jvidÊÓƵ

Annual report pursuant to Section 13 and 15(d)

Information jvidÊÓƵ Liberty's Operating Segments

v2.4.0.6
Information jvidÊÓƵ Liberty's Operating Segments
 12 Months Ended
Dec. 31, 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 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. 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 year ended DecemberÌý31, 2011, Liberty has identified the following consolidated subsidiaries and equity method affiliates as its reportable segments:
•
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.
•
Expedia, Inc.—a 26% owned equity method affiliate that operates an easily accessible global travel marketplace, allowing customers to research, plan and book travel products and services from travel suppliers and allowing these travel suppliers to efficiently reach and provide their products and services to Expedia customers.
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
Years ended
Ìý
December 31,
Ìý
2011
Ìý
2010
Ìý
2009
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
amounts in millions
QVC
$
8,268

Ìý
1,733

Ìý
7,807

Ìý
1,671

Ìý
7,352

Ìý
1,556

E-commerce
1,348

Ìý
123

Ìý
1,125

Ìý
103

Ìý
953

Ìý
112

Expedia, Inc.
3,449

Ìý
699

Ìý
3,034

Ìý
683

Ìý
2,743

Ìý
605

Corporate and other
—

Ìý
(33
)
Ìý
—

Ìý
(28
)
Ìý
—

Ìý
(14
)
Total
$
13,065

Ìý
2,522

Ìý
11,966

Ìý
2,429

Ìý
11,048

Ìý
2,259

Eliminate equity method affiliates
(3,449
)
Ìý
(699
)
Ìý
(3,034
)
Ìý
(683
)
Ìý
(2,743
)
Ìý
(605
)
Consolidated
$
9,616

Ìý
1,823

Ìý
8,932

Ìý
1,746

Ìý
8,305

Ìý
1,654

Other Information
Ìý
DecemberÌý31,
2011
Ìý
DecemberÌý31,
2010
Ìý
Ìý
Total
assets
Ìý
Investments
in
affiliates
Ìý
Capital
expenditures
Ìý
Total
assets
Ìý
Investments
in
affiliates
Ìý
Capital
expenditures
Ìý
amounts in millions
QVC
$
13,554

Ìý
—

Ìý
259

Ìý
13,665

Ìý
2

Ìý
220

E-commerce
1,486

Ìý
13

Ìý
53

Ìý
1,399

Ìý
6

Ìý
38

Expedia, Inc.
6,505

Ìý
—

Ìý
208

Ìý
6,657

Ìý
—

Ìý
136

Corporate and other
2,299

Ìý
1,122

Ìý
—

Ìý
11,536

Ìý
941

Ìý
—

Total
$
23,844

Ìý
1,135

Ìý
520

Ìý
33,257

Ìý
949

Ìý
394

Eliminate equity method affiliates
(6,505
)
Ìý
—

Ìý
(208
)
Ìý
(6,657
)
Ìý
—

Ìý
(136
)
Consolidated
$
17,339

Ìý
1,135

Ìý
312

Ìý
26,600

Ìý
949

Ìý
258


The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
Ìý
Ìý
Ìý
Ìý
Ìý
Years ended December 31,
Ìý
2011
Ìý
2010
Ìý
2009
Ìý
amounts in millions
Consolidated segment Adjusted OIBDA
$
1,823

Ìý
1,746

Ìý
1,654

ÌýÌýStock-based compensation
(49
)
Ìý
(67
)
Ìý
(47
)
ÌýÌýDepreciation and amortization
(641
)
Ìý
(571
)
Ìý
(566
)
ÌýÌýInterest expense
(427
)
Ìý
(626
)
Ìý
(594
)
ÌýÌýShare of earnings (loss) of affiliates, net
140

Ìý
112

Ìý
24

ÌýÌýRealized and unrealized gains (losses) on financial instruments, net
84

Ìý
62

Ìý
(589
)
ÌýÌýGains (losses) on dispositions, net
—

Ìý
355

Ìý
42

ÌýÌýOther, net
9

Ìý
(47
)
Ìý
(6
)
Earnings (loss) from continuing operations before income taxes
$
939

Ìý
964

Ìý
(82
)


Revenue by Geographic Area
Revenue by geographic area based on the location of customers is as follows:
Ìý
Years ended December 31,
Ìý
2011
Ìý
2010
Ìý
2009
Ìý
amounts in millions
United States
$
6,670

Ìý
6,298

Ìý
5,884

Japan
1,133

Ìý
1,019

Ìý
870

Germany
1,068

Ìý
956

Ìý
942

Other foreign countries
745

Ìý
659

Ìý
609

Ìý
$
9,616

Ìý
8,932

Ìý
8,305



Long-lived Assets by Geographic Area
Ìý
December 31,
Ìý
2011
Ìý
2010
Ìý
amounts in millions
United States
$
481

Ìý
473

Japan
224

Ìý
183

Germany
233

Ìý
216

Other foreign countries
195

Ìý
166

Ìý
$
1,133

Ìý
1,038