Company Generates Strong Revenue, Customer
and Adjusted OIBDA Growth Across All Businesses
Qurate Retail, Inc. ("Qurate Retail") (Nasdaq: QRTEA, QRTEB,
QRTEP) today reported third quarter 2020 results (1).
“Our performance was outstanding this quarter. We generated
strong growth in revenue, OIBDA, free cash flow and new customers,
reflecting broad-based strength in home-related products,” said
Mike George, President and CEO of Qurate Retail. “We are
particularly pleased with our consolidated adjusted OIBDA up 24%
and gains at all our business units. We believe our strategic
priorities and continued investments in innovation position us well
to sustain our momentum in the long term. Qurate Retail offers a
unique blend of media assets, particularly our leadership in
livestreaming, and retail core competencies centered on curating
appealing merchandise and building loyal customer relationships
through highly engaging content. This combination provides a
valuable competitive advantage in the evolving retail
marketplace.”
Third quarter operating results:
- Total Qurate Retail revenue increased 10% to $3.4 billion
- Revenue increased 9% in constant currency(2)
- eCommerce revenue grew 15% to $2.1 billion or 62% of total
revenue
- Qurate Retail reported diluted EPS of $0.80
- Adjusted diluted EPS(3) increased 36% to $0.57
- QxH revenue increased 7% to $2.0 billion
- QVC International revenue increased 11% to $723 million
- Revenue increased 8% in constant currency
- Zulily revenue increased 10% to $395 million
- Cornerstone revenue increased 26% to $285 million
Corporate updates:
- Distributed special dividend to shareholders on September 14th
- Cash dividend of $1.50 per share
- Newly issued preferred stock dividend of $3.00 per share
- QVC issued $500 million of 4.375% senior notes due 2028
- Proceeds used to tender for outstanding $500 million 5.125%
senior notes due 2022
Discussion of Results
Unless otherwise noted, the following discussion compares
financial information for the three months ended September 30, 2020
to the same period in 2019.
THIRD
QUARTER 2020 FINANCIAL RESULTS
(amounts in millions)
3Q19
3Q20
% Change
% Change Constant Currency(a)
Revenue
QxH
$
1,854
$
1,980
7
%
QVC International
650
723
11
%
8
%
Zulily
359
395
10
%
Cornerstone
226
285
26
%
Total Qurate Retail Revenue
$
3,089
$
3,383
10
%
9
%
Operating Income (Loss)
QxH
$
243
$
274
13
%
QVC International
87
114
31
%
26
%
Zulily(b)
(1,042
)
3
NM
Cornerstone
(5
)
28
NM
Unallocated corporate cost(c)
(10
)
(13
)
(30
)
%
Total Qurate Retail Operating Income
(Loss)
$
(727
)
$
406
NM
Adjusted OIBDA
QxH
$
346
$
380
10
%
QVC International
106
132
25
%
21
%
Zulily(b)
8
27
238
%
Cornerstone
4
35
775
%
Unallocated corporate cost(c)
(8
)
(8
)
-
%
Total Qurate Retail Adjusted
OIBDA
$
456
$
566
24
%
___________________________
a)
For a definition of constant
currency financial metrics, see the accompanying schedules.
b)
Zulily incurred a $1.0 billion
non-cash impairment charge related to its tradename and goodwill in
Q3-19.
c)
Includes corporate costs incurred
at Qurate Retail, Inc. but not allocated to any business
segment.
THIRD
QUARTER 2020 NET INCOME AND ADJUSTED NET INCOME(3)
(amounts in millions)
3Q19
3Q20
% Change
Net income (loss)
$
(755
)
$
352
NM
Adjusted net income(a)
$
177
$
238
34
%
Basic weighted average shares outstanding
("WASO")
417
417
Potentially dilutive shares
1
4
Diluted WASO
418
421
GAAP EPS(b)
$
(1.85
)
$
0.80
NM
Adjusted EPS(a)
$
0.42
$
0.57
36
%
___________________________
a)
See reconciling schedule 3.
b)
Represents diluted net income (loss) per share attributable to
Series A and Series B common stockholders as presented in Qurate
Retail’s financial statements.
QxH
Revenue increased on higher unit volume, reduced customer
returns and an increase in shipping and handling revenue, partially
offset by a reduction in average selling price. QxH reported growth
in home and accessories, which was partially offset by declines
primarily in apparel and electronics.
Gross margin increased primarily due to improved product
margins, as the negative impact of category mix was more than
offset by favorable customer returns and shipping and handling
revenue, strategic promotional and pricing actions and vendor
negotiations. The product margin gains were partially offset by
higher fulfillment (warehouse and freight) and inventory
obsolescence expenses. The fulfillment pressure was mainly
associated with general freight rate increases, increased
distribution costs in connection with the opening of the Bethlehem
fulfillment center, increased wage rates and reduced pack factor.
Operating income and adjusted OIBDA margin(3) increased reflecting
the improved gross margins, lower bad debt expense and TV
commissions, partially offset by higher marketing expense and
incentive compensation accruals.
QVC International
US Dollar denominated results were positively affected by
exchange rate fluctuations, primarily due to the Dollar weakening
5% versus the Euro and British Pound and 1% against the Japanese
Yen. The financial metrics presented in this press release also
provide a comparison of the percentage change in QVC
International’s results in constant currency (where applicable) to
the comparable figures calculated in accordance with US GAAP for
the third quarter of 2020.
QVC International reported revenue growth in all categories,
except jewelry which was flat. Constant currency revenue increased
in all markets.
Gross margin rate increased primarily due to improved product
margins, which reflect favorable customer returns and shipping and
handling revenue which more than offset unfavorable mix impact.
Operating income and adjusted OIBDA margin increased primarily due
to revenue growth, gross margin improvement and lower
administrative costs and TV commissions, partially offset by higher
incentive compensation accruals.
Zulily
Zulily revenue increased on higher average selling price and
unit volume. Gross margin increased primarily due to higher product
margins, partially offset by higher freight costs. Operating income
and adjusted OIBDA margin increased primarily due to lower
marketing expense, partially offset by higher incentive
compensation accruals. Zulily recognized a $1 billion non-cash
impairment charge related to its tradename and goodwill in the
third quarter of 2019.
Cornerstone
Cornerstone revenue increased due to strong demand in its home
brands (Frontgate, Ballard Designs, and Grandin Road), partially
offset by weakness in apparel at Garnet Hill. Operating income and
adjusted OIBDA margin increased primarily from sales growth and
gross margin expansion driven by higher product margins.
THIRD
QUARTER 2020 SUPPLEMENTAL METRICS
(amounts in millions unless otherwise
noted)
3Q19
3Q20
% Change
% Change Constant Currency(a)
QxH
Cost of Sales % of Revenue
65.0
%
64.3
%
70
bps
Operating Income Margin (%)
13.1
%
13.8
%
70
bps
Adjusted OIBDA Margin (%)
18.7
%
19.2
%
50
bps
Average Selling Price
$
53.35
$
51.60
(3
)
%
Units Sold
7
%
Return Rate(b)
17.3
%
14.8
%
250
bps
eCommerce Revenue(c)
$
1,027
$
1,162
13
%
eCommerce % of Total Revenue
55.4
%
58.7
%
330
bps
Mobile % of eCommerce Revenue(d)
68.4
%
65.0
%
(340
)
bps
LTM Total Customers(e)
10.7
11.3
6
%
QVC – International
Cost of Sales % of Revenue
62.9
%
62.0
%
90
bps
Operating Income Margin (%)
13.4
%
15.8
%
240
bps
Adjusted OIBDA Margin (%)
16.3
%
18.3
%
200
bps
Average Selling Price
2
%
(2
)
%
Units Sold
7
%
eCommerce Revenue(c)
$
266
$
323
21
%
17
%
eCommerce % of Total Revenue
40.9
%
44.7
%
380
bps
Mobile % of eCommerce Revenue(d)
75.9
%
73.2
%
(270
)
bps
LTM Total Customers(e)
4.6
4.9
7
%
Zulily
Cost of Sales % of Revenue
74.4
%
72.9
%
150
bps
Operating Income Margin (%)
(290.3
)
%
0.8
%
NM
Adjusted OIBDA Margin (%)
2.2
%
6.8
%
460
bps
Mobile % of Total Orders
75.2
%
74.2
%
(100
)
bps
LTM Total Customers(e)
5.9
5.4
(8
)
%
Cornerstone
Operating Income Margin (%)
(2.2
)
%
9.8
%
NM
Adjusted OIBDA Margin (%)
1.8
%
12.3
%
1,050
bps
eCommerce Revenue(c)
$
161
$
209
30
%
eCommerce % of Total Revenue
71.2
%
73.3
%
210
bps
___________________________
a)
For a definition of constant currency financial metrics, see the
accompanying schedules.
b)
Measured as returned sales over gross shipped sales.
c)
Based on net revenue.
d)
Based on gross US Dollar orders.
e)
LTM: Last twelve months.
Taxes
Qurate Retail estimates that its average annual effective tax
rate through 2021 will be in the range of 15-18% including federal,
state and foreign taxes, net of tax credits generated by Qurate
Retail’s green energy investments. This estimate excludes the
impact of one-time items and is subject to adjustment.
Capital Returns
Qurate Retail did not repurchase shares from August 1, 2020
through October 31, 2020. The remaining repurchase authorization
for Qurate Retail is approximately $497 million.
On September 14, 2020, Qurate Retail distributed a special
dividend to holders of QRTEA and QRTEB common stock consisting of
(i) cash in the amount of $1.50 per common share for an aggregate
cash dividend of approximately $626 million and (ii) $3.00 per
share of newly issued 8.0% Series A Cumulative Redeemable Preferred
Stock (the “Preferred Stock”), having an initial liquidation price
of $100 per share of Preferred Stock, with cash paid in lieu of
fractional shares. Holders of the Preferred Stock are entitled to
receive quarterly cash dividends at a rate of 8.0% per annum of the
liquidation price on a cumulative basis. If declared, accrued
dividends will be payable quarterly on each dividend payment date,
beginning December 15, 2020, and thereafter on each March 15, June
15, September 15 and December 15 during the term. There were 12.5
million shares of Preferred Stock issued and outstanding at
September 30, 2020. The Preferred Stock is accounted for as a
liability on Qurate Retail’s balance sheet at its liquidation
value. Given the liability classification of the Preferred Stock,
all dividends accrued will be classified as interest expense in the
condensed consolidated statements of operations.
FOOTNOTES
1)
Qurate Retail’s President and
CEO, Mike George, and Executive Chairman, Greg Maffei will discuss
these headlines and other matters on Qurate Retail’s earnings
conference call which will begin at 8:30 a.m. (E.S.T.) on November
5, 2020. For information regarding how to access the call, please
see “Important Notice” later in this document.
2)
For a definition of constant
currency financial metrics, see the accompanying schedules.
Applicable reconciliations can be found in the financial tables at
the beginning of this press release.
3)
For definitions and applicable
reconciliations of Adjusted OIBDA, Adjusted OIBDA margin, adjusted
net income and adjusted EPS, see the accompanying schedules.
NOTES
Cash and Debt
The following presentation is provided to separately identify
cash and debt information.
(amounts in millions)
6/30/2020
9/30/2020
Cash and cash equivalents
(GAAP)
$
948
$
1,044
Indemnification Asset(a)
$
215
$
310
Debt:
QVC senior notes(b)
$
4,450
$
4,450
QVC bank credit facility
—
—
Total Qurate Retail Group Debt
$
4,450
$
4,450
Senior notes(b)
791
791
Senior exchangeable debentures(c)
1,417
1,413
Corporate Level Debentures
2,208
2,204
Total Qurate Retail, Inc. Debt
$
6,658
$
6,654
Unamortized discount, fair market value
adjustment and deferred loan costs
(17
)
212
Total Qurate Retail, Inc. Debt
(GAAP)
$
6,641
$
6,866
Other Financial Obligations:
Preferred stock(d)
$
—
$
1,248
QVC, Inc. leverage(e)
2.0x
2.0x
___________________________
a)
Indemnity from GCI Liberty, pursuant to an indemnification
agreement with respect to the 1.75% exchangeable debentures due
2046 (the “Charter exchangeable debentures”) issued by Liberty
Interactive LLC (“LI LLC”), as described in this press release.
b)
Face amount of Senior Notes and Debentures with no reduction for
the unamortized discount.
c)
Face amount of Senior Exchangeable Debentures with no reduction for
the fair market value adjustment.
d)
Preferred Stock has an 8% coupon, $100 per share initial
liquidation preference plus accrued and unpaid dividends and is
non-voting. It is subject to a mandatory redemption on March 15,
2031. The Preferred Stock is considered a liability for GAAP
purposes, and is recorded net of capitalized costs.
e)
As defined in QVC, Inc.’s credit agreement. Includes QxH, QVC
International and Zulily.
Cash at Qurate Retail increased $96 million in the third quarter
as cash from operations and $262 million of pre-tax proceeds
received from the sale of a green energy investment more than
offset the $626 million special cash dividend paid to shareholders
and capital expenditures. Total debt at Qurate Retail was flat in
the third quarter.
On August 20, 2020, QVC completed a registered debt offering for
$500 million of 4.375% senior notes due 2028. Net proceeds from the
offering and cash on hand was used in a cash tender offer to
purchase the outstanding $500 million 5.125% senior notes due 2022.
As a result of the tender offer and the redemption, Qurate Retail
recorded a $42 million loss on extinguishment of debt in the third
quarter.
QVC’s bank credit facility is undrawn as of September 30, 2020
with available capacity of $2.9 billion, net of letters of credit.
The credit facility matures on December 31, 2023. Qurate Retail
does not have any maturity of senior secured notes until 2023 and
believes that it will be able to repay these notes with available
cash on hand, cash generated from operations, borrowings under its
revolving credit facility or through refinancing in the public debt
market. Qurate Retail is in compliance with all debt covenants, and
QVC, Inc.’s leverage ratio as defined in its credit agreement was
2.0x as of September 30, 2020.
Qurate Retail benefits from an indemnification agreement with
GCI Liberty with respect to its Charter exchangeable debentures.
The indemnification agreement compensates Qurate Retail for any
payments made in excess of the adjusted principal amount of the
debentures to any holder that exercises its exchange right on or
before the put/call date of October 5, 2023. This indemnity is
supported by a negative pledge in favor of Qurate Retail on the 1.0
million reference shares of Class A common stock of Charter held at
GCI Liberty that underlie the Charter exchangeable debentures. The
indemnification asset on Qurate Retail’s balance sheet is valued
based on the estimated exchange feature in the Charter exchangeable
debentures. As of September 30, 2020, a holder of the Charter
exchangeable debentures has the ability to exchange, and
accordingly, the exchangeable debentures and indemnification asset
were both classified as current as of September 30, 2020. There is
$332 million principal amount of the Charter exchangeable
debentures outstanding as of September 30, 2020.
Important Notice: Qurate Retail, Inc. (Nasdaq: QRTEA,
QRTEB, QRTEP) President and CEO, Mike George, and Executive
Chairman, Greg Maffei, will discuss Qurate Retail’s earnings
release on a conference call which will begin at 8:30 a.m. (E.S.T.)
on November 5, 2020. The call can be accessed by dialing (800)
458-4121 or (323) 794-2093, passcode 2199315, at least 10 minutes
prior to the start time. The call will also be broadcast live
across the Internet and archived on our website. To access the
webcast go to http://ir.qurateretail.com/events-and-presentations.
Links to this press release and replays of the call will also be
available on Qurate Retail’s website.
This press release includes certain forward-looking statements,
including statements about business strategies and initiatives and
their expected benefits, market potential, future financial
performance and prospects, Qurate Retail’s estimated ongoing annual
tax rate, market conditions, the indemnification by GCI Liberty,
future repayment of debt, the continuation of our stock repurchase
program, the payment of quarterly cash dividends on the Preferred
Stock and other matters that are not historical facts. These
forward-looking statements involve many risks and uncertainties
that could cause actual results to differ materially from those
expressed or implied by such statements, including, without
limitation, possible changes in market acceptance of new products
or services, competitive issues, regulatory matters affecting our
businesses, continued access to capital on terms acceptable to
Qurate Retail, changes in law and government regulations, the
availability of investment opportunities, general market conditions
(including as a result of COVID-19) and market conditions conducive
to stock repurchases. These forward-looking statements speak only
as of the date of this press release, and Qurate Retail expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward-looking statement contained herein to
reflect any change in Qurate Retail's expectations with regard
thereto or any change in events, conditions or circumstances on
which any such statement is based. Please refer to the publicly
filed documents of Qurate Retail, including the most recent Forms
10-K and 10-Q, for additional information about Qurate Retail and
about the risks and uncertainties related to Qurate Retail's
business which may affect the statements made in this press
release.
NON-GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our
financial results, this press release includes a presentation of
Adjusted OIBDA, which is a non-GAAP financial measure, for Qurate
Retail, QVC (and certain of its subsidiaries), Zulily and
Cornerstone together with a reconciliation to that entity or such
businesses’ operating income, as determined under GAAP. Qurate
Retail defines Adjusted OIBDA as operating income (loss) plus
depreciation and amortization, stock-based compensation, separately
reported litigation settlements, restructuring, acquisition and
other related costs and impairments. Further, this press release
includes Adjusted OIBDA margin which is also a non-GAAP financial
measure. Qurate Retail defines Adjusted OIBDA margin as Adjusted
OIBDA divided by revenue.
Qurate Retail believes Adjusted OIBDA is an important indicator
of the operational strength and performance of its businesses by
identifying those items that are not directly a reflection of each
business’ performance or indicative of ongoing business trends. In
addition, this measure allows management to view operating results
and perform analytical comparisons and benchmarking between
businesses and identify strategies to improve performance. Because
Adjusted OIBDA is used as a measure of operating performance,
Qurate Retail views operating income as the most directly
comparable GAAP measure. Adjusted OIBDA is not meant to replace or
supersede operating income or any other GAAP measure, but rather to
supplement such GAAP measures in order to present investors with
the same information that Qurate Retail's management considers in
assessing the results of operations and performance of its assets.
Please see the attached schedules for applicable
reconciliations.
In addition, this press release includes references to adjusted
net income and adjusted earnings per share, which are non-GAAP
financial measures, for Qurate Retail. Qurate Retail defines
adjusted net income as net income, excluding the impact of
acquisition accounting amortization (net of deferred tax benefit),
mark to market adjustments on certain public debt and equity
securities and other one-time adjustments. Qurate Retail defines
adjusted earnings per share as diluted earnings per share plus the
diluted per share effects of certain adjustments, net of tax.
Qurate Retail believes adjusted net income and adjusted earnings
per share are important indicators of financial performance due to
the impact of purchase accounting amortization, mark to market
adjustments and other one-time items identified in Schedule 3
below. Because adjusted net income and adjusted earnings per share
are used as measures of overall financial performance, Qurate
Retail views net income and diluted earnings per share,
respectively, as the most directly comparable GAAP measures.
Adjusted net income and adjusted earnings per share are not meant
to replace or supersede net income, diluted earnings per share or
any other GAAP measure, but rather to supplement such GAAP measures
in order to present investors with a supplemental metric of
financial performance. Please see the attached schedules for a
reconciliation of adjusted net income to net income (loss) and
adjusted earnings per share to diluted earnings per share, in each
case, calculated in accordance with GAAP for Qurate Retail
(Schedule 3).
This press release also references certain financial metrics on
a constant currency basis, which is a non-GAAP measure, for Qurate
Retail. Constant currency financial metrics, as presented herein,
are calculated by translating the current-year and prior-year
reported amounts into comparable amounts using a single foreign
exchange rate for each currency.
Qurate Retail believes constant currency financial metrics are
an important indicator of financial performance, in particular for
QVC, due to the translational impact of foreign currency
fluctuations relating to its subsidiaries in the UK, Germany, Italy
and Japan. We use constant currency financial metrics to provide a
framework to assess how our businesses performed excluding the
effects of foreign currency exchange fluctuations. Please see the
financial tables at the beginning of this press release for a
reconciliation of the impact of foreign currency fluctuations on
revenue, operating income, Adjusted OIBDA and average selling
price.
SCHEDULE 1
The following table provides a reconciliation of Qurate Retail’s
Adjusted OIBDA to its operating income calculated in accordance
with GAAP for the three months ended September 30, 2019, December
31, 2019, March 31, 2020, June 30, 2020 and September 30, 2020,
respectively.
CONSOLIDATED
OPERATING INCOME AND ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
3Q19
4Q19
1Q20
2Q20
3Q20
Qurate Retail, Inc. Operating Income
(Loss)
$
(727
)
$
287
$
231
$
405
$
406
Depreciation and amortization
146
149
142
144
141
Stock compensation expense
17
17
11
16
19
Impairment of intangible assets
1,020
147
—
—
—
Qurate Retail, Inc. Adjusted
OIBDA
$
456
$
600
$
384
$
565
$
566
SCHEDULE 2
The following table provides a reconciliation of Adjusted OIBDA
for QVC, Zulily and Cornerstone to that entity or such businesses'
operating income (loss) calculated in accordance with GAAP for the
three months ended September 30, 2019, December 31, 2019, March 31,
2020, June 30, 2020 and September 30, 2020, respectively.
SUBSIDIARY ADJUSTED
OIBDA RECONCILIATION
(amounts in millions)
3Q19
4Q19
1Q20
2Q20
3Q20
QVC
Operating income
$
330
$
306
$
270
$
381
$
388
Depreciation and amortization
112
114
114
116
114
Stock compensation
10
9
6
10
10
Impairment of intangible assets
—
147
—
—
—
Adjusted OIBDA
$
452
$
576
$
390
$
507
$
512
QxH Adjusted OIBDA
$
346
$
443
$
293
$
388
$
380
QVC International Adjusted
OIBDA
106
133
97
119
132
Zulily
Operating income (loss)
$
(1,042
)
$
(13
)
$
(20
)
$
20
$
3
Depreciation and amortization
26
26
20
20
20
Stock compensation
4
3
2
5
4
Impairment of intangible assets
1,020
—
—
—
—
Adjusted OIBDA
$
8
$
16
$
2
$
45
$
27
Cornerstone
Operating income (loss)
$
(5
)
$
3
$
(11
)
$
13
$
28
Depreciation and amortization
8
9
8
8
7
Stock compensation
1
—
1
—
—
Adjusted OIBDA
$
4
$
12
$
(2
)
$
21
$
35
SCHEDULE 3
The following table provides a reconciliation of Qurate Retail’s
net income (loss) to its adjusted net income and diluted earnings
(loss) per share to adjusted earnings per share, in each case,
calculated in accordance with GAAP for the three months ended
September 30, 2019, December 31, 2019, March 31, 2020, June 30,
2020 and September 30, 2020, respectively.
ADJUSTED NET INCOME
AND ADJUSTED EPS RECONCILIATION
(amounts in millions)
3Q19
4Q19
1Q20
2Q20
3Q20
Qurate Retail, Inc. Net Income (Loss)
(GAAP)
$
(770
)
141
(20
)
$
220
$
338
Purchase accounting amort., net of
deferred tax benefit (a)
32
33
29
24
28
Impairment of intangible assets, net of
tax impact
881
113
—
—
—
Non-recurring tax items
—
(11
)
—
—
—
Gain on transactions, net of tax
impact
—
—
—
—
(167
)
Loss on extinguishment of debt, net of tax
impact
—
—
—
—
30
Mark-to-market adjustments, net(b)
34
8
105
(18
)
9
Adjusted Net Income
$
177
$
284
$
114
$
226
$
238
Diluted earnings (loss) per share
(GAAP)
$
(1.85
)
$
0.34
$
(0.05
)
$
0.53
$
0.80
Total adjustments per share, net of
tax
2.27
0.34
0.32
0.01
(0.24
)
Adjusted earnings per share
$
0.42
$
0.68
$
0.27
$
0.54
$
0.57
___________________________
a)
Add-back relates to non-cash, non-tax deductible purchase
accounting amortization from Qurate Retail’s acquisitions of QVC,
HSN, Zulily and Cornerstone, net of book deferred tax benefit.
b)
Add-back includes realized and unrealized gains/losses on financial
instruments, net of tax.
QURATE RETAIL, INC.
BALANCE SHEET
INFORMATION
(unaudited)
September 30,
December 31,
2020
2019
amounts in millions
Assets
Current assets:
Cash and cash equivalents
$
1,044
673
Trade and other receivables, net
1,142
1,854
Inventory, net
1,481
1,413
Other current assets
702
636
Total current assets
4,369
4,576
Property and equipment, net
1,282
1,351
Intangible assets not subject to
amortization
9,769
9,744
Intangible assets subject to amortization,
net
799
955
Other assets, at cost, net of accumulated
amortization
573
679
Total assets
$
16,792
17,305
Liabilities and Equity
Current liabilities:
Accounts payable
1,147
1,091
Accrued liabilities
1,101
1,173
Current portion of debt
1,682
1,557
Other current liabilities
226
180
Total current liabilities
4,156
4,001
Long-term debt
5,184
5,855
Deferred income tax liabilities
1,744
1,716
Preferred stock
1,248
—
Other liabilities
753
761
Total liabilities
13,085
12,333
Equity
3,578
4,840
Non-controlling interests in equity of
subsidiaries
129
132
Total liabilities and equity
$
16,792
17,305
QURATE RETAIL, INC.
STATEMENT OF OPERATIONS
INFORMATION
(unaudited)
Three months ended
September 30,
2020
2019
Revenue:
Total revenue, net
$
3,383
3,089
Operating costs and expenses:
Cost of retail sales (exclusive of
depreciation shown separately below)
2,178
2,026
Operating expense
203
200
Selling, general and administrative,
including stock-based compensation
455
424
Depreciation and amortization
141
146
Impairment of intangible assets
—
1,020
2,977
3,816
Operating income (loss)
406
(727
)
Other income (expense):
Interest expense
(98
)
(93
)
Share of earnings (losses) of affiliates,
net
(32
)
(36
)
Realized and unrealized gains (losses) on
financial instruments, net
(12
)
(45
)
Gains (losses) on transactions, net
223
—
Other, net
(65
)
(4
)
16
(178
)
Earnings (loss) before income taxes
422
(905
)
Income tax benefit (expense)
(70
)
150
Net earnings (loss)
352
(755
)
Less net earnings (loss) attributable to
noncontrolling interests
14
15
Net earnings (loss) attributable to Qurate
Retail, Inc. shareholders
$
338
(770
)
QURATE RETAIL, INC.
STATEMENT OF CASH FLOWS
INFORMATION
(unaudited)
Nine months ended
September 30,
2020
2019
amounts in millions
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)
$
577
(559
)
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
427
457
Impairment of intangible assets
—
1,020
Stock-based compensation
46
54
Share of (earnings) losses of affiliates,
net
96
104
Realized and unrealized gains (losses) on
financial instruments, net
127
239
(Gains) losses on transactions, net
(224
)
1
Deferred income tax expense (benefit)
19
(165
)
Other, net
52
10
Changes in operating assets and
liabilities
Decrease (increase) in accounts
receivable
720
575
Decrease (increase) in inventory
(63
)
(209
)
Decrease (increase) in prepaid expenses
and other assets
69
53
(Decrease) increase in trade accounts
payable
52
(192
)
(Decrease) increase in accrued and other
liabilities
(43
)
(478
)
Net cash provided (used) by operating
activities
1,855
910
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in and loans to cost and
equity investees
(88
)
(109
)
Capital expenditures
(165
)
(249
)
Expenditures for television distribution
rights
(41
)
(128
)
Cash proceeds from dispositions of
investments
269
—
Net cash provided (used) by investing
activities
(25
)
(486
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of debt
1,300
2,215
Repayments of debt
(2,077
)
(2,179
)
Repurchases of Qurate Retail common
stock
—
(392
)
Withholding taxes on net settlements of
stock-based compensation
(3
)
(6
)
Dividends paid to noncontrolling
interest
(46
)
(34
)
Dividends paid to common shareholders
(626
)
—
Other financing activities, net
(12
)
(72
)
Net cash provided (used) by financing
activities
(1,464
)
(468
)
Effect of foreign currency rates on cash,
cash equivalents and restricted cash
5
(3
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
371
(47
)
Cash, cash equivalents and restricted cash
at beginning of period
681
660
Cash, cash equivalents and restricted cash
at end period
$
1,052
613
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201104005629/en/
Qurate Retail, Inc. Courtnee Chun, 720-875-5420
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