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Quarterly report pursuant to Section 13 or 15(d)

Information jvidÊÓƵ Liberty's Operating Segments

v2.3.0.15
Information jvidÊÓƵ Liberty's Operating Segments
 9 Months Ended
Sep. 30, 2011
Information jvidÊÓƵ Liberty's Operating Segments Ìý
Information jvidÊÓƵ Liberty's Operating Segments
Information 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 pre-tax earnings or total assets and (B)Ìýthose equity method affiliates whose share of earnings represent 10% or more of Liberty's annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.
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 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, separately reported litigation settlements 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, 2011, Liberty has identified the following business as its reportable segment:
•
QVC—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.
Additionally, for presentation purposes Liberty is providing financial information of the E-commerce businesses on an aggregated basis. The consolidated 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. While 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.
•
E-commerce—the aggregation of certain consolidated subsidiaries that market and sell a wide variety of consumer products via the Internet. Categories of consumer products include perishable and personal gift offerings (Provide Commerce, Inc.), active lifestyle gear and clothing (Backcountry.com, Inc.), fitness and health goods (Bodybuilding.com, LLC) and celebration offerings from invitations to costumes (Celebrate Interactive Holdings, Inc.).
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. The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the Company's summary of significant accounting policies.
Performance Measures
Ìý
Nine months
ended
Ìý
SeptemberÌý30,
Ìý
2011
Ìý
2010
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
amounts in millions
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
5,619

Ìý
1,154

Ìý
5,286

Ìý
1,138

E-commerce
918

Ìý
74

Ìý
760

Ìý
56

Corporate and other
—

Ìý
(23
)
Ìý
—

Ìý
(12
)
ÌýÌýÌýÌýConsolidated
$
6,537

Ìý
1,205

Ìý
6,046

Ìý
1,182



Ìý
Three months
ended
Ìý
SeptemberÌý30,
Ìý
2011
Ìý
2010
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
amounts in millions
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
1,886

Ìý
373

Ìý
1,771

Ìý
369

E-commerce
247

Ìý
9

Ìý
197

Ìý
10

Corporate and other
—

Ìý
(5
)
Ìý
—

Ìý
(6
)
ÌýÌýÌýÌýConsolidated
$
2,133

Ìý
377

Ìý
1,968

Ìý
373


Other Information
Ìý
SeptemberÌý30,
2011
Ìý
Ìý
Total
assets
Ìý
Investments
in
affiliates
Ìý
Capital
expenditures
Ìý
amounts in millions
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
13,206

Ìý
—

Ìý
154

E-commerce
1,441

Ìý
15

Ìý
38

Corporate and other
2,378

Ìý
1,051

Ìý
—

ÌýÌýÌýÌýConsolidated
$
17,025

Ìý
1,066

Ìý
192



The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
Ìý
Three months
ended
Ìý
Nine months
ended
Ìý
SeptemberÌý30,
Ìý
SeptemberÌý30,
Ìý
2011
Ìý
2010
Ìý
2011
Ìý
2010
Ìý
amounts in millions
Consolidated segment Adjusted OIBDA
$
377

Ìý
373

Ìý
1,205

Ìý
1,182

ÌýÌýStock-based compensation
(2
)
Ìý
(12
)
Ìý
(32
)
Ìý
(49
)
ÌýÌýDepreciation and amortization
(151
)
Ìý
(141
)
Ìý
(448
)
Ìý
(421
)
ÌýÌýInterest expense
(105
)
Ìý
(166
)
Ìý
(326
)
Ìý
(502
)
ÌýÌýShare of earnings (loss) of affiliates, net
62

Ìý
36

Ìý
119

Ìý
93

ÌýÌýRealized and unrealized gains (losses) on financial instruments, net
(91
)
Ìý
(89
)
Ìý
(61
)
Ìý
(14
)
ÌýÌýGains (losses) on dispositions, net
—

Ìý
30

Ìý
—

Ìý
216

ÌýÌýOther, net
(9
)
Ìý
5

Ìý
12

Ìý
(41
)
Earnings (loss) from continuing operations before income taxes
$
81

Ìý
36

Ìý
469

Ìý
464