| Information About Qurate Retail's Operating Segments |
(9) Information About Qurate Retail's Operating Segments
Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and online commerce industries. Qurate Retail identifies its reportable segments as (A) those operating segments that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA (as defined below) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Qurate Retail's annual pre-tax earnings.
The Qurate Retail chief operating decision maker primarily evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, number of units shipped, conversion rates and active customers, as appropriate.
For the nine months ended September 30, 2023, Qurate Retail has identified the following operating segments as its reportable segments:
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QxH – QVC U.S. and HSN market and sell a wide variety of consumer products in the U.S., primarily by means of their televised shopping programs and via the Internet through their websites and mobile applications. |
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QVC International – QVC International markets and sells a wide variety of consumer products in several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile applications. |
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CBI – CBI consists of a portfolio of aspirational home and apparel brands in the U.S. that sell merchandise through brick-and-mortar retail locations as well as via the Internet through their websites. |
Qurate Retail'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 2022 10-K.
Performance Measures
Disaggregated revenue by segment and product category consisted of the following:
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Three months ended |
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September 30, 2023 |
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QxH |
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QVC Int'l |
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CBI |
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Corp and other |
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Total |
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in millions |
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Home |
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$ |
631 |
|
220 |
|
246 |
|
— |
|
1,097 |
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Apparel |
|
|
304 |
|
105 |
|
39 |
|
— |
|
448 |
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Beauty |
|
|
235 |
|
141 |
|
— |
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— |
|
376 |
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Accessories |
|
|
204 |
|
49 |
|
— |
|
— |
|
253 |
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Electronics |
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|
124 |
|
16 |
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— |
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— |
|
140 |
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Jewelry |
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|
76 |
|
44 |
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— |
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— |
|
120 |
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Other revenue |
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|
43 |
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2 |
|
— |
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— |
|
45 |
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Total Revenue |
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$ |
1,617 |
|
577 |
|
285 |
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— |
|
2,479 |
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Nine months ended |
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September 30, 2023 |
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QxH |
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QVC Int'l |
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CBI |
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Corp and other |
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Total |
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in millions |
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Home |
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$ |
1,868 |
|
701 |
|
735 |
|
76 |
|
3,380 |
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Apparel |
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|
939 |
|
329 |
|
125 |
|
113 |
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1,506 |
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Beauty |
|
|
745 |
|
417 |
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— |
|
14 |
|
1,176 |
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Accessories |
|
|
619 |
|
156 |
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— |
|
78 |
|
853 |
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Electronics |
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|
316 |
|
48 |
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— |
|
2 |
|
366 |
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Jewelry |
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|
218 |
|
118 |
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— |
|
11 |
|
347 |
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Other revenue |
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|
131 |
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6 |
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— |
|
7 |
|
144 |
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Total Revenue |
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$ |
4,836 |
|
1,775 |
|
860 |
|
301 |
|
7,772 |
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Three months ended |
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September 30, 2022 |
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QxH |
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QVC Int'l |
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CBI |
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Corp and other |
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Total |
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in millions |
Home |
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$ |
621 |
|
208 |
|
283 |
|
53 |
|
1,165 |
Apparel |
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|
330 |
|
100 |
|
44 |
|
79 |
|
553 |
Beauty |
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|
252 |
|
129 |
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— |
|
9 |
|
390 |
Accessories |
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|
190 |
|
49 |
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— |
|
47 |
|
286 |
Electronics |
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|
152 |
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20 |
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— |
|
2 |
|
174 |
Jewelry |
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|
73 |
|
45 |
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— |
|
6 |
|
124 |
Other revenue |
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|
45 |
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3 |
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— |
|
4 |
|
52 |
Total Revenue |
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$ |
1,663 |
|
554 |
|
327 |
|
200 |
|
2,744 |
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Nine months ended |
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September 30, 2022 |
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QxH |
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QVC Int'l |
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CBI |
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Corp and other |
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Total |
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in millions |
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Home |
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$ |
1,950 |
|
729 |
|
825 |
|
167 |
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3,671 |
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Apparel |
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|
982 |
|
334 |
|
140 |
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265 |
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1,721 |
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Beauty |
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|
766 |
|
419 |
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— |
|
30 |
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1,215 |
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Accessories |
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|
633 |
|
162 |
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— |
|
145 |
|
940 |
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Electronics |
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|
411 |
|
71 |
|
— |
|
5 |
|
487 |
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Jewelry |
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|
231 |
|
139 |
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— |
|
23 |
|
393 |
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Other revenue |
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|
128 |
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8 |
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— |
|
17 |
|
153 |
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Total Revenue |
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$ |
5,101 |
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1,862 |
|
965 |
|
652 |
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8,580 |
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For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses excluding stock-based compensation and, where applicable, separately identified items impacting comparability. Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. 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 where applicable, separately identified impairments, litigation settlements, restructuring, penalties, acquisition-related costs, fire related costs, net (including Rocky Mount inventory losses) and gains (losses) on sale leaseback transactions, that are included in the measurement of operating income (loss) pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income (loss), net earnings (loss), cash flows provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Qurate Retail generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.
Adjusted OIBDA is summarized as follows:
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Three months ended September 30, |
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Nine months ended September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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amounts in millions |
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QxH |
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$ |
201 |
|
143 |
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|
525 |
|
600 |
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QVC International |
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|
77 |
|
62 |
|
|
226 |
|
261 |
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CBI |
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11 |
|
10 |
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|
40 |
|
85 |
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Corporate and other |
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(4) |
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(30) |
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(57) |
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(79) |
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Consolidated Qurate Retail |
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$ |
285 |
|
185 |
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|
734 |
|
867 |
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Other Information
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September 30, 2023 |
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Total assets |
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Capital expenditures |
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amounts in millions |
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QxH |
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$ |
8,201 |
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83 |
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QVC International |
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1,800 |
|
33 |
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CBI |
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|
524 |
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3 |
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Corporate and other |
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|
912 |
|
32 |
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Consolidated Qurate Retail |
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$ |
11,437 |
|
151 |
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The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:
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Three months ended |
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Nine months ended |
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September 30, |
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September 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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amounts in millions |
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Adjusted OIBDA |
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$ |
285 |
|
185 |
|
734 |
|
867 |
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Stock-based compensation |
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(10) |
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(15) |
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(40) |
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(46) |
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Depreciation and amortization |
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(105) |
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(107) |
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(309) |
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(371) |
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Restructuring, penalties and fire related costs, net of recoveries (including Rocky Mount inventory losses, see note 8) |
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(19) |
|
134 |
|
189 |
|
28 |
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Impairment of intangible assets |
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|
— |
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(3,081) |
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— |
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(3,081) |
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Gains on sale of intangible asset and sale leaseback transactions |
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|
— |
|
277 |
|
119 |
|
520 |
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Operating income (loss) |
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$ |
151 |
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(2,607) |
|
693 |
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(2,083) |
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Interest expense |
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(119) |
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(107) |
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(336) |
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(343) |
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Interest and dividend income |
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|
14 |
|
2 |
|
39 |
|
5 |
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Realized and unrealized gains (losses) on financial instruments, net |
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(15) |
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(8) |
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(95) |
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29 |
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Loss on disposition of Zulily, net |
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|
— |
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— |
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(64) |
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— |
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Gain (loss) on extinguishment of debt |
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1 |
|
14 |
|
45 |
|
8 |
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Tax sharing expense with Liberty Broadband |
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(4) |
|
36 |
|
(12) |
|
78 |
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Other, net |
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|
5 |
|
21 |
|
13 |
|
69 |
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Earnings (loss) before income taxes |
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$ |
33 |
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(2,649) |
|
283 |
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(2,237) |
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