate Retail 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 and revenue or sales per customer equivalent. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, number of units shipped, conversion rates and active customers, as appropriate.

Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses excluding all stock-based compensation. Qurate Retail 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, transaction related costs (including restructuring, integration, and advisory fees), 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. Qurate Retail generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the three months ended March 31, 2018, Qurate Retail has identified the following consolidated subsidiaries as its reportable segments:

·

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

·

HSN – a consolidated subsidiary that markets and sells a wide variety of consumer products primarily in the United States by means of its televised shopping programs and via the Internet and mobile transactions through its domestic websites.

·

zulily – a consolidated subsidiary that markets and sells a wide variety of consumer products in the United States and several foreign countries through flash sales events, primarily through its desktop, mobile and app experiences.

Qurate Retail'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 are the same as those described in the Company's Summary of Significant Accounting Policies in the Annual Report on Form 10-K for the year ended December 31, 2017.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31,

 

 

 

2018

 

2017

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC

 

$

2,093

 

433

 

1,965

 

434

 

HSN

 

 

509

 

43

 

NA

 

NA

 

zulily

 

 

419

 

27

 

359

 

15

 

Corporate and other

 

 

209

 

(11)

 

 4

 

(12)

 

Inter-segment eliminations

 

 

 —

 

 —

 

(1)

 

 —

 

Consolidated Qurate Retail

 

$

3,230

 

492

 

2,327

 

437

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

March 31, 2018

 

 

 

Total assets

 

Investments in affiliates

 

Capital expenditures

 

 

 

amounts in millions

 

QVC

 

$

11,484

 

41

 

36

 

HSN

 

 

2,721

 

 —

 

 2

 

zulily

 

 

2,283

 

 —

 

 4

 

Corporate and other

 

 

2,227

 

163

 

 5

 

Consolidated Qurate Retail

 

$

18,715

 

204

 

47

 

 

 

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

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2018

    

2017

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$

492

 

437

 

Stock-based compensation

 

 

(23)

 

(16)

 

Depreciation and amortization

 

 

(163)

 

(208)

 

Transaction related costs

 

 

(12)

 

 —

 

Operating income (loss)

 

 

294

 

213

 

Interest expense

 

 

(98)

 

(90)

 

Share of earnings (loss) of affiliates, net

 

 

(14)

 

(27)

 

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

 

 

99

 

175

 

Other, net

 

 

 4

 

 1

 

Earnings (loss) before income taxes

 

$

285

 

272