Registration of securities issued in business combination transactions

Information about QVC's Operating Segments

v2.4.0.8
Information about QVC's Operating Segments
 3 Months Ended 12 Months Ended
Mar. 31, 2013
Dec. 31, 2012
Segment Reporting [Abstract]    
Segment Reporting Disclosure
Information about QVC's Operating Segments
Each of the Company's operating segments are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the internet and mobile applications in certain markets. The Company has operations in the United States, Japan, Germany, the United Kingdom and Italy. As such, the Company has identified five reportable segments: the United States, Japan, Germany, the United Kingdom and Italy.
The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per subscriber equivalent. The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments, including the ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among our businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization and stock-based compensation, that are included in the measurement of operating income pursuant to U.S. 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 U.S. GAAP.
Performance measures
 
Three months ended March 31,
 
Three months ended March 31,
 
 
2013
 
2012
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
1,297

291

1,240

270

QVC-Japan
256

54

289

63

QVC-Germany
250

43

247

46

QVC-U.K.
140

19

140

20

QVC-Italy
31

(3
)
16

(9
)
Consolidated QVC
$
1,974

404

1,932

390


Net revenue amounts by product category are not available from our general purpose financial statements.
Other information
 
Three months ended March 31,
 
Three months ended March 31,
 
 
2013
 
2012
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
13

88

13

80

QVC-Japan
3

2

4

3

QVC-Germany
8

9

9

8

QVC-U.K.
4

3

3

3

QVC-Italy
2

2

2

2

Consolidated QVC
$
30

104

31

96


 
March 31,
 
December 31,
 
 
2013
 
2012
 
(in millions)
Total
assets

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
10,216

14

10,541

88

QVC-Japan
819

11

969

105

QVC-Germany
1,043

5

1,064

25

QVC-U.K.
581

2

619

22

QVC-Italy
239

1

245

6

Consolidated QVC
$
12,898

33

13,438

246


Long-lived assets, net of accumulated depreciation, by geographic area were as follows:
 
March 31,

December 31,

(in millions)
2013

2012

QVC-U.S.
$
422

429

QVC-Japan
264

280

QVC-Germany
235

247

QVC-U.K.
119

128

QVC-Italy
44

47

Consolidated QVC
$
1,084

1,131


The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
 
Three months ended March 31,
 
(in millions)
2013

2012

Adjusted OIBDA
$
404

390

Stock‑based compensation
(10
)
(5
)
Depreciation and amortization
(134
)
(127
)
Equity in earnings of investee
1

—

Gain on financial instruments
12

11

Interest expense
(63
)
(55
)
Interest income
—

1

Foreign currency (loss) gain
(1
)
6

Loss on extinguishment of debt
(41
)
—

Income before income taxes
$
168

221

(17) Information about QVC's Operating Segments
Each of the Company's operating segments are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the internet and mobile applications in certain markets. The Company has operations in the United States, the United Kingdom, Germany, Japan and Italy. As such, the Company has identified five reportable segments: the United States, the United Kingdom, Germany, Japan and Italy. Beginning in 2011, management for each of these operations reports to the chief operating decision maker, whereas the Company previously managed its operations and reported results under two business segments: Domestic and International.
The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per subscriber equivalent. The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments, including the ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among our businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization and stock-based compensation, that are included in the measurement of operating income pursuant to U.S. 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 U.S. GAAP.
Performance measures
 
Years ended December 31,
 

2012
 
2011
 
2010
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
5,585

1,292

5,412

1,225

5,241

1,191

QVC-Japan
1,247

279

1,127

241

1,015

224

QVC-Germany
956

179

1,068

199

956

181

QVC-U.K.
641

104

626

111

599

109

QVC-Italy
87

(26
)
35

(43
)
2

(32
)
Consolidated QVC
$
8,516

1,828

8,268

1,733

7,813

1,673

Net revenue amounts by product category are not available from our general purpose financial statements.
Other information
 
Years ended December 31,
 

2012
 
2011
 
2010
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
51

338

52

376

55

334

QVC-Japan
16

10

29

12

24

14

QVC-Germany
31

33

33

36

32

36

QVC-U.K.
21

12

13

11

14

11

QVC-Italy
7

7

8

4

3

—

Consolidated QVC
$
126

400

135

439

128

395

 
December 31,
 

2012
 
2011
 
(in millions)
Total
assets

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
10,541

88

10,682

101

QVC-Japan
969

105

959

63

QVC-Germany
1,064

25

1,112

35

QVC-U.K.
619

22

577

53

QVC-Italy
245

6

240

7

Consolidated QVC
$
13,438

246

13,570

259

Long-lived assets, net of accumulated depreciation, by geographic area were as follows:
 
December 31,
 
(in millions)
2012

2011

QVC-U.S.
$
429

432

QVC-Japan
280

224

QVC-Germany
247

233

QVC-U.K.
128

143

QVC-Italy
47

52

Consolidated QVC
$
1,131

1,084

The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
 
Years ended December 31,
 
(in millions)
2012

2011

2010

Consolidated Adjusted OIBDA
$
1,828

1,733

1,673

Stock‑based compensation
(34
)
(22
)
(18
)
Depreciation and amortization
(526
)
(574
)
(523
)
(Loss) gain on investments
(4
)
(2
)
105

Gain on financial instruments
48

50

40

Interest expense
(235
)
(231
)
(415
)
Interest income
2

2

2

Foreign currency gain (loss)
2

(2
)
(8
)
Other
—

—

(23
)
Income before income taxes
$
1,081

954

833