-
Grew consolidated QVC revenue by 6% with strength in
Japan andGermany -
Adjusted OIBDA(2) increased 1%, excluding the effects
of the new agreement with
GE Capital Retail Bank and QVC Italy launch, adjusted OIBDA grew 2% -
Operating income decreased less than 1%, excluding the effects of
the new agreement with
GE Capital Retail Bank and QVC Italy launch, operating income grew 2%
-
Adjusted OIBDA(2) increased 1%, excluding the effects
of the new agreement with
- Agreed to purchase additional 1.5 million shares of HSN, scheduled to close in the fourth quarter, which will increase ownership to 34%
-
Repurchased
$173 million ofLiberty Interactive stock fromAugust 1 st throughOctober 31 st, 2011 -
Reduced interest rate on the bank credit facility by 25 basis points
due to the improved credit rating of QVC's senior secured debt by S&P
-
During the quarter, QVC reduced bank debt by
$160 million , decreasing leverage ratio to 1.5x - Reduced bank leverage ratio will result in additional 25 basis point reduction at the end of November
-
During the quarter, QVC reduced bank debt by
"QVC continued to produce solid results, in a challenging macroeconomic
environment with particularly strong performance in
Liberty Interactive's revenue increased 8% to
QVC
QVC's consolidated net revenue increased 6% in the third quarter to
"QVC achieved 6% consolidated net revenue growth including 2% growth in
the US and 14% growth in our international markets," stated
QVC's domestic revenue increased 2% in the third quarter to
QVC's international revenue increased 14% in the third quarter to
QVC UK's revenue decreased 4% in local currency in the third quarter due primarily to a decline in sales of our electronics and jewelry categories, partially offset by increased sales in home, apparel and accessories. QVC UK's average selling price in local currency decreased 1% and units sold remained consistent at 3.6 million for the third quarter. QVC UK's adjusted OIBDA decreased 8% in local currency and the adjusted OIBDA margin decreased 56 basis points due primarily to increased freight costs and higher programming distribution costs associated with their second channel, QVC Beauty Channel, partially offset by increased product margins and lower inventory obsolescence expense.
QVC Germany's revenue grew 8% in local currency in the quarter driven by increased sales of electronics, jewelry, beauty and nutrition product categories. QVC Germany's average selling price in local currency increased 5% for the third quarter and units sold increased 5%. QVC Germany's returns as a percent of gross product revenue increased 209 basis points from the prior period due in part to a product mix shift to higher return categories including jewelry. QVC Germany's adjusted OIBDA decreased 4% in local currency and the adjusted OIBDA margin decreased 197 basis points due to lower initial margins and increased inventory obsolescence, partially offset by favorable customer service costs. This decline in adjusted OIBDA was expected as QVC Germany experienced adjusted OIBDA growth of 25% in the third quarter of 2010.
QVC Japan's revenue grew 4% in local currency in the third quarter due
to increased sales primarily in apparel. QVC Japan's market has
rebounded after the tragic events experienced in March with positive
sequential year over year growth achieved each month in the quarter. QVC
QVC Italy continues the trend upward with a 61% sequential sales growth over the second quarter of 2011 driven primarily by sales in the home and beauty product areas. QVC Italy continues to invest in a strong marketing campaign to build awareness and accelerate new customer acquisition, and continues to monitor these and other fixed costs as they leverage their cost structure.
QVC's outstanding bank and bond debt was
eCommerce Businesses
In the aggregate, the eCommerce businesses increased revenue 25% to
Share Repurchases
From
FOOTNOTES
1) |
Liberty Interactive Corporation's President and CEO, |
|
2) |
For a definition of adjusted OIBDA and applicable reconciliations and a definition of adjusted OIBDA margin, see the accompanying schedules. |
LIBERTY INTERACTIVE CORPORATION FINANCIAL METRICS |
|||||||||
(amounts in millions) |
3Q10 |
3Q11 |
% Change |
||||||
Revenue | |||||||||
QVC | |||||||||
US |
|
1,196 | 2% | ||||||
International | 604 | 690 | 14% | ||||||
Total QVC Revenue | 1,771 | 1,886 | 6% | ||||||
eCommerce businesses | 197 | 247 | 25% | ||||||
Total Liberty Interactive Revenue | 1,968 | 2,133 | 8% | ||||||
Adjusted OIBDA | |||||||||
QVC | |||||||||
US |
|
259 | -1% | ||||||
International | 108 | 114 | 6% | ||||||
Total QVC Adjusted OIBDA | 369 | 373 | 1% | ||||||
eCommerce businesses | 10 | 9 | -10% | ||||||
Corporate and other | (6) | (5) | 17% | ||||||
Total Liberty Interactive Adjusted OIBDA | 373 | 377 | 1% | ||||||
Operating Income | |||||||||
QVC | |||||||||
US |
|
159 | 0% | ||||||
International | 76 | 75 | -1% | ||||||
Total QVC Operating Income | 235 | 234 | 0% | ||||||
eCommerce businesses | -- | (2) | NM | ||||||
Corporate and other | (15) | (8) | 47% | ||||||
Total Liberty Interactive Operating Income | 220 | 224 | 2% | ||||||
QVC OPERATING METRICS |
|||||||||
(amounts in millions except average sale price amounts) | 3Q10 | 3Q11 | % Change | ||||||
QVC - US | |||||||||
Revenue |
|
1,196 | 2% | ||||||
Adjusted OIBDA |
|
259 | -1% | ||||||
Adjusted OIBDA margin | 22.37% | 21.66% | -71 bps | ||||||
Average sale price (ASP) |
|
54.49 | 13% | ||||||
Units sold | 26.19 | 24.44 | -7% | ||||||
eCommerce % of US revenue | 31.2% | 35.3% | 410 bps | ||||||
Return rate | 18.81% | 19.91% | -110 bps | ||||||
QVC - |
|||||||||
Revenue |
|
147 | -1% | ||||||
Adjusted OIBDA |
|
24 | -4% | ||||||
Adjusted OIBDA margin | 16.89% | 16.33% | -56 bps | ||||||
Average sale price (ASP) | £27.85 | 27.66 | -1% | ||||||
Units sold | 3.64 | 3.60 | -1% | ||||||
QVC - |
|||||||||
Revenue |
|
252 | 18% | ||||||
Adjusted OIBDA |
|
40 | 5% | ||||||
Adjusted OIBDA margin | 17.84% | 15.87% | -197 bps | ||||||
Average sale price (ASP) | €34.68 | 36.56 | 5% | ||||||
Units sold | 6.12 | 6.45 | 5% | ||||||
QVC - |
|||||||||
Revenue |
|
281 | 16% | ||||||
Adjusted OIBDA |
|
61 | 13% | ||||||
Adjusted OIBDA margin | 22.22% | 21.71% | -51 bps | ||||||
Average sale price (ASP) | ¥6,944 | 6,267 | -10% | ||||||
Units sold | 3.29 | 3.81 | 16% | ||||||
QVC - |
|||||||||
Revenue | $ -- | 10 | NM | ||||||
Adjusted OIBDA |
|
(11) | -22% | ||||||
Adjusted OIBDA margin | -- % | NM | NM | ||||||
Average sale price (ASP) | € -- | 31.98 | NM | ||||||
Units sold | -- | 0.2 | NM | ||||||
NOTES
Unless otherwise noted, the foregoing discussion compares financial
information for the three months ended
On
Following the Split-Off,
The following financial information is intended to supplement Liberty Interactive's consolidated statements of operations which are included in its Form 10-Q.
Fair Value of
(amounts in millions and include the value of derivatives) |
|
|
||||
Expedia(1) | 2,007 | 1,782 | ||||
HSN(1) | 610 | 613 | ||||
Interval Leisure Group and Tree.com(1) | 242 | 236 | ||||
|
1,258 | 1,019 | ||||
Total |
4,117 | 3,650 |
(1) |
Represents fair value of Liberty Interactive's investments. In accordance with GAAP, Liberty Interactive accounts for these investments using the equity method of accounting and includes these investments in its consolidated balance sheet at their historical carrying values. |
|
(2) |
Represents Liberty Interactive's non-strategic public holdings which are accounted for at fair value. |
Cash and Debt
The following presentation is provided to separately identify cash and liquid investments and debt information.
(amounts in millions) |
|
|
||||||
Cash and liquid investments(1) | 1,360 | 985 | ||||||
Less: Short-term marketable securities | 48 | 89 | ||||||
Total Liberty Interactive Cash (GAAP) | 1,312 | 896 | ||||||
Debt: | ||||||||
Senior notes and debentures(2) | 1,115 | 1,100 | ||||||
Senior exchangeable debentures(3) | 3,086 | 2,967 | ||||||
QVC senior notes(2) | 2,000 | 2,000 | ||||||
QVC bank credit facility | 611 | 459 | ||||||
Other | 65 | 85 | ||||||
Total Liberty Interactive Debt | 6,877 | 6,611 | ||||||
Unamortized discount | (22 | ) | (21 | ) | ||||
Fair market value adjustment | (425 | ) | (541 | ) | ||||
Total Liberty Interactive Debt (GAAP) | 6,430 | 6,049 |
(1) |
Includes |
|
(2) |
Face amount of Senior Notes and Debentures with no reduction for the unamortized discount or fair market value adjustment. |
|
(3) |
Face amount of Senior Exchangeable Debentures with no reduction for the unamortized discount or fair market value adjustment. |
Cash and liquid investments decreased
Important Notice:
This press release includes certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
including statements about business strategies, market potential, future
financial prospects, international expansion, new service and product
offerings, the continuation of our stock repurchase program, our
upcoming purchase of HSN stock and other matters that are not historical
facts. These forward-looking statements involve many risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied by such statements, including, without
limitation, possible changes in market acceptance of new products or
services, competitive issues, regulatory matters affecting our
businesses, continued access to capital on terms acceptable to
SUPPLEMENTAL INFORMATION
As a supplement to Liberty Interactive's condensed consolidated
statements of operations, which are included in its Form 10-Q, the
following is a presentation of quarterly financial information and
operating metrics on a stand-alone basis for the largest privately held
business (QVC) owned by
Please see below for the definition of adjusted OIBDA and a discussion of why management believes the presentation of adjusted OIBDA for QVC provides useful information for investors. Schedule 2 to this press release provides a reconciliation of adjusted OIBDA for each identified entity or group to that entity's or group's operating income for the same period, as determined under GAAP.
QUARTERLY SUMMARY
(amounts in millions) | 3Q10 | 4Q10 | 1Q11 | 2Q11 | 3Q11 | ||||||||||
|
|||||||||||||||
QVC | |||||||||||||||
Revenue — US | 1,167 | 1,719 | 1,192 | 1,232 | 1,196 | ||||||||||
Revenue — International | 604 | 802 | 643 | 666 | 690 | ||||||||||
Revenue — Total | 1,771 | 2,521 | 1,835 | 1,898 | 1,886 | ||||||||||
Adjusted OIBDA — US | 261 | 364 | 260 | 305 | 259 | ||||||||||
Adjusted OIBDA — International | 108 | 169 | 103 | 113 | 114 | ||||||||||
Adjusted OIBDA — Total | 369 | 533 | 363 | 418 | 373 | ||||||||||
Operating income — US | 159 | 261 | 159 | 204 | 159 | ||||||||||
Operating income — International | 76 | 132 | 66 | 77 | 75 | ||||||||||
Operating income — Total | 235 | 393 | 225 | 281 | 234 | ||||||||||
Gross margin — US | 35.9% | 33.1% | 35.1% | 37.5% | 35.7% | ||||||||||
Gross margin — International | 37.4% | 37.7% | 36.9% | 38.0% | 36.7% |
NON-GAAP FINANCIAL MEASURES
This press release includes a presentation of adjusted OIBDA, which is a
non-GAAP financial measure, for
SCHEDULE 1
The following table provides a reconciliation of Liberty Interactive's
adjusted OIBDA to its operating income calculated in accordance with
GAAP for the three months ended
QUARTERLY SUMMARY
(amounts in millions) | 3Q10 | 4Q10 | 1Q11 | 2Q11 | 3Q11 | |||||||||||||||
|
||||||||||||||||||||
Adjusted OIBDA | 373 | 564 | 378 | 450 | 377 | |||||||||||||||
Depreciation and amortization | (141 | ) | (150 | ) | (149 | ) | (148 | ) | (151 | ) | ||||||||||
Stock compensation expense | (12 | ) | (18 | ) | (16 | ) | (14 | ) | (2 | ) | ||||||||||
Operating Income | 220 | 396 | 213 | 288 | 224 |
SCHEDULE 2
The following table provides a reconciliation of adjusted OIBDA for QVC
(and certain of its subsidiaries) and the eCommerce businesses to that
entity's or group's operating income (loss) calculated in accordance
with GAAP for the three months ended September, 30th, 2010,
QUARTERLY SUMMARY
(amounts in millions) | 3Q10 | 4Q10 | 1Q11 | 2Q11 | 3Q11 | |||||||||||||||
|
||||||||||||||||||||
QVC | ||||||||||||||||||||
QVC US adjusted OIBDA | 261 | 364 | 260 | 305 | 259 | |||||||||||||||
QVC |
25 | 43 | 21 | 26 | 24 | |||||||||||||||
QVC Germany adjusted OIBDA | 38 | 71 | 49 | 41 | 40 | |||||||||||||||
|
54 | 69 | 43 | 59 | 61 | |||||||||||||||
QVC Italy adjusted OIBDA | (9 | ) | (14 | ) | (10 | ) | (13 | ) | (11 | ) | ||||||||||
|
108 | 169 | 103 | 113 | 114 | |||||||||||||||
Total QVC adjusted OIBDA | 369 | 533 | 363 | 418 | 373 | |||||||||||||||
Depreciation and amortization | (129 | ) | (136 | ) | (134 | ) | (131 | ) | (133 | ) | ||||||||||
Stock compensation expense | (5 | ) | (4 | ) | (4 | ) | (6 | ) | (6 | ) | ||||||||||
Operating Income | 235 | 393 | 225 | 281 | 234 | |||||||||||||||
eCommerce Businesses | ||||||||||||||||||||
Adjusted OIBDA | 10 | 47 | 29 | 36 | 9 | |||||||||||||||
Depreciation and amortization | (12 | ) | (15 | ) | (16 | ) | (16 | ) | (17 | ) | ||||||||||
Stock compensation expense | 2 | (4 | ) | (5 | ) | (1 | ) | 6 | ||||||||||||
Operating Income (Loss) | -- | 28 | 8 | 19 | (2 | ) | ||||||||||||||
|
|||||||||
CONDENSED CONSOLIDATED BALANCE SHEET — (unaudited) | |||||||||
|
|
||||||||
amounts in millions | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents |
$ |
896 |
1,353 | ||||||
Trade and other receivables, net | 648 | 885 | |||||||
Inventory, net | 1,205 | 1,069 | |||||||
Other current assets | 177 | 85 | |||||||
Assets of discontinued operations - current |
— |
3,163 |
|||||||
Total current assets | 2,926 | 6,555 | |||||||
Investments in available-for-sale securities and other cost investments | 1,022 | 1,110 | |||||||
Investments in affiliates, accounted for using the equity method | 1,066 | 949 | |||||||
Property and equipment, at cost | 1,926 | 1,777 | |||||||
Accumulated depreciation |
(847 |
) |
(739 |
) |
|||||
1,079 | 1,038 | ||||||||
Intangible assets not subject to amortization: | |||||||||
Goodwill | 5,987 | 5,983 | |||||||
Trademarks | 2,518 | 2,513 | |||||||
8,505 | 8,496 | ||||||||
Intangible assets subject to amortization, net | 2,344 | 2,595 | |||||||
Other assets, at cost, net of accumulated amortization | 83 | 87 | |||||||
Assets of discontinued operations |
— |
5,770 | |||||||
Total assets |
$ |
17,025 |
26,600 | ||||||
LIABILITIES AND EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 586 | 630 | ||||||
Accrued liabilities | 606 | 768 | |||||||
Payable to |
44 | 85 | |||||||
Current portion of debt | 1,211 | 493 | |||||||
Deferred income tax liabilities | 854 | 152 | |||||||
Other current liabilities | 145 | 231 | |||||||
Liabilities of discontinued operations - current | — | 2,380 | |||||||
Total current liabilities | 3,446 | 4,739 | |||||||
Long-term debt, including |
4,838 | 5,970 | |||||||
Long-term financial instruments | 76 | 86 | |||||||
Deferred income tax liabilities | 1,870 | 2,709 | |||||||
Other liabilities | 199 | 244 | |||||||
Liabilities of discontinued operations | — |
1,410 |
|||||||
Total liabilities | 10,429 | 15,158 | |||||||
Equity: | |||||||||
Total stockholders' equity | 6,481 | 11,313 | |||||||
Noncontrolling interests in equity of subsidiaries | 115 | 129 | |||||||
Total equity | 6,596 | 11,442 | |||||||
Commitments and contingencies | |||||||||
Total liabilities and equity | $ | 17,025 | 26,600 | ||||||
|
|||||||||||||||||
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS — (unaudited) | |||||||||||||||||
Three months ended | Nine months ended | ||||||||||||||||
|
|
|
|
||||||||||||||
amounts in millions | |||||||||||||||||
REVENUE: | |||||||||||||||||
Net retail sales |
$ |
2,133 |
1,968 | 6,537 | 6,046 | ||||||||||||
OPERATING COSTS AND EXPENSES: | |||||||||||||||||
Cost of sales (exclusive of depreciation shown separately below) | 1,364 | 1,254 | 4,139 | 3,832 | |||||||||||||
Operating | 209 | 186 | 621 | 562 | |||||||||||||
Selling, general and administrative, including stock-based compensation | 185 | 167 | 604 | 519 | |||||||||||||
Depreciation and amortization | 151 | 141 | 448 | 421 | |||||||||||||
1,909 | 1,748 | 5,812 | 5,334 | ||||||||||||||
Operating income | 224 | 220 | 725 | 712 | |||||||||||||
OTHER INCOME (EXPENSE): | |||||||||||||||||
Interest expense |
(105 |
) |
(166 |
) |
(326 |
) |
(502 |
) |
|||||||||
Share of earnings (losses) of affiliates, net | 62 | 36 | 119 | 93 | |||||||||||||
Realized and unrealized gains (losses) on financial instruments, net |
(91 |
) |
(89 |
) |
(61 |
) |
(14 |
) |
|||||||||
Gains (losses) on dispositions, net | — | 30 | — | 216 | |||||||||||||
Other, net |
(9 |
) |
5 | 12 |
(41 |
) |
|||||||||||
(143 |
) |
(184 |
) |
(256 |
) |
(248 |
) |
||||||||||
Earnings (loss) from continuing operations before income taxes | 81 | 36 | 469 | 464 | |||||||||||||
Income tax (expense) benefit |
(56 |
) |
66 |
(186 |
) |
(78 |
) |
||||||||||
Earnings (loss) from continuing operations | 25 | 102 | 283 | 386 | |||||||||||||
Earnings (loss) from discontinued operations, net of taxes |
(32 |
) |
92 | 378 | 248 | ||||||||||||
Net earnings (loss) |
(7 |
) |
194 | 661 | 634 | ||||||||||||
Less net earnings (loss) attributable to the noncontrolling interests | 12 | 15 | 34 | 29 | |||||||||||||
Net earnings (loss) attributable to |
$ |
(19 |
) |
179 | 627 | 605 | |||||||||||
Net earnings (loss) attributable to |
|||||||||||||||||
|
$ |
(90 |
) |
26 | 211 |
(34 |
) |
||||||||||
|
58 | 48 | 177 | 166 | |||||||||||||
|
13 | 105 | 239 | 473 | |||||||||||||
$ |
(19 |
) |
179 | 627 | 605 | ||||||||||||
|
|||||||||
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS - (unaudited) | |||||||||
Nine months ended | |||||||||
|
|
||||||||
amounts in millions | |||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
Net earnings |
$ |
661 |
634 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||
(Earnings) loss from discontinued operations |
(378 |
) |
(248 |
) |
|||||
Depreciation and amortization | 448 | 421 | |||||||
Stock-based compensation | 32 | 49 | |||||||
Cash payments for stock-based compensation |
(2 |
) |
(20 |
) |
|||||
Noncash interest expense | 6 | 86 | |||||||
Share of (earnings) losses of affiliates, net |
(119 |
) |
(93 |
) |
|||||
Cash receipts from returns on equity investments | 15 | 14 | |||||||
Realized and unrealized (gains) losses on financial instruments, net | 61 | 14 | |||||||
(Gains) losses on disposition of assets, net | — |
(216 |
) |
||||||
Deferred income tax expense (benefit) |
(61 |
) |
(8 |
) |
|||||
Other noncash charges (credits), net |
(10 |
) |
23 | ||||||
Changes in operating assets and liabilities | |||||||||
Current and other assets | 106 | 561 | |||||||
Payables and other liabilities |
(243 |
) |
(147 |
) |
|||||
Net cash provided (used) by operating activities | 516 | 1,070 | |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
Cash proceeds from dispositions | — | 459 | |||||||
Proceeds from settlement of financial instruments, net | — |
(31 |
) |
||||||
Capital expended for property and equipment |
(192 |
) |
(176 |
) |
|||||
Net sales (purchases) of short term investments |
(89 |
) |
— | ||||||
Other investing activities, net |
(21 |
) |
(45 |
) |
|||||
Net cash provided (used) by investing activities |
(302 |
) |
207 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
Borrowings of debt | 195 | 2,999 | |||||||
Repayments of debt |
(673 |
) |
(4,518 |
) |
|||||
Repurchases of |
(87 |
) |
— | ||||||
Other financing activities, net |
(50 |
) |
(88 |
) |
|||||
Net cash provided (used) by financing activities |
(615 |
) |
(1,607 |
) |
|||||
Effect of foreign currency exchange rates on cash |
(7 |
) |
9 | ||||||
Net cash provided (used) by discontinued operations: | |||||||||
Cash provided (used) by operating activities | 304 | 301 | |||||||
Cash provided (used) by investing activities |
(104 |
) |
145 | ||||||
Cash provided (used) by financing activities |
(264 |
) |
(1,429 |
) |
|||||
Change in available cash held by discontinued operations | 15 | 548 | |||||||
Net cash provided (used) by discontinued operations |
(49 |
) |
(435 |
) |
|||||
Net increase (decrease) in cash and cash equivalents |
(457 |
) |
(756 |
) |
|||||
Cash and cash equivalents at beginning of period | 1,353 | 1,955 | |||||||
Cash and cash equivalents at end of period |
$ |
896 |
1,199 |
720-875-5420
Source:
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