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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                             to                             

Commission File Number 001-33982

QURATE RETAIL, INC.

(Exact name of Registrant as specified in its charter)


incorporation or organization)


Identification No.)

State of Delaware

(State or other jurisdiction of
incorporation or organization)

84-1288730

(I.R.S. Employer
Identification No.)

12300 Liberty Boulevard
Englewood, Colorado

(Address of principal executive offices)

80112

(Zip Code)

Registrant's telephone number, including area code: (720875-5300

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Series A common stock

QRTEA

The Nasdaq Stock Market LLC

Series B common stock

QRTEB

The Nasdaq Stock Market LLC

8.0% Series A Cumulative Redeemable Preferred Stock

QRTEP

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes    No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer 

Accelerated Filer 

Non-accelerated Filer 

Smaller Reporting Company 

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes     No 

The number of outstanding shares of Qurate Retail, Inc.'s common stock as of April 30, 2022 was:

Series A common stock

373,636,068

Series B common stock

8,373,512

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited)

    

I-3

QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited)

I-5

QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)

I-6

QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)

I-7

QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited)

I-8

QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)

I-9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

I-23

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

I-33

Item 4. Controls and Procedures.

I-35

PART II—OTHER INFORMATION

II-1

Item 1. Legal Proceedings

II-1

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

II-1

Item 6. Exhibits

II-2

SIGNATURES

II-3

I-2

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

    

March 31,

    

December 31,

 

2022

2021

amounts in millions

Assets

Current assets:

Cash and cash equivalents

$

608

 

587

Trade and other receivables, net of allowance for credit losses of $102 million and $107 million, respectively

 

1,307

 

1,679

Inventory, net

 

1,772

 

1,623

Indemnification agreement receivable

239

324

Other current assets

 

243

 

235

Total current assets

 

4,169

 

4,448

Property and equipment, net

 

1,028

 

1,077

Intangible assets not subject to amortization (note 5):

Goodwill

 

6,312

 

6,339

Trademarks

 

3,038

 

3,038

 

9,350

 

9,377

Intangible assets subject to amortization, net (note 5)

 

698

 

745

Other assets, at cost, net of accumulated amortization

 

563

 

602

Total assets

$

15,808

 

16,249

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)

March 31,

December 31,

 

2022

2021

 

amounts in millions,

 

except share amounts

 

Liabilities and Equity

    

    

    

    

Current liabilities:

Accounts payable

$

1,212

 

1,429

Accrued liabilities

 

985

 

1,236

Current portion of debt, $1,151 million and $1,315 million measured at fair value (note 6)

 

1,901

 

1,315

Other current liabilities

 

212

 

244

Total current liabilities

 

4,310

 

4,224

Long-term debt (note 6)

 

5,191

 

5,674

Deferred income tax liabilities

 

1,390

 

1,353

Preferred stock (note 7)

1,265

1,261

Other liabilities

 

645

 

707

Total liabilities

 

12,801

 

13,219

Equity

Stockholders' equity:

Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 373,490,863 shares at March 31, 2022 and 371,132,684 shares at December 31, 2021

 

4

 

4

Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,392,212 shares at March 31, 2022 and 8,163,190 shares at December 31, 2021

 

 

Series C common stock, $.01 par value. Authorized 400,000,000 shares; no shares issued

Additional paid-in capital

 

7

 

Accumulated other comprehensive earnings (loss), net of taxes

 

(104)

 

(79)

Retained earnings

 

2,973

 

2,969

Total stockholders' equity

 

2,880

 

2,894

Noncontrolling interests in equity of subsidiaries

 

127

 

136

Total equity

 

3,007

 

3,030

Commitments and contingencies (note 8)

Total liabilities and equity

$

15,808

 

16,249

See accompanying notes to condensed consolidated financial statements.

I-4

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended

 

March 31,

 

    

2022

    

2021

 

amounts in millions, except per share amounts

 

Total revenue, net

$

2,883

 

3,337

Operating costs and expenses:

Cost of goods sold (exclusive of depreciation shown separately below)

 

2,002

 

2,195

Operating expense

 

196

 

206

Selling, general and administrative, including stock-based compensation (note 2)

 

445

 

435

Restructuring and fire related costs, net

4

Depreciation and amortization

 

130

 

128

 

2,777

 

2,964

Operating income (loss)

 

106

 

373

Other income (expense):

Interest expense

 

(117)

 

(117)

Share of earnings (losses) of affiliates, net

 

(1)

 

(32)

Realized and unrealized gains (losses) on financial instruments, net (note 4)

 

30

 

41

Other, net

 

53

 

13

 

(35)

 

(95)

Earnings (loss) before income taxes

 

71

 

278

Income tax (expense) benefit

 

(58)

 

(54)

Net earnings (loss)

13

224

Less net earnings (loss) attributable to the noncontrolling interests

 

12

 

18

Net earnings (loss) attributable to Qurate Retail, Inc. shareholders

$

1

 

206

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):

$

0.00

 

0.50

Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):

$

0.00

 

0.49

See accompanying notes to condensed consolidated financial statements.

I-5

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)

Three months ended

 

March 31,

 

    

2022

    

2021

 

amounts in millions

 

Net earnings (loss)

$

13

 

224

Other comprehensive earnings (loss), net of taxes:

Foreign currency translation adjustments

 

(60)

 

(73)

Comprehensive earnings (loss) attributable to debt credit risk adjustments

29

(56)

Other comprehensive earnings (loss)

 

(31)

 

(129)

Comprehensive earnings (loss)

 

(18)

 

95

Less comprehensive earnings (loss) attributable to the noncontrolling interests

 

6

 

9

Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders

$

(24)

 

86

See accompanying notes to condensed consolidated financial statements.

I-6

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

Three months ended

 

March 31,

 

    

2022

    

2021

 

amounts in millions

 

Cash flows from operating activities:

Net earnings (loss)

$

13

 

224

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization

 

130

 

128

Stock-based compensation

 

15

 

16

Share of (earnings) losses of affiliates, net

 

1

 

32

Realized and unrealized (gains) losses on financial instruments, net

 

(30)

 

(41)

Deferred income tax expense (benefit)

 

29

 

2

Other, net

 

(25)

 

6

Changes in operating assets and liabilities

Decrease (increase) in accounts receivable

 

365

 

382

Decrease (increase) in inventory

(155)

(81)

Decrease (increase) in prepaid expenses and other assets

8

32

(Decrease) increase in trade accounts payable

(211)

(165)

(Decrease) increase in accrued and other liabilities

(319)

(382)

Net cash provided (used) by operating activities

 

(179)

 

153

Cash flows from investing activities:

Investments in and loans to cost and equity investees

 

(7)

 

(118)

Capital expenditures

 

(43)

 

(47)

Expenditures for television distribution rights

(2)

(56)

Cash proceeds from dispositions of investments

12

2

Proceeds from sale of fixed assets

40

Other investing activities, net

24

(1)

Net cash provided (used) by investing activities

 

(16)

 

(180)

Cash flows from financing activities:

Borrowings of debt

 

460

 

265

Repayments of debt

 

(195)

 

(194)

Repurchases of Qurate Retail common stock

 

 

(41)

Withholding taxes on net settlements of stock-based compensation

 

(7)

 

(21)

Dividends paid to noncontrolling interest

(14)

(16)

Dividends paid to common shareholders

(10)

(13)

Other financing activities, net

 

(5)

 

(3)

Net cash provided (used) by financing activities

 

229

 

(23)

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

 

(13)

 

(17)

Net increase (decrease) in cash, cash equivalents and restricted cash

 

21

 

(67)

Cash, cash equivalents and restricted cash at beginning of period

 

596

 

814

Cash, cash equivalents and restricted cash at end of period

$

617

 

747

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:

March 31,

December 31,

2022

2021

in millions

Cash and cash equivalents

$

608

587

Restricted cash included in other current assets

9

9

Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows

$

617

596

See accompanying notes to condensed consolidated financial statements.

I-7

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)

Stockholders' Equity

Accumulated

Additional

other

Noncontrolling

 

Preferred

Common stock

paid-in

comprehensive

Retained

interest in equity

Total

 

  

stock

  

Series A

  

Series B

  

capital

  

earnings (loss)

  

earnings

  

of subsidiaries

  

equity

 

amounts in millions

 

Balance at January 1, 2022

$

4

(79)

2,969

136

3,030

Net earnings (loss)

 

1

12

13

Other comprehensive earnings (loss)

 

(25)

(6)

(31)

Stock-based compensation

14

14

Distribution to noncontrolling interest

(15)

(15)

Withholding taxes on net share settlements of stock-based compensation

(7)

(7)

Other

3

3

Balance at March 31, 2022

$

4

7

(104)

2,973

127

3,007

Stockholders' Equity

Accumulated

Additional

other

Noncontrolling

Preferred

Common stock

paid-in

comprehensive

Retained

interest in equity

Total

  

stock

  

Series A

  

Series B

  

capital

  

earnings (loss)

  

earnings

  

of subsidiaries

  

equity

amounts in millions

Balance at January 1, 2021

$

4

72

3,522

135

3,733

Net earnings (loss)

 

206

18

224

Other comprehensive income (loss)

 

(120)

(9)

(129)

Stock-based compensation

15

15

Series A Qurate Retail stock repurchases

(41)

(41)

Distribution to noncontrolling interest

(16)

(16)

Withholding taxes on net share settlements of stock-based compensation

(21)

(21)

Other

(2)

1

(1)

Reclassification

49

(49)

Balance at March 31, 2021

$

 

4

 

 

 

(48)

 

3,680

 

128

 

3,764

See accompanying notes to condensed consolidated financial statements.

I-8

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1)   Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Qurate Retail, Inc. 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”), which includes HSN, Inc. (“HSN”), Cornerstone Brands, Inc. (“Cornerstone”), Zulily, LLC (“Zulily”), 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, Cornerstone 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, 2021, 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, 2021 (the “2021 10-K”).

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 measurements, (ii) accounting for income taxes, and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.    

In December 2019, a new coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China and has subsequently spread across the globe causing a global pandemic, impacting all countries where Qurate Retail operates. As a result of the spread of COVID-19, certain local governmental agencies have imposed travel restrictions, local quarantines or stay at home restrictions to contain the spread, which has caused a significant disruption to most sectors of the economy.

Management is not presently aware of any events or circumstances arising from COVID-19 that would require the Company to update the estimates, judgments or revise the carrying value of our assets or liabilities. Management's estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our 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.  As a result of certain corporate transactions, LMC and Qurate Retail may have obligations to each other for certain tax related matters. Neither Qurate Retail nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with a split-off transaction that occurred in the first quarter of 2018 (the “GCI Liberty Split-Off”), Qurate Retail and GCI Liberty, Inc. (“GCI Liberty”) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty agreed to indemnify Qurate Retail for taxes and tax-related losses resulting from the GCI Liberty Split-Off to the extent such taxes or tax-related losses (i) result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by GCI Liberty (applicable to actions or failures to act by GCI Liberty and its subsidiaries following the completion of the GCI Liberty Split-Off), or (ii) result from Section 355(e) of the Internal Revenue Code applying to the GCI Liberty Split-Off as a result of the GCI Liberty Split-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-

I-9

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

percent or greater interest (measured by vote or value) in the stock of GCI Liberty (or any successor corporation). Following a merger between Liberty Broadband Corporation (“Liberty Broadband”) and GCI Liberty, Liberty Broadband (for accounting purposes, a related party of the Company) has assumed the tax sharing agreement.

In December 2019, the Company entered into an amendment to the services agreement in connection with LMC’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s Chairman of the Board (the “Chairman” or “Mr. Maffei”). Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., and Liberty Broadband (collectively, the “Service Companies”) or reimbursed to LMC, in each case, based on allocations among LMC and the Service Companies set forth in the amended services agreement, currently set at 13% for the Company. 

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 $3 million and $2 million was reimbursable to LMC for the three months ended March 31, 2022 and 2021, respectively. Qurate Retail had a tax sharing payable to LMC and Liberty Broadband in the amount of approximately $74 million and $96 million as of March 31, 2022 and December 31, 2021, respectively, included in Other liabilities in the condensed consolidated balance sheets. 

(2)   Stock-Based Compensation

The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock (“RSAs”), 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.

Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $15 million and $16 millon of stock-based compensation during the three months ended March 31, 2022 and 2021, respectively.

I-10

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Qurate Retail – RSUs

The following table presents the number and weighted average GDFV of RSUs granted by the Company during the three months ended March 31, 2022:

Three months ended

March 31, 2022

RSUs Granted (000's)

Weighted Average GDFV

Series A Qurate Retail common stock, subsidiary employees (1)

10,486

$

4.91

Series A Qurate Retail common stock, Qurate Retail employees and directors (2)

217

$

4.91

Series A Qurate Retail common stock, Qurate Retail President and CEO (3)

596

$

4.91

Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (4)

327

$

4.95

(1) Grants mainly vest equally over three years.
(2) Grants mainly vest one year from the month of grant, subject to the satisfaction of certain performance objectives.
(3) Grant vests one year from the month of grant, subject to the satisfaction of certain performance objectives. Grant was made in connection with the employment agreement of our President and Chief Executive Officer.
(4) Grant vests one year from the month of grant, subject to the satisfaction of certain performance objectives. Grant was made in connection with our Chairman’s employment agreement.  

For awards that are performance-based, 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 probability of satisfying the performance objectives is assessed at the end of each reporting period.

Pursuant to the terms of the Stock Exchange Agreement, dated as of June 3, 2021, by and between Mr. Maffei and the Company, on March 25, 2022, Mr. Maffei transferred to the Company an aggregate of 229,022 shares of Series A common stock of Qurate Retail (“QRTEA”) received by Mr. Maffei upon vesting of the performance-based restricted stock unit award granted to Mr. Maffei on March 10, 2021 and in exchange, the Company issued to Mr. Maffei an equivalent number of shares of Series B common stock of Qurate Retail (“QRTEB”). Each share of Qurate Retail’s Series B common stock is convertible, at the option of the holder, into one share of Qurate Retail’s Series A common stock.

Qurate Retail—Outstanding Awards

The following tables present the number and weighted average exercise price ("WAEP") of the options 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 options.

    

    

    

Weighted

    

Aggregate

 

average

intrinsic

Series A

remaining

value

(000's)

WAEP

life

(millions)

Options outstanding at January 1, 2022

 

42,110

$

9.23

Granted

 

$

Exercised

 

(56)

$

2.80

Forfeited/Cancelled

 

(2,936)

$

11.16

Options outstanding at March 31, 2022

 

39,118

$

9.10

 

3.3

years

$

18

Options exercisable at March 31, 2022

 

25,183

$

11.19

 

2.3

years

$

6

I-11

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

    

    

    

Weighted

    

Aggregate

 

average

intrinsic

Series B

remaining

value

(000's)

WAEP

life

(millions)

Options outstanding at January 1, 2022

 

2,221

$

12.25

Granted

 

$

Exercised

 

$

Forfeited/Cancelled

$

Options outstanding at March 31, 2022

 

2,221

$

12.25

 

1.5

years

$

Options exercisable at March 31, 2022

 

2,221

$

12.25

 

1.5

years

$

The following table presents the number and weighted average GDFV of RSUs granted to certain officers, employees and directors of the Company.

Weighted

Weighted

Series A

Average

Series B

Average

(000's)

GDFV

(000's)

GDFV

RSUs outstanding at January 1, 2022

 

12,905

$

9.38

$

Granted

 

11,299

$

4.91

327

$

4.95

Vested

 

(3,593)

$

9.86

$

Forfeited/Cancelled

 

(1,154)

$

8.82

$

RSUs outstanding at March 31, 2022

 

19,457

$

6.73

327

$

4.95

 

As of March 31, 2022, Qurate Retail also had 1.1 million QRTEB RSAs and 116 thousand Qurate Retail 8.0% Series A Cumulative Redeemable Preferred Stock RSAs and RSUs outstanding. The QRTEB unvested RSAs had a weighted average GDFV of $13.65 per share, and 95 thousand of the Qurate Retail 8.0% Series A Cumulative Redeemable Preferred Stock unvested RSUs had an incremental cost of $48.17 per share.

As of March 31, 2022, the total unrecognized compensation cost related to unvested Awards was approximately $152 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.8 years.

As of March 31, 2022, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately 39.1 million shares of QRTEA and 2.2 million shares of QRTEB common stock.

(3)   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.

I-12

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Excluded from diluted EPS for the three months ended March 31, 2022 and 2021 are 26 million and 25 million potential common shares, respectively, because their inclusion would have been antidilutive.

Qurate Retail Common Stock

    

Three months ended

March 31,

2022

2021

number of shares in millions

Basic WASO

 

379

411

Potentially dilutive shares

 

5

11

Diluted WASO

 

384

422

(4)   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

 

March 31, 2022

December 31, 2021

 

    

    

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

$

213

 

213

 

 

149

 

149

 

Indemnification asset

$

239

239

324

324

Debt

$

1,151

 

 

1,151

 

1,315

 

 

1,315

The majority of the Company's Level 2 financial assets and liabilities are primarily debt instruments and derivative 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.

The indemnification asset relates to Liberty Broadband’s agreement to indemnify Liberty Interactive LLC (“LI LLC”) and pertains to the ability of holders of LI LLC’s 1.75% exchangeable debentures due 2046 (the “1.75% Exchangeable Debentures”) to exercise their 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 March 31, 2022 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 March 31, 2022, a holder of the 1.75% Exchangeable Debentures has the ability to exchange and, accordingly, such indemnification asset is included as a current asset in our condensed consolidated balance sheet as of that date.

I-13

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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

 

March 31,

 

    

2022

    

2021

 

amounts in millions

 

Equity securities

(10)

7

Exchangeable senior debentures

 

124

 

46

Indemnification asset

(85)

(52)

Other financial instruments

1

40

$

30

 

41

The Company has elected to account for its exchangeable debt using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statement of operations are primarily due to market factors primarily driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss).  The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk was a gain of $34 million and a loss of $68 million for the three months ended March 31, 2022 and 2021, respectively.  The cumulative change was a gain of $182 million as of March 31, 2022, net of the recognition of previously unrecognized gains and losses.  

(5)   Intangible Assets

Goodwill

Changes in the carrying amount of goodwill are as follows:

Corporate and

    

QxH

QVC Int'l

Zulily

    

Other

    

Total

 

amounts in millions

 

Balance at January 1, 2022

$

5,228

855

244

 

12

 

6,339

Foreign currency translation adjustments

 

(27)

 

 

(27)

Balance at March 31, 2022

$

5,228

828

244

 

12

 

6,312

Intangible Assets Subject to Amortization

Amortization expense for intangible assets with finite useful lives was $82 million for both of the three months ended March 31, 2022 and 2021, respectively. Based on its amortizable intangible assets as of March 31, 2022, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions):

Remainder of 2022

    

$

242

2023

$

208

2024

$

130

2025

$

58

2026

$

52

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

(6)   Long-Term Debt

Debt is summarized as follows:

Outstanding

 

principal at

Carrying value

 

    

March 31, 2022

    

March 31, 2022

    

December 31, 2021

 

amounts in millions

 

Corporate level debentures

8.5% Senior Debentures due 2029

$

287

 

286

 

286

8.25% Senior Debentures due 2030

 

505

 

503

 

503

4% Exchangeable Senior Debentures due 2029

396

294

328

3.75% Exchangeable Senior Debentures due 2030

431

312

347

1.75% Exchangeable Senior Debentures due 2046

332

545

640

Subsidiary level notes and facilities

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 4.75% Senior Secured Notes due 2027

575

575

575

QVC 4.375% Senior Secured Notes due 2028

500

500

500

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

225

QVC 6.25% Senior Secured Notes due 2068

500

500

500

QVC Senior Secured Credit Facility

747

747

481

Deferred loan costs

(43)

(44)

Total consolidated Qurate Retail debt

$

7,148

 

7,092

 

6,989

Less current classification

 

(1,901)

 

(1,315)

Total long-term debt

$

5,191

 

5,674

QVC Senior Secured Notes

As of March 31, 2022, the 4.375% Senior Secured Notes due 2023 are classified within current portion of debt as they mature in less than one year.

QVC Senior Secured Credit Facility

On October 27, 2021, QVC amended and restated its latest credit agreement (as amended and restated, the “Fifth Amended and Restated Credit Agreement”) and refinanced QVC’s existing bank credit facility by entering into a fifth amended and restated agreement with QVC, Zulily, Cornerstone, and QVC Global Corporate Holdings, LLC (“QVC Global”), each a direct or indirect wholly owned subsidiary of Qurate Retail, as borrowers (QVC, Zulily, Cornerstone and QVC Global, collectively, the “Borrowers”), JPMorgan Chase Bank, N.A., as administrative agent, and the other parties named therein.

The Fifth Amended and Restated Credit Agreement is a multi-currency facility providing for a $3.25 billion revolving credit facility (the “New Credit Facility”), with a $450 million sub-limit for letters of credit and an alternative currency revolving sub-limit equal to 50% of the revolving commitments thereunder.   The New Credit Facility may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings under the Fifth Amended and Restated Credit Agreement bear interest at either the alternate base rate (such rate, the “ABR Rate”) or a LIBOR-based rate (or the applicable non-U.S. Dollar equivalent rate) (such rate, the “Term Benchmark/RFR Rate”) at the applicable Borrower’s election in each case plus a margin. Borrowings that are ABR Rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between 0.25% and 0.625% depending on the Borrowers’

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

combined ratio of consolidated total debt to consolidated EBITDA (the “consolidated leverage ratio”). Borrowings that are Term Benchmark/RFR Rate loans will bear interest at a per annum rate equal to the applicable rate plus a margin that varies between 1.25% and 1.625% depending on the Borrowers’ 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 will be required other than when borrowings and letter of credit usage exceed availability; provided that, if Zulily, Cornerstone, QVC Global or any other borrower under the New Credit Facility (other than QVC) is removed, at the election of QVC, as a borrower thereunder, all of its loans must be repaid and its letters of credit are terminated or cash collateralized. Any amounts prepaid on the New Credit Facility may be reborrowed.

The loans under the New Credit Facility are scheduled to mature on October 27, 2026. Payment of the loans may be accelerated following certain customary events of default.

The payment and performance of the Borrowers’ obligations under the Fifth Amended and Restated Credit Agreement are guaranteed by each of QVC’s, QVC Global’s, Zulily’s and Cornerstone’s Material Domestic Subsidiaries (as defined in the Fifth Amended and Restated Credit Agreement), if any, and certain other subsidiaries of any Borrower that such Borrower has chosen to provide guarantees. Further, the borrowings under the Fifth Amended and Restated Credit Agreement are secured, pari passu with QVC’s existing notes, by a pledge of all of QVC’s equity interests. The borrowings under the Fifth Amended and Restated Credit Agreement are also secured by a pledge of all of Zulily’s and Cornerstone’s equity interests.

The Fifth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on the Borrowers and each of their respective restricted subsidiaries (subject to certain exceptions) with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets; paying certain dividends and other restricted payments; dissolving, consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; restricting subsidiary distributions; and limiting the Borrowers’ consolidated leverage ratio.

Borrowings under the Fifth Amended and Restated Credit Agreement may be used to repay outstanding indebtedness, pay certain fees and expenses, finance working capital needs and general purposes of the Borrowers and their respective subsidiaries and make certain restricted payments and loans to the Borrowers’ respective parents and affiliates.

Availability under the Fifth Amended and Restated Credit Agreement at March 31, 2022 was $2,481 million. The interest rate on the Fifth Amended and Restated Credit Agreement was 1.8% at March 31, 2022.

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. See note 4 for information related to unrealized gains (losses) on debt measured at fair value.  As of March 31, 2022 the Company’s exchangeable debentures have been classified as current because the Company does not own shares to exchange the debentures or they are currently exchangeable. 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. Although we do not own shares underlying certain of the exchangeable senior debentures, the Company has entered into certain derivative transactions in order to hedge against upward price fluctuations on certain shares.  Such derivative instruments are recognized in the other current assets line item in the condensed consolidated balance sheets, and are marked to fair value each reporting period. The changes in fair value are recognized in the realized and unrealized gains (losses) on financial instruments, net line item in the condensed statement of operations.  

Debt Covenants

Qurate Retail and its subsidiaries are in compliance with all debt covenants at March 31, 2022.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

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 QVC 6.375% Senior Secured Notes due 2067 (“2067 Notes”) and the QVC 6.25% Senior Secured Notes Due 2068 (“2068 Notes”) are traded on the New York Stock Exchange, and the Company considers them to be actively traded. As such, the 2067 Notes and 2068 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 March 31, 2022 are as follows (amounts in millions):

Senior debentures

$

731

QVC senior secured notes

    

$

4,225

Due to the variable rate nature, Qurate Retail believes that the carrying amount of its other debt, not discussed above, approximated fair value at March 31, 2022.

(7) Preferred Stock

On September 14, 2020, Qurate Retail issued its 8.0% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Preferred Stock”). There were 13,500,000 shares of Preferred Stock authorized and 12,668,027 shares of Preferred Stock issued and outstanding at March 31, 2022. 

Priority. The Preferred Stock ranks senior to the shares of common stock of Qurate Retail, with respect to dividend rights, rights of redemption and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of Qurate Retail’s affairs. Shares of Preferred Stock are not convertible into shares of common stock of Qurate Retail.

Dividends. Holders of the Preferred Stock are entitled to receive quarterly cash dividends at a rate of 8.0% per annum of the liquidation price (as described below) on a cumulative basis, during the term. 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 (or, if such date is not a business day, the next business day after such date). If Qurate Retail fails to pay dividends or the applicable redemption price with respect to any redemption within 30 days after the applicable dividend payment or redemption date, the dividend rate will increase as provided by the Certificate of Designations for the Preferred Stock (the “Certificate of Designations”). Accrued dividends that are not paid within 30 days after the applicable dividend payment date will be added to the liquidation price until paid together with all dividends accrued thereon.

The ability of Qurate Retail to declare or pay any dividend on, or purchase, redeem, or otherwise acquire, any of its common stock or any other stock ranking on parity with the Preferred Stock will be subject to restrictions if Qurate Retail does not pay all dividends and all redemption payments on the Preferred Stock, subject to certain exceptions as set forth in the Certificate of Designations.

Distributions upon Liquidation, Dissolution or Winding Up. Upon Qurate Retail’s liquidation, winding-up or dissolution, each holder of shares of the Preferred Stock will be entitled to receive, before any distribution is made to the holders of Qurate Retail common stock, an amount equal to the liquidation price plus all unpaid dividends (whether or not declared) accrued from the immediately preceding dividend payment date, subject to the prior payment of liabilities owed to Qurate Retail’s creditors and the preferential amounts to which any stock senior to the Preferred Stock is entitled. The Preferred Stock has a liquidation price equal to the sum of (i) $100, plus (ii) all accrued and unpaid dividends (whether or not declared) that have been added to the liquidation price.

Mandatory and Optional Redemption. The Preferred Stock is subject to mandatory redemption on March 15, 2031 at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

payment date. On or after the fifth anniversary of September 14, 2020 (the “Original Issue Date”), Qurate Retail may redeem all or a portion of the outstanding shares of Preferred Stock, at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend payment date plus, if the redemption is (x) on or after the fifth anniversary of the Original Issue Date but prior to its sixth anniversary, 4.00% of the liquidation price, (y) on or after the sixth anniversary of the Original Issue Date but prior to its seventh anniversary, 2.00% of the liquidation price and (z) on or after the seventh anniversary of the Original Issue Date, zero. Both mandatory and optional redemptions must be paid in cash.

Voting Power. Holders of the Preferred Stock will not have any voting rights or powers, except as specified in the Certificate of Designations or as required by Delaware law.

Preferred Stock Directors. So long as the aggregate liquidation price of the outstanding shares of Preferred Stock exceeds 25% of the aggregate liquidation price of the shares of Preferred Stock issued on the Original Issue Date, holders of Preferred Stock will have certain director election rights as described in the Certificate of Designations whenever dividends on shares of Preferred Stock have not been declared and paid for two consecutive dividend periods and whenever Qurate Retail fails to pay the applicable redemption price in full with respect to any redemption of the Preferred Stock or fails to make a payment with respect to the Preferred Stock in connection with a liquidation or Extraordinary Transactions (as defined in the Certificate of Designations).

Recognition. As the Preferred Stock is subject to unconditional mandatory redemption in cash and was issued in the form of a share, the Company concluded the Preferred Stock was a mandatorily redeemable financial instrument and should be classified as a liability in the condensed consolidated balance sheets.  The Preferred Stock was initially recorded at its fair value, which was determined to be the liquidation preference of $100 per share.  Given the liability classification of the Preferred Stock, all dividends accrued will be classified as interest expense in the condensed consolidated statements of operations.

(8)   Commitments and Contingencies

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.

Fire at Rocky Mount Fulfillment Center

On December 18, 2021, QVC experienced a fire at its Rocky Mount, Inc. fulfillment center in North Carolina. Rocky Mount was QVC’s second-largest fulfillment center for the operating segment comprised of QVC U.S. and HSN (“QxH”) and QVC’s primary returns center for hard goods.

QVC maintains property, general liability and business interruption insurance coverage. Based on provisions of QVC's insurance policies, the Company recorded insurance recoveries for certain fire related costs for which recovery was deemed probable. During the year ended December 31, 2021, QVC recorded $229 million of fire related costs for which recovery was deemed probable and received $100 million of insurance proceeds. During the three months ended March 31, 2022, QVC incurred an additional $2 million in other fire related costs, net that will not be reimbursed by QVC’s insurance policies and $14 million of other fire related costs for which recovery was deemed probable based on QVC's insurance policies. As a result, the insurance receivable balance was $143 million as of March 31, 2022 and was recorded in other receivables, which is included in Trade and other receivables, net in the condensed consolidated balance sheet.

QVC is still in the process of assessing the extent of damage to property and recoverability of inventory and submitting relevant insurance claims. During the three months ended March 31, 2022, QVC recorded an $80 million write-

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

down related to Rocky Mount inventory which was included in cost of goods sold. Due to the circumstances surrounding the write-down of inventory, this write-down has been excluded from Adjusted OIBDA (as defined in note 9). These write-downs are expected to be submitted as part of QVC’s business interruption insurance claim; however, there can be no guarantee they will be recovered. QVC expects to continue to record additional costs and recoveries until the property damage and inventory recoverability assessment is completed and the insurance claim is fully settled.

Zulily Restructuring

In the first quarter of 2022, Zulily began to execute a series of transformation initiatives, beginning with the announcement of the closure of its fulfillment center in Bethlehem, Pennsylvania. These initiatives are consistent with Zulily’s strategy to operate more efficiently as it implements its turnaround plan, and Zulily expects to incur additional expenses related to these transformation initiatives in future periods. Zulily recorded $2 million of restructuring charges during the three months ended March 31, 2022, principally related to its regional office space strategy and expenses associated with the Pennsylvania facility closure.

(

(9)   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 (as defined below) 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.

The Qurate Retail chief operating decision maker primarily evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, number of units shipped, conversion rates and active customers, as appropriate.

For the three months ended March 31, 2022, Qurate Retail has identified the following operating segments as its reportable segments:

QxH -  QVC U.S. and HSN market and sell a wide variety of consumer products in the United States, primarily by means of their televised shopping programs and via the Internet through their websites and mobile applications.
QVC International – QVC International markets and sells a wide variety of consumer products in several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile applications.
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 app, mobile and desktop 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 2021 10-K.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Performance Measures

Disaggregated revenue by segment and product category consisted of the following:

Three months ended

March 31, 2022

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

649

273

61

246

1,229

Apparel

296

117

94

51

558

Beauty

261

145

11

417

Accessories

202

55

49

306

Electronics

147

26

2

175

Jewelry

87

52

9

148

Other revenue

42

2

6

50

Total Revenue

$

1,684

670

232

297

2,883

Three months ended

March 31, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

775

324

123

206

1,428

Apparel

290

126

135

44

595

Beauty

286

164

19

469

Accessories

238

66

75

379

Electronics

201

33

4

238

Jewelry

98

60

14

172

Other revenue

48

1

7

56

Total Revenue

$

1,936

774

377

250

3,337

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses excluding stock-based compensation and, where applicable, separately identified items impacting comparability. Qurate Retail believes this measure 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. This measure of performance excludes depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring, acquisition-related costs and fire related costs, net (including Rocky Mount inventory losses), that are included in the measurement of operating income (loss) pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income (loss), net earnings (loss), cash flows 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.

Adjusted OIBDA is summarized as follows:

Three months ended March 31,

2022

2021

amounts in millions

QxH

$

225

 

349

QVC International

104