| Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments |
(19)ÌýÌýInformation 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 Adjusted OIBDA 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, certain purchase accounting adjustments, 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 year ended DecemberÌý31, 2016, Liberty has identified the following consolidated subsidiaries as its reportable segments:
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·
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QVC—consolidated subsidiary that markets and sells a wide variety of consumer products in the U.S. and several foreign countries, primarily by means of its televised shopping programs and via the Internet and mobile transactions through its domestic and international websites.
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·
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zulily – consolidated subsidiary that markets and sells unique products in the U.S. and several foreign countries through flash sales events, primarily through its desktop and mobile websites and mobile applications.
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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.ÌýÌýThe 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
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Years ended DecemberÌý31,
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Ìý
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2016
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Ìý
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2015
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Ìý
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2014
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Ìý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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Ìý
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ÌýÌýÌýÌý
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Adjusted
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Adjusted
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Adjusted
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Ìý
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Ìý
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Ìý
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Revenue
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OIBDA
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Revenue
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OIBDA
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Revenue
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ÌýOIBDA
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amountsÌýinÌýmillions
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QVC Group
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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QVC
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Ìý
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$
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8,682
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Ìý
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1,840
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Ìý
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8,743
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Ìý
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1,894
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Ìý
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8,801
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Ìý
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1,910
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Ìý
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zulily
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Ìý
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Ìý
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1,547
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Ìý
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112
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Ìý
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426
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Ìý
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21
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Ìý
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NA
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Ìý
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NA
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Ìý
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Corporate and other (1)
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Ìý
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Ìý
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Ìý—
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Ìý
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(16)
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Ìý
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Ìý—
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Ìý
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(28)
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Ìý
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1,227
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Ìý
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29
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Ìý
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Inter-segment eliminations
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Ìý
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Ìý
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(10)
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Ìý
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Ìý—
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Ìý
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Ìý—
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Ìý
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Ìý—
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Ìý
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Ìý—
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Ìý
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Ìý—
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Ìý
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Total QVC Group
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Ìý
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Ìý
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10,219
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Ìý
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1,936
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Ìý
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9,169
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Ìý
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1,887
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Ìý
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10,028
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Ìý
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1,939
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Ìý
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Ventures Group
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Corporate and other (1)
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Ìý
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Ìý
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428
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Ìý
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3
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Ìý
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820
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Ìý
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59
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Ìý
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471
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Ìý
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26
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Ìý
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Total Ventures Group
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Ìý
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Ìý
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428
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Ìý
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3
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Ìý
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820
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Ìý
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59
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Ìý
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471
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Ìý
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26
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Ìý
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Consolidated Liberty
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Ìý
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$
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10,647
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Ìý
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1,939
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Ìý
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9,989
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Ìý
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1,946
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Ìý
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10,499
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Ìý
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1,965
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Ìý
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Ìý
Ìý
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(1)
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As discussed in note 2, on October 3, 2014, Liberty completed the reattribution from the QVC Group (formerly referred to as the Interactive Group, prior to the reattribution), to the Ventures Group its Digital Commerce businesses. The reattribution of the Digital Commerce businesses is presented on a prospective basis from the date of the reattribution in Liberty’s consolidated financial statements, with October 1, 2014 used as a proxy for the date of the reattribution. Accordingly, Revenue and Adjusted OIBDA attributable to the Digital Commerce businesses are included in the QVC Group for the period through September 30, 2014 and are included in the Ventures Group for the period beginning October 1, 2014.
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Other Information
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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December 31, 2016
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Ìý
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December 31, 2015
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Ìý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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Ìý
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ÌýÌýÌýÌý
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Investments
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ÌýÌýÌýÌý
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Investment
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Investments
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ÌýÌýÌýÌý
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Ìý
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Ìý
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Ìý
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Ìý
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Total
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Ìý
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in
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Ìý
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in Liberty
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Ìý
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Capital
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Ìý
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Total
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Ìý
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in
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Ìý
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Capital
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Ìý
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Ìý
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Ìý
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assets
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Ìý
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affiliates
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Broadband
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Ìý
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expenditures
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Ìý
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assets
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Ìý
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affiliates
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Ìý
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expenditures
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Ìý
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Ìý
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Ìý
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amountsÌýinÌýmillions
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Ìý
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QVC Group
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ÌýÌýÌýÌý
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Ìý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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ÌýÌýÌýÌý
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Ìý
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Ìý
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QVC
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Ìý
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$
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11,545
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Ìý
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40
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Ìý
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Ìý—
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Ìý
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179
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Ìý
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12,058
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Ìý
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43
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Ìý
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215
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Ìý
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zulily
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Ìý
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Ìý
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2,461
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Ìý
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Ìý—
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Ìý
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Ìý—
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Ìý
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27
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Ìý
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2,741
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Ìý
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Ìý—
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Ìý
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3
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Ìý
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Corporate and other
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Ìý
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Ìý
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351
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Ìý
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184
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Ìý
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Ìý—
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Ìý
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Ìý—
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Ìý
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342
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Ìý
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165
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Ìý
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Ìý—
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Ìý
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Total QVC Group
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Ìý
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Ìý
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14,357
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Ìý
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224
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Ìý
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Ìý—
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Ìý
|
206
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Ìý
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15,141
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Ìý
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208
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Ìý
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218
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Ìý
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Ventures Group
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Corporate and other
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Ìý
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Ìý
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5,998
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Ìý
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357
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Ìý
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3,161
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Ìý
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27
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Ìý
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6,039
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Ìý
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506
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Ìý
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40
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Ìý
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Total Ventures Group
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Ìý
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Ìý
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5,998
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Ìý
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357
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Ìý
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3,161
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Ìý
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27
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Ìý
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6,039
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Ìý
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506
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Ìý
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40
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Ìý
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Consolidated Liberty
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Ìý
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$
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20,355
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Ìý
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581
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Ìý
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3,161
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Ìý
|
233
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Ìý
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21,180
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Ìý
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714
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Ìý
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258
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Ìý
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Ìý
The following table provides a reconciliation of segment Adjusted OIBDA to operating income and earnings (loss) from continuing operations before income taxes:
Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
|
Ìý
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|
Ìý
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Ìý
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YearsÌýendedÌýDecemberÌý31,
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Ìý
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Ìý
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ÌýÌýÌýÌý
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2016
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ÌýÌýÌýÌý
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2015
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ÌýÌýÌýÌý
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2014
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Ìý
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Ìý
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Ìý
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amountsÌýinÌýmillions
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Consolidated segment Adjusted OIBDA
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Ìý
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$
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1,939
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Ìý
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1,946
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Ìý
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1,965
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Ìý
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Stock-based compensation
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Ìý
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Ìý
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(97)
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Ìý
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(127)
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Ìý
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(108)
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Ìý
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Depreciation and amortization
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Ìý
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Ìý
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(874)
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Ìý
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(703)
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Ìý
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(669)
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Ìý
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Operating income
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Ìý
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Ìý
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968
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Ìý
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1,116
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Ìý
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1,188
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Ìý
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Interest expense
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Ìý
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Ìý
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(363)
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Ìý
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(360)
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Ìý
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(387)
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Ìý
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Share of earnings (loss) of affiliates, net
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Ìý
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Ìý
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(68)
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Ìý
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(178)
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Ìý
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(19)
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Ìý
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Realized and unrealized gains (losses) on financial instruments, net
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Ìý
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Ìý
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1,175
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Ìý
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114
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Ìý
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(57)
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Ìý
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Gains (losses) on transactions, net
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Ìý
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Ìý
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9
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Ìý
|
110
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Ìý
|
74
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Ìý
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Other, net
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Ìý
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Ìý
|
131
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Ìý
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14
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Ìý
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(24)
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Ìý
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Earnings (loss) from continuing operations before income taxes
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Ìý
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$
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1,852
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Ìý
|
816
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Ìý
|
775
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Ìý
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Ìý
Revenue by Geographic Area
Revenue by geographic area based on the location of customers is as follows:
Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
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Ìý
|
Ìý
|
|
Ìý
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Ìý
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YearsÌýendedÌýDecemberÌý31,
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Ìý
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Ìý
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ÌýÌýÌýÌý
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2016
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ÌýÌýÌýÌý
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2015
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ÌýÌýÌýÌý
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2014
|
Ìý
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Ìý
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Ìý
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amountsÌýinÌýmillions
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Ìý
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United States
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Ìý
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$
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7,979
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Ìý
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7,412
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Ìý
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7,617
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Ìý
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Japan
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Ìý
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Ìý
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900
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Ìý
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811
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Ìý
|
912
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Ìý
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Germany
|
Ìý
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Ìý
|
866
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Ìý
|
850
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Ìý
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1,003
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Ìý
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Other foreign countries
|
Ìý
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Ìý
|
902
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Ìý
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916
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Ìý
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967
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Ìý
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Ìý
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Ìý
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$
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10,647
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Ìý
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9,989
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Ìý
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10,499
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Ìý
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Ìý
Long-lived Assets by Geographic Area
Ìý
|
Ìý
|
Ìý
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Ìý
|
Ìý
|
Ìý
|
Ìý
|
Ìý
|
|
Ìý
|
Ìý
|
DecemberÌý31,
|
Ìý
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|
Ìý
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ÌýÌýÌýÌý
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2016
|
ÌýÌýÌýÌý
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2015
|
Ìý
|
|
Ìý
|
Ìý
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amountsÌýinÌýmillions
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Ìý
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United States
|
Ìý
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$
|
694
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Ìý
|
637
|
Ìý
|
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Japan
|
Ìý
|
Ìý
|
145
|
Ìý
|
156
|
Ìý
|
|
Germany
|
Ìý
|
Ìý
|
154
|
Ìý
|
173
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Ìý
|
|
Other foreign countries
|
Ìý
|
Ìý
|
138
|
Ìý
|
174
|
Ìý
|
|
Ìý
|
Ìý
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$
|
1,131
|
Ìý
|
1,140
|
Ìý
|
Ìý
|