Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 31, 2018 | |
Entity Registrant Name | Qurate Retail, Inc. | |
Entity Central Index Key | 1,355,096 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Common Class A | ||
Entity Common Stock, Shares Outstanding | 420,149,728 | |
Common Class B | ||
Entity Common Stock, Shares Outstanding | 29,258,343 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 532 | $ 903 |
Trade and other receivables, net of allowance for doubtful accounts of $96 million and $92 million, respectively | 1,186 | 1,726 |
Inventory, net | 1,727 | 1,411 |
Other current assets | 198 | 125 |
Total current assets | 3,643 | 4,165 |
Investments in equity securities (note 4) | 376 | 2,363 |
Investments in affiliates, accounted for using the equity method | 178 | 309 |
Property and equipment, net | 1,300 | 1,341 |
Intangible assets not subject to amortization (note 8): | ||
Goodwill | 7,009 | 7,082 |
Trademarks | 3,925 | 3,929 |
Indefinite Lived Intangible Assets Total | 10,934 | 11,011 |
Intangible assets subject to amortization, net (note 8) | 1,102 | 1,248 |
Other assets, at cost, net of accumulated amortization | 140 | 50 |
Assets of discontinued operations (note 4) | 3,635 | |
Total assets | 17,673 | 24,122 |
Liabilities and Equity | ||
Accounts payable | 1,166 | 1,151 |
Accrued liabilities | 955 | 1,125 |
Current portion of debt, including $1,054 million and $978 million measured at fair value (note 9) | 1,472 | 996 |
Other current liabilities | 175 | 169 |
Total current liabilities | 3,768 | 3,441 |
Long-term debt, including $372 million and $868 million measured at fair value (note 9) | 5,885 | 7,553 |
Deferred income tax liabilities | 2,008 | 2,500 |
Other liabilities | 255 | 242 |
Liabilities of discontinued operations (note 4) | 303 | |
Total liabilities | 11,916 | 14,039 |
Equity | ||
Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued | ||
Additional paid-in capital | 1,043 | |
Accumulated other comprehensive earnings (loss), net of taxes | (116) | (133) |
Retained earnings | 5,747 | 9,068 |
Total stockholders' equity | 5,636 | 9,984 |
Noncontrolling interests in equity of subsidiaries | 121 | 99 |
Total equity | 5,757 | 10,083 |
Commitments and contingencies (note 10) | ||
Total liabilities and equity | 17,673 | 24,122 |
Common Class A | ||
Equity | ||
Common stock value | 5 | 5 |
Common Class B | ||
Equity | ||
Common stock value | ||
Common Class C | ||
Equity | ||
Common stock value | ||
Liberty Ventures common stock | Common Class A | ||
Equity | ||
Common stock value | 1 | |
Liberty Ventures common stock | Common Class B | ||
Equity | ||
Common stock value | ||
Liberty Ventures common stock | Common Class C | ||
Equity | ||
Common stock value |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Allowance for Doubtful Accounts Receivable, Current | $ 96 | $ 92 |
Short-term Debt, Fair Value | 1,054 | 978 |
Long-term Debt, Fair Value | $ 372 | $ 868 |
Preferred stock, par or stated value per share | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common Class A | ||
Common stock, par or stated value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 4,000,000,000 | 4,000,000,000 |
Common stock, shares issued | 426,254,718 | 449,335,940 |
Common stock, shares outstanding | 426,254,718 | 449,335,940 |
Common Class B | ||
Common stock, par or stated value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 29,258,343 | 29,203,895 |
Common stock, shares outstanding | 29,258,343 | 29,203,895 |
Common Class C | ||
Common stock, par or stated value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 0 | 0 |
Liberty Ventures common stock | Common Class A | ||
Common stock, par or stated value per share | $ 0.01 | |
Common stock, shares authorized | 400,000,000 | |
Common stock, shares issued | 81,686,659 | |
Common stock, shares outstanding | 81,686,659 | |
Liberty Ventures common stock | Common Class B | ||
Common stock, par or stated value per share | $ 0.01 | |
Common stock, shares authorized | 15,000,000 | |
Common stock, shares issued | 4,455,311 | |
Common stock, shares outstanding | 4,455,311 | |
Liberty Ventures common stock | Common Class C | ||
Common stock, par or stated value per share | $ 0.01 | |
Common stock, shares authorized | 400,000,000 | |
Common stock, shares issued | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue: | ||||
Total revenue, net | $ 3,231 | $ 2,381 | $ 9,694 | $ 7,060 |
Operating costs and expenses: | ||||
Cost of retail sales (exclusive of depreciation shown separately below) | 2,109 | 1,554 | 6,252 | 4,553 |
Operating expenses | 241 | 160 | 707 | 461 |
Selling, general and administrative, including stock-based compensation and transaction related costs (note 5) | 477 | 279 | 1,357 | 777 |
Depreciation and amortization | 167 | 180 | 489 | 594 |
Total operating costs and expenses | 2,994 | 2,173 | 8,805 | 6,385 |
Operating income (loss) | 237 | 208 | 889 | 675 |
Other income (expense): | ||||
Interest expense | (94) | (88) | (288) | (267) |
Share of earnings (losses) of affiliates, net | (29) | (86) | (89) | (122) |
Realized and unrealized gains (losses) on financial instruments, net (note 7) | (27) | 4 | 92 | 280 |
Other, net | 1 | 7 | (8) | 1 |
Total other income (expense) | (149) | (163) | (293) | (108) |
Earnings (loss) from continuing operations before income taxes | 88 | 45 | 596 | 567 |
Income tax (expense) benefit | (6) | 33 | (60) | (127) |
Earnings (loss) from continuing operations | 82 | 78 | 536 | 440 |
Earnings (loss) from discontinued operations, net of taxes | 230 | 141 | 571 | |
Net earnings (loss) | 82 | 308 | 677 | 1,011 |
Less net earnings (loss) attributable to the noncontrolling interests | 10 | 12 | 34 | 33 |
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders | 72 | 296 | 643 | 978 |
Qurate Retail | ||||
Other income (expense): | ||||
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders | $ 72 | $ 119 | $ 401 | $ 321 |
Earnings (Loss) Per Common Share | ||||
Income (Loss) from Continuing Operations, Per Basic Share | $ 0.16 | $ 0.27 | $ 0.86 | $ 0.71 |
Income (Loss) from Continuing Operations, Per Diluted Share | 0.16 | 0.26 | 0.85 | 0.71 |
Earnings Per Share, Basic | 0.16 | 0.27 | 0.86 | 0.71 |
Earnings Per Share, Diluted | $ 0.16 | $ 0.26 | $ 0.85 | $ 0.71 |
Liberty Ventures common stock | ||||
Other income (expense): | ||||
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders | $ 177 | $ 242 | $ 657 | |
Earnings (Loss) Per Common Share | ||||
Income (Loss) from Continuing Operations, Per Basic Share | $ (0.62) | $ 1.17 | $ 1.01 | |
Income (Loss) from Continuing Operations, Per Diluted Share | (0.61) | 1.16 | 1 | |
Earnings Per Share, Basic | 2.06 | 2.81 | 7.73 | |
Earnings Per Share, Diluted | $ 2.03 | $ 2.78 | $ 7.64 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements Of Comprehensive Earnings (Loss) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings (loss) | $ 82 | $ 308 | $ 677 | $ 1,011 |
Other comprehensive earnings (loss), net of taxes: | ||||
Foreign currency translation adjustments | (21) | 28 | (46) | 111 |
Recognition of previously unrealized losses (gains) on debt, net | 16 | |||
Share of other comprehensive earnings (losses) of equity affiliates | (1) | 3 | ||
Comprehensive earnings (loss) attributable to debt credit risk adjustments | 4 | (28) | ||
Other comprehensive earnings (loss) | (17) | 28 | (59) | 114 |
Comprehensive earnings (loss) | 65 | 336 | 618 | 1,125 |
Less comprehensive earnings (loss) attributable to the noncontrolling interests | 7 | 12 | 34 | 38 |
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders | $ 58 | $ 324 | $ 584 | $ 1,087 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net earnings (loss) | $ 677 | $ 1,011 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
(Earnings) loss from discontinued operations | (141) | (571) |
Depreciation and amortization | 489 | 594 |
Stock-based compensation | 67 | 59 |
Share of (earnings) losses of affiliates, net | 89 | 122 |
Cash receipts from returns on equity investments | 21 | |
Realized and unrealized (gains) losses on financial instruments, net | (92) | (280) |
Deferred income tax expense (benefit) | (84) | 21 |
Other, net | 29 | 8 |
Changes in operating assets and liabilities | ||
Current and other assets | 444 | 162 |
Payables and other liabilities | (482) | (67) |
Net cash provided (used) by operating activities | 996 | 1,080 |
Cash flows from investing activities: | ||
Cash proceeds from dispositions of investments | 281 | |
Investments in and loans to cost and equity investees | (73) | (140) |
Capital expended for property and equipment | (172) | (126) |
Other investing activities, net | (120) | (36) |
Net cash provided (used) by investing activities | (84) | (302) |
Cash flows from financing activities: | ||
Borrowings of debt | 3,142 | 1,689 |
Repayments of debt | (3,415) | (1,917) |
GCI Liberty Split-Off | (475) | |
Repurchases of Qurate Retail common stock | (623) | (452) |
Withholding taxes on net settlements of stock-based compensation | (24) | (14) |
Indemnification payment from GCI Liberty, Inc. | 133 | |
Other financing activities, net | (21) | (26) |
Net cash provided (used) by financing activities | (1,283) | (720) |
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | (2) | 13 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (373) | 71 |
Cash, cash equivalents and restricted cash at beginning of period | 912 | 836 |
Cash, cash equivalents and restricted cash at end of period | $ 539 | $ 907 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement Of Equity - 9 months ended Sep. 30, 2018 - USD ($) shares in Millions, $ in Millions | Liberty Ventures common stockCommon Class ACommon Stock | Common Class ACommon Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Earnings | Retained Earnings | Noncontrolling Interest In Equity Of Subsidiaries | Total |
Balance at Dec. 31, 2017 | $ 1 | $ 5 | $ 1,043 | $ (133) | $ 9,068 | $ 99 | $ 10,083 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 643 | 34 | 677 | ||||
Other comprehensive income (loss) | (59) | (59) | |||||
Stock compensation | 67 | 67 | |||||
Series A Qurate Retail stock repurchases | 0 | (623) | (623) | ||||
Distribution to noncontrolling interest | (23) | (23) | |||||
Option exercises | 2 | 2 | |||||
Withholding taxes on net share settlements of stock-based compensation | $ (24) | (24) | |||||
Cumulative effect of accounting change (note 2) | 76 | (70) | 6 | ||||
Reattribution of the Ventures Group to the Qurate Retail ( In shares) | (1) | 1 | |||||
GCI Liberty split-off | $ (4,360) | 11 | (4,349) | ||||
Reclassification | $ 3,894 | (3,894) | |||||
Balance at Sep. 30, 2018 | $ 5 | $ (116) | $ 5,747 | $ 121 | $ 5,757 |
Basis Of Presentation
Basis Of Presentation | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements | |
Basis of Presentation | (1) Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of Qurate Retail, Inc. (formerly named Liberty Interactive Corporation, prior to the Transactions defined and described below, or “Liberty”) and its controlled subsidiaries (collectively, "Qurate Retail," the "Company," “Consolidated Qurate Retail,” “us,” “we,” or “our” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. Qurate Retail is made up of wholly-owned subsidiaries QVC, Inc. (“QVC”), zulily, llc (“zulily”), and HSN, Inc. (“HSNi” which includes its televised shopping business “HSN” and its catalog retail business “Cornerstone”), and other cost and equity method investments. Qurate Retail is primarily engaged in the video and online commerce industries in North America, Europe and Asia. The businesses of the Company’s wholly-owned subsidiaries, QVC, HSNi and zulily, are seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping. The accompanying (a) condensed consolidated balance sheet as of December 31, 2017, 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 GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Qurate Retail's Annual Report on Form 10-K for the year ended December 31, 2017. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Qurate Retail considers (i) fair value measurement, (ii) accounting for income taxes, (iii) assessments of other-than-temporary declines in fair value of its investments and (iv) estimates of retail-related adjustments and allowances to be its most significant estimates. Prior to the Transactions (described and defined below), the Company utilized tracking stocks in its capital structure. A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. Qurate Retail had two tracking stocks—QVC Group common stock and Liberty Ventures common stock, which were intended to track and reflect the economic performance of the businesses, assets and liabilities attributed to the QVC Group and the Ventures Group, respectively. The QVC Group was comprised of the Company’s wholly-owned subsidiaries QVC, zulily and HSNi (as of December 29, 2017), among other assets and liabilities. The Ventures Group was comprised of businesses not included in the QVC Group including Evite, Inc. (“Evite”) and our interests in Liberty Broadband Corporation (“Liberty Broadband”), LendingTree, Inc. (“LendingTree”), FTD Companies, Inc. (“FTD”), investments in Charter Communications, Inc. (“Charter”) and ILG, Inc. (“ILG”), among other assets and liabilities. The Company’s results are attributed to the QVC Group and the Ventures Group through March 9, 2018. On December 29, 2017, Qurate Retail acquired the approximately 62% of HSNi it did not already own in an all-stock transaction making HSNi a wholly-owned subsidiary. HSNi stockholders (other than Qurate Retail) received fixed consideration of 1.65 shares of Series A QVC Group common stock (“QVCA”) for each share of HSNi common stock. Qurate Retail issued 53.6 million shares QVCA common stock to HSNi stockholders. On March 9, 2018, Qurate Retail completed the transactions contemplated by the Agreement and Plan of Reorganization (as amended, the “Reorganization Agreement,” and the transactions contemplated thereby, the “Transactions”) among General Communication, Inc. (“GCI”), an Alaska corporation, and Liberty Interactive LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Liberty (“LI LLC”). Pursuant to the Reorganization Agreement, GCI amended and restated its articles of incorporation (which resulted in GCI being renamed GCI Liberty, Inc. (“GCI Liberty”)) and effected a reclassification and auto conversion of its common stock. After market close on March 8, 2018, Qurate Retail’s board of directors approved the reattribution of certain assets and liabilities from Qurate Retail’s Ventures Group to its QVC Group, which was effective immediately. The reattributed assets and liabilities included cash, Qurate Retail’s interest in ILG, FTD, certain green energy investments, LI LLC’s exchangeable debentures, and certain tax benefits. Following these events, Qurate Retail acquired GCI (renamed “GCI Liberty, Inc.”) through a reorganization in which certain Qurate Retail interests, assets and liabilities attributed to the Ventures Group were contributed (the “contribution”) to GCI Liberty in exchange for a controlling interest in GCI Liberty. Qurate Retail and LI LLC contributed to GCI Liberty their entire equity interest in Liberty Broadband, Charter, and LendingTree, the Evite operating business and other assets and liabilities attributed to Qurate Retail’s Venture Group (following the reattribution), in exchange for (a) the issuance to LI LLC of a number of shares of GCI Liberty Class A Common Stock and a number of shares of GCI Liberty Class B Common Stock equal to the number of outstanding shares of Series A Liberty Ventures common stock and Series B Liberty Ventures common stock on March 9, 2018, respectively, (b) cash and (c) the assumption of certain liabilities by GCI Liberty. Following the contribution, Qurate Retail effected a tax-free separation of its controlling interest in the combined company (the “GCI Liberty Split-Off”), GCI Liberty, to the holders of Liberty Ventures common stock in full redemption of all outstanding shares of such stock, in which each outstanding share of Series A Liberty Ventures common stock was redeemed for one share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for one share of GCI Liberty Class B common stock. Simultaneous with the closing of the Transactions, QVC Group common stock became the only outstanding common stock of Qurate Retail, and thus QVC Group common stock ceased to function as a tracking stock. On April 9, 2018, Liberty Interactive Corporation was renamed Qurate Retail, Inc. On May 23, 2018, Qurate Retail amended its charter to eliminate the tracking stock capitalization structure and reclassify each share of QVC Group common stock into one share of the corresponding series of new common stock of Qurate Retail. With respect to events on or after May 23, 2018, we refer to our Series A and Series B common stock as “Qurate Retail common stock.” In July 2018, the Internal Revenue Service (“IRS”) completed its review of the GCI Liberty Split-Off and informed Qurate Retail that it agreed with the nontaxable characterization of the transactions. Qurate Retail received an Issue Resolution Agreement from the IRS documenting this conclusion. On October 17, 2018, Qurate Retail announced a series of initiatives designed to better position its HSNi and QVC- U.S. businesses (“QRG Initiatives”). As part of the QRG Initiatives, QVC will close its fulfillment center in Lancaster, Pennsylvania and has entered into an agreement to lease a new fulfillment center in Bethlehem, Pennsylvania, commencing in 2019 (see note 10). Qurate Retail recorded transaction related costs of $43 million during the third quarter of 2018, which primarily related to severance as a result of the QRG Initiatives. As a result of repurchases of Series A Qurate Retail common stock and the GCI Liberty Split-Off, the Company’s additional paid-in capital balance was in a deficit position as of September 30, 2018. In order to ensure that the additional paid-in capital account is not negative, we reclassified the amount of the deficit ($3.9 billion) at September 30, 2018 to retained earnings. Qurate Retail holds investments that are accounted for using the equity method. Qurate Retail does not control the decision making process or business management practices of these affiliates. Accordingly, Qurate Retail relies on management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that Qurate Retail uses in the application of the equity method. In addition, Qurate Retail relies on audit reports that are provided by the affiliates' independent auditors on the financial statements of such affiliates. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a material effect on Qurate Retail's condensed consolidated financial statements. Qurate Retail has entered into certain agreements with Liberty Media Corporation ("LMC") (for accounting purposes, a related party of the Company), a separate publicly traded company. These agreements include a reorganization agreement, services agreement and facilities sharing agreement. Neither Qurate Retail nor LMC has any stock ownership, beneficial or otherwise, in the other. The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between Qurate Retail and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides Qurate Retail with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. Qurate Retail reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for Qurate Retail's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Qurate Retail. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with Qurate Retail. Under these various agreements, approximately $2 million and $3 million was reimbursable to LMC for the three months ended September 30, 2018 and 2017, respectively, and $6 million and $8 million was reimbursable to LMC for the nine months ended September 30, 2018 and 2017, respectively. The Tax Cuts and Jobs Act (the “Tax Act”) was enacted in December 2017. The Tax Act significantly changed U.S. tax law by, among other things, lowering the U.S. corporate income tax rate, implementing a territorial tax system and imposing a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. In the prior year, we recognized the provisional tax impacts related to the one-time transition tax and the revaluation of deferred tax balances and included these estimates in our consolidated financial statements for the year ended December 31, 2017. We are still in the process of analyzing the impact of the various provisions of the Tax Act. The ultimate impact may materially differ from these provisional amounts due to, among other things, continued analysis of the estimates and further guidance and interpretations on the application of the law. We expect to complete our analysis by December 2018. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2018 | |
Recent Accounting Pronouncements | |
Recent Accounting Pronouncements | (2) Recent Accounting Pronouncements Recently Adopted Accounting Pronouncements Revenue Recognition. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance on revenue from contracts with customers. The new guidance 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 additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. On January 1, 2018, the Company adopted the revenue accounting standard using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company does not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis. Refer to the table below for the adoption of this guidance. Balance at Adjustments Balance at December 31, Due to ASU January 1, 2017 2014-09 2018 in millions Assets: Inventory, net $ Other current assets $ Liabilities: Other current liabilities $ Deferred income tax liabilities $ Equity: Retained earnings $ In accordance with the new revenue standard requirements, the following table illustrates the impact on our reported results in the condensed consolidated statements of operations assuming we did not adopt the new revenue standard on January 1, 2018. Other than as previously discussed, upon the adoption of the new revenue standard on January 1, 2018, there were no additional material adjustments to our condensed consolidated balance sheet as of September 30, 2018. As reported Balance without Three months ended adoption of September 30, 2018 Impact of ASC 606 ASC 606 in millions Net revenue $ 3,231 3,177 Cost of retail sales $ 2,109 2,098 Selling, general and administrative expenses, including stock-based compensation and transaction related costs $ 477 446 Operating expense $ 241 240 Income tax (expense) benefit $ 3 Net income $ 72 64 As reported Balance without Nine months ended adoption of September 30, 2018 Impact of ASC 606 ASC 606 in millions Net revenue $ 9,694 9,552 Cost of retail sales $ 6,252 6,229 Selling, general and administrative expenses, including stock-based compensation and transaction related costs $ 1,357 1,263 Operating expense $ 707 704 Income tax (expense) benefit $ 5 Net income $ 643 626 The effect of changes of adoption is primarily due to changes in the timing of revenue recognition and the classification of credit card income for the QVC-branded credit card and the HSN-branded credit card. Additionally, for the three and nine months ended September 30, 2018, revenue is recognized at the time of shipment to our customers consistent with when control passes and credit card income is recognized in revenue. For the three and nine months ended September 30, 2017, revenue was recognized at the time of delivery to the customers and deferred revenue, as well as inventory and related expenses, were recorded to account for the shipments in-transit. In addition, credit card income was recognized as an offset to selling, general and administrative expenses. The Company also recognized a separate $77 million asset (included in other current assets) relating to the expected return of inventory and a $190 million liability (included in other current liabilities) relating to its sales return reserve at September 30, 2018, instead of the net presentation that was used at December 31, 2017. Disaggregated revenue by segment and product category consisted of the following: Three months ended September 30, 2018 QVC U.S. QVC Int'l HSN zulily Corp and other Total in millions Home $ 497 235 216 118 170 1,236 Apparel 286 113 23 175 37 634 Beauty 228 148 67 11 — 454 Accessories 180 64 62 105 — 411 Electronics 115 26 92 3 — 236 Jewelry 79 51 39 12 — 181 Other revenue 33 3 14 8 21 79 Total Revenue $ 1,418 640 513 432 228 3,231 Nine months ended September 30, 2018 QVC U.S. QVC Int'l HSN zulily Corp and other Total in millions Home $ 1,450 730 640 341 520 3,681 Apparel 898 348 74 494 109 1,923 Beauty 717 450 200 35 — 1,402 Accessories 560 203 170 329 — 1,262 Electronics 290 74 255 11 — 630 Jewelry 250 154 112 35 — 551 Other revenue 97 13 44 21 70 245 Total Revenue $ 4,262 1,972 1,495 1,266 699 9,694 Consumer Product Revenue and Other Revenue. Qurate Retail's revenue includes sales of consumer products in the following categories: home, apparel, beauty, accessories, electronics and jewelry, which are primarily sold through live merchandise-focused televised shopping programs and via our websites and other interactive media, including catalogs. Other revenue consists primarily of income generated from our company branded credit cards in which a large consumer financial services company provides revolving credit directly to the Company’s customers for the sole purpose of purchasing merchandise or services with these cards. In return, the Company receives a portion of the net economics of the credit card program. Revenue Recognition. Revenue is recognized when obligations with our customers are satisfied; generally this occurs at the time of shipment to our customers consistent with when control of the shipped product passes. The recognized revenue reflects the consideration we expect to receive in exchange for transferring goods, net of allowances for returns. The Company recognizes revenue related to its company branded credit cards over time as the credit cards are used by Qurate Retail's customers. Sales, value add, use and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The Company has elected to treat shipping and handling activities after the customer obtains control of the goods as a fulfillment cost and not as a promised good or service. Accordingly, the Company will accrue all fulfillment costs related to the shipping and handling of consumer goods at the time of shipment. The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money. Significant Judgments. Qurate Retail’s products are generally sold with a right of return for up to 30 days after the date of shipment and we may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. The Company has determined that it is the principal in vendor arrangements as the Company can establish control over the goods prior to shipment. Accordingly, the Company records revenue for these arrangements on a gross basis. Recognition and Measurement of Financial Instruments. In January 2016, the FASB issued new accounting guidance that is intended to improve the recognition and measurement of financial instruments. The new guidance 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 Company adopted this guidance during the first quarter of 2018. As the Company has historically measured its investments in equity securities with readily determinable fair values at fair value, the new guidance had no impact on the accounting for these instruments. The Company has elected the measurement alternative for its equity securities without readily determinable fair values and will perform a qualitative assessment of these instruments to identify potential impairments. In addition, a portion of the unrealized gain (loss) recognized on the Company’s exchangeable debt accounted for at fair value is now presented in other comprehensive income as it relates to instrument specific credit risk, however this impact was not material to the overall financial statements for the period ended September 30, 2018. Statement of Cash Flows. In November 2016, the FASB issued new accounting guidance which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted this guidance during the first quarter of 2018 and has reclassified prior period balances in cash and cash equivalents within the condensed consolidated statements of cash flows in order to conform with current period presentation. The following table reconciles cash, cash equivalents and restricted cash reported in our condensed consolidated balance sheets to the total amount presented in our condensed consolidated statements of cash flows: September 30, December 31, 2018 2017 in millions Cash and cash equivalents $ 532 Restricted cash included in other current assets 7 Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows $ 539 In August 2016, the FASB issued new accounting guidance which addresses eight specific cash flow issues to reduce the diversity in practice for appropriate classification on the statement of cash flows. The Company adopted this guidance during the first quarter of 2018, and there was no significant effect of the standard on its condensed consolidated financial statements. Share-based payment modification. In May 2017, the FASB issued new accounting guidance to provide clarity to which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting in Accounting Standards Codification (“ASC”) 718. The Company adopted this guidance during the first quarter of 2018, and there was no significant effect of the standard on its condensed consolidated financial statements. Intra-entity Transfers of Assets Other Than Inventory. In October 2016, the FASB issued new accounting guidance which requires an entity to recognize at the transaction date the income tax consequences of intercompany asset transfers. The Company adopted this guidance during the first quarter of 2018, and there was no significant effect of the standard on its condensed consolidated financial statements. Accounting Pronouncements Not Yet Adopted Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued new guidance which addresses the effect of the change in the U.S. federal corporate tax rate due to the enactment of the Tax Act on items within accumulated other comprehensive income (loss). The guidance is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its condensed consolidated financial statements. Leases. In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance also simplifies the accounting for sale and leaseback transactions. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. We plan to adopt this guidance on January 1, 2019 and expect to elect certain practical expedients under the transition guidance. Additionally, the Company plans to elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and does not plan to restate prior periods. The Company is currently working with its consolidated subsidiaries to evaluate the impact of the adoption of this new guidance on our consolidated financial statements, including identifying the population of leases, evaluating technology solutions and collecting lease data. Internal-Use Software. In August 2018, the FASB issued new guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance will be effective for the Company in the first quarter of 2020 with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | (3) Acquisitions On December 29, 2017, Qurate Retail acquired the approximately 62% of HSNi it did not already own in an all-stock transaction making HSNi a wholly-owned subsidiary. HSNi shareholders (other than Qurate Retail) received fixed consideration of 1.65 QVCA shares for each share of HSNi common stock. Qurate Retail issued 53.6 million shares QVCA common stock to HSNi shareholders. In conjunction with application of acquisition accounting, we recorded a full step up in basis of HSNi which resulted in a $409 million gain. The fair market value of our ownership interest previously held in HSNi ($605 million) was determined based on the trading price of QVCA common stock on the date of the acquisition (Level 1) less a control premium. The market value of the shares of QVCA common stock issued to HSNi stockholders ($1.3 billion) was determined based on the trading price of QVCA common stock on the date of the acquisition. The total equity value of the transaction was $1.9 billion. The preliminary purchase price allocation for HSNi is as follows (amounts in millions): Cash and cash equivalents $ Property and equipment Other assets 784 Goodwill 926 Trademarks Intangible assets subject to amortization Accounts payable & accrued liabilities Long-term debt Other liabilities assumed Deferred tax liabilities $ Goodwill is calculated as the excess of the consideration transferred over the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, value associated with future customers, continued innovation and noncontractual relationships. Intangible assets acquired during 2017 were comprised of customer relationships of $421 million with a weighted average life of approximately 9 years, capitalized software of $16 million with a weighted average life of approximately 1 year, and technology of $161 million with a weighted average life of approximately 7 years. None of the acquired goodwill is expected to be deductible for tax purposes. Subsequent to December 31, 2017, the preliminary purchase price allocation was adjusted, resulting in an increase of $6 million to property and equipment, $32 million to other assets, $4 million to accounts payable and accrued liabilities, $7 million to debt, $1 million to other liabilities assumed, and corresponding decreases of $24 million to goodwill, $2 million to deferred tax liabilities and $4 million to intangible assets subject to amortization. As of September 30, 2018, the valuation related to the purchase is not final and the purchase price allocation is preliminary and subject to revision. The primary areas of the purchase price allocation that are not yet finalized are related to certain fixed and intangible assets, liabilities and tax balances. The pro forma revenue and net earnings from continuing operations of Qurate Retail, prepared utilizing the historical financial statements of HSNi, giving effect to purchase accounting related adjustments made at the time of acquisition, as if the transaction discussed above occurred on January 1, 2016, are as follows: Three months ended Nine months ended September 30, September 30, 2017 2017 amounts in millions Revenue $ 3,163 9,450 Net earnings (loss) from continuing operations $ 68 433 The pro forma information is not representative of Qurate Retail’s future financial position, future results of operations or future cash flows nor does it reflect what Qurate Retail’s financial position, results of operations or cash flows would have been as if the transaction had happened previously and Qurate Retail controlled HSNi during the periods presented. |
Disposals
Disposals | 9 Months Ended |
Sep. 30, 2018 | |
Disposals [Abstract] | |
Disposals | (4) Disposals On March 9, 2018, Qurate Retail completed the GCI Liberty Split-Off. At the time of the GCI Liberty Split-Off, GCI Liberty was comprised of, among other things, GCI Liberty’s legacy business, Qurate Retail’s former interest in Liberty Broadband, Charter and LendingTree, and Qurate Retail’s former wholly-owned subsidiary Evite. Qurate Retail viewed Liberty Broadband, LendingTree and Evite as separate components and evaluated them separately for discontinued operations presentation. As Qurate Retail’s former interest in Charter was accounted for as an available for sale investment it did not meet the definition of a component for discontinued operation presentation. The disposition of Liberty Broadband was considered significant to the overall financials and therefore was considered to be a strategic shift. Accordingly, the accompanying condensed consolidated financial statements of Qurate Retail have been prepared to reflect Qurate Retail’s interest in Liberty Broadband as a discontinued operation. The disposition of LendingTree and Evite as part of the GCI Liberty Split-Off does not have a major effect on Qurate Retail’s historical or future results. Therefore, the disposition of LendingTree and Evite was not considered a strategic shift in Qurate Retail’s operations. Accordingly, LendingTree and Evite are not presented as discontinued operations in the accompanying condensed consolidated financial statements of Qurate Retail. LendingTree and Evite are included in the Corporate and other segment through March 8, 2018. Included in revenue in the accompanying condensed consolidated statements of operations is zero dollars and $6 million for the three months ended September 30, 2018 and 2017, respectively, and $3 million and $16 million for the nine months ended September 30, 2018 and 2017, respectively, related to Evite. Included in net earnings (loss) in the accompanying condensed consolidated statements of operations are losses of zero dollars and less than a million dollars for the three months ended September 30, 2018 and 2017, respectively, and losses of $2 million and $3 million for the nine months ended September 30, 2018 and 2017, respectively, related to Evite. Included in total assets in the accompanying condensed consolidated balance sheets as of December 31, 2017 is $43 million related to Evite. Included in net earnings (loss) in the accompanying condensed consolidated statements of operations are earnings of zero dollars and $1 million for the three months ended September 30, 2018 and 2017, respectively, and less than a million dollars and $4 million for the nine months ended September 30, 2018 and 2017, respectively, related to LendingTree. Included in total assets in the accompanying condensed consolidated balance sheets as of December 31, 2017 is $115 million related to LendingTree. Certain financial information for the Company’s investment in Liberty Broadband, which is included in the discontinued operations line items of the condensed consolidated Qurate Retail balance sheets as of December 31, 2017 is as follows: December 31, 2017 amounts in millions Investment in Liberty Broadband measured at fair value $ 3,635 Deferred income tax liabilities $ 303 Certain financial information for the Company’s investment in Liberty Broadband, which is included in earnings (loss) from discontinued operations is as follows: Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 amounts in millions Earnings (loss) before income taxes $ NA 365 187 906 Income tax (expense) benefit $ NA (135) (46) (335) The impact from discontinued operations on basic and diluted earnings (loss) per share is as follows: Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Basic earnings (loss) from discontinued operations attributable to Qurate Retail shareholders per common share: Series A and Series B Qurate Retail common stock $ NA NA NA NA Series A and Series B Liberty Ventures common stock $ NA 2.68 1.64 6.71 Diluted earnings (loss) from discontinued operations attributable to Qurate Retail shareholders per common share: Series A and Series B Qurate Retail common stock $ NA NA NA NA Series A and Series B Liberty Ventures common stock $ NA 2.64 1.62 6.64 Prior to the GCI Liberty Split-Off, Qurate Retail accounted for the investment in Liberty Broadband at its fair value. Accordingly, Liberty Broadband’s assets, liabilities and results of operations were not included in Qurate Retail’s consolidated financial statements. Summary financial information for Liberty Broadband for the periods prior to the GCI Liberty Split-Off is as follows: December 31, 2017 amounts in millions Current assets $ 84 Total assets $ 11,932 Current liabilities $ 11 Total liabilities $ 1,445 Equity $ 10,487 Three months ended Nine months ended September 30, September 30, 2017 2017 amounts in millions Operating income $ (6) (19) Share of earnings (loss) of affiliate $ (5) 25 Gain (loss) on dilution of investment in affiliate $ (4) (42) Income tax (expense) benefit $ 7 18 Net earnings (loss) attributable to Liberty Broadband shareholders $ (10) (27) |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation | (5) Stock-Based Compensation The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock, restricted stock units (“RSUs”) and options to purchase shares of the Company’s common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date. In connection with the GCI Liberty Split-Off (see note 1), the Company redeemed each outstanding share of its Series A and Series B Liberty Ventures common stock for shares of the corresponding class of GCI Liberty common stock. Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $21 million and $22 million of stock-based compensation during the three months ended September 30, 2018 and 2017, respectively, and $67 million and $59 million of stock-based compensation during the nine months ended September 30, 2018 and 2017, respectively. The following table presents the number and weighted average GDFV of options granted by the Company during the nine months ended September 30, 2018: Nine months ended September 30, 2018 Options Granted (000's) Weighted Average GDFV Series A Qurate Retail common stock, QVC employees (1) 2,924 $ 8.76 Series A Qurate Retail common stock, zulily employees (1) 336 $ 8.65 Series A Qurate Retail common stock, HSNi employees (1) 859 $ 8.77 Series A Qurate Retail common stock, Qurate Retail President and CEO (2) 577 $ 7.09 Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (3) 175 $ 8.84 Series B Liberty Ventures common stock, Qurate Retail Chairman of the Board (3) 143 $ 16.55 (1) Grants mainly vest semi-annually over four years. (2) Grant vests 50% on each of December 15, 2019 and 2020. (3) Grants cliff vest on December 31, 2018. Grants were made in connection with his employment agreement. In addition to the stock option grants to the Qurate Retail Chairman of the Board and in connection with our Chairman’s employment agreement, Qurate Retail granted performance based RSUs to him. During the nine months ended September 30, 2018, Qurate Retail granted 124 thousand performance-based RSUs of Series B Qurate Retail common stock. The RSUs had a GDFV of $27.56 per share at the time they were granted. The performance-based RSUs cliff vest in one year, subject to the satisfaction of certain performance objectives. Performance objectives, which are subjective, are considered in determining the timing and amount of compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The value of the grant is remeasured at each reporting period. Qurate Retail also granted approximately 183 thousand performance-based RSUs of Series A Qurate Retail common Stock (“Series A RSUs”) to its current CEO in the third quarter in connection with his appointment to the position. The Series A RSUs had a GDFV of $22.18 per share at the time they were granted and will cliff vest in December 2020, subject to satisfaction of certain performance objectives. The Company has calculated the GDFV for all of its equity classified Awards and any subsequent remeasurement of its liability classified Awards and certain performance-based Awards using the Black-Scholes-Merton Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. The volatility used in the calculation for Awards is based on the historical volatility of Qurate Retail's stock and the implied volatility of publicly traded Qurate Retail options. The Company uses a zero dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options. Qurate Retail—Outstanding Awards The following tables present the number and weighted average exercise price ("WAEP") of the Awards to purchase Qurate Retail common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the Awards. Qurate Retail Weighted Aggregate average intrinsic Series A remaining value (000's) WAEP life (millions) Outstanding at January 1, 2018 32,361 $ 23.48 Granted 4,697 $ 26.85 Exercised (3,640) $ 16.66 Forfeited/Cancelled (1,726) $ 26.92 Outstanding at September 30, 2018 31,692 $ 24.57 3.7 years $ 41 Exercisable at September 30, 2018 19,518 $ 23.99 2.7 years $ 35 Qurate Retail Weighted Aggregate average intrinsic Series B remaining value (000's) WAEP life (millions) Outstanding at January 1, 2018 1,643 $ 27.16 Granted 175 $ 27.77 Exercised — $ — Forfeited/Cancelled — $ — Outstanding at September 30, 2018 1,818 $ 27.22 3.7 years $ — Exercisable at September 30, 2018 997 $ 25.40 4.6 years $ — The grant, exercise and forfeiture/cancellation activity for Liberty Ventures Series A and B shares was immaterial during the period from January 1, 2018 through March 9, 2018, and no Awards were outstanding as of September 30, 2018. All of the outstanding Awards of Liberty Ventures Series A and B common stock were redeemed for GCI Liberty Series A and B common stock as a result of the GCI Liberty Split-Off on March 9, 2018. As of September 30, 2018, the total unrecognized compensation cost related to unvested Awards was approximately $87 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 2.5 years. As of September 30, 2018, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately 31.7 million shares of Series A Qurate Retail common stock and 1.8 million shares of Series B Qurate Retail common stock. |
Earnings (Loss) Per Common Shar
Earnings (Loss) Per Common Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Common Share | (6) Earnings (Loss) Per Common Share Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding ("WASO") for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive. Series A and Series B Qurate Retail Common Stock Excluded from diluted EPS for the three months ended September 30, 2018 and 2017, are 28 million and 16 million potential common shares, respectively, because their inclusion would have been antidilutive. Excluded from diluted EPS, for the nine months ended September 30, 2018 and 2017, are 28 million and 16 million potential common shares, respectively, because their inclusion would have been antidilutive. Qurate Retail Common Stock Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 number of shares in millions Basic WASO 459 448 467 451 Potentially dilutive shares 2 4 4 3 Diluted WASO 461 452 471 454 Series A and Series B Liberty Ventures Common Stock Excluded from diluted EPS for the nine months ended September 30, 2018 were 2 million potential common shares, because their inclusion would have been antidilutive. No potential common shares were excluded from diluted EPS for the three and nine months ended September 30, 2017, and the three months ended September 30, 2018. Liberty Ventures Common Stock Three months ended Nine months ended September 30, September 30, 2018 (1) 2017 2018 2017 number of shares in millions Basic WASO NA 86 86 85 Potentially dilutive shares NA 1 Diluted WASO NA 87 87 86 (1) All of the outstanding shares of Liberty Ventures Series A and B common stock were redeemed for GCI Liberty Series A and B common stock as a result of the GCI Liberty Split-Off on March 9, 2018. |
Assets and Liabilities Measured
Assets and Liabilities Measured at Fair Value | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Measured at Fair Value | (7) Assets and Liabilities Measured at Fair Value For assets and liabilities required to be reported at fair value, 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 are inputs, other than quoted market prices included within Level 1, that 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 at fair value are as follows: Fair Value Measurements at Fair Value Measurements at September 30, 2018 December 31, 2017 Quoted Quoted prices prices in active Significant in active Significant markets for other markets for other identical observable identical observable assets inputs assets inputs Description Total (Level 1) (Level 2) Total (Level 1) (Level 2) amounts in millions Cash equivalents $ 389 389 — 655 655 — Equity securities $ 282 282 — 2,275 2,275 — Indemnification asset $ 100 — 100 — — — Debt $ 1,426 — 1,426 1,846 — 1,846 The majority of the Company's Level 2 financial assets and liabilities are primarily debt instruments with quoted market prices that are not considered to be traded on "active markets," as defined in GAAP. The fair values for such instruments are derived from a typical model using observable market data as the significant inputs. Pursuant to an indemnification agreement, GCI Liberty has agreed to indemnify LI LLC for certain payments made to a holder of LI LLC’s 1.75% Exchangeable Debentures due 2046 (the “1.75% Exchangeable Debentures”). An indemnity asset in the amount of $281 million was recorded upon completion of the GCI Liberty Split-Off. Within six months of the GCI Liberty Split-Off, Qurate Retail, LI LLC and GCI Liberty agreed to cooperate, and reasonably assist each other, with respect to the commencement and consummation of one or more privately negotiated transactions, a tender offer or other purchase transactions (each, a “Purchase Offer”) whereby LI LLC would offer to purchase the 1.75% Exchangeable Debentures on terms and conditions (including maximum offer price) reasonably acceptable to GCI Liberty. GCI Liberty would indemnify LI LLC for each 1.75% Exchangeable Debenture repurchased by LI LLC in a Purchase Offer for an amount by which the purchase price for such debenture exceeds the amount of cash reattributed with respect to such purchased 1.75% Exchangeable Debenture net of certain tax benefits, if any, attributable to such 1.75% Exchangeable Debenture. In June 2018, Qurate Retail repurchased 417,759 of the 1.75% Exchangeable Debentures for approximately $457 million, including accrued interest, and GCI Liberty made a payment under the indemnification agreement to Qurate Retail in the amount of $133 million. Following the initial six month period, the remaining indemnification to LI LLC for certain payments made to a holder of the 1.75% Exchangeable Debentures pertains to the holder’s ability to exercise its exchange right according to the terms of the debentures on or before October 5, 2023. Such amount will equal the difference between the exchange value and par value of the 1.75% Exchangeable Debentures at the time the exchange occurs. The indemnification asset recorded in the condensed consolidated balance sheets as of September 30, 2018 represents the fair value of the estimated exchange feature included in the 1.75% Exchangeable Debentures primarily based on market observable inputs (Level 2). As of September 30, 2018, a holder of the 1.75% Exchangeable Debentures does not have the ability to exchange and, accordingly, such indemnification asset is included as a long-term asset in our condensed consolidated balance sheets. Additionally, as of September 30, 2018, 332,241 bonds of the 1.75% Exchangeable Debentures remain outstanding. Realized and Unrealized Gains (Losses) on Financial Instruments Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following: Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 amounts in millions Equity securities $ 10 130 154 552 Exchangeable senior debentures (52) (91) (9) (230) Indemnification asset 15 — (49) — Other financial instruments — (35) (4) (42) $ (27) 4 92 280 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | (8) Intangible Assets Goodwill Changes in the carrying amount of goodwill are as follows: Corporate and QVC HSN zulily Other Total amounts in millions Balance at January 1, 2018 $ 5,190 933 917 42 7,082 Foreign currency translation adjustments (24) — — — (24) Disposition (1) — — — (25) (25) Other (2) — (21) — (3) (24) Balance at September 30, 2018 $ 5,166 912 917 14 7,009 (1) As a result of the GCI Liberty Split-Off on March 9, 2018, the Company disposed of its wholly-owned subsidiary Evite, resulting in a $25 million decrease to goodwill. (2) As discussed in note 3, the preliminary purchase price allocation for the HSNi acquisition was adjusted, resulting in a decrease to goodwill. Intangible Assets Subject to Amortization Amortization expense for intangible assets with finite useful lives was $117 million and $137 million for the three months ended September 30, 2018 and 2017, respectively, and $332 million and $462 million for the nine months ended September 30, 2018 and 2017, respectively. Based on its amortizable intangible assets as of September 30, 2018, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions): Remainder of 2018 $ 84 2019 $ 279 2020 $ 213 2021 $ 153 2022 $ 77 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
Long-Term Debt | (9) Long-Term Debt Debt is summarized as follows: Outstanding principal at Carrying value September 30, 2018 September 30, 2018 December 31, 2017 amounts in millions Corporate level debentures 8.5% Senior Debentures due 2029 $ 287 286 285 8.25% Senior Debentures due 2030 504 502 502 4% Exchangeable Senior Debentures due 2029 433 325 316 3.75% Exchangeable Senior Debentures due 2030 434 315 318 3.5% Exchangeable Senior Debentures due 2031 318 412 342 0.75% Exchangeable Senior Debentures due 2043 — 2 2 1.75% Exchangeable Senior Debentures due 2046 332 372 868 Subsidiary level notes and facilities QVC 3.125% Senior Secured Notes due 2019 400 399 399 QVC 5.125% Senior Secured Notes due 2022 500 500 500 QVC 4.375% Senior Secured Notes due 2023 750 750 750 QVC 4.85% Senior Secured Notes due 2024 600 600 600 QVC 4.45% Senior Secured Notes due 2025 600 599 599 QVC 5.45% Senior Secured Notes due 2034 400 399 399 QVC 5.95% Senior Secured Notes due 2043 300 300 300 QVC 6.375% Senior Secured Notes due 2067 225 225 — QVC Bank Credit Facilities 825 825 1,763 HSNi Bank Credit Facilities 390 390 460 Other subsidiary debt 189 189 170 Deferred loan costs — (33) (24) Total consolidated Qurate Retail debt $ 7,487 7,357 8,549 Less current classification (1,472) (996) Total long-term debt $ 5,885 7,553 QVC Bank Credit Facilities On June 23, 2016, QVC amended and restated its senior secured credit facility (the “Third Amended and Restated Credit Agreement”) with zulily as co-borrower. The Third Amended and Restated Credit Agreement is a multi-currency facility that provides for a $2.65 billion revolving credit facility, with a $300 million total 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 QVC and zulily, as co-borrowers with an additional $50 million sub-limit for standby letters of credit. The remaining $2.25 billion and any incremental loans may be borrowed only by QVC. 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% to 0.75% depending on QVC and zulily’s combined ratio of Consolidated Total Debt to Consolidated EBITDA for the most recent four fiscal quarter period (the “Combined Consolidated Leverage Ratio”). Borrowings that are LIBOR loans will bear interest at a per annum rate equal to the applicable LIBOR rate plus a margin that varies between 1.25% and 1.75% depending on QVC and zulily’s Combined Consolidated Leverage Ratio. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments are required other than when borrowings and letter of credit usage exceed availability; provided that, if zulily ceases to be controlled by Qurate Retail, all of zulily’s loans must be repaid and its letters of credit cash collateralized. Any amounts prepaid on the revolving facility may be reborrowed. The facility matures on June 23, 2021, except that $140 million of the $2.25 billion commitment available to QVC matures on March 9, 2020. Payment of loans may be accelerated following certain customary events of default. The payment and performance of the borrowers’ obligations (including zulily’s obligations) under the Third Amended and Restated Credit Agreement are guaranteed by each of QVC’s Material Domestic Subsidiaries (as defined in the Third Amended and Restated Credit Agreement). Further, the borrowings under the Third Amended and Restated Credit Agreement are secured, pari passu with QVC’s existing notes, by a pledge of all of the capital stock of QVC. The payment and performance of the borrowers’ obligations with respect to the $400 million tranche available to both QVC and zulily are also guaranteed by each of zulily’s Material Domestic Subsidiaries (as defined in the Third Amended and Restated Credit Agreement), if any, and are secured by a pledge of all of zulily’s equity interests. The Third Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on QVC and zulily and each of their 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 the Third Amended Restated Credit Agreement as QVC’s consolidated total debt to Adjusted OIBDA (as defined in note 11) ratio for the most recent four fiscal quarter period; and limiting the Combined Consolidated Leverage Ratio. The interest rate on borrowings outstanding under the Third Amended and Restated Credit Agreement was 3.7% at September 30, 2018. Availability under the Third Amended and Restated Credit Agreement at September 30, 2018 was $1.8 billion, including the remaining portion of the $400 million tranche available to zulily and outstanding letters of credit. 6.375% Senior Notes due 2067 In September 2018, QVC completed a registered debt offering for $225 million of 6.375% Senior Notes due 2067 (the “2067 Notes”). The proceeds were used to partially prepay existing indebtedness under QVC’s senior secured credit facility and for general corporate purposes. The costs to complete the financing were deferred and are being amortized to interest expense over the term of the 2067 Notes. Interest on the 2067 Notes will be paid quarterly in March, June, September and December, commencing on December 15, 2018. QVC has the option to call the 2067 Notes after 5 years at par value. HSNi Bank Credit Facility On January 27, 2015, HSNi entered into a $1.25 billion five-year syndicated credit agreement ("Credit Agreement") which was secured by 100% of the voting equity securities of HSNi's U.S. subsidiaries and 65% of HSNi's first-tier foreign subsidiaries. Certain HSNi subsidiaries had unconditionally guaranteed HSNi's obligations under the Credit Agreement. The Credit Agreement, which included a $750 million revolving credit facility and a $500 million term loan, could be increased up to $1.75 billion subject to certain conditions and was set to expire on January 27, 2020. On December 29, 2017, the Credit Agreement was amended, the outstanding balance on the term loan was repaid, and the revolving credit facility was increased to $1 billion. The maturity of the revolving credit facility was extended to December 29, 2022. Loans under the amended Credit Agreement bear interest at a per annum rate equal to LIBOR plus a predetermined margin that ranges from 1.25% to 1.75% or the Base Rate (as defined in the amended Credit Agreement) plus a predetermined margin that ranges from 0.25% to 0.75%. HSNi pays a commitment fee ranging from 0.20% to 0.30% (based on the leverage ratio) on the unused portion of the revolving credit facility. The amended Credit Agreement includes various covenants, limitations and events of default customary for similar facilities including a maximum leverage ratio of 3.50x (as defined in the amended Credit Agreement). The interest rate on the $390 million outstanding long-term debt balance as of September 30, 2018 was 3.7%. The amount available to HSNi under the revolving credit facility portion of the amended Credit Agreement is reduced by the amount of outstanding letters of credit issued under the revolving credit facility, which totaled $8.4 million as of September 30, 2018. The ability to draw funds under the revolving credit facility is dependent upon meeting the aforementioned financial covenants. As of September 30, 2018, the amount that could be borrowed under the revolving credit facility, after consideration of the financial covenants and the outstanding letters of credit, was approximately $602 million . Exchangeable Senior Debentures The Company has elected to account for its exchangeable senior debentures using the fair value option. Accordingly, changes in the fair value of these instruments are recognized as unrealized gains (losses) in the statements of operations. As of September 30, 2018 the balance of the 4% Exchangeable Senior Debentures due 2029, the 3.75% Exchangeable Senior Debentures due 2030, and the 3.5% Exchangeable Senior Debentures due 2031 have been classified as current because the Company does not own shares to redeem the debentures. For the remaining exchangeables, the Company reviews the terms of the debentures on a quarterly basis to determine whether a triggering event has occurred to require current classification of the exchangeables upon a call event. The 0.75% Exchangeable Senior Debentures due 2043 are classified as current as of September 30, 2018 as they are currently redeemable. Debt Covenants Qurate Retail, QVC, HSNi and other subsidiaries of Qurate Retail are in compliance with all debt covenants at September 30, 2018. Other Subsidiary Debt Other subsidiary debt at September 30, 2018 is comprised primarily of capitalized satellite transponder lease obligations. Fair Value of Debt Qurate Retail estimates the fair value of its debt based on the quoted market prices for the same or similar issues or on the current rate offered to Qurate Retail for debt of the same remaining maturities (Level 2). The 2067 Notes are traded on the New York Stock Exchange, and the Company considers them to be actively traded. As such, the 2067 Notes are valued based on their trading price (Level 1). The fair value of Qurate Retail's publicly traded debt securities that are not reported at fair value in the accompanying condensed consolidated balance sheet at September 30, 2018 are as follows (amounts in millions): Senior debentures $ 850 QVC senior secured notes $ 3,666 Due to the variable rate nature, Qurate Retail believes that the carrying amount of its other debt, not discussed above, approximated fair value at September 30, 2018. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | (10) Commitments and Contingencies Distribution Center Lease 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 was 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 had an option to extend the term of the Lease for up to two consecutive terms of 10 years each. In August 2018, QVC exercised the right to purchase the Premises and related land from the landlord by entering into an amended and restated agreement (“New Lease”). QVC made an initial payment of $10 million and will make annual payments of $12 million over a term of 13 years. QVC treats the New Lease within capital lease obligations and lease payments are attributed to: (1) a reduction of the principal obligation and (2) imputed interest expense. In connection with the New Lease, QVC capitalized the related land at fair market value while the building asset is currently being depreciated over its estimated useful life of 20 years. On October 5, 2018, subsequent to the end of the third quarter of 2018, QVC entered into a lease (“ECDC Lease”) for an East Coast distribution center as part of the QRG Initiatives. The 1.7 million square foot rental building is located in Bethlehem, Pennsylvania and will be leased to QVC for an initial term of 15 years. QVC expects the ECDC Lease to commence in the third quarter of 2019, at which point the discounted value of the ECDC Lease will be recorded as an asset and a liability in the consolidated balance sheets in accordance with ASU 2016-02, which the Company will adopt on January 1, 2019. Under the ECDC Lease, QVC will be required to pay an initial base rent of approximately $10 million per year, increasing to approximately $14 million per year, as well as all real estate taxes and other building operating costs. QVC also has the option to extend the term of the ECDC Lease for up to two consecutive terms of 5 years each and one final term of 4 years. Litigation 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 Qurate Retail 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 amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements. |
Information About Qurate Retail
Information About Qurate Retail's Operating Segments | 9 Months Ended |
Sep. 30, 2018 | |
Information About Liberty's Operating Segments | |
Information About Qurate Retail's Operating Segments | (11) Information About Qurate Retail's Operating Segments Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and online commerce industries. Qurate Retail identifies its reportable segments as (A) those operating segments that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Qurate Retail's annual pre-tax earnings. Qurate Retail evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit and revenue or sales per customer equivalent. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, number of units shipped, conversion rates and active customers, as appropriate. Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses excluding all stock-based compensation. Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, certain purchase accounting adjustments, separately reported litigation settlements, transaction related costs (including restructuring, integration, and advisory fees), and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Qurate Retail generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices. During the second quarter of 2018 the Company changed its reportable segments to include QVC U.S. and QVC International, and presented prior period information to conform with this change. Previously, QVC was considered one reportable segment. As a result of the GCI Liberty Split-Off, and the related management transitions, a new Chief Operating Decision Maker (“CODM”) was identified, and the information that the new CODM reviews is aggregated differently than it was prior to the Transactions. For the nine months ended September 30, 2018, Qurate Retail has identified the following operating segments as its reportable segments: · QVC U.S. and QVC International – QVC markets and sells a wide variety of consumer products in the United States and several foreign countries, primarily by means of its televised shopping programs and via the Internet through its domestic and international websites and mobile applications. · HSN – HSN markets and sells a wide variety of consumer products primarily in the United States by means of its televised shopping programs and via the Internet and mobile transactions through its domestic websites. · zulily – zulily markets and sells a wide variety of consumer products in the United States and several foreign countries through flash sales events, primarily through its desktop, mobile and app experiences. Qurate Retail's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments are the same as those described in the Company's Summary of Significant Accounting Policies in the Annual Report on Form 10-K for the year ended December 31, 2017. Performance Measures Three months ended September 30, 2018 2017 Adjusted Adjusted Revenue OIBDA Revenue OIBDA amounts in millions QVC U.S. $ 1,418 324 1,374 316 QVC International 640 93 636 99 HSN 513 47 NA NA zulily 432 18 367 12 Corporate and other 230 (14) 4 (14) Inter-segment eliminations (2) — — — Consolidated Qurate Retail $ 3,231 468 2,381 413 Nine months ended September 30, 2018 2017 Adjusted Adjusted Revenue OIBDA Revenue OIBDA amounts in millions QVC U.S. $ 4,262 1,005 4,111 1,013 QVC International 1,972 300 1,843 304 HSN 1,495 136 NA NA zulily 1,266 74 1,093 53 Corporate and other 701 (13) 16 (39) Inter-segment eliminations (2) — (3) — Consolidated Qurate Retail $ 9,694 1,502 7,060 1,331 Other Information September 30, 2018 Total assets Investments in affiliates Capital expenditures amounts in millions QVC U.S. $ 9,284 39 83 QVC International 2,136 — 42 HSN 2,793 — 11 zulily 2,222 — 18 Corporate and other 1,238 139 18 Consolidated Qurate Retail $ 17,673 178 172 The following table provides a reconciliation of Consolidated segment Adjusted OIBDA to Operating income (loss) and Earnings (loss) from continuing operations before income taxes: Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 amounts in millions Consolidated segment Adjusted OIBDA $ 468 413 1,502 1,331 Stock-based compensation (21) (22) (67) (59) Depreciation and amortization (167) (180) (489) (594) Transaction related costs (43) (3) (57) (3) Operating income (loss) 237 208 889 675 Interest expense (94) (88) (288) (267) Share of earnings (loss) of affiliates, net (29) (86) (89) (122) Realized and unrealized gains (losses) on financial instruments, net (27) 4 92 280 Other, net 1 7 (8) 1 Earnings (loss) before income taxes $ 88 45 596 567 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies [Abstract] | |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements Revenue Recognition. In May 2014, the Financial Accounting Standards Board (the “FASB”) issued new accounting guidance on revenue from contracts with customers. The new guidance 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 additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. On January 1, 2018, the Company adopted the revenue accounting standard using the modified retrospective method. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The Company does not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis. Refer to the table below for the adoption of this guidance. Balance at Adjustments Balance at December 31, Due to ASU January 1, 2017 2014-09 2018 in millions Assets: Inventory, net $ Other current assets $ Liabilities: Other current liabilities $ Deferred income tax liabilities $ Equity: Retained earnings $ In accordance with the new revenue standard requirements, the following table illustrates the impact on our reported results in the condensed consolidated statements of operations assuming we did not adopt the new revenue standard on January 1, 2018. Other than as previously discussed, upon the adoption of the new revenue standard on January 1, 2018, there were no additional material adjustments to our condensed consolidated balance sheet as of September 30, 2018. As reported Balance without Three months ended adoption of September 30, 2018 Impact of ASC 606 ASC 606 in millions Net revenue $ 3,231 3,177 Cost of retail sales $ 2,109 2,098 Selling, general and administrative expenses, including stock-based compensation and transaction related costs $ 477 446 Operating expense $ 241 240 Income tax (expense) benefit $ 3 Net income $ 72 64 As reported Balance without Nine months ended adoption of September 30, 2018 Impact of ASC 606 ASC 606 in millions Net revenue $ 9,694 9,552 Cost of retail sales $ 6,252 6,229 Selling, general and administrative expenses, including stock-based compensation and transaction related costs $ 1,357 1,263 Operating expense $ 707 704 Income tax (expense) benefit $ 5 Net income $ 643 626 The effect of changes of adoption is primarily due to changes in the timing of revenue recognition and the classification of credit card income for the QVC-branded credit card and the HSN-branded credit card. Additionally, for the three and nine months ended September 30, 2018, revenue is recognized at the time of shipment to our customers consistent with when control passes and credit card income is recognized in revenue. For the three and nine months ended September 30, 2017, revenue was recognized at the time of delivery to the customers and deferred revenue, as well as inventory and related expenses, were recorded to account for the shipments in-transit. In addition, credit card income was recognized as an offset to selling, general and administrative expenses. The Company also recognized a separate $77 million asset (included in other current assets) relating to the expected return of inventory and a $190 million liability (included in other current liabilities) relating to its sales return reserve at September 30, 2018, instead of the net presentation that was used at December 31, 2017. Disaggregated revenue by segment and product category consisted of the following: Three months ended September 30, 2018 QVC U.S. QVC Int'l HSN zulily Corp and other Total in millions Home $ 497 235 216 118 170 1,236 Apparel 286 113 23 175 37 634 Beauty 228 148 67 11 — 454 Accessories 180 64 62 105 — 411 Electronics 115 26 92 3 — 236 Jewelry 79 51 39 12 — 181 Other revenue 33 3 14 8 21 79 Total Revenue $ 1,418 640 513 432 228 3,231 Nine months ended September 30, 2018 QVC U.S. QVC Int'l HSN zulily Corp and other Total in millions Home $ 1,450 730 640 341 520 3,681 Apparel 898 348 74 494 109 1,923 Beauty 717 450 200 35 — 1,402 Accessories 560 203 170 329 — 1,262 Electronics 290 74 255 11 — 630 Jewelry 250 154 112 35 — 551 Other revenue 97 13 44 21 70 245 Total Revenue $ 4,262 1,972 1,495 1,266 699 9,694 Consumer Product Revenue and Other Revenue. Qurate Retail's revenue includes sales of consumer products in the following categories: home, apparel, beauty, accessories, electronics and jewelry, which are primarily sold through live merchandise-focused televised shopping programs and via our websites and other interactive media, including catalogs. Other revenue consists primarily of income generated from our company branded credit cards in which a large consumer financial services company provides revolving credit directly to the Company’s customers for the sole purpose of purchasing merchandise or services with these cards. In return, the Company receives a portion of the net economics of the credit card program. Revenue Recognition. Revenue is recognized when obligations with our customers are satisfied; generally this occurs at the time of shipment to our customers consistent with when control of the shipped product passes. The recognized revenue reflects the consideration we expect to receive in exchange for transferring goods, net of allowances for returns. The Company recognizes revenue related to its company branded credit cards over time as the credit cards are used by Qurate Retail's customers. Sales, value add, use and other taxes we collect concurrent with revenue-producing activities are excluded from revenue. The Company has elected to treat shipping and handling activities after the customer obtains control of the goods as a fulfillment cost and not as a promised good or service. Accordingly, the Company will accrue all fulfillment costs related to the shipping and handling of consumer goods at the time of shipment. The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money. Significant Judgments. Qurate Retail’s products are generally sold with a right of return for up to 30 days after the date of shipment and we may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. The Company has determined that it is the principal in vendor arrangements as the Company can establish control over the goods prior to shipment. Accordingly, the Company records revenue for these arrangements on a gross basis. Recognition and Measurement of Financial Instruments. In January 2016, the FASB issued new accounting guidance that is intended to improve the recognition and measurement of financial instruments. The new guidance 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 Company adopted this guidance during the first quarter of 2018. As the Company has historically measured its investments in equity securities with readily determinable fair values at fair value, the new guidance had no impact on the accounting for these instruments. The Company has elected the measurement alternative for its equity securities without readily determinable fair values and will perform a qualitative assessment of these instruments to identify potential impairments. In addition, a portion of the unrealized gain (loss) recognized on the Company’s exchangeable debt accounted for at fair value is now presented in other comprehensive income as it relates to instrument specific credit risk, however this impact was not material to the overall financial statements for the period ended September 30, 2018. Statement of Cash Flows. In November 2016, the FASB issued new accounting guidance which requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The Company adopted this guidance during the first quarter of 2018 and has reclassified prior period balances in cash and cash equivalents within the condensed consolidated statements of cash flows in order to conform with current period presentation. The following table reconciles cash, cash equivalents and restricted cash reported in our condensed consolidated balance sheets to the total amount presented in our condensed consolidated statements of cash flows: September 30, December 31, 2018 2017 in millions Cash and cash equivalents $ 532 Restricted cash included in other current assets 7 Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows $ 539 In August 2016, the FASB issued new accounting guidance which addresses eight specific cash flow issues to reduce the diversity in practice for appropriate classification on the statement of cash flows. The Company adopted this guidance during the first quarter of 2018, and there was no significant effect of the standard on its condensed consolidated financial statements. Share-based payment modification. In May 2017, the FASB issued new accounting guidance to provide clarity to which changes to the terms or conditions of share-based payment awards require an entity to apply modification accounting in Accounting Standards Codification (“ASC”) 718. The Company adopted this guidance during the first quarter of 2018, and there was no significant effect of the standard on its condensed consolidated financial statements. Intra-entity Transfers of Assets Other Than Inventory. In October 2016, the FASB issued new accounting guidance which requires an entity to recognize at the transaction date the income tax consequences of intercompany asset transfers. The Company adopted this guidance during the first quarter of 2018, and there was no significant effect of the standard on its condensed consolidated financial statements. Accounting Pronouncements Not Yet Adopted Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. In February 2018, the FASB issued new guidance which addresses the effect of the change in the U.S. federal corporate tax rate due to the enactment of the Tax Act on items within accumulated other comprehensive income (loss). The guidance is effective for annual and interim reporting periods beginning after December 15, 2018, with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its condensed consolidated financial statements. Leases. In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance also simplifies the accounting for sale and leaseback transactions. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. We plan to adopt this guidance on January 1, 2019 and expect to elect certain practical expedients under the transition guidance. Additionally, the Company plans to elect the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and does not plan to restate prior periods. The Company is currently working with its consolidated subsidiaries to evaluate the impact of the adoption of this new guidance on our consolidated financial statements, including identifying the population of leases, evaluating technology solutions and collecting lease data. Internal-Use Software. In August 2018, the FASB issued new guidance which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance will be effective for the Company in the first quarter of 2020 with early adoption permitted. The Company is currently assessing the impact that adopting this new accounting standard will have on its consolidated financial statements. |
Recent Accounting Pronounceme_3
Recent Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Schedule of disaggregation of revenue | Three months ended September 30, 2018 QVC U.S. QVC Int'l HSN zulily Corp and other Total in millions Home $ 497 235 216 118 170 1,236 Apparel 286 113 23 175 37 634 Beauty 228 148 67 11 — 454 Accessories 180 64 62 105 — 411 Electronics 115 26 92 3 — 236 Jewelry 79 51 39 12 — 181 Other revenue 33 3 14 8 21 79 Total Revenue $ 1,418 640 513 432 228 3,231 Nine months ended September 30, 2018 QVC U.S. QVC Int'l HSN zulily Corp and other Total in millions Home $ 1,450 730 640 341 520 3,681 Apparel 898 348 74 494 109 1,923 Beauty 717 450 200 35 — 1,402 Accessories 560 203 170 329 — 1,262 Electronics 290 74 255 11 — 630 Jewelry 250 154 112 35 — 551 Other revenue 97 13 44 21 70 245 Total Revenue $ 4,262 1,972 1,495 1,266 699 9,694 |
Schedule of cash, cash equivalents and restricted cash | September 30, December 31, 2018 2017 in millions Cash and cash equivalents $ 532 Restricted cash included in other current assets 7 Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows $ 539 |
ASU 2014-09 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | |
Schedule of cumulative effect of accounting changes | Balance at Adjustments Balance at December 31, Due to ASU January 1, 2017 2014-09 2018 in millions Assets: Inventory, net $ Other current assets $ Liabilities: Other current liabilities $ Deferred income tax liabilities $ Equity: Retained earnings $ In accordance with the new revenue standard requirements, the following table illustrates the impact on our reported results in the condensed consolidated statements of operations assuming we did not adopt the new revenue standard on January 1, 2018. Other than as previously discussed, upon the adoption of the new revenue standard on January 1, 2018, there were no additional material adjustments to our condensed consolidated balance sheet as of September 30, 2018. As reported Balance without Three months ended adoption of September 30, 2018 Impact of ASC 606 ASC 606 in millions Net revenue $ 3,231 3,177 Cost of retail sales $ 2,109 2,098 Selling, general and administrative expenses, including stock-based compensation and transaction related costs $ 477 446 Operating expense $ 241 240 Income tax (expense) benefit $ 3 Net income $ 72 64 As reported Balance without Nine months ended adoption of September 30, 2018 Impact of ASC 606 ASC 606 in millions Net revenue $ 9,694 9,552 Cost of retail sales $ 6,252 6,229 Selling, general and administrative expenses, including stock-based compensation and transaction related costs $ 1,357 1,263 Operating expense $ 707 704 Income tax (expense) benefit $ 5 Net income $ 643 626 |
Acquisitions (Tables)
Acquisitions (Tables) - HSNi | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of Purchase Price Allocation | The preliminary purchase price allocation for HSNi is as follows (amounts in millions): Cash and cash equivalents $ Property and equipment Other assets 784 Goodwill 926 Trademarks Intangible assets subject to amortization Accounts payable & accrued liabilities Long-term debt Other liabilities assumed Deferred tax liabilities $ |
Business Acquisition, Pro Forma Information | Three months ended Nine months ended September 30, September 30, 2017 2017 amounts in millions Revenue $ 3,163 9,450 Net earnings (loss) from continuing operations $ 68 433 |
Disposals (Tables)
Disposals (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of earnings per share impact of discontinued operations | Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 Basic earnings (loss) from discontinued operations attributable to Qurate Retail shareholders per common share: Series A and Series B Qurate Retail common stock $ NA NA NA NA Series A and Series B Liberty Ventures common stock $ NA 2.68 1.64 6.71 Diluted earnings (loss) from discontinued operations attributable to Qurate Retail shareholders per common share: Series A and Series B Qurate Retail common stock $ NA NA NA NA Series A and Series B Liberty Ventures common stock $ NA 2.64 1.62 6.64 |
Expedia | |
Schedule of Disposal Groups Including Discontinued Operations Balance Sheet [Table Text Block] | December 31, 2017 amounts in millions Investment in Liberty Broadband measured at fair value $ 3,635 Deferred income tax liabilities $ 303 |
Schedule Of Disposal Groups Including Discontinued Operations Income Statement [Table Text Block] | Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 amounts in millions Earnings (loss) before income taxes $ NA 365 187 906 Income tax (expense) benefit $ NA (135) (46) (335) |
Certain financial information of disposal groups, balance sheet | December 31, 2017 amounts in millions Current assets $ 84 Total assets $ 11,932 Current liabilities $ 11 Total liabilities $ 1,445 Equity $ 10,487 |
Certain financial information of disposal groups, income statement | Three months ended Nine months ended September 30, September 30, 2017 2017 amounts in millions Operating income $ (6) (19) Share of earnings (loss) of affiliate $ (5) 25 Gain (loss) on dilution of investment in affiliate $ (4) (42) Income tax (expense) benefit $ 7 18 Net earnings (loss) attributable to Liberty Broadband shareholders $ (10) (27) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of stock option activity | Nine months ended September 30, 2018 Options Granted (000's) Weighted Average GDFV Series A Qurate Retail common stock, QVC employees (1) 2,924 $ 8.76 Series A Qurate Retail common stock, zulily employees (1) 336 $ 8.65 Series A Qurate Retail common stock, HSNi employees (1) 859 $ 8.77 Series A Qurate Retail common stock, Qurate Retail President and CEO (2) 577 $ 7.09 Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (3) 175 $ 8.84 Series B Liberty Ventures common stock, Qurate Retail Chairman of the Board (3) 143 $ 16.55 (1) Grants mainly vest semi-annually over four years. (2) Grant vests 50% on each of December 15, 2019 and 2020. (3) Grants cliff vest on December 31, 2018. Grants were made in connection with his employment agreement. |
Common Class A | |
Schedule of Share-based Compensation, Activity | Qurate Retail Weighted Aggregate average intrinsic Series A remaining value (000's) WAEP life (millions) Outstanding at January 1, 2018 32,361 $ 23.48 Granted 4,697 $ 26.85 Exercised (3,640) $ 16.66 Forfeited/Cancelled (1,726) $ 26.92 Outstanding at September 30, 2018 31,692 $ 24.57 3.7 years $ 41 Exercisable at September 30, 2018 19,518 $ 23.99 2.7 years $ 35 |
Common Class B | |
Schedule of Share-based Compensation, Activity | Qurate Retail Weighted Aggregate average intrinsic Series B remaining value (000's) WAEP life (millions) Outstanding at January 1, 2018 1,643 $ 27.16 Granted 175 $ 27.77 Exercised — $ — Forfeited/Cancelled — $ — Outstanding at September 30, 2018 1,818 $ 27.22 3.7 years $ — Exercisable at September 30, 2018 997 $ 25.40 4.6 years $ — |
Earnings (Loss) Per Common Sh_2
Earnings (Loss) Per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Schedule of Weighted Average Number of Shares | Qurate Retail Common Stock Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 number of shares in millions Basic WASO 459 448 467 451 Potentially dilutive shares 2 4 4 3 Diluted WASO 461 452 471 454 |
Liberty Ventures common stock | |
Schedule of Weighted Average Number of Shares | Liberty Ventures Common Stock Three months ended Nine months ended September 30, September 30, 2018 (1) 2017 2018 2017 number of shares in millions Basic WASO NA 86 86 85 Potentially dilutive shares NA 1 Diluted WASO NA 87 87 86 All of the outstanding shares of Liberty Ventures Series A and B common stock were redeemed for GCI Liberty Series A and B common stock as a result of the GCI Liberty Split-Off on March 9, 2018. |
Assets and Liabilities Measur_2
Assets and Liabilities Measured at Fair Value (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
Assets And Liabilities Measured At Fair Value On A Recurring Basis | Fair Value Measurements at Fair Value Measurements at September 30, 2018 December 31, 2017 Quoted Quoted prices prices in active Significant in active Significant markets for other markets for other identical observable identical observable assets inputs assets inputs Description Total (Level 1) (Level 2) Total (Level 1) (Level 2) amounts in millions Cash equivalents $ 389 389 — 655 655 — Equity securities $ 282 282 — 2,275 2,275 — Indemnification asset $ 100 — 100 — — — Debt $ 1,426 — 1,426 1,846 — 1,846 |
Unrealized Gain (Loss) on Investments | Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 amounts in millions Equity securities $ 10 130 154 552 Exchangeable senior debentures (52) (91) (9) (230) Indemnification asset 15 — (49) — Other financial instruments — (35) (4) (42) $ (27) 4 92 280 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes In The Carrying Amount Of Goodwill | Corporate and QVC HSN zulily Other Total amounts in millions Balance at January 1, 2018 $ 5,190 933 917 42 7,082 Foreign currency translation adjustments (24) — — — (24) Disposition (1) — — — (25) (25) Other (2) — (21) — (3) (24) Balance at September 30, 2018 $ 5,166 912 917 14 7,009 (1) As a result of the GCI Liberty Split-Off on March 9, 2018, the Company disposed of its wholly-owned subsidiary Evite, resulting in a $25 million decrease to goodwill. As discussed in note 3, the preliminary purchase price allocation for the HSNi acquisition was adjusted, resulting in a decrease to goodwill. |
Amortization Expense For The Next Five Fiscal Years | Based on its amortizable intangible assets as of September 30, 2018, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions): Remainder of 2018 $ 84 2019 $ 279 2020 $ 213 2021 $ 153 2022 $ 77 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Long-term Debt, Unclassified [Abstract] | |
Debt Excluding Intergroup Debt | Outstanding principal at Carrying value September 30, 2018 September 30, 2018 December 31, 2017 amounts in millions Corporate level debentures 8.5% Senior Debentures due 2029 $ 287 286 285 8.25% Senior Debentures due 2030 504 502 502 4% Exchangeable Senior Debentures due 2029 433 325 316 3.75% Exchangeable Senior Debentures due 2030 434 315 318 3.5% Exchangeable Senior Debentures due 2031 318 412 342 0.75% Exchangeable Senior Debentures due 2043 — 2 2 1.75% Exchangeable Senior Debentures due 2046 332 372 868 Subsidiary level notes and facilities QVC 3.125% Senior Secured Notes due 2019 400 399 399 QVC 5.125% Senior Secured Notes due 2022 500 500 500 QVC 4.375% Senior Secured Notes due 2023 750 750 750 QVC 4.85% Senior Secured Notes due 2024 600 600 600 QVC 4.45% Senior Secured Notes due 2025 600 599 599 QVC 5.45% Senior Secured Notes due 2034 400 399 399 QVC 5.95% Senior Secured Notes due 2043 300 300 300 QVC 6.375% Senior Secured Notes due 2067 225 225 — QVC Bank Credit Facilities 825 825 1,763 HSNi Bank Credit Facilities 390 390 460 Other subsidiary debt 189 189 170 Deferred loan costs — (33) (24) Total consolidated Qurate Retail debt $ 7,487 7,357 8,549 Less current classification (1,472) (996) Total long-term debt $ 5,885 7,553 |
Debt Securities That Are Not Reported At Fair Value | The fair value of Qurate Retail's publicly traded debt securities that are not reported at fair value in the accompanying condensed consolidated balance sheet at September 30, 2018 are as follows (amounts in millions): Senior debentures $ 850 QVC senior secured notes $ 3,666 |
Information About Qurate Reta_2
Information About Qurate Retail's Operating Segments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Information About Liberty's Operating Segments | |
Performance Measures By Segment | Three months ended September 30, 2018 2017 Adjusted Adjusted Revenue OIBDA Revenue OIBDA amounts in millions QVC U.S. $ 1,418 324 1,374 316 QVC International 640 93 636 99 HSN 513 47 NA NA zulily 432 18 367 12 Corporate and other 230 (14) 4 (14) Inter-segment eliminations (2) — — — Consolidated Qurate Retail $ 3,231 468 2,381 413 Nine months ended September 30, 2018 2017 Adjusted Adjusted Revenue OIBDA Revenue OIBDA amounts in millions QVC U.S. $ 4,262 1,005 4,111 1,013 QVC International 1,972 300 1,843 304 HSN 1,495 136 NA NA zulily 1,266 74 1,093 53 Corporate and other 701 (13) 16 (39) Inter-segment eliminations (2) — (3) — Consolidated Qurate Retail $ 9,694 1,502 7,060 1,331 |
Other Information By Segment | September 30, 2018 Total assets Investments in affiliates Capital expenditures amounts in millions QVC U.S. $ 9,284 39 83 QVC International 2,136 — 42 HSN 2,793 — 11 zulily 2,222 — 18 Corporate and other 1,238 139 18 Consolidated Qurate Retail $ 17,673 178 172 |
Reconciliation Of Segment Adjusted OIBDA To Earnings (Loss) From Continuing Operations Before Income Taxes | Three months ended Nine months ended September 30, September 30, 2018 2017 2018 2017 amounts in millions Consolidated segment Adjusted OIBDA $ 468 413 1,502 1,331 Stock-based compensation (21) (22) (67) (59) Depreciation and amortization (167) (180) (489) (594) Transaction related costs (43) (3) (57) (3) Operating income (loss) 237 208 889 675 Interest expense (94) (88) (288) (267) Share of earnings (loss) of affiliates, net (29) (86) (89) (122) Realized and unrealized gains (losses) on financial instruments, net (27) 4 92 280 Other, net 1 7 (8) 1 Earnings (loss) before income taxes $ 88 45 596 567 |
Basis of Presentation (Details)
Basis of Presentation (Details) shares in Millions, $ in Millions | Oct. 17, 2018USD ($) | Dec. 29, 2017shares | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Mar. 09, 2018item |
Severance Costs | $ 43 | ||||||
Number Of Tracking Stock | item | 2 | ||||||
LMC | |||||||
Related Party Transaction, Amounts of Transaction | $ 2 | $ 3 | $ 6 | $ 8 | |||
Additional Paid-In Capital | |||||||
Reclassification | $ 3,894 | ||||||
HSNi | |||||||
Business Acquisition, Percentage of Voting Interests Acquired | 62.00% | ||||||
QVC Group | HSNi | |||||||
Business Acquisition Equity Interests Issued or Issuable Number Of Shares Issued Per Shares Acquired | 1.65 | ||||||
QVC Group | HSNi | Common Class A | |||||||
Stock Issued During Period Shares Acquisitions] | shares | 53.6 | ||||||
Liberty Ventures common stock | Common Class A | |||||||
Share exchange ratio | 1 | ||||||
Liberty Ventures common stock | Common Class B | |||||||
Share exchange ratio | 1 |
Recent Accounting Pronounceme_4
Recent Accounting Pronouncements (Revenue Recognition) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Jan. 01, 2018 | Dec. 31, 2017 | |
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Inventories | $ 1,727 | $ 1,727 | $ 1,384 | $ 1,411 | ||
Other current assets | 198 | 198 | 114 | 125 | ||
Other current liabilities | 175 | 175 | 123 | 169 | ||
Deferred income tax liabilities | 2,008 | 2,008 | 2,502 | 2,500 | ||
Retained earnings | 5,747 | 5,747 | $ 9,074 | 9,068 | ||
Net revenue | 3,231 | 9,694 | ||||
Cost of retail sales | 2,109 | $ 1,554 | 6,252 | $ 4,553 | ||
Selling, general and administrative expenses, including stock based compensation | 477 | 279 | 1,357 | 777 | ||
Operating expenses | 241 | 160 | 707 | 461 | ||
Income tax (expense) benefit | (6) | 33 | (60) | (127) | ||
Net income | 72 | $ 296 | 643 | $ 978 | ||
Other Current Assets | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Inventory expected return current | 77 | 77 | ||||
Other Current Liabilities | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Sales return liability current | 190 | 190 | ||||
Before Adoption | ASU 2014-09 | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Net revenue | 3,177 | 9,552 | ||||
Cost of retail sales | 2,098 | 6,229 | ||||
Selling, general and administrative expenses, including stock based compensation | 446 | 1,263 | ||||
Operating expenses | 240 | 704 | ||||
Income tax (expense) benefit | (3) | (55) | ||||
Net income | 64 | 626 | ||||
Adjustment | ASU 2014-09 | ||||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||||
Inventories | (27) | |||||
Other current assets | (11) | |||||
Other current liabilities | (46) | |||||
Deferred income tax liabilities | 2 | |||||
Retained earnings | $ 6 | |||||
Net revenue | (54) | (142) | ||||
Cost of retail sales | (11) | (23) | ||||
Selling, general and administrative expenses, including stock based compensation | (31) | (94) | ||||
Operating expenses | (1) | (3) | ||||
Income tax (expense) benefit | 3 | 5 | ||||
Net income | $ (8) | $ (17) |
Recent Accounting Pronounceme_5
Recent Accounting Pronouncements (Revenue Disaggregation) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2018 | Sep. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 3,231 | $ 9,694 |
Maximum sales return period | 30 days | |
Home | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 1,236 | $ 3,681 |
Apparel | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 634 | 1,923 |
Beauty | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 454 | 1,402 |
Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 411 | 1,262 |
Electronics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 236 | 630 |
Jewelry | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 181 | 551 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 79 | 245 |
QVC US | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 1,418 | 4,262 |
QVC US | Home | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 497 | 1,450 |
QVC US | Apparel | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 286 | 898 |
QVC US | Beauty | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 228 | 717 |
QVC US | Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 180 | 560 |
QVC US | Electronics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 115 | 290 |
QVC US | Jewelry | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 79 | 250 |
QVC US | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 33 | 97 |
QVC Int'l | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 640 | 1,972 |
QVC Int'l | Home | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 235 | 730 |
QVC Int'l | Apparel | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 113 | 348 |
QVC Int'l | Beauty | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 148 | 450 |
QVC Int'l | Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 64 | 203 |
QVC Int'l | Electronics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 26 | 74 |
QVC Int'l | Jewelry | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 51 | 154 |
QVC Int'l | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 3 | 13 |
HSN | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 513 | 1,495 |
HSN | Home | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 216 | 640 |
HSN | Apparel | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 23 | 74 |
HSN | Beauty | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 67 | 200 |
HSN | Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 62 | 170 |
HSN | Electronics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 92 | 255 |
HSN | Jewelry | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 39 | 112 |
HSN | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 14 | 44 |
zulily | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 432 | 1,266 |
zulily | Home | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 118 | 341 |
zulily | Apparel | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 175 | 494 |
zulily | Beauty | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 11 | 35 |
zulily | Accessories | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 105 | 329 |
zulily | Electronics | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 3 | 11 |
zulily | Jewelry | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 12 | 35 |
zulily | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 8 | 21 |
Corp and Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 228 | 699 |
Corp and Other | Home | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 170 | 520 |
Corp and Other | Apparel | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 37 | 109 |
Corp and Other | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 21 | $ 70 |
Recent Accounting Pronounceme_6
Recent Accounting Pronouncements (Cash and Restricted Cash) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Recent Accounting Pronouncements | ||||
Cash and cash equivalents | $ 532 | $ 903 | ||
Restricted cash included in other current assets | $ 7 | $ 9 | ||
Restricted Cash and Cash Equivalents, Asset, Statement of Financial Position [Extensible List] | Other Assets, Current | Other Assets, Current | ||
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows | $ 539 | $ 912 | $ 907 | $ 836 |
Acquisitions (Details)
Acquisitions (Details) shares in Millions, $ in Millions | Dec. 29, 2017USD ($)shares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Cash and cash equivalents | $ 22 | ||||
Property and equipment | 220 | ||||
Other assets | 784 | ||||
Goodwill | 926 | $ 7,009 | $ 7,082 | ||
Trademarks | 676 | ||||
Intangible assets subject to amortization | 598 | ||||
Accounts payable & accrued liabilities | (519) | ||||
Long-term debt | (467) | ||||
Other liabilities assumed | (13) | ||||
Deferred tax liabilities | (279) | ||||
Total | $ 1,948 | ||||
HSNi | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Business Acquisition, Percentage of Voting Interests Acquired | 62.00% | ||||
Remeasurement Gain | $ 409 | ||||
Fair market value of ownership interest prior to acquisition | 605 | ||||
Equity value of acquisition | 1,900 | ||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | 0 | ||||
Adjustments to property and equipment | 6 | ||||
Adjustments to other assets | 32 | ||||
Adjustments to Accounts payable and accrued liabilities | 4 | ||||
Adjustments to debt | (7) | ||||
Adjustments to other liabilities assumed | (1) | ||||
Adjustment to goodwill | (24) | ||||
Adjustments to deferred tax liabilities | 2 | ||||
Adjustments to Intangibles | $ (4) | ||||
Business Acquisition, Pro Forma Information | |||||
Pro Forma Revenue | $ 3,163 | $ 9,450 | |||
Pro Forma Income (Loss) from Continuing Operations before Changes in Accounting and Extraordinary Items, Net of Tax | $ 68 | $ 433 | |||
HSNi | Customer Relationships | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Intangible assets subject to amortization | $ 421 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 9 years | ||||
HSNi | Capitalized Software | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Intangible assets subject to amortization | $ 16 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 1 year | ||||
HSNi | Technology | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Intangible assets subject to amortization | $ 161 | ||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 7 years | ||||
QVC Group | HSNi | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Business Acquisition Equity Interests Issued or Issuable Number Of Shares Issued Per Shares Acquired | 1.65 | ||||
Common Class A | QVC Group | HSNi | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net [Abstract] | |||||
Stock Issued During Period Shares Acquisitions | shares | 53.6 | ||||
Value of shares issued to acquire business | $ 1,300 |
Disposals (Details)
Disposals (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Deferred income tax liabilities | $ 303 | ||||
Liberty Ventures common stock | GCI Liberty | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Income (Loss) from Discontinued Operations and Disposal of Discontinued Operations, Net of Tax, Per Basic Share | $ 2.68 | $ 1.64 | $ 6.71 | ||
Income (Loss) from Discontinued Operations, Net of Tax, Per Diluted Share | $ 2.64 | $ 1.62 | $ 6.64 | ||
Evite | GCI Liberty | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Revenue | $ 0 | $ 6 | $ 3 | $ 16 | |
Disposal Group Net Earnings (Loss) | 0 | (2) | (3) | ||
Disposal Group Total Assets | 43 | ||||
LendingTree | GCI Liberty | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Disposal Group Net Earnings (Loss) | $ 0 | 1 | 4 | ||
Disposal Group Total Assets | 115 | ||||
Liberty Broadband | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Current assets of Liberty Broadband | 84 | ||||
Total assets of Liberty Broadband | 11,932 | ||||
Current liabilities of Liberty Broadband | 11 | ||||
Total liabilities of Liberty Broadband | 1,445 | ||||
Equity of Liberty Broadband | 10,487 | ||||
Operating income of Liberty Broadband | (6) | (19) | |||
Share of earnings (loss) of affiliate of Liberty Broadband | (5) | 25 | |||
Gain (loss) on dilution of investment in affiliate of Liberty Broadband | (4) | (42) | |||
Income tax (expense) benefit of Liberty Broadband | 7 | 18 | |||
Net earnings (loss) attributable to Liberty Broadband shareholders of Liberty Broadband | (10) | (27) | |||
Liberty Broadband | GCI Liberty | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Investment in Liberty Broadband measured at fair value | 3,635 | ||||
Deferred income tax liabilities | $ 303 | ||||
Earnings (loss) before income taxes | 365 | 187 | 906 | ||
Income tax (expense) benefit | (135) | (46) | $ (335) | ||
Maximum | Evite | GCI Liberty | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Disposal Group Net Earnings (Loss) | $ (1) | ||||
Maximum | LendingTree | GCI Liberty | Spinoff | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Disposal Group Net Earnings (Loss) | $ 1 |
Stock-Based Compensation (Narra
Stock-Based Compensation (Narrative) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Stock-based compensation | $ 21 | $ 22 | $ 67 | $ 59 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | |||
Total unrecognized compensation cost related to unvested Liberty equity awards | $ 87 | $ 87 | ||
Weighted average period of recognition related to unvested equity awards (in years) | 2 years 6 months | |||
Common Class A | ||||
Common Stock, Capital Shares Reserved for Future Issuance | 31,700 | 31,700 | ||
Options granted | 4,697 | |||
Common Class B | ||||
Common Stock, Capital Shares Reserved for Future Issuance | 1,800 | 1,800 | ||
Options granted | 175 | |||
QVC Employees | Common Class A | ||||
Options granted | 2,924 | |||
Weighted average grant-date fair value of options | $ 8.76 | |||
Award vesting period | 4 years | |||
zulily Employees | Common Class A | ||||
Options granted | 336 | |||
Weighted average grant-date fair value of options | $ 8.65 | |||
Award vesting period | 4 years | |||
HSNi Employees | Common Class A | ||||
Options granted | 859 | |||
Weighted average grant-date fair value of options | $ 8.77 | |||
Award vesting period | 4 years | |||
Qurate Retail President and CEO | Common Class A | ||||
Options granted | 577 | |||
Weighted average grant-date fair value of options | $ 7.09 | |||
Qurate Retail President and CEO | Common Class A | Awards subject to Fifty Percent Vesting | ||||
Award Vesting Period Percentage | 50.00% | |||
Board of Directors Chairman | Common Class B | ||||
Options granted | 175 | |||
Weighted average grant-date fair value of options | $ 8.84 | |||
Board of Directors Chairman | Common Class B | Restricted Stock | ||||
Award vesting period | 1 year | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 124 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 27.56 | $ 27.56 | ||
CEO | Common Class A | Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period | 183 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value | $ 22.18 | $ 22.18 | ||
Liberty Ventures common stock | Board of Directors Chairman | Common Class B | ||||
Options granted | 143 | |||
Weighted average grant-date fair value of options | $ 16.55 |
Stock-Based Compensations (Gran
Stock-Based Compensations (Grants) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Common Class A | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding options | 32,361 | |
Options granted | 4,697 | |
Options exercised | (3,640) | |
Options forfeited/cancelled | (1,726) | |
Outstanding options | 31,692 | |
Exercisable options | 19,518 | |
Outstanding WAEP | $ 24.57 | $ 23.48 |
WAEP granted | 26.85 | |
WAEP exercised | 16.66 | |
WAEP forfeited/cancelled | 26.92 | |
Exercisable WAEP | $ 23.99 | |
Weighted average remaining life - options outstanding | 3 years 8 months 12 days | |
Weighted average remaining life - options exercisable | 2 years 8 months 12 days | |
Aggregate intrinsic value of options outstanding | $ 41 | |
Aggregate intrinsic value of options exercisable | $ 35 | |
Common Class B | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding options | 1,643 | |
Options granted | 175 | |
Outstanding options | 1,818 | |
Exercisable options | 997 | |
Outstanding WAEP | $ 27.22 | $ 27.16 |
WAEP granted | 27.77 | |
Exercisable WAEP | $ 25.40 | |
Weighted average remaining life - options outstanding | 3 years 8 months 12 days | |
Weighted average remaining life - options exercisable | 4 years 7 months 6 days | |
Liberty Ventures common stock | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||
Outstanding options | 0 |
Earnings (Loss) Per Common Sh_3
Earnings (Loss) Per Common Share (Earrings Per Share Basic and Diluted) (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 28 | 16 | 28 | 16 |
Basic EPS (WA shares outstanding) | 459 | 448 | 467 | 451 |
Potentially dilutive shares | 2 | 4 | 4 | 3 |
Diluted EPS (WA shares outstanding) | 461 | 452 | 471 | 454 |
Liberty Ventures common stock | ||||
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 | 2 | 0 |
Basic EPS (WA shares outstanding) | 86 | 86 | 85 | |
Potentially dilutive shares | 1 | 1 | 1 | |
Diluted EPS (WA shares outstanding) | 87 | 87 | 86 |
Assets and Liabilities Measur_3
Assets and Liabilities Measured at Fair Value (Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Mar. 09, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | $ 389 | $ 655 | |
Equity Securities | 282 | 2,275 | |
Indemnification asset | 100 | $ 281 | |
Debt | 1,426 | 1,846 | |
Indemnification payment from GCI Liberty, Inc. | 133 | ||
Fair Value, Inputs, Level 1 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash equivalents | 389 | 655 | |
Equity Securities | 282 | 2,275 | |
Significant Other Observable Inputs (Level 2) | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Indemnification asset | 100 | ||
Debt | $ 1,426 | $ 1,846 | |
1.75% Exchangeable Senior Debentures due 2046 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest rate (as a percent) | 1.75% | ||
Securities repurchased | 417,759 | ||
Debt Instrument, Repurchase Amount | $ 457 | ||
Exchangeable debenture securities outstanding | 332,241 | ||
1.75% Exchangeable Senior Debentures due 2046 | GCI Liberty | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Indemnification payment from GCI Liberty, Inc. | $ 133 |
Assets and Liabilities Measur_4
Assets and Liabilities Measured at Fair Value Realized Unrealized Gain Loss (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Realized and unrealized gains (losses) on financial instruments, net (note 7) | $ (27) | $ 4 | $ 92 | $ 280 |
Fair Value Option Securities | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Realized and unrealized gains (losses) on financial instruments, net (note 7) | 10 | 130 | 154 | 552 |
Exchangeable Senior Debentures | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Realized and unrealized gains (losses) on financial instruments, net (note 7) | (52) | (91) | (9) | (230) |
Indemnification Assets | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Realized and unrealized gains (losses) on financial instruments, net (note 7) | $ 15 | (49) | ||
Other Financial Instruments | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Realized and unrealized gains (losses) on financial instruments, net (note 7) | $ (35) | $ (4) | $ (42) |
Intangible Assets (Changes in t
Intangible Assets (Changes in the Carrying Amount of Goodwill) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance, beginning of the year | $ 7,082 |
Foreign currency translation adjustments | (24) |
Sale of subsidiary | (25) |
Other | (24) |
Balance, end of the year | 7,009 |
Decrease due to spin-off | 25 |
QVC | |
Goodwill [Roll Forward] | |
Balance, beginning of the year | 5,190 |
Foreign currency translation adjustments | (24) |
Balance, end of the year | 5,166 |
HSN | |
Goodwill [Roll Forward] | |
Balance, beginning of the year | 933 |
Other | (21) |
Balance, end of the year | 912 |
zulily | |
Goodwill [Roll Forward] | |
Balance, beginning of the year | 917 |
Balance, end of the year | 917 |
Corp and Other | |
Goodwill [Roll Forward] | |
Balance, beginning of the year | 42 |
Sale of subsidiary | (25) |
Other | (3) |
Balance, end of the year | $ 14 |
Intangible Assets (Amortization
Intangible Assets (Amortization Expense For The Next Five Fiscal Years) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of Intangible Assets | $ 117 | $ 137 | $ 332 | $ 462 |
Remainder of 2018 | 84 | 84 | ||
2,019 | 279 | 279 | ||
2,020 | 213 | 213 | ||
2,021 | 153 | 153 | ||
2,022 | $ 77 | $ 77 |
Long-Term Debt (Debt Excluding
Long-Term Debt (Debt Excluding Intergroup Debt) (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Outstanding principal | $ 7,487 | |
Total consolidated debt | 7,357 | $ 8,549 |
Less debt classified as current | (1,472) | (996) |
Long-term debt, including current portion | 5,885 | 7,553 |
Deferred loan costs | (33) | (24) |
8.5% Senior Debentures Due 2029 | ||
Outstanding principal | 287 | |
Total consolidated debt | $ 286 | 285 |
Debt instrument interest rate | 8.50% | |
8.25% Senior Debentures Due 2030 | ||
Outstanding principal | $ 504 | |
Total consolidated debt | $ 502 | 502 |
Debt instrument interest rate | 8.25% | |
4% Exchangeable Senior Debentures Due 2029 | ||
Outstanding principal | $ 433 | |
Total consolidated debt | $ 325 | 316 |
Debt instrument interest rate | 4.00% | |
3.75% Exchangeable Senior Debentures Due 2030 | ||
Outstanding principal | $ 434 | |
Total consolidated debt | $ 315 | 318 |
Debt instrument interest rate | 3.75% | |
3.5% Exchangeable Senior Debentures Due 2031 | ||
Outstanding principal | $ 318 | |
Total consolidated debt | $ 412 | 342 |
Debt instrument interest rate | 3.50% | |
0.75% Exchangeable Senior Debentures due 2043 | ||
Total consolidated debt | $ 2 | 2 |
Debt instrument interest rate | 0.75% | |
1.75% Exchangeable Senior Debentures due 2046 | ||
Outstanding principal | $ 332 | |
Total consolidated debt | $ 372 | 868 |
Debt instrument interest rate | 1.75% | |
Subsidiary Debt | ||
Outstanding principal | $ 189 | |
Total consolidated debt | 189 | 170 |
QVC | QVC 3.125% Senior Secured Notes Due 2019 | ||
Outstanding principal | 400 | |
Total consolidated debt | $ 399 | 399 |
Debt instrument interest rate | 3.125% | |
QVC | QVC 5.125% Senior Secured Notes Due 2022 | ||
Outstanding principal | $ 500 | |
Total consolidated debt | $ 500 | 500 |
Debt instrument interest rate | 5.125% | |
QVC | QVC 4.375% Senior Secured Notes due 2023 | ||
Outstanding principal | $ 750 | |
Total consolidated debt | $ 750 | 750 |
Debt instrument interest rate | 4.375% | |
QVC | QVC 4.85% Senior Secured Notes Due 2024 | ||
Outstanding principal | $ 600 | |
Total consolidated debt | $ 600 | 600 |
Debt instrument interest rate | 4.85% | |
QVC | QVC 4.45% Senior Secured Notes Due 2025 [Member] | ||
Outstanding principal | $ 600 | |
Total consolidated debt | $ 599 | 599 |
Debt instrument interest rate | 4.45% | |
QVC | QVC 5.45% Senior Secured Notes Due 2034 [Member] | ||
Outstanding principal | $ 400 | |
Total consolidated debt | $ 399 | 399 |
Debt instrument interest rate | 5.45% | |
QVC | QVC 5.95% Senior Secured Notes due 2043 | ||
Outstanding principal | $ 300 | |
Total consolidated debt | $ 300 | 300 |
Debt instrument interest rate | 5.95% | |
QVC | QVC 6.735% Senior Secured Notes Due 2067 | ||
Outstanding principal | $ 225 | |
Total consolidated debt | $ 225 | |
Debt instrument interest rate | 6.375% | |
QVC | QVC Bank Credit Facilities | ||
Outstanding principal | $ 825 | |
Total consolidated debt | 825 | 1,763 |
HSNi | HSNi Bank Credit Facility | ||
Outstanding principal | 390 | |
Total consolidated debt | $ 390 | $ 460 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) $ in Thousands | Dec. 29, 2017USD ($) | Jun. 23, 2016USD ($) | Jan. 27, 2015USD ($) | Sep. 30, 2018USD ($)item | Dec. 31, 2017USD ($) |
Long-term debt | $ 7,357,000 | $ 8,549,000 | |||
Outstanding principal | $ 7,487,000 | ||||
8.5% Senior Debentures Due 2029 | |||||
Interest rate (as a percent) | 8.50% | ||||
Long-term debt | $ 286,000 | 285,000 | |||
Outstanding principal | $ 287,000 | ||||
8.25% Senior Debentures Due 2030 | |||||
Interest rate (as a percent) | 8.25% | ||||
Long-term debt | $ 502,000 | 502,000 | |||
Outstanding principal | $ 504,000 | ||||
4% Exchangeable Senior Debentures Due 2029 | |||||
Interest rate (as a percent) | 4.00% | ||||
Long-term debt | $ 325,000 | 316,000 | |||
Outstanding principal | $ 433,000 | ||||
3.75% Exchangeable Senior Debentures Due 2030 | |||||
Interest rate (as a percent) | 3.75% | ||||
Long-term debt | $ 315,000 | 318,000 | |||
Outstanding principal | $ 434,000 | ||||
3.5% Exchangeable Senior Debentures Due 2031 | |||||
Interest rate (as a percent) | 3.50% | ||||
Long-term debt | $ 412,000 | 342,000 | |||
Outstanding principal | $ 318,000 | ||||
0.75% Exchangeable Senior Debentures due 2043 | |||||
Interest rate (as a percent) | 0.75% | ||||
Long-term debt | $ 2,000 | 2,000 | |||
1.75% Exchangeable Senior Debentures due 2046 | |||||
Interest rate (as a percent) | 1.75% | ||||
Long-term debt | $ 372,000 | 868,000 | |||
Outstanding principal | 332,000 | ||||
Debt Instrument, Repurchase Amount | 457,000 | ||||
Subsidiary Debt | |||||
Long-term debt | 189,000 | 170,000 | |||
Outstanding principal | $ 189,000 | ||||
QVC | QVC 3.125% Senior Secured Notes Due 2019 | |||||
Interest rate (as a percent) | 3.125% | ||||
Long-term debt | $ 399,000 | 399,000 | |||
Outstanding principal | $ 400,000 | ||||
QVC | QVC 5.125% Senior Secured Notes Due 2022 | |||||
Interest rate (as a percent) | 5.125% | ||||
Long-term debt | $ 500,000 | 500,000 | |||
Outstanding principal | $ 500,000 | ||||
QVC | QVC 4.375% Senior Secured Notes due 2023 | |||||
Interest rate (as a percent) | 4.375% | ||||
Long-term debt | $ 750,000 | 750,000 | |||
Outstanding principal | $ 750,000 | ||||
QVC | QVC 4.85% Senior Secured Notes Due 2024 | |||||
Interest rate (as a percent) | 4.85% | ||||
Long-term debt | $ 600,000 | 600,000 | |||
Outstanding principal | $ 600,000 | ||||
QVC | QVC 4.45% Senior Secured Notes Due 2025 [Member] | |||||
Interest rate (as a percent) | 4.45% | ||||
Long-term debt | $ 599,000 | 599,000 | |||
Outstanding principal | $ 600,000 | ||||
QVC | QVC 5.45% Senior Secured Notes Due 2034 [Member] | |||||
Interest rate (as a percent) | 5.45% | ||||
Long-term debt | $ 399,000 | 399,000 | |||
Outstanding principal | $ 400,000 | ||||
QVC | QVC 5.95% Senior Secured Notes due 2043 | |||||
Interest rate (as a percent) | 5.95% | ||||
Long-term debt | $ 300,000 | 300,000 | |||
Outstanding principal | 300,000 | ||||
QVC | QVC Bank Credit Facilities | |||||
Long-term debt | 825,000 | 1,763,000 | |||
Outstanding principal | $ 825,000 | ||||
QVC | Amendment No. 3 QVC Bank Credit Facility | |||||
Maximum borrowing capacity | $ 2,650,000 | ||||
Interest rate (as a percent) | 3.70% | ||||
Remaining borrowing capacity | $ 1,800,000 | ||||
Number of Quarters Used In Computing Debt Ratio | item | 4 | ||||
QVC | QVC 6.735% Senior Secured Notes Due 2067 | |||||
Interest rate (as a percent) | 6.375% | ||||
Long-term debt | $ 225,000 | ||||
Outstanding principal | $ 225,000 | ||||
Debt instrument, term | 5 years | ||||
QVC | Standby Letters of Credit | |||||
Maximum borrowing capacity | 300,000 | ||||
QVC | Standby Letters of Credit | Portion of Credit Facility Available to QVC and zulily | |||||
Maximum borrowing capacity | 50,000 | ||||
QVC | Uncommitted Incremental Revolving Loan Commitments or Incremental Term Loans | |||||
Maximum borrowing capacity | 1,500,000 | ||||
QVC | Portion of Credit Facility Available Only to QVC | |||||
Maximum borrowing capacity | 2,250,000 | ||||
QVC | Portion of Credit Facility Available to QVC and zulily | |||||
Maximum borrowing capacity | 400,000 | ||||
Remaining borrowing capacity | $ 400,000 | ||||
QVC | Portion of Credit Facility that matures on March 9, 2020 [Member] | |||||
Maximum borrowing capacity | $ 140,000 | ||||
HSNi | HSNi Bank Credit Facility | |||||
Maximum borrowing capacity | $ 1,750,000 | ||||
Long-term debt | 390,000 | $ 460,000 | |||
Outstanding principal | 390,000 | ||||
Secured debt | $ 1,250,000 | ||||
Debt instrument, term | 5 years | ||||
Percentage secured by U.S. subsidiaries | 100.00% | ||||
Percentage secured by foreign subsidiaries | 65.00% | ||||
Line of Credit, current borrowing capacity | $ 750,000 | ||||
HSNi | HSNi Bank Credit Facility | Senior secured note | |||||
Secured debt | $ 500,000 | ||||
HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Maximum borrowing capacity | $ 1,000,000 | ||||
Remaining borrowing capacity | $ 602,000 | ||||
Debt instrument interest Rate Interest rate (as a percent) | 3.70% | ||||
Leverage ratio | 3.50 | ||||
Credit issued under the revolving credit facility | $ 8,400 | ||||
Minimum | HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Commitment fee (as a percent) | 0.20% | ||||
Minimum | LIBOR | QVC | Amendment No. 3 QVC Bank Credit Facility | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | ||||
Minimum | LIBOR | HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.25% | ||||
Minimum | Base Rate | QVC | Amendment No. 3 QVC Bank Credit Facility | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.25% | ||||
Minimum | Base Rate | HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Debt instrument interest Rate Interest rate (as a percent) | 0.25% | ||||
Maximum | HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Commitment fee (as a percent) | 0.30% | ||||
Maximum | LIBOR | QVC | Amendment No. 3 QVC Bank Credit Facility | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | ||||
Maximum | LIBOR | HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | ||||
Maximum | Base Rate | QVC | Amendment No. 3 QVC Bank Credit Facility | |||||
Debt Instrument, Basis Spread on Variable Rate | 0.75% | ||||
Maximum | Base Rate | HSNi | Amendment No. 1 HSNi Bank Credit Facility | |||||
Debt instrument interest Rate Interest rate (as a percent) | 0.75% |
Long-Term Debt (Debt Securities
Long-Term Debt (Debt Securities That Are Not Reported At Fair Value) (Details) $ in Millions | Sep. 30, 2018USD ($) |
Senior Debentures | |
Debt Instrument [Line Items] | |
Fair Value of Debt Securities That Are Not Reported at Fair Value | $ 850 |
QVC Senior Secured Notes | |
Debt Instrument [Line Items] | |
Fair Value of Debt Securities That Are Not Reported at Fair Value | $ 3,666 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - QVC $ in Millions | Oct. 05, 2018USD ($)ft²item | Jul. 02, 2015USD ($)ft²item | Aug. 31, 2018USD ($) |
West Coast Distribution Center Lease | |||
Long-term Purchase Commitment [Line Items] | |||
Area of leased building (in square feet) | ft² | 1,000,000 | ||
Lessee, Operating Lease, Term of Contract | 15 years | ||
Operating Leases, Rent Expense | $ 6 | ||
Operating Lease, Rent Expense In Final Year Of Initial Term | $ 8 | ||
Maximum number of terms eligible for extension | item | 2 | ||
Lessee, Operating Lease, Renewal Term | 10 years | ||
Initial Payment to Purchase Land | $ 10 | ||
Subsequent Annual Payments to Purchase Land | $ 12 | ||
Term of Annual Payments for Land Purchase | 13 years | ||
ECDC Lease | |||
Long-term Purchase Commitment [Line Items] | |||
Area of leased building (in square feet) | ft² | 1.7 | ||
Lessee, Operating Lease, Term of Contract | 15 years | ||
Maximum number of terms eligible for extension | item | 2 | ||
Lessee, Operating Lease, Renewal Term | 5 years | ||
Lessee operating lease, final renewal term | 4 years | ||
ECDC Lease | Minimum | |||
Long-term Purchase Commitment [Line Items] | |||
Operating Leases, Rent Expense | $ 10 | ||
ECDC Lease | Maximum | |||
Long-term Purchase Commitment [Line Items] | |||
Operating Leases, Rent Expense | $ 14 |
Commitments and Contingencies -
Commitments and Contingencies - Building Useful Life (Details) | 9 Months Ended |
Sep. 30, 2018 | |
QVC | West Coast Distribution Center Lease | Building | |
Property, Plant and Equipment [Line Items] | |
Property, Plant and Equipment, Useful Life | 20 years |
Information About Qurate Reta_3
Information About Qurate Retail's Operating Segments (Performance Measures By Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues | $ 3,231 | $ 2,381 | $ 9,694 | $ 7,060 |
Adjusted OIBDA | 468 | 413 | 1,502 | 1,331 |
Corp and Other | ||||
Revenues | 230 | 4 | 701 | 16 |
Adjusted OIBDA | (14) | (14) | (13) | (39) |
Inter-group Eliminations | ||||
Revenues | (2) | (2) | (3) | |
QVC US | Operating Segments | ||||
Revenues | 1,418 | 1,374 | 4,262 | 4,111 |
Adjusted OIBDA | 324 | 316 | 1,005 | 1,013 |
QVC Int'l | Operating Segments | ||||
Revenues | 640 | 636 | 1,972 | 1,843 |
Adjusted OIBDA | 93 | 99 | 300 | 304 |
HSN | Operating Segments | ||||
Revenues | 513 | 1,495 | ||
Adjusted OIBDA | 47 | 136 | ||
zulily | Operating Segments | ||||
Revenues | 432 | 367 | 1,266 | 1,093 |
Adjusted OIBDA | $ 18 | $ 12 | $ 74 | $ 53 |
Information About Qurate Reta_4
Information About Qurate Retail's Operating Segments (Other Information By Segment) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Total assets | $ 17,673 | $ 24,122 | |
Investments in affiliates, accounted for using the equity method | 178 | $ 309 | |
Capital expenditures | 172 | $ 126 | |
QVC US | |||
Total assets | 9,284 | ||
Investments in affiliates, accounted for using the equity method | 39 | ||
Capital expenditures | 83 | ||
QVC Int'l | |||
Total assets | 2,136 | ||
Capital expenditures | 42 | ||
HSN | |||
Total assets | 2,793 | ||
Capital expenditures | 11 | ||
zulily | |||
Total assets | 2,222 | ||
Capital expenditures | 18 | ||
Corp and Other | |||
Total assets | 1,238 | ||
Investments in affiliates, accounted for using the equity method | 139 | ||
Capital expenditures | $ 18 |
Information About Qurate Reta_5
Information About Qurate Retail's Operating Segments (Reconciliation Of Segment Adjusted OIBDA To Earnings (Loss) From Continuing Operations Before Income Taxes) (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Information About Liberty's Operating Segments | ||||
Consolidated segment Adjusted OIBDA | $ 468 | $ 413 | $ 1,502 | $ 1,331 |
Stock-based compensation | (21) | (22) | (67) | (59) |
Depreciation and amortization | (167) | (180) | (489) | (594) |
Transaction related costs | (43) | (3) | (57) | (3) |
Operating Income (Loss) | 237 | 208 | 889 | 675 |
Interest expense | (94) | (88) | (288) | (267) |
Share of earnings (losses) of affiliates, net | (29) | (86) | (89) | (122) |
Realized and unrealized gains (losses) on financial instruments, net (note 7) | (27) | 4 | 92 | 280 |
Other, net | 1 | 7 | (8) | 1 |
Earnings (loss) from continuing operations before income taxes | $ 88 | $ 45 | $ 596 | $ 567 |