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 October 31, 2023 was:
Series A common stock | | ||
Series B common stock | |
Table of Contents
I-2
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(unaudited)
| September 30, |
| December 31, |
| ||
2023 | 2022 | |||||
amounts in millions | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | |
| | ||
Trade and other receivables, net of allowance for credit losses of $ |
| |
| | ||
Inventory, net |
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Indemnification agreement receivable | | | ||||
Other current assets |
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Total current assets |
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Property and equipment, net |
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Intangible assets not subject to amortization (note 5): | ||||||
Goodwill |
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Trademarks |
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Intangible assets subject to amortization, net (note 5) |
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Operating lease right-of-use assets | | | ||||
Other assets, at cost, net of accumulated amortization |
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Total assets | $ | |
| |
(continued)
See accompanying notes to condensed consolidated financial statements.
I-3
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Continued)
(unaudited)
September 30, | December 31, |
| ||||
2023 | 2022 |
| ||||
amounts in millions, |
| |||||
except share amounts |
| |||||
Liabilities and Equity |
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| ||
Current liabilities: | ||||||
Accounts payable | $ | |
| | ||
Accrued liabilities |
| |
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Current portion of debt, $ |
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Other current liabilities |
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Total current liabilities |
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Long-term debt (note 6) |
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Deferred income tax liabilities |
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Preferred stock (note 7) | | | ||||
Operating lease liabilities | | | ||||
Other liabilities |
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Total liabilities |
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Equity | ||||||
Stockholders' equity: | ||||||
Series A common stock, $ |
| |
| | ||
Series B common stock, $ |
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| ||||
Series C common stock, $ | ||||||
Additional paid-in capital |
| |
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Accumulated other comprehensive earnings (loss), net of taxes |
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Retained earnings |
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Total stockholders' equity |
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| | ||
Noncontrolling interests in equity of subsidiaries |
| |
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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 | Nine months ended |
| |||||||||
September 30, | September 30, |
| |||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| |||
amounts in millions, except per share amounts |
| ||||||||||
$ | |
| |
| |
| | ||||
Operating costs and expenses: | |||||||||||
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| | ||||
Operating expense |
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| | |||
Selling, general and administrative, including stock-based compensation (note 2) |
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Restructuring, penalties and fire related costs, net of (recoveries) (note 8) | | ( | ( | ( | |||||||
Depreciation and amortization |
| |
| |
| |
| | |||
Impairment of intangible assets (note 5) | — | | — | | |||||||
Gains on sale of intangible asset and sale leaseback transactions (note 8) | — | ( | ( | ( | |||||||
| |
| |
| |
| | ||||
Operating income (loss) |
| |
| ( |
| |
| ( | |||
Other income (expense): | |||||||||||
Interest expense |
| ( |
| ( |
| ( |
| ( | |||
Dividend and interest income | | | | | |||||||
Realized and unrealized gains (losses) on financial instruments, net (note 4) |
| ( |
| ( |
| ( |
| | |||
Loss on disposition of Zulily, net | — | — | ( | — | |||||||
Gain (loss) on extinguishment of debt | | | | | |||||||
Tax sharing income (expense) with Liberty Broadband | ( | | ( | | |||||||
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 | Nine months ended |
| ||||||||
September 30, | September 30, |
| ||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 |
| ||
amounts in millions |
| |||||||||
Net earnings (loss) | $ | |
| ( |
| |
| ( | ||
Other comprehensive earnings (loss), net of taxes: | ||||||||||
Foreign currency translation adjustments |
| ( |
| ( |
| ( |
| ( | ||
Recognition of previously unrealized losses (gains) on debt, net | — | ( | ( | ( | ||||||
Credit risk on fair value debt instruments gains (loss) | | | | | ||||||
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)
Nine months ended |
| |||||
September 30, |
| |||||
| 2023 |
| 2022 |
| ||
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 |
| |
| | ||
Impairment of intangible assets | — | | ||||
Stock-based compensation |
| |
| | ||
Realized and unrealized (gains) losses on financial instruments, net |
| |
| ( | ||
Gain on sale of intangible asset and sale leaseback transactions | ( | ( | ||||
Gain on insurance proceeds, net of fire related costs | ( | ( | ||||
Insurance proceeds received for operating expenses and business interruption losses | | | ||||
Loss on disposition of Zulily, net | | — | ||||
(Gain) loss on extinguishment of debt | ( | ( | ||||
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: | ||||||
Capital expenditures |
| ( |
| ( | ||
Expenditures for television distribution rights | ( | ( | ||||
Cash proceeds from dispositions of investments | | | ||||
Cash paid for disposal of Zulily | ( | — | ||||
Proceeds from sale of fixed assets | | | ||||
Insurance proceeds received for fixed asset loss | | | ||||
Payments for settlements of financial instruments | ( | — | ||||
Proceeds from settlements of financial instruments | | — | ||||
Other investing activities, net | — | | ||||
Net cash provided (used) by investing activities |
| |
| | ||
Cash flows from financing activities: | ||||||
Borrowings of debt |
| |
| | ||
Repayments of debt |
| ( |
| ( | ||
Dividends paid to noncontrolling interest |
| ( |
| ( | ||
Dividends paid to common shareholders | ( | ( | ||||
Indemnification agreement settlement | | — | ||||
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:
September 30, | December 31, | ||||
2023 | 2022 | ||||
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, 2023 | $ | — | | — | | | | | | |||||||||
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 September 30, 2023 | $ | — | | — | | | | | |
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, 2023 | $ | — | | — | | | | | | |||||||||
Net earnings (loss) |
| — | — | — | — | — | | | | |||||||||
Other comprehensive earnings (loss) |
| — | — | — | — | ( | — | ( | ( | |||||||||
Stock-based compensation | — | — | — | | — | — | — | | ||||||||||
Distribution to noncontrolling interest | — | — | — | — | — | — | ( | ( | ||||||||||
Balance at September 30, 2023 | $ | — | | — | | | | | |
I-8
QURATE RETAIL, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Equity (continued)
(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 September 30, 2022 | $ | — | | — | | ( | | | |
Stockholders' Equity | ||||||||||||||||||
Accumulated | 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 | $ | — | | — | | ( | | | | |||||||||
Net earnings (loss) |
| — | — | — | — | — | ( | | ( | |||||||||
Other comprehensive income (loss) |
| — | — | — | — | ( | — | ( | ( | |||||||||
Stock-based compensation | — | — | — | | — | — | — | | ||||||||||
Distribution to noncontrolling interest | — | — | — | — | — | — | ( | ( | ||||||||||
Withholding taxes on net share settlements of stock-based compensation | — | — | — | | — | — | — | | ||||||||||
Balance at September 30, 2022 | $ | — | | — | | ( | | | |