Annual report pursuant to Section 13 and 15(d)

Information About Qurate Retail's Operating Segments

v3.20.4
Information About Qurate Retail's Operating Segments
12 Months Ended
Dec. 31, 2020
Information About Qurate Retail's Operating Segments  
Information About Qurate Retail's Operating Segments

(16) 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 on-line 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. The segment presentation for prior periods has been conformed to the current period segment presentation.

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

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding all stock-based compensation and transaction related costs). Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. 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 year ended December 31, 2020, Qurate Retail has identified the following consolidated subsidiaries as its reportable segments:

QxH– QVC U.S. and HSN market and sell a wide variety of consumer products in the United States, primarily by means of their televised shopping programs and via the Internet through their websites and mobile applications.
QVC International –  QVC International markets and sells a wide variety of consumer products in several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile applications.
Zulily – Zulily markets and sells a wide variety of consumer products in the United States and several foreign countries through flash sales events, primarily through its app, mobile and desktop 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 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,

2020

2019

2018

    

    

Adjusted

    

    

Adjusted

    

    

Adjusted

Revenue

OIBDA

Revenue

OIBDA

Revenue

 OIBDA

amounts in millions

QxH

$

8,505

 

1,547

 

8,277

 

1,536

 

8,544

 

1,630

QVC International

2,967

510

2,709

446

2,738

429

Zulily

1,636

83

1,571

48

1,817

108

Corporate and other

 

1,070

 

58

 

901

 

(1)

 

973

 

(13)

Inter-segment eliminations

(1)

(2)

Consolidated Qurate Retail

$

14,177

 

2,198

 

13,458

 

2,029

 

14,070

 

2,154

Other Information

December 31, 2020

December 31, 2019

 

  

  

  

  

 

Total

Capital

Total

Capital

 

assets

expenditures

assets

expenditures

 

 

amounts in millions

QxH

$

12,393

 

182

 

12,774

 

257

QVC International

2,455

36

2,268

34

Zulily

1,049

23

1,136

23

Corporate and other

 

1,102

 

16

 

1,127

 

11

Consolidated Qurate Retail

$

16,999

 

257

 

17,305

 

325

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

Years ended December 31,

 

    

2020

    

2019

    

2018

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

$

2,198

 

2,029

 

2,154

Stock-based compensation

 

(64)

 

(71)

 

(88)

Depreciation and amortization

 

(562)

 

(606)

 

(637)

Transaction related costs

(1)

(72)

Impairment of intangible assets and long lived assets

(1,167)

(33)

Operating income

1,572

 

184

 

1,324

Interest expense

 

(408)

 

(374)

 

(381)

Share of earnings (loss) of affiliates, net

 

(156)

 

(160)

 

(162)

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

 

(110)

 

(251)

 

76

Gains (losses) on transactions, net

 

224

 

(1)

 

1

Tax sharing income (expense) with Liberty Broadband

(39)

(26)

32

Other, net

 

(32)

 

6

 

(7)

Earnings (loss) from continuing operations before income taxes

$

1,051

 

(622)

 

883

Revenue by Geographic Area

The following table summarizes net revenue generated by subsidiaries located within the identified geographic areas:

Years ended December 31,

 

    

2020

    

2019

    

2018

 

amounts in millions

 

United States

$

11,119

 

10,666

 

11,233

Japan

 

1,132

 

1,028

 

947

Germany

 

978

 

890

 

943

Other foreign countries

 

948

 

874

 

947

$

14,177

 

13,458

 

14,070

Long-lived Assets by Geographic Area

December 31,

 

    

2020

    

2019

 

amounts in millions

 

United States

$

893

 

935

Japan

 

149

 

153

Germany

 

150

 

154

Other foreign countries

 

108

 

109

$

1,300

 

1,351