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Quarterly report pursuant to Section 13 or 15(d)

Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments

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Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments
 3 Months Ended
Mar. 31, 2012
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments Ìý
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments
Liberty, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. Liberty identifies its reportable segments as (A)Ìýthose consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual pre-tax earnings or total assets and (B)Ìýthose equity method affiliates whose share of earnings represent 10% or more of Liberty's annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.
Liberty evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, Liberty reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.
Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation). Liberty believes this measure is an important indicator of the operational strength and performance of its businesses, including each business's ability to service debt and fund capital expenditures. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, separately reported litigation settlements and restructuring and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Liberty generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.
For the three months ended March 31, 2012, Liberty has identified the following consolidated subsidiaries and equity method affiliates as its reportable segments:
•
QVC—consolidated subsidiary that markets and sells a wide variety of consumer products in the United States and several foreign countries, primarily by means of its televised shopping programs and via the Internet through its domestic and international websites and mobile applications.
•
Expedia, Inc.—an equity method affiliate in which we hold a 27% ownership interest (see note 7) that operates an easily accessible global travel marketplace, allowing customers to research, plan and book travel products and services from travel suppliers and allowing these travel suppliers to efficiently reach and provide their products and services to Expedia customers.
Additionally, for presentation purposes Liberty is providing financial information of the E-commerce businesses on an aggregated basis. The consolidated businesses do not contribute significantly to the overall operations of Liberty on an individual basis; however, Liberty believes that on an aggregated basis they provide relevant information for users of these financial statements. While these businesses may not meet the aggregation criteria under relevant accounting literature Liberty believes the information is relevant and helpful for a more complete understanding of the consolidated results.
•
E-commerce—the aggregation of certain consolidated subsidiaries that market and sell a wide variety of consumer products via the Internet. Categories of consumer products include perishable and personal gift offerings (Provide Commerce, Inc.), active lifestyle gear and clothing (Backcountry.com, Inc.), fitness and health goods (Bodybuilding.com, LLC) and celebration offerings from invitations to costumes (Celebrate Interactive Holdings, Inc.).
Liberty'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 that are also consolidated subsidiaries are the same as those described in the Company's summary of significant accounting policies.
Performance Measures
Ìý
Three months ended
Ìý
March 31,
Ìý
2012
Ìý
2011
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
amounts in millions
QVC
$
1,932

Ìý
390

Ìý
1,835

Ìý
363

E-commerce
382

Ìý
34

Ìý
324

Ìý
29

Expedia, Inc.
816

Ìý
103

Ìý
728

Ìý
84

Corporate and other
—

Ìý
(6
)
Ìý
—

Ìý
(14
)
Total
$
3,130

Ìý
521

Ìý
2,887

Ìý
462

Eliminate equity method affiliates
(816
)
Ìý
(103
)
Ìý
(728
)
Ìý
(84
)
ÌýÌýÌýÌýConsolidated
$
2,314

Ìý
418

Ìý
2,159

Ìý
378

Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý

Other Information
Ìý
MarchÌý31, 2012
Ìý
Total
assets
Ìý
Investments
in
affiliates
Ìý
Capital
expenditures
Ìý
amounts in millions
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
13,268

Ìý
—

Ìý
45

E-commerce
1,452

Ìý
11

Ìý
23

Expedia, Inc.
6,818

Ìý
—

Ìý
46

Corporate and other
2,424

Ìý
1,141

Ìý
—

ÌýÌýÌýÌýTotal
23,962

Ìý
1,152

Ìý
114

Eliminate equity method affiliates
(6,818
)
Ìý
—

Ìý
(46
)
ÌýÌýÌýÌýConsolidated
$
17,144

Ìý
1,152

Ìý
68


The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
Ìý
Three months
ended
Ìý
March 31,
Ìý
2012
Ìý
2011
Ìý
amounts in millions
Consolidated segment Adjusted OIBDA
$
418

Ìý
378

ÌýÌýStock-based compensation
(17
)
Ìý
(16
)
ÌýÌýDepreciation and amortization
(143
)
Ìý
(149
)
ÌýÌýInterest expense
(106
)
Ìý
(114
)
ÌýÌýShare of earnings (loss) of affiliates, net
11

Ìý
20

ÌýÌýRealized and unrealized gains (losses) on financial instruments, net
(18
)
Ìý
(59
)
ÌýÌýOther, net
3

Ìý
18

Earnings (loss) from continuing operations before income taxes
$
148

Ìý
78