Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v3.2.0.727
Information about QVC's Operating Segments
 6 Months Ended
Jun. 30, 2015
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 operating segments: the United States, Germany, Japan, 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 goods sold, 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,
 
 
2015
 
2014
 
 
2015
 
2014
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

 
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
1,406

349

1,352

325

 
2,748

655

2,657

626

QVC-Germany
191

35

227

40

 
403

74

477

79

QVC-Japan
199

37

223

43

 
398

76

457

90

QVC-U.K.
173

35

178

33

 
329

63

343

60

QVC-Italy
29

(1
)
34

(2
)
 
58

(3
)
66

(4
)
QVC-France
—

(6
)
—

—

 
—

(9
)
—

—

Consolidated QVC
$
1,998

449

2,014

439

 
3,936

856

4,000

851


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,
 
 
2015
 
2014
 
 
2015
 
2014
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

 
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
16

100

14

99

 
32

206

27

192

QVC-Germany
6

8

8

8

 
13

16

16

19

QVC-Japan
5

2

4

2

 
10

4

9

4

QVC-U.K.
5

3

4

3

 
8

6

8

7

QVC-Italy
3

—

3

—

 
5

1

6

1

Consolidated QVC
$
35

113

33

112

 
68

233

66

223


 
June 30, 2015
 
December 31, 2014
 
(in millions)
Total
assets

Capital
expenditures, net

Total
assets

Capital
expenditures, net

QVC-U.S.
$
9,811

60

10,133

141

QVC-Germany
834

3

915

10

QVC-Japan
606

1

644

2

QVC-U.K.
543

4

537

16

QVC-Italy
216

1

245

12

QVC-France
15

10

2

1

Consolidated QVC
$
12,025

79

12,476

182


Long-lived assets, net of accumulated depreciation, by geographic area were as follows:
(in millions)
June 30, 2015

December 31, 2014

QVC-U.S.
$
463

463

QVC-Germany
183

209

QVC-Japan
161

176

QVC-U.K.
116

120

QVC-Italy
49

57

QVC-France
10

1

Consolidated QVC
$
982

1,026


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)
2015

2014

2015

2014

Adjusted OIBDA
$
449

439

856

851

Stock-based compensation
(7
)
(10
)
(15
)
(18
)
Depreciation and amortization
(148
)
(145
)
(301
)
(289
)
Equity in losses of investee
(3
)
(2
)
(4
)
(3
)
Interest expense, net
(50
)
(60
)
(109
)
(122
)
Foreign currency (loss) gain
(11
)
1

(1
)
—

Loss on extinguishment of debt
(21
)
—

(21
)
—

Income before income taxes
$
209

223

405

419