ENGLEWOOD, Colo.--(BUSINESS WIRE)--Qurate Retail, Inc. ("Qurate Retail") (Nasdaq: QRTEA, QRTEB, QRTEP) today reported third quarter 2024 results(1).
"While the third quarter was anticipated to be the most difficult quarter of 2024, current headline events and the challenging macro-economic climate heavily impacted viewership of our programming and consumer behavior more than expected," said David Rawlinson, President and CEO of Qurate Retail. "As a result, revenue underperformed this quarter and resulted in meaningful bottom-line deleverage. Despite this, we were able to hold consolidated gross margin flat with disciplined cost management and reduced operating expenses. We also continued our proactive balance sheet management, completing an offer in which 89% of QVC's 2027 and 2028 notes were tendered which improves the QVC credit profile with reduced debt and an extended maturity profile.
"We are nearing the end of our multi-year Project Athens initiative focused on margin and free cash flow. The team has materially improved the business, becoming a more profitable, leaner and more nimble organization. We are transitioning to the next phase of our strategic growth as we enhance our capabilities to reach aggregated audiences on primarily social and streaming platforms."
Third quarter 2024 headlines:
- Qurate Retail revenue decreased 5% in both US Dollars and constant currency(2)
- Generated $152 million in operating income
- Adjusted OIBDA(3) decreased 12% in both US Dollars and constant currency to $250 million
- QxH revenue decreased 6%
- QVC International revenue decreased 1% in both US Dollars and constant currency
- Cornerstone revenue decreased 12%
- Tendered 89% of QVC, Inc.'s 2027 and 2028 notes
- Partially funded with $605 million of new 6.875% senior secured notes due 2029
- Improves QVC credit position with reduced debt balance and extended maturity profile
Discussion of Results
Unless otherwise noted, the following discussion compares financial information for the three months ended September 30, 2024 to the same period in 2023.
THIRD QUARTER 2024 FINANCIAL RESULTS | ||||||||||||||
(amounts in millions) | 3Q23 | 3Q24 | % Change | % Change Constant Currency(a) | ||||||||||
Revenue | ||||||||||||||
QxH | $ | 1,617 | $ | 1,521 | (6 | )% | ||||||||
QVC International | 577 | 571 | (1 | )% | (1 | )% | ||||||||
Cornerstone | 285 | 252 | (12 | )% | ||||||||||
Total Qurate Retail Revenue | 2,479 | 2,344 | (5 | )% | (5 | )% | ||||||||
Operating Income (Loss) | ||||||||||||||
QxH(b) | $ | 91 | $ | 107 | 18 | % | ||||||||
QVC International | 63 | 57 | (10 | )% | (8 | )% | ||||||||
Cornerstone | 4 | (2 | ) | NM | ||||||||||
Unallocated corporate cost | (7 | ) | (10 | ) | (43 | )% | ||||||||
Total Qurate Retail Operating Income | 151 | 152 | 1 | % | 1 | % | ||||||||
Adjusted OIBDA | ||||||||||||||
QxH(b) | $ | 201 | $ | 182 | (9 | )% | ||||||||
QVC International | 77 | 70 | (9 | )% | (9 | )% | ||||||||
Cornerstone | 11 | 6 | (45 | )% | ||||||||||
Unallocated corporate cost | (4 | ) | (8 | ) | (100 | )% | ||||||||
Total Qurate Retail Adjusted OIBDA | $ | 285 | $ | 250 | (12 | )% | (12 | )% | ||||||
| ________________________________________ | ||
a) | For a definition of constant currency financial metrics, see the accompanying schedules. | |
b) | In the third quarter of 2023, QxH incurred (i) a $2 million gain on the sale of its Rocky Mount, NC fulfillment center ("Rocky Mount") in February 2023 on proceeds released from escrow and (ii) $21 million of restructuring, penalty and fire-related costs. These items are included in operating income and excluded from Adjusted OIBDA. See Reconciling Schedule 2. | |
QxH
QxH revenue declined due to a 6% decrease in units shipped as well as lower shipping and handling revenue, partially offset by favorable returns. QxH reported declines in all categories.
Operating income increased in the third quarter comparing against $19 million of one-time net restructuring costs and penalties incurred in the prior year period.
Adjusted OIBDA margin(3) decreased due to fulfillment (warehouse and freight) pressure and sales deleverage, partially offset by higher product margins. Fulfillment pressure was driven by higher fulfillment center wages and freight rates and deleverage, partially offset by increased productivity efficiencies. Operating expenses decreased 6% due to lower commissions. Selling, general and administrative expenses decreased 4% driven by lower personnel expense and outside services costs, partially offset by increased marketing costs due to brand marketing to support QVC's Age of Possibility campaign.
QVC International
QVC International's constant currency revenue decreased primarily due to a 3% decrease in average selling price, partially offset by a 1% increase in units shipped and favorable returns. QVC International reported constant currency growth in home and accessories, with a decline in apparel and beauty.
Operating income and Adjusted OIBDA margin decreased primarily due to higher fulfillment costs and lower product margins, partially offset by lower operating expenses. Fulfillment costs increased due to higher freight rates and fulfillment center wages. Product margins decreased reflecting lower initial margin due to product mix and higher ocean freight rates, partially offset by favorable returns.
US Dollar denominated results were not materially impacted by exchange rate fluctuations. The Dollar weakened 3% against the British Pound, 1% against the Euro and strengthened 3% against the Japanese Yen. The financial metrics presented in this press release also provide a comparison of the percentage change in QVC International's results in constant currency to the comparable figures calculated in accordance with US GAAP, where applicable.
Cornerstone
Cornerstone revenue decreased, reflecting softness and competitive promotional pressure in the home sector. Cornerstone is implementing a transformation plan to improve its revenue and profitability given the continued challenges in the housing sector. Operating income and Adjusted OIBDA margin decreased mainly due to higher costs for outside services related to its transformation plan and sales deleverage, partially offset by lower supply chain costs.
THIRD QUARTER 2024 SUPPLEMENTAL METRICS | ||||||||||||||
(amounts in millions unless otherwise noted) | 3Q23 | 3Q24 | % Change | % Change Constant Currency(a) | ||||||||||
QxH | ||||||||||||||
Cost of Goods Sold % of Revenue | 65.4 | % | 65.5 | % | 10 | bps | ||||||||
Operating Income Margin (%)(b) | 5.6 | % | 7.0 | % | 140 | bps | ||||||||
Adjusted OIBDA Margin (%)(b) | 12.4 | % | 12.0 | % | (40 | )bps | ||||||||
Average Selling Price | $ | 51.78 | $ | 51.76 | 0 | % | ||||||||
Units Sold | (6 | )% | ||||||||||||
Return Rate(c) | 15.4 | % | 14.6 | % | (80 | )bps | ||||||||
eCommerce Revenue(d) | $ | 996 | $ | 967 | (3 | )% | ||||||||
eCommerce % of Total Revenue | 61.6 | % | 63.6 | % | 200 | bps | ||||||||
Mobile % of eCommerce Revenue(e) | 69.0 | % | 70.7 | % | 170 | bps | ||||||||
LTM Total Customers(f) | 8.2 | 7.9 | (4 | )% | ||||||||||
QVC International | ||||||||||||||
Cost of Goods Sold % of Revenue | 63.4 | % | 64.6 | % | 120 | bps | ||||||||
Operating Income Margin (%) | 10.9 | % | 10.0 | % | (90 | )bps | ||||||||
Adjusted OIBDA Margin (%) | 13.3 | % | 12.3 | % | (100 | )bps | ||||||||
Average Selling Price | (3 | )% | (3 | )% | ||||||||||
Units Sold | 1 | % | ||||||||||||
Return Rate(c) | 19.6 | % | 18.9 | % | (70 | )bps | ||||||||
eCommerce Revenue(d) | $ | 283 | $ | 297 | 5 | % | 5 | % | ||||||
eCommerce % of Total Revenue | 49.0 | % | 52.0 | % | 300 | bps | ||||||||
Mobile % of eCommerce Revenue(e) | 69.3 | % | 76.1 | % | 680 | bps | ||||||||
LTM Total Customers(f) | 4.2 | 4.0 | (5 | )% | ||||||||||
Cornerstone | ||||||||||||||
Cost of Goods Sold % of Revenue | 62.8 | % | 59.9 | % | (290 | )bps | ||||||||
Operating Income Margin (%) | 1.4 | % | NM | NM | ||||||||||
Adjusted OIBDA Margin (%) | 3.9 | % | 2.4 | % | (150 | )bps | ||||||||
eCommerce Revenue(d) | $ | 218 | $ | 188 | (14 | )% | ||||||||
eCommerce % of Total Revenue | 76.5 | % | 74.6 | % | (190 | )bps | ||||||||
| ________________________________________ | ||
a) | For a definition of constant currency financial metrics, see the accompanying schedules. | |
b) | In the third quarter of 2023, QxH incurred (i) a $2 million gain on the sale of Rocky Mount in February 2023 on proceeds released from escrow and (ii) $21 million of restructuring, penalty and fire-related costs. These items are included in operating income and excluded from Adjusted OIBDA. See Reconciling Schedule 2. | |
c) | Measured as returned sales over gross shipped sales in US Dollars. | |
d) | Based on net revenue. | |
e) | Based on gross US Dollar orders. | |
f) | LTM: Last twelve months. | |
| FOOTNOTES | ||
1) | Qurate Retail will discuss these headlines and other matters on Qurate Retail's earnings conference call that will begin at 8:30 a.m. (E.T.) on November 7, 2024. For information regarding how to access the call, please see "Important Notice" later in this document. | |
2) | For a definition of constant currency financial metrics, see the accompanying schedules. Applicable reconciliations can be found in the financial tables at the beginning of this press release. | |
3) | For definitions and applicable reconciliations of Adjusted OIBDA and Adjusted OIBDA margin, see the accompanying schedules. | |
NOTES
Cash and Debt
The following presentation is provided to separately identify cash and debt information.
(amounts in millions) | 6/30/2024 | 9/30/2024 | ||||||
Cash and cash equivalents (GAAP) | $ | 1,210 | $ | 873 | ||||
Debt: | ||||||||
QVC senior secured notes(a) | $ | 3,086 | $ | 2,732 | ||||
QVC senior secured bank credit facility | 1,225 | 1,280 | ||||||
Total Qurate Retail Group Debt | $ | 4,311 | $ | 4,012 | ||||
Senior notes(a) | 792 | 792 | ||||||
Senior exchangeable debentures(b) | 779 | 779 | ||||||
Corporate Level Debentures | 1,571 | 1,571 | ||||||
Total Qurate Retail, Inc. Debt | $ | 5,882 | $ | 5,583 | ||||
Unamortized discount, fair market value adjustment and deferred loan costs | (543 | ) | (524 | ) | ||||
Total Qurate Retail, Inc. Debt (GAAP) | $ | 5,339 | $ | 5,059 | ||||
Other Financial Obligations: | ||||||||
Preferred stock(c) | $ | 1,272 | $ | 1,272 | ||||
QVC, Inc. leverage(d) | 3.1x | 3.1x | ||||||
| ________________________________________ | ||
a) | Face amount of Senior Notes and Debentures with no reduction for the unamortized discount. | |
b) | Face amount of Senior Exchangeable Debentures with no adjustment for the fair market value adjustment. | |
c) | Preferred Stock has an 8% coupon, $100 per share initial liquidation preference plus accrued and unpaid dividends and is non-voting. It is subject to mandatory redemption on March 15, 2031. The Preferred Stock is considered a liability for GAAP purposes, and is recorded net of capitalized costs. | |
d) | As defined in QVC's credit agreement. A portion of expected cost savings are included in Adjusted EBITDA for purposes of the covenant calculations under QVC's bank credit facility. | |
Cash at Qurate Retail decreased $337 million in the third quarter primarily due to net debt repayment and capital expenditures during the period. On September 26, 2024, QVC completed an offer in which 89% of its 4.75% senior secured notes due 2027 and 4.375% senior secured notes due 2028 were tendered. The transaction was funded by $605 million of new 6.875% senior secured notes due 2029 and $352 million of cash. Total debt at Qurate Retail decreased $299 million in the third quarter due to the repurchase of QVC's 2027 and 2028 senior secured notes, partially offset by the issuance of the new 2029 senior secured notes and additional net borrowing under QVC's bank credit facility.
QVC's bank credit facility has $1.3 billion drawn as of September 30, 2024 with incremental availability of $1.8 billion, net of letters of credit. QVC's leverage ratio, as defined by the QVC revolving credit facility, was 3.1x at quarter-end. Pursuant to the terms of QVC's revolving credit facility, a portion of expected cost savings are included in operating income for purposes of QVC's leverage ratio for covenant calculations.
As of September 30, 2024, QVC's consolidated leverage ratio (as calculated under QVC's senior secured notes) was greater than 3.5x and as a result QVC is restricted in its ability to make unlimited dividends or other restricted payments. Dividends made by QVC to service the principal and interest of indebtedness of its parent entities, as well as payments made by QVC to Qurate Retail under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries, are permitted under the bond indenture and credit agreement.
Qurate Retail is in compliance with all debt covenants as of September 30, 2024.
Important Notice: Qurate Retail, Inc. (Nasdaq: QRTEA, QRTEB, QRTEP) will discuss Qurate Retail's earnings release on a conference call which will begin at 8:30 a.m. (E.T.) on November 7, 2024. The call can be accessed by dialing (877) 704-4234 or (215) 268-9904, passcode 13744091, at least 10 minutes prior to the start time. The call will also be broadcast live across the Internet and archived on our website. To access the webcast go to https://www.qurateretail.com/investors/news-events/ir-calendar. Links to this press release and replays of the call will also be available on Qurate Retail's website.
This press release includes certain forward-looking statements, including statements about business strategies and initiatives (including Project Athens and Cornerstone's transformation plan) and their expected benefits, market potential, future financial performance and prospects 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 Qurate Retail, changes in law and government regulations, the availability of investment opportunities, general market conditions (including as a result of future public health crises), issues impacting the global supply chain and labor market and use of social media and influencers. These forward-looking statements speak only as of the date of this press release, and Qurate Retail expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Qurate Retail's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please refer to the publicly filed documents of Qurate Retail, including the most recent Forms 10-K and 10-Q, for additional information about Qurate Retail and about the risks and uncertainties related to Qurate Retail's business which may affect the statements made in this press release.
NON-GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our financial results, this press release includes a presentation of Adjusted OIBDA, which is a non-GAAP financial measure, for Qurate Retail, QVC (and certain of its subsidiaries) and Cornerstone together with a reconciliation to that entity or such businesses' operating income, as determined under GAAP. Qurate Retail defines Adjusted OIBDA as operating income (loss) plus depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring, penalties, acquisition-related costs, fire related costs, net (including Rocky Mount inventory losses), and (gains) losses on sale leaseback transactions. Further, this press release includes Adjusted OIBDA margin, which is also a non-GAAP financial measure. Qurate Retail defines Adjusted OIBDA margin as Adjusted OIBDA divided by revenue.
Qurate Retail believes Adjusted OIBDA is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business's performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. Because Adjusted OIBDA is used as a measure of operating performance, Qurate Retail views operating income as the most directly comparable GAAP measure. Adjusted OIBDA is not meant to replace or supersede operating income or any other GAAP measure, but rather to supplement such GAAP measures in order to present investors with the same information that Qurate Retail's management considers in assessing the results of operations and performance of its assets. Please see the attached schedules for applicable reconciliations.
This press release also references certain financial metrics on a constant currency basis, which is a non-GAAP measure, for Qurate Retail. Constant currency financial metrics, as presented herein, are calculated by translating the current-year and prior-year reported amounts into comparable amounts using a single foreign exchange rate for each currency.
Qurate Retail believes constant currency financial metrics are an important indicator of financial performance, in particular for QVC, due to the translational impact of foreign currency fluctuations relating to its subsidiaries in the UK, Germany, Italy and Japan. We use constant currency financial metrics to provide a framework to assess how our businesses performed excluding the effects of foreign currency exchange fluctuations. Please see the financial tables at the beginning of this press release for a reconciliation of the impact of foreign currency fluctuations on revenue, operating income, Adjusted OIBDA and average selling price.
SCHEDULE 1
The following table provides a reconciliation of Qurate Retail's Adjusted OIBDA to its operating income (loss) calculated in accordance with GAAP for the three months ended September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024 and September 30, 2024, respectively.
CONSOLIDATED OPERATING INCOME AND ADJUSTED OIBDA RECONCILIATION | |||||||||||||||||
(amounts in millions) | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 | ||||||||||||
Qurate Retail Operating Income (Loss) | $ | 151 | $ | (103 | ) | $ | 145 | $ | 165 | $ | 152 | ||||||
Depreciation and amortization | 105 | 98 | 99 | 96 | 95 | ||||||||||||
Stock compensation expense | 10 | 13 | 16 | 3 | 3 | ||||||||||||
Restructuring, penalty and fire related costs, net of (recoveries) (including Rocky Mount inventory losses)(a) | 19 | - | - | 18 | - | ||||||||||||
Impairment of intangible assets(b) | - | 326 | - | - | - | ||||||||||||
(Gains) losses on sale of assets and sale leaseback transactions(c) | - | 6 | (1 | ) | - | - | |||||||||||
Qurate Retail Adjusted OIBDA | $ | 285 | $ | 340 | $ | 259 | $ | 282 | $ | 250 | |||||||
| ________________________________________ | ||
a) | In the third quarter of 2023, QxH incurred (i) a $2 million gain on the sale of its Rocky Mount fulfillment center in February 2023 on proceeds released from escrow and (ii) $21 million of restructuring, penalty and fire-related costs. In the second quarter of 2024, Qurate Retail incurred $18 million of restructuring charges related to a plan to shift its information technology operating model. These items are included in operating income and excluded from Adjusted OIBDA. | |
b) | In the fourth quarter of 2023, QxH recognized a $326 million non-cash impairment charge related to goodwill. | |
c) | Includes a loss related to the sale leaseback of a German property in the fourth quarter of 2023 and a gain related to the sale leaseback of a German property in the first quarter of 2024. | |
SCHEDULE 2
The following table provides a reconciliation of Adjusted OIBDA for QVC and Cornerstone to that entity or such businesses' operating income (loss) calculated in accordance with GAAP for the three months ended September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024 and September 30, 2024, respectively.
SUBSIDIARY ADJUSTED OIBDA RECONCILIATION | ||||||||||||||||||
(amounts in millions) | 3Q23 | 4Q23 | 1Q24 | 2Q24 | 3Q24 | |||||||||||||
QVC | ||||||||||||||||||
Operating income (loss) | $ | 154 | $ | (113 | ) | $ | 157 | $ | 163 | $ | 164 | |||||||
Depreciation and amortization | 98 | 91 | 92 | 88 | 87 | |||||||||||||
Stock compensation | 7 | 10 | 12 | 2 | 1 | |||||||||||||
Restructuring, penalty and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) | 19 | - | - | 18 | - | |||||||||||||
(Gains) losses on sale of assets and sale leaseback transactions | - | 6 | (1 | ) | - | - | ||||||||||||
Impairment of intangible assets | - | 326 | - | - | - | |||||||||||||
Adjusted OIBDA | $ | 278 | $ | 320 | $ | 260 | $ | 271 | $ | 252 | ||||||||
QxH Adjusted OIBDA | $ | 201 | $ | 221 | $ | 185 | $ | 194 | $ | 182 | ||||||||
QVC International Adjusted OIBDA | $ | 77 | $ | 99 | $ | 75 | $ | 77 | $ | 70 | ||||||||
Cornerstone | ||||||||||||||||||
Operating income (loss) | $ | 4 | $ | 18 | $ | (3 | ) | $ | 11 | $ | (2 | ) | ||||||
Depreciation and amortization | 7 | 7 | 7 | 8 | 8 | |||||||||||||
Stock compensation | - | 2 | 2 | - | - | |||||||||||||
Restructuring costs | - | - | - | - | - | |||||||||||||
Adjusted OIBDA | $ | 11 | $ | 27 | $ | 6 | $ | 19 | $ | 6 | ||||||||
QURATE RETAIL, INC. CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (unaudited) | |||||
September 30, | December 31, | ||||
2024 | 2023 | ||||
amounts in millions | |||||
Assets | |||||
Current assets: | |||||
Cash and cash equivalents | $ | 873 | 1,121 | ||
Trade and other receivables, net of allowance for credit losses | 883 | 1,308 | |||
Inventory, net | 1,299 | 1,044 | |||
Other current assets | 174 | 209 | |||
Total current assets | 3,229 | 3,682 | |||
Property and equipment, net | 500 | 512 | |||
Intangible assets not subject to amortization | 5,873 | 5,862 | |||
Intangible assets subject to amortization, net | 437 | 526 | |||
Operating lease right-of-use assets | 618 | 635 | |||
Other assets, at cost, net of accumulated amortization | 116 | 151 | |||
Total assets | $ | 10,773 | 11,368 | ||
Liabilities and Equity | |||||
Current liabilities: | |||||
Accounts payable | 839 | 895 | |||
Accrued liabilities | 802 | 983 | |||
Current portion of debt | 874 | 642 | |||
Other current liabilities | 134 | 97 | |||
Total current liabilities | 2,649 | 2,617 | |||
Long-term debt | 4,185 | 4,698 | |||
Deferred income tax liabilities | 1,443 | 1,531 | |||
Preferred stock | 1,272 | 1,270 | |||
Operating lease liabilities | 614 | 615 | |||
Other liabilities | 131 | 148 | |||
Total liabilities | 10,294 | 10,879 | |||
Equity | 397 | 385 | |||
Non-controlling interests in equity of subsidiaries | 82 | 104 | |||
Total liabilities and equity | $ | 10,773 | 11,368 | ||
QURATE RETAIL, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS INFORMATION (unaudited) | |||||||
Three months ended | |||||||
September 30, | |||||||
2024 | 2023 | ||||||
amounts in millions | |||||||
Revenue: | |||||||
Total revenue, net | $ | 2,344 | 2,479 | ||||
Operating costs and expenses: | |||||||
Cost of goods sold (exclusive of depreciation shown separately below) | 1,517 | 1,603 | |||||
Operating expense | 175 | 186 | |||||
Selling, general and administrative, including stock-based compensation | 405 | 415 | |||||
Restructuring, penalty and fire related costs, net of (recoveries) | - | 19 | |||||
Depreciation and amortization | 95 | 105 | |||||
2,192 | 2,328 | ||||||
Operating income (loss) | 152 | 151 | |||||
Other income (expense): | |||||||
Interest expense | (117 | ) | (119 | ) | |||
Dividend and interest income | 14 | 14 | |||||
Realized and unrealized gains (losses) on financial instruments, net | (36 | ) | (14 | ) | |||
Other, net | (13 | ) | 1 | ||||
(152 | ) | (118 | ) | ||||
Earnings (loss) before income taxes | - | 33 | |||||
Income tax (expense) benefit | (15 | ) | (21 | ) | |||
Net earnings (loss) | (15 | ) | 12 | ||||
Less net earnings (loss) attributable to the noncontrolling interests | 8 | 11 | |||||
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders | $ | (23 | ) | 1 | |||
QURATE RETAIL, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS INFORMATION (unaudited) | |||||||
Nine months ended | |||||||
September 30, | |||||||
2024 | 2023 | ||||||
amounts in millions | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net earnings (loss) | $ | 25 | 164 | ||||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 290 | 309 | |||||
Stock-based compensation | 22 | 40 | |||||
Realized and unrealized (gains) losses on financial instruments, net | 53 | 60 | |||||
Gain on sale of assets and sale leaseback transactions | (1 | ) | (119 | ) | |||
Gain on insurance proceeds, net of fire related costs | - | (225 | ) | ||||
Insurance proceeds received for operating expenses and business interruption losses | - | 226 | |||||
Loss on disposition of Zulily | - | 64 | |||||
Deferred income tax expense (benefit) | (86 | ) | 62 | ||||
Other, net | 11 | 3 | |||||
Changes in operating assets and liabilities | |||||||
Decrease (increase) in accounts receivable | 411 | 378 | |||||
Decrease (increase) in inventory | (249 | ) | 63 | ||||
Decrease (increase) in prepaid expenses and other assets | 71 | 90 | |||||
(Decrease) increase in trade accounts payable | (59 | ) | (103 | ) | |||
(Decrease) increase in accrued and other liabilities | (175 | ) | (410 | ) | |||
Net cash provided (used) by operating activities | 313 | 602 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (137 | ) | (151 | ) | |||
Expenditures for television distribution rights | (23 | ) | (111 | ) | |||
Cash proceeds from dispositions of investments | 7 | 71 | |||||
Cash paid for disposal of Zulily | - | (35 | ) | ||||
Proceeds from sale of fixed assets | 6 | 202 | |||||
Insurance proceeds received for fixed asset loss | - | 54 | |||||
Payments for settlements of financial instruments | - | (179 | ) | ||||
Proceeds from settlements of financial instruments | - | 167 | |||||
Other investing activities, net | (2 | ) | - | ||||
Net cash provided (used) by investing activities | (149 | ) | 18 | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Borrowings of debt | 1,895 | 1,137 | |||||
Repayments of debt | (2,249 | ) | (1,893 | ) | |||
Dividends paid to noncontrolling interest | (51 | ) | (35 | ) | |||
Dividends paid to common shareholders | (4 | ) | (8 | ) | |||
Indemnification agreement settlement | - | 26 | |||||
Other financing activities, net | (3 | ) | (3 | ) | |||
Net cash provided (used) by financing activities | (412 | ) | (776 | ) | |||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash | 2 | (17 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (246 | ) | (173 | ) | |||
Cash, cash equivalents and restricted cash at beginning of period | 1,136 | 1,285 | |||||
Cash, cash equivalents and restricted cash at end period | $ | 890 | 1,112 | ||||
Contacts
Shane Kleinstein (720) 875-5432
