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, 2014
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 identified six reportable segments: the United States, Japan, Germany, the United Kingdom, Italy and France.
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,
 
 
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.
$
1,368

329

1,303

304

 
4,025

955

3,912

915

QVC-Japan
216

41

236

46

 
673

131

752

157

QVC-Germany
229

42

224

37

 
706

121

681

115

QVC-U.K.
173

31

156

26

 
516

91

449

71

QVC-Italy
34

(1
)
28

(5
)
 
100

(5
)
88

(12
)
QVC-France
—

(3
)
—

—

 
—

(3
)
—

—

Consolidated QVC
$
2,020

439

1,947

408

 
6,020

1,290

5,882

1,246


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,
 
 
2014
 
2013
 
 
2014
 
2013
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

 
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
14

98

14

90

 
41

290

41

269

QVC-Japan
5

3

5

2

 
14

7

13

6

QVC-Germany
8

9

6

12

 
24

28

22

30

QVC-U.K.
5

3

(1
)
6

 
13

10

8

12

QVC-Italy
2

—

2

3

 
8

1

5

7

Consolidated QVC
$
34

113

26

113

 
100

336

89

324


 
Nine months ended September 30,
 
Year ended December 31,
 
 
2014
 
2013
 
(in millions)
Total
assets

Capital
expenditures, net

Total
assets

Capital
expenditures, net

QVC-U.S.
$
10,001

73

10,322

123

QVC-Japan
681

—

732

16

QVC-Germany
1,042

6

1,109

28

QVC-U.K.
629

9

613

16

QVC-Italy
251

10

280

28

QVC-France
1

—

—

—

Consolidated QVC
$
12,605

98

13,056

211


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

December 31,

(in millions)
2014

2013

QVC-U.S.
$
438

448

QVC-Japan
197

220

QVC-Germany
211

244

QVC-U.K.
122

129

QVC-Italy
61

65

Consolidated QVC
$
1,029

1,106


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)
2014

2013

2014

2013

Adjusted OIBDA
$
439

408

1,290

1,246

Stock‑based compensation
(16
)
(10
)
(34
)
(29
)
Depreciation and amortization
(147
)
(139
)
(436
)
(413
)
Equity in losses of investee
(2
)
(2
)
(5
)
(3
)
Gains on financial instruments
—

—

—

15

Interest expense, net
(60
)
(52
)
(182
)
(165
)
Foreign currency gain (loss)
2

(1
)
2

(2
)
Loss on extinguishment of debt
(48
)
—

(48
)
(57
)
Income before income taxes
$
168

204

587

592