Document and Entity Information
Document and Entity Information Document | 9 Months Ended |
Sep. 30, 2016shares | |
Document Information [Abstract] | |
Entity Registrant Name | QVC INC |
Entity Central Index Key | 1,254,699 |
Current Fiscal Year End Date | --12-31 |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 1 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2016 |
Document Fiscal Year Focus | 2,016 |
Document Fiscal Period Focus | Q3 |
Amendment Flag | false |
Entity Current Reporting Status submitted electronically | Yes |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 319 | $ 327 |
Restricted cash | 11 | 11 |
Accounts receivable, less allowance for doubtful accounts of $90 at September 30, 2016 and $86 at December 31, 2015 | 794 | 1,370 |
Inventories | 1,123 | 929 |
Prepaid expenses and other current assets | 50 | 42 |
Total current assets | 2,297 | 2,679 |
Noncurrent assets: | ||
Property and equipment, net of accumulated depreciation of $1,045 at September 30, 2016 and $941 at December 31, 2015 | 1,087 | 1,002 |
Cable and satellite television distribution rights, net | 205 | 339 |
Goodwill | 5,069 | 5,035 |
Other intangible assets, net | 2,793 | 2,936 |
Other noncurrent assets | 87 | 67 |
Total assets | 11,538 | 12,058 |
Current liabilities: | ||
Current portion of debt and capital lease obligations | 13 | 9 |
Accounts payable-trade | 637 | 658 |
Accrued liabilities | 626 | 872 |
Total current liabilities | 1,276 | 1,539 |
Noncurrent liabilities: | ||
Long-term portion of debt and capital lease obligations | 5,254 | 5,393 |
Deferred income taxes | 750 | 827 |
Other long-term liabilities | 153 | 181 |
Total liabilities | 7,433 | 7,940 |
QVC, Inc. stockholder's equity: | ||
Common stock, $0.01 par value, 1 authorized share | 0 | 0 |
Additional paid-in capital | 6,842 | 6,827 |
Accumulated deficit | (2,740) | (2,669) |
Accumulated other comprehensive loss | (122) | (140) |
Total QVC, Inc. stockholder's equity | 3,980 | 4,018 |
Noncontrolling interest | 125 | 100 |
Total equity | 4,105 | 4,118 |
Total liabilities and equity | $ 11,538 | $ 12,058 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parentheticals) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Allowance for doubtful accounts | $ 90 | $ 86 |
Accumulated depreciation | $ 1,045 | $ 941 |
Common stock par value | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 1 | 1 |
Condensed Statements of Operati
Condensed Statements of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net revenue | $ 1,948 | $ 2,007 | $ 6,024 | $ 5,943 |
Cost of goods sold | 1,251 | 1,266 | 3,816 | 3,721 |
Gross profit | 697 | 741 | 2,208 | 2,222 |
Operating expenses: | ||||
Operating | 140 | 144 | 428 | 424 |
Selling, general and administrative, including stock-based compensation | 172 | 176 | 533 | 536 |
Depreciation | 38 | 33 | 103 | 101 |
Amortization | 116 | 108 | 345 | 341 |
Operating expenses | 466 | 461 | 1,409 | 1,402 |
Operating income | 231 | 280 | 799 | 820 |
Other (expense) income: | ||||
Equity in losses of investee | (2) | (3) | (4) | (7) |
Interest expense, net | (52) | (49) | (159) | (158) |
Foreign currency gain | 5 | 12 | 27 | 11 |
Loss on extinguishment of debt | 0 | 0 | 0 | (21) |
Nonoperating expense | (49) | (40) | (136) | (175) |
Income before income taxes | 182 | 240 | 663 | 645 |
Income tax expense | (66) | (86) | (244) | (243) |
Net income | 116 | 154 | 419 | 402 |
Less net income attributable to the noncontrolling interest | (9) | (8) | (28) | (25) |
Net income attributable to QVC, Inc. stockholder | $ 107 | $ 146 | $ 391 | $ 377 |
Condensed Statements of Compreh
Condensed Statements of Comprehensive Income Statement - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Net income | $ 116 | $ 154 | $ 419 | $ 402 |
Foreign currency translation adjustments, net of tax | (3) | 3 | 36 | (77) |
Total comprehensive income | 113 | 157 | 455 | 325 |
Comprehensive income attributable to noncontrolling interest | (11) | (11) | (46) | (25) |
Comprehensive income attributable to QVC, Inc. stockholder | $ 102 | $ 146 | $ 409 | $ 300 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Net income | $ 419 | $ 402 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Equity in losses of investee | 4 | 7 |
Deferred income taxes | (68) | (78) |
Foreign currency gain | (27) | (11) |
Depreciation | 103 | 101 |
Amortization | 345 | 341 |
Noncash interest | 5 | 6 |
Loss on extinguishment of debt | 0 | 21 |
Stock-based compensation | 24 | 24 |
Change in other long-term liabilities | 0 | 17 |
Effects of changes in working capital items | 44 | (37) |
Net cash provided by operating activities | 849 | 793 |
Investing activities: | ||
Capital expenditures | (140) | (132) |
Expenditures for cable and satellite television distribution rights | (8) | (48) |
Changes in other noncurrent assets | (2) | (1) |
Other investing activities | (3) | 2 |
Net cash used in investing activities | (153) | (179) |
Financing activities: | ||
Principal payments of debt and capital lease obligations | (1,300) | (1,565) |
Principal borrowings of debt from senior secured credit facility | 1,048 | 1,470 |
Payment of debt origination fees | (2) | (3) |
Payment of bond premium fees | 0 | (18) |
Dividends paid to Liberty | 427 | 444 |
Dividends paid to noncontrolling interest | (21) | (20) |
Other financing activities | (9) | (14) |
Net cash used in financing activities | (711) | (594) |
Effect of foreign exchange rate changes on cash and cash equivalents | 7 | (4) |
Net (decrease) increase in cash and cash equivalents | (8) | 16 |
Cash and cash equivalents, beginning of period | 327 | 347 |
Cash and cash equivalents, end of period | 319 | 363 |
Effects of changes in working capital items: | ||
Decrease in accounts receivable | 583 | 319 |
Increase in inventories | (192) | (298) |
Increase in prepaid expenses and other current assets | (14) | (5) |
(Decrease) increase in accounts payable-trade | (40) | 84 |
Decrease in accrued liabilities and other | (293) | (137) |
Effects of changes in working capital items | $ 44 | $ (37) |
Condensed Statement of Equity
Condensed Statement of Equity - 9 months ended Sep. 30, 2016 - USD ($) $ in Millions | Total | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Noncontrolling interest |
Balance, December 31, 2015 at Dec. 31, 2015 | $ 4,118 | $ 0 | $ 6,827 | $ (2,669) | $ (140) | $ 100 |
Balance beginning (in shares) at Dec. 31, 2015 | 1 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 419 | 0 | 391 | 0 | 28 | |
Foreign currency translation adjustments, net of tax | 0 | 0 | 18 | 18 | ||
Foreign currency translation adjustments, net of tax | 36 | |||||
Dividends paid to Liberty and noncontrolling interest and other | (448) | 0 | (427) | 0 | (21) | |
Impact of tax liability allocation and indemnification agreement with Liberty | (35) | 0 | (35) | 0 | 0 | |
Withholding taxes on net share settlements of stock-based compensation | (9) | (9) | 0 | 0 | 0 | |
Stock-based compensation | 24 | 24 | 0 | 0 | 0 | |
Balance, September 30, 2016 at Sep. 30, 2016 | $ 4,105 | $ 0 | $ 6,842 | $ (2,740) | $ (122) | $ 125 |
Balance ending (in shares) at Sep. 30, 2016 | 1 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation [Abstract] | |
Basis of presentation | Basis of Presentation QVC, Inc. and its consolidated subsidiaries ("QVC" or the "Company") is a retailer of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised shopping programs, the Internet and mobile applications. In the United States ("U.S."), QVC's live programming is distributed via its nationally televised shopping program 24 hours per day, 364 days per year. Internationally, QVC's program services are based in Germany, the United Kingdom ("U.K."), Italy, Japan, and France. In Germany, QVC distributes its program 24 hours per day with 17 hours of live programming. In Japan, QVC distributes live programming 24 hours per day. In the U.K., QVC distributes its program 24 hours per day with 16 hours of live programming. In Italy, QVC distributes programming live for 17 hours per day on satellite and digital terrestrial television and an additional seven hours per day of recorded programming on satellite and seven hours per day of general interest programming on digital terrestrial television. On weekdays, QVC distributes shopping programming in France live for eight hours per day, and distributes an additional 14 hours per day of recorded programming and two hours per day of general interest programming. On weekends, QVC distributes shopping programming in France live for 12 hours per day, and distributes an additional 10 hours per day of recorded programming and two hours per day of general interest programming. Historically, QVC reported its results on a country-by-country basis. During the year ended December 31, 2015, QVC began reporting its results based on two operating segments: QVC-US, which is comprised of our U.S. operations and QVC-International, which is comprised of our international operations in Germany, Japan, the U.K., Italy and France. Refer to note 11 for additional information. The Company's Japanese operations ("QVC-Japan") are conducted through a joint venture with Mitsui & Co., LTD ("Mitsui") for a television and multimedia retailing service in Japan. QVC-Japan is owned 60% by the Company and 40% by Mitsui. The Company and Mitsui share in all profits and losses based on their respective ownership interests. During the nine months ended September 30, 2016 and 2015 , QVC-Japan paid dividends to Mitsui of $21 million and $20 million , respectively. The Company also has a joint venture with CNR Media Group, formerly known as China Broadcasting Corporation, a limited liability company owned by China National Radio (''CNR''). The Company owns a 49% interest in a CNR subsidiary, CNR Home Shopping Co., Ltd. (''CNRS''). CNRS operates a retail business in China through a shopping television channel with an associated website. Live programming is distributed 15 hours per day and recorded programming is distributed for nine hours per day. This joint venture is accounted for as an equity method investment recorded as equity in losses of investee in the condensed consolidated statements of operations. The Company is an indirect wholly owned subsidiary of Liberty Interactive Corporation ("Liberty"), which owns interests in a broad range of digital commerce businesses. The QVC Group common stock (Nasdaq: QVCA and QVCB), tracks the economic performance, assets and liabilities of the QVC Group. The QVC Group tracks the Company, zulily, llc (as of October 1, 2015) and Liberty's 38% equity interest in HSN, Inc., one of the Company's two closest televised shopping competitors, along with cash and certain liabilities. The QVC Group does not represent a separate legal entity; rather, it represents those businesses, assets and liabilities that are attributed to that group. On October 1, 2015, Liberty acquired all of the outstanding shares of zulily, inc. ("zulily") (now known as zulily, llc) and QVC declared and paid a dividend to Liberty in the amount of $910 million with funds drawn from the Company’s credit facility to support Liberty’s purchase. zulily is an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched each day for a limited time period. zulily is attributed to the QVC Group and the Company believes that its business is complementary to the Company. zulily is not part of the results of operations or financial position of QVC presented in these condensed consolidated financial statements. During the nine months ended September 30, 2016, QVC and zulily engaged in multiple transactions relating to sales, sourcing of merchandise, marketing initiatives and business advisory services. The gross value of these transactions totaled less than $11 million , which did not have a material impact on QVC's financial position, results of operations, or liquidity. Additionally, on June 23, 2016, QVC amended and restated its senior secured credit facility (the "Third Amended and Restated Credit Agreement") increasing the revolving credit facility from $2.25 billion to $2.65 billion as explained further in note 6. The Third Amended and Restated Credit Agreement includes a $400 million tranche that may be borrowed by QVC or zulily. Under the terms of the Third Amended and Restated Credit Agreement, QVC and zulily are jointly and severally liable for all amounts borrowed on the $400 million tranche. In accordance with the accounting guidance for obligations resulting from joint and several liability arrangements, QVC will record a liability for amounts it has borrowed under the credit facility plus any additional amount it expects to repay on behalf of zulily. As of September 30, 2016 , there was $55 million borrowed by zulily on the $400 million tranche of the senior secured credit facility, none of which the Company expects to repay on behalf of zulily. QVC engages with CommerceHub, Inc. ("CommerceHub"), which was an approximately 99% owned subsidiary of Liberty prior to the completion of its spinoff from Liberty in July 2016, to handle communications between QVC and certain of its vendors for drop ship sales and returns. CommerceHub is not part of the results of operations or financial position of QVC presented in these condensed consolidated financial statements. During each of the nine months ended September 30, 2016, and 2015, QVC paid CommerceHub for the related services totaling less than $2 million , which did not have a material impact on QVC's financial position, results of operations, or liquidity. As of July 22, 2016, Liberty completed the spin-off of CommerceHub. As a result, Liberty and CommerceHub are now separate publicly traded companies. The condensed consolidated financial statements include the accounts of QVC, Inc. and its majority-owned subsidiaries. All significant intercompany accounts and transactions were eliminated in consolidation. The accompanying (a) condensed consolidated balance sheet as of December 31, 2015, 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 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S. 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. The results of operations for any interim period are not necessarily indicative of results for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in QVC's Annual Report on Form 10-K for the year ended December 31, 2015 . The preparation of financial statements in conformity with U.S. 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. Estimates include, but are not limited to, sales returns, uncollectible receivables, inventory obsolescence, depreciable lives of fixed assets, internally-developed software, valuation of acquired intangible assets and goodwill, income taxes and stock‑based compensation. On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued ASU No. 2016-08 which clarifies principal versus agent considerations, in April 2016, the FASB issued ASU No. 2016-10 which clarifies the identification of performance obligations and the implementation guidance for licensing, and in May 2016, the FASB issued ASU No. 2016-12 which clarifies assessing collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. The Company has started a preliminary assessment, but has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement , which provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. The Company has adopted this guidance as of January 1, 2016, and there was no significant effect of the standard on its financial reporting. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory , which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The new principle is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. The Company has determined there is no significant effect of the standard on its ongoing financial reporting. In January 2016, the FASB issued ASU No. 2016-01, Financial Statements - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which requires equity investments with readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s ongoing financial reporting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for the Company beginning on January 1, 2019 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company has not yet determined what the effects of adopting this ASU will be on its ongoing financial reporting. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures which resulted in an inconsequential effect to the condensed consolidated statement of operations for the nine months ended September 30, 2016. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the condensed consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. The presentation changes for excess tax benefits have been applied retrospectively in the condensed consolidated statements of cash flows resulting in $6 million of excess tax benefits for the nine months ended September 30, 2016 reclassified from cash flows from financing activities to cash flows from operating activities. Refer to the reclassification section below for additional detail of the adoption of this guidance. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues to reduce the diversity in practice for appropriate classification on the statement of cash flows. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 with early adoption permitted. The Company does not expect the adoption will have a material effect on the condensed consolidated financial statements. In October 2016, the FASB issued ASU No. 2016-16, Income taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory , which requires an entity to recognize at the transaction date the income tax consequences of intercompany asset transfers. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures. Reclassifications Certain prior period amounts have been reclassified to conform with current period presentation. For the three and nine month periods ended September 30, 2015 the Company has reclassified costs of $30 million and $93 million , respectively, on the condensed consolidated statements of operations from operating to selling, general and administrative, including stock-based compensation due to continued convergence of broadcast and e-commerce operations which included programming, broadcasting, personnel and production costs. For the three and nine month periods ended September 30, 2015 the Company has reclassified certain prior period amounts relating to the QVC-International segment disclosure to conform with the current period presentation. Refer to note 11 for additional information. For the nine months ended September 30, 2015 the Company has reclassified excess tax benefit from stock-based compensation of approximately $13 million on the condensed consolidated statements of cash flows from other financing activities to accrued liabilities and other in relation to the adoption of ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . |
Cable and Satellite Television
Cable and Satellite Television Distribution Rights, Net | 9 Months Ended |
Sep. 30, 2016 | |
Cable and Satellite Television Distribution Rights [Abstract] | |
Cable and Satellite Television Distribution Rights, Net | Cable and Satellite Television Distribution Rights, Net Cable and satellite television distribution rights consisted of the following: (in millions) September 30, 2016 December 31, 2015 Cable and satellite television distribution rights $ 2,277 2,259 Less accumulated amortization (2,072 ) (1,920 ) Cable and satellite television distribution rights, net $ 205 339 The Company recorded amortization expense of $47 million and $45 million for the three months ended September 30, 2016 and 2015 , respectively, related to cable and satellite television distribution rights. For the nine months ended September 30, 2016 and 2015 , amortization expense for cable and satellite television distribution rights was $143 million and $140 million , respectively. As of September 30, 2016 , related amortization expense for each of the next five years ended December 31 was as follows (in millions): Remainder of 2016 $ 46 2017 125 2018 13 2019 9 2020 8 The decrease in future amortization expense in 2018 is primarily due to the end of affiliation agreement terms for contracts in place at the time of Liberty's acquisition of QVC in 2003. |
Goodwill (Notes)
Goodwill (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill disclosure | Goodwill The changes in the carrying amount of goodwill for the nine months ended September 30, 2016 were as follows: (in millions) QVC-U.S. QVC-Germany QVC-Japan QVC-U.K. QVC-Italy Total Balance as of December 31, 2015 $ 4,190 278 251 193 123 5,035 Exchange rate fluctuations — 6 47 (23 ) 4 34 Balance as of September 30, 2016 $ 4,190 284 298 170 127 5,069 |
Other Intangible Assets, Net
Other Intangible Assets, Net | 9 Months Ended |
Sep. 30, 2016 | |
Other Intangible Assets [Abstract] | |
Intangible assets disclosure | Other Intangible Assets, Net Other intangible assets consisted of the following: September 30, 2016 December 31, 2015 (in millions) Gross Accumulated Other intangible assets, net Gross Accumulated Other intangible assets, net Purchased and internally developed software $ 682 (490 ) 192 625 (418 ) 207 Affiliate and customer relationships 2,408 (2,242 ) 166 2,409 (2,115 ) 294 Debt origination fees 8 (1 ) 7 9 (2 ) 7 Trademarks (indefinite life) 2,428 — 2,428 2,428 — 2,428 $ 5,526 (2,733 ) 2,793 5,471 (2,535 ) 2,936 The Company recorded amortization expense of $69 million and $63 million for the three months ended September 30, 2016 and 2015 , respectively, related to other intangible assets. For the nine months ended September 30, 2016 and 2015 , amortization expense for other intangible assets was $202 million and $201 million , respectively. As of September 30, 2016 , the related amortization and interest expense for each of the next five years ended December 31 was as follows (in millions): Remainder of 2016 $ 71 2017 202 2018 72 2019 16 2020 4 The decrease in future amortization expense in 2018 is primarily due to the end of the useful lives of the affiliate and customer relationships in place at the time of Liberty's acquisition of QVC in 2003. |
Accrued Liabilities
Accrued Liabilities | 9 Months Ended |
Sep. 30, 2016 | |
Accrued Liabilities [Abstract] | |
Accrued liabilities | Accrued Liabilities Accrued liabilities consisted of the following: (in millions) September 30, 2016 December 31, 2015 Accounts payable non-trade $ 188 240 Accrued compensation and benefits 99 116 Deferred revenue 79 83 Allowance for sales returns 73 106 Income taxes 55 116 Sales and other taxes 41 79 Accrued interest 41 58 Other 50 74 $ 626 872 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt disclosure | Long-Term Debt Long-term debt consisted of the following: (in millions) September 30, 2016 December 31, 2015 3.125% Senior Secured Notes due 2019, net of original issue discount $ 399 399 5.125% Senior Secured Notes due 2022 500 500 4.375% Senior Secured Notes due 2023, net of original issue discount 750 750 4.85% Senior Secured Notes due 2024, net of original issue discount 600 600 4.45% Senior Secured Notes due 2025, net of original issue discount 599 599 5.45% Senior Secured Notes due 2034, net of original issue discount 399 399 5.95% Senior Secured Notes due 2043, net of original issue discount 300 300 Senior secured credit facility 1,570 1,815 Capital lease obligations 74 72 Build to suit lease obligation (1) 104 — Less debt issuance costs, net (28 ) (32 ) Total debt 5,267 5,402 Less current portion (13 ) (9 ) Long-term portion of debt and capital lease obligations $ 5,254 5,393 (1) At December 31, 2015, the build to suit lease liability (note 7) was presented in other long term liabilities. Senior Secured Notes All of QVC's senior secured notes are secured by the capital stock of QVC and certain of its subsidiaries and have equal priority to the senior secured credit facility. The interest on all of QVC's senior secured notes is payable semi-annually. On April 15, 2015, QVC completed the redemption of $500 million principal amount of its 7.375% Senior Secured Notes due 2020, whereby holders received consideration of $1,036.88 for each $1,000 of principal tendered. As a result of the redemption, the Company recorded an extinguishment loss in the condensed consolidated statements of operations of $21 million for the nine month period ended September 30, 2015. Senior Secured Credit Facility On June 23, 2016, QVC entered into a third amended and restated senior secured credit agreement with zulily as borrowers (collectively, the “Borrowers”) which is a multi-currency facility that provides for a $2.65 billion revolving credit facility with a $300 million sub-limit for standby letters of credit and $1.5 billion of uncommitted incremental revolving loan commitments or incremental term loans. The Third Amended and Restated Credit Agreement includes a $400 million tranche that may be borrowed by the Company or zulily with an additional $50 million sub-limit for standby letters of credit. The remaining $2.25 billion may be borrowed only by the Company. Borrowings that are alternate base rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between 0.25% and 0.75% depending on the Borrowers’ combined ratio of Consolidated Total Debt to Consolidated EBITDA (the “Consolidated Leverage Ratio”). Borrowings that are LIBOR loans will bear interest at a per annum rate equal to the applicable LIBOR plus a margin that varies between 1.25% and 1.75% depending on the Consolidated Leverage Ratio. Because the calculation of the Consolidated Leverage Ratio was revised to include zulily, the effective interest rate margins, on the date that the Third Amended and Restated Credit Agreement was entered into, decreased from the interest rate margins under the previous bank credit facility. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if zulily ceases to be controlled by Liberty Interactive Corporation, all of its loans must be repaid and its letters of credit cash collateralized. Any amounts prepaid on the revolving facility may be reborrowed. Payment of loans may be accelerated following certain customary events of default. The senior secured credit facility is secured by the capital stock of QVC. QVC had $1,024.8 million available under the terms of the senior secured credit facility at September 30, 2016 , including the portion available under the $400 million tranche that zulily may also borrow on. The interest rate on the senior secured credit facility was 1.9% at September 30, 2016 . The purpose of the amendment was to, among other things, extend the maturity of our senior secured credit facility to June 23, 2021, provide zulily the opportunity to borrow on the senior secured credit facility, and lower the interest rate on borrowings. The Third Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on the Company and zulily and each of their respective restricted subsidiaries (subject to certain exceptions) with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets; paying certain dividends and other restricted payments; dissolving, consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; restricting subsidiary distributions; limiting QVC’s consolidated leverage ratio, which is defined in QVC’s senior secured credit facility as QVC’s consolidated total debt to Adjusted OIBDA ratio for the most recent four fiscal quarter period; and limiting the borrowers’ combined consolidated leverage ratio, which is defined in QVC’s senior secured credit facility as QVC and zulily’s combined debt to Adjusted OIBDA ratio for the most recent four fiscal quarter period. The Company defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). Other Debt Related Information QVC was in compliance with all of its debt covenants at September 30, 2016 . During the quarter, there were no significant changes to QVC's debt credit ratings. The weighted average rate applicable to all of the outstanding debt (excluding capital leases) prior to amortization of bond discounts and related debt issuance costs was 3.8% as of September 30, 2016 . |
Leases and Transponder Service
Leases and Transponder Service Agreements | 9 Months Ended |
Sep. 30, 2016 | |
Leases and Transponder Service Agreements [Abstract] | |
Leases of lessee disclosure | Leases and Transponder Service Arrangements Future minimum payments under noncancelable operating leases and capital transponder leases with initial terms of one year or more and the lease related to the Company's west coast distribution center (build to suit lease) at September 30, 2016 consisted of the following: (in millions) Capital transponders Operating leases Build to suit lease Remainder of 2016 $ 3 5 — 2017 12 20 5 2018 15 17 6 2019 15 14 6 2020 11 10 6 Thereafter 23 80 73 Total $ 79 146 96 The Company has entered into thirteen separate capital lease agreements with transponder suppliers to transmit its signals in the U.S., Germany and France at an aggregate monthly cost of $1 million . Depreciation expense related to the transponders was $3 million for both three months ended September 30, 2016 and 2015. For the nine months ended September 30, 2016 and 2015 , depreciation expense related to the transponders was $8 million and $10 million , respectively. Total future minimum capital lease payments of $79 million include $5 million of imputed interest. The transponder service agreements for our U.S. transponders expire between 2019 and 2023. The transponder service agreements for our international transponders expire between 2019 and 2024. Expenses for operating leases, principally for data processing equipment, facilities, satellite uplink service agreements and the west coast distribution center land, amounted to $6 million and $7 million for the three months ended September 30, 2016 and 2015 , respectively. For the nine months ended September 30, 2016 and 2015 , expenses for operating leases were $18 million and $19 million , respectively. On July 2, 2015, QVC entered into a lease (the “Lease”) for a west coast distribution center. Pursuant to the Lease, the landlord built an approximately one million square foot rental building in Ontario, California (the “Premises”), and thereafter leased the Premises to QVC as its new west coast distribution center for an initial term of 15 years . Under the Lease, QVC is required to pay an initial base rent of approximately $6 million per year, increasing to approximately $8 million per year by the final year of the initial term, as well as all real estate taxes and other building operating costs. QVC also has an option to extend the term of the Lease for up to two consecutive terms of 10 years each. QVC has the right to purchase the Premises and related land from the landlord by entering into an amended and restated agreement at any time during the twenty-fifth or twenty-sixth months of the Lease's initial term with a $10 million initial payment and annual payments of $12 million over a term of 13 years . The Company concluded that it was the deemed owner (for accounting purposes only) of the Premises during the construction period under build to suit lease accounting. Building construction began in July of 2015. During the construction period, the Company recorded estimated project construction costs incurred by the landlord as a projects in progress asset and a corresponding long-term liability in “Property and equipment, net” and “Other long-term liabilities,” respectively, on its consolidated balance sheet. In addition, the Company paid for normal tenant improvements and certain structural improvements and recorded these amounts as part of the projects in progress asset. Upon completion of construction, the long-term liability was reclassified to debt. As of September 30, 2016 the liability related to the west coast distribution center was approximately $104 million of which $87 million was incurred during the nine months ended September 30, 2016 . On August 29, 2016, the west coast distribution center was officially opened. The Company evaluated whether the Lease met the criteria for "sale-leaseback" treatment under U.S. GAAP and concluded that it did not. Therefore, the Company will treat the Lease as a financing obligation and lease payments will be attributed to: (1) a reduction of the principal financing obligation; (2) imputed interest expense; and (3) land lease expense representing an imputed cost to lease the underlying land of the Premises. In addition, the building asset will be depreciated over its estimated useful life of 20 years . Although the Company will not begin making monthly lease payments pursuant to the Lease until February 2017, the portion of the lease obligations allocated to the land is being treated for accounting purposes as an operating lease that commenced in 2015. If the Company does not exercise its right to purchase the Premises and related land, the Company will derecognize both the net book values of the asset and the financing obligation at the conclusion of the lease term. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income Taxes The Company calculates its interim income tax provision by applying its best estimate of the annual expected effective tax rate to its ordinary year-to-date income or loss. The tax or benefit related to significant unusual items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent and temporary differences as a result of differences between amounts measured and recognized in accordance with tax laws and financial accounting standards, and the likelihood of recovering deferred tax assets. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as the tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on the prior quarters is included in the tax expense for the current quarter. For the three months ended September 30, 2016 , the Company recorded a tax provision of $66 million , which represented an effective tax rate of 36.3% . For the nine months ended September 30, 2016 the Company recorded a tax provision of $244 million , which represented an effective tax rate of 36.8% . These rates differ from the U.S. federal income tax rate of 35.0% due primarily to state tax expense. QVC is party to ongoing discussions with the Internal Revenue Service under the Compliance Assurance Process audit program. The Company files Federal tax returns on a consolidated basis with its parent company, Liberty. The Company, or one of its subsidiaries, files income tax returns in various states and foreign jurisdictions. As of September 30, 2016 , the Company, or one of its subsidiaries, was under examination in California, New York City, and Pennsylvania as well as in Germany and the U.K. The Company has received assessments related to an examination in Germany. The Company believes that any amounts ultimately paid in connection with the assessments will be creditable against its U.S. federal tax liability. The Company is a party to a Tax Liability Allocation and Indemnification Agreement (the “Tax Agreement”) with Liberty. The Tax Agreement establishes the methodology for the calculation and payment of income taxes in connection with the consolidation of the Company with Liberty for income tax purposes. Generally, the Tax Agreement provides that the Company will pay Liberty an amount equal to the tax liability, if any, that it would have if it were to file as a consolidated group separate and apart from Liberty, with exceptions for the treatment and timing of certain items, including but not limited to deferred intercompany transactions, credits, and net operating and capital losses. To the extent that the separate company tax expense is different from the payment terms of the Tax Agreement, the difference is recorded as either a dividend or capital contribution. The amounts of the tax-related balances due to Liberty at September 30, 2016 and December 31, 2015 were $13 million and $71 million , respectively, and were included in accrued liabilities in the accompanying condensed consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company has contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible the Company may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that the amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements. Network and information systems, including the Internet and telecommunication systems, third party delivery services and other technologies are critical to our business activities. Substantially all our customer orders, fulfillment and delivery services are dependent upon the use of network and information systems, including the use of third party telecommunication and delivery service providers. If information systems including the Internet or telecommunication services are disrupted, or if the third party delivery services experience a disruption in their transportation delivery services, we could face a significant disruption in fulfilling our customer orders and shipment of our products. We have active disaster recovery programs in place to help mitigate risks associated with these critical business activities. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair value disclosures | Financial Instruments and Fair Value Measurements For assets and liabilities required to be reported or disclosed at fair value, U.S. GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs, other than quoted market prices included within Level 1, are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company's assets and liabilities measured or disclosed at fair value were as follows: Fair value measurements at September 30, 2016 using (in millions) Total Quoted prices Significant Significant Current assets: Cash equivalents $ 125 125 — — Net Investment hedge 1 — 1 — Long-term liabilities: Debt (note 6) 5,159 — 5,159 — Fair value measurements at December 31, 2015 using (in millions) Total Quoted prices Significant Significant Current assets: Cash equivalents $ 218 218 — — Net investment hedge 3 — 3 — Long-term liabilities: Debt (note 6) 5,189 — 5,189 — The majority of the Company's Level 2 financial liabilities are debt instruments with quoted market prices that are not considered to be traded on "active markets," as defined in U.S. GAAP. Accordingly, the financial instruments are reported in the foregoing tables as Level 2 fair value instruments. QVC entered into a Euro 500 million basis swap as a hedge of a net investment in a foreign subsidiary during the fourth quarter of 2015 and the underlying derivative matured on March 15, 2016 . The purpose of this hedge was to protect QVC's investment in the foreign subsidiary against the variability of the U.S. dollar and Euro exchange rate. The Company entered into a similar hedge of the same net investment in a foreign subsidiary effective March 15, 2016 which subsequently matured on September 15, 2016 . Effective September 15, 2016 , the Company entered into a foreign exchange forward contract with the same purpose as the previous hedges. The forward contract entails QVC's sale of Euro 500 million at a forward rate which matures on December 19, 2016. The gain or loss is and will be recognized in other comprehensive income and is classified as Level 2 in the table above. No amount of the gain or loss has been reclassified into earnings as of the balance sheet date. On June 15, 2016, QVC entered into a three-year interest rate swap arrangement with a notional amount of $125 million to mitigate the interest rate risk associated with interest payments related to its variable rate debt. The swap arrangement did not qualify as a cash flow hedge under U.S. GAAP. Accordingly, changes in the fair value of the swap are reflected in gain on financial instruments in the accompanying condensed consolidated statements of operations. At September 30, 2016 , the fair value of the swap instrument was in a net asset position of less than $1 million which was included in other noncurrent assets. |
Information about QVC's Operati
Information about QVC's Operating Segments | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment reporting disclosure | Information about QVC's Operating Segments During the year ended December 31, 2015, QVC began reporting its results based on two operating segments: QVC-U.S. and QVC-International, as a result of the One Q Reorganization Plan ("One Q"). The One Q organizational structure is intended to allow the Company to better leverage its global scale and capabilities, to enhance its competitive position and to create operational efficiencies. Beginning in the first quarter of 2016, QVC began allocating certain additional corporate costs for management reporting purposes, which were historically included in its QVC-U.S. segment, to the QVC-International segment. These management cost allocations are related to certain functions such as merchandising, commerce platforms, information technology, human resources, legal, finance, brand and communications, corporate development and administration that support all of QVC’s operations. For the three and nine months ended September 30, 2016, these costs totaled approximately $8 million and $24 million , respectively . QVC's chief operating decision maker ("CODM") is QVC's Chief Executive Officer. QVC's CODM has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, QVC-U.S. and QVC-International. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level (see below). QVC-U.S. and QVC-International are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the Internet and mobile applications in certain markets. The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per subscriber equivalent. The Company defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments, including the ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among the Company's businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization and stock-based compensation, that are included in the measurement of operating income pursuant to U.S. 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 U.S. GAAP. Performance measures Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 (in millions) Net Adjusted Net Adjusted Net Adjusted Net Adjusted QVC-U.S. $ 1,338 308 1,420 333 4,173 997 4,168 988 QVC-International 610 85 587 97 1,851 274 1,775 298 Consolidated QVC $ 1,948 393 2,007 430 6,024 1,271 5,943 1,286 Net revenue amounts by product category are not available from our general purpose financial statements. Other information Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 (in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization Depreciation Amortization QVC-U.S. $ 22 103 15 97 55 308 47 303 QVC-International 16 13 18 11 48 37 54 38 Consolidated QVC $ 38 116 33 108 103 345 101 341 September 30, 2016 December 31, 2015 (in millions) Total Capital Total Capital QVC-U.S. $ 9,391 120 9,913 169 QVC-International 2,147 20 2,145 46 Consolidated QVC $ 11,538 140 12,058 215 Long-lived assets, net of accumulated depreciation, by segment were as follows: (in millions) September 30, 2016 December 31, 2015 QVC-U.S. $ 597 501 QVC-International 490 501 Consolidated QVC $ 1,087 1,002 The following table provides a reconciliation of Adjusted OIBDA to income before income taxes: Three months ended September 30, Nine months ended September 30, (in millions) 2016 2015 2016 2015 Adjusted OIBDA $ 393 430 1,271 1,286 Stock-based compensation (8 ) (9 ) (24 ) (24 ) Depreciation and amortization (154 ) (141 ) (448 ) (442 ) Equity in losses of investee (2 ) (3 ) (4 ) (7 ) Interest expense, net (52 ) (49 ) (159 ) (158 ) Foreign currency gain 5 12 27 11 Loss on extinguishment of debt — — — (21 ) Income before income taxes $ 182 240 663 645 |
Other Comprehensive Income
Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2016 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Comprehensive Income (Loss) | Other Comprehensive Loss The change in the component of accumulated other comprehensive loss, net of taxes ("AOCL"), is summarized as follows: (in millions) Foreign currency translation adjustments AOCL Balance at January 1, 2016 $ (140 ) (140 ) Other comprehensive income attributable to QVC, Inc. stockholder 18 18 Balance at September 30, 2016 (122 ) (122 ) Balance at January 1, 2015 $ (39 ) (39 ) Other comprehensive loss attributable to QVC, Inc. stockholder (77 ) (77 ) Balance at September 30, 2015 (116 ) (116 ) The component of other comprehensive income is reflected in QVC's condensed consolidated statements of comprehensive income, net of taxes. The following table summarizes the tax effects related to the component of other comprehensive income: (in millions) Before-tax amount Tax benefit Net-of-tax amount Three months ended September 30, 2016 Foreign currency translation adjustments $ (7 ) 4 (3 ) Other comprehensive income (7 ) 4 (3 ) Three months ended September 30, 2015 Foreign currency translation adjustments $ (9 ) 12 3 Other comprehensive loss (9 ) 12 3 Nine months ended September 30, 2016: Foreign currency translation adjustments $ 23 13 36 Other comprehensive loss 23 13 36 Nine months ended September 30, 2015: Foreign currency translation adjustments $ (89 ) 12 (77 ) Other comprehensive loss (89 ) 12 (77 ) |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Event Subsequent to September 30, 2016, QVC declared and paid a dividend to Liberty in the amount of $160 million . As of October 31, 2016, zulily had $285 million outstanding on the shared tranche within the Third Amended and Restated Credit Agreement. |
Guarantor_Non-Guarantor Subsidi
Guarantor/Non-Guarantor Subsidiary Financial Information | 9 Months Ended |
Sep. 30, 2016 | |
Guarantor Non-guarantor Subsidiary Financial Information [Abstract] | |
Guarantor/Non-guarantor Subsidiary Financial Information | Guarantor/Non-guarantor Subsidiary Financial Information The following information contains the condensed consolidating financial statements for the Company, the parent on a stand-alone basis (QVC, Inc.), the combined subsidiary guarantors (Affiliate Relations Holdings, Inc.; Affiliate Investment, Inc.; AMI 2, Inc.; ER Marks, Inc.; QVC Rocky Mount, Inc.; QVC San Antonio, LLC; Global Holdings I, Inc.; and Global Holdings II, Inc.) and the combined non-guarantor subsidiaries pursuant to Rule 3-10 of Regulation S-X. In connection with the Third Amended and Restated Credit Agreement (refer to note 6), QVC International Ltd is no longer a guarantor subsidiary, and is reflected with the combined non-guarantor subsidiaries. These condensed consolidating financial statements have been prepared from the Company's financial information on the same basis of accounting as the Company's condensed consolidated financial statements. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, such as management fees, royalty revenue and expense, interest income and expense and gains on intercompany asset transfers. Goodwill and other intangible assets have been allocated to the subsidiaries based on management’s estimates. Certain costs have been partially allocated to all of the subsidiaries of the Company. With One Q as mentioned in note 11, QVC began allocating certain additional corporate costs for management reporting purposes, which were historically included in its QVC-U.S. segment, to the QVC-International segment. The subsidiary guarantors are 100% owned by the Company. All guarantees are full and unconditional and are joint and several. There are no significant restrictions on the ability of the Company to obtain funds from its U.S. subsidiaries, including the guarantors, by dividend or loan. The Company has not presented separate notes and other disclosures concerning the subsidiary guarantors as the Company has determined that such material information is available in the notes to the Company's condensed consolidated financial statements. Condensed Consolidating Balance Sheets September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Assets Current assets: Cash and cash equivalents $ 2 99 218 — 319 Restricted cash 9 — 2 — 11 Accounts receivable, net 564 — 230 — 794 Inventories 845 — 278 — 1,123 Prepaid expenses and other current assets 25 — 25 — 50 Total current assets 1,445 99 753 — 2,297 Property and equipment, net 318 65 704 — 1,087 Cable and satellite television distribution rights, net — 181 24 — 205 Goodwill 4,190 — 879 — 5,069 Other intangible assets, net 716 2,049 28 — 2,793 Other noncurrent assets 6 — 81 — 87 Investments in subsidiaries 3,492 1,064 — (4,556 ) — Total assets $ 10,167 3,458 2,469 (4,556 ) 11,538 Liabilities and equity Current liabilities: Current portion of debt and capital lease obligations $ 3 — 10 — 13 Accounts payable-trade 395 — 242 — 637 Accrued liabilities 8 183 435 — 626 Intercompany accounts payable (receivable) 479 (203 ) (276 ) — — Total current liabilities 885 (20 ) 411 — 1,276 Long-term portion of debt and capital lease obligations 5,105 — 149 — 5,254 Deferred income taxes 90 716 (56 ) — 750 Other long-term liabilities 107 — 46 153 Total liabilities 6,187 696 550 — 7,433 Equity: QVC, Inc. stockholder's equity 3,980 2,762 1,794 (4,556 ) 3,980 Noncontrolling interest — — 125 — 125 Total equity 3,980 2,762 1,919 (4,556 ) 4,105 Total liabilities and equity $ 10,167 3,458 2,469 (4,556 ) 11,538 Condensed Consolidating Balance Sheets December 31, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Assets Current assets: Cash and cash equivalents $ — 112 215 — 327 Restricted cash 9 — 2 — 11 Accounts receivable, net 1,114 — 256 — 1,370 Inventories 714 — 215 — 929 Prepaid expenses and other current assets 18 — 24 — 42 Total current assets 1,855 112 712 — 2,679 Property and equipment, net 295 67 640 — 1,002 Cable and satellite television distribution rights, net — 297 42 — 339 Goodwill 4,190 — 845 — 5,035 Other intangible assets, net 842 2,050 44 — 2,936 Other noncurrent assets 5 — 62 — 67 Investments in subsidiaries 3,569 2,687 — (6,256 ) — Total assets $ 10,756 5,213 2,345 (6,256 ) 12,058 Liabilities and equity Current liabilities: Current portion of debt and capital lease obligations $ 3 — 6 — 9 Accounts payable-trade 396 — 262 — 658 Accrued liabilities 229 207 436 — 872 Intercompany accounts payable (receivable) 562 1,271 (1,833 ) — — Total current liabilities 1,190 1,478 (1,129 ) — 1,539 Long-term portion of debt and capital lease obligations 5,342 — 51 — 5,393 Deferred income taxes 94 744 (11 ) — 827 Other long-term liabilities 112 — 69 — 181 Total liabilities 6,738 2,222 (1,020 ) — 7,940 Equity: QVC, Inc. stockholder's equity 4,018 2,991 3,265 (6,256 ) 4,018 Noncontrolling interest — — 100 — 100 Total equity 4,018 2,991 3,365 (6,256 ) 4,118 Total liabilities and equity $ 10,756 5,213 2,345 (6,256 ) 12,058 Condensed Consolidating Statements of Operations Three months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 1,369 224 662 (307 ) 1,948 Cost of goods sold 847 38 416 (50 ) 1,251 Gross profit 522 186 246 (257 ) 697 Operating expenses: Operating 94 61 64 (79 ) 140 Selling, general and administrative, including stock-based compensation 246 — 104 (178 ) 172 Depreciation 16 1 21 — 38 Amortization 62 41 13 — 116 418 103 202 (257 ) 466 Operating income 104 83 44 — 231 Other (expense) income: Equity in losses of investee — — (2 ) — (2 ) Interest expense, net (52 ) — — — (52 ) Foreign currency gain 3 — 2 — 5 Intercompany interest (expense) income — — — — — (49 ) — — — (49 ) Income before income taxes 55 83 44 — 182 Income tax expense (13 ) (26 ) (27 ) — (66 ) Equity in earnings of subsidiaries, net of tax 74 24 — (98 ) — Net income 116 81 17 (98 ) 116 Less net income attributable to the noncontrolling interest (9 ) — (9 ) 9 (9 ) Net income attributable to QVC, Inc. stockholder $ 107 81 8 (89 ) 107 Condensed Consolidating Statements of Operations Three months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 1,458 223 641 (315 ) 2,007 Cost of goods sold 905 27 385 (51 ) 1,266 Gross profit 553 196 256 (264 ) 741 Operating expenses: Operating 81 63 72 (72 ) 144 Selling, general and administrative, including stock-based compensation 271 — 97 (192 ) 176 Depreciation 11 2 20 — 33 Amortization 56 40 12 — 108 419 105 201 (264 ) 461 Operating income 134 91 55 — 280 Other (expense) income: Equity in losses of investee — — (3 ) — (3 ) Interest expense, net (50 ) — 1 — (49 ) Foreign currency gain 4 7 1 — 12 Intercompany interest (expense) income (1 ) (21 ) 22 — — (47 ) (14 ) 21 — (40 ) Income before income taxes 87 77 76 — 240 Income tax expense (23 ) (25 ) (38 ) — (86 ) Equity in earnings of subsidiaries, net of tax 90 37 — (127 ) — Net income 154 89 38 (127 ) 154 Less net income attributable to the noncontrolling interest (8 ) — (8 ) 8 (8 ) Net income attributable to QVC, Inc. stockholder $ 146 89 30 (119 ) 146 Condensed Consolidating Statements of Operations Nine months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 4,272 688 2,009 (945 ) 6,024 Cost of goods sold 2,594 116 1,245 (139 ) 3,816 Gross profit 1,678 572 764 (806 ) 2,208 Operating expenses: Operating 296 180 204 (252 ) 428 Selling, general and administrative, including stock-based compensation 773 — 314 (554 ) 533 Depreciation 41 5 57 — 103 Amortization 182 125 38 — 345 1,292 310 613 (806 ) 1,409 Operating income 386 262 151 — 799 Other (expense) income: Equity in losses of investee — — (4 ) — (4 ) Interest expense, net (159 ) — — — (159 ) Foreign currency gain 12 — 15 — 27 Intercompany interest (expense) income (1 ) 1 — — — (148 ) 1 11 — (136 ) Income before income taxes 238 263 162 — 663 Income tax expense (75 ) (85 ) (84 ) — (244 ) Equity in earnings of subsidiaries, net of tax 256 106 — (362 ) — Net income 419 284 78 (362 ) 419 Less net income attributable to the noncontrolling interest (28 ) — (28 ) 28 (28 ) Net income attributable to QVC, Inc. stockholder $ 391 284 50 (334 ) 391 Condensed Consolidating Statements of Operations Nine months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 4,282 645 1,938 (922 ) 5,943 Cost of goods sold 2,632 75 1,153 (139 ) 3,721 Gross profit 1,650 570 785 (783 ) 2,222 Operating expenses: Operating 253 181 214 (224 ) 424 Selling, general and administrative, including stock-based compensation 803 — 292 (559 ) 536 Depreciation 32 6 63 — 101 Amortization 175 121 45 — 341 1,263 308 614 (783 ) 1,402 Operating income 387 262 171 — 820 Other (expense) income: Equity in losses of investee — — (7 ) — (7 ) Interest expense, net (157 ) — (1 ) — (158 ) Foreign currency gain (loss) 12 (6 ) 5 — 11 Loss on extinguishment of debt (21 ) — — — (21 ) Intercompany interest (expense) income (7 ) (30 ) 37 — — (173 ) (36 ) 34 — (175 ) Income before income taxes 214 226 205 — 645 Income tax expense (63 ) (101 ) (79 ) — (243 ) Equity in earnings of subsidiaries, net of tax 251 145 — (396 ) — Net income 402 270 126 (396 ) 402 Less net income attributable to the noncontrolling interest (25 ) — (25 ) 25 (25 ) Net income attributable to QVC, Inc. stockholder $ 377 270 101 (371 ) 377 Condensed Consolidating Statements of Comprehensive Income Three months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 116 81 17 (98 ) 116 Foreign currency translation adjustments (3 ) — (3 ) 3 (3 ) Total comprehensive income 113 81 14 (95 ) 113 Comprehensive income attributable to noncontrolling interest (11 ) — (11 ) 11 (11 ) Comprehensive income attributable to QVC, Inc. stockholder $ 102 81 3 (84 ) 102 Condensed Consolidating Statements of Comprehensive Income Three months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 154 89 38 (127 ) 154 Foreign currency translation adjustments 3 — 3 (3 ) 3 Total comprehensive income 157 89 41 (130 ) 157 Comprehensive income attributable to noncontrolling interest (11 ) — (11 ) 11 (11 ) Comprehensive income attributable to QVC, Inc. stockholder $ 146 89 30 (119 ) 146 Condensed Consolidating Statements of Comprehensive Income Nine months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 419 284 78 (362 ) 419 Foreign currency translation adjustments 36 — 36 (36 ) 36 Total comprehensive income 455 284 114 (398 ) 455 Comprehensive income attributable to noncontrolling interest (46 ) — (46 ) 46 (46 ) Comprehensive income attributable to QVC, Inc. stockholder $ 409 284 68 (352 ) 409 Condensed Consolidating Statements of Comprehensive Income Nine months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 402 270 126 (396 ) 402 Foreign currency translation adjustments (77 ) — (77 ) 77 (77 ) Total comprehensive income 325 270 49 (319 ) 325 Comprehensive income attributable to noncontrolling interest (25 ) — (25 ) 25 (25 ) Comprehensive income attributable to QVC, Inc. stockholder $ 300 270 24 (294 ) 300 Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Operating activities: Net cash provided by operating activities $ 586 256 7 — 849 Investing activities: Capital expenditures (113 ) (3 ) (24 ) — (140 ) Expenditures for cable and satellite television distribution rights, net — (8 ) — — (8 ) Changes in other noncurrent assets 6 — (8 ) — (2 ) Other investing activities (12 ) — 9 — (3 ) Intercompany investing activities 432 137 — (569 ) — Net cash provided by (used in) investing activities 313 126 (23 ) (569 ) (153 ) Financing activities: Principal payments of debt and capital lease obligations (1,295 ) — (5 ) — (1,300 ) Principal borrowings of debt from senior secured credit facility 1,048 — — — 1,048 Payment of debt origination fees (2 ) — — — (2 ) Dividends paid to Liberty (427 ) — — — (427 ) Dividends paid to noncontrolling interest — — (21 ) — (21 ) Other financing activities (9 ) — — — (9 ) Net short-term intercompany debt (repayments) borrowings (83 ) (1,474 ) 1,557 — — Other intercompany financing activities (129 ) 1,079 (1,519 ) 569 — Net cash (used in) provided by financing activities (897 ) (395 ) 12 569 (711 ) Effect of foreign exchange rate changes on cash and cash equivalents — — 7 — 7 Net increase (decrease) in cash and cash equivalents 2 (13 ) 3 — (8 ) Cash and cash equivalents, beginning of period — 112 215 — 327 Cash and cash equivalents, end of period $ 2 99 218 — 319 Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Operating activities: Net cash provided by operating activities $ 359 152 282 — 793 Investing activities: Capital expenditures (90 ) (6 ) (36 ) — (132 ) Expenditures for cable and satellite television distribution rights, net — (45 ) (3 ) — (48 ) Decrease (increase) in restricted cash 1 — (1 ) — — Other investing activities 2 — — — 2 Changes in other noncurrent assets — — (1 ) — (1 ) Intercompany investing activities 339 382 — (721 ) — Net cash provided by (used in) investing activities 252 331 (41 ) (721 ) (179 ) Financing activities: Principal payments of debt and capital lease obligations (1,560 ) — (5 ) — (1,565 ) Principal borrowings of debt from senior secured credit facility 1,470 — — — 1,470 Payment of debt origination fees (3 ) — — — (3 ) Payment of bond premium fees (18 ) — — — (18 ) Dividends paid to Liberty (444 ) — — — (444 ) Dividends paid to noncontrolling interest — — (20 ) — (20 ) Other financing activities (14 ) — — — (14 ) Net short-term intercompany debt (repayments) borrowings (884 ) 2,224 (1,340 ) — — Other intercompany financing activities 837 (2,695 ) 1,137 721 — Net cash used in financing activities (616 ) (471 ) (228 ) 721 (594 ) Effect of foreign exchange rate changes on cash and cash equivalents — — (4 ) — (4 ) Net (decrease) increase in cash and cash equivalents (5 ) 12 9 — 16 Cash and cash equivalents, beginning of period 2 123 222 — 347 Cash and cash equivalents, end of period $ (3 ) 135 231 — 363 |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Basis of Presentation [Abstract] | |
New accounting pronouncements policy | On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued ASU No. 2016-08 which clarifies principal versus agent considerations, in April 2016, the FASB issued ASU No. 2016-10 which clarifies the identification of performance obligations and the implementation guidance for licensing, and in May 2016, the FASB issued ASU No. 2016-12 which clarifies assessing collectibility, presentation of sales taxes, noncash consideration, and completed contracts and contract modifications at transition. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. The Company has started a preliminary assessment, but has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In April 2015, the FASB issued ASU No. 2015-05, Customer's Accounting for Fees Paid in a Cloud Computing Arrangement , which provides explicit guidance to help companies evaluate the accounting for fees paid by a customer in a cloud computing arrangement. The new guidance clarifies that if a cloud computing arrangement includes a software license, the customer should account for the license consistent with its accounting for other software licenses. If the arrangement does not include a software license, the customer should account for the arrangement as a service contract. The Company has adopted this guidance as of January 1, 2016, and there was no significant effect of the standard on its financial reporting. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory , which changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The new principle is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out (LIFO) or the retail inventory method. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. The Company has determined there is no significant effect of the standard on its ongoing financial reporting. In January 2016, the FASB issued ASU No. 2016-01, Financial Statements - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities , which requires equity investments with readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company’s ongoing financial reporting. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) , which revises the accounting related to lessee accounting. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new lease guidance also simplifies the accounting for sale and leaseback transactions primarily because lessees must recognize lease assets and lease liabilities. The amendments in this ASU are effective for the Company beginning on January 1, 2019 and should be applied through a modified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. The Company has not yet determined what the effects of adopting this ASU will be on its ongoing financial reporting. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which simplifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016 with early adoption permitted. The Company adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures which resulted in an inconsequential effect to the condensed consolidated statement of operations for the nine months ended September 30, 2016. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the condensed consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. The presentation changes for excess tax benefits have been applied retrospectively in the condensed consolidated statements of cash flows resulting in $6 million of excess tax benefits for the nine months ended September 30, 2016 reclassified from cash flows from financing activities to cash flows from operating activities. Refer to the reclassification section below for additional detail of the adoption of this guidance. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments , which addresses eight specific cash flow issues to reduce the diversity in practice for appropriate classification on the statement of cash flows. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 with early adoption permitted. The Company does not expect the adoption will have a material effect on the condensed consolidated financial statements. |
Cable and Satellite Televisio23
Cable and Satellite Television Distribution Rights, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Cable and Satellite Television Distribution Rights [Abstract] | |
Schedule of cable and satellite television distribution rights | Cable and satellite television distribution rights consisted of the following: (in millions) September 30, 2016 December 31, 2015 Cable and satellite television distribution rights $ 2,277 2,259 Less accumulated amortization (2,072 ) (1,920 ) Cable and satellite television distribution rights, net $ 205 339 |
Schedule of future amortization expense | As of September 30, 2016 , related amortization expense for each of the next five years ended December 31 was as follows (in millions): Remainder of 2016 $ 46 2017 125 2018 13 2019 9 2020 8 |
Goodwill (Tables)
Goodwill (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2016 were as follows: (in millions) QVC-U.S. QVC-Germany QVC-Japan QVC-U.K. QVC-Italy Total Balance as of December 31, 2015 $ 4,190 278 251 193 123 5,035 Exchange rate fluctuations — 6 47 (23 ) 4 34 Balance as of September 30, 2016 $ 4,190 284 298 170 127 5,069 |
Other Intangible Assets, Net (T
Other Intangible Assets, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Other Intangible Assets [Abstract] | |
Schedule of acquired intangible assets by class | Other intangible assets consisted of the following: September 30, 2016 December 31, 2015 (in millions) Gross Accumulated Other intangible assets, net Gross Accumulated Other intangible assets, net Purchased and internally developed software $ 682 (490 ) 192 625 (418 ) 207 Affiliate and customer relationships 2,408 (2,242 ) 166 2,409 (2,115 ) 294 Debt origination fees 8 (1 ) 7 9 (2 ) 7 Trademarks (indefinite life) 2,428 — 2,428 2,428 — 2,428 $ 5,526 (2,733 ) 2,793 5,471 (2,535 ) 2,936 |
Schedule of finite-lived intangible assets future amortization expense | As of September 30, 2016 , the related amortization and interest expense for each of the next five years ended December 31 was as follows (in millions): Remainder of 2016 $ 71 2017 202 2018 72 2019 16 2020 4 |
Accrued Liabilities (Tables)
Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accrued Liabilities [Abstract] | |
Schedule of accrued liabilities | Accrued liabilities consisted of the following: (in millions) September 30, 2016 December 31, 2015 Accounts payable non-trade $ 188 240 Accrued compensation and benefits 99 116 Deferred revenue 79 83 Allowance for sales returns 73 106 Income taxes 55 116 Sales and other taxes 41 79 Accrued interest 41 58 Other 50 74 $ 626 872 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of debt | Long-term debt consisted of the following: (in millions) September 30, 2016 December 31, 2015 3.125% Senior Secured Notes due 2019, net of original issue discount $ 399 399 5.125% Senior Secured Notes due 2022 500 500 4.375% Senior Secured Notes due 2023, net of original issue discount 750 750 4.85% Senior Secured Notes due 2024, net of original issue discount 600 600 4.45% Senior Secured Notes due 2025, net of original issue discount 599 599 5.45% Senior Secured Notes due 2034, net of original issue discount 399 399 5.95% Senior Secured Notes due 2043, net of original issue discount 300 300 Senior secured credit facility 1,570 1,815 Capital lease obligations 74 72 Build to suit lease obligation (1) 104 — Less debt issuance costs, net (28 ) (32 ) Total debt 5,267 5,402 Less current portion (13 ) (9 ) Long-term portion of debt and capital lease obligations $ 5,254 5,393 |
Leases and Transponder Servic28
Leases and Transponder Service Agreements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Leases and Transponder Service Agreements [Abstract] | |
Future minimum lease payments | Future minimum payments under noncancelable operating leases and capital transponder leases with initial terms of one year or more and the lease related to the Company's west coast distribution center (build to suit lease) at September 30, 2016 consisted of the following: (in millions) Capital transponders Operating leases Build to suit lease Remainder of 2016 $ 3 5 — 2017 12 20 5 2018 15 17 6 2019 15 14 6 2020 11 10 6 Thereafter 23 80 73 Total $ 79 146 96 |
Financial Instruments and Fai29
Financial Instruments and Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value, assets and liabilities measured on recurring basis | The Company's assets and liabilities measured or disclosed at fair value were as follows: Fair value measurements at September 30, 2016 using (in millions) Total Quoted prices Significant Significant Current assets: Cash equivalents $ 125 125 — — Net Investment hedge 1 — 1 — Long-term liabilities: Debt (note 6) 5,159 — 5,159 — Fair value measurements at December 31, 2015 using (in millions) Total Quoted prices Significant Significant Current assets: Cash equivalents $ 218 218 — — Net investment hedge 3 — 3 — Long-term liabilities: Debt (note 6) 5,189 — 5,189 — |
Information about QVC's Opera30
Information about QVC's Operating Segments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Revenue and Adjusted OIBDA by Segment | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 (in millions) Net Adjusted Net Adjusted Net Adjusted Net Adjusted QVC-U.S. $ 1,338 308 1,420 333 4,173 997 4,168 988 QVC-International 610 85 587 97 1,851 274 1,775 298 Consolidated QVC $ 1,948 393 2,007 430 6,024 1,271 5,943 1,286 |
Schedule of Depreciation and Amortization by Segment | Three months ended September 30, Nine months ended September 30, 2016 2015 2016 2015 (in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization Depreciation Amortization QVC-U.S. $ 22 103 15 97 55 308 47 303 QVC-International 16 13 18 11 48 37 54 38 Consolidated QVC $ 38 116 33 108 103 345 101 341 |
Schedule of Capital Expenditures and Total Assets by Segment | September 30, 2016 December 31, 2015 (in millions) Total Capital Total Capital QVC-U.S. $ 9,391 120 9,913 169 QVC-International 2,147 20 2,145 46 Consolidated QVC $ 11,538 140 12,058 215 |
Long-lived Assets by Geographic Areas (by Segment) | Long-lived assets, net of accumulated depreciation, by segment were as follows: (in millions) September 30, 2016 December 31, 2015 QVC-U.S. $ 597 501 QVC-International 490 501 Consolidated QVC $ 1,087 1,002 |
Reconciliation of Adjusted OIBDA to Income before Income Taxes | The following table provides a reconciliation of Adjusted OIBDA to income before income taxes: Three months ended September 30, Nine months ended September 30, (in millions) 2016 2015 2016 2015 Adjusted OIBDA $ 393 430 1,271 1,286 Stock-based compensation (8 ) (9 ) (24 ) (24 ) Depreciation and amortization (154 ) (141 ) (448 ) (442 ) Equity in losses of investee (2 ) (3 ) (4 ) (7 ) Interest expense, net (52 ) (49 ) (159 ) (158 ) Foreign currency gain 5 12 27 11 Loss on extinguishment of debt — — — (21 ) Income before income taxes $ 182 240 663 645 |
Other Comprehensive Income (Tab
Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The change in the component of accumulated other comprehensive loss, net of taxes ("AOCL"), is summarized as follows: (in millions) Foreign currency translation adjustments AOCL Balance at January 1, 2016 $ (140 ) (140 ) Other comprehensive income attributable to QVC, Inc. stockholder 18 18 Balance at September 30, 2016 (122 ) (122 ) Balance at January 1, 2015 $ (39 ) (39 ) Other comprehensive loss attributable to QVC, Inc. stockholder (77 ) (77 ) Balance at September 30, 2015 (116 ) (116 ) |
Schedule of Component of Comprehensive Income (Loss) | The component of other comprehensive income is reflected in QVC's condensed consolidated statements of comprehensive income, net of taxes. The following table summarizes the tax effects related to the component of other comprehensive income: (in millions) Before-tax amount Tax benefit Net-of-tax amount Three months ended September 30, 2016 Foreign currency translation adjustments $ (7 ) 4 (3 ) Other comprehensive income (7 ) 4 (3 ) Three months ended September 30, 2015 Foreign currency translation adjustments $ (9 ) 12 3 Other comprehensive loss (9 ) 12 3 Nine months ended September 30, 2016: Foreign currency translation adjustments $ 23 13 36 Other comprehensive loss 23 13 36 Nine months ended September 30, 2015: Foreign currency translation adjustments $ (89 ) 12 (77 ) Other comprehensive loss (89 ) 12 (77 ) |
Guarantor_Non-Guarantor Subsi32
Guarantor/Non-Guarantor Subsidiary Financial Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Guarantor Non-guarantor Subsidiary Financial Information [Abstract] | |
Guarantor Non-guarantor Subsidiary Financial Information, Balance Sheets, Current Period | Condensed Consolidating Balance Sheets September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Assets Current assets: Cash and cash equivalents $ 2 99 218 — 319 Restricted cash 9 — 2 — 11 Accounts receivable, net 564 — 230 — 794 Inventories 845 — 278 — 1,123 Prepaid expenses and other current assets 25 — 25 — 50 Total current assets 1,445 99 753 — 2,297 Property and equipment, net 318 65 704 — 1,087 Cable and satellite television distribution rights, net — 181 24 — 205 Goodwill 4,190 — 879 — 5,069 Other intangible assets, net 716 2,049 28 — 2,793 Other noncurrent assets 6 — 81 — 87 Investments in subsidiaries 3,492 1,064 — (4,556 ) — Total assets $ 10,167 3,458 2,469 (4,556 ) 11,538 Liabilities and equity Current liabilities: Current portion of debt and capital lease obligations $ 3 — 10 — 13 Accounts payable-trade 395 — 242 — 637 Accrued liabilities 8 183 435 — 626 Intercompany accounts payable (receivable) 479 (203 ) (276 ) — — Total current liabilities 885 (20 ) 411 — 1,276 Long-term portion of debt and capital lease obligations 5,105 — 149 — 5,254 Deferred income taxes 90 716 (56 ) — 750 Other long-term liabilities 107 — 46 153 Total liabilities 6,187 696 550 — 7,433 Equity: QVC, Inc. stockholder's equity 3,980 2,762 1,794 (4,556 ) 3,980 Noncontrolling interest — — 125 — 125 Total equity 3,980 2,762 1,919 (4,556 ) 4,105 Total liabilities and equity $ 10,167 3,458 2,469 (4,556 ) 11,538 |
Guarantor Non-guarantor Subsidiary Financial Information, Balance Sheets, Prior Period | Condensed Consolidating Balance Sheets December 31, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Assets Current assets: Cash and cash equivalents $ — 112 215 — 327 Restricted cash 9 — 2 — 11 Accounts receivable, net 1,114 — 256 — 1,370 Inventories 714 — 215 — 929 Prepaid expenses and other current assets 18 — 24 — 42 Total current assets 1,855 112 712 — 2,679 Property and equipment, net 295 67 640 — 1,002 Cable and satellite television distribution rights, net — 297 42 — 339 Goodwill 4,190 — 845 — 5,035 Other intangible assets, net 842 2,050 44 — 2,936 Other noncurrent assets 5 — 62 — 67 Investments in subsidiaries 3,569 2,687 — (6,256 ) — Total assets $ 10,756 5,213 2,345 (6,256 ) 12,058 Liabilities and equity Current liabilities: Current portion of debt and capital lease obligations $ 3 — 6 — 9 Accounts payable-trade 396 — 262 — 658 Accrued liabilities 229 207 436 — 872 Intercompany accounts payable (receivable) 562 1,271 (1,833 ) — — Total current liabilities 1,190 1,478 (1,129 ) — 1,539 Long-term portion of debt and capital lease obligations 5,342 — 51 — 5,393 Deferred income taxes 94 744 (11 ) — 827 Other long-term liabilities 112 — 69 — 181 Total liabilities 6,738 2,222 (1,020 ) — 7,940 Equity: QVC, Inc. stockholder's equity 4,018 2,991 3,265 (6,256 ) 4,018 Noncontrolling interest — — 100 — 100 Total equity 4,018 2,991 3,365 (6,256 ) 4,118 Total liabilities and equity $ 10,756 5,213 2,345 (6,256 ) 12,058 |
Guarantor Non-guarantor Subsidiary Financial Information, Statements of Operations, Current Period | Nine months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 4,272 688 2,009 (945 ) 6,024 Cost of goods sold 2,594 116 1,245 (139 ) 3,816 Gross profit 1,678 572 764 (806 ) 2,208 Operating expenses: Operating 296 180 204 (252 ) 428 Selling, general and administrative, including stock-based compensation 773 — 314 (554 ) 533 Depreciation 41 5 57 — 103 Amortization 182 125 38 — 345 1,292 310 613 (806 ) 1,409 Operating income 386 262 151 — 799 Other (expense) income: Equity in losses of investee — — (4 ) — (4 ) Interest expense, net (159 ) — — — (159 ) Foreign currency gain 12 — 15 — 27 Intercompany interest (expense) income (1 ) 1 — — — (148 ) 1 11 — (136 ) Income before income taxes 238 263 162 — 663 Income tax expense (75 ) (85 ) (84 ) — (244 ) Equity in earnings of subsidiaries, net of tax 256 106 — (362 ) — Net income 419 284 78 (362 ) 419 Less net income attributable to the noncontrolling interest (28 ) — (28 ) 28 (28 ) Net income attributable to QVC, Inc. stockholder $ 391 284 50 (334 ) 391 Condensed Consolidating Statements of Operations Three months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 1,369 224 662 (307 ) 1,948 Cost of goods sold 847 38 416 (50 ) 1,251 Gross profit 522 186 246 (257 ) 697 Operating expenses: Operating 94 61 64 (79 ) 140 Selling, general and administrative, including stock-based compensation 246 — 104 (178 ) 172 Depreciation 16 1 21 — 38 Amortization 62 41 13 — 116 418 103 202 (257 ) 466 Operating income 104 83 44 — 231 Other (expense) income: Equity in losses of investee — — (2 ) — (2 ) Interest expense, net (52 ) — — — (52 ) Foreign currency gain 3 — 2 — 5 Intercompany interest (expense) income — — — — — (49 ) — — — (49 ) Income before income taxes 55 83 44 — 182 Income tax expense (13 ) (26 ) (27 ) — (66 ) Equity in earnings of subsidiaries, net of tax 74 24 — (98 ) — Net income 116 81 17 (98 ) 116 Less net income attributable to the noncontrolling interest (9 ) — (9 ) 9 (9 ) Net income attributable to QVC, Inc. stockholder $ 107 81 8 (89 ) 107 |
Guarantor Non-guarantor Subsidiary Financial Information, Statements of Operations, Prior Period | Nine months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 4,282 645 1,938 (922 ) 5,943 Cost of goods sold 2,632 75 1,153 (139 ) 3,721 Gross profit 1,650 570 785 (783 ) 2,222 Operating expenses: Operating 253 181 214 (224 ) 424 Selling, general and administrative, including stock-based compensation 803 — 292 (559 ) 536 Depreciation 32 6 63 — 101 Amortization 175 121 45 — 341 1,263 308 614 (783 ) 1,402 Operating income 387 262 171 — 820 Other (expense) income: Equity in losses of investee — — (7 ) — (7 ) Interest expense, net (157 ) — (1 ) — (158 ) Foreign currency gain (loss) 12 (6 ) 5 — 11 Loss on extinguishment of debt (21 ) — — — (21 ) Intercompany interest (expense) income (7 ) (30 ) 37 — — (173 ) (36 ) 34 — (175 ) Income before income taxes 214 226 205 — 645 Income tax expense (63 ) (101 ) (79 ) — (243 ) Equity in earnings of subsidiaries, net of tax 251 145 — (396 ) — Net income 402 270 126 (396 ) 402 Less net income attributable to the noncontrolling interest (25 ) — (25 ) 25 (25 ) Net income attributable to QVC, Inc. stockholder $ 377 270 101 (371 ) 377 Condensed Consolidating Statements of Operations Three months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net revenue $ 1,458 223 641 (315 ) 2,007 Cost of goods sold 905 27 385 (51 ) 1,266 Gross profit 553 196 256 (264 ) 741 Operating expenses: Operating 81 63 72 (72 ) 144 Selling, general and administrative, including stock-based compensation 271 — 97 (192 ) 176 Depreciation 11 2 20 — 33 Amortization 56 40 12 — 108 419 105 201 (264 ) 461 Operating income 134 91 55 — 280 Other (expense) income: Equity in losses of investee — — (3 ) — (3 ) Interest expense, net (50 ) — 1 — (49 ) Foreign currency gain 4 7 1 — 12 Intercompany interest (expense) income (1 ) (21 ) 22 — — (47 ) (14 ) 21 — (40 ) Income before income taxes 87 77 76 — 240 Income tax expense (23 ) (25 ) (38 ) — (86 ) Equity in earnings of subsidiaries, net of tax 90 37 — (127 ) — Net income 154 89 38 (127 ) 154 Less net income attributable to the noncontrolling interest (8 ) — (8 ) 8 (8 ) Net income attributable to QVC, Inc. stockholder $ 146 89 30 (119 ) 146 |
Guarantor Non-guarantor Subsidiary Financial Information, Comprehensive Income (Loss) | Nine months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 419 284 78 (362 ) 419 Foreign currency translation adjustments 36 — 36 (36 ) 36 Total comprehensive income 455 284 114 (398 ) 455 Comprehensive income attributable to noncontrolling interest (46 ) — (46 ) 46 (46 ) Comprehensive income attributable to QVC, Inc. stockholder $ 409 284 68 (352 ) 409 Condensed Consolidating Statements of Comprehensive Income Three months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 116 81 17 (98 ) 116 Foreign currency translation adjustments (3 ) — (3 ) 3 (3 ) Total comprehensive income 113 81 14 (95 ) 113 Comprehensive income attributable to noncontrolling interest (11 ) — (11 ) 11 (11 ) Comprehensive income attributable to QVC, Inc. stockholder $ 102 81 3 (84 ) 102 |
Guarantor Non-guarantor Subsidiary Financial Information, Comprehensive Income (Loss), Prior Period | Condensed Consolidating Statements of Comprehensive Income Three months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 154 89 38 (127 ) 154 Foreign currency translation adjustments 3 — 3 (3 ) 3 Total comprehensive income 157 89 41 (130 ) 157 Comprehensive income attributable to noncontrolling interest (11 ) — (11 ) 11 (11 ) Comprehensive income attributable to QVC, Inc. stockholder $ 146 89 30 (119 ) 146 Nine months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Net income $ 402 270 126 (396 ) 402 Foreign currency translation adjustments (77 ) — (77 ) 77 (77 ) Total comprehensive income 325 270 49 (319 ) 325 Comprehensive income attributable to noncontrolling interest (25 ) — (25 ) 25 (25 ) Comprehensive income attributable to QVC, Inc. stockholder $ 300 270 24 (294 ) 300 |
Guarantor Non-guarantor Subsidiary Financial Information, Schedule of Cash Flows, Current Period | Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2016 (in millions) Parent Combined Combined Eliminations Consolidated- Operating activities: Net cash provided by operating activities $ 586 256 7 — 849 Investing activities: Capital expenditures (113 ) (3 ) (24 ) — (140 ) Expenditures for cable and satellite television distribution rights, net — (8 ) — — (8 ) Changes in other noncurrent assets 6 — (8 ) — (2 ) Other investing activities (12 ) — 9 — (3 ) Intercompany investing activities 432 137 — (569 ) — Net cash provided by (used in) investing activities 313 126 (23 ) (569 ) (153 ) Financing activities: Principal payments of debt and capital lease obligations (1,295 ) — (5 ) — (1,300 ) Principal borrowings of debt from senior secured credit facility 1,048 — — — 1,048 Payment of debt origination fees (2 ) — — — (2 ) Dividends paid to Liberty (427 ) — — — (427 ) Dividends paid to noncontrolling interest — — (21 ) — (21 ) Other financing activities (9 ) — — — (9 ) Net short-term intercompany debt (repayments) borrowings (83 ) (1,474 ) 1,557 — — Other intercompany financing activities (129 ) 1,079 (1,519 ) 569 — Net cash (used in) provided by financing activities (897 ) (395 ) 12 569 (711 ) Effect of foreign exchange rate changes on cash and cash equivalents — — 7 — 7 Net increase (decrease) in cash and cash equivalents 2 (13 ) 3 — (8 ) Cash and cash equivalents, beginning of period — 112 215 — 327 Cash and cash equivalents, end of period $ 2 99 218 — 319 |
Guarantor Non-guarantor Subsidiary Financial Information, Schedule of Cash Flows, Prior Period | Condensed Consolidating Statements of Cash Flows Nine months ended September 30, 2015 (in millions) Parent Combined Combined Eliminations Consolidated- Operating activities: Net cash provided by operating activities $ 359 152 282 — 793 Investing activities: Capital expenditures (90 ) (6 ) (36 ) — (132 ) Expenditures for cable and satellite television distribution rights, net — (45 ) (3 ) — (48 ) Decrease (increase) in restricted cash 1 — (1 ) — — Other investing activities 2 — — — 2 Changes in other noncurrent assets — — (1 ) — (1 ) Intercompany investing activities 339 382 — (721 ) — Net cash provided by (used in) investing activities 252 331 (41 ) (721 ) (179 ) Financing activities: Principal payments of debt and capital lease obligations (1,560 ) — (5 ) — (1,565 ) Principal borrowings of debt from senior secured credit facility 1,470 — — — 1,470 Payment of debt origination fees (3 ) — — — (3 ) Payment of bond premium fees (18 ) — — — (18 ) Dividends paid to Liberty (444 ) — — — (444 ) Dividends paid to noncontrolling interest — — (20 ) — (20 ) Other financing activities (14 ) — — — (14 ) Net short-term intercompany debt (repayments) borrowings (884 ) 2,224 (1,340 ) — — Other intercompany financing activities 837 (2,695 ) 1,137 721 — Net cash used in financing activities (616 ) (471 ) (228 ) 721 (594 ) Effect of foreign exchange rate changes on cash and cash equivalents — — (4 ) — (4 ) Net (decrease) increase in cash and cash equivalents (5 ) 12 9 — 16 Cash and cash equivalents, beginning of period 2 123 222 — 347 Cash and cash equivalents, end of period $ (3 ) 135 231 — 363 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) | Oct. 01, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 23, 2016 |
General business information | ||||||
Dividends paid to noncontrolling interest | $ 21,000,000 | $ 20,000,000 | ||||
Dividends paid to Liberty | 427,000,000 | 444,000,000 | ||||
Related Party Transaction, Amounts of Transaction | 11,000,000 | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,650,000,000 | |||||
Related Party Transaction, Expenses from Transactions with Related Party | 2,000,000 | |||||
Selling, general and administrative, including stock-based compensation | $ 172,000,000 | $ 176,000,000 | 533,000,000 | 536,000,000 | ||
Operating Expenses | $ 466,000,000 | 461,000,000 | $ 1,409,000,000 | 1,402,000,000 | ||
QVC-Japan | ||||||
General business information | ||||||
Investment Owned, Percent of Net Assets | 60.00% | 60.00% | ||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 40.00% | 40.00% | ||||
CNR Home Shopping Co., Ltd. | ||||||
General business information | ||||||
Equity Method Investment, Ownership Percentage | 49.00% | 49.00% | ||||
HSN, Inc. | ||||||
General business information | ||||||
Ownership Percentage by Parent | 38.00% | 38.00% | ||||
Liberty | ||||||
General business information | ||||||
Dividends paid to Liberty | $ 910,000,000 | |||||
CommerceHub, Inc. | ||||||
General business information | ||||||
Ownership Percentage by Parent | 99.00% | 99.00% | ||||
Live Programming - U.S. | ||||||
General business information | ||||||
Days Per Year Programming | 364 days | |||||
Hours of Distribution Each Day | 24 hours | |||||
Distribution - Germany | ||||||
General business information | ||||||
Hours of Distribution Each Day | 24 hours | |||||
Live Programming - Germany | ||||||
General business information | ||||||
Hours of Distribution Each Day | 17 hours | |||||
Live Programming - Japan | ||||||
General business information | ||||||
Hours of Distribution Each Day | 24 hours | |||||
Distribution - U.K. | ||||||
General business information | ||||||
Hours of Distribution Each Day | 24 hours | |||||
Live Programming - U.K. | ||||||
General business information | ||||||
Hours of Distribution Each Day | 16 hours | |||||
Live Programming - Italy | ||||||
General business information | ||||||
Hours of Distribution Each Day | 17 hours | |||||
Recorded Programming - Italy | ||||||
General business information | ||||||
Hours of Distribution Each Day | 7 hours | |||||
Live Programming - France | ||||||
General business information | ||||||
Hours of Distribution Each Day, Weekdays | 8 hours | |||||
Hours of Distribution Each Day, Weekends | 12 hours | |||||
Recorded Programming - France | ||||||
General business information | ||||||
Hours of Distribution Each Day, Weekdays | 14 hours | |||||
Hours of Distribution Each Day, Weekends | 10 hours | |||||
General Interest Programming - France | ||||||
General business information | ||||||
Hours of Distribution Each Day, Weekdays | 2 hours | |||||
Hours of Distribution Each Day, Weekends | 2 hours | |||||
Live Programming - CNRS | ||||||
General business information | ||||||
Hours of Distribution Each Day | 15 hours | |||||
Recorded Programming - CNRS | ||||||
General business information | ||||||
Hours of Distribution Each Day | 9 hours | |||||
Restatement adjustment | ||||||
General business information | ||||||
Selling, general and administrative, including stock-based compensation | 30,000,000 | 93,000,000 | ||||
Operating Expenses | $ (30,000,000) | (93,000,000) | ||||
Excess Tax Benefit from Share-based Compensation, Operating Activities | $ 6,000,000 | 13,000,000 | ||||
Excess tax benefit from share-based compensation, financing activities | (6,000,000) | $ (13,000,000) | ||||
Revolving Credit Facility | QVC | ||||||
General business information | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 2,250,000,000 | |||||
Revolving Credit Facility | Tranche One, Shared with Related Party | ||||||
General business information | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 400,000,000 | |||||
Line of Credit Facility, Fair Value of Amount Outstanding | $ 55,000,000 | $ 55,000,000 |
Cable and Satellite Televisio34
Cable and Satellite Television Distribution Rights, Net (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Cable and satellite television distribution rights, net | $ 205 | $ 205 | $ 339 | ||
Cable and satellite television distribution rights | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Cable and satellite television distribution rights | 2,277 | 2,277 | 2,259 | ||
Less accumulated amortization | (2,072) | (2,072) | $ (1,920) | ||
Amortization | $ 47 | $ 45 | $ 143 | $ 140 |
Cable and Satellite Televisio35
Cable and Satellite Television Distribution Rights, Net (Future Amortization Expense) (Details) - Cable and satellite television distribution rights $ in Millions | Sep. 30, 2016USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2016 | $ 46 |
2,017 | 125 |
2,018 | 13 |
2,019 | 9 |
2,020 | $ 8 |
Goodwill Goodwill (Details)
Goodwill Goodwill (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | $ 5,035 |
Exchange rate fluctuations | 34 |
Balance as of September 30, 2016 | 5,069 |
QVC-U.S. | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | 4,190 |
Exchange rate fluctuations | 0 |
Balance as of September 30, 2016 | 4,190 |
QVC-Germany | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | 278 |
Exchange rate fluctuations | 6 |
Balance as of September 30, 2016 | 284 |
QVC-Japan | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | 251 |
Exchange rate fluctuations | 47 |
Balance as of September 30, 2016 | 298 |
QVC-U.K. | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | 193 |
Exchange rate fluctuations | (23) |
Balance as of September 30, 2016 | 170 |
QVC-Italy | |
Goodwill [Line Items] | |
Balance as of December 31, 2015 | 123 |
Exchange rate fluctuations | 4 |
Balance as of September 30, 2016 | $ 127 |
Other Intangible Assets, Net (O
Other Intangible Assets, Net (Other Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Gross cost | |||||
Purchased and internally developed software | $ 682 | $ 682 | $ 625 | ||
Affiliate and customer relationships | 2,408 | 2,408 | 2,409 | ||
Debt origination fees | 8 | 8 | 9 | ||
Trademarks (indefinite life) | 2,428 | 2,428 | 2,428 | ||
Other intangible assets (excluding goodwill), gross | 5,526 | 5,526 | 5,471 | ||
Accumulated amortization | |||||
Purchased and internally developed software | (490) | (490) | (418) | ||
Affiliate and customer relationships | (2,242) | (2,242) | (2,115) | ||
Debt origination fees | (1) | (1) | (2) | ||
Other intangible assets (excluding goodwill), accumulated amortization | (2,733) | (2,733) | (2,535) | ||
Other intangible assets, net | |||||
Purchased and internally developed software | 192 | 192 | 207 | ||
Affiliate and customer relationships | 166 | 166 | 294 | ||
Debt origination fees | 7 | 7 | 7 | ||
Other intangible assets (excluding goodwill), net | 2,793 | 2,793 | $ 2,936 | ||
Amortization of other intangible assets | $ 69 | $ 63 | $ 202 | $ 201 |
Other Intangible Assets, Net (F
Other Intangible Assets, Net (Future Amortization Expense) (Details) - Other Intangible Assets [Member] $ in Millions | Sep. 30, 2016USD ($) |
Finite-Lived Intangible Assets [Line Items] | |
Remainder of 2016 | $ 71 |
2,017 | 202 |
2,018 | 72 |
2,019 | 16 |
2,020 | $ 4 |
Accrued Liabilities (Details)
Accrued Liabilities (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Accrued Liabilities [Abstract] | ||
Accounts payable non-trade | $ 188 | $ 240 |
Accrued compensation and benefits | 99 | 116 |
Deferred revenue | 79 | 83 |
Allowance for sales returns | 73 | 106 |
Income taxes | 55 | 116 |
Sales and other taxes | 41 | 79 |
Accrued interest | 41 | 58 |
Other | 50 | 74 |
Accrued liabilities | $ 626 | $ 872 |
Long-Term Debt (Debt) (Details)
Long-Term Debt (Debt) (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Build to suit lease obligation | $ 104 | $ 0 |
Less debt issuance costs, net | (28) | (32) |
Total debt | 5,267 | 5,402 |
Less current portion | (13) | (9) |
Long-term portion of debt and capital lease obligations | $ 5,254 | 5,393 |
3.125% Senior Secured Notes due 2019, net of original issue discount | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 3.125% | |
Debt and Capital Lease Obligations | $ 399 | 399 |
5.125% Senior Secured Notes due 2022 | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.125% | |
Debt and Capital Lease Obligations | $ 500 | 500 |
4.375% Senior Secured Notes due 2023, net of original issue discount | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.375% | |
Debt and Capital Lease Obligations | $ 750 | 750 |
4.85% Senior Secured Notes due 2024, net of original issue discount | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.85% | |
Debt and Capital Lease Obligations | $ 600 | 600 |
4.45% Senior Secured Notes due 2025, net of original issue discount | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.45% | |
Debt and Capital Lease Obligations | $ 599 | 599 |
5.45% Senior Secured Notes due 2034, net of original issue discount | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.45% | |
Debt and Capital Lease Obligations | $ 399 | 399 |
5.95% Senior Secured Notes due 2043, net of original issue discount | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.95% | |
Debt and Capital Lease Obligations | $ 300 | 300 |
Senior secured credit facility | ||
Debt Instrument [Line Items] | ||
Debt and Capital Lease Obligations | 1,570 | 1,815 |
Capital lease obligations | ||
Debt Instrument [Line Items] | ||
Debt and Capital Lease Obligations | $ 74 | $ 72 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Jun. 23, 2016 | Apr. 15, 2015 | |
Debt Instrument [Line Items] | ||||||
Loss on extinguishment of debt | $ 0 | $ 0 | $ 0 | $ (21,000,000) | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 2,650,000,000 | |||||
Line of Credit Facility, Standby Letter of Credit | 300,000,000 | |||||
Line of credit facility, uncommitted loan | 1,500,000,000 | |||||
Debt Instrument, Lower Range of Basis Spread on Variable Rate | 0.25% | 0.25% | ||||
Debt Instrument, Higher Range of Basis Spread on Variable Rate | 0.75% | 0.75% | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 1,024,800,000 | $ 1,024,800,000 | ||||
Line of Credit Facility, Interest Rate at Period End | 1.90% | 1.90% | ||||
Debt, Weighted Average Interest Rate | 3.80% | 3.80% | ||||
London Interbank Offered Rate (LIBOR) | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Lower Range of Basis Spread on Variable Rate | 1.25% | 1.25% | ||||
Debt Instrument, Higher Range of Basis Spread on Variable Rate | 1.75% | 1.75% | ||||
7.375% Senior Secured Notes | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Face Amount | $ 500,000,000 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 7.375% | |||||
Debt Instrument, Repurchase Price Including Premium | $ 1,036.88 | |||||
Debt Insturment, Face Value of Individual Bonds Repurchased | $ 1,000 | |||||
Revolving Credit Facility | Tranche One, Shared with Related Party | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 400,000,000 | |||||
Revolving Credit Facility | QVC | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | 2,250,000,000 | |||||
Standby Letters of Credit | Tranche One, Shared with Related Party | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Standby Letter of Credit | $ 50,000,000 |
Leases and Transponder Servic42
Leases and Transponder Service Agreements (Details) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)ft² | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Capital transponders | |||||
Remainder of 2016 | $ 3,000,000 | $ 3,000,000 | |||
2,017 | 12,000,000 | 12,000,000 | |||
2,018 | 15,000,000 | 15,000,000 | |||
2,019 | 15,000,000 | 15,000,000 | |||
2,020 | 11,000,000 | 11,000,000 | |||
Thereafter | 23,000,000 | 23,000,000 | |||
Total | 79,000,000 | 79,000,000 | |||
Operating leases | |||||
Remainder of 2016 | 5,000,000 | 5,000,000 | |||
2,017 | 20,000,000 | 20,000,000 | |||
2,018 | 17,000,000 | 17,000,000 | |||
2,019 | 14,000,000 | 14,000,000 | |||
2,020 | 10,000,000 | 10,000,000 | |||
Thereafter | 80,000,000 | 80,000,000 | |||
Total | 146,000,000 | 146,000,000 | |||
Build to suit lease | |||||
Remainder of 2016 | 0 | 0 | |||
2,017 | 5,000,000 | 5,000,000 | |||
2,018 | 6,000,000 | 6,000,000 | |||
2,019 | 6,000,000 | 6,000,000 | |||
2,020 | 6,000,000 | 6,000,000 | |||
Thereafter | 73,000,000 | 73,000,000 | |||
Total | $ 96,000,000 | $ 96,000,000 | |||
Capital leased assets, number of units | 13 | 13 | |||
Capital Transponder Monthly Lease Expense | $ 1,000,000 | $ 1,000,000 | |||
Capital leases depreciation expense | 3,000,000 | $ 3,000,000 | 8,000,000 | $ 10,000,000 | |
Imputed Interest on Capital Lease | 5,000,000 | 5,000,000 | |||
Operating leases expense net | $ 6,000,000 | $ 7,000,000 | $ 18,000,000 | $ 19,000,000 | |
Area of lease (in sqft) | ft² | 1,000,000 | 1,000,000 | |||
Initial term of lease | 15 years | ||||
Minimum base rent | $ 6,000,000 | ||||
Maximum base rent | $ 8,000,000 | ||||
Number of extension options | 2 | ||||
Term of lease extensions | 10 years | ||||
Amended arrangement initial payment | $ 10,000,000 | ||||
Amended arrangement annual installment payments | $ 12,000,000 | ||||
Amended arrangement payment term | 13 years | ||||
Build to suit lease obligation | $ 104,000,000 | $ 104,000,000 | $ 0 | ||
Capital Expenditures Incurred but Not yet Paid | $ 87,000,000 | ||||
Build to suit Useful Lives | 20 years |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Income Tax Contingency [Line Items] | |||||
Income tax expense | $ (66) | $ (86) | $ (244) | $ (243) | |
Effective income tax rate reconciliation, percent | 36.30% | 36.80% | |||
UNITED STATES | |||||
Income Tax Contingency [Line Items] | |||||
Effective income tax rate reconciliation, at federal statutory income tax rate, percent | 35.00% | ||||
Liberty | Tax Agreement | |||||
Income Tax Contingency [Line Items] | |||||
Current tax payments due to related parties | $ 13 | $ 13 | $ 71 |
Financial Instruments and Fai44
Financial Instruments and Fair Value Measurements (Details) € in Millions, $ in Millions | Sep. 30, 2016USD ($) | Sep. 30, 2016EUR (€) | Sep. 15, 2016EUR (€) | Jun. 15, 2016USD ($) | Dec. 31, 2015USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Derivative, Notional Amount | $ 125 | ||||
Derivative Asset | $ 1 | ||||
Recurring | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Derivative Asset | $ 3 | ||||
Current Assets, Fair Value Disclosure | |||||
Cash equivalents | 125 | 218 | |||
Long-term liabilities | |||||
Long-term Debt, Fair Value | 5,159 | 5,189 | |||
Recurring | Level 1 | |||||
Current Assets, Fair Value Disclosure | |||||
Cash equivalents | 125 | 218 | |||
Recurring | Level 2 | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Derivative Asset | 3 | ||||
Current Assets, Fair Value Disclosure | |||||
Derivative Asset, Current | 1 | ||||
Long-term liabilities | |||||
Long-term Debt, Fair Value | $ 5,159 | $ 5,189 | |||
Designated as Hedging Instrument | Foreign Exchange Contract | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Derivative, Notional Amount | € | € 500 | ||||
Net Investment Hedging | Designated as Hedging Instrument | Foreign Exchange Contract | |||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Derivative, Notional Amount | € | € 500 |
Information about QVC's Opera45
Information about QVC's Operating Segments (Revenue and Adjusted OIBDA by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net revenue | $ 1,948 | $ 2,007 | $ 6,024 | $ 5,943 |
Adjusted OIBDA | 393 | 430 | 1,271 | 1,286 |
QVC-U.S. | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 1,338 | 1,420 | 4,173 | 4,168 |
Adjusted OIBDA | 308 | 333 | 997 | 988 |
QVC- International | ||||
Segment Reporting Information [Line Items] | ||||
Net revenue | 610 | 587 | 1,851 | 1,775 |
Adjusted OIBDA | $ 85 | $ 97 | $ 274 | $ 298 |
Information about QVC's Opera46
Information about QVC's Operating Segments (Depreciation/Amortization by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Depreciation | $ 38 | $ 33 | $ 103 | $ 101 |
Amortization | 116 | 108 | 345 | 341 |
QVC-U.S. | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation | 22 | 15 | 55 | 47 |
Amortization | 103 | 97 | 308 | 303 |
QVC- International | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation | 16 | 18 | 48 | 54 |
Amortization | $ 13 | $ 11 | $ 37 | $ 38 |
Information about QVC's Opera47
Information about QVC's Operating Segments (Total Assets and CAPEX by Segment) (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||
Total assets | $ 11,538 | $ 12,058 |
Capital expenditures | 140 | 215 |
QVC-U.S. | ||
Segment Reporting Information [Line Items] | ||
Total assets | 9,391 | 9,913 |
Capital expenditures | 120 | 169 |
QVC- International | ||
Segment Reporting Information [Line Items] | ||
Total assets | 2,147 | 2,145 |
Capital expenditures | $ 20 | $ 46 |
Information about QVC's Opera48
Information about QVC's Operating Segments (Long-lived Assets by Segment) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 |
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 1,087 | $ 1,002 |
QVC-U.S. | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | 597 | 501 |
QVC- International | ||
Segment Reporting Information [Line Items] | ||
Property and equipment, net | $ 490 | $ 501 |
Information about QVC's Opera49
Information about QVC's Operating Segments (Reconciliation of Adjusted OIBDA to Income before Income Taxes) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting [Abstract] | ||||
Adjusted OIBDA | $ 393 | $ 430 | $ 1,271 | $ 1,286 |
Stock-based compensation | (8) | (9) | (24) | (24) |
Depreciation and amortization | (154) | (141) | (448) | (442) |
Equity in losses of investee | (2) | (3) | (4) | (7) |
Interest expense, net | (52) | (49) | (159) | (158) |
Foreign currency gain | 5 | 12 | 27 | 11 |
Loss on extinguishment of debt | 0 | 0 | 0 | (21) |
Income before income taxes | $ 182 | $ 240 | $ 663 | $ 645 |
Information about QVC's Opera50
Information about QVC's Operating Segments Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
QVC- International | ||
Segment Reporting Information [Line Items] | ||
Segment Cost Allocation | $ 8 | $ 24 |
Other Comprehensive Income (Acc
Other Comprehensive Income (Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Foreign currency translation adjustments | ||
Beginning balance | $ (140) | $ (39) |
Other comprehensive income (loss) attributable to QVC, Inc. stockholder | 18 | (77) |
Ending balance | (122) | (116) |
AOCL | ||
Beginning balance | (140) | (39) |
Other comprehensive income (loss) attributable to QVC, Inc. stockholder | 18 | (77) |
Ending balance | $ (122) | $ (116) |
Other Comprehensive Income (Com
Other Comprehensive Income (Component of Other Comprehensive Income) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Foreign currency translation adjustments before tax | $ (7) | $ (9) | $ 23 | $ (89) |
Tax (expense) benefit from foreign currency translation gain (loss) | 4 | 12 | 13 | 12 |
Foreign currency translation adjustments, net of tax | $ (3) | $ 3 | $ 36 | $ (77) |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Nov. 08, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Oct. 31, 2016 | |
Subsequent Event [Line Items] | ||||
Dividends paid to Liberty | $ 427,000,000 | $ 444,000,000 | ||
Line of Credit Facility, Remaining Borrowing Capacity | $ 1,024,800,000 | |||
Liberty | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Dividends paid to Liberty | $ 160,000,000 | |||
Revolving Credit Facility | Tranche One, Shared with Related Party | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 285,000,000 |
Guarantor_Non-Guarantor Subsi54
Guarantor/Non-Guarantor Subsidiary Financial Information (Narrative) (Details) | Sep. 30, 2016 |
Guarantor Non-guarantor Subsidiary Financial Information [Abstract] | |
Subsidiary Guarantors, Ownership Percentage | 100.00% |
Guarantor_Non-Guarantor Subsi55
Guarantor/Non-Guarantor Subsidiary Financial Information (Statement of Financial Position) (Details) - USD ($) $ in Millions | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||||
Cash and cash equivalents | $ 319 | $ 327 | $ 363 | $ 347 |
Restricted cash | 11 | 11 | ||
Accounts receivable, net | 794 | 1,370 | ||
Inventories | 1,123 | 929 | ||
Prepaid expenses and other current assets | 50 | 42 | ||
Total current assets | 2,297 | 2,679 | ||
Property and equipment, net | 1,087 | 1,002 | ||
Cable and satellite television distribution rights, net | 205 | 339 | ||
Goodwill | 5,069 | 5,035 | ||
Other intangible assets, net | 2,793 | 2,936 | ||
Other noncurrent assets | 87 | 67 | ||
Investments in subsidiaries | 0 | 0 | ||
Total assets | 11,538 | 12,058 | ||
Current liabilities: | ||||
Current portion of debt and capital lease obligations | 13 | 9 | ||
Accounts payable-trade | 637 | 658 | ||
Accrued liabilities | 626 | 872 | ||
Intercompany accounts payable (receivable) | 0 | 0 | ||
Total current liabilities | 1,276 | 1,539 | ||
Long-term portion of debt and capital lease obligations | 5,254 | 5,393 | ||
Deferred income taxes | 750 | 827 | ||
Other long-term liabilities | 153 | 181 | ||
Total liabilities | 7,433 | 7,940 | ||
QVC, Inc. stockholder's equity: | ||||
QVC, Inc. stockholder's equity | 3,980 | 4,018 | ||
Noncontrolling interest | 125 | 100 | ||
Total equity | 4,105 | 4,118 | ||
Total liabilities and equity | 11,538 | 12,058 | ||
Parent issuer- QVC, Inc. | ||||
Current assets: | ||||
Cash and cash equivalents | 2 | 0 | (3) | 2 |
Restricted cash | 9 | 9 | ||
Accounts receivable, net | 564 | 1,114 | ||
Inventories | 845 | 714 | ||
Prepaid expenses and other current assets | 25 | 18 | ||
Total current assets | 1,445 | 1,855 | ||
Property and equipment, net | 318 | 295 | ||
Cable and satellite television distribution rights, net | 0 | 0 | ||
Goodwill | 4,190 | 4,190 | ||
Other intangible assets, net | 716 | 842 | ||
Other noncurrent assets | 6 | 5 | ||
Investments in subsidiaries | 3,492 | 3,569 | ||
Total assets | 10,167 | 10,756 | ||
Current liabilities: | ||||
Current portion of debt and capital lease obligations | 3 | 3 | ||
Accounts payable-trade | 395 | 396 | ||
Accrued liabilities | 8 | 229 | ||
Intercompany accounts payable (receivable) | 479 | 562 | ||
Total current liabilities | 885 | 1,190 | ||
Long-term portion of debt and capital lease obligations | 5,105 | 5,342 | ||
Deferred income taxes | 90 | 94 | ||
Other long-term liabilities | 107 | 112 | ||
Total liabilities | 6,187 | 6,738 | ||
QVC, Inc. stockholder's equity: | ||||
QVC, Inc. stockholder's equity | 3,980 | 4,018 | ||
Noncontrolling interest | 0 | 0 | ||
Total equity | 3,980 | 4,018 | ||
Total liabilities and equity | 10,167 | 10,756 | ||
Combined subsidiary guarantors | ||||
Current assets: | ||||
Cash and cash equivalents | 99 | 112 | 135 | 123 |
Restricted cash | 0 | 0 | ||
Accounts receivable, net | 0 | 0 | ||
Inventories | 0 | 0 | ||
Prepaid expenses and other current assets | 0 | 0 | ||
Total current assets | 99 | 112 | ||
Property and equipment, net | 65 | 67 | ||
Cable and satellite television distribution rights, net | 181 | 297 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 2,049 | 2,050 | ||
Other noncurrent assets | 0 | 0 | ||
Investments in subsidiaries | 1,064 | 2,687 | ||
Total assets | 3,458 | 5,213 | ||
Current liabilities: | ||||
Current portion of debt and capital lease obligations | 0 | 0 | ||
Accounts payable-trade | 0 | 0 | ||
Accrued liabilities | 183 | 207 | ||
Intercompany accounts payable (receivable) | (203) | 1,271 | ||
Total current liabilities | (20) | 1,478 | ||
Long-term portion of debt and capital lease obligations | 0 | 0 | ||
Deferred income taxes | 716 | 744 | ||
Other long-term liabilities | 0 | 0 | ||
Total liabilities | 696 | 2,222 | ||
QVC, Inc. stockholder's equity: | ||||
QVC, Inc. stockholder's equity | 2,762 | 2,991 | ||
Noncontrolling interest | 0 | 0 | ||
Total equity | 2,762 | 2,991 | ||
Total liabilities and equity | 3,458 | 5,213 | ||
Combined non-guarantor subsidiaries | ||||
Current assets: | ||||
Cash and cash equivalents | 218 | 215 | 231 | 222 |
Restricted cash | 2 | 2 | ||
Accounts receivable, net | 230 | 256 | ||
Inventories | 278 | 215 | ||
Prepaid expenses and other current assets | 25 | 24 | ||
Total current assets | 753 | 712 | ||
Property and equipment, net | 704 | 640 | ||
Cable and satellite television distribution rights, net | 24 | 42 | ||
Goodwill | 879 | 845 | ||
Other intangible assets, net | 28 | 44 | ||
Other noncurrent assets | 81 | 62 | ||
Investments in subsidiaries | 0 | 0 | ||
Total assets | 2,469 | 2,345 | ||
Current liabilities: | ||||
Current portion of debt and capital lease obligations | 10 | 6 | ||
Accounts payable-trade | 242 | 262 | ||
Accrued liabilities | 435 | 436 | ||
Intercompany accounts payable (receivable) | (276) | (1,833) | ||
Total current liabilities | 411 | (1,129) | ||
Long-term portion of debt and capital lease obligations | 149 | 51 | ||
Deferred income taxes | (56) | (11) | ||
Other long-term liabilities | 46 | 69 | ||
Total liabilities | 550 | (1,020) | ||
QVC, Inc. stockholder's equity: | ||||
QVC, Inc. stockholder's equity | 1,794 | 3,265 | ||
Noncontrolling interest | 125 | 100 | ||
Total equity | 1,919 | 3,365 | ||
Total liabilities and equity | 2,469 | 2,345 | ||
Elimination | ||||
Current assets: | ||||
Cash and cash equivalents | 0 | 0 | $ 0 | $ 0 |
Restricted cash | 0 | 0 | ||
Accounts receivable, net | 0 | 0 | ||
Inventories | 0 | 0 | ||
Prepaid expenses and other current assets | 0 | 0 | ||
Total current assets | 0 | 0 | ||
Property and equipment, net | 0 | 0 | ||
Cable and satellite television distribution rights, net | 0 | 0 | ||
Goodwill | 0 | 0 | ||
Other intangible assets, net | 0 | 0 | ||
Other noncurrent assets | 0 | 0 | ||
Investments in subsidiaries | (4,556) | (6,256) | ||
Total assets | (4,556) | (6,256) | ||
Current liabilities: | ||||
Current portion of debt and capital lease obligations | 0 | 0 | ||
Accounts payable-trade | 0 | 0 | ||
Accrued liabilities | 0 | 0 | ||
Intercompany accounts payable (receivable) | 0 | 0 | ||
Total current liabilities | 0 | 0 | ||
Long-term portion of debt and capital lease obligations | 0 | 0 | ||
Deferred income taxes | 0 | 0 | ||
Other long-term liabilities | 0 | |||
Total liabilities | 0 | 0 | ||
QVC, Inc. stockholder's equity: | ||||
QVC, Inc. stockholder's equity | (4,556) | (6,256) | ||
Noncontrolling interest | 0 | 0 | ||
Total equity | (4,556) | (6,256) | ||
Total liabilities and equity | $ (4,556) | $ (6,256) |
Guarantor_Non-Guarantor Subsi56
Guarantor/Non-Guarantor Subsidiary Financial Information (Statement of Operations) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Net revenue | $ 1,948 | $ 2,007 | $ 6,024 | $ 5,943 |
Cost of goods sold | 1,251 | 1,266 | 3,816 | 3,721 |
Gross profit | 697 | 741 | 2,208 | 2,222 |
Operating expenses: | ||||
Operating | 140 | 144 | 428 | 424 |
Selling, general and administrative, including stock-based compensation | 172 | 176 | 533 | 536 |
Depreciation | 38 | 33 | 103 | 101 |
Amortization | 116 | 108 | 345 | 341 |
Operating expenses | 466 | 461 | 1,409 | 1,402 |
Operating income | 231 | 280 | 799 | 820 |
Other (expense) income: | ||||
Equity in losses of investee | (2) | (3) | (4) | (7) |
Interest expense, net | (52) | (49) | (159) | (158) |
Foreign currency gain | 5 | 12 | 27 | 11 |
Loss on extinguishment of debt | 0 | 0 | 0 | (21) |
Intercompany interest (expense) income | 0 | 0 | 0 | 0 |
Nonoperating expense | (49) | (40) | (136) | (175) |
Income before income taxes | 182 | 240 | 663 | 645 |
Income tax expense | (66) | (86) | (244) | (243) |
Equity in earnings of subsidiaries, net of tax | 0 | 0 | 0 | 0 |
Net income | 116 | 154 | 419 | 402 |
Less net income attributable to the noncontrolling interest | (9) | (8) | (28) | (25) |
Net income attributable to QVC, Inc. stockholder | 107 | 146 | 391 | 377 |
Parent issuer- QVC, Inc. | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net revenue | 1,369 | 1,458 | 4,272 | 4,282 |
Cost of goods sold | 847 | 905 | 2,594 | 2,632 |
Gross profit | 522 | 553 | 1,678 | 1,650 |
Operating expenses: | ||||
Operating | 94 | 81 | 296 | 253 |
Selling, general and administrative, including stock-based compensation | 246 | 271 | 773 | 803 |
Depreciation | 16 | 11 | 41 | 32 |
Amortization | 62 | 56 | 182 | 175 |
Operating expenses | 418 | 419 | 1,292 | 1,263 |
Operating income | 104 | 134 | 386 | 387 |
Other (expense) income: | ||||
Equity in losses of investee | 0 | 0 | 0 | 0 |
Interest expense, net | (52) | (50) | (159) | (157) |
Foreign currency gain | 3 | 4 | 12 | 12 |
Loss on extinguishment of debt | (21) | |||
Intercompany interest (expense) income | 0 | (1) | (1) | (7) |
Nonoperating expense | (49) | (47) | (148) | (173) |
Income before income taxes | 55 | 87 | 238 | 214 |
Income tax expense | (13) | (23) | (75) | (63) |
Equity in earnings of subsidiaries, net of tax | 74 | 90 | 256 | 251 |
Net income | 116 | 154 | 419 | 402 |
Less net income attributable to the noncontrolling interest | (9) | (8) | (28) | (25) |
Net income attributable to QVC, Inc. stockholder | 107 | 146 | 391 | 377 |
Combined subsidiary guarantors | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net revenue | 224 | 223 | 688 | 645 |
Cost of goods sold | 38 | 27 | 116 | 75 |
Gross profit | 186 | 196 | 572 | 570 |
Operating expenses: | ||||
Operating | 61 | 63 | 180 | 181 |
Selling, general and administrative, including stock-based compensation | 0 | 0 | 0 | 0 |
Depreciation | 1 | 2 | 5 | 6 |
Amortization | 41 | 40 | 125 | 121 |
Operating expenses | 103 | 105 | 310 | 308 |
Operating income | 83 | 91 | 262 | 262 |
Other (expense) income: | ||||
Equity in losses of investee | 0 | 0 | 0 | 0 |
Interest expense, net | 0 | 0 | 0 | 0 |
Foreign currency gain | 0 | 7 | 0 | (6) |
Loss on extinguishment of debt | 0 | |||
Intercompany interest (expense) income | 0 | (21) | 1 | (30) |
Nonoperating expense | 0 | (14) | 1 | (36) |
Income before income taxes | 83 | 77 | 263 | 226 |
Income tax expense | (26) | (25) | (85) | (101) |
Equity in earnings of subsidiaries, net of tax | 24 | 37 | 106 | 145 |
Net income | 81 | 89 | 284 | 270 |
Less net income attributable to the noncontrolling interest | 0 | 0 | 0 | 0 |
Net income attributable to QVC, Inc. stockholder | 81 | 89 | 284 | 270 |
Combined non-guarantor subsidiaries | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net revenue | 662 | 641 | 2,009 | 1,938 |
Cost of goods sold | 416 | 385 | 1,245 | 1,153 |
Gross profit | 246 | 256 | 764 | 785 |
Operating expenses: | ||||
Operating | 64 | 72 | 204 | 214 |
Selling, general and administrative, including stock-based compensation | 104 | 97 | 314 | 292 |
Depreciation | 21 | 20 | 57 | 63 |
Amortization | 13 | 12 | 38 | 45 |
Operating expenses | 202 | 201 | 613 | 614 |
Operating income | 44 | 55 | 151 | 171 |
Other (expense) income: | ||||
Equity in losses of investee | (2) | (3) | (4) | (7) |
Interest expense, net | 0 | 1 | 0 | (1) |
Foreign currency gain | 2 | 1 | 15 | 5 |
Loss on extinguishment of debt | 0 | |||
Intercompany interest (expense) income | 0 | 22 | 0 | 37 |
Nonoperating expense | 0 | 21 | 11 | 34 |
Income before income taxes | 44 | 76 | 162 | 205 |
Income tax expense | (27) | (38) | (84) | (79) |
Equity in earnings of subsidiaries, net of tax | 0 | 0 | 0 | 0 |
Net income | 17 | 38 | 78 | 126 |
Less net income attributable to the noncontrolling interest | (9) | (8) | (28) | (25) |
Net income attributable to QVC, Inc. stockholder | 8 | 30 | 50 | 101 |
Elimination | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net revenue | (307) | (315) | (945) | (922) |
Cost of goods sold | (50) | (51) | (139) | (139) |
Gross profit | (257) | (264) | (806) | (783) |
Operating expenses: | ||||
Operating | (79) | (72) | (252) | (224) |
Selling, general and administrative, including stock-based compensation | (178) | (192) | (554) | (559) |
Depreciation | 0 | 0 | 0 | |
Amortization | 0 | 0 | 0 | |
Operating expenses | (257) | (264) | (806) | (783) |
Operating income | 0 | 0 | 0 | 0 |
Other (expense) income: | ||||
Equity in losses of investee | 0 | 0 | 0 | |
Interest expense, net | 0 | 0 | 0 | 0 |
Foreign currency gain | 0 | 0 | 0 | |
Loss on extinguishment of debt | 0 | |||
Intercompany interest (expense) income | 0 | 0 | 0 | 0 |
Nonoperating expense | 0 | 0 | 0 | 0 |
Income before income taxes | 0 | 0 | 0 | 0 |
Income tax expense | 0 | 0 | 0 | 0 |
Equity in earnings of subsidiaries, net of tax | (98) | (127) | (362) | (396) |
Net income | (98) | (127) | (362) | (396) |
Less net income attributable to the noncontrolling interest | 9 | 8 | 28 | 25 |
Net income attributable to QVC, Inc. stockholder | $ (89) | $ (119) | $ (334) | $ (371) |
Guarantor_Non-Guarantor Subsi57
Guarantor/Non-Guarantor Subsidiary Financial Information (Statement of Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | $ 116 | $ 154 | $ 419 | $ 402 |
Foreign currency translation adjustments | (3) | 3 | 36 | (77) |
Total comprehensive income | 113 | 157 | 455 | 325 |
Comprehensive income attributable to noncontrolling interest | (11) | (11) | (46) | (25) |
Comprehensive income attributable to QVC, Inc. stockholder | 102 | 146 | 409 | 300 |
Parent issuer- QVC, Inc. | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 116 | 154 | 419 | 402 |
Foreign currency translation adjustments | (3) | 3 | 36 | (77) |
Total comprehensive income | 113 | 157 | 455 | 325 |
Comprehensive income attributable to noncontrolling interest | (11) | (11) | (46) | (25) |
Comprehensive income attributable to QVC, Inc. stockholder | 102 | 146 | 409 | 300 |
Combined subsidiary guarantors | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 81 | 89 | 284 | 270 |
Foreign currency translation adjustments | 0 | 0 | 0 | 0 |
Total comprehensive income | 81 | 89 | 284 | 270 |
Comprehensive income attributable to noncontrolling interest | 0 | 0 | 0 | 0 |
Comprehensive income attributable to QVC, Inc. stockholder | 81 | 89 | 284 | 270 |
Combined non-guarantor subsidiaries | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | 17 | 38 | 78 | 126 |
Foreign currency translation adjustments | (3) | 3 | 36 | (77) |
Total comprehensive income | 14 | 41 | 114 | 49 |
Comprehensive income attributable to noncontrolling interest | (11) | (11) | (46) | (25) |
Comprehensive income attributable to QVC, Inc. stockholder | 3 | 30 | 68 | 24 |
Elimination | ||||
Condensed Financial Statements, Captions [Line Items] | ||||
Net income | (98) | (127) | (362) | (396) |
Foreign currency translation adjustments | 3 | (3) | (36) | 77 |
Total comprehensive income | (95) | (130) | (398) | (319) |
Comprehensive income attributable to noncontrolling interest | 11 | 11 | 46 | 25 |
Comprehensive income attributable to QVC, Inc. stockholder | $ (84) | $ (119) | $ (352) | $ (294) |
Guarantor_Non-Guarantor Subsi58
Guarantor/Non-Guarantor Subsidiary Financial Information (Statement of Cash Flow) (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net cash provided by operating activities | $ 849 | $ 793 |
Investing activities: | ||
Capital expenditures | (140) | (132) |
Expenditures for cable and satellite television distribution rights | (8) | (48) |
Increase (Decrease) in Restricted Cash | 0 | |
Other investing activities | (3) | 2 |
Changes in other noncurrent assets | (2) | (1) |
Intercompany investing activities | 0 | 0 |
Net cash used in investing activities | (153) | (179) |
Financing activities: | ||
Principal payments of debt and capital lease obligations | (1,300) | (1,565) |
Principal borrowings of debt from senior secured credit facility | 1,048 | 1,470 |
Payment of debt origination fees | (2) | (3) |
Payment of bond premium fees | 0 | (18) |
Dividends paid to Liberty | 427 | 444 |
Dividends paid to noncontrolling interest | (21) | (20) |
Other financing activities | (9) | (14) |
Net short-term intercompany debt (repayments) borrowings | 0 | 0 |
Other intercompany financing activities | 0 | 0 |
Net cash used in financing activities | (711) | (594) |
Effect of foreign exchange rate changes on cash and cash equivalents | 7 | (4) |
Net (decrease) increase in cash and cash equivalents | (8) | 16 |
Cash and cash equivalents, beginning of period | 327 | 347 |
Cash and cash equivalents, end of period | 319 | 363 |
Parent issuer- QVC, Inc. | ||
Operating activities: | ||
Net cash provided by operating activities | 586 | 359 |
Investing activities: | ||
Capital expenditures | (113) | (90) |
Expenditures for cable and satellite television distribution rights | 0 | 0 |
Increase (Decrease) in Restricted Cash | 1 | |
Other investing activities | (12) | 2 |
Changes in other noncurrent assets | 6 | 0 |
Intercompany investing activities | 432 | 339 |
Net cash used in investing activities | 313 | 252 |
Financing activities: | ||
Principal payments of debt and capital lease obligations | (1,295) | (1,560) |
Principal borrowings of debt from senior secured credit facility | 1,048 | 1,470 |
Payment of debt origination fees | (2) | (3) |
Payment of bond premium fees | (18) | |
Dividends paid to Liberty | 427 | 444 |
Dividends paid to noncontrolling interest | 0 | 0 |
Other financing activities | (9) | (14) |
Net short-term intercompany debt (repayments) borrowings | (83) | (884) |
Other intercompany financing activities | (129) | 837 |
Net cash used in financing activities | (897) | (616) |
Effect of foreign exchange rate changes on cash and cash equivalents | 0 | 0 |
Net (decrease) increase in cash and cash equivalents | 2 | (5) |
Cash and cash equivalents, beginning of period | 0 | 2 |
Cash and cash equivalents, end of period | 2 | (3) |
Combined subsidiary guarantors | ||
Operating activities: | ||
Net cash provided by operating activities | 256 | 152 |
Investing activities: | ||
Capital expenditures | (3) | (6) |
Expenditures for cable and satellite television distribution rights | (8) | (45) |
Increase (Decrease) in Restricted Cash | 0 | |
Other investing activities | 0 | 0 |
Changes in other noncurrent assets | 0 | 0 |
Intercompany investing activities | 137 | 382 |
Net cash used in investing activities | 126 | 331 |
Financing activities: | ||
Principal payments of debt and capital lease obligations | 0 | 0 |
Principal borrowings of debt from senior secured credit facility | 0 | 0 |
Payment of debt origination fees | 0 | 0 |
Payment of bond premium fees | 0 | |
Dividends paid to Liberty | 0 | 0 |
Dividends paid to noncontrolling interest | 0 | 0 |
Other financing activities | 0 | 0 |
Net short-term intercompany debt (repayments) borrowings | (1,474) | 2,224 |
Other intercompany financing activities | 1,079 | (2,695) |
Net cash used in financing activities | (395) | (471) |
Effect of foreign exchange rate changes on cash and cash equivalents | 0 | 0 |
Net (decrease) increase in cash and cash equivalents | (13) | 12 |
Cash and cash equivalents, beginning of period | 112 | 123 |
Cash and cash equivalents, end of period | 99 | 135 |
Combined non-guarantor subsidiaries | ||
Operating activities: | ||
Net cash provided by operating activities | 7 | 282 |
Investing activities: | ||
Capital expenditures | (24) | (36) |
Expenditures for cable and satellite television distribution rights | 0 | (3) |
Increase (Decrease) in Restricted Cash | (1) | |
Other investing activities | 9 | 0 |
Changes in other noncurrent assets | (8) | (1) |
Intercompany investing activities | 0 | 0 |
Net cash used in investing activities | (23) | (41) |
Financing activities: | ||
Principal payments of debt and capital lease obligations | (5) | (5) |
Principal borrowings of debt from senior secured credit facility | 0 | 0 |
Payment of debt origination fees | 0 | 0 |
Payment of bond premium fees | 0 | |
Dividends paid to Liberty | 0 | 0 |
Dividends paid to noncontrolling interest | (21) | (20) |
Other financing activities | 0 | 0 |
Net short-term intercompany debt (repayments) borrowings | 1,557 | (1,340) |
Other intercompany financing activities | (1,519) | 1,137 |
Net cash used in financing activities | 12 | (228) |
Effect of foreign exchange rate changes on cash and cash equivalents | 7 | (4) |
Net (decrease) increase in cash and cash equivalents | 3 | 9 |
Cash and cash equivalents, beginning of period | 215 | 222 |
Cash and cash equivalents, end of period | 218 | 231 |
Elimination | ||
Operating activities: | ||
Net cash provided by operating activities | 0 | 0 |
Investing activities: | ||
Capital expenditures | 0 | 0 |
Expenditures for cable and satellite television distribution rights | 0 | 0 |
Increase (Decrease) in Restricted Cash | 0 | |
Other investing activities | 0 | 0 |
Changes in other noncurrent assets | 0 | 0 |
Intercompany investing activities | (569) | (721) |
Net cash used in investing activities | (569) | (721) |
Financing activities: | ||
Principal payments of debt and capital lease obligations | 0 | 0 |
Principal borrowings of debt from senior secured credit facility | 0 | 0 |
Payment of debt origination fees | 0 | 0 |
Payment of bond premium fees | 0 | |
Dividends paid to Liberty | 0 | 0 |
Dividends paid to noncontrolling interest | 0 | 0 |
Other financing activities | 0 | 0 |
Net short-term intercompany debt (repayments) borrowings | 0 | 0 |
Other intercompany financing activities | 569 | 721 |
Net cash used in financing activities | 569 | 721 |
Effect of foreign exchange rate changes on cash and cash equivalents | 0 | 0 |
Net (decrease) increase in cash and cash equivalents | 0 | 0 |
Cash and cash equivalents, beginning of period | 0 | 0 |
Cash and cash equivalents, end of period | $ 0 | $ 0 |