Qurate Retail, Inc. [QRTEA] Filings

10-Q 1 qrtea-20220930x10q.htm 10-Q UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33982

QURATE RETAIL, INC.

(Exact name of Registrant as specified in its charter)

incorporation or organization)	Identification No.)
State of Delaware (State or other jurisdiction of incorporation or organization)	84-1288730 (I.R.S. Employer Identification No.)

12300 Liberty Boulevard Englewood, Colorado (Address of principal executive offices)	80112 (Zip Code)

Registrant's telephone number, including area code: (720) 875-5300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Series A common stock	QRTEA	The Nasdaq Stock Market LLC
Series B common stock	QRTEB	The Nasdaq Stock Market LLC
8.0% Series A Cumulative Redeemable Preferred Stock	QRTEP	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

The number of outstanding shares of Qurate Retail, Inc.'s common stock as of October 31, 2022 was:


Series A common stock		373,838,128
Series B common stock		8,373,512

Table of Contents

Table of Contents


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited)		I-3
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited)		I-5
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)		I-6
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)		I-7
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited)		I-8
QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)		I-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		I-25
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		I-38
Item 4. Controls and Procedures.		I-39

PART II—OTHER INFORMATION		II-1
Item 1. Legal Proceedings		II-1
Item 1A. Risk Factors		II-1
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		II-2
Item 6. Exhibits		II-3

SIGNATURES		II-4

I-2

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


	September 30,		December 31,
	2022		2021

	amounts in millions
Assets
Current assets:
Cash and cash equivalents	$	624	587
Trade and other receivables, net of allowance for credit losses of $107 million and $107 million, respectively		1,027	1,679
Inventory, net		1,737	1,623
Indemnification agreement receivable		—	324
Other current assets		189	235
Total current assets		3,577	4,448
Property and equipment, net		594	1,030
Intangible assets not subject to amortization (note 5):
Goodwill		3,430	6,339
Trademarks		2,718	3,038
		6,148	9,377
Intangible assets subject to amortization, net (note 5)		645	745
Other assets, at cost, net of accumulated amortization		832	602
Total assets	$	11,796	16,202

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)


	September 30,		December 31,
	2022		2021

	amounts in millions,
	except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	977	1,429
Accrued liabilities		940	1,236
Current portion of debt, $389 million and $1,315 million measured at fair value (note 6)		603	1,315
Other current liabilities		214	244
Total current liabilities		2,734	4,224
Long-term debt, $310 million and zero measured at fair value (note 6)		5,303	5,674
Deferred income tax liabilities		1,447	1,350
Preferred stock (note 7)		1,266	1,261
Other liabilities		698	707
Total liabilities		11,448	13,216
Equity
Stockholders' equity:
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 373,833,469 shares at September 30, 2022 and 371,132,684 shares at December 31, 2021		4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,373,512 shares at September 30, 2022 and 8,163,190 shares at December 31, 2021		—	—
Series C common stock, $.01 par value. Authorized 400,000,000 shares; no shares issued		—	—
Additional paid-in capital		38	—
Accumulated other comprehensive earnings (loss), net of taxes		(194)	(79)
Retained earnings		387	2,925
Total stockholders' equity		235	2,850
Noncontrolling interests in equity of subsidiaries		113	136
Total equity		348	2,986
Commitments and contingencies (note 8)
Total liabilities and equity	$	11,796	16,202

See accompanying notes to condensed consolidated financial statements.

I-4

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)


	Three months ended			Nine months ended
	September 30,			September 30,
	2022		2021	2022		2021

	amounts in millions, except per share amounts
Total revenue, net	$	2,744	3,144		8,580	9,985
Operating costs and expenses:
Cost of goods sold (exclusive of depreciation shown separately below)		1,905	2,069		5,885	6,504
Operating expense		205	204		599	627
Selling, general and administrative, including stock-based compensation (note 2)		464	458		1,370	1,378
Restructuring and fire related costs, net of (recoveries) (note 8)		(134)	—		(123)	—
Depreciation and amortization		107	139		371	396
Impairment of intangible assets (note 5)		3,081	—		3,081	—
(Gains) losses on sales of fixed assets, net (note 8)		(277)	—		(520)	—
		5,351	2,870		10,663	8,905
Operating income (loss)		(2,607)	274		(2,083)	1,080
Other income (expense):
Interest expense		(107)	(121)		(343)	(356)
Share of earnings (losses) of affiliates, net		—	(24)		(1)	(78)
Realized and unrealized gains (losses) on financial instruments, net (note 4)		(8)	41		29	101
Tax sharing income (expense) with Liberty Broadband		36	(3)		78	(16)
Other, net		37	3		83	6
		(42)	(104)		(154)	(343)
Earnings (loss) before income taxes		(2,649)	170		(2,237)	737
Income tax (expense) benefit		(87)	(20)		(265)	(113)
Net earnings (loss)		(2,736)	150		(2,502)	624
Less net earnings (loss) attributable to the noncontrolling interests		11	23		41	69
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	(2,747)	127		(2,543)	555

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	(7.21)	0.31		(6.69)	1.36
Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	(7.21)	0.31		(6.69)	1.32

See accompanying notes to condensed consolidated financial statements.

I-5

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)


	Three months ended			Nine months ended
	September 30,			September 30,
	2022		2021	2022	2021

	amounts in millions
Net earnings (loss)	$	(2,736)	150	(2,502)	624
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		(127)	(28)	(330)	(92)
Recognition of previously unrealized losses (gains) on debt, net		(14)	—	(14)	—
Comprehensive earnings (loss) attributable to debt credit risk adjustments		30	(13)	204	(50)
Other comprehensive earnings (loss)		(111)	(41)	(140)	(142)
Comprehensive earnings (loss)		(2,847)	109	(2,642)	482
Less comprehensive earnings (loss) attributable to the noncontrolling interests		5	22	16	59
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	(2,852)	87	(2,658)	423

See accompanying notes to condensed consolidated financial statements.

I-6

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Nine months ended
	September 30,
	2022		2021

	amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	(2,502)	624
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		371	396
Impairment of intangible assets		3,081	—
Stock-based compensation		46	54
Share of (earnings) losses of affiliates, net		1	78
Realized and unrealized (gains) losses on financial instruments, net		(29)	(101)
(Gains) losses on sales of fixed assets, net		(520)	—
Gain on insurance proceeds		(139)	—
Insurance proceeds received for operating losses		96	—
Deferred income tax expense (benefit)		45	(35)
Other, net		(68)	15
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		483	439
Decrease (increase) in inventory		(163)	(453)
Decrease (increase) in prepaid expenses and other assets		98	85
(Decrease) increase in trade accounts payable		(418)	(48)
(Decrease) increase in accrued and other liabilities		(419)	(339)
Net cash provided (used) by operating activities		(37)	715
Cash flows from investing activities:
Investments in and loans to cost and equity investees		(7)	(177)
Capital expenditures		(171)	(169)
Expenditures for television distribution rights		(36)	(184)
Cash proceeds from dispositions of investments		12	10
Proceeds from sale of fixed assets		701	40
Insurance proceeds		184	—
Other investing activities, net		21	(3)
Net cash provided (used) by investing activities		704	(483)
Cash flows from financing activities:
Borrowings of debt		2,069	394
Repayments of debt		(2,577)	(284)
Repurchases of Qurate Retail common stock		—	(216)
Withholding taxes on net settlements of stock-based compensation		(7)	(25)
Payments for issuances of financial instruments		—	(107)
Proceeds from settlements of financial instruments		—	88
Dividends paid to noncontrolling interest		(39)	(46)
Dividends paid to common shareholders		(11)	(14)
Other financing activities, net		(6)	(9)
Net cash provided (used) by financing activities		(571)	(219)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		(59)	(20)
Net increase (decrease) in cash, cash equivalents and restricted cash		37	(7)
Cash, cash equivalents and restricted cash at beginning of period		596	814
Cash, cash equivalents and restricted cash at end of period	$	633	807

The following table reconciles cash, cash equivalents and restricted cash reported in our condensed consolidated balance sheets to the total amount presented in our condensed consolidated statements of cash flows:


		September 30,	December 31,
		2022	2021

	in millions
Cash and cash equivalents	$	624	587
Restricted cash included in other current assets		9	9
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows	$	633	596

See accompanying notes to condensed consolidated financial statements.

I-7

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at January 1, 2022	$	—	4	—	—	(79)	2,925	136	2,986
Net earnings (loss)		—	—	—	—	—	(2,543)	41	(2,502)
Other comprehensive earnings (loss)		—	—	—	—	(115)	—	(25)	(140)
Stock-based compensation		—	—	—	44	—	—	—	44
Distribution to noncontrolling interest		—	—	—	—	—	—	(39)	(39)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(7)	—	—	—	(7)
Other		—	—	—	1	—	5	—	6
Balance at September 30, 2022	$	—	4	—	38	(194)	387	113	348



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at June 30, 2022	$	—	4	—	23	(89)	3,134	119	3,191
Net earnings (loss)		—	—	—	—	—	(2,747)	11	(2,736)
Other comprehensive earnings (loss)		—	—	—	—	(105)	—	(6)	(111)
Stock-based compensation		—	—	—	14	—	—	—	14
Distribution to noncontrolling interest		—	—	—	—	—	—	(11)	(11)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	1	—	—	—	1
Other		—	—	—	—	—	—	—	—
Balance at September 30, 2022	$	—	4	—	38	(194)	387	113	348

I-8

Table of Contents



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at January 1, 2021	$	—	4	—	—	72	3,478	135	3,689
Net earnings (loss)		—	—	—	—	—	555	69	624
Other comprehensive income (loss)		—	—	—	—	(132)	—	(10)	(142)
Stock-based compensation		—	—	—	51	—	—	—	51
Series A Qurate Retail stock repurchases		—	—	—	(239)	—	—	—	(239)
Distribution to noncontrolling interest		—	—	—	—	—	—	(46)	(46)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(25)	—	—	—	(25)
Other		—	—	—	(46)	—	4	—	(42)
Reclassification		—	—	—	259	—	(259)	—	—
Balance at September 30, 2021	$	—	4	—	—	(60)	3,778	148	3,870



	Stockholders' Equity
			Common stock					Accumulated
			Qurate		Additional	other		Noncontrolling
	Preferred		Retail		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at June 30, 2021	$	—	4	—	—	(20)	3,743	141	3,868
Net earnings (loss)		—	—	—	—	—	127	23	150
Other comprehensive income (loss)		—	—	—	—	(40)	—	(1)	(41)
Stock-based compensation		—	—	—	18	—	—	—	18
Series A Qurate Retail stock repurchases		—	—	—	(134)	—	—	—	(134)
Distribution to noncontrolling interest		—	—	—	—	—	—	(15)	(15)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(1)	—	—	—	(1)
Other		—	—	—	24	—	1	—	25
Reclassification		—	—	—	93	—	(93)	—	—
Balance at September 30, 2021	$	—

Qurate Retail, Inc. [QRTEA] Filings
Qurate Retail, Inc. [QRTEB] Filings
Qurate Retail, Inc. [QRTEP] Filings
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-02-25]
10-Q	[2021-11-04]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-02-26]
10-Q	[2020-11-05]
10-Q	[2020-08-10]
10-Q	[2020-05-08]
10-K	[2020-02-26]
10-Q	[2019-11-12]
10-Q	[2019-08-08]
10-Q	[2019-05-10]
10-K	[2019-02-28]
10-Q	[2018-11-09]
10-Q	[2018-08-08]
10-Q	[2018-05-10]
10-K	[2018-03-01]
10-Q	[2017-11-09]
10-Q	[2017-08-08]
10-Q	[2017-05-09]
10-K	[2017-02-28]
10-Q	[2016-11-08]
10-Q	[2016-08-05]
10-Q	[2016-05-09]
10-K	[2016-02-26]
10-Q	[2015-11-05]
10-Q	[2015-08-05]
10-Q	[2015-05-08]
10-K	[2015-02-27]
10-Q	[2014-11-05]
10-Q	[2014-08-05]
10-Q	[2014-05-08]
10-K	[2014-02-28]
10-Q	[2013-11-05]
10-Q	[2013-08-06]
10-Q	[2013-05-08]
10-K	[2013-02-28]
10-Q	[2012-11-06]
10-Q	[2012-08-08]
10-Q	[2012-05-08]
10-K	[2012-02-23]

Qurate Retail, Inc. [QRTEA] Filings

Qurate Retail, Inc. [QRTEB] Filings

Qurate Retail, Inc. [QRTEP] Filings