Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v3.7.0.1
Information about QVC's Operating Segments
 6 Months Ended
Jun. 30, 2017
Segment Reporting [Abstract]  
Segment reporting disclosure
Information about QVC's Operating Segments
The Company has identified two reportable operating segments: QVC-U.S. and QVC-International. Both 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.
QVC's chief operating decision maker ("CODM") is QVC's Chief Executive Officer. QVC's CODM has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, QVC-U.S. and QVC-International. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level (see below).
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 the Company's 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,
 
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

Net
revenue

Adjusted
OIBDA

QVC-U.S.
$
1,367

361

1,428

363

2,737

697

2,835

689

QVC-International
612

107

635

100

1,207

205

1,241

189

Consolidated QVC
$
1,979

468

2,063

463

3,944

902

4,076

878


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,
 
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
22

105

16

103

46

210

33

205

QVC-International
15

12

15

12

32

23

32

24

Consolidated QVC
$
37

117

31

115

78

233

65

229



June 30, 2017
 
December 31, 2016
 
(in millions)
Total
assets

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
9,136

34

9,595

152

QVC-International
2,010

10

1,950

27

Consolidated QVC
$
11,146

44

11,545

179


Long-lived assets, net of accumulated depreciation, by segment were as follows:
(in millions)
June 30, 2017

December 31, 2016

QVC-U.S.
$
558

594

QVC-International
444

437

Consolidated QVC
$
1,002

1,031


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)
2017

2016

2017

2016

Adjusted OIBDA
$
468

463

902

878

Stock-based compensation
(8
)
(10
)
(14
)
(16
)
Depreciation and amortization
(154
)
(146
)
(311
)
(294
)
Equity in losses of investee
(1
)
(1
)
(3
)
(2
)
Interest expense, net
(56
)
(54
)
(111
)
(107
)
Foreign currency (loss) gain
(8
)
20

(10
)
22

Income before income taxes
$
241

272

453

481