Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v3.8.0.1
Information about QVC's Operating Segments
 9 Months Ended
Sep. 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 September 30,
 
Nine months ended September 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.
$
1,374

313

1,338

308

4,111

1,010

4,173

997

QVC-International
636

99

610

85

1,843

304

1,851

274

Consolidated QVC
$
2,010

412

1,948

393

5,954

1,314

6,024

1,271


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,
 
 
2017
 
2016
 
2017
 
2016
 
(in millions)
Depreciation

Amortization

Depreciation

Amortization

Depreciation

Amortization

Depreciation

Amortization

QVC-U.S.
$
24

83

22

103

70

293

55

308

QVC-International
14

8

16

13

46

31

48

37

Consolidated QVC
$
38

91

38

116

116

324

103

345



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

Capital
expenditures

Total
assets

Capital
expenditures

QVC-U.S.
$
9,107

63

9,595

152

QVC-International
2,156

20

1,950

27

Consolidated QVC
$
11,263

83

11,545

179


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

December 31, 2016

QVC-U.S.
$
552

594

QVC-International
446

437

Consolidated QVC
$
998

1,031


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)
2017

2016

2017

2016

Adjusted OIBDA
$
412

393

1,314

1,271

Stock-based compensation
(9
)
(8
)
(23
)
(24
)
Depreciation and amortization
(129
)
(154
)
(440
)
(448
)
Equity in losses of investee
—

(2
)
(3
)
(4
)
Interest expense, net
(54
)
(52
)
(165
)
(159
)
Foreign currency gain (loss)
4

5

(6
)
27

Income before income taxes
$
224

182

677

663