Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v2.4.0.8
Information about QVC's Operating Segments
 6 Months Ended
Jun. 30, 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. As such, 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,
 
 
2013
 
2012
 
 
2013
 
2012
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

 
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
1,312

320

1,280

315

 
2,609

611

2,520

585

QVC-Japan
260

57

310

70

 
516

111

599

133

QVC-Germany
207

35

210

39

 
457

78

457

85

QVC-U.K.
153

26

156

21

 
293

45

296

41

QVC-Italy
29

(4
)
18

(7
)
 
60

(7
)
34

(16
)
Consolidated QVC
$
1,961

434

1,974

438

 
3,935

838

3,906

828


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,
 
 
2013
 
2012
 
 
2013
 
2012
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

 
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
14

91

13

82

 
27

179

26

162

QVC-Japan
5

2

4

2

 
8

4

8

5

QVC-Germany
8

9

8

8

 
16

18

17

16

QVC-U.K.
5

3

7

3

 
9

6

10

6

QVC-Italy
1

2

1

1

 
3

4

3

3

Consolidated QVC
$
33

107

33

96

 
63

211

64

192


 
June 30, 2013
 
December 31, 2012
 
(in millions)
Total
assets

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
10,047

37

10,541

88

QVC-Japan
789

13

969

105

QVC-Germany
1,037

14

1,064

25

QVC-U.K.
585

6

619

22

QVC-Italy
252

5

245

6

Consolidated QVC
$
12,710

75

13,438

246


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

December 31,

(in millions)
2013

2012

QVC-U.S.
$
417

429

QVC-Japan
245

280

QVC-Germany
238

247

QVC-U.K.
116

128

QVC-Italy
45

47

Consolidated QVC
$
1,061

1,131


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)
2013

2012

2013

2012

Adjusted OIBDA
$
434

438

838

828

Stock‑based compensation
(9
)
(8
)
(19
)
(13
)
Depreciation and amortization
(140
)
(129
)
(274
)
(256
)
Equity in losses of investee
(2
)
—

(1
)
—

Gains on financial instruments
3

13

15

24

Interest expense
(50
)
(57
)
(113
)
(111
)
Foreign currency loss
—

(8
)
(1
)
(2
)
Loss on extinguishment of debt
(16
)
—

(57
)
—

Income before income taxes
$
220

249

388

470