Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

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Information about QVC's Operating Segments
 6 Months Ended
Jun. 30, 2019
Segment Reporting [Abstract]  
Segment reporting disclosure Information about QVC's Operating Segments
The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue. For segment reporting purposes, the Company defines Adjusted OIBDA, as net revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation and transaction related costs). The Company believes this measure is an important indicator of the operational strength and performance of its segments by identifying those items that are not directly a reflection of each segment's performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among the Company's businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization, stock-based compensation, transaction related costs and impairment loss (if any) that are included in the measurement of operating income pursuant to U.S. 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 U.S. GAAP.
QVC's chief operating decision maker ("CODM") is QVC's Chief Executive Officer. QVC's CODM has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level.
For the three and six months ended June 30, 2020 and 2019, QVC identified QxH and QVC-International as its two reportable segments. Both operating segments are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the Internet and mobile applications in certain markets.
Performance measures
Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
(in millions) Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA
QxH $ 2,010    388    1,874    395    3,802    681    3,731    747   
QVC-International 713    119    640    106    1,348    216    1,284    207   
   Consolidated QVC $ 2,723    507    2,514    501    5,150    897    5,015    954   
Other information
Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
(in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization Depreciation Amortization
QxH $ 29    70    28    67    58    138    56    136   
QVC-International 14    3    26    3    28    6    44    6   
Consolidated QVC $ 43    73    54    70    86    144    100    142   
June 30, 2020
(in millions) Total
assets		 Capital
expenditures		 Property and equipment, net
QxH $ 12,150    82    776   
QVC-International 2,235    10    393   
Consolidated QVC $ 14,385    92    1,169   
The following table provides a reconciliation of Adjusted OIBDA to operating income and income before income taxes:
Three months ended June 30, Six months ended June 30,
(in millions) 2020 2019 2020 2019
Adjusted OIBDA $ 507    501    897    954   
Transaction related costs —    (1)   —    (1)  
Stock-based compensation (10)   (11)   (16)   (20)  
Depreciation and amortization (116)   (124)   (230)   (242)  
Operating income 381    365    651    691   
Equity in losses of investee (1)   (1)   (2)   (1)  
Losses on financial instruments —    (1)   (4)   (3)  
Interest expense, net (64)   (60)   (129)   (121)  
Foreign currency gain (loss) 1    —    2    (3)  
Income before income taxes $ 317    303    518    563