Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v3.3.0.814
Information about QVC's Operating Segments
 9 Months Ended
Sep. 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 September 30,
 
 
Nine months ended September 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.
$
1,420

333

1,368

329

 
4,168

988

4,025

955

QVC-Germany
199

36

229

42

 
602

110

706

121

QVC-Japan
192

35

216

41

 
590

111

673

131

QVC-U.K.
168

33

173

31

 
497

96

516

91

QVC-Italy
28

—

34

(1
)
 
86

(3
)
100

(5
)
QVC-France
—

(7
)
—

(3
)
 
—

(16
)
—

(3
)
Consolidated QVC
$
2,007

430

2,020

439

 
5,943

1,286

6,020

1,290


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,
 
 
2015
 
2014
 
 
2015
 
2014
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

 
Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
15

97

14

98

 
47

303

41

290

QVC-Germany
7

7

8

9

 
20

23

24

28

QVC-Japan
5

2

5

3

 
15

6

14

7

QVC-U.K.
3

2

5

3

 
11

8

13

10

QVC-Italy
2

—

2

—

 
7

1

8

1

QVC-France
1

—

—

—

 
1

—

—

—

Consolidated QVC
$
33

108

34

113

 
101

341

100

336


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

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
9,925

98

10,133

141

QVC-Germany
851

7

915

10

QVC-Japan
619

2

644

2

QVC-U.K.
500

10

537

16

QVC-Italy
224

2

245

13

QVC-France
28

13

2

1

Consolidated QVC
$
12,147

132

12,476

183


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

December 31, 2014

QVC-U.S.
$
479

463

QVC-Germany
180

209

QVC-Japan
161

176

QVC-U.K.
107

120

QVC-Italy
48

57

QVC-France
22

1

Consolidated QVC
$
997

1,026


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)
2015

2014

2015

2014

Adjusted OIBDA
$
430

439

1,286

1,290

Stock-based compensation
(9
)
(16
)
(24
)
(34
)
Depreciation and amortization
(141
)
(147
)
(442
)
(436
)
Equity in losses of investee
(3
)
(2
)
(7
)
(5
)
Interest expense, net
(49
)
(60
)
(158
)
(182
)
Foreign currency gain
12

2

11

2

Loss on extinguishment of debt
—

(48
)
(21
)
(48
)
Income before income taxes
$
240

168

645

587