In return for carrying our signals, each programming distributor in thefor our U.S. distribution receives an allocated portion, based upon market share, of up to 5% of the net sales of merchandise sold via the television programs and from certain Internet sales to customers located in the programming distributor's service areas. Internationally,In some cases, pay television operators receive additional compensation in the form of commission guarantees in exchange for their commitments to deliver a specified number of subscribers, channel placement incentives and advertising insertion time. QVC-International programming distributors predominatelypredominantly receive an agreed-upon annual fee, a monthly or yearly fee per subscriber regardless of the net sales, a variable percentage of net sales or some combination of the above arrangements.

Through our nine worldwideQVC-International has four distribution centers, we shipped approximately 93% of our orders within two days of the order placement in 2016.centers. Our U.S. distribution centers are located in Suffolk, Virginia; Lancaster, Pennsylvania; Rocky Mount, North Carolina; Florence, South Carolina; and Ontario, California. Our U.S. distribution centers and drop ship partners have shipped nearly 814,000on average 454,000 units per day at QxH and over 733,000 packages in a single day. We also have distribution centers in Sakura-shi, Chiba, Japan; Hücklehoven, Germany; Knowsley, U.K. and Castel San Giovanni, Italy.183,000 units per day for QVC-International during 2019. Refer to Item 2. "Properties" for further details.

Third party carriers transport our packages from our distribution centers to our customers. In each market where we operate, we have negotiated long-term contracts with shipping companies, which in certain circumstances provide for favorable shipping rates.

In the processing of consumer transactions and managing our employees, our business receives, transmits and stores a large volume of personally identifiable information and other user data. The processing, storage, sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by us. Moreover, there are federal, state and international laws regarding privacy and the processing, storage, sharing, use, disclosure and protection of personally identifiable information and user data. Specifically, personally identifiable information is increasingly subject to legislation and regulations, including changes inchanging legislation and regulations, in numerous jurisdictions around the world, the intent of which isare intended to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction. Compliance with these laws and regulations, or changes in these laws and regulations may be onerous and expensive and may be inconsistent from jurisdiction to jurisdiction, further increasing the cost of compliance. For example, the European Court of Justice in October 2015 issued a ruling immediately invalidatinginvalidated the U.S.-EU Safe Harbor Framework, which facilitated personal data transfers to the U.S. in compliance with applicable European data protection laws. The U.S.-EU Safe Harbor Framework was one of the mechanisms we relied upon to transfer European personal data to the United States. In addition, third party vendors and service providers withEU-U.S. Privacy Shield, which we do business also relied onreplaced the U.S.-EU Safe Harbor Framework, for their accessbecame fully operational on August 1, 2016, but is subject to our European customer and employee personal data.legal challenge in the E.U. The business of companies that relied on the U.S.-EU Safe Harbor Framework may be impacted by its invalidation. Following this invalidation, the U.S. and European Union ("EU") authorities approved a new data transfer structure, theEU-U.S. Privacy Shield provides a mechanism to replacecomply with data protection requirements when transferring personal data from the U.S.-EU Safe Harbor Framework, but the Privacy Shield is now the subject of litigation similarE.U. to the litigation that resulted in the invalidation of the U.S.-EU Safe Harbor Framework.U.S. In addition, Standard Contractual Clauses - another key mechanism to allow data transfers between the U.S. and the EUE.U. - isare also subject to litigation over whether Standard Contractual Clauses can be used for transferring personal data from the EUE.U. to the U.S. The Court of Justice of the E.U. is expected to rule on the challenges to the EU-U.S. Privacy Shield and Standard Contractual Clauses in 2020. Further, the European Parliament and the Council of the European Union have approved a General Data Protection Regulation,GDPR, which enters into applicationbecame effective on May 25, 2018, and which will givegives consumers in the E.U. additional rights and imposeimposes additional restrictions and penalties on companies for illegal collection and misuse of personal information. Finally, on January 10, 2017, theThe European Commission proposedis continuing to consider whether to propose new regulations regarding privacy and electronic communications that would complement GDPR, including additional regulation of the Internet tracking tools known as “cookies.” In the absence of such new regulations, European data regulators are indicating their intent to take greater enforcement efforts with respect to the use of cookies. The "Brexit" withdrawal of the United Kingdom (U.K.) from the E.U. may cause transfers of personal data from the E.U. to the U.K. to be subject to increased regulations that would adversely impede the continued sharing of E.U. personal data with the U.K. California has enacted the California Consumer Privacy Act of 2018 (“CCPA”), which, among other things, allows California consumers to request that certain companies disclose the types of personal information collected by such companies. The CCPA became effective on January 1, 2020. The California Attorney General is drafting implementing regulations and guidance regarding the law. Other states in the United States are also separately proposing laws to regulate privacy and security of personal data. Our failure, and/or the failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations, or changes in applicable laws and regulations, or any compromise of security that results in the unauthorized release of personally identifiable information or other user data could damage our reputation and the reputation of our third party vendors and service providers, discourage potential users from trying our products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers, any one or all of which could adversely affect our business, financial condition and results of operations. In addition, we may not have adequate insurance coverage to compensate for losses.

Our failure to identify new vendors and manufacturers, maintain relationships with a significant number of existing vendors and manufacturers and/or access quality merchandise in a timely and efficient manner could cause us to miss customer delivery dates or delay scheduled promotions, which would result in lost sales or the failure to meet customer expectations and could cause customers to cancel orders or cause us to be unable to source merchandise in sufficient quantities, which could result in lost revenue.

We believe that the duration of each lease is adequate and we do not anticipate any future problems renewing or obtaining suitable leases for our principal properties. We believe that our principal properties, whether owned or leased, are currently adequate for the purposes for which they are used and are suitably maintained for these purposes. From time to time, we consider various alternatives related to our long-term facilitiesfacilities' needs.

We areThe Company is an indirect wholly ownedwholly-owned subsidiary of Qurate Retail, Inc. ("Qurate Retail") (formerly Liberty Interactive Corporation ("Liberty")Corporation) (Nasdaq: QRTEA and QRTEB), which owns interests in a broad range of digital commerce businesses. On October 3, 2014,businesses, including Qurate Retail's other wholly-owned subsidiary Zulily, LLC ("Zulily"), as well as other minority investments. QVC is part of the Company declared and paid a dividend in cash to Liberty in the amount of $1 billion with funds drawn from the Company's credit facility. Additionally, Liberty reattributed from the InteractiveQurate Retail Group to the Ventures Group $970 million in cash and certain of its digital commerce companies, including Backcountry.com, Inc., Bodybuilding.com, LLC, CommerceHub, Inc. ("CommerceHub"QRG"), Provide Commerce, Inc. and Evite, Inc. As a result of these transactions, the Interactive Group is now referred to as theformerly QVC Group, a portfolio of brands including QVC, Zulily and the Cornerstone brands ("CBI"). On March 9, 2018, Qurate Retail, GCI Liberty, Inc. ("GCI Liberty") (formerly General Communication, Inc.), an Alaska corporation, and Liberty Interactive LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Qurate Retail completed transactions whereby Qurate Retail acquired GCI Liberty through a reorganization in which tracks the economic performance,certain assets and liabilities of the Company, zulily (defined below) (as of October 1, 2015) and Liberty's 38% equityattributed to Qurate Retail’s Ventures Group were contributed to GCI Liberty in exchange for a controlling interest in HSN, Inc. ("HSN"), oneGCI Liberty. Qurate Retail then effected a tax-free separation of its controlling interest in the Company's two closest televised shopping competitors, along with cash and certain liabilities. The Liberty Interactive tracking stock trading symbol "LINTA" was changed to "QVCA" and the "LINTB" tracking stock trading symbol was changed to "QVCB," effective October 7, 2014. Effective June 4, 2015, the name of the “Liberty Interactive common stock” was changed to the “QVCcombined company. Qurate Retail's QVC Group common stock.” The QVC Group does not represent a separate legal entity; rather, it represents those businesses, assets and liabilities that are attributed to that group.stock became the only outstanding common stock of Qurate Retail.

The prolonged economicEconomic uncertainty in various regions of the world in which our subsidiaries and affiliates operate could adversely affect demand for our products and services since a substantial portion of our revenue is derived from discretionary spending by individuals, which typically falls during times of economic instability. Global financial markets continue to experiencehave recently experienced disruptions, including increased volatility and diminished liquidity and credit availability. If economic and financial market conditions in the U.S. or other key markets, including Japan and Europe, remainbecome uncertain persist, or deteriorate, further, our customers may respond by suspending, delaying or reducing their discretionary spending. A suspension, delay or reduction in discretionary spending could adversely affect revenue. Accordingly, our ability to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments remain weak or decline. Such weak economic conditions may also inhibit our expansion into new European and other markets. We currently are unable to predict the extent of any of these potential adverse effects.

QVC's consolidated net revenue decreased 0.7% for eachThe President of the years ended December 31, 2016United States has expressed apprehension towards trade agreements, such as the Trans-Pacific Partnership, and 2015, respectively,suggested that the U.S. would renegotiate or withdraw from certain trade agreements. He has advocated for and imposed tariffs on certain goods imported into the U.S., particularly from China. In response to these new U.S. tariffs, some foreign governments, including China, have instituted or are considering instituting tariffs on certain U.S. goods. New tariffs and other changes in U.S. trade policy could trigger retaliatory actions by affected countries. Like many other multinational corporations, we do a significant amount of business that could be impacted by changes to U.S. and international trade policies (including governmental action related to tariffs and trade agreements). Such changes have the potential to adversely impact the U.S. economy or certain sectors thereof, our industry and the global demand for our products and, as compareda result, could have a material adverse effect on our business, financial condition and results of operations.

The decrease in 2015 was primarily due to favorable foreign currency exchange rates of $29 million, partially offset by a $9 million increase in commissions expense and an $8$10 million increase in credit card fees. The increasefees primarily at QVC-U.S. and $6 million due to unfavorable exchange rates, which was partially offset by a $2 million decrease in commissions expense was primarily due to increased salesat QVC-U.S., offset by increases in the U.S. The increase in credit card fees wasU.K. and Japan and a $2 million decrease of telephone expenses primarily due to increased sales combined with a higher mix of purchases from customers using credit cards with higher rates charged to merchants primarily in the U.S.at QVC-U.S.

The decrease in 20152018 was primarily related to the inclusion of $254 million of HSN's selling, general and administrative expenses as well as the reclassification of PLCC income, attributing $105 million as a $48result of the adoption of ASC 606, which was previously recorded as an offset to selling, general and administrative expenses for the year ended December 31, 2017. Additionally, there was a $29 million favorable impact of exchange rates,increase in outside services across all markets, a $21 million increase in bad debt expense primarily at QVC-U.S. and to a lesser extent, Japan, a $14 million increase in marketing expenses primarily at QVC-U.S. and a $12 million increase in credit card income and a $10 million decreasedue to unfavorable exchange rates. The increase in bad debt expense is due to favorability in default rates from prior periods, mostly related to the Easy-Pay program at QVC-U.S. during the year ended December 31, 2017. These increases were partially offset by a $53$8 million increasedecrease in personnel expense. The increase in credit card income was due tocosts primarily at QVC-U.S. and Germany.

On March 18, 2014, QVC issued $400 million principal amount of The 3.125% Senior Secured Notes due 2019 (the "2019 Notes") were repaid at maturity in April 2019.

There were no goodwillexcess in accordance with ASC 350-30-35. QVC recorded a $147 million and other intangible asset impairments in$30 million impairment loss related to its HSN indefinite-lived tradename during the yearyears ended December 31, 2016.2019 and 2018, respectively. The carrying value of the HSN indefinite-lived tradename as of December 31, 2019 is $450 million.

For the quarter ended December 31, 2016aforementioned remediation activities, the Company completedidentified additional instances where system access was not appropriately restricted in Germany, indicating that the testingprior year ITGC material weakness has not been fully remediated. As a result, the Company will continue to assess the ITGC risk across the environment and evaluation ofevaluate if the operating effectiveness of the controls, and based on the results of the testing, the controls were determined to becontrol activities are designed and operating to address the risks identified.