|
State of Delaware
(State or other jurisdiction of
incorporation or organization)
|
23-2414041
(I.R.S. Employer Identification Number)
|
|
|
1200 Wilson Drive
West Chester, Pennsylvania
(Address of principal executive offices)
|
19380
(Zip Code)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
6.375% Senior Secured Notes due 2067
|
QVCD
|
New York Stock Exchange
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
x
|
Smaller reporting company
o
|
Emerging growth company
o
|
|
|
Part I
|
Page
|
|
|
|
Item 1.
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
|
|
|
Part II
|
|
Item 6.
|
||
|
|
June 30,
|
|
December 31,
|
|
|
(in millions, except share amounts)
|
2019
|
|
2018
|
|
|
Assets
|
|
|
|||
Current assets:
|
|
|
|||
Cash and cash equivalents
|
$
|
450
|
|
543
|
|
Restricted cash
|
8
|
|
7
|
|
|
Accounts receivable, less allowance for doubtful accounts of $114 at June 30, 2019 and $112 at December 31, 2018
|
1,254
|
|
1,787
|
|
|
Inventories
|
1,306
|
|
1,280
|
|
|
Prepaid expenses and other current assets
|
135
|
|
216
|
|
|
Total current assets
|
3,153
|
|
3,833
|
|
|
Property and equipment, net of accumulated depreciation of $1,348 at June 30, 2019 and $1,281 at December 31, 2018
|
1,193
|
|
1,165
|
|
|
Operating lease right-of-use assets
|
148
|
|
—
|
|
|
Television distribution rights, net
|
199
|
|
140
|
|
|
Goodwill
|
5,976
|
|
5,972
|
|
|
Other intangible assets, net
|
3,661
|
|
3,666
|
|
|
Other noncurrent assets
|
69
|
|
80
|
|
|
Total assets
|
$
|
14,399
|
|
14,856
|
|
Liabilities and equity
|
|
|
|||
Current liabilities:
|
|
|
|||
Current portion of debt and finance lease obligations
|
$
|
20
|
|
421
|
|
Accounts payable-trade
|
702
|
|
1,008
|
|
|
Accrued liabilities
|
857
|
|
1,026
|
|
|
Total current liabilities
|
1,579
|
|
2,455
|
|
|
Long-term portion of debt and finance lease obligations
|
5,072
|
|
4,699
|
|
|
Deferred income taxes
|
690
|
|
700
|
|
|
Other long-term liabilities
|
315
|
|
173
|
|
|
Total liabilities
|
7,656
|
|
8,027
|
|
|
Equity:
|
|
|
|||
QVC, Inc. stockholder's equity:
|
|
|
|||
Common stock, $0.01 par value, 1 authorized share
|
—
|
|
—
|
|
|
Additional paid-in capital
|
9,139
|
|
9,123
|
|
|
Accumulated deficit
|
(2,373
|
)
|
(2,269
|
)
|
|
Accumulated other comprehensive loss
|
(139
|
)
|
(144
|
)
|
|
Total QVC, Inc. stockholder's equity
|
6,627
|
|
6,710
|
|
|
Noncontrolling interest
|
116
|
|
119
|
|
|
Total equity
|
6,743
|
|
6,829
|
|
|
Total liabilities and equity
|
$
|
14,399
|
|
14,856
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||
Net revenue
|
$
|
2,514
|
|
2,556
|
|
$
|
5,015
|
|
$
|
5,158
|
|
Operating costs and expenses:
|
|
|
|
|
|
||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
1,578
|
|
1,589
|
|
3,188
|
|
3,245
|
|
|||
Operating
|
179
|
|
209
|
|
356
|
|
422
|
|
|||
Selling, general and administrative, including transaction related costs and stock-based compensation
|
268
|
|
270
|
|
538
|
|
547
|
|
|||
Depreciation
|
54
|
|
43
|
|
100
|
|
87
|
|
|||
Amortization
|
70
|
|
55
|
|
142
|
|
111
|
|
|||
|
2,149
|
|
2,166
|
|
4,324
|
|
4,412
|
|
|||
Operating income
|
365
|
|
390
|
|
691
|
|
746
|
|
|||
Other (expense) income:
|
|
|
|
|
|||||||
Equity in losses of investee
|
(1
|
)
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
|||
(Losses) gains on financial instruments
|
(1
|
)
|
—
|
|
(3
|
)
|
1
|
|
|||
Interest expense, net
|
(60
|
)
|
(68
|
)
|
(121
|
)
|
(133
|
)
|
|||
Foreign currency gain (loss)
|
—
|
|
2
|
|
(3
|
)
|
1
|
|
|||
|
(62
|
)
|
(68
|
)
|
(128
|
)
|
(132
|
)
|
|||
Income before income taxes
|
303
|
|
322
|
|
563
|
|
614
|
|
|||
Income tax expense
|
(85
|
)
|
(78
|
)
|
(159
|
)
|
(158
|
)
|
|||
Net income
|
218
|
|
244
|
|
404
|
|
456
|
|
|||
Less net income attributable to the noncontrolling interest
|
(12
|
)
|
(11
|
)
|
(22
|
)
|
(22
|
)
|
|||
Net income attributable to QVC, Inc. stockholder
|
$
|
206
|
|
233
|
|
382
|
|
434
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net income
|
$
|
218
|
|
244
|
|
404
|
|
456
|
|
Foreign currency translation adjustments, net of tax
|
14
|
|
(96
|
)
|
8
|
|
(26
|
)
|
|
Total comprehensive income
|
232
|
|
148
|
|
412
|
|
430
|
|
|
Comprehensive income attributable to noncontrolling interest
|
(15
|
)
|
(6
|
)
|
(25
|
)
|
(24
|
)
|
|
Comprehensive income attributable to QVC, Inc. stockholder
|
$
|
217
|
|
142
|
|
387
|
|
406
|
|
|
Six months ended June 30,
|
|
|||
(in millions)
|
2019
|
|
2018
|
|
|
Operating activities:
|
|
|
|||
Net income
|
$
|
404
|
|
456
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
Equity in income of investee
|
1
|
|
1
|
|
|
Deferred income taxes
|
(9
|
)
|
1
|
|
|
Foreign currency loss (gain)
|
3
|
|
(1
|
)
|
|
Depreciation
|
100
|
|
87
|
|
|
Amortization
|
142
|
|
111
|
|
|
Change in fair value of financial instruments and noncash interest
|
7
|
|
3
|
|
|
Stock-based compensation
|
20
|
|
24
|
|
|
Change in other long-term liabilities
|
(6
|
)
|
2
|
|
|
Other non-cash charges, net
|
5
|
|
—
|
|
|
Effects of changes in working capital items
|
32
|
|
(33
|
)
|
|
Net cash provided by operating activities
|
699
|
|
651
|
|
|
Investing activities:
|
|
|
|||
Capital expenditures
|
(153
|
)
|
(74
|
)
|
|
Expenditures for television distribution rights
|
(124
|
)
|
(61
|
)
|
|
Changes in other noncurrent assets
|
(13
|
)
|
—
|
|
|
Other investing activities
|
29
|
|
(8
|
)
|
|
Net cash used in investing activities
|
(261
|
)
|
(143
|
)
|
|
Financing activities:
|
|
|
|||
Principal payments of senior secured credit facility and finance lease obligations
|
(1,425
|
)
|
(1,608
|
)
|
|
Principal borrowings of debt from senior secured credit facility
|
1,795
|
|
1,458
|
|
|
Principal repayment of senior secured notes
|
(400
|
)
|
—
|
|
|
Capital contribution received from Qurate Retail, Inc.
|
—
|
|
140
|
|
|
Dividends paid to Qurate Retail, Inc.
|
(469
|
)
|
(243
|
)
|
|
Dividends paid to noncontrolling interest
|
(28
|
)
|
(23
|
)
|
|
Other financing activities
|
(4
|
)
|
(14
|
)
|
|
Net cash used in financing activities
|
(531
|
)
|
(290
|
)
|
|
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
1
|
|
4
|
|
|
Net (decrease) increase in cash, cash equivalents and restricted cash
|
(92
|
)
|
222
|
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
550
|
|
290
|
|
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
458
|
|
512
|
|
Effects of changes in working capital items:
|
|
|
|||
Decrease in accounts receivable
|
$
|
539
|
|
616
|
|
Increase in inventories
|
(22
|
)
|
(118
|
)
|
|
Decrease (increase) in prepaid expenses and other current assets
|
41
|
|
(76
|
)
|
|
Decrease in accounts payable-trade
|
(282
|
)
|
(203
|
)
|
|
Decrease in accrued liabilities and other
|
(244
|
)
|
(252
|
)
|
|
Effects of changes in working capital items
|
$
|
32
|
|
(33
|
)
|
|
Common stock
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Accumulated other
comprehensive loss |
|
Noncontrolling interest
|
|
Total equity
|
|
||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|||||||||||
Balance, December 31, 2017
|
1
|
|
$
|
—
|
|
8,576
|
|
(2,797
|
)
|
(93
|
)
|
110
|
|
5,796
|
|
Adjustments due to new accounting pronouncements
|
—
|
|
—
|
|
—
|
|
13
|
|
—
|
|
—
|
|
13
|
|
|
Net income
|
—
|
|
—
|
|
—
|
|
434
|
|
—
|
|
22
|
|
456
|
|
|
Foreign currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
(28
|
)
|
2
|
|
(26
|
)
|
|
Capital contribution paid from Qurate Retail, Inc.
|
—
|
|
—
|
|
140
|
|
—
|
|
—
|
|
—
|
|
140
|
|
|
Dividends paid to Qurate Retail, Inc. and noncontrolling interest and other
|
—
|
|
—
|
|
—
|
|
(243
|
)
|
—
|
|
(23
|
)
|
(266
|
)
|
|
Impact of tax liability allocation and indemnification agreement with Qurate Retail, Inc.
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
—
|
|
—
|
|
(3
|
)
|
|
Withholding taxes on net share settlements of stock-based compensation
|
—
|
|
—
|
|
(16
|
)
|
—
|
|
—
|
|
—
|
|
(16
|
)
|
|
Stock-based compensation
|
—
|
|
—
|
|
24
|
|
—
|
|
—
|
|
—
|
|
24
|
|
|
Balance, June 30, 2018
|
1
|
|
$
|
—
|
|
8,724
|
|
(2,596
|
)
|
(121
|
)
|
111
|
|
6,118
|
|
|
Common stock
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Accumulated other
comprehensive loss |
|
Noncontrolling interest
|
|
Total equity
|
|
||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|||||||||||
Balance, March 31, 2018
|
1
|
|
$
|
—
|
|
8,713
|
|
(2,818
|
)
|
(30
|
)
|
105
|
|
5,970
|
|
Net income
|
—
|
|
—
|
|
—
|
|
233
|
|
—
|
|
11
|
|
244
|
|
|
Foreign currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
(91
|
)
|
(5
|
)
|
(96
|
)
|
|
Dividends paid to Qurate Retail, Inc. and noncontrolling interest and other
|
—
|
|
—
|
|
—
|
|
(10
|
)
|
—
|
|
—
|
|
(10
|
)
|
|
Impact of tax liability allocation and indemnification agreement with Qurate Retail, Inc.
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
(1
|
)
|
|
Withholding taxes on net share settlements of stock-based compensation
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
|
Stock-based compensation
|
—
|
|
—
|
|
12
|
|
—
|
|
—
|
|
—
|
|
12
|
|
|
Balance, June 30, 2018
|
1
|
|
$
|
—
|
|
8,724
|
|
(2,596
|
)
|
(121
|
)
|
111
|
|
6,118
|
|
|
Common stock
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Accumulated other
comprehensive loss |
|
Noncontrolling interest
|
|
Total equity
|
|
||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|||||||||||
Balance, December 31, 2018
|
1
|
|
$
|
—
|
|
9,123
|
|
(2,269
|
)
|
(144
|
)
|
119
|
|
6,829
|
|
Net income
|
—
|
|
—
|
|
—
|
|
382
|
|
—
|
|
22
|
|
404
|
|
|
Foreign currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
5
|
|
3
|
|
8
|
|
|
Dividends paid to Qurate Retail, Inc. and noncontrolling interest and other
|
—
|
|
—
|
|
—
|
|
(469
|
)
|
—
|
|
(28
|
)
|
(497
|
)
|
|
Impact of tax liability allocation and indemnification agreement with Qurate Retail, Inc.
|
—
|
|
—
|
|
—
|
|
(17
|
)
|
—
|
|
—
|
|
(17
|
)
|
|
Withholding taxes on net share settlements of stock-based compensation
|
—
|
|
—
|
|
(4
|
)
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
|
Stock-based compensation
|
—
|
|
—
|
|
20
|
|
—
|
|
—
|
|
—
|
|
20
|
|
|
Balance, June 30, 2019
|
1
|
|
$
|
—
|
|
9,139
|
|
(2,373
|
)
|
(139
|
)
|
116
|
|
6,743
|
|
|
Common stock
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Accumulated other
comprehensive loss |
|
Noncontrolling interest
|
|
Total equity
|
|
||||
(in millions, except share data)
|
Shares
|
|
Amount
|
|
|||||||||||
Balance, March 31, 2019
|
1
|
|
$
|
—
|
|
9,129
|
|
(2,447
|
)
|
(150
|
)
|
107
|
|
6,639
|
|
Net income
|
—
|
|
—
|
|
—
|
|
206
|
|
—
|
|
12
|
|
218
|
|
|
Foreign currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
11
|
|
3
|
|
14
|
|
|
Dividends paid to Qurate Retail, Inc. and noncontrolling interest and other
|
—
|
|
—
|
|
—
|
|
(115
|
)
|
—
|
|
(6
|
)
|
(121
|
)
|
|
Impact of tax liability allocation and indemnification agreement with Qurate Retail, Inc.
|
—
|
|
—
|
|
—
|
|
(17
|
)
|
—
|
|
—
|
|
(17
|
)
|
|
Withholding taxes on net share settlements of stock-based compensation
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
|
Stock-based compensation
|
—
|
|
—
|
|
11
|
|
—
|
|
—
|
|
—
|
|
11
|
|
|
Balance, June 30, 2019
|
1
|
|
$
|
—
|
|
9,139
|
|
(2,373
|
)
|
(139
|
)
|
116
|
|
6,743
|
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
|
|
Television distribution rights
|
$
|
769
|
|
723
|
|
Less accumulated amortization
|
(570
|
)
|
(583
|
)
|
|
Television distribution rights, net
|
$
|
199
|
|
140
|
|
Remainder of 2019
|
$
|
65
|
|
2020
|
117
|
|
|
2021
|
14
|
|
|
2022
|
3
|
|
|
2023
|
—
|
|
(in millions)
|
QxH
|
|
QVC-International
|
|
Total
|
|
|
Balance as of December 31, 2018
|
$
|
5,112
|
|
860
|
|
5,972
|
|
Exchange rate fluctuations
|
—
|
|
4
|
|
4
|
|
|
Balance as of June 30, 2019
|
$
|
5,112
|
|
864
|
|
5,976
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|
|||||||||
(in millions)
|
Gross
cost |
|
Accumulated
amortization |
|
Other intangible assets, net
|
|
Gross
cost |
|
Accumulated
amortization |
|
Other intangible assets, net
|
|
|
Purchased and internally developed software
|
$
|
937
|
|
(666
|
)
|
271
|
|
890
|
|
(640
|
)
|
250
|
|
Affiliate and customer relationships
|
2,830
|
|
(2,474
|
)
|
356
|
|
2,831
|
|
(2,450
|
)
|
381
|
|
|
Debt origination fees
|
10
|
|
(1
|
)
|
9
|
|
10
|
|
—
|
|
10
|
|
|
Trademarks (indefinite life)
|
3,025
|
|
—
|
|
3,025
|
|
3,025
|
|
—
|
|
3,025
|
|
|
|
$
|
6,802
|
|
(3,141
|
)
|
3,661
|
|
6,756
|
|
(3,090
|
)
|
3,666
|
|
Remainder of 2019
|
$
|
84
|
|
2020
|
136
|
|
|
2021
|
112
|
|
|
2022
|
81
|
|
|
2023
|
67
|
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
|
|
Accounts payable non-trade
|
$
|
303
|
|
314
|
|
Allowance for sales returns
|
158
|
|
242
|
|
|
Accrued compensation and benefits
|
112
|
|
146
|
|
|
Sales and other taxes
|
64
|
|
101
|
|
|
Accrued interest
|
56
|
|
58
|
|
|
Income taxes
|
47
|
|
37
|
|
|
Deferred revenue
|
25
|
|
24
|
|
|
Accrued cable distribution fees
|
19
|
|
39
|
|
|
Other
|
73
|
|
65
|
|
|
|
$
|
857
|
|
1,026
|
|
(in millions)
|
June 30, 2019
|
|
December 31, 2018
|
|
|
3.125% Senior Secured Notes due 2019, net of original issue discount
|
$
|
—
|
|
399
|
|
5.125% Senior Secured Notes due 2022
|
500
|
|
500
|
|
|
4.375% Senior Secured Notes due 2023, net of original issue discount
|
750
|
|
750
|
|
|
4.85% Senior Secured Notes due 2024, net of original issue discount
|
600
|
|
600
|
|
|
4.45% Senior Secured Notes due 2025, net of original issue discount
|
599
|
|
599
|
|
|
5.45% Senior Secured Notes due 2034, net of original issue discount
|
399
|
|
399
|
|
|
5.95% Senior Secured Notes due 2043, net of original issue discount
|
300
|
|
300
|
|
|
6.375% Senior Secured Notes due 2067
|
225
|
|
225
|
|
|
Senior secured credit facility
|
1,565
|
|
1,185
|
|
|
Finance lease obligations
|
178
|
|
188
|
|
|
Less debt issuance costs, net
|
(24
|
)
|
(25
|
)
|
|
Total debt and finance lease obligations
|
5,092
|
|
5,120
|
|
|
Less current portion
|
(20
|
)
|
(421
|
)
|
|
Long-term portion of debt and finance lease obligations
|
$
|
5,072
|
|
4,699
|
|
|
Three months ended
|
|
Six months ended
|
|
|
(in millions)
|
June 30, 2019
|
|
June 30, 2019
|
|
|
Finance lease cost
|
|
|
|
|
|
Depreciation of leased assets
|
$
|
5
|
|
10
|
|
Interest on lease liabilities
|
2
|
|
4
|
|
|
Total finance lease cost
|
7
|
|
14
|
|
|
Operating lease cost
|
8
|
|
14
|
|
|
Total lease cost
|
$
|
15
|
|
28
|
|
|
June 30, 2019
|
|
Weighted-average remaining lease term (years):
|
|
|
Finance leases
|
9.3
|
|
Operating leases
|
12.1
|
|
Weighted-average discount rate:
|
|
|
Finance leases
|
5.0
|
%
|
Operating leases
|
6.1
|
%
|
|
Six months ended
|
|
|
(in millions)
|
June 30, 2019
|
|
|
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
Operating cash flows from operating lease
|
$
|
12
|
|
Operating cash flows from finance leases
|
4
|
|
|
Financing cash flows from finance leases
|
10
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
|
|
Operating leases
|
72
|
|
|
Finance leases
|
$
|
—
|
|
(in millions)
|
Finance leases
|
|
Operating leases
|
|
Total leases
|
|
|
Remainder of 2019
|
$
|
15
|
|
14
|
|
29
|
|
2020
|
27
|
|
29
|
|
56
|
|
|
2021
|
25
|
|
20
|
|
45
|
|
|
2022
|
23
|
|
18
|
|
41
|
|
|
2023
|
22
|
|
16
|
|
38
|
|
|
Thereafter
|
117
|
|
155
|
|
272
|
|
|
Total lease payments
|
229
|
|
252
|
|
481
|
|
|
Less: imputed interest
|
(51
|
)
|
(84
|
)
|
(135
|
)
|
|
Total lease liabilities
|
$
|
178
|
|
168
|
|
346
|
|
|
Three months ended June 30, 2019
|
|
Six months ended June 30, 2019
|
|
|||||||||
(in millions)
|
QxH
|
|
QVC-International
|
|
Total
|
|
QxH
|
|
QVC-International
|
|
Total
|
|
|
Home
|
$
|
655
|
|
231
|
|
886
|
|
1,334
|
|
478
|
|
1,812
|
|
Apparel
|
344
|
|
108
|
|
452
|
|
670
|
|
220
|
|
890
|
|
|
Beauty
|
317
|
|
158
|
|
475
|
|
609
|
|
301
|
|
910
|
|
|
Accessories
|
247
|
|
65
|
|
312
|
|
467
|
|
127
|
|
594
|
|
|
Electronics
|
173
|
|
22
|
|
195
|
|
354
|
|
47
|
|
401
|
|
|
Jewelry
|
93
|
|
50
|
|
143
|
|
205
|
|
102
|
|
307
|
|
|
Other revenue
|
45
|
|
6
|
|
51
|
|
92
|
|
9
|
|
101
|
|
|
Total net revenue
|
$
|
1,874
|
|
640
|
|
2,514
|
|
3,731
|
|
1,284
|
|
5,015
|
|
|
Three months ended June 30, 2018
|
|
Six months ended June 30, 2018
|
|
|||||||||
(in millions)
|
QxH
|
|
QVC-International
|
|
Total
|
|
QxH
|
|
QVC-International
|
|
Total
|
|
|
Home
|
$
|
651
|
|
235
|
|
886
|
|
1,377
|
|
495
|
|
1,872
|
|
Apparel
|
378
|
|
116
|
|
494
|
|
703
|
|
235
|
|
938
|
|
|
Beauty
|
316
|
|
158
|
|
474
|
|
622
|
|
302
|
|
924
|
|
|
Accessories
|
230
|
|
72
|
|
302
|
|
448
|
|
139
|
|
587
|
|
|
Electronics
|
164
|
|
22
|
|
186
|
|
338
|
|
48
|
|
386
|
|
|
Jewelry
|
113
|
|
48
|
|
161
|
|
245
|
|
103
|
|
348
|
|
|
Other revenue
|
48
|
|
5
|
|
53
|
|
93
|
|
10
|
|
103
|
|
|
Total net revenue
|
$
|
1,900
|
|
656
|
|
2,556
|
|
3,826
|
|
1,332
|
|
5,158
|
|
|
|
Fair value measurements at June 30, 2019 using
|
|
||||||
(in millions)
|
Total
|
|
Quoted prices
in active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
|
|
Current assets:
|
|
|
|
|
|||||
Cash equivalents
|
$
|
222
|
|
222
|
|
—
|
|
—
|
|
Interest rate swap arrangements (note 6)
|
1
|
|
—
|
|
1
|
|
—
|
|
|
Debt (note 6)
|
4,980
|
|
226
|
|
4,754
|
|
—
|
|
|
|
Fair value measurements at December 31, 2018 using
|
|
||||||
(in millions)
|
Total
|
|
Quoted prices
in active markets for identical assets (Level 1) |
|
Significant
other observable inputs (Level 2) |
|
Significant
unobservable inputs (Level 3) |
|
|
Current assets:
|
|
|
|
|
|||||
Cash equivalents
|
$
|
267
|
|
267
|
|
—
|
|
—
|
|
Interest rate swap arrangements (note 6)
|
5
|
|
—
|
|
5
|
|
—
|
|
|
Debt (note 6)
|
4,758
|
|
189
|
|
4,569
|
|
—
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||
(in millions)
|
Net
revenue |
|
Adjusted
OIBDA |
|
Net
revenue |
|
Adjusted
OIBDA |
|
Net
revenue |
|
Adjusted
OIBDA |
|
Net
revenue |
|
Adjusted
OIBDA |
|
|
QxH
|
$
|
1,874
|
|
395
|
|
1,900
|
|
401
|
|
3,731
|
|
747
|
|
3,826
|
|
770
|
|
QVC-International
|
640
|
|
106
|
|
656
|
|
100
|
|
1,284
|
|
207
|
|
1,332
|
|
207
|
|
|
Consolidated QVC
|
$
|
2,514
|
|
501
|
|
2,556
|
|
501
|
|
5,015
|
|
954
|
|
5,158
|
|
977
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||
(in millions)
|
Depreciation
|
|
Amortization
|
|
Depreciation
|
|
Amortization
|
|
Depreciation
|
|
Amortization
|
|
Depreciation
|
|
Amortization
|
|
|
QxH
|
$
|
28
|
|
67
|
|
30
|
|
52
|
|
56
|
|
136
|
|
59
|
|
105
|
|
QVC-International
|
26
|
|
3
|
|
13
|
|
3
|
|
44
|
|
6
|
|
28
|
|
6
|
|
|
Consolidated QVC
|
$
|
54
|
|
70
|
|
43
|
|
55
|
|
100
|
|
142
|
|
87
|
|
111
|
|
|
June 30, 2019
|
|
|||||
(in millions)
|
Total
assets |
|
Capital
expenditures |
|
Property and equipment, net
|
|
|
QxH
|
$
|
12,244
|
|
140
|
|
776
|
|
QVC-International
|
2,155
|
|
13
|
|
417
|
|
|
Consolidated QVC
|
$
|
14,399
|
|
153
|
|
1,193
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||
Adjusted OIBDA
|
$
|
501
|
|
501
|
|
$
|
954
|
|
$
|
977
|
|
Transaction related costs
|
(1
|
)
|
(1
|
)
|
(1
|
)
|
(9
|
)
|
|||
Stock-based compensation
|
(11
|
)
|
(12
|
)
|
(20
|
)
|
(24
|
)
|
|||
Depreciation and amortization
|
(124
|
)
|
(98
|
)
|
(242
|
)
|
(198
|
)
|
|||
Equity in losses of investee
|
(1
|
)
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
|||
(Losses) gains on financial instruments
|
(1
|
)
|
—
|
|
(3
|
)
|
1
|
|
|||
Interest expense, net
|
(60
|
)
|
(68
|
)
|
(121
|
)
|
(133
|
)
|
|||
Foreign currency gain (loss)
|
—
|
|
2
|
|
(3
|
)
|
1
|
|
|||
Income before income taxes
|
$
|
303
|
|
322
|
|
563
|
|
614
|
|
(in millions)
|
Foreign currency translation adjustments
|
|
AOCL
|
|
|
Balance at January 1, 2019
|
$
|
(144
|
)
|
(144
|
)
|
Other comprehensive income attributable to QVC, Inc. stockholder
|
5
|
|
5
|
|
|
Balance at June 30, 2019
|
(139
|
)
|
(139
|
)
|
|
|
|
|
|||
Balance at January 1, 2018
|
$
|
(93
|
)
|
(93
|
)
|
Other comprehensive income attributable to QVC, Inc. stockholder
|
(28
|
)
|
(28
|
)
|
|
Balance at June 30, 2018
|
(121
|
)
|
(121
|
)
|
(in millions)
|
Before-tax amount
|
|
Tax expense
|
|
Net-of-tax amount
|
|
|
Three months ended June 30, 2019
|
|
|
|
||||
Foreign currency translation adjustments
|
$
|
14
|
|
—
|
|
14
|
|
Other comprehensive income
|
14
|
|
—
|
|
14
|
|
|
|
|
|
|
||||
Three months ended June 30, 2018
|
|
|
|
||||
Foreign currency translation adjustments
|
$
|
(97
|
)
|
1
|
|
(96
|
)
|
Other comprehensive income
|
(97
|
)
|
1
|
|
(96
|
)
|
|
|
|
|
|
||||
Six months ended June 30, 2019
|
|
|
|
||||
Foreign currency translation adjustments
|
$
|
8
|
|
—
|
|
8
|
|
Other comprehensive income
|
8
|
|
—
|
|
8
|
||
|
|
|
|
||||
Six months ended June 30, 2018
|
|
|
|
||||
Foreign currency translation adjustments
|
$
|
(26
|
)
|
—
|
|
(26
|
)
|
Other comprehensive income
|
(26
|
)
|
—
|
|
(26
|
)
|
December 31, 2018
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Assets
|
|||||||||||
Current assets:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
73
|
|
192
|
|
278
|
|
—
|
|
543
|
|
Restricted cash
|
5
|
|
—
|
|
2
|
|
—
|
|
7
|
|
|
Accounts receivable, net
|
1,166
|
|
307
|
|
314
|
|
—
|
|
1,787
|
|
|
Inventories
|
725
|
|
310
|
|
245
|
|
—
|
|
1,280
|
|
|
Prepaid expenses and other current assets
|
95
|
|
73
|
|
48
|
|
—
|
|
216
|
|
|
Total current assets
|
2,064
|
|
882
|
|
887
|
|
—
|
|
3,833
|
|
|
Property and equipment, net
|
281
|
|
213
|
|
671
|
|
—
|
|
1,165
|
|
|
Television distribution rights, net
|
—
|
|
139
|
|
1
|
|
—
|
|
140
|
|
|
Goodwill
|
4,190
|
|
922
|
|
860
|
|
—
|
|
5,972
|
|
|
Other intangible assets, net
|
529
|
|
3,116
|
|
21
|
|
—
|
|
3,666
|
|
|
Other noncurrent assets
|
8
|
|
20
|
|
52
|
|
—
|
|
80
|
|
|
Investments in subsidiaries
|
5,523
|
|
885
|
|
—
|
|
(6,408
|
)
|
—
|
|
|
Total assets
|
$
|
12,595
|
|
6,177
|
|
2,492
|
|
(6,408
|
)
|
14,856
|
|
Liabilities and equity
|
|||||||||||
Current liabilities:
|
|
|
|
|
|
||||||
Current portion of debt and capital lease obligations
|
$
|
403
|
|
1
|
|
17
|
|
—
|
|
421
|
|
Accounts payable-trade
|
494
|
|
201
|
|
313
|
|
—
|
|
1,008
|
|
|
Accrued liabilities
|
358
|
|
394
|
|
274
|
|
—
|
|
1,026
|
|
|
Intercompany accounts (receivable) payable
|
(95
|
)
|
(1,015
|
)
|
1,110
|
|
—
|
|
—
|
|
|
Total current liabilities
|
1,160
|
|
(419
|
)
|
1,714
|
|
—
|
|
2,455
|
|
|
Long-term portion of debt and capital lease obligations
|
4,540
|
|
6
|
|
153
|
|
—
|
|
4,699
|
|
|
Deferred income taxes
|
63
|
|
695
|
|
(58
|
)
|
—
|
|
700
|
|
|
Other long-term liabilities
|
122
|
|
34
|
|
17
|
|
—
|
|
173
|
|
|
Total liabilities
|
5,885
|
|
316
|
|
1,826
|
|
—
|
|
8,027
|
|
|
Equity:
|
|
|
|
|
|
||||||
QVC, Inc. stockholder's equity
|
6,710
|
|
5,861
|
|
547
|
|
(6,408
|
)
|
6,710
|
|
|
Noncontrolling interest
|
—
|
|
—
|
|
119
|
|
—
|
|
119
|
|
|
Total equity
|
6,710
|
|
5,861
|
|
666
|
|
(6,408
|
)
|
6,829
|
|
|
Total liabilities and equity
|
$
|
12,595
|
|
6,177
|
|
2,492
|
|
(6,408
|
)
|
14,856
|
|
Three months ended June 30, 2019
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net revenue
|
$
|
1,423
|
|
695
|
|
693
|
|
(297
|
)
|
2,514
|
|
Operating costs and expenses
|
|
|
|
|
|
||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
847
|
|
342
|
|
422
|
|
(33
|
)
|
1,578
|
|
|
Operating
|
101
|
|
98
|
|
67
|
|
(87
|
)
|
179
|
|
|
Selling, general and administrative, including transaction related costs and stock-based compensation
|
286
|
|
45
|
|
114
|
|
(177
|
)
|
268
|
|
|
Depreciation
|
15
|
|
9
|
|
30
|
|
—
|
|
54
|
|
|
Amortization
|
18
|
|
48
|
|
4
|
|
—
|
|
70
|
|
|
|
1,267
|
|
542
|
|
637
|
|
(297
|
)
|
2,149
|
|
|
Operating income
|
156
|
|
153
|
|
56
|
|
—
|
|
365
|
|
|
Other (expense) income:
|
|
|
|
|
|
||||||
Equity in losses of investee
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
Losses on financial instruments
|
(1
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
|
Interest (expense) income, net
|
(59
|
)
|
—
|
|
(1
|
)
|
—
|
|
(60
|
)
|
|
Foreign currency gain (loss)
|
1
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
|
Intercompany interest income (expense)
|
8
|
|
10
|
|
(18
|
)
|
—
|
|
—
|
|
|
|
(51
|
)
|
10
|
|
(21
|
)
|
—
|
|
(62
|
)
|
|
Income before income taxes
|
105
|
|
163
|
|
35
|
|
—
|
|
303
|
|
|
Income tax expense
|
(32
|
)
|
(32
|
)
|
(21
|
)
|
—
|
|
(85
|
)
|
|
Equity in earnings of subsidiaries, net of tax
|
145
|
|
—
|
|
—
|
|
(145
|
)
|
—
|
|
|
Net income
|
218
|
|
131
|
|
14
|
|
(145
|
)
|
218
|
|
|
Less net income attributable to the noncontrolling interest
|
(12
|
)
|
—
|
|
(12
|
)
|
12
|
|
(12
|
)
|
|
Net income attributable to QVC, Inc. stockholder
|
$
|
206
|
|
131
|
|
2
|
|
(133
|
)
|
206
|
|
Three months ended June 30, 2018
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net revenue
|
$
|
1,460
|
|
691
|
|
704
|
|
(299
|
)
|
2,556
|
|
Operating costs and expenses
|
|
|
|
|
|
||||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
858
|
|
335
|
|
433
|
|
(37
|
)
|
1,589
|
|
|
Operating
|
97
|
|
123
|
|
70
|
|
(81
|
)
|
209
|
|
|
Selling, general and administrative, including transaction related costs and stock-based compensation
|
273
|
|
62
|
|
116
|
|
(181
|
)
|
270
|
|
|
Depreciation
|
17
|
|
9
|
|
17
|
|
—
|
|
43
|
|
|
Amortization
|
19
|
|
34
|
|
2
|
|
—
|
|
55
|
|
|
|
1,264
|
|
563
|
|
638
|
|
(299
|
)
|
2,166
|
|
|
Operating income
|
196
|
|
128
|
|
66
|
|
—
|
|
390
|
|
|
Other (expense) income:
|
|
|
|
|
|
||||||
Equity in losses of investee
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
(2
|
)
|
|
Interest expense, net
|
(57
|
)
|
(9
|
)
|
(2
|
)
|
—
|
|
(68
|
)
|
|
Foreign currency gain (loss)
|
6
|
|
—
|
|
(4
|
)
|
—
|
|
2
|
|
|
Intercompany interest (expense) income
|
(8
|
)
|
38
|
|
(30
|
)
|
—
|
|
—
|
|
|
|
(59
|
)
|
29
|
|
(38
|
)
|
—
|
|
(68
|
)
|
|
Income before income taxes
|
137
|
|
157
|
|
28
|
|
—
|
|
322
|
|
|
Income tax expense
|
(38
|
)
|
(27
|
)
|
(13
|
)
|
—
|
|
(78
|
)
|
|
Equity in earnings of subsidiaries, net of tax
|
145
|
|
9
|
|
—
|
|
(154
|
)
|
—
|
|
|
Net income
|
244
|
|
139
|
|
15
|
|
(154
|
)
|
244
|
|
|
Less net income attributable to the noncontrolling interest
|
(11
|
)
|
—
|
|
(11
|
)
|
11
|
|
(11
|
)
|
|
Net income attributable to QVC, Inc. stockholder
|
$
|
233
|
|
139
|
|
4
|
|
(143
|
)
|
233
|
|
Six months ended June 30, 2019
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net revenue
|
$
|
2,810
|
|
1,408
|
|
1,390
|
|
(593
|
)
|
5,015
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
1,692
|
|
715
|
|
851
|
|
(70
|
)
|
3,188
|
|
|
Operating
|
204
|
|
192
|
|
137
|
|
(177
|
)
|
356
|
|
|
Selling, general and administrative, including transaction related costs and stock-based compensation
|
559
|
|
99
|
|
226
|
|
(346
|
)
|
538
|
|
|
Depreciation
|
31
|
|
18
|
|
51
|
|
—
|
|
100
|
|
|
Amortization
|
37
|
|
98
|
|
7
|
|
—
|
|
142
|
|
|
|
2,523
|
|
1,122
|
|
1,272
|
|
(593
|
)
|
4,324
|
|
|
Operating income
|
287
|
|
286
|
|
118
|
|
—
|
|
691
|
|
|
Other (expense) income:
|
|
|
|
|
|
||||||
Equity in losses of investee
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
Losses on financial instruments
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
|
Interest expense, net
|
(120
|
)
|
2
|
|
(3
|
)
|
—
|
|
(121
|
)
|
|
Foreign currency (loss) gain
|
(1
|
)
|
—
|
|
(2
|
)
|
—
|
|
(3
|
)
|
|
Intercompany interest (expense) income
|
16
|
|
18
|
|
(34
|
)
|
—
|
|
—
|
|
|
|
(108
|
)
|
20
|
|
(40
|
)
|
—
|
|
(128
|
)
|
|
Income before income taxes
|
179
|
|
306
|
|
78
|
|
—
|
|
563
|
|
|
Income tax expense
|
(58
|
)
|
(57
|
)
|
(44
|
)
|
—
|
|
(159
|
)
|
|
Equity in earnings of subsidiaries, net of tax
|
283
|
|
5
|
|
—
|
|
(288
|
)
|
—
|
|
|
Net income
|
404
|
|
254
|
|
34
|
|
(288
|
)
|
404
|
|
|
Less net income attributable to the noncontrolling interest
|
(22
|
)
|
—
|
|
(22
|
)
|
22
|
|
(22
|
)
|
|
Net income attributable to QVC, Inc. stockholder
|
$
|
382
|
|
254
|
|
12
|
|
(266
|
)
|
382
|
|
Six months ended June 30, 2018
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net revenue
|
$
|
2,915
|
|
1,423
|
|
1,432
|
|
(612
|
)
|
5,158
|
|
Operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
1,736
|
|
706
|
|
880
|
|
(77
|
)
|
3,245
|
|
|
Operating
|
199
|
|
249
|
|
144
|
|
(170
|
)
|
422
|
|
|
Selling, general and administrative, including transaction related costs and stock-based compensation
|
552
|
|
131
|
|
229
|
|
(365
|
)
|
547
|
|
|
Depreciation
|
33
|
|
18
|
|
36
|
|
—
|
|
87
|
|
|
Amortization
|
39
|
|
67
|
|
5
|
|
—
|
|
111
|
|
|
|
2,559
|
|
1,171
|
|
1,294
|
|
(612
|
)
|
4,412
|
|
|
Operating income
|
356
|
|
252
|
|
138
|
|
—
|
|
746
|
|
|
Other (expense) income:
|
|
|
|
|
|
||||||
Equity in losses of investee
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|
Gains on financial instruments
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
|
|
Interest expense, net
|
(114
|
)
|
(17
|
)
|
(2
|
)
|
—
|
|
(133
|
)
|
|
Foreign currency (loss) gain
|
2
|
|
—
|
|
(1
|
)
|
—
|
|
1
|
|
|
Intercompany interest (expense) income
|
(15
|
)
|
76
|
|
(61
|
)
|
—
|
|
—
|
|
|
|
(127
|
)
|
60
|
|
(65
|
)
|
—
|
|
(132
|
)
|
|
Income before income taxes
|
229
|
|
312
|
|
73
|
|
—
|
|
614
|
|
|
Income tax expense
|
(60
|
)
|
(62
|
)
|
(36
|
)
|
—
|
|
(158
|
)
|
|
Equity in earnings of subsidiaries, net of tax
|
287
|
|
34
|
|
—
|
|
(321
|
)
|
—
|
|
|
Net income
|
456
|
|
284
|
|
37
|
|
(321
|
)
|
456
|
|
|
Less net income attributable to the noncontrolling interest
|
(22
|
)
|
—
|
|
(22
|
)
|
22
|
|
(22
|
)
|
|
Net income attributable to QVC, Inc. stockholder
|
$
|
434
|
|
284
|
|
15
|
|
(299
|
)
|
434
|
|
Three months ended June 30, 2019
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net income
|
$
|
218
|
|
131
|
|
14
|
|
(145
|
)
|
218
|
|
Foreign currency translation adjustments, net of tax
|
14
|
|
—
|
|
14
|
|
(14
|
)
|
14
|
|
|
Total comprehensive income
|
232
|
|
131
|
|
28
|
|
(159
|
)
|
232
|
|
|
Comprehensive income attributable to noncontrolling interest
|
(15
|
)
|
—
|
|
(15
|
)
|
15
|
|
(15
|
)
|
|
Comprehensive income attributable to QVC, Inc. stockholder
|
$
|
217
|
|
131
|
|
13
|
|
(144
|
)
|
217
|
|
Three months ended June 30, 2018
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net income
|
$
|
244
|
|
139
|
|
15
|
|
(154
|
)
|
244
|
|
Foreign currency translation adjustments, net of tax
|
(96
|
)
|
—
|
|
(96
|
)
|
96
|
|
(96
|
)
|
|
Total comprehensive income
|
148
|
|
139
|
|
(81
|
)
|
(58
|
)
|
148
|
|
|
Comprehensive income attributable to noncontrolling interest
|
(6
|
)
|
—
|
|
(6
|
)
|
6
|
|
(6
|
)
|
|
Comprehensive income attributable to QVC, Inc. stockholder
|
$
|
142
|
|
139
|
|
(87
|
)
|
(52
|
)
|
142
|
|
Six months ended June 30, 2019
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net income
|
$
|
404
|
|
254
|
|
34
|
|
(288
|
)
|
404
|
|
Foreign currency translation adjustments
|
8
|
|
—
|
|
8
|
|
(8
|
)
|
8
|
|
|
Total comprehensive income
|
412
|
|
254
|
|
42
|
|
(296
|
)
|
412
|
|
|
Comprehensive income attributable to noncontrolling interest
|
(25
|
)
|
—
|
|
(25
|
)
|
25
|
|
(25
|
)
|
|
Comprehensive income attributable to QVC, Inc. stockholder
|
$
|
387
|
|
254
|
|
17
|
|
(271
|
)
|
387
|
|
Six months ended June 30, 2018
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Net income
|
$
|
456
|
|
284
|
|
37
|
|
(321
|
)
|
456
|
|
Foreign currency translation adjustments
|
(26
|
)
|
—
|
|
(26
|
)
|
26
|
|
(26
|
)
|
|
Total comprehensive income
|
430
|
|
284
|
|
11
|
|
(295
|
)
|
430
|
|
|
Comprehensive income attributable to noncontrolling interest
|
(24
|
)
|
—
|
|
(24
|
)
|
24
|
|
(24
|
)
|
|
Comprehensive income attributable to QVC, Inc. stockholder
|
$
|
406
|
|
284
|
|
(13
|
)
|
(271
|
)
|
406
|
|
Six months ended June 30, 2019
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
$
|
293
|
|
383
|
|
23
|
|
—
|
|
699
|
|
Investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(61
|
)
|
(28
|
)
|
(64
|
)
|
—
|
|
(153
|
)
|
|
Expenditures for television distribution rights
|
—
|
|
(124
|
)
|
—
|
|
—
|
|
(124
|
)
|
|
Changes in other noncurrent assets
|
(10
|
)
|
8
|
|
(11
|
)
|
—
|
|
(13
|
)
|
|
Other investing activities
|
—
|
|
29
|
|
—
|
|
—
|
|
29
|
|
|
Intercompany investing activities
|
77
|
|
(319
|
)
|
—
|
|
242
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
6
|
|
(434
|
)
|
(75
|
)
|
242
|
|
(261
|
)
|
|
Financing activities:
|
|
|
|
|
|
||||||
Principal payments of debt and finance lease obligations
|
(1,420
|
)
|
—
|
|
(5
|
)
|
—
|
|
(1,425
|
)
|
|
Principal borrowings of debt from senior secured credit facility
|
1,795
|
|
—
|
|
—
|
|
—
|
|
1,795
|
|
|
Principal repayment of senior secured notes
|
(400
|
)
|
—
|
|
—
|
|
—
|
|
(400
|
)
|
|
Dividends paid to Qurate Retail, Inc.
|
(469
|
)
|
—
|
|
—
|
|
—
|
|
(469
|
)
|
|
Dividends paid to noncontrolling interest
|
—
|
|
—
|
|
(28
|
)
|
—
|
|
(28
|
)
|
|
Other financing activities
|
(4
|
)
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
|
Net short-term intercompany debt borrowings (repayments)
|
157
|
|
(201
|
)
|
44
|
|
—
|
|
—
|
|
|
Other intercompany financing activities
|
(20
|
)
|
246
|
|
16
|
|
(242
|
)
|
—
|
|
|
Net cash (used in) provided by financing activities
|
(361
|
)
|
45
|
|
27
|
|
(242
|
)
|
(531
|
)
|
|
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|
Net decrease in cash, cash equivalents and restricted cash
|
(62
|
)
|
(6
|
)
|
(24
|
)
|
—
|
|
(92
|
)
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
78
|
|
192
|
|
280
|
|
—
|
|
550
|
|
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
16
|
|
186
|
|
256
|
|
—
|
|
458
|
|
Six months ended June 30, 2018
|
|
||||||||||
(in millions)
|
Parent
issuer- QVC, Inc. |
|
Combined
subsidiary guarantors |
|
Combined
non-guarantor subsidiaries |
|
Eliminations
|
|
Consolidated-
QVC, Inc. and subsidiaries |
|
|
Operating activities:
|
|
|
|
|
|
||||||
Net cash provided by operating activities
|
$
|
345
|
|
252
|
|
54
|
|
—
|
|
651
|
|
Investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(39
|
)
|
(7
|
)
|
(28
|
)
|
—
|
|
(74
|
)
|
|
Expenditures for television distribution rights
|
—
|
|
(60
|
)
|
(1
|
)
|
—
|
|
(61
|
)
|
|
Other investing activities
|
—
|
|
(8
|
)
|
—
|
|
—
|
|
(8
|
)
|
|
Changes in other noncurrent assets
|
1
|
|
—
|
|
(1
|
)
|
—
|
|
—
|
|
|
Intercompany investing activities
|
89
|
|
(105
|
)
|
—
|
|
16
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
51
|
|
(180
|
)
|
(30
|
)
|
16
|
|
(143
|
)
|
|
Financing activities:
|
|
|
|
|
|
||||||
Principal payments of debt and capital lease obligations
|
(1,442
|
)
|
(160
|
)
|
(6
|
)
|
—
|
|
(1,608
|
)
|
|
Principal borrowings of debt from senior secured credit facility
|
1,278
|
|
180
|
|
—
|
|
—
|
|
1,458
|
|
|
Capital contributions received from Qurate Retail, Inc.
|
140
|
|
—
|
|
—
|
|
—
|
|
140
|
|
|
Dividends paid to Qurate Retail, Inc.
|
(243
|
)
|
—
|
|
—
|
|
—
|
|
(243
|
)
|
|
Dividends paid to noncontrolling interest
|
—
|
|
—
|
|
(23
|
)
|
—
|
|
(23
|
)
|
|
Other financing activities
|
(7
|
)
|
(7
|
)
|
—
|
|
—
|
|
(14
|
)
|
|
Net short-term intercompany debt (repayments) borrowings
|
(86
|
)
|
36
|
|
50
|
|
—
|
|
—
|
|
|
Other intercompany financing activities
|
(14
|
)
|
5
|
|
25
|
|
(16
|
)
|
—
|
|
|
Net cash (used in) provided by financing activities
|
(374
|
)
|
54
|
|
46
|
|
(16
|
)
|
(290
|
)
|
|
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
—
|
|
4
|
|
—
|
|
4
|
|
|
Net increase in cash, cash equivalents and restricted cash
|
22
|
|
126
|
|
74
|
|
—
|
|
222
|
|
|
Cash, cash equivalents and restricted cash, beginning of period
|
7
|
|
55
|
|
228
|
|
—
|
|
290
|
|
|
Cash, cash equivalents and restricted cash, end of period
|
$
|
29
|
|
181
|
|
302
|
|
—
|
|
512
|
|
•
|
customer demand for our products and services and our ability to anticipate customer demand and to adapt to changes in demand;
|
•
|
competitor responses to our products and services;
|
•
|
increased digital TV penetration and the impact on channel positioning of our programs;
|
•
|
the levels of online traffic on our websites and our ability to convert visitors into consumers or contributors;
|
•
|
uncertainties inherent in the development and integration of new business lines and business strategies;
|
•
|
our future financial performance, including availability, terms and deployment of capital;
|
•
|
our ability to successfully integrate and recognize anticipated efficiencies and benefits from the businesses we acquire;
|
•
|
the cost and ability of shipping companies, suppliers and vendors to deliver products, equipment, software and services;
|
•
|
the outcome of any pending or threatened litigation;
|
•
|
availability of qualified personnel;
|
•
|
changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission, and adverse outcomes from regulatory proceedings;
|
•
|
changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors;
|
•
|
domestic and international economic and business conditions and industry trends;
|
•
|
changes in tariffs, trade policy and trade relations following the 2016 U.S. presidential election and the vote by the United Kingdom ("U.K.") to exit from the European Union (“Brexit”);
|
•
|
consumer spending levels, including the availability and amount of individual consumer debt and customer bad debt;
|
•
|
advertising spending levels;
|
•
|
changes in distribution and viewing of television programming, including the expanded deployment of personal video recorders, video on demand and Internet Protocol television and their impact on home shopping programming;
|
•
|
rapid technological changes;
|
•
|
failure to protect the security of personal information, subjecting us to potentially costly government enforcement actions and/or private litigation and reputational damage;
|
•
|
the regulatory and competitive environment of the industries in which we operate;
|
•
|
threatened terrorist attacks, political unrest in international markets and ongoing military action around the world;
|
•
|
fluctuations in foreign currency exchange rates; and
|
•
|
Qurate Retail, Inc.'s ("Qurate Retail") (formerly known as Liberty Interactive Corporation) dependence on our cash flow for servicing its debt and for other purposes.
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Net revenue
|
$
|
2,514
|
|
2,556
|
|
5,015
|
|
5,158
|
|
Operating costs and expenses:
|
|
|
|
|
|||||
Cost of goods sold (exclusive of depreciation and amortization shown separately below)
|
1,578
|
|
1,589
|
|
3,188
|
|
3,245
|
|
|
Operating
|
179
|
|
209
|
|
356
|
|
422
|
|
|
Selling, general and administrative, excluding transaction related costs and stock-based compensation
|
256
|
|
257
|
|
517
|
|
514
|
|
|
Adjusted OIBDA (defined below)
|
501
|
|
501
|
|
954
|
|
977
|
|
|
Transaction related costs
|
1
|
|
1
|
|
1
|
|
9
|
|
|
Stock-based compensation
|
11
|
|
12
|
|
20
|
|
24
|
|
|
Depreciation
|
54
|
|
43
|
|
100
|
|
87
|
|
|
Amortization
|
70
|
|
55
|
|
142
|
|
111
|
|
|
Operating income
|
365
|
|
390
|
|
691
|
|
746
|
|
|
Other (expense) income:
|
|
|
|
|
|||||
Equity in losses of investee
|
(1
|
)
|
(2
|
)
|
(1
|
)
|
(1
|
)
|
|
(Losses) gains on financial instruments
|
(1
|
)
|
—
|
|
(3
|
)
|
1
|
|
|
Interest expense, net
|
(60
|
)
|
(68
|
)
|
(121
|
)
|
(133
|
)
|
|
Foreign currency gain (loss)
|
—
|
|
2
|
|
(3
|
)
|
1
|
|
|
|
(62
|
)
|
(68
|
)
|
(128
|
)
|
(132
|
)
|
|
Income before income taxes
|
303
|
|
322
|
|
563
|
|
614
|
|
|
Income tax expense
|
(85
|
)
|
(78
|
)
|
(159
|
)
|
(158
|
)
|
|
Net income
|
218
|
|
244
|
|
404
|
|
456
|
|
|
Less net income attributable to the noncontrolling interest
|
(12
|
)
|
(11
|
)
|
(22
|
)
|
(22
|
)
|
|
Net income attributable to QVC, Inc. stockholder
|
$
|
206
|
|
233
|
|
382
|
|
434
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
QxH
|
$
|
1,874
|
|
1,900
|
|
3,731
|
|
3,826
|
|
QVC-International
|
640
|
|
656
|
|
1,284
|
|
1,332
|
|
|
Consolidated QVC
|
$
|
2,514
|
|
2,556
|
|
5,015
|
|
5,158
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
Affiliate agreements
|
$
|
1
|
|
1
|
|
2
|
|
2
|
|
Customer relationships
|
12
|
|
12
|
|
24
|
|
24
|
|
|
Other technology
|
4
|
|
4
|
|
8
|
|
8
|
|
|
Acquisition related amortization
|
17
|
|
17
|
|
34
|
|
34
|
|
|
Property and equipment
|
54
|
|
43
|
|
100
|
|
87
|
|
|
Software amortization
|
22
|
|
22
|
|
44
|
|
46
|
|
|
Channel placement amortization and related expenses
|
31
|
|
16
|
|
64
|
|
31
|
|
|
Total depreciation and amortization
|
$
|
124
|
|
98
|
|
242
|
|
198
|
|
|
Payments due by period
|
|
|||||||||||||
(in millions)
|
Remainder of 2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
|
Long-term debt (1)
|
$
|
—
|
|
—
|
|
—
|
|
500
|
|
2,315
|
|
2,125
|
|
4,940
|
|
Interest payments (2)
|
116
|
|
235
|
|
234
|
|
234
|
|
192
|
|
1,270
|
|
2,281
|
|
|
Finance lease obligations (including imputed interest)
|
15
|
|
27
|
|
25
|
|
23
|
|
22
|
|
117
|
|
229
|
|
|
Operating lease obligations
|
$
|
14
|
|
29
|
|
20
|
|
18
|
|
16
|
|
155
|
|
252
|
|
(in millions, except percentages)
|
Remainder of 2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
Thereafter
|
|
Total
|
|
Fair Value
|
|
|
Fixed rate debt (1)
|
$
|
—
|
|
—
|
|
—
|
|
500
|
|
750
|
|
2,125
|
|
3,375
|
|
3,415
|
|
Weighted average interest rate on fixed rate debt
|
—
|
%
|
—
|
%
|
—
|
%
|
5.1
|
%
|
4.4
|
%
|
5.2
|
%
|
5.0
|
%
|
N/A
|
|
|
Variable rate debt (1)
|
$
|
—
|
|
—
|
|
—
|
|
—
|
|
1,565
|
|
—
|
|
1,565
|
|
1,565
|
|
Average interest rate on variable rate debt
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
3.9
|
%
|
—
|
%
|
3.9
|
%
|
N/A
|
|
•
|
Improvement of the design and operation of control activities and procedures associated with user and administrator access to the affected IT systems, including removing all inappropriate IT system access associated with the information technology general controls ("ITGCs") material weakness;
|
•
|
Improvement of change management and computer operation control activities that contributed to the ITGC material weakness;
|
•
|
Implementation of user activity monitoring for control activities contributing to the ITGC material weakness;
|
•
|
Delivery of training to control owners addressing control operating protocols including ITGCs and policies; and
|
•
|
Enhancement of the design and operation of control activities meant to validate the completeness and accuracy of revenue recorded in the U.K.
|
31.1
|
|
|
31.2
|
|
|
32.1
|
|
|
101.INS
|
|
XBRL Instance Document*
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document*
|
101.CAL
|
|
XBRL Taxonomy Calculation Linkbase Document*
|
101.LAB
|
|
XBRL Taxonomy Label Linkbase Document*
|
101.PRE
|
|
XBRL Taxonomy Presentation Linkbase Document*
|
101.DEF
|
|
XBRL Taxonomy Definition Document*
|
Date: August 8, 2019
|
By:/s/ MICHAEL A. GEORGE
|
|
Michael A. George
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
|
Date: August 8, 2019
|
By:/s/ JEFFREY A. DAVIS
|
|
Jeffrey A. Davis
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
By:/s/ MICHAEL A. GEORGE
|
|
Michael A. George
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
By:/s/ JEFFREY A. DAVIS
|
|
Jeffrey A. Davis
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
Date: August 8, 2019
|
By:/s/ MICHAEL A. GEORGE
|
|
Michael A. George
|
|
President and Chief Executive Officer (Principal Executive Officer)
|
|
|
Date: August 8, 2019
|
By:/s/ JEFFREY A. DAVIS
|
|
Jeffrey A. Davis
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|