| Information jvidÊÓƵ Liberty's Operating Segments |
(13)ÌýÌýÌýInformation jvidÊÓƵ Liberty's Operating Segments
Liberty, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. Liberty identifies its reportable segments as (A)Ìýthose consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B)Ìýthose equity method affiliates whose share of earnings represent 10% or more of Liberty's annual pre-tax earnings.
Liberty evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, Liberty reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.
Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses excluding all stock-based compensation. Liberty believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation and restructuring and impairment charges that are included in the measurement of operating income pursuant to 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 GAAP. Liberty generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.
For the nine months ended SeptemberÌý30,Ìý2015, Liberty has identified the following consolidated subsidiary as its reportable segment:
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QVC - a consolidated subsidiary that markets and sells a wide variety of consumer products in the United States and several foreign countries, primarily by means of its televised shopping programs and via the Internet through its domestic and international websites and mobile applications.
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Additionally, for presentation purposes, Liberty is providing financial information of the Digital Commerce businesses on an aggregated basis. The consolidated Digital Commerce businesses do not contribute significantly to the overall operations of Liberty on an individual basis; however, Liberty believes that on an aggregated basis they provide relevant information for users of these financial statements.ÌýÌýWhile these businesses may not meet the aggregation criteria under relevant accounting literature Liberty believes the information is relevant and helpful for a more complete understanding of the consolidated results.
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Digital Commerce - the aggregation of certain consolidated subsidiaries that market and sell a wide variety of consumer products via the Internet.ÌýÌýCategories of consumer products include active lifestyle gear and clothing (Backcountry), fitness and health goods (Bodybuilding), a drop-ship solutions company (CommerceHub), Ìýdigital invitations (Evite), Ìýperishable and personal gift offerings (Provide), and products for infants and toddlers (Right Start).Ìý Due to the transactions discussed in note 3, the results of Provide are included in the Company’s results through December 31, 2014 and the results of Backcountry are included through June 30, 2015.
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Liberty's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies.ÌýÌýThe accounting policies of the segments are the same as those described in the Company's summary of significant accounting policies in the Annual Report on Form 10-K for the year ended DecemberÌý31,Ìý2014.
Performance Measures
Ìý
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Ìý
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Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Ìý
|
Ìý
|
Three months endedÌýÌýSeptemberÌý30,
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Ìý
|
|
Ìý
|
Ìý
|
2015
|
Ìý
|
2014
|
Ìý
|
|
Ìý
|
ÌýÌýÌýÌý
|
Ìý
|
Ìý
|
ÌýÌýÌýÌý
|
Adjusted
|
ÌýÌýÌýÌý
|
Ìý
|
ÌýÌýÌýÌý
|
Adjusted
|
Ìý
|
|
Ìý
|
Ìý
|
Revenue
|
Ìý
|
OIBDA
|
Ìý
|
Revenue
|
Ìý
|
OIBDA
|
Ìý
|
|
Ìý
|
Ìý
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amountsÌýinÌýmillions
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Ìý
|
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QVC Group
|
Ìý
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Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
QVC
|
Ìý
|
$
|
2,007
|
Ìý
|
430
|
Ìý
|
2,020
|
Ìý
|
439
|
Ìý
|
|
Digital Commerce
|
Ìý
|
Ìý
|
NA
|
Ìý
|
NA
|
Ìý
|
310
|
Ìý
|
(2)
|
Ìý
|
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Corporate and other
|
Ìý
|
Ìý
|
Ìý—
|
Ìý
|
(9)
|
Ìý
|
Ìý—
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Ìý
|
(6)
|
Ìý
|
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Total QVC Group
|
Ìý
|
Ìý
|
2,007
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Ìý
|
421
|
Ìý
|
2,330
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Ìý
|
431
|
Ìý
|
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Ventures Group
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Digital Commerce
|
Ìý
|
Ìý
|
146
|
Ìý
|
17
|
Ìý
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NA
|
Ìý
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NA
|
Ìý
|
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Corporate and other
|
Ìý
|
Ìý
|
Ìý—
|
Ìý
|
(4)
|
Ìý
|
Ìý—
|
Ìý
|
(6)
|
Ìý
|
|
Total Ventures Group
|
Ìý
|
Ìý
|
146
|
Ìý
|
13
|
Ìý
|
Ìý—
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Ìý
|
(6)
|
Ìý
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Consolidated Liberty
|
Ìý
|
$
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2,153
|
Ìý
|
434
|
Ìý
|
2,330
|
Ìý
|
425
|
Ìý
|
Ìý
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Ìý
|
Ìý
|
Nine months ended SeptemberÌý30,
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Ìý
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|
Ìý
|
Ìý
|
2015
|
Ìý
|
2014
|
Ìý
|
|
Ìý
|
ÌýÌýÌýÌý
|
Ìý
|
Ìý
|
ÌýÌýÌýÌý
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Adjusted
|
ÌýÌýÌýÌý
|
Ìý
|
ÌýÌýÌýÌý
|
Adjusted
|
Ìý
|
|
Ìý
|
Ìý
|
Revenue
|
Ìý
|
OIBDA
|
Ìý
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Revenue
|
Ìý
|
OIBDA
|
Ìý
|
|
Ìý
|
Ìý
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amountsÌýinÌýmillions
|
Ìý
|
|
QVC Group
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
QVC
|
Ìý
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$
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5,943
|
Ìý
|
1,286
|
Ìý
|
6,020
|
Ìý
|
1,290
|
Ìý
|
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Digital Commerce
|
Ìý
|
Ìý
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NA
|
Ìý
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NA
|
Ìý
|
1,227
|
Ìý
|
53
|
Ìý
|
|
Corporate and other
|
Ìý
|
Ìý
|
Ìý—
|
Ìý
|
(19)
|
Ìý
|
Ìý—
|
Ìý
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(16)
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Ìý
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Total QVC Group
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Ìý
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Ìý
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5,943
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Ìý
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1,267
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Ìý
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7,247
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Ìý
|
1,327
|
Ìý
|
|
Ventures Group
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Digital Commerce
|
Ìý
|
Ìý
|
676
|
Ìý
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58
|
Ìý
|
NA
|
Ìý
|
NA
|
Ìý
|
|
Corporate and other
|
Ìý
|
Ìý
|
Ìý—
|
Ìý
|
(13)
|
Ìý
|
Ìý—
|
Ìý
|
(12)
|
Ìý
|
|
Total Ventures Group
|
Ìý
|
Ìý
|
676
|
Ìý
|
45
|
Ìý
|
Ìý—
|
Ìý
|
(12)
|
Ìý
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Consolidated Liberty
|
Ìý
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$
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6,619
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Ìý
|
1,312
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Ìý
|
7,247
|
Ìý
|
1,315
|
Ìý
|
Ìý
Other Information
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Ìý
|
Ìý
|
SeptemberÌý30, 2015
|
Ìý
|
|
Ìý
|
ÌýÌýÌýÌý
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Total
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ÌýÌýÌýÌý
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Investments
|
ÌýÌýÌýÌý
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Capital
|
Ìý
|
|
Ìý
|
Ìý
|
assets
|
Ìý
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InÌýaffiliates
|
Ìý
|
expenditures
|
Ìý
|
|
Ìý
|
Ìý
|
amountsÌýinÌýmillions
|
Ìý
|
|
QVC Group
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
QVC
|
Ìý
|
$
|
12,141
|
Ìý
|
45
|
Ìý
|
132
|
Ìý
|
|
Corporate and other
|
Ìý
|
Ìý
|
447
|
Ìý
|
159
|
Ìý
|
Ìý—
|
Ìý
|
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Total QVC Group
|
Ìý
|
Ìý
|
12,588
|
Ìý
|
204
|
Ìý
|
132
|
Ìý
|
|
Ventures Group
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Digital Commerce
|
Ìý
|
Ìý
|
783
|
Ìý
|
343
|
Ìý
|
32
|
Ìý
|
|
Corporate and other
|
Ìý
|
Ìý
|
5,120
|
Ìý
|
959
|
Ìý
|
Ìý—
|
Ìý
|
|
Total Ventures Group
|
Ìý
|
Ìý
|
5,903
|
Ìý
|
1,302
|
Ìý
|
32
|
Ìý
|
|
Inter-group eliminations
|
Ìý
|
Ìý
|
(206)
|
Ìý
|
Ìý—
|
Ìý
|
—
|
Ìý
|
|
Consolidated Liberty
|
Ìý
|
$
|
18,285
|
Ìý
|
1,506
|
Ìý
|
164
|
Ìý
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The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) before income taxes:
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Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Ìý
|
Ìý
|
Three months endedÌý
|
Ìý
|
Nine months ended
|
Ìý
|
|
Ìý
|
Ìý
|
SeptemberÌý30,
|
Ìý
|
SeptemberÌý30,
|
Ìý
|
|
Ìý
|
ÌýÌýÌýÌý
|
2015
|
ÌýÌýÌýÌý
|
2014
|
ÌýÌýÌýÌý
|
2015
|
ÌýÌýÌýÌý
|
2014
|
Ìý
|
|
Ìý
|
Ìý
|
amountsÌýinÌýmillions
|
Ìý
|
|
Consolidated segment Adjusted OIBDA
|
Ìý
|
$
|
434
|
Ìý
|
425
|
Ìý
|
1,312
|
Ìý
|
1,315
|
Ìý
|
|
Stock-based compensation
|
Ìý
|
Ìý
|
(37)
|
Ìý
|
(20)
|
Ìý
|
(81)
|
Ìý
|
(71)
|
Ìý
|
|
Impairment of intangible assets
|
Ìý
|
Ìý
|
Ìý—
|
Ìý
|
Ìý—
|
Ìý
|
Ìý—
|
Ìý
|
(7)
|
Ìý
|
|
Depreciation and amortization
|
Ìý
|
Ìý
|
(150)
|
Ìý
|
(166)
|
Ìý
|
(479)
|
Ìý
|
(493)
|
Ìý
|
|
Interest expense
|
Ìý
|
Ìý
|
(88)
|
Ìý
|
(99)
|
Ìý
|
(273)
|
Ìý
|
(292)
|
Ìý
|
|
Share of earnings (loss) of affiliates, net
|
Ìý
|
Ìý
|
31
|
Ìý
|
36
|
Ìý
|
121
|
Ìý
|
38
|
Ìý
|
|
Realized and unrealized gains (losses) on financial instruments, net
|
Ìý
|
Ìý
|
70
|
Ìý
|
18
|
Ìý
|
98
|
Ìý
|
(48)
|
Ìý
|
|
Gains (losses) on dispositions, net
|
Ìý
|
Ìý
|
(1)
|
Ìý
|
Ìý—
|
Ìý
|
110
|
Ìý
|
Ìý—
|
Ìý
|
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Other, net
|
Ìý
|
Ìý
|
25
|
Ìý
|
(38)
|
Ìý
|
11
|
Ìý
|
(28)
|
Ìý
|
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Earnings (loss) before income taxes
|
Ìý
|
$
|
284
|
Ìý
|
156
|
Ìý
|
819
|
Ìý
|
414
|
Ìý
|
Ìý
|