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Quarterly report pursuant to Section 13 or 15(d)

Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments

v2.4.0.8
Information º¬Ð߲ݴ«Ã½ Liberty's Operating Segments
 9 Months Ended
Sep. 30, 2013
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 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 all 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 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 nine months ended September 30, 2013, Liberty has identified the following consolidated subsidiaries 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.
•
TripAdvisor, Inc. - a consolidated subsidiary that is an online travel research company that empowers users to plan and maximize their travel experience.
Additionally, for presentation purposes, Liberty is providing financial information of the E-commerce businesses on an aggregated basis. The consolidated E-commerce 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), celebration offerings from invitations to costumes (Celebrate Interactive Holdings LLC) and a drop-ship solutions company (CommerceHub).
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 in the Annual Report on Form 10-K for the year ended DecemberÌý31, 2012.
Performance Measures
Ìý
Nine months ended September 30,
Ìý
2013
Ìý
2012
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
amounts in millions
Interactive Group
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
5,882

Ìý
1,246

Ìý
5,824

Ìý
1,225

E-commerce
1,197

Ìý
60

Ìý
1,051

Ìý
61

Corporate and other
—

Ìý
(18
)
Ìý
—

Ìý
(16
)
Total Interactive Group
7,079

Ìý
1,288

Ìý
6,875

Ìý
1,270

Ventures Group
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
TripAdvisor, Inc.
732

Ìý
326

Ìý
—

Ìý
—

Corporate and other
—

Ìý
(9
)
Ìý
—

Ìý
(4
)
Total Ventures Group
732

Ìý
317

Ìý
—

Ìý
(4
)
Consolidated Liberty
$
7,811

Ìý
1,605

Ìý
6,875

Ìý
1,266


Ìý
Three months ended September 30,
Ìý
2013
Ìý
2012
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
Revenue
Ìý
Adjusted
OIBDA
Ìý
amounts in millions
Interactive Group
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
1,947

Ìý
408

Ìý
1,918

Ìý
397

E-commerce
298

Ìý
(5
)
Ìý
278

Ìý
4

Corporate and other
—

Ìý
(7
)
Ìý
—

Ìý
(5
)
Total Interactive Group
2,245

Ìý
396

Ìý
2,196

Ìý
396

Ventures Group
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
Ìý
TripAdvisor, Inc.
255

Ìý
104

Ìý
—

Ìý
—

Corporate and other
—

Ìý
(3
)
Ìý
—

Ìý
(3
)
Total Ventures Group
255

Ìý
101

Ìý
—

Ìý
(3
)
Consolidated Liberty
$
2,500

Ìý
497

Ìý
2,196

Ìý
393


Other Information
Ìý
SeptemberÌý30, 2013
Ìý
Total
assets
Ìý
Investments
in
affiliates
Ìý
Capital
expenditures
Ìý
amounts in millions
Interactive Group
Ìý
Ìý
Ìý
Ìý
Ìý
QVC
$
12,811

Ìý
52

Ìý
122

E-commerce
1,229

Ìý
—

Ìý
56

Corporate and other
444

Ìý
283

Ìý
—

Total Interactive Group
14,484

Ìý
335

Ìý
178

Ventures Group
Ìý
Ìý
Ìý
Ìý
Ìý
TripAdvisor
7,325

Ìý
—

Ìý
39

Corporate and other
2,716

Ìý
890

Ìý
—

Total Ventures Group
10,041

Ìý
890

Ìý
39

Inter-group eliminations
(155
)
Ìý
—

Ìý
—

Consolidated Liberty
$
24,370

Ìý
1,225

Ìý
217


The following table provides a reconciliation of segment Adjusted OIBDA to earnings (loss) from continuing operations before income taxes:
Ìý
Three months ended
September 30, 2013
Ìý
Nine months ended
September 30,
Ìý
2013
Ìý
2012
Ìý
2013
Ìý
2012
Ìý
amounts in millions
Consolidated segment Adjusted OIBDA
$
497

Ìý
393

Ìý
1,605

Ìý
1,266

ÌýÌýStock-based compensation
(38
)
Ìý
(18
)
Ìý
(124
)
Ìý
(53
)
Impairment of intangible assets
(19
)
Ìý
(39
)
Ìý
(19
)
Ìý
(39
)
ÌýÌýDepreciation and amortization
(235
)
Ìý
(147
)
Ìý
(702
)
Ìý
(437
)
ÌýÌýInterest expense
(87
)
Ìý
(111
)
Ìý
(288
)
Ìý
(324
)
ÌýÌýShare of earnings (loss) of affiliates, net
29

Ìý
43

Ìý
25

Ìý
89

ÌýÌýRealized and unrealized gains (losses) on financial instruments, net
15

Ìý
(160
)
Ìý
(49
)
Ìý
(338
)
ÌýÌýGains (losses) on dispositions, net
—

Ìý
—

Ìý
(2
)
Ìý
288

ÌýÌýOther, net
3

Ìý
(2
)
Ìý
(50
)
Ìý
31

Earnings (loss) before income taxes
$
165

Ìý
(41
)
Ìý
396

Ìý
483