Basis of Presentation |
6 Months Ended |
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Jun. 30, 2024 | |
| Basis of Presentation | |
| Basis of Presentation |
(1)Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of ߲ݴý. and its controlled subsidiaries (collectively, "߲ݴý," the "Company," “Consolidated ߲ݴý,” “us,” “we,” or “our” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. ߲ݴý is made up of wholly-owned subsidiaries QVC, Inc. (“QVC”), which includes HSN, Inc. (“HSN”), Cornerstone Brands, Inc. (“CBI”), and other cost method investments. ߲ݴý 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 and CBI, 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 December31, 2023, 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 Form10-Q and Article10 of RegulationS-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 ߲ݴý's Annual Report on Form10-K for the year ended December31, 2023 (the “2023 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. ߲ݴý 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. ߲ݴý has entered into certain agreements with Liberty Media Corporation ("LMC"), 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 ߲ݴý may have obligations to each other for certain tax related matters. Neither ߲ݴý 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”), ߲ݴý and GCI Liberty, Inc. (“GCI Liberty”) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty agreed to indemnify ߲ݴý 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-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 has assumed the tax sharing agreement.
In December 2019, the Company entered into an amended services agreement. Under the amended services agreement, components of LMC’s Chief Executive Officer’s compensation are either paid directly to him or reimbursed to LMC, in each case, based on allocations set forth in the amended services agreement, currently set at10% for the Company but subject to adjustment on an annual basis and upon the occurrence of certain events.
The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between ߲ݴý and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides ߲ݴý with certain general and administrative services including legal, tax, accounting, treasury, information technology, cybersecurity and investor relations support. ߲ݴý reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for ߲ݴý's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to ߲ݴý. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with ߲ݴý. Under these various agreements, approximately $3 million and $2 million was reimbursable to LMC for the three months ended June30, 2024 and 2023, respectively, and $6 million and $4 million for the six months ended June30, 2024 and 2023, respectively. ߲ݴý had a tax sharing payable to Liberty Broadband in the amount of approximately $20 million and $16 million as of June30, 2024 and December 31, 2023, respectively, included in other liabilities in the condensed consolidated balance sheets.
Zulily, LLC (“Zulily”) was a wholly owned subsidiary of ߲ݴý until its divestiture on May 24, 2023. ߲ݴý recognized a loss on the divestiture of $64million in the second quarter of 2023. Zulily is included in Corporate and other through May 23, 2023 and is not presented as a discontinued operation as the disposition did not represent a strategic shift that had a major effect on ߲ݴý’s operations and financial results.
Included in revenue in the accompanying condensed consolidated statements of operations is $109million and $301 million for the three and six months ended June 30, 2023, respectively, related to Zulily. Included in net earnings (loss) in the accompanying condensed consolidated statement of operations are losses of $9million and $44 million for the three and six months ended June 30, 2023, respectively, related to Zulily.
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