Qurate Retail, Inc. [QRTEP] Filings

10-Q 1 qrtea-20230930x10q.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, 2023



☐	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, 2023 was:


Series A common stock		380,697,040
Series B common stock		8,700,380

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-27
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		I-42
Item 4. Controls and Procedures.		I-42

PART II—OTHER INFORMATION		II-1
Item 2. Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities		II-1
Item 5. Other Information		II-1
Item 6. Exhibits		II-2

SIGNATURES		II-3

I-2

Table of Contents

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	$	1,099	1,275
Trade and other receivables, net of allowance for credit losses of $92 million and $111 million, respectively		952	1,394
Inventory, net		1,229	1,346
Indemnification agreement receivable		21	50
Other current assets		184	210
Total current assets		3,485	4,275
Property and equipment, net		506	570
Intangible assets not subject to amortization (note 5):
Goodwill		3,457	3,501
Trademarks		2,698	2,718
		6,155	6,219
Intangible assets subject to amortization, net (note 5)		567	612
Operating lease right-of-use assets		577	585
Other assets, at cost, net of accumulated amortization		147	310
Total assets	$	11,437	12,571

(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,
	2023		2022

	amounts in millions,
	except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	813	976
Accrued liabilities		804	1,133
Current portion of debt, $307 million and $614 million measured at fair value (note 6)		730	828
Other current liabilities		109	162
Total current liabilities		2,456	3,099
Long-term debt (note 6)		4,835	5,525
Deferred income tax liabilities		1,515	1,440
Preferred stock (note 7)		1,270	1,266
Operating lease liabilities		539	518
Other liabilities		129	198
Total liabilities		10,744	12,046
Equity
Stockholders' equity:
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 380,510,994 shares at September 30, 2023 and 374,390,323 shares at December 31, 2022		4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,700,380 shares at September 30, 2023 and 8,373,512 shares at December 31, 2022		—	—
Series C common stock, $.01 par value. Authorized 4,000,000,000 shares; no shares issued		—	—
Additional paid-in capital		90	53
Accumulated other comprehensive earnings (loss), net of taxes		28	18
Retained earnings		468	337
Total stockholders' equity		590	412
Noncontrolling interests in equity of subsidiaries		103	113
Total equity		693	525
Commitments and contingencies (note 8)
Total liabilities and equity	$	11,437	12,571

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,
	2023		2022	2023		2022

	amounts in millions, except per share amounts
Total revenue, net	$	2,479	2,744		7,772	8,580
Operating costs and expenses:
Cost of goods sold (exclusive of depreciation shown separately below)		1,603	1,905		5,146	5,885
Operating expense		186	205		573	599
Selling, general and administrative, including stock-based compensation (note 2)		415	464		1,359	1,370
Restructuring, penalties and fire related costs, net of (recoveries) (note 8)		19	(134)		(189)	(123)
Depreciation and amortization		105	107		309	371
Impairment of intangible assets (note 5)		—	3,081		—	3,081
Gains on sale of intangible asset and sale leaseback transactions (note 8)		—	(277)		(119)	(520)
		2,328	5,351		7,079	10,663
Operating income (loss)		151	(2,607)		693	(2,083)
Other income (expense):
Interest expense		(119)	(107)		(336)	(343)
Dividend and interest income		14	2		39	5
Realized and unrealized gains (losses) on financial instruments, net (note 4)		(15)	(8)		(95)	29
Loss on disposition of Zulily, net		—	—		(64)	—
Gain (loss) on extinguishment of debt		1	14		45	8
Tax sharing income (expense) with Liberty Broadband		(4)	36		(12)	78
Other, net		5	21		13	69
		(118)	(42)		(410)	(154)
Earnings (loss) before income taxes		33	(2,649)		283	(2,237)
Income tax (expense) benefit		(21)	(87)		(119)	(265)
Net earnings (loss)		12	(2,736)		164	(2,502)
Less net earnings (loss) attributable to the noncontrolling interests		11	11		36	41
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	1	(2,747)		128	(2,543)

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.00	(7.21)		0.33	(6.69)
Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.00	(7.21)		0.33	(6.69)

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,
	2023		2022	2023	2022

	amounts in millions
Net earnings (loss)	$	12	(2,736)	164	(2,502)
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		(47)	(127)	(51)	(330)
Recognition of previously unrealized losses (gains) on debt, net		—	(14)	(32)	(14)
Credit risk on fair value debt instruments gains (loss)		1	30	82	204
Other comprehensive earnings (loss)		(46)	(111)	(1)	(140)
Comprehensive earnings (loss)		(34)	(2,847)	163	(2,642)
Less comprehensive earnings (loss) attributable to the noncontrolling interests		8	5	25	16
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	(42)	(2,852)	138	(2,658)

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,
	2023		2022

	amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	164	(2,502)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		309	371
Impairment of intangible assets		—	3,081
Stock-based compensation		40	46
Realized and unrealized (gains) losses on financial instruments, net		95	(29)
Gain on sale of intangible asset and sale leaseback transactions		(119)	(520)
Gain on insurance proceeds, net of fire related costs		(225)	(139)
Insurance proceeds received for operating expenses and business interruption losses		226	96
Loss on disposition of Zulily, net		64	—
(Gain) loss on extinguishment of debt		(45)	(8)
Deferred income tax expense (benefit)		62	45
Other, net		13	(59)
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		378	483
Decrease (increase) in inventory		63	(163)
Decrease (increase) in prepaid expenses and other assets		90	98
(Decrease) increase in trade accounts payable		(103)	(418)
(Decrease) increase in accrued and other liabilities		(410)	(419)
Net cash provided (used) by operating activities		602	(37)
Cash flows from investing activities:
Capital expenditures		(151)	(171)
Expenditures for television distribution rights		(111)	(36)
Cash proceeds from dispositions of investments		71	12
Cash paid for disposal of Zulily		(35)	—
Proceeds from sale of fixed assets		202	701
Insurance proceeds received for fixed asset loss		54	184
Payments for settlements of financial instruments		(179)	—
Proceeds from settlements of financial instruments		167	—
Other investing activities, net		—	14
Net cash provided (used) by investing activities		18	704
Cash flows from financing activities:
Borrowings of debt		1,137	2,069
Repayments of debt		(1,893)	(2,577)
Dividends paid to noncontrolling interest		(35)	(39)
Dividends paid to common shareholders		(8)	(11)
Indemnification agreement settlement		26	—
Other financing activities, net		(3)	(13)
Net cash provided (used) by financing activities		(776)	(571)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		(17)	(59)
Net increase (decrease) in cash, cash equivalents and restricted cash		(173)	37
Cash, cash equivalents and restricted cash at beginning of period		1,285	596
Cash, cash equivalents and restricted cash at end of period	$	1,112	633

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	$	1,099	1,275
Restricted cash included in other current assets		13	10
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows	$	1,112	1,285

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, 2023	$	—	4	—	53	18	337	113	525
Net earnings (loss)		—	—	—	—	—	128	36	164
Other comprehensive earnings (loss)		—	—	—	—	10	—	(11)	(1)
Stock-based compensation		—	—	—	36	—	—	—	36
Distribution to noncontrolling interest		—	—	—	—	—	—	(35)	(35)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(1)	—	—	—	(1)
Other		—	—	—	2	—	3	—	5
Balance at September 30, 2023	$	—	4	—	90	28	468	103	693



	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	$	—	4	—	79	71	467	106	727
Net earnings (loss)		—	—	—	—	—	1	11	12
Other comprehensive earnings (loss)		—	—	—	—	(43)	—	(3)	(46)
Stock-based compensation		—	—	—	11	—	—	—	11
Distribution to noncontrolling interest		—	—	—	—	—	—	(11)	(11)
Balance at September 30, 2023	$	—	4	—	90	28	468	103	693

I-8

Table of Contents

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	$	—	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		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 income (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
Balance at September 30, 2022	$	—	4	—	38	(194)	387	113	348

Qurate Retail, Inc. [QRTEP] Filings
Qurate Retail, Inc. [QRTEA] Filings
Qurate Retail, Inc. [QRTEB] Filings
10-Q	[2023-11-03]
10-Q	[2023-08-04]
10-Q	[2023-05-05]
10-K	[2023-03-01]
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. [QRTEP] Filings

Qurate Retail, Inc. [QRTEA] Filings

Qurate Retail, Inc. [QRTEB] Filings