Quarterly report pursuant to Section 13 or 15(d)

Information About Liberty's Operating Segments

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Information About Liberty's Operating Segments
 3 Months Ended
Mar. 31, 2016
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, 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 three months ended March 31, 2016, Liberty has identified the following consolidated subsidiaries as its reportable segments:

·

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.

·

zulily – a 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.

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, 2015.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended  March 31,

 

 

 

2016

 

2015

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$
2,013

 
415

 
1,938

 
407

 

zulily

 

 
355

 
23

 

NA

 

NA

 

Corporate and other

 

 

 —

 
(5)

 

 —

 
(6)

 

Inter-segment eliminations

 

 
(1)

 

 —

 

NA

 

NA

 

Total QVC Group

 

 
2,367

 
433

 
1,938

 
401

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 
143

 
4

 
276

 
18

 

Total Ventures Group

 

 
143

 
4

 
276

 
18

 

Consolidated Liberty

 

$
2,510

 
437

 
2,214

 
419

 

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

March 31, 2016

 

 

    

Total

    

Investments

    

Capital

 

 

 

assets

 

In affiliates

 

expenditures

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

QVC

 

$
11,833

 
43

 
39

 

zulily

 

 
2,637

 

 —

 
4

 

Corporate and other

 

 
355

 
180

 

 —

 

Total QVC Group

 

 
14,825

 
223

 
43

 

Ventures Group

 

 

 

 

 

 

 

 

Corporate and other

 

 
6,133

 
1,428

 
8

 

Total Ventures Group

 

 
6,133

 
1,428

 
8

 

Consolidated Liberty

 

$
20,958

 
1,651

 
51

 

 

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

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

March 31,

 

 

    

2016

    

2015

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$
437

 
419

 

Stock-based compensation

 

 
(31)

 
(15)

 

Depreciation and amortization

 

 
(217)

 
(168)

 

Interest expense

 

 
(93)

 
(95)

 

Share of earnings (loss) of affiliates, net

 

 
(21)

 
3

 

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

 

 
(7)

 
(4)

 

Other, net

 

 
34

 
15

 

Earnings (loss) before income taxes

 

$
102

 
155