directors. Other than LMC’s ownership of LMAC’s sponsor, which beneficially owns 20% of LMAC’s outstanding common stock as of January 26, 2021, none of the foregoing companies has any ownership interest in any of the others. Our executive officers and the members of our company’s board of directors have fiduciary duties to our stockholders. Likewise, any such persons who serve in similar capacities at LMC, TripAdvisor Holdings, Liberty Broadband or LMAC have fiduciary duties to that company’s stockholders. Therefore, such persons may have conflicts of interest or the appearance of conflicts of interest with respect to matters involving or affecting more than one of the companies to which they owe fiduciary duties. For example, there may be the potential for a conflict of interest when our company, LMC, TripAdvisor Holdings, Liberty Broadband or LMAC looks at acquisitions and other corporate opportunities that may be suitable for each of them. Moreover, most of our company's directors and officers own LMC, TripAdvisor Holdings, Liberty Broadband and/or LMAC stock and equity awards. These ownership interests could create, or appear to create, potential conflicts of interest when the applicable individuals are faced with decisions that could have different implications for our company, LMC, TripAdvisor Holdings, Liberty Broadband and/or LMAC. Any potential conflict that qualifies as a "related party transaction" (as defined in Item 404 of Regulation S-K under the Securities Act of 1933, as amended) is subject to review by an independent committee of the applicable issuer's board of directors in accordance with its corporate governance guidelines. Each of Liberty Broadband, TripAdvisor Holdings and LMAC has renounced its rights to certain business opportunities and their respective restated certificate of incorporation contains provisions deeming directors and officers not in breach of their fiduciary duties in certain cases for directing a corporate opportunity to another person or entity (including LMC, TripAdvisor Holdings, Liberty Broadband and LMAC) instead of such company. Any other potential conflicts that arise will be addressed on a case-by-case basis, keeping in mind the applicable fiduciary duties owed by the executive officers and directors of each issuer. From time to time, we may enter into transactions with LMC, TripAdvisor Holdings, Liberty Broadband or LMAC and/or their subsidiaries or other affiliates. There can be no assurance that the terms of any such transactions will be as favorable to our company, LMC, TripAdvisor Holdings, Liberty Broadband or LMAC or any of their respective subsidiaries or affiliates as would be the case where there is no overlapping officer or director.

Risks Related to Economic Conditions

Certain of our subsidiaries and business affiliates have operations outside of the ~~United States~~U.S. that are subject to numerous operational and financial risks. Certain of our subsidiaries and business affiliates have operations in countries other than the ~~United States~~U.S. that are subject to the following risks inherent in international operations:

●

fluctuations in currency exchange rates;

●

longer payment cycles for sales in foreign countries that may increase the uncertainty associated with recoverable accounts;

●

recessionary conditions and economic instability, including fiscal policies that are implementing austerity measures in certain countries, which are affecting overseas markets;

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limited ability to repatriate funds to the U.S. at favorable tax rates;

●

potentially adverse tax consequences;

●

export and import restrictions, changes in tariffs, trade policies and trade relations;

●

increases in taxes and governmental royalties and fees;

●

the ability to obtain and maintain required licenses or certifications, such as for web services and electronic devices, that enable us to operate our businesses in foreign jurisdictions;

●

changes in foreign and U.S. laws, regulations and policies that govern operations of foreign-based companies;

●

changes to general consumer protection laws and regulations;

●

difficulties in staffing and managing international operations as a result of distance, language and cultural differences; and

●

threatened and actual terrorist attacks, political unrest in international markets and ongoing military action around the world that may result in disruptions of service that are critical to QVC’s ~~and HSNi’s~~ international businesses.

Moreover, in many foreign countries, particularly in certain developing economies, it is not uncommon to encounter business practices that are prohibited by certain regulations, such as the Foreign Corrupt Practices Act and similar laws.

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Although certain of our subsidiaries and business affiliates have undertaken compliance efforts with respect to these laws, their respective employees, contractors and agents, as well as those companies to which they outsource certain of their business operations, may take actions in violation of their policies and procedures. Any such violation, even if prohibited by the policies and procedures of these subsidiaries and business affiliates or the law, could have certain adverse effects on the financial condition of these subsidiaries and business affiliates. Any failure by these subsidiaries and business

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affiliates to effectively manage the challenges associated with the international operation of their businesses could materially adversely affect their, and hence our, financial condition.

Significant developments stemming from ~~the 2016~~ U.S. ~~presidential election~~trade policy or ~~the~~ Brexit ~~vote~~ could have a material adverse effect on ~~businesses attributed~~our businesses. There is uncertainty as to the ~~QVC and Ventures Groups.~~ ~~After~~actions that may be taken under a new Biden Administration with respect to U.S. trade policy with China. The imposition of any new U.S. tariffs on Chinese imports or the ~~presidential inauguration on January 20, 2017, President Donald J. Trump and his administration took office~~taking of other actions against China in the ~~United States. As~~future, and any responses by China, could impair our ability to meet customer demand and could result in lost sales or an increase in our cost of merchandise, which would have a ~~presidential candidate, President Trump expressed apprehension towards existing trade agreements, such as the North American Free Trade Agreement~~material adverse impact on our business and ~~the Trans-Pacific Partnership, and suggested that the U.S. would renegotiate or withdraw from these agreements. During the campaign, he also raised the possibility~~results of significantly increasing tariffs on goods imported into the United States, particularly from China and Mexico. On January 23, 2017, the President of the United States signed a presidential memorandum to withdraw the U.S. from the Trans-Pacific Partnership. This and other proposed actions, if implemented, could adversely affect businesses attributed to the QVC and Ventures Groups that sell imported products.operations.

Additionally, the Brexit process and negotiations have created political and economic uncertainty, particularly in the U.K. and the ~~EU,~~E.U., and this uncertainty may last for years. ~~QVC’s~~On June 23, 2016, the U.K. held a referendum in which voters approved, on an advisory basis, an exit from the E.U. The U.K. formally left the E.U. on January 31, 2020. This began a transition period that ran until December 31, 2020. On January 1, 2021, the U.K. left the E.U. Customs Union and Single Market, as well as all E.U. policies and international agreements. On December 24, 2020, the European Commission reached a trade agreement with the U.K. on the terms of its future cooperation with the E.U. (the “Trade Agreement”). The Trade Agreement offers U.K. and E.U. companies preferential access to each other’s markets, ensuring imported goods that satisfy applicable point of origin rules (that is, that U.K. or E.U. goods are wholly produced or significantly worked in the U.K. or E.U., as applicable) will be free of tariffs and quotas; however, economic relations between the U.K. and the E.U. will now be on more restrictive terms than existed previously. For example, packages sent to and from the U.K., will need to satisfy new customs requirements and obtain applicable transit documents which may result in delays exporting items to customers outside of the U.K. and delays importing products into the U.K. that are shipped to us by our vendors. At this time, we cannot predict that the Trade Agreement and any future agreements on economic relations between the U.K. and the E.U. will have on our businesses and our customers, and it is possible that new terms may adversely affect our operations and financial results.

The potential impacts, if any, of the considerable uncertainty relating to Brexit or the terms of the new economic and security relationship between the U.K. and the E.U. on the free movement of goods, services, people and capital between the U.K. and the E.U., customer behavior, economic conditions, interest rates, currency exchange rates, availability of capital or other matters are unclear. Our business could be affected with respect to these matters during this period of uncertainty, and perhaps ~~longer, by the impact of this vote.~~longer. In ~~addition, QVC’s~~particular, our business could be negatively affected by new trade agreements between the U.K. and other countries, including the U.S., and by the possible imposition of trade or other regulatory barriers, including the imposition of tariffs, in the U.K. which could result in shipping delays and shortages or increased costs of products sold by our business. Additionally, the U.K. economy and consumer demand in the U.K., including for our products, could be negatively impacted. Further, various geopolitical forces related to Brexit may impact the global economy, the European economy and our business, including, for example, due to other E.U. member states where we have operations proposing referendums to, or electing to, exit the E.U. These possible negative impacts, and others resulting from the U.K.’s ~~actual~~ withdrawal from the ~~EU,~~E.U., may adversely affect ~~QVC’s~~our operating results.

~~Our online commerce businesses,~~Weak economic conditions worldwide may reduce consumer demand for our businesses’ products and services. Prolonged economic uncertainty in various regions of the world in which our subsidiaries and business affiliates operate could adversely affect demand for our businesses’ products and services since a substantial portion of our businesses’ revenue is derived from discretionary spending by individuals, which typically falls during times of economic instability. Global financial markets may experience disruptions, including ~~QVC, HSNi~~increased volatility and ~~zulily~~diminished liquidity and credit availability. If economic and financial market conditions in the U.S. or other key markets, including China, Japan and Europe deteriorate, customers of our subsidiaries and business affiliates may respond by suspending, delaying, or reducing their discretionary spending. A suspension, delay or reduction in discretionary spending could adversely affect our revenue. Accordingly, our ability to increase or maintain revenue and earnings could be ~~negatively~~adversely affected ~~by changes in search engine algorithms and dynamics or search engine disintermediation as well as their inability~~ to ~~monetize~~ the ~~resulting web traffic.~~ ~~The success~~extent that relevant economic environments decline. Such weak economic conditions may also inhibit the expansion of our ~~online commerce~~subsidiaries and

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business affiliates into new European and other markets. We currently are unable to predict the extent of any of these potential adverse effects.

Changes in trade policies resulting from forced labor and human rights abuses in China may adversely impact our businesses ~~depends~~and operating results. Recently there have been heightened tensions in relations between Western nations and China. The U.S. government has made statements and taken certain actions that may lead to potential changes to U.S. and trade policies towards China. For example, on ~~a high degree of website traffic, which is dependent on many factors, including~~January 19, 2021, the ~~availability of appealing website content, user loyalty and new user generation from search portals~~U.S. State Department declared that ~~charge a fee (such as Google). In obtaining a significant amount of website traffic via search engines, they utilize techniques such as search engine optimization~~China’s human rights abuses in China’s Xinjiang Uyghur Autonomous Region (“~~SEO”~~XUAR”) ~~which is the practice of developing websites with relevant and current content that rank well in “organic,” or unpaid, search engine results) and search engine marketing (“SEM”) (which~~ is a ~~form~~“genocide” against ethnic Uyghur Muslims. Currently, there are two bills pending before the Congress of ~~Internet marketing that involves~~ the ~~promotion of websites by increasing their visibility in search engine results pages through~~United States purporting to address the use of ~~paid placement, contextual advertising, and paid inclusion) to improve their placement~~forced labor in ~~relevant search queries. Search engines, including Google, frequently update and change~~ the ~~logic that determines~~XUAR. If either or both of these bills, or similar bills in the ~~placement and display~~U.S. or any of ~~results~~the other markets in which we operate, are enacted into law, a presumptive ban could be imposed on the import of ~~a user’s search, such that the purchased or algorithmic placement of links~~goods to the ~~websites~~United States that are made, wholly or in part, in the XUAR or by persons that participate in certain programs in the XUAR that entail the use of ~~our online commerce businesses can~~forced labor. The U.S. Customs and Border Protection (“CBP”) issued a region-wide withhold release order (“WRO”), effective January 13, 2021, pursuant to which the CBP will detain cotton products produced in the XUAR. The WRO applies to, among other things, cotton grown in the XUAR and to all products made in whole or in part using such cotton, regardless of where the downstream products are produced, and importers are responsible for ensuring the products they are attempting to import do not exploit forced labor at any point in their supply chain, including the production or harvesting of the raw material. As a result of the WRO, products imported into the U.S. could be ~~negatively affected. Moreover,~~held by the CBP based on a ~~search engine could, for competitive~~suspicion that they originated from the XUAR or ~~other purposes, alter its search algorithms or results causing their websites~~that they may have been produced by Chinese suppliers accused of participating in forced labor, pending the importer providing satisfactory evidence to ~~place lower in search query results. If a major search engine changes its algorithms in a manner that negatively affects their paid or unpaid search ranking, or if competitive dynamics impact~~ the effectiveness of SEO or SEM in a negative manner, the business and financial performance of our online commerce businesses would be adversely affected, potentially to a material extent. Furthermore, the failure of our online commerce businesses to successfully manage their SEO and SEM strategiescontrary. Such process could result in a ~~substantial decrease~~delay or complete inability to import such goods, which could result in ~~traffic~~inventory shortages and lost sales. Additionally, the United States Treasury Department placed sanctions on China’s Xinjiang Production and Construction Corporation (“XPCC”) for serious human rights abuses against ethnic minorities in the XUAR. The XUAR is the source of large amounts of cotton and textiles for the global apparel supply chain and XPCC controls many of the cotton farms and much of the textile industry in the region. Although our businesses do not knowingly do business with XPCC, our businesses could be subject to ~~their websites,~~penalties, fines or sanctions if any of the vendors from which they purchase goods is found to have dealings, directly or indirectly with XPCC or entities it controls. Even if our businesses were not subject to penalties, fines or sanctions, if products we source are linked in any way to XPCC, our businesses’ reputations could be damaged. Our businesses may also incur expenses for the review pertaining to these matters and the cost of remediation and other changes to products, processes or sources of supply as a consequence of such verification activities. In the event of a significant disruption or unavailability in the supply of the fabrics or raw materials used by our vendors in the manufacture of our products, our businesses’ vendors might not be able to locate alternative suppliers of materials of comparable quality at an acceptable price. In addition, prices of purchased finished products also depend on wage rates in the regions where our businesses’ vendors’ contract manufacturers are located, as well as ~~increased~~freight costs ~~if they were~~from those regions. Fluctuations in wage rates required by legal or industry standards could increase our businesses’ costs. Increases in raw material costs or wage rates, unless sufficiently offset by our pricing actions, may cause a decrease in our businesses’ profitability and negatively impact our businesses’ sales volume. For additional risks arising from changes in U.S. tariffs on Chinese imports or other actions against China and retaliatory responses by China, see “Significant developments stemming from U.S. trade policy or Brexit could have a material adverse effect on our businesses.”

Risks Related to replace free traffic with paid traffic. Even if our online commerce businesses are successful in generating a high level of website traffic, no assurance can be given that our online commerce businesses will be successful in achieving repeat user loyalty or that new visitors will explore the offerings on their sites. Monetizing this traffic by converting users to consumers is dependent on many factors, including availability of inventory, consumer preferences, price, ease of useOur Indebtedness and website quality. No assurance can be given that the fees paid to search portals will not exceed the revenue generated by their visitors. Any failure to sustain user traffic or to monetize such traffic could materially adversely affect the financial performance of our online commerce businesses and, as a result, adversely affect our financial results.Common Stock

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Our ~~online commerce businesses, including~~subsidiary QVC HSNi and zulily may experience difficulty in achieving the successful development, implementation and customer acceptance of, and a viable advertising market via, applications for smartphone and tablet computing devices, which could harm their business. Although our online commerce businesses have developed services and applications to address user and consumer interaction with website content on smartphone and other non-traditional desktop or laptop computer systems (which typically have smaller screens and less convenient typing capabilities), the efficacy of the smartphone application and its advertising market is still developing. Moreover, if smartphone computing services prove to be less effective for the users of our online commerce businesses or less economically attractive for advertisers and the smartphone segment of Internet traffic grows at the expense of traditional computer and tablet Internet access, our online commerce businesses may experience difficulty attracting and retaining traffic and, in turn, advertisers, on these platforms. Additionally, as new devices and new platforms are continually being released, it is difficult to predict the challenges that may be encountered in developing versions of our online commerce businesses’ offerings for use on these alternative devices, and our online commerce businesses may need to devote significant resources to the creation, support, and maintenance of their services on such devices. To the extent that revenue generated from advertising placed on smartphone computing devices becomes increasingly more important to their businesses and they fail to adequately evolve and address this market, their business and financial performance could be negatively impacted. In addition, growth in the use of smartphone products as a substitute for use on personal computers and tablets may adversely impact revenue derived from advertising, as many of the processes used for smartphone advertising and related monetization strategies are still in development.

~~Our subsidiaries QVC and HSNi have~~has significant indebtedness, which could limit ~~their~~its flexibility to respond to current market conditions, restrict ~~their~~its business activities and adversely affect ~~their~~its financial condition. As of December 31, ~~2017,~~2020, QVC had total secured debt, ~~of approximately $5,215 million,~~other than its finance lease obligations, consisting of ~~$3,550~~$4,448 million of secured indebtedness under its existing notes, in ~~senior~~each case, secured ~~notes, $1,496 million~~by a first priority lien on all shares of its capital stock, and an additional $2.93 billion of unused capacity under its senior secured credit ~~facility and $169~~facility. Additionally, in December 2020, QVC Global Corporate Holdings, LLC a subsidiary of QVC, became the primary co-obligor of the $218 million principal amount of LI LLC’s 3.5% Senior Exchangeable Debentures due 2031, which had a fair value of $393 million at December 31, 2020. In addition, QVC had $168 million of ~~capital~~finance lease obligations and ~~build to suit~~$220 million of operating lease ~~obligations.~~liabilities. QVC also had $877 million available for borrowing under its senior secured credit facility as of that date. As of December 31, 2017, HSNi had total debt of approximately $460 million and also had $533 million available for borrowing. QVC or HSNi may incur significant additional indebtedness in the future. If new indebtedness is added to QVC’s current debt levels, the related risks that it now faces could intensify. The indebtedness of QVC, ~~and HSNi,~~ combined with other financial obligations and contractual commitments, could among other things:

●

increase QVC’s ~~and HSNi’s~~ vulnerability to general adverse economic and industry conditions;

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require a substantial portion of QVC’s ~~and HSNi’s~~ cash flow from operations to be dedicated to the payment of principal and interest on its indebtedness;

●

limit QVC’s ~~and HSNi’s~~ ability to use cash flow or obtain additional financing for future working capital, capital expenditures or other general corporate purposes, which reduces the funds available to it for operations and any future business ~~opportunities~~;

opportunities;

●

limit flexibility in planning for, or reacting to, changes in its business and the markets in which it operates;

●

competitively disadvantage QVC ~~and HSNi~~ compared with competitors that have less debt;

●

limit QVC’s ~~and HSNi’s~~ ability to borrow additional funds or to borrow funds at rates or on other terms that it finds acceptable; and

●

expose QVC ~~and HSNi~~ to the risk of increased interest rates because certain of QVC’s ~~and HSNi’s~~ borrowings, including borrowings under its credit facility, are at variable interest rates.

In addition, it is possible that QVC ~~or HSNi~~ may need to incur additional indebtedness in the future in the ordinary course of business. If new debt is added to ~~their~~its current debt levels, the risks described above could intensify. If QVC ~~or HSNi~~ experiences adverse effects on ~~their~~its financial condition as a result of their indebtedness, our financial performance could be adversely affected as well.

WeQVC may ~~fail~~need to ~~realize the potential benefits of the acquisition of HSNi or those benefits may take longer~~refinance its indebtedness. Although QVC expects to ~~realize than expected.~~ We believe there are significant benefits and synergies that may be realized through leveraging the scale, vendor relationships, merchandizing expertise and customer base of QVC and HSNi. However, the efforts to realize these benefits and synergies will be a complex process and may disrupt each company’s existing operations if not implemented in a timely and efficient manner. If the respective managements of Liberty, QVC and HSNi are unable to minimize the potential disruption to their respective businesses and operations during this period, we may not realize the anticipated benefits of the acquisition of HSNi. Realizing these benefits may depend in part on the efficient coordination and alignment of various functions, including marketing, merchandising, buying expertise, customer acquisition and the integration of certain administrative functions, while maintaining adequate focus on QVC’s and HSNi’s core businesses.

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The operating expenses attributed to the QVC Group are expected to increase over the near term due to the increased headcount, expanded operations and changes related to the assimilation of HSNi. In addition, we have incurred expenses related to the acquisition of HSNi that have been attributed to the QVC Group, which may adversely affect our financial results. To the extent that our expenses increase but revenue does not increase commensurately, there are unanticipated expenses related to the assimilation process, there are significant costs associated with presently unknown liabilities, or if the foregoing charges and expenses are larger than anticipated, our consolidated business, operating results and financial condition, as well as those attributable to the QVC Group, may be adversely affected. Failure to timely implement, or problems with implementing, the post-acquisition strategy for HSNi also may adversely affect the trading price of QVC Group common stock.

~~We depend on the continued growth of e-commerce in general and zulily depends on the flash sales model in particular.~~ The business of selling products over the Internet, particularly on the flash sales model, is dynamic and evolving. The market segment for the flash sales model has grown significantly, and this growth may not be sustainable. If customers cease to find the flash sales model shopping experience fun, entertaining and a good value,refinance or otherwise ~~lose interest in shopping in this manner, zulily may not acquire new customers at rates consistent with~~repay its historical or projected periods, and existing customers’ buying patterns and levels may be less than historical or projected rates. If zulily is unable to successfully deliver emails or mobile alerts to its subscribers, or if subscribers decline to open its emails or mobile alerts, zulily’s net sales and profitability would be adversely affected. In addition, changes in how webmail application providers, such as Google Inc. and Yahoo! Inc., prioritize, filter and deliver email may also reduce the number of subscribers opening zulily’s emails which may also result in a decline in net sales. If the market segment for the flash sales model were to become saturated or decline overall, zulilyindebtedness, it may not be able to ~~acquire~~refinance its indebtedness on commercially reasonable terms or at all. The financial terms or covenants of any new ~~customers~~credit facility, notes or ~~engage~~other indebtedness may not be as favorable as those under its senior secured credit facility and its existing ~~customers,~~notes. QVC’s ability to complete a refinancing of its senior secured credit facility and its existing notes prior to their respective maturities will depend on its financial and operating performance, its credit rating with rating agencies, as well as a number of conditions beyond its control. For example, if disruptions in the financial markets were to exist at the time that it intended to refinance this indebtedness, it might be restricted in its ability to access the financial markets. If QVC is unable to refinance its indebtedness, its alternatives would include negotiating an extension of the maturities of its senior secured credit facility and its existing notes with the lenders and seeking or raising new equity capital. If QVC were unsuccessful, the lenders under its senior secured credit facility and the holders of its existing notes could demand repayment of the indebtedness owed to them on the relevant maturity date, which could adversely affect its and our financial condition.

Covenants in QVC’s debt agreements restrict its business in many ways. QVC’s senior secured credit facility and the ~~QVC Group’s financial condition~~indentures governing its notes contain various covenants that limit its ability and/or its restricted subsidiaries' ability to, among other things:

●

incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons;

●

pay dividends or make distributions or redeem or repurchase capital stock;

●

prepay, redeem or repurchase debt;

●

make loans, investments and capital expenditures;

●

enter into agreements that restrict distributions from its subsidiaries;

●

sell assets and capital stock of its subsidiaries;

●

enter into sale and leaseback transactions;

●

enter into certain transactions with affiliates;

●

consolidate or merge with or into, or sell substantially all of its assets to, another person; and

●

designate its subsidiaries as unrestricted subsidiaries.

In addition, QVC’s senior secured credit facility contains restrictive covenants and ~~operating results.~~

~~We do not have the right~~requires it to ~~manage our business affiliates attributed~~maintain a specified leverage ratio. QVC’s ability to ~~our Ventures Group, which means we are not able~~meet this leverage ratio test can be affected by events beyond its control, and it may be unable to ~~cause~~meet those ~~affiliates to act in a manner that we deem desirable.~~ ~~We do not have the right to manage the businesses or affairs~~tests. A breach of any of ~~our business affiliates (generally~~these covenants could result in a default under QVC’s senior secured credit facility, which in turn could result in a default under the indentures governing its notes. Upon the occurrence of an event of default under QVC’s senior secured credit facility, the lenders could elect to declare all amounts outstanding under its senior secured credit facility to be immediately due and payable and terminate all commitments to extend further credit. If QVC were unable to repay those ~~companies in which we have less than a majority voting stake or with respect~~amounts, the lenders could proceed against the collateral granted to ~~which we have provided a proxy over our voting power~~them to ~~a third party). Rather, our rights may take the form~~secure that

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Table of representation on the board of directors or similar committee that supervises management or possession of veto rights over significant or extraordinary actions. The scope of our veto rights varies from agreement to agreement. Although our board representationContents

indebtedness. QVC’s senior secured credit facility, its notes and ~~veto rights may enable us to exercise influence over the management or policies of a business affiliate, enable us to prevent the sale of material assets~~certain future indebtedness are secured by a ~~business affiliate~~first priority perfected lien in ~~which we own less than a majority voting interest or prevent us from paying dividends or making distributions~~all shares of its capital stock. If the lenders and counterparties under QVC’s senior secured credit facility, its notes and certain future indebtedness accelerate the repayment of obligations, it may not have sufficient assets to ~~our stockholders or partners, they will not enable us to cause these actions to be taken as these companies~~repay such obligations. QVC’s borrowings under its senior secured credit facility are, ~~business affiliates in which we own a partial interest.~~

~~We have overlapping directors and officers with LMC, TripAdvisor Holdings, Liberty Broadband and Expedia Holdings,~~ and are expected to ~~have overlapping directors and officers with GCI Liberty, Inc., which may lead to conflicting interests~~. As a result of the LMC Split-Off, other transactions between 2011 and 2016 that resulted in the separate corporate existence of Liberty, TripAdvisor Holdings, Liberty Broadband and Expedia Holdings, as well as the completion of the proposed transactions (the “Transactions”) involving Liberty and GCI (renamed GCI Liberty), most of the executive officers of Liberty also serve or will serve as executive officers of LMC, TripAdvisor Holdings, Liberty Broadband, Expedia Holdings and GCI Liberty and there are overlapping directors. Other than Liberty’~~s current ownership of shares of Liberty Broadband~~’~~s non-voting Series C common stock, which we expect~~continue to be, ~~held by GCI Liberty after the completion of the Transactions, none of the foregoing companies has any ownership interest in any of the others. Our executive officers and the members of our company~~’~~s board of directors have fiduciary duties to our stockholders. Likewise, any such persons who serve in similar capacities~~ at ~~LMC, TripAdvisor Holdings, Liberty Broadband, Expedia Holdings or GCI Liberty have fiduciary duties to that company~~’~~s stockholders. Therefore, such persons may have conflicts~~variable rates of interest orand expose it to interest rate risk. If interest rates increase, QVC’s debt service obligations on the ~~appearance of conflicts of interest with respect to matters involving or affecting more than one of~~variable rate indebtedness will also increase even though the ~~companies to which they owe fiduciary duties. For example, there may be~~amount borrowed remains the ~~potential for a conflict of interest when our company, LMC, TripAdvisor Holdings, Liberty Broadband, Expedia Holdings or GCI Liberty looks at acquisitions~~same, and other corporate opportunities that may be suitable for each of them. Moreover, most of our company's directors and officers own LMC, TripAdvisor Holdings, Liberty Broadband, Expedia Holdings, and will own GCI Liberty, stock and equity awards. These ownership interests could create, or appear to create, potential conflicts of interest when the applicable individuals are faced with decisions that could have different implications for our company, LMC, TripAdvisor Holdings,

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Liberty Broadband, Expedia Holdings and/or GCI Liberty. Any potential conflict that qualifies as a "related party transaction" (as defined in Item 404 of Regulation S-K under the Securities Act of 1933, as amended) is subject to review by an independent committee of the applicable issuer's board of directors in accordance with its corporate governance guidelines. Each of Liberty Broadband, TripAdvisor Holdings and Expedia Holdings has renounced its rights to certain business opportunities and each company’s restated certificate of incorporation contains provisions deeming directors and officers not in breach of their fiduciary duties in certain cases for directing a corporate opportunity to another person or entity (including LMC, TripAdvisor Holdings, Liberty Broadband and Expedia Holdings) instead of such company. In addition, we understand that GCI Liberty is expected to adopt similar renouncement and waiver provisions if it is successfully able to reincorporate in Delaware following the closing of the Transactions. Any other potential conflicts that arise will be addressed on a case-by-case basis, keeping in mind the applicable fiduciary duties owed by the executive officers and directors of each issuer. From time to time, we may enter into transactions with LMC, TripAdvisor Holdings, Liberty Broadband, Expedia Holdings or GCI Liberty and/or their subsidiaries or other affiliates. There can be no assurance that the terms of any such transactions will be as favorable to our company, LMC, TripAdvisor Holdings, Liberty Broadband, Expedia Holdings or GCI Liberty or any of their respective subsidiaries or affiliates asQVC’s net income would ~~be the case where there is no overlapping officer or director.~~decrease.

~~The liquidity and value of our public investments may be affected by market conditions beyond our control that could cause us to record losses for declines in their market value.~~ Included among our assets are equity interests in publicly-traded companies that are not consolidated subsidiaries. The value of these interests may be affected by economic and market conditions that are beyond our control; and our ability to liquidate or otherwise monetize these interests without adversely affecting their value may be limited. In addition, as of December 31, 2017, we owned (and attributed to our Ventures Group) shares of Charter valued at approximately $1.8 billion and shares of Liberty Broadband, which is Charter's largest stockholder with a 25.01% voting interest in Charter, valued at approximately $3.6 billion. The risks associated with the business of Charter, and hence the business of Liberty Broadband, are different than those associated with the video and online commerce industries in which our subsidiaries and equity affiliates operate. For additional information regarding these risks and uncertainties, we refer the holders of Liberty Ventures common stock to “Item 1A, Risk Factors, Factors Relating to Our Corporate History and Structure” and “Item 1A, Risk Factors, Factors Relating to Charter” of Liberty Broadband Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 9, 2018.

A substantial portion of our consolidated debt ~~attributed to each group~~ is held above the operating subsidiary level, and we could be unable in the future to obtain cash in amounts sufficient to service that debt and our other financial obligations. As of December 31, ~~2017,~~2020, our wholly-owned subsidiary ~~Liberty Interactive~~LI LLC ~~(“Liberty LLC”)~~ had ~~$2,738~~$1,986 million principal amount of publicly-traded debt outstanding. ~~Liberty~~LI LLC is also a co-obligor on the 3.5% Senior Exchangeable Debentures due 2031 in the principal amount of $218 million as of December 31, 2020. LI LLC is a holding company for all of our subsidiaries and investments. Our ability to meet the financial obligations of ~~Liberty~~LI LLC and our other financial obligations will depend on our ability to access cash. Our sources of cash include our available cash balances, net cash from operating activities, dividends and interest from our investments, availability under credit facilities at the operating subsidiary level, monetization of our public investment portfolio and proceeds from asset sales. There are no assurances that we will maintain the amounts of cash, cash equivalents or marketable securities that we maintained over the past few years. The ability of our operating subsidiaries ~~including QVC and HSNi,~~ to pay dividends or to make other payments or advances to us or ~~Liberty~~LI LLC depends on their individual operating results, any statutory, regulatory or contractual restrictions to which they may be or may become subject and the terms of their own indebtedness, including QVC’s credit facility and bond ~~indentures and HSNi’s credit facility.~~indentures. The agreements governing such indebtedness restrict sales of assets and prohibit or limit the payment of dividends or the making of distributions, loans or advances to stockholders and partners. Neither we nor ~~Liberty~~LI LLC will generally receive cash, in the form of dividends, loans, advances or otherwise, from our business affiliates. See ~~“We~~“We do not have the right to manage our business affiliates, ~~attributed to our Ventures Group,~~ which means we are not able to cause those business affiliates to act in a manner that we deem ~~desirable”~~desirable” above.

We have disposed of certain of the reference shares underlying the exchangeable debentures of ~~Liberty~~LI LLC, ~~attributed to our Ventures Group,~~ which exposes us to liquidity risk. ~~Liberty~~ LI LLC currently has outstanding multiple tranches of exchangeable debentures in the aggregate principal amount of ~~$1,947~~$1,194 million as of December 31, ~~2017.~~2020. LI LLC is also a co-obligor on the 3.5% Senior Exchangeable Debentures due 2031 in the principal amount of $218 million as of December 31, 2020. Under the terms of these exchangeable debentures, ~~which are attributed to our Ventures Group (other than the 1% Exchangeable Senior Debentures due 2043, which are attributed to the QVC Group),~~ the holders may elect to require ~~Liberty~~LI LLC to exchange the debentures for the value of a specified number of the underlying reference shares, which ~~Liberty~~LI LLC may

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honor through delivery of reference shares, cash or a combination thereof. Also, ~~Liberty~~LI LLC is required to distribute to the holders of its exchangeable debentures any cash, securities (other than publicly traded securities, which would themselves become reference shares) or other payments made by the issuer of the reference shares in respect of those shares. The principal amount of the debentures will be reduced by the amount of any such required distributions other than regular cash dividends. ~~As Liberty~~LI LLC has disposed of some of the reference shares underlying certain of these exchangeable ~~debentures,~~debentures. For example, in connection with the Transactions, our company contributed its entire equity interest in Charter Communications, Inc. to GCI Liberty, which was subsequently acquired by Liberty Broadband. Shares of Charter serve as the underlying reference shares for the 1.75% Exchangeable Debentures. Pursuant to agreements entered into in connection with the Transactions and Liberty Broadband’s acquisition of GCI Liberty, there is an indemnification obligation from Liberty Broadband to LI LLC for certain payments made to a holder of the 1.75% Exchangeable Debentures that pertains to the holder’s ability to exercise its exchange right according to the terms of the 1.75% Exchangeable Debentures on or before October 5, 2023. However, we cannot give any assurance as to whether Liberty Broadband will fulfill its indemnification obligations pursuant to the indemnification agreement.

As a result of LI LLC having disposed of these reference shares, any exercise of the exchange right by, or required distribution of cash, securities or other payments to, holders of such debentures will require that ~~Liberty~~LI LLC fund the required payments from its own resources, which will depend on the availability of cash or other sources of liquidity to ~~Liberty~~LI LLC at that time. Additionally, in the event all reference shares underlying a series of exchangeable debentures are liquidated or otherwise cease to be outstanding without replacement, there is a possibility that the treatment of tax matters associated with that series could change. This may include acceleration of tax liabilities that are recorded as deferred tax liabilities in our financial statements, in amounts that would be significant.

~~Risks Relating to the Ownership of Our Common Stock due to our Tracking Stock Capitalization~~

Holders of QVC Group tracking stock and Ventures Group tracking stock are common stockholders of our company and are, therefore, subject to risks associated with an investment in our company as a whole, even if a holder does not own shares of common stock of both of our groups. Even though we have attributed, for financial reporting purposes, all of our consolidated assets, liabilities, revenue, expenses and cash flows to either the QVC Group or the Ventures Group in order to prepare the separate financial statement schedules for each of those groups, we retain legal title to all of our assets and our capitalization does not limit our legal responsibility, or that of our subsidiaries, for the liabilities included in any set of financial statement schedules. Holders of QVC Group tracking stock and Ventures Group tracking stock do not have any legal rights related to specific assets attributed to the QVC Group or the Ventures Group and, in any liquidation, holders of QVC Group tracking stock and holders of Ventures Group tracking stock will be entitled to receive a pro rata share of our available net assets based on their respective numbers of liquidation units.

Our board of directors' ability to reattribute businesses, assets and expenses between tracking stock groups may make it difficult to assess the future prospects of either tracking stock group based on its past performance. Our board of directors is vested with discretion to reattribute businesses, assets and liabilities that are attributed to one tracking stock group to the other tracking stock group, without the approval of any of our stockholders. For example, in October 2014, our board of directors approved the change in attribution from the QVC Group to the Ventures Group of certain Liberty online commerce subsidiaries and approximately $1 billion in cash, without stockholder approval. Any reattribution made by our board of directors, as well as the existence of the right in and of itself to effect a reattribution, may impact the ability of investors to assess the future prospects of either tracking stock group, including its liquidity and capital resource needs, based on its past performance. Stockholders may also have difficulty evaluating the liquidity and capital resources of each group based on past performance, as our board of directors may use one group's liquidity to fund the other group's liquidity and capital expenditure requirements through the use of inter-group loans and inter-group interests.

~~We could be required to use assets attributed to one group to pay liabilities attributed to the other group.~~ The assets attributed to one group are potentially subject to the liabilities attributed to the other group, even if those liabilities arise from lawsuits, contracts or indebtedness that are attributed to such other group. While our current management and allocation policies provide that reattributions of assets between groups will result in the creation of an inter-group loan or an inter-group interest or an offsetting reattribution of cash or other assets, no provision of our restated charter prevents us from satisfying liabilities of one group with assets of the other group, and our creditors are not in any way limited by our tracking stock capitalization from proceeding against any assets they could have proceeded against if we did not have a tracking stock capitalization.

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~~The market price of QVC Group tracking stock and Ventures Group tracking stock may not reflect the performance of the QVC Group and the Ventures Group, respectively, as we intend.~~ We cannot assure you that the market price of the common stock of a group, in fact, will reflect the performance of the group of businesses, assets and liabilities attributed to that group. Holders of QVC Group tracking stock and Ventures Group tracking stock are common stockholders of our company as a whole and, as such, will be subject to all risks associated with an investment in our company and all of our businesses, assets and liabilities. As a result, the market price of each series of stock of a group may simply reflect the performance of our company as a whole or may more independently reflect the performance of some or all of the group of assets attributed to such group. In addition, investors may discount the value of the stock of a group because it is part of a common enterprise rather than a stand-alone entity.

The market price of QVC Group tracking stock and Ventures Group tracking stock may be volatile, could fluctuate substantially and could be affected by factors that do not affect traditional common stock. ~~The market prices of QVC Group tracking stock and Ventures Group tracking stock may be materially affected by, among other things:~~

~~actual or anticipated fluctuations in a group's operating results or in the operating results of particular companies attributable to such group;~~

~~potential acquisition activity by our company, our subsidiaries or our business affiliates;~~

issuances of debt or equity securities to raise capital by our company, our subsidiaries or our business affiliates and the manner in which that debt or the proceeds of an equity issuance are attributed to each of the groups;

~~changes in financial estimates by securities analysts regarding QVC Group tracking stock or Ventures Group tracking stock or the companies attributable to either of our tracking stock groups;~~

the complex nature and the potential difficulties investors may have in understanding the terms of both of our tracking stocks, as well as concerns regarding the possible effect of certain of those terms on an investment in our stock; and

~~general market conditions.~~

~~The market value of QVC Group tracking stock and Ventures Group tracking stock could be adversely affected by events involving the assets and businesses attributed to either of the groups.~~ Because we are the issuer of QVC Group tracking stock and Ventures Group tracking stock, an adverse market reaction to events relating to the assets and businesses attributed to either of our groups, such as earnings announcements, announcements of new products or services, or acquisitions or dispositions that the market does not view favorably, may cause an adverse reaction to the common stock of our other group. This could occur even if the triggering event is not material to us as a whole. A certain triggering event may also have a greater impact on one group than the same triggering event would have on the other group due to the asset composition of the affected group. In addition, the incurrence of significant indebtedness by us or any of our subsidiaries on behalf of one group, including indebtedness incurred or assumed in connection with acquisitions of or investments in businesses, could affect our credit rating and that of our subsidiaries and, therefore, could increase the borrowing costs of businesses attributable to our other group or the borrowing costs of our company as a whole.

~~We may not pay dividends equally or at all on QVC Group tracking stock or Ventures Group tracking stock.~~ We do not presently intend to pay cash dividends on QVC Group tracking stock or Ventures Group tracking stock for the foreseeable future. However, we will have the right to pay dividends on the shares of common stock of each group in equal or unequal amounts, and we may pay dividends on the shares of common stock of one group and not pay dividends on shares of common stock of the other group. In addition, any dividends or distributions on, or repurchases of, shares relating to either group will reduce our assets legally available to be paid as dividends on the shares relating to the other group.

~~Our tracking stock capital structure could create conflicts of interest, and our board of directors may make decisions that could adversely affect only some holders of our common stock.~~ Our tracking stock capital structure could give rise to occasions when the interests of holders of stock of one group might diverge or appear to diverge from the interests of holders of stock of the other group. In addition, given the nature of their businesses, there may be inherent conflicts of interests between the QVC Group and the Ventures Group. Our tracking stock groups are not separate entities and thus holders of QVC Group tracking stock and Ventures Group tracking stock do not have the right to elect separate boards of directors. As a result, our company's officers and directors owe fiduciary duties to our company as a whole and all of our stockholders as opposed to only holders of a particular group. Decisions deemed to be in the best interest of our

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~~company and all of our stockholders may not be in the best interest of a particular group when considered independently. Examples include:~~

~~decisions as to the terms of any business relationships that may be created between the QVC Group and the Ventures Group or the terms of any reattributions of assets or liabilities between the groups;~~

decisions as to the allocation of consideration among the holders of QVC Group tracking stock and Ventures Group tracking stock, or among the series of stocks relating to either of our groups, to be received in connection with a merger involving our company;

~~decisions as to the allocation of corporate opportunities between the groups, especially where the opportunities might meet the strategic business objectives of both groups;~~

~~decisions as to operational and financial matters that could be considered detrimental to one group but beneficial to the other;~~

~~decisions as to the conversion of shares of common stock of one group into shares of common stock of the other;~~

~~decisions regarding the creation of, and, if created, the subsequent increase or decrease of any inter-group interest that one group may own in the other group;~~

~~decisions as to the internal or external financing attributable to businesses or assets attributed to either of our groups;~~

~~decisions as to the dispositions of assets of either of our groups; and~~

~~decisions as to the payment of dividends on the stock relating to either of our groups.~~

~~Our directors' or officers' ownership of QVC Group tracking stock and Ventures Group tracking stock may create or appear to create conflicts of interest.~~ If directors or officers own disproportionate interests (in percentage or value terms) in QVC Group tracking stock or Ventures Group tracking stock, that disparity could create or appear to create conflicts of interest when they are faced with decisions that could have different implications for the holders of QVC Group tracking stock or Ventures Group tracking stock.

Other than pursuant to our management and allocation policies, we have not adopted any specific procedures for consideration of matters involving a divergence of interests among holders of shares of stock relating to our two groups, or among holders of different series of stock relating to a specific group. ~~Rather than develop additional specific procedures in advance, our board of directors intends to exercise its judgment from time to time, depending on the circumstances, as to how best to:~~

~~obtain information regarding the divergence (or potential divergence) of interests;~~

~~determine under what circumstances to seek the assistance of outside advisers;~~

~~determine whether a committee of our board of directors should be appointed to address a specific matter and the appropriate members of that committee; and~~

~~assess what is in our best interests and the best interests of all of our stockholders.~~

Our board of directors believes the advantage of retaining flexibility in determining how to fulfill its responsibilities in any such circumstances as they may arise outweighs any perceived advantages of adopting additional specific procedures in advance.

~~Our board of directors may change the management and allocation policies to the detriment of either group without stockholder approval.~~ Our board of directors has adopted certain management and allocation policies to serve as guidelines in making decisions regarding the relationships between the QVC Group and the Ventures Group with respect to matters such as tax liabilities and benefits, inter-group loans, inter-group interests, attribution of assets, financing alternatives, corporate opportunities and similar items. These policies also set forth the initial focuses and strategies of these groups and the initial attribution of our businesses, assets and liabilities between them. These policies are not included in the restated certificate of incorporation (the “restated charter”). Our board of directors may at any time change or make exceptions to these policies. Because these policies relate to matters concerning the day-to-day management of our company as opposed to significant corporate actions, such as a merger involving our company or a sale of substantially all

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of our assets, no stockholder approval is required with respect to their adoption or amendment. A decision to change, or make exceptions to, these policies or adopt additional policies could disadvantage one group while advantaging the other.

Holders of shares of stock relating to a particular group may not have any remedies if any action by our directors or officers has an adverse effect on only that stock, or on a particular series of that stock. Principles of Delaware law and the provisions of our restated charter may protect decisions of our board of directors that have a disparate impact upon holders of shares of stock relating to a particular group, or upon holders of any series of stock relating to a particular group. Under Delaware law, the board of directors has a duty to act with due care and in the best interests of all of our stockholders, regardless of the stock, or series, they hold. Principles of Delaware law established in cases involving differing treatment of multiple classes or series of stock provide that a board of directors owes an equal duty to all stockholders and does not have separate or additional duties to any subset of stockholders. Judicial opinions in Delaware involving tracking stocks have established that decisions by directors or officers involving differing treatment of holders of tracking stocks may be judged under the “business judgment rule.” In some circumstances, our directors or officers may be required to make a decision that is viewed as adverse to the holders of shares relating to a particular group or to the holders of a particular series of that stock. Under the principles of Delaware law and the business judgment rule referred to above, a stockholder may not be able to successfully challenge decisions that a stockholder believes have a disparate impact upon the stockholders of one of our groups if a majority of our board of directors is disinterested and independent with respect to the action taken, is adequately informed with respect to the action taken and acts in good faith and in the honest belief that the board is acting in the best interest of Liberty and all of our stockholders.

~~Stockholders will not vote on how to attribute consideration received in connection with a merger involving our company among holders of QVC Group tracking stock and Ventures Group tracking stock.~~ Our restated charter does not contain any provisions governing how consideration received in connection with a merger or consolidation involving our company is to be attributed to the holders of QVC Group tracking stock and holders of Ventures Group tracking stock or to the holders of different series of stock, and none of the holders of QVC Group tracking stock or Ventures Group tracking stock will have a separate class vote in the event of such a merger or consolidation. Consistent with applicable principles of Delaware law, our board of directors will seek to divide the type and amount of consideration received in a merger or consolidation involving our company among holders of QVC Group tracking stock and Ventures Group tracking stock in a fair manner. As the different ways the board of directors may divide the consideration between holders of stock relating to the different groups, and among holders of different series of a particular stock, might have materially different results, the consideration to be received by holders of QVC Group tracking stock and Ventures Group tracking stock in any such merger or consolidation may be materially less valuable than the consideration they would have received if they had a separate class vote on such merger or consolidation.

~~We may dispose of assets of the QVC Group or the Ventures Group without your approval.~~ Delaware law requires stockholder approval only for a sale or other disposition of all or substantially all of the assets of our company taken as a whole, and our restated charter does not require a separate class vote in the case of a sale of a significant amount of assets of any of our groups. As long as the assets attributed to the QVC Group or the Ventures Group proposed to be disposed of represent less than substantially all of our assets, we may approve sales and other dispositions of any amount of the assets of such group without any stockholder approval.

If we dispose of all or substantially all of the assets attributed to any group (which means, for this purpose, assets representing 80% of the fair market value of the total assets of the disposing group, as determined by our board of directors), we would be required, if the disposition is not an exempt disposition under the terms of our restated charter, to choose one or more of the following three alternatives:

~~declare and pay a dividend on the disposing group's common stock;~~

~~redeem shares of the disposing group's common stock in exchange for cash, securities or other property; and/or~~

~~convert all or a portion of the disposing group's outstanding common stock into common stock of the other group.~~

In this type of a transaction, holders of the disposing group's common stock may receive less value than the value that a third-party buyer might pay for all or substantially all of the assets of the disposing group.

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~~Our board of directors will decide, in its sole discretion, how to proceed and is not required to select the option that would result in the highest value to holders of any group of our common stock.~~

~~Holders of QVC Group tracking stock or Ventures Group tracking stock may receive less consideration upon a sale of the assets attributed to that group than if that group were a separate company.~~ If the QVC Group or the Ventures Group were a separate, independent company and its shares were acquired by another person, certain costs of that sale, including corporate level taxes, might not be payable in connection with that acquisition. As a result, stockholders of a separate, independent company with the same assets might receive a greater amount of proceeds than the holders of QVC Group tracking stock or Ventures Group tracking stock would receive upon a sale of all or substantially all of the assets of the group to which their shares relate. In addition, we cannot assure our stockholders that in the event of such a sale the per share consideration to be paid to holders of QVC Group tracking stock or Ventures Group tracking stock, as the case may be, will be equal to or more than the per share value of that share of stock prior to or after the announcement of a sale of all or substantially all of the assets of the applicable group. Further, there is no requirement that the consideration paid be tax-free to the holders of the shares of common stock of that group. Accordingly, if we sell all or substantially all of the assets attributed to the QVC Group or the Ventures Group, our stockholders could suffer a loss in the value of their investment in our company.

We may split off, spin off or reattribute assets, liabilities and businesses attributed to our tracking stock groups in a manner that may disparately impact some of our stockholders if our board of directors determines such transaction to be in the best interest of all of our stockholders, and in some cases, not all of our stockholders would be entitled to vote on such a transaction. Pursuant to the terms of the restated charter, our board of directors may determine that it is in the best interest of all of our stockholders to effect a redemptive split-off whereby all or a portion of the outstanding shares of a particular tracking stock would be redeemed for shares of common stock of a subsidiary (“Splitco”) that holds all or a portion of the assets and liabilities attributed to such tracking stock group subject to the approval of only the holders of the tracking stock to be redeemed. However, the vote of holders of our other tracking stock would not be required, unless Splitco also held assets and liabilities of such other tracking stock group. If we were to effect a redemptive split-off, then, pursuant to the terms of the restated charter, we would be required to redeem the outstanding shares of the affected tracking stock from its holders on an equal per share basis (i.e., we could not redeem shares from holders of only certain series of the affected tracking stock or redeem from all holders of the affected tracking stock on a non-pro rata basis). Following a redemptive split-off, the other tracking stock would become the only outstanding common stock of Liberty, and thus would cease to function as a tracking stock and would effectively become a regular common stock (even if the tracking stock structure set forth in the restated charter remained in place until the restated charter was amended to eliminate the tracking stock specific provisions). In addition, in the case of a partial redemptive split-off, holders of the affected tracking stock would hold shares of Splitco and continue to hold a reduced number of shares of the affected tracking stock which would track the remaining assets and liabilities retained by us and attributed to such tracking stock after the split-off.

We are also permitted, pursuant to the terms of the restated charter, to effect a spin-off of certain of our assets and liabilities through the dividend of shares of a subsidiary holding such assets and liabilities, and the spin-off would not be subject to prior stockholder approval. In this situation, a tracking stock holder would retain their tracking stock shares and receive shares of the spun-off entity.

Furthermore, in structuring these transactions, our board of directors may determine to alter the composition of the assets and liabilities underlying our tracking stock groups through a reattribution. As contemplated by both the restated charter and the Management and Allocation Policies designed to assist us in managing and separately presenting the businesses and operations attributed to our tracking stock groups, our board of directors is vested with the discretion to reattribute assets and liabilities from one tracking stock group to another tracking stock group without the approval of any of its stockholders, and the only limitations on its exercise of such discretion are that the reattribution be in the best interest of all of our stockholders and that the reattribution be done on a fair value basis. Holders of the affected tracking stock groups will not be entitled to a separate vote to approve a reattribution, even if such reattribution is occurring in connection with a redemptive split-off and such stockholders would otherwise be entitled to vote on the redemptive split-off itself.

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In the event of a liquidation of Liberty, holders of Ventures Group tracking stock and QVC Group tracking stock will not have a priority with respect to the assets attributed to the related tracking stock group remaining for distribution to stockholders. Under the restated charter, upon Liberty's liquidation, dissolution or winding up, holders of the Ventures Group tracking stock and the QVC Group tracking stock will be entitled to receive, in respect of their shares of such stock, their proportionate interest in all of Liberty's assets, if any, remaining for distribution to holders of common stock in proportion to their respective number of "liquidation units" per share. Relative liquidation units were determined based on the volume weighted average prices of the Ventures Group tracking stock and the QVC Group tracking stock over the 20 trading day period which commenced shortly after the initial filing of the restated charter. Hence, the assets to be distributed to a holder of either tracking stock upon a liquidation, dissolution or winding up of Liberty will have nothing to do with the value of the assets attributed to the related tracking stock group or to changes in the relative value of the QVC Group tracking stock and the Ventures Group tracking stock over time.

Our board of directors may in its sole discretion elect to convert the common stock relating to one group into common stock relating to the other group, thereby changing the nature of your investment and possibly diluting your economic interest in our company, which could result in a loss in value to you. Our restated charter permits our board of directors, in its sole discretion, to convert all of the outstanding shares of common stock relating to either of our groups into shares of common stock of the other group on specified terms. A conversion would preclude the holders of stock in each group involved in such conversion from retaining their investment in a security that is intended to reflect separately the performance of the relevant group. We cannot predict the impact on the market value of our stock of (1) our board of directors' ability to effect any such conversion or (2) the exercise of this conversion right by our company. In addition, our board of directors may effect such a conversion at a time when the market value of our stock could cause the stockholders of one group to be disadvantaged.

~~Holders of QVC Group tracking stock and Ventures Group tracking stock will vote together and will have limited separate voting rights.~~ Holders of QVC Group tracking stock and Ventures Group tracking stock will vote together as a single class, except in certain limited circumstances prescribed by our restated charter and under Delaware law. Each share of Series B common stock of each group has ten votes per share, and each share of Series A common stock of each group has one vote per share. Holders of Series C common stock of each group have no voting rights, other than those required under Delaware law. When holders of QVC Group tracking stock and Ventures Group tracking stock vote together as a single class, holders having a majority of the votes will be in a position to control the outcome of the vote even if the matter involves a conflict of interest among our stockholders or has a greater impact on one group than the other.

Transactions in our common stock by our insiders could depress the market price of our common stock. Sales of or hedging transactions such as collars relating to our shares by John C. Malone, a director of our company, Gregory B. Maffei, our Chairman of the Board, or Michael George, our Chief Executive Officer, or any of our other directors or executive officers could cause a perception in the marketplace that our stock price has peaked or that adverse events or trends have occurred or may be occurring at our company. This perception can result notwithstanding any personal financial motivation for these insider transactions. As a result, insider transactions could depress the market price for shares of one or more series of our ~~tracking stocks.~~common stock.

~~Our capital structure, as well as the fact that the QVC Group and the Ventures Group are not independent companies,~~It may ~~inhibit or prevent acquisition bids for the QVC Group or the Ventures Group and may make it~~be difficult for a third party to acquire us, even if doing so may be beneficial to our stockholders. If the QVC Group and the Ventures Group were separate independent companies, any person interested in acquiring the QVC Group or the Ventures Group without negotiating with management could seek control of that group by obtaining control of its outstanding voting stock, by means of a tender offer, or by means of a proxy contest. Although we intend QVC Group tracking stock and Ventures Group tracking stock to reflect the separate economic performance of the QVC Group and the Ventures Group, respectively, those groups are not separate entities and a person interested in acquiring only one group without negotiation with our management could obtain control of that group only by obtaining control of a majority in voting power of all of the outstanding shares of common stock of our company. The existence of shares of common stock, and different series of shares, relating to different groups could present complexities and in certain circumstances pose obstacles, financial and otherwise, to an acquiring person that are not present in companies that do not have capital structures similar to ours.

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Certain provisions of our restated charter and bylaws may discourage, delay or prevent a change in control of our company that a stockholder may consider favorable. These provisions include:

●

authorizing a capital structure with multiple series of common stock, a Series B common stock ~~of each group~~ that entitles the holders to ten votes per share, a Series A common stock ~~of each group~~ that entitles the holder to one vote per share, and a Series C common stock ~~of each group~~ that except as otherwise required by applicable law, entitles the holder to no voting rights;

●

classifying our board of directors with staggered three-year terms, which may lengthen the time required to gain control of our board of directors;

●

limiting who may call special meetings of stockholders;

●

prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of the stockholders;

●

establishing advance notice requirements for nominations of candidates for election to the board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings;

●

requiring stockholder approval by holders of at least 66 2/3% of our aggregate voting power or the approval by at least 75% of our board of directors with respect to certain extraordinary matters, such as a merger or consolidation of our company, a sale of all or substantially all of our assets or an amendment to our restated charter; and

●

the existence of authorized and unissued stock, including "blank check" preferred stock, which could be issued by our board of directors to persons friendly to our then current management, thereby protecting the continuity of our management, or which could be used to dilute the stock ownership of persons seeking to obtain control of our company.

~~Our chairman,~~ John C. Malone, a director of our company, beneficially owns shares representing the power to direct approximately ~~37% and 32%~~41% of the aggregate voting power in our company, due to his beneficial ownership of approximately ~~95% and 90%~~94% of the outstanding shares of ~~each of~~ our Series B ~~QVC Group~~Qurate Retail common stock ~~and Series B Liberty Ventures common stock, respectively,~~ as of January 31, ~~2018.~~2021.

~~Risks Relating to the Transactions~~

In addition to the other information included in this Annual Report and the risks described below, you should carefully consider the risks associated with the Transactions, including the risks relating to the completion of the Transactions and, subject to the completion of the Transactions, the risks relating to the legacy GCI operations and GCI Liberty’s corporate and capital structure and certain financial matters. These risks are described in “Risk Factors” in Amendment No. 3 to GCI’s Registration Statement on Form S-4, filed with the SEC on December 27, 2017.

~~We expect to incur significant costs and expenses in connection with the Transactions.~~ We expect to incur certain nonrecurring costs in connection with the consummation of the Transactions contemplated by the related GCI Reorganization Agreement including advisory, legal and other transaction costs. A majority of these costs have already been incurred or will be incurred regardless of whether the Transactions are completed. While many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time, our management continues to assess the magnitude of these costs, and additional unanticipated costs may be incurred in connection with the Transactions. Although we expect that the realization of benefits related to the Transactions will offset such costs and expenses over time, no assurances can be made that this net benefit will be achieved in the near term, or at all.

The announcement and pendency of the Transactions could divert the attention of management and cause disruptions in the businesses of GCI and Liberty, which could have an adverse effect on the business and financial results of both GCI and Liberty. Liberty and GCI are unaffiliated companies that are currently operating independently of each other. Management of both GCI and Liberty may be required to divert a disproportionate amount of attention away from their respective day-to-day activities and operations, and devote time and effort to consummating the Transactions. The risks, and adverse effects, of such disruptions and diversions could be exacerbated by a delay in the completion of the Transactions. These factors could adversely affect the financial position or results of operations of Liberty and GCI, regardless of whether the Transactions are completed.

~~I-42~~

~~Table of Contents~~

~~We are subject to contractual restrictions while the Transactions are pending, which could adversely affect our business.~~ The GCI Reorganization Agreement imposes certain restrictive interim covenants on our Company. For instance, the consent of GCI is required in respect of, among other things, amendments to our organizational documents, certain payments of dividends with respect to the Liberty Ventures common stock and certain issuances of shares of Liberty Ventures common stock. These restrictions may prevent us from taking certain actions before the closing of the Transactions or the termination of the GCI Reorganization Agreement, including making certain acquisitions or otherwise pursuing certain business opportunities, or making certain changes to our capital stock, that our board of directors may deem beneficial.

~~Failure to complete the Transactions could negatively impact our stock price and financial results.~~ If the Transactions are not completed for any reason, including as a result of the GCI stockholders or Liberty stockholders failing to approve the necessary proposals, we may be subject to numerous risks, including the following:

~~Liberty experiencing negative reactions from the financial markets, including negative impacts on the price of Liberty Ventures common stock;~~

~~Liberty being required to pay GCI a termination fee in connection with the termination of the GCI Reorganization Agreement under certain circumstances;~~

~~Liberty experiencing reputational harm due to the adverse perception of any failure to successfully complete the Transactions; and~~

Liberty (i) operating under the restrictions on the conduct of its business set forth in the GCI Reorganization Agreement, (ii) having its management divert attention away from their respective day-to-day activities and operations and devoting time and effort to consummating the Transactions and (iii) incurring significant costs, including advisory, legal and other transaction costs, each as explained above, without realizing any of the benefits of having completed the Transactions.

In addition, we could be subject to the cost of litigation related to any dispute regarding an alleged failure of a closing condition or any related enforcement proceeding commenced against us to perform our obligations under the GCI Reorganization Agreement or any of the other transaction documents, as well as any judgment potentially sustained against us in any such action. All of these risks, expenses and contingencies could adversely affect our financial position and results of operation.

Item 1B. Unresolved Staff Comments

None.

Item 2. ~~Properties.~~

Properties

We lease our corporate headquarters in Englewood, Colorado under a facilities agreement with LMC. All of our other real or personal property is owned or leased by our subsidiaries and business affiliates.

~~QVC~~QxH owns its corporate headquarters and operations center in West Chester, Pennsylvania which ~~consist~~consists of office space and ~~include~~includes executive offices, ~~television~~video broadcast studios, showrooms, broadcast facilities and administrative ~~offices for QVC. QVC also~~offices. QxH owns call centers in San Antonio, ~~Texas;~~Texas and Chesapeake, ~~Virginia; Bochum and Kassel, Germany; and Chiba-Shi, Japan. QVC~~Virginia. QxH owns a multi-functional building in St. Petersburg, Florida. QxH owns distribution centers in Lancaster, Pennsylvania; Piney Flats, Tennessee; Suffolk, Virginia; Rocky Mount, North Carolina; Florence, South Carolina; and Ontario, ~~California;~~California and leases a distribution center in Bethlehem, Pennsylvania.

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QVC International owns call centers in Bochum and Kassel, Germany; and Chiba-Shi, Japan. QVC International owns distribution centers in Chiba, Japan; and Hü~~cklehoven,~~ckelhoven, Germany. Additionally, QVC International owns multi-functional buildings in Knowsley, United ~~Kingdom,~~Kingdom; Chiba, ~~Japan~~Japan; Brugherio, Italy; and ~~Brugherio, Italy.~~ In Dusseldorf, Germany, ~~QVC owns its~~ ~~administrative offices within the headquarters located~~and leases a multi-functional building in ~~Düsseldorf, Germany which also includes leased television studios and broadcast facilities.~~ ~~To supplement the facilities QVC owns, it also leases various facilities worldwide.~~London, U.K.

~~zulily~~Zulily leases its corporate headquarters in Seattle, Washington, fulfillment centers in Lockbourne, Ohio, McCarran, Nevada, ~~and~~ Bethlehem, Pennsylvania, and a corporate ~~office~~offices in Gahanna, ~~Ohio.~~Ohio and Shenzhen, China.

~~I-43~~

~~Table of Contents~~

HSNi owns its corporate headquarters in St. Petersburg, Florida, which consist of office space and include executive offices, television studios, showrooms, broadcast facilities and administrative offices for HSNi. HSN owns its fulfillment center in Piney Flats, Tennessee. HSN leases its fulfillment centers in Fontana, California; Roanoke, Virginia; Ronkonkoma, New York and Greeneville, Tennessee; as well as five outlet stores and other properties in various locations in the United States for administrative offices and data centers. Cornerstone owns an office ~~and storage facility~~ in Franconia, New Hampshire. Cornerstone leases its fulfillment centers in ~~West Chester, Ohio; Monroe,~~Butler and Warren Counties in Ohio and Phoenix, Arizona. It also leases other properties consisting of administrative offices, 1921 retail stores and outlets ~~and photo centers~~ in various locations throughout the United States.

Our other subsidiaries and business affiliates own or lease the fixed assets necessary for the operation of their respective businesses, including office space, transponder space, headends, cable television and telecommunications distribution equipment and telecommunications switches.

Item 3. Legal Proceedings

None.

~~On September 7, 2017, a putative class action complaint was filed by a purported HSNi stockholder in the United States District Court for the District of Delaware:~~ ~~McClure v. HSN, Inc., et al.~~, Case No. 1:17-cv-01279. The complaint names as defendants HSNi and members of the HSNi board. The complaint asserts claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and rules and regulations promulgated thereunder, and alleges that HSNi and the members of the HSNi board caused a registration statement that allegedly omitted material information to be filed in connection with the merger, which allegedly rendered the registration statement false and misleading. The complaint further alleges that the members of the HSNi board acted as controlling persons of HSNi and had knowledge of the allegedly false statements contained in the registration statement or were negligent in not knowing that material information was allegedly omitted from the registration statement. Among other relief, the complaint seeks a declaration certifying a class, an injunction to prevent the merger from proceeding unless and until HSNi discloses the material information allegedly omitted from the registration statement, unspecified damages, and unspecified costs, expenses and attorneys’ fees. The complaint was dismissed in early 2018.

On September 28, 2017, a putative class action complaint was filed by a purported HSNi stockholder in the United States District Court for the Middle District of Florida: Palkon v. HSN, Inc., et al., Case No. 8:17-cv-2271. The complaint names as defendants HSNi, members of the HSNi board, Liberty and Liberty Horizon, Inc., a Delaware corporation and a direct, wholly-owned subsidiary of Liberty (“Merger Sub”). The complaint asserts claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as amended, and rules and regulations promulgated thereunder, and alleges that HSNi and the members of the HSNi board caused a registration statement that omitted material information to be filed in connection with Liberty’s acquisition ~~on December 29, 2017~~ of ~~the approximately 62% of HSNi it did not already own in an all-stock transaction (the “Merger”),~~ ~~which registration statement allegedly rendered the registration statement false and misleading.~~

The complaint further alleges that the members of the HSNi board, Liberty and Merger Sub acted as controlling persons of HSNi, were involved in the making and composition of the registration statement, and had knowledge of the allegedly false statements contained in the registration statement. The complaint seeks, among other relief, an injunction to prevent the Merger from proceeding, rescission of the Merger, an order directing HSNi to disseminate a registration statement that does not contain any untrue statements of material fact, a judgment declaring a violation of Sections 14(a) and/or 20(a) of the Exchange Act, as well as Rule 14a-9 promulgated thereunder, unspecified damages, and unspecified costs, expenses, and attorneys’ fees. In early 2018, the case was voluntarily dismissed.

Item 4. Mine Safety Disclosures

Not applicable.

~~I-44~~I-37

Table of Contents

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity ~~Securities.~~Securities.

Market Information

Each series of the common stock of Qurate Retail, Inc. (formerly named Liberty Interactive Corporation, ~~(“Liberty,~~“Qurate Retail,” the “Company,” “we,” “us” and “our”) trades on the Nasdaq Global Select Market. Our Series A and Series B QVC Group common stock ~~trade~~traded on the Nasdaq Global Select Market under the symbols “QVCA” and “QVCB,” respectively. ~~Our~~On May 23, 2018, the Company filed its restated certificate of incorporation, which (i) eliminated the tracking stock capitalization structure of the Company and (ii) reclassified each outstanding share of our Series A and ~~Series B Liberty Ventures common stock trade under the symbols “LVNTA” and “LVNTB,” respectively. Our~~ Series B QVC Group common stock ~~and Series B Liberty Ventures common stock are not actively traded.~~ ~~In connection with the Expedia Holdings Split-Off (as defined below), Liberty redeemed (i) 0.4 of each outstanding~~into one share of ~~Liberty’s Series A and Series B Liberty Ventures common stock for 0.4 of a share of Expedia Holdings~~our Series A and Series B common stock, ~~respectively, at 5:00 p.m., New York City time, on November 4, 2016. Accordingly,~~respectively. Following the ~~high and low sales prices of the~~reclassification, our Series A and Series B ~~Liberty Ventures~~ common stock ~~have been retroactively restated in the table below. Each series of our common stock trades~~continued trading on the Nasdaq Global Select ~~Market.~~Market, but under the symbols “QRTEA” and “QRTEB.” Stock price information for securities traded on the Nasdaq Global Select Market can be found on the Nasdaq’s website at www.nasdaq.com. Although the reclassification resulted in stock name and related ticker symbol changes, historical information for our Series B QVC Group common stock refers to such stock herein as our Series B common stock. The following table sets forth the range of high and low sales prices of shares of our Series B common stock for the years ended December 31, ~~2017~~2020 and ~~2016.~~2019. Although our Series B common stock is traded on the Nasdaq Global Select Market, an established public trading market does not exist for the stock, as it is not actively traded.


	QVC Group
	Series A (QVCA)			Series B (QVCB)
	High		Low	High	Low
2016

						Qurate Retail
							Series B (QRTEB)
							High	Low
2019
First quarter	$	26.97	22.51	30.62	24.40	$	22.37	15.91
Second quarter	$	27.25	23.01	26.98	24.02	$	17.50	11.62
Third quarter	$	27.06	18.42	26.69	19.00	$	14.62	10.10
Fourth quarter	$	22.33	17.88	24.10	17.78	$	10.62	7.84
2017
2020
First quarter	$	20.88	17.24	22.05	17.62	$	6.04	2.39
Second quarter	$	24.94	19.81	24.93	19.40	$	5.96	3.32
Third quarter	$	26.00	20.90	25.10	21.14	$	28.46	5.60
Fourth quarter	$	26.79	20.79	26.79	20.93	$	12.00	6.78

Liberty Ventures

Series A (LVNTA)

Series B (LVNTB)

High

Low

High

Low

2016

First quarter

$
40.22

29.24

36.83

33.14

Second quarter

$
36.55

30.97

36.72

34.36

Third quarter (July 1 - July 22)

$
38.59

32.76

37.87

37.33

Third quarter (July 23 - September 30) (1)

$
40.80

36.09

39.89

38.05

Fourth quarter (October 1 - November 4)

$
41.37

38.40

41.57

39.29

Fourth quarter (November 5 - December 31) (2)

$
41.74

36.54

41.94

36.93

2017

First quarter

$
45.17

36.69

46.61

38.61

Second quarter

$
55.93

44.13

56.33

53.33

Third quarter

$
62.41

50.56

59.88

51.80

Fourth quarter

$
59.90

52.43

54.30

54.30

~~(1)~~

As discussed in Part I of this report, the CommerceHub Spin-Off (as defined below) was effected on July 22, 2016 as a pro-rata dividend of shares of CommerceHub to the stockholders of Liberty’s Series A and Series B Liberty Ventures common stock.

~~II-1~~

~~Table of Contents~~

~~(2)~~

As discussed in Part I of this report, the Expedia Holdings Split-Off was effected on November 4, 2016 as a redemption of Liberty’s Series A and Series B Liberty Ventures common stock for shares of Expedia Holdings.

Holders

As of January 31, ~~2018,~~2021, there were ~~2,742~~2,335 and 8567 record holders of our Series A and Series B ~~QVC Group common stock, respectively, and 991 and 61 record holders of our Series A and Series B Liberty Ventures~~Qurate Retail common stock, respectively. The foregoing numbers of record holders do not include the number of stockholders whose shares are held nominally by banks, brokerage houses or other institutions, but include each such institution as one shareholder.

Dividends

On August 21, 2020, Qurate Retail announced that an authorized committee of its Board of Directors had declared a special dividend (the “Special Dividend”) on each outstanding share of its Series A and Series B common stock consisting of (i) cash in the amount of $1.50 per common share, for an aggregate cash dividend of approximately $626 million, and (ii) 0.03 shares of newly issued 8.0% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Preferred Stock”), having an initial liquidation price of $100 per share of Preferred Stock, with cash paid in lieu of fractional shares. The distribution ratio for the Preferred Stock portion of the Special Dividend was equivalent to $3.00 in initial liquidation preference per common share, for an aggregate issuance of approximately $1.3 billion aggregate liquidation preference. The dividend was distributed on September 14, 2020 to holders of record of Qurate Retail’s Series A and Series B common stock. Holders of the Preferred Stock are entitled to receive quarterly cash dividends at a fixed rate of 8.0% per year on a cumulative basis, beginning December 15, 2020 and thereafter on each of March 15, June 15,

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Table of Contents

September 15 and December 15 during the term. The Preferred Stock is non-voting, except in limited circumstances as required by law, and subject to a mandatory redemption on March 15, 2031.

WeOn November 20, 2020, Qurate Retail announced that an authorized committee of its Board of Directors declared a special cash dividend in the amount of $1.50 per common share, for an aggregate dividend of approximately $625 million, payable in cash on December 7, 2020 to stockholders of record of the Company’s Series A and Series B common stock at the close of business on November 30, 2020.

Aside from the above mentioned dividends, we have not paid any cash dividends on our common ~~stock, and we have no present intention of so doing.~~stock. Payment of cash dividends, if any, in the future will be determined by our board of directors in light of our earnings, financial condition and other relevant considerations. See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operation – Liquidity and Capital Resources.”

Securities Authorized for Issuance Under Equity Compensation Plans

Information required by this item is incorporated by reference to our definitive proxy statement for our ~~2018~~2021 Annual Meeting of ~~Stockholders that will be filed with the Securities and Exchange Commission on or before April 30, 2018.~~Stockholders.

Purchases of Equity Securities by the Issuer

Share Repurchase Programs

~~On several occasions our board of directors has authorized a share repurchase program for our Series A and Series B QVC Group common stock. On each of~~In May 5, 2006, November 3, 2006 and October 30, 2007 our board authorized the repurchase of $1 billion of Series A and Series B Liberty Interactive common stock for a total of $3 billion. These previous authorizations remained effective following the LMC Split-Off, notwithstanding the fact that the Liberty Interactive common stock ceased to be a tracking stock during the period following the LMC Split-Off (as defined below) and prior to the creation of our Liberty Ventures common stock in August 2012. On February 22, 20122019, the board authorized the repurchase of ~~an additional $700~~$500 million of Series A and Series B Liberty Interactive common stock. Additionally, on each of October 30, 2012 and February 27, 2014, the board authorized the repurchase of an additional $1 billion of Series A and Series B Liberty Interactive common stock. In connection with the TripAdvisor Holdings Spin-Off (as defined below) during August 2014, the board authorized $350 million for the repurchase of either the Liberty Interactive or Liberty Ventures tracking stocks. In October 2014, the board authorized the repurchase of an additional $650 million of Series A and Series B Liberty Ventures common stock. In August 2015, the board authorized the repurchase of an additional $1 billion of Series A or Series B ~~QVC Group~~Qurate Retail common ~~stock. In addition, on October 26, 2016, the board authorized the repurchase~~stock.


	Series A Qurate Retail Common Stock (QRTEA)
					Maximum Number
					(or Approximate Dollar
				Total Number of	Value) of Shares that
	Total Number	Average		Shares Purchased as Part	May Yet Be purchased
	of Shares	Price Paid per		of Publicly Announced	Under the Plans or
Period	Purchased	Share		Plans or Programs	Programs
October 1 - 31, 2020	—	$	—	—	$	497	million
November 1 - 30, 2020	1,149,206	$	11.36	1,149,206	$	484	million
December 1 - 31, 2020	5,372,576	$	10.57	5,372,576	$	427	million
Total	6,521,782			6,521,782

There were no repurchases of ~~an additional $300 million of either the QVC Group~~Series B Qurate Retail common stock or ~~the Liberty Ventures common stock. On September 19, 2017, the board authorized the repurchase of an additional $1 billion of Series A QVC Group common stock.~~

~~II-2~~

~~Table of Contents~~

~~A summary of the repurchase activity for~~Preferred Stock during the three months ended December 31, ~~2017 is as follows:~~2020.

Series A QVC Group Common Stock (QVCA)











Maximum Number


(or Approximate Dollar

Total Number of

Value) of Shares that

Total Number

Average

Shares Purchased as Part

May Yet Be purchased

of Shares

Price Paid per

of Publicly Announced

Under the Plans or

Period

Purchased

Share

Plans or Programs

Programs

October 1 - 31, 2017

7,736,267

$
23.03

7,736,267

$
822
million
November 1 - 30, 2017

5,901,315

$
23.23

5,901,315

$
684
million
December 1 - 31, 2017

—

$
—

—

$
684
million
Total

13,637,582

13,637,582

~~3,135~~2,537 shares of Series A ~~QVC Group~~Qurate Retail common stock and ~~zero~~45 shares of ~~Series A Liberty Ventures common stock~~Preferred Stock were surrendered by certain of our officers and employees to pay withholding taxes and other deductions in connection with the vesting of their restricted stock during the three months ended December 31, ~~2017.~~2020.

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Table of Contents

Item 6. Selected Financial Data.

The following tables present selected historical information relating to our financial condition and results of operations for the past five years. Certain prior period amounts have been reclassified for comparability with the current year presentation. The following data should be read in conjunction with our consolidated financial statements.Not applicable.

December 31,


2017

2016

2015

2014

2013

amounts in millions

Summary Balance Sheet Data:

Cash and cash equivalents

$
903

825

2,449

2,306

902

Investments in available-for-sale securities and other cost investments

$
2,363

1,922

1,353

1,224

1,313

Investment in affiliates, accounted for using the equity method

$
309

581

714

1,119

760

Investment in Liberty Broadband measured at fair value

$
3,635

3,161

—

—

—

Intangible assets not subject to amortization (1)

$
11,011

9,354

9,485

7,893

8,383

Noncurrent assets of discontinued operations (2) (3)

$
—

—

927

514

7,572

Total assets

$
24,122

20,355

21,180

18,598

24,642

Long-term debt

$
7,553

7,166

7,481

7,062

6,072

Deferred income tax liabilities

$
2,803

3,636

3,217

2,681

2,794

Noncurrent liabilities of discontinued operations (2) (3)

$
—

—

285

140

1,584

Total equity (1)

$
10,083

6,861

6,875

5,780

11,435

Noncontrolling interest in equity of subsidiaries (2)

$
99

89

88

107

4,499

~~II-3~~

~~Table of Contents~~

Years ended December 31,


2017

2016

2015

2014

2013

amounts in millions,

except per share amounts

Summary Statement of Operations Data:

Revenue

$
10,404

10,647

9,989

10,499

10,219

Operating income (loss)

$
1,043

968

1,116

1,188

1,136

Interest expense

$
(355)

(363)

(360)

(387)

(380)

Share of earnings (losses) of affiliates, net

$
(200)

(68)

(178)

(19)

2

Realized and unrealized gains (losses) on financial instruments, net

$
618

1,175

114

(57)

(22)

Gains (losses) on transactions, net (1)

$
410

9

110

74

(1)

Earnings (loss) from continuing operations (4):

QVC Group common stock

$
1,254

511

674

574

500

Liberty Ventures common stock

1,233

743

(43)

(36)

27

$
2,487

1,254

631

538

527

Basic earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share (5):

Series A and Series B QVC Group common stock

$
2.71

0.99

1.35

1.10

0.88

Series A and Series B Liberty Ventures common stock

$
14.34

5.54

(0.36)

(0.43)

0.37

Diluted earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share (5):

Series A and Series B QVC Group common stock

$
2.70

0.98

1.33

1.09

0.86

Series A and Series B Liberty Ventures common stock (3)

$
14.17

5.49

(0.36)

(0.43)

0.36

(1)On December 29, 2017, the Company acquired the remaining approximately 62% of HSNi it did not already own in an all-stock transaction, making HSNi a wholly-owned subsidiary, attributed to the QVC Group tracking stock group. In conjunction with the application of acquisition accounting, the Company recorded a full step up in basis of HSNi along with a gain between our historical basis and the fair value of our interest in HSNi.

(2) On December 11, 2012, the Company acquired approximately 4.8 million additional shares of common stock of TripAdvisor, Inc. ("TripAdvisor") (an additional 4% equity ownership interest), for $300 million, along with the right to control the vote of the shares of TripAdvisor's common stock and class B common stock the Company owns. Following the transaction the Company owned approximately 22% of the equity and 57% of the total votes of all classes of TripAdvisor common stock. On August 27, 2014, the Company completed the TripAdvisor Holdings Spin-Off. The consolidated financial statements of Liberty have been prepared to reflect TripAdvisor Holdings as discontinued operations. However, the noncontrolling interest attributable to our former ownership interest in TripAdvisor is included in the noncontrolling interest line item in the consolidated balance sheet from the date of acquisition until the date of completion of the TripAdvisor Holdings Spin-Off. See Item 1 “ Business” for further details on the TripAdvisor Holdings Spin-Off.

(3)The Expedia Holdings Split-Off was effected on November 4, 2016 as a split-off through the redemption of a portion of Liberty’s Series A and Series B Liberty Ventures common stock for shares of Expedia Holdings (as defined below). The consolidated financial statements of Liberty have been prepared to reflect Liberty’s interest in Expedia (as defined below) as a discontinued operation.

(4)Includes earnings (losses) from continuing operations attributable to the noncontrolling interests of $46 million, $39 million, $42 million, $40 million and $45 million for the years ended December 31, 2017, 2016, 2015, 2014, and 2013, respectively.

~~II-4~~

~~Table of Contents~~

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying consolidated financial statements and the notes thereto. Additionally, see note 32 in the accompanying consolidated financial statements for an overview of new accounting standards that we have adopted or that we plan to adopt that have had or may have an impact on our financial statements.

Overview

We own controlling and non-controlling interests in a broad range of video and online commerce companies. Our largest ~~business~~businesses and reportable ~~segment, is~~segments are QxH (QVC U.S. and HSN) and QVC International. QVC, Inc. (“QVC”)., which includes QxH and QVC International, markets and sells a wide variety of consumer products in the United States (“U.S.”) and several foreign countries ~~primarily by means of its televised~~via highly engaging video-rich, interactive shopping ~~programs and via the Internet through its domestic and international websites and mobile applications. On December 29, 2017, we acquired the approximately 62% of HSN, Inc.~~experiences. Zulily, LLC (“~~HSNi”~~Zulily”) we did not already own in an all-stock transaction (the “Merger”) making HSNi a wholly-owned subsidiary, attributed to the QVC Group. HSNi has two main operating segments: its televised shopping business “HSN” and its catalog retail business “Cornerstone.” HSN is a reportable segment, and Cornerstone is included in the “Corporate and other” reportable segment. QVC and HSN are referred to collectively as the “Televised Shopping Businesses.” On October 1, 2015, we acquired zulily, inc. (“zulily”) (now known as zulily, llc), an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched every day, ~~which~~and is ~~also~~ a reportable segment. Our “Corporate and other” category includes our consolidated subsidiary Cornerstone Brands, Inc. (“Cornerstone”), along with various cost and equity method investments. See ~~note 5 of~~discussion below for the ~~accompanying consolidated financial statements for further details on the acquisitions of zulily and HSNi.~~

~~Our~~entities that were included in Corporate and other ~~category includes entire or majority interests~~ in ~~consolidated subsidiaries, which operate online commerce businesses~~prior periods.

Prior to the Transactions (described and defined below), the Company utilized tracking stocks in a broad range of retail categories, ownership interests in unconsolidated businesses and corporate expenses. These consolidated subsidiaries include Evite, Inc. (“Evite”), Backcountry.com, Inc. ("Backcountry") (through June 30, 2015, see note 6 of the accompanying consolidated financial statements), CommerceHub, Inc. (“CommerceHub”) (through July 22, 2016, see note 6 of the accompanying consolidated financial statements) and Bodybuilding.com, LLC ("Bodybuilding") (through November 4, 2016, see note 6 of the accompanying consolidated financial statements) (collectively, the “Digital Commerce businesses”), and Cornerstone. Evite is an online invitation and social event planning service on the web. Backcountry operates websites offering sports gear and clothing for outdoor and active individuals in a variety of categories. CommerceHub provides a cloud-based platform for online retailers and their suppliers (manufacturers and distributors) to sell products to consumers without physically owning inventory, or managing the fulfillment of those products. Bodybuilding manages websites related to sports nutrition, bodybuilding and fitness. We also hold ownership interests in FTD Companies, Inc. (“FTD”) and LendingTree, Inc. (“LendingTree”), which we account for as equity method investments; an interest in Liberty Broadband Corporation (“Liberty Broadband”), which we account for at fair value; and we maintain investments and related financial instruments in public companies such as Charter Communications, Inc. (“Charter”), ILG, Inc. (“ILG”) and Time Warner Inc. (“Time Warner”), which are accounted for at their respective fair market values.

~~Tracking~~its capital structure. A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. ~~Liberty has~~Qurate Retail had two tracking ~~stocks,~~ stocks—QVC Group common stock and Liberty Ventures common stock, which ~~are~~were intended to track and reflect the economic performance of ~~Liberty’s QVC Group~~Qurate Retail’s businesses, assets and ~~Ventures Group, respectively. While~~liabilities attributed to the QVC Group and the Ventures Group, ~~have separate collections~~respectively. The QVC Group was comprised of ~~businesses,~~the Company’s wholly-owned subsidiaries QVC, Zulily, HSN and Cornerstone among other assets and liabilities attributed to them, no group is a separate legal entity and therefore no group can own assets, issue securities or enter into legally binding agreements. Holders of tracking stock have no direct claim to the group's stock or assets and are not represented by separate boards of directors. Instead, holders of tracking stock are stockholders of the parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.

~~The term "Ventures Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities that have been attributed to that group.~~ liabilities. The Ventures Group ~~consists~~was comprised of ~~our~~ businesses not included in the QVC Group including Evite, Inc. (“Evite”) and our interests in Liberty Broadband Corporation (“Liberty Broadband”), LendingTree, ~~FTD,~~Inc. (“LendingTree”), investments in Charter Communications, Inc. (“Charter”) and ILG, ~~as well as cash~~Inc. (“ILG”), among other assets and liabilities (which were all included in the ~~amount of approximately $573 million (at December 31, 2017), including subsidiary cash.~~Corporate and other category). The Company’s results are attributed to the QVC Group and the Ventures Group ~~also has attributed to it certain liabilities related to our Exchangeable Debentures and certain deferred tax liabilities.~~through March 9, 2018.

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~~Table of Contents~~

~~The Ventures Group is primarily focused on~~On March 9, 2018, Qurate Retail completed the ~~maximization of~~transactions contemplated by the ~~value of these investments and investing in new business opportunities.~~

~~On April 4, 2017, Liberty entered into an~~ Agreement and Plan of Reorganization (as amended, the ~~“GCI Reorganization Agreement”~~“Reorganization Agreement,” and the transactions contemplated thereby, the “Transactions”) ~~with~~among General Communication, Inc. (“GCI”), an Alaska corporation, and Liberty Interactive LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of ~~Liberty~~Qurate Retail (“LI LLC”)~~, whereby~~. Pursuant to the Reorganization Agreement, GCI amended and restated its articles of incorporation (which resulted in GCI being renamed GCI Liberty, ~~will acquire~~ Inc. (“GCI Liberty”)) and effected a reclassification and auto conversion of its common stock. After market close on March 8, 2018, Qurate Retail’s board of directors approved the reattribution of certain assets and liabilities from Qurate Retail’s Ventures Group to its QVC Group, which was effective immediately. The reattributed assets and liabilities included cash, Qurate Retail’s interest in ILG, certain green energy investments, LI LLC’s exchangeable debentures, and certain tax benefits.

Following these events, Qurate Retail acquired GCI Liberty through a reorganization in which certain ~~Ventures Group~~Qurate Retail interests, assets and liabilities ~~will be~~attributed to the Ventures Group were contributed (the “contribution”) to GCI Liberty ~~(as defined below)~~ in exchange for a controlling interest in GCI Liberty. ~~Liberty~~Qurate Retail and LI LLC ~~will contribute~~contributed to GCI Liberty ~~its~~their entire equity interest in Liberty Broadband, Charter, and ~~Charter, along with, subject to certain exceptions, Liberty’s entire equity interests in~~ LendingTree, ~~together with~~ the Evite operating business and ~~certain~~ other assets and liabilities attributed to Qurate Retail’s Venture Group (following the reattribution), in exchange for ~~(i)~~(a) the issuance to LI LLC of a number of shares of ~~new~~ GCI Liberty Class A Common Stock and a number of shares of ~~new~~ GCI Liberty Class B Common Stock

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equal to the number of outstanding shares of Series A Liberty Ventures common stock and Series B Liberty Ventures common stock ~~outstanding~~ on ~~the closing date of the Contribution,~~March 9, 2018, respectively, ~~(ii)~~(b) cash and ~~(iii)~~(c) the assumption of certain liabilities by GCI ~~Liberty (the “Contribution”).~~Liberty.

~~Liberty will then effect~~Following the contribution, Qurate Retail effected a tax-free separation of its controlling interest in the combined company ~~(which has since been renamed~~(the “GCI Liberty Split-Off”), GCI Liberty, ~~Inc. (“GCI Liberty”))~~ to the holders of Liberty Ventures common stock~~, distributing one share of the corresponding class of new GCI Liberty common stock for each share of Liberty Ventures common stock held,~~ in full redemption of all outstanding shares of such stock, ~~leaving~~in which each outstanding share of Series A Liberty Ventures common stock was redeemed for one share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for one share of GCI Liberty Class B common stock. Simultaneous with the closing of the Transactions, QVC Group common stock asbecame the only outstanding common stock of Liberty. On the business day prior to the Contribution, holders of reclassified GCI Class A Common Stock and reclassified GCI Class B Common Stock each will receive (i) 0.63 of a share of new GCI Liberty Class A Common Stock and (ii) 0.20 of a share of new GCI Liberty Series A Cumulative Redeemable Preferred Stock (the “GCI Liberty preferred stock”) in exchange for each share of their reclassified GCI stock. The exchange ratios were determined based on total consideration of $32.50 per share for existing GCI common stock, comprised of $27.50 per share in new GCI Liberty Class A Common Stock and $5.00 per share in newly issued GCI Liberty preferred stock, and a Liberty Ventures reference price of $43.65 (with no additional premium paid for shares of reclassified GCI Class B Common Stock). The GCI Liberty Series A preferred stock will accrue dividends at an initial rate of 5% per annum (which would increase to 7% in connection with a future reincorporation of GCI Liberty in Delaware) and will be redeemable upon the 21st anniversary of the closing of the Transactions.

At the closing of the Transactions, Liberty will reattribute certain assets and liabilities from the Ventures Group to the QVC Group (the “Reattribution”). The reattributed assets and liabilities are expected to include cash, Liberty’s interest in ILG, FTD, certain green energy investments, LI LLC’s exchangeable debentures, and certain tax benefits. Pursuant to a recent amendment to the GCI Reorganization Agreement, LI LLC’s 1.75% Exchangeable Debentures due 2046 (the “1.75% Exchangeable Debentures”) will not be subject to a pre-closing exchange offer and will instead be reattributed to the QVC Group, along with (i) an amount of cash equal to the net present value of the adjusted principal amount of such 1.75% Exchangeable Debentures (determined as if paid on October 5, 2023) and stated interest payments on the 1.75% Exchangeable Debentures to October 5, 2023 and (ii) an indemnity obligation from GCI Liberty with respect to any payments made by LI LLC in excess of stated principal and interest to any holder that exercises its exchange right under the terms of the debentures through October 5, 2023. The cash reattributed to the QVC Group will be funded by available cash attributed to Liberty’s Ventures Group and the proceeds of a margin loan facility attributed to the Ventures Group in an initial principal amount of $1 billion. Within six months of the closing, Liberty, LI LLC and GCI Liberty will cooperate with, and reasonably assist each other with respect to, the commencement and consummation of a purchase offer (the “Purchase Offer”) whereby LI LLC will offer to purchase, either pursuant to privately negotiated transactions or a tender offer, the 1.75% Exchangeable Debentures on terms and conditions (including maximum offer price) reasonably acceptable to GCI Liberty. GCI Liberty will indemnify LI LLC for each 1.75% Exchangeable Debenture repurchased by LI LLC in the Purchase Offer in an amount equal to the difference between (x) the purchase price paid by LI LLC to acquire such 1.75% Exchangeable Debenture in the Purchase Offer and (y) the sum of the amount of cash reattributed with respect to such purchased 1.75% Exchangeable Debenture in the Reattribution plus the amount of certain tax benefits attributable to such 1.75% Exchangeable Debenture so purchased. GCI Liberty’s indemnity obligation with respect to payments made upon a holder’s exercise of its exchange right will be eliminated as to any 1.75% Exchangeable Debentures purchased in the Purchase Offer.

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Liberty will complete the Reattribution using similar valuation methodologies to those used in connection with its previous reattributions, including taking into account the advice of its financial advisor. The Transactions are expected to be consummated on March 9, 2018, subject to the satisfaction of customary closing conditions. Simultaneous with that closing, QVC Group common stock will become the only outstanding common stock of Liberty,Qurate Retail, and thus QVC Group common stock ~~will cease~~ceased to function as a tracking ~~stock and will effectively become regular common stock, and~~stock. On April 9, 2018, Liberty ~~will be~~Interactive Corporation was renamed Qurate Retail, Inc. On May 23, 2018, Qurate Retail amended its charter to eliminate the tracking stock capitalization structure and reclassify each share of QVC Group ~~Inc.,~~common stock into one share of the corresponding series of new common stock of Qurate Retail. Throughout this annual report, we refer to our Series A and Series B common stock as “Qurate Retail common stock” and “QVC Group common stock.” In July 2018, the Internal Revenue Service (“IRS”) completed its review of the GCI Liberty Split-Off and informed Qurate Retail that it agreed with the nontaxable characterization of the transactions. Qurate Retail received an Issue Resolution Agreement from the IRS documenting this conclusion.

On October 17, 2018, Qurate Retail announced a series of initiatives designed to better position its HSN and QVC U.S. businesses (“QRG Initiatives”). As part of the QRG Initiatives, QVC will close its fulfillment centers in Lancaster, Pennsylvania and Roanoke, Virginia and leased a new fulfillment center in Bethlehem, Pennsylvania, that commenced in 2019 (see note 8 to the accompanying consolidated financial statements). Expenditures related to the QRG Initiatives are recorded as part of transaction related costs. Qurate Retail recorded transaction related costs of $41 million during the year ended December 31, 2018, which primarily related to severance as a result of the QRG Initiatives. Also, as a result of changes in internal reporting from the QRG Initiatives, during the first quarter of 2019 the Company changed its reportable segments to combine HSN and QVC U.S. into one reportable segment called “QxH.”

In December 2019, the novel 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 the virus, 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.

In response to these stay at home restrictions, QVC has mandated that non-essential employees work from home, has reduced the number of employees who are allowed on its production set and has implemented increased cleaning protocols, social distancing measures and temperature screenings for those employees who enter into certain facilities. In some cases, the move to a work from home arrangement for QVC’s non-essential employees will be permanent, which may result in the reduction of office space. QVC has also mandated that all essential employees who do not feel comfortable coming to work will not be required to do so. As a result of these resource constraints, QVC included fewer hours of live programming on some of its secondary channels and has experienced some delays in shipping at certain fulfillment centers. In certain markets, QVC temporarily increased the wages and salaries for those employees deemed essential who do not have the ability to work from home, including production and fulfillment center employees. QVC has also paid a one-time work from home allowance to its employees during the second quarter of 2020. While the temporary increase in wages and salaries has been terminated in most of QVC’s facilities, the inability to control the spread of COVID-19, or the expansion or extension of these stay at home restrictions could negatively impact QVC’s results in the future.

The stay at home restrictions imposed in response to COVID-19 required many traditional brick and mortar retailers to temporarily close their stores, but allowed distance retailers, including QVC, to continue operating. As a result, beginning at the end of March 2020, QVC observed an increase in new customers and an increase in demand for certain categories, such as home. However, QVC may not be able to retain these new customers after the pandemic subsides and any increase in demand in its product categories during the pandemic may be temporary.

Zulily has seen increased freight surcharges from China due to COVID-19 and in concert with QVC ~~HSNi~~has made work accommodations in its fulfillment centers which has resulted in an increase in labor expense. Zulily has also incurred additional expenses to deep cleanse its fulfillment centers and ~~zulily~~office buildings, coupled with a work-from-home allowance

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to reimburse its employees for home office and associated technology costs as ~~wholly-owned subsidiaries~~.a result of COVID-19. In addition, Zulily management cut all travel expenses, and reduced capital expenditures due to uncertainty created by COVID-19.

~~The term "QVC Group" does not represent~~

In addition, there are several potential adverse impacts of COVID-19 that could cause a ~~separate legal entity, rather it represents those businesses, assets~~material negative impact to the Company’s financial results, including our capital and ~~liabilities that have been attributed to that group. The QVC Group is primarily focused~~liquidity. These include governmental restrictions on the ~~Televised Shopping Businesses~~Company’s ability to continue to operate under stay at home restrictions and produce content, reduced demand for products sold, decreases in the disposable income of existing and potential new customers, the impacts of any recession and other ~~online~~uncertainties with respect to the continuity of government stimulus programs implemented in response to COVID-19, increased currency volatility resulting in adverse currency rate fluctuations, higher unemployment, labor shortages, an adverse impact to our supply chain and shipping disruptions for both the products we import and purchase domestically and the products the Company sells, including essential products experiencing higher demand due to factory closures, labor shortages and other resource constraints. While the impact is currently uncertain, the inability to control the spread of COVID-19 could cause any one of these adverse impacts, or ~~catalog retail businesses. The QVC Group has attributed~~combination of adverse impacts, to ithave a material impact on the ~~remainder~~Company’s financial results.

Further, the extent of the impact of the COVID-19 pandemic on our businesses remains fluid and the likelihood of an impact on us that could be material increases the longer the virus impacts activity levels in the locations in which we operate. In particular, the widespread distribution, acceptance and effectiveness of vaccines is highly uncertain and cannot be predicted at this time. Delays in the widespread distribution of vaccines, or lack of public acceptance, could lead people to continue to self-isolate and not participate in the economy at pre-pandemic levels for a prolonged period of time. Further, even if vaccines are widely distributed and accepted, there can be no assurance that the vaccines will ultimately be successful in limiting or stopping the spread of COVID-19. Even after the COVID-19 pandemic subsides, the U.S. economy and other major global economies may experience a recession, and we anticipate our businesses and ~~assets not attributed to the Ventures Group, including our wholly-owned subsidiaries QVC, zulily (as of October 1, 2015), and HSNi (as of December 29, 2017) as well as cash~~operations could be materially adversely affected by a prolonged recession in the ~~amount of approximately $330 million (at December 31, 2017), including subsidiary cash.~~

~~Disposals~~

Disposals

As a result of the GCI Liberty Split-Off, Qurate Retail viewed LendingTree, Evite and ~~is not presented as a discontinued operation as the sale did not represent a strategic shift that had a major effect on Liberty’s operations and financial results.~~

~~On July 22, 2016,~~ Liberty completed its previously announced spin-off (the “CommerceHub Spin-Off”) of its former wholly-owned subsidiary CommerceHub. CommerceHub is included in the Corporate and other segment through July 22, 2016 and is not presented as a discontinued operation as the CommerceHub Spin-Off did not represent a strategic shift that had a major effect on Liberty’s operations and financial results.

On November 4, 2016, Liberty completed its previously announced split-off (the “Expedia Holdings Split-Off”) of its former wholly-owned subsidiary Liberty Expedia Holdings, Inc. (“Expedia Holdings”). Expedia Holdings is comprised of, among other things, Liberty’s former interest in Expedia, Inc. (“Expedia”) and Liberty’s former wholly-owned subsidiary Bodybuilding. On November 2, 2016, Expedia Holdings borrowed $350 million under a new margin loan and distributed $299 million, net of certain debt related costs, to Liberty on November 4, 2016.

~~Liberty viewed Expedia and Bodybuilding~~Broadband as separate components and evaluated them separately for discontinued operations presentation. Based on a quantitative analysis, the split-off of ~~Liberty’s~~Qurate Retail’s interest in ~~Expedia represented a strategic shift that~~Liberty Broadband had a major effect on ~~Liberty’s operations, primarily due to prior year one-time gains on transactions recognized by Expedia.~~Qurate Retail’s operations. Accordingly, ~~the consolidated financial statements of Liberty have been prepared to reflect Liberty’s~~Qurate Retail’s interest in ~~Expedia~~Liberty Broadband is presented as a discontinued operation. The disposition of ~~Bodybuilding~~Evite and LendingTree as part of the ~~Expedia Holdings~~GCI Liberty Split-Off ~~does~~did not have a major effect on ~~Liberty’s~~Qurate Retail’s historical results nor is it expected to have a major effect on ~~Liberty’s~~Qurate Retail’s future operations. ~~The disposition of Bodybuilding does not represent a strategic shift in Liberty’s operations.~~ Accordingly, ~~Bodybuilding is~~Evite and LendingTree are not presented as a discontinued ~~operation in the consolidated financial statements of Liberty. Bodybuilding is included in the Corporate and other segment through November 4, 2016.~~operations.

Strategies and Challenges

Televised Shopping Businesses. The goal of QVC is to ~~become~~extend its leadership in video commerce, e-commerce, mobile commerce and social commerce by continuing to create the ~~preeminent global multimedia~~world’s most engaging shopping ~~community~~experiences, combining the best of retail, media, and social, highly differentiated from traditional brick-and-mortar stores or transactional e-commerce. QVC provides customers with curated collections of unique products, made personal and relevant by the power of storytelling. QVC curates experiences, conversations and communities for ~~people who love to shop,~~millions of highly discerning shoppers, and ~~to offer a shopping experience that is as much about entertainment and enrichment as it is about buying. The goal~~also curates large audiences, across its many platforms, for its thousands of ~~HSN is to become the preeminent interactive entertainment and lifestyle retailer offering a curated assortment of exclusive products and top~~ brand names to its customers through entertainment, inspiration and personalities providing an entirely unique shopping experience. The objective for both of the Televised Shopping Businesses is to provide an integrated shopping experience that utilizes all forms of media including television, the internet and mobile devices. The Televised Shopping Businesses intendpartners.

QVC intends to employ several strategies to achieve these ~~goals and~~ objectives. Among these strategies are to (i) ~~extend the breadth, relevance~~Curate special products at compelling values; (ii) Extend video reach and ~~exposure of the QVC~~relevance; (iii) Reimagine daily digital discovery; (iv) Expand and HSN brands; (ii) source products that represent unique quality and value; (iii) create engaging presentation content in televised programming, mobile and online; (iv) leverage customer loyalty and continue multi-platform expansion;engage its passionate community; and (v) ~~create a~~

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~~compelling and differentiated~~Deliver joyful customer ~~experience.~~service. In addition, QVC ~~expects~~is exploring opportunities to ~~expand globally by leveraging its existing systems, infrastructure and skills~~evolve the International operating model to pursue growth opportunities in ~~other countries around the world.~~a more leveraged way across markets.

Future net revenue growth will primarily depend on sales growth from e-commerce, ~~and~~ mobile platforms and applications via streaming video, additions of new customers from households already receiving ~~the Company’s television~~QVC’s broadcast programming, and increased spending from existing customers. Future net revenue may also be affected by (i) the willingness of cable television and direct-to-home satellite system operators to continue carrying ~~the Company’s~~QVC’s programming

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services; (ii) ~~the Televised Shopping Businesses’~~QVC’s ability to maintain favorable channel positioning, which may become more difficult due to governmental action or from distributors converting analog customers to digital; (iii) changes in television viewing habits because of personal video recorders, video-on-demand and internet video services; (iv) QVC’s ability to source new and ~~(iv)~~compelling products; and (v) general economic conditions.

~~Prolonged~~In July 2020, QVC implemented a planned workforce reduction with the goal of making the organizational structure streamlined and more efficient. As part of the workforce reduction, QVC has decided to eliminate live hours on QVC2 in the U.S. and other secondary channels within the international segment.

The current economic uncertainty in various regions of the world in which ~~the Televised Shopping Businesses’~~our subsidiaries and affiliates operate could adversely affect demand for ~~our businesses’~~their products and services since a substantial portion of ~~our businesses’~~their revenue is derived from discretionary spending by individuals, which typically falls during times of economic instability. Global financial markets ~~may experience~~have recently experienced disruptions, including increased volatility and diminished liquidity and credit availability. If economic and financial market conditions in the United States (“U.S.”) or other key markets, including Japan and Europe, continue to be uncertain or deteriorate, customers may respond by suspending, delaying, or reducing their discretionary spending. A suspension, delay or reduction in discretionary spending could adversely affect revenue. Accordingly, our businesses’ ability to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments decline. Such weak economic conditions may also inhibit QVC’s expansion into new European and other markets. The Company is currently unable to predict the extent of any of these potential adverse effects.

The Brexit process and negotiations have created political and economic uncertainty, particularly in the U.K. and the E.U., and this uncertainty may last for years. On June 23, 2016, the ~~United Kingdom (“~~U.K.”) held a referendum in which ~~British citizens~~voters approved, on an advisory basis, an exit from the E.U. The U.K. formally left the E.U. on January 31, 2020. This has resulted in a transition period that ran until December 31, 2020. On January 1, 2021, the U.K. left the E.U. Customs Union and Single Market, as well as all E.U. policies and international agreements. On December 24, 2020, the European ~~Union~~Commission reached a trade agreement with the U.K. on the terms of its future cooperation with the E.U. (the ~~"EU"~~“Trade Agreement”)~~, commonly referred~~. The Trade Agreement offers U.K. and E.U. companies preferential access to ~~as “Brexit.” As a result~~each other’s markets, ensuring imported goods that satisfy applicable point of ~~the referendum, the global markets and currencies have been adversely impacted, including a sharp decline~~origin rules (that is, that U.K. or E.U. goods are wholly produced or significantly worked in the ~~value~~U.K. or E.U., as applicable) will be free of tariffs and quotas; however, economic relations between the U.K. and the E.U. will now be on more restrictive terms than existed previously. For example, packages sent to and from the U.K., will need to satisfy new customs requirements and obtain applicable transit documents which may result in delays exporting items to customers outside of the U.K. ~~Pound Sterling as compared to the U.S. Dollar. Volatility in exchange rates is expected to continue in the short term as~~and delays importing products into the U.K. ~~negotiates~~that are shipped to QVC by its ~~exit from~~vendors. At this time, QVC cannot predict that the ~~EU. In~~Trade Agreement and any future agreements on economic relations between the ~~longer term, any impact from Brexit~~U.K. and the E.U. will have on ~~QVC will depend, in part, on the outcome of tariff, trade, regulatory~~its businesses and ~~other negotiations. Although it is unknown what the result of those negotiations will be,~~its customers, and it is possible that new terms may adversely affect QVC’s operations and financial results.

~~During his campaign~~There is uncertainty as to the actions that may be taken under a new Biden Administration with respect to U.S. trade policy with China. The imposition of any new U.S. tariffs on Chinese imports or the taking of other actions against China in the ~~2016 U.S. presidential election, the current President~~future, and any responses by China, could impair QVC’s ability to meet customer demand and could result in lost sales or an increase in its cost of ~~the U.S. expressed apprehension towards existing trade agreements, such as the North American Free Trade Agreement~~merchandise, which would have a material adverse impact on its business and ~~the Trans-Pacific Partnership, and suggested that the U.S. would renegotiate or withdraw from these agreements. He also raised the possibility~~results of significantly increasing tariffs on goods imported into the United States, particularly from China and Mexico, which, if implemented, could adversely affect our subsidiaries’ businesses because they sell imported products.operations.

~~zulily.~~ ~~zulily’s objective is to be the leading online retail destination for women who love to shop. zulily’s~~Zulily. Zulily’s goal is to be part of its customers’ daily routine, allowing them to visit ~~zulily~~Zulily sites and discover a selection of fresh, new and affordable merchandise curated for them every morning. ~~zulily~~Zulily intends to employ the following strategies to achieve these goals and objectives: (i) acquire new customers; (ii) increase customer loyalty and repeat purchasing; (iii) add new vendors and strengthen existing vendor relationships; ~~and~~ (iv) invest in mobile platform and channels ~~that~~with which its customers want to ~~engage with the brand in. In addition, zulily expects to~~engage; and (v) invest in ~~and develop international markets and~~low cost supply chain ~~systems.~~systems in the U.S. and cross border.

~~zulily~~Zulily has limited contractual assurances of continued supply, pricing or access to new products, and vendors could change the terms upon which they sell to ~~zulily~~Zulily or discontinue selling to ~~zulily~~Zulily for future sales at any time. As ~~zulily~~Zulily grows, continuing to identify a sufficient number of new emerging brands and smaller boutique vendors may become more and more of a challenge. If ~~zulily~~Zulily is not able to identify and effectively promote these new brands, it may lose customers to competitors. Even if ~~zulily~~Zulily identifies new vendors, it may not be able to purchase desired merchandise in sufficient quantities or on acceptable terms in the future, and products from alternative sources, if any, may be of a lesser quality or

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more expensive than those from existing vendors. In addition, larger national brands may offer products that are less unique, and it may be easier for zulily’s competitors to offer such products at prices or upon terms that may be compelling to consumers. An inability to purchase suitable merchandise on acceptable terms or to source new vendors could have an adverse effect on ~~zulily’s~~Zulily’s business.

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To support its large and diverse base of vendors and its flash sales model that requires constantly changing products, ~~zulily~~Zulily must incur costs related to its merchandising team, photography studios and creative personnel. As ~~zulily~~Zulily grows, it may not be able to continue to expand its product offerings in a cost-effective manner. In addition, the variety in size and sophistication of ~~zulily’s~~Zulily’s vendors presents different challenges to its infrastructure and operations. ~~zulily’s~~Zulily’s emerging brands and smaller boutique vendors may be less experienced in manufacturing and shipping, which ~~in the past has led~~may lead to inconsistencies in quality, delays in the delivery of merchandise or additional fulfillment cost. ~~zulily’s~~Zulily’s larger national brands may impose additional requirements or offer less favorable terms than smaller vendors related to margins and inventory ownership and risk and may also be unable to ship products timely. ~~If zulily is unable to maintain and effectively manage its relationships with emerging brands and smaller boutique vendors or larger national brands, zulily’s business could be adversely affected.~~

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Results of Operations—Consolidated

General. We provide in the tables below information regarding our Consolidated Operating Results and Other Income and Expense, as well as information regarding the contribution to those items from our principal reportable segments. The "Corporate and other" category consists of ~~those assets or businesses which we do not disclose separately, including~~ our ~~Digital Commerce businesses.~~consolidated subsidiary Cornerstone, along with various cost and equity method investments. For a more detailed discussion and analysis of the financial results of the principal reporting segments, see "Results of Operations - Businesses" below.

Operating Results

Years ended December 31,


2017

2016

2015

amounts in millions

Revenue

QVC Group

QVC

$
8,771

8,682

8,743

HSN

—

NA

NA

zulily

1,613

1,547

426

Corporate and other

—

—

—

Inter-segment eliminations

(3)

(10)

—

Total QVC Group

10,381

10,219

9,169

Ventures Group

Corporate and other

23

428

820

Total Ventures Group

23

428

820

Consolidated Liberty

$
10,404

10,647

9,989

Operating Income (Loss)

QVC Group

QVC

$
1,347

1,203

1,275

HSN

(38)

NA

NA

zulily

(129)

(152)

(53)

Corporate and other

(80)

(40)

(52)

Total QVC Group

1,100

1,011

1,170

Ventures Group

Corporate and other

(57)

(43)

(54)

Total Ventures Group

(57)

(43)

(54)

Consolidated Liberty

$
1,043

968

1,116

Adjusted OIBDA

QVC Group

QVC

$
1,897

1,840

1,894

HSN

—

NA

NA

zulily

91

112

21

Corporate and other

(35)

(16)

(28)

Total QVC Group

1,953

1,936

1,887

Ventures Group

Corporate and other

(27)

3

59

Total Ventures Group

(27)

3

59

Consolidated Liberty

$
1,926

1,939

1,946


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Revenue
QxH	$	8,505	8,277	8,544
QVC International		2,967	2,709	2,738
Zulily		1,636	1,571	1,817
Corporate and other		1,070	901	973
Inter-segment eliminations		(1)	—	(2)
Consolidated Qurate Retail	$	14,177	13,458	14,070

Operating Income (Loss)
QxH	$	1,128	973	1,161
QVC International		439	354	351
Zulily		(12)	(1,091)	(95)
Corporate and other		17	(52)	(93)
Consolidated Qurate Retail	$	1,572	184	1,324

Adjusted OIBDA
QxH	$	1,547	1,536	1,630
QVC International		510	446	429
Zulily		83	48	108
Corporate and other		58	(1)	(13)
Consolidated Qurate Retail	$	2,198	2,029	2,154

Revenue. Our consolidated revenue increased 5.3% and decreased ~~2.3% and increased 6.6%~~4.3% for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, as compared to the corresponding prior year periods. ~~Corporate and other revenue decreased $405 million for the year ended December 31, 2017, as compared to the corresponding period in the prior year due to the~~

~~II-10~~II-7

Table of Contents

~~disposition of Bodybuilding in November 2016 as part of the Expedia Holdings Split-Off ($355 million)~~QVC International, QxH and the CommerceHub Spin-Off in July 2016 ($51 million). Corporate and other revenue decreased $392 million for the year ended December 31, 2016, as compared to the corresponding prior year period due to the sale of Backcountry in June 2015 ($227 million), the disposition of Bodybuilding in November 2016 as part of the Expedia Holdings Split-Off ($109 million) and the CommerceHub Spin-Off in July 2016 ($38 million). QVC’sZulily revenue increased ~~$89~~$258 million, $228 million, and ~~decreased $61~~$65 million, ~~for the years ended December 31, 2017 and 2016,~~ respectively, ~~as compared to the corresponding prior year periods. zulily’s revenue increased $66 million~~ during the year ended December 31, ~~2017,~~2020, as ~~compared to the corresponding prior year period. The increase in zulily’s revenue in 2016~~ compared to the same period in the prior year was due to the acquisition of zulily on October 1, 2015. With the exception of $38 million of severance-related costs incurred on December 30, 2017, HSN’s results of operations are not included in our consolidated operating results for the year ended December 31, 2017.year. See "Results of Operations - Businesses" below for a more complete discussion of the results of operations of QVC ~~HSN~~ and ~~zulily.~~

~~Operating income (loss).~~ Our consolidated operating income increased $75 million and decreased $148 million for the years ended December 31, 2017 and 2016, respectively, as compared to the corresponding prior year periods. Operating losses forZulily. Corporate and other ~~declined $54~~revenue increased $169 million for the year ended December 31, ~~2017,~~2020, as compared to the corresponding period in the prior year ~~period, primarily~~ due to an increase in ~~stock compensation expense~~Cornerstone revenue of $169 million as a result of strong customer response in the ~~stock option exchange (see note 15~~home category due to ~~the accompanying consolidated financial statements),~~increased demand for home furnishings, interior décor and ~~transaction costs associated with the acquisition of HSN, partially offset by the disposition of Bodybuilding in November 2016 as part of the Expedia Holdings Split-Off,~~outdoor living items.

QxH, Zulily and ~~the CommerceHub Spin-Off. Operating losses for Corporate~~QVC International revenue decreased $267 million, $246 million and ~~other decreased $23~~$29 million ~~for~~during the year ended December 31, ~~2016, as~~2019 compared to the ~~corresponding prior year~~same period primarily due to the CommerceHub Spin-Off. QVC’s operating income increased $144 million and decreased $72 million for the years ended December 31, 2017 and 2016, respectively as compared to the corresponding prior year periods. zulily’s operating losses improved $23 million and declined $99 million for the years ended December 31, 2017 and 2016, respectively, as compared to the corresponding prior year periods. HSN’s operating loss was the result of $38 million of severance-related expenses, including salaries and wages and stock-based compensation expense, recorded in the ~~period ended December 31, 2017.~~prior year. See "Results of Operations - Businesses" below for a more complete discussion of the results of operations of QVC ~~HSN~~ and ~~zulily.~~Zulily. Corporate and other revenue decreased $72 million for the year ended December 31, 2019, as compared to the corresponding prior year period due to a decrease in Cornerstone revenue of $70 million due to the shutdown of one of the home brands in Cornerstone’s portfolio during the fourth quarter of 2018.

Operating income (loss). Our consolidated operating income increased $1,388 million and decreased $1,140 million for the years ended December 31, 2020 and 2019, respectively, as compared to the corresponding prior year periods.

Zulily operating losses decreased $1,079 million for the year ended December 31, 2020, as compared to the corresponding prior year period, primarily due to no impairment of intangible assets at Zulily compared to the impairment taken in the prior year. QxH and QVC International operating income increased $155 million and $85 million, respectively, for the year ended December 31, 2020, compared to the same period in the prior year. See "Results of Operations - Businesses" below for a more complete discussion of the results of operations of QVC and Zulily. Operating income for Corporate and other improved $69 million for the year ended December 31, 2020, as compared to the corresponding period in the prior year, due to a reduction in operating losses at Cornerstone as a result of strong home category revenue and product margin performance.

Zulily operating losses increased $996 million for the year ended December 31, 2019, as compared to the corresponding prior year period, primarily due to the impairment of intangible assets at Zulily during the third quarter of 2019. QxH and QVC International operating income decreased $188 million and increased $3 million, respectively, for the year ended December 31, 2019, as compared to the corresponding prior year period. See "Results of Operations - Businesses" below for a more complete discussion of the results of operations of QVC and Zulily. Operating losses for Corporate and other improved $41 million for the year ended December 31, 2019, as compared to the corresponding prior year period, primarily due to a reduction in operating losses at Cornerstone as a result of the shutdown of one of the home brands in Cornerstone’s portfolio during the fourth quarter of 2018, along with the elimination of corporate costs at the Liberty Ventures Group due to the GCI Liberty Split-Off in 2018.

Adjusted OIBDA. To provide investors with additional information regarding our financial results, we also disclose Adjusted OIBDA, which is a non-GAAP financial measure. We define Adjusted OIBDA as ~~revenue less cost of sales,~~ operating ~~expenses~~income (loss) plus depreciation and ~~selling, general~~amortization, stock-based compensation, separately reported litigation settlements, transaction related costs (including restructuring, integration, and ~~administrative ("SG&A") expenses (excluding stock compensation).~~advisory fees) and impairments. Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. We believe this is an important indicator of the operational strength and performance of our businesses ~~including~~by identifying those items that are not directly a reflection of each ~~business's ability to service debt and fund capital expenditures.~~business’ performance or indicative of ongoing business trends. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes such costs as depreciation and amortization, stock-based compensation and restructuring and impairment charges that are included in the measurement of operating income pursuant to generally accepted accounting policies (“GAAP”). Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash ~~flow~~flows provided by operating activities and other measures of financial performance prepared in accordance with ~~GAAP. See note 19 to the accompanying consolidated financial statements for~~U.S. generally accepted accounting principles.

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Table of Contents

The following table provides a reconciliation of Operating income (loss) to Adjusted ~~OIBDA to operating income and earnings (loss) from continuing operations before income taxes.~~OIBDA.


	Year ended
	December 31,
	2020		2019	2018

	amounts in millions
Operating income (loss)	$	1,572	184	1,324
Depreciation and amortization		562	606	637
Stock-based compensation		64	71	88
Impairment of intangible assets		—	1,167	33
Transaction related costs		—	1	72
Adjusted OIBDA	$	2,198	2,029	2,154

Consolidated Adjusted OIBDA ~~decreased $13~~increased $169 million and $7decreased $125 million for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, as compared to the corresponding prior year periods. ~~Corporate~~

QVC International, Zulily and ~~other~~QxH Adjusted OIBDA ~~decreased $49~~increased $64 million, $35 million and $11 million for the year ended December 31, 2017, as compared to the corresponding period in the prior year, primarily due to the disposition of Bodybuilding in November 2016 as part of the Expedia Holdings Split-Off ($24 million), the CommerceHub Spin-Off in July 2016 ($16 million), and transaction costs associated with the acquisition of HSNi (approximately $15 million). Corporate and other adjusted OIBDA decreased $44 million for the year ended December 31, 2016, as compared to the corresponding prior year period, primarily due to the CommerceHub Spin-Off in July 2016 ($28 million), the sale of Backcountry in June 2015 ($8 million) and the disposition of Bodybuilding in November 2016 as part of the Expedia Holdings Split-Off ($5 million). QVC’s Adjusted OIBDA increased $57 million and decreased $54 million for the years ended December 31, 2017 and 2016,2020, respectively, as compared to the corresponding prior year ~~periods. zulily’s Adjusted OIBDA decreased $21 million and increased $91 million for the years ended December 31, 2017 and 2016, respectively, as compared to the corresponding prior year periods.~~period. See "Results of Operations - Businesses" below for a more complete discussion of the results of operations of QVC ~~HSN~~ and ~~zulily.~~ Zulily. Corporate and other Adjusted OIBDA increased $59 million for the year ended December 31, 2020, as compared to the corresponding period in the prior year due to higher Adjusted OIBDA at Cornerstone due to strong home category revenue and product margin performance.

~~II-11~~

~~Table~~QxH and Zulily Adjusted OIBDA decreased $94 million and $60 million, respectively, for the year ended December 31, 2019, as compared to the same period in the prior year. QVC International Adjusted OIBDA increased $17 million for the year ended December 31, 2019, as compared to the same period in the prior year, primarily due to the closure of ~~Contents~~QVC’s operations in France in March of 2019. Adjusted OIBDA losses related to QVC France were $6 million and $32 million for the years ended December 31, 2019 and December 31, 2018, respectively. See "Results of Operations - Businesses" below for a more complete discussion of the results of operations of QVC and Zulily. Corporate and other Adjusted OIBDA increased $12 million for the year ended December 31, 2019, as compared to the corresponding period in the prior year due to higher Adjusted OIBDA at Cornerstone due to the impacts of the shutdown of one of the home brands in Cornerstone’s portfolio discussed above and improved performance in the businesses’ home segment, and the elimination of corporate costs at the Liberty Ventures Group due to the GCI Liberty Split-Off.

Other Income and Expense

Components of Other Income (Expense) are presented in the table below.


	Years ended December 31,
	2020		2019	2018

	amounts in millions

Interest expense	$	(408)	(374)	(381)
Share of earnings (losses) of affiliate, net		(156)	(160)	(162)
Realized and unrealized gains (losses) on financial instruments, net		(110)	(251)	76
Gains (losses) on transactions, net		224	(1)	1
Tax sharing income (expense) with Liberty Broadband		(39)	(26)	32
Other, net		(32)	6	(7)
Other income (expense)	$	(521)	(806)	(441)

Years ended December 31,


2017

2016

2015

amounts in millions

Interest expense

QVC Group

$
(293)

(289)

(283)

Ventures Group

(62)

(74)

(77)

Consolidated Liberty

$
(355)

(363)

(360)

Share of earnings (losses) of affiliate, net

QVC Group

$
38

42

55

Ventures Group

(238)

(110)

(233)

Consolidated Liberty

$
(200)

(68)

(178)

Realized and unrealized gains (losses) on financial instruments, net

QVC Group

$
—

2

42

Ventures Group

618

1,173

72

Consolidated Liberty

$
618

1,175

114

Gains (losses) on transactions, net

QVC Group

$
409

—

—

Ventures Group

1

9

110

Consolidated Liberty

$
410

9

110

Other, net

QVC Group

$
(3)

42

(6)

Ventures Group

10

89

20

Consolidated Liberty

$
7

131

14

Interest expense. Interest expense ~~decreased $8~~increased $34 million and ~~increased $3~~decreased $7 million for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, as compared to the corresponding prior year periods. The increase for the year ended December 31, 2020 is due to QVC refinancing its borrowings on its senior secured credit facility with newly issued

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senior secured notes, which have higher interest rates, as well as dividends incurred and paid related to the Preferred Stock during the period recorded through interest expense due to the accounting treatment, partially offset by lower outstanding debt balances due to repayment of amounts outstanding on QVC’s senior secured credit facility. The decrease for the year ended December 31, 2019 is due to lower average debt balances during 2019 compared to the prior year as well as a reduction in the variable interest rate on QVC’s bank credit facilities compared to the prior year.

Share of earnings (losses) of affiliates. Share of losses of affiliates decreased $4 million and $2 million during the years ended December 31, 2020 and 2019, respectively, as compared to the corresponding prior year periods. The decrease in ~~interest expense for the year ended December 31, 2017~~2020 is due to ~~higher average debt balances at~~fewer losses related to the ~~corporate level in 2016, and~~Company’s alternative energy solutions entities compared to the ~~redemption of the majority of our 0.75% Exchangeable Senior Debentures due 2043 during the second and third quarter of 2016. The~~prior year, almost completely offset by an increase in ~~interest expense for the year ended December 31, 2016 is~~share of losses due to ~~higher average debt balances at QVC,~~an other than temporary impairment of QVC’s China equity method investment. The decrease in 2019 was due to the fact that the prior year included losses related to the Company’s former investment in FTD Companies, Inc. (“FTD”), partially offset by ~~lower interest rates under QVC’s credit facility.~~

~~II-12~~

~~Table of Contents~~

~~Share of earnings (losses) of affiliates.~~ ~~The following table presents our share of earnings (losses) of affiliates:~~

Years ended December 31,


2017

2016

2015

amounts in millions

QVC Group

HSN

$
40

48

64

Other

(2)

(6)

(9)

Total QVC Group

38

42

55

Ventures Group

FTD (1)

(146)

(41)

(83)

LendingTree

7

12

2

Other

(99)

(81)

(152)

Total Ventures Group

(238)

(110)

(233)

Consolidated Liberty

$
(200)

(68)

(178)

~~(1)~~

~~The carrying value of Liberty’s investment in FTD was written down to its fair value as of December 31, 2017 and as of December 31, 2015.~~

~~The Other category for~~increased losses at the ~~Ventures Group is comprised of~~Company’s alternative energy ~~investments and other investments. The alternative energy investments generally~~solution entities due to continued investment in such ventures. These entities typically operate at a loss and the Company records its share of such losses but ~~provide~~have favorable tax attributes and credits, which are recorded ~~through the income tax (expense) benefit line item~~ in the consolidated statements of operations. During the year ended December 31, 2015, Liberty recorded an impairment of approximately $98 million related to one of its alternative energy investments which has underperformed operationally.Company’s tax accounts.

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:


					Years ended December 31,
					2020		2019	2018

	Years ended December 31,
	2017		2016	2015
	amounts in millions
Fair Value Option Securities - AFS	$	434	723	84
Fair Value Option Securities - Liberty Broadband		473	761	NA
					amounts in millions
Equity securities					$	(1)	(22)	155
Exchangeable senior debentures		(193)	(308)	30		(277)	(337)	(3)
Indemnification asset						143	123	(70)
Other financial instruments		(96)	(1)	—		25	(15)	(6)
	$	618	1,175	114
					$	(110)	(251)	76

The changes in these accounts are due primarily to market factors and changes in the fair value of the underlying stocks or financial instruments to which these relate. The decrease in losses for the year ended December 31, ~~2017~~2020 as compared to the corresponding prior year period was primarily due to a decrease in unrealized losses on the Company’s exchangeable senior debentures driven by less growth in stock prices of the securities underlying the debentures than the prior year, a decrease in unrealized losses related to derivative instruments, a decrease in unrealized losses related to equity securities, and an increase in unrealized gains on the indemnification asset. The decrease for the year ended December 31, 2019 as compared to the corresponding prior year period was primarily driven by a decrease in the investments in Liberty Broadband and Charter experiencing higher gains during 2016 compared to 2017, as well as the exchange of a majority of our 0.75% Exchangeable Senior Debentures due 2043 during 2016. The increase for the year ended December 31, 2016 as compared to the corresponding prior year period was primarily driven by the investment in Liberty Broadband,unrealized gain on the investment in Charter and the ~~change~~contribution of Charter shares to GCI Liberty in ~~Liberty’s ownership interest~~the GCI Liberty Split-Off, a decrease in unrealized gains on the investment in ILG ~~which resulted~~due to the purchase of ILG by Marriott Vacations Worldwide during the third quarter of 2018 and subsequent sale of this investment, and an increase in ~~its classification~~unrealized losses on exchangeable debt, partially offset by an unrealized gain on the indemnification asset as ~~an available-for-sale security rather than an equity method investment.~~a result of the GCI Liberty Split-Off.

Gains (losses) on transactions, net. ~~Gain~~ Gains on transactions, net, increased ~~$401~~$225 million and decreased ~~$101~~$2 million for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, as compared to the corresponding prior year periods. The increase in gain on transactions, net for the year ended December 31, ~~2017~~2020 is ~~related~~due the sale of one of the Company’s alternative energy investments during the third quarter of 2020. The Company received total cash consideration of $272 million and recorded a gain of $224 million on the sale of the alternative energy investment.

Tax sharing income (expense) with Liberty Broadband. Due to the ~~acquisition~~GCI Liberty Split-Off, the Company entered into a tax sharing agreement with GCI Liberty, which was assumed by Liberty Broadband in the fourth quarter of ~~HSNi.~~ ~~In conjunction with~~2020 due to a merger between the ~~application~~companies. As a result, the Company recognized tax sharing expense of ~~acquisition accounting, we recorded a full step up in basis of HSNi along with a gain between our historical basis~~$39 million and ~~the fair value of our interest in HSNi.~~ ~~The gain on transactions, net,~~$26 million for the ~~year~~years ended December 31, ~~2016 is primarily the result~~2020 and 2019, respectively, and tax sharing income of the sale of Right Start in January 2016. The gain on transactions, net for the year ended December 31, 2015 primarily relates to the sale of Backcountry on June 30, 2015, which resulted in a $105 million gain.

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~~Table of Contents~~

~~Other, net.~~ ~~The primary components of other, net are gains (losses) on dilution of investments in affiliates, foreign exchange gains (losses) and interest income. Other, net decreased $124~~$32 million for the year ended December 31, ~~2017~~2018.

Other, net. Other, net decreased $38 million and increased $13 million for the years ended December 31, 2020 and 2019, respectively, when compared to the corresponding prior year period. The decrease in other, net for the year ended

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Table of Contents

December 31, 2020, as compared to the same period in the prior year, is primarily due to a ~~change~~loss on extinguishment of debt of $40 million primarily related to the retirement of the QVC 5.125% Senior Secured Notes due 2022. The activity captured in ~~gain (loss)~~Other, net is primarily attributable to gains (losses) on ~~dilution~~early extinguishment of ~~investments of $80 million and a change in~~debt, foreign exchange gains (losses) of $44 million. Other, net increased $117 million for the year ended December 31, 2016 when compared to the corresponding prior year period primarily due to a change in gain (loss) on dilution of investments in affiliates of $83 million, and ~~a change in foreign exchange gains (losses) of $26 million.~~ interest income.

Income taxes. The Company had an income tax benefit of ~~$964~~$211 million, an income tax benefit of $217 million and income tax expense of ~~$598 million and $185~~$60 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. In connection with the initial analysis of the impact of the Tax Cuts and Jobs Act (the “Tax Act”), as discussed in note 12 in the accompanying consolidated financial statements, the Company has recorded a discrete net tax benefit in the period ending December 31, 2017. This net benefit primarily consists of a net benefit for the corporate rate reduction. In addition our tax rate was impacted by the consolidation of our equity method investment in HSNi during the year ended December 31, 2017.

Our effective tax rate for the years ended December 31, ~~2016~~2020, 2019 and ~~2015~~2018 was ~~32.3%~~20.1%, 34.9% and ~~22.7%,~~6.8% respectively. For the year ended December 31, 2020, the Company recorded an income tax benefit. The current year tax benefit was primarily driven by the impacts of a corporate realignment and tax credits generated by alternative energy investments. See notes 7 and 9 to the accompanying consolidated financial statements for more information related to the corporate realignment.

In 2019 the effective tax rate ~~is less~~was higher than the U.S. federal tax ~~rate~~ of ~~35% in both periods~~21% primarily due to tax benefits from tax credits and incentives ~~derived from~~generated by our alternative energy ~~investments. In addition, in 2015, Liberty recognized~~investments and tax benefits ~~related~~from losses generated in 2019 that were eligible for carryback to tax years with federal income tax rates greater than the ~~receipt~~U.S. statutory tax rate of ~~taxable dividends~~21%, partially offset by a goodwill impairment that ~~are subject~~is not deductible for tax purposes and an increase in the valuation allowance against certain deferred tax assets. In 2018 the effective tax rate was lower than the U.S. federal tax of 21% primarily due to ~~dividends received deductions.~~tax benefits from tax credits and incentives generated by our alternative energy investments, a reduction in the Company’s state effective tax rate used to measure deferred taxes resulting from the GCI Liberty Split-Off in March 2018, and a reduction in the Company’s state effective tax rate used to measure deferred taxes resulting from a state law change during the second quarter.

Net ~~earnings.~~earnings (loss). We had net earnings of ~~$2,487~~$1,262 million, ~~$1,274~~net losses of $405 million, and ~~$911~~net earnings of $964 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. The change in net earnings (loss) was the result of the above-described fluctuations in our revenue, expenses and other gains and losses.

Liquidity and Capital Resources

As of December 31, ~~2017~~2020 substantially all of our cash and cash equivalents are invested in U.S. Treasury securities, other government securities or government guaranteed funds, AAA rated money market funds and other highly rated financial and corporate debt instruments.

The following are potential sources of liquidity: available cash balances, equity issuances, dividend and interest receipts, proceeds from asset sales, ~~monetization of our public investment portfolio,~~ debt (including availability under QVC’s ~~Bank Credit Facilities, (the “Third Amended and Restated Credit Facility”) and HSNi’s Bank Credit Facility,~~bank credit facilities, as discussed in note 117 of the accompanying consolidated financial statements), and cash generated by the operating activities of our wholly-owned subsidiaries. Cash generated by the operating activities of our subsidiaries is only a source of liquidity to the extent such cash exceeds the working capital needs of the subsidiaries and is not otherwise restricted such as, in the case of QVC ~~zulily~~ and ~~HSNi,~~Zulily, due to a requirement that a leverage ratio ~~(defined as~~(calculated in accordance with the ~~ratio~~terms of ~~subsidiaries’ consolidated total debt~~the document governing such indebtedness which was an exhibit to ~~Adjusted OIBDA~~the Annual Report on Form 10-K for the ~~most recent four fiscal quarter period)~~year ended December 31, 2019) of less than 3.5 ~~to 1.0~~ must be ~~maintained.~~ maintained. As of December 31, 2020 the Company’s leverage ratio was 2.0.

During the year, ~~there were no changes to our corporate~~ the Company’s issuer debt credit rating was lowered from BB to BB- and QVC’s issue-level rating on secured debt was lowered from BBB- to BB+ by S&P Global Ratings. All other credit ratings ~~or our consolidated subsidiaries' debt credit ratings. Liberty, QVC~~remained unchanged. Qurate Retail and ~~HSNi~~its subsidiaries are in compliance with their debt covenants as of December 31, ~~2017.~~2020.

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Table of Contents

As of December 31, ~~2017, Liberty's~~2020, Qurate Retail's liquidity position consisted of the following:

Cash and cash

Available-for-

equivalents

sale securities

amounts in millions

QVC

$
261

—

HSNi

22

zulily

17

—

Corporate and other

30

3

Total QVC Group

330

3

Corporate and other

573

2,360

Total Ventures Group

573

2,360

Consolidated Liberty

$
903

2,363


	Cash and cash
	equivalents

	amounts in millions
QVC	$	682
Zulily		6
Corporate and other		118
Total Qurate Retail	$	806

To the extent that the Company recognizes any taxable gains from the sale of assets, we may incur tax expense and be required to make tax payments, thereby reducing any cash proceeds. Additionally, we have ~~$877 million~~$2.93 billion available for

~~II-14~~

~~Table of Contents~~

borrowing under the QVC Bank Credit Facility at December 31, ~~2017, and $533 million available for borrowing under the HSNi Bank Credit Facility as of December 31, 2017.~~2020. As of December 31, ~~2017,~~2020, QVC had approximately ~~$204~~$380 million of cash and cash equivalents held in foreign subsidiaries that is available for domestic purposes with no significant tax consequences upon repatriation to the U.S. QVC accrues taxes on the unremitted earnings of its international subsidiaries. Approximately ~~79%~~63% of this foreign cash balance was that of ~~QVC-Japan.~~QVC Japan. QVC owns 60% of ~~QVC-Japan~~QVC Japan and shares all profits and losses with the 40% minority interest holder, Mitsui & Co, LTD. ~~QVC believes that it currently has appropriate legal structures in place to repatriate foreign cash as tax efficiently as possible and meet the business needs of QVC.~~

Additionally, our operating businesses have generated, on average, more than $1 billion in annual cash provided by operating activities over the prior three years and we do not anticipate any significant reductions in that amount in future periods.

Years ended December 31,


2017

2016

2015

Cash Flow Information

amounts in millions

QVC Group cash provided (used) by operating activities

$
1,222

1,273

1,005

Ventures Group cash provided (used) by operating activities

270

170

57

Net cash provided (used) by operating activities

$
1,492

1,443

1,062

QVC Group cash provided (used) by investing activities

$
(229)

(238)

(909)

Ventures Group cash provided (used) by investing activities

(162)

(1,254)

121

Net cash provided (used) by investing activities

$
(391)

(1,492)

(788)

QVC Group cash provided (used) by financing activities

$
(1,014)

(1,103)

(89)

Ventures Group cash provided (used) by financing activities

(22)

(469)

(33)

Net cash provided (used) by financing activities

$
(1,036)

(1,572)

(122)


	Years ended December 31,
	2020		2019	2018

Cash Flow Information	amounts in millions
Net cash provided (used) by operating activities	$	2,455	1,284	1,273
Net cash provided (used) by investing activities	$	(161)	(600)	47
Net cash provided (used) by financing activities	$	(2,181)	(661)	(1,574)

~~QVC Group~~

During the year ended December 31, ~~2017, the QVC Group~~2020, Qurate Retail's primary uses of cash were ~~primarily the~~payment of cash dividends to common stockholders of $1.3 billion, net ~~repayment~~debt repayments of ~~certain debt obligations~~$779 million, capital expenditures of ~~$149~~$257 million, investments in and loans to equity method investments of $119 million and ~~repurchase~~repurchases of ~~Series A QVC Group~~ common stock of ~~$765 million. Additionally, the QVC Group had approximately $201~~$70 million, partially offset by proceeds from dispositions of ~~capital expenditures during the year ended December 31, 2017.~~

~~In 2018, the projected uses of QVC Group cash are the cost to service outstanding debt, approximately~~$280 million in interest payments on QVC and corporate level debt, anticipated capital improvement spending of approximately $290 million and the continued buyback of QVC Group common stock under the approved share buyback program.

~~Ventures Group~~

~~During the year ended December 31, 2017, the Ventures Group uses of cash were primarily the repayment of certain debt obligations of $13 million and the purchase of additional cost and equity~~ investments of ~~$159 million.~~$271 million, which primarily related to the sale of an investment in an alternative energy company accounted for as an equity method investment.

The projected uses of ~~Ventures Group~~Qurate Retail’s cash ~~are approximately $58 million~~ in ~~interest payments to service outstanding debt, and further investments in existing or new businesses through continued investment activity.~~

~~Consolidated~~

~~During~~ the next year, ended December 31, 2017, Liberty's primary uses of cash were $162 million of net repayments on outstanding debt, repurchases of Series A QVC Group common stock of $765 million, purchase of additional cost and equity investments of $159 million and capital expenditures of $204 million.

~~The projected uses of Liberty’s cash,~~ outside of normal operating expenses (inclusive of tax payments), are the costs to service outstanding debt, ~~approximately $338~~$344 million for estimated interest payments on outstanding debt, including corporate level and other subsidiary debt, anticipated capital improvement spending ~~at the QVC Group~~ of approximately ~~$290~~$270 million, the repayment of certain debt obligations, ~~and~~the potential buyback of common stock under the approved share buyback program, payment of dividends to the holders of the Preferred Stock, other forms of capital returns to investorsand additional investments in existing or new businesses. WeThe Company also may be required to make net payments of income tax liabilities to settle items under discussion with tax authorities. ~~We expect~~The Company expects that cash on hand and cash provided by operating activities in future periods and outstanding borrowing capacity will be sufficient to fund projected uses of cash.

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Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

In connection with agreements for the sale of assets by our company, we may retain liabilities that relate to events occurring prior to the sale, such as tax, environmental, litigation and employment matters. We generally indemnify the purchaser in the event that a third party asserts a claim against the purchaser that relates to a liability retained by us. These types of indemnification obligations may extend for a number of years. We are unable to estimate the maximum potential liability for these types of indemnification obligations as the sale agreements may not specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be

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determined at this time. Historically, we have not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.

We have contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible we may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements.

Information concerning the amount and timing of required payments, both accrued and off-balance sheet, under our contractual obligations, excluding uncertain tax positions as it is undeterminable when payments will be made, is summarized below.


	Payments due by period
			Less than			After
	Total		1 year	2 - 3 years	4 - 5 years	5 years

	amounts in millions
Consolidated contractual obligations
Long-term debt (1)	$	6,654	11	772	1,224	4,647
Interest payments (2)		4,695	344	682	548	3,121
Finance and operating lease obligations		700	106	184	130	280
Preferred Stock (3)		2,277	100	200	200	1,777
Purchase orders and other obligations (4)		2,922	2,848	51	13	10
Total	$	17,248	3,409	1,889	2,115	9,835

Payments due by period

Less than

After

Total

1 year

2 - 3 years

4 - 5 years

5 years

amounts in millions

Consolidated contractual obligations

Long-term debt (1)

$
8,594

24

448

2,766

5,356

Interest payments (2)

5,743

338

667

580

4,158

Operating lease obligations

413

73

116

81

143

Build to suit lease

87

5

12

12

58

Purchase orders and other obligations

1,756

1,688

64

4

—

Total

$
16,593

2,128

1,307

3,443

9,715

(1)

Amounts are reflected in the table at the outstanding principal amount, assuming the debt instruments will remain outstanding until the stated maturity date, and may differ from the amounts stated in our consolidated balance sheet to the extent debt instruments (i) were issued at a discount or premium or (ii) have elements which are reported at fair value in our consolidated balance sheets. Amounts ~~also include capital lease obligations. Amounts~~ do not assume additional borrowings or refinancings of existing debt.

(2)

Amounts (i) are based on our outstanding debt at December 31, ~~2017,~~2020, (ii) assume the interest rates on our variable rate debt remain constant at the December 31, ~~2017~~2020 rates and (iii) assume that our existing debt is repaid at maturity.

(3)

This amount reflects the annual 8.0% dividend on shares of Preferred Stock outstanding as of December 31, 2020 and redemption of the Preferred Stock on March 15, 2031.

(4)

Amounts include open purchase orders for inventory and non-inventory purchases along with other contractual obligations.

Critical Accounting Estimates

The preparation of our financial statements in conformity with GAAP requires us 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. Listed below are the accounting estimates that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported. All of these accounting estimates and assumptions, as well as the resulting impact to our financial statements, have been discussed with the audit committee of our board of directors.

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Fair Value Measurements

Financial Instruments. We record a number of assets and liabilities in our consolidated balance sheets at fair value on a recurring basis, including ~~available-for-sale ("AFS")~~equity securities, ~~our investment in Liberty Broadband,~~ financial instruments and our exchangeable senior debentures. 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. We use quoted market prices, or Level 1 inputs, to value our Fair Value Option (as defined below) ~~securities and our investment in Liberty Broadband.~~securities. As of December 31, ~~2017~~2020 and ~~2016, the carrying value of our~~2019, we had no Level 1 Fair Value Option ~~securities was $2,275 million and $1,846 million, respectively. As of December 31, 2017, the carrying value of our investment in Liberty Broadband was $3,635 million.~~securities.

Level 2 inputs, other than quoted market prices included within Level 1, are observable for the asset or liability, either directly or indirectly. We use quoted market prices to determine the fair value of our exchangeable senior debentures. However, these debentures are not traded on active markets as defined in GAAP, so these liabilities fall in Level 2. As of December 31, ~~2017 and 2016,~~2020, the principal amount and carrying value of our exchangeable debentures were ~~$1,947~~$1,412 million and ~~$1,846~~$1,750 million, respectively.

Level 3 inputs are unobservable inputs for an asset or liability. We currently have no Level 3 financial instrument assets or liabilities.

Non-Financial Instruments. Our non-financial instrument valuations are primarily comprised of our annual assessment of the recoverability of our goodwill and other nonamortizable intangible assets, such as ~~trademarks~~tradenames and our evaluation of the recoverability of our other long-lived assets upon certain triggering events, and our determination of the estimated fair value allocation of net tangible and identifiable intangible assets acquired in business combinations. If the carrying value of our long-lived assets exceeds their undiscounted cash flows, we are required to write the carrying value down to fair value. Any such writedown is included in impairment of long-lived assets in our consolidated statements of operations. A high degree of judgment is required to estimate the fair value of our long-lived assets. We may use quoted market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates. We may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the high degree of judgment involved in our estimation techniques, any value ultimately derived from our long-lived assets may differ from our estimate of fair value. As each of our operating segments has long-lived assets, this critical accounting policy affects the financial position and results of operations of each segment.

As of December 31, ~~2017,~~2020, the intangible assets not subject to amortization for each of our significant reportable segments were as follows:

Goodwill

Trademarks

Total

amounts in millions

QVC

$
5,190

2,428

7,618

HSNi

933

627

1,560

zulily

917

870

1,787

Corporate and other

42

4

46

$
7,082

3,929

11,011


	Goodwill		Tradenames	Total

	amounts in millions
QxH	$	5,228	2,878	8,106
QVC International		921	—	921
Zulily		477	290	767
Corporate and other		12	—	12
	$	6,638	3,168	9,806

We perform our annual assessment of the recoverability of our goodwill and other non-amortizable intangible assets during the fourth quarter of each ~~year.~~year, or more frequently, if events or circumstances indicate impairment may have occurred. We utilize a qualitative assessment for determining whether a quantitative goodwill and other non-amortizable intangible asset impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. In evaluating goodwill on a qualitative basis the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business,

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management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis the Company also considers fair value determinations for certain

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reporting units that have been made at various points throughout the current and prior years for other purposes. In 2019, an impairment of $440 million was recorded to Zulily’s goodwill. There were no goodwill impairments in 2020 and 2018. In 2019 and 2018, impairments of $147 million and $30 million, respectively, were recorded to HSN’s tradenames. Also in 2019, an impairment of $580 million was recorded to Zulily’s tradename. There were no impairments of other intangible ~~impairments~~assets in ~~2017, 2016 and 2015.~~2020.

Retail Related Adjustments and Allowances. QVC records adjustments and allowances for sales returns, inventory obsolescence and uncollectible receivables. Each of these adjustments is estimated based on historical experience. Sales returns are calculated as a percent of sales and are netted against revenue in our consolidated statements of operations. For the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, sales returns represented ~~18.1%~~15.6%, ~~18.3%~~17.3% and ~~19.1%~~17.4% of QVC's gross product revenue, respectively. The inventory obsolescence reserve is calculated as a percent of QVC's inventory at the end of a reporting period based on, among other factors, the average inventory balance for the preceding 12 months and historical experience with liquidated inventory. The change in the reserve is included in cost of retail sales in our consolidated statements of operations. AtAs of December 31, ~~2017,~~2020, QVC's inventory was ~~$1,019~~$1,119 million, which was net of the obsolescence ~~adjustment~~reserve of ~~$92~~$170 million. AtAs of December 31, ~~2016,~~2019, inventory was ~~$950~~$1,214 million, which was net of the obsolescence ~~adjustment~~reserve of ~~$76~~$145 million. QVC's allowance for ~~doubtful accounts~~credit losses is calculated as a percent of accounts receivable at the end of a reporting period, and the change in such allowance is recorded as a provision for ~~doubtful accounts~~credit losses in Selling, general, and administrative (“SG&A”) expenses in our consolidated statements of operations. AtAs of December 31, ~~2017,~~2020, QVC's trade accounts receivable were ~~$1,388~~$1,602 million, net of the allowance for ~~doubtful accounts~~credit losses of ~~$91~~$124 million. AtAs of December 31, ~~2016,~~2019, trade accounts receivable were ~~$1,246~~$1,813 million, net of the allowance for ~~doubtful accounts~~credit losses of ~~$97~~$123 million. Each of these estimates requires management judgment and may not reflect actual results.

Income Taxes. We are required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for the future tax consequences of events that have been reflected in our financial statements or tax returns for each taxing jurisdiction in which we operate. This process requires our management to make judgments regarding the timing and probability of the ultimate tax impact of the various agreements and transactions that we enter into. Based on these judgments we may record tax reserves or adjustments to valuation allowances on deferred tax assets to reflect the expected realizability of future tax benefits. Actual income taxes could vary from these estimates due to future changes in income tax law, significant changes in the jurisdictions in which we operate, our inability to generate sufficient future taxable income or unpredicted results from the final determination of each year's liability by taxing authorities. These changes could have a significant impact on our financial position.

Results of Operations—Businesses

QVC

QVC is a retailer of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised shopping programs, the Internet and mobile applications.

In the U.S., ~~QVC's~~QVC’s televised shopping programs, including live and recorded content, are broadcast across multiple channels nationally on a full-time basis, including QVC, ~~QVC2~~QVC 2, QVC 3, HSN and ~~Beauty iQ. The Company's U.S.~~HSN2. QxH programming is also available on ~~QVC.com, QVC's U.S. website; mobile~~its websites (QVC.com and HSN.com); virtual multichannel video programming distributors (including Hulu + Live TV, AT&T TV and as of January 2021, YouTube TV); applications via streaming ~~video; over-the-air broadcasters; and over-the-top content platforms (Roku,~~video (Facebook Live, Roku, Apple TV ~~etc.) (such~~and Amazon Fire); mobile applications; social pages and over-the-air broadcasters.

QVC’s digital platforms enable consumers to purchase goods offered on its broadcast programming, along with a wide assortment of products that are available only on QVC’s U.S. ~~operations, “QVC-U.S.”). QVC's~~websites. These websites and QVC’s other digital platforms (including mobile applications, social pages, and others) are natural extensions of its business model, allowing customers to engage in its shopping experience wherever they are, with live or on-demand content customized to the device they are using. In addition to offering video content, QVC’s U.S. websites allow shoppers to browse, research, compare and perform targeted searches for products, read customer reviews, control the order-entry process and conveniently access their account.

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QVC’s international televised shopping programs, including live and recorded content, are distributed to households outside of the U.S., primarily in Germany, Austria, Japan, the United Kingdom ("U.K."), the Republic of Ireland ~~Italy~~ and ~~France (such international operations, “QVC-International”).~~Italy. In some of the countries where QVC operates, ~~QVC's~~its televised shopping programs are broadcast across multiple QVC channels: QVC ~~Beauty &~~ Style and QVC2 in Germany and QVC Beauty, QVC Extra, and QVC Style in the U.K. ~~The programming created for most of these markets is~~Similar to the U.S., QVC’s international businesses also ~~available~~engage customers via ~~streaming video on QVC's digital platforms. QVC's~~websites, mobile applications, and social pages. QVC’s international business employs product sourcing teams who select products tailored to the interests of each local market.

QVC also has a joint venture with CNR Media Group, formerly known as China Broadcasting Corporation, a limited liability company owned by China National Radio (''CNR''). QVC owns a 49% interest in a CNR subsidiary, CNR Home Shopping Co., Ltd. (''CNRS''). CNRS operates a retail business in China through a shopping television channel with an associated website. The CNRS joint venture is accounted for as an equity method investment.

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QVC's operating results were as follows:

Years ended December 31,

2017

2016

2015

amounts in millions

Net revenue

$
8,771

8,682

8,743

Cost of sales

(5,598)

(5,540)

(5,528)

Operating expenses

(601)

(606)

(607)

SG&A expenses (excluding stock-based compensation)

(675)

(696)

(714)

Adjusted OIBDA

1,897

1,840

1,894

Stock-based compensation

(31)

(32)

(31)

Depreciation and amortization

(519)

(605)

(588)

Operating income

$
1,347

1,203

1,275


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Net revenue	$	11,472	10,986	11,282
Cost of sales		(7,418)	(7,148)	(7,248)
Operating expenses		(786)	(768)	(881)
SG&A expenses (excluding stock-based compensation and transaction related costs)		(1,211)	(1,088)	(1,094)
Adjusted OIBDA		2,057	1,982	2,059
Impairment of intangible assets		—	(147)	(30)
Stock-based compensation		(37)	(39)	(46)
Depreciation and amortization		(453)	(468)	(411)
Transaction related costs		—	(1)	(60)
Operating income	$	1,567	1,327	1,512

Net revenue was generated from the following geographical areas:

Years ended December 31,

2017

2016

2015

amounts in millions

QVC-U.S.

$
6,140

6,120

6,257

QVC-International

2,631

2,562

2,486

$
8,771

8,682

8,743


	Years ended December 31,
	2020		2019	2018

	amounts in millions
QxH	$	8,505	8,277	8,544
QVC International		2,967	2,709	2,738
	$	11,472	10,986	11,282

QVC's consolidated net revenue increased ~~1.0%~~4.4% and decreased ~~0.7%~~2.6% for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, as compared to the corresponding prior years. The ~~2017~~2020 increase of ~~$89~~$486 million in net revenue was primarily comprised of ~~an increase of $405 million due to~~ a ~~4.2%~~2.6% increase in units ~~sold. This~~sold, a $172 million decrease in estimated product returns, primarily driven by QxH, a $22 million increase in shipping and handling revenue across all markets except Italy and $54 million in favorable foreign exchange rates, which was ~~primarily~~partially offset by a ~~2.3% decrease~~slight decline in average selling price per unit ("ASP") ~~attributing $237 million, $33 million due to unfavorable foreign currency rates, a~~.

The 2019 decrease of ~~$27 million in shipping and handling revenue, a $15 million decrease in miscellaneous income and an increase of $4 million in estimated product returns. The 2016 decrease of $61~~$296 million in net revenue was primarily ~~due to~~comprised of a ~~3.9%~~2.7% decrease in ~~ASP attributing $393~~units sold, $69 million in unfavorable foreign exchange rates and a ~~$17~~$41 million decrease in shipping and handling revenue ~~in constant currency. The decrease~~across all markets, which was partially offset by a ~~2.4%~~1% increase in ~~units shipped attributing $237 million,~~ASP driven by the international markets, and a $49 million decrease ~~of $105 million~~ in estimated product ~~returns.~~ returns, primarily driven by the decrease in sales volume at QxH.

During the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, the changes in revenue and expenses were affected by changes in the exchange rates for the Japanese Yen, the Euro and the U.K. Pound Sterling. In the event the U.S. Dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow will be negatively affected. QVC’s product margins may continue to be under pressure due to the devaluation of foreign currencies, and it will attempt to reduce its exposure through pricing and vendor negotiations as Brexit negotiations progress.

In discussing QVC’s operating results, the term “currency exchange rates” refers to the currency exchange rates QVC uses to convert the operating results for all countries where the functional currency is not the U.S. dollar. QVC calculates the effect of changes in currency exchange rates as the difference between current period activity translated using the prior period's currency exchange rates. Throughout our discussion, we refer to the results of this calculation as

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the impact of currency exchange rate fluctuations. When we refer to “constant currency operating results”, this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to understand better QVC’s underlying performance without the effects of currency exchange rate fluctuations.

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The percentage change in net revenue for ~~QVC-U.S. and QVC-International~~QVC in U.S. Dollars and in constant currency was as follows:

Year ended December 31, 2017

Year ended December 31, 2016


U.S. dollars

Foreign Currency Exchange Impact

Constant currency

U.S. dollars

Foreign Currency Exchange Impact

Constant currency

QVC-US

0.3
%

—
%

0.3
%

(2.2)
%

—
%

(2.2)
%

QVC-International

2.7
%

(1.3)
%

4.0
%

3.1
%

0.1
%

3.0
%


	Year ended December 31, 2020						Year ended December 31, 2019
	U.S. dollars		Foreign Currency Exchange Impact		Constant currency		U.S. dollars		Foreign Currency Exchange Impact		Constant currency
QxH	2.8	%	—	%	2.8	%	(3.1)	%	—	%	(3.1)	%
QVC International	9.5	%	2.0	%	7.5	%	(1.1)	%	(2.6)	%	1.5	%

In ~~2017, QVC-U.S.~~2020, the QxH net revenue increase was primarily due to a ~~3.7%~~1.8% increase in units shipped, ~~and~~ a $171 million decrease in estimated product ~~returns. This~~returns and a $7 million increase ~~was offset by a 2.9% decrease in ASP, a $32 million decrease~~ in shipping and handling revenue, ~~and~~partially offset by a ~~$14 million decrease~~1.3% decline in ~~miscellaneous income. QVC-U.S.~~ASP. For the year ended December 31, 2020, QxH experienced shipped sales growth in home and accessories with declines in all ~~categories except jewelry.~~other categories. The decrease in estimated product returns was primarily ~~due~~driven by a shift in product mix to ~~an overall~~ lower return rate categories, partially offset by an increase in sales volume. The increase in shipping and handling revenue was primarily driven by the increase in units shipped and fewer promotional offers. QVC-International net revenue growth in constant currency was primarily due to a 4.6% increase in units shipped, driven by increases in units shipped across all markets, a 1.5% increase in ASP, driven by ASP increases in Germany and the U.K. and a $15 million increase in shipping and handling revenue driven by increases in all markets except Italy, primarily due to the increase in units shipped. QVC-International experienced shipped sales growth in constant currency in home, beauty and electronics with declines in all other categories.

In 2019, the QxH net revenue decrease was primarily due to a 2.8% decrease in units shipped, a 0.5% decrease in ASP, and an $18 million decrease in shipping and handling revenue. This decrease was partially offset by a $65 million decrease in estimated product returns, primarily driven by the decrease in sales volume. QxH experienced shipped sales decline in all categories except ~~jewelry.~~electronics. The decrease in net shipping and handling revenue was a result of a decrease in shipping and handling revenue per unit from promotional offers. ~~QVC-International~~QVC International net revenue growth in constant currency was primarily due to a ~~5.0%~~5.1% increase in ASP, including increases in all markets. The increase was partially offset by a decrease of 2.5% in units shipped, primarily driven by Germany, the U.K., and Italy partially offset by increases in Japan, ~~Germany, France and the U.K. offset by~~ a ~~decrease in units shipped in Italy. There was a $5~~$22 million ~~increase~~decrease in shipping and handling revenue, primarily ~~driven by Japan. This was offset by a decrease of 1.0%~~ in ~~ASP, primarily driven in Japan and Germany offset by increases in Italy and~~ the U.K., and a ~~$20~~$16 million increase in estimated product returns ~~driven by~~across all ~~markets except Japan. QVC-International~~markets. QVC International experienced shipped sales growth in constant currency in all categories except electronics and ~~jewelry.~~

In 2016, QVC-U.S. net revenue decline was primarily due to a 5.5% decrease in ASP and a 4.0% decrease in shipping and handling revenue. The decline was offset by a 2.3% increase in units shipped and a decrease in estimated product returns. QVC-U.S. experienced shipped sales declines in jewelry, electronics and beauty with growth in apparel, home and accessories. The decrease in net shipping and handling revenue was primarily due to the decrease in shipping and handling rates per unit from promotional offers. The decrease in estimated product returns was primarily due to a decrease in an overall lower return rate across all categories and sales. QVC-International net revenue growth in constant currency was primarily due to a 2.5% increase in units shipped, driven mainly in Germany and the U.K., offset by the increase in estimated product returns, driven primarily by product returns in Germany. QVC-International experienced shipped sales growth in constant currency in all categories except jewelry and apparel.

QVC's cost of sales as a percentage of net revenue was ~~63.8%~~64.7%, ~~63.8%~~65.1% and ~~63.2%~~64.2% for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. The ~~slight increase~~decrease in ~~2016 was~~cost of goods sold as a percentage of revenue in 2020 is primarily due to favorable estimated product returns at QxH and strategic promotional and pricing initiatives, which decreased product ~~margins~~costs as a percentage of net revenue across QxH, Japan and ~~increased freight costs in the U.S. associated with the increases in units shipped,~~Germany, which was partially offset by increased fulfillment costs at QxH, primarily related to increased freight charges. The increase in cost of goods sold as a ~~favorable inventory obsolescence provision~~percentage of revenue in ~~the U.S.~~2019 is primarily due to an increase in product fulfillment costs related to a new fulfillment center in Bethlehem, Pennsylvania and higher freight costs at QxH.

~~QVC's operating~~Operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees, and telecommunications expenses. Operating expenses ~~decreased $5.0~~increased $18 million or ~~0.8%~~2% and decreased ~~$1.0~~$113 million or ~~0.2%~~13% for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively. The increase in 2020 was primarily due to a $15 million increase in customer service expenses, primarily at QxH, a $6 million increase in credit card fees at QxH and to a lesser extent, Japan, and a $5 million increase due to unfavorable exchange rates partially offset by a $6 million decrease in commissions, primarily at QxH and to a lesser extent, Germany and the U.K., partially offset by Japan. The increase in customer service expenses is primarily driven by increased call volume during the year. The increase in credit card fees is primarily due to increased sales and lower sales penetration of our U.S. Private Label Credit Cards,

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which do not charge credit card fees. The decrease in ~~2017~~commissions is primarily due to increased digital penetration. The decrease in 2019 was primarily due to a $92 million decrease in commissions primarily at QxH, a $13 million decrease in personnel costs, primarily at QxH and to a lesser extent, Italy, Germany and Japan, and a $5 million decrease due to favorable exchange rates. The ~~slight~~ decrease in ~~2016 was~~commissions is primarily due to ~~lower telecommunication expense, partially offset by~~new longer term television distribution rights agreements entered into at HSN, with similar terms to QVC’s television distribution agreements, which led to increased ~~commissions expense. The decrease in telecommunication expense was primarily due to lower phone~~capitalization of television distribution rights agreements and ~~network rates in the U.S. The increase in commissions expense was primarily due to increases internationally offset by a decrease in sales in the U.S.~~favorable terms on commissions.

~~QVC's~~ SG&A expenses (excluding stock ~~compensation)~~compensation and transaction related costs as defined below) include personnel, information technology, provision for ~~doubtful accounts,~~ credit ~~card income,~~losses, production costs and marketing and advertising expense. Such expenses ~~decreased $21~~increased $123 million, and ~~remained at 8%~~were 10.6% of net revenue for the year ended December 31, ~~2017~~2020 as compared to the prior year and decreased ~~$18~~$6 million and 8%were 9.9% of net revenue for the year ended December 31, ~~2016~~2019 as compared to the prior ~~year, as a result of a variety of factors.~~

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year.

The ~~decrease~~increase in ~~2017~~2020 was primarily due to a ~~decrease in bad debt expense of $35 million, a decrease in severance expense of $13 million, $4 million from favorable foreign currency rates and a $6~~$111 million increase in ~~credit card income offset by an increase in bonus expense of $33 million and~~personnel costs across all markets, a $4$53 million increase in online marketing ~~expenses. The~~primarily at QxH and $7 million in unfavorable exchange rates. These increases were partially offset by a $34 million decrease in ~~bad debt expense was~~estimated credit losses primarily at QxH and to a lesser extent, Japan, a $14 million decline in outside services primarily at QxH and a $10 million decrease in travel expenses across all markets. The increase related to lower default rates associated with the Easy-Pay program in the U.S. The increase in credit card income was due to the favorable economics of the QVC-branded credit card (“Q card”) portfolio in the U.S. The increase in marketing expensespersonnel costs was primarily due to an increase ~~in the investment made~~ to ~~eMarketing partially offset by discontinuing the naming rights to the Chiba Marine Stadium in Japan.~~

~~The decrease in 2016 was primarily related to reduced personnel costs~~our estimated incentive pay across all markets, and a work from home allowance as a result of ~~$63 million and an increase of credit card income of $8 million~~COVID-19, which was partially offset by the closure of our operations in France in 2019. The decrease to estimated credit losses was due to favorable adjustments based on actual collections, a decrease in the number of installment counts taken by customers, the implementation of fraud screening and a favorable shift in product category mix. The decrease in travel expenses was primarily due to less travel as a result of COVID-19.

The decrease in 2019 was primarily due to a $43 million decrease in personnel costs primarily in QxH, France and the U.K. partially offset by increases in Japan, Germany and Italy, and an $11 million decrease due to favorable exchange rates. The decreases were partially offset by a $22 million increase in outside services, primarily at QxH and Japan, partially offset by a decrease in Germany, a $12 million increase in bad debt expense, ~~of $25~~and a $16 million ~~software expense of $13 million, franchise tax expense of $10 million and external services of $8 million.~~increase in online marketing expenses primarily in QxH. The decrease in personnel costs ~~was primarily~~is due to a decrease in ~~bonuses and benefits in the U.S., and severance. The increase in credit card income was due to the favorable economics and usage~~wages at QxH as a result of the ~~Q card portfolio~~QRG Initiatives, a decrease in bonus compensation across all markets except for Japan, the ~~U.S.~~termination of a retirement health plan and the closure of QVC’s operations in France, partially offset by higher severance across all markets. The increase in bad debt expense was primarily related to an increase in U.S. Easy-Pay sales penetration and default rates. The increase in software expense was mainly due to an increase in software licensing and software maintenance. The increase in franchise tax expense was mainly due to a favorable franchise tax reserve adjustment related to an audit settlement in 2015 which was not experienced infor the year ended December 31, ~~2016. The increase in external services was~~2019 is primarily due to ~~internal control enhancements~~increased Easy Pay usage and the ~~establishment~~number of installments taken at QxH.

QVC recorded impairment losses of $147 million and $30 million for the years ended December 31, 2019 and 2018, respectively, related to the decrease in the fair value of the HSN indefinite-lived tradename as a ~~global business service~~result of the quantitative assessment that was performed by the Company in each of those years (see note 6 to the accompanying consolidated financial statements). There was no impairment loss recorded by QVC for the year ended December 31, 2020.

QVC recorded $1 million and $60 million of transaction related costs for the years ended December 31, 2019 and 2018, respectively. The transaction related costs in 2018 were primarily related to severance payments related to the future closure of QVC's Lancaster, PA fulfillment center ~~located~~and other initiatives to better position its QxH operations as well as the closure of operations in ~~Krakow, Poland.~~France. No transaction related costs were recorded for the year ended December 31, 2020.

Stock-based compensation includes compensation related to options and restricted stock granted to certain officers and employees. QVC recorded ~~$31~~$37 million, ~~$32~~$39 million and ~~$31~~$46 million of stock-based compensation expense for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. There was no significant change for 2020. The decrease in 2019 was primarily due to forfeitures of non-vested options from terminated individuals.

Depreciation and amortization ~~consisted~~decreased $15 million and increased $57 million for the years ended December 31, 2020 and December 31, 2019, respectively. Depreciation and amortization included $66 million, $66 million and $67 million of acquisition related amortization during the ~~following:~~

Years ended December 31,


2017

2016

2015

amounts in millions

Affiliate agreements

$
97

146

146

Customer relationships

113

169

170

Acquisition related amortization

210

315

316

Property and equipment

155

142

134

Software amortization

93

100

93

Channel placement amortization and related expenses

61

48

45

Total depreciation and amortization

$
519

605

588

years ended December 31, 2020, 2019, and 2018, respectively. For the year ended December 31, ~~2017, acquisition related amortization expense~~2020, property and equipment depreciation decreased primarily due to the ~~end~~disposition of ~~the useful lives of certain affiliate agreements and customer relationships established at the time of Liberty's acquisition of QVC~~assets in ~~2003. This was offset by an increase~~France in ~~channel placement amortization related to the addition of Beauty iQ in the U.S. and the increase in depreciation related to the additions at the California distribution center.~~2019. For the year ended December 31, ~~2016, depreciation and~~2019, channel placement amortization expense increased

II-18

Table of Contents

primarily due to ~~expense related~~new television distribution contracts entered into at HSN and software amortization decreased due to the ~~additions at the California distribution center and new website functionality.~~

~~II-21~~

~~Table~~end of ~~Contents~~

~~HSN~~

On December 29, 2017, Liberty acquired the approximately 62% of HSNi it did not already own in an all-stock transaction making HSNi a wholly-owned subsidiary, attributed to the QVC Group tracking stock group. As HSNi’s Cornerstone operating segment was included in the “Corporate and other” reportable segment (see note 19 in the accompanying consolidated financial statements), the information presented in this section relates to the HSN reportable segment. With the exception of $38 million of severance-related costs incurred on December 30, 2017, HSN’s results of operations are not included in our consolidated operating results for the year ended December 31, 2017, as the final two days of the period were considered immaterial. However, we believe a discussion of HSN’s stand alone results promotes a better understanding of the overall results of its business.

HSN is an interactive entertainment and lifestyle retailer offering a curated assortment of exclusive products and top brand names to its customers primarily through television home shopping programming on the HSN television networks, through its business-to-consumer digital commerce site HSN.com, through mobile applications, through outlet stores and through wholesale distributionuseful lives of certain proprietary products to other retailers. HSN incorporates entertainment, inspiration and personalities to provide an entirely unique shopping experience. HSN’s live programming is distributed via its nationally televised shopping program seven days a week, 364 days per year.software additions.

Zulily

~~HSN’s stand-alone~~Zulily's operating results for the last three years were as follows:


	Years ended
	December 31,		December 31,	December 31,
	2020		2019	2018

	amounts in millions
Net revenue	$	1,636	1,571	1,817
Cost of sales		(1,228)	(1,179)	(1,346)
Operating expenses		(44)	(42)	(50)
SG&A expenses (excluding stock-based compensation and transaction related costs)		(281)	(302)	(313)
Adjusted OIBDA		83	48	108
Stock-based compensation		(15)	(15)	(17)
Depreciation and amortization		(80)	(104)	(186)
Impairment of intangible assets		—	(1,020)	—
Operating income (loss)	$	(12)	(1,091)	(95)

Years ended

December 31,

December 31,

December 31,

2017 (3)

2016 (3)

2015 (3)

amounts in millions

Net revenue

$
2,343

2,479

2,552

Cost of sales

(1,533)

(1,638)

(1,647)

SG&A expenses (excluding stock-based compensation and acquisition related expenses)

(590)

(582)

(605)

Adjusted OIBDA

220

259

300

Stock-based compensation

(17)

(15)

(14)

Depreciation and amortization

(31)

(29)

(29)

Acquisition and restructuring related expenses (1) (2)

(69)

—

(5)

Operating income (loss)

$
103

215

252

~~(1)~~

~~For the year ended December 31, 2017, Acquisition and restructuring related expenses includes $69 million of transaction related costs related to the acquisition of HSN by the Company.~~

~~(2)~~

~~For the year ended December 31, 2015,~~ ~~Acquisition and restructuring related~~ ~~expenses includes $2 million of severance costs associated with a reorganization at HSN and $3 million for certain costs associated with the planned closure of one of HSN's distribution centers.~~

~~(3)~~

~~HSN has reclassified certain costs between financial statement line items to conform with Liberty’s reporting structure for ease of comparability for the periods presented.~~

HSN’s net sales primarily relate to the sale of merchandise, including shipping and handling fees, and are reduced by incentive discounts and actual and estimated sales returns. Sales taxes collected are not included in net sales. Digital sales include sales placed through our websites and our mobile applications, including tablets and smart phones. Revenue is recorded when delivery to the customer has occurred. Delivery is considered to have occurred when the customer takes title and assumes the risks and rewards of ownership, which is on the date of shipment. HSNi’s sales policy allows customers to return virtually all merchandise for a full refund or exchange, subject to pre-established time restrictions.

~~II-22~~

~~Table of Contents~~

HSN's net revenue decreased 5.5% and 2.9% for the years ended December 31, 2017 and December 31, 2016, respectively, as compared to the corresponding prior years. The decrease in net revenue for the year ended December 31, 2017 was primarily attributed to a 3.3% decrease in ASP, a 3.5% decrease in units shipped and a 21.7% decrease in shipping and handling revenue. The decline was partially offset by a 1.4% improvement in the sales return rate from 16.3% to 14.9%. HSN experienced sales declines in all categories. The decrease in net shipping and handling revenue was primarily due to the decrease in shipping and handling rates per unit from promotional offers and due to a reduction in HSN’s standard shipping rates which became effective in August 2016. The decrease in estimated product returns was primarily due to a decrease in return rates experienced across most categories~~. The decrease in net revenue for the year ended December 31, 2016 was primarily attributed~~ to a 3.4% decrease in ASP and a 20.0% decrease in shipping and handling revenue, partially offset by a 0.8% improvement in the sales return rate from 17.1% to 16.3%. HSN experienced sales declines in all categories with the exception of apparel and electronics. The decrease in net shipping and handling revenue was primarily due to the decrease in shipping and handling rates per unit from promotional offers and due to a reduction in HSN’s standard shipping rates which became effective in August 2016. The decrease in the sales return rate was primarily due to a sales mix shift to categories with lower return rates and an overall lower return rate across all categories. Approximately one-third of the decline in net sales was attributable to a direct-response television marketing campaign that began in 2014 and concluded in the first quarter of 2016.

HSN's cost of sales as a percentage of net revenue was 65.4%, 66.1% and 64.5% for the years ended December 31, 2017, 2016 and 2015 respectively. The decrease for the year ended December 31, 2017, as compared to the prior year, was primarily attributed to ~~increased product margins and a favorable inventory obsolescence provision, partially offset by higher freight costs driven largely by annual rate increases with HSN’s outbound shipping carriers. The increase for the year ended December 31, 2016 was primarily attributed to~~ lower shipping revenues and higher fulfillment and shipping costs resulting from issues with the implementation of HSN’s warehouse automation initiative. Shipping and handling costs were also impacted by changes in product mix and annual rate increases with HSN’s outbound shipping carriers.

HSN’s SG&A expenses (excluding stock-based compensation and acquisition-related costs) include personnel, commissions, information technology, order processing and customer service expenses, credit card processing fees, credit card income, provision for doubtful accounts, productions costs and marketing and advertising expense. These expenses increased $8 million, and as a percentage of net revenue, increased from 23.5% to 25.2% for the year ended December 31, 2017, as compared to the prior year. The increase in SG&A expense was primarily due to higher personnel costs of $8 million and an increase in bad debt expense of $5 million related to HSN’s Flexpay program, partially offset by lower marketing expense of $8 million. The increase in personnel costs was primarily due to higher bonus expense and higher wages driven by annual merit increases. The decrease in marketing expense is due to lower digital marketing costs and due to advertising and media costs incurred in the prior year related to the expansion of HSN’s wholesale business and direct-response television business. The increase in expense as a percentage of net revenue was driven by the deleveraging of fixed costs due to the decrease in net sales and due to the increases in bonus and bad debt expenses.

HSN’s SG&A expenses decreased $23 million, and as a percentage of revenue decreased from 23.7% to 23.5% for the year ended December 31, 2016, as compared to 2015. The SG&A expense decrease was primarily due to a $11 million decline in bad debt expense driven by higher loss rates from HSN's Flexpay program in the prior year. The decrease is also due to decreases in personnel costs, including performance-based incentives of $10 million. There was also a $9 million decrease in media costs related to direct-response television business. These decreases were partially offset by higher commissions expense of $7 million primarily due to expanded coverage of HSN2, an increase in digital marketing and an increase in consulting costs.

Stock-based compensation includes compensation related to stock appreciation rights and restricted stock units granted to certain employees. HSN recorded $17 million, $15 million and $14 million of stock-based compensation expense for the years ended December 31, 2017, 2016 and 2015, respectively. Stock-based compensation in 2017 included the acceleration of vesting of certain awards ~~for employees terminated in connection with the Merger, offset by the cancellation of awards as a result of the resignation of HSN’s former CEO in 2017.~~

HSN’s depreciation and amortization expense increased $2 million and remained flat for the years ended December 31, 2017 and 2016, respectively, as compared to the corresponding prior years. The increase in 2017 is primarily attributed to ~~additions related to HSN’s warehouse automation initiative~~.

~~II-23~~

~~Table of Contents~~

Included in HSN’s operating income for the year ended December 31, 2017 are allocated acquisition-related costs of $69 million primarily related to investment banking fees, legal fees and severance-related costs. Of the $38 million of acquisition costs recorded by the Company for the two day period after the acquisition, $30 million related to severance and bonus payments is included in the amount reported by HSN. The additional $8 million recorded by the Company related to accelerated vesting of stock options, was not included in HSN’s acquisition-related costs, and has been included in Selling, general and administrative, including stock-based compensation expense in the accompanying consolidated statements of operations.

~~zulily~~

Liberty acquired zulily on October 1, 2015, and zulily’s results are only included in Liberty’s results for periods subsequent to October 1, 2015. We believe a discussion of zulily’s stand alone results, including certain one-time purchase accounting related adjustments detailed below, promotes a better understanding of the overall results of its business.

~~zulily's operating results for the last three years were as follows:~~

Years ended

December 31,

December 31,

December 31,

2017

2016

2015 (1)

amounts in millions

Net revenue

$
1,613

1,547

1,361

Cost of sales

(1,195)

(1,108)

(978)

Operating expenses

(47)

(47)

(43)

SG&A expenses (excluding stock-based compensation and acquisition related expenses)

(280)

(280)

(269)

Adjusted OIBDA

91

112

71

Acquisition related expenses

—

—

(30)

Stock-based compensation

(18)

(19)

(19)

Depreciation and amortization

(202)

(245)

(83)

Deferred revenue adjustment

—

—

(17)

Operating income (loss)

$
(129)

(152)

(78)

~~(1)~~

~~zulily has reclassified certain costs between financial statement line items to conform with Liberty’s reporting structure for ease of comparability for the period ended December 31, 2015.~~

Net revenue consists primarily of sales of women's, children's and men's apparel, children's merchandise and other product categories such as home, accessories and beauty ~~and personalized~~ products. ~~zulily~~Zulily recognizes product sales at the time all revenue recognition criteria has been met, which is generally at ~~delivery.~~shipment. Net revenue represents the sales of these items plus shipping and handling charges to customers and private label credit card income, net of estimated refunds and returns, store credits, and promotional discounts. Net revenue is primarily driven by ~~growth in zulily’s~~Zulily’s active customers, the frequency with which customers purchase and average order value.

~~zulily's~~Zulily's consolidated net revenue increased ~~4.3%~~4.1% and ~~13.7%~~decreased 13.5% for the years ended December 31, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively, as compared to the corresponding prior years. The increase in net revenue for the year ended December 31, ~~2017~~2020 was primarily attributed to ~~a 5.1% increase~~increases of 4.3% in ~~orders placed~~average sale price and 0.2% in total units shipped driven by increased demand for online shopping and Zulily’s merchandise as a ~~15.9% increase in active customers year over year, coming from accelerated growth in~~result of stay-at-home orders and the ~~fourth quarter. Along with the increase in orders placed, units per order also increased but was offset by lower average sales price per unit.~~temporary closure of brick-and-mortar retail due to COVID-19. The ~~increase~~decrease in net revenue for the year ended December 31, ~~2016~~2019 was primarily attributed to ~~an increase~~a 14.2% decrease in total orders placed of 14.5%, driven by a 14.1% increase in the number of orders placed per active customer. An active customer is defined as an individual who had purchased at least once in the last twelve months, measured from the last day of the period.demand.

~~zulily's~~Zulily's cost of sales as a percentage of net revenue was ~~74.1%~~75.1%, ~~71.6%~~75.0% and ~~71.9%~~74.1% for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. ~~The increase~~Cost of sales as a percentage of net revenue increased for the year ended December 31, ~~2017 was~~2020 as compared to the year ended December 31, 2019 primarily ~~attributed~~due to higher ~~free~~ shipping costs and ~~promotional offers,~~increased wages in the fulfilment centers, partially offset by favorable product margin. Cost of sales as ~~well as higher supply chain expenses resulting from an increase in international~~

~~II-24~~

~~Table~~a percentage of ~~Contents~~

shipping, a shift in product mix, ramping up of zulily’s Pennsylvania fulfillment center and growth of its third-party fulfillment services and higher unit volume at a lower average sales price per unit. The decreasenet revenue increased for the year ended December 31, ~~2016 was~~2019 as compared to the year ended December 31, 2018 primarily ~~attributed~~due to ~~improved operational efficiency, partially offset by higher~~increased shipping ~~and handling~~ costs.

~~zulily’s~~Zulily’s operating expenses are principally comprised of credit card processing fees and customer service expenses. Operating expenses ~~remained flat and~~ increased ~~$4 million, or 9.3%,~~ for the ~~years~~year ended December 31, ~~2017 and 2016, respectively. The increase~~2020, as compared to the same period in ~~operating~~the prior year, driven by increased sales volumes. Operating expenses ~~was primarily attributed~~decreased for the year ended December 31, 2019, as compared to ~~an increase~~the same period in ~~credit card~~the prior year, due to a decrease in transaction processing fees ~~which are driven by higher sales volume.~~as a result of decreased net sales.

~~zulily’s~~Zulily’s SG&A expenses include personnel related costs for general corporate functions, marketing and advertising expenses and information ~~technology, and the costs associated with the use by these functions of facilities and equipment, including rent.~~technology. As a percentage of net revenue, SG&A decreased from ~~18.1%~~19.2% to ~~17.4%~~17.2% for the year ended December 31, ~~2017~~2020 as compared to the year ended December 31, 2019, primarily due to ~~a shift~~lower marketing spending and more leverage attributable to the increase in ~~marketing and advertising spend to promotional offers.~~

~~zulily’s SG&A expenses increased $11 million, and as~~sales. As a percentage of net revenue, ~~decreased~~SG&A increased from ~~19.8%~~

II-19

Table of Contents

17.2% to ~~18.1%~~19.2% for the year ended December 31, ~~2016. The SG&A expense increase was~~2019 as compared to the year ended December 31, 2018, primarily due to ~~an increase~~deleveraging personnel-related costs.

Zulily’s stock-based compensation expense remained flat for the year ended December 31, 2020 as compared to the corresponding period in ~~overall marketing spend. The decrease in expense as a percentage of net revenue was driven by top line revenue growth over a partially fixed cost base.~~

~~zulily’s~~the prior year. Zulily’s stock-based compensation expense decreased slightly for the year ended December 31, ~~2017 as~~2019, compared to the corresponding period in the prior year, ~~primarily~~ due to the ~~transfer~~departures of ~~certain~~ senior leadership ~~to QVC. zulily’s stock-based compensation expense remained flat for~~including the ~~year ended December 31, 2016, compared to the corresponding period in the prior year.~~ Chief Merchant.

~~zulily’s~~Zulily’s depreciation and amortization expense decreased ~~$43~~$24 million and ~~increased $162~~$82 million for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively, as compared to the corresponding prior years. The decrease for the year ended December 31, ~~2017 as~~2020, compared to the same period in the prior year, was primarily due to the amortization of Zulily’s customer relationship asset following a utilization pattern assuming greater benefit earlier in the customer relationship life. The decrease for the year ended December 31, 2019, compared to the same period in the prior year, was primarily attributable to ~~the decelerating amortization of~~ intangible assets recognized in purchase ~~accounting. The increase for~~accounting that were fully amortized as of the ~~year ended December 31, 2016 as compared to~~third quarter of 2018.

For discussion of the ~~prior year was primarily attributed to amortization~~impairment of intangible assets ~~as a result of purchase accounting. To a lesser extent, the increase~~ in ~~depreciation and amortization was related to additional automation equipment and leasehold improvements in its fulfillment centers.~~

~~II-25~~

~~Table of Contents~~

~~zulily’s results for the year ended December 31, 2015, including certain one-time purchase accounting related adjustments, were as follows (amounts in millions):~~

Post-Acquisition:

Pre-Acquisition:

October 1, 2015 - December 31, 2015

Deferred Revenue Adjustment

December 29, 2014 - September 30, 2015

2015 Total

Net revenue

$
426

17

918

1,361

Cost of sales

(318)

—

(660)

(978)

Operating expenses

(13)

—

(30)

(43)

SG&A expenses (excluding stock-based compensation and acquisition related expenses)

(74)

—

(195)

(269)

Adjusted OIBDA

21

17

33

71

Acquisition related expenses

—

—

(30)

(30)

Stock-based compensation

(5)

—

(14)

(19)

Depreciation and amortization

(69)

—

(14)

(83)

Deferred revenue adjustment

—

(17)

—

(17)

Operating income (loss)

$
(53)

—

(25)

(78)

~~The results of operations for the year ended December 31, 2015 include approximately $30 million in costs associated with the closing~~2019, see note 6 of the acquisition. The results of operations for the period October 1, 2015 through December 31, 2015 include approximately $63 million of depreciation and amortization as a result of purchase accounting related to new intangible assets and to a lesser extent stepped up valuation on assets existing prior to the date of the acquisition. Additionally, as a result of our application of purchase accounting, zulily’s deferred revenue was adjusted to fair value, based on a broader market margin, instead of a company specific margin. This adjustment had the one-time impact of lowering revenue and Adjusted OIBDA in the post-acquisition period.accompanying consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risk in the normal course of business due to our ongoing investing and financial activities and the conduct of operations by our subsidiaries in different foreign countries. Market risk refers to the risk of loss arising from adverse changes in stock prices, interest rates and foreign currency exchange rates. The risk of loss can be assessed from the perspective of adverse changes in fair values, cash flows and future earnings. We have established policies, procedures and internal processes governing our management of market risks and the use of financial instruments to manage our exposure to such risks.

We are exposed to changes in interest rates primarily as a result of our borrowing and investment activities, which include investments in fixed and floating rate debt instruments and borrowings used to maintain liquidity and to fund business operations. The nature and amount of our long-term and short-term debt are expected to vary as a result of future requirements, market conditions and other factors. We manage our exposure to interest rates by maintaining what we believe is an appropriate mix of fixed and variable rate debt. We believe this best protects us from interest rate risk. We have achieved this mix by (i) issuing fixed rate debt that we believe has a low stated interest rate and significant term to

~~II-26~~

~~Table of Contents~~

maturity, (ii) issuing variable rate debt with appropriate maturities and interest rates and (iii) entering into interest rate swap arrangements when we deem appropriate. As of December 31, ~~2017,~~2020, our debt is comprised of the following amounts:


	Variable rate debt				Fixed rate debt
	Principal		Weighted avg		Principal		Weighted avg
	amount		interest rate		amount		interest rate

	dollar amounts in millions
QxH and QVC International	$	—	—	%	$	4,668	4.9	%
Corporate and other	$	—	—	%	$	1,986	5.3	%

Variable rate debt

Fixed rate debt

Principal

Weighted avg

Principal

Weighted avg

amount

interest rate

amount

interest rate

dollar amounts in millions

QVC Group








QVC

$
1,496

3.0
%
$
3,719

4.6
%
HSNi

$
460

3.1
%
$
—

—
%
zulily

$
267

3.0
%
$
—

—
%
Corporate and other

$
—

—
%
$
792

8.3
%
Ventures Group

Corporate and other

$
—

—
%
$
1,947

3.0
%

We are exposed to changes in stock prices primarily as a result of our significant holdings in publicly traded securities. We continually monitor changes in stock markets, in general, and changes in the stock prices of our holdings, specifically. We believe that changes in stock prices can be expected to vary as a result of general market conditions, technological changes, specific industry changes and other factors. We periodically use equity collars and other financial instruments to manage market risk associated with certain investment positions. These instruments, when utilized, are recorded at fair value based on option pricing models.

At December 31, 2017, the fair value of our AFS securities was $2,275 million. Had the market price of such securities been 10% lower at December 31, 2017, the aggregate value of such securities would have been $228 million lower. Our investments in FTD and LendingTree are publicly traded securities and are accounted for as equity method affiliates, which are not reflected at fair value in our balance sheets. The aggregate fair value of such securities was $1,171 million at December 31, 2017 and had the market price of such securities been 10% lower at December 31, 2017, the aggregate value of such securities would have been $117 million lower. These securities are also subject to market risk that is not directly reflected in our statements of operations. At December 31, 2017, the fair value of our investment in Liberty Broadband was $3,635 million. Had the market price of such security been 10% lower at December 31, 2017, the fair value of such security would have been $364 million lower. Additionally, our exchangeable senior debentures are also subject to market risk. Because we mark these instruments to fair value each reporting date, increases in the price of the respective underlying security generally result in higher liabilities and unrealized losses in our statements of operations.

~~Liberty~~Qurate Retail is exposed to foreign exchange rate fluctuations related primarily to the monetary assets and liabilities and the financial results of QVC's foreign subsidiaries. Assets and liabilities of foreign subsidiaries for which the functional currency is the local currency are translated into U.S. dollars at period-end exchange rates, and the statements of operations are generally translated at the average exchange rate for the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S. dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded in accumulated other comprehensive earnings (loss) as a separate component of stockholders' equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses, which are reflected in income as unrealized (based on period-end translations) or realized upon settlement of the transactions. Cash flows from our operations in foreign countries are translated at the average rate for the period. Accordingly, ~~Liberty~~Qurate Retail may experience economic loss and a negative impact on earnings and equity

II-20

Table of Contents

with respect to our holdings solely as a result of foreign currency exchange rate fluctuations. QVC's reported Adjusted OIBDA for the year ended December 31, ~~2017~~2020 would have been impacted by approximately $5 million for every 1% change in foreign currency exchange rates relative to the U.S. Dollar.

We periodically assess the effectiveness of our derivative financial instruments. With regard to interest rate swaps, we monitor the fair value of interest rate swaps as well as the effective interest rate the interest rate swap yields, in comparison to historical interest rate trends. We believe that any losses incurred with regard to interest rate swaps would be largely offset by the effects of interest rate movements on the underlying debt facilities. These measures allow our management to evaluate the success of our use of derivative instruments and to determine when to enter into or exit from derivative instruments.

~~II-27~~

~~Table of Contents~~

Item 8. Financial Statements and Supplementary Data.

The consolidated financial statements of ~~Liberty~~Qurate Retail are filed under this Item, beginning on page ~~II-33.~~II-27. The financial statement schedules required by Regulation S-X are filed under Item 15 of this Annual Report on Form 10‑10‑K.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and ~~Procedures~~. Procedures.

Disclosure Controls and Procedures

In accordance with Rules 13a-15 and 15d-15 ~~under~~of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the Company carried out an evaluation, under the supervision and with the participation of management, including its chief executive officer and its principal accounting and financial officer (the “Executives”), of the effectiveness of its disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Executives concluded that the Company's disclosure controls and procedures were effective as of December 31, ~~2017~~2020 to provide reasonable assurance that information required to be disclosed in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control Over Financial Reporting

The Company acquired HSNi in December 2017. As a result of the acquisition, the Company is reviewing the internal controls of HSNi and is making appropriate changes as deemed necessary. Except for the changes in internal control at HSNi, thereThere has been no change in the ~~Company's~~Company’s internal control over financial reporting that occurred during the ~~three months~~Company’s quarter ended December 31, ~~2017~~2020, that has materially affected, or is reasonably likely to materially affect, ~~its~~the Company’s internal control over financial reporting.

Remediation Activities

See “Item 9A. Controls and Procedures - Management’s Report on Internal Control Over Financial Reporting” and “Item 9A. Controls and Procedures - Material Weakness in Internal Control” contained in the Company’s report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Form 10-K”) for disclosure of information about the material weakness that was reported as a result of the Company’s annual assessment as of December 31, 2019 and remediation plans for that material weakness.

In response to the material weakness identified in Management’s Report on Internal Control Over Financial Reporting as set forth in Part II, Item 9A in the 2019 Form 10-K, the Company developed a plan with oversight from the Audit Committee of the Board of Directors of Qurate Retail to remediate the material weakness. The remediation efforts implemented include the following:

●

Removed inappropriate IT system access at the Company’s German subsidiary;

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●

Enhanced ITGC control activities to ensure access to certain financially significant systems and data at the Company’s German subsidiary is appropriately restricted to authorized personnel; and

●

Continued enhanced ITGC risk assessment procedures around higher risk applications to identify potential risk areas that could have an impact on financial reporting

For the quarter ended December 31, 2020, the Company completed the testing and evaluation of the operating effectiveness of the controls and determined that the controls were designed and operating effectively as of December 31, 2020. Accordingly, the Company concluded the previously reported material weakness was remediated as of December 31, 2020.

Management’s Report on Internal Control Over Financial Reporting

See page ~~II-29~~II-23 for Management's Report on Internal Control Over Financial Reporting.

See page ~~II-30~~II-24 for KPMG LLP’s ~~attestation~~ report regarding the effectiveness of ~~our~~the Company’s internal control over financial reporting.

Item 9B. Other Information.

None.

~~II-28~~II-22

Table of Contents

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

~~Liberty Interactive Corporation’s (the “Company”) management~~Management of the Company is responsible for establishing and maintaining adequate internal control over the Company’s financial reporting, as such term is defined in Rule 13a-15(f) of the ~~Securities~~ Exchange ~~Act of 1934.~~Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with ~~accounting principles generally accepted in the United States of America.~~GAAP. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

The ~~Company's~~Company’s management assessed the effectiveness of internal control over financial reporting as of December 31, ~~2017,~~2020, using the criteria in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this ~~evaluation the Company's~~assessment, management ~~believes~~has concluded that, as of December 31, ~~2017, its~~2020, the Company’s internal control over financial reporting is effective.The Company's assessment of internal control over financial reporting did not include the internal controls of HSN, Inc. (“HSNi”) which the Company acquired on December 29, 2017. The amount of total assets and revenue of HSNi included in our consolidated financial statements as of and for the year ended December 31, 2017 ~~was $3.0 billion and zero,~~ ~~respectively.~~

The ~~Company's~~Company’s independent registered public accounting firm that audited the consolidated financial statements and related ~~disclosures~~notes in the Annual Report on Form 10-K has issued an audit report on the ~~effectiveness of the Company's~~Company’s internal control over financial reporting. ~~This~~Their report appears on page ~~II-30~~II-24 of this Annual Report on Form 10-K.

~~II-29~~II-23

Table of Contents

Report of Independent Registered Public Accounting Firm

~~The~~To the Stockholders and Board of Directors ~~and Stockholders~~

~~Liberty Interactive Corporation:~~Qurate Retail, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited ~~Liberty Interactive Corporation~~Qurate Retail, Inc. and ~~subsidiaries’~~subsidiaries' (the ~~“Company”)~~Company) internal control over financial reporting as of December 31, ~~2017,~~2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway ~~Commission~~.Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, ~~2017,~~2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ~~(“PCAOB”)~~(PCAOB), the consolidated balance sheets of the Company as of December 31, ~~2017~~2020 and ~~2016, and~~2019, the related consolidated statements of operations, comprehensive earnings (loss), cash flows, and equity for each of the years in the three-year period ended December 31, ~~2017,~~2020, and the related notes (collectively, the consolidated financial statements), and our report dated ~~March 1, 2018~~February 26, 2021 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired HSN, Inc. during 2017, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2017, HSN, Inc.’s internal control over financial reporting associated with total assets of $3,011 million and total revenues of zero included in the consolidated financial statements of the Company as of and for the year ended December 31, 2017. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of HSN, Inc.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

~~II-30~~

~~Table of Contents~~

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Denver, Colorado
~~March 1, 2018~~February 26, 2021

~~II-31~~II-24

Table of Contents

Report of Independent Registered Public Accounting Firm

~~The~~To the Stockholders and Board of Directors ~~and Stockholders~~
Qurate Retail, Inc.:

~~Liberty Interactive Corporation:~~

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of ~~Liberty Interactive Corporation~~Qurate Retail, Inc. and subsidiaries (the ~~“Company”)~~Company) as of December 31, ~~2017~~2020 and ~~2016,~~2019, the related consolidated statements of operations, comprehensive earnings (loss), cash flows, and equity for each of the years in the three-year period ended December 31, ~~2017,~~2020, and the related notes (collectively, the ~~“consolidated~~consolidated financial ~~statements”)~~statements). In our opinion, ~~based on our audits and the report of the other auditors,~~ the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2020 and ~~2016,~~2019, and the results of ~~their~~its operations and ~~their~~its cash flows for each of the years in the three-year period ended December 31, ~~2017,~~2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ~~(“PCAOB”)~~(PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2017,~~2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated ~~March 1, 2018~~February 26, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

~~We did not audit~~

Change in Accounting Principle

As discussed in note 8 to the consolidated financial statements, the Company has changed its method of ~~HSN, Inc., a wholly-owned subsidiary, which statements reflect certain assets constituting $786 million~~accounting for leases as of ~~December 31, 2017. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates~~January 1, 2019 due to the ~~amounts included for HSN, Inc., is based solely on the report~~adoption of ~~the other auditors.~~Accounting Standards Codification Topic 842, Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits ~~and the report of the other auditors~~ provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Sufficiency of audit evidence over revenue

As discussed in note 2 to the consolidated financial statements, and disclosed in the consolidated statements of operations, the Company had $14,177 million in revenue for the year ended December 31, 2020, of which $8,505 million related to QxH, $2,967 million related to QVC International, $1,636 million related to Zulily, and $1,069 million of corporate and other revenue. The processing of these revenue streams is reliant upon multiple information technology (IT) systems and the IT systems differ between revenue streams.

II-25

Table of Contents

We identified the evaluation of the sufficiency of audit evidence over revenue as a critical audit matter. This matter required especially subjective auditor judgment due to the number of revenue streams and the related IT systems utilized throughout the revenue recognition processes. This matter also included evaluating the nature and extent of evidence obtained over each revenue stream, which included the involvement of IT professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the processing and recording of revenue, including the IT systems tested. We evaluated the design and tested the operating effectiveness of certain internal controls related to the processing and recording of revenue. This included manual and automated controls over the IT systems used for the processing and recording of revenue. For certain revenue streams, we assessed the recorded revenue by comparing the total cash received during the year to the revenue recognized, including evaluating the relevance and reliability of the inputs to the assessment. For selected transactions, we compared the amounts recognized for consistency with underlying documentation, including evidence of contracts with customers. In addition, we involved IT professionals with specialized skills and knowledge who assisted in the design and performance of audit procedures related to certain IT systems used by the Company for the processing and recording of revenue. We evaluated the sufficiency of audit evidence obtained by assessing the results of procedures performed, including the relevance and reliability of evidence obtained.

/s/ KPMG LLP

We have served as the Company’s auditor since 1995.

Denver, Colorado
~~March 1, 2018~~February 26, 2021

~~II-32~~II-26

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, ~~2017~~2020 and ~~2016~~2019


	2020		2019

Assets	amounts in millions
Current assets:
Cash and cash equivalents	$	806	673
Trade and other receivables, net		1,640	1,854
Inventory, net		1,301	1,413
Indemnification agreement receivable		345	202
Other current assets		473	434
Total current assets		4,565	4,576

Property and equipment, at cost		2,989	2,806
Accumulated depreciation		(1,689)	(1,455)
		1,300	1,351
Intangible assets not subject to amortization (note 6):
Goodwill		6,638	6,576
Tradenames		3,168	3,168
		9,806	9,744
Intangible assets subject to amortization, net (note 6)		779	955
Other assets, at cost, net of accumulated amortization		549	679
Total assets	$	16,999	17,305

2017

2016

Assets

amounts in millions

Current assets:

Cash and cash equivalents

$
903

825

Trade and other receivables, net

1,726

1,308

Inventory, net

1,411

968

Other current assets

125

68

Total current assets

4,165

3,169

Investments in available-for-sale securities and other cost investments (note 8)

2,363

1,922

Investments in affiliates, accounted for using the equity method (note 9)

309

581

Investment in Liberty Broadband measured at fair value (note 9)

3,635

3,161

Property and equipment, at cost

2,564

2,163

Accumulated depreciation

(1,223)

(1,032)

1,341

1,131

Intangible assets not subject to amortization (note 10):

   Goodwill

7,082

6,052

   Trademarks

3,929

3,302

11,011

9,354

Intangible assets subject to amortization, net (note 10)

1,248

1,005

Other assets, at cost, net of accumulated amortization

50

32

   Total assets

$
24,122

20,355

(continued)

~~II-33~~II-27

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Consolidated Balance Sheets (Continued)

December 31, ~~2017~~2020 and ~~2016~~2019

2017

2016

amounts in millions

Liabilities and Equity

Current liabilities:

Accounts payable

$
1,151

790

Accrued liabilities

1,125

706

Current portion of debt, including $978 million and $862 million measured at fair value (note 11)

996

876

Other current liabilities

169

162

       Total current liabilities

3,441

2,534

Long-term debt, including $868 million and $805 million measured at fair value (note 11)

7,553

7,166

Deferred income tax liabilities (note 12)

2,803

3,636

Other liabilities

242

158

   Total liabilities

14,039

13,494

Equity

Stockholders' equity (note 13):

   Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued

—

—

Series A QVC Group common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 449,335,940 shares at December 31, 2017 and 429,005,932 shares at December 31, 2016

5

5

Series B QVC Group common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,203,895 shares at December 31, 2017 and 29,358,638 shares at December 31, 2016

—

—

Series A Liberty Ventures common stock, $.01 par value. Authorized 400,000,000 shares at December 31, 2017 and December 31, 2016; issued and outstanding 81,686,659 shares at December 31, 2017 and 81,150,711 shares at December 31, 2016

1

1

Series B Liberty Ventures common stock, $.01 par value. Authorized 15,000,000 shares at December 31, 2017 and December 31, 2016; issued and outstanding 4,455,311 shares at December 31, 2017 and 4,271,958 shares at December 31, 2016

—

—

   Additional paid-in capital

1,043

—

   Accumulated other comprehensive earnings (loss), net of taxes

(133)

(266)

   Retained earnings

9,068

7,032

       Total stockholders' equity

9,984

6,772

Noncontrolling interests in equity of subsidiaries

99

89

   Total equity

10,083

6,861

Commitments and contingencies (note 18)

   Total liabilities and equity

$
24,122

20,355


	2020		2019

	amounts in millions
Liabilities and Equity
Current liabilities:
Accounts payable	$	1,305	1,091
Accrued liabilities		1,418	1,173
Current portion of debt, including $1,750 million and $1,557 million measured at fair value (note 7)		1,750	1,557
Other current liabilities		231	180
Total current liabilities		4,704	4,001
Long-term debt		5,186	5,855
Deferred income tax liabilities (note 9)		1,359	1,716
Preferred stock (note 10)		1,249	—
Other liabilities		768	761
Total liabilities		13,266	12,333
Equity
Stockholders' equity (note 10):
Series A Qurate Retail common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 382,165,550 shares at December 31, 2020 and 386,691,461 shares at December 31, 2019		4	4
Series B Qurate Retail common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,366,492 shares at December 31, 2020 and 29,278,424 shares at December 31, 2019		—	—
Additional paid-in capital		—	—
Accumulated other comprehensive earnings (loss), net of taxes		72	(55)
Retained earnings		3,522	4,891
Total stockholders' equity		3,598	4,840
Noncontrolling interests in equity of subsidiaries		135	132
Total equity		3,733	4,972
Commitments and contingencies (note 15)
Total liabilities and equity	$	16,999	17,305

See accompanying notes to consolidated financial statements.

II-28

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Consolidated Statements Of Operations

Years ended December 31, 2020, 2019 and 2018


	2020		2019	2018

	amounts in millions,
	except per share amounts
Total revenue, net	$	14,177	13,458	14,070
Operating costs and expenses:
Cost of retail sales (exclusive of depreciation shown separately below)		9,291	8,899	9,209
Operating expense		867	844	970
Selling, general and administrative, including stock-based compensation and transaction related costs		1,885	1,758	1,897
Impairment of intangible assets and long lived assets		—	1,167	33
Depreciation and amortization		562	606	637
		12,605	13,274	12,746
Operating income		1,572	184	1,324
Other income (expense):
Interest expense		(408)	(374)	(381)
Share of earnings (losses) of affiliates, net		(156)	(160)	(162)
Realized and unrealized gains (losses) on financial instruments, net (note 5)		(110)	(251)	76
Gains (losses) on transactions, net		224	(1)	1
Tax sharing income (expense) with Liberty Broadband		(39)	(26)	32
Other, net		(32)	6	(7)
		(521)	(806)	(441)
Earnings (loss) from continuing operations before income taxes		1,051	(622)	883
Income tax (expense) benefit (note 9)		211	217	(60)
Earnings (loss) from continuing operations		1,262	(405)	823
Earnings (loss) from discontinued operations, net of taxes (note 4)		—	—	141
Net earnings (loss)		1,262	(405)	964
Less net earnings (loss) attributable to the noncontrolling interests		58	51	48
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	1,204	(456)	916
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders:
Qurate Retail common stock		1,204	(456)	674
Liberty Ventures common stock		—	—	242
	$	1,204	(456)	916

Basic net earnings (loss) from continuing operations attributable to Qurate Retail, Inc. shareholders per common share (note 2):
Series A and Series B Qurate Retail common stock	$	2.89	(1.08)	1.46
Series A and Series B Liberty Ventures common stock	$	NA	NA	1.17
Diluted net earnings (loss) from continuing operations attributable to Qurate Retail, Inc. shareholders per common share (note 2):
Series A and Series B Qurate Retail common stock	$	2.86	(1.08)	1.45
Series A and Series B Liberty Ventures common stock	$	NA	NA	1.16
Basic net earnings (loss) attributable to Qurate Retail, Inc. shareholders per common share (note 2):
Series A and Series B Qurate Retail common stock	$	2.89	(1.08)	1.46
Series A and Series B Liberty Ventures common stock	$	NA	NA	2.81
Diluted net earnings (loss) attributable to Qurate Retail, Inc. shareholders per common share (note 2):
Series A and Series B Qurate Retail common stock	$	2.86	(1.08)	1.45
Series A and Series B Liberty Ventures common stock	$	NA	NA	2.78

See accompanying notes to consolidated financial statements.

~~II-34~~II-29

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~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Consolidated Statements Of ~~Operations~~Comprehensive Earnings (Loss)

Years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

2017

2016

2015

amounts in millions,

except per share amounts

Total revenue, net

$
10,404

10,647

9,989

Operating costs and expenses:

Cost of retail sales (exclusive of depreciation shown separately below)

6,789

6,908

6,393

Operating expense

659

707

699

Selling, general and administrative, including stock-based compensation (note 3)

1,153

1,190

1,078

Acquisition and restructuring charges

35

—

—

Depreciation and amortization

725

874

703

9,361

9,679

8,873

Operating income

1,043

968

1,116

Other income (expense):

Interest expense

(355)

(363)

(360)

Share of earnings (losses) of affiliates, net (note 9)

(200)

(68)

(178)

Realized and unrealized gains (losses) on financial instruments, net (note 7)

618

1,175

114

Gains (losses) on transactions, net

410

9

110

Other, net

7

131

14

480

884

(300)

Earnings (loss) from continuing operations before income taxes

1,523

1,852

816

Income tax (expense) benefit (note 12)

964

(598)

(185)

Earnings (loss) from continuing operations

2,487

1,254

631

Earnings (loss) from discontinued operations, net of taxes (note 6)

—

20

280

Net earnings (loss)

2,487

1,274

911

Less net earnings (loss) attributable to the noncontrolling interests

46

39

42

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders

$
2,441

1,235

869

Net earnings (loss) attributable to Liberty Interactive Corporation shareholders:

QVC Group common stock

1,208

473

640

Liberty Ventures common stock

1,233

762

229

$
2,441

1,235

869

Basic net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation shareholders per common share (note 3):

Series A and Series B QVC Group common stock

$
2.71

0.99

1.35

Series A and Series B Liberty Ventures common stock

$
14.34

5.54

(0.36)

Diluted net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation shareholders per common share (note 3):

Series A and Series B QVC Group common stock

$
2.70

0.98

1.33

Series A and Series B Liberty Ventures common stock

$
14.17

5.49

(0.36)

Basic net earnings (loss) attributable to Liberty Interactive Corporation shareholders per common share (note 3):

Series A and Series B QVC Group common stock

$
2.71

0.99

1.35

Series A and Series B Liberty Ventures common stock

$
14.34

5.69

1.61

Diluted net earnings (loss) attributable to Liberty Interactive Corporation shareholders per common share (note 3):

Series A and Series B QVC Group common stock

$
2.70

0.98

1.33

Series A and Series B Liberty Ventures common stock

$
14.17

5.64

1.60


	2020		2019	2018

	amounts in millions
Net earnings (loss)	$	1,262	(405)	964
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		118	1	(48)
Recognition of previously unrealized losses (gains) on debt, net		(1)	(1)	16
Share of other comprehensive earnings (loss) of equity affiliates		—	—	(2)
Comprehensive earnings (loss) attributable to debt credit risk adjustments (note 7)		17	1	38
Other comprehensive earnings (loss)		134	1	4
Comprehensive earnings (loss)		1,396	(404)	968
Less comprehensive earnings (loss) attributable to the noncontrolling interests		65	52	50
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	1,331	(456)	918

See accompanying notes to consolidated financial statements.

~~II-35~~II-30

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Consolidated Statements Of ~~Comprehensive Earnings (Loss)~~Cash Flows

Years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

2017

2016

2015

amounts in millions

Net earnings (loss)

$
2,487

1,274

911

Other comprehensive earnings (loss), net of taxes:

Foreign currency translation adjustments

134

(84)

(101)

Share of other comprehensive earnings (loss) of equity affiliates

3

(5)

(4)

Other

—

4

(17)

Other comprehensive earnings (loss)

137

(85)

(122)

Comprehensive earnings (loss)

2,624

1,189

789

Less comprehensive earnings (loss) attributable to the noncontrolling interests

50

40

41

Comprehensive earnings (loss) attributable to Liberty Interactive Corporation shareholders

$
2,574

1,149

748

Comprehensive earnings (loss) attributable to Liberty Interactive Corporation shareholders:

QVC Group common stock

$
1,338

388

540

Liberty Ventures common stock

1,236

761

208

$
2,574

1,149

748


	2020		2019	2018

	amounts in millions
	(See note 3)
Cash flows from operating activities:
Net earnings (loss)	$	1,262	(405)	964
Adjustments to reconcile net earnings to net cash provided by operating activities:
(Earnings) loss from discontinued operations		—	—	(141)
Depreciation and amortization		562	606	637
Impairment of intangible assets		—	1,167	33
Stock-based compensation		64	71	88
Noncash interest expense		7	5	6
Share of (earnings) losses of affiliates, net		156	160	162
Realized and unrealized (gains) losses on financial instruments, net		110	251	(76)
(Gains) losses on transactions, net		(224)	1	(1)
(Gains) losses on extinguishment of debt		40	(1)	24
Deferred income tax expense (benefit)		(356)	(243)	(185)
Other noncash charges (credits), net		8	9	3
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		232	(18)	(75)
Decrease (increase) in inventory		133	62	(106)
Decrease (increase) in prepaid expenses and other assets		39	15	(127)
(Decrease) increase in trade accounts payable		185	(122)	56
(Decrease) increase in accrued and other liabilities		237	(274)	11
Net cash provided (used) by operating activities		2,455	1,284	1,273
Cash flows from investing activities:
Cash proceeds from dispositions of investments		271	—	562
Investment in and loans to cost and equity investees		(119)	(141)	(100)
Capital expenditures		(257)	(325)	(275)
Expenditures for television distribution rights		(56)	(134)	(140)
Net cash provided (used) by investing activities		(161)	(600)	47
Cash flows from financing activities:
Borrowings of debt		1,300	3,161	4,221
Repayments of debt		(2,079)	(3,274)	(4,395)
Repurchases of Qurate Retail common stock		(70)	(392)	(988)
GCI Liberty Split-Off		—	—	(475)
Withholding taxes on net share settlements of stock-based compensation		(7)	(7)	(29)
Indemnification payment from GCI Liberty, Inc.		—	—	133
Dividends paid to noncontrolling interest		(62)	(40)	(40)
Dividends paid to common and preferred shareholders		(1,251)	—	—
Other financing activities, net		(12)	(109)	(1)
Net cash provided (used) by financing activities		(2,181)	(661)	(1,574)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		20	(2)	2
Net increase (decrease) in cash, cash equivalents and restricted cash		133	21	(252)
Cash, cash equivalents and restricted cash at beginning of period		681	660	912
Cash, cash equivalents and restricted cash at end of period	$	814	681	660

See accompanying notes to consolidated financial statements.

~~II-36~~II-31

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Consolidated Statements Of ~~Cash Flows~~Equity

Years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

2017

2016

2015

amounts in millions

(See note 4)

Cash flows from operating activities:






Net earnings (loss)

$
2,487

1,274

911

Adjustments to reconcile net earnings to net cash provided by operating activities:

(Earnings) loss from discontinued operations

—

(20)

(280)

Depreciation and amortization

725

874

703

Stock-based compensation

123

97

127

Cash payments for stock-based compensation

—

(92)

(16)

Noncash interest expense

—

12

5

Share of (earnings) losses of affiliates, net

200

68

178

Cash receipts from returns on equity investments

29

31

32

Realized and unrealized (gains) losses on financial instruments, net

(618)

(1,175)

(114)

(Gains) losses on transactions, net

(410)

(9)

(110)

(Gains) losses on extinguishment of debt

—

6

21

Deferred income tax expense (benefit)

(1,136)

473

(103)

Other noncash charges (credits), net

10

(115)

(11)

Changes in operating assets and liabilities

Current and other assets

(143)

136

(237)

Payables and other liabilities

225

(117)

(44)

Net cash provided (used) by operating activities

1,492

1,443

1,062

Cash flows from investing activities:

Cash (paid) for acquisitions, net of cash acquired

22

—

(844)

Cash proceeds from dispositions of investments

3

353

271

Investment in and loans to cost and equity investees

(159)

(86)

(120)

Cash receipts from returns of equity investments

—

—

250

Capital expended for property and equipment

(204)

(233)

(258)

Purchases of short term investments and other marketable securities

—

(264)

(1,370)

Sales of short term investments and other marketable securities

—

1,174

1,359

Investment in Liberty Broadband

—

(2,400)

—

Other investing activities, net

(53)

(36)

(76)

Net cash provided (used) by investing activities

(391)

(1,492)

(788)

Cash flows from financing activities:

Borrowings of debt

2,469

3,427

4,558

Repayments of debt

(2,631)

(4,498)

(3,811)

Repurchases of QVC Group common stock

(765)

(799)

(785)

Withholding taxes on net share settlements of stock-based compensation

(70)

(16)

(30)

Distribution from Liberty Expedia Holdings

—

299

—

Other financing activities, net

(39)

15

(54)

Net cash provided (used) by financing activities

(1,036)

(1,572)

(122)

Effect of foreign currency exchange rates on cash

13

(20)

(3)

Net cash provided (used) by discontinued operations:

Cash provided (used) by operating activities

—

17

17

Cash provided (used) by investing activities

—

—

(23)

Cash provided (used) by financing activities

—

—

—

Change in available cash held by discontinued operations

—

—

—

Net cash provided (used) by discontinued operations

—

17

(6)

Net increase (decrease) in cash and cash equivalents

78

(1,624)

143

Cash and cash equivalents at beginning of period

825

2,449

2,306

Cash and cash equivalents at end of period

$
903

825

2,449


	Stockholders' Equity
							Accumulated
		QVC		Liberty			other		Noncontrolling
		Group		Ventures		Additional	comprehensive		interest in
						paid-in	earnings (loss),	Retained	equity of	Total
		Series A	Series B	Series A	Series B	capital	net of taxes	Earnings	subsidiaries	equity

	amounts in millions
Balance at January 1, 2018	$	5	—	1	—	1,043	(133)	9,068	99	10,083
Net earnings (loss)		—	—	—	—	—	—	916	48	964
Other comprehensive earnings (loss)		—	—	—	—	—	2	—	2	4
Stock-based compensation		—	—	—	—	88	—	—	—	88
Series A Qurate Retail stock repurchases		(1)	—	—	—	(987)	—	—	—	(988)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	(40)	(40)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	(29)	—	—	—	(29)
Cumulative effect of accounting change (note 2)		—	—	—	—	—	76	(70)	—	6
Reattribution of the Ventures Group to Qurate Retail		—	—	(1)	—	1	—	—	—	—
GCI Liberty Split-Off		—	—	—	—	(4,358)	—	—	11	(4,347)
Other		—	—	—	—	3	—	—	—	3
Reclassification		—	—	—	—	4,239	—	(4,239)	—	—
Balance at December 31, 2018	$	4	—	—	—	—	(55)	5,675	120	5,744
Net earnings (loss)		—	—	—	—	—	—	(456)	51	(405)
Other comprehensive earnings (loss)		—	—	—	—	—	—	—	1	1
Stock-based compensation		—	—	—	—	71	—	—	—	71
Series A Qurate Retail stock repurchases		—	—	—	—	(392)	—	—	—	(392)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	(40)	(40)
Other		—	—	—	—	(7)	—	—	—	(7)
Reclassification		—	—	—	—	328	—	(328)	—	—
Balance at December 31, 2019	$	4	—	—	—	—	(55)	4,891	132	4,972
Net earnings (loss)		—	—	—	—	—	—	1,204	58	1,262
Other comprehensive earnings (loss)		—	—	—	—	—	127	—	7	134
Stock-based compensation		—	—	—	—	59	—	—	—	59
Series A Qurate Retail stock repurchases		—	—	—	—	(70)	—	—	—	(70)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	(62)	(62)
Distribution of dividends to common and preferred shareholders		—	—	—	—	—	—	(2,541)	—	(2,541)
Other		—	—	—	—	(21)	—	—	—	(21)
Reclassification		—	—	—	—	32	—	(32)	—	—
Balance at December 31, 2020	$	4	—	—	—	—	72	3,522	135	3,733

See accompanying notes to consolidated financial statements.

~~II-37~~II-32

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

~~Consolidated Statements Of Equity~~

~~Years ended December 31, 2017, 2016 and 2015~~

Stockholders' Equity

Accumulated

QVC

Liberty

other

Noncontrolling

Group

Ventures

Additional

comprehensive

interest in

Preferred

paid-in

earnings (loss),

Retained

equity of

Total

Stock

Series A

Series B

Series A

Series B

capital

net of taxes

Earnings

subsidiaries

equity

amounts in millions

Balance at January 1, 2015

$
—

5

—

1

—

4

(94)

5,757

107

5,780

Net earnings

—

—

—

—

—

—

—

869

42

911

Other comprehensive earnings (loss)

—

—

—

—

—

—

(121)

—

(1)

(122)

Stock-based compensation

—

—

—

—

—

70

—

—

—

70

Minimum withholding taxes on net share settlements of stock-based compensation

—

—

—

—

—

(30)

—

—

—

(30)

Excess tax benefits on stock-based compensation

—

—

—

—

—

16

—

—

—

16

Stock issued upon exercise of stock options

—

—

—

—

—

40

—

—

—

40

Series A QVC Group stock repurchases

—

—

—

—

—

(785)

—

—

—

(785)

Distribution to noncontrolling interest

—

—

—

—

—

—

—

—

(58)

(58)

Acquisition of zulily

—

—

—

—

—

1,087

—

—

—

1,087

Acquisition of noncontrolling interest

—

—

—

—

—

(31)

—

—

(2)

(33)

Other

—

—

—

—

—

(1)

—

—

—

(1)

Balance at December 31, 2015

$
—

5

—

1

—

370

(215)

6,626

88

6,875

Net earnings

—

—

—

—

—

—

—

1,235

39

1,274

Other comprehensive earnings (loss)

—

—

—

—

—

—

(86)

—

1

(85)

Cumulative effect of accounting change

—

—

—

—

—

—

—

5

—

5

Stock-based compensation

—

—

—

—

—

89

—

—

—

89

Withholding taxes on net share settlements of stock-based compensation

—

—

—

—

—

(16)

—

—

—

(16)

Stock issued upon exercise of stock options

—

—

—

—

—

24

—

—

—

24

Series A QVC Group stock repurchases

—

—

—

—

—

(799)

—

—

—

(799)

Distribution to noncontrolling interest

—

—

—

—

—

—

—

—

(39)

(39)

Distribution of Liberty Expedia Holdings

—

—

—

—

—

—

35

(493)

—

(458)

Reclassification

—

—

—

—

—

341

—

(341)

—

—

Other

—

—

—

—

—

(9)

—

—

—

(9)

Balance at December 31, 2016

$
—

5

—

1

—

—

(266)

7,032

89

6,861

Net earnings

—

—

—

—

—

—

—

2,441

46

2,487

Other comprehensive earnings (loss)

—

—

—

—

—

—

133

—

4

137

Stock-based compensation

—

—

—

—

—

123

—

—

—

123

Series A QVC Group stock repurchases

—

—

—

—

—

(765)

—

—

—

(765)

Distribution to noncontrolling interest

—

—

—

—

—

—

—

—

(40)

(40)

Stock issued upon exercise of stock options

—

—

—

—

—

5

—

—

—

5

Withholding taxes on net share settlements of stock-based compensation

—

—

—

—

—

(70)

—

—

—

(70)

Issuance of Series A QVC Group stock in connection HSNi acquisition (note 5)

—

—

—

—

—

1,343

—

—

��—

1,343

Reclassification

—

—

—

—

—

405

—

(405)

—

—

Other

—

—

—

—

—

2

—

—

—

2

Balance at December 31, 2017

$
—

5

—

1

—

1,043

(133)

9,068

99

10,083

~~See accompanying notes to consolidated financial statements.~~

~~II-38~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

Notes to Consolidated Financial Statements

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

(1) Basis of Presentation

The accompanying consolidated financial statements include the accounts of Qurate Retail, Inc. (formerly named Liberty Interactive Corporation ~~(formerly known as Liberty Media Corporation)~~prior to the Transactions (defined and described below), or “Liberty”) and its controlled subsidiaries (collectively, ~~"Liberty,~~"Qurate Retail," the "Company," “we,” “us,” and “our”) unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation.

~~Liberty,~~Qurate Retail, through its ownership of interests in subsidiaries and other companies, is primarily engaged in the video and online commerce industries in North America, Europe and Asia.

~~On October 1, 2015,~~Prior to the Transactions, the Company utilized tracking stocks in its capital structure. A tracking stock is a type of common stock that the issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance of the company as a whole. Qurate Retail had 2 tracking stocks—QVC Group common stock and Liberty ~~acquired all~~Ventures common stock, which were intended to track and reflect the ~~outstanding shares~~economic performance of ~~zulily, inc. (“zulily”) (now known as zulily, llc). zulily is an online retailer offering customers a fun~~the businesses, assets and ~~entertaining shopping experience with a fresh selection of new product styles launched every day. zulily is~~liabilities attributed to the QVC ~~Group. See note 5 for additional information related~~Group and the Ventures Group, respectively. The QVC Group was comprised of the Company’s wholly-owned subsidiaries QVC, Inc., Zulily, LLC (“Zulily”), HSN, Inc. (“HSN”) and Cornerstone Brands, Inc. (“Cornerstone”), among other assets and liabilities. The Ventures Group was comprised of businesses not included in the QVC Group including Evite, Inc. (“Evite”) and our interests in Liberty Broadband Corporation (“Liberty Broadband”), LendingTree, Inc. (“LendingTree”), investments in Charter Communications, Inc. (“Charter”) and ILG, Inc. (“ILG”), among other assets and liabilities. The Company’s results are attributed to the ~~acquisition.~~QVC Group and the Ventures Group through March 9, 2018.

On ~~July 22, 2016, Liberty~~March 9, 2018, Qurate Retail completed the ~~spin-off (the “CommerceHub Spin-Off”~~transactions contemplated by the Agreement and Plan of Reorganization (as amended, the “Reorganization Agreement,” and the transactions contemplated thereby, the “Transactions”) among General Communication, Inc. (“GCI”), an Alaska corporation, and Liberty Interactive LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Qurate Retail (“LI LLC”). Pursuant to the Reorganization Agreement, GCI amended and restated its articles of incorporation (which resulted in GCI being renamed GCI Liberty, Inc. (“GCI Liberty”)) and effected a reclassification and auto conversion of its ~~former wholly-owned subsidiary CommerceHub, Inc. (“CommerceHub”).~~common stock. After market close on March 8, 2018, Qurate Retail’s board of directors approved the reattribution of certain assets and liabilities from Qurate Retail’s Ventures Group to its QVC Group, which was effective immediately. The ~~CommerceHub Spin-Off was accomplished by~~reattributed assets and liabilities included cash, Qurate Retail’s interest in ILG, certain green energy investments, LI LLC’s exchangeable debentures, and certain tax benefits.

Following these events, Qurate Retail acquired GCI Liberty through a reorganization in which certain Qurate Retail interests, assets and liabilities attributed to the ~~distribution by~~Ventures Group were contributed (the “contribution”) to GCI Liberty in exchange for a controlling interest in GCI Liberty. Qurate Retail and LI LLC contributed to GCI Liberty their entire equity interest in Liberty Broadband, Charter, and LendingTree, the Evite operating business and other assets and liabilities attributed to Qurate Retail’s Venture Group (following the reattribution), in exchange for (a) the issuance to LI LLC of a ~~dividend~~number of ~~(i) 0.1~~shares of GCI Liberty Class A Common Stock and a ~~share~~number of ~~CommerceHub’s Series A common stock for each~~shares of GCI Liberty Class B Common Stock equal to the number of outstanding ~~share~~shares of ~~Liberty’s~~ Series A Liberty Ventures common stock as of 5:00 p.m., New York City time, on July 8, 2016 (such date and time, the “Record Date”), (ii) 0.1 of a share of CommerceHub’s Series B common stock for each outstanding share of Liberty’s Series B Liberty Ventures common stock as of the Record Date and (iii) 0.2 of a share of CommerceHub’s Series C common stock for each outstanding share of Series A and Series B Liberty Ventures common stock ason March 9, 2018, respectively, (b) cash and (c) the assumption of certain liabilities by GCI Liberty. The following is a reconciliation of the ~~Record Date,~~assets and liabilities that were derecognized by the Company (in millions) at the date of the GCI Liberty Split-Off (as defined below):

II-33

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018


Investment in Liberty Broadband	$	3,822
Investment in Charter		1,866
Corporate Cash		475
Margin Loan		(996)
Deferred Income Tax Liabilities		(550)
Other, net		(270)
	$	4,347

Following the contribution, Qurate Retail effected a tax-free separation of its controlling interest in the combined company (the “GCI Liberty Split-Off”), GCI Liberty, to the holders of Liberty Ventures common stock in full redemption of all outstanding shares of such stock, in which each ~~case,~~outstanding share of Series A Liberty Ventures common stock was redeemed for 1 share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for 1 share of GCI Liberty Class B common stock. Simultaneous with ~~cash paid in lieu~~the closing of ~~fractional shares.~~the Transactions, QVC Group common stock became the only outstanding common stock of Qurate Retail, and thus QVC Group common stock ceased to function as a tracking stock. On April 9, 2018, Liberty Interactive Corporation was renamed Qurate Retail, Inc. On May 23, 2018, Qurate Retail amended its charter to eliminate the tracking stock capitalization structure and reclassify each share of QVC Group common stock into 1 share of the corresponding series of new common stock of Qurate Retail. Throughout this annual report, we refer to our Series A and Series B common stock as “Qurate Retail common stock” and “QVC Group common stock.” In ~~September 2016,~~July 2018, the ~~IRS~~Internal Revenue Service (“IRS”) completed its review of the ~~CommerceHub Spin-Off~~GCI Liberty Split-Off and informed ~~Liberty~~Qurate Retail that it agreed with the nontaxable characterization of the transaction. Liberty received an Issue Resolution Agreement from the Internal Revenue Service (“IRS”) documenting this conclusion. CommerceHub is included in Liberty’s Corporate and other segment through July 22, 2016 and is not presented as a discontinued operation as the CommerceHub Spin-Off did not represent a strategic shift that had a major effect on Liberty’s operations and financial results.

On November 4, 2016, Liberty completed the split-off (the “Expedia Holdings Split-Off”) of its former wholly-owned subsidiary Liberty Expedia Holdings, Inc. (“Expedia Holdings”). At the time of the Expedia Holdings Split-Off, Expedia Holdings was comprised of, among other things, Liberty’s former interest in Expedia, Inc. (“Expedia”) and Liberty’s former wholly-owned subsidiary Bodybuilding. On November 2, 2016, Expedia Holdings borrowed $350 million under a new margin loan and distributed $299 million, net of certain debt related costs, to Liberty on November 4, 2016. The Expedia Holdings Split-Off was accomplished by the redemption of (i) 0.4 of each outstanding share of Liberty’s Series A Liberty Ventures common stock for 0.4 of a share of Expedia Holdings Series A common stock at 5:00 p.m., New York City time, on November 4, 2016 (such date and time, the “Redemption Date”) and (ii) 0.4 of each outstanding share of Liberty’s Series B Liberty Ventures common stock for 0.4 of a share of Expedia Holdings Series B common stock on the Redemption Date, in each case, with cash paid in lieu of any fractional shares of Liberty Ventures common stock or Expedia Holdings common stock (after taking into account all of the shares owned of record by each holder thereof, as applicable). In February 2017, the IRS completed its review of the Expedia Holdings Split-Off and informed Liberty that it agreed with the nontaxable characterization of the transaction. Libertytransactions. Qurate Retail received an Issue Resolution Agreement from the IRS documenting this conclusion.

~~Liberty viewed Expedia~~On October 17, 2018, Qurate Retail announced a series of initiatives designed to better position its HSN and Bodybuilding as separate components and evaluated them separately for discontinued operations presentation. Based on a quantitative analysis, the split-off of Liberty’s interest in Expedia represented a strategic shift that had a major effect on Liberty’s operations, primarily due to one-time gains on transactions recognized by Expedia in 2015. Accordingly, the consolidated financial statements of Liberty have been prepared to reflect Liberty’s interest in Expedia as a discontinued operation. The disposition of Bodybuilding asQVC U.S. businesses (“QRG Initiatives”). As part of the ~~Expedia Holdings Split-Off~~

~~II-39~~

~~Table~~QRG Initiatives, QVC will close its fulfillment centers in Lancaster, Pennsylvania and Roanoke, Virginia and leased a new fulfillment center in Bethlehem, Pennsylvania, that commenced in 2019 (see note 8). Qurate Retail recorded transaction related costs of ~~Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

$41 million during the year ended December 31, ~~2017, 2016 and 2015~~

~~does not have a major effect on Liberty’s historical results nor is it expected~~2018 related to ~~have a major effect on Liberty’s future operations. The disposition of Bodybuilding did not represent a strategic shift in Liberty’s operations. Accordingly, Bodybuilding is not presented~~the QRG Initiatives, which primarily related to severance costs. Also, as a ~~discontinued operation~~result of changes in internal reporting from the ~~consolidated financial statements~~QRG Initiatives, during the first quarter of ~~Liberty. Bodybuilding is included in~~2019 the ~~Corporate~~Company changed its reportable segments to combine HSN and ~~other~~QVC U.S. into one reportable segment ~~through November 4, 2016.~~called “QxH.”

~~Pursuant to a reimbursement agreement entered into in connection with the Expedia Holdings Split-Off,~~Qurate Retail and GCI Liberty ~~reimbursed Expedia,~~(for accounting purposes a related party ~~prior~~of Qurate Retail) entered into a tax sharing agreement. Pursuant to that 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 ~~Expedia Holdings~~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 ~~$4 million during October 2016, thereby settling~~as a result of the ~~reimbursement~~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-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 and GCI Liberty, Liberty Broadband has assumed the tax sharing agreement.

~~Liberty~~Qurate Retail and Liberty Media Corporation (“LMC”) (for accounting purposes a related party of ~~Liberty)~~Qurate Retail) entered into certain agreements in order to govern certain of the ongoing relationships between the two companies. These

II-34

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

agreement (the “Tax Sharing Agreement”). The Tax Sharing Agreement provides for the allocation and indemnification of tax liabilities and benefits between ~~Liberty~~Qurate Retail and LMC and other agreements related to tax matters. ~~Liberty~~Qurate Retail is party to on-going discussions with the IRS under the Compliance Assurance Process audit program. The IRS may propose adjustments that relate to tax attributes allocated to and income allocable to LMC. Any potential outcome associated with any proposed adjustments would be covered by the Tax Sharing Agreement and are not expected to have any impact on ~~Liberty's~~Qurate Retail's financial position. Pursuant to the Services Agreement, LMC ~~will provide Liberty~~provides Qurate Retail with general and administrative services including legal, tax, accounting, treasury and investor relations support. ~~Liberty will reimburse~~See below for a description of an amendment to the Services Agreement entered into in December 2019. Qurate Retail reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for ~~Liberty's~~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 ~~Liberty.~~Qurate Retail. Under the Facilities Sharing Agreement, ~~Liberty will share~~Qurate Retail shares office space with LMC and related amenities at LMC's corporate headquarters. Under these various agreements approximately ~~$11~~$9 million, ~~$10~~$8 million and ~~$13~~$8 million of these allocated expenses were ~~reimbursed~~reimbursable from ~~Liberty~~Qurate Retail to LMC for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively. Qurate Retail had a tax sharing payable with LMC and Liberty Broadband of approximately $129 million and $95 million as of December 31, 2020 and 2019, respectively, included in Other liabilities in the consolidated balance sheets.

~~(2) Tracking Stocks~~

~~Tracking stocks are~~In December 2019, the Company entered into an amendment to the Services Agreement in connection with LMC’s entry into a ~~type of common stock that~~new employment arrangement with Gregory B. Maffei, the ~~issuing company intends to reflect or "track" the economic performance of a particular business or "group," rather than the economic performance~~Company’s Chairman of the ~~company as a whole. Liberty has two tracking stocks—QVC Group common stock and Liberty Ventures common stock, which are intended~~Board (the “Chairman”). Under the amended Services Agreement, components of his compensation would either be paid directly to track and reflect the economic performance of Liberty’s QVC Group and Ventures Group, respectively. While the QVC Group and the Ventures Group have separate collections of businesses, assets and liabilities attributed to them, no group is a separate legal entity and therefore cannot own assets, issue securities or enter into legally binding agreements. Holders of tracking stock have no direct claim to the group's stock or assets and are not representedhim by ~~separate boards of directors. Instead, holders of tracking stock are stockholders~~each of the ~~parent corporation, with a single board of directors and subject to all of the risks and liabilities of the parent corporation.~~

~~The term "Ventures Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities that have been attributed to that group.~~ ~~The Ventures Group consists of our businesses not included in the QVC Group including Evite,~~Company, Liberty TripAdvisor Holdings, Inc. (“~~Evite”~~Liberty TripAdvisor”), GCI Liberty, Inc. (“GCI Liberty”), and ~~our~~ ~~interests in~~ Liberty Broadband Corporation (“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 19% for the Company but subject to adjustment on an annual basis upon the occurrence of certain events. The amended Services Agreement provides for a five year employment term which began on January 1, 2020 and ends December 31, 2024, with an aggregate annual base salary of $3 million (with no contracted increase), ~~LendingTree, Inc.~~an aggregate one-time cash commitment bonus of $5 million (paid in December 2019), an aggregate annual target cash performance bonus of $17 million, aggregate annual equity awards of $17.5 million and aggregate equity awards granted in connection with his entry into his new agreement of $90 million (the “upfront awards”). A portion of the grants made to our Chairman in the year ended December 31, 2020 related to our Company’s allocable portion of these upfront awards.

In December 2019, a new coronavirus (“~~LendingTree”~~COVID-19”)~~, FTD Companies, Inc. (“FTD”), investments~~ was reported to have surfaced in ~~Charter Communications, Inc. (“Charter Communications, Inc.”~~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 the virus, 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 the COVID-19 pandemic 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.

On April 4, 2017, Liberty entered into an Agreement and Plan of Reorganization (as amended, the “GCI Reorganization Agreement” and the transactions contemplated thereby, the “Transactions”) with General

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Communication, Inc. (“GCI”), an Alaska corporation, and Liberty Interactive LLC, a Delaware limited liability company and a direct wholly-owned subsidiary of Liberty (“LI LLC”), whereby Liberty will acquire GCI through a reorganization in which certain Ventures Group assets and liabilities will be contributed to GCI Liberty (as defined below) in exchange for a controlling interest in GCI Liberty. Liberty and LI LLC will contribute to GCI Liberty its entire equity interest in Liberty Broadband and Charter, along with, subject to certain exceptions, Liberty’s entire equity interests in LendingTree, together with the Evite operating business and certain other assets and liabilities, in exchange for (i) the issuance to LI LLC of a number of(ii) 0.03 shares of new GCI Liberty Class A Common Stock and a number of shares of new GCI Liberty Class B Common Stock equal to the number of outstanding shares of Series A Liberty Ventures common stock and Series B Liberty Ventures common stock outstanding on the closing date of the Contribution, respectively, (ii) cash and (iii) the assumption of certain liabilities by GCI Liberty (the “Contribution”).

~~Liberty will then effect a tax-free separation of its controlling interest in the combined company (which has since been renamed~~ GCI Liberty, Inc. (“GCI Liberty”)) to the holders of Liberty Ventures common stock, distributing one share of the corresponding class of new GCI Liberty common stock for each share of Liberty Ventures common stock held, in full redemption of all outstanding shares of such stock, leaving QVC Group common stock as the only outstanding common stock of Liberty. On the business day prior to the Contribution, holders of reclassified GCI Class A Common Stock and reclassified GCI Class B Common Stock each will receive (i) 0.63 of a share of new GCI Liberty Class A Common Stock and (ii) 0.20 of a share of new GCI Libertynewly issued 8.0% Series A Cumulative Redeemable Preferred Stock, ~~(the “GCI Liberty preferred stock”) in exchange for each share of their reclassified GCI stock. The exchange ratios were determined based on total consideration of $32.50~~par value $0.01 per share for existing GCI common stock, comprised of $27.50 per share in new GCI Liberty Class A Common Stock and $5.00 per share in newly issued GCI Liberty preferred stock, and a Liberty Ventures reference price of $43.65 (with no additional premium paid for shares of reclassified GCI Class B Common Stock). The GCI Liberty Series A preferred stock will accrue dividends at an initial rate of 5% per annum (which would increase to 7% in connection with a future reincorporation of GCI Liberty in Delaware) and will be redeemable upon the 21st anniversary of the closing of the Transactions.

~~At the closing of the Transactions, Liberty will reattribute certain assets and liabilities from the Ventures Group to the QVC Group~~ (the “Reattribution”). The reattributed assets and liabilities are expected to include cash, Liberty’s interest in ILG, FTD, certain green energy investments, LI LLC’s exchangeable debentures, and certain tax benefits. Pursuant to a recent amendment to the GCI Reorganization Agreement, LI LLC’s 1.75% Exchangeable Debentures due 2046 (the “1.75% Exchangeable Debentures”) will not be subject to a pre-closing exchange offer and will instead be reattributed to the QVC Group, along with (i) an amount of cash equal to the net present value of the adjusted principal amount of such 1.75% Exchangeable Debentures (determined as if paid on October 5, 2023) and stated interest payments on the 1.75% Exchangeable Debentures to October 5, 2023 and (ii) an indemnity obligation from GCI Liberty with respect to any payments made by LI LLC in excess of stated principal and interest to any holder that exercises its exchange right under the terms of the debentures through October 5, 2023. The cash reattributed to the QVC Group will be funded by available cash attributed to Liberty’s Ventures Group and the proceeds of a margin loan facility attributed to the Ventures Group in an initial principal amount of $1 billion. Within six months of the closing, Liberty, LI LLC and GCI Liberty will cooperate with, and reasonably assist each other with respect to, the commencement and consummation of a purchase offer (the “Purchase Offer”) whereby LI LLC will offer to purchase, either pursuant to privately negotiated transactions or a tender offer, the 1.75% Exchangeable Debentures on terms and conditions (including maximum offer price) reasonably acceptable to GCI Liberty. GCI Liberty will indemnify LI LLC for each 1.75% Exchangeable Debenture repurchased by LI LLC in the Purchase Offer in an amount equal to the difference between (x) the purchase price paid by LI LLC to acquire such 1.75% Exchangeable Debenture in the Purchase Offer and (y) the sum of the amount of cash reattributed with respect to such purchased 1.75% Exchangeable Debenture in the Reattribution plus the amount of certain tax benefits attributable to such 1.75% Exchangeable Debenture so purchased. GCI Liberty’s indemnity obligation with respect to payments made upon a holder’s exercise of its exchange right will be eliminated as to any 1.75% Exchangeable Debentures purchased in the Purchase Offer.

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~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

~~On December 29, 2017, Broadband Holdco, LLC, a wholly owned subsidiary~~“Preferred Stock”), having an initial liquidation price of $100 per share of Preferred Stock, with cash paid in lieu of fractional shares. The distribution ratio for the Preferred Stock portion of the ~~Company, entered into a margin loan agreement with~~Special Dividend was equivalent to $3.00 in initial liquidation preference per common share, for an ~~availability~~aggregate issuance of $1approximately $1.3 billion ~~with various lender parties. Approximately 42.7 million shares~~aggregate liquidation preference. The dividend was distributed on September 14, 2020 to holders of ~~Liberty Broadband series C~~record of Qurate Retail’s Series A and Series B common ~~stock held by~~stock. Holders of the ~~Company with a value of $3.6 billion were pledged by Broadband Holdco, LLC as collateral~~Preferred Stock are entitled to ~~the loan as of December 31, 2017. This margin loan has a term of two years and bears interest~~receive quarterly cash dividends at a fixed rate of ~~LIBOR plus 1.85%~~8.0% per year on a cumulative basis, beginning December 15, 2020 and ~~contains~~thereafter on each of March 15, June 15, September 15 and December 15 during the term. The Preferred Stock is non-voting, except in limited circumstances as required by law, and subject to a mandatory redemption on March 15, 2031.

On November 20, 2020, Qurate Retail announced that an ~~undrawn commitment fee of 0.75% per annum. As of December 31, 2017 there were no outstanding borrowings on the margin loan.~~

~~Liberty will complete the Reattribution using similar valuation methodologies to those used in connection with its previous reattributions, including taking into account the advice~~authorized committee of its ~~financial advisor. The Transactions are expected to be consummated~~ ~~on March 9, 2018, subject to the satisfaction~~Board of ~~customary closing conditions. Simultaneous with that closing, QVC Group common stock will become the only outstanding common stock of Liberty, and thus QVC Group common stock will cease to function as~~Directors declared a ~~tracking stock and will effectively become regular common stock, and Liberty will be renamed Qurate Retail Group, Inc., with QVC, HSNi and zulily as wholly-owned subsidiaries.~~

The term "QVC Group" does not represent a separate legal entity, rather it represents those businesses, assets and liabilities that have been attributed to that group. The QVC Group is primarily comprised of our merchandise-focused televised-shopping programs, Internet and mobile application businesses. The QVC Group has attributed to it the remainder of our businesses and assets not attributed to the Ventures Group, including our wholly-owned subsidiaries QVC and zulily (as of October 1, 2015) and HSN, Inc. (“HSNi”special cash dividend (the “December Special Dividend”) ~~(as of December 29, 2017) as well as cash~~ in the amount of $1.50 per common share, for an aggregate dividend of approximately ~~$330~~$625 million, ~~(at~~payable in cash on December ~~31, 2017), including subsidiary cash.~~

~~On May 18, 2016, Liberty completed a $2.4 billion investment in Liberty Broadband (for accounting purposes a related party~~7, 2020 to stockholders of record of the ~~Company) in connection with the merger of Charter~~Company’s Series A and Time Warner Cable Inc. ("TWC"). The proceeds of this investment were used by Liberty Broadband to fund, in part, its acquisition of $5 billion of stock in the new public parent company (“Charter”) of the combined enterprises. Liberty, along with third party investors, all of whom invested on the same terms as Liberty, purchased newly issued shares of Liberty Broadband Series CB common stock at the close of business on November 30, 2020.

During the year ended December 31, 2020, the Company recognized a ~~per share price of $56.23, which was determined based upon the fair value of Liberty Broadband's net assets on~~gain as a sum-of-the-parts basis at the time the investment agreements were executed (May 2015). Liberty's investment in Liberty Broadband was funded using cash on hand and is attributed to the Ventures Group. See note 9 for additional information related to this investment.

~~Liberty, as part~~result of the ~~merger~~sale of ~~Charter~~one of its alternative energy investments. The Company received total cash consideration of $272 million and ~~TWC described above, exchanged, in~~recorded a ~~tax-free transaction, its shares~~gain of ~~TWC common stock for shares of Charter Class A common stock,~~$224 million on ~~a one-for-one basis, and Liberty has granted to Liberty Broadband a proxy and a right of first refusal with respect to~~ the ~~shares of Charter Class A common stock held by Liberty in the exchange.~~ sale.

~~See Exhibit 99.1 to this Annual Report on Form 10-K for unaudited attributed financial information for Liberty's tracking stock groups.~~

~~(3)~~(2) Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash equivalents consist of investments which are readily convertible into cash and have maturities of three months or less at the time of acquisition.

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Receivables

Receivables are reflected net of an allowance for doubtful accounts and sales returns. A provision for bad debts is provided as a percentage of accounts receivable based on historical experience in the period of sale and included in selling, general and administrative expense. A provision for vendor receivables are determined based on an estimate of probable expected losses and included in cost of retail sales.

A summary of activity in the allowance for doubtful accounts is as follows:


	Balance		Additions			Balance
	beginning		Charged		Deductions-	end of
	of year		to expense	Other	write-offs	year

	amounts in millions
2020	$	129	92	—	(89)	132
2019	$	117	130	4	(122)	129
2018	$	92	123	3	(101)	117

Balance

Additions

Balance

beginning

Charged

Deductions-

end of

of year

to expense

Other

write-offs

year

amounts in millions

2017

$
99

73

(1)


(79)


92

2016

$
87

109

(1)


(96)


99

2015

$
92

84

(1)


(88)


87

Inventory

Inventory, consisting primarily of products held for sale, is stated at the lower of cost or market. Cost is determined by the average cost method, which approximates the first-in, first-out method. Assessments about the realizability of inventory require the Company to make judgments based on currently available information about the likely

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

method of disposition including sales to individual customers, returns to product vendors, liquidations and the estimated recoverable values of each disposition category. Inventory is stated net of inventory obsolescence reserves of ~~$93~~$181 million and ~~$76~~$152 million for the years ended December 31, ~~2017~~2020 and ~~2016,~~2019, respectively.

In July 2015, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance that changes the measurement principle for inventory from the lower of cost or market to lower of cost and net realizable value. The new principle is part of the FASB’s simplification initiative and applies to entities that measure inventory using a method other than last-in, first-out or the retail inventory method. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016. The Company has determined there is no significant effect of the standard on its ongoing financial reporting.

Investments

All marketable equity and debt securities held by the Company are ~~classified as available-for-sale ("AFS") and are~~ carried at fair value, generally based on quoted market ~~prices. United States (“U.S.”) generally accepted accounting principles ("GAAP") permit entities to choose to measure many financial instruments, such as AFS securities,~~prices and certain other items at fair value and to recognize the changes in fair value of such instruments in the entity's statements of operations (the "fair value option"). Liberty had previously entered into economic hedges for certain of its non-strategic AFS securities (although such instruments were not accounted for as fair value hedges by the Company). Changes in the fair value of these economic hedges were reflected in Liberty's statements of operations as unrealized gains (losses). In order to better match the changes in fair value of the subject AFS securities and the changes in fair value of the corresponding economic hedges in the Company's financial statements, Liberty has elected the fair value option for those of its AFS securities which it considers to be non-strategic ("Fair Value Option Securities"). Accordingly, changes in the fair value of ~~Fair Value Option Securities, as determined by quoted market prices,~~such securities are reported in realized and unrealized ~~gains~~gain (losses) on financial instruments in the accompanying consolidated statements of operations. The ~~total~~Company elected the measurement alternative (defined as the cost of the security, adjusted for changes in fair value ~~of AFS~~when there are observable prices, less impairments) for its equity securities without readily determinable fair values. The Company had 0 equity securities for which ~~the Company has~~it elected the fair value option ~~aggregated $2,275 million and $1,846 million~~ as of December 31, ~~2017~~2020 and ~~2016, respectively.~~

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Other investments in which the Company's ownership interest is less than 20%, unless the Company has the ability to exercise significant influence, and that are not considered marketable securities are carried at cost.

2019.

For those investments in affiliates in which the Company has the ability to exercise significant influence, the equity method of accounting is used, except in situations where the fair value option has been selected. Under the equity method of accounting, the investment, originally recorded at cost, is adjusted to recognize the Company's share of net earnings or losses of the affiliate as they occur rather than as dividends or other distributions are received. Losses are limited to the extent of the Company's investment in, advances to and commitments for the investee. In the event the Company is unable to obtain accurate financial information from an equity affiliate in a timely manner, the Company records its share of earnings or losses of such affiliate on a lag.

Changes in the Company's proportionate share of the underlying equity of an equity method investee, which result from the issuance of additional equity securities by such equity investee, are recognized in the statements of operations through the Other, net line item. To the extent there is a difference between our ownership percentage in the underlying equity of an equity method investee and our carrying value, such difference is accounted for as if the equity method investee were a consolidated subsidiary.

The Company ~~continually reviews~~performs a qualitative assessment annually for its equity ~~investments and its AFS~~ securities ~~which are not Fair Value Option Securities~~without readily determinable fair values to ~~determine~~identify whether ~~a decline in fair value below the carrying value is other than temporary. The primary factors the Company considers in its determination are the length of time~~an equity security could be impaired. When our qualitative assessment indicates that an impairment could exist, we estimate the fair value of the investment ~~is below the Company's carrying value; the severity of the decline;~~ and the financial condition, operating performance and near term prospects of the investee. In addition, the Company considers the reason for the decline in fair value, be it general market conditions, industry specific or investee specific; analysts' ratings and estimates of 12 month share price targets for the investee; changes in stock price or valuation subsequent to the ~~balance sheet date; and~~extent the ~~Company's intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in~~ fair value is ~~deemed to be other~~less than ~~temporary,~~ the carrying value, ofwe record the ~~security is written down to fair value. In situations where the fair value of~~difference as an investment is not evident due to a lack of a public market price or other factors, the Company uses its best estimates and assumptions to arrive at the estimated fair value of such investment. The Company's assessment of the foregoing factors involves considerable management judgment and accordingly, actual results may differ materially from the Company's estimates and judgments. Writedowns for AFS securities which are not Fair Value Option Securities would be includedimpairment in the consolidated statements of ~~operations as other than temporary declines in fair values of investments. Writedowns for equity method investments would be included in share of earnings (losses) of affiliates.~~operations.

In January 2016, the FASB issued new accounting guidance that is intended to improve the recognition and measurement of financial instruments. The new guidance requires equity investments with readily determinable fair values (except those accounted for under the equity method of accounting or those that result in consolidation) to be measured at fair value with changes in fair value recognized in net income and simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2017, with early adoption permitted under certain circumstances. The Company plans to adopt this standard during the first quarter of 2018 and does not expect that the adoption will have a material effect on its consolidated financial statements.

Derivative Instruments and Hedging Activities

All of the Company's derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized in earnings. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive earnings and are recognized in the statements of operations when the hedged item affects earnings. Ineffective portions of changes

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

in the fair value of cash flow hedges are recognized in earnings. If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings.

The Company generally enters into derivative contracts that it intends to designate as a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge). For all hedging relationships, the Company formally documents the hedging relationship and its risk management objective and strategy for undertaking the hedge, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument's effectiveness in offsetting the hedged risk will be assessed prospectively and retrospectively, and a description of the method of measuring ineffectiveness. The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting cash flows of hedged items. Changes in the fair value of a derivative that is highly effective and that is designated and qualifies as a cash flow hedge are recorded in accumulated other comprehensive income to the extent that the derivative is effective as a hedge, until earnings are affected by the variability in cash flows of the designated hedged item. The

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

ineffective portion of the change in fair value of a derivative instrument that qualifies as a cash flow hedge is reported in earnings.

Property and Equipment

Property and equipment consisted of the following:


				December 31,		December 31,
				2020		2019

	December 31,		December 31,
	2017		2016
	amounts in millions
				amounts in millions
Land	$	108	81	$	133	128
Buildings and improvements		1,165	1,016		1,291	1,204
Support equipment		1,240	1,034		1,243	1,023
Projects in progress		51	32		44	169
Finance lease right-of-use ("ROU") assets					278	282
Total property and equipment	$	2,564	2,163	$	2,989	2,806

Property and equipment, including significant improvements, is stated at ~~cost.~~amortized cost, less impairment losses, if any. Depreciation is computed using the straight-line method using estimated useful lives of 2 to 15 years for support equipment and 83 to 20 years for buildings and improvements. Depreciation expense for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 was ~~$176~~$199 million, ~~$171~~$220 million and ~~$153~~$211 million, respectively.

Intangible Assets

Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment upon certain triggering events. Goodwill and other intangible assets with indefinite useful lives (collectively, "indefinite lived intangible assets") are not amortized, but instead are tested for impairment at least annually. Our annual impairment assessment of our indefinite-lived intangible assets is performed during the fourth quarter of each year.

In January 2017, the FASB issued new accounting guidance to simplify the measurement of goodwill impairment. Under the new guidance, an entity no longer performs a hypothetical purchase price allocation to measure goodwill impairment. Instead, a goodwill impairment is measured using the difference between the carrying value and the fair value of the reporting unit. The Company early adopted this guidance during the fourth quarter of 2017.

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current year and prior year for other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, the Company performs the quantitative impairment test.

The quantitative goodwill impairment test compares the estimated fair value of a reporting unit to its carrying value. Developing estimates of fair value requires significant judgments, including making assumptions about appropriate discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and timing of expected future cash flows. The cash flows employed in ~~Liberty's~~Qurate Retail's valuation analyses are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There is no assurance that actual results in the future will approximate these forecasts.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The accounting guidance also permits entities to first perform a qualitative assessment to determine whether it is more likely than not that an indefinite-lived intangible asset, other than goodwill, is impaired. The accounting guidance also allows entities the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to the quantitative impairment test. The entity may resume performing the qualitative assessment in any subsequent period. If the qualitative assessment supports that it is more likely than not that the carrying value of the Company’s indefinite-lived intangible assets, other than goodwill, exceeds its fair value, then a quantitative assessment is performed. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

Impairment of Long-lived Assets

The Company periodically reviews the carrying amounts of its property and equipment and its intangible assets (other than goodwill and indefinite-lived intangible assets) to determine whether current events or circumstances indicate that such carrying amounts may not be recoverable. If the carrying amount of the asset group is greater than the expected undiscounted cash flows to be generated by such asset group, including its ultimate disposition, an impairment adjustment is to be recognized. Such adjustment is measured by the amount that the carrying value of such asset groups exceeds their fair value. The Company generally measures fair value by considering sale prices for similar asset groups or by discounting estimated future cash flows using an appropriate discount rate. Considerable management judgment is necessary to estimate the fair value of asset groups. Accordingly, actual results could vary significantly from such estimates. Asset groups to be disposed of are carried at the lower of their financial statement carrying amount or fair value less costs to sell.

Noncontrolling Interests

The Company reports noncontrolling interests of subsidiaries within equity in the balance sheet and the amount of consolidated net income attributable to the parent and to the noncontrolling interest is presented in the statements of operations. Also, changes in ownership interests in subsidiaries in which the Company maintains a controlling interest are recorded in equity.

Foreign Currency Translation

The functional currency of the Company is the U.S. Dollar. The functional currency of the Company's foreign operations generally is the applicable local currency for each foreign subsidiary. Assets and liabilities of foreign subsidiaries are translated at the spot rate in effect at the applicable reporting date, and the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment, net of applicable income taxes, is recorded as a component of accumulated other comprehensive earnings in stockholders' equity.

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses which are reflected in the accompanying consolidated statements of operations and comprehensive earnings (loss) as unrealized (based on the applicable period-end exchange rate) or realized upon settlement of the transactions. These realized and unrealized gains and losses are reported in the Other, net line item in the consolidated statements of operations.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Revenue Recognition

~~Retail~~Disaggregated revenue by segment and product category consisted of the following:


	Year ended
	December 31, 2020
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,529	1,199	490	903	6,121
Beauty		1,261	724	73	—	2,058
Apparel		1,170	437	583	166	2,356
Accessories		944	260	394	—	1,598
Electronics		1,069	122	17	—	1,208
Jewelry		363	216	51	—	630
Other revenue		169	9	28	—	206
Total Revenue	$	8,505	2,967	1,636	1,069	14,177


	Year ended
	December 31, 2019
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,053	1,010	422	729	5,214
Beauty		1,304	659	53	—	2,016
Apparel		1,291	439	582	172	2,484
Accessories		919	262	416	—	1,597
Electronics		1,142	104	15	—	1,261
Jewelry		402	221	54	—	677
Other revenue		166	14	29	—	209
Total Revenue	$	8,277	2,709	1,571	901	13,458

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018


	Year ended
	December 31, 2018
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,185	1,023	511	791	5,510
Beauty		1,330	640	50	—	2,020
Apparel		1,325	453	684	180	2,642
Accessories		934	273	472	—	1,679
Electronics		1,134	119	18	—	1,271
Jewelry		474	213	53	—	740
Other revenue		162	17	29	—	208
Total Revenue	$	8,544	2,738	1,817	971	14,070

Consumer Product Revenue and Other Revenue. Qurate Retail's revenue includes sales of consumer products in the following categories: home, beauty, apparel, accessories, electronics and jewelry, which are primarily sold through live merchandise-focused televised shopping programs and via our websites and other interactive media, including catalogs.

Other revenue consists primarily of income generated from our company branded credit cards in which a large consumer financial services company provides revolving credit directly to the Company’s customers for the sole purpose of purchasing merchandise or services with these cards. In return, the Company receives a portion of the net economics of the credit card program.

Revenue Recognition. Revenue is recognized when obligations with our customers are satisfied; generally this occurs at the time of shipment to our customers consistent with when control of the shipped product passes. The recognized revenue reflects the consideration we expect to receive in exchange for transferring goods, net of allowances for returns.

The Company recognizes revenue related to its company branded credit cards over time as the credit cards are used by Qurate Retail's customers.

Sales, value add, use and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

The Company has elected to treat shipping and handling activities that occur after the customer obtains control of the goods as a fulfillment cost and not as a promised good or service. Accordingly, the Company accrues the related shipping costs and recognizes revenue upon delivery of goods to ~~customers.~~ the shipping carrier. In electing this accounting policy, all shipping and handling activities are treated as fulfillment costs.

The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money.

Significant Judgments. Qurate Retail’s products are generally sold with a right of return and we may provide other credits or incentives, which are accounted for as variable consideration when estimating the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period as additional information becomes available. The Company has determined that it is the principal in vendor arrangements as the Company can establish control over the goods prior to shipment. Accordingly, the Company records revenue for ~~shipments in-transit is recorded as deferred revenue~~these arrangements on a gross basis.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and included in other current liabilities. Additionally, service revenue, which is less than one percent of overall revenue, is recognized when the applicable criteria are met: persuasive evidence of an arrangement exists, services have been rendered, the price is fixed and determinable and collectability is reasonably assured.2018

An allowance for returned merchandise is provided as a percentage of sales based on historical experience. ~~The total reduction in sales due to returns for the years ended December 31, 2017, 2016 and 2015 aggregated $1,861 million, $1,865 million and $2,037 million, respectively.~~ Sales tax collected from customers on retail sales is recorded on a net basis and is not included in revenue.

A summary of activity in the allowance for sales returns, is as follows:

Balance beginning of year

Additions - charged to earnings

Deductions

Balance end of year

in millions
2017
$
98

1,027

(1,023)

102
2016
$
106

1,051

(1,060)

98
2015
$
109

1,213

(1,216)

106


		Balance beginning of year	Additions - charged to earnings	Deductions	Balance end of year

		in millions
2020	$	261	2,188	(2,149)	300
2019	$	266	2,336	(2,341)	261
2018	$	267	2,434	(2,435)	266

In May 2014, the FASB issued new accounting guidance on revenue from contracts with customers. The new guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. This new guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In March 2016, the FASB issued additional guidance which clarifies principal versus agent considerations, and in April 2016, the FASB issued further guidance which clarifies the identification of performance obligations and the implementation guidance for licensing. The updated guidance will replace most existing revenue recognition guidance in GAAP when it becomes effective and permits the use of either a full retrospective or modified retrospective transition method. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and early adoption is permitted only for fiscal years beginning after December 15, 2016. The Company will adopt the accounting guidance effective as of January 1, 2018 with an immaterial adjustment to retained earnings using the modified transition method. The Company has completed our review of the applicable ASU and has concluded it will recognize revenue at the time of shipment to its customers consistent with when title passes. This is a change from the current practice whereby the Company recognizes revenue at the time of delivery to the customers and deferred revenue is recorded to account for the shipments in-transit. The Company has also concluded that it will continue to act as principal in certain vendor arrangements and will recognize credit card income for its QVC-branded credit card as part of net revenue. At the current time, the credit card income is included as an offset to selling, general, and administrative expenses. In addition, the Company’s balance sheet presentation of its sales return reserve will change to present a separate return asset and liability, instead of the net presentation currently used. The Company will also elect the practical expedient to not adjust the promised amount of consideration for the effects of a significant financing component when its payment terms are less than one year, as well

~~II-47~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~as the practical expedient to exclude from the measurement of the transaction price sales and similar taxes collected from customers.~~

Cost of Sales

Cost of sales primarily includes actual product cost, provision for obsolete inventory, buying allowances received from suppliers, shipping and handling costs and warehouse costs.

~~Advertising Costs~~

Advertising costs generally are expensed as incurred. Advertising expense aggregated $217 million, $231 million and $154 million for the years ended December 31, 2017, 2016 and 2015, respectively. Advertising costs are reflected in the selling, general and administrative, including stock-based compensation line item in our consolidated statements of operations.

Stock-Based Compensation

As more fully described in note ~~15,~~12, the Company has granted to its directors, employees and employees of its subsidiaries options, restricted stock and stock appreciation rights relating to shares of ~~QVC Group~~Qurate Retail and/or Liberty Ventures common stock ("~~Liberty~~Qurate Retail common stock") (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an Award of equity instruments (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 an Award of liability instruments (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

Stock compensation expense was ~~$123~~$64 million, ~~$97~~$71 million and ~~$127~~$88 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively, included in selling, general and administrative expense in the accompanying consolidated statements of operations.

In March 2016, the FASB issued new guidance which simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early application permitted. The Company adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. For tax benefits that were not previously recognized and for adjustments to compensation cost based on actual forfeitures, the Company has recorded a cumulative-effect adjustment in retained earnings as of January 1, 2016. The presentation changes for excess tax benefits have been applied retrospectively in the consolidated statements of cash flows, resulting in $33 million of excess tax benefits for the year ended December 31, 2015 reclassified from cash flows from financing activities to cash flows from operating activities.

Income Taxes

~~II-48~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

or settled. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it more likely than not such net deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of an enacted change in tax rates is recognized in income in the period that includes the enactment date.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes interest expense from the first period the interest would begin accruing according to the relevant tax law. Such interest expense is included in interest expense in the accompanying consolidated statements of operations. Any accrual of penalties related to underpayment of income taxes on uncertain tax positions is included in other income (expense) in the accompanying consolidated statements of operations.

In October 2016, the FASB issued new guidance amending the accounting for income taxes associated with intra-entity transfers of assets other than inventory. This accounting update, which is part of the FASB's simplification initiative, is intended to reduce diversity in practice and the complexity of tax accounting, particularly for those transfers involving intellectual property. This new guidance requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017 with early adoption permitted. We anticipate an immaterial retained earnings decrease upon adoption related to the unrecognized income tax effects of asset transfers that occurred prior to adoption.

Earnings (Loss) Attributable to ~~Liberty~~Qurate Retail Stockholders and Earnings (Loss) Per Common Share

Net earnings (loss) attributable to ~~Liberty~~Qurate Retail stockholders is comprised of the following (amounts in millions):


	Years ended December 31,
	2017		2016	2015
QVC Group

					Years ended December 31,
					2020		2019	2018
Qurate Retail
Net earnings (loss) from continuing operations	$	1,208	473	640	$	1,204	(456)	674
Net earnings (loss) from discontinued operations	$	NA	NA	NA	$	NA	NA	NA
Liberty Ventures
Net earnings (loss) from continuing operations	$	1,233	742	(51)	$	NA	NA	101
Net earnings (loss) from discontinued operations	$	—	20	280	$	NA	NA	141

Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) attributable to such common stock 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.

~~II-49~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Series A and Series B ~~QVC Group~~Qurate Retail Common Stock

EPS for all periods through December 31, ~~2017,~~2020, is based on the following weighted average shares outstanding. Excluded from diluted EPS for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 are approximately 2028 million, 1322 million and 625 million ~~potential~~potentially dilutive common shares, respectively, because their inclusion would be antidilutive.


	Years ended December 31,
	2020	2019	2018

	number of shares in millions
Basic WASO	416	424	462
Potentially dilutive shares	5	—	3
Diluted WASO	421	424	465

Years ended December 31,



2017

2016

2015

number of shares in millions

Basic WASO

445

476

475

Potentially dilutive shares

3

5

6

Diluted WASO

448

481

481

Series A and Series B Liberty Ventures Common Stock

All of the outstanding shares of Liberty Ventures Series A and B common stock were redeemed for GCI Liberty Series A and B common stock as a result of the GCI Liberty Split-Off on March 9, 2018. EPS for ~~all periods through~~the year ended December 31, ~~2017,~~2018 is based on ~~the following weighted average~~basic WASO of 86 million, potentially dilutive shares ~~outstanding.~~of 1 million and diluted WASO of 87 million. Excluded from diluted EPS for the ~~years~~year ended December 31, ~~2017, 2016, and 2015~~2018 are less than a million potential common shares because their inclusion would be antidilutive.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Years ended December 31,



2017

2016

2015

number of shares in millions

Basic WASO

86

134

142

Potentially dilutive shares

1

1

1

Diluted WASO

87

135

143

Reclasses and adjustments

Certain prior period amounts have been reclassified for comparability with the current year presentation.

As a result of repurchases of Series A ~~QVC Group~~Qurate Retail common stock, the Company’s additional paid-in capital balance was in a deficit position in certain quarterly periods during the ~~year~~years ended December 31, ~~2017.~~2020, 2019 and 2018. In order to maintain a zero balance in the additional paid-in capital account, we reclassified the amount of the deficit ~~($405 million)~~ at December 31, ~~2017~~2020, 2019 and 2018 to retained earnings.

Estimates

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. ~~Liberty~~Qurate Retail considers (i) recurring and non-recurring fair value measurements, (ii) accounting for income taxes ~~(iii) assessments of other-than-temporary declines in fair value of its investments~~ and ~~(iv)~~(iii) estimates of retail-related adjustments and allowances to be its most significant estimates.

Liberty holds investments that are accounted for using the equity method. Liberty does not control the decision making process or business management practices of these affiliates. Accordingly, Liberty relies on management of these affiliates to provide it with accurate financial information prepared in accordance with GAAP that Liberty uses in the application of the equity method. In addition, Liberty relies on audit reports that are provided by the affiliates' independent auditors on

~~II-50~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

the financial statements of such affiliates. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliates that would have a material effect on Liberty's consolidated financial statements.

~~New Accounting Pronouncements Not Yet Adopted~~

In February 2016, the FASB issued new guidance which revises the accounting for leases. Under the new guidance, lessees will be required to recognize a lease liability and a right-of-use asset for all leases. The new guidance also simplifies the accounting for sale and leaseback transactions. The new standard, to be applied via a modified retrospective transition approach, is effective for the Company for fiscal years and interim periods beginning after December 15, 2018, with early adoption permitted. The Company has not yet determined the effect of the standard on its ongoing financial reporting. The Company is currently working with its consolidated subsidiaries to evaluate the impact of the adoption of this new guidance on our consolidated financial statements, including identifying the population of leases, evaluating technology solutions and collecting lease data.

(4) (3) Supplemental Disclosures to Consolidated Statements of Cash Flows


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Cash paid for acquisitions:
Fair value of assets acquired	$	—	—	(11)
Intangible assets subject to amortization		—	—	(4)
Net liabilities assumed		—	—	10
Deferred tax assets (liabilities)		—	—	5
Cash paid (received) for acquisitions, net of cash acquired	$	—	—	—

Cash paid for interest	$	392	360	362

Cash paid for income taxes	$	116	175	226

Non-cash capital additions obtained in exchange for liabilities	$	—	36	—

Years ended December 31,

2017

2016

2015

amounts in millions

Cash paid for acquisitions:

Fair value of assets acquired

$
956

—

154

Intangible assets not subject to amortization

1,577

7

1,791

Intangible assets subject to amortization

651

(40)

837

Net liabilities assumed

(977)

—

(214)

Deferred tax assets (liabilities)

(281)

33

(637)

Fair value of equity consideration

(1,948)

—

(1,087)

Cash paid (received) for acquisitions, net of cash acquired

$
(22)

—

844

Cash paid for interest

$
343

354

374

Cash paid for income taxes

$
158

204

318

~~(5) Acquisitions~~

On December 29, 2017, Liberty acquired the approximately 62% of HSNi it did not already own in an all-stock transaction making HSNi a wholly-owned subsidiary, attributed to the QVC Group. HSNi shareholders (other than Liberty) received fixed consideration of 1.65 shares of Series A QVC Group common stock (“QVCA”) for each share of HSNi common stock. Liberty issued 53.6 million shares QVCA common stock to HSNi shareholders. ~~In conjunction with application of acquisition accounting, we recorded a full step up in basis of HSNi which resulted in a $409 million gain.~~ The fair market value of our ownership interest previously held in HSNi ($605 million) was determined based on the trading price of QVCA common stock on the date of the acquisition (Level 1) less a control premium. The market value of the shares of QVCA common stock issued to HSNi shareholders ($1.3 billion) was determined based on the trading price of QVCA common stock on the date of the acquisition. The total equity value of the transaction was $1.9 billion. With the exception of $43 million of severance-related costs incurred on December 30, 2017, HSNi’s results of operations

~~II-51~~II-44

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

~~are not included~~

The following table reconciles cash, cash equivalents and restricted cash reported in our consolidated ~~operating results for the year ended December 31, 2017, as the final two days of the period were considered immaterial.~~

~~The preliminary purchase price allocation for HSNi is as follows (amounts in millions):~~

Cash and cash equivalents

$
22

Property and equipment

214

Other assets

752

Goodwill

950

Trademarks

676

Intangible assets subject to amortization

602

Accounts payable & accrued liabilities

(515)

Debt

(460)

Other liabilities assumed

(12)

Deferred tax liabilities

(281)

$
1,948

Goodwill is calculated as the excess of the consideration transferred over the identifiable net assets acquired and represents the future economic benefits expected to arise from other intangible assets acquired that do not qualify for separate recognition, including assembled workforce, value associated with future customers, continued innovation and noncontractual relationships. Intangible assets acquired during 2017 were comprised of customer relationships of $425 million with a weighted average life of approximately 9 years, capitalized software of $16 million with a weighted average life of approximately 1 year, and technology of $161 million with a weighted average life of approximately 7 years. None of the acquired goodwill is expected to be deductible for tax purposes. As of December 31, 2017, the valuation relatedbalance sheets to the purchase is not final and the purchase price allocation is preliminary and subject to revision. The primary areas of the purchase price allocation that are not yet finalized are related to certain fixed and intangible assets, liabilities and tax balances.

~~Included~~total amount presented in net earnings (loss) from continuing operations for the year ended December 31, 2017 is $43 million related to HSNi’s operations since the date of acquisition, which is primarily related to severance cost post acquisition. Of the $43 million, $38 million related to HSN ($8 million of which related to stock-based compensation expense and is included in Selling, general and administrative, including stock-based compensation expense in theour consolidated statements of ~~operations) and $5 million related to Cornerstone.~~cash flows:

The pro forma revenue and net earnings from continuing operations of Liberty, prepared utilizing the historical financial statements of HSNi, giving effect to purchase accounting related adjustments made at the time of acquisition, as if the transaction discussed above occurred on January 1, 2016, are as follows:

Years Ended December 31,

2017

2016

amounts in millions

(unaudited)

Revenue

$
13,791

14,220

Net earnings (loss) from continuing operations

2,200

1,258


		December 31,	December 31,
		2020	2019

		in millions
Cash and cash equivalents	$	806	673
Restricted cash included in other current assets		8	8
Total cash, cash equivalents and restricted cash in the consolidated statement of cash flows	$	814	681

~~II-52~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

(4) Disposals

The pro forma information is not representative of Liberty’s future financial position, future results of operations or future cash flows nor does it reflect what Liberty’s financial position, results of operations or cash flows would have been as if the transaction had happened previously and Liberty controlled HSNi during the periods presented. The pro forma information includes a nonrecurring adjustment for transactions costs incurred as a result of the acquisition.

On October 1, 2015, Liberty acquired zulily for consideration of approximately $2.3 billion, comprised of $9.375 of cash and 0.3098 newly issued shares of QVCA for each zulily share, with cash paid in lieu of any fractional shares. The fair value of the issued shares was determined based on the trading price of QVCA shares on the last trading day prior to the acquisition. Funding for the $1.2 billion cash portion of the consideration came from cash on hand at zulily and a distribution from QVC funded by a drawdown under its revolving credit facility (see note 11). zulily is attributed to the QVC Group.

~~The final purchase price allocation for zulily is as follows (amounts in millions):~~


~~Cash and cash equivalents~~	$	~~341~~
~~Property and equipment~~		~~105~~
~~Other assets~~		46
~~Goodwill~~		~~917~~
~~Trademarks~~		~~870~~
~~Intangible assets subject to amortization~~		~~790~~
~~Accounts payable & accrued liabilities~~		~~(145)~~
~~Other liabilities assumed~~		~~(65)~~
~~Deferred tax liabilities~~		~~(607)~~
	$	~~2,252~~

Intangible assets acquired during 2015 were comprised of customer relationships of $490 million with a weighted average life of approximately 4 years, email lists of $250 million with a weighted average life of approximately 2 years, and capitalized software of $50 million with a weighted average life of approximately 3 years. None of the acquired goodwill is deductible for tax purposes. Subsequent to December 31, 2015, the preliminary purchase price allocation was adjusted, resulting in decreases of $50 million to trademarks, $40 million to intangible assets subject to amortization and $33 million to deferred tax liabilities and a corresponding increase of $57 million to goodwill. If these adjustments had been recorded as of the acquisition date, amortization expense would have been approximately $3 million lower for the period ended December 31, 2015. There have been no other significant changes to our purchase price allocation since December 31, 2015.

~~Included in net earnings (loss) from continuing operations for the year ended December 31, 2015 is $34 million related to zulily’s operations since the date of acquisition.~~

~~(6) Disposals~~

~~Disposals - Presented as Discontinued Operations~~

~~On November 4, 2016,~~Investment in Liberty ~~completed the Expedia Holdings Split-Off. Expedia Holdings is comprised of, among other things, Liberty’s former interest~~Broadband

3,822

Investment in Expedia, Inc. and Liberty’s former wholly-owned subsidiary Bodybuilding. Liberty views Expedia and Bodybuilding as separate components and evaluated them separately for discontinued operations presentation. Based on a quantitative analysis, the split-off of Liberty’s interest in Expedia represents a strategic shift that has a major effect on Liberty’s operations, primarily due to prior year one-time gains on transactions recognizedCharter

~~II-53~~1,866

~~Table of Contents~~Corporate Cash

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

475

~~Notes to Consolidated Financial Statements (Continued)~~

Margin Loan

~~December 31, 2017, 2016 and 2015~~

(996)

by Expedia. Accordingly, the consolidated financial statements of Liberty have been prepared to reflect Liberty’s interest in Expedia as a discontinued operation. The disposition of Bodybuilding as part of the Expedia Holdings Split-Off does not have a major effect on Liberty’s historical results nor is it expected to have a major effect on Liberty’s future operations. The disposition of Bodybuilding does not represent a strategic shift in Liberty’s operations. Accordingly, Bodybuilding is not presented as a discontinued operation in the consolidated financial statements of Liberty. See “Disposals – Not Presented as Discontinued Operations” below for additional information regarding Bodybuilding.

Prior to the Expedia Holdings Split-Off, Liberty accounted for the investment in Expedia as an equity method affiliate and recorded our share of Expedia’s earnings (losses) in our consolidated statements of operations. Accordingly, Expedia’s assets, liabilities and results of operations were not included in Liberty’s consolidated financial statements. Certain financial information for Expedia for the periods prior to the Expedia Holdings Split-Off is as follows:Deferred Income Tax Liabilities

December 31,

2015

amounts in millions

Current assets

$
2,976

Total assets

$
15,486

Current liabilities

$
5,926

Total liabilities

$
10,556

Equity

$
4,930

(550)

Year ended December 31,

2015

amounts in millions

Operating income

$
414

Gain on sale of business

$
509

Income tax (expense) benefit

$
(203)

Net earnings (loss) attributable to Expedia shareholders

$
764

Certain financial information for Liberty’s investment in Expedia, which is included in the discontinued operations line items of the consolidated Liberty balance sheets as of December 31, 2015, is as follows (amounts in millions):Other, net

		(270)
$	4,347

Following the contribution, Qurate Retail effected a tax-free separation of its controlling interest in the combined company (the “GCI Liberty Split-Off”), GCI Liberty, to the holders of Liberty Ventures common stock in full redemption of all outstanding shares of such stock, in which each outstanding share of Series A Liberty Ventures common stock was redeemed for 1 share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for 1 share of GCI Liberty Class B common stock. Simultaneous with the closing of the Transactions, QVC Group common stock became the only outstanding common stock of Qurate Retail, and thus QVC Group common stock ceased to function as a tracking stock. On April 9, 2018, Liberty Interactive Corporation was renamed Qurate Retail, Inc. On May 23, 2018, Qurate Retail amended its charter to eliminate the tracking stock capitalization structure and reclassify each share of QVC Group common stock into 1 share of the corresponding series of new common stock of Qurate Retail. Throughout this annual report, we refer to our Series A and Series B common stock as “Qurate Retail common stock” and “QVC Group common stock.” In July 2018, the Internal Revenue Service (“IRS”) completed its review of the GCI Liberty Split-Off and informed Qurate Retail that it agreed with the nontaxable characterization of the transactions. Qurate Retail received an Issue Resolution Agreement from the IRS documenting this conclusion.

On October 17, 2018, Qurate Retail announced a series of initiatives designed to better position its HSN and QVC U.S. businesses (“QRG Initiatives”). As part of the QRG Initiatives, QVC will close its fulfillment centers in Lancaster, Pennsylvania and Roanoke, Virginia and leased a new fulfillment center in Bethlehem, Pennsylvania, that commenced in 2019 (see note 8). Qurate Retail recorded transaction related costs of $41 million during the year ended December 31, 2018 related to the QRG Initiatives, which primarily related to severance costs. Also, as a result of changes in internal reporting from the QRG Initiatives, during the first quarter of 2019 the Company changed its reportable segments to combine HSN and QVC U.S. into one reportable segment called “QxH.”

Qurate Retail and GCI Liberty (for accounting purposes a related party of Qurate Retail) entered into a tax sharing agreement. Pursuant to that 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-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 and GCI Liberty, Liberty Broadband has assumed the tax sharing agreement.

Qurate Retail and Liberty Media Corporation (“LMC”) (for accounting purposes a related party of Qurate Retail) entered into certain agreements in order to govern certain of the ongoing relationships between the two companies. These

~~December 31, 2015~~

~~Investments in affiliates, accounted for using the equity method~~

~~927~~

~~Deferred income tax liabilities~~

~~285~~

~~II-54~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~Certain financial information for Liberty’s investment in Expedia, which is included in earnings (loss) from discontinued operations, is as follows (amounts in millions):~~

Years ended December 31,

2016

2015

Earnings (loss) before income taxes

$
24

437

Income tax (expense) benefit

$
(4)

(157)

~~The combined impact from discontinued operations, discussed above, is as follows:~~

Years ended December 31,

2016

2015

Basic earnings (loss) from discontinued operations attributable to Liberty shareholders per common share (note 3):

Series A and Series B QVC Group common stock

$
NA

NA

Series A and Series B Liberty Ventures common stock

$
0.15

1.97

Diluted earnings (loss) from discontinued operations attributable to Liberty shareholders per common share (note 3):

Series A and Series B QVC Group common stock

$
NA

NA

Series A and Series B Liberty Ventures common stock

$
0.15

1.96

~~Disposals – Not Presented as Discontinued Operations~~

On June 30, 2015, Liberty sold Backcountry for aggregate consideration, including assumption of debt, amounts held in escrow, and a noncontrolling interest, of approximately $350 million. The sale resulted in a $105 million gain, which is included in Gains (losses) on transactions, net in the accompanying consolidated statements of operations. Backcountry is not presented as a discontinued operation as the sale did not represent a strategic shift that has a major effect on Liberty’s operations and financial results. Included in Total revenue, net in the accompanying consolidated statements of operations is $227 million for the year ended December 31, 2015, related to Backcountry. Included in Net earnings (loss) in the accompanying consolidated statements of operations are losses of $3 million for the year ended December 31, 2015, related to Backcountry.

On July 22, 2016, Liberty completed the CommerceHub Spin-Off. CommerceHub is included in the Corporate and other segment through July 22, 2016 and is not presented as a discontinued operation as the CommerceHub Spin-Off did not represent a strategic shift that had a major effect on Liberty’s operations and financial results. Included in Total revenue, net in the accompanying consolidated statements of operations is $51 million and $89 million for the years ended December 31, 2016 and 2015, respectively, related to CommerceHub. Included in Net earnings (loss) in the accompanying consolidated statements of operations are earnings of $5 million and losses of $10 million for the years ended December 31, 2016 and 2015, respectively, related to CommerceHub. Included in Total assets in the accompanying consolidated balance sheets as of December 31, 2015 is $115 million related to CommerceHub.

As discussed above, on November 4, 2016, Liberty completed the Expedia Holdings Split-Off. Although Liberty’s interest in Expedia has been presented as a discontinued operation, Bodybuilding is not presented as a discontinued operation in the consolidated financial statements of Liberty. Bodybuilding is included in the Corporate and other segment through November 4, 2016. Included in Total revenue, net in the accompanying consolidated statements of operations is

~~II-55~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

$355 million and $464 million for the years ended December 31, 2016 and 2015, respectively, related to Bodybuilding. Included in Net earnings (loss) in the accompanying consolidated statements of operations are earnings of $6 million and $3 million for the years ended December 31, 2016 and 2015, respectively, related to Bodybuilding. Included in Total assets in the accompanying consolidated balance sheets as of December 31, 2015 is $198 million related to Bodybuilding.

~~(7) 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, other than quoted market prices included within Level 1, are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The Company does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.

~~The Company's assets and liabilities measured at fair value are as follows:~~

December 31, 2017

December 31, 2016

Quoted prices

Quoted prices

in active

Significant

in active

Significant

markets

other

markets

other

for identical

observable

for identical

observable

assets

inputs

assets

inputs

Description

Total

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

amounts in millions

Cash equivalents

$
655

655

—

625

625

—

Available-for-sale securities

$
2,275

2,275

—

1,846

1,846

—

Investment in Liberty Broadband

$
3,635

3,635

—

3,161

3,161

—

Debt

$
1,846

—

1,846

1,667

—

1,667

The majority of the Company's Level 2 financial assets and liabilities are debt instruments with quoted market prices that are not considered to be traded on "active markets," as defined in GAAP. Accordingly, the debt instruments are reported in the foregoing table as Level 2 fair value.

~~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:~~

Years ended December 31,


2017

2016

2015

amounts in millions

Fair Value Option Securities - AFS

$
434

723

84

Fair Value Option Securities - Liberty Broadband

473

761

NA

Exchangeable senior debentures

(193)

(308)

30

Other financial instruments

(96)

(1)

—

$
618

1,175

114

~~II-56~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~(8) Investments in Available-for-Sale Securities and Other Cost Investments~~

All marketable equity and debt securities held by the Company are classified as AFS and are carried at fair value generally based on quoted market prices. GAAP permits entities to choose to measure many financial instruments, such as AFS securities, and certain other items at fair value and to recognize the changes in fair value of such instruments in the entity's statements of operations (the "fair value option"). Liberty has elected the fair value option for its AFS securities ("Fair Value Option Securities"). Accordingly, changes in the fair value of Fair Value Option Securities, as determined by quoted market prices, are reported in realized and unrealized gains (losses) on financial instruments in the accompanying consolidated statements of operations.

~~Investments in AFS securities, the majority of which are considered Fair Value Option Securities and other cost investments, are summarized as follows:~~

December 31,

December 31,

2017

2016

amounts in millions

QVC Group

Other investments

$
3

4

Total attributed QVC Group

3

4

Ventures Group

Charter

1,800

1,543

ILG

474

302

Other investments

86

73

Total attributed Ventures Group

2,360

1,918

Consolidated Liberty

$
2,363

1,922

~~(9) Investments in Affiliates Accounted for Using the Equity Method~~

Liberty has various investments accounted for using the equity method. The following table includes Liberty's carrying amount and percentage ownership of the more significant investments in affiliates at December 31, 2017 and the carrying amount at December 31, 2016:

December 31, 2017

December 31, 2016

Percentage

Market

Carrying

Carrying

ownership

value

amount

amount

dollars in millions

QVC Group








HSNi (1)

100
%
$
NA

$
NA

184

Other

various

NA

40

40

Total QVC Group

40

224

Ventures Group

FTD (2)

37
%
$
73

73

216

LendingTree (3)

27
%

1,098

115

31

Other (4)

various

NA

81

110

Total Ventures Group

269

357

Consolidated Liberty

$
309

581

~~II-57~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~The following table presents Liberty's share of earnings (losses) of affiliates:~~

Years ended December 31,


2017

2016

2015

amounts in millions

QVC Group

HSNi (1)

$
40

48

64

Other

(2)

(6)

(9)

Total QVC Group

38

42

55

Ventures Group

FTD (2)

(146)

(41)

(83)

LendingTree (3)

7

12

2

Other (4)

(99)

(81)

(152)

Total Ventures Group

(238)

(110)

(233)

Consolidated Liberty

$
(200)

(68)

(178)

~~(1)~~

As discussed in note 5, on December 29, 2017, the Company acquired the approximately 62% of HSNi it did not already own in an all-stock transaction making HSNi a wholly-owned subsidiary, attributed to the QVC Group tracking stock group. Therefore the Company no longer has an equity method investment in HSNi as of December 31, 2017. In addition, HSNi paid dividends of $28 million, $28 million, and $228 million during the years ended December 31, 2017, 2016 and 2015, respectively, which were recorded as reductions to the investment balances, and recorded as a cash inflow from operations in the Cash receipts from returns on equity investments line item in the consolidated statements of cash flows. Dividends from HSNi during the year ended December 31, 2015 included a special dividend of $10 per share from which Liberty received approximately $200 million in cash, which was recorded as a cash inflow from investing activities in the Cash receipts from returns of equity investments line item in the consolidated statements of cash flows.

~~(2)~~

~~The carrying value of Liberty’s investment in FTD was written down to its fair value (based on the closing price (Level 1)) as of December 31, 2017 and December 31, 2015.~~

II-34

~~(3)~~

During the year ended December 31, 2017, the Company purchased an additional 450 thousand shares of LendingTree common stock (“TREE”). In order to purchase the additional shares, Ventures Holdco, LLC, a wholly owned subsidiary of the Company executed a 2-year postpaid variable forward with a notional value of $110 million. The company pledged 642,850 shares of TREE and purchased the delta underlying of 450,000 shares for $77 million. Changes in the fair value of the derivative are reflected in the Realized and unrealized gains (losses) on financial instruments, net line item in the consolidated statements of operations. For the period ended December 31, 2017, the Company recorded an unrealized loss of $95 million.

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

agreements include a reorganization agreement, a services agreement (the “Services Agreement”), a facilities sharing agreement (the “Facilities Sharing Agreement”) and a tax sharing agreement (the “Tax Sharing Agreement”). The Tax Sharing Agreement provides for the allocation and indemnification of tax liabilities and benefits between Qurate Retail and LMC and other agreements related to tax matters. Qurate Retail is party to on-going discussions with the IRS under the Compliance Assurance Process audit program. The IRS may propose adjustments that relate to tax attributes allocated to and income allocable to LMC. Any potential outcome associated with any proposed adjustments would be covered by the Tax Sharing Agreement and are not expected to have any impact on Qurate Retail's financial position. Pursuant to the Services Agreement, LMC provides Qurate Retail with general and administrative services including legal, tax, accounting, treasury and investor relations support. See below for a description of an amendment to the Services Agreement entered into in December 2019. 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, Qurate Retail shares office space with LMC and related amenities at LMC's corporate headquarters. Under these various agreements approximately $9 million, $8 million and $8 million of these allocated expenses were reimbursable from Qurate Retail to LMC for the years ended December 31, 2020, 2019 and 2018, respectively. Qurate Retail had a tax sharing payable with LMC and Liberty Broadband of approximately $129 million and $95 million as of December 31, 2020 and 2019, respectively, included in Other liabilities in the consolidated balance sheets.

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”). Under the amended Services Agreement, components of his compensation would either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc. (“Liberty TripAdvisor”), GCI Liberty, Inc. (“GCI Liberty”), and Liberty Broadband Corporation (“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 19% for the Company but subject to adjustment on an annual basis upon the occurrence of certain events. The amended Services Agreement provides for a five year employment term which began on January 1, 2020 and ends December 31, 2024, with an aggregate annual base salary of $3 million (with no contracted increase), an aggregate one-time cash commitment bonus of $5 million (paid in December 2019), an aggregate annual target cash performance bonus of $17 million, aggregate annual equity awards of $17.5 million and aggregate equity awards granted in connection with his entry into his new agreement of $90 million (the “upfront awards”). A portion of the grants made to our Chairman in the year ended December 31, 2020 related to our Company’s allocable portion of these upfront awards.

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 the virus, 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.

II-35

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

“Preferred Stock”), having an initial liquidation price of $100 per share of Preferred Stock, with cash paid in lieu of fractional shares. The distribution ratio for the Preferred Stock portion of the Special Dividend was equivalent to $3.00 in initial liquidation preference per common share, for an aggregate issuance of approximately $1.3 billion aggregate liquidation preference. The dividend was distributed on September 14, 2020 to holders of record of Qurate Retail’s Series A and Series B common stock. Holders of the Preferred Stock are entitled to receive quarterly cash dividends at a fixed rate of 8.0% per year on a cumulative basis, beginning December 15, 2020 and thereafter on each of March 15, June 15, September 15 and December 15 during the term. The Preferred Stock is non-voting, except in limited circumstances as required by law, and subject to a mandatory redemption on March 15, 2031.

On November 20, 2020, Qurate Retail announced that an authorized committee of its Board of Directors declared a special cash dividend (the “December Special Dividend”) in the amount of $1.50 per common share, for an aggregate dividend of approximately $625 million, payable in cash on December 7, 2020 to stockholders of record of the Company’s Series A and Series B common stock at the close of business on November 30, 2020.

During the year ended December 31, 2020, the Company recognized a gain as a result of the sale of one of its alternative energy investments. The Company received total cash consideration of $272 million and recorded a gain of $224 million on the sale.

(2) Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash equivalents consist of investments which are readily convertible into cash and have maturities of three months or less at the time of acquisition.

Receivables

A summary of activity in the allowance for doubtful accounts is as follows:


	Balance		Additions			Balance
	beginning		Charged		Deductions-	end of
	of year		to expense	Other	write-offs	year

	amounts in millions
2020	$	129	92	—	(89)	132
2019	$	117	130	4	(122)	129
2018	$	92	123	3	(101)	117

Inventory

II-36

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

method of disposition including sales to individual customers, returns to product vendors, liquidations and the estimated recoverable values of each disposition category. Inventory is stated net of inventory obsolescence reserves of $181 million and $152 million for the years ended December 31, 2020 and 2019, respectively.

Investments

All marketable equity and debt securities held by the Company are carried at fair value, generally based on quoted market prices and changes in the fair value of such securities are reported in realized and unrealized gain (losses) on financial instruments in the accompanying consolidated statements of operations. The Company elected the measurement alternative (defined as the cost of the security, adjusted for changes in fair value when there are observable prices, less impairments) for its equity securities without readily determinable fair values. The Company had 0 equity securities for which it elected the fair value option as of December 31, 2020 and 2019.

The Company performs a qualitative assessment annually for its equity securities without readily determinable fair values to identify whether an equity security could be impaired. When our qualitative assessment indicates that an impairment could exist, we estimate the fair value of the investment and to the extent the fair value is less than the carrying value, we record the difference as an impairment in the consolidated statements of operations.

Derivative Instruments and Hedging Activities

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

ineffective portion of the change in fair value of a derivative instrument that qualifies as a cash flow hedge is reported in earnings.

Property and Equipment

Property and equipment consisted of the following:


	December 31,		December 31,
	2020		2019

	amounts in millions
Land	$	133	128
Buildings and improvements		1,291	1,204
Support equipment		1,243	1,023
Projects in progress		44	169
Finance lease right-of-use ("ROU") assets		278	282
Total property and equipment	$	2,989	2,806

Property and equipment, including significant improvements, is stated at amortized cost, less impairment losses, if any. Depreciation is computed using the straight-line method using estimated useful lives of 2 to 15 years for support equipment and 3 to 20 years for buildings and improvements. Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $199 million, $220 million and $211 million, respectively.

Intangible Assets

In evaluating goodwill on a qualitative basis, the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it was more likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current year and prior year for other purposes. If based on the qualitative analysis it is more likely than not that an impairment exists, the Company performs the quantitative impairment test.

The quantitative goodwill impairment test compares the estimated fair value of a reporting unit to its carrying value. Developing estimates of fair value requires significant judgments, including making assumptions about appropriate discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and timing of expected future cash flows. The cash flows employed in Qurate Retail's valuation analyses are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There is no assurance that actual results in the future will approximate these forecasts.

II-38

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Impairment of Long-lived Assets

Noncontrolling Interests

Foreign Currency Translation

II-39

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Revenue Recognition

Disaggregated revenue by segment and product category consisted of the following:


	Year ended
	December 31, 2020
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,529	1,199	490	903	6,121
Beauty		1,261	724	73	—	2,058
Apparel		1,170	437	583	166	2,356
Accessories		944	260	394	—	1,598
Electronics		1,069	122	17	—	1,208
Jewelry		363	216	51	—	630
Other revenue		169	9	28	—	206
Total Revenue	$	8,505	2,967	1,636	1,069	14,177


	Year ended
	December 31, 2019
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,053	1,010	422	729	5,214
Beauty		1,304	659	53	—	2,016
Apparel		1,291	439	582	172	2,484
Accessories		919	262	416	—	1,597
Electronics		1,142	104	15	—	1,261
Jewelry		402	221	54	—	677
Other revenue		166	14	29	—	209
Total Revenue	$	8,277	2,709	1,571	901	13,458

II-40

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018


	Year ended
	December 31, 2018
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,185	1,023	511	791	5,510
Beauty		1,330	640	50	—	2,020
Apparel		1,325	453	684	180	2,642
Accessories		934	273	472	—	1,679
Electronics		1,134	119	18	—	1,271
Jewelry		474	213	53	—	740
Other revenue		162	17	29	—	208
Total Revenue	$	8,544	2,738	1,817	971	14,070

The Company recognizes revenue related to its company branded credit cards over time as the credit cards are used by Qurate Retail's customers.

Sales, value add, use and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

The Company has elected to treat shipping and handling activities that occur after the customer obtains control of the goods as a fulfillment cost and not as a promised good or service. Accordingly, the Company accrues the related shipping costs and recognizes revenue upon delivery of goods to the shipping carrier. In electing this accounting policy, all shipping and handling activities are treated as fulfillment costs.

The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money.

II-41

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

An allowance for returned merchandise is provided as a percentage of sales based on historical experience. Sales tax collected from customers on retail sales is recorded on a net basis and is not included in revenue.

A summary of activity in the allowance for sales returns, is as follows:


		Balance beginning of year	Additions - charged to earnings	Deductions	Balance end of year

		in millions
2020	$	261	2,188	(2,149)	300
2019	$	266	2,336	(2,341)	261
2018	$	267	2,434	(2,435)	266

Cost of Sales

Cost of sales primarily includes actual product cost, provision for obsolete inventory, buying allowances received from suppliers, shipping and handling costs and warehouse costs.

Stock-Based Compensation

As more fully described in note 12, the Company has granted to its directors, employees and employees of its subsidiaries options, restricted stock and stock appreciation rights relating to shares of Qurate Retail and/or Liberty Ventures common stock ("Qurate Retail common stock") (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an Award of equity instruments (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 an Award of liability instruments (such as stock appreciation rights that will be settled in cash) based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

Stock compensation expense was $64 million, $71 million and $88 million for the years ended December 31, 2020, 2019 and 2018, respectively, included in selling, general and administrative expense in the accompanying consolidated statements of operations.

Income Taxes

II-42

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Earnings (Loss) Attributable to Qurate Retail Stockholders and Earnings (Loss) Per Common Share

Net earnings (loss) attributable to Qurate Retail stockholders is comprised of the following (amounts in millions):


	Years ended December 31,
	2020		2019	2018
Qurate Retail
Net earnings (loss) from continuing operations	$	1,204	(456)	674
Net earnings (loss) from discontinued operations	$	NA	NA	NA
Liberty Ventures
Net earnings (loss) from continuing operations	$	NA	NA	101
Net earnings (loss) from discontinued operations	$	NA	NA	141

Series A and Series B Qurate Retail Common Stock

EPS for all periods through December 31, 2020, is based on the following weighted average shares outstanding. Excluded from diluted EPS for the years ended December 31, 2020, 2019 and 2018 are approximately 28 million, 22 million and 25 million potentially dilutive common shares, respectively, because their inclusion would be antidilutive.


	Years ended December 31,
	2020	2019	2018

	number of shares in millions
Basic WASO	416	424	462
Potentially dilutive shares	5	—	3
Diluted WASO	421	424	465

Series A and Series B Liberty Ventures Common Stock

All of the outstanding shares of Liberty Ventures Series A and B common stock were redeemed for GCI Liberty Series A and B common stock as a result of the GCI Liberty Split-Off on March 9, 2018. EPS for the year ended December 31, 2018 is based on basic WASO of 86 million, potentially dilutive shares of 1 million and diluted WASO of 87 million. Excluded from diluted EPS for the year ended December 31, 2018 are less than a million potential common shares because their inclusion would be antidilutive.

II-43

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Reclasses and adjustments

Certain prior period amounts have been reclassified for comparability with the current year presentation.

As a result of repurchases of Series A Qurate Retail common stock, the Company’s additional paid-in capital balance was in a deficit position in certain quarterly periods during the years ended December 31, 2020, 2019 and 2018. In order to maintain a zero balance in the additional paid-in capital account, we reclassified the amount of the deficit at December 31, 2020, 2019 and 2018 to retained earnings.

Estimates

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) recurring and non-recurring fair value measurements, (ii) accounting for income taxes and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.

(3) Supplemental Disclosures to Consolidated Statements of Cash Flows


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Cash paid for acquisitions:
Fair value of assets acquired	$	—	—	(11)
Intangible assets subject to amortization		—	—	(4)
Net liabilities assumed		—	—	10
Deferred tax assets (liabilities)		—	—	5
Cash paid (received) for acquisitions, net of cash acquired	$	—	—	—

Cash paid for interest	$	392	360	362

Cash paid for income taxes	$	116	175	226

Non-cash capital additions obtained in exchange for liabilities	$	—	36	—

II-44

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

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


		December 31,	December 31,
		2020	2019

		in millions
Cash and cash equivalents	$	806	673
Restricted cash included in other current assets		8	8
Total cash, cash equivalents and restricted cash in the consolidated statement of cash flows	$	814	681

(4) Disposals

~~(4)~~

The Other category for the Ventures Group is comprised of alternative energy investments and other investments. The alternative energy investments generally operate at a loss but provide favorable tax attributes recorded through the income tax (expense) benefit line item in the consolidated statements of operations. During the year ended December 31, 2015, Liberty recorded an impairment of approximately $98 million, based on a discounted cash flow valuation (Level 3), related to one of its alternative energy investments which had underperformed operationally.

~~II-58~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Investment in Liberty Broadband

~~As discussed~~3,822

Investment in Charter

1,866

Corporate Cash

475

Margin Loan

(996)

Deferred Income Tax Liabilities

(550)

Other, net

(270)

4,347

Following the contribution, Qurate Retail effected a tax-free separation of its controlling interest in the combined company (the “GCI Liberty Split-Off”), GCI Liberty, to the holders of Liberty Ventures common stock in full redemption of all outstanding shares of such stock, in which each outstanding share of Series A Liberty Ventures common stock was redeemed for 1 share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for 1 share of GCI Liberty Class B common stock. Simultaneous with the closing of the Transactions, QVC Group common stock became the only outstanding common stock of Qurate Retail, and thus QVC Group common stock ceased to function as a tracking stock. On April 9, 2018, Liberty Interactive Corporation was renamed Qurate Retail, Inc. On May 23, 2018, Qurate Retail amended its charter to eliminate the tracking stock capitalization structure and reclassify each share of QVC Group common stock into 1 share of the corresponding series of new common stock of Qurate Retail. Throughout this annual report, we refer to our Series A and Series B common stock as “Qurate Retail common stock” and “QVC Group common stock.” In July 2018, the Internal Revenue Service (“IRS”) completed its review of the GCI Liberty Split-Off and informed Qurate Retail that it agreed with the nontaxable characterization of the transactions. Qurate Retail received an Issue Resolution Agreement from the IRS documenting this conclusion.

On October 17, 2018, Qurate Retail announced a series of initiatives designed to better position its HSN and QVC U.S. businesses (“QRG Initiatives”). As part of the QRG Initiatives, QVC will close its fulfillment centers in Lancaster, Pennsylvania and Roanoke, Virginia and leased a new fulfillment center in Bethlehem, Pennsylvania, that commenced in 2019 (see note 8). Qurate Retail recorded transaction related costs of $41 million during the year ended December 31, 2018 related to the QRG Initiatives, which primarily related to severance costs. Also, as a result of changes in internal reporting from the QRG Initiatives, during the first quarter of 2019 the Company changed its reportable segments to combine HSN and QVC U.S. into one reportable segment called “QxH.”

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

(2) Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash equivalents consist of investments which are readily convertible into cash and have maturities of three months or less at the time of acquisition.

Receivables

A summary of activity in the allowance for doubtful accounts is as follows:


	Balance		Additions			Balance
	beginning		Charged		Deductions-	end of
	of year		to expense	Other	write-offs	year

	amounts in millions
2020	$	129	92	—	(89)	132
2019	$	117	130	4	(122)	129
2018	$	92	123	3	(101)	117

Inventory

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

method of disposition including sales to individual customers, returns to product vendors, liquidations and the estimated recoverable values of each disposition category. Inventory is stated net of inventory obsolescence reserves of $181 million and $152 million for the years ended December 31, 2020 and 2019, respectively.

Investments

Derivative Instruments and Hedging Activities

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

ineffective portion of the change in fair value of a derivative instrument that qualifies as a cash flow hedge is reported in earnings.

Property and Equipment

Property and equipment consisted of the following:


	December 31,		December 31,
	2020		2019

	amounts in millions
Land	$	133	128
Buildings and improvements		1,291	1,204
Support equipment		1,243	1,023
Projects in progress		44	169
Finance lease right-of-use ("ROU") assets		278	282
Total property and equipment	$	2,989	2,806

Intangible Assets

The quantitative goodwill impairment test compares the estimated fair value of a reporting unit to its carrying value. Developing estimates of fair value requires significant judgments, including making assumptions about appropriate discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and timing of expected future cash flows. The cash flows employed in Qurate Retail's valuation analyses are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There is no assurance that actual results in the future will approximate these forecasts.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Impairment of Long-lived Assets

Noncontrolling Interests

Foreign Currency Translation

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Revenue Recognition

Disaggregated revenue by segment and product category consisted of the following:


	Year ended
	December 31, 2020
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,529	1,199	490	903	6,121
Beauty		1,261	724	73	—	2,058
Apparel		1,170	437	583	166	2,356
Accessories		944	260	394	—	1,598
Electronics		1,069	122	17	—	1,208
Jewelry		363	216	51	—	630
Other revenue		169	9	28	—	206
Total Revenue	$	8,505	2,967	1,636	1,069	14,177


	Year ended
	December 31, 2019
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,053	1,010	422	729	5,214
Beauty		1,304	659	53	—	2,016
Apparel		1,291	439	582	172	2,484
Accessories		919	262	416	—	1,597
Electronics		1,142	104	15	—	1,261
Jewelry		402	221	54	—	677
Other revenue		166	14	29	—	209
Total Revenue	$	8,277	2,709	1,571	901	13,458

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018


	Year ended
	December 31, 2018
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	3,185	1,023	511	791	5,510
Beauty		1,330	640	50	—	2,020
Apparel		1,325	453	684	180	2,642
Accessories		934	273	472	—	1,679
Electronics		1,134	119	18	—	1,271
Jewelry		474	213	53	—	740
Other revenue		162	17	29	—	208
Total Revenue	$	8,544	2,738	1,817	971	14,070

The Company recognizes revenue related to its company branded credit cards over time as the credit cards are used by Qurate Retail's customers.

Sales, value add, use and other taxes we collect concurrent with revenue-producing activities are excluded from revenue.

The Company has elected to treat shipping and handling activities that occur after the customer obtains control of the goods as a fulfillment cost and not as a promised good or service. Accordingly, the Company accrues the related shipping costs and recognizes revenue upon delivery of goods to the shipping carrier. In electing this accounting policy, all shipping and handling activities are treated as fulfillment costs.

The Company generally has payment terms with its customers of one year or less and has elected the practical expedient applicable to such contracts not to consider the time value of money.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

A summary of activity in the allowance for sales returns, is as follows:


		Balance beginning of year	Additions - charged to earnings	Deductions	Balance end of year

		in millions
2020	$	261	2,188	(2,149)	300
2019	$	266	2,336	(2,341)	261
2018	$	267	2,434	(2,435)	266

Cost of Sales

Cost of sales primarily includes actual product cost, provision for obsolete inventory, buying allowances received from suppliers, shipping and handling costs and warehouse costs.

Stock-Based Compensation

Income Taxes

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Earnings (Loss) Attributable to Qurate Retail Stockholders and Earnings (Loss) Per Common Share

Net earnings (loss) attributable to Qurate Retail stockholders is comprised of the following (amounts in millions):


	Years ended December 31,
	2020		2019	2018
Qurate Retail
Net earnings (loss) from continuing operations	$	1,204	(456)	674
Net earnings (loss) from discontinued operations	$	NA	NA	NA
Liberty Ventures
Net earnings (loss) from continuing operations	$	NA	NA	101
Net earnings (loss) from discontinued operations	$	NA	NA	141

Series A and Series B Qurate Retail Common Stock


	Years ended December 31,
	2020	2019	2018

	number of shares in millions
Basic WASO	416	424	462
Potentially dilutive shares	5	—	3
Diluted WASO	421	424	465

Series A and Series B Liberty Ventures Common Stock

All of the outstanding shares of Liberty Ventures Series A and B common stock were redeemed for GCI Liberty Series A and B common stock as a result of the GCI Liberty Split-Off on March 9, 2018. EPS for the year ended December 31, 2018 is based on basic WASO of 86 million, potentially dilutive shares of 1 million and diluted WASO of 87 million. Excluded from diluted EPS for the year ended December 31, 2018 are less than a million potential common shares because their inclusion would be antidilutive.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Reclasses and adjustments

Certain prior period amounts have been reclassified for comparability with the current year presentation.

Estimates

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) recurring and non-recurring fair value measurements, (ii) accounting for income taxes and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.

(3) Supplemental Disclosures to Consolidated Statements of Cash Flows


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Cash paid for acquisitions:
Fair value of assets acquired	$	—	—	(11)
Intangible assets subject to amortization		—	—	(4)
Net liabilities assumed		—	—	10
Deferred tax assets (liabilities)		—	—	5
Cash paid (received) for acquisitions, net of cash acquired	$	—	—	—

Cash paid for interest	$	392	360	362

Cash paid for income taxes	$	116	175	226

Non-cash capital additions obtained in exchange for liabilities	$	—	36	—

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

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


		December 31,	December 31,
		2020	2019

		in millions
Cash and cash equivalents	$	806	673
Restricted cash included in other current assets		8	8
Total cash, cash equivalents and restricted cash in the consolidated statement of cash flows	$	814	681

(4) Disposals

Disposals - Presented as Discontinued Operations

On March 9, 2018, Qurate Retail completed the GCI Liberty Split-Off. At the time of the GCI Liberty Split-Off, GCI Liberty was comprised of, among other things, GCI Liberty’s legacy business, Qurate Retail’s former interest in Liberty Broadband, Charter and LendingTree, and Qurate Retail’s former wholly-owned subsidiary Evite. Qurate Retail viewed Liberty Broadband, LendingTree and Evite as separate components and evaluated them separately for discontinued operations presentation. As Qurate Retail’s former interest in Charter was accounted for as an available for sale investment it did not meet the definition of a component for discontinued operation presentation. The disposition of Liberty Broadband was considered significant to the overall financial statements. Accordingly, the accompanying consolidated financial statements of Qurate Retail have been prepared to reflect Qurate Retail’s interest in Liberty Broadband as a discontinued operation for the year ended December 31, 2018. The disposition of LendingTree and Evite as part of the GCI Liberty Split-Off does not have a major effect on Qurate Retail’s historical or future results. Accordingly, LendingTree and Evite are not presented as discontinued operations in the accompanying consolidated financial statements of Qurate Retail. LendingTree and Evite are included in the Corporate and other segment through March 8, 2018. See “Disposals – Not Presented as Discontinued Operations” below for additional information regarding Evite and LendingTree.

Certain financial information for Qurate Retail’s investment in Liberty Broadband, which is included in earnings (loss) from discontinued operations, is as follows (amounts in millions):


		Year ended December 31,
		2018
Earnings (loss) before income taxes	$	187
Income tax (expense) benefit	$	(46)

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The combined impact from discontinued operations, discussed above, is as follows:


	Year ended December 31,
		2018
Basic earnings (loss) from discontinued operations attributable to Qurate Retail shareholders per common share (note 2):
Series A and Series B Qurate Retail common stock	$	NA
Series A and Series B Liberty Ventures common stock	$	1.64
Diluted earnings (loss) from discontinued operations attributable to Qurate Retail shareholders per common share (note 2):
Series A and Series B Qurate Retail common stock	$	NA
Series A and Series B Liberty Ventures common stock	$	1.62

Disposals – Not Presented as Discontinued Operations

As discussed above, on March 9, 2018, Qurate Retail completed the GCI Liberty Split-Off. Although Liberty Broadband has been presented as a discontinued operation, Evite and LendingTree are not presented as discontinued operations. Included in revenue in the accompanying consolidated statements of operations is $3 million for the year ended December 31, 2018, related to Evite. Included in net earnings (loss) in the accompanying consolidated statements of operations are losses of $2 million for the year ended December 31, 2018, related to Evite. Included in net earnings (loss) in the accompanying consolidated statements of operations are earnings of less than a million for the year ended December 31, 2018, related to LendingTree.

(5) Assets and Liabilities Measured at Fair Value

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The Company's assets and liabilities measured at fair value are as follows:


	December 31, 2020				December 31, 2019
			Quoted prices			Quoted prices
			in active	Significant		in active	Significant
			markets	other		markets	other
			for identical	observable		for identical	observable
			assets	inputs		assets	inputs
Description	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)

	amounts in millions
Cash equivalents	$	290	290	—	339	339	—
Indemnification asset (1)	$	345	—	345	202	—	202
Debt	$	1,750	—	1,750	1,557	—	1,557

(1)

The indemnification asset is included in connection with the merger of Charter and TWC, on May 18, 2016, Liberty invested $2.4 billion in Liberty Broadband Series C nonvoting shares. As of December 31, 2017, Liberty has a 23.5% economic ownership interest in Liberty Broadband. Due to overlapping boards of directors and management, Liberty has been deemed to have significant influence over Liberty Broadband for accounting purposes, even though Liberty does not have any voting rights. Liberty has elected to apply the fair value option for its investment in Liberty Broadband (Level 1) as it is believed that the Company’s investors value this investment basedOther current assets on the trading price of Liberty Broadband. Liberty recognizes changes in the fair value of its investment in Liberty Broadband in realized and unrealized gains (losses) on financial instruments, net in the consolidated statements of operations.

~~(10) Goodwill and Other Intangible Assets~~

~~Goodwill~~

~~Changes in the carrying amount of goodwill are as follows:~~

QVC

zulily

HSN

Corporate and Other

Total

amounts in millions

Balance at January 1, 2016

$
5,149

860

—

103

6,112

Acquisition (1)

—

57

—

—

57

Disposition (2)

—

—

—

(78)

(78)

Foreign currency translation adjustments

(39)

—

—

—

(39)

Balance at December 31, 2016

5,110

917

—

25

6,052

Acquisition (3)

—

—

933

17

950

Foreign currency translation adjustments

80

—

—

—

80

Balance at December 31, 2017

$
5,190

917

933

42

7,082

~~(1)~~

~~Subsequent to December 31, 2015, the preliminary purchase price allocation for the zulily acquisition was adjusted, resulting in a $57 million increase to goodwill.~~

~~(2)~~

As discussed in note 6, Liberty completed the CommerceHub Spin-Off on July 22, 2016, resulting in a $21 million decrease to goodwill. In addition, as discussed in note 6, Liberty completed the Expedia Holdings Split-Off on November 4, 2016, resulting in a $57 million decrease to goodwill related to Bodybuilding.

~~(3)~~

~~Goodwill recognized from acquisitions primarily relates to assembled workforces, website community and other intangible assets that do not qualify for separate recognition.~~

~~As presented in the accompanying~~ consolidated balance sheets ~~trademarks is the other significant indefinite lived intangible asset.~~

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~Intangible Assets Subject to Amortization~~

~~Intangible assets subject to amortization are comprised of the following:~~

December 31, 2017

December 31, 2016


Gross



Net

Gross



Net

carrying

Accumulated

carrying

carrying

Accumulated

carrying

amount

amortization

amount

amount

amortization

amount

amounts in millions

Television distribution rights

$
730

(652)

78

2,279

(2,095)

184

Customer relationships

3,356

(2,626)

730

2,910

(2,394)

516

Other

1,268

(828)

440

965

(660)

305

Total

$
5,354

(4,106)

1,248

6,154

(5,149)

1,005

The weighted average life of these amortizable intangible assets was approximately 9 years, at the time of acquisition. However, amortization is expected to match the usage of the related asset and will be on an accelerated basis as demonstrated in table below.

Amortization expense for intangible assets with finite useful lives was $549 million, $703 million and $550 million for the years ended December 31, 2017, 2016 and 2015, respectively. Based on its amortizable intangible assets as of December 31, ~~2017, Liberty expects that amortization expense will be as follows~~2020 and 2019.

Pursuant to an indemnification agreement initially entered into by GCI Liberty and assumed by Liberty Broadband in connection with a merger between the two companies, Liberty Broadband has agreed to indemnify LI LLC for certain payments made to holders of LI LLC’s 1.75% Exchangeable Debentures due 2046 (the “1.75% Exchangeable Debentures”). An indemnity asset in the amount of $281 million was recorded upon completion of the GCI Liberty Split-Off. In June 2018, Qurate Retail repurchased 417,759 of the 1.75% Exchangeable Debentures for approximately $457 million, including accrued interest, and GCI Liberty made a payment under the indemnification agreement to Qurate Retail in the amount of $133 million. The remaining indemnification to LI LLC for certain payments made to holders of the 1.75% Exchangeable Debentures pertains to the holders’ ability to exercise their exchange right according to the terms of the debentures on or before October 5, 2023. Such amount will equal the difference between the exchange value and par value of the 1.75% Exchangeable Debentures at the time the exchange occurs. The indemnification asset recorded in the consolidated balance sheets as of December 31, 2020 represents the fair value of the estimated exchange feature included in the 1.75% Exchangeable Debentures primarily based on observable market data as significant inputs (Level 2). As of December 31, 2020 and 2019, a holder of the 1.75% Exchangeable Debentures does have the ability to exchange and, accordingly, such indemnification asset is included as a current asset in our consolidated balance sheets as of those dates.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

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:


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Equity securities	$	(1)	(22)	155
Exchangeable senior debentures		(277)	(337)	(3)
Indemnification asset		143	123	(70)
Other financial instruments		25	(15)	(6)
	$	(110)	(251)	76

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 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 were gains of $21 million, $1 million and $70 million, net of the recognition of previously unrecognized gains and losses, for the years ended December 31, 2020, 2019, and 2018, respectively. The cumulative change was a gain of $193 million as of December 31, 2020, net of the recognition of previously unrecognized gains and losses.

(6) Goodwill and Other Intangible Assets

Goodwill

Changes in the carrying amount of goodwill are as follows:


	QxH		QVC International	Zulily	Corporate and Other	Total

	amounts in millions
Balance at January 1, 2019	$	5,228	860	917	12	7,017
Foreign currency translation adjustments		—	(1)	—	—	(1)
Impairment (1)		—	—	(440)	—	(440)
Balance at December 31, 2019		5,228	859	477	12	6,576
Foreign currency translation adjustments		—	62	—	—	62
Balance at December 31, 2020	$	5,228	921	477	12	6,638

(1)

See discussion of the ~~next five years (amounts in millions):~~

2018

$
401

2019

$
236

2020

$
162

2021

$
129

2022

$
77

~~Impairments~~

~~As of December 31, 2017 accumulated goodwill~~2019 impairment ~~losses for certain e-commerce companies was $56 million.~~

below.

Goodwill recognized from acquisitions primarily relates to assembled workforces, website community and other intangible assets that do not qualify for separate recognition.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

As presented in the accompanying consolidated balance sheets, tradenames is the other significant indefinite lived intangible asset.

Intangible Assets Subject to Amortization

Intangible assets subject to amortization are comprised of the following:


	December 31, 2020				December 31, 2019
	Gross			Net	Gross		Net
	carrying		Accumulated	carrying	carrying	Accumulated	carrying
	amount		amortization	amount	amount	amortization	amount

	amounts in millions
Television distribution rights	$	814	(751)	63	764	(624)	140
Customer relationships		3,334	(3,004)	330	3,319	(2,891)	428
Other		1,434	(1,048)	386	1,343	(956)	387
Total	$	5,582	(4,803)	779	5,426	(4,471)	955

The weighted average life of these amortizable intangible assets was approximately 9 years at the time of acquisition. However, amortization is expected to match the usage of the related asset and will be on an accelerated basis as demonstrated in table below.

Amortization expense for intangible assets with finite useful lives was $363 million, $386 million and $426 million for the years ended December 31, 2020, 2019 and 2018, respectively. Based on its amortizable intangible assets as of December 31, 2020, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions):


2021	$	296
2022	$	184
2023	$	120
2024	$	74
2025	$	50

Impairments

As a result of Zulily’s deteriorating financial performance during 2019, Zulily initiated a process to evaluate its current business model and long-term business strategy in light of the challenging retail environment. Upon completing the evaluation of Zulily’s model and long-term strategy, it was determined during the third quarter of 2019 that an indication of impairment existed for the Zulily reporting unit related to its tradename and goodwill. With the assistance of a third party specialist, the fair value of the tradename was determined using the relief from royalty method (Level 3), and an impairment in the amount of $580 million was recorded during the third quarter of 2019, in the impairment of intangible assets and long lived assets line item in the consolidated statements of operations. With the assistance of a third party specialist, the fair value of the Zulily reporting unit was determined using a discounted cash flow method (Level 3), and a goodwill impairment in the amount of $440 million was recorded during the third quarter of 2019, in the impairment of intangible assets and long lived assets line item in the consolidated statements of operations.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The Company performed a qualitative goodwill impairment analysis during the fourth quarter of 2019 and 2018 and determined that triggering events existed at the HSN reporting unit in both periods due to a variety of factors, primarily HSN’s inability to meet its 2019 and 2018 revenue projections. With the assistance of an external valuation expert, the Company determined the estimated business enterprise value of HSN, including its intangible assets and goodwill as of December 31, 2018, and the estimated value of its tradename intangible asset as of December 31, 2019 and December 31, 2018. In 2018 the business enterprise valuation was performed using a combination of a discounted cash flow model using HSN’s projections of future operating performance (income approach) and market multiples (market approach) (Level 3). In both periods the tradename valuation was performed using a relief from royalties method, primarily using a discounted cash flow model using HSN’s projections of future operating performance (income approach) and applying a royalty rate (market approach) (Level 3). As a result of the analysis, HSN recorded a $147 million and a $30 million impairment to its tradename intangible asset as of December 31, 2019 and December 31, 2018, respectively. NaN impairment of HSN’s goodwill was necessary in 2018.

As of December 31, 2020 the Company had accumulated goodwill impairment losses of $440 million, which was all attributed to the Zulily reporting unit.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

(7) Debt

Debt is summarized as follows:


	Outstanding
	principal			Carrying value
	December 31,			December 31,	December 31,
	2020			2020	2019

	amounts in millions
Corporate level debentures
8.5% Senior Debentures due 2029	$	287		285	285
8.25% Senior Debentures due 2030		505		502	502
4% Exchangeable Senior Debentures due 2029		430		362	327
3.75% Exchangeable Senior Debentures due 2030		432		346	318
3.5% Exchangeable Senior Debentures due 2031		—		—	422
0.75% Exchangeable Senior Debentures due 2043		—		—	2
1.75% Exchangeable Senior Debentures due 2046		332		649	488
Subsidiary level notes and facilities
QVC 5.125% Senior Secured Notes due 2022		—		—	500
QVC 4.375% Senior Secured Notes due 2023		750		750	750
QVC 4.85% Senior Secured Notes due 2024		600		600	600
QVC 4.45% Senior Secured Notes due 2025		600		600	599
QVC 4.75% Senior Secured Notes due 2027		575		575	—
QVC 4.375% Senior Secured Notes due 2028		500		500	—
QVC 5.45% Senior Secured Notes due 2034		400		400	399
QVC 5.95% Senior Secured Notes due 2043		300		300	300
QVC 6.375% Senior Secured Notes due 2067		225		225	225
QVC 6.25% Senior Secured Notes due 2068		500		500	500
3.5% Exchangeable Senior Debentures due 2031		218		393	—
QVC Bank Credit Facilities		—		—	1,235
Deferred loan costs		—		(51)	(40)
Total consolidated Qurate Retail debt	$	6,654		6,936	7,412
Less debt classified as current				(1,750)	(1,557)
Total long-term debt			$	5,186	5,855

Exchangeable Senior Debentures

Each $1,000 debenture of Liberty Interactive LLC’s (“LI LLC”) 4% Exchangeable Senior Debentures was exchangeable at the holder's option for the value of 3.2265 shares of Sprint Corporation (“Sprint”) common stock and 0.7860 shares of Lumen Technologies, Inc. (“Lumen Technologies”) (formerly known as CenturyLink, Inc.) common stock. On April 1, 2020, T-Mobile US, Inc. (“T-Mobile”) completed its acquisition of Sprint Corporation (“TMUS/S Acquisition”) for 0.10256 shares of T-Mobile for every share of Sprint Corporation. Following the TMUS/S Acquisition, the reference shares attributable to each $1,000 original principal amount of the 4.0% Senior Exchangeable Debentures due 2029 consist of 0.3309 shares of common stock of T-Mobile, and 0.7860 shares of common stock of Lumen Technologies. LI LLC may, at its election, pay the exchange value in cash, Sprint and Lumen Technologies common stock or a combination thereof. LI LLC, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the face amount of the debentures plus accrued interest. As a result of various principal payments made to holders of

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

the 4% Exchangeable Senior Debentures, the adjusted principal amount of each $1,000 debenture is $917 as of December 31, 2020.

Each $1,000 debenture of LI LLC's 3.75% Exchangeable Senior Debentures was exchangeable at the holder's option for the value of 2.3578 shares of Sprint common stock and 0.5746 shares of Lumen Technologies common stock. Following the TMUS/S Acquisition, each $1,000 debenture of LI LLC’s 3.75% Exchangeable Senior Debentures is exchangeable at the holder’s option for the value of 0.2419 shares of T-Mobile common stock and 0.5746 shares of Lumen Technologies common stock. LI LLC may, at its election, pay the exchange value in cash, Sprint and Lumen Technologies common stock or a combination thereof. Qurate Retail, at its option, may redeem the debentures, in whole or in part, for cash equal to the face amount of the debentures plus accrued interest. As a result of various principal payments made to holders of the 3.75% Exchangeable Senior Debentures, the adjusted principal amount of each $1,000 debenture is $940 as of December 31, 2020.

In August 2016, Qurate Retail issued $750 million principal amount of new senior exchangeable debentures due September 2046 which bear interest at an annual rate of 1.75%. Each $1,000 debenture is exchangeable at the holder’s option for the value of 2.9317 shares of Charter Class A common stock. Qurate Retail may, at its election, pay the exchange value in cash, Charter Class A common stock or a combination thereof. The number of shares of Charter Class A common stock attributable to a debenture represents an initial exchange price of approximately $341.10 per share. On October 5, 2023, Qurate Retail, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the face amount of the debentures plus accrued interest. See note 5 for additional information about these debentures.

As part of a common control transaction with QVC completed in December 2020, QVC Global Corporate Holdings, LLC (“QVC Global”), a subsidiary of QVC, became the primary co-obligor of LI LLC’s 3.5% Exchangeable Senior Debentures (the “Motorola Exchangeables”), allowing the Motorola Exchangeables to be serviced direct by cash generated from QVC’s foreign operations. Concurrently, LI LLC issued a promissory note to QVC Global with an initial face amount of $1.8 billion, a stated annual interest rate of 0.48% and a maturity of December 29, 2029. Interest on the promissory note is to be paid annually beginning on December 29, 2021. Each $1,000 debenture of the Motorola Exchangeables is exchangeable at the holder's option for the value of 5.2598 shares of Motorola Solutions, Inc. (“MSI”). The remaining exchange value is payable, at QVC Global's option, in cash or MSI stock or a combination thereof. QVC Global, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the adjusted principal amount of the debentures plus accrued interest. As a result of various principal payments made to holders of the Motorola Exchangeables, the adjusted principal amount of each $1,000 debenture is $497 as of December 31, 2020. During the years ended December 31, 2020 and 2019, holders exchanged, under the terms of the Motorola Exchangeables, principal amounts of approximately $25 million and $58 million, respectively, and Qurate Retail made cash payments of approximately $49 million and $99 million, respectively, to settle the obligations.

Qurate Retail has elected to account for all of its exchangeables using the fair value option. Accordingly, changes in the fair value of these instruments are recognized as unrealized gains (losses) in the statements of operations. Qurate Retail will review the triggering events on a quarterly basis to determine whether a triggering event has occurred to require current classification of certain exchangeables, see additional discussion below.

Qurate Retail has sold, split-off or otherwise disposed of all of its shares of MSI, T-Mobile, Charter and Lumen Technologies common stock which underlie the respective exchangeable senior debentures. Because such exchangeable debentures are exchangeable at the option of the holder at any time and Qurate Retail can no longer use owned shares to redeem the debentures, Qurate Retail has classified for financial reporting purposes the debentures that could be redeemed for cash as a current liability. Exchangeable senior debentures classified as current totaled $1,750 million at December 31, 2020. Although such amount has been classified as a current liability for financial reporting purposes, the Company

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

~~II-60~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~(11) Debt~~

~~Debt is summarized as follows:~~

Outstanding

principal

Carrying value

December 31,

December 31,

December 31,

2017

2017

2016

amounts in millions

QVC Group

Corporate level notes and debentures

8.5% Senior Debentures due 2029

$
287

285

285

8.25% Senior Debentures due 2030

504

502

501

Subsidiary level notes and facilities

QVC 3.125% Senior Secured Notes due 2019

400

399

399

QVC 5.125% Senior Secured Notes due 2022

500

500

500

QVC 4.375% Senior Secured Notes due 2023

750

750

750

QVC 4.85% Senior Secured Notes due 2024

600

600

600

QVC 4.45% Senior Secured Notes due 2025

600

599

599

QVC 5.45% Senior Secured Notes due 2034

400

399

399

QVC 5.95% Senior Secured Notes due 2043

300

300

300

QVC Bank Credit Facilities

1,763

1,763

1,896

HSNi Bank Credit Facility

460

460

NA

Other subsidiary debt

170

170

174

Deferred loan costs

—

(24)

(28)

Total QVC Group

$
6,734

6,703

6,375

Ventures Group

Corporate level debentures

4% Exchangeable Senior Debentures due 2029

$
434

316

276

3.75% Exchangeable Senior Debentures due 2030

435

318

267

3.5% Exchangeable Senior Debentures due 2031

328

342

316

0.75% Exchangeable Senior Debentures due 2043

—

2

3

1.75% Exchangeable Senior Debentures due 2046

750

868

805

Total Ventures Group

$
1,947

1,846

1,667

Total consolidated Liberty debt

$
8,681

8,549

8,042

Less debt classified as current

(996)

(876)

Total long-term debt

7,553

7,166

~~Exchangeable Senior Debentures~~

Each $1,000 debenture of Liberty Interactive LLC’s (“Liberty LLC”) 4% Exchangeable Senior Debentures is exchangeable at the holder's option for the value of 3.2265 shares of Sprint Corporation (“Sprint”) common stock and 0.7860 shares of CenturyLink, Inc. ("CenturyLink") common stock. Liberty LLC may, at its election, pay the exchange value in cash, Sprint and CenturyLink common stock or a combination thereof. Liberty LLC, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the face amount of the debentures plus accrued interest.

Each $1,000 debenture of Liberty LLC's 3.75% Exchangeable Senior Debentures is exchangeable at the holder's option for the value of 2.3578 shares of Sprint common stock and 0.5746 shares of CenturyLink common stock. Liberty LLC may, at its election, pay the exchange value in cash, Sprint and CenturyLink common stock or a combination thereof.

~~II-61~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~Liberty, at its option, may redeem the debentures, in whole or in part, for cash equal to the face amount of the debentures plus accrued interest.~~

Each $1,000 debenture of Liberty LLC's 3.5% Exchangeable Senior Debentures (the "Motorola Exchangeables") was exchangeable at the holder's option for the value of 5.2598 shares of Motorola Solutions, Inc. and 4.6024 shares of Motorola Mobility Holdings, Inc., as a result of Motorola Inc.'s separation of Motorola Mobility Holdings, Inc. ("MMI") in a 1 for 8 stock distribution, and the subsequent 1 for 7 reverse stock split of Motorola, Inc. (which has been renamed Motorola Solutions, Inc. ("MSI")), effective January 4, 2011. MMI was acquired on May 22, 2012 for $40 per share in cash. Pursuant to the indenture, the cash paid to shareholders in the MMI acquisition was to be paid to the holders of the Motorola Exchangeables as an extraordinary distribution. Liberty LLC made a cash payment of $184.096 per debenture in the second quarter of 2012 for a total payment of $111 million. The remaining exchange value is payable, at Liberty's option, in cash or MSI stock or a combination thereof. Liberty LLC, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the adjusted principal amount of the debentures plus accrued interest. As a result of a cash distribution made by Liberty LLC in 2007, the cash disbursement discussed above and various principal payments made to holders of the Motorola Exchangeables, the adjusted principal amount of each $1,000 debenture is $547 as of December 31, 2017.

Each $1,000 original principal amount of the 0.75% Exchangeable Senior Debentures due 2043 is exchangeable for a basket of 3.1648 shares of common stock of Charter, 5.1635 shares of common stock of Time Warner and 0.6454 shares of Time, Inc., which may change over time to include other publicly traded common equity securities that may be distributed on or in respect of those shares of Charter and Time Warner (or into which any of those securities may be converted or exchanged). This basket of shares for which each Debenture in the original principal amount of $1,000 may be exchanged is referred to as the Reference Shares attributable to such Debenture, and to each issuer of Reference Shares as a reference company. Each Debenture is exchangeable at the option of the holder at any time, upon which they will be entitled to receive the Reference Shares attributable to such Debenture or, at the election of Liberty LLC, cash or a combination of Reference Shares and cash having a value equal to such Reference Shares. Upon exchange, holders will not be entitled to any cash payment representing accrued interest or outstanding additional distributions. Subsequent to December 31, 2017, an extraordinary additional distribution was made to the holders of the 0.75% Exchangeable Senior Debentures due 2043 in the amount of $11.9399 per $1,000 original principal of the debentures, which is attributable to the cash consideration of $18.50 per share paid to former holders of common stock of Time Inc. on January 31, 2018, in connection with the acquisition of Time Inc. by Meredith Corporation. The Company expects to pay the extraordinary additional distribution on March 1, 2018, to holders of record of the 0.75% Exchangeable Senior Debentures due 2043 on February 14, 2018, the special record date for the extraordinary additional distribution.

During the year ended December 31, 2016, holders exchanged, under the terms of the debentures, approximately $523 million principal of the 0.75% Exchangeable Senior Debentures due 2043 and Liberty made cash payments of approximately $1,181 million to settle the obligations. In addition, in conjunction with the Liberty Broadband transaction (see note 9), an extraordinary distribution of approximately $325 million was paid to holders of the 0.75% Exchangeable Senior Debentures due 2043.

In August 2016, Liberty issued $750 million principal amount of new senior exchangeable debentures due September 2046 which bear interest at an annual rate of 1.75%. Each $1,000 debenture is exchangeable at the holder’s option for the value of 2.9317 shares of Charter Class A common stock. Liberty may, at its election, pay the exchange value in cash, Charter Class A common stock or a combination thereof. The number of shares of Charter Class A common stock attributable to a debenture represents an initial exchange price of approximately $341.10 per share. On October 5, 2023, Liberty, at its option, may redeem the debentures, in whole or in part, for cash generally equal to the face amount of the debentures plus accrued interest.

~~II-62~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Liberty has elected to account for all of its Exchangeables using the fair value option. Accordingly, changes in the fair value of these instruments are recognized as unrealized gains (losses) in the statements of operations. Liberty will review the triggering events on a quarterly basis to determine whether a triggering event has occurred to require current classification of certain Exchangeables, see additional discussion below.

Liberty has sold, split-off or otherwise disposed of all of its shares of MSI, Sprint and CenturyLink common stock which underlie the respective Exchangeable Senior Debentures. Because such exchangeable debentures are exchangeable at the option of the holder at any time and Liberty can no longer use owned shares to redeem the debentures, Liberty has classified for financial reporting purposes the portion due 2043 of the debentures that could be redeemed for cash as a current liability. Exchangeable Senior Debentures classified as current totaled $978 million at December 31, 2017. Although such amount has been classified as a current liability for financial reporting purposes, the Company believes the probability that the holders of such instruments will exchange a significant principal amount of the debentures prior to maturity is unlikely.

Interest on the Company's exchangeable debentures is payable semi-annually based on the date of issuance. At maturity, all of the Company's exchangeable debentures are payable in cash.

Senior Debentures

Interest on the 8.5% Senior Debentures due 2029 and the 8.25% Senior Debentures due 2030 ~~(the~~(collectively, the “Senior Debentures”) is payable semi-annually based on the date of issuance. The Senior Debentures are stated net of an aggregate unamortized discount and issuance costs of $5 million at December 31, 2020 and $4 million at December 31, ~~2017 and $5 million at December 31, 2016.~~2019. Such discount isand issuance costs are being amortized to interest expense in the accompanying consolidated statements of operations.

QVC Senior Secured Notes

On March 18, 2014, QVC issued $400 million principal amount of 3.125% Senior Secured Notes due 2019 at an issue price of 99.828% and $600 million principal amount of 4.85% Senior Secured Notes due 2024 at an issue price of 99.927% (collectively, the “March Notes”). The March Notes are secured by the capital stock of QVC and certain of QVC’s subsidiaries and have equal priority to QVC’s senior secured credit facility. The net proceeds from the March Notes offerings were used to repay indebtedness under QVC’s senior secured credit facility and for working capital and other general corporate purposes.

On August 21, 2014, QVC issued $600 million principal amount of 4.45% Senior Secured Notes due 2025 at an issue price of 99.860% and $400 million principal amount 5.45% Senior Secured Notes due 2034 at an issue price of 99.784% (collectively, the “August Notes”). The August Notes are secured by the capital stock of QVC and certain of QVC’s subsidiaries and have equal priority to QVC’s senior secured credit facility.

During prior years, QVC issued ~~$500 million principal amount of 7.375% Senior Secured Notes due 2020 at par,~~ $500 million principal amount of 5.125% Senior Secured Notes due 2022 at par, $750 million principal amount of 4.375% Senior Secured Notes due 2023 at par and $300 million principal amount of 5.95% Senior Secured Notes due 2043 at par.

In September 2018, QVC completed a registered debt offering for $225 million of 6.375% Senior Notes due 2067 (the “2067 Notes”). QVC has the option to call the 2067 Notes after 5 years at par value, plus accrued and unpaid interest.

On ~~April 15, 2015,~~November 26, 2019, QVC completed a registered debt offering for $435 million of the ~~redemption of $500 million principal amount of its 7.375%~~6.25% Senior Secured Notes due 2068 (“2068 Notes”) at par. QVC granted an option for underwriters to purchase up to an additional $65 million of 2068 Notes which was exercised on December 6, 2019, bringing the aggregate principal borrowed to $500 million. QVC has the option to call the 2068 Notes after 5 years at par value, plus accrued and unpaid interest.

On February 4, 2020, ~~whereby holders received consideration~~QVC completed a registered debt offering for $575 million of ~~$1,036.88~~the 4.75% Senior Secured Notes due 2027 (the "2027 Notes”) at par. Interest on the 2027 Notes is paid semi-annually in February and August, with payments commencing on August 15, 2020. The proceeds were used to partially prepay existing indebtedness under QVC's bank credit facilities.

On August 20, 2020, QVC completed a registered debt offering for ~~each $1,000~~$500 million of ~~principal tendered.~~the 4.375% Senior Secured Notes due 2028 (the "2028 Notes") at par. Interest on the 2028 Notes will be paid semi-annually in March and September, with payments commencing on March 1, 2021. The proceeds were used in a cash tender offer (the “Tender Offer”) to purchase the outstanding $500 million of 5.125% Senior Secured Notes due 2022 (the “2022 Notes”). QVC also issued a notice of redemption exercising its right to optionally redeem any of the 2022 Notes that remained outstanding following the Tender Offer. As a result of the Tender Offer and the redemption, the Company recorded a ~~$21 million~~loss on extinguishment ~~loss is included in other, net~~of debt in the ~~accompanying~~ consolidated ~~statement~~statements of operations of $42 million for the year ended December 31, ~~2015.~~

2020.

~~II-63~~II-53

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

QVC Bank Credit Facilities

On ~~March 9, 2015,~~December 31, 2018, QVC ~~amended~~entered into the Fourth Amended and ~~restated its senior secured credit facility,~~Restated Credit Agreement with Zulily as co-borrowers (collectively, the “Borrowers”) which is a multi-currency facility that ~~provided~~provides for a ~~$2.25~~$2.95 billion revolving credit facility, with a ~~$250~~$450 million sub-limit for standby letters of credit and $1.5 billion of uncommitted incremental revolving loan commitments or incremental term loans.

~~On June 23, 2016, QVC amended and restated its senior secured credit facility (the “Third Amended and Restated Credit Agreement”) with zulily as co-borrower (the “Borrowers”).~~ The Third Amended and Restated Credit Agreement is a multi-currency facility that provides for a $2.65 billion revolving credit facility, with a $300 million total sub-limit for standby letters of credit and $1.5 billion of uncommitted incremental revolving loan commitments or incremental term loans. The ThirdFourth Amended and Restated Credit Agreement includes a $400 million tranche that may be borrowed by QVC or ~~zulily,~~Zulily, with ~~an additional~~a $50 million sub-limit for ~~standing~~standby letters of credit. The remaining ~~$2.25~~$2.55 billion and any incremental loans may be borrowed only by QVC. ~~The borrowers may elect~~Borrowings that ~~the~~are alternate base rate loans ~~extended under the senior secured credit facility~~will bear interest at a ~~rate~~ per annum rate equal to the ~~ABR or LIBOR, as each is defined in the senior secured credit facility agreement,~~base rate plus a margin ofthat varies between 0.25% to 0.75% depending on the Borrowers’ combined ratio of consolidated total debt to consolidated EBITDA (the “Combined Consolidated Leverage Ratio”). Borrowings that are LIBOR loans will bear interest at a per annum rate equal to the applicable LIBOR plus a margin that varies between 1.25% and 1.75% depending on ~~various factors.~~the Borrowers’ Combined Consolidated Leverage Ratio. Each loan may be prepaid ~~in whole or in part~~at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments ~~are~~will be required other than when borrowings and letter of credit usage exceed availability; provided that, if ~~zulily~~Zulily ceases to be controlled by ~~Liberty,~~Qurate Retail, all of its loans must be repaid and its letters of credit cash collateralized. ~~Any amounts prepaid on the revolving facility may be reborrowed.~~ The facility matures on ~~June 23, 2021, except that $140 million~~December 31, 2023. Payment of ~~the $2.25 billion commitment available to QVC matures on March 9, 2020. Borrowings under the facility~~loans may be accelerated following certain customary events of default. The purpose of the amendment was to, among other things, extend the maturity of QVC’s senior secured credit facility, provide zulily the opportunity to borrow on the senior secured credit facility and lower the interest rate on borrowings.

The payment and performance of the borrowers’ obligations (including ~~zulily’s~~Zulily’s obligations) under the ~~Third~~Fourth Amended and Restated Credit Agreement are guaranteed by each of QVC’s Material Domestic Subsidiaries (as defined in the ~~Third~~Fourth Amended and Restated Credit Agreement). Further, the borrowings under the ~~Third~~Fourth Amended and Restated Credit Agreement are secured, pari passu with QVC’s existing notes, by a pledge of all of QVC’s equity interests. In addition, the payment and performance of the borrowers’ obligations with respect to the $400 million tranche available to both QVC and ~~zulily~~Zulily are also guaranteed by ~~zulily~~Zulily and secured by a pledge of all of ~~zulily’s~~Zulily’s equity interests.

The ~~Third~~Fourth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on QVC and ~~zulily~~Zulily and each of their respective restricted subsidiaries (subject to certain exceptions) with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets; paying certain dividends and other restricted payments; dissolving, consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; restricting subsidiary distributions; and limiting QVC’s consolidated leverage ratio ~~which is defined in QVC’s senior secured credit facility as QVC’s consolidated total debt to Adjusted OIBDA ratio for~~and the most recent four fiscal quarter period; and limiting the borrowers’ combined consolidated leverage ratio, which is defined in QVC’s senior secured credit facility as QVC and zulily’s combined debt to Adjusted OIBDA ratio for the most recent four fiscal quarter period. Liberty defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding stock-based compensation).Borrowers’ Combined Consolidated Leverage Ratio.

~~The interest rate on borrowings outstanding under the Third Amended and Restated Credit Agreement was 3.0% at December 31, 2017.~~ Availability under the ~~Third~~Fourth Amended and Restated Credit Agreement at December 31, ~~2017~~2020 was ~~$877~~$2.93 billion, including the remaining portion of the $400 million tranche available to Zulily and net of ~~$10~~$23 million of outstanding standby letters of credit.

~~II-64~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~QVC~~ Interest Rate Swap ~~Arrangement~~

Arrangements

During the year ended December 31, 2016, QVC entered into a three-year interest rate swap arrangement with a notional amount of $125 million to mitigate the interest rate risk associated with interest payments related to its variable rate debt. The swap arrangement ~~does~~did not qualify as a cash flow hedge under ~~GAAP. Accordingly, changes~~GAAP, and expired in June 2019. In July 2019, QVC entered into a three-year interest swap arrangement with a notional amount of $125 million. The swap arrangement did not qualify as a cash flow hedge under U.S. GAAP and the fair value of the swap ~~are reflected~~instrument was in ~~Realized~~a net liability position of $3 million and ~~unrealized gains or losses on financial instruments, net in the accompanying consolidated statements of operations.~~

~~HSNi Bank Credit Facility~~

On January 27, 2015, HSNi entered into a $1.25 billion five-year syndicated credit agreement ("Credit Agreement") which is secured by 100% of the voting equity securities of HSNi's U.S. subsidiaries and 65% of HSNi's first-tier foreign subsidiaries. Certain HSNi subsidiaries have unconditionally guaranteed HSNi's obligations under the Credit Agreement. The Credit Agreement, which included a $750less than $1 million revolving credit facility and a $500 million term loan, could be increased up to $1.75 billion subject to certain conditions and was set to expire on January 27, 2020. On December 29, 2017, the Credit Agreement was amended, the outstanding balance on the term loan was repaid, and the revolving credit facility was increased to $1 billion. The maturity of the revolving credit facility was extended to December 29, 2022. Loans under the amended Credit Agreement bear interest at a per annum rate equal to LIBOR plus a predetermined margin that ranges from 1.25% to 1.75% or the Base Rate (as defined in the Credit Agreement) plus a predetermined margin that ranges from 0.25% to 0.75%. ~~HSNi pays a commitment fee ranging from 0.20% to 0.30% (based on the leverage ratio) on the unused portion of the revolving credit facility.~~

The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities including a maximum leverage ratio of 3.50x (as defined in the Credit Agreement). The interest rate on the $460 million outstanding long-term debt balance as of December 31, 2017 was 3.07%. The amount available to HSNi under the revolving credit facility portion of the Credit Agreement is reduced by the amount of outstanding letters of credit issued under the revolving credit facility, which totaled ~~$7 million~~ as of December 31, ~~2017. The ability to draw funds under the revolving credit facility is dependent upon meeting the aforementioned financial covenants. As of~~2020 and 2019, respectively. On December 31, ~~2017, the amount that could be borrowed under the revolving credit facility, after consideration of the financial covenants and the outstanding letters of credit, was approximately~~ ~~$533 million~~.

~~HSNi Interest Rate Swap Arrangement~~

~~HSNi has an outstanding~~2018, QVC entered into a thirteen month interest rate swap arrangement that effectively ~~converts~~converted $250 million of its variable rate bank credit facility to a fixed rate of 1.05% ~~with a maturity date~~which expired in January ~~2020 (the swapped fixed rate is exclusive~~2020.

II-54

Table of ~~the credit spread under the Credit Agreement). Based on HSNi's leverage ratio as of~~ Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, the all-in fixed rate was 2.3525%.~~ ~~The interest rate swaps were previously designated~~2020, 2019 and qualified as cash flow hedges; therefore, the effective portions of the changes in fair value were recorded in accumulated other comprehensive income (loss). Going forward the Company will account for the interest rate swaps at fair value with changes recorded through unrealized gain (loss).2018

~~Other Subsidiary Debt~~

~~Other subsidiary debt at December 31, 2017 is comprised of capitalized satellite transponder lease obligations.~~

Debt Covenants

~~Liberty, QVC~~Qurate Retail and ~~other~~its subsidiaries were in compliance with all debt covenants at December 31, ~~2017.~~

~~II-65~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

2020.

Five Year Maturities

The annual principal maturities of ~~Liberty's~~Qurate Retail's debt, based on stated maturity dates, for each of the next five years is as follows (amounts in millions):


2021	$	11
2022	$	11
2023	$	761
2024	$	612
2025	$	612

2018

$
24

2019

$
425

2020

$
23

2021

$
1,786

2022

$
980

Fair Value of Debt

~~Liberty~~Qurate Retail estimates the fair value of its debt based on the quoted market prices for the same or similar issues or on the current rate offered to ~~Liberty~~Qurate Retail for debt of the same remaining ~~maturities.~~ maturities (Level 2). The 2067 Notes and 2068 Notes are traded on the New York Stock Exchange, and the Company considers them to be actively traded. As such, the 2067 Notes and 2068 Notes are valued based on their trading price (Level 1). The fair value, based on quoted prices of instruments not considered to be active markets, ~~(Level 2),~~ of ~~Liberty's~~Qurate Retail's publicly traded debt securities that are not reported at fair value in the accompanying consolidated balance sheets is as follows (amounts in millions):

December 31,

2017

2016

Senior debentures

$
866

853

QVC senior secured notes

$
3,636

3,496


	December 31,
	2020		2019
Senior debentures	$	892	804
QVC senior secured notes	$	4,705	4,011

Due to the variable rate nature, ~~Liberty~~Qurate Retail believes that the carrying amount of its subsidiary debt not discussed above approximated fair value at December 31, ~~2017.~~2020.

(8) Leases

~~(12) Income Taxes~~

~~On December 22, 2017,~~Effective January 1, 2019, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) providing bonus depreciation that will allow for full expensing of qualified property; (3) creating a new limitation on deductible interest expense; (4) eliminating the corporate alternative minimum taxCompany adopted Accounting Standards Codification Topic 842 (“~~AMT”~~ASC 842”) and changing how existing AMT credits can be realized; (5) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; (6) adding limitations onelected the ~~deductibility of certain executive compensation;~~ ~~and (7) requiring~~transition method that allows for a ~~one-time transition tax on certain unrepatriated earnings of foreign subsidiaries that is payable over eight years~~. The SEC issued guidance on accounting for the tax effects of the Tax Act. The Company must reflect the income tax effects of those aspects of the Tax Act for which the accounting is known. To the extent that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements and the Tax Act provides a measurement period that should not extend beyond one year from the Tax Act enactment date. If a company cannot determine a provisional estimate to be included in the financial statements, it should continue to apply the tax laws that were in effect immediately before the enactment of the Tax Act.

~~The corporate rate reduction was applied to our inventory of deferred tax assets and deferred tax liabilities which resulted in the net tax benefit~~cumulative-effect adjustment in the period ~~ended December 31, 2017.~~ of adoption. ASC 842 requires a company to recognize lease assets and lease liabilities arising from operating leases in the statement of financial position. Additionally, the criteria for classifying a lease as a finance lease versus an operating lease are substantially the same as the previous guidance. Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported under the accounting standards in effect for those periods.

The Company ~~has determined a reasonable estimate~~elected certain of the available transition practical expedients, including those that permit it to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. The Company did not elect the hindsight practical expedient, which permits entities to use hindsight in determining the lease term and assessing

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~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

impairment. The most significant impact of the new guidance was the recognition of ROU assets and lease liabilities for operating leases. In addition, the Company elected the practical expedient to account for the lease and non-lease components as a single lease component and will not recognize right-of-use assets or lease liabilities for short-term leases, which are those leases with a term of twelve months or less at the lease commencement date.

The Company recognized $287 million of operating lease ROU assets, $51 million of short term operating lease liabilities and $259 million of long term operating lease liabilities on the consolidated balance sheet upon adoption of the new standard. The operating lease liabilities were determined based on the present value of the remaining rental payments and the operating lease ROU asset was determined based on the value of the lease liabilities, adjusted primarily for deferred rent, net of prepaid rent of $23 million.

The Company has finance lease agreements with transponder and transmitter network suppliers for the right to transmit its signals in the U.S. and Germany. The Company is also party to a finance lease agreement for data processing hardware and a warehouse. The Company also leases data processing equipment, facilities, office space, retail space and land. These leases are classified as operating leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments using our incremental borrowing rate.

Our leases have remaining leaseterms of less than one year to 14 years some of which may include the option to extend for up to 14 years, and some of which include options to terminate the leases within less than one year.

The components of lease cost during the years ended December 31, 2020 and December 31, 2019 were as follows:


	Year ended
	December 31, 2020		December 31, 2019

	in millions
Operating lease cost (1)	$	87	78
Finance lease cost
Depreciation of leased assets	$	19	20
Interest on lease liabilities		8	9
Total finance lease cost	$	27	29

(1)

Included within operating lease costs were short-term lease costs and variable lease costs, which were not material to the financial statements.

Prior to the adoption of ASC 842, rental expense under lease arrangements amounted to $80 million for the year ended December 31, 2018.

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~~for these amounts,~~Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and ~~based on a continued analysis~~2018

The remaining weighted-average lease term and the weighted-average discount rate were as follows:


	December 31, 2020		December 31, 2019
Weighted-average remaining lease term (years):
Finance leases		8.5	9.2
Operating leases		8.5	9.1
Weighted-average discount rate:
Finance leases		5.1%	5.0%
Operating leases		5.1%	4.9%

Supplemental balance sheet information related to leases was as follows:


	December 31,		December 31,
	2020		2019

	in millions
Operating leases:
Operating lease ROU assets (1)	$	371	397

Current operating lease liabilities (2)	$	63	64
Operating lease liabilities (3)		320	349
Total operating lease liabilities	$	383	413

Finance Leases:
Finance lease ROU assets (4)	$	278	282
Finance lease ROU asset accumulated depreciation (4)		(141)	(129)
Finance lease ROU assets, net	$	137	153
Current finance lease liabilities (2)	$	18	18
Finance lease liabilities (3)		150	163
Total finance lease liabilities	$	168	181

(1)

Included within the Other assets, at cost, net of accumulated amortization line item on the consolidated balance sheets.

(2)

Included within the Other current liabilities line item on the consolidated balance sheets.

(3)

Included within the Other liabilities line item on the consolidated balance sheets.

(4)

Included within the Property and equipment, net line item on the consolidated balance sheets.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Supplemental cash flow information related to leases was as follows:


	Year ended
	December 31,
	2020		2019

	in millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	86	75
Operating cash flows from finance leases	$	8	9
Financing cash flows from finance leases	$	18	22
ROU assets obtained in exchange for lease obligations
Operating leases	$	35	173
Finance leases	$	—	16

Future lease payments under finance leases and operating leases with initial terms of one year or more at December 31, 2020 consisted of the ~~estimates~~following:


	Finance Leases		Operating Leases

		in millions
2021	$	26	81
2022		26	70
2023		25	62
2024		24	47
2025		22	38
Thereafter		89	190
Total lease payments	$	212	488
Less: imputed interest		44	105
Total lease liabilities	$	168	383

On October 5, 2018, QVC entered into a lease for an East Coast distribution center (“ECDC Lease”). The 1.7 million square foot rental building is located in Bethlehem, Pennsylvania and ~~further guidance and interpretations on the application~~has an initial term of 15 years. QVC obtained initial access to a portion of the ~~law, additional revisions may occur,~~ECDC Lease during March 2019 and ~~may be material, throughout~~obtained access to the ~~allowable measurement period.~~remaining portion during September 2019. In total, QVC recorded a ROU asset of $141 million and an operating lease liability of $131 million relating to the ECDC Lease, with the difference attributable to prepaid rent. QVC is required to pay an initial base rent of $10 million per year, with payments that began in the third quarter of 2019, and increasing to $14 million per year, as well as all real estate taxes and other building operating costs. QVC also has the option to extend the term of the ECDC Lease for up to 2 consecutive terms of 5 years each and one final term of 4 years.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

(9) Income Taxes

Income tax benefit (expense) consists of:


					Years ended December 31,
					2020		2019	2018

	Years ended December 31,
	2017		2016	2015
	amounts in millions
					amounts in millions
Current:
Federal	$	(61)	(40)	(188)	$	8	94	(126)
State and local		(23)	(12)	(26)		(48)	(27)	(35)
Foreign		(88)	(73)	(74)		(105)	(93)	(84)
	$	(172)	(125)	(288)
					$	(145)	(26)	(245)
Deferred:
Federal	$	1,266	(444)	74	$	315	247	131
State and local		(130)	(33)	21		26	(5)	57
Foreign		—	4	8		15	1	(3)
		1,136	(473)	103
						356	243	185
Income tax benefit (expense)	$	964	(598)	(185)	$	211	217	(60)

The following table presents a summary of our domestic and foreign earnings from continuing operations before income taxes:


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Domestic	$	735	(858)	683
Foreign		316	236	200
Total	$	1,051	(622)	883

Years ended December 31,


2017

2016

2015

amounts in millions

Domestic

$
1,314

1,684

674

Foreign

209

168

142

Total

$
1,523

1,852

816

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of ~~35%~~21% as a result of the following:


					Years ended December 31,
					2020		2019	2018

	Years ended December 31,
	2017		2016	2015
	amounts in millions
					amounts in millions
Computed expected tax benefit (expense)	$	(533)	(649)	(286)	$	(221)	131	(186)
State and local income taxes, net of federal income taxes		(26)	(26)	(15)		(45)	9	(13)
Foreign taxes, net of foreign tax credits		(32)	(9)	(5)		47	(1)	(5)
Dividends received deductions		10	9	51
Alternative energy tax credits and incentives		85	94	61		139	152	92
Change in valuation allowance affecting tax expense		(101)	(16)	6		(59)	(51)	9
Change in tax rate due to Tax Act		1,485	—	—
Change in state tax rate		(84)	1	(7)
Consolidation of equity investment		138	—	—
Change in tax rate						(15)	(23)	61
Corporate realignment						360	—	—
Change in tax rate - tax loss carryback						—	45	—
Tax write-off of consolidated subsidiary						—	34	—
Impairment of intangible asset						—	(93)	—
Other, net		22	(2)	10		5	14	(18)
Income tax benefit (expense)	$	964	(598)	(185)	$	211	217	(60)

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~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

For the year ended December 31, ~~2017~~2020 the ~~significant reconciling items are net~~Company recorded an income tax benefit. The current year tax benefit was primarily driven by the impacts of a corporate realignment and tax credits generated by alternative energy investments.

During the fourth quarter of 2020, the Company completed a corporate realignment transaction, whereby the assets and liabilities of certain foreign business units held in U.S. subsidiaries were transferred to QVC Global, a foreign subsidiary of QVC. This changed the manner in which income of the foreign business units is subject to U.S. income tax. As part of this realignment and upon entering into a payment agreement, QVC Global became the primary co-obligor of the Motorola Exchangeables. The Company’s accounting policy is not to record deferred income taxes related to global intangible low-taxed income related to activity in our foreign subsidiaries but instead to recognize income tax expense in the periods as incurred. Accordingly, the deferred income tax liability for the Motorola Exchangeables that existed prior to the corporate realignment was reduced to zero and the Company recorded a corresponding income tax benefit. Although the Company no longer records deferred income taxes in the consolidated balance sheets associated with the Motorola Exchangeables, the Company expects to incur future income tax expense at prevailing income tax rates upon maturity or retirement of the Motorola Exchangeables and will reflect such income tax expense in the period incurred.

For the year ended December 31, 2019 income tax benefit was greater than the U.S. statutory rate of 21% due to tax benefits ~~for the effect of the change in the U.S. federal corporate tax rate~~ from ~~35% to 21% on deferred taxes, the tax-free consolidation of our equity method investment in HSNi, and tax benefits derived from Liberty’s alternative energy~~ tax credits and incentives generated by our alternative energy investments and tax benefits from losses generated in 2019 that were eligible for carryback to tax years with federal income tax rates greater than the U.S. statutory tax rate of 21%, partially offset by ~~net~~a goodwill impairment that is not deductible for tax ~~expense for~~purposes and an increase in the ~~Company’s~~ valuation allowance against certain deferred tax assets.

For the year ended December 31, 2018 income tax expense was lower than the U.S. statutory rate of 21% due to tax benefits from tax credits and ~~an increase~~incentives generated by our alternative energy investments, a reduction in the Company’s state effective tax rate used to measure deferred ~~taxes.~~

~~The Company has also evaluated~~taxes resulting from the ~~impact of the one-time mandatory repatriation provision of the Tax Act. Under that provision, earnings~~GCI Liberty Split-Off in March 2018, and ~~profits of certain of~~a reduction in the Company’s ~~foreign subsidiaries not previously subjected to US~~state effective tax ~~could be subjected to US tax in 2017 at reduced rates. The Tax Act allows that earnings and profits deficits of certain subsidiaries may be~~rate used to ~~offset~~measure deferred taxes resulting from a state law change during the ~~surpluses in others in computing the amount subject~~second quarter.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to ~~the tax under the mandatory repatriation provision. The Company has performed an evaluation of its earnings~~Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and profits of its foreign subsidiaries and estimates that deficits in some of the subsidiaries offset the surpluses in others so that no amount is subject to the mandatory repatriation provision of the Tax Act.2018

Income tax expense was lower than the U.S. statutory tax rate of 35% in 2016 due to tax benefits derived from Liberty’s alternative energy tax credits and incentives. Income tax expense was lower than the U.S. statutory tax rate of 35% in 2015 due to the receipt of taxable dividends that are subject to a dividends received deduction.

The tax effects of temporary differences that give rise to significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:


				December 31,
				2020		2019

	December 31,
	2017		2016
	amounts in millions
				amounts in millions
Deferred tax assets:
Net operating and capital loss carryforwards	$	160	123
Tax losses and credit carryforwards				$	280	314
Foreign tax credit carryforwards		98	134		161	154
Accrued stock compensation		51	56		18	22
Operating lease liability					82	84
Other accrued liabilities		19	118		54	48
Other future deductible amounts		190	144
Other					168	186
Deferred tax assets		518	575		763	808
Valuation allowance		(165)	(64)		(264)	(205)
Net deferred tax assets		353	511		499	603


Deferred tax liabilities:
Investments		903	1,057		31	122
Intangible assets		1,188	1,540		816	856
Fixed assets					163	106
Discount on exchangeable debentures		981	1,404		714	1,047
Deferred gain on debt retirements		43	129
Other		41	17		102	153
Deferred tax liabilities		3,156	4,147		1,826	2,284
Net deferred tax liabilities	$	2,803	3,636	$	1,327	1,681

The Company's valuation allowance increased ~~$101~~$59 million in ~~2017. The entire change in valuation allowance~~2020, all of which affected tax ~~expense and is primarily the result of new provisions in the Tax Act that changed the Company’s judgment with respect to the future utilization of its foreign tax credit carryforward.~~

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~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

expense.

At December 31, ~~2017,~~2020, the Company ~~had~~has a deferred tax asset of $280 million for net operating losses, ~~(on a tax effected basis), federal business tax credits and foreign tax~~ credit carryforwards, ~~for income tax purposes aggregating approximately $160 million, $31 million~~ and ~~$98 million, respectively, which will begin to expire in 2017 and beyond if~~interest expense carryforwards. If not utilized to reduce ~~domestic, state or foreign~~ income tax liabilities in future ~~periods.~~periods, $272 million of these loss carryforwards and tax credits will expire at various times between 2021 and 2042. The ~~net operating~~remaining $8 million of tax losses and carryforwards may be carried forward indefinitely. These losses and credit carryforwards are expected to be utilized prior to expiration, except for ~~$67~~$187 million.

At December 31, 2020, the Company had a deferred tax asset of $161 million for foreign tax credit carryforwards. If not utilized to reduce income tax liabilities in future periods, these foreign tax credit carryforwards will expire at various times between 2022 and 2030. The ~~federal business tax credits are expected to be utilized prior to expiration. As a result of the international provisions in the Tax Act, the~~ Company estimates that ~~$98~~$76 million of its foreign tax credit carryforward will expire without utilization.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

A reconciliation of unrecognized tax benefits is as follows:


					Years ended December 31,
					2020		2019	2018

	Years ended December 31,
	2017		2016	2015
	amounts in millions
					amounts in millions
Balance at beginning of year	$	72	104	136	$	75	70	71
Additions based on tax positions related to the current year		10	16	14		7	5	9
Additions for tax positions of prior years		4	—	—		7	14	2
Reductions for tax positions of prior years		—	(26)	(12)		(1)	(3)	—
Lapse of statute and settlements		(15)	(22)	(34)		(5)	(11)	(12)
Balance at end of year	$	71	72	104	$	83	75	70

As of December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, the Company had recorded tax reserves of ~~$71~~$83 million, ~~$72~~$75 million and ~~$104~~$70 million, respectively, related to unrecognized tax benefits for uncertain tax positions. If such tax benefits were to be recognized for financial statement purposes, ~~$60~~$66 million, ~~$50~~$61 million and ~~$47~~$56 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively, would be reflected in the Company's tax expense and affect its effective tax rate. ~~Liberty's~~Qurate Retail's estimate of its unrecognized tax benefits related to uncertain tax positions requires a high degree of judgment. The Company has tax positions for which the amount of related unrecognized tax benefits could change during ~~2018.~~2019. The amount of unrecognized tax benefits related to these issues could change as a result of potential settlements, lapsing of statute of limitations and revisions of estimates. It is reasonably possible that the amount of the Company's gross unrecognized tax benefits may ~~decrease~~increase within the next twelve months by up to $3 million.

As of December 31, ~~2017,~~2020, the Company's tax years prior to ~~2014~~2017 are closed for federal income tax purposes, and the IRS has completed its examination of the Company's ~~2014~~2017 and 2018 tax ~~year.~~years, however, 2017 and 2018 remain open until the statute of limitations lapses on October 15 of 2021 and 2022, respectively. The Company's ~~2015, 2016~~2019 and ~~2017~~2020 tax years are being examined currently as part of the IRS's Compliance Assurance Process ("CAP") program. Various states are currently examining the Company's prior ~~years~~years’ state income tax returns. ~~Certain QVC subsidiaries are currently~~The Company is not under audit in ~~Germany for 2012 through 2014.~~

any foreign tax jurisdictions.

The Company recorded ~~$17~~$25 million of accrued interest and penalties related to uncertain tax positions ~~as of each of~~for the year ended December 31, ~~2017, 2016~~2020, $23 million for the year ended December 31, 2019 and ~~2015.~~$20 million for the year ended December 31, 2018.

~~(13)~~(10) Stockholders' Equity

Preferred Stock

On September 14, 2020, Qurate Retail issued the Preferred Stock. There were 13,500,000 shares of Preferred Stock authorized and 12,513,752 shares issued and outstanding at December 31, 2020.

~~Liberty's preferred~~

Priority. The Preferred Stock ranks senior to the shares of common stock ~~is issuable, from time~~of Qurate Retail, with respect to ~~time, with such designations, preferences~~dividend rights, rights of redemption and ~~relative participating, optional~~rights on the distribution of assets on any voluntary or ~~other rights, qualifications, limitations~~involuntary liquidation, dissolution or ~~restrictions thereof, as shall be stated and expressed in~~winding up of Qurate Retail’s affairs. Shares of Preferred Stock are not convertible into shares of common stock of Qurate Retail.

Dividends. Holders of the Preferred Stock are entitled to receive quarterly cash dividends at a ~~resolution or~~rate of 8.0% per annum of the liquidation price (as described below) on a cumulative basis, during the term. If declared, accrued dividends

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Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

will be payable quarterly on each dividend payment date, beginning December 15, 2020 and thereafter on each March 15, June 15, September 15, and December 15 during the term (or, if such date is not a business day, the next business day after such date). If Qurate Retail fails to pay dividends or the applicable redemption price with respect to any redemption within 30 days after the applicable dividend payment or redemption date, the dividend rate will increase as provided by the Certificate of Designations for the Preferred Stock (the “Certificate of Designations”). Accrued dividends that are not paid within 30 days after the applicable dividend payment date will be added to the liquidation price until paid together with all dividends accrued thereon.

The ability of Qurate Retail to declare or pay any dividend on, or purchase, redeem, or otherwise acquire, any of its common stock or any other stock ranking on parity with the Preferred Stock will be subject to restrictions if Qurate Retail does not pay all dividends and all redemption payments on the Preferred Stock, subject to certain exceptions as set forth in the Certificate of Designations.

On February 18, 2021, the Company declared a quarterly cash dividend of $2.00 per share payable in cash on March 15, 2021 to stockholders of record of the Preferred Stock at the close of business on March 1, 2021.

Distributions upon Liquidation, Dissolution or Winding Up. Upon Qurate Retail’s liquidation, winding-up or dissolution, each holder of shares of the Preferred Stock will be entitled to receive, before any distribution is made to the holders of Qurate Retail common stock, an amount equal to the liquidation price plus all unpaid dividends (whether or not declared) accrued from the immediately preceding dividend payment date, subject to the prior payment of liabilities owed to Qurate Retail’s creditors and the preferential amounts to which any stock senior to the Preferred Stock is entitled. The Preferred Stock has a liquidation price equal to the sum of (i) $100, plus (ii) all accrued and unpaid dividends (whether or not declared) that have been added to the liquidation price.

Mandatory and Optional Redemption. The Preferred Stock is subject to mandatory redemption on March 15, 2031 at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend payment date. On or after the fifth anniversary of September 14, 2020 (the “Original Issue Date”), Qurate Retail may redeem all or a portion of the outstanding shares of Preferred Stock, at the liquidation price plus all unpaid dividends (whether or not declared) accrued from the most recent dividend payment date plus, if the redemption is (x) on or after the fifth anniversary of the Original Issue Date but prior to its sixth anniversary, 4.00% of the liquidation price, (y) on or after the sixth anniversary of the Original Issue Date but prior to its seventh anniversary, 2.00% of the liquidation price and (z) on or after the seventh anniversary of the Original Issue Date, 0. Both mandatory and optional redemptions must be paid in cash.

Voting Power. Holders of the Preferred Stock will not have any voting rights or powers, except as specified in the Certificate of Designations or as required by Delaware law.

Preferred Stock Directors. So long as the aggregate liquidation price of the outstanding shares of Preferred Stock exceeds 25% of the aggregate liquidation price of the shares of Preferred Stock issued on the Original Issue Date, holders of Preferred Stock will have certain director election rights as described in the Certificate of Designations whenever dividends on shares of Preferred Stock have not been declared and paid for 2 consecutive dividend periods and whenever Qurate Retail fails to pay the applicable redemption price in full with respect to any redemption of the Preferred Stock or fails to make a payment with respect to the Preferred Stock in connection with a liquidation or Extraordinary Transactions (as defined in the Certificate of Designations).

Recognition. As the Preferred Stock is subject to unconditional mandatory redemption in cash and was issued in the form of a share, the Company concluded the Preferred Stock was a mandatorily redeemable financial instrument and should be classified as a liability in the consolidated balance sheets. The Preferred Stock was initially recorded at its fair

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~~resolutions providing for the issue~~Table of ~~such preferred stock adopted by Liberty's Board of Directors. As of~~ Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, no shares~~2020, 2019 and 2018

value, which was determined to be the liquidation preference of ~~preferred stock were issued.~~$100 per share. Given the liability classification of the Preferred Stock, all dividends accrued will be classified as interest expense in the consolidated statements of operations.

Common Stock

Series A ~~QVC Group and Liberty Ventures~~Qurate Retail common stock has ~~one~~1 vote per share, and Series B ~~QVC Group and Liberty Ventures~~Qurate Retail common stock has ~~ten~~10 votes per share. Each share of the Series B common stock is exchangeable at the option of the holder for ~~one~~1 share of Series A common stock of the same group. The Series A and Series B common stock participate on an equal basis with respect to dividends and distributions.

At the Annual Meeting of Stockholders held on June 2, 2015, the Company’s stockholders approved an amendment to the Restated Certificate of Incorporation that increased (i) the total number of shares of the Company’s capital stock which the Company will have the authority to issue to 9,015 million shares, (ii) the number of shares of the Company’s capital stock designated as “Common Stock” to 8,965 million shares and (iii) the number of shares of Common Stock designated as “Series A Liberty Ventures Common Stock,” “Series B Liberty Ventures Common Stock” and “Series C Liberty Ventures Common Stock” to 400 million shares, 15 million shares and 400 million shares, respectively.

At the Annual Meeting of Stockholders held on May 23, 2018, the Company’s stockholders approved an amendment to the Restated Certificate of Incorporation, which (i) eliminated the tracking stock capitalization structure of the Company and (ii) reclassified each outstanding share of Series A and Series B QVC Group common stock into one share of our Series A and Series B common stock, respectively. In addition, the amendment to the Restated Certificate of Incorporation changed (i) the total number of shares of the Company’s capital stock which the Company will have the authority to issue to 8,200 million shares, (ii) the number of shares of the Company’s capital stock designated as “Common Stock” to 8,150 million shares, (iii) the number of shares of Common Stock designated as “Series A Common Stock,” “Series B Common Stock” and “Series C Common Stock” to 4,000 million shares, 150 million shares and 4,000 million shares, respectively, and (iv) the number of shares of the Company’s capital stock designated as “Preferred Stock” to 50 million shares.

As of December 31, ~~2017, Liberty~~2020, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately ~~32.4~~40.6 million shares of Series A ~~QVC Group~~Qurate Retail common stock and approximately ~~1.6~~3.2 million shares of Series B QVC Group common stock. As of December 31, 2017, Liberty reserved for issuance upon exercise of outstanding stock options approximately 1.7 million shares of Series A Liberty Ventures common stock and approximately 1.1 million shares of Series B Liberty VenturesQurate Retail common stock.

In addition to the Series A and Series B ~~QVC Group and Ventures~~Qurate Retail common stock, there are 4 billion ~~and 400 million~~ shares of Series C ~~QVC Group and Ventures~~Qurate Retail common stock authorized for issuance, respectively. As of December 31, ~~2017, no~~2020, 0 shares of any Series C ~~QVC Group and Ventures~~Qurate Retail common stock were issued or ~~outstanding.~~outstanding.

On October 1, 2015, in conjunction with the acquisition of zulily, Liberty issued 38.5 million shares of Series A QVC Group common stock. On December 29, 2017, in conjunction with the acquisition of HSNi, Liberty issued 53.6 million shares of Series A QVC Group common stock. See additional discussion about both acquisitions in note 5.

~~Additionally, as~~As discussed in note 1, on ~~November 4, 2016, Liberty~~March 9, 2018, Qurate Retail completed the ~~Expedia Holdings~~GCI Liberty Split-Off. ~~The Expedia Holdings~~As part of the GCI Liberty Split-Off, ~~was accomplished by the redemption~~all outstanding shares of ~~(i) 0.4 of each outstanding share of Liberty’s~~ Series A Liberty Ventures common stock were redeemed for ~~0.4 of a~~one share of ~~Expedia Holdings Series~~GCI Liberty Class A common stock and ~~(ii) 0.4 of~~ each outstanding share of ~~Liberty’s~~ Series B Liberty Ventures common stock was redeemed for ~~0.4 of a~~one share of ~~Expedia Holdings Series~~GCI Liberty Class B common stock, in each case, with cash paid in lieu of any fractional shares of Liberty Ventures common stock or Expedia Holdings common stock (after taking into account all of the shares owned of record by each holder thereof, as applicable).stock.

Purchases of Common Stock

During the year ended December 31, ~~2015,~~2018, the Company repurchased ~~28,134,498~~43,080,787 shares of Series A ~~QVC Group~~Qurate Retail common stock for aggregate cash consideration of ~~$785~~$988 million.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

During the year ended December 31, 2019, the Company repurchased 24,329,610 shares of Series A Qurate Retail common stock for aggregate cash consideration of $392 million.

During the year ended December 31, ~~2016,~~2020, the Company repurchased ~~34,836,196~~6,521,782 shares of Series A ~~QVC Group~~Qurate Retail common stock for aggregate cash consideration of ~~$799~~$70 million.

~~During the year ended December 31, 2017, the Company repurchased 34,765,751 shares of Series A QVC Group common stock for aggregate cash consideration of $766 million.~~

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~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

All of the foregoing shares were repurchased pursuant to a previously announced share repurchase program and have been retired and returned to the status of authorized and available for issuance.

In connection with the Expedia Holdings Split-Off, holders of Liberty Ventures common stock were paid cash in lieu of fractional shares of Series A and Series B Liberty Ventures common stock. In order to fund the cash payments made to holders of shares of Series B Liberty Ventures common stock, the fractional shares that would have otherwise been issued to those holders were aggregated into an immaterial number of shares of Series B Liberty Ventures common stock by the Company’s transfer agent and were repurchased by Liberty.

~~(14)~~(11) Related PartyTransactions with Officers and Directors

~~Chief Executive Officer~~Chairman Compensation Arrangement

In December ~~2014, the Compensation Committee of~~2019, Liberty ~~approved~~Media entered into a ~~compensation~~new employment arrangement ~~including term options discussed in note 15, for its President and Chief Executive Officer (the "CEO").~~with Gregory B. Maffei, our Chairman. The arrangement provides for a five year employment term ~~beginning~~which began on January 1, ~~2015~~2020 and ~~ending~~ends December 31, ~~2019,~~2024, with an annual base salary of ~~$960,750, increasing annually~~$3 million (with no contracted increase), a one-time cash commitment bonus of $5 million (paid in December 2019), an annual target cash performance bonus of $17 million (with payment subject to the achievement of one or more performance metrics as determined by 5%the applicable company’s Compensation Committee), upfront equity awards and annual equity awards (as described below).

The Chairman was entitled to receive term equity awards with an aggregate grant date fair value of $90 million (the “Upfront Awards”) which were granted in 2 equal tranches. The first tranche consisted of time-vested stock options from each of Qurate Retail, LMC, Liberty Broadband and GCI Liberty and time-vested restricted stock units (“RSUs”) from Liberty TripAdvisor (collectively, the “2019 term awards”) that vest, in each case, on December 31, 2023 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 15, 2023), subject to the Chairman’s continued employment, except under certain circumstances. Qurate Retail’s portion of the ~~prior year's~~2019 term awards, granted in December 2019, had an aggregate grant date fair value of $8,550,000 and consisted of stock options to purchase 2,133,697 shares of Series A Qurate Retail common stock (“QRTEA”) with an exercise price of $8.17. The second tranche of the Upfront Awards consisted of time-vested stock options from each of LMC, Qurate Retail, Liberty Broadband and GCI Liberty and time-vested RSUs from Liberty TripAdvisor (collectively, the “2020 term awards”) that vest, in each case, on December 31, 2024 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 7, 2024), subject to the Chairman’s continued employment, except under certain circumstances. Qurate Retail’s portion of the 2020 term awards, granted in December 2020, had an aggregate grant date fair value of $5,850,000 and consisted of stock options to purchase 1,190,529 QRTEA shares with an exercise price of $10.34.

Beginning in 2020, the Chairman received annual equity award grants with an annual aggregate grant date fair value of $17.5 million, consisting of time-vested options and/or performance-based RSUs. The Chairman elected the portions of his annual equity awards that he desired to be issued in the form of options, performance-based RSUs or a combination of both. The annual equity awards were allocated across Qurate Retail, LMC, Liberty Broadband, GCI Liberty and Liberty TripAdvisor. Vesting of any of these annual performance-based RSUs will be subject to the achievement of one or more performance metrics to be approved by the Compensation Committee of the applicable company with respect to its respective allocable portion of the annual performance-based RSUs. At Qurate Retail, the CEO’s annual equity awards were issued with respect to QRTEA.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

CEO Compensation Agreement

On September 27, 2015, the Compensation Committee of Qurate Retail approved a compensation arrangement for our current CEO. The arrangement provided for a five year employment term beginning December 16, 2015 and ending December 31, 2020, with an annual base salary of $1.25 million and an annual target cash bonus equal to ~~250%~~100% of the ~~applicable year's~~CEO’s annual base salary. The arrangement also ~~provides that, in the event~~provided the CEO ~~is terminated for "cause," he will be entitled only~~with the opportunity to ~~his accrued base salary and any amounts due under applicable law and he will forfeit all rights to his unvested term options. If, however,~~earn annual performance-based equity incentive awards during the employment term. Beginning in 2016, the CEO ~~is terminated by Liberty without cause or if he terminates his employment for “good reason,”~~received an annual $4.125 million grant of performance-based RSUs with respect to QRTEA. Also, on September 27, 2015, in connection with the ~~arrangement provides for him to receive his accrued base salary, his accrued but unpaid bonus and any amounts due under applicable law, a severance payment of 1.5 times his base salary during the year~~approval of his ~~termination,~~compensation arrangement, the CEO received a ~~payment equal to $11.75 million pro rated based upon the elapsed number~~one-time grant of ~~days in the calendar year of termination, a payment equal to $17.5 million, and for his unvested term~~1,680,065 stock options to ~~generally vest pro rata~~purchase shares of QRTEA with an exercise price of $26.00 per share. 50% of such options vested on December 31, 2019 and the remaining 50% vested on December 31, 2020, with an expiration date of December 31, 2022.

In connection with the CEO’s appointment to this position on March 9, 2018, the Compensation Committee of Qurate Retail approved a one-time grant of stock options and performance-based RSUs to the CEO on August 13, 2018. The options consist of 577,358 options to purchase shares of QRTEA with an exercise price of $22.18. 50% of such options vested on December 15, 2019 and the remaining 50% vested on December 15, 2020. The options have a seven year term. The RSUs consisted of 182,983 performance-based RSUs with respect to QRTEA, of which 152,825 RSUs vested on December 21, 2020 based on ~~the portion~~performance of the ~~term elapsed through~~Company and the ~~termination date plus 18 months and for all vested and accelerated options to remain exercisable until their respective expiration dates. If~~personal performance of the CEO, ~~terminates his employment without “good reason,” he will be entitled to his accrued base salary, his accrued but unpaid bonus~~ and ~~any amounts due under applicable law and a payment~~at the sole discretion of the $11.75 million and for his unvested term options to generally vest pro rata based on the portion of the term elapsed through the termination date and all vested and accelerated options to remain exercisable until their respective expiration dates. Lastly, in the case of the CEO's death or his disability, the arrangement provides that he will be entitled only to his accrued base salary and any amounts due under applicable law, a payment of 1.5 times his base salary during that year, a payment equal to $11.75 million pro rated based upon the elapsed number of days in the calendar year of termination, a payment equal to $17.5 million and for his unvested term options to fully vest and for his vested and accelerated term options to remain exercisable until their respective expiration dates.Compensation Committee.

~~Pursuant~~Effective November 17, 2020, Qurate Retail entered into an amendment to the CEO’s compensation arrangement hethat provides for a one year extension of the employment agreement dated December 16, 2015. The CEO’s employment term will now end on December 31, 2021, unless terminated earlier in accordance with the agreement, and his annual base salary has increased to $1.5 million. The CEO will be eligible to receive ~~aggregate~~an annual target ~~equity awards~~cash bonus equal to 100% of his annual base salary with a maximum bonus of 240% of base salary, subject to the achievement of performance criteria. The CEO is eligible to receive a performance-based RSU award equal to $5.5 million of target value, with a maximum value equal to $8.3 million, and a time-vested RSU award also equal to $5.5 million of value. The performance-based RSU award will be ~~allocated between Liberty~~subject to performance criteria as determined by the Compensation Committee.

(12) Stock-Based Compensation

Qurate Retail - Incentive Plans

The Company has granted to certain of its directors, employees and ~~Liberty Media in the amounts~~employees of ~~$16 million with respect to calendar year 2015, $17 million with respect to calendar year 2016, $18 million with respect to calendar year 2017, $19 million with respect to calendar year 2018~~its subsidiaries, restricted stock (“RSAs”), RSUs and ~~$20 million with respect to calendar year 2019. Such target equity awards are comprised of~~ options to purchase shares of ~~QVCB~~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 ~~LVNTB, along with performance-based~~ restricted ~~stock units~~stock) based on the grant-date fair value (“~~Performance RSUs”~~GDFV”)~~. Vesting~~ of the ~~Performance RSUs~~Award, and recognizes that cost over the period during which the employee is ~~determined~~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 ~~satisfaction of performance metrics that are set by Liberty and Liberty Media’s respective compensation committees in~~ the ~~first quarter of each applicable year, except that the CEO will forfeit his unvested Performance RSUs if his employment is terminated for any reason before the end~~current fair value of the ~~applicable year. In addition, Liberty~~Award, and ~~Liberty Media’s compensation committees may grant additional equity awards, with a~~remeasures the fair value of ~~up to 50% of~~ the target amount allocated to Liberty for the relevant year (the “Above Target Awards”), and the compensation committees may determine to establish additional performance metrics with respect to such Above Target Awards.

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~(15) Stock-Based Compensation~~

~~Liberty - Incentive Plans~~Award at each reporting date.

Pursuant to the ~~Liberty Interactive~~Qurate Retail, Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”), the Company may grant Awards in respect of a maximum of 30.0 million shares of Qurate Retail common stock plus the shares remaining available for Awards under the prior Qurate Retail, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”), as amended, as of close of business on May 20, 2020, the ~~Company may grant stock options (“Awards”)~~day before the effective date of the 2020 Plan. Any forfeited shares from the 2016 Plan

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

shall also be ~~made in respect of a maximum of 39.9 million shares of Series A and Series B QVC Group common stock and Liberty Ventures common stock.~~available again under the 2020 Plan. Awards generally vest over ~~4-5~~1-5 years and have a term of 7-10 years. ~~Liberty~~Qurate Retail issues new shares upon exercise of equity awards.

In connection with the HSNi acquisition in December 2017 (see note 5), outstanding awards to purchase shares of HSNi common stock (an “HSN Award”) were exchanged for awards to purchase shares of Series A QVC Group common stock (a “QVCA Award”). The exercise prices and number of shares subject to the QVCA Award were determined based on (1) the exercise prices and number of shares subject to the HSN Award and (2) the acquisition exchange ratio. The exchange of such awards was considered a modification under ASC 805 – ~~Business Combinations~~. A portion of the fair value of the replacement QVCA Awards was attributed to the consideration paid in the acquisition. The remaining portion of the fair value will be recognized in the consolidated financial statements over the remaining vesting period of each individual award.

In connection with the Expedia Holdings Split-Off in November 2016, the holder of an outstanding award to purchase shares of Liberty Ventures Series A and Series B common stock (a “Liberty Ventures Award”) received an Award to purchase shares of the corresponding series of Expedia Holdings common stock and an adjustment to the exercise price and number of shares subject to the Liberty Ventures Award (as so adjusted, an “Adjusted Liberty Ventures Award”). Following the Expedia Holdings Split-Off, employees of Liberty hold Awards in both Liberty Ventures common stock and Expedia Holdings common stock. The compensation expense relating to employees of Liberty is recorded at Liberty.

In connection with the CommerceHub Spin-Off in July 2016, the holder of an outstanding award to purchase shares of Liberty Ventures Series A and Series B common stock (an “Original Liberty Ventures Award”) received an adjustment to the exercise price and number of shares subject to the Original Liberty Ventures Award (as so adjusted, an “Adjusted Liberty Ventures Award”). A holder of an Original Liberty Ventures Award who was a member of the board of directors or an officer of Liberty holding the position of Vice President or above also received an Award to purchase shares of the corresponding series of CommerceHub common stock as well as Series C CommerceHub common stock (in each case, a “CommerceHub Award”). Following the CommerceHub Spin-Off, employees of Liberty may hold Awards in both Liberty Ventures common stock and CommerceHub common stock. The compensation expense relating to employees of Liberty is recorded at Liberty.

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~Liberty~~Qurate Retail – Grants

The following table presents the number and weighted average ~~grant-date fair value (“GDFV”)~~GDFV of options granted by ~~Liberty~~Qurate Retail during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015:~~ 2018:


	For the Years ended December 31,
	2020			2019			2018
	Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV

Series A Qurate Retail common stock, QVC and HSN employees (1)	4,200	$	1.96	2,503	$	4.07	3,783	$	8.77
Series A Qurate Retail common stock, Zulily employees (1)	618	$	1.94	328	$	4.08	336	$	8.65
Series A Qurate Retail common stock, Qurate Retail employees and directors (2)	747	$	4.86	639	$	3.97	72	$	7.31
Series A Qurate Retail common stock, Qurate Retail President and CEO (3)	NA		NA	NA		NA	577	$	7.09
Series A Qurate Retail common stock, Qurate Retail Chairman of the Board (4)	1,191	$	4.88	2,134	$	3.44	NA		NA
Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (4)	NA		NA	26	$	5.84	175	$	8.84
Series B Ventures Group common stock, Qurate Retail Chairman of the Board (4)	NA		NA	NA		NA	143	$	16.55

For the Years ended December 31,

2017

2016

2015

Options Granted (000's)

Weighted Average GDFV

Options Granted (000's)

Weighted Average GDFV

Options Granted (000's)

Weighted Average GDFV

Series A QVC Group common stock, QVC employees (1)

3,115

$
7.86

2,860

$
7.84

2,002

$
11.87

Series A QVC Group common stock, zulily employees (1)

483

$
7.86

433

$
7.57

264

$
9.84

Series A QVC Group common stock, Liberty employees and directors (2)

518

$
7.81

421

$
8.02

2,459

$
11.63

Series A QVC Group common stock, QVC CEO (3)

NA

NA

NA

NA

1,680

$
10.40

Series B QVC Group common stock, Liberty CEO (4)

154

$
7.92

730

$
7.47

132

$
10.10

Series A Ventures Group common stock, Liberty employees and directors (2)

188

$
16.52

114

$
12.25

683

$
18.10

Series B Ventures Group common stock, Liberty CEO (4)

269

$
15.41

209

$
12.48

135

$
16.94

(1)

~~(1)~~

~~Mainly vests~~Vests semi-annually over four years.

(2)

~~(2)~~

~~Mainly vests~~Vests between ~~three~~two and five years for employees and in one year for directors.

(3)

~~(3)~~

~~Vests~~Vested 50% on each of December ~~31,~~15, 2019 and December 15, 2020. ~~Grant was~~

(4)	The grants made in December 2020 and December 2019 in connection with athe Chairman’s new ~~compensation arrangement.~~

~~(4)~~

~~Grants~~employment agreement cliff vest in ~~2017~~December 2024 and ~~2016~~December 2023, respectively. The grant made in March 2019 vested immediately. The grants made in 2018 cliff vested at the end of ~~their respective~~the grant ~~year; grant~~year. Grants made in ~~2015 cliff vested in March 2016. Grants~~2019 and 2018 were ~~made~~ in connection with ~~his~~the Chairman’s previous employment agreement (see ~~note 14)~~notes 1 and 11).

In connection with the Option Exchange (see below), Liberty granted 5.9 million, 946 thousand and 1.1 million options to purchase shares of Series A QVC Group common stock, Series A Liberty Ventures common stock and Series B Liberty Ventures common stock, respectively. Such options had an incremental weighted average GDFV of $3.49, $8.53 and $6.94, respectively.

In addition to the stock option grants to the ~~Liberty CEO, Liberty~~Qurate Retail Chairman of the Board, and in connection with his employment agreement, Qurate Retail granted time-based and performance-based ~~restricted stock units ("RSUs")~~RSUs. During the year ended December 31, 2020, Qurate Retail granted 38 thousand time-based RSUs of QRTEA to our Chairman. The RSUs had a GDFV of $7.44 per share and cliff vested on December 10, 2020. This RSU grant was issued in lieu of our Chairman receiving 50% of his remaining base salary for the last three quarters of calendar year 2020, and he waived his right to receive the other 50%, in each case, in light of the ongoing financial impact of COVID-19. During the year ended December 31, 2019, Qurate Retail granted 19 thousand time-based RSUs of Series B ~~QVC Group~~Qurate Retail common ~~stock in 2017, 2016~~stock. Such RSUs had a GDFV of $17.90 per share at the time they were granted and ~~2015~~cliff vested on March 11, 2019. During the year ended December 31, 2020, Qurate Retail granted to our Chairman 584 thousand performance-based RSUs of ~~115 thousand, 53 thousand and 182 thousand, respectively. The~~QRTEA. Such RSUs had a fair value of ~~$19.90, $25.11~~$4.44 at the time they were granted. During the years ended December 31, 2019 and ~~$29.41~~2018, Qurate Retail granted 194 thousand and 124 thousand performance-based RSUs, respectively, of Series B Qurate Retail common stock to our Chairman. Such RSUs had a fair value of $17.90 and $27.56 per share, respectively, at the time they were granted. ~~Liberty also~~Also during the years ended December 31, 2020 and 2019, Qurate Retail granted approximately 725 thousand and 191 thousand performance-based RSUs, respectively, of ~~Series B Liberty Ventures common stock in 2016~~QRTEA to our President and ~~2015 of 16 thousand and 13 thousand, respectively. The~~CEO. Such RSUs had a ~~fair value~~GDFV of ~~$38.79~~$4.44 and ~~$42.33~~$17.90 per share, respectively, at the time they were granted. ~~The 2017, 2016~~All of the 2020, 2019 and ~~2015~~2018 performance-based RSUs cliff ~~vested in~~ vest

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

one year from the month of grant, subject to the satisfaction of certain performance objectives and based on an amount determined by the compensation committee. Performance objectives, which are subjective, are considered in determining the timing and amount of the compensation expense recognized. As the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The value of the grant is remeasured at each reporting period.

During the third quarter of 2020 and in connection with the Special Dividend, holders of RSAs and RSUs of QRTEA outstanding at the close of business on the record date received:

a special cash dividend in the amount of $1.50 per share for each QRTEA RSA and RSU so held (“Cash Dividend”), and

ii.

a special dividend of 0.03 shares of newly issued Preferred Stock (“QRTEP”) for each QRTEA RSA and RSU so held, with cash distributed in lieu of fractional shares (“Preferred Stock Dividend”). The Preferred Stock Dividend related to QRTEA RSAs and RSUs was issued in the form of QRTEP RSAs and RSUs, corresponding to the original grant of either RSAs or RSUs.

The Cash Dividend for RSA holders was paid upon distribution. The Cash Dividend for RSU holders along with the QRTEP RSAs and RSUs are subject to the same vesting schedules as those applicable to the corresponding original QRTEA RSAs and RSUs.

Also in connection with the Special Dividend, holders of outstanding stock options and stock appreciation rights (“SARs”) to purchase shares of QRTEA or Series B Qurate Retail common stock (“QRTEB”) and together with QRTEA, “QRTEA/B”) on the record date were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the stock options and SARs were granted. The adjustment to the exercise price and the number of shares subject to the original stock option or SAR award preserved:

the pre-Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

ii.

the pre-Special Dividend ratio of the exercise price to the market price of the corresponding original QRTEA/B stock option or SAR.

During the fourth quarter of ~~2017,~~2020 and in connection with the ~~Company entered into~~December Special Dividend, holders of QRTEA RSAs and RSUs outstanding at the close of business on the record date received a ~~series~~special cash dividend in the amount of ~~transactions~~$1.50 per share for each QRTEA RSA or RSU so held (“December Cash Dividend”).

The December Cash Dividend for RSA holders was paid upon distribution. The December Cash Dividend for RSU holders is subject to the same vesting schedules as those applicable to the corresponding original QRTEA RSUs.

Also in connection with ~~certain officers~~the December Special Dividend, holders of ~~Liberty, associated with certain~~ outstanding stock options ~~in order~~and SARs to ~~recognize tax deductions in~~purchase shares of QRTEA/B on the ~~current year versus future years (the “Option Exchange”). On December 26, 2017 (the “Grant Date”),~~record date were adjusted pursuant to the ~~approval~~anti-dilution provisions of the ~~Compensation Committee~~incentive plans under which the stock options and SARs were granted. The adjustment to the exercise price and the number of ~~its Board of Directors,~~shares subject to the ~~Company effected the acceleration of (i) each unvested in-the-money~~original stock option to acquire shares of LVNTA and (ii) each unvested in-the-money option to acquire shares of LVNTB, in each case, held by certain of its officers (collectively, the “Eligible Optionholders”). Following this acceleration, also on the Grant Date, each

or SAR award preserved:

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Eligible Optionholder exercised, on a net settled basis, all of his outstanding in-the-money vested and unvested options to acquire QVCA shares, LVNTA shares and LVNTB shares (the “Eligible Options”), and:

the pre-December Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

~~with respect to each vested Eligible Option,~~ ii.

the ~~Company granted the Eligible Optionholder a vested new option with substantially the same terms and conditions as the exercised vested Eligible Option, except that~~pre-December Special Dividend ratio of the exercise price ~~for~~to the ~~new option is, in the case of options to acquire shares of QVCA or LVNTA, the closing~~market price ~~on the Grant Date per QVCA or LVNTA share, as applicable, and, in the case of options to acquire shares of LVNTB, the fair market value on the Grant Date~~ of the ~~LVNTB shares as determined pursuant to the incentive plan under which the awards were granted; and~~

corresponding original QRTEA/B stock option or SAR.

~~with respect to each unvested Eligible Option:~~

in satisfaction of the exercise, on a net settled basis, of the unvested Eligible Options, the Company granted the Eligible Optionholder a number of restricted LVNTA or LVNTB shares (the “Restricted Shares”) with a vesting schedule identical to that of the unvested Eligible Options so exercised, and the Eligible Optionholder made an election under Section 83(b) of the Internal Revenue Code with respect to such Restricted Shares; and

the Company granted the Eligible Optionholder a new option (the “Unvested New Option”) to acquire the same series of common stock and with substantially the same terms and conditions, including with respect to vesting and expiration, as the unvested Eligible Option exercised as set forth above, except that the number of LVNTA or LVNTB shares subject to such Unvested New Option is equal to the number of shares subject to the unvested Eligible Option minus the number of Restricted Shares received upon exercise of such unvested Eligible Option. The exercise price of such new option is, in the case of a LVNTA option, the closing price on the Grant Date per share of LVNTA, or, in the case of a LVNTB option, the fair market value on the Grant Date of the LVNTB shares as determined pursuant to the incentive plan under which the Unvested New Options were granted.

The Option Exchange was considered a modification under ASC 718 – Stock Compensation, with the following impacts on compensation expense. The unamortized value of the unvested Eligible Options that were exercised, which was $14 million for LVNTA and LVNTB combined, will be expensed over the vesting period of the Restricted Shares attributable to the exercise of those options. The grant of new vested options resulted in incremental compensation expense in the fourth quarter of 2017 of $30 million for QVCA, LVNTA and LVNTB combined. The grant of Unvested New Options resulted in incremental compensation expense totaling $6 million for LVNTA and LVNTB combined, which will be amortized over the vesting periods of those options.

The Company has calculated the GDFV for all of its equity classified awards using the Black-Scholes-Merton Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. For

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

grants made in ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, the range of expected terms was ~~2.0~~5.2 to ~~6.7~~6.3 years. The volatility used in the calculation for Awards is based on the historical volatility of ~~Liberty's~~the Company's stocks and the implied volatility of publicly traded ~~Liberty~~Qurate Retail options. The Company uses a ~~zero~~0 dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

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~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

The following table presents the range of volatilities used by ~~Liberty~~Qurate Retail in the Black-Scholes-Merton Model for the ~~2017, 2016~~2020, 2019 and ~~2015 QVC Group~~2018 Qurate Retail and Liberty Ventures grants.

Volatility

2017 grants






QVC Group options

26.9
%
-
32.7
%
Liberty Ventures options

25.9
%
-
28.9
%
2016 grants






QVC Group options

27.4
%
-
27.4
%
Liberty Ventures options

30.6
%
-
30.6
%
2015 grants






QVC Group options

27.4
%
-
39.7
%
Liberty Ventures options

30.6
%
-
42.4
%


	Volatility
2020 grants
Qurate Retail options	46.8	%	-	54.8	%
2019 grants
Qurate Retail options	30.1	%	-	44.8	%
2018 grants
Qurate Retail options	29.7	%	-	30.5	%
Liberty Ventures options	27.9	%	-	27.9	%

~~Liberty~~Qurate Retail - Outstanding Awards

The following table presents the number and weighted average exercise price ("WAEP") of ~~the~~ Awards to purchase ~~QVC Group and Liberty Ventures~~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 Awards.

QVC Group

Series A

Series B

Weighted

Aggregate

Weighted

Aggregate

average

intrinsic

average

intrinsic

Awards

remaining

value

Awards

remaining

value


(000's)

WAEP

life

(in millions)

(000's)

WAEP

life

(in millions)

Outstanding at January 1, 2017

29,585

$
20.80

1,489

$
27.50

HSNi Acquisition

3,635

$
26.22

—

$
—

Granted

4,116

$
23.82

154

$
23.87

Exercised

(3,611)

$
16.34

—

$
—

Forfeited/Cancelled

(1,364)

$
27.23

—

$
—

Option Exchange, Exercised

(5,931)

$
17.76

—

$
—

Option Exchange, Granted

5,931

$
25.74

—

$
—

Outstanding at December 31, 2017

32,361

$
23.48

4.0
years

$
86

1,643

$
27.16

4.8
years

$
—

Exercisable at December 31, 2017

20,286

$
22.66

3.2
years

$
71

997

$
25.40

4.3
years

$
—


	Qurate Retail
	Series A							Series B
				Weighted		Aggregate					Weighted		Aggregate
				average		intrinsic					average		intrinsic
	Awards			remaining		value		Awards			remaining		value
	(000's)	WAEP		life		(in millions)		(000's)	WAEP		life		(in millions)
Outstanding at January 1, 2020	23,248	$	21.28					1,844	$	27.09
Granted	6,756	$	6.15					—	$	—
Exercised	(1,297)	$	2.95					—	$	—
Forfeited/Cancelled	(5,958)	$	17.12					—	$	—
Special Dividend adjustment	15,145	$	11.19					1,182	$	16.51
December Special Dividend adjustment	2,659	$	10.56					217	$	15.39
Outstanding at December 31, 2020	40,553	$	10.61	4.2	years	$	108	3,243	$	15.39	2.1	years	$	—
Exercisable at December 31, 2020	22,874	$	14.12	2.9	years	$	13	3,243	$	15.39	2.1	years	$	—

Liberty Ventures

Series A

Series B

Weighted

Aggregate

Weighted

Aggregate

average

intrinsic

average

intrinsic

Awards

remaining

value

Awards

remaining

value


(000's)

WAEP

life

(in millions)

(000's)

WAEP

life

(in millions)

Outstanding at January 1, 2017

1,974

$
22.18

987

$
35.02

Granted

188

$
55.42

269

$
52.39

Exercised

(451)

$
16.69

—

$
—

Forfeited/Cancelled

(12)

$
38.50

—

$
—

Option Exchange, Exercised

(975)

$
20.99

(1,256)

$
38.74

Option Exchange, Granted

946

$
55.96

1,080

$
56.38

Outstanding at December 31, 2017

1,670

$
47.12

2.6
years

$
14

1,080

$
56.38

4.7
years

$
—

Exercisable at December 31, 2017

1,273

$
47.45

2.0
years

$
10

443

$
56.38

2.0
years

$
—

~~II-75~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

As of December 31, ~~2017,~~2020, the total unrecognized compensation cost related to unvested ~~Liberty~~Qurate Retail Awards was approximately ~~$116~~$106 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately ~~1.8~~1.9 years.

As of December 31, 2020, Qurate Retail reserved 43.8 million shares of Series A and Series B common stock for issuance under exercise privileges of outstanding stock Awards.

II-69

Table of Contents

~~Liberty~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Qurate Retail - Exercises

The aggregate intrinsic value of all options exercised during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 was ~~$145~~$7 million, ~~$44~~$2 million and ~~$115~~$28 million, respectively. The aggregate intrinsic value of options exercised for the year ended December 31, 2017 includes approximately $104 million related to the intrinsic value of options exercised as a result of the Option Exchange.

~~Liberty~~Qurate Retail - Restricted Stock and Restricted Stock Units

The Company ~~had~~has approximately ~~5.2~~12.7 million and ~~252~~373 thousand unvested ~~restricted shares~~RSAs and RSUs of ~~QVC Group~~QRTEA and ~~Liberty Ventures common stock,~~QRTEP, respectively, held by certain directors, officers and employees of the Company as of December 31, ~~2017. These Series A~~2020. The QRTEA unvested RSAs and ~~Series B unvested restricted shares of QVC Group and Liberty Ventures had~~RSUs have a weighted average GDFV of ~~$24.00 and $50.46~~$7.32 per share, ~~respectively.~~and 300 thousand of the QRTEP unvested RSUs have an incremental cost of $48.88 per share.

The aggregate fair value of all ~~restricted shares of Liberty common stock~~QRTEA, QRTEB and QRTEP RSAs and RSUs that vested during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 was ~~$23~~$17 million, ~~$26~~$25 million and ~~$16~~$64 million, respectively.

~~Other~~

Certain of the Company's other subsidiaries have stock-based compensation plans under which employees and non-employees are granted options or similar stock-based awards. Awards made under these plans vest and become exercisable over various terms and are typically cash settled and recorded as liability awards. During the year ended December 31, 2016, approximately $90 million of cash payments were made to settle CommerceHub stock based awards. The awards and compensation recorded, if any, under the plans at the other subsidiaries are not significant to Liberty.

~~(16)~~(13) Employee Benefit Plans

Subsidiaries of ~~Liberty~~Qurate Retail sponsor 401(k) plans, which provide their employees an opportunity to make contributions to a trust for investment in ~~Liberty~~Qurate Retail common stock, as well as other mutual funds. The Company's subsidiaries make matching contributions to their plans based on a percentage of the amount contributed by employees. Employer cash contributions to all plans aggregated ~~$20~~$28 million, $25 million and ~~$27~~$26 million ~~respectively,~~ for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively.

~~(17)~~(14) Other Comprehensive Earnings (Loss)

Accumulated other comprehensive earnings (loss) included in ~~Liberty's~~the Company’s consolidated balance sheets and consolidated statements of equity reflect the aggregate of foreign currency translation adjustments, ~~unrealized holding gains~~comprehensive earnings (loss) attributable to debt credit risk adjustments and ~~losses on AFS securities and Liberty's~~the Company's share of accumulated other comprehensive earnings of affiliates.

~~II-76~~II-70

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

The change in the components of accumulated other comprehensive earnings (loss), net of taxes ("AOCI"), is summarized as follows:

Foreign

Share of



currency

AOCI

translation

of equity

adjustments

affiliates

AOCI

amounts in millions

Balance at January 1, 2015

$
(75)

(19)

(94)

Other comprehensive earnings (loss) attributable to Liberty Interactive Corporation stockholders

(100)

(21)

(121)

Balance at December 31, 2015

(175)

(40)

(215)

Other comprehensive earnings (loss) attributable to Liberty Interactive Corporation stockholders

(85)

(1)

(86)

Distribution of Liberty Expedia Holdings

—

35

35

Balance at December 31, 2016

$
(260)

(6)

(266)

Other comprehensive earnings (loss) attributable to Liberty Interactive Corporation stockholders

130

3

133

Balance at December 31, 2017

$
(130)

(3)

(133)


				Comprehensive
	Foreign		Share of	Earnings (loss)
	currency		AOCI	Attributable to
	translation		of equity	Debt Credit Risk
	adjustments		affiliates	Adjustments	Other	AOCI

	amounts in millions
Balance at January 1, 2018	$	(130)	(3)	—	—	(133)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		(50)	(2)	38	16	2
Cumulative effect of accounting change		—	—	—	76	76
Balance at December 31, 2018		(180)	(5)	38	92	(55)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		(1)	—	2	(1)	—
Balance at December 31, 2019	$	(181)	(5)	40	91	(55)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		111	—	17	(1)	127
Balance at December 31, 2020	$	(70)	(5)	57	90	72

The components of other comprehensive earnings (loss) are reflected in ~~Liberty's~~Qurate Retail's consolidated statements of comprehensive earnings (loss) net of taxes. The following table summarizes the tax effects related to each component of other comprehensive earnings (loss).


							Tax
					Before-tax		(expense)	Net-of-tax
					amount		benefit	amount

			Tax
	Before-tax		(expense)	Net-of-tax
	amount		benefit	amount
	amounts in millions
Year ended December 31, 2017:
					amounts in millions
Year ended December 31, 2020:
Foreign currency translation adjustments	$	155	(21)	134	$	115	3	118
Recognition of previously unrealized losses (gains) on debt, net						(1)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments						22	(5)	17
Other comprehensive earnings (loss)					$	136	(2)	134
Year ended December 31, 2019:
Foreign currency translation adjustments					$	—	1	1
Recognition of previously unrealized losses (gains) on debt, net						(1)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments						1	—	1
Other comprehensive earnings (loss)					$	—	1	1
Year ended December 31, 2018:
Foreign currency translation adjustments					$	(49)	1	(48)
Recognition of previously unrealized losses (gains) on debt, net						21	(5)	16
Share of other comprehensive earnings (loss) of equity affiliates		5	(2)	3		(3)	1	(2)
Comprehensive earnings (loss) attributable to debt credit risk adjustments						50	(12)	38
Other comprehensive earnings (loss)	$	160	(23)	137	$	19	(15)	4
Year ended December 31, 2016:
Foreign currency translation adjustments	$	(97)	13	(84)
Share of other comprehensive earnings (loss) of equity affiliates		(8)	3	(5)
Other comprehensive earnings (loss) from discontinued operations		(3)	1	(2)
Other		10	(4)	6
Other comprehensive earnings (loss)	$	(98)	13	(85)
Year ended December 31, 2015:
Foreign currency translation adjustments	$	(118)	17	(101)
Share of other comprehensive earnings (loss) of equity affiliates		(6)	2	(4)
Other comprehensive earnings (loss) from discontinued operations		(27)	10	(17)
Other comprehensive earnings (loss)	$	(151)	29	(122)

~~II-77~~II-71

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

~~(18)~~

(15) Commitments and Contingencies

~~Operating Leases~~

Liberty leases business offices, has entered into satellite transponder lease agreements and uses certain equipment under lease arrangements. Rental expense under such arrangements amounted to $45 million, $46 million and $39 million for the years ended December 31, 2017, 2016 and 2015, respectively.

~~A summary of future minimum lease payments under noncancelable operating leases and build to suit leases as of December 31, 2017 follows (amounts in millions):~~

Years ending December 31:

2018
$
78

2019
$
70

2020
$
58

2021
$
51

2022
$
42

Thereafter
$
201

It is expected that in the normal course of business, leases that expire generally will be renewed or replaced by leases on other properties; thus, it is anticipated that future lease commitments will not be less than the amount shown for 2017.

~~Distribution Center Lease~~

On July 2, 2015, QVC entered into a lease (the “Lease”) for a west coast distribution center. Pursuant to the Lease, the landlord built an approximately one million square foot rental building in Ontario, California (the “Premises”), and thereafter leased the Premises to QVC as its new California distribution center for an initial term of 15 years. Under the Lease, QVC is required to pay an initial base rent of approximately $6 million per year, increasing to approximately $8 million per year by the final year of the initial term, as well as all real estate taxes and other building operating costs. QVC also has an option to extend the term of the Lease for up to two consecutive terms of 10 years each.

QVC has the right to purchase the Premises and related land from the landlord by entering into an amended and restated agreement at any time during the twenty-fifth or twenty-sixth months of the Lease's initial term with a $10 million initial payment and annual payments of $12 million over a term of 13 years.

QVC concluded that it was the deemed owner (for accounting purposes only) of the Premises during the construction period under build to suit lease accounting. Building construction began in July of 2015. During the construction period, QVC recorded estimated project construction costs incurred by the landlord as a projects in progress asset and a corresponding long-term liability in “Property and equipment, net” and “Other long-term liabilities,” respectively. In addition, QVC paid for normal tenant improvements and certain structural improvements and recorded these amounts as part of the projects in progress asset. Upon completion of construction, the long-term liability was reclassified to debt. QVC incurred construction costs of $89 million during the year ended December 31, 2016. No such costs were incurred for the year ended December 31, 2017.

On August 29, 2016, QVC’s California distribution center officially opened. QVC concluded that the Lease does not meet the criteria for “sale-leaseback” treatment under U.S. GAAP. Therefore, QVC treats the Lease as a financing obligation and lease payments are attributed to: (1) a reduction of the principal financing obligation; (2) imputed interest

~~II-78~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

expense; and (3) land lease expense representing an imputed cost to lease the underlying land of the Premises. In addition, the building asset will be depreciated over its estimated useful life of 20 years. Although QVC did not begin making monthly lease payments pursuant to the Lease until February 2017, the portion of the lease obligations allocated to the land has been treated for accounting purposes as an operating lease that commenced in 2015. If QVC does not exercise its right to purchase the Premises and related land, QVC will derecognize both the net book values of the asset and the financing obligation.

Litigation

~~Liberty~~Qurate Retail has contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible ~~Liberty~~Qurate Retail may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements.

~~(19)~~(16) Information About ~~Liberty's~~Qurate Retail's Operating Segments

~~Liberty,~~Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. ~~Liberty~~Qurate Retail identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of ~~Liberty's~~Qurate Retail's annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.

~~Liberty~~Qurate Retail evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, ~~Liberty~~Qurate Retail reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.

~~Liberty~~For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding all stock-based ~~compensation)~~compensation and transaction related costs). ~~Liberty~~Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses ~~including~~by identifying those items that are not directly a reflection of each ~~business's ability to service debt and fund capital expenditures.~~business’ 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. This measure of performance excludes depreciation and amortization, stock-based compensation, certain purchase accounting adjustments, separately reported litigation settlements, transaction related costs (including restructuring, integration, and ~~restructuring~~advisory fees), and impairment charges that are included in the measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. ~~Liberty~~Qurate Retail generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the year ended December 31, ~~2017, Liberty~~2020, Qurate Retail has identified the following consolidated subsidiaries as its reportable segments:

●

QxH– QVC U.S. and HSN market and sell a wide variety of consumer products in the United States, primarily by means of their televised shopping programs and via the Internet through their websites and mobile applications.

●

QVC International – ~~consolidated subsidiary that~~QVC International markets and sells a wide variety of consumer products in ~~the U.S. and~~ several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile ~~transactions through its domestic and international websites.~~

applications.

II-72

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

●

~~zulily~~Zulily – ~~consolidated subsidiary that~~Zulily markets and sells ~~unique~~a wide variety of consumer products in the ~~U.S.~~United States and several foreign countries through flash sales events, primarily through its app, mobile and desktop ~~and mobile websites and mobile applications.~~

experiences.

~~II-79~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

HSN – consolidated subsidiary that markets and sells a wide variety of consumer products primarily in the U.S. by means of its televised shopping programs and via the Internet and mobile transactions through its domestic websites.

~~Liberty's~~Qurate Retail's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the Company's summary of significant accounting policies.

Performance Measures

Years ended December 31,

2017

2016

2015




Adjusted



Adjusted



Adjusted

Revenue

OIBDA

Revenue

OIBDA

Revenue

OIBDA

amounts in millions

QVC Group

QVC

$
8,771

1,897

8,682

1,840

8,743

1,894

HSN

—

—

NA

NA

NA

NA

zulily

1,613

91

1,547

112

426

21

Corporate and other

—

(35)

—

(16)

—

(28)

Inter-segment eliminations

(3)

—

(10)

—

—

—

Total QVC Group

10,381

1,953

10,219

1,936

9,169

1,887

Ventures Group

Corporate and other

23

(27)

428

3

820

59

Total Ventures Group

23

(27)

428

3

820

59

Consolidated Liberty

$
10,404

1,926

10,647

1,939

9,989

1,946


	Years ended December 31,
	2020			2019		2018
			Adjusted		Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA	Revenue	OIBDA

	amounts in millions
QxH	$	8,505	1,547	8,277	1,536	8,544	1,630
QVC International		2,967	510	2,709	446	2,738	429
Zulily		1,636	83	1,571	48	1,817	108
Corporate and other		1,070	58	901	(1)	973	(13)
Inter-segment eliminations		(1)	—	—	—	(2)	—
Consolidated Qurate Retail	$	14,177	2,198	13,458	2,029	14,070	2,154

~~II-80~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

Other Information


	December 31, 2020			December 31, 2019

	Total		Capital	Total	Capital
	assets		expenditures	assets	expenditures

	amounts in millions
QxH	$	12,393	182	12,774	257
QVC International		2,455	36	2,268	34
Zulily		1,049	23	1,136	23
Corporate and other		1,102	16	1,127	11
Consolidated Qurate Retail	$	16,999	257	17,305	325

December 31, 2017

December 31, 2016




Investments

Investment





Investments

Investment


Total

in

in Liberty

Capital

Total

in

in Liberty

Capital

assets

affiliates

Broadband

expenditures

assets

affiliates

Broadband

expenditures

amounts in millions

QVC Group

QVC

$
11,550

40

—

152

11,545

40

—

179

HSN

2,798

—

—

—

NA

NA

NA

NA

zulily

2,323

—

—

49

2,461

—

—

27

Corporate and other

566

—

—

—

351

184

—

—

Total QVC Group

17,237

40

—

201

14,357

224

—

206

Ventures Group

Corporate and other

6,885

269

3,635

3

5,998

357

3,161

27

Total Ventures Group

6,885

269

3,635

3

5,998

357

3,161

27

Inter-group eliminations

—

—

—

—

—

—

Consolidated Liberty

$
24,122

309

3,635

204

20,355

581

3,161

233

II-73

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The following table provides a reconciliation of consolidated segment Adjusted OIBDA to operating income and earnings (loss) from continuing operations before income taxes:


					Years ended December 31,
					2020		2019	2018

	Years ended December 31,
	2017		2016	2015
	amounts in millions
					amounts in millions
Consolidated segment Adjusted OIBDA	$	1,926	1,939	1,946	$	2,198	2,029	2,154
Stock-based compensation		(123)	(97)	(127)		(64)	(71)	(88)
Depreciation and amortization		(725)	(874)	(703)		(562)	(606)	(637)
Acquisition and restructuring related costs		(35)	—	—
Transaction related costs						—	(1)	(72)
Impairment of intangible assets and long lived assets						—	(1,167)	(33)
Operating income		1,043	968	1,116		1,572	184	1,324
Interest expense		(355)	(363)	(360)		(408)	(374)	(381)
Share of earnings (loss) of affiliates, net		(200)	(68)	(178)		(156)	(160)	(162)
Realized and unrealized gains (losses) on financial instruments, net		618	1,175	114		(110)	(251)	76
Gains (losses) on transactions, net		410	9	110		224	(1)	1
Tax sharing income (expense) with Liberty Broadband						(39)	(26)	32
Other, net		7	131	14		(32)	6	(7)
Earnings (loss) from continuing operations before income taxes	$	1,523	1,852	816	$	1,051	(622)	883

~~II-81~~

~~Table of Contents~~

~~LIBERTY INTERACTIVE CORPORATION AND SUBSIDIARIES~~

~~Notes to Consolidated Financial Statements (Continued)~~

~~December 31, 2017, 2016 and 2015~~

~~Revenue by Geographic Area~~Preferred Stock

~~Revenue by geographic area based~~On September 14, 2020, Qurate Retail issued the Preferred Stock. There were 13,500,000 shares of Preferred Stock authorized and 12,513,752 shares issued and outstanding at December 31, 2020.

Priority. The Preferred Stock ranks senior to the shares of common stock of Qurate Retail, with respect to dividend rights, rights of redemption and rights on the ~~location~~distribution of ~~customers is as follows:~~assets on any voluntary or involuntary liquidation, dissolution or winding up of Qurate Retail’s affairs. Shares of Preferred Stock are not convertible into shares of common stock of Qurate Retail.

Years ended December 31,


2017

2016

2015

amounts in millions

United States

$
7,684

7,979

7,412

Japan

934

900

811

Germany

899

866

850

Other foreign countries

887

902

916

$
10,404

10,647

9,989

~~Long-lived Assets by Geographic Area~~

December 31,

2017

2016

amounts in millions

United States

$
895

694

Japan

143

145

Germany

164

154

Other foreign countries

139

138

$
1,341

1,131

Dividends. Holders of the Preferred Stock are entitled to receive quarterly cash dividends at a rate of 8.0% per annum of the liquidation price (as described below) on a cumulative basis, during the term. If declared, accrued dividends

~~II-82~~II-62

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

Voting Power. Holders of the Preferred Stock will not have any voting rights or powers, except as specified in the Certificate of Designations or as required by Delaware law.

II-63

~~(20)Quarterly Financial Information (Unaudited)~~

As discussed in note 3, during the third quarter of 2016, the Company adopted new accounting guidance that requires the recognition of excess tax benefits and tax deficiencies as income tax benefit or expense rather than as additional paid-in capital. The Company has applied the new guidance prospectively from January 1, 2016. The unaudited quarterly information for the first and second quarters of 2016 has been retrospectively adjusted to reflect the impact of the adoption of this guidance.

In addition, as discussed in note 6, in November 2016, Liberty completed the Expedia Holdings Split-Off. The unaudited quarterly information below for 2016 reflects Liberty’s interest in Expedia as a discontinued operation for all periods presented.

1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

amounts in millions,

except per share amounts

2017:

Revenue

$
2,327

2,352

2,381

3,344

Operating income

$
213

254

208

368

Earnings from continuing operations

$
519

184

308

1,476

Net earnings (loss) attributable to Liberty Interactive Corporation stockholders:

Series A and Series B QVC Group common stock

$
91

111

119

887

Series A and Series B Liberty Ventures common stock

$
416

64

177

576

Basic net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.20

0.25

0.27

2.07

Series A and Series B Liberty Ventures common stock

$
4.89

0.75

2.06

6.70

Diluted net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.20

0.24

0.26

2.05

Series A and Series B Liberty Ventures common stock

$
4.84

0.74

2.03

6.70

Basic net earnings (loss) attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.20

0.25

0.27

2.07

Series A and Series B Liberty Ventures common stock

$
4.89

0.75

2.06

6.70

Diluted net earnings (loss) attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.20

0.24

0.26

2.05

Series A and Series B Liberty Ventures common stock

$
4.84

0.74

2.03

6.70

~~II-83~~

Table of Contents

~~LIBERTY INTERACTIVE CORPORATION~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018

1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

amounts in millions,

except per share amounts

2016:

Revenue

$
2,510

2,563

2,412

3,162

Operating income

$
189

250

157

372

Earnings from continuing operations

$
92

387

451

324

Net earnings (loss) attributable to Liberty Interactive Corporation stockholders:

Series A and Series B QVC Group common stock

$
94

130

61

188

Series A and Series B Liberty Ventures common stock

$
(26)

249

408

131

Basic net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.19

0.27

0.13

0.41

Series A and Series B Liberty Ventures common stock

$
(0.07)

1.73

2.68

1.15

Diluted net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.19

0.27

0.13

0.40

Series A and Series B Liberty Ventures common stock

$
(0.07)

1.72

2.64

1.15

Basic net earnings (loss) attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.19

0.27

0.13

0.41

Series A and Series B Liberty Ventures common stock

$
(0.18)

1.75

2.87

1.21

Diluted net earnings (loss) attributable to Liberty Interactive Corporation stockholders per common share:

Series A and Series B QVC Group common stock

$
0.19

0.27

0.13

0.40

Series A and Series B Liberty Ventures common stock

$
(0.18)

1.74

2.83

1.21

~~II-84~~

~~Table~~value, which was determined to be the liquidation preference of ~~Contents~~$100 per share. Given the liability classification of the Preferred Stock, all dividends accrued will be classified as interest expense in the consolidated statements of operations.

Common Stock

~~PART III~~Series A Qurate Retail common stock has 1 vote per share, and Series B Qurate Retail common stock has 10 votes per share. Each share of the Series B common stock is exchangeable at the option of the holder for 1 share of Series A common stock of the same group. The Series A and Series B common stock participate on an equal basis with respect to dividends and distributions.

~~The following required information is incorporated by reference to our definitive proxy statement for our 2018~~At the Annual Meeting of Stockholders ~~presently scheduled~~held on June 2, 2015, the Company’s stockholders approved an amendment to ~~be held in~~ the ~~second quarter~~Restated Certificate of ~~2018:~~Incorporation that increased (i) the total number of shares of the Company’s capital stock which the Company will have the authority to issue to 9,015 million shares, (ii) the number of shares of the Company’s capital stock designated as “Common Stock” to 8,965 million shares and (iii) the number of shares of Common Stock designated as “Series A Liberty Ventures Common Stock,” “Series B Liberty Ventures Common Stock” and “Series C Liberty Ventures Common Stock” to 400 million shares, 15 million shares and 400 million shares, respectively.

~~Item 10.Directors, Executive Officers and Corporate Governance~~

~~Item 11.Executive Compensation~~

~~Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters~~

~~Item 13.Certain Relationships and Related Transactions, and Director Independence~~

~~Item 14.Principal Accountant Fees and Services~~

~~We expect to file our definitive proxy statement for our 2018~~At the Annual Meeting of Stockholders ~~with~~held on May 23, 2018, the ~~Securities and Exchange Commission on or before April 30, 2018.~~

~~III-1~~

~~Table of Contents~~

~~PART IV.~~

~~Item 15. Exhibits and Financial Statement Schedules.~~

~~(a)(1)~~ ~~Financial Statements~~

~~Included in Part II of this report:~~


		~~Page No.~~
~~Liberty Interactive Corporation:~~
~~Reports of Independent Registered Public Accounting Firm~~		~~II-30 & II-32~~
~~Consolidated Balance Sheets, December 31, 2017 and 2016~~		~~II-33~~
~~Consolidated Statements of Operations, Years ended December 31, 2017, 2016 and 2015~~		~~II-35~~
~~Consolidated Statements of Comprehensive Earnings (loss), Years ended December 31, 2017, 2016 and 2015~~		~~II-36~~
~~Consolidated Statements of Cash Flows, Years ended December 31, 2017, 2016 and 2015~~		~~II-37~~
~~Consolidated Statements of Equity, Years ended December 31, 2017, 2016 and 2015~~		~~II-38~~
~~Notes to Consolidated Financial Statements, December 31, 2017, 2016 and 2015~~		~~II-39~~

~~(a)(2)~~ ~~Financial Statement Schedules~~

~~(i)~~

~~All schedules have been omitted because they are not applicable, not material or the required information is set forth in the financial statements or notes thereto.~~

~~(ii)~~

~~Balance sheet only Report of Independent Registered Public Accounting Firm for HSN, Inc. referenced by current year Report of Independent Registered Public Accounting Firm.~~

~~(iii)~~

~~Separate financial statements for Liberty Broadband Corporation:~~



	~~Page No.~~

~~Report of Independent Registered Public Accounting Firm~~	~~IV-11~~
~~Consolidated Balance Sheets, December 31, 2017 and 2016~~	~~IV-12~~
~~Consolidated Statements of Operations, Years ended December 31, 2017, 2016 and 2015~~	~~IV-13~~
~~Consolidated Statements of Comprehensive Income (Loss), Years ended December 31, 2017, 2016 and 2015~~	~~IV-14~~
~~Consolidated Statements of Cash Flows, Years ended December 31, 2017, 2016 and 2015~~	~~IV-15~~
~~Consolidated Statements of Changes in Shareholders’ Equity, Years ended December 31, 2017, 2016 and 2015~~	~~IV-16~~
~~Notes to Consolidated Financial Statements~~	~~IV-17~~

~~IV-1~~

~~Table of Contents~~

~~(a)(3)~~ ~~Exhibits~~

~~Listed below are the exhibits which are filed as a part of this Report (according~~Company’s stockholders approved an amendment to the Restated Certificate of Incorporation, which (i) eliminated the tracking stock capitalization structure of the Company and (ii) reclassified each outstanding share of Series A and Series B QVC Group common stock into one share of our Series A and Series B common stock, respectively. In addition, the amendment to the Restated Certificate of Incorporation changed (i) the total number ~~assigned~~of shares of the Company’s capital stock which the Company will have the authority to ~~them in Item 601~~issue to 8,200 million shares, (ii) the number of ~~Regulation S-K):~~shares of the Company’s capital stock designated as “Common Stock” to 8,150 million shares, (iii) the number of shares of Common Stock designated as “Series A Common Stock,” “Series B Common Stock” and “Series C Common Stock” to 4,000 million shares, 150 million shares and 4,000 million shares, respectively, and (iv) the number of shares of the Company’s capital stock designated as “Preferred Stock” to 50 million shares.

~~2 - Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession:~~

~~2.1~~	Reorganization Agreement, dated as of July 15, 2016, between Liberty Interactive Corporation and CommerceHub, Inc. (incorporated by reference to Exhibit 2.1 to CommerceHub, Inc.’s Current Report on Form 8-K filed on July 26, 2016 (File No. 001-37840) (the “CommerceHub 8-K”)).

~~2.2~~	Reorganization Agreement, dated as of October 26, 2016, between Liberty Interactive Corporation and Liberty Expedia Holdings, Inc. (incorporated by reference to Exhibit 2.1 to Post-Effective Amendment No. 1 to Liberty Expedia Holdings, Inc.’s Registration Statement on Form S-4 filed on November 4, 2016 (File No. 333-210377)).

~~2.3~~	Agreement and Plan of Reorganization, dated as of April 4, 2017, by and among Liberty Interactive Corporation, General Communication, Inc. and Liberty Interactive LLC (incorporated by reference to Annex A to Liberty Interactive Corporation’s Definitive Proxy Statement on Schedule 14A filed on December 29, 2017 (File No. 001-33982)).

~~2.4~~	Agreement and Plan of Merger, dated as of July 5, 2017, by and among Liberty Interactive Corporation, Liberty Horizon, Inc. and HSN, Inc. (included as Annex A to the proxy statement/prospectus forming a part of Liberty Interactive Corporation’s Registration Statement on Form S-4 filed on August 31, 2017 (File No. 333-220270).

~~2.5~~	Amendment No. 1 to Agreement and Plan of Reorganization, dated as of July 19, 2017, by and among Liberty Interactive Corporation, Liberty Interactive LLC and General Communication, Inc. (incorporated by reference to Annex B to Liberty Interactive Corporation’s Definitive Proxy Statement on Schedule 14A filed on December 29, 2017 (File No. 001-33982)).

~~2.6~~	Amendment No. 2 to Agreement and Plan of Reorganization, dated as of November 8, 2017, by and among Liberty Interactive Corporation, Liberty Interactive LLC and General Communication, Inc. (incorporated by reference to Annex C to Liberty Interactive Corporation’s Definitive Proxy Statement on Schedule 14A filed on December 29, 2017 (File No. 001-33982)).

~~3 - Articles of Incorporation and Bylaws:~~

~~3.1~~	Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Registrant's Form 8-A filed on June 4, 2015 (File No. 001-33982) (the “Form 8-A”)).

~~3.2~~	~~Certificate of Amendment to the Restated Certificate of Incorporation of Liberty Interactive Corporation (incorporated by reference to Exhibit 3.2 to the Form 8-A).~~

~~3.3~~	~~Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed on August 6, 2015 (File No. 001-33982)).~~

~~IV-2~~

~~Table of Contents~~

~~4 - Instruments Defining the Rights to Securities Holders, including Indentures:~~

~~4.1~~	~~Form of Specimen certificate for shares of the Registrant's Series A QVC Group common stock, par value $.01 per share (incorporated by reference to Exhibit 4.1 to the Form 8-A).~~

~~4.2~~	~~Form of Specimen certificate for shares of the Registrant's Series B QVC Group common stock, par value $.01 per share (incorporated by reference to Exhibit 4.2 to the Form 8-A).~~

~~4.3~~	Specimen certificate for shares of the Registrant's Series A Liberty Ventures common stock, par value $.01 per share (incorporated by reference to Exhibit 4.3 to the Registrant's Registration Statement on Form S-4 filed on April 3, 2012 (File No. 333-180543) (the “Liberty S-4”)).

~~4.4~~	~~Specimen certificate for shares of the Registrant's Series B Liberty Ventures common stock, par value $.01 per share (incorporated by reference to Exhibit 4.4 to the Liberty S-4).~~

~~4.5~~	~~The Registrant undertakes to furnish to the Securities and Exchange Commission, upon request, a copy of all instruments with respect to long-term debt not filed herewith.~~

~~10 - Material Contracts:~~

~~10.1~~	Liberty Interactive Corporation 2000 Incentive Plan (As Amended and Restated Effective November 7, 2011) (the "2000 Incentive Plan") (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ending September 30, 2011 filed on November 8, 2011 (File No. 001-33982) (the “Liberty 2011 10-Q”)). +

~~10.2~~	Amendment to the 2000 Incentive Plan (effective as of August 5, 2013) (incorporated by reference to Exhibit 10.3 to the Liberty Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 filed on November 5, 2013) (File No. 001-33982) (the “Liberty 2013 10-Q”). +

~~10.3~~	Liberty Interactive Corporation 2007 Incentive Plan (As Amended and Restated Effective November 7, 2011) (the "2007 Incentive Plan") (incorporated by reference to Exhibit 10.6 to the Liberty 2011 10-Q). +

~~10.4~~	~~Amendment to the 2007 Incentive Plan (effective as of August 5, 2013) (incorporated by reference to Exhibit 10.4 to the Liberty 2013 10-Q).~~ +

~~10.5~~	Liberty Interactive Corporation 2010 Incentive Plan (As Amended and Restated Effective November 7, 2011) (the “2010 Incentive Plan”) (incorporated by reference to Exhibit 10.7 to the Liberty 2011 10-Q). +

~~10.6~~	~~Amendment to the 2010 Incentive Plan (effective August 5, 2013) (incorporated by reference to Exhibit 10.5 to the Liberty 2013 10-Q).~~ +

~~10.7~~	Liberty Interactive Corporation 2002 Nonemployee Director Incentive Plan (As Amended and Restated Effective November 7, 2011) (the "2002 Directors Plan") (incorporated by reference to Exhibit 10.8 to the Liberty 2011 10-Q). +

~~10.8~~	~~Amendment to the 2002 Directors Plan (effective as of August 5, 2013) (incorporated by reference to Exhibit 10.1 to the Liberty 2013 10-Q).~~ +

~~IV-3~~

~~Table of Contents~~

~~10.9~~	Liberty Interactive Corporation 2011 Nonemployee Director Incentive Plan (amended and restated as of December 17, 2015) (the “2011 Directors Plan”) (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 26, 2016 (File No. 001-33982) (the “Liberty 2015 10-K”). +

~~10.10~~	Liberty Interactive Corporation 2012 Incentive Plan (Amended and Restated as of March 31, 2015) (the “2012 Incentive Plan”) (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2015 filed on May 8, 2015 (File No. 001-33982)). +

~~10.11~~	~~Liberty Interactive Corporation 2016 Omnibus Incentive Plan (incorporated by reference to Annex A to the Registrant’s Proxy Statement on Schedule 14A filed on July 8, 2016 (File No. 001-33982)).~~ +

~~10.12~~	Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014 (File No. 001-33982) (the “Liberty 2013 10-K”)). +

~~10.13~~	~~Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.14 to the Liberty 2013 10-K).~~ +

~~10.14~~	Form of Non-Qualified Stock Option Agreement under the 2000 Incentive Plan, the 2007 Incentive Plan and the 2010 Incentive Plan [for certain designated award recipients] (incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 filed on February 23, 2012 (File No. 001-33982) (the “Liberty 2011 10-K”)). +

~~10.15~~	Form of Restricted Stock Award Agreement under the 2000 Incentive Plan, the 2007 Incentive Plan and the 2010 Incentive Plan [for certain designated award recipients] (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 filed on February 25, 2010 (File No. 001-33982) (the “Liberty 2009 10-K)). +

~~10.16~~	~~Form of Non-Qualified Stock Option Agreement under the 2002 Directors Plan and the 2011 Directors Plan (incorporated by reference to 10.19 to the Liberty 2011 10-K).~~ +

~~10.17~~	~~Form of Restricted Stock Award Agreement under the 2002 Directors Plan and the 2011 Directors Plan (incorporated by reference to 10.20 to the Liberty 2011 10-K).~~ +

~~10.18~~	~~Non-Qualified Stock Option Agreement under the 2007 Incentive Plan for Michael George dated March 2, 2011 (incorporated by reference to 10.22 to the Liberty 2011 10-K).~~ +

~~10.19~~	Amended and Restated Non-Qualified Stock Option Agreement under the 2000 Incentive Plan for Gregory B. Maffei (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ending June 30, 2012 filed on August 8, 2012 (File No. 001-33982) (the “Liberty 2012 10-Q”)). +

~~10.20~~	~~Amended and Restated Non-Qualified Stock Option Agreement under the 2007 Incentive Plan for Gregory B. Maffei (incorporated by reference to Exhibit 10.2 to the Liberty 2012 10-Q).~~ +

~~10.21~~	~~Employment Agreement between Michael George and QVC, effective December 16, 2015 (incorporated by reference to Exhibit 10.23 to the Liberty 2015 10-K).~~ +

~~IV-4~~

~~Table of Contents~~

~~10.22~~	Employment Agreement between Gregory B. Maffei and Liberty Interactive Corporation dated December 29, 2014 (incorporated by reference to Exhibit 10.25 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014 filed on February 27, 2015 (File No. 001-33982)). +

~~10.23~~	Non-Qualified Stock Option Agreement under the Liberty Interactive Corporation 2010 Incentive Plan for Gregory B. Maffei, effective December 24, 2014 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 filed on August 5, 2015 (File No. 001-33982)). +

~~10.24~~	Letter Agreement regarding personal use of the Liberty aircraft, dated as of February 5, 2013, between Gregory B. Maffei and Liberty Media Corporation (incorporated by reference to Exhibit 10.18 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2012 filed on February 28, 2013 (File No. 001-33982)). +

~~10.25~~	Letter Agreement regarding personal use of Liberty Media’s aircraft, dated as of November 11, 2015, between Gregory B. Maffei and Liberty Media Corporation (incorporated by reference to Exhibit 10.27 to the Liberty 2015 10-K). +

~~10.26~~	~~Agreement Regarding LINTA Equity Awards dated September 23, 2011, between Liberty Interactive Corporation and Gregory B. Maffei (incorporated by reference to Exhibit 10.25 to the Liberty 2011 10-K).~~ +

~~10.27~~	Call Agreement, dated as of February 9, 1998 (the "Call Agreement"), between Liberty Interactive Corporation (as successor of Liberty Interactive LLC (f/k/a Liberty Media LLC, “Old Liberty”), as assignee of Tele-Communications, Inc.) and the Malone Group (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009 (File No. 001-33982)).

~~10.28~~	Letter, dated as of March 5, 1999, from Tele-Communications, Inc. and Old Liberty addressed to Mr. Malone and Leslie Malone relating to the Call Agreement (incorporated by reference to Exhibit 10.27 to the Liberty 2009 10-K).

~~10.29~~	~~Form of Indemnification Agreement between the Registrant and its executive officers/directors (incorporated by reference to Exhibit 10.29 to the Liberty 2011 10-K).~~

~~10.30~~	Tax Sharing Agreement, dated September 23, 2011, between Liberty Interactive Corporation, Liberty Interactive LLC and Liberty Media Corporation (as assignee of Starz (f/k/a Liberty Media Corporation)) (incorporated by reference to Exhibit 10.4 to Post-Effective Amendment No. 1 to Starz's Registration Statement on Form S-4 filed on September 23, 2011 (File No. 333-171201) (the “Starz S-4”)).

~~10.31~~	Services Agreement, dated as of September 23, 2011, by and between Liberty Interactive Corporation and Liberty Media Corporation (as assignee of Starz (f/k/a Liberty Media Corporation)) (incorporated by reference to Exhibit 10.5 to the Starz S-4).

~~10.32~~	Tax Sharing Agreement, dated as of August 27, 2014, between Liberty Interactive Corporation and Liberty TripAdvisor Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 3, 2014 (File No. 001-33982)).

~~IV-5~~

~~Table of Contents~~

~~10.33~~	Amendment to Tax Sharing Agreement, dated as of October 3, 2014, between Liberty Interactive Corporation and Liberty TripAdvisor Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2015 filed on May 8, 2015 (File No. 001-33982)).

~~10.34~~	~~Tax Sharing Agreement, dated as of July 22, 2016, between Liberty Interactive Corporation and CommerceHub, Inc. (incorporated by reference to Exhibit 10.1 to the CommerceHub 8-K).~~

~~10.35~~	Tax Sharing Agreement, dated as of November 4, 2016, between Liberty Interactive Corporation and Liberty Expedia Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2016 (File No. 001-33982)).

~~10.36~~	Indenture dated as of March 23, 2010 among QVC, the guarantors party thereto and U.S. Bank National Association, as trustee, as supplemented by that Supplemental Indenture dated as of June 30, 2011 (incorporated by reference to Exhibit 10.2 to the QVC S-4).

~~10.37~~	~~Indenture dated as of July 2, 2012 among QVC, the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to the QVC S-4).~~

~~10.38~~	Indenture dated as of March 18, 2013 among QVC, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 10.2 to QVC's Quarterly Report on Form 10-Q filed on May 9, 2013 (File No. 333-184501)).

~~10.39~~	Form of the Indenture dated as of March 18, 2014 among QVC, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to QVC’s Registration Statement on Form S-4 filed on April 30, 2014 (File No. 333-195586)).

~~10.40~~	Indenture dated as of August 21, 2014 among QVC, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to QVC’s Registration Statement on Form S-4 filed on October 10, 2014 (File No. 333-199254)).

~~10.41~~	Second Amended and Restated Credit Agreement, dated as of March 9, 2015, among QVC, Inc., as Borrower, J.P. Morgan Securities LLC, as Lead Arranger and Lead Bookrunner, JPMorgan Chase Bank, N.A., as Administrative Agent, Wells Fargo Bank, N.A., and BNP Paribas, as Syndication Agents, and the parties named therein as Lenders, Issuing Banks, Documentation Agents and Co-Lead Arrangers and Co-Bookrunners (incorporated by reference to Exhibit 4.1 to QVC’s Current Report on Form 8-K (File No. 333-184501) as filed on March 13, 2015).

~~10.42~~	Third Amended and Restated Credit Agreement, dated as of June 23, 2016, among QVC, Inc. and zulily, llc, as Borrowers, JPMorgan Chase Bank, N.A., as Lead Arranger, Lead Bookrunner and Administrative Agent and the parties named therein as Lenders, Co-Bookrunners, Co-Syndication Agents and Co-Documentation Agents (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on June 28, 2016 (File No. 001-33982)).

~~10.43~~	Amended and Restated Investment Agreement, dated May 28, 2015, by and among Liberty Broadband Corporation, Liberty Interactive Corporation, JANA Nirvana Master Fund, Ltd., JANA Master Fund, Ltd., and Coatue Offshore Master Fund, Ltd. (incorporated by reference to Exhibit 10.5 to Liberty Broadband Corporation’s Current Report on Form 8-K filed on May 29, 2015 (File No. 001-36713) (the “LBC 8-K”).

~~IV-6~~

~~Table of Contents~~

~~10.44~~	Amended and Restated Assignment and Assumption Agreement, dated May 29, 2015, by and among Liberty Broadband Corporation, Liberty Interactive Corporation, Soroban Master Fund LP, and Soroban Opportunities Master Fund LP (incorporated by reference to Exhibit 10.8 to the LBC 8-K).

~~10.45~~	Liberty Interactive Corporation Nonemployee Director Deferred Compensation Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2015 filed on May 8, 2015 (File No. 001-33982)).

~~10.46~~	~~zulily, inc. 2009 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to zulily, inc.’s Registration Statement on Form S-1 filed on October 8, 2013 (File No. 333-191617)).~~ +

~~10.47~~	~~zulily, inc. 2013 Equity Plan (incorporated by reference to Exhibit 10.3 to Amendment No. 1 to zulily, inc.’s Registration Statement on Form S-1 filed on October 17, 2013 (File No. 333-191617)).~~ +

~~10.48~~	~~Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.48 to the Liberty 2015 10-K).~~ +

~~10.49~~	~~Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.49 to the Liberty 2015 10-K).~~ +

~~10.50~~	Form of 2017 Performance-based Restricted Stock Unit Agreement (QVCB) under the Liberty Interactive Corporation 2016 Omnibus Incentive Plan (the “2016 Incentive Plan”) for Gregory B. Maffei (incorporated by reference to Exhibit 10.1 to Liberty Interactive Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed on November 9, 2017 (File No. 001-33982) (the “LIC 2017 10-Q”))~~. +~~

~~10.51~~	~~Form of 2017 Term Option Agreement under the 2016 Incentive Plan for Gregory B. Maffei (incorporated by reference to Exhibit 10.2 to the LIC 2017 10-Q).~~ +

~~10.52~~	Form of 2017 Performance-based Restricted Stock Unit Agreement under the 2016 Incentive Plan for certain officers other than the Chief Executive Officer and Chief Legal Officer (incorporated by reference to Exhibit 10.3 to the LIC 2017 10-Q). +

~~10.53~~	~~Form of Restricted Stock Units Agreement under the 2016 Incentive Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.4 to the LIC 2017 10-Q).~~ +

~~10.54~~	~~Form of Nonqualified Stock Option Agreement under the 2016 Incentive Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.5 to the LIC 2017 10-Q).~~ +

~~10.55~~	HSN, Inc. Second Amended and Restated 2008 Stock and Annual Incentive Plan (incorporated by reference to Exhibit 10.13 to HSN, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013 (File No. 01-34061) as filed on February 20, 2014). +

~~10.56~~	~~HSN, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Annex A of HSN, Inc.’s 2017 Proxy Statement on Schedule 14A (File No. 01-34061) as filed on April 10, 2017).~~ +

~~10.57~~	~~Form of Election Form with respect to December 2017 Option Exchange Proposal for participants.* +~~

~~IV-7~~

~~Table of Contents~~

~~10.58~~	Voting Agreement, dated as of April 4, 2017, by and among Liberty Interactive Corporation, General Communication, Inc., John C. Malone and Leslie Malone (incorporated by reference to Annex F to Liberty Interactive Corporation’s Definitive Proxy Statement on Schedule 14A filed on December 29, 2017 (File No. 001-33982)). +

~~10.59~~	Voting Agreement, dated as of April 4, 2017, by and among Liberty Interactive Corporation, General Communication, Inc., John W. Stanton and Theresa E. Gillespie (incorporated by reference to Annex G to Liberty Interactive Corporation’s Definitive Proxy Statement on Schedule 14A filed on December 29, 2017 (File No. 001-33982)).

~~10.60~~	Voting Agreement, dated as of April 4, 2017, by and among Liberty Interactive Corporation, General Communication, Inc., Ronald A. Duncan and Dani Bowman (incorporated by reference to Annex H to Liberty Interactive Corporation’s Definitive Proxy Statement on Schedule 14A filed on December 29, 2017 (File No. 001-33982)).

~~10.61~~	Letter Agreement between Liberty Interactive Corporation and Liberty Media Corporation relating to the Services Agreement dated September 23, 2011 (incorporated by reference to Exhibit 10.60 to Liberty Media Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017 as filed on February 28, 2018 (File No. 001-35707)).

21	Subsidiaries of Liberty Interactive Corporation.*

~~23.1~~	Consent of KPMG LLP.*

~~23.2~~	Consent of KPMG LLP.*

~~23.3~~	Consent of Ernst & Young LLP.*

~~31.1~~	Rule 13a-14(a)/15d - 14(a) Certification.*

~~31.2~~	Rule 13a-14(a)/15d - 14(a) Certification.*

32	Section 1350 Certification.**

~~99.1~~	Unaudited Attributed Financial Information for Tracking Stock Groups.*

~~99.2~~	Reconciliation of Liberty Interactive Corporation Net Assets and Net Earnings to Liberty Interactive LLC Net Assets and Net Earnings. **

~~101.INS~~	XBRL Instance Document.*

~~101.SCH~~	XBRL Taxonomy Extension Schema Document.*

~~101.CAL~~	XBRL Taxonomy Calculation Linkbase Document.*

~~101.LAB~~	XBRL Taxonomy Label Linkbase Document.*

~~101.PRE~~	XBRL Taxonomy Presentation Linkbase Document.*

~~101.DEF~~	XBRL Taxonomy Definition Document.*

* Filed herewith.

~~IV-8~~

~~Table of Contents~~

** Furnished herewith.

~~+ This document has been identified as a management contract or compensatory plan or arrangement.~~

~~Item 16. Form 10-K Summary.~~

~~Not applicable.~~

~~IV-9~~

~~Table of Contents~~

~~Report of Independent Registered Certified Public Accounting Firm~~

~~To the Shareholders and the Board of Directors of HSN, Inc.~~

~~Opinion on the Financial Statement~~

~~We have audited the accompanying consolidated balance sheet of HSN, Inc. and subsidiaries (a wholly owned subsidiary of Liberty Interactive Corporation) (the Company) as~~As of December 31, ~~2017,~~2020, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately 40.6 million shares of Series A Qurate Retail common stock and approximately 3.2 million shares of Series B Qurate Retail common stock.

In addition to the Series A and Series B Qurate Retail common stock, there are 4 billion shares of Series C Qurate Retail common stock authorized for issuance, respectively. As of December 31, 2020, 0 shares of any Series C Qurate Retail common stock were issued or outstanding.

As discussed in note 1, on March 9, 2018, Qurate Retail completed the GCI Liberty Split-Off. As part of the GCI Liberty Split-Off, all outstanding shares of Series A Liberty Ventures common stock were redeemed for one share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for one share of GCI Liberty Class B common stock.

Purchases of Common Stock

During the year ended December 31, 2018, the Company repurchased 43,080,787 shares of Series A Qurate Retail common stock for aggregate cash consideration of $988 million.

II-64

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

During the year ended December 31, 2019, the Company repurchased 24,329,610 shares of Series A Qurate Retail common stock for aggregate cash consideration of $392 million.

During the year ended December 31, 2020, the Company repurchased 6,521,782 shares of Series A Qurate Retail common stock for aggregate cash consideration of $70 million.

All of the foregoing shares were repurchased pursuant to a previously announced share repurchase program and have been retired and returned to the status of authorized and available for issuance.

(11) Related Party Transactions with Officers and Directors

Chairman Compensation Arrangement

In December 2019, Liberty Media entered into a new employment arrangement with Gregory B. Maffei, our Chairman. The arrangement provides for a five year employment term which began on January 1, 2020 and ends December 31, 2024, with an annual base salary of $3 million (with no contracted increase), a one-time cash commitment bonus of $5 million (paid in December 2019), an annual target cash performance bonus of $17 million (with payment subject to the achievement of one or more performance metrics as determined by the applicable company’s Compensation Committee), upfront equity awards and annual equity awards (as described below).

The Chairman was entitled to receive term equity awards with an aggregate grant date fair value of $90 million (the “Upfront Awards”) which were granted in 2 equal tranches. The first tranche consisted of time-vested stock options from each of Qurate Retail, LMC, Liberty Broadband and GCI Liberty and time-vested restricted stock units (“RSUs”) from Liberty TripAdvisor (collectively, the “2019 term awards”) that vest, in each case, on December 31, 2023 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 15, 2023), subject to the Chairman’s continued employment, except under certain circumstances. Qurate Retail’s portion of the 2019 term awards, granted in December 2019, had an aggregate grant date fair value of $8,550,000 and consisted of stock options to purchase 2,133,697 shares of Series A Qurate Retail common stock (“QRTEA”) with an exercise price of $8.17. The second tranche of the Upfront Awards consisted of time-vested stock options from each of LMC, Qurate Retail, Liberty Broadband and GCI Liberty and time-vested RSUs from Liberty TripAdvisor (collectively, the “2020 term awards”) that vest, in each case, on December 31, 2024 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 7, 2024), subject to the Chairman’s continued employment, except under certain circumstances. Qurate Retail’s portion of the 2020 term awards, granted in December 2020, had an aggregate grant date fair value of $5,850,000 and consisted of stock options to purchase 1,190,529 QRTEA shares with an exercise price of $10.34.

II-65

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

CEO Compensation Agreement

In connection with the CEO’s appointment to asthis position on March 9, 2018, the ~~“financial statement”) (not presented separately herein). In our opinion,~~Compensation Committee of Qurate Retail approved a one-time grant of stock options and performance-based RSUs to the ~~financial statement presents fairly, in all material respects,~~CEO on August 13, 2018. The options consist of 577,358 options to purchase shares of QRTEA with an exercise price of $22.18. 50% of such options vested on December 15, 2019 and the ~~financial position~~remaining 50% vested on December 15, 2020. The options have a seven year term. The RSUs consisted of 182,983 performance-based RSUs with respect to QRTEA, of which 152,825 RSUs vested on December 21, 2020 based on performance of the Company and the personal performance of the CEO, and at the sole discretion of the Compensation Committee.

~~Basis for Opinion~~

This financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company2021, unless terminated earlier in accordance with the ~~U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.~~

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion.

~~/s/ Ernst & Young LLP~~

~~We have served as the Company’s auditor since 2007.~~

~~Tampa, Florida~~

~~March 1, 2018~~

~~IV-10~~

~~Table of Contents~~

~~Report of Independent Registered Public Accounting Firm~~

~~To the Stockholders and Board of Directors~~

~~Liberty Broadband Corporation:~~

~~Opinion on the Consolidated Financial Statements~~

We have audited the accompanying consolidated balance sheets of Liberty Broadband Corporation and subsidiaries (the “Company”) as of December 31, 2017 and 2016, the related consolidated statements of operations, comprehensive earnings (loss), cash flows, and equity for each of the years in the three‑year period ended December 31, 2017, and the related notes (collectively, the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in ~~Internal Control – Integrated Framework (2013)~~ issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 9, 2018 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

~~Basis for Opinion~~

~~/s/ KPMG LLP~~

~~We have served as the Company’s auditor since 2014.~~

Denver, Colorado
February 9, 2018

~~IV-11~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Consolidated Balance Sheets~~

~~December 31, 2017 and 2016~~

2017

2016

amounts in thousands

Assets






Current assets:

Cash and cash equivalents

$
81,257

205,728

Derivative instruments

—

49,019

Other current assets

2,797

3,672

Total current assets

84,054

258,419

Investment in Charter, accounted for using the equity method (note 5)

11,835,613

9,315,253

Other tangible and intangible assets, net

12,073

15,803

Other assets

49

1,485

Total assets

$
11,931,789

9,590,960

Liabilities and Equity

Current liabilities:

Accounts payable and accrued liabilities

$
5,381

7,931

Current portion of debt (note 6)

—

400,000

Deferred revenue and other current liabilities

5,168

4,185

Total current liabilities

10,549

412,116

Debt (note 6)

497,370

198,512

Deferred income tax liabilities (note 7)

932,593

504,644

Other liabilities

4,376

2,596

Total liabilities

1,444,888

1,117,868

Equity

Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued

—

—

Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 26,301,755 and 26,251,533 at December 31, 2017 and 2016, respectively

262

262

Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,455,179 and 2,467,509 at December 31, 2017 and 2016, respectively

25

25

Series C common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 152,563,229 and 153,019,547 at December 31, 2017 and 2016, respectively

1,526

1,530

Additional paid-in capital

7,907,900

7,945,883

Accumulated other comprehensive earnings, net of taxes

8,424

7,656

Retained earnings (accumulated deficit)

2,568,764

517,736

Total equity

10,486,901

8,473,092

Commitments and contingencies (note 11)

Total liabilities and equity

$
11,931,789

9,590,960

~~See accompanying notes to consolidated financial statements.~~

~~IV-12~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Consolidated Statements of Operations~~

~~Years Ended December 31, 2017, 2016 and 2015~~

2017

2016

2015

amounts in thousands,

except per share amounts

Revenue:








Software sales

$
12,320

28,597

10,364

Service

772

1,858

76,139

Other

—

131

4,679

Total revenue

13,092

30,586

91,182

Operating costs and expenses

Operating, including stock-based compensation (note 9)

2,582

2,798

6,096

Selling, general and administrative, including stock-based compensation (note 9)

24,065

34,703

42,792

Research and development, including stock-based compensation (note 9)

8,153

10,240

17,032

Gain on legal settlement

—

—

(60,450)

Impairment of intangible assets

—

—

20,669

Depreciation and amortization

3,770

4,005

6,088

38,570

51,746

32,227

Operating income (loss)

(25,478)

(21,160)

58,955

Other income (expense):

Interest expense

(19,570)

(14,956)

(7,424)

Dividend and interest income

1,449

5,020

3,797

Share of earnings (losses) of affiliate (note 5)

2,508,991

641,544

(120,962)

Gain (loss) on dilution of investment in affiliate (note 5)

(17,872)

770,766

(7,198)

Realized and unrealized gains (losses) on financial instruments, net (note 4)

3,098

94,122

2,619

Other, net

(18)

336

158

Earnings (loss) from continuing operations before income taxes

2,450,600

1,475,672

(70,055)

Income tax benefit (expense)

(416,933)

(558,369)

19,868

Net earnings (loss) attributable to Liberty Broadband shareholders

$
2,033,667

917,303

(50,187)

Basic earnings (loss) from continuing operations attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 3)

$
11.19

6.03

(0.49)

Diluted net earnings (loss) attributable to Series A, Series B and Series C Liberty Broadband shareholders per common share (note 3)

$
11.10

6.00

(0.49)

~~See accompanying notes to consolidated financial statements.~~

~~IV-13~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Consolidated Statements of Comprehensive Earnings (Loss)~~

~~Years ended December 31, 2017, 2016 and 2015~~

2017

2016

2015

amounts in thousands

Net earnings (loss)

$
2,033,667

917,303

(50,187)

Other comprehensive earnings (loss), net of taxes:

Unrealized holding gains (losses) arising during the period

—

(221)

(287)

Share of other comprehensive earnings (loss) of equity affiliate

768

811

1,274

Other

—

(1,839)

—

Other comprehensive earnings (loss), net of taxes

768

(1,249)

987

Comprehensive earnings (loss) attributable to Liberty Broadband shareholders

$
2,034,435

916,054

(49,200)

~~See accompanying notes to consolidated financial statements.~~

~~IV-14~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Consolidated Statements of Cash Flows~~

~~Years ended December 31, 2017, 2016 and 2015~~

2017

2016

2015

amounts in thousands

Cash flows from operating activities:








Net earnings (loss)

$
2,033,667

917,303

(50,187)

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Depreciation and amortization

3,770

4,005

6,088

Stock-based compensation

5,292

5,713

6,380

Impairment of intangible assets

—

—

20,669

Cash payments for stock-based compensation

(525)

(591)

(1,268)

Share of (earnings) losses of affiliate, net

(2,508,991)

(641,544)

120,962

(Gain) loss on dilution of investment in affiliate

17,872

(770,766)

7,198

Realized and unrealized (gains) losses on financial instruments, net

(3,098)

(94,122)

(2,619)

Deferred income tax expense (benefit)

416,838

560,778

(24,964)

Other, net

2,030

1,033

(1,440)

Changes in operating assets and liabilities:

Current and other assets

2,310

9,161

(1,238)

Payables and other liabilities

804

(2,868)

(44,292)

Net cash provided by operating activities

(30,031)

(11,898)

35,289

Cash flows from investing activities:

Capital expended for property and equipment

(70)

(267)

(731)

Investments in equity investees

—

(5,000,000)

—

Purchases of short term investments and other marketable securities

—

(155,444)

(18,032)

Sales of short term investments and other marketable securities

—

164,458

18,019

Other investing activities, net

14

453

(1,735)

Net cash used in investing activities

(56)

(4,990,800)

(2,479)

Cash flows from financing activities:

Cash received from rights offering

—

—

697,309

Borrowings of debt

500,000

200,000

67,995

Repayments of debt

(600,000)

—

(40,000)

Cash received from issuance of Series C Liberty Broadband common stock

—

4,400,000

—

Proceeds (payments) from issuances of financial instruments

(149,368)

(47,888)

30,158

Proceeds (payments) from settlements of financial instruments

155,683

—

(182,192)

Other financing activities, net

(699)

1,235

4,190

Net cash provided by (used in) financing activities

(94,384)

4,553,347

577,460

Net increase (decrease) in cash

(124,471)

(449,351)

610,270

Cash and cash equivalents, beginning of year

205,728

655,079

44,809

Cash and cash equivalents, end of year

$
81,257

205,728

655,079

~~Supplemental disclosure to the consolidated statements of cash flows:~~

Years ended December 31,

2017

2016

2015

amounts in thousands

Cash paid for interest

$
17,496

13,783

7,251

Cash paid (received) for taxes

$
(1,787)

(9,410)

5,485

~~See accompanying notes to consolidated financial statements~~.

~~IV-15~~

~~Table of Contents~~

~~LIBERTY BROADBAND CORPORATION~~

~~Consolidated Statement of Equity~~

~~Years ended December 31, 2017, 2016 and 2015~~

Accumulated

Retained

Additional

other

earnings

Preferred

Common stock

paid-in

comprehensive

(accumulated

Total

Stock

Series A

Series B

Series C

capital

earnings

deficit)

equity

amounts in thousands

Balance at January 1, 2015

$
—

261

25

572

2,835,373

7,918

(349,380)

2,494,769

Net earnings (loss)

—

—

—

—

—

—

(50,187)

(50,187)

Other comprehensive earnings (loss)

—

—

—

—

—

987

—

987

Stock-based compensation

—

—

—

—

5,200

—

—

5,200

Issuance of common stock upon exercise of stock options

—

1

—

1

138

—

—

140

Excess tax benefits from stock-based compensation

—

—

—

—

1,217

—

—

1,217

Common stock issued pursuant to the rights offering

—

—

—

173

697,136

—

—

697,309

Other

—

—

—

—

(1,216)

—

—

(1,216)

Balance at December 31, 2015

—

262

25

746

3,537,848

8,905

(399,567)

3,148,219

Net earnings (loss)

—

—

—

—

—

—

917,303

917,303

Other comprehensive earnings (loss)

—

—

—

—

—

(1,249)

—

(1,249)

Stock-based compensation

—

—

—

—

5,362

—

—

5,362

Issuance of common stock upon exercise of stock options

—

—

—

1

3,529

—

—

3,530

Issuance of common stock

—

—

—

783

4,399,217

—

—

4,400,000

Other

—

—

—

—

(73)

—

—

(73)

Balance at December 31, 2016

—

262

25

1,530

7,945,883

7,656

517,736

8,473,092

Net earnings (loss)

—

—

—

—

—

—

2,033,667

2,033,667

Other comprehensive earnings (loss)

—

—

—

—

—

768

—

768

Stock-based compensation

—

—

—

—

5,358

—

—

5,358

Issuance of common stock upon exercise of stock options

—

—

—

1

2,456

—

—

2,457

Cumulative effect of accounting change at Charter

—

—

—

—

—

—

17,361

17,361

Non-cash settlement of financial instrument

—

—

—

(5)

(45,797)

—

—

(45,802)

Balance at December 31, 2017

$
—

262

25

1,526

7,907,900

8,424

2,568,764

10,486,901

~~See accompanying notes to consolidated financial statements.~~

~~IV-16~~

~~Table of Contents~~

~~(1) Basis of Presentation~~

During May 2014, the board of directors of Liberty Media Corporation and its subsidiaries (“Liberty”) authorized management to pursue a plan to spin-off to its stockholders common stock of a wholly-owned subsidiary, Liberty Broadband Corporation (“Liberty Broadband” or the “Company”), and to distribute subscription rights to acquire shares of Liberty Broadband’s common stock (the “Broadband Spin-Off”). At the time of the Broadband Spin-off, Liberty Broadband was comprised of (i) Liberty’s former interest in Charter Communications, Inc. (“Legacy Charter”), (ii) Liberty’s former wholly-owned subsidiary TruePosition, Inc. (“TruePosition”), (iii) Liberty’s former minority equity investment in Time Warner Cable, Inc. (“Time Warner Cable”), (iv) certain deferred tax liabilities, as well as liabilities related to the Time Warner Cable written call options and (v) initial indebtedness, pursuant to margin loans entered into prior to the completion of the Broadband Spin-Off. These financial statements refer to the combination of the aforementioned subsidiary, investments, and financial instruments, as “Liberty Broadband,” “the Company,” “us,” “we” and “our” in the notes to the consolidated financial statements. The Broadband Spin-Off was accounted for at historical cost due to the pro rata nature of the distribution to holders of Liberty common stock.

In the Broadband Spin-Off, record holders of Liberty Series A, Series B and Series C common stock received one-fourth of a share of the corresponding series of Liberty Broadband common stock for each share of Liberty common stock held by them, with cash paid in lieu of fractional shares. In addition, following the completion of the Broadband Spin-Off, on December 10, 2014, Liberty Broadband stockholders received a subscription right to acquire ~~one~~ ~~share of Series C Liberty Broadband common stock for every~~ ~~five~~ ~~shares of Liberty Broadband common stock. See note 8 for additional information related to the rights offering.~~

Following the Broadband Spin-Off, Liberty and Liberty Broadband operate as separate, publicly traded companies, and neither has any stock ownership, beneficial or otherwise, in the other. In connection with the Broadband Spin-Off, Liberty (for accounting purposes a related party of the Company) and Liberty Broadband entered into certain agreements in order to govern certain of the ongoing relationships between the two companies after the Broadband Spin-Off and to provide for an orderly transition. These agreements include a reorganization agreement, a services agreement, a facilities sharing agreement, and ~~a tax sharing agreement.~~

his annual base salary has increased to $1.5 million. The reorganization agreement provides for, among other things, the principal corporate transactions (including the internal restructuring) required to effect the Broadband Spin-Off, certain conditions to the Broadband Spin-Off and provisions governing the relationship between Liberty Broadband and Liberty with respect to and resulting from the Broadband Spin-Off. The tax sharing agreement provides for the allocation and indemnification of tax liabilities and benefits between Liberty and Liberty Broadband and other agreements related to tax matters. Pursuant to the tax sharing agreement, Liberty Broadband has agreed to indemnify Liberty, subject to certain limited exceptions, for losses and taxes resulting from the Broadband Spin-Off to the extent such losses or taxes result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by Liberty Broadband (applicable to actions or failures to act by Liberty Broadband and its subsidiaries following the completion of the Broadband Spin-Off). Pursuant to the services agreement, Liberty provides Liberty Broadband with general and administrative services including legal, tax, accounting, treasury and investor relations support. Under the facilities sharing agreement, Liberty Broadband shares office space with Liberty and related amenities at Liberty’s corporate headquarters. Liberty Broadband will reimburse Liberty for direct, out-of-pocket expenses incurred by Liberty in providing these services whichCEO will be ~~negotiated semi-annually. Under these various agreements, approximately $3.2 million and $3.4 million were reimbursed~~eligible to ~~Liberty for the years ended December 31, 2017 and 2016, respectively.~~

On May 18, 2016, Time Warner Cable merged with Charter (the “Time Warner Cable Merger”). In connection with the Time Warner Cable Merger, Legacy Charter underwent a corporate reorganization, resulting in CCH I, LLC (“Charter”), a former subsidiary of Charter, becoming the new publicly traded parent company. Also on May 18, 2016, the previously announced acquisition of Bright House Networks, LLC (“Bright House”) from Advance/Newhouse

~~IV-17~~

~~Table of Contents~~

Partnership (“A/N”) by Charter (the “Bright House Transaction”) was completed. In connection with the Time Warner Cable Merger and Bright House Transaction, Liberty Broadband entered into certain agreements with Legacy Charter, Charter (for accounting purposes a related party of the Company), Liberty Interactive Corporation (“Liberty Interactive,” for accounting purposes a related party of the Company) and Time Warner Cable. As a result of the Time Warner Cable Merger and Bright House Transaction (collectively, the “Transactions”), Liberty Broadband exchanged its shares of Time Warner Cable for shares of Charter and purchased additional shares of Charter. As a result, and pursuantreceive an annual target cash bonus equal to proxy agreements entered into with Liberty Interactive and A/N, Liberty Broadband controls 25.01% of the aggregate voting power of Charter. See note 5 for additional detail regarding these transactions and corresponding agreements.

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and represent a combination of the historical financial information of Skyhook, the Company’s interest in Charter, the Company’s former minority equity investment in Time Warner Cable and certain deferred tax liabilities. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

~~(2) Description of Business~~

Skyhook Holding, Inc. (formerly known as TruePosition) was originally incorporated on November 24, 1992 to provide technology for locating wireless phones and other mobile devices. TruePosition offered a passive network-based location system based on its patented U-TDOA technology (“U-TDOA Service”) to provide E-9-1-1 services domestically and to enhance services in support of commercial applications and national security law enforcement worldwide. In February 2014, TruePosition acquired 100% of ~~the outstanding common shares~~his annual base salary with a maximum bonus of Skyhook Wireless, Inc., for approximately $57.5 million in cash. Skyhook Wireless, Inc. was an alternative location services provider that offered a positioning system that used device-based measurements, as opposed to TruePosition’s network-based technology.

~~In 2015, as a result~~240% of the loss of one of its major customers – a wireless carrier that accounted for 80% - 90% of TruePosition’s revenue – as well as changes in the regulatory environment, TruePosition ceased making further investment in its U-TDOA Service. Thereafter, in May 2016, TruePosition and Skyhook Wireless, Inc. combined operations in order to focus on the development and sale of Skyhook’s device-based location technology, and TruePosition subsequently changed its name to Skyhook Holding, Inc. Skyhook Holding, Inc. and Skyhook Wireless, Inc. are referred to collectively herein as “Skyhook.”

Today, Skyhook markets and sells two primary products: (1) a location determination service called the Precision Location Solution; and (2) a location intelligence and data insights service called Geospatial Insights.

Skyhook’s Precision Location Solution works by collecting nearby radio signals (such as information from Wi-Fi access points, cell towers, IP addresses and other radio beacons) that are observed by a mobile device. Skyhook’s Geospatial Insights product uses anonymized location data to analyze foot traffic patterns and better understand the real-world behavior of consumers. Skyhook’s revenue is derived from the sale and integration of its Precision Location Solution (including the licensing of software and data components that make up that solution) and the licensing of Geospatial Insights data. In addition, Skyhook earns revenue through entering into licensing agreements with companies to utilize its underlying intellectual property (including patents).

Charter is the second largest cable operator in the United States and a leading broadband communications services company providing video, Internet and voice services to approximately 27.2 million residential and business customers at December 31, 2017. In addition, Charter sells video and online advertising inventory to local, regional and national advertising customers and fiber-delivered communications and managed information technology (“IT”) solutions to large enterprise customers. Charter also owns and operates regional sports networks and local sports, news and community channels and sells security and home management services in the residential marketplace. Charter’s core strategy is to deliver high quality products at highly competitive prices, combined with outstanding service.

~~IV-18~~

~~Table of Contents~~

Also included in Liberty Broadband is a former investment in outstanding shares of Time Warner Cable, which was classified as available-for-sale and carried at fair value based on quoted market prices until the second quarter of 2016 when Time Warner Cable merged with Charter. Additionally, the Company historically had written call options and a cashless collar agreement on Time Warner Cable shares. See note 4 for information regarding the Time Warner Cable written call options and cashless collar agreement.

~~(3) Summary of Significant Accounting Policies~~

~~Cash and Cash Equivalents~~

Cash consists of cash deposits held in global financial institutions. Cash equivalents consist of highly liquid investments with original maturities of three months or less at the time of acquisition. Cash that has restrictions upon its usage has been excluded from cash and cash equivalents.

~~Derivative Instruments and Hedging Activities~~

All of the Company’s derivatives, whether designated in hedging relationships or not, are recorded on the balance sheet at fair value. None of the Company’s derivatives are currently designated as hedges, as a result, changes in the fair value of the derivative are recognized in earnings.

The fair value of certain of the Company’s derivative instruments are estimated using the Black Scholes Merton option-pricing model (“Black-Scholes model”). The Black-Scholes model incorporates a number of variables in determining such fair values, including expected volatility of the underlying security and an appropriate discount rate. The Company obtained volatility rates from pricing services based on the expected volatility of the underlying security over the remaining term of the derivative instrument. A discount rate was obtained at the inception of the derivative instrument and updated each reporting period, based on the Company’s estimate of the discount rate at which it could currently settle the derivative instrument. The Company considered its own credit risk as well as the credit risk of its counterparties in estimating the discount rate. Management judgment was required in estimating the Black-Scholes variables. See note 4 for further discussion of fair value of the Company’s derivative instruments. The Company had an outstanding derivative instrument classified as an asset at December 31, 2016. See note 4 for further information.

~~Investment in Equity Method Affiliate~~

For those investments in affiliates in which the Company has the ability to exercise significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize the Company’s share of net earnings or losses of the affiliate as they occur rather than as dividends or other distributions are received. Losses are limited to the extent of the Company’s investment in, advances to and commitments for the investee. The Company determines the difference between the purchase price of the investee and the underlying equity which results in an excess basis in the investment. This excess basis is allocated to the underlying assets and liabilities of the Company’s investee through a purchase accounting exercise and is allocated within memo accounts used for equity accounting purposes. Depending on the applicable underlying assets, these amounts are either amortized over the applicable useful lives or determined to be indefinite lived. Changes in the Company’s proportionate share of the underlying equity of an equity method investee, which result from the issuance of additional equity securities by such equity investee, are recognized in the statement of operations through the gain (loss) on dilution of investment in affiliate line item. We periodically evaluate our equity method investment to determine if decreases in fair value below our cost basis are other than temporary. If a decline in fair value is determined to be other than temporary, we are required to reflect such decline in our consolidated statement of operations. Other than temporary declines in fair value of our equity method investment would be included in share of earnings (losses) of affiliate in our consolidated statement of operations.

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The primary factors we consider in our determination of whether declines in fair value are other than temporary are the length of time that the fair value of the investment is below our carrying value; the severity of the decline; and the financial condition, operating performance and near term prospects of the investee. In addition, we consider the reason for the decline in fair value, be it general market conditions, industry specific or investee specific; analysts' ratings and estimates of 12 month share price targets for the investee; changes in stock price or valuation subsequent to the balance sheet date; and our intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. Fair value of our publicly traded cost and equity investments is based on the market prices of the investments at the balance sheet date. Impairments are calculated as the difference between our carrying value and our estimate of fair value. As our assessment of the fair value of our investments and any resulting impairment losses and the timing of when to recognize such charges requires a high degree of judgment and includes significant estimates and assumptions, actual results could differ materially from our estimates and assumptions.

As Liberty Broadband does not control the decision making process or business management practices of our affiliate accounted for using the equity method, Liberty Broadband relies on management of its affiliate to provide it with accurate financial information prepared in accordance with GAAP that the Company uses in the application of the equity method. In addition, Liberty Broadband relies on the audit reports that are provided by the affiliate’s independent auditors on the financial statements of such affiliate. The Company is not aware, however, of any errors in or possible misstatements of the financial information provided by its equity affiliate that would have a material effect on Liberty Broadband’s consolidated financial statements. See note 5 for additional discussion regarding our investment in Charter and the Transactions that occurred during the second quarter of 2016.

~~Other tangible and intangible assets~~

Other tangible and intangible assets consist of long-lived assets, goodwill and other intangible assets. Intangible assets with definite useful lives and long-lived assets, including property and equipment, are carried at cost and are amortized on a straight-line basis over their estimated useful lives of three to five and a half years. The Company reviews the carrying value of long-lived assets and intangible assets with definite useful lives for impairment upon triggering events. Goodwill is reviewed annually on a qualitative basis.

There was no indication of impairment of long-lived assets during the years end December 31, 2017, 2016 or 2015, and no goodwill impairment loss recorded during the years ended December 31, 2017 and 2016. In 2015, the impairment test resulted in a $20.7 million impairment loss related to Skyhook’s goodwill on its legacy U-TDOA Service.

~~Foreign Currency Translation and Transaction Gains and Losses~~

The functional currency of the Company is the United States (“U.S.”) dollar. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise. Subsequent changes in exchange rates result in transaction gains and losses which are reflected in the accompanying consolidated statements of operations and comprehensive earnings (loss) as unrealized (based on the applicable period end exchange rate) or realized upon settlement of the transactions.

~~IV-20~~

~~Table of Contents~~

~~Revenue Recognition~~

Skyhook earns revenue from the sale and integration of its Precision Location Solution (including the licensing of software and data components that make up that solution) and the licensing of Geospatial Insights data. In addition, Skyhook earns revenue from licensing its intellectual property to other enterprises. Prior to 2016, Skyhook also earned significant revenue from the sale of hardware and the licensing of associated software required to operate a passive network overlay system for generating location records for wireless devices using U-TDOA technology, and from professional and support services related thereto. These services were primarily sold to wireless carriers to provide E-9-1-1 services domestically and to enhance services in support of commercial applications, national security and law enforcement worldwide.

Skyhook recognizes fees received from intellectual property licensing at the inception of a license term for perpetual licenses (or licenses with terms comprising substantially all of the remaining life of the intellectual property) when collectability of the license fee is probable and there are no ongoing performance obligations. Revenue recognition is deferred when collectability of the license fee is not considered probable, when the license term is less than substantially all of the remaining life of the intellectual property, or when there are ongoing performance obligations which are not separate elements from the license. In such circumstances, revenue may be recognized as the license fees are collected or over the license term or performance period as appropriate.

Fees from the integration of Skyhook technology are accounted for consistent with the outstanding guidance for software revenue recognition. Under those policies, for revenue derived from multiple-element arrangements, if vendor specific objective evidence (“VSOE”) exists for each of the elements of the arrangement at the outset, the Company allocates the revenue to the various elements for recognition upon delivery of each element. If VSOE is not present, the revenue is deferred until the earlier of establishing sufficient VSOE for allocating revenue for recognition or delivery of all of the elements. If a multiple-element arrangement includes post-contract customer support (commonly referred to as maintenance), VSOE must exist for the maintenance in order to allocate revenue to all of the elements of the arrangement. If VSOE does not exist for the maintenance, revenue for the entire arrangement is recognized ratably over the contractual or expected term of the maintenance arrangement.

Revenue from the provision of location services and through the sale of data and revenue from tangible products that contain software components and non-software components that function together to deliver the tangible products essential functionality are not under the scope of software revenue recognition guidance and are insteadbase salary, subject to the guidance for multiple-element arrangements. Accordingly, for multiple-element arrangements entered into or materially modified on or after January 1, 2011, the overall arrangement fee is allocated to each element (both delivered and undelivered items) based on their relative selling prices, regardless of whether those selling prices are evidenced by VSOE or third-party evidence of selling price or are based on the entity’s estimated selling price. The associated revenue for each element is recognized upon delivery assuming all other criteria for revenue recognition are met.

(12) Stock-Based Compensation

Qurate Retail - Incentive Plans

The Company has adopted this guidance under the modified retrospective transition method as of January 1, 2018. Skyhook has also adopted this guidance under the modified retrospective transition method as of January 1, 2018 and the adoption did not have a material impact on its financial position or results of operations. Additionally, Charter, which is accounted for as an equity method investment,

~~IV-21~~

~~Table of Contents~~

has adopted the new guidance as of January 1, 2018 using the modified retrospective transition method and the adoption did not have a material impact on its financial position or results of operations.

~~Research and Development Costs~~

~~Research and development costs are expensed as incurred.~~

~~Deferred Revenue and Deferred Costs~~

Deferred revenue represents billings in excess of revenue previously recognized. Deferred costs represent direct costs related to installation services, hardware, and software, which, to the extent not previously recognized, are recognized as the related revenue is recognized. Skyhook recognized $35.5 million of deferred revenue during December 2015, which was attributable to prepaid transaction fees, in connection with the expiration of its largest legacy U-TDOA Service customer’s contract.

~~Stock-Based Compensation~~

~~As more fully described in note 9, Liberty Broadband has~~ granted to certain of its directors, employees and employees of ~~certain of~~ its subsidiaries, ~~options,~~ restricted stock (“RSAs”), RSUs and ~~stock appreciation rights (“SARs”)~~options to purchase shares of ~~Liberty Broadband~~the Company’s common stock (collectively, ~~“Awards”~~"Awards"). ~~Liberty Broadband~~The Company measures the cost of employee services received in exchange for an ~~Award of~~ equity ~~instruments~~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). ~~Liberty Broadband~~The Company measures the cost of employee services received in exchange for ana liability classified Award ~~of liability instruments (such as stock appreciation rights that will be settled in cash)~~ based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date. ~~Certain outstanding awards~~

Pursuant to the Qurate Retail, Inc. 2020 Omnibus Incentive Plan (the “2020 Plan”), the Company may grant Awards in respect of ~~Liberty were assumed by Liberty Broadband at~~a maximum of 30.0 million shares of Qurate Retail common stock plus the ~~time~~shares remaining available for Awards under the prior Qurate Retail, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”), as amended, as of close of business on May 20, 2020, the day before the effective date of the ~~Broadband Spin-Off.~~2020 Plan. Any forfeited shares from the 2016 Plan

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Table of Contents

~~Additionally, Skyhook sponsors long-term incentive plans (“LTIPs”) which provide for~~QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

shall also be available again under the ~~granting~~2020 Plan. Awards generally vest over 1-5 years and have a term of phantom stock units (“PSUs”), and phantom stock appreciation rights (“PARs”) to employees, directors, and consultants of Skyhook. Skyhook measures the cost of employee services received in exchange for awards7-10 years. Qurate Retail issues new shares upon exercise of equity ~~instruments based on~~awards.

Qurate Retail – Grants

The following table presents the ~~grant-date fair value~~number and weighted average GDFV of options granted by Qurate Retail during the years ended December 31, 2020, 2019 and 2018:


	For the Years ended December 31,
	2020			2019			2018
	Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV

Series A Qurate Retail common stock, QVC and HSN employees (1)	4,200	$	1.96	2,503	$	4.07	3,783	$	8.77
Series A Qurate Retail common stock, Zulily employees (1)	618	$	1.94	328	$	4.08	336	$	8.65
Series A Qurate Retail common stock, Qurate Retail employees and directors (2)	747	$	4.86	639	$	3.97	72	$	7.31
Series A Qurate Retail common stock, Qurate Retail President and CEO (3)	NA		NA	NA		NA	577	$	7.09
Series A Qurate Retail common stock, Qurate Retail Chairman of the Board (4)	1,191	$	4.88	2,134	$	3.44	NA		NA
Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (4)	NA		NA	26	$	5.84	175	$	8.84
Series B Ventures Group common stock, Qurate Retail Chairman of the Board (4)	NA		NA	NA		NA	143	$	16.55

(1)	Vests semi-annually over four years.

(2)	Vests between two and five years for employees and in one year for directors.

(3)	Vested 50% on each of December 15, 2019 and December 15, 2020.

(4)

The grants made in December 2020 and December 2019 in connection with the Chairman’s new employment agreement cliff vest in December 2024 and December 2023, respectively. The grant made in March 2019 vested immediately. The grants made in 2018 cliff vested at the end of the grant year. Grants made in 2019 and 2018 were in connection with the Chairman’s previous employment agreement (see notes 1 and 11).

In addition to the stock option grants to the Qurate Retail Chairman of the ~~award~~Board, and ~~recognizes that cost ratably over the period during which the employee is required to provide service (usually the vesting period of the award). Skyhook measures the cost of employee services received~~ in ~~exchange for awards of liability instruments (such as PSUs~~connection with his employment agreement, Qurate Retail granted time-based and PARs that will be settled in cash) based on the current fair value of the award, and remeasures the fair value of the award at each reporting date. The consolidated statements of operations includes stock-based compensation related to Skyhook awards.

In March 2016, the FASB issued new guidance which simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, forfeitures, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The new standard is effective for the Company for fiscal years and interim periods beginning after December 15, 2016, with early application permitted. The Company adopted this guidance in the third quarter of 2016. In accordance with the new guidance, excess tax benefits and tax deficiencies are recognized as income tax benefit or expense rather than as additional paid-in capital. The Company has elected to recognize forfeitures as they occur rather than continue to estimate expected forfeitures. In addition, pursuant to the new guidance, excess tax benefits are classified as an operating activity on the consolidated statements of cash flows. The recognition of excess tax benefits and deficiencies are applied prospectively from January 1, 2016. Based on the Company’s analysis, no cumulative effect adjustment to retained earnings was necessary for tax benefits that were not previously recognized and for adjustments to compensation cost based on actual forfeitures. The presentation changes for excess tax benefits have been applied retrospectively in the consolidated statements of cash flows, resulting in the reclassification of $1.2 million of excess tax benefits forperformance-based RSUs. During the year ended December 31, ~~2015, from cash flows from financing activities~~2020, Qurate Retail granted 38 thousand time-based RSUs of QRTEA to ~~cash flows from operating activities. There were no excess tax benefits reclassified~~our Chairman. The RSUs had a GDFV of $7.44 per share and cliff vested on December 10, 2020. This RSU grant was issued in lieu of our Chairman receiving 50% of his remaining base salary for the last three quarters of calendar year 2020, and he waived his right to receive the other 50%, in each case, in light of the ongoing financial impact of COVID-19. During the year ended December 31, ~~2016.~~

~~IV-22~~

~~Table~~2019, Qurate Retail granted 19 thousand time-based RSUs of ~~Contents~~

~~Income Taxes~~

The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying value amounts and income tax bases of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards. The deferred tax assets and liabilities are calculated using enacted tax rates in effect for each taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered or settled. Net deferred tax assets are then reduced by a valuation allowance if the Company believes it more likely than not that such net deferred tax assets will not be realized. We consider all relevant factors when assessing the likelihood of future realization of our deferred tax assets, including our recent earnings experience by jurisdiction, expectations of future taxable income, and the carryforward periods available to us for tax reporting purposes, as well as assessing available tax planning strategies. The effect on deferred tax assets and liabilities of an enacted change in tax rates is recognized in income in the period that includes the enactment date. Due to inherent complexities arising from the nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially vary from these estimates.

When the tax law requires interest to be paid on an underpayment of income taxes, the Company recognizes interest expense from the first period the interest would begin accruing according to the relevant tax law.Series B Qurate Retail common stock. Such interest expense is included in interest expense in the accompanying consolidated statements of operations. Any accrual of penalties related to underpayment of income taxes on uncertain tax positions is included in other income (expense) in the accompanying consolidated statements of operations.

We recognize in our consolidated financial statements the impact of a tax position, if that position is more likely than not to be sustained upon an examination, based on the technical merits of the position.

~~Certain Risks and Concentrations~~

The Skyhook business is subject to certain risks and concentrations including dependence on relationships with its customers. Skyhook had one significant legacy U-TDOA Service customer whose contract expired on December 31, 2015. The loss of this customerRSUs had a ~~material adverse effect~~GDFV of $17.90 per share at the time they were granted and cliff vested on ~~Skyhook’s business which is expected to continue unless Skyhook is able to generate significant new business to replace the financial impact of this customer. For~~March 11, 2019. During the year ended December 31, ~~2015, this customer accounted for 85%~~2020, Qurate Retail granted to our Chairman 584 thousand performance-based RSUs of ~~Skyhook’s total revenue. The Company’s largest customers, that accounted for greater than 10%~~QRTEA. Such RSUs had a fair value of ~~revenue, aggregated 57% of total revenue for the years ended December 31, 2017 and 2016.~~

~~Contingent Liabilities~~

Periodically, we review the status of all significant outstanding matters to assess any potential financial exposure. When (i) it is probable that an asset has been impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our consolidated statements of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both these conditions if there is a reasonable possibility that a loss may have been incurred that would be material to the financial statements. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best information available$4.44 at the time ~~which can be highly subjective. The final outcome of these matters could vary significantly from the amounts included in the accompanying consolidated financial statements.~~

~~IV-23~~

~~Table of Contents~~

~~Comprehensive Earnings (Loss)~~

Comprehensive earnings (loss) consists of net earnings (loss), cumulative foreign currency translation adjustments, unrealized gains and losses on available-for-sale securities, net of tax and the Company’s share of the comprehensive earnings (loss) of our equity method affiliate.

~~Earnings per Share (EPS)~~

Basic earnings (loss) per common share (“EPS”) is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding 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.~~

The Company issued 85,761,332 common shares, which is the aggregate number of shares of Series A, Series B and Series C common stock outstanding upon the completion of the Broadband Spin-Off on November 4, 2014. Additionally, following the completion of the Broadband Spin-Off, Liberty Broadband distributed subscription rights, which were priced at a discount to the market value, to all holders of Liberty Broadband common stock (see further discussion in note 8). The rights offering, because of the discount, is considered a stock dividend which requires retroactive treatment for prior periods for the weighted average shares outstanding based on a factor applied determined by the fair value per share immediately prior to the rights exercise and the theoretical fair value after the rights exercise. The number of shares issued upon completion of the Broadband Spin-Off, adjusted for the rights factor, was used to determine both basic and diluted EPS for the period from January 1, 2014 through the date of the Broadband Spin-Off, as no Company equity awards were outstanding prior to the Broadband Spin-Off. In addition, the Company issued 78,250,042 shares of Series C common stock in connection with the Time Warner Cable Merger on May 18, 2016 (see further discussion in note 8). Basic EPS subsequent to the Broadband Spin-Off was computed using the weighted average number of shares outstanding (“WASO”), adjusted for the rights factor, from the date of the completion of the Broadband Spin-Off through January 9, 2015, the date on which the rights offering was fully subscribed. Basic EPS subsequent to January 9, 2015 was computed using WASO. Diluted EPS subsequent to the Broadband Spin-Off was computed using the WASO from the date of the completion of the Broadband Spin-Off through January 9, 2015, adjusted for the rights factor and potentially dilutive equity awards outstanding during the same period. Subsequent to January 9, 2015, basic EPS was computed using the WASO during the period, and diluted EPS was computed using the WASO adjusted for potentially dilutive equity awards outstanding during the period.

Years ended December 31,


2017

2016

2015

number of shares in thousands

Basic WASO

181,772

152,103

102,504

Potentially dilutive shares

1,374

749

494

Diluted WASO

183,146

152,852

102,998

Potential common shares excluded from diluted EPS because their inclusion would be antidilutive for the years ended December 31, 2017, 2016 and 2015 are approximately zero, 17 thousand, and 3 thousand, respectively.

~~Reclasses and adjustments~~

~~Certain prior period amounts have been reclassified for comparability with the current year presentation.~~

~~Estimates~~

~~IV-24~~

~~Table of Contents~~

amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The Company considers the application of the equity method of accounting for its affiliates and accounting for income taxes to be its most significant estimates.

~~(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 does not have any recurring assets or liabilities measured at fair value that would be considered Level 3.

~~The Company’s assets and liabilities measured at fair value are as follows:~~

December 31, 2017

December 31, 2016

Quoted prices

Significant

Quoted prices

Significant

in active

other

in active

other

markets for

observable

markets for

observable

identical assets

inputs

identical assets

inputs

Description

Total

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

amounts in thousands

Cash equivalents

$
76,304

76,304

—

198,011

198,011

—

Derivative instruments (1)

$
—

—

—

49,019

—

49,019

(1)As of December 31, 2016, the Company had an outstanding zero-strike call option on 704,908 shares of Liberty Broadband Series C common stock which expired in March 2017. The Company prepaid a premium of $47.9 million in December 2016. Liberty Broadband exercised its option to settle the contract in cash in March 2017 for cash proceeds of $50.0 million. The Company accounted for the zero-strike call option as a financial instrument asset due to its settlement provisions. The Company entered into another zero-strike call option on 527,156 shares of Liberty Broadband Series C common stock and prepaid a premium of $47.7 million in October 2017. Upon expiration of the contract in December 2017, the Company elected to physically settle 527,156 shares of Liberty Broadband Series C common stock at a price of $90.54 per share.

The fair value of Level 2 derivative instruments were derived from a Black-Scholes model using observable market data as the significant inputs. The inputs used in the model during the period outstanding (exclusive of the applicable trading price of Series C Liberty Broadband common stock and the strike prices associated with the call options) were as follows:

Range

Volatility

21.1
%
-
21.5
%

Interest rate

1.0
%
-
1.0
%

Dividend yield

0
%
-
0
%

~~Other Financial Instruments~~

Other financial instruments not measured at fair value on a recurring basis include trade receivables, trade payables, accrued and other current liabilities, current portion of debt and long-term debt. With the exception of long-term debt, the carrying amount approximates fair value due to the short maturity of these instruments as reported on our consolidated balance sheets. The carrying value of our long-term debt bears interest at a variable rate and therefore is also considered to approximate fair value.

~~IV-25~~

~~Table of Contents~~

~~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:~~

Years ended December 31,

2017

2016

2015

(amounts in thousands)

Time Warner Cable investment and financial instruments (1)(2)(3)

$
—

92,990

2,619

Derivative instruments (4)

3,098

1,132

—

$
3,098

94,122

2,619

(1)As of December 31, 2014, the Company had an outstanding written call option on 625,000 Time Warner Cable shares with a strike price of $92.02 per share which expired in February 2015. Upon expiration, this written call option was rolled into a new written call option on 625,000 Time Warner Cable shares with a strike price of $100.39 per share which the Company cash settled during June 2015 for $48.3 million. Additionally, as of December 31, 2014, the Company had another outstanding written call option on 625,000 Time Warner Cable shares with a strike price of $90.84 per share which the Company cash settled during April 2015 for $36.7 million.

(2)On March 27, 2015, Liberty Broadband entered into a cashless collar agreement with a financial institution on 1.7 million Time Warner Cable shares held by the Company with a put option strike price of $136.80 per share and a call option strike price of $161.62 per share. The collar was originally scheduled to expire during March 2017. The Company unwound the agreement during July 2015 for $67.1 million cash paid to the counterparty. In connection with this collar agreement, the Company also entered into a revolving loan agreement with an availability of $234 million, which was terminated upon unwinding of the collar agreement during July 2015 (note 6).

~~(3)~~As discussed in note 5, Time Warner Cable merged with Charter on May 18, 2016. Therefore the Company no longer has an investment in Time Warner Cable as of May 18, 2016, and the unrealized gain (loss) related to our investment in Time Warner Cable is recorded through this date. In connection with the merger, the Company exchanged, in a tax-free transaction, its shares of Time Warner Cable for shares of Charter Class A common stock.

~~(4)~~As of December 31, 2016, the Company had an outstanding zero-strike call option on 704,908 shares of Liberty Broadband Series C common stock which expired in March 2017. The Company had an unrealized gain on the option during 2016 primarily due to an increase in the market price of Liberty Broadband Series C common stock during that period. In April 2017, the Company entered into another zero-strike call option on 600,242 shares of Liberty Broadband Series C common stock. The Company prepaid a premium of $50.0 million in April 2017. Upon expiration in June 2017, the call option was rolled into a new zero-strike call option on 600,242 shares of Liberty Broadband Series C common stock. Liberty Broadband exercised its option to settle the contract in cash in August 2017 for cash proceeds of $53.8 million. The Company realized gains on the options outstanding and settled during the current year primarily due to an increase in the market price of Liberty Broadband Series C common stock during that period.

~~(5) Investment in Charter Accounted for Using the Equity Method~~

Through a number of prior years’ transactions, Liberty Broadband has acquired an interest in Charter. The investment in Charter is accounted for as an equity method affiliate based on our ownership interest and the board seats held by individuals appointed by Liberty Broadband. As of December 31, 2017, the carrying value of Liberty Broadband’s ownership in Charter was approximately $11,836 million. The market value of Liberty Broadband’s ownership in Charter as of December 31, 2017 was approximately $18,166 million, which represented an approximate economic ownership of 22.7% of the outstanding equity of Charter as of that date.

~~IV-26~~

~~Table of Contents~~

Pursuant to Proxy Agreements with Liberty Interactive and A/N, Liberty Broadband has an irrevocable proxy to vote certain shares of Charter common stock owned beneficially or of record by Liberty Interactive and A/N following the closing of the Time Warner Cable Merger, for a five year term subject to extension upon the mutual agreement of both parties, subject to certain limitations.

As a result of the A/N Proxy and the Liberty Interactive Proxy Agreement, Liberty Broadband controls 25.01% of the aggregate voting power of Charter following the completion of the Time Warner Cable Merger and the Bright House Transaction and is Charter’s largest stockholder.

Additionally, so long as the A/N Proxy is in effect, if A/N proposes to transfer common units of Charter Communications Holdings, LLC (which units are exchangeable into Charter shares and which will, under certain circumstances, result in the conversion of certain shares of Class B Common Stock into Charter shares) or Charter shares, in each case, constituting either (i) shares representing the first 7.0% of the outstanding voting power of Charter held by A/N or (ii) shares representing the last 7.0% of the outstanding voting power of New Charter held by A/N, Liberty Broadband will have a right of first refusal (“ROFR”) to purchase all or a portion of any such securities A/N proposes to transfer. The purchase price per share for any securities sold to Liberty Broadband pursuant to the ROFR will be the volume-weighted average price of Charter shares for the two trading day period before the notice of a proposed sale by A/N, payable in cash. Certain transfers are permitted to affiliates of A/N, subject to the transferee entity entering into an agreement assuming the transferor’s obligations under the A/N Proxy.

granted. During the years ended December 31, ~~2017, 2016~~2019 and ~~2015, there was~~2018, Qurate Retail granted 194 thousand and 124 thousand performance-based RSUs, respectively, of Series B Qurate Retail common stock to our Chairman. Such RSUs had a ~~dilution loss~~fair value of ~~$18 million, a dilution gain of $771 million,~~$17.90 and a dilution loss of $7 million, respectively, in the Company’s investment in Charter. The gain during 2016 is primarily due to the Time Warner Cable Merger. Even after considering the exchange of Time Warner Cable shares held by Liberty Broadband to shares of Charter, Liberty Broadband’s interest in Charter was diluted as a result of the conversion of outstanding Time Warner Cable shares held by third parties into shares of Charter. However, Liberty Broadband recognized a gain during the period as Liberty Broadband’s investment basis in Charter was at a price$27.56 per share, ~~below~~respectively, at the new equity issued in the Time Warner Cable Merger. This gain was partially offset by losses due to the issuance of Charter common stock from the exercise of warrants and stock options, held by outside investors (employees and other third parties), at prices below Liberty Broadband’s investment basis per sharetime they were granted. Also during the year. The dilution losses during the other periods presented are attributable to stock option exercises by employees and other third parties at prices below Liberty Broadband’s book basis per share.

~~During~~ the years ended December 31, ~~2017, 2016~~2020 and ~~2015,~~2019, Qurate Retail granted approximately 725 thousand and 191 thousand performance-based RSUs, respectively, of QRTEA to our President and CEO. Such RSUs had a GDFV of $4.44 and $17.90 per share, respectively, at the time they were granted. All of the 2020, 2019 and 2018 performance-based RSUs cliff vest

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

one year from the month of grant, subject to the satisfaction of certain performance objectives and based on an amount determined by the compensation committee. Performance objectives, which are subjective, are considered in determining the timing and amount of the compensation expense recognized. As the satisfaction of the performance objectives becomes probable, the Company ~~recorded $768 thousand, $811 thousand~~records compensation expense. The value of the grant is remeasured at each reporting period.

During the third quarter of 2020 and ~~$1.3 million, respectively,~~in connection with the Special Dividend, holders of RSAs and RSUs of QRTEA outstanding at the close of business on the record date received:

a special cash dividend in the amount of $1.50 per share for each QRTEA RSA and RSU so held (“Cash Dividend”), and

ii.

the pre-Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

ii.

the pre-Special Dividend ratio of the exercise price to the market price of the corresponding original QRTEA/B stock option or SAR.

Also in connection with the December Special Dividend, holders of outstanding stock options and SARs to purchase shares of QRTEA/B on the record date were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the stock options and SARs were granted. The adjustment to the exercise price and the number of shares subject to the original stock option or SAR award preserved:

the pre-December Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

ii.

the pre-December Special Dividend ratio of the exercise price to the market price of the corresponding original QRTEA/B stock option or SAR.

The Company has calculated the GDFV for all of its ~~share~~equity classified awards using the Black-Scholes-Merton Model. The Company estimates the expected term of ~~Charter’s other comprehensive earnings, net~~the Awards based on historical exercise and forfeiture data. For

II-68

Table of ~~income taxes. Charter records gains~~Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and ~~losses~~2018

grants made in 2020, 2019 and 2018, the range of expected terms was 5.2 to 6.3 years. The volatility used in the calculation for Awards is based on the historical volatility of the Company's stocks and the implied volatility of publicly traded Qurate Retail options. The Company uses a 0 dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject options.

The following table presents the range of volatilities used by Qurate Retail in the Black-Scholes-Merton Model for the 2020, 2019 and 2018 Qurate Retail and Liberty Ventures grants.


	Volatility
2020 grants
Qurate Retail options	46.8	%	-	54.8	%
2019 grants
Qurate Retail options	30.1	%	-	44.8	%
2018 grants
Qurate Retail options	29.7	%	-	30.5	%
Liberty Ventures options	27.9	%	-	27.9	%

Qurate Retail - Outstanding Awards

The following table presents the number and weighted average exercise price ("WAEP") of Awards 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 Awards.


	Qurate Retail
	Series A							Series B
				Weighted		Aggregate					Weighted		Aggregate
				average		intrinsic					average		intrinsic
	Awards			remaining		value		Awards			remaining		value
	(000's)	WAEP		life		(in millions)		(000's)	WAEP		life		(in millions)
Outstanding at January 1, 2020	23,248	$	21.28					1,844	$	27.09
Granted	6,756	$	6.15					—	$	—
Exercised	(1,297)	$	2.95					—	$	—
Forfeited/Cancelled	(5,958)	$	17.12					—	$	—
Special Dividend adjustment	15,145	$	11.19					1,182	$	16.51
December Special Dividend adjustment	2,659	$	10.56					217	$	15.39
Outstanding at December 31, 2020	40,553	$	10.61	4.2	years	$	108	3,243	$	15.39	2.1	years	$	—
Exercisable at December 31, 2020	22,874	$	14.12	2.9	years	$	13	3,243	$	15.39	2.1	years	$	—

As of December 31, 2020, the total unrecognized compensation cost related to unvested Qurate Retail Awards was approximately $106 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately 1.9 years.

As of December 31, 2020, Qurate Retail reserved 43.8 million shares of Series A and Series B common stock for issuance under exercise privileges of outstanding stock Awards.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Qurate Retail - Exercises

The aggregate intrinsic value of all options exercised during the years ended December 31, 2020, 2019 and 2018 was $7 million, $2 million and $28 million, respectively.

Qurate Retail - Restricted Stock and Restricted Stock Units

The Company has approximately 12.7 million and 373 thousand unvested RSAs and RSUs of QRTEA and QRTEP, respectively, held by certain directors, officers and employees of the Company as of December 31, 2020. The QRTEA unvested RSAs and RSUs have a weighted average GDFV of $7.32 per share, and 300 thousand of the QRTEP unvested RSUs have an incremental cost of $48.88 per share.

The aggregate fair value of ~~its interest rate swap agreements which qualify as hedging activities in other comprehensive income. The pre-tax portion of Liberty Broadband’s share of Charter’s other comprehensive earnings~~all QRTEA, QRTEB and QRTEP RSAs and RSUs that vested during the years ended December 31, 2020, 2019 and 2018 was ~~$1.2~~$17 million, ~~$1.3~~$25 million and ~~$2.1~~$64 million, respectively.

(13) Employee Benefit Plans

Subsidiaries of Qurate Retail sponsor 401(k) plans, which provide their employees an opportunity to make contributions to a trust for investment in Qurate Retail common stock, as well as other mutual funds. The Company's subsidiaries make matching contributions to their plans based on a percentage of the amount contributed by employees. Employer cash contributions to all plans aggregated $28 million, $25 million and $26 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, respectively.

(14) Other Comprehensive Earnings (Loss)

Accumulated other comprehensive earnings (loss) included in the Company’s consolidated balance sheets and consolidated statements of equity reflect the aggregate of foreign currency translation adjustments, comprehensive earnings (loss) attributable to debt credit risk adjustments and the Company's share of accumulated other comprehensive earnings of affiliates.

~~IV-27~~II-70

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QURATE RETAIL, INC. AND SUBSIDIARIES

~~The excess basis has increased~~

Notes to ~~$2,975 million as of~~ Consolidated Financial Statements (Continued)

December 31, ~~2017. Such amount has been allocated within memo accounts used for equity method accounting purposes as follows (amounts~~2020, 2019 and 2018

The change in ~~millions):~~

Property and equipment

$
361

Customer relationships

689

Franchise fees

1,670

Trademarks

29

Goodwill

986

Debt

(98)

Deferred income tax liability

(662)

$
2,975

~~Upon acquisition,~~ the ~~Company ascribed remaining useful lives~~components of 7 years and 13 years to property and equipment and customer relationships, respectively, and indefinite lives to franchise fees, trademarks and goodwill. The excess basis of outstanding debt is amortized over the contractual period using the effective interest rate method. The increase in excess basis for the year ended December 31, 2017, was primarily related to the impact of income tax rate changes on the deferred tax liability recorded within the memo accounts for Charter, as well as Charter’s share buyback program. Included in our share ofaccumulated other comprehensive earnings from Charter of $2,509 million and $642 million and losses of $121 million for the years ended December 31, 2017, 2016 and 2015, respectively, are $277 million, $42 million and $52 million, respectively, of losses,(loss), net of taxes due to the amortization of the excess basis of our investment in Charter related to debt and intangible assets with identifiable useful lives. The excess basis amortization during the year ended December 31, 2015 was offset by the write-off of the excess basis related to debt instruments which Charter repaid during the second quarter of 2015 prior to their contractual maturity.

~~IV-28~~

~~Table of Contents~~

~~Charter Communications, Inc.~~

~~Summarized financial information for Charter is as follows:~~

~~Consolidated Balance Sheets~~

December 31,

December 31,

2017

2016

amounts in millions

Current assets

$
2,555

3,300

Property and equipment, net

33,888

32,963

Goodwill

29,554

29,509

Intangible assets

79,270

81,924

Other assets

1,356

1,371

Total assets

$
146,623

149,067

Current liabilities

$
11,090

9,572

Deferred income taxes

17,314

26,665

Long-term debt

68,186

59,719

Other liabilities

2,502

2,745

Equity

47,531

50,366

Total liabilities and equity

$
146,623

149,067

~~Consolidated Statements of Operations~~

Years ended December 31,

2017

2016

2015

amounts in millions

Revenue

$
41,581

29,003

9,754

Cost and expenses:

Operating costs and expenses (excluding depreciation and amortization)

26,541

18,655

6,426

Depreciation and amortization

10,588

6,907

2,125

Other operating expenses, net

346

985

89

37,475

26,547

8,640

Operating income

4,106

2,456

1,114

Interest expense

(3,090)

(2,499)

(1,306)

Loss on extinguishment of debt

(40)

(111)

(128)

Other income (expense), net

52

974

(11)

Income tax (expense) benefit

9,087

2,925

60

Net earnings (loss)

10,115

3,745

(271)

Less: Net income attributable to noncontrolling interests

(220)

(223)

—

Net Income (loss) attributable to Charter shareholders

$
9,895

3,522

(271)

~~IV-29~~

~~Table of Contents~~

~~(6) Debt~~

~~Outstanding debt at December 31, 2017 and December 31, 2016~~("AOCI"), is summarized as follows:

December 31, 2017

December 31, 2016

amounts in thousands

2017 Margin Loans
$
500,000

—

2014 Margin Loans

—

400,000

2016 Margin Loans

—

200,000

Total
$
500,000

600,000


				Comprehensive
	Foreign		Share of	Earnings (loss)
	currency		AOCI	Attributable to
	translation		of equity	Debt Credit Risk
	adjustments		affiliates	Adjustments	Other	AOCI

	amounts in millions
Balance at January 1, 2018	$	(130)	(3)	—	—	(133)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		(50)	(2)	38	16	2
Cumulative effect of accounting change		—	—	—	76	76
Balance at December 31, 2018		(180)	(5)	38	92	(55)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		(1)	—	2	(1)	—
Balance at December 31, 2019	$	(181)	(5)	40	91	(55)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		111	—	17	(1)	127
Balance at December 31, 2020	$	(70)	(5)	57	90	72

~~2014 Margin Loans~~

On October 30, 2014, in connection with and prior to the effectiveness of the Broadband Spin-Off, a wholly-owned special purpose subsidiary of the Company ("BroadbandSPV") entered into two margin loan agreements (the "2014 Margin Loan Agreements") with each of the lenders party thereto. The 2014 Margin Loan Agreements permitted BroadbandSPV, subject to certain funding conditions, to borrow term loans up to an aggregate principal amount equal to $400 million (the "2014 Margin Loans"), of which BroadbandSPV borrowed $320 million on October 31, 2014 and had $80 million available to be drawn immediately following the Broadband Spin-Off. During November 2014, subsequent to the Broadband Spin-Off, Liberty Broadband borrowed an additional $52 million to fund the exercise of the Legacy Charter warrants. During October 2015, Liberty Broadband borrowed an additional $28 million pursuant to the 2014 Margin Loan Agreements. The maximum borrowing capacity of $400 million under the 2014 Margin Loan Agreements was outstanding at December 31, 2016. The maturity date of the 2014 Margin Loans was October 30, 2017. Borrowings under the 2014 Margin Loan Agreements bore interest at the three-month LIBOR rate plus 1.55% and had an unused commitment fee of 0.25% per annum based on the average daily unused portion of the 2014 Margin Loans. Interest was payable quarterly in arrears beginning on December 31, 2014. On August 31, 2017, the outstanding borrowings of $400 million were repaid, as discussed below.

~~2016 Margin Loans~~

On March 21, 2016, a wholly-owned special purpose subsidiary of the Company (“Cheetah 5”), entered into two margin loan agreements (the “2016 Margin Loan Agreements” and together with the 2014 Margin Loan Agreements, the “Margin Loan Agreements”) with each of the lenders thereto. The 2016 Margin Loan Agreements permitted Cheetah 5, subject to certain funding conditions, to borrow initial term loans up to an aggregate principal amount equal to $200 million and delayed draw loans (the “Draw Loans”) up to an aggregate principal amount equal to $100 million, for an aggregate total of $300 million (collectively the “2016 Margin Loans”). Cheetah 5 had borrowed $200 million as of December 31, 2016 and had $100 million available to be drawn until September 21, 2017. The maturity date of the 2016 Margin Loans was March 21, 2018. Borrowings under the 2016 Margin Loans bore interest at the applicable LIBOR rate plus 2.10% per annum and have an unused commitment fee of 0.5% per annum based on the average daily unused portion of the Draw Loans. Interest was payable quarterly in arrears beginning on March 31, 2016. The proceeds of the 2016 Margin Loans were used for the Company’s additional investment in Charter during May 2016 (note 5). On August 31, 2017, the outstanding borrowings of $200 million were repaid, as discussed below.

~~2017 Margin Loan Facility~~

On August 31, 2017, a bankruptcy remote wholly owned subsidiary of the Company (“SPV”), entered into a multi-draw margin loan credit facility (the “2017 Margin Loan Facility” and, the credit agreement governing such facility, the “2017 Margin Loan Agreement”) with Bank of America, N.A and the lenders thereunder. SPV is permitted, subject to

~~IV-30~~

~~Table of Contents~~

certain funding conditions, to borrow term loans up to an aggregate principal amount equal to $1.0 billion. SPV will also have the ability from time to time to request additional loans in an aggregate principal amount of up to $1.0 billion on an uncommitted basis subject to certain conditions. SPV had borrowed $500 million as of December 31, 2017 and had $500 million available to be drawn until August 31, 2018. The maturity date of the loans under the 2017 Margin Loan Agreement is August 30, 2019 (except for any incremental loans incurred thereunder to the extent SPV and the incremental lenders agree to a later maturity date). Accordingly, the debt is classified as noncurrent as of December 31, 2017. Borrowings under the 2017 Margin Loan Agreement bear interest at the three-month LIBOR rate plus a per annum spread of 1.5%, unless it is unlawful for the applicable lender to fund or maintain loans based on LIBOR or there are material restrictions on the applicable lender to do so, in which case borrowings under the 2017 Margin Loan Agreement will either (a) bear interest at 0.5% plus the higher of (i) the federal funds rate plus ½ of 1%, (ii) the prime rate and (iii) LIBOR plus 1% for each day during such period or (b) be prepaid. Borrowings outstanding under this margin loan bore interest at a rate of 3.19% per annum at December 31, 2017. Interest is payable quarterly in arrears beginning on September 29, 2017. SPV used available cash and a portion of the proceeds of the loans under the 2017 Margin Loan Facility to repay the Margin Loan Agreements. Borrowings may also be used for distribution as a dividend or a return of capital, for the purchase of margin stock and for general corporate purposes.

The ~~2017 Margin Loan Agreement contains various affirmative and negative covenants that restrict the activities~~components of ~~SPV (and,~~other comprehensive earnings (loss) are reflected in ~~some cases, the Company and its subsidiaries with respect to shares~~Qurate Retail's consolidated statements of ~~Charter owned by the Company and its subsidiaries).~~comprehensive earnings (loss) net of taxes. The 2017 Margin Loan Agreement does not include any financial covenants. The 2017 Margin Loan Agreement also contains restrictions related to additional indebtedness and events of default customary for margin loans of this type.

SPV’s obligations under the 2017 Margin Loan Agreement are secured by first priority liens on a portion of the Company’s ownership interest in Charter, sufficient for SPV to meet the loan to value requirements under the 2017 Margin Loan Agreement. The 2017 Margin Loan Agreement indicates that no lender party shall have any voting rights with respect to the shares transferred, except to the extent that a lender party buys any shares in a sale or other disposition made pursuant to the terms of the loan agreements. As~~of December 31, 2017, 6.8 million shares of Charter with a value of $2.3 billion were pledged as collateral pursuant to the 2017 Margin Loan Agreement.~~

~~(7) Income Taxes~~

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate tax rate from 35 percent to 21 percent; (2) bonus depreciation that will allow for full expensing of qualified property; (3) creating a new limitation on deductible interest expense; (4) eliminating the corporate alternative minimum tax (“AMT”) and changing how existing AMT credits can be realized; (5) changing rules related to uses and limitations of net operating loss carryforwards created in tax years beginning after December 31, 2017; and (6) limitations on the deductibility of certain executive compensation. The SEC issued guidance on accounting forfollowing table summarizes the tax effects related to each component of other comprehensive earnings (loss).


			Tax
	Before-tax		(expense)	Net-of-tax
	amount		benefit	amount

	amounts in millions
Year ended December 31, 2020:
Foreign currency translation adjustments	$	115	3	118
Recognition of previously unrealized losses (gains) on debt, net		(1)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		22	(5)	17
Other comprehensive earnings (loss)	$	136	(2)	134
Year ended December 31, 2019:
Foreign currency translation adjustments	$	—	1	1
Recognition of previously unrealized losses (gains) on debt, net		(1)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		1	—	1
Other comprehensive earnings (loss)	$	—	1	1
Year ended December 31, 2018:
Foreign currency translation adjustments	$	(49)	1	(48)
Recognition of previously unrealized losses (gains) on debt, net		21	(5)	16
Share of other comprehensive earnings (loss) of equity affiliates		(3)	1	(2)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		50	(12)	38
Other comprehensive earnings (loss)	$	19	(15)	4

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

(15) Commitments and Contingencies

Litigation

Qurate Retail has contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible Qurate Retail may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements.

(16) Information About Qurate Retail's Operating Segments

Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and on-line commerce industries. Qurate Retail identifies its reportable segments as (A) those consolidated subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Qurate Retail's annual pre-tax earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.

Qurate Retail evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, conversion rates and active customers, as appropriate.

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding all stock-based compensation and transaction related costs). Qurate Retail believes this measure is an important indicator of the ~~Tax Act. The~~ ~~Company~~ ~~must reflect the income tax effects~~operational strength and performance of its businesses by identifying those ~~aspects~~items that are not directly a reflection of ~~the Tax Act for which the~~each business’ 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. This measure of performance excludes depreciation and amortization, stock-based compensation, certain purchase accounting ~~is known. To the extent~~adjustments, separately reported litigation settlements, transaction related costs (including restructuring, integration, and advisory fees), and impairment charges that a company’s accounting for certain income tax effects of the Tax Act is incomplete but it is able to determine a reasonable estimate, it must record a provisional estimate in the financial statements and the Tax Act provides a measurement period that should not extend beyond one year from the Tax Act enactment date. If a company cannot determine a provisional estimate to beare included in the ~~financial statements, it~~measurement of operating income pursuant to GAAP. Accordingly, Adjusted OIBDA should ~~continue~~be considered in addition to, ~~apply the tax laws that were in effect immediately before the enactment of the Tax Act.~~

The corporate tax rate reduction was applied to our inventory of deferred tax assets and deferred tax liabilities, which resulted in the net tax benefit in the period ending December 31, 2017. We have reported provisional amounts for the income tax effects of the Tax Act for which the accounting is incomplete but a reasonable estimate could be determined. Based on a continued analysis of the estimates and further guidance and interpretations on the application of the law, additional revisions may occur throughout the allowable measurement period.

~~IV-31~~

~~Table of Contents~~

~~Income tax benefit (expense) consists of:~~

Years ended December 31,

2017

2016

2015

amounts in thousands

Current:






Federal

$
(11)

1,556

(4,234)

State and local

(84)

853

(862)

(95)

2,409

(5,096)

Deferred:

Federal

(301,837)

(493,890)

23,512

State and local

(115,001)

(66,888)

1,452

(416,838)

(560,778)

24,964

Income tax benefit (expense)

$
(416,933)

(558,369)

19,868

~~Income tax benefit (expense) differs from the amounts computed by applying the U.S. federal income tax rate of 35%~~not as a ~~result~~substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Qurate Retail generally accounts for intersegment sales and transfers as if the ~~following:~~

Years ended December 31,

2017

2016

2014

amounts in thousands

Computed expected tax benefit (expense)

$
(857,710)

(516,485)

24,519

State and local taxes, net of federal income taxes

(74,805)

(42,995)

1,786

Foreign taxes, net of foreign tax credit

—

(1,180)

(59)

Change in valuation allowance

(1,208)

683

612

Dividends received deduction

—

931

752

Change in tax rate - other

—

45

(179)

Change in tax rate - U.S. tax reform

515,773

—

—

Impairment of intangible assets not deductible for tax purposes

—

—

(7,234)

Derivative instrument

1,084

396

—

Other

(67)

236

(329)

Income tax (expense) benefit

$
(416,933)

(558,369)

19,868

sales or transfers were to third parties, that is, at current prices.

For the year ended December 31, ~~2017~~2020, Qurate Retail has identified the ~~significant reconciling items,~~following consolidated subsidiaries as ~~noted~~its reportable segments:

●

QVC International – QVC International markets and sells a wide variety of consumer products in several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile applications.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

●

Zulily – Zulily markets and sells a wide variety of consumer products in the United States and several foreign countries through flash sales events, primarily through its app, mobile and desktop experiences.

Qurate Retail's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated subsidiaries are the same as those described in the ~~table above, are the result~~Company's summary of the effect of the change in the U.S. federal corporate tax rate from 35% to 21% on deferred taxes and the effect of state income taxes. In connection with the initial analysis of the impact of the Tax Act, the Company has recorded a discrete net tax benefit of $516 million in the period ending December 31, 2017. This net benefit primarily consists of a net benefit for the corporate rate reduction.significant accounting policies.

~~For the year ended December 31, 2016 the significant reconciling items, as noted in the table above, are the result of the effect of state income taxes.~~Performance Measures

For the year ended December 31, 2015 the significant reconciling items, as noted in the table above, are the result of the impairment to non-deductible goodwill related to Skyhook’s legacy U-TDOA Service.


	Years ended December 31,
	2020			2019		2018
			Adjusted		Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA	Revenue	OIBDA

	amounts in millions
QxH	$	8,505	1,547	8,277	1,536	8,544	1,630
QVC International		2,967	510	2,709	446	2,738	429
Zulily		1,636	83	1,571	48	1,817	108
Corporate and other		1,070	58	901	(1)	973	(13)
Inter-segment eliminations		(1)	—	—	—	(2)	—
Consolidated Qurate Retail	$	14,177	2,198	13,458	2,029	14,070	2,154

Other Information


	December 31, 2020			December 31, 2019

	Total		Capital	Total	Capital
	assets		expenditures	assets	expenditures

	amounts in millions
QxH	$	12,393	182	12,774	257
QVC International		2,455	36	2,268	34
Zulily		1,049	23	1,136	23
Corporate and other		1,102	16	1,127	11
Consolidated Qurate Retail	$	16,999	257	17,305	325

~~IV-32~~II-73

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QURATE RETAIL, INC. AND SUBSIDIARIES

~~The tax effects of temporary differences and tax attributes that give rise~~

Notes to ~~significant portions of the deferred income tax assets and deferred income tax liabilities are presented below:~~

December 31,

2017

2016

amounts in thousands

Deferred tax assets:






Net operating loss and tax credit carryforwards

$
49,555

23,017

Accrued stock-based compensation

4,275

4,812

Deferred revenue

1,805

1,721

Other

64

2,073

Total deferred tax assets

55,699

31,623

Less: valuation allowance

(8,153)

(6,945)

Net deferred tax assets

47,546

24,678

Deferred tax liabilities:

Investments

(979,522)

(527,151)

Intangible assets

(617)

(2,170)

Other

—

(1)

Total deferred tax liabilities

(980,139)

(529,322)

Net deferred tax asset (liability)

$
(932,593)

(504,644)

Consolidated Financial Statements (Continued)

~~The Company’s valuation allowance increased $1.2 million in 2017, which affected tax expense during the year ended~~

December 31, ~~2017.~~2020, 2019 and 2018

At December 31, 2017, the Company had a deferred tax liability on investments of $979.5 million due to its share of earnings in its equity investment in Charter, which were partially offset by the application of the rate change of the Tax Act and, in the prior year, the result of the Transactions, as discussed in note 5.

At December 31, 2017, Liberty Broadband had federal and state net operating losses (on a tax effected basis) and tax credit carryforwards for income tax purposes aggregating approximately $49.6 million. These losses and credit carryforwards are expected to be utilized prior to expiration, except for $8.2 million which based on current projections, may expire unused and accordingly are subject to a valuation allowance. The carryforwards that are expected to be utilized will begin to expire in 2021.

~~As of December 31, 2017, the Company had not recorded tax reserves related to unrecognized tax benefits for uncertain tax positions.~~

As of December 31, 2017, the IRS has completed its examination of Liberty Broadband’s 2015 and 2016 tax years. Liberty Broadband’s 2017 tax year is being examined as part of the IRS’s Compliance Assurance Process “CAP” program. Because Liberty Broadband’s ownership of Charter is less than the required 80%, Charter is not consolidated with Liberty Broadband for federal income tax purposes.

~~(8) Stockholders' Equity~~

~~IV-33~~

~~Table~~The following table provides a reconciliation of ~~Contents~~

consolidated segment Adjusted OIBDA to operating income and earnings (loss) from continuing operations before income taxes:

~~In addition, following the completion of the Broadband Spin-Off, on December 10, 2014, stockholders received a subscription right to acquire~~ ~~one~~ ~~share of Liberty Broadband Series C common stock for every~~ ~~five~~ shares of Liberty Broadband common stock they held as of the rights record date at a per share subscription price of $40.36, which was a 20% discount to the 20-trading day volume weighted average trading price of the Series C Liberty Broadband common stock following the completion of the Broadband Spin-Off. The rights offering was fully subscribed on January 9, 2015, with 17,277,224 shares of Series C common stock issued to those rightsholders exercising basic and, as applicable, oversubscription privileges. The subscription rights were issued to raise capital for general corporate purposes of Liberty Broadband.


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Consolidated segment Adjusted OIBDA	$	2,198	2,029	2,154
Stock-based compensation		(64)	(71)	(88)
Depreciation and amortization		(562)	(606)	(637)
Transaction related costs		—	(1)	(72)
Impairment of intangible assets and long lived assets		—	(1,167)	(33)
Operating income		1,572	184	1,324
Interest expense		(408)	(374)	(381)
Share of earnings (loss) of affiliates, net		(156)	(160)	(162)
Realized and unrealized gains (losses) on financial instruments, net		(110)	(251)	76
Gains (losses) on transactions, net		224	(1)	1
Tax sharing income (expense) with Liberty Broadband		(39)	(26)	32
Other, net		(32)	6	(7)
Earnings (loss) from continuing operations before income taxes	$	1,051	(622)	883

In connection with the Time Warner Cable Merger in May 2016, Liberty Broadband funded its purchase of shares of Charter Class A common stock using proceeds of $4.4 billion related to subscriptions for approximately 78.3 million newly issued shares of Liberty Broadband Series C common stock, par value $0.01 per share (the “Series C Shares”), at a price per share of $56.23, which was determined based upon the fair value of Liberty Broadband’s net assets on a sum-of-the parts basis at the time certain Amended and Restated Investment Agreements were executed. The purchasers of the Series C Shares were Liberty Interactive through its Liberty Ventures Group (approximately 42.7 million shares) and certain other third party investors, which all invested on substantially similar terms. One of the third party investors also held a position in Time Warner Cable and agreed to vote its Time Warner Cable shares in favor of the Time Warner Cable Merger. Each of Legacy Charter and Liberty Broadband obtained stockholder approval during September 2015 for the issuance of the Charter shares and the Series C Shares, respectively, in accordance with the rules and requirements of the Nasdaq Stock Market. The issuance of the Series C Shares was not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and the rules and regulations of the Securities and Exchange Commission promulgated thereunder. As a result of the issuance of the Series C Shares in connection with the Transactions, Liberty Interactive’s non-voting economic ownership in Liberty Broadband was 23.5% as of December 31, 2016.

As discussed in note 4, the Company had an outstanding zero-strike call option on 704,908 Series C Shares at December 31, 2016, which expired in March 2017. The Company prepaid a premium of $47.9 million in December 2016. Liberty Broadband exercised its option to settle the contract in cash in March 2017 for cash proceeds of $50.0 million. The Company entered into another zero-strike call option on 527,156 shares of Liberty Broadband Series C common stock and prepaid a premium of $47.7 million in October 2017. Upon expiration of the contract in December 2017, the Company physically settled the contract by purchasing 527,156 shares of Liberty Broadband Series C common stock at a price of $90.54 per share. As of December 31, 2017, the Company had no zero-strike call options outstanding. The Company accounted for the zero-strike call option as a financial instrument asset due to its settlement provisions. Accordingly, changes in the fair value of the asset are included in realized and unrealized gains (losses) on financial instruments in the accompanying statement of operations.

Preferred Stock

~~Liberty Broadband's preferred~~On September 14, 2020, Qurate Retail issued the Preferred Stock. There were 13,500,000 shares of Preferred Stock authorized and 12,513,752 shares issued and outstanding at December 31, 2020.

Priority. The Preferred Stock ranks senior to the shares of common stock of Qurate Retail, with respect to dividend rights, rights of redemption and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of Qurate Retail’s affairs. Shares of Preferred Stock are not convertible into shares of common stock of Qurate Retail.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

will be payable quarterly on each dividend payment date, beginning December 15, 2020 and thereafter on each March 15, June 15, September 15, and December 15 during the term (or, if such date is ~~issuable, from time~~not a business day, the next business day after such date). If Qurate Retail fails to ~~time,~~pay dividends or the applicable redemption price with ~~such designations, preferences and relative participating, optional~~respect to any redemption within 30 days after the applicable dividend payment or ~~other rights, qualifications, limitations or restrictions thereof,~~redemption date, the dividend rate will increase as ~~shall be stated and expressed in a resolution or resolutions providing~~provided by the Certificate of Designations for the ~~issue~~Preferred Stock (the “Certificate of ~~such preferred~~Designations”). Accrued dividends that are not paid within 30 days after the applicable dividend payment date will be added to the liquidation price until paid together with all dividends accrued thereon.

The ability of Qurate Retail to declare or pay any dividend on, or purchase, redeem, or otherwise acquire, any of its common stock ~~adopted~~or any other stock ranking on parity with the Preferred Stock will be subject to restrictions if Qurate Retail does not pay all dividends and all redemption payments on the Preferred Stock, subject to certain exceptions as set forth in the Certificate of Designations.

Voting Power. Holders of the Preferred Stock will not have any voting rights or powers, except as specified in the Certificate of Designations or as required by ~~Liberty Broadband's board~~Delaware law.

Preferred Stock Directors. So long as the aggregate liquidation price of ~~directors.~~the outstanding shares of Preferred Stock exceeds 25% of the aggregate liquidation price of the shares of Preferred Stock issued on the Original Issue Date, holders of Preferred Stock will have certain director election rights as described in the Certificate of Designations whenever dividends on shares of Preferred Stock have not been declared and paid for 2 consecutive dividend periods and whenever Qurate Retail fails to pay the applicable redemption price in full with respect to any redemption of the Preferred Stock or fails to make a payment with respect to the Preferred Stock in connection with a liquidation or Extraordinary Transactions (as defined in the Certificate of Designations).

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Notes to Consolidated Financial Statements (Continued)

December 31, ~~2017, no shares~~2020, 2019 and 2018

Common Stock

~~Liberty Broadband's~~ Series A Qurate Retail common stock has ~~one~~1 vote per share, ~~Liberty Broadband's~~and Series B Qurate Retail common stock has ~~ten~~10 votes per ~~share and Liberty Broadband’s Series C common stock has no votes per share (except as otherwise required by applicable law).~~share. Each share of the Series B common stock is exchangeable at the option of the holder for ~~one~~1 share of Series A common ~~stock. All series~~stock of ~~our~~the same group. The Series A and Series B common stock participate on an equal basis with respect to dividends and distributions.

~~IV-34~~

~~Table~~At the Annual Meeting of ~~Contents~~Stockholders held on June 2, 2015, the Company’s stockholders approved an amendment to the Restated Certificate of Incorporation that increased (i) the total number of shares of the Company’s capital stock which the Company will have the authority to issue to 9,015 million shares, (ii) the number of shares of the Company’s capital stock designated as “Common Stock” to 8,965 million shares and (iii) the number of shares of Common Stock designated as “Series A Liberty Ventures Common Stock,” “Series B Liberty Ventures Common Stock” and “Series C Liberty Ventures Common Stock” to 400 million shares, 15 million shares and 400 million shares, respectively.

As of December 31, ~~2017, there were 404 thousand~~2020, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately 40.6 million shares of Series A Qurate Retail common stock and ~~2.4~~approximately 3.2 million shares of Series CB Qurate Retail common stock.

In addition to the Series A and Series B Qurate Retail common stock, ~~reserved~~there are 4 billion shares of Series C Qurate Retail common stock authorized for issuance, ~~under exercise privileges~~respectively. As of December 31, 2020, 0 shares of any Series C Qurate Retail common stock were issued or outstanding.

As discussed in note 1, on March 9, 2018, Qurate Retail completed the GCI Liberty Split-Off. As part of the GCI Liberty Split-Off, all outstanding shares of Series A Liberty Ventures common stock ~~options.~~ were redeemed for one share of GCI Liberty Class A common stock and each outstanding share of Series B Liberty Ventures common stock was redeemed for one share of GCI Liberty Class B common stock.

Purchases of Common Stock

~~(9) Stock-Based Compensation~~

~~Included in~~During the ~~accompanying consolidated statements of operations are the following amounts of stock-based compensation for the years~~year ended December 31, ~~2017,~~2018, the Company repurchased 43,080,787 shares of Series A Qurate Retail common stock for aggregate cash consideration of $988 million.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

During the year ended December 31, 2019, the Company repurchased 24,329,610 shares of Series A Qurate Retail common stock for aggregate cash consideration of $392 million.

During the year ended December 31, 2020, the Company repurchased 6,521,782 shares of Series A Qurate Retail common stock for aggregate cash consideration of $70 million.

All of the foregoing shares were repurchased pursuant to a previously announced share repurchase program and have been retired and returned to the status of authorized and available for issuance.

(11) Related Party Transactions with Officers and Directors

Chairman Compensation Arrangement

The Chairman was entitled to receive term equity awards with an aggregate grant date fair value of $90 million (the “Upfront Awards”) which were granted in 2 equal tranches. The first tranche consisted of time-vested stock options from each of Qurate Retail, LMC, Liberty Broadband and GCI Liberty and time-vested restricted stock units (“RSUs”) from Liberty TripAdvisor (collectively, the “2019 term awards”) that vest, in each case, on December 31, 2023 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 15, 2023), subject to the Chairman’s continued employment, except under certain circumstances. Qurate Retail’s portion of the 2019 term awards, granted in December 2019, had an aggregate grant date fair value of $8,550,000 and consisted of stock options to purchase 2,133,697 shares of Series A Qurate Retail common stock (“QRTEA”) with an exercise price of $8.17. The second tranche of the Upfront Awards consisted of time-vested stock options from each of LMC, Qurate Retail, Liberty Broadband and GCI Liberty and time-vested RSUs from Liberty TripAdvisor (collectively, the “2020 term awards”) that vest, in each case, on December 31, 2024 (except Liberty TripAdvisor’s award of time-vested RSUs, which vests on December 7, 2024), subject to the Chairman’s continued employment, except under certain circumstances. Qurate Retail’s portion of the 2020 term awards, granted in December 2020, had an aggregate grant date fair value of $5,850,000 and consisted of stock options to purchase 1,190,529 QRTEA shares with an exercise price of $10.34.

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

CEO Compensation Agreement

Effective November 17, 2020, Qurate Retail entered into an amendment to the CEO’s compensation arrangement that provides for a one year extension of the employment agreement dated December 16, 2015. The CEO’s employment term will now end on December 31, 2021, unless terminated earlier in ~~thousands).~~accordance with the agreement, and his annual base salary has increased to $1.5 million. The CEO will be eligible to receive an annual target cash bonus equal to 100% of his annual base salary with a maximum bonus of 240% of base salary, subject to the achievement of performance criteria. The CEO is eligible to receive a performance-based RSU award equal to $5.5 million of target value, with a maximum value equal to $8.3 million, and a time-vested RSU award also equal to $5.5 million of value. The performance-based RSU award will be subject to performance criteria as determined by the Compensation Committee.

December 31,

2017

2016

2015

Operating expense

$
(2)

—

7

Selling, general and administrative

5,114

5,555

5,978

Research and development

180

158

395

$
5,292

5,713

6,380

~~Liberty Broadband~~

(12) Stock-Based Compensation

Qurate Retail - Incentive Plans

The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock (“RSAs”), 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.

Pursuant to the ~~Liberty Broadband 2014~~Qurate Retail, Inc. 2020 Omnibus Incentive Plan ~~as amended,~~(the “2020 Plan”), the Company may grant Awards ~~to be made~~ in respect of a maximum of ~~8.4~~30.0 million shares of ~~Liberty Broadband~~Qurate Retail common ~~stock.~~stock plus the shares remaining available for Awards under the prior Qurate Retail, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”), as amended, as of close of business on May 20, 2020, the day before the effective date of the 2020 Plan. Any forfeited shares from the 2016 Plan

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

shall also be available again under the 2020 Plan. Awards generally vest over 1-5 years and have a term of 7-10 years. ~~Liberty Broadband~~Qurate Retail issues new shares upon exercise of equity awards.

~~Liberty Broadband~~Qurate Retail – Grants

The following table presents the number and weighted average GDFV of ~~Stock Options~~options granted by Qurate Retail during the years ended December 31, 2020, 2019 and 2018:


	For the Years ended December 31,
	2020			2019			2018
	Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV

Series A Qurate Retail common stock, QVC and HSN employees (1)	4,200	$	1.96	2,503	$	4.07	3,783	$	8.77
Series A Qurate Retail common stock, Zulily employees (1)	618	$	1.94	328	$	4.08	336	$	8.65
Series A Qurate Retail common stock, Qurate Retail employees and directors (2)	747	$	4.86	639	$	3.97	72	$	7.31
Series A Qurate Retail common stock, Qurate Retail President and CEO (3)	NA		NA	NA		NA	577	$	7.09
Series A Qurate Retail common stock, Qurate Retail Chairman of the Board (4)	1,191	$	4.88	2,134	$	3.44	NA		NA
Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (4)	NA		NA	26	$	5.84	175	$	8.84
Series B Ventures Group common stock, Qurate Retail Chairman of the Board (4)	NA		NA	NA		NA	143	$	16.55

(1)	Vests semi-annually over four years.

(2)	Vests between two and five years for employees and in one year for directors.

(3)	Vested 50% on each of December 15, 2019 and December 15, 2020.

(4)

In addition to the stock option grants to the Qurate Retail Chairman of the Board, and in connection with his employment agreement, Qurate Retail granted time-based and performance-based RSUs. During the year ended December 31, 2020, Qurate Retail granted 38 thousand time-based RSUs of QRTEA to our Chairman. The RSUs had a GDFV of $7.44 per share and cliff vested on December 10, 2020. This RSU grant was issued in lieu of our Chairman receiving 50% of his remaining base salary for the last three quarters of calendar year 2020, and he waived his right to receive the other 50%, in each case, in light of the ongoing financial impact of COVID-19. During the year ended December 31, 2019, Qurate Retail granted 19 thousand time-based RSUs of Series B Qurate Retail common stock. Such RSUs had a GDFV of $17.90 per share at the time they were granted and cliff vested on March 11, 2019. During the year ended December 31, 2020, Qurate Retail granted to our Chairman 584 thousand performance-based RSUs of QRTEA. Such RSUs had a fair value of $4.44 at the time they were granted. During the years ended December 31, ~~2017, 2016~~2019 and ~~2015, Liberty Broadband~~2018, Qurate Retail granted ~~16 thousand, 17~~194 thousand and 21124 thousand performance-based RSUs, respectively, of Series B Qurate Retail common stock to our Chairman. Such RSUs had a fair value of $17.90 and $27.56 per share, respectively, at the time they were granted. Also during the years ended December 31, 2020 and 2019, Qurate Retail granted approximately 725 thousand and 191 thousand performance-based RSUs, respectively, of QRTEA to our President and CEO. Such RSUs had a GDFV of $4.44 and $17.90 per share, respectively, at the time they were granted. All of the 2020, 2019 and 2018 performance-based RSUs cliff vest

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

During the third quarter of 2020 and in connection with the Special Dividend, holders of RSAs and RSUs of QRTEA outstanding at the close of business on the record date received:

a special cash dividend in the amount of $1.50 per share for each QRTEA RSA and RSU so held (“Cash Dividend”), and

ii.

Also in connection with the Special Dividend, holders of outstanding stock options ~~respectively,~~and stock appreciation rights (“SARs”) to purchase shares of QRTEA or Series CB Qurate Retail common stock (“QRTEB”) and together with QRTEA, “QRTEA/B”) on the record date were adjusted pursuant to ~~its non-employee directors~~the anti-dilution provisions of the incentive plans under which the stock options and SARs were granted. The adjustment to the exercise price and the number of shares subject to the original stock option or SAR award preserved:

the pre-Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

ii.

the pre-Special Dividend ratio of the exercise price to the market price of the corresponding original QRTEA/B stock option or SAR.

During the fourth quarter of 2020 and in connection with the December Special Dividend, holders of QRTEA RSAs and RSUs outstanding at the close of business on the record date received a ~~weighted average grant-date fair value (“GDFV”)~~special cash dividend in the amount of ~~$22.68, $18.64 and $13.51~~$1.50 per share ~~respectively, which mainly cliff vest over a one year~~for each QRTEA RSA or RSU so held (“December Cash Dividend”).

The December Cash Dividend for RSA holders was paid upon distribution. The December Cash Dividend for RSU holders is subject to the same vesting ~~period. There were no~~schedules as those applicable to the corresponding original QRTEA RSUs.

Also in connection with the December Special Dividend, holders of outstanding stock options and SARs to purchase shares of ~~Series A common~~QRTEA/B on the record date were adjusted pursuant to the anti-dilution provisions of the incentive plans under which the stock ~~granted during~~options and SARs were granted. The adjustment to the ~~period.~~exercise price and the number of shares subject to the original stock option or SAR award preserved:

the pre-December Special Dividend intrinsic value of the original QRTEA/B stock option or SAR, and

ii.

the pre-December Special Dividend ratio of the exercise price to the market price of the corresponding original QRTEA/B stock option or SAR.

The Company has calculated the GDFV for all of its equity classified awards ~~and any subsequent remeasurement of its liability classified awards~~ using the ~~Black-Scholes~~Black-Scholes-Merton Model. The Company estimates the expected term of the Awards based on historical exercise and forfeiture data. For

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Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

grants made in ~~2017, 2016~~2020, 2019 and ~~2015,~~2018, the range of expected terms was ~~4.6~~5.2 to ~~5.3~~6.3 years. The volatility used in the calculation for Awards is based on the historical volatility of ~~Liberty Broadband common stock~~the Company's stocks and the implied volatility of publicly traded ~~Liberty Broadband~~Qurate Retail options. ~~For grants made in 2017, 2016 and 2015, the range of volatilities was 24.4% to 28.2%.~~ The Company uses a ~~zero~~0 dividend rate and the risk-free rate for Treasury Bonds with a term similar to that of the subject ~~option.~~options.

~~IV-35~~

~~Table~~The following table presents the range of ~~Contents~~

volatilities used by Qurate Retail in the Black-Scholes-Merton Model for the 2020, 2019 and 2018 Qurate Retail and Liberty Ventures grants.

~~Liberty Broadband –~~


	Volatility
2020 grants
Qurate Retail options	46.8	%	-	54.8	%
2019 grants
Qurate Retail options	30.1	%	-	44.8	%
2018 grants
Qurate Retail options	29.7	%	-	30.5	%
Liberty Ventures options	27.9	%	-	27.9	%

Qurate Retail - Outstanding Awards

The following table presents the number and weighted average exercise price ~~(“WAEP”~~("WAEP") of Awards to purchase ~~Liberty Broadband~~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 Awards.

Weighted



average

remaining

Aggregate

contractual

intrinsic

Series A

WAEP

life

value

(in thousands)

(in years)

(in millions)

Outstanding at January 1, 2017

454

$
32.47

Granted

—

$
—

Exercised

(50)

$
26.85

Forfeited/Cancelled

—

$
—

Outstanding at December 31, 2017

404

$
33.16

2.0

$
21

Exercisable at December 31, 2017

402

$
33.08

2.0

$
21

Weighted



average

remaining

Aggregate

contractual

intrinsic

Series C

WAEP

life

value

(in thousands)

(in years)

(in millions)

Outstanding at January 1, 2017

2,467

$
42.45

Granted

16

$
85.34

Exercised

(95)

$
27.08

Forfeited/Cancelled

—

$
—

Outstanding at December 31, 2017

2,388

$
43.35

5.2

$
100

Exercisable at December 31, 2017

866

$
34.34

2.1

$
44

~~The Company had no outstanding Series B options during 2017.~~


	Qurate Retail
	Series A							Series B
				Weighted		Aggregate					Weighted		Aggregate
				average		intrinsic					average		intrinsic
	Awards			remaining		value		Awards			remaining		value
	(000's)	WAEP		life		(in millions)		(000's)	WAEP		life		(in millions)
Outstanding at January 1, 2020	23,248	$	21.28					1,844	$	27.09
Granted	6,756	$	6.15					—	$	—
Exercised	(1,297)	$	2.95					—	$	—
Forfeited/Cancelled	(5,958)	$	17.12					—	$	—
Special Dividend adjustment	15,145	$	11.19					1,182	$	16.51
December Special Dividend adjustment	2,659	$	10.56					217	$	15.39
Outstanding at December 31, 2020	40,553	$	10.61	4.2	years	$	108	3,243	$	15.39	2.1	years	$	—
Exercisable at December 31, 2020	22,874	$	14.12	2.9	years	$	13	3,243	$	15.39	2.1	years	$	—

As of December 31, ~~2017,~~2020, the total unrecognized compensation cost related to unvested ~~Liberty Broadband~~Qurate Retail Awards was approximately ~~$10.0~~$106 million. Such amount will be recognized in the ~~Company’s~~Company's consolidated statements of operations over a weighted average period of approximately ~~1.5~~1.9 years.

As of December 31, ~~2017, Liberty Broadband~~2020, Qurate Retail reserved ~~2.8~~43.8 million shares of Series A and Series CB common stock for issuance under exercise privileges of outstanding stock Awards.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

Qurate Retail - Exercises

The aggregate intrinsic value of all options exercised during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015~~2018 was ~~$8.1~~$7 million, ~~$14.4~~$2 million and ~~$11.2~~$28 million, respectively.

~~Liberty Broadband –~~Qurate Retail - Restricted ~~Shares~~Stock and Restricted Stock Units

The ~~aggregate fair value~~Company has approximately 12.7 million and 373 thousand unvested RSAs and RSUs of ~~all Series A~~QRTEA and ~~Series C restricted shares of Liberty Broadband common stock that vested during the years ended December 31, 2017, 2016 and 2015 was $116 thousand, $674 thousand and $5.8 million, respectively.~~

~~IV-36~~

~~Table of Contents~~

~~As of December 31, 2017, the Company had approximately 24,000 unvested restricted shares of Series A and Series C Liberty Broadband common stock~~QRTEP, respectively, held by certain directors, officers and employees of the Company ~~with~~as of December 31, 2020. The QRTEA unvested RSAs and RSUs have a weighted average GDFV of ~~$13.43~~$7.32 per share, and 300 thousand of the QRTEP unvested RSUs have an incremental cost of $48.88 per share.

~~Skyhook equity incentive plans~~

~~Long-Term Incentive Plans~~

Skyhook has a long-term incentive plan which provides for the granting of PARs and PSUs to employees, directors, and consultants of Skyhook that is not significant to Liberty Broadband. As of December 31, 2017 and 2016, $1.2 million and $1.7 million, respectively, are included in other liabilities for theThe aggregate fair value ~~(Level 2)~~ of ~~the Company's LTIP obligations.~~

~~(10) Employee Benefit Plans~~

~~Prior to January 1, 2015, Skyhook participated in Liberty’s defined-contribution plan (the “Liberty 401(k) Plan”).~~

Employees of Skyhook participate in a separate defined-contribution plan administered by Skyhook (the “Skyhook 401(k) Plan”). The Skyhook 401(k) Plan provides for employees to make contributions by salary reductions for investment in several mutual funds and/or a self-directed brokerage account pursuant to Section 401(k) of the Internal Revenue Code.

~~Pursuant to the existing Skyhook 401(k) Plan, Skyhook employees are eligible for 100% matching contributions for each dollar contributed up to 10%, subject to certain limitations. For~~all QRTEA, QRTEB and QRTEP RSAs and RSUs that vested during the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015, Skyhook contributed approximately $1.0~~2018 was $17 million, ~~$0.8~~$25 million and ~~$1.1~~$64 million, respectively.

~~(11) Commitments~~(13) Employee Benefit Plans

~~Leases~~

Skyhook leases various properties under operating leases expiring at various times through 2021. The aggregate minimum annual lease payments under the noncancelable operating leases as of December 31, 2017 are as follows (amounts in thousands):

2018

$
445

2019

497

2020

548

2021

11

$
1,501

~~Skyhook’s two principal facilities are under lease through December 2019 and January 2021, respectively. Total rental expense~~$26 million for the years ended December 31, ~~2017, 2016~~2020, 2019 and ~~2015 was $1.1 million, $2.4 million~~2018, respectively.

(14) Other Comprehensive Earnings (Loss)

Accumulated other comprehensive earnings (loss) included in the Company’s consolidated balance sheets and ~~$3.7 million, respectively.~~consolidated statements of equity reflect the aggregate of foreign currency translation adjustments, comprehensive earnings (loss) attributable to debt credit risk adjustments and the Company's share of accumulated other comprehensive earnings of affiliates.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The change in the components of accumulated other comprehensive earnings (loss), net of taxes ("AOCI"), is summarized as follows:


				Comprehensive
	Foreign		Share of	Earnings (loss)
	currency		AOCI	Attributable to
	translation		of equity	Debt Credit Risk
	adjustments		affiliates	Adjustments	Other	AOCI

	amounts in millions
Balance at January 1, 2018	$	(130)	(3)	—	—	(133)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		(50)	(2)	38	16	2
Cumulative effect of accounting change		—	—	—	76	76
Balance at December 31, 2018		(180)	(5)	38	92	(55)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		(1)	—	2	(1)	—
Balance at December 31, 2019	$	(181)	(5)	40	91	(55)
Other comprehensive earnings (loss) attributable to Qurate Retail, Inc. stockholders		111	—	17	(1)	127
Balance at December 31, 2020	$	(70)	(5)	57	90	72

The components of other comprehensive earnings (loss) are reflected in Qurate Retail's consolidated statements of comprehensive earnings (loss) net of taxes. The following table summarizes the tax effects related to each component of other comprehensive earnings (loss).


			Tax
	Before-tax		(expense)	Net-of-tax
	amount		benefit	amount

	amounts in millions
Year ended December 31, 2020:
Foreign currency translation adjustments	$	115	3	118
Recognition of previously unrealized losses (gains) on debt, net		(1)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		22	(5)	17
Other comprehensive earnings (loss)	$	136	(2)	134
Year ended December 31, 2019:
Foreign currency translation adjustments	$	—	1	1
Recognition of previously unrealized losses (gains) on debt, net		(1)	—	(1)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		1	—	1
Other comprehensive earnings (loss)	$	—	1	1
Year ended December 31, 2018:
Foreign currency translation adjustments	$	(49)	1	(48)
Recognition of previously unrealized losses (gains) on debt, net		21	(5)	16
Share of other comprehensive earnings (loss) of equity affiliates		(3)	1	(2)
Comprehensive earnings (loss) attributable to debt credit risk adjustments		50	(12)	38
Other comprehensive earnings (loss)	$	19	(15)	4

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

(15) Commitments and Contingencies

Litigation

~~On May 23, 2012, Skyhook (then known as TruePosition) filed a patent infringement lawsuit in the U.S. District Court for the District of Delaware against Polaris Wireless, Inc. (“Polaris”),~~Qurate Retail has contingent liabilities related to ~~the sale by Polaris of systems used to locate mobile devices. In parallel with the lawsuit, at Polaris’s request, the U.S. Patent~~legal and ~~Trademark Office initiated an Inter Partes Review. Both the District Court~~tax proceedings and ~~the Patent Trial and Appeal Board ruled adversely to Skyhook and~~

~~IV-37~~

~~Table of Contents~~

~~those rulings were upheld on appeal. No further appeal was taken. During the pendency of the appeal, Polaris filed a motion~~other matters arising in the District Court for an award of approximately $3 million in attorneys’ fees and expenses incurred in defending the lawsuit. The matter was heard by the Court on October 16, 2015, wherein the court denied the Polaris motion.

On September 10, 2010, Skyhook filed a patent infringement lawsuit in the U.S. District Court for the District of Massachusetts against Google, Inc. (“Google”). In March 2013, Skyhook amended its lawsuit to add additional claims. In total, at the time the case was to be tried, Skyhook alleged that Google infringed on eight Skyhook patents involving location technology and sought an injunction and/or award of damages in an amount to be determined at trial. The case had been scheduled to be tried before a jury commencing March 9, 2015. However, on March 5, 2015, the parties advised the District Court that the case has been settled and thereby dismissed the action without costs and without prejudice to the right person, upon good cause shown within 45 days, to reopen the action if settlement is not consummated.On March 27, 2015, the parties consummated a final settlement agreement and on April 24, 2015, Google paid Skyhook settlement consideration of $90 million. In return for payment of the settlement consideration, Google received dismissal of the action with prejudice, a license to the existing Skyhook patents and patent applications (and their continuations, divisionals, continuations-in-part), a three-year covenant not to sue (subject to limited exceptions) and a mutual release of claims. The settlement amount of $90 million is recorded net of approximately $29.5 million for legal fees in the statement of operations for the year ended December 31, 2015.

~~General Litigation~~

In the ordinary course of business, the Company and its consolidated subsidiaries are parties to legal proceedings and claims involving alleged infringement of third-party intellectual property rights, defamation, and other claims.business. Although it is reasonably possible ~~that the Company~~Qurate Retail may incur losses upon conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements.

~~Off-Balance Sheet Arrangements~~(16) Information About Qurate Retail's Operating Segments

~~Liberty Broadband did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on~~Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the ~~Company’s financial condition, results of operations, liquidity, capital expenditures or capital resources.~~

~~(12) Segment Information~~

~~Liberty Broadband~~video and on-line commerce industries. Qurate Retail identifies its reportable segments as (A) those consolidated ~~companies~~subsidiaries that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA or total assets and (B) those equity method affiliates whose share of earnings ~~or losses~~ represent 10% or more of ~~Liberty Broadband’s~~Qurate Retail's annual pre-tax ~~earnings (losses).~~earnings. The segment presentation for prior periods has been conformed to the current period segment presentation.

~~Liberty Broadband~~Qurate Retail evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted ~~OIBDA.~~OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per customer equivalent. In addition, ~~Liberty Broadband~~Qurate Retail reviews nonfinancial measures such as ~~subscriber growth.~~unique website visitors, conversion rates and active customers, as appropriate.

~~Liberty Broadband~~For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses (excluding all stock-based ~~compensation)~~compensation and transaction related costs). ~~Liberty Broadband~~Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses ~~including~~by identifying those items that are not directly a reflection of each ~~business’s ability to service debt and fund capital expenditures.~~business’ 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. This measure of performance excludes depreciation and amortization, ~~stock based~~stock-based compensation, certain purchase accounting adjustments, separately reported litigation settlements, transaction related costs (including restructuring, integration, and ~~restructuring~~advisory fees), and impairment charges that are included in the measurement of operating income

~~IV-38~~

~~Table of Contents~~

pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net ~~earnings,~~income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with GAAP. ~~Liberty Broadband~~Qurate Retail generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

For the year ended December 31, ~~2017, Liberty Broadband~~2020, Qurate Retail has identified the following consolidated ~~company and equity method investment~~subsidiaries as its reportable segments:

●

~~Skyhook—~~QxH– QVC U.S. and HSN market and sell a ~~wholly owned subsidiary~~wide variety of ~~the Company that provides the Precision Location Solution (a location determination service) and Geospatial Insights product (a location intelligence and data insights service).~~

~~Charter—an equity method investment that is one of the largest providers of cable services~~consumer products in the United States, ~~offering~~primarily by means of their televised shopping programs and via the Internet through their websites and mobile applications.

●

QVC International – QVC International markets and sells a wide variety of ~~entertainment, information~~consumer products in several foreign countries, primarily by means of its televised shopping programs and ~~communications solutions to residential~~via the Internet through its international websites and ~~commercial customers.~~

mobile applications.

~~Liberty Broadband’s~~II-72

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

●

Qurate Retail's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments that are also consolidated ~~companies~~subsidiaries are the same as those described in the ~~Company’s~~Company's summary of significant accounting policies in the Company’s annual financial statements. For periods in which Liberty Broadband owned Charter shares and warrants, we have included amounts attributable to Charter in the tables below. Although Liberty Broadband owns less than 100% of the outstanding shares of Charter, 100% of the Charter amounts are included in the schedule below and subsequently eliminated in order to reconcile the account totals to the Liberty Broadband consolidated financial statements.policies.

~~IV-39~~

~~Table of Contents~~

Performance Measures

Years ended December 31,

2017

2016

2015

Adjusted

Adjusted

Adjusted

Revenue

OIBDA

Revenue

OIBDA

Revenue

OIBDA

amounts in thousands

Skyhook

$
13,092

(9,496)

30,586

(2,681)

91,182

43,600

Charter

41,581,000

14,955,000

29,003,000

9,607,000

9,754,000

3,317,000

Corporate and other

—

(6,920)

—

(8,761)

—

(11,958)

41,594,092

14,938,584

29,033,586

9,595,558

9,845,182

3,348,642

Eliminate equity method affiliate

(41,581,000)

(14,955,000)

(29,003,000)

(9,607,000)

(9,754,000)

(3,317,000)

Consolidated Liberty Broadband

$
13,092

(16,416)

30,586

(11,442)

91,182

31,642


	Years ended December 31,
	2020			2019		2018
			Adjusted		Adjusted		Adjusted
	Revenue		OIBDA	Revenue	OIBDA	Revenue	OIBDA

	amounts in millions
QxH	$	8,505	1,547	8,277	1,536	8,544	1,630
QVC International		2,967	510	2,709	446	2,738	429
Zulily		1,636	83	1,571	48	1,817	108
Corporate and other		1,070	58	901	(1)	973	(13)
Inter-segment eliminations		(1)	—	—	—	(2)	—
Consolidated Qurate Retail	$	14,177	2,198	13,458	2,029	14,070	2,154

Other Information

December 31, 2017

December 31, 2016

Total

Investments

Capital

Total

Investments

Capital

assets

in affiliates

expenditures

assets

in affiliates

expenditures

amounts in thousands

Skyhook

$
24,481

—

70

30,463

—

267

Charter

146,623,000

—

8,681,000

149,067,000

—

5,325,000

Corporate and other

11,907,308

11,835,613

—

9,560,497

9,315,253

—

158,554,789

11,835,613

8,681,070

158,657,960

9,315,253

5,325,267

Eliminate equity method affiliate

(146,623,000)

—

(8,681,000)

(149,067,000)

—

(5,325,000)

Consolidated Liberty Broadband

$
11,931,789

11,835,613

70

9,590,960

9,315,253

267


	December 31, 2020			December 31, 2019

	Total		Capital	Total	Capital
	assets		expenditures	assets	expenditures

	amounts in millions
QxH	$	12,393	182	12,774	257
QVC International		2,455	36	2,268	34
Zulily		1,049	23	1,136	23
Corporate and other		1,102	16	1,127	11
Consolidated Qurate Retail	$	16,999	257	17,305	325

~~Revenue by Geographic Area~~

Years ended December 31,

2017

2016

2015

amounts in thousands

United States

$
10,315

27,806

87,739

Other countries

2,777

2,780

3,443

$
13,092

30,586

91,182

~~IV-40~~II-73

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Continued)

December 31, 2020, 2019 and 2018

The following table provides a reconciliation of consolidated segment Adjusted OIBDA to ~~Operating~~operating income ~~(loss)~~ and earnings (loss) from continuing operations before income taxes:

Years ended December 31,

2017

2016

2015

amounts in thousands

Consolidated segment Adjusted OIBDA

$
(16,416)

(11,442)

31,642

Stock-based compensation

(5,292)

(5,713)

(6,380)

Depreciation and amortization

(3,770)

(4,005)

(6,088)

Gain on legal settlement

—

—

60,450

Impairment of intangible assets

—

—

(20,669)

Operating income (loss)

(25,478)

(21,160)

58,955

Interest expense

(19,570)

(14,956)

(7,424)

Dividend and interest income

1,449

5,020

3,797

Share of earnings (loss) of affiliates, net

2,508,991

641,544

(120,962)

Realized and unrealized gains (losses) on financial instruments, net

3,098

94,122

2,619

Gain (loss) on dilution of investment in affiliate

(17,872)

770,766

(7,198)

Other, net

(18)

336

158

Earnings (loss) from continuing operations before income taxes

$
2,450,600

1,475,672

(70,055)


	Years ended December 31,
	2020		2019	2018

	amounts in millions
Consolidated segment Adjusted OIBDA	$	2,198	2,029	2,154
Stock-based compensation		(64)	(71)	(88)
Depreciation and amortization		(562)	(606)	(637)
Transaction related costs		—	(1)	(72)
Impairment of intangible assets and long lived assets		—	(1,167)	(33)
Operating income		1,572	184	1,324
Interest expense		(408)	(374)	(381)
Share of earnings (loss) of affiliates, net		(156)	(160)	(162)
Realized and unrealized gains (losses) on financial instruments, net		(110)	(251)	76
Gains (losses) on transactions, net		224	(1)	1
Tax sharing income (expense) with Liberty Broadband		(39)	(26)	32
Other, net		(32)	6	(7)
Earnings (loss) from continuing operations before income taxes	$	1,051	(622)	883

Revenue by Geographic Area

The following table summarizes net revenue generated by subsidiaries located within the identified geographic areas:

~~(13) Quarterly Financial Information (Unaudited)~~

1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

amounts in thousands

2017:








Revenue

$
3,140

3,073

3,430

3,449

Operating income (loss)

$
(6,362)

(7,333)

(5,787)

(5,996)

Net earnings (loss) attributable to Liberty Broadband Corporation Series A, Series B and Series C stockholders

$
(14,445)

(2,977)

(9,864)

2,060,953

Basic earnings (loss) attributable to Liberty Broadband Corporation Series A, Series B and Series C stockholders per common share

$
(0.08)

(0.02)

(0.05)

11.37

Diluted earnings (loss) attributable to Liberty Broadband Corporation Series A, Series B and Series C stockholders per common share

$
(0.08)

(0.02)

(0.05)

11.28


	Years ended December 31,
	2020		2019	2018

	amounts in millions
United States	$	11,119	10,666	11,233
Japan		1,132	1,028	947
Germany		978	890	943
Other foreign countries		948	874	947
	$	14,177	13,458	14,070

Long-lived Assets by Geographic Area


	December 31,
	2020		2019

	amounts in millions
United States	$	893	935
Japan		149	153
Germany		150	154
Other foreign countries		108	109
	$	1,300	1,351

1st

2nd

3rd

4th

Quarter

Quarter

Quarter

Quarter

amounts in thousands

2016:








Revenue

$
3,831

2,966

20,616

3,173

Operating income (loss)

$
(9,340)

(10,737)

6,624

(7,707)

Net earnings (loss) attributable to Liberty Broadband Corporation Series A, Series B and Series C stockholders

$
(22,241)

890,154

3,789

45,601

Basic earnings (loss) attributable to Liberty Broadband Corporation Series A, Series B and Series C stockholders per common share

$
(0.22)

6.31

0.02

0.25

Diluted earnings (loss) attributable to Liberty Broadband Corporation Series A, Series B and Series C stockholders per common share

$
(0.22)

6.28

0.02

0.25

~~IV-41~~II-74

Table of Contents

PART III

The following required information is incorporated by reference to our definitive proxy statement for our 2021 Annual Meeting of Stockholders presently scheduled to be held in the second quarter of 2021:

Item 10.

Directors, Executive Officers and Corporate Governance

Item 11.

Executive Compensation

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13.

Certain Relationships and Related Transactions, and Director Independence

Item 14.

Principal Accountant Fees and Services

We expect to file our definitive proxy statement for our 2021 Annual Meeting of Stockholders with the Securities and Exchange Commission on or before April 30, 2021.

III-1

Table of Contents

PART IV.

Item 15. Exhibits and Financial Statement Schedules.

~~SIGNATURES~~(a)(1) Financial Statements

Included in Part II of this report:


		Page No.
Qurate Retail, Inc.:
Reports of Independent Registered Public Accounting Firm		II-24 & II-25
Consolidated Balance Sheets, December 31, 2020 and 2019		II-27
Consolidated Statements of Operations, Years ended December 31, 2020, 2019 and 2018		II-29
Consolidated Statements of Comprehensive Earnings (loss), Years ended December 31, 2020, 2019 and 2018		II-30
Consolidated Statements of Cash Flows, Years ended December 31, 2020, 2019 and 2018		II-31
Consolidated Statements of Equity, Years ended December 31, 2020, 2019 and 2018		II-32
Notes to Consolidated Financial Statements, December 31, 2020, 2019 and 2018		II-33

(a)(2) Financial Statement Schedules

(i)

All schedules have been omitted because they are not applicable, not material or the required information is set forth in the financial statements or notes thereto.

(a)(3) Exhibits

Listed below are the exhibits which are filed as a part of this Report (according to the number assigned to them in Item 601 of Regulation S-K):


3 - Articles of Incorporation and Bylaws:

3.1	Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to Amendment No. 5 to the Registrant's Registration Statement on Form 8-A filed on May 24, 2018 (File No. 001-33982) (the “2018 Form 8-A”)).

3.2	Amended and Restated Bylaws of the Registrant, as amended effective April 9, 2018 (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K filed on April 10, 2018 (File No. 001-33982)).

3.3	Certificate of Designations of 8.0% Series A Cumulative Redeemable Preferred Stock (incorporated by reference Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on August 26, 2020 (File No. 001-33982).

IV-1

Table of Contents

4 - Instruments Defining the Rights of Securities Holders, including Indentures:

4.1	Form of Specimen certificate for shares of the Registrant's Series A common stock, par value $.01 per share (incorporated by reference to Exhibit 4.1 to the 2018 Form 8-A).

4.2	Form of Specimen certificate for shares of the Registrant's Series B common stock, par value $.01 per share (incorporated by reference to Exhibit 4.2 to the 2018 Form 8-A).

4.3	Specimen Certificate for shares of 8.0% Series A Cumulative Redeemable Preferred Stock (incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form 8-A filed on August 27, 2020 (File No. 001-33982)).

4.4	Description of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.*

4.5	The Registrant undertakes to furnish to the Securities and Exchange Commission, upon request, a copy of all instruments with respect to long-term debt not filed herewith.

10 - Material Contracts:

10.1	Liberty Interactive Corporation 2000 Incentive Plan (As Amended and Restated Effective November 7, 2011) (the "2000 Incentive Plan") (incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2011 filed on November 8, 2011 (File No. 001-33982) (the “Liberty 2011 10-Q”)). +

10.2	Amendment to the 2000 Incentive Plan (effective as of August 5, 2013) (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 filed on November 5, 2013 (File No. 001-33982) (the “Liberty 2013 10-Q”)). +

10.3	Liberty Interactive Corporation 2007 Incentive Plan (As Amended and Restated Effective November 7, 2011) (the "2007 Incentive Plan") (incorporated by reference to Exhibit 10.6 to the Liberty 2011 10-Q). +

10.4	Amendment to the 2007 Incentive Plan (effective as of August 5, 2013) (incorporated by reference to Exhibit 10.4 to the Liberty 2013 10-Q). +

10.5	Liberty Interactive Corporation 2010 Incentive Plan (As Amended and Restated Effective November 7, 2011) (the “2010 Incentive Plan”) (incorporated by reference to Exhibit 10.7 to the Liberty 2011 10-Q). +

10.6	Amendment to the 2010 Incentive Plan (effective August 5, 2013) (incorporated by reference to Exhibit 10.5 to the Liberty 2013 10-Q). +

10.7	Liberty Interactive Corporation 2002 Nonemployee Director Incentive Plan (As Amended and Restated Effective November 7, 2011) (the "2002 Directors Plan") (incorporated by reference to Exhibit 10.8 to the Liberty 2011 10-Q). +

10.8	Amendment to the 2002 Directors Plan (effective as of August 5, 2013) (incorporated by reference to Exhibit 10.1 to the Liberty 2013 10-Q). +

IV-2

Table of Contents

10.9	Liberty Interactive Corporation 2011 Nonemployee Director Incentive Plan (amended and restated as of December 17, 2015) (the “2011 Directors Plan”) (incorporated by reference to Exhibit 10.9 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2015 filed on February 26, 2016 (File No. 001-33982) (the “Liberty 2015 10-K”)). +

10.10	Liberty Interactive Corporation 2012 Incentive Plan (Amended and Restated as of March 31, 2015) (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2015 filed on May 8, 2015 (File No. 001-33982)). +

10.11	Liberty Interactive Corporation 2016 Omnibus Incentive Plan (incorporated by reference to Annex A to the Registrant’s Proxy Statement on Schedule 14A filed on July 8, 2016 (File No. 001-33982)). +

10.12	Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.13 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 28, 2014 (File No. 001-33982) (the “Liberty 2013 10-K”)). +

10.13	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.14 to the Liberty 2013 10-K). +

10.14	Form of Non-Qualified Stock Option Agreement under the 2000 Incentive Plan, the 2007 Incentive Plan and the 2010 Incentive Plan [for certain designated award recipients] (incorporated by reference to Exhibit 10.16 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2011 filed on February 23, 2012 (File No. 001-33982) (the “Liberty 2011 10-K”)). +

10.15	Form of Restricted Stock Award Agreement under the 2000 Incentive Plan, the 2007 Incentive Plan and the 2010 Incentive Plan [for certain designated award recipients] (incorporated by reference to Exhibit 10.19 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2009 filed on February 25, 2010 (File No. 001-33982) (the “Liberty 2009 10-K)). +

10.16	Form of Non-Qualified Stock Option Agreement under the 2002 Directors Plan and the 2011 Directors Plan (incorporated by reference to Exhibit 10.19 to the Liberty 2011 10-K). +

10.17	Form of Restricted Stock Award Agreement under the 2002 Directors Plan and the 2011 Directors Plan (incorporated by reference to Exhibit 10.20 to the Liberty 2011 10-K). +

10.18	Non-Qualified Stock Option Agreement under the 2007 Incentive Plan for Michael George dated March 2, 2011 (incorporated by reference to Exhibit 10.22 to the Liberty 2011 10-K). +

10.19	Amended and Restated Non-Qualified Stock Option Agreement under the 2000 Incentive Plan for Gregory B. Maffei (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 filed on August 8, 2012 (File No. 001-33982) (the “Liberty 2012 10-Q”)). +

10.20	Amended and Restated Non-Qualified Stock Option Agreement under the 2007 Incentive Plan for Gregory B. Maffei (incorporated by reference to Exhibit 10.2 to the Liberty 2012 10-Q). +

10.21	Employment Agreement between Michael George and QVC, Inc., effective December 16, 2015 (incorporated by reference to Exhibit 10.23 to the Liberty 2015 10-K). +

IV-3

Table of Contents

10.22	First Amendment to Employment Agreement, effective as of November 17, 2020, by and between Michael George and QVC, Inc. (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 17, 2020 (File No. 001-33982)). +

10.23	Non-Qualified Stock Option Agreement under the Liberty Interactive Corporation 2010 Incentive Plan for Gregory B. Maffei, effective December 24, 2014 (incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2015 filed on August 5, 2015 (File No. 001-33982)). +

10.24	Call Agreement, dated as of February 9, 1998 (the "Call Agreement"), between Liberty Interactive Corporation (as successor of Liberty Interactive LLC (f/k/a Liberty Media LLC, “Old Liberty”), as assignee of Tele-Communications, Inc.) and the Malone Group (incorporated by reference to Exhibit 10.26 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009 (File No. 001-33982)).

10.25	Letter, dated as of March 5, 1999, from Tele-Communications, Inc. and Old Liberty addressed to Mr. Malone and Leslie Malone relating to the Call Agreement (incorporated by reference to Exhibit 10.27 to the Liberty 2009 10-K).

10.26	Form of Indemnification Agreement between the Registrant and its executive officers/directors (incorporated by reference to Exhibit 10.29 to the Liberty 2011 10-K).

10.27	Tax Sharing Agreement, dated September 23, 2011, between Liberty Interactive Corporation, Liberty Interactive LLC and Liberty Media Corporation (as assignee of Starz (f/k/a Liberty Media Corporation)) (incorporated by reference to Exhibit 10.4 to Post-Effective Amendment No. 1 to Starz's Registration Statement on Form S-4 filed on September 23, 2011 (File No. 333-171201) (the “Starz S-4”)).

10.28	Services Agreement, dated as of September 23, 2011, by and between Liberty Interactive Corporation and Liberty Media Corporation (as assignee of Starz (f/k/a Liberty Media Corporation)) (the “Services Agreement”) (incorporated by reference to Exhibit 10.5 to the Starz S-4).

10.29	Indenture dated as of March 18, 2013 among QVC, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2013 filed on May 9, 2013 (File No. 333-184501)).

10.30	Form of the Indenture dated as of March 18, 2014 among QVC, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to QVC Inc.’s Registration Statement on Form S-4 filed on April 30, 2014 (File No. 333-195586)).

10.31	Indenture dated as of August 21, 2014 among QVC, Inc., the guarantors party thereto and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 to QVC Inc.’s Registration Statement on Form S-4 filed on October 10, 2014 (File No. 333-199254)).

10.32	Fourth Amended and Restated Credit Agreement, dated as of December 31, 2018, among QVC, Inc. and zulily, llc, as Borrowers, JPMorgan Chase Bank, N.A., as Lead Arranger, Lead Bookrunner and Administrative Agent and the parties named therein as Lenders, Co-Bookrunners, Co-Syndication Agents and Co-Documentation Agents (incorporated by reference to Exhibit 4.1 to QVC Inc.’s Current Report on Form 8-K filed on January 4, 2019 (File No. 001-38654)).

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10.33	Liberty Interactive Corporation Nonemployee Director Deferred Compensation Plan (incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended on March 31, 2015 filed on May 8, 2015 (File No. 001-33982)).+

10.34	zulily, inc. 2009 Equity Incentive Plan, as amended (incorporated by reference to Exhibit 10.1 to zulily, inc.’s Registration Statement on Form S-1 filed on October 8, 2013 (File No. 333-191617)). +

10.35	zulily, inc. 2013 Equity Plan (incorporated by reference to Exhibit 10.3 to Amendment No. 1 to zulily, inc.’s Registration Statement on Form S-1 filed on October 17, 2013 (File No. 333-191617)). +

10.36	Form of Non-Qualified Stock Option Agreement (incorporated by reference to Exhibit 10.48 to the Liberty 2015 10-K). +

10.37	Form of Restricted Stock Award Agreement (incorporated by reference to Exhibit 10.49 to the Liberty 2015 10-K). +

10.38	Form of 2017 Performance-based Restricted Stock Unit Agreement (QVCB) under the Liberty Interactive Corporation 2016 Omnibus Incentive Plan (the “2016 Incentive Plan”) for Gregory B. Maffei (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed on November 9, 2017 (File No. 001-33982) (the “2017 Q3 10-Q”)). +

10.39	Form of 2017 Term Option Agreement under the 2016 Incentive Plan for Gregory B. Maffei (incorporated by reference to Exhibit 10.2 to the 2017 Q3 10-Q). +

10.40	Form of 2017 Performance-based Restricted Stock Unit Agreement under the 2016 Incentive Plan for certain officers other than the Chief Executive Officer and Chief Legal Officer (incorporated by reference to Exhibit 10.3 to the 2017 Q3 10-Q). +

10.41	Form of Restricted Stock Units Agreement under the 2016 Incentive Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.4 to the 2017 Q3 10-Q). +

10.42	Form of Nonqualified Stock Option Agreement under the 2016 Incentive Plan for Nonemployee Directors (incorporated by reference to Exhibit 10.5 to the 2017 Q3 10-Q). +

10.43	HSN, Inc. Second Amended and Restated 2008 Stock and Annual Incentive Plan (incorporated by reference to Exhibit 10.13 to HSN, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2013 filed on February 20, 2014 (File No. 01-34061)). +

10.44	HSN, Inc. 2017 Omnibus Incentive Plan (incorporated by reference to Annex A of HSN, Inc.’s 2017 Proxy Statement on Schedule 14A filed on April 10, 2017 (File No. 01-34061)). +

10.45	Letter Agreement between Liberty Interactive Corporation and Liberty Media Corporation relating to the Services Agreement (incorporated by reference to Exhibit 10.60 to Liberty Media Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017 filed on February 28, 2018 (File No. 001-35707)).

10.46	Amendment, dated March 13, 2018, of certain Liberty Interactive Corporation incentive plans (incorporated by reference to Exhibit 10.4 to the Liberty 2018 Q1 10-Q).+

10.47	Tax Sharing Agreement, dated as of March 9, 2018, by and between Liberty Interactive Corporation and GCI Liberty, Inc. (incorporated by reference to Exhibit 10.1 to GCI Liberty, Inc’s Current Report on Form 8-K filed on March 14, 2018 (File No. 001-38385) (the “GCI March 8-K”)).

IV-5

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10.48	Indemnification Agreement, dated as of March 9, 2018, by and among Liberty Interactive Corporation, GCI Liberty, Inc., Liberty Interactive LC and LV Bridge, LLC (incorporated by reference to Exhibit 10.2 to the GCI March 8-K).

10.49	Performance-Based Restricted Stock Unit Award Agreement under the Qurate Retail, Inc. 2016 Omnibus Incentive Plan for Michael George (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 filed on November 9, 2018 (File No. 001-33982) (the “Liberty 2018 Q3 10-Q”)).+

10.50	Nonqualified Stock Option Agreement under the Qurate Retail, Inc. 2016 Omnibus Incentive Plan for Michael George (incorporated by reference to Exhibit 10.2 to the Liberty 2018 Q3 10-Q).+

10.51	Indenture, dated September 13, 2018, by and among QVC, Inc., Affiliate Investment, Inc., Affiliate Relations Holdings, Inc., AMI 2, Inc., ER Marks, Inc., QVC Global Holdings I, Inc., QVC Global Holdings II, Inc., QVC Rocky Mount, Inc., QVC San Antonio, LLC and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to QVC, Inc.’s Form 8-A filed on September 13, 2018 (File No. 001-38654) (the “2018 QVC Form 8-A”)).

10.52	First Supplemental Indenture, dated September 13, 2018, by and among QVC, Inc., Affiliate Investment, Inc., Affiliate Relations Holdings, Inc., AMI 2, Inc., ER Marks, Inc., QVC Global Holdings I, Inc., QVC Global Holdings II, Inc., QVC Rocky Mount, Inc., QVC San Antonio, LLC and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the 2018 QVC Form 8-A).

10.53	Form of QVC, Inc. 6.375% Senior Secured Notes due 2067 (incorporated by reference to Exhibit 4.3 to the 2018 QVC Form 8-A).

10.54	Second Supplemental Indenture, dated November 26, 2019, by and among QVC, Inc., Affiliate Investment, Inc., Affiliate Relations Holdings, Inc., AMI 2, Inc., ER Marks, Inc., QVC Global Holdings I, Inc., QVC Global Holdings II, Inc., QVC Rocky Mount, Inc., QVC San Antonio, LLC, QVC Deutschland GP, Inc., HSN, Inc., HSNi, LLC, HSN Holding LLC, AST Sub, Inc., Home Shopping Network En Espanol, L.L.C., Home Shopping Network En Espanol, L.P., H.O.T. Networks Holdings (Delaware) LLC, HSN of Nevada LLC, Ingenious Designs LLC, NLG Merger Corp., Ventana Television, Inc., and Ventana Television Holdings, Inc., as guarantors, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to QVC, Inc.’s Form 8-A filed on November 26, 2019 (File No. 001-38654) (the “2019 QVC Form 8-A”)).

10.55	Form of 6.250% Senior Secured Notes due 2068 (incorporated by reference to Exhibit 4.3 to the 2019 QVC Form 8-A).

10.56	Form of Amended and Restated Indemnification Agreement between the Registrant and its executive officers/directors (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 filed on May 10, 2019 (File No. 001-33982)).

10.57	Form of First Amendment to Services Agreement, effective as of December 13, 2019, between Liberty Media Corporation and Qurate Retail, Inc., Liberty Broadband Corporation, GCI Liberty, Inc. and Liberty TripAdvisor Holdings, Inc.* (incorporated by reference to Exhibit 10.62 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2019 filed on February 26, 2020 (File No. 001-33982)).+

10.58	Executive Employment Agreement, dated effective as of December 13, 2019, between Liberty Media Corporation and Gregory B. Maffei (incorporated by reference to Exhibit 10.1 to Liberty Media Corporation’s Current Report on Form 8-K filed on December 19, 2019 (File No. 001-35707)). +

10.59	Form of Annual Option Award Agreement between the Registrant and Gregory B. Maffei under the Qurate Retail, Inc. 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report filed on December 19, 2019 (File No. 001-33982) (the “December 2019 8-K”)). +

IV-6

Table of Contents

10.60	Form of Annual Performance-based Restricted Stock Unit Award Agreement between the Registrant and Gregory B. Maffei under the Qurate Retail, Inc. 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 to the December 2019 8-K). +

10.61	Form of Upfront Award Agreement between the Registrant and Gregory B. Maffei under the Qurate Retail, Inc. 2016 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to the December 2019 8-K). +

10.62	Third Supplemental Indenture, dated February 4, 2020, by and among QVC, Inc., Affiliate Investment, Inc., Affiliate Relations Holdings, Inc., AMI 2, Inc., ER Marks, Inc., QVC Global Holdings I, Inc., QVC Global Holdings II, Inc., QVC Rocky Mount, Inc., QVC San Antonio, LLC, QVC Deutschland GP, Inc., HSN, Inc., HSNi, LLC, HSN Holding LLC, AST Sub, Inc., Home Shopping Network En Espanol, L.L.C., Home Shopping Network En Espanol, L.P., H.O.T. Networks Holdings (Delaware) LLC, HSN of Nevada LLC, Ingenious Designs LLC, NLG Merger Corp., Ventana Television, Inc., and Ventana Television Holdings, Inc., as guarantors, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to QVC Inc.’s Current Report on Form 8-K (File No. 001-38654) filed on February 4, 2020 (the “February 2020 Form 8-K”)).

10.63	Form of 4.75% Senior Secured Notes due 2027 (incorporated by reference to Exhibit 4.3 to the February 2020 Form 8-K).

10.64	Qurate Retail, Inc. 2020 Omnibus Incentive Plan (incorporated by reference to Annex A to the Registrant’s Proxy Statement on Schedule 14A filed on April 14, 2020 (File No. 001-33982)). +

10.65	Fourth Supplemental Indenture, dated August 20, 2020, by and among QVC, Inc., Affiliate Investment, Inc., Affiliate Relations Holdings, Inc., AMI 2, Inc., ER Marks, Inc., QVC Global Holdings I, Inc., QVC Global Holdings II, Inc., QVC Rocky Mount, Inc., QVC San Antonio, LLC, QVC Deutschland GP, Inc., HSN, Inc., HSNi, LLC, HSN Holding LLC, AST Sub, Inc., Home Shopping Network En Espanol, L.L.C., Home Shopping Network En Espanol, L.P., H.O.T. Networks Holdings (Delaware) LLC, HSN of Nevada LLC, Ingenious Designs LLC, NLG Merger Corp., Ventana Television, Inc., and Ventana Television Holdings, Inc., as guarantors, and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on August 20, 2020 (File No. 001-38654) (the “August 2020 Form 8-K”)).

10.66	Form of 4.375% Senior Secured Notes due 2028 (incorporated by reference to Exhibit 4.3 to the August 2020 Form 8-K).

10.67	Form of Nonqualified Stock Option Agreement under the Qurate Retail, Inc. 2020 OmnibusIncentive Plan, as amended from time to time, for Nonemployee Directors.*+

10.68	Form of Restricted Stock Units Agreement under the Qurate Retail, Inc. 2020 OmnibusIncentive Plan, as amended from time to time, for Nonemployee Directors.*+

10.69	Form of Nonqualified Stock Option Agreement under the Qurate Retail, Inc. 2020 OmnibusIncentive Plan, as amended from time to time, for certain officers.*+

21	Subsidiaries of Qurate Retail, Inc.*

23.1	Consent of KPMG LLP.*

31.1	Rule 13a-14(a)/15d - 14(a) Certification.*

31.2	Rule 13a-14(a)/15d - 14(a) Certification.*

32	Section 1350 Certification.**

IV-7

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99.1	Reconciliation of Qurate Retail, Inc. Net Assets and Net Earnings to Liberty Interactive LLC Net Assets and Net Earnings. **

101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.*

101.SCH	Inline XBRL Taxonomy Extension Schema Document.*

101.CAL	Inline XBRL Taxonomy Calculation Linkbase Document.*

101.LAB	Inline XBRL Taxonomy Label Linkbase Document.*

101.PRE	Inline XBRL Taxonomy Presentation Linkbase Document.*

101.DEF	Inline XBRL Taxonomy Definition Document.*

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).*

* Filed herewith.

** Furnished herewith.

+ This document has been identified as a management contract or compensatory plan or arrangement.

Item 16. Form 10-K Summary.

Not applicable.

IV-8

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~LIBERTY INTERACTIVE CORPORATION~~


~~Date: March 1, 2018~~	By ~~/s/Gregory B. Maffei~~QURATE RETAIL, INC.
	~~Gregory B. Maffei~~
Date: February 26, 2021	By /s/ MICHAEL A. GEORGE
	Michael A. George
	Chief Executive Officer and President

Date: ~~March 1, 2018~~February 26, 2021	By ~~/s/Mark D. Carleton~~/s/ BRIAN J. WENDLING
	~~Mark D. Carleton~~Brian J. Wendling Chief Accounting Officer and Principal Financial Officer ~~(Principal~~ (Principal Financial Officer and Principal Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated.


Signature	Title	Date
~~Signature~~	~~Title~~	~~Date~~

/s/~~John C. Malone~~Gregory B. Maffei	Chairman of the Board and Director	~~March 1, 2018~~February 26, 2021
~~John C. Malone~~Gregory B. Maffei

/s/~~Gregory B. Maffei~~Michael A. George	Director, Chief Executive Officer	~~March 1, 2018~~February 26, 2021
~~Gregory B. Maffei~~Michael A. George	and President

/s/~~Mark D. Carleton~~Brian J. Wendling	Chief Accounting Officer and Principal Financial Officer	~~March 1, 2018~~February 26, 2021
~~Mark D. Carleton~~Brian J. Wendling	(Principal Financial Officer and Principal Accounting Officer)

/s/Richard N. Barton	Director	~~March 1, 2018~~February 26, 2021
Richard N. Barton

/s/~~Michael A. George~~John C. Malone	Director	~~March 1, 2018~~February 26, 2021
~~Michael A. George~~John C. Malone

/s/M. Ian G. Gilchrist	Director	~~March 1, 2018~~February 26, 2021
M. Ian G. Gilchrist

/s/Evan D. Malone	Director	~~March 1, 2018~~February 26, 2021
Evan D. Malone

/s/David E. Rapley	Director	~~March 1, 2018~~February 26, 2021
David E. Rapley

~~/s/M. LaVoy Robison~~	~~Director~~	~~March 1, 2018~~
~~M. LaVoy Robison~~

/s/Larry E. Romrell	Director	~~March 1, 2018~~February 26, 2021
Larry E. Romrell

~~IV-42~~IV-9

Table of Contents


/s/Andrea L. Wong	Director	~~March 1, 2018~~February 26, 2021
Andrea L. Wong

/s/Mark C. Vadon	Director	~~March 1, 2018~~February 26, 2021
Mark C. Vadon

/s/Fiona P. Dias	Director	February 26, 2021
Fiona P. Dias

~~IV-43~~IV-10

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Series A Common Stock
~~Series A QVC Group Common Stock, par value $.01 per share~~QRTEA	The Nasdaq Stock Market LLC
Series B ~~QVC Group~~ Common Stock ~~par value $.01 per share~~	QRTEB	The Nasdaq Stock Market LLC
8.0% Series A ~~Liberty Ventures Common~~Cumulative Redeemable Preferred Stock ~~par value $.01 per share~~	QRTEP	The Nasdaq Stock Market LLC
~~Series B Liberty Ventures Common Stock, par value $.01 per share~~	~~The Nasdaq Stock Market LLC~~


	Series A	Series B
QVC Group common stock	448,261,047	29,203,895
Liberty Ventures common stock	81,687,188	4,455,308



Series A common stock		381,046,243
Series B common stock		29,366,492


	Part I	Page

Item 1.	Business	I-3
Item 1A.	Risk Factors	~~I-23~~I-18
Item 1B.	Unresolved Staff Comments	~~I-43~~I-36
Item 2.	Properties	~~I-43~~I-36
Item 3.	Legal Proceedings	~~I-44~~I-37
Item 4.	Mine Safety Disclosures	~~I-44~~I-37

	Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	II-1
Item 6.	Selected Financial Data	II-3
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	~~II-5~~II-3
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	~~II-26~~II-20
Item 8.	Financial Statements and Supplementary Data	~~II-28~~II-21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	~~II-28~~II-21
Item 9A.	Controls and Procedures	~~II-28~~II-21
Item 9B.	Other Information	~~II-28~~II-22

	Part III
Item 10.	Directors, Executive Officers and Corporate Governance	~~III~~‑III‑1
Item 11.	Executive Compensation	~~III~~‑III‑1
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~III~~‑III‑1
Item 13.	Certain Relationships and Related Transactions, and Director Independence	~~III~~‑III‑1
Item 14.	Principal Accountant Fees and Services	~~III~~‑III‑1

	Part IV
Item 15.	Exhibits and Financial Statement Schedules	IV‑IV‑1
Item 16.	Form 10-K Summary	IV‑9IV‑8


	Years ended December 31,
Product category	2017	2016	2015
Home	34%	33%	33%
Apparel	19%	19%	17%
Beauty	17%	17%	17%
Accessories	13%	13%	13%
Electronics	9%	9%	10%
Jewelry	8%	9%	10%
Total	100%	100%	100%


	Years ended December 31,
Product category	2020	2019	2018
Home	42%	38%	38%
Beauty	18%	18%	18%
Apparel	14%	16%	16%
Accessories	11%	11%	11%
Electronics	10%	11%	11%
Jewelry	5%	6%	6%
Total	100%	100%	100%


	Liberty Ventures
	Series A (LVNTA)			Series B (LVNTB)
	High		Low	High	Low
2016
First quarter	$	40.22	29.24	36.83	33.14
Second quarter	$	36.55	30.97	36.72	34.36
Third quarter (July 1 - July 22)	$	38.59	32.76	37.87	37.33
Third quarter (July 23 - September 30) (1)	$	40.80	36.09	39.89	38.05
Fourth quarter (October 1 - November 4)	$	41.37	38.40	41.57	39.29
Fourth quarter (November 5 - December 31) (2)	$	41.74	36.54	41.94	36.93
2017
First quarter	$	45.17	36.69	46.61	38.61
Second quarter	$	55.93	44.13	56.33	53.33
Third quarter	$	62.41	50.56	59.88	51.80
Fourth quarter	$	59.90	52.43	54.30	54.30


	Series A QVC Group Common Stock (QVCA)
					Maximum Number
					(or Approximate Dollar
				Total Number of	Value) of Shares that
	Total Number	Average		Shares Purchased as Part	May Yet Be purchased
	of Shares	Price Paid per		of Publicly Announced	Under the Plans or
Period	Purchased	Share		Plans or Programs	Programs
October 1 - 31, 2017	7,736,267	$	23.03	7,736,267	$	822	million
November 1 - 30, 2017	5,901,315	$	23.23	5,901,315	$	684	million
December 1 - 31, 2017	—	$	—	—	$	684	million
Total	13,637,582			13,637,582


	Cash and cash		Available-for-
	equivalents		sale securities
	amounts in millions
QVC	$	261	—
HSNi		22
zulily		17	—
Corporate and other		30	3
Total QVC Group		330	3

Corporate and other		573	2,360
Total Ventures Group		573	2,360
Consolidated Liberty	$	903	2,363


	Payments due by period
			Less than			After
	Total		1 year	2 - 3 years	4 - 5 years	5 years
	amounts in millions
Consolidated contractual obligations
Long-term debt (1)	$	8,594	24	448	2,766	5,356
Interest payments (2)		5,743	338	667	580	4,158
Operating lease obligations		413	73	116	81	143
Build to suit lease		87	5	12	12	58
Purchase orders and other obligations		1,756	1,688	64	4	—
Total	$	16,593	2,128	1,307	3,443	9,715


	Goodwill		Trademarks	Total
	amounts in millions
QVC	$	5,190	2,428	7,618
HSNi		933	627	1,560
zulily		917	870	1,787
Corporate and other		42	4	46
	$	7,082	3,929	11,011


	Year ended December 31, 2017						Year ended December 31, 2016
	U.S. dollars		Foreign Currency Exchange Impact		Constant currency		U.S. dollars		Foreign Currency Exchange Impact		Constant currency
QVC-US	0.3	%	—	%	0.3	%	(2.2)	%	—	%	(2.2)	%
QVC-International	2.7	%	(1.3)	%	4.0	%	3.1	%	0.1	%	3.0	%


	Years ended
	December 31,		December 31,	December 31,
	2017 (3)		2016 (3)	2015 (3)
	amounts in millions
Net revenue	$	2,343	2,479	2,552
Cost of sales		(1,533)	(1,638)	(1,647)
SG&A expenses (excluding stock-based compensation and acquisition related expenses)		(590)	(582)	(605)
Adjusted OIBDA		220	259	300
Stock-based compensation		(17)	(15)	(14)
Depreciation and amortization		(31)	(29)	(29)
Acquisition and restructuring related expenses (1) (2)		(69)	—	(5)
Operating income (loss)	$	103	215	252


	Post-Acquisition:			Pre-Acquisition:
	October 1, 2015 - December 31, 2015		Deferred Revenue Adjustment	December 29, 2014 - September 30, 2015	2015 Total
Net revenue	$	426	17	918	1,361
Cost of sales		(318)	—	(660)	(978)
Operating expenses		(13)	—	(30)	(43)
SG&A expenses (excluding stock-based compensation and acquisition related expenses)		(74)	—	(195)	(269)
Adjusted OIBDA		21	17	33	71
Acquisition related expenses		—	—	(30)	(30)
Stock-based compensation		(5)	—	(14)	(19)
Depreciation and amortization		(69)	—	(14)	(83)
Deferred revenue adjustment		—	(17)	—	(17)
Operating income (loss)	$	(53)	—	(25)	(78)


	Variable rate debt				Fixed rate debt
	Principal		Weighted avg		Principal		Weighted avg
	amount		interest rate		amount		interest rate
	dollar amounts in millions
QVC Group
QVC	$	1,496	3.0	%	$	3,719	4.6	%
HSNi	$	460	3.1	%	$	—	—	%
zulily	$	267	3.0	%	$	—	—	%
Corporate and other	$	—	—	%	$	792	8.3	%
Ventures Group
Corporate and other	$	—	—	%	$	1,947	3.0	%


	2017		2016
Assets	amounts in millions
Current assets:
Cash and cash equivalents	$	903	825
Trade and other receivables, net		1,726	1,308
Inventory, net		1,411	968
Other current assets		125	68
Total current assets		4,165	3,169
Investments in available-for-sale securities and other cost investments (note 8)		2,363	1,922
Investments in affiliates, accounted for using the equity method (note 9)		309	581
Investment in Liberty Broadband measured at fair value (note 9)		3,635	3,161

Property and equipment, at cost		2,564	2,163
Accumulated depreciation		(1,223)	(1,032)
		1,341	1,131
Intangible assets not subject to amortization (note 10):
Goodwill		7,082	6,052
Trademarks		3,929	3,302
		11,011	9,354
Intangible assets subject to amortization, net (note 10)		1,248	1,005
Other assets, at cost, net of accumulated amortization		50	32
Total assets	$	24,122	20,355


	Stockholders' Equity
								Accumulated
			QVC		Liberty			other		Noncontrolling
			Group		Ventures		Additional	comprehensive		interest in
	Preferred						paid-in	earnings (loss),	Retained	equity of	Total
	Stock		Series A	Series B	Series A	Series B	capital	net of taxes	Earnings	subsidiaries	equity
	amounts in millions
Balance at January 1, 2015	$	—	5	—	1	—	4	(94)	5,757	107	5,780
Net earnings		—	—	—	—	—	—	—	869	42	911
Other comprehensive earnings (loss)		—	—	—	—	—	—	(121)	—	(1)	(122)
Stock-based compensation		—	—	—	—	—	70	—	—	—	70
Minimum withholding taxes on net share settlements of stock-based compensation		—	—	—	—	—	(30)	—	—	—	(30)
Excess tax benefits on stock-based compensation		—	—	—	—	—	16	—	—	—	16
Stock issued upon exercise of stock options		—	—	—	—	—	40	—	—	—	40
Series A QVC Group stock repurchases		—	—	—	—	—	(785)	—	—	—	(785)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	—	(58)	(58)
Acquisition of zulily		—	—	—	—	—	1,087	—	—	—	1,087
Acquisition of noncontrolling interest		—	—	—	—	—	(31)	—	—	(2)	(33)
Other		—	—	—	—	—	(1)	—	—	—	(1)
Balance at December 31, 2015	$	—	5	—	1	—	370	(215)	6,626	88	6,875
Net earnings		—	—	—	—	—	—	—	1,235	39	1,274
Other comprehensive earnings (loss)		—	—	—	—	—	—	(86)	—	1	(85)
Cumulative effect of accounting change		—	—	—	—	—	—	—	5	—	5
Stock-based compensation		—	—	—	—	—	89	—	—	—	89
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	—	(16)	—	—	—	(16)
Stock issued upon exercise of stock options		—	—	—	—	—	24	—	—	—	24
Series A QVC Group stock repurchases		—	—	—	—	—	(799)	—	—	—	(799)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	—	(39)	(39)
Distribution of Liberty Expedia Holdings		—	—	—	—	—	—	35	(493)	—	(458)
Reclassification		—	—	—	—	—	341	—	(341)	—	—
Other		—	—	—	—	—	(9)	—	—	—	(9)
Balance at December 31, 2016	$	—	5	—	1	—	—	(266)	7,032	89	6,861
Net earnings		—	—	—	—	—	—	—	2,441	46	2,487
Other comprehensive earnings (loss)		—	—	—	—	—	—	133	—	4	137
Stock-based compensation		—	—	—	—	—	123	—	—	—	123
Series A QVC Group stock repurchases		—	—	—	—	—	(765)	—	—	—	(765)
Distribution to noncontrolling interest		—	—	—	—	—	—	—	—	(40)	(40)
Stock issued upon exercise of stock options		—	—	—	—	—	5	—	—	—	5
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	—	(70)	—	—	—	(70)
Issuance of Series A QVC Group stock in connection HSNi acquisition (note 5)		—	—	—	—	—	1,343	—	—	��—	1,343
Reclassification		—	—	—	—	—	405	—	(405)	—	—
Other		—	—	—	—	—	2	—	—	—	2
Balance at December 31, 2017	$	—	5	—	1	—	1,043	(133)	9,068	99	10,083


	Balance		Additions			Balance
	beginning		Charged		Deductions-	end of
	of year		to expense	Other	write-offs	year
	amounts in millions
2017	$	99	73	(1)	(79)	92
2016	$	87	109	(1)	(96)	99
2015	$	92	84	(1)	(88)	87


		Balance beginning of year	Additions - charged to earnings	Deductions	Balance end of year
		in millions
2017	$	98	1,027	(1,023)	102
2016	$	106	1,051	(1,060)	98
2015	$	109	1,213	(1,216)	106


Cash and cash equivalents	$	22
Property and equipment		214
Other assets		752
Goodwill		950
Trademarks		676
Intangible assets subject to amortization		602
Accounts payable & accrued liabilities		(515)
Debt		(460)
Other liabilities assumed		(12)
Deferred tax liabilities		(281)
	$	1,948


	Year ended December 31,
		2015
	amounts in millions
Operating income	$	414
Gain on sale of business	$	509
Income tax (expense) benefit	$	(203)
Net earnings (loss) attributable to Expedia shareholders	$	764


	December 31, 2017				December 31, 2016
			Quoted prices			Quoted prices
			in active	Significant		in active	Significant
			markets	other		markets	other
			for identical	observable		for identical	observable
			assets	inputs		assets	inputs
Description	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)
	amounts in millions
Cash equivalents	$	655	655	—	625	625	—
Available-for-sale securities	$	2,275	2,275	—	1,846	1,846	—
Investment in Liberty Broadband	$	3,635	3,635	—	3,161	3,161	—
Debt	$	1,846	—	1,846	1,667	—	1,667


	December 31, 2017						December 31, 2016
	Percentage		Market		Carrying		Carrying
	ownership		value		amount		amount
			dollars in millions
QVC Group
HSNi (1)	100	%	$	NA	$	NA	184
Other	various			NA		40	40
Total QVC Group						40	224
Ventures Group
FTD (2)	37	%	$	73		73	216
LendingTree (3)	27	%		1,098		115	31
Other (4)	various			NA		81	110
Total Ventures Group						269	357
Consolidated Liberty					$	309	581


	Outstanding
	principal		Carrying value
	December 31,		December 31,	December 31,
	2017		2017	2016
	amounts in millions
QVC Group
Corporate level notes and debentures
8.5% Senior Debentures due 2029	$	287	285	285
8.25% Senior Debentures due 2030		504	502	501
Subsidiary level notes and facilities
QVC 3.125% Senior Secured Notes due 2019		400	399	399
QVC 5.125% Senior Secured Notes due 2022		500	500	500
QVC 4.375% Senior Secured Notes due 2023		750	750	750
QVC 4.85% Senior Secured Notes due 2024		600	600	600
QVC 4.45% Senior Secured Notes due 2025		600	599	599
QVC 5.45% Senior Secured Notes due 2034		400	399	399
QVC 5.95% Senior Secured Notes due 2043		300	300	300
QVC Bank Credit Facilities		1,763	1,763	1,896
HSNi Bank Credit Facility		460	460	NA
Other subsidiary debt		170	170	174
Deferred loan costs		—	(24)	(28)
Total QVC Group	$	6,734	6,703	6,375
Ventures Group
Corporate level debentures
4% Exchangeable Senior Debentures due 2029	$	434	316	276
3.75% Exchangeable Senior Debentures due 2030		435	318	267
3.5% Exchangeable Senior Debentures due 2031		328	342	316
0.75% Exchangeable Senior Debentures due 2043		—	2	3
1.75% Exchangeable Senior Debentures due 2046		750	868	805
Total Ventures Group	$	1,947	1,846	1,667
Total consolidated Liberty debt	$	8,681	8,549	8,042
Less debt classified as current			(996)	(876)
Total long-term debt			7,553	7,166


	For the Years ended December 31,
	2017			2016			2015
	Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV		Options Granted (000's)	Weighted Average GDFV

Series A QVC Group common stock, QVC employees (1)	3,115	$	7.86	2,860	$	7.84	2,002	$	11.87
Series A QVC Group common stock, zulily employees (1)	483	$	7.86	433	$	7.57	264	$	9.84
Series A QVC Group common stock, Liberty employees and directors (2)	518	$	7.81	421	$	8.02	2,459	$	11.63
Series A QVC Group common stock, QVC CEO (3)	NA		NA	NA		NA	1,680	$	10.40
Series B QVC Group common stock, Liberty CEO (4)	154	$	7.92	730	$	7.47	132	$	10.10
Series A Ventures Group common stock, Liberty employees and directors (2)	188	$	16.52	114	$	12.25	683	$	18.10
Series B Ventures Group common stock, Liberty CEO (4)	269	$	15.41	209	$	12.48	135	$	16.94


	Volatility
2017 grants
QVC Group options	26.9	%	-	32.7	%
Liberty Ventures options	25.9	%	-	28.9	%
2016 grants
QVC Group options	27.4	%	-	27.4	%
Liberty Ventures options	30.6	%	-	30.6	%
2015 grants
QVC Group options	27.4	%	-	39.7	%
Liberty Ventures options	30.6	%	-	42.4	%


	Foreign		Share of
	currency		AOCI
	translation		of equity
	adjustments		affiliates	AOCI
	amounts in millions
Balance at January 1, 2015	$	(75)	(19)	(94)
Other comprehensive earnings (loss) attributable to Liberty Interactive Corporation stockholders		(100)	(21)	(121)
Balance at December 31, 2015		(175)	(40)	(215)
Other comprehensive earnings (loss) attributable to Liberty Interactive Corporation stockholders		(85)	(1)	(86)
Distribution of Liberty Expedia Holdings		—	35	35
Balance at December 31, 2016	$	(260)	(6)	(266)
Other comprehensive earnings (loss) attributable to Liberty Interactive Corporation stockholders		130	3	133
Balance at December 31, 2017	$	(130)	(3)	(133)


Years ending December 31:
2018	$	78
2019	$	70
2020	$	58
2021	$	51
2022	$	42
Thereafter	$	201


	1st		2nd	3rd	4th
	Quarter		Quarter	Quarter	Quarter
	amounts in millions,
	except per share amounts
2017:
Revenue	$	2,327	2,352	2,381	3,344
Operating income	$	213	254	208	368
Earnings from continuing operations	$	519	184	308	1,476
Net earnings (loss) attributable to Liberty Interactive Corporation stockholders:
Series A and Series B QVC Group common stock	$	91	111	119	887
Series A and Series B Liberty Ventures common stock	$	416	64	177	576
Basic net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share:
Series A and Series B QVC Group common stock	$	0.20	0.25	0.27	2.07
Series A and Series B Liberty Ventures common stock	$	4.89	0.75	2.06	6.70
Diluted net earnings (loss) from continuing operations attributable to Liberty Interactive Corporation stockholders per common share:
Series A and Series B QVC Group common stock	$	0.20	0.24	0.26	2.05
Series A and Series B Liberty Ventures common stock	$	4.84	0.74	2.03	6.70
Basic net earnings (loss) attributable to Liberty Interactive Corporation stockholders per common share:
Series A and Series B QVC Group common stock	$	0.20	0.25	0.27	2.07
Series A and Series B Liberty Ventures common stock	$	4.89	0.75	2.06	6.70
Diluted net earnings (loss) attributable to Liberty Interactive Corporation stockholders per common share:
Series A and Series B QVC Group common stock	$	0.20	0.24	0.26	2.05
Series A and Series B Liberty Ventures common stock	$	4.84	0.74	2.03	6.70


	2017		2016
	amounts in thousands
Assets
Current assets:
Cash and cash equivalents	$	81,257	205,728
Derivative instruments		—	49,019
Other current assets		2,797	3,672
Total current assets		84,054	258,419
Investment in Charter, accounted for using the equity method (note 5)		11,835,613	9,315,253
Other tangible and intangible assets, net		12,073	15,803
Other assets		49	1,485
Total assets	$	11,931,789	9,590,960
Liabilities and Equity
Current liabilities:
Accounts payable and accrued liabilities	$	5,381	7,931
Current portion of debt (note 6)		—	400,000
Deferred revenue and other current liabilities		5,168	4,185
Total current liabilities		10,549	412,116
Debt (note 6)		497,370	198,512
Deferred income tax liabilities (note 7)		932,593	504,644
Other liabilities		4,376	2,596
Total liabilities		1,444,888	1,117,868
Equity
Preferred stock, $.01 par value. Authorized 50,000,000 shares; no shares issued		—	—
Series A common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 26,301,755 and 26,251,533 at December 31, 2017 and 2016, respectively		262	262
Series B common stock, $.01 par value. Authorized 18,750,000 shares; issued and outstanding 2,455,179 and 2,467,509 at December 31, 2017 and 2016, respectively		25	25
Series C common stock, $.01 par value. Authorized 500,000,000 shares; issued and outstanding 152,563,229 and 153,019,547 at December 31, 2017 and 2016, respectively		1,526	1,530
Additional paid-in capital		7,907,900	7,945,883
Accumulated other comprehensive earnings, net of taxes		8,424	7,656
Retained earnings (accumulated deficit)		2,568,764	517,736
Total equity		10,486,901	8,473,092
Commitments and contingencies (note 11)
Total liabilities and equity	$	11,931,789	9,590,960


	Range
Volatility	21.1	%	-	21.5	%
Interest rate	1.0	%	-	1.0	%
Dividend yield	0	%	-	0	%