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Information about QVC's Operating Segments | 9 Months Ended
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Sep. 30, 2018
Segment Reporting [Abstract] |
Segment reporting disclosure | Information about QVC's Operating Segments The Company has identified two reportable operating segments: QVC-U.S. and QVC-International. Both operating segments are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the Internet and mobile applications in certain markets. QVC's chief operating decision maker ("CODM") is QVC's Chief Executive Officer. QVC's CODM has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, QVC-U.S. and QVC-International. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level (see below). The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per subscriber equivalent. The Company defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses (excluding restructuring, integration and advisory fees incurred by QVC as a result of the acquisition of HSN by Qurate Retail on December 29, 2017 ("transaction related costs") and stock-based compensation). The Company believes this measure is an important indicator of the operational strength and performance of its segments, including the ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among the Company's businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization, stock-based compensation and transaction related costs that are included in the measurement of operating income pursuant to U.S. GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. GAAP. Performance measures
| Three months ended September 30, |  | Nine months ended September 30, |
| 2018 |  | 2017 |  | 2018 |  | 2017 |
(in millions) | Net revenue |  | Adjusted OIBDA |  | Net revenue |  | Adjusted OIBDA |  | Net revenue |  | Adjusted OIBDA |  | Net revenue |  | Adjusted OIBDA |
QVC-U.S. | $ | 1,418 |  | 324 |  | 1,374 |  | 316 |  | 4,262 |  | 1,005 |  | 4,111 |  | 1,013 |
QVC-International | 640 |  | 93 |  | 636 |  | 99 |  | 1,972 |  | 300 |  | 1,843 |  | 304 |
Consolidated QVC | $ | 2,058 |  | 417 |  | 2,010 |  | 415 |  | 6,234 |  | 1,305 |  | 5,954 |  | 1,317 |
Other information
| Three months ended September 30, |  | Nine months ended September 30, |
| 2018 |  | 2017 |  | 2018 |  | 2017 |
(in millions) | Depreciation |  | Amortization |  | Depreciation |  | Amortization |  | Depreciation |  | Amortization |  | Depreciation |  | Amortization |
QVC-U.S. | $ | 22 |  | 40 |  | 24 |  | 83 |  | 68 |  | 111 |  | 70 |  | 293 |
QVC-International | 14 |  | 2 |  | 14 |  | 8 |  | 42 |  | 8 |  | 46 |  | 31 |
Consolidated QVC | $ | 36 |  | 42 |  | 38 |  | 91 |  | 110 |  | 119 |  | 116 |  | 324 |
| September 30, 2018 |  | December 31, 2017 |
(in millions) | Total assets |  | Capital expenditures |  | Total assets |  | Capital expenditures |
QVC-U.S. | $ | 9,284 |  | 83 |  | 9,429 |  | 116 |
QVC-International | 2,136 |  | 42 |  | 2,121 |  | 36 |
Consolidated QVC | $ | 11,420 |  | 125 |  | 11,550 |  | 152 |
Property and equipment, net of accumulated depreciation, by segment were as follows:
(in millions) | September 30, 2018 |  | December 31, 2017 |
QVC-U.S. | $ | 538 |  | 559 |
QVC-International | 443 |  | 446 |
Consolidated QVC | $ | 981 |  | 1,005 |
The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
| Three months ended September 30, |  | Nine months ended September 30, |
(in millions) | 2018 |  | 2017 |  | 2018 |  | 2017 |
Adjusted OIBDA | $ | 417 |  | 415 |  | 1,305 |  | 1,317 |
Transaction related costs | (28 | ) | (3 | ) | (32 | ) | (3 | )
Stock-based compensation | (10 | ) | (9 | ) | (30 | ) | (23 | )
Depreciation and amortization | (78 | ) | (129 | ) | (229 | ) | (440 | )
Equity in losses of investee | (1 | ) | — |  | (2 | ) | (3 | )
Interest expense, net | (57 | ) | (54 | ) | (172 | ) | (165 | )
Foreign currency (loss) gain | (1 | ) | 4 |  | — |  | (6 | )
Income before income taxes | $ | 242 |  | 224 |  | 840 |  | 677 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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