Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v2.4.0.8
Information about QVC's Operating Segments
 3 Months Ended
Mar. 31, 2014
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. 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,
 
 
2014
 
2013
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
1,305

301

1,297

291

QVC-Japan
234

47

256

54

QVC-Germany
250

39

250

43

QVC-U.K.
165

27

140

19

QVC-Italy
32

(2
)
31

(3
)
Consolidated QVC
$
1,986

412

1,974

404


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,
 
 
2014
 
2013
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
13

94

13

88

QVC-Japan
5

2

3

2

QVC-Germany
8

11

8

9

QVC-U.K.
4

3

4

3

QVC-Italy
3

1

2

2

Consolidated QVC
$
33

111

30

104


 
March 31,
 
December 31,
 
 
2014
 
2013
 
(in millions)
Total
assets

Capital
expenditures, net

Total
assets

Capital
expenditures, net

QVC-U.S.
$
10,136

16

10,322

123

QVC-Japan
741

(2
)
732

16

QVC-Germany
1,137

4

1,109

28

QVC-U.K.
624

2

613

16

QVC-Italy
282

9

280

28

Consolidated QVC
$
12,920

29

13,056

211


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

December 31,

(in millions)
2014

2013

QVC-U.S.
$
439

448

QVC-Japan
219

220

QVC-Germany
240

244

QVC-U.K.
127

129

QVC-Italy
71

65

Consolidated QVC
$
1,096

1,106


The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
 
Three months ended March 31,
 
(in millions)
2014

2013

Adjusted OIBDA
$
412

404

Stock‑based compensation
(8
)
(10
)
Depreciation and amortization
(144
)
(134
)
Equity in (losses) earnings of investee
(1
)
1

Gains on financial instruments
—

12

Interest expense, net
(62
)
(63
)
Foreign currency loss
(1
)
(1
)
Loss on extinguishment of debt
—

(41
)
Income before income taxes
$
196

168