Lease and Transponder Service Agreements

v3.22.2

Lease and Transponder Service Agreements	6 Months Ended
	Jun. 30, 2022
Leases [Abstract]
Leases of Lessee	Leases The Company has finance lease agreements with transponder and transmitter network suppliers for the right to transmit its signals in the U.S. and Germany. QVC also leases data processing equipment, facilities, office space and land. These leases are classified as operating leases. Our leases have remaining lease terms of less than 1 year to 12 years, some of which may include the option to extend or terminate the leases. The components of lease cost for the three and six months ended June 30, 2022 and 2021, were as follows: Three months ended June 30, Six months ended June 30, (in millions) 2022 2021 2022 2021 Finance lease cost      Depreciation of leased assets $ 4  5  9  10       Interest on lease liabilities 2  2  4  4  Total finance lease cost 6  7  13  14  Operating lease cost 10  10  20  20       Total lease cost $ 16  17  33  34  The remaining weighted-average lease term and the weighted-average discount rate were as follows: June 30, 2022 Weighted-average remaining lease term (years):      Finance leases 5.1      Operating leases 9.1 Weighted-average discount rate:      Finance leases 3.5  %      Operating leases 6.6  % Supplemental balance sheet information related to leases was as follows: (in millions) June 30, 2022 December 31, 2021 Operating Leases:   Operating lease right-of-use assets $ 227  201    Accrued liabilities $ 34  26    Other long-term liabilities 187  177        Total operating lease liabilities $ 221  203  Finance Leases:    Property and equipment $ 156  277     Accumulated depreciation (115) (151)      Property and equipment, net $ 41  126     Current portion of debt and finance lease obligations $ 11  20     Long-term portion of debt and finance lease obligations 46  137       Total finance lease liabilities $ 57  157  Supplemental cash flow information related to leases was as follows: Six months ended June 30, (in millions) 2022 2021 Cash paid for amounts included in the measurement of lease liabilities:      Operating cash flows from operating leases $ 21  20       Operating cash flows from finance leases 4  4       Financing cash flows from finance leases 10  9  Right-of-use assets obtained in exchange for lease obligations:       Operating leases $ 45  4  Future payments under noncancelable operating leases and finance leases with initial terms of one year or more as of June 30, 2022 consisted of the following: (in millions) Finance leases Operating leases Total leases Remainder of 2022 $ 7  25  32  2023 13  45  58  2024 12  37  49  2025 10  26  36  2026 9  19  28  Thereafter 11  144  155  Total lease payments 62  296  358  Less: imputed interest (5) (75) (80) Total lease liabilities $ 57  221  278  Sale-Leaseback Transaction In June 2022, QVC modified the finance lease for its distribution center in Ontario, California which reduced the term of the lease and removed QVC’s ability to take ownership of the distribution center at the end of the lease term. QVC will make annual payments over the modified lease term. Since the lease was modified and removed QVC’s ability to take ownership at the end of the lease term, the Company accounted for the modification similar to a sale and leaseback transaction and, as a result, recognized a $240 million gain on the sale of the distribution center for the three and six months ended June 30, 2022 calculated as the difference between the aggregate consideration received (including cash and forgiveness of the remaining financing obligation of $84 million) and the carrying value of the distribution center. The gain is included in gain on sale of fixed assets in the condensed consolidated statement of operations. The Company accounted for the modified lease as an operating lease and recorded a $37 million right-of-use asset and a $31 million operating lease liability, with the difference attributable to prepaid rent.