Annual report pursuant to Section 13 and 15(d)

Information About Liberty's Operating Segments

v2.4.0.6
Information About Liberty's Operating Segments
 12 Months Ended
Dec. 31, 2012
Information About Liberty's Operating Segments  
Information About Liberty's Operating Segments
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, 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, 2012, Liberty has identified the following consolidated subsidiaries and equity method affiliates 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.
•
TripAdvisor, Inc. - an online travel research company, empowering users to plan and maximize their travel experience.
Additionally, for presentation purposes Liberty is providing financial information of the E-commerce businesses on an aggregated basis. The consolidated 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.
•
E-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 Commerce, Inc.), active lifestyle gear and clothing (Backcountry.com, Inc.), fitness and health goods (Bodybuilding.com, LLC) and celebration offerings from invitations to costumes (Celebrate Interactive Holdings, Inc.).
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,
 
2012
 
2011
 
2010
 
Revenue
 
Adjusted
OIBDA
 
Revenue
 
Adjusted
OIBDA
 
Revenue
 
Adjusted
OIBDA
 
amounts in millions
Interactive Group
 
 
 
 
 
 
 
 
 
 
 
QVC
$
8,516

 
1,828

 
8,268

 
1,733

 
7,807

 
1,671

E-commerce
1,502

 
96

 
1,348

 
123

 
1,125

 
103

Corporate and other
—

 
(27
)
 
—

 
(29
)
 
—

 
(25
)
Total Interactive Group
$
10,018

 
1,897

 
9,616

 
1,827

 
8,932

 
1,749

Ventures Group
 
 
 
 
 
 
 
 
 
 
 
TripAdvisor
$
36

 
8

 
—

 
—

 
—

 
—

Corporate and other
$
—

 
(5
)
 
—

 
(4
)
 
—

 
(3
)
Total Ventures Group
$
36

 
3

 
—

 
(4
)
 
—

 
(3
)
Consolidated Liberty
$
10,054

 
1,900

 
9,616

 
1,823

 
8,932

 
1,746

Other Information
 
December 31,
2012
 
December 31,
2011
 
Total
assets
 
Investments
in
affiliates
 
Capital
expenditures
 
Total
assets
 
Investments
in
affiliates
 
Capital
expenditures
 
amounts in millions
Interactive Group
 
 
 
 
 
 
 
 
 
 
 
QVC
$
13,414

 
52

 
246

 
13,554

 
—

 
259

E-commerce
1,488

 
9

 
91

 
1,486

 
13

 
53

Corporate and other
213

 
243

 
1

 
384

 
217

 
—

Total Interactive Group
$
15,115

 
304

 
338

 
15,424

 
230

 
312

Ventures Group
 
 
 
 
 
 
 
 
 
 
 
TripAdvisor
7,377

 
—

 
1

 
—

 
—

 
—

Corporate and other
3,919

 
547

 
—

 
2,070

 
905

 
—

Total Ventures Group
11,296

 
547

 
1

 
2,070

 
905

 
—

Inter-group eliminations
$
(156
)
 
—

 
—

 
(155
)
 
—

 
—

Consolidated Liberty
$
26,255

 
851

 
339

 
17,339

 
1,135

 
312


The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
 
Years ended December 31,
 
2012
 
2011
 
2010
 
amounts in millions
Consolidated segment Adjusted OIBDA
$
1,900

 
1,823

 
1,746

  Stock-based compensation
(91
)
 
(49
)
 
(67
)
  Depreciation and amortization
(609
)
 
(641
)
 
(571
)
  Impairment of intangible assets
(92
)
 
—

 
—

  Interest expense
(432
)
 
(427
)
 
(626
)
  Share of earnings (loss) of affiliates, net
85

 
140

 
112

  Realized and unrealized gains (losses) on financial instruments, net
(351
)
 
84

 
62

  Gains (losses) on transactions, net
1,531

 
—

 
355

  Other, net
44

 
9

 
(47
)
Earnings (loss) from continuing operations before income taxes
$
1,985

 
939

 
964



Revenue by Geographic Area
Revenue by geographic area based on the location of customers is as follows:
 
Years ended December 31,
 
2012
 
2011
 
2010
 
amounts in millions
United States
$
7,009

 
6,670

 
6,298

Japan
1,251

 
1,133

 
1,019

Germany
957

 
1,068

 
956

Other foreign countries
837

 
745

 
659

 
$
10,054

 
9,616

 
8,932



Long-lived Assets by Geographic Area
 
December 31,
 
2012
 
2011
 
amounts in millions
United States
$
529

 
481

Japan
280

 
224

Germany
247

 
233

Other foreign countries
179

 
195

 
$
1,235

 
1,133