Registration of securities issued in business combination transactions

Information about QVC's Operating Segments

v2.4.0.8
Information about QVC's Operating Segments
 6 Months Ended 12 Months Ended
Jun. 30, 2014
Dec. 31, 2013
Segment Reporting [Abstract]    
Segment reporting disclosure
Information about QVC's Operating Segments
Each of the Company's 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. The Company has operations in the United States, Japan, Germany, the United Kingdom and Italy. The Company has identified five reportable segments: the United States, Japan, Germany, the United Kingdom and Italy.
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 or sales per subscriber equivalent. The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments, including the ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among our businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization and stock-based compensation, 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.
Performance measures
 
Three months ended June 30,
 
 
Six months ended June 30,
 
 
2014
 
2013
 
 
2014
 
2013
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

 
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
1,352

325

1,312

320

 
2,657

626

2,609

611

QVC-Japan
223

43

260

57

 
457

90

516

111

QVC-Germany
227

40

207

35

 
477

79

457

78

QVC-U.K.
178

33

153

26

 
343

60

293

45

QVC-Italy
34

(2
)
29

(4
)
 
66

(4
)
60

(7
)
Consolidated QVC
$
2,014

439

1,961

434

 
4,000

851

3,935

838


Net revenue amounts by product category are not available from our general purpose financial statements.
Other information
 
Three months ended June 30,
 
 
Six months ended June 30,
 
 
2014
 
2013
 
 
2014
 
2013
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

 
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
14

99

14

91

 
27

192

27

179

QVC-Japan
4

2

5

2

 
9

4

8

4

QVC-Germany
8

8

8

9

 
16

19

16

18

QVC-U.K.
4

3

5

3

 
8

7

9

6

QVC-Italy
3

—

1

2

 
6

1

3

4

Consolidated QVC
$
33

112

33

107

 
66

223

63

211


 
Six months ended June 30,
 
Year ended December 31,
 
 
2014
 
2013
 
(in millions)
Total
assets

Capital
expenditures, net

Total
assets

Capital
expenditures, net

QVC-U.S.
$
9,933

38

10,322

123

QVC-Japan
732

(1
)
732

16

QVC-Germany
1,103

4

1,109

28

QVC-U.K.
628

6

613

16

QVC-Italy
271

10

280

28

Consolidated QVC
$
12,667

57

13,056

211


Long-lived assets, net of accumulated depreciation, by geographic area were as follows:
 
June 30,

December 31,

(in millions)
2014

2013

QVC-U.S.
$
436

448

QVC-Japan
218

220

QVC-Germany
225

244

QVC-U.K.
129

129

QVC-Italy
68

65

Consolidated QVC
$
1,076

1,106


The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
 
Three months ended June 30,
 
Six months ended June 30,
 
(in millions)
2014

2013

2014

2013

Adjusted OIBDA
$
439

434

851

838

Stock‑based compensation
(10
)
(9
)
(18
)
(19
)
Depreciation and amortization
(145
)
(140
)
(289
)
(274
)
Equity in losses of investee
(2
)
(2
)
(3
)
(1
)
Gains on financial instruments
—

3

—

15

Interest expense, net
(60
)
(50
)
(122
)
(113
)
Foreign currency gain (loss)
1

—

—

(1
)
Loss on extinguishment of debt
—

(16
)
—

(57
)
Income before income taxes
$
223

220

419

388

Information about QVC's Operating Segments
Each of the Company's 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. The Company has operations in the U.S., Japan, Germany, the U.K. and Italy. As such, the Company has identified five reportable segments: the U.S., Japan, Germany, the U.K. and Italy.
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 or sales per subscriber equivalent. The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments, including the ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among our businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization and stock-based compensation, 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.
Performance measures
 
Years ended December 31,
 
 
2013
 
2012
 
2011
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
5,844

1,352

5,585

1,292

5,412

1,225

QVC-Japan
1,024

212

1,247

279

1,127

241

QVC-Germany
971

173

956

179

1,068

199

QVC-U.K.
657

118

641

104

626

111

QVC-Italy
127

(14
)
87

(26
)
35

(43
)
Consolidated QVC
$
8,623

1,841

8,516

1,828

8,268

1,733


Net revenue amounts by product category are not available from our general purpose financial statements.
Other information
 
Years ended December 31,
 
 
2013
 
2012
 
2011
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
55

362

51

338

52

376

QVC-Japan
23

9

16

10

29

12

QVC-Germany
30

38

31

33

33

36

QVC-U.K.
12

14

21

12

13

11

QVC-Italy
7

8

7

7

8

4

Consolidated QVC
$
127

431

126

400

135

439


 
Years ended December 31,
 
 
2013
 
2012
 
(in millions)
Total
assets

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
10,322

123

10,541

88

QVC-Japan
732

16

969

105

QVC-Germany
1,109

28

1,064

25

QVC-U.K.
613

16

619

22

QVC-Italy
280

28

245

6

Consolidated QVC
$
13,056

211

13,438

246


Long-lived assets, net of accumulated depreciation, by geographic area were as follows:
 
December 31,
 
(in millions)
2013

2012

QVC-U.S.
$
448

429

QVC-Japan
220

280

QVC-Germany
244

247

QVC-U.K.
129

128

QVC-Italy
65

47

Consolidated QVC
$
1,106

1,131


The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
 
Years ended December 31,
 
(in millions)
2013

2012

2011

Adjusted OIBDA
$
1,841

1,828

1,733

Stock‑based compensation
(38
)
(34
)
(22
)
Depreciation and amortization
(558
)
(526
)
(574
)
Equity in losses of investee
(4
)
(4
)
(2
)
Gains on financial instruments
15

48

50

Interest expense, net
(214
)
(233
)
(229
)
Foreign currency gain (loss)
1

2

(2
)
Loss on extinguishment of debt
(57
)
—

—

Income before income taxes
$
986

1,081

954