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
 9 Months Ended
Sep. 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 September 30,
 
 
Nine months ended September 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.
$
1,303

304

1,237

278

 
3,912

915

3,757

863

QVC-Japan
236

46

301

67

 
752

157

900

200

QVC-Germany
224

37

211

36

 
681

115

668

121

QVC-U.K.
156

26

149

21

 
449

71

445

62

QVC-Italy
28

(5
)
20

(5
)
 
88

(12
)
54

(21
)
Consolidated QVC
$
1,947

408

1,918

397

 
5,882

1,246

5,824

1,225


Net revenue amounts by product category are not available from our general purpose financial statements.
Other information
 
Three months ended September 30,
 
 
Nine months ended September 30,
 
 
2013
 
2012
 
 
2013
 
2012
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

 
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
14

90

12

86

 
41

269

38

248

QVC-Japan
5

2

4

3

 
13

6

12

8

QVC-Germany
6

12

7

8

 
22

30

24

24

QVC-U.K.
(1
)
6

3

3

 
8

12

13

9

QVC-Italy
2

3

2

1

 
5

7

5

4

Consolidated QVC
$
26

113

28

101

 
89

324

92

293


 
September 30, 2013
 
December 31, 2012
 
(in millions)
Total Assets

Capital expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
10,140

69

10,541

88

QVC-Japan
772

14

969

105

QVC-Germany
1,068

20

1,064

25

QVC-U.K.
597

8

619

22

QVC-Italy
268

10

245

6

Consolidated QVC
$
12,845

121

13,438

246


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

December 31,

(in millions)
2013

2012

QVC-U.S.
$
424

429

QVC-Japan
243

280

QVC-Germany
244

247

QVC-U.K.
122

128

QVC-Italy
48

47

Consolidated QVC
$
1,081

1,131


The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
 
Three months ended September 30,
 
Nine months ended September 30,
 
(in millions)
2013

2012

2013

2012

Adjusted OIBDA
$
408

397

1,246

1,225

Stock‑based compensation
(10
)
(8
)
(29
)
(21
)
Depreciation and amortization
(139
)
(129
)
(413
)
(385
)
Equity in losses of investee
(2
)
(3
)
(3
)
(3
)
Gains on financial instruments
—

12

15

36

Interest expense, net
(52
)
(61
)
(165
)
(172
)
Foreign currency (loss) gain
(1
)
1

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

—

(57
)
—

Income before income taxes
$
204

209

592

679