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, 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 nine months ended September 30, 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), celebration offerings from invitations to costumes (Celebrate Interactive Holdings LLC) and a drop-ship solutions company (CommerceHub).
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 in the Annual Report on Form 10-K for the year ended December 31, 2012.
Performance Measures
 
Nine months ended September 30,
 
2013
 
2012
 
Revenue
 
Adjusted
OIBDA
 
Revenue
 
Adjusted
OIBDA
 
amounts in millions
Interactive Group
 
 
 
 
 
 
 
QVC
$
5,882

 
1,246

 
5,824

 
1,225

E-commerce
1,197

 
60

 
1,051

 
61

Corporate and other
—

 
(18
)
 
—

 
(16
)
Total Interactive Group
7,079

 
1,288

 
6,875

 
1,270

Ventures Group
 
 
 
 
 
 
 
TripAdvisor, Inc.
732

 
326

 
—

 
—

Corporate and other
—

 
(9
)
 
—

 
(4
)
Total Ventures Group
732

 
317

 
—

 
(4
)
Consolidated Liberty
$
7,811

 
1,605

 
6,875

 
1,266


 
Three months ended September 30,
 
2013
 
2012
 
Revenue
 
Adjusted
OIBDA
 
Revenue
 
Adjusted
OIBDA
 
amounts in millions
Interactive Group
 
 
 
 
 
 
 
QVC
$
1,947

 
408

 
1,918

 
397

E-commerce
298

 
(5
)
 
278

 
4

Corporate and other
—

 
(7
)
 
—

 
(5
)
Total Interactive Group
2,245

 
396

 
2,196

 
396

Ventures Group
 
 
 
 
 
 
 
TripAdvisor, Inc.
255

 
104

 
—

 
—

Corporate and other
—

 
(3
)
 
—

 
(3
)
Total Ventures Group
255

 
101

 
—

 
(3
)
Consolidated Liberty
$
2,500

 
497

 
2,196

 
393


Other Information
 
September 30, 2013
 
Total
assets
 
Investments
in
affiliates
 
Capital
expenditures
 
amounts in millions
Interactive Group
 
 
 
 
 
QVC
$
12,811

 
52

 
122

E-commerce
1,229

 
—

 
56

Corporate and other
444

 
283

 
—

Total Interactive Group
14,484

 
335

 
178

Ventures Group
 
 
 
 
 
TripAdvisor
7,325

 
—

 
39

Corporate and other
2,716

 
890

 
—

Total Ventures Group
10,041

 
890

 
39

Inter-group eliminations
(155
)
 
—

 
—

Consolidated Liberty
$
24,370

 
1,225

 
217


The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
 
Three months ended
September 30, 2013
 
Nine months ended
September 30,
 
2013
 
2012
 
2013
 
2012
 
amounts in millions
Consolidated segment Adjusted OIBDA
$
497

 
393

 
1,605

 
1,266

  Stock-based compensation
(38
)
 
(18
)
 
(124
)
 
(53
)
Impairment of intangible assets
(19
)
 
(39
)
 
(19
)
 
(39
)
  Depreciation and amortization
(235
)
 
(147
)
 
(702
)
 
(437
)
  Interest expense
(87
)
 
(111
)
 
(288
)
 
(324
)
  Share of earnings (loss) of affiliates, net
29

 
43

 
25

 
89

  Realized and unrealized gains (losses) on financial instruments, net
15

 
(160
)
 
(49
)
 
(338
)
  Gains (losses) on dispositions, net
—

 
—

 
(2
)
 
288

  Other, net
3

 
(2
)
 
(50
)
 
31

Earnings (loss) before income taxes
$
165

 
(41
)
 
396

 
483