| Guarantor Non-guarantor Subsidiary Financial Information |
Guarantor/Non-guarantor Subsidiary Financial Information
The following information contains the condensed consolidating financial statements for the Company, the parent on a stand-alone basis (QVC, Inc.), the combined subsidiary guarantors (Affiliate Relations Holdings, Inc.; Affiliate Investment, Inc.; AMI 2, Inc.; ER Marks, Inc.; QVC International LLC; QVC Rocky Mount, Inc. and QVC San Antonio, LLC) and the combined non-guarantor subsidiaries pursuant to Rule 3-10 of Regulation S-X. Certain non-guarantor subsidiaries are majority-owned by QVC International LLC, which is a guarantor subsidiary.
These condensed consolidating financial statements have been prepared from the Company's financial information on the same basis of accounting as the Company's condensed consolidated financial statements. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, such as management fees, royalty revenue and expense, interest income and expense and gains on intercompany asset transfers. Goodwill and other intangible assets have been allocated to the subsidiaries based on management’s estimates. Certain costs have been partially allocated to all of the subsidiaries of the Company.
During the three months ended June 30, 2014, an intangible asset held by certain non-guarantor subsidiaries was sold to QVC, Inc. resulting in a gain of $20 million reflected in intercompany interest and other income for the non-guarantor subsidiaries and also included in equity in earnings of subsidiaries for the subsidiary guarantors. The gain is eliminated in the eliminations column. The impact of these earnings has been eliminated in the presentation of intangible assets and equity in earnings of subsidiaries of the parent company.
The subsidiary guarantors are 100% owned by the Company. All guarantees are full and unconditional and are joint and several. There are no significant restrictions on the ability of the Company to obtain funds from its U.S. subsidiaries, including the guarantors, by dividend or loan. The Company has not presented separate notes and other disclosures concerning the subsidiary guarantors as the Company has determined that such material information is available in the notes to the Company's condensed consolidated financial statements.
The Company adjusted the previously reported consolidating financial statements to correctly classify transactions among QVC Inc., the combined subsidiary guarantors and the combined non-guarantor subsidiaries.
The adjustments to the condensed consolidating statements of operations:
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• |
attributed net revenue of $58 million and operating expenses of $9 million from QVC, Inc. to the combined non-guarantor subsidiaries for the three months ended June 30, 2013;
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• |
recognized equal and offsetting increases in the equity in earnings of subsidiaries of QVC, Inc. with a corresponding elimination for the three months ended June 30, 2013;
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• |
attributed net revenue of $112 million, cost of goods sold of $11 million and operating expenses of $17 million from QVC, Inc. to the combined non-guarantor subsidiaries for the six months ended June 30, 2013; and
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• |
recognized equal and offsetting increases in the equity in earnings of subsidiaries of QVC, Inc. with a corresponding elimination for the six months ended June 30, 2013.
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The adjustments to the condensed consolidating statements of cash flows for the six months ended June 30, 2013:
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• |
attributed net cash provided by operating activities of $83 million from QVC, Inc. to the combined non-guarantor subsidiaries primarily related to revenue net of cost of goods sold and operating expenses;
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• |
decreased net cash provided by investing activities of $34 million of QVC, Inc. with an equal and offsetting elimination; and
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• |
increased net cash provided by financing activities of $117 million of QVC, Inc. and decreased net cash used in financing activities of $83 million of the non-guarantor subsidiaries, all with equal and offsetting eliminations.
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The adjustments had no impact to the Company's condensed consolidated balance sheets, condensed consolidated statements of operations, condensed consolidated statements of comprehensive income, condensed consolidated statements of changes in equity or condensed consolidated statements of cash flows for any current and previously reported period.
Condensed consolidating balance sheets
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June 30, 2014 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Assets |
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
18 |
|
162 |
|
368 |
|
— |
|
548 |
|
Restricted cash |
11 |
|
— |
|
3 |
|
— |
|
14 |
|
Accounts receivable, net |
490 |
|
— |
|
266 |
|
— |
|
756 |
|
Inventories |
725 |
|
— |
|
264 |
|
— |
|
989 |
|
Deferred income taxes |
147 |
|
— |
|
18 |
|
— |
|
165 |
|
Prepaid expenses |
28 |
|
— |
|
29 |
|
— |
|
57 |
|
Total current assets |
1,419 |
|
162 |
|
948 |
|
— |
|
2,529 |
|
Property and equipment, net |
253 |
|
66 |
|
757 |
|
— |
|
1,076 |
|
Cable and satellite television distribution rights, net |
— |
|
441 |
|
99 |
|
— |
|
540 |
|
Goodwill |
4,169 |
|
— |
|
1,041 |
|
— |
|
5,210 |
|
Other intangible assets, net |
1,092 |
|
2,049 |
|
102 |
|
— |
|
3,243 |
|
Other noncurrent assets |
9 |
|
— |
|
60 |
|
— |
|
69 |
|
Investments in subsidiaries |
4,893 |
|
1,601 |
|
— |
|
(6,494 |
) |
— |
|
Total assets |
$ |
11,835 |
|
4,319 |
|
3,007 |
|
(6,494 |
) |
12,667 |
|
Liabilities and equity |
Current liabilities: |
|
|
|
|
|
Current portion of debt and capital lease obligations |
$ |
2 |
|
— |
|
9 |
|
— |
|
11 |
|
Accounts payable-trade |
275 |
|
— |
|
195 |
|
— |
|
470 |
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Accrued liabilities |
150 |
|
86 |
|
507 |
|
— |
|
743 |
|
Intercompany accounts payable (receivable) |
1,084 |
|
(814 |
) |
(270 |
) |
— |
|
— |
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Total current liabilities |
1,511 |
|
(728 |
) |
441 |
|
— |
|
1,224 |
|
Long-term portion of debt and capital lease obligations |
3,886 |
|
— |
|
51 |
|
— |
|
3,937 |
|
Deferred compensation |
14 |
|
— |
|
— |
|
— |
|
14 |
|
Deferred income taxes |
319 |
|
901 |
|
3 |
|
— |
|
1,223 |
|
Other long-term liabilities |
109 |
|
— |
|
48 |
|
— |
|
157 |
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Total liabilities |
5,839 |
|
173 |
|
543 |
|
— |
|
6,555 |
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Equity: |
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|
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QVC, Inc. stockholder's equity |
5,996 |
|
4,146 |
|
2,348 |
|
(6,494 |
) |
5,996 |
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Noncontrolling interest |
— |
|
— |
|
116 |
|
— |
|
116 |
|
Total equity |
5,996 |
|
4,146 |
|
2,464 |
|
(6,494 |
) |
6,112 |
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Total liabilities and equity |
$ |
11,835 |
|
4,319 |
|
3,007 |
|
(6,494 |
) |
12,667 |
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Condensed consolidating balance sheets
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December 31, 2013 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Assets |
Current assets: |
|
|
|
|
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Cash and cash equivalents |
$ |
78 |
|
133 |
|
246 |
|
— |
|
457 |
|
Restricted cash |
11 |
|
— |
|
3 |
|
— |
|
14 |
|
Accounts receivable, net |
816 |
|
— |
|
295 |
|
— |
|
1,111 |
|
Inventories |
684 |
|
— |
|
247 |
|
— |
|
931 |
|
Deferred income taxes |
146 |
|
— |
|
16 |
|
— |
|
162 |
|
Prepaid expenses |
20 |
|
— |
|
27 |
|
— |
|
47 |
|
Total current assets |
1,755 |
|
133 |
|
834 |
|
— |
|
2,722 |
|
Property and equipment, net |
265 |
|
67 |
|
774 |
|
— |
|
1,106 |
|
Cable and satellite television distribution rights, net |
— |
|
510 |
|
114 |
|
— |
|
624 |
|
Goodwill |
4,169 |
|
— |
|
1,028 |
|
— |
|
5,197 |
|
Other intangible assets, net |
1,128 |
|
2,050 |
|
158 |
|
— |
|
3,336 |
|
Other noncurrent assets |
8 |
|
— |
|
63 |
|
— |
|
71 |
|
Investments in subsidiaries |
4,894 |
|
1,628 |
|
— |
|
(6,522 |
) |
— |
|
Total assets |
$ |
12,219 |
|
4,388 |
|
2,971 |
|
(6,522 |
) |
13,056 |
|
Liabilities and equity |
Current liabilities: |
|
|
|
|
|
Current portion of debt and capital lease obligations |
$ |
2 |
|
— |
|
11 |
|
— |
|
13 |
|
Accounts payable-trade |
336 |
|
— |
|
158 |
|
— |
|
494 |
|
Accrued liabilities |
393 |
|
96 |
|
471 |
|
— |
|
960 |
|
Intercompany accounts payable (receivable) |
1,019 |
|
(879 |
) |
(140 |
) |
— |
|
— |
|
Total current liabilities |
1,750 |
|
(783 |
) |
500 |
|
— |
|
1,467 |
|
Long-term portion of debt and capital lease obligations |
3,745 |
|
— |
|
55 |
|
— |
|
3,800 |
|
Deferred compensation |
13 |
|
— |
|
1 |
|
— |
|
14 |
|
Deferred income taxes |
399 |
|
923 |
|
4 |
|
— |
|
1,326 |
|
Other long-term liabilities |
90 |
|
— |
|
18 |
|
— |
|
108 |
|
Total liabilities |
5,997 |
|
140 |
|
578 |
|
— |
|
6,715 |
|
Equity: |
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|
|
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QVC, Inc. stockholder's equity |
6,222 |
|
4,248 |
|
2,274 |
|
(6,522 |
) |
6,222 |
|
Noncontrolling interest |
— |
|
— |
|
119 |
|
— |
|
119 |
|
Total equity |
6,222 |
|
4,248 |
|
2,393 |
|
(6,522 |
) |
6,341 |
|
Total liabilities and equity |
$ |
12,219 |
|
4,388 |
|
2,971 |
|
(6,522 |
) |
13,056 |
|
Condensed consolidating statements of operations
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Three months ended June 30, 2014 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net revenue |
$ |
1,368 |
|
187 |
|
692 |
|
(233 |
) |
2,014 |
|
Cost of goods sold |
850 |
|
23 |
|
432 |
|
(55 |
) |
1,250 |
|
Gross profit |
518 |
|
164 |
|
260 |
|
(178 |
) |
764 |
|
Operating expenses: |
|
|
|
|
|
Operating |
42 |
|
49 |
|
89 |
|
— |
|
180 |
|
Selling, general and administrative, including stock-based compensation |
243 |
|
1 |
|
89 |
|
(178 |
) |
155 |
|
Depreciation |
10 |
|
1 |
|
22 |
|
— |
|
33 |
|
Amortization |
58 |
|
38 |
|
16 |
|
— |
|
112 |
|
Intercompany management expense (income) |
20 |
|
(5 |
) |
(15 |
) |
— |
|
— |
|
|
373 |
|
84 |
|
201 |
|
(178 |
) |
480 |
|
Operating income |
145 |
|
80 |
|
59 |
|
— |
|
284 |
|
Other (expense) income: |
|
|
|
|
|
Equity in losses of investee |
— |
|
— |
|
(2 |
) |
— |
|
(2 |
) |
Interest expense, net |
(60 |
) |
— |
|
— |
|
— |
|
(60 |
) |
Foreign currency (loss) gain |
(1 |
) |
— |
|
2 |
|
— |
|
1 |
|
Intercompany interest and other (expense) income |
(5 |
) |
13 |
|
12 |
|
(20 |
) |
— |
|
|
(66 |
) |
13 |
|
12 |
|
(20 |
) |
(61 |
) |
Income before income taxes |
79 |
|
93 |
|
71 |
|
(20 |
) |
223 |
|
Income tax expense |
(27 |
) |
(28 |
) |
(28 |
) |
— |
|
(83 |
) |
Equity in earnings of subsidiaries, net of tax |
88 |
|
29 |
|
— |
|
(117 |
) |
— |
|
Net income |
140 |
|
94 |
|
43 |
|
(137 |
) |
140 |
|
Less net income attributable to the noncontrolling interest |
(10 |
) |
— |
|
(10 |
) |
10 |
|
(10 |
) |
Net income attributable to QVC, Inc. stockholder |
$ |
130 |
|
94 |
|
33 |
|
(127 |
) |
130 |
|
Condensed consolidating statements of operations - Adjusted
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Three months ended June 30, 2013 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net revenue |
$ |
1,326 |
|
182 |
|
681 |
|
(228 |
) |
1,961 |
|
Cost of goods sold |
836 |
|
23 |
|
427 |
|
(59 |
) |
1,227 |
|
Gross profit |
490 |
|
159 |
|
254 |
|
(169 |
) |
734 |
|
Operating expenses: |
|
|
|
|
|
Operating |
38 |
|
48 |
|
85 |
|
— |
|
171 |
|
Selling, general and administrative, including stock-based compensation |
227 |
|
— |
|
80 |
|
(169 |
) |
138 |
|
Depreciation |
9 |
|
2 |
|
22 |
|
— |
|
33 |
|
Amortization |
51 |
|
36 |
|
20 |
|
— |
|
107 |
|
Intercompany management expense (income) |
15 |
|
(4 |
) |
(11 |
) |
— |
|
— |
|
|
340 |
|
82 |
|
196 |
|
(169 |
) |
449 |
|
Operating income |
150 |
|
77 |
|
58 |
|
— |
|
285 |
|
Other (expense) income: |
|
|
|
|
|
Equity in losses of investee |
— |
|
— |
|
(2 |
) |
— |
|
(2 |
) |
Gains on financial instruments |
— |
|
— |
|
3 |
|
— |
|
3 |
|
Interest (expense) income, net |
(50 |
) |
(1 |
) |
1 |
|
— |
|
(50 |
) |
Foreign currency (loss) gain |
(1 |
) |
— |
|
1 |
|
— |
|
— |
|
Loss on extinguishment of debt |
(16 |
) |
— |
|
— |
|
— |
|
(16 |
) |
Intercompany interest and other (expense) income |
(4 |
) |
12 |
|
(8 |
) |
— |
|
— |
|
|
(71 |
) |
11 |
|
(5 |
) |
— |
|
(65 |
) |
Income before income taxes |
79 |
|
88 |
|
53 |
|
— |
|
220 |
|
Income tax expense |
(21 |
) |
(32 |
) |
(28 |
) |
— |
|
(81 |
) |
Equity in earnings of subsidiaries, net of tax |
81 |
|
11 |
|
— |
|
(92 |
) |
— |
|
Net income |
139 |
|
67 |
|
25 |
|
(92 |
) |
139 |
|
Less net income attributable to the noncontrolling interest |
(13 |
) |
— |
|
(13 |
) |
13 |
|
(13 |
) |
Net income attributable to QVC, Inc. stockholder |
$ |
126 |
|
67 |
|
12 |
|
(79 |
) |
126 |
|
Condensed consolidating statements of operations
|
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|
|
|
|
|
|
|
|
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|
Six months ended June 30, 2014 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net revenue |
$ |
2,692 |
|
364 |
|
1,399 |
|
(455 |
) |
4,000 |
|
Cost of goods sold |
1,692 |
|
48 |
|
878 |
|
(112 |
) |
2,506 |
|
Gross profit |
1,000 |
|
316 |
|
521 |
|
(343 |
) |
1,494 |
|
Operating expenses: |
|
|
|
|
|
Operating |
82 |
|
95 |
|
181 |
|
— |
|
358 |
|
Selling, general and administrative, including stock-based compensation |
466 |
|
(1 |
) |
181 |
|
(343 |
) |
303 |
|
Depreciation |
19 |
|
3 |
|
44 |
|
— |
|
66 |
|
Amortization |
110 |
|
77 |
|
36 |
|
— |
|
223 |
|
Intercompany management expense (income) |
40 |
|
(8 |
) |
(32 |
) |
— |
|
— |
|
|
717 |
|
166 |
|
410 |
|
(343 |
) |
950 |
|
Operating income |
283 |
|
150 |
|
111 |
|
— |
|
544 |
|
Other (expense) income: |
|
|
|
|
|
Equity in losses of investee |
— |
|
— |
|
(3 |
) |
— |
|
(3 |
) |
Interest expense, net |
(113 |
) |
— |
|
(9 |
) |
— |
|
(122 |
) |
Foreign currency (loss) gain |
(3 |
) |
— |
|
3 |
|
— |
|
— |
|
Intercompany interest and other (expense) income |
(10 |
) |
26 |
|
4 |
|
(20 |
) |
— |
|
|
(126 |
) |
26 |
|
(5 |
) |
(20 |
) |
(125 |
) |
Income before income taxes |
157 |
|
176 |
|
106 |
|
(20 |
) |
419 |
|
Income tax expense |
(7 |
) |
(52 |
) |
(98 |
) |
— |
|
(157 |
) |
Equity in earnings (losses) of subsidiaries, net of tax |
112 |
|
(19 |
) |
— |
|
(93 |
) |
— |
|
Net income |
262 |
|
105 |
|
8 |
|
(113 |
) |
262 |
|
Less net income attributable to the noncontrolling interest |
(19 |
) |
— |
|
(19 |
) |
19 |
|
(19 |
) |
Net income (loss) attributable to QVC, Inc. stockholder |
$ |
243 |
|
105 |
|
(11 |
) |
(94 |
) |
243 |
|
The increase in tax expense of the combined non-guarantor subsidiaries compared to the same period in the prior year was primarily due to an unfavorable tax audit settlement in one of our European subsidiaries. This also resulted in a tax benefit for QVC, Inc. as a result of the corresponding foreign tax credit in the U.S.
Condensed consolidating statements of operations - Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net revenue |
$ |
2,640 |
|
365 |
|
1,389 |
|
(459 |
) |
3,935 |
|
Cost of goods sold |
1,679 |
|
49 |
|
871 |
|
(120 |
) |
2,479 |
|
Gross profit |
961 |
|
316 |
|
518 |
|
(339 |
) |
1,456 |
|
Operating expenses: |
|
|
|
|
|
Operating |
75 |
|
93 |
|
176 |
|
— |
|
344 |
|
Selling, general and administrative, including stock-based compensation |
463 |
|
— |
|
169 |
|
(339 |
) |
293 |
|
Depreciation |
19 |
|
3 |
|
41 |
|
— |
|
63 |
|
Amortization |
102 |
|
70 |
|
39 |
|
— |
|
211 |
|
Intercompany management expense (income) |
32 |
|
(7 |
) |
(25 |
) |
— |
|
— |
|
|
691 |
|
159 |
|
400 |
|
(339 |
) |
911 |
|
Operating income |
270 |
|
157 |
|
118 |
|
— |
|
545 |
|
Other (expense) income: |
|
|
|
|
|
Equity in losses of investee |
— |
|
— |
|
(1 |
) |
— |
|
(1 |
) |
Gains on financial instruments |
12 |
|
— |
|
3 |
|
— |
|
15 |
|
Interest expense, net |
(112 |
) |
(1 |
) |
— |
|
— |
|
(113 |
) |
Foreign currency (loss) gain |
(2 |
) |
(1 |
) |
2 |
|
— |
|
(1 |
) |
Loss on extinguishment of debt |
(57 |
) |
— |
|
— |
|
— |
|
(57 |
) |
Intercompany interest and other (expense) income |
(7 |
) |
25 |
|
(18 |
) |
— |
|
— |
|
|
(166 |
) |
23 |
|
(14 |
) |
— |
|
(157 |
) |
Income before income taxes |
104 |
|
180 |
|
104 |
|
— |
|
388 |
|
Income tax expense |
(32 |
) |
(60 |
) |
(51 |
) |
— |
|
(143 |
) |
Equity in earnings of subsidiaries, net of tax |
173 |
|
26 |
|
— |
|
(199 |
) |
— |
|
Net income |
245 |
|
146 |
|
53 |
|
(199 |
) |
245 |
|
Less net income attributable to the noncontrolling interest |
(25 |
) |
— |
|
(25 |
) |
25 |
|
(25 |
) |
Net income attributable to QVC, Inc. stockholder |
$ |
220 |
|
146 |
|
28 |
|
(174 |
) |
220 |
|
Condensed consolidating statements of comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2014 |
|
(in millions) |
Subsidiary
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net income |
$ |
140 |
|
94 |
|
43 |
|
(137 |
) |
140 |
|
Foreign currency translation adjustments |
2 |
|
— |
|
2 |
|
(2 |
) |
2 |
|
Total comprehensive income |
142 |
|
94 |
|
45 |
|
(139 |
) |
142 |
|
Comprehensive income attributable to noncontrolling interest |
(10 |
) |
— |
|
(10 |
) |
10 |
|
(10 |
) |
Comprehensive income attributable to QVC, Inc. stockholder |
$ |
132 |
|
94 |
|
35 |
|
(129 |
) |
132 |
|
Condensed consolidating statements of comprehensive income - Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2013 |
|
(in millions) |
Subsidiary
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net income |
$ |
139 |
|
67 |
|
25 |
|
(92 |
) |
139 |
|
Foreign currency translation adjustments |
(16 |
) |
— |
|
(16 |
) |
16 |
|
(16 |
) |
Total comprehensive income |
123 |
|
67 |
|
9 |
|
(76 |
) |
123 |
|
Comprehensive income attributable to noncontrolling interest |
(7 |
) |
— |
|
(7 |
) |
7 |
|
(7 |
) |
Comprehensive income attributable to QVC, Inc. stockholder |
$ |
116 |
|
67 |
|
2 |
|
(69 |
) |
116 |
|
Condensed consolidating statements of comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2014 |
|
(in millions) |
Subsidiary
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net income |
$ |
262 |
|
105 |
|
8 |
|
(113 |
) |
262 |
|
Foreign currency translation adjustments |
18 |
|
— |
|
18 |
|
(18 |
) |
18 |
|
Total comprehensive income |
280 |
|
105 |
|
26 |
|
(131 |
) |
280 |
|
Comprehensive income attributable to noncontrolling interest |
(22 |
) |
— |
|
(22 |
) |
22 |
|
(22 |
) |
Comprehensive income attributable to QVC, Inc. stockholder |
$ |
258 |
|
105 |
|
4 |
|
(109 |
) |
258 |
|
Condensed consolidating statements of comprehensive income - Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013 |
|
(in millions) |
Subsidiary
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Net income |
$ |
245 |
|
146 |
|
53 |
|
(199 |
) |
245 |
|
Foreign currency translation adjustments |
(107 |
) |
— |
|
(107 |
) |
107 |
|
(107 |
) |
Total comprehensive income (loss) |
138 |
|
146 |
|
(54 |
) |
(92 |
) |
138 |
|
Comprehensive income attributable to noncontrolling interest |
(6 |
) |
— |
|
(6 |
) |
6 |
|
(6 |
) |
Comprehensive income (loss) attributable to QVC, Inc. stockholder |
$ |
132 |
|
146 |
|
(60 |
) |
(86 |
) |
132 |
|
Condensed consolidating statements of cash flows
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2014 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Operating activities: |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
$ |
217 |
|
172 |
|
160 |
|
— |
|
549 |
|
Investing activities: |
|
|
|
|
|
|
|
|
|
|
Capital expenditures, net |
(74 |
) |
(1 |
) |
38 |
|
(20 |
) |
(57 |
) |
Expenditures for cable and satellite television distribution rights, net |
— |
|
(8 |
) |
— |
|
— |
|
(8 |
) |
Intercompany investing activities |
114 |
|
27 |
|
— |
|
(141 |
) |
— |
|
Net cash provided by (used in) investing activities |
40 |
|
18 |
|
38 |
|
(161 |
) |
(65 |
) |
Financing activities: |
|
|
|
|
|
|
|
|
|
|
Principal payments of debt and capital lease obligations |
(1,414 |
) |
— |
|
(5 |
) |
— |
|
(1,419 |
) |
Principal borrowings of debt from senior secured credit facility |
554 |
|
— |
|
— |
|
— |
|
554 |
|
Proceeds from issuance of senior secured notes, net of original issue discount |
999 |
|
— |
|
— |
|
— |
|
999 |
|
Payment of debt origination fees |
(12 |
) |
— |
|
— |
|
— |
|
(12 |
) |
Other financing activities |
(4 |
) |
— |
|
— |
|
— |
|
(4 |
) |
Dividends paid to Liberty |
(480 |
) |
— |
|
— |
|
— |
|
(480 |
) |
Dividends paid to noncontrolling interest |
— |
|
— |
|
(25 |
) |
— |
|
(25 |
) |
Net short-term intercompany debt borrowings (repayments) |
65 |
|
65 |
|
(130 |
) |
— |
|
— |
|
Intercompany financing activities |
(25 |
) |
(226 |
) |
90 |
|
161 |
|
— |
|
Net cash used in financing activities |
(317 |
) |
(161 |
) |
(70 |
) |
161 |
|
(387 |
) |
Effect of foreign exchange rate changes on cash and cash equivalents |
— |
|
— |
|
(6 |
) |
— |
|
(6 |
) |
Net (decrease) increase in cash and cash equivalents |
(60 |
) |
29 |
|
122 |
|
— |
|
91 |
|
Cash and cash equivalents, beginning of period |
78 |
|
133 |
|
246 |
|
— |
|
457 |
|
Cash and cash equivalents, end of period |
$ |
18 |
|
162 |
|
368 |
|
— |
|
548 |
|
Condensed consolidating statements of cash flows - Adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013 |
|
(in millions) |
Parent
issuer-
QVC, Inc. |
|
Combined
subsidiary
guarantors |
|
Combined
non-guarantor
subsidiaries |
|
Eliminations |
|
Consolidated-
QVC, Inc. and
subsidiaries |
|
Operating activities: |
|
|
|
|
|
Net cash provided by operating activities |
$ |
275 |
|
115 |
|
52 |
|
— |
|
442 |
|
Investing activities: |
|
|
|
|
|
Capital expenditures, net |
(33 |
) |
— |
|
(42 |
) |
— |
|
(75 |
) |
Expenditures for cable and satellite television distribution rights, net |
— |
|
(25 |
) |
(1 |
) |
— |
|
(26 |
) |
Changes in other noncurrent assets |
4 |
|
— |
|
(3 |
) |
— |
|
1 |
|
Intercompany investing activities |
258 |
|
149 |
|
— |
|
(407 |
) |
— |
|
Net cash provided by (used in) investing activities |
229 |
|
124 |
|
(46 |
) |
(407 |
) |
(100 |
) |
Financing activities: |
|
|
|
|
|
|
|
|
|
|
Principal payments of debt and capital lease obligations |
(1,690 |
) |
— |
|
(5 |
) |
— |
|
(1,695 |
) |
Principal borrowings of debt from senior secured credit facility |
1,053 |
|
— |
|
— |
|
— |
|
1,053 |
|
Proceeds from issuance of senior secured notes, net of original issue discount |
1,050 |
|
— |
|
— |
|
— |
|
1,050 |
|
Payment of debt origination fees |
(16 |
) |
— |
|
— |
|
— |
|
(16 |
) |
Payment of bond premium fees |
(46 |
) |
— |
|
— |
|
— |
|
(46 |
) |
Other financing activities |
7 |
|
— |
|
— |
|
— |
|
7 |
|
Dividends paid to Liberty |
(765 |
) |
— |
|
— |
|
— |
|
(765 |
) |
Dividends paid to noncontrolling interest |
— |
|
— |
|
(25 |
) |
— |
|
(25 |
) |
Net short-term intercompany debt (repayments) borrowings |
(21 |
) |
86 |
|
(65 |
) |
— |
|
— |
|
Intercompany financing activities |
(143 |
) |
(326 |
) |
62 |
|
407 |
|
— |
|
Net cash used in financing activities |
(571 |
) |
(240 |
) |
(33 |
) |
407 |
|
(437 |
) |
Effect of foreign exchange rate changes on cash and cash equivalents |
— |
|
— |
|
(29 |
) |
— |
|
(29 |
) |
Net decrease in cash and cash equivalents |
(67 |
) |
(1 |
) |
(56 |
) |
— |
|
(124 |
) |
Cash and cash equivalents, beginning of period |
75 |
|
165 |
|
300 |
|
— |
|
540 |
|
Cash and cash equivalents, end of period |
$ |
8 |
|
164 |
|
244 |
|
— |
|
416 |
|
|