UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
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
(Exact name of Registrant as specified in its charter)
State of (State or other jurisdiction of | (I.R.S. Employer |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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.
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).
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.
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
The number of outstanding shares of Qurate Retail, Inc.'s common stock as of April 30, 2022 was:
Series A common stock | | ||
Series B common stock | |
Table of Contents
I-2
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
| March 31, |
| December 31, |
| ||
2022 | 2021 | |||||
amounts in millions | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | |
| | ||
Trade and other receivables, net of allowance for credit losses of $ |
| |
| | ||
Inventory, net |
| |
| | ||
Indemnification agreement receivable | | | ||||
Other current assets |
| |
| | ||
Total current assets |
| |
| | ||
Property and equipment, net |
| |
| | ||
Intangible assets not subject to amortization (note 5): | ||||||
Goodwill |
| |
| | ||
Trademarks |
| |
| | ||
| |
| | |||
Intangible assets subject to amortization, net (note 5) |
| |
| | ||
Other assets, at cost, net of accumulated amortization |
| |
| | ||
Total assets | $ | |
| | ||
(continued)
See accompanying notes to condensed consolidated financial statements.
I-3
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Continued)
(unaudited)
March 31, | December 31, |
| ||||
2022 | 2021 |
| ||||
amounts in millions, |
| |||||
except share amounts |
| |||||
Liabilities and Equity |
|
|
|
| ||
Current liabilities: | ||||||
Accounts payable | $ | |
| | ||
Accrued liabilities |
| |
| | ||
Current portion of debt, $ |
| |
| | ||
Other current liabilities |
| |
| | ||
Total current liabilities |
| |
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Long-term debt (note 6) |
| |
| | ||
Deferred income tax liabilities |
| |
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Preferred stock (note 7) | | | ||||
Other liabilities |
| |
| | ||
Total liabilities |
| |
| | ||
Equity | ||||||
Stockholders' equity: | ||||||
Series A common stock, $ |
| |
| | ||
Series B common stock, $ |
|
| ||||
Series C common stock, $ | ||||||
Additional paid-in capital |
| |
| — | ||
Accumulated other comprehensive earnings (loss), net of taxes |
| ( |
| ( | ||
Retained earnings |
| |
| | ||
Total stockholders' equity |
| |
| | ||
Noncontrolling interests in equity of subsidiaries |
| |
| | ||
Total equity |
| |
| | ||
Commitments and contingencies (note 8) | ||||||
Total liabilities and equity | $ | |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-4
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended |
| |||||
March 31, |
| |||||
| 2022 |
| 2021 |
| ||
amounts in millions, except per share amounts |
| |||||
$ | |
| | |||
Operating costs and expenses: | ||||||
| |
| | |||
Operating expense |
| |
| | ||
Selling, general and administrative, including stock-based compensation (note 2) |
| |
| | ||
Restructuring and fire related costs, net | | — | ||||
Depreciation and amortization |
| |
| | ||
| |
| | |||
Operating income (loss) |
| |
| | ||
Other income (expense): | ||||||
Interest expense |
| ( |
| ( | ||
Share of earnings (losses) of affiliates, net |
| ( |
| ( | ||
Realized and unrealized gains (losses) on financial instruments, net (note 4) |
| |
| | ||
Other, net |
| |
| | ||
| ( |
| ( | |||
Earnings (loss) before income taxes |
| |
| | ||
Income tax (expense) benefit |
| ( |
| ( | ||
Net earnings (loss) | | | ||||
Less net earnings (loss) attributable to the noncontrolling interests |
| |
| | ||
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders | $ | |
| | ||
Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3): | $ | |
| | ||
Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3): | $ | |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-5
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Earnings (Loss)
(unaudited)
Three months ended |
| |||||
March 31, |
| |||||
| 2022 |
| 2021 |
| ||
amounts in millions |
| |||||
Net earnings (loss) | $ | |
| | ||
Other comprehensive earnings (loss), net of taxes: | ||||||
Foreign currency translation adjustments |
| ( |
| ( | ||
Comprehensive earnings (loss) attributable to debt credit risk adjustments | | ( | ||||
Other comprehensive earnings (loss) |
| ( |
| ( | ||
Comprehensive earnings (loss) |
| ( |
| | ||
Less comprehensive earnings (loss) attributable to the noncontrolling interests |
| |
| | ||
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders | $ | ( |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-6
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three months ended |
| |||||
March 31, |
| |||||
| 2022 |
| 2021 |
| ||
amounts in millions |
| |||||
Cash flows from operating activities: | ||||||
Net earnings (loss) | $ | |
| | ||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | ||||||
Depreciation and amortization |
| |
| | ||
Stock-based compensation |
| |
| | ||
Share of (earnings) losses of affiliates, net |
| |
| | ||
Realized and unrealized (gains) losses on financial instruments, net |
| ( |
| ( | ||
Deferred income tax expense (benefit) |
| |
| | ||
Other, net |
| ( |
| | ||
Changes in operating assets and liabilities | ||||||
Decrease (increase) in accounts receivable |
| |
| | ||
Decrease (increase) in inventory | ( | ( | ||||
Decrease (increase) in prepaid expenses and other assets | | | ||||
(Decrease) increase in trade accounts payable | ( | ( | ||||
(Decrease) increase in accrued and other liabilities | ( | ( | ||||
Net cash provided (used) by operating activities |
| ( |
| | ||
Cash flows from investing activities: | ||||||
Investments in and loans to cost and equity investees |
| ( |
| ( | ||
Capital expenditures |
| ( |
| ( | ||
Expenditures for television distribution rights | ( | ( | ||||
Cash proceeds from dispositions of investments | | | ||||
Proceeds from sale of fixed assets | — | | ||||
Other investing activities, net | | ( | ||||
Net cash provided (used) by investing activities |
| ( |
| ( | ||
Cash flows from financing activities: | ||||||
Borrowings of debt |
| |
| | ||
Repayments of debt |
| ( |
| ( | ||
Repurchases of Qurate Retail common stock |
| — |
| ( | ||
Withholding taxes on net settlements of stock-based compensation |
| ( |
| ( | ||
Dividends paid to noncontrolling interest | ( | ( | ||||
Dividends paid to common shareholders | ( | ( | ||||
Other financing activities, net |
| ( |
| ( | ||
Net cash provided (used) by financing activities |
| |
| ( | ||
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash |
| ( |
| ( | ||
Net increase (decrease) in cash, cash equivalents and restricted cash |
| |
| ( | ||
Cash, cash equivalents and restricted cash at beginning of period |
| |
| | ||
Cash, cash equivalents and restricted cash at end of period | $ | |
| | ||
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:
March 31, | December 31, | ||||
2022 | 2021 | ||||
in millions | |||||
Cash and cash equivalents | $ | ||||
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows | $ | ||||
See accompanying notes to condensed consolidated financial statements.
I-7
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 | $ | — | | — | — | ( | | | | |||||||||
Net earnings (loss) |
| — | — | — | — | — | | | | |||||||||
Other comprehensive earnings (loss) |
| — | — | — | — | ( | — | ( | ( | |||||||||
Stock-based compensation | — | — | — | | — | — | — | | ||||||||||
Distribution to noncontrolling interest | — | — | — | — | — | — | ( | ( | ||||||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | ( | — | — | — | ( | ||||||||||
Other | — | — | — | — | — | | — | | ||||||||||
Balance at March 31, 2022 | $ | — | | — | | ( | | | | |||||||||
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 | $ | — | | — | — | | | | | |||||||||
Net earnings (loss) |
| — | — | — | — | — | | | | |||||||||
Other comprehensive income (loss) |
| — | — | — | — | ( | — | ( | ( | |||||||||
Stock-based compensation | — | — | — | | — | — | — | | ||||||||||
Series A Qurate Retail stock repurchases | — | — | — | ( | — | — | — | ( | ||||||||||
Distribution to noncontrolling interest | — | — | — | — | — | — | ( | ( | ||||||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | ( | — | — | — | ( | ||||||||||
Other | — | — | — | ( | — | | — | ( | ||||||||||
Reclassification | — | — | — | | — | ( | — | — | ||||||||||
Balance at March 31, 2021 | $ | — |
| |
| — |
| — |
| ( |
| |
| |
| | ||
See accompanying notes to condensed consolidated financial statements.
I-8
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of Qurate Retail, Inc. and its controlled subsidiaries (collectively, "Qurate Retail," the "Company," “Consolidated Qurate Retail,” “us,” “we,” or “our” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. Qurate Retail is made up of wholly-owned subsidiaries QVC, Inc. (“QVC”), which includes HSN, Inc. (“HSN”), Cornerstone Brands, Inc. (“Cornerstone”), Zulily, LLC (“Zulily”), and other cost and equity method investments.
Qurate Retail is primarily engaged in the video and online commerce industries in North America, Europe and Asia. The businesses of the Company’s wholly-owned subsidiaries, QVC, Cornerstone and Zulily, are seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.
The accompanying (a) condensed consolidated balance sheet as of December 31, 2021, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Qurate Retail's Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 10-K”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Qurate Retail considers (i) fair value measurements, (ii) accounting for income taxes, and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.
In December 2019, a new coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China and has subsequently spread across the globe causing a global pandemic, impacting all countries where Qurate Retail operates. As a result of the spread of COVID-19, certain local governmental agencies have imposed travel restrictions, local quarantines or stay at home restrictions to contain the spread, which has caused a significant disruption to most sectors of the economy.
Management is not presently aware of any events or circumstances arising from COVID-19 that would require the Company to update the estimates, judgments or revise the carrying value of our assets or liabilities. Management's estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements.
Qurate Retail has entered into certain agreements with Liberty Media Corporation ("LMC") (for accounting purposes, a related party of the Company), a separate publicly traded company. These agreements include a reorganization agreement, services agreement and facilities sharing agreement. As a result of certain corporate transactions, LMC and Qurate Retail may have obligations to each other for certain tax related matters. Neither Qurate Retail nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with a split-off transaction that occurred in the first quarter of 2018 (the “GCI Liberty Split-Off”), Qurate Retail and GCI Liberty, Inc. (“GCI Liberty”) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty agreed to indemnify Qurate Retail for taxes and tax-related losses resulting from the GCI Liberty Split-Off to the extent such taxes or tax-related losses (i) result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by GCI Liberty (applicable to actions or failures to act by GCI Liberty and its subsidiaries following the completion of the GCI Liberty Split-Off), or (ii) result from Section 355(e) of the Internal Revenue Code applying to the GCI Liberty Split-Off as a result of the GCI Liberty Split-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-
I-9
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
percent or greater interest (measured by vote or value) in the stock of GCI Liberty (or any successor corporation). Following a merger between Liberty Broadband Corporation (“Liberty Broadband”) and GCI Liberty, Liberty Broadband (for accounting purposes, a related party of the Company) has assumed the tax sharing agreement.
In December 2019, the Company entered into an amendment to the services agreement in connection with LMC’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s Chairman of the Board (the “Chairman” or “Mr. Maffei”). Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., and Liberty Broadband (collectively, the “Service Companies”) or reimbursed to LMC, in each case, based on allocations among LMC and the Service Companies set forth in the amended services agreement, currently set at
The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between Qurate Retail and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides Qurate Retail with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. Qurate Retail reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for Qurate Retail's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Qurate Retail. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with Qurate Retail. Under these various agreements, approximately $
(2) Stock-Based Compensation
The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock (“RSAs”), restricted stock units (“RSUs”) and options to purchase shares of the Company’s common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.
Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $
I-10
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Qurate Retail – RSUs
The following table presents the number and weighted average GDFV of RSUs granted by the Company during the three months ended March 31, 2022:
Three months ended | ||||||
March 31, 2022 | ||||||
RSUs Granted (000's) | Weighted Average GDFV | |||||
Series A Qurate Retail common stock, subsidiary employees (1) | | $ | | |||
Series A Qurate Retail common stock, Qurate Retail employees and directors (2) | | $ | | |||
Series A Qurate Retail common stock, Qurate Retail President and CEO (3) | | $ | | |||
Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (4) | | $ | | |||
| (1) | Grants mainly vest equally over |
| (2) | Grants mainly vest |
| (3) | Grant vests |
| (4) | Grant vests |
For awards that are performance-based, performance objectives, which are subjective, are considered in determining the timing and amount of compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The probability of satisfying the performance objectives is assessed at the end of each reporting period.
Pursuant to the terms of the Stock Exchange Agreement, dated as of June 3, 2021, by and between Mr. Maffei and the Company, on March 25, 2022, Mr. Maffei transferred to the Company an aggregate of
Qurate Retail—Outstanding Awards
The following tables present the number and weighted average exercise price ("WAEP") of the options to purchase Qurate Retail common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the options.
|
|
| Weighted |
| Aggregate |
| ||||||
average | intrinsic | |||||||||||
Series A | remaining | value | ||||||||||
(000's) | WAEP | life | (millions) | |||||||||
Options outstanding at January 1, 2022 |
| | $ | | ||||||||
Granted |
| — | $ | — | ||||||||
Exercised |
| ( | $ | | ||||||||
Forfeited/Cancelled |
| ( | $ | | ||||||||
Options outstanding at March 31, 2022 |
| | $ | |
| years | $ | | ||||
Options exercisable at March 31, 2022 |
| | $ | |
| years | $ | | ||||
I-11
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
|
|
| Weighted |
| Aggregate |
| ||||||
average | intrinsic | |||||||||||
Series B | remaining | value | ||||||||||
(000's) | WAEP | life | (millions) | |||||||||
Options outstanding at January 1, 2022 |
| | $ | | ||||||||
Granted |
| — | $ | — | ||||||||
Exercised |
| — | $ | — | ||||||||
Forfeited/Cancelled | — | $ | — | |||||||||
Options outstanding at March 31, 2022 |
| | $ | |
| years | $ | — | ||||
Options exercisable at March 31, 2022 |
| | $ | |
| years | $ | — | ||||
The following table presents the number and weighted average GDFV of RSUs granted to certain officers, employees and directors of the Company.
Weighted | Weighted | ||||||||||
Series A | Average | Series B | Average | ||||||||
(000's) | GDFV | (000's) | GDFV | ||||||||
RSUs outstanding at January 1, 2022 |
| | $ | | — | $ | — | ||||
Granted |
| | $ | | | $ | | ||||
Vested |
| ( | $ | | — | $ | — | ||||
Forfeited/Cancelled |
| ( | $ | | — | $ | — | ||||
RSUs outstanding at March 31, 2022 |
| | $ | | | $ | |
| |||
As of March 31, 2022, Qurate Retail also had
As of March 31, 2022, the total unrecognized compensation cost related to unvested Awards was approximately $
As of March 31, 2022, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately
(3) Earnings (Loss) Per Common Share
Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding ("WASO") for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.
I-12
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Excluded from diluted EPS for the three months ended March 31, 2022 and 2021 are
Qurate Retail Common Stock | |||||
| Three months ended | ||||
March 31, | |||||
2022 | 2021 | ||||
number of shares in millions | |||||
Basic WASO |
| | | ||
Potentially dilutive shares |
| | | ||
Diluted WASO |
| | | ||
(4) Assets and Liabilities Measured at Fair Value
For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.
The Company's assets and liabilities measured at fair value are as follows:
Fair Value Measurements at | Fair Value Measurements at |
| ||||||||||||
March 31, 2022 | December 31, 2021 |
| ||||||||||||
|
| Quoted |
|
|
| Quoted |
|
| ||||||
prices | prices |
| ||||||||||||
in active | Significant | in active | Significant |
| ||||||||||
markets for | other | markets for | other |
| ||||||||||
identical | observable | identical | observable |
| ||||||||||
assets | inputs | assets | inputs |
| ||||||||||
Description | Total | (Level 1) | (Level 2) | Total | (Level 1) | (Level 2) |
| |||||||
amounts in millions |
| |||||||||||||
Cash equivalents | $ | |
| |
| — |
| |
| |
| — | ||
Indemnification asset | $ | | — | | | — | | |||||||
Debt | $ | |
| — |
| |
| |
| — |
| | ||
The majority of the Company's Level 2 financial assets and liabilities are primarily debt instruments and derivative instruments with quoted market prices that are not considered to be traded on "active markets," as defined in GAAP. The fair values for such instruments are derived from a typical model using observable market data as the significant inputs.
The indemnification asset relates to Liberty Broadband’s agreement to indemnify Liberty Interactive LLC (“LI LLC”) and pertains to the ability of holders of LI LLC’s
I-13
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)
Realized and Unrealized Gains (Losses) on Financial Instruments
Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:
Three months ended |
| |||||
March 31, |
| |||||
| 2022 |
| 2021 |
| ||
amounts in millions |
| |||||
Equity securities | ( | | ||||
Exchangeable senior debentures |
| |
| | ||
Indemnification asset | ( | ( | ||||
Other financial instruments | | | ||||
$ | |
| | |||
The Company has elected to account for its exchangeable debt using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statement of operations are primarily due to market factors primarily driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss). The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk was a gain of $
(5) Intangible Assets
Goodwill
Changes in the carrying amount of goodwill are as follows:
Corporate and | ||||||||||||
| QxH | QVC Int'l | Zulily |
| Other |
| Total |
| ||||
amounts in millions |
| |||||||||||
Balance at January 1, 2022 | $ | | | |
| |
| | ||||
Foreign currency translation adjustments |
| — | ( | — |
| — |
| ( | ||||
Balance at March 31, 2022 | $ | | | |
| |
| | ||||
Intangible Assets Subject to Amortization
Amortization expense for intangible assets with finite useful lives was $
Remainder of 2022 |
| $ | | |
2023 | $ | | ||
2024 | $ | | ||
2025 | $ | | ||
2026 | $ | |
I-14
QURATE RETAIL, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Continued)
(unaudited)