Qurate Retail, Inc. ("Qurate Retail") (Nasdaq: QRTEA, QRTEB)
today reported third quarter 2019 results. Headlines
include(1):
Operating results:
- Qurate Retail total revenue decreased 4% to $3.1 billion
- Revenue decreased 4% in constant currency(2)
- eCommerce revenue comprised $1.8 billion or 59% of total
revenue
- Qurate Retail reported $(1.85) diluted EPS; $0.42 adjusted
diluted EPS(3)
- QxH revenue decreased 4% to $1.9 billion
- QVC International revenue increased 2% to $650 million
- Revenue increased 3% in constant currency
- Zulily revenue decreased 17% to $359 million
- Incurred a $1.0 billion non-cash impairment charge related to
its tradename and goodwill
- Cornerstone revenue decreased 2% to $226 million
- Revenue increased 5% excluding closed Improvements
business
Corporate updates:
- Repurchased 100k of Liberty Interactive LLC’s 3.50% MSI
exchangeable bonds in October for $88 million
- $251 million principal amount of bonds outstanding pro-forma
for repurchase
“The third quarter was challenging, with continued sales and
Adjusted OIBDA pressure at QxH and Zulily,” said Mike George,
President and CEO of Qurate Retail. “However, we were pleased to
see Cornerstone’s continuing operations turn to growth and a
further acceleration of growth at QVC International. Despite the
sales pressures, we generated strong growth in free cash flow. As
we look ahead, we are intensely focused on improving our operating
results, accelerating synergy capture and better positioning our
companies for a changing retail and media world, while sustaining
strong cash flow.”
Discussion of Results
Unless otherwise noted, the following discussion compares
financial information for the three months ended September 30, 2019
to the same period in 2018. During the first quarter of 2019,
Qurate Retail changed its reportable segments to combine QVC US and
HSN into one QxH reportable segment and is presenting prior period
information in this press release to conform to this change.
THIRD
QUARTER 2019 FINANCIAL RESULTS
(amounts in millions)
3Q18
3Q19
% Change
% Change Constant Currency(a)
Revenue
QxH
$
1,929
$
1,854
(4
)%
QVC International(b)
640
650
2
%
3
%
Zulily
432
359
(17
)%
Cornerstone
230
226
(2
)%
Total Qurate Retail Revenue
$
3,231
$
3,089
(4
)%
(4
)%
Operating Income
QxH
$
228
$
243
7
%
QVC International(b)
77
87
13
%
16
%
Zulily(c)
(38
)
(1,042
)
NA
Cornerstone
(19
)
(5
)
74
%
Unallocated corporate cost(d)
(11
)
(10
)
9
%
Total Qurate Retail Operating
Income
$
237
$
(727
)
NA
Adjusted OIBDA
QxH
$
371
$
346
(7
)%
QVC International(b)
93
106
14
%
15
%
Zulily
18
8
(56
)%
Cornerstone
(7
)
4
157
%
Unallocated corporate cost(d)
(7
)
(8
)
(14
)%
Total Qurate Retail Adjusted
OIBDA
$
468
$
456
(3
)%
_____________________________
a)
For a definition of constant currency
financial metrics, see the accompanying schedules.
b)
Includes QVC Japan, QVC Germany, QVC UK,
QVC Italy and QVC France, which terminated its operations on March
13, 2019.
c)
In the third quarter of 2019, Zulily
incurred a $1.0 billion non-cash impairment charge related to its
tradename and goodwill.
d)
Includes corporate costs incurred at
Qurate Retail, Inc. but not allocated to any business segment.
THIRD
QUARTER 2019 NET INCOME AND ADJUSTED NET INCOME(3)
(amounts in millions)
3Q18
3Q19
Net Income(a)
$
72
$
(770
)
Adjusted Net Income(b)
$
169
$
177
Basic weighted average shares outstanding
("WASO")
459
417
Potentially dilutive shares
2
1
Diluted WASO
461
418
GAAP EPS(a)
$
0.16
$
(1.85
)
Adjusted EPS(b)
$
0.37
$
0.42
_____________________________
a)
Represents net income and diluted net
income per share from continuing operations attributable to Series
A and Series B common stockholders as presented in Qurate Retail’s
financial statements.
b)
See reconciling schedule 3.
QxH
QxH reported sales declines in jewelry, accessories and home,
which were partially offset by gains in beauty and apparel.
Operating income margin expanded primarily due to
transaction-related costs incurred in the third quarter of 2018.
Adjusted OIBDA margin(3) contracted, reflecting sales deleverage,
higher fulfillment (warehouse and freight), inventory management
and marketing expense, partially offset by lower TV distribution
commissions and higher product margins. Lower TV distribution
commissions were in part associated with the accounting treatment
for certain renewed HSN carriage agreements (described below), as
well as favorable renegotiated rates at HSN.
Beginning in the third quarter of 2018, HSN began renewing TV
carriage agreements with certain distribution partners, which
provided multi-year upfront payments that are amortized over the
life of the agreements, versus its previous convention of expensing
quarterly payments as incurred. This accounting change has a
positive impact on QxH’s Adjusted OIBDA(3) with a corresponding
increase in QxH’s amortization expense, which is neutral to
operating income each period and cash neutral over the life of the
agreements.
QVC International
US Dollar denominated results were negatively impacted by
exchange rate fluctuations, primarily due to the Dollar
strengthening 5% versus the British Pound and 4% against the Euro,
partially offset by the Dollar weakening 4% versus 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 2019.
QVC International constant currency revenue, operating income
and Adjusted OIBDA gains were driven by growth primarily in Japan
and Germany. Operating income and Adjusted OIBDA margins expanded,
reflecting improved gross margins primarily from ASP leverage,
partially offset by lower shipping and handling revenue. As
previously announced, QVC closed its television and digital
platforms in France on March 13, 2019, which benefited results in
the third quarter due to losses incurred in the prior year.
Zulily
Zulily revenue declined primarily due to lower unit volume
driven by a decrease in new customers and lower purchasing
frequency from existing customers compared to the corresponding
periods in the prior year. Product categories that led the sales
decline were apparel (kids and women), home and footwear. Zulily’s
results were negatively affected by less efficient customer
acquisition spend on certain digital marketing channels. Operating
loss increased primarily due to a $1.0 billion non-cash, impairment
charge related to its tradename and goodwill. Adjusted OIBDA
declined primarily due to the sales decline combined with sales
deleverage across supply chain and fixed cost expenses, partially
offset by reduced marketing spend.
Cornerstone
Cornerstone results include the Improvements catalog business
until it was shut down effective December 2018. Excluding
Improvements, revenue increased 5% due to strength in the home
segment, including Grandin Road, Frontgate and Ballard Designs, and
product margins grew. Operating income and Adjusted OIBDA also
benefited from costs related to the closure of Improvements
incurred in the prior year.
THIRD
QUARTER 2019 SUPPLEMENTAL METRICS
(amounts in millions unless otherwise
noted)
3Q18
3Q19
% Change
% Change Constant Currency(a)
QxH
Cost of Sales % of Revenue
63.9
%
65.0
%
110
bps
Operating Income Margin (%)
11.8
%
13.1
%
130
bps
Adjusted OIBDA Margin (%)
19.2
%
18.7
%
(50)
bps
Average Selling Price
$
52.91
$
53.35
1
%
Units Sold
(4
)%
Return Rate(b)
17.2
%
17.3
%
10
bps
eCommerce Revenue(c)
$
1,052
$
1,027
(2
)%
eCommerce % of Total Revenue
54.5
%
55.4
%
90
bps
Mobile % of eCommerce Revenue(d)
64.8
%
68.4
%
360
bps
LTM Total Customers(e)
10.8
10.7
(1
)%
QVC – International
Cost of Sales % of Revenue
63.1
%
62.9
%
(20)
bps
Operating Income Margin (%)
12.0
%
13.4
%
140
bps
Adjusted OIBDA Margin (%)
14.5
%
16.3
%
180
bps
Average Selling Price
7
%
8
%
Units Sold
(3
)%
eCommerce Revenue(c)
$
244
$
266
9
%
11
%
eCommerce % of Total Revenue
38.1
%
40.9
%
280
bps
Mobile % of eCommerce Revenue(d)
71.6
%
75.9
%
430
bps
LTM Total Customers(e)
4.8
4.6
(4
)%
Zulily
Cost of Sales % of Revenue
73.8
%
74.4
%
60
bps
Operating Income Margin (%)
(8.8
)%
(290.3
)%
NA
Adjusted OIBDA Margin (%)
4.2
%
2.2
%
(200)
bps
Mobile % of Total Orders
72.4
%
75.2
%
280
bps
LTM Total Customers(e)
6.6
5.9
(11
)%
Cornerstone
Operating Income Margin (%)
(8.3
)%
(2.2
)%
610
bps
Adjusted OIBDA Margin (%)
(3.0
)%
1.8
%
480
bps
eCommerce Revenue(c)
$
166
$
161
(3
)%
eCommerce % of Total Revenue
72.2
%
71.2
%
(100)
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 ongoing annual effective tax
rate will be in the range of 16% - 19% 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 tax items and is subject to adjustment. Qurate Retail’s
book tax rate in 2019 is impacted by the tax loss generated by the
sale of Qurate Retail’s investment in FTD in the second quarter (as
described in the second quarter 2019 earnings press release), as
well as the goodwill impairment recognized at Zulily in the third
quarter, which is not deductible for tax purposes. The impairment
has no impact on Qurate Retail’s cash taxes.
Share Repurchases
From August 1, 2019 through October 31, 2019, Qurate Retail
repurchased approximately 2.2 million shares of Series A common
stock (Nasdaq: QRTEA) at an average cost per share of $13.33 for
total cash consideration of $29 million. Since the creation of our
existing common stock (including its predecessors, the QVC Group
and the Liberty Interactive Group) in May 2006, Qurate Retail has
repurchased shares for aggregate cash consideration of $9.0
billion, representing approximately 60% of the shares outstanding
in May 2006. All repurchases up to August 9, 2012, the date on
which the QVC Group stock was recapitalized to create the Liberty
Ventures common stock, were comprised of shares of the combined
stocks. The remaining repurchase authorization for Qurate Retail is
approximately $497 million as of October 31, 2019.
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 11, 2019.
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)
6/30/2019
9/30/2019
Cash and cash equivalents
(GAAP)
$
519
$
605
Indemnification Asset(a)
$
133
$
137
Debt:
QVC senior notes(b)
$
3,375
$
3,375
QVC bank credit facility
1,733
1,777
Total Qurate Retail Group Debt
$
5,108
$
5,152
Senior notes(b)
791
791
Senior exchangeable debentures(c)
1,505
1,499
Corporate Level Debentures
2,296
2,290
Total Qurate Retail, Inc. Debt
$
7,404
$
7,442
Unamortized discount, fair market value
adjustment and deferred loan costs
54
98
Total Qurate Retail, Inc. Debt
(GAAP)
$
7,458
$
7,540
QVC, Inc. leverage(d)
2.3x
2.3x
_____________________________
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)
As defined in QVC, Inc.’s credit
agreement. Includes QxH, QVC International and Zulily. QVC, Inc.
leverage as of June 30, 2019 has been restated in the above
table.
Cash at Qurate Retail increased $86 million in the third quarter
as cash from operations more than offset capital expenditures and
share repurchases. Total debt at Qurate Retail increased by $38
million in the third quarter primarily due to additional borrowing
under QVC’s bank credit facility.
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, 2019, a holder of the Charter
exchangeable debentures does not have the ability to exchange, and
accordingly, the indemnification asset has been classified as a
long-term asset. There is $332 million principal amount of the
Charter exchangeable debentures outstanding as of September 30,
2019.
Important Notice: Qurate Retail, Inc. (Nasdaq: QRTEA,
QRTEB) 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
11, 2019. The call can be accessed by dialing (800) 458-4121 or
(323) 794-2093, passcode 7830796, 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
prospects and performance, Qurate Retail’s estimated ongoing annual
tax rate, market conditions, the indemnification by GCI Liberty,
the continuation of our stock repurchase program 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 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, as well as its JV in China. 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, 2018, December
31, 2018, March 31, 2019, June 30, 2019 and September 30, 2019,
respectively.
CONSOLIDATED
OPERATING INCOME AND ADJUSTED OIBDA RECONCILIATION
(amounts in millions)
3Q18
4Q18
1Q19
2Q19
3Q19
Qurate Retail, Inc. Operating
Income
$
237
$
435
$
288
$
336
$
(727)
Depreciation and amortization
167
148
153
158
146
Stock compensation expense
21
21
19
18
17
Impairment of intangible assets
—
33
—
—
1,020
Operating company level transaction
related costs
43
15
—
1
—
Qurate Retail, Inc. Adjusted
OIBDA
$
468
$
652
$
460
$
513
$
456
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, 2018, December 31, 2018, March 31,
2019, June 30, 2019 and September 30, 2019, respectively. As there
are no material reconciling items between Adjusted OIBDA and
operating income for the QVC China joint venture for the referenced
periods, no reconciliation has been provided.
SUBSIDIARY ADJUSTED
OIBDA RECONCILIATION
(amounts in millions)
3Q18
4Q18
1Q19
2Q19
3Q19
QVC
Operating income
$
305
$
461
$
326
$
365
$
330
Depreciation and amortization
107
106
118
124
112
Stock compensation
12
11
9
11
10
Impairment of intangible assets
—
30
—
—
—
Transaction related costs
40
10
—
1
—
Adjusted OIBDA
$
464
$
618
$
453
$
501
$
452
QxH Adjusted OIBDA
$
371
$
489
$
352
$
395
$
346
QVC International Adjusted
OIBDA
93
129
101
106
106
Zulily
Operating loss
$
(38)
$
(2)
$
(13)
$
(23)
$
(1,042)
Depreciation and amortization
51
32
26
26
26
Stock compensation
5
4
4
4
4
Impairment of intangible assets
—
—
—
—
1,020
Adjusted OIBDA
$
18
$
34
$
17
$
7
$
8
Cornerstone
Operating income (loss)
$
(19)
$
(13)
$
(7)
$
6
$
(5)
Depreciation and amortization
8
11
9
8
8
Stock compensation
1
—
1
—
1
Impairment of intangible assets
—
3
—
—
—
Transaction related costs
3
5
—
—
—
Adjusted OIBDA
$
(7)
$
6
$
3
$
14
$
4
SCHEDULE 3
The following table provides a reconciliation of Qurate Retail’s
adjusted net income to its net income and adjusted earnings per
share to diluted earnings per share, in each case, calculated in
accordance with GAAP for the three months ended September 30, 2018,
December 31, 2018, March 31, 2019, June 30, 2019 and September 30,
2019, respectively.
ADJUSTED NET INCOME
AND ADJUSTED EPS RECONCILIATION
(amounts in millions)
3Q18
4Q18
1Q19
2Q19
3Q19
Qurate Retail, Inc. Net income
(GAAP)
$
72
$
273
$
55
$
118
$
(770)
Purchase accounting amort., net of
deferred tax benefit (a)
48
32
34
34
32
Operating company level transaction
related costs, net of tax benefit
33
11
—
1
—
Impairment of intangible assets, net of
tax impact
—
25
—
—
881
Non-recurring tax items(b)
—
(76)
—
(34)
—
Mark-to-market adjustments, net(c)
16
12
62
87
34
Adjusted Net Income
$
169
$
277
$
151
$
206
$
177
Diluted earnings per share
(GAAP)
$
0.16
$
0.61
$
0.13
$
0.28
$
(1.85)
Total adjustments per share, net of
tax
0.21
0.01
0.22
0.20
2.27
Adjusted earnings per share
$
0.37
$
0.62
$
0.35
$
0.48
$
0.42
_____________________________
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)
Includes impact of US tax reform and other
one-time tax items.
c)
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,
2019
2018
amounts in millions
Assets
Current assets:
Cash and cash equivalents
$
605
653
Trade and other receivables, net
1,260
1,835
Inventory, net
1,674
1,474
Other current assets
290
224
Total current assets
3,829
4,186
Investments in equity securities
101
96
Property and equipment, net
1,321
1,322
Intangible assets not subject to
amortization
9,874
10,912
Intangible assets subject to amortization,
net
1,009
1,058
Other assets, at cost, net of accumulated
amortization
845
267
Total assets
$
16,979
17,841
Liabilities and Equity
Current liabilities:
Accounts payable
1,013
1,204
Accrued liabilities
927
1,182
Current portion of debt
1,202
1,410
Other current liabilities
209
155
Total current liabilities
3,351
3,951
Long-term debt
6,338
5,963
Deferred income tax liabilities
1,757
1,925
Other liabilities
764
258
Total liabilities
12,210
12,097
Equity
4,643
5,624
Non-controlling interests in equity of
subsidiaries
126
120
Total liabilities and equity
$
16,979
17,841
QURATE RETAIL, INC. STATEMENT
OF OPERATIONS INFORMATION (unaudited)
Three months ended
September 30,
2019
2018
Revenue:
Total revenue, net
$
3,089
3,231
Operating costs and expenses:
Cost of retail sales
2,026
2,109
Operating expense
200
241
Selling, general and administrative,
including stock-based compensation and transaction related
costs
424
477
Depreciation and amortization
146
167
Impairment of intangible assets
1,020
—
3,816
2,994
Operating income (loss)
(727)
237
Other income (expense):
Interest expense
(93)
(94)
Share of earnings (losses) of affiliates,
net
(36)
(29)
Realized and unrealized gains (losses) on
financial instruments, net
(45)
(27)
Other, net
(4)
(2)
(178)
(152)
Earnings (loss) from continuing operations
before income taxes
(905)
85
Income tax benefit (expense)
150
(3)
Net earnings (loss)
(755)
82
Less net earnings (loss) attributable to
noncontrolling interests
15
10
Net earnings (loss) attributable to Qurate
Retail, Inc. shareholders
$
(770)
72
QURATE RETAIL, INC. STATEMENT
OF CASH FLOWS INFORMATION (unaudited)
Nine months ended
September 30,
2019
2018
amounts in millions
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)
$
(559)
677
Adjustments to reconcile net earnings to
net cash provided by operating activities:
(Earnings) loss from discontinued
operations
—
(141)
Depreciation and amortization
457
489
Impairment of intangible assets
1,020
—
Stock-based compensation
54
67
Share of (earnings) losses of affiliates,
net
104
89
Realized and unrealized gains (losses) on
financial instruments, net
239
(92)
Deferred income tax expense (benefit)
(165)
(84)
Other, net
11
29
Changes in operating assets and
liabilities
Current and other assets
419
163
Payables and other liabilities
(670)
(201)
Net cash provided (used) by operating
activities
910
996
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash proceeds from dispositions of
investments
—
281
Investments in and loans to cost and
equity investees
(109)
(73)
Capital expenditures
(249)
(172)
Payments for television distribution
rights
(128)
(120)
Net cash provided (used) by investing
activities
(486)
(84)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of debt
2,215
3,142
Repayments of debt
(2,179)
(3,415)
GCI Liberty Split-Off
—
(475)
Repurchases of Qurate Retail common
stock
(392)
(623)
Indemnification payment from GCI Liberty,
Inc.
—
133
Other financing activities, net
(112)
(45)
Net cash provided (used) by financing
activities
(468)
(1,283)
Effect of foreign currency rates on cash,
cash equivalents and restricted cash
(3)
(2)
Net increase (decrease) in cash, cash
equivalents and restricted cash
(47)
(373)
Cash, cash equivalents and restricted cash
at beginning of period
660
912
Cash, cash equivalents and restricted cash
at end period
$
613
539
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191111005148/en/
Courtnee Chun 720-875-5420
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