Annual report pursuant to Section 13 and 15(d)

Information about QVC's Operating Segments

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Information about QVC's Operating Segments
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
Segment reporting disclosure Information about QVC's Operating Segments and Geographical Data
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. For segment reporting purposes, the Company defines Adjusted OIBDA, as net revenue less cost of goods sold (excluding fire related costs, net), operating expenses, and selling, general and administrative expenses (excluding expenses related to the closure of operations in France ("transaction related costs") and stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments by identifying those items that are not directly a reflection of each segment's performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among the Company's businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization, fire related costs, net, stock-based compensation and transaction related costs 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.

The Company's chief operating decision maker ("CODM") is the Company's Chief Executive Officer who has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, QxH, and QVC-International. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level (see below).
During the first quarter of 2019, the Company changed its reportable operating segments to combine QVC-U.S. and HSN into one reportable segment called QxH and presented prior period information to conform with this change. As a result of the QRG Initiatives and additional synergies between QVC-U.S. and HSN, the CODM began reviewing the QVC-U.S. and HSN information as one business unit during the first quarter.
For the year ended December 31, 2021, QVC has identified QxH and QVC-International as its two reportable segments. Both 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.
QVC allocates certain corporate costs for management reporting purposes from its QxH segment to the QVC-International segment. These management cost allocations are related to certain functions such as merchandising, commerce platforms, information technology, human resources, legal, finance, brand and communications, corporate development and administration that support all of QVC’s operations. For the years ended December 31, 2021, 2020 and 2019, the costs allocated to QVC-International totaled $37 million, $33 million and $27 million, respectively.
Performance measures
Years ended December 31,
2021 2020 2019
(in millions) Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA
QxH $ 8,277  1,439  8,505  1,547  8,277  1,536 
QVC-International 3,077  562  2,967  510  2,709  446 
Consolidated QVC $ 11,354  2,001  11,472  2,057  10,986  1,982 
Other information
Years ended December 31,
2021 2020 2019
(in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization
QxH $ 105  256  116  270  113  269 
QVC-International 54  14  55  12  73  13 
Consolidated QVC $ 159  270  171  282  186  282 
Years ended December 31,
2021 2020
(in millions) Total
assets		 Capital
expenditures		 Total
assets		 Capital
expenditures
QxH $ 13,962  169  14,103  182 
QVC-International 2,226  41  2,455  36 
Consolidated QVC $ 16,188  210  16,558  218 
Property and equipment, net of accumulated depreciation, by segment were as follows:
December 31,
(in millions) 2021 2020
QxH $ 610  771 
QVC-International 356  407 
Consolidated QVC $ 966  1,178 
The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
Years ended December 31,
(in millions) 2021 2020 2019
Adjusted OIBDA $ 2,001  2,057  1,982 
Fire related costs, net
 (21) —  — 
Impairment loss —  —  (147)
Transaction related costs —  —  (1)
Stock-based compensation (44) (37) (39)
Depreciation and amortization (429) (453) (468)
Operating Income 1,507  1,567  1,327 
Equity in losses of investee (2) (30) — 
Gains (losses) on financial instruments 8  3  (5)
Interest expense, net (249) (257) (240)
Foreign currency (loss) gain (9) 6  (3)
Loss on extinguishment of debt (7) (42) — 
Other Income 11  —  — 
Income before income taxes $ 1,259  1,247  1,079 
The following table summarizes net revenues based on revenues generated by subsidiaries located within the identified geographic area:
Years ended December 31,
(in millions) 2021 2020 2019
United States $ 8,277  8,505  8,277 
Japan 1,167  1,132  1,028 
Germany 1,027  978  890 
United Kingdom 722  696  640 
Other countries 161  161  151 
Consolidated QVC $ 11,354  11,472  10,986 
The following table summarizes property and equipment, net of accumulated depreciation, based on physical location:
December 31,
(in millions) 2021 2020
United States $ 610  771 
Germany 133  150 
Japan 123  149 
United Kingdom 71  75 
Other countries 29  33 
Consolidated QVC $ 966  1,178