Basis Of Presentation |
6 Months Ended |
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Jun. 30, 2020 | |
| Basis of Presentation | 听 |
| Basis of Presentation |
(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 GCI Liberty Split-Off defined and described below) 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), Cornerstone Brands, Inc. (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. 听 The accompanying (a) condensed consolidated balance sheet as of December听31, 2019, 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. 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, 2019. 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 In December 2019, a new coronavirus (鈥淐OVID-19鈥) was reported to have surfaced in Wuhan, China and has subsequently spread across the globe causing a global pandemic, impacting all countries where jvid视频 operates. As a result of the spread of the virus, most local governmental agencies have imposed travel restrictions, local quarantines or stay at home restrictions to contain the spread, which has caused a significant disruption to most sectors of the economy. As a result of COVID-19, management has increased the amounts of certain estimated reserves, including but not limited to, uncollectible receivables, inventory obsolescence and sales returns for the three and six months ended June 30, 2020. Other than these changes, management is not presently aware of any events or circumstances arising from the COVID-19 pandemic that would require the Company to update our estimates or judgments or revise the carrying value of our assets or liabilities. 听Management鈥檚 estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements. 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. 听As a result of certain corporate transactions, LMC and jvid视频 may have obligations to each other for certain tax related matters. Neither jvid视频 nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with a split-off transaction that occurred in the first quarter of 2018 (the 鈥淕CI Liberty Split-Off鈥), jvid视频 and GCI Liberty, Inc. (鈥淕CI Liberty鈥) (for accounting purposes, a related party of the Company) entered into a tax sharing agreement. 听Pursuant to the tax sharing agreement, GCI Liberty has agreed to indemnify jvid视频 for taxes and tax-related losses resulting from the GCI Liberty Split-Off to the extent such taxes or tax-related losses (i) result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by GCI Liberty (applicable to actions or failures to act by GCI Liberty and its subsidiaries following the completion of the GCI Liberty Split-Off), or (ii) result from Section 355(e) of the Internal Revenue Code applying to the GCI Liberty Split-Off as a result of the GCI Liberty Split-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of GCI Liberty (or any successor corporation).
In December 2019, the Company entered into an amendment to the services agreement in connection with LMC鈥檚 entry into a new employment arrangement with Gregory B. Maffei, the Company鈥檚 Chairman of the Board (the 鈥淐hairman鈥). Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., GCI Liberty, and Liberty Broadband Corporation. (collectively, the 鈥淪ervice Companies鈥) or reimbursed to LMC, in each case, based on allocations among LMC and the Service Companies set forth in the amended services agreement, currently set at听19% for the Company.听
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 $2 million and $1 million was reimbursable to LMC for the three months ended June听30, 2020 and 2019, respectively, and $5 million and $3 million was reimbursable to LMC for the six months ended June听30, 2020 and 2019, respectively. 听jvid视频 had a tax sharing payable with LMC and GCI Liberty in the amount of approximately $99 million and $95 million as of June听30, 2020 and December 31, 2019, respectively, included in Other liabilities in the condensed consolidated balance sheets.听
On August 10, 2020, jvid视频 announced its Board of Directors intends to distribute a special dividend consisting of (i) cash in the amount of听$1.50听per common share for an aggregate cash dividend of approximately听$633 million and (ii) newly issued 8.0% fixed rate cumulative redeemable preferred shares (the 鈥淧referred Shares鈥) equivalent to $3.00 in initial liquidation value per common share, for an aggregate issuance of approximately $1.3 billion aggregate liquidation preference. The dividend has not yet been declared and is subject to formal approval by a committee of the board, but is currently expected to be payable on听September 14th to holders of record of jvid视频鈥檚 Series A and Series B common stock as of the close of business on听August 31st. Holders of the Preferred Shares are expected to receive quarterly cash dividends at a fixed rate of 8.0% per year. The Preferred Shares are expected to be non-voting, subject to a mandatory redemption right in the first quarter of 2031.
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