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, 2013
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 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 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, 2013, 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 through its domestic and international websites and mobile applications.
•
TripAdvisor, Inc. - a consolidated subsidiary that is an online travel research company that empowers 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 E-commerce 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
 
Three months ended
March 31,
 
2013
 
2012
 
Revenue
 
Adjusted
OIBDA
 
Revenue
 
Adjusted
OIBDA
 
amounts in millions
Interactive Group
 
 
 
 
 
 
 
QVC
$
1,974

 
404

 
1,932

 
390

E-commerce
460

 
39

 
382

 
34

Corporate and other
—

 
(6
)
 
—

 
(5
)
Total Interactive Group
2,434

 
437

 
2,314

 
419

Ventures Group
 
 
 
 
 
 
 
TripAdvisor, Inc.
230

 
109

 
—

 
—

Corporate and other
—

 
(3
)
 
—

 
(1
)
Total Ventures Group
230

 
106

 
—

 
(1
)
Consolidated Liberty
$
2,664

 
543

 
2,314

 
418

Other Information
 
March 31, 2013
 
Total
assets
 
Investments
in
affiliates
 
Capital
expenditures
 
amounts in millions
Interactive Group
 
 
 
 
 
QVC
$
12,865

 
53

 
33

E-commerce
1,455

 
5

 
17

Corporate and other
234

 
261

 
—

Total Interactive Group
14,554

 
319

 
50

Ventures Group
 
 
 
 
 
TripAdvisor
7,364

 
—

 
9

Corporate and other
3,592

 
551

 
—

Total Ventures Group
10,956

 
551

 
9

Inter-group eliminations
(156
)
 
—

 
—

Consolidated Liberty
$
25,354

 
870

 
59


The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
 
Three months ended
March 31,
 
2013
 
2012
 
amounts in millions
Consolidated segment Adjusted OIBDA
$
543

 
418

  Stock-based compensation
(42
)
 
(17
)
  Depreciation and amortization
(230
)
 
(143
)
  Interest expense
(111
)
 
(106
)
  Share of earnings (loss) of affiliates, net
(11
)
 
11

  Realized and unrealized gains (losses) on financial instruments, net
(73
)
 
(18
)
  Other, net
(38
)
 
3

Earnings (loss) before income taxes
$
38

 
148