Quarterly report pursuant to Section 13 or 15(d)

Information About Liberty's Operating Segments

v2.4.1.9
Information About Liberty's Operating Segments
 3 Months Ended
Mar. 31, 2015
Information About Liberty's Operating Segments  
Information About Liberty's Operating Segments

(13)   Information About Liberty's Operating Segments

Liberty, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. Liberty 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 Liberty's annual pre-tax earnings.

Liberty 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, Liberty reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.

Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses excluding all stock-based compensation. Liberty believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures. 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 and restructuring 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. Liberty generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the three months ended March 31, 2015, Liberty has identified the following consolidated subsidiary as its reportable segment:

·

QVC - a consolidated subsidiary that markets and sells a wide variety of consumer products in the United States and several foreign countries, primarily by means of its televised shopping programs and via the Internet through its domestic and international websites and mobile applications.

Additionally, for presentation purposes, Liberty is providing financial information of the Digital Commerce businesses on an aggregated basis. The consolidated Digital Commerce businesses do not contribute significantly to the overall operations of Liberty on an individual basis; however, Liberty believes that on an aggregated basis they provide relevant information for users of these financial statements.  While these businesses may not meet the aggregation criteria under relevant accounting literature Liberty believes the information is relevant and helpful for a more complete understanding of the consolidated results.

·

Digital Commerce - the aggregation of certain consolidated subsidiaries that market and sell a wide variety of consumer products via the Internet.  Categories of consumer products include perishable and personal gift offerings (Provide), active lifestyle gear and clothing (Backcountry), fitness and health goods (Bodybuilding), digital invitations (Evite) and a drop-ship solutions company (CommerceHub).  Due to the FTD Transaction (discussed in note 8), the results of Provide are only included in the Company’s results through December 31, 2014.

Liberty'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 are the same as those described in the Company's summary of significant accounting policies in the Annual Report on Form 10-K for the year ended December 31, 2014.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31,

 

 

 

2015

 

2014

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$
1,938 

 
407 

 
1,986 

 
412 

 

Digital Commerce

 

 

NA

 

NA

 
448 

 
29 

 

Corporate and other

 

 

 —

 
(6)

 

 —

 
(4)

 

Total QVC Group

 

 
1,938 

 
401 

 
2,434 

 
437 

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Digital Commerce

 

 
276 

 
22 

 

NA

 

NA

 

Corporate and other

 

 

 —

 
(4)

 

 —

 
(3)

 

Total Ventures Group

 

 
276 

 
18 

 

 —

 
(3)

 

Consolidated Liberty

 

$
2,214 

 
419 

 
2,434 

 
434 

 

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2015

 

 

    

Total

    

Investments

    

Capital

 

 

 

assets

 

In affiliates

 

expenditures

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

QVC

 

$
12,074 

 
46 

 
31 

 

Corporate and other

 

 
407 

 
147 

 

 —

 

Total QVC Group

 

 
12,481 

 
193 

 
31 

 

Ventures Group

 

 

 

 

 

 

 

 

Digital Commerce

 

 
1,011 

 
352 

 
13 

 

Corporate and other

 

 
4,715 

 
874 

 

 —

 

Total Ventures Group

 

 
5,726 

 
1,226 

 
13 

 

Inter-group eliminations

 

 
(205)

 

 —

 

—

 

Consolidated Liberty

 

$
18,002 

 
1,419 

 
44 

 

 

The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2015

    

2014

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$
419 

 
434 

 

Stock-based compensation

 

 
(15)

 
(25)

 

Depreciation and amortization

 

 
(168)

 
(163)

 

Interest expense

 

 
(95)

 
(95)

 

Share of earnings (loss) of affiliates, net

 

 
3 

 
(2)

 

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

 

 
(4)

 
(25)

 

Other, net

 

 
15 

 
7 

 

Earnings (loss) before income taxes

 

$
155 

 
131