Qurate Retail, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Long-Term Debt

Long-Term Debt

9 Months Ended

Sep. 30, 2012

Long-term Debt, Unclassified [Abstract]

Debt is summarized as follows:



		Outstanding principal at September 30, 2012		Carrying value
		Outstanding principal at September 30, 2012		September 30, 2012			December 31, 2011
		amounts in millions
Interactive Group
	5.7% Senior Notes due 2013	$	279	278			308
	8.5% Senior Debentures due 2029	287		285			285
	8.25% Senior Debentures due 2030	504		501			501
	QVC 7.125% Senior Secured Notes due 2017	500		500			500
	QVC 7.5% Senior Secured Notes due 2019	1,000		987			986
	QVC 7.375% Senior Secured Notes due 2020	500		500			500
	QVC 5.125% Senior Secured Notes due 2022	500		500			—
	QVC Bank Credit Facilities	851		851			434
	Other subsidiary debt	118		118			82
Total Interactive Group debt		4,539		4,520			3,596
Ventures Group
	3.125% Exchangeable Senior Debentures due 2023	1,138		1,586			1,275
	4% Exchangeable Senior Debentures due 2029	469		304			258
	3.75% Exchangeable Senior Debentures due 2030	460		276			235
	3.5% Exchangeable Senior Debentures due 2031	371		283			341
	3.25% Exchangeable Senior Debentures due 2031	414		388			334
Total Ventures Group debt		2,852		2,837			2,443

	Total consolidated Liberty debt	$	7,391	7,357			6,039
	Less current maturities			(1,551		)	(1,189	)
	Total long-term debt			$	5,806		4,850

QVC Bank Credit Facilities

The QVC Bank Credit Facilities provide for a $2 billion revolving credit facility, with a $250 million sub-limit for standby letters of credit. Availability under the QVC Bank Credit Facilities at September 30, 2012 was $1,149 million. The $851 million outstanding principal matures in September 2015. On August 8, 2012, $800 million was drawn on the QVC Bank Credit Facility in order for Liberty to have a sufficient cash balance to attribute cash to the Ventures Group at the date of the recapitalization of Liberty's common stock into two tracking stocks.

QVC was in compliance with all of its debt covenants at September 30, 2012.

In July 2012, QVC issued $500 million principal amount of 5.125% Senior Secured Notes due 2022 at par. The net proceeds from the issuance of these instruments were used to reduce the outstanding principal under the QVC Bank Credit Facilities and for general corporate purposes.

QVC Interest Rate Swap Arrangements

During the third quarter of 2009, QVC entered into seven forward interest rate swap arrangements with an aggregate notional amount of $1.8 billion. Such arrangements provide for payments that began in March 2011 through March 2013. QVC will make fixed payments at rates ranging from 2.98% to 3.67% and receive variable payments at 3 month LIBOR (0.39% at September 30, 2012). Additionally, during 2011, QVC entered into seven additional swap arrangements with an aggregate notional amount of $1.4 billion requiring QVC to make variable payments, that began in June 2011 through March 2013, at 3 month LIBOR (0.39% at September 30, 2012) and receive fixed payments, that began in June 2011 through March 2013, ranging from 0.57% to 0.95%. These swap arrangements do not qualify as cash flow hedges under GAAP. Accordingly, changes in the fair value of the swaps are reflected in realized and unrealized gains or losses on financial instruments in the accompanying condensed consolidated statements of operations.

Other Subsidiary Debt

Other subsidiary debt at September 30, 2012 is comprised of capitalized satellite transponder lease obligations and bank debt of certain subsidiaries.

Fair Value of Debt

Liberty estimates the fair value of its debt based on the quoted market prices for the same or similar issues or on the current rate offered to Liberty for debt of the same remaining maturities (level 2). The fair value of Liberty's publicly traded debt securities that are not reported at fair value in the accompanying condensed consolidated balance sheet at September 30, 2012 is as follows (amounts in millions):



Senior notes	$	285
Senior debentures	$	838
QVC senior secured notes	$	2,732

Due to the variable rate nature, Liberty believes that the carrying amount of its subsidiary debt not discussed above approximated fair value at September 30, 2012.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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