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
 9 Months Ended
Sep. 30, 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 and revenue or sales per customer equivalent. In addition, Liberty reviews nonfinancial measures such as unique website visitors, number of units shipped, 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 nine months ended September 30, 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  September 30,

 

 

 

2016

 

2015

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$
1,948

 
393

 
2,007

 
430

 

zulily

 

 
359

 
18

 

NA

 

NA

 

Corporate and other

 

 

 —

 
(5)

 

 —

 
(9)

 

Inter-segment eliminations

 

 
(4)

 

 —

 

NA

 

NA

 

Total QVC Group

 

 
2,303

 
406

 
2,007

 
421

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 
109

 
(4)

 
146

 
13

 

Total Ventures Group

 

 
109

 
(4)

 
146

 
13

 

Consolidated Liberty

 

$
2,412

 
402

 
2,153

 
434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended September 30,

 

 

 

2016

 

2015

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$
6,024

 
1,271

 
5,943

 
1,286

 

zulily

 

 
1,080

 
72

 

NA

 

NA

 

Corporate and other

 

 

 —

 
(17)

 

 —

 
(19)

 

Inter-segment eliminations

 

 
(10)

 

 —

 

NA

 

NA

 

Total QVC Group

 

 
7,094

 
1,326

 
5,943

 
1,267

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 
391

 
8

 
676

 
45

 

Total Ventures Group

 

 
391

 
8

 
676

 
45

 

Consolidated Liberty

 

$
7,485

 
1,334

 
6,619

 
1,312

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2016

 

 

 

Total assets

 

Investments In affiliates

 

Investment in Liberty Broadband

 

Capital expenditures

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$
11,538

 
42

 

 —

 
140

 

zulily

 

 
2,515

 

 —

 

 —

 
18

 

Corporate and other

 

 
389

 
184

 

 —

 

 —

 

Total QVC Group

 

 
14,442

 
226

 

 —

 
158

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 
6,590

 
1,319

 
3,051

 
19

 

Total Ventures Group

 

 
6,590

 
1,319

 
3,051

 
19

 

Consolidated Liberty

 

$
21,032

 
1,545

 
3,051

 
177

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Nine months ended

 

 

 

September 30,

 

September 30,

 

 

    

2016

    

2015

    

2016

    

2015

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$
402

 
434

 
1,334

 
1,312

 

Stock-based compensation

 

 
(20)

 
(37)

 
(75)

 
(81)

 

Depreciation and amortization

 

 
(225)

 
(150)

 
(663)

 
(479)

 

Interest expense

 

 
(92)

 
(88)

 
(277)

 
(273)

 

Share of earnings (loss) of affiliates, net

 

 
18

 
31

 
(3)

 
121

 

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

 

 
606

 
70

 
942

 
98

 

Gains (losses) on dispositions, net

 

 

 —

 
(1)

 
9

 
110

 

Other, net

 

 
(8)

 
25

 
118

 
11

 

Earnings (loss) before income taxes

 

$
681

 
284

 
1,385

 
819