Annual report pursuant to Section 13 and 15(d)

Information About Liberty's Operating Segments

v3.3.1.900
Information About Liberty's Operating Segments
 12 Months Ended
Dec. 31, 2015
Information About Liberty's Operating Segments  
Information About Liberty's Operating Segments

(19)  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. The segment presentation for prior periods has been conformed to the current period segment presentation.

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 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, certain purchase accounting adjustments, separately reported litigation settlements 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 year ended December 31, 2015, Liberty has identified the following consolidated subsidiaries as its reportable segments:

·

QVC—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 and mobile transactions through its domestic and international websites.

·

zulily – consolidated subsidiary that markets and sells unique products in the United States and several foreign countries through flash sales events, primarily through its desktop and mobile websites and mobile applications.

In prior years, Liberty voluntarily provided financial information for the Digital Commerce businesses on an aggregated basis.  Due to the sale of Provide and Backcountry and due to Liberty’s announced intention to pursue a plan to spin-off Bodybuilding and CommerceHub (as described in note 1), Liberty no longer provides separate financial information for the Digital Commerce businesses. The Digital Commerce businesses are now included in Corporate and other.

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 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,

 

 

 

2015

 

2014

 

2013

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

Revenue

 

 OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QVC

 

$
8,743

 
1,894

 
8,801

 
1,910

 
8,623

 
1,841

 

zulily

 

 
426

 
21

 

NA

 

NA

 

NA

 

NA

 

Corporate and other (1)

 

 

 —

 
(28)

 
1,227

 
29

 
1,596

 
83

 

Total QVC Group

 

 
9,169

 
1,887

 
10,028

 
1,939

 
10,219

 
1,924

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other (1)

 

 
820

 
59

 
471

 
26

 

 —

 
(11)

 

Total Ventures Group

 

 
820

 
59

 
471

 
26

 

 —

 
(11)

 

Consolidated Liberty

 

$
9,989

 
1,946

 
10,499

 
1,965

 
10,219

 
1,913

 

 

 

(1)

As discussed in note 2, on October 3, 2014, Liberty completed the reattribution from the QVC Group (formerly referred to as the Interactive Group, prior to the reattribution), to the Ventures Group its Digital Commerce companies. The reattribution of the Digital Commerce companies is presented on a prospective basis from the date of the reattribution in Liberty’s consolidated financial statements, with October 1, 2014 used as a proxy for the date of the reattribution. Accordingly, Revenue and Adjusted OIBDA attributable to the Digital Commerce companies are included in the QVC Group for the period through September 30, 2014 and are included in the Ventures Group for the period beginning October 1, 2014.

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2015

 

December 31, 2014

 

 

    

 

 

    

Investments

    

 

    

 

    

Investments

    

 

 

 

 

Total

 

in

 

Capital

 

Total

 

in

 

Capital

 

 

 

assets

 

affiliates

 

expenditures

 

assets

 

affiliates

 

expenditures

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

QVC

 

$
12,058

 
43

 
215

 
12,226

 
47

 
183

 

zulily

 

 
2,741

 

 —

 
3

 

NA

 

NA

 

NA

 

Corporate and other

 

 
342

 
165

 

 —

 
544

 
328

 
43

 

Total QVC Group

 

 
15,141

 
208

 
218

 
12,770

 
375

 
226

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 
6,039

 
1,433

 
40

 
5,828

 
1,258

 
15

 

Total Ventures Group

 

 
6,039

 
1,433

 
40

 
5,828

 
1,258

 
15

 

Consolidated Liberty

 

$
21,180

 
1,641

 
258

 
18,598

 
1,633

 
241

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

    

2015

    

2014

    

2013

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$
1,946

 
1,965

 
1,913

 

Stock-based compensation

 

 
(127)

 
(108)

 
(118)

 

Depreciation and amortization

 

 
(703)

 
(662)

 
(629)

 

Impairment of intangible assets

 

 

 —

 
(7)

 
(30)

 

Interest expense

 

 
(360)

 
(387)

 
(380)

 

Share of earnings (loss) of affiliates, net

 

 
(60)

 
39

 
33

 

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

 

 
114

 
(57)

 
(22)

 

Gains (losses) on transactions, net

 

 
110

 
74

 
(1)

 

Gains (losses) on dilution of investments in affiliates

 

 
314

 
(2)

 
1

 

Other, net

 

 
19

 
(19)

 
(30)

 

Earnings (loss) from continuing operations before income taxes

 

$
1,253

 
836

 
737

 

 

Revenue by Geographic Area

Revenue by geographic area based on the location of customers is as follows:

 

 

 

 

 

 

 

 

 

 

 

 

Years ended December 31,

 

 

    

2015

    

2014

    

2013

 

 

 

amounts in millions

 

United States

 

$
7,412

 
7,617

 
7,332

 

Japan

 

 
811

 
912

 
1,029

 

Germany

 

 
850

 
1,003

 
971

 

Other foreign countries

 

 
916

 
967

 
887

 

 

 

$
9,989

 
10,499

 
10,219

 

 

Long-lived Assets by Geographic Area

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

    

2015

    

2014

 

 

 

amounts in millions

 

United States

 

$
637

 
529

 

Japan

 

 
156

 
176

 

Germany

 

 
173

 
210

 

Other foreign countries

 

 
174

 
178

 

 

 

$
1,140

 
1,093