jvid视频

(1)听听听Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of jvid视频. (formerly named Liberty Interactive Corporation, prior to the Transactions defined and described below, or 鈥淟iberty鈥�) and its controlled subsidiaries (collectively, "jvid视频," the "Company," 鈥淐onsolidated jvid视频,鈥� 鈥渦s,鈥� 鈥渨e,鈥� or 鈥渙ur鈥� unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. jvid视频 is made up of wholly-owned subsidiaries QVC, Inc. (鈥淨VC鈥�), which includes HSN, Inc. (鈥淗SN鈥�) following the transfer of ownership of HSN to QVC (described below), Cornerstone Brands, Inc. (former subsidiary of HSN prior to the transfer of ownership of HSN to QVC, 鈥淐ornerstone鈥�), Zulily, LLC (鈥淶ulily鈥�), and other cost and equity method investments.

jvid视频 is primarily engaged in the video and online commerce industries in North America, Europe and Asia. The businesses of the Company鈥檚 wholly-owned subsidiaries, QVC, Cornerstone and Zulily, are seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.

The accompanying (a) condensed consolidated balance sheet as of December听31, 2018, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form听10-Q and Article听10 of Regulation听S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. In the current quarter the Company corrected a prior year immaterial error of $281 million which resulted in a reclassification within the working capital categories in the operating activities section of the condensed consolidated statement of cash flows which did not change net working capital. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in jvid视频's Annual Report on Form听10-K for the year ended December听31, 2018.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. jvid视频 considers (i)听fair value measurements, (ii)听accounting for income taxes, and (iii)听estimates of retail-related adjustments and allowances to be its most significant estimates. 听 听

Prior to the Transactions (described and defined below), the Company utilized tracking stocks in its capital structure. A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. jvid视频 had two tracking stocks鈥擰VC Group common stock and Liberty Ventures common stock, which were intended to track and reflect the economic performance of the businesses, assets and liabilities attributed to the QVC Group and the Ventures Group, respectively. The QVC Group was comprised of the Company鈥檚 wholly-owned subsidiaries QVC, Zulily, HSN and Cornerstone, among other assets and liabilities. The Ventures Group was comprised of businesses not included in the QVC Group including Evite, Inc. (鈥淓vite鈥�) and our interests in Liberty Broadband Corporation (鈥淟iberty Broadband鈥�), LendingTree, Inc. (鈥淟endingTree鈥�), investments in Charter Communications, Inc. (鈥淐harter鈥�) and ILG, Inc. (鈥淚LG鈥�), among other assets and liabilities. The Company鈥檚 results are attributed to the QVC Group and the Ventures Group through March 9, 2018.

On December 31, 2018, jvid视频 transferred its 100% ownership interest in HSN to QVC, Inc. through a transaction among entities under common control. References throughout this quarterly report to 鈥淨VC鈥� refer to QVC, Inc., which includes HSN, QVC U.S. and QVC International. 听Cornerstone remains a subsidiary of jvid视频.

On March听9, 2018, jvid视频 completed the transactions contemplated by the Agreement and Plan of Reorganization (as amended, the 鈥淩eorganization Agreement,鈥� and the transactions contemplated thereby, the

鈥淭ransactions鈥�) among General Communication,听Inc. (鈥淕CI鈥�), an Alaska corporation, and Liberty Interactive听LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Liberty (鈥淟I听LLC鈥�). Pursuant to the Reorganization Agreement, GCI amended and restated its articles of incorporation (which resulted in GCI being renamed GCI Liberty,听Inc. (鈥淕CI Liberty鈥�)) and effected a reclassification and auto conversion of its common stock. After market close on March 8, 2018, jvid视频鈥檚 board of directors approved the reattribution of certain assets and liabilities from jvid视频鈥檚 Ventures Group to its QVC Group, which was effective immediately. The reattributed assets and liabilities included cash, jvid视频鈥檚 interest in ILG, certain green energy investments, LI LLC鈥檚 exchangeable debentures, and certain tax benefits.听

Following these events, jvid视频 acquired GCI (renamed 鈥淕CI Liberty, Inc.鈥�) through a reorganization in which certain jvid视频 interests, assets and liabilities attributed to the Ventures Group were contributed (the 鈥渃ontribution鈥�) to GCI Liberty in exchange for a controlling interest in GCI Liberty. jvid视频 and LI听LLC contributed to GCI Liberty their entire equity interest in Liberty Broadband, Charter, and LendingTree, the Evite operating business and other assets and liabilities attributed to jvid视频鈥檚 Venture Group (following the reattribution), in exchange for (a)听the issuance to LI听LLC of听a number of shares of GCI Liberty Class听A Common Stock and a number of shares of GCI Liberty Class听B Common Stock equal to the number of outstanding shares of Series听A Liberty Ventures common stock and Series听B Liberty Ventures common stock on March听9, 2018, respectively, (b)听cash and (c)听the assumption of certain liabilities by GCI Liberty. The following is a reconciliation of the assets and liabilities that were derecognized by the Company (in millions) at the date of the GCI Liberty Split-Off (as defined below):

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Following the contribution, jvid视频 effected a tax-free separation of its controlling interest in the combined company (the 鈥淕CI Liberty Split-Off鈥�), GCI Liberty, to the holders of Liberty Ventures common stock in full redemption of all outstanding shares of such stock, in which each outstanding share of Series听A Liberty Ventures common stock was redeemed for one share of GCI Liberty Class听A common stock and each outstanding share of Series听B Liberty Ventures common stock was redeemed for one share of GCI Liberty Class听B common stock. 听Simultaneous with the closing of the Transactions, QVC Group common stock became the only outstanding common stock of jvid视频, and thus QVC Group common stock ceased to function as a tracking stock. On April 9, 2018, Liberty Interactive Corporation was renamed jvid视频. On May 23, 2018, jvid视频 amended its charter to eliminate the tracking stock capitalization structure and reclassify each share of QVC Group common stock into one share of the corresponding series of new common stock of jvid视频. With respect to events on or after May 23, 2018, we refer to our Series A and Series B common stock as 鈥渏vid视频 common stock.鈥� In July 2018, the Internal Revenue Service (鈥淚RS鈥�) completed its review of the GCI Liberty Split-Off and informed jvid视频 that it agreed with the nontaxable characterization of the transactions. jvid视频 received an Issue Resolution Agreement from the IRS documenting this conclusion.

On October 17, 2018, jvid视频 announced a series of initiatives designed to better position its HSN and QVC- U.S. businesses (鈥淨RG Initiatives鈥�). As part of the QRG Initiatives, QVC will close its fulfillment centers in Lancaster, Pennsylvania and Roanoke, Virginia and has entered into an agreement to lease a new fulfillment center in Bethlehem, Pennsylvania, commencing in 2019 (see note 8). 听As a result of changes in internal reporting from the QRG Initiatives, during the first quarter of 2019 the Company changed its reportable segments to combine HSN and QVC U.S. into one reportable segment called 鈥淨xH.鈥�

As a result of repurchases of Series A jvid视频 common stock, the Company鈥檚 additional paid-in capital balance was in a deficit position as of June听30, 2019. 听In order to ensure that the additional paid-in capital account is not negative, we reclassified the amount of the deficit ($265 million) at June听30, 2019 to retained earnings.

jvid视频 has entered into certain agreements with Liberty Media Corporation ("LMC") (for accounting purposes, a related party of the Company), a separate publicly traded company. These agreements include a reorganization agreement, services agreement and facilities sharing agreement. Neither jvid视频 nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with the GCI Liberty Split-Off, jvid视频 and GCI Liberty (for accounting purposes a related party of jvid视频) entered into a tax sharing agreement.

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The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between jvid视频 and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides jvid视频 with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. jvid视频 reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for jvid视频's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to jvid视频. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with jvid视频. Under these various agreements, approximately $1 million and $2 million was reimbursable to LMC for the three months ended June听30, 2019 and 2018, respectively, and $3 million and $4 million was reimbursable to LMC for the six months ended June听30, 2019 and 2018, respectively. 听jvid视频 has a tax sharing payable to GCI Liberty in the amount of approximately $82 million as of June 30, 2019, which is included in Other liabilities in the condensed consolidated balances sheets.听

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Accounting Pronouncements Not Yet Adopted

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Internal-Use Software. 听In August 2018, the Financial Accounting Standards Board (鈥淔ASB鈥�) issued new guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. 听The guidance will be effective for the Company in the first quarter of 2020 with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements.