Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

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Information about QVC's Operating Segments
 9 Months Ended
Sep. 30, 2020
Segment Reporting [Abstract]  
Segment reporting disclosure Information about QVC's Operating Segments
The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA (defined below), gross margin, average sales price per unit, number of units shipped and revenue. For segment reporting purposes, the Company defines Adjusted OIBDA, as net 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 by identifying those items that are not directly a reflection of each segment's performance or indicative of ongoing business trends. 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, stock-based compensation, and impairment loss (if any) 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.
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. 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.
For the three and nine months ended September 30, 2021 and 2020, QVC identified QxH and QVC-International as its two reportable segments. 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.
Performance measures
Three months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
(in millions) Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA
QxH $ 1,813  325  1,980  380  5,738  1,065  5,782  1,061 
QVC-International 699  115  723  132  2,264  402  2,071  348 
   Consolidated QVC $ 2,512  440  2,703  512  8,002  1,467  7,853  1,409 
Other information
Three months ended September 30, Nine months ended September 30,
2021 2020 2021 2020
(in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization Depreciation Amortization
QxH $ 24  70  31  66  74  190  89  204 
QVC-International 13  4  14  3  41  10  42  9 
Consolidated QVC $ 37  74  45  69  115  200  131  213 
September 30, 2021
(in millions) Total
assets		 Capital
expenditures		 Property and equipment, net
QxH $ 14,073  124  720 
QVC-International 2,267  21  366 
Consolidated QVC $ 16,340  145  1,086 
The following table provides a reconciliation of Adjusted OIBDA to operating income and income before income taxes:
Three months ended September 30, Nine months ended September 30,
(in millions) 2021 2020 2021 2020
Adjusted OIBDA $ 440  512  1,467  1,409 
Stock-based compensation (13) (10) (33) (26)
Depreciation and amortization (111) (114) (315) (344)
Operating income 316  388  1,119  1,039 
Equity in (losses) earnings of investee (2) 1  (2) (1)
(Losses) gains on financial instruments (5) 1  (8) (3)
Interest expense, net (64) (65) (192) (194)
Foreign currency gain (loss) —  1  (4) 3 
Loss on extinguishment of debt —  (42) —  (42)
Other income —  —  8  — 
Income before income taxes $ 245  284  921  802