Quarterly report pursuant to Section 13 or 15(d)

Information About Liberty's Operating Segments

v3.7.0.1
Information About Liberty's Operating Segments
 6 Months Ended
Jun. 30, 2017
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, online commerce and cable 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 six months ended June 30, 2017, 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, 2016.

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended  June 30,

 

 

 

2017

 

2016

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$

1,979

 

468

 

2,063

 

463

 

zulily

 

 
367

 
26

 

366

 

31

 

Corporate and other

 

 

 —

 

(6)

 

 —

 

(7)

 

Inter-segment eliminations

 

 

 —

 

 —

 

(5)

 

 —

 

Total QVC Group

 

 

2,346

 

488

 

2,424

 

487

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 

 6

 

(7)

 

139

 

 8

 

Total Ventures Group

 

 

 6

 

(7)

 

139

 

 8

 

Consolidated Liberty

 

$

2,352

 

481

 

2,563

 

495

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended June 30,

 

 

 

2017

 

2016

 

 

    

 

 

    

Adjusted

    

 

    

Adjusted

 

 

 

Revenue

 

OIBDA

 

Revenue

 

OIBDA

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$

3,944

 

902

 

4,076

 

878

 

zulily

 

 

726

 

41

 

721

 

54

 

Corporate and other

 

 

 —

 

(10)

 

 —

 

(12)

 

Inter-segment eliminations

 

 

(1)

 

 —

 

(6)

 

 —

 

Total QVC Group

 

 

4,669

 

933

 

4,791

 

920

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 

10

 

(15)

 

282

 

12

 

Total Ventures Group

 

 

10

 

(15)

 

282

 

12

 

Consolidated Liberty

 

$

4,679

 

918

 

5,073

 

932

 

 

Other Information

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2017

 

 

 

Total assets

 

Investments in affiliates

 

Investment in Liberty Broadband

 

Capital expenditures

 

 

 

amounts in millions

 

QVC Group

 

 

 

 

 

 

 

 

 

 

QVC

 

$

11,146

 

38

 

 —

 

44

 

zulily

 

 

2,390

 

 —

 

 —

 

29

 

Corporate and other

 

 

417

 

193

 

 —

 

 —

 

Total QVC Group

 

 

13,953

 

231

 

 —

 

73

 

Ventures Group

 

 

 

 

 

 

 

 

 

 

Corporate and other

 

 

7,020

 
415

 
3,703

 

 1

 

Total Ventures Group

 

 

7,020

 
415

 
3,703

 

 1

 

Consolidated Liberty

 

$

20,973

 

646

 

3,703

 

74

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

Six months ended

 

 

 

June 30,

 

June 30,

 

 

    

2017

    

2016

    

2017

    

2016

 

 

 

amounts in millions

 

Consolidated segment Adjusted OIBDA

 

$

481

 

495

 

918

 

932

 

Stock-based compensation

 

 

(21)

 

(24)

 

(37)

 

(55)

 

Depreciation and amortization

 

 

(206)

 

(221)

 

(414)

 

(438)

 

Operating income (loss)

 

 

254

 

250

 

467

 

439

 

Interest expense

 

 

(89)

 

(92)

 

(179)

 

(185)

 

Share of earnings (loss) of affiliates, net

 

 

(9)

 

(2)

 

(36)

 

 1

 

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

 

 

116

 

343

 

817

 

336

 

Other, net

 

 

(7)

 

100

 

(6)

 

138

 

Earnings (loss) before income taxes

 

$

265

 

599

 

1,063

 

729