UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q


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

For the quarterly period ended September 30, ~~2021~~2022



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

For the transition period from to

Commission File Number 001-33982

QURATE RETAIL, INC.

(Exact name of Registrant as specified in its charter)

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

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

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

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


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

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

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

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


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

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

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

The number of outstanding shares of Qurate Retail, Inc.'s common stock as of October 31, ~~2021~~2022 was:


Series A common stock		~~388,566,013~~373,838,128
Series B common stock		~~8,177,190~~8,373,512

Table of Contents

Table of Contents


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited)		I-3
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited)		I-5
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)		I-6
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)		I-7
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited)		I-8
QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)		I-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		I-25
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		~~I-37~~I-38
Item 4. Controls and Procedures.		I-39

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

SIGNATURES		~~II-3~~II-4

I-2

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)

September 30,

December 31,

2021

2020

amounts in millions

Assets

Current assets:

Cash and cash equivalents

$
798

806

Trade and other receivables, net of allowance for doubtful accounts of $103 million and $132 million, respectively

1,185

1,640

Inventory, net

1,742

1,301

Indemnification agreement receivable

394

345

Other current assets

418

473

Total current assets

4,537

4,565

Property and equipment, net

1,196

1,300

Intangible assets not subject to amortization (note 5):

Goodwill

6,592

6,638

Trademarks

3,168

3,168

9,760

9,806

Intangible assets subject to amortization, net (note 5)

794

779

Other assets, at cost, net of accumulated amortization

673

549

Total assets

$
16,960

16,999


	September 30,		December 31,
	2022		2021

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

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)


	September 30,		December 31,	September 30,		December 31,
	2021		2020	2022		2021

	amounts in millions,			amounts in millions,
	except share amounts			except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	1,238	1,305	$	977	1,429
Accrued liabilities		1,034	1,418		940	1,236
Current portion of debt, $1,983 million and $1,750 million measured at fair value (note 6)		1,983	1,750
Current portion of debt, $389 million and $1,315 million measured at fair value (note 6)					603	1,315
Other current liabilities		190	231		214	244
Total current liabilities		4,445	4,704		2,734	4,224
Long-term debt (note 6)		5,311	5,186
Long-term debt, $310 million and zero measured at fair value (note 6)					5,303	5,674
Deferred income tax liabilities		1,318	1,359		1,447	1,350
Preferred stock (note 7)		1,260	1,249		1,266	1,261
Other liabilities		712	768		698	707
Total liabilities		13,046	13,266		11,448	13,216
Equity
Stockholders' equity:
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 391,202,469 shares at September 30, 2021 and 382,165,550 shares at December 31, 2020		4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,177,190 shares at September 30, 2021 and 29,366,492 shares at December 31, 2020		—	—
Series C common stock, $.01 par value. Authorized 400,000,000 shares; 0 shares issued		—	—
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 373,833,469 shares at September 30, 2022 and 371,132,684 shares at December 31, 2021					4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,373,512 shares at September 30, 2022 and 8,163,190 shares at December 31, 2021					—	—
Series C common stock, $.01 par value. Authorized 400,000,000 shares; no shares issued					—	—
Additional paid-in capital		—	—		38	—
Accumulated other comprehensive earnings (loss), net of taxes		(60)	72		(194)	(79)
Retained earnings		3,822	3,522		387	2,925
Total stockholders' equity		3,766	3,598		235	2,850
Noncontrolling interests in equity of subsidiaries		148	135		113	136
Total equity		3,914	3,733		348	2,986
Commitments and contingencies (note 9)
Commitments and contingencies (note 8)
Total liabilities and equity	$	16,960	16,999	$	11,796	16,202

See accompanying notes to condensed consolidated financial statements.

I-4

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)

Three months ended

Nine months ended

September 30,

September 30,


2021

2020

2021

2020

amounts in millions, except per share amounts

Total revenue, net

$
3,144

3,383

9,985

9,725

Operating costs and expenses:

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

2,069

2,178

6,504

6,328

Operating expense

204

203

627

605

Selling, general and administrative, including stock-based compensation (note 2)

458

455

1,378

1,323

Depreciation and amortization

139

141

396

427

2,870

2,977

8,905

8,683

Operating income (loss)

274

406

1,080

1,042

Other income (expense):

Interest expense

(121)

(98)

(356)

(290)

Share of earnings (losses) of affiliates, net

(24)

(32)

(78)

(96)

Realized and unrealized gains (losses) on financial instruments, net (note 4)

41

(12)

101

(127)

Gains (losses) on transactions, net

—

223

—

224

Other, net

—

(65)

(10)

(65)

(104)

16

(343)

(354)

Earnings (loss) before income taxes

170

422

737

688

Income tax (expense) benefit

(20)

(70)

(113)

(111)

Net earnings (loss)

150

352

624

577

Less net earnings (loss) attributable to the noncontrolling interests

23

14

69

39

Net earnings (loss) attributable to Qurate Retail, Inc. shareholders

$
127

338

555

538

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

$
0.31

0.81

1.36

1.29

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

$
0.31

0.80

1.32

1.28


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

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

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

See accompanying notes to condensed consolidated financial statements.

I-5

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)


	Three months ended			Nine months ended		Three months ended			Nine months ended
	September 30,			September 30,		September 30,			September 30,
	2021		2020	2021	2020	2022		2021	2022	2021

	amounts in millions					amounts in millions
Net earnings (loss)	$	150	352	624	577	$	(2,736)	150	(2,502)	624
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		(28)	49	(92)	45		(127)	(28)	(330)	(92)
Recognition of previously unrealized losses (gains) on debt, net		—	—	—	(1)		(14)	—	(14)	—
Comprehensive earnings (loss) attributable to debt credit risk adjustments		(13)	(68)	(50)	31		30	(13)	204	(50)
Other comprehensive earnings (loss)		(41)	(19)	(142)	75		(111)	(41)	(140)	(142)
Comprehensive earnings (loss)		109	333	482	652		(2,847)	109	(2,642)	482
Less comprehensive earnings (loss) attributable to the noncontrolling interests		22	16	59	43		5	22	16	59
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	87	317	423	609	$	(2,852)	87	(2,658)	423

See accompanying notes to condensed consolidated financial statements.

I-6

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)

Nine months ended

September 30,

2021

2020

amounts in millions

Cash flows from operating activities:

Net earnings (loss)

$
624

577

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

Depreciation and amortization

396

427

Stock-based compensation

54

46

Share of (earnings) losses of affiliates, net

78

96

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

(101)

127

(Gains) losses on transactions, net

—

(224)

Deferred income tax expense (benefit)

(35)

19

Other, net

15

52

Changes in operating assets and liabilities

Decrease (increase) in accounts receivable

439

720

Decrease (increase) in inventory

(453)

(63)

Decrease (increase) in prepaid expenses and other assets

85

69

(Decrease) increase in trade accounts payable

(48)

52

(Decrease) increase in accrued and other liabilities

(339)

(43)

Net cash provided (used) by operating activities

715

1,855

Cash flows from investing activities:

Investments in and loans to cost and equity investees

(177)

(88)

Capital expenditures

(169)

(165)

Expenditures for television distribution rights

(184)

(41)

Cash proceeds from dispositions of investments

10

269

Proceeds from sale of fixed assets

40

—

Other investing activities, net

(3)

—

Net cash provided (used) by investing activities

(483)

(25)

Cash flows from financing activities:

Borrowings of debt

394

1,300

Repayments of debt

(284)

(2,077)

Repurchases of Qurate Retail common stock

(216)

—

Withholding taxes on net settlements of stock-based compensation

(25)

(3)

Payments for issuances of financial instruments

(107)

(25)

Proceeds from settlements of financial instruments

88

31

Dividends paid to noncontrolling interest

(46)

(46)

Dividends paid to common shareholders

(14)

(626)

Other financing activities, net

(9)

(18)

Net cash provided (used) by financing activities

(219)

(1,464)

Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash

(20)

5

Net increase (decrease) in cash, cash equivalents and restricted cash

(7)

371

Cash, cash equivalents and restricted cash at beginning of period

814

681

Cash, cash equivalents and restricted cash at end of period

$
807

1,052


	Nine months ended
	September 30,
	2022		2021

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

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


		September 30,	December 31,		September 30,	December 31,
		2021	2020		2022	2021

	in millions			in millions
Cash and cash equivalents	$	798	806	$	624	587
Restricted cash included in other current assets		9	8		9	9
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows	$	807	814	$	633	596

See accompanying notes to condensed consolidated financial statements.

I-7

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)



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

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

Stockholders' Equity

Accumulated

Additional

other

Noncontrolling

Preferred

Common stock

paid-in

comprehensive

Retained

interest in equity

Total


stock

Series A

Series B

capital

earnings (loss)

earnings

of subsidiaries

equity

amounts in millions

Balance at January 1, 2021

$
—

4

—

—

72

3,522

135

3,733

Net earnings (loss)

—

—

—

—

—

555

69

624

Other comprehensive earnings (loss)

—

—

—

—

(132)

—

(10)

(142)

Stock compensation

—

—

—

51

—

—

—

51

Series A Qurate Retail stock repurchases

—

—

—

(239)

—

—

—

(239)

Distribution to noncontrolling interest

—

—

—

—

—

—

(46)

(46)

Withholding taxes on net share settlements of stock-based compensation

—

—

—

(25)

—

—

—

(25)

Other

—

—

—

(46)

—

4

—

(42)

Reclassification

—

—

—

259

—

(259)

—

—

Balance at September 30, 2021

$
—

4

—

—

(60)

3,822

148

3,914



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

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

I-8

Table of Contents

Stockholders' Equity

Accumulated

Additional

other

Noncontrolling

Preferred

Common stock

paid-in

comprehensive

Retained

interest in equity

Total


stock

Series A

Series B

capital

earnings (loss)

earnings

of subsidiaries

equity

amounts in millions

Balance at June 30, 2021

$
—

4

—

—

(20)

3,787

141

3,912

Net earnings (loss)

—

—

—

—

—

127

23

150

Other comprehensive earnings (loss)

—

—

—

—

(40)

—

(1)

(41)

Stock compensation

—

—

—

18

—

—

—

18

Series A Qurate Retail stock repurchases

—

—

—

(134)

—

—

—

(134)

Distribution to noncontrolling interest

—

—

—

—

—

—

(15)

(15)

Withholding taxes on net share settlements of stock-based compensation

—

—

—

(1)

—

—

—

(1)

Other

—

—

—

24

—

1

—

25

Reclassification

—

—

—

93

—

(93)

—

—

Balance at September 30, 2021

$
—

4

—

—

(60)

3,822

148

3,914

~~I-8~~

~~Table of Contents~~

Stockholders' Equity

Accumulated

Additional

other

Noncontrolling

Preferred

Common stock

paid-in

comprehensive

Retained

interest in equity

Total


stock

Series A

Series B

capital

earnings (loss)

earnings

of subsidiaries

equity

amounts in millions

Balance at January 1, 2020

$
—

4

—

—

(55)

4,891

132

4,972

Net earnings (loss)

—

—

—

—

—

538

39

577

Other comprehensive earnings (loss)

—

—

—

—

71

—

4

75

Stock compensation

—

—

—

44

—

—

—

44

Distribution to noncontrolling interest

—

—

—

—

—

—

(46)

(46)

Distribution of dividends to common shareholders

—

—

—

—

—

(1,898)

—

(1,898)

Other

—

—

—

(17)

—

—

—

(17)

Balance at September 30, 2020

$
—

4

—

27

16

3,531

129

3,707



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

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

Stockholders' Equity

Common stock

Accumulated

Qurate

Additional

other

Noncontrolling

Preferred

Retail

paid-in

comprehensive

Retained

interest in equity

Total


stock

Series A

Series B

capital

earnings (loss)

earnings

of subsidiaries

equity

amounts in millions

Balance at June 30, 2020

$
—

4

—

25

37

5,091

129

5,286

Net earnings (loss)

—

—

—

—

—

338

14

352

Other comprehensive income (loss)

—

—

—

—

(21)

—

2

(19)

Stock compensation

—

—

—

17

—

—

—

17

Distribution to noncontrolling interest

—

—

—

—

—

—

(16)

(16)

Distribution of dividends to common shareholders

—

—

—

—

—

(1,898)

—

(1,898)

Other

—

—

—

(15)

—

—

—

(15)

Balance at September 30, 2020

$
—

4

—

27

16

3,531

129

3,707



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

	amounts in millions
Balance at June 30, 2021	$	—	4	—	—	(20)	3,743	141	3,868
Net earnings (loss)		—	—	—	—	—	127	23	150
Other comprehensive income (loss)		—	—	—	—	(40)	—	(1)	(41)
Stock-based compensation		—	—	—	18	—	—	—	18
Series A Qurate Retail stock repurchases		—	—	—	(134)	—	—	—	(134)
Distribution to noncontrolling interest		—	—	—	—	—	—	(15)	(15)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(1)	—	—	—	(1)
Other		—	—	—	24	—	1	—	25
Reclassification		—	—	—	93	—	(93)	—	—
Balance at September 30, 2021	$	—	4	—	—	(60)	3,778	148	3,870

See accompanying notes to condensed consolidated financial statements.

I-9

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Qurate Retail, Inc. and its controlled subsidiaries (collectively, "Qurate Retail," the "Company," “Consolidated Qurate Retail,” “us,” “we,” or “our” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. Qurate Retail is made up of wholly-owned subsidiaries QVC, Inc. (“QVC”), which includes HSN, Inc. (“HSN”), Cornerstone Brands, Inc. (“Cornerstone”), Zulily, LLC (“Zulily”), and other cost and equity method investments.

Qurate Retail is primarily engaged in the video and online commerce industries in North America, Europe and Asia. The businesses of the Company’s wholly-owned subsidiaries, QVC, Cornerstone and Zulily, are seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.

The accompanying (a) condensed consolidated balance sheet as of December 31, ~~2020,~~2021, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Qurate Retail's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 10-K”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Qurate Retail considers (i) fair value measurements, (ii) accounting for income taxes, and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.

In December 2019, a new coronavirus (“COVID-19”) was reported to have surfaced in Wuhan, China and has subsequently spread across the globe causing a global pandemic, impacting all countries where Qurate Retail operates. As a result of the spread of COVID-19, certain local governmental agencies have imposed travel restrictions, local quarantines or stay at home restrictions to contain the spread, which has caused a significant disruption to most sectors of the economy.

Management is not presently aware of any events or circumstances arising from COVID-19 that would require the Company to update the estimates, judgments or revise the carrying value of our assets or liabilities. Management's estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the consolidated financial statements. Actual results could differ from estimates, and any such differences may be material to our financial statements.

As a result of repurchases of Series A Qurate Retail common stock (“QRTEA”) and other equity transactions, the Company’s additional paid-in capital balance was in a deficit position as of September 30, 2021. In order to ensure that the additional paid-in capital account is not negative, we reclassified the amount of the deficit ($259 million) at September 30, 2021 to retained earnings.

Qurate Retail has entered into certain agreements with Liberty Media Corporation ("LMC") (for accounting purposes, a related party of the Company), a separate publicly traded company. These agreements include a reorganization agreement, services agreement and facilities sharing agreement. As a result of certain corporate transactions, LMC and Qurate Retail may have obligations to each other for certain tax related matters. Neither Qurate Retail nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with a split-off transaction that occurred in the first quarter of 2018 (the “GCI Liberty Split-Off”), Qurate Retail and GCI Liberty, Inc. (“GCI Liberty”) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty agreed to indemnify Qurate Retail for taxes and tax-related losses

~~I-10~~

~~Table of Contents~~

~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

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~~50-

I-10

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

percent or greater interest (measured by vote or value) in the stock of GCI Liberty (or any successor corporation). Following a merger between Liberty Broadband Corporation (“Liberty Broadband”) and GCI Liberty, Liberty Broadband (for accounting purposes, a related party of the Company) has assumed the tax sharing agreement.

In December 2019, the Company entered into an amendment to the services agreement in connection with LMC’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s Chairman of the Board (the “Chairman” or “Mr. Maffei”). Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., and Liberty Broadband (collectively, the “Service Companies”) or reimbursed to LMC, in each case, based on allocations among LMC and the Service Companies set forth in the amended services agreement, currently set at ~~17%~~13% for the Company.

The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between Qurate Retail and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides Qurate Retail with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. Qurate Retail reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for Qurate Retail's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Qurate Retail. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with Qurate Retail. Under these various agreements, approximately $1 million and $2 million was reimbursable to LMC for ~~both of~~ the three months ended September 30, 2022 and 2021, respectively, and ~~2020,~~$6 million and $8 ~~million and $7~~ million was reimbursable to LMC for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Qurate Retail had a tax sharing payable to LMC and Liberty Broadband in the amount of approximately ~~$122~~$18 million and ~~$129~~$96 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively, included in Other liabilities in the condensed consolidated balance sheets.

Revision of Prior Period Financial Information~~On November 4,~~

The Company has revised its condensed consolidated financial statements and related notes included herein to correct immaterial errors in depreciation expense reported in periods prior to 2021, ~~Qurate Retail announced that its Board of Directors declared a special cash dividend~~along with deferred tax adjustments. Revisions have been reflected in the ~~amount of $1.25 per common share for an aggregate cash dividend of approximately $495~~comparative 2021 financial statements to reduce property and equipment, net by $47 million, ~~based on shares outstanding~~reduce deferred income tax liabilities by $3 million and reduce retained earnings by $44 million, including the opening balance as of October 31, 2021 (to be updated for actual shares outstanding as of the record date). The dividend is payable on November 22, 2021 to stockholders of record of Qurate Retail’s Series A and Series B common stock as of the close of business on November 15,January 1, 2021.

(2) Stock-Based Compensation

The Company has granted to certain of its directors, employees and employees of its subsidiaries, restricted stock (“RSAs”), restricted stock units (“RSUs”) and options to purchase shares of the Company’s common stock (collectively, "Awards"). The Company measures the cost of employee services received in exchange for an equity classified Award (such as stock options and restricted stock) based on the grant-date fair value (“GDFV”) of the Award, and recognizes that cost over the period during which the employee is required to provide service (usually the vesting period of the Award). The Company measures the cost of employee services received in exchange for a liability classified Award based on the current fair value of the Award, and remeasures the fair value of the Award at each reporting date.

Included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations are $15 million and $19 million of stock-based compensation during ~~both of~~ the three months ended September 30, 2022 and 2021, respectively, and ~~2020,~~$46 million and $54 ~~million and $46~~ million of stock-based compensation during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

I-11

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Qurate Retail—RSUs

The following table presents the number and weighted average GDFV of ~~options~~RSUs granted by the Company during the nine months ended September 30, ~~2021:~~2022:


	Nine months ended			Nine months ended
	September 30, 2021			September 30, 2022
	Options Granted (000's)	Weighted Average GDFV		RSUs Granted (000's)	Weighted Average GDFV

Series A Qurate Retail common stock, QVC and HSN employees (1)	895	$	6.75
Series A Qurate Retail common stock, Zulily employees (1)	79	$	6.74
Series A Qurate Retail common stock, Qurate Retail employees (2)	63	$	6.18
Series A Qurate Retail common stock, David Rawlinson II (3)	1,185	$	5.02
Series A Qurate Retail common stock, subsidiary employees (1)				11,101	$	4.82
Series A Qurate Retail common stock, Qurate Retail employees and directors (2)				217	$	4.91
Series A Qurate Retail common stock, Qurate Retail President and CEO (3)				596	$	4.91
Series B Qurate Retail common stock, Qurate Retail Chairman of the Board (4)				327	$	4.95

(1)

Grants mainly vest ~~semi-annually~~equally over ~~four~~three years.

(2)

Grants mainly vest ~~between~~ ~~two~~ ~~and three years.~~one year from the month of grant, subject to the satisfaction of certain performance objectives.

(3)

Grant vests ~~in 2 equal tranches on December 31, 2023 and December 31, 2024.~~one year from the month of grant, subject to the satisfaction of certain performance objectives. Grant was made in connection with the employment agreement of ~~Mr. Rawlinson,~~our President and Chief Executive ~~Officer~~Officer.

(4)

Grant vests one year from the month of grant, subject to the ~~Company (see note 8).~~satisfaction of certain performance objectives. Grant was made in connection with our Chairman’s employment agreement.

During the nine months ended September 30, 2021, Qurate Retail granted to employees and directors 4.9 million RSUs of QRTEA, which RSUs have a GDFV of $12.87 per share and generally vest annually over four years. In connection with Gregory B. Maffei’s employment agreement, during the nine months ended September 30, 2021, Qurate Retail granted 229 thousand

For awards that are performance-based, ~~RSUs of QRTEA to Mr. Maffei. The Series A RSUs had a GDFV of $12.90 per share at the time they were granted and will cliff vest one year from the month of grant, subject to the satisfaction of certain~~ performance objectives. As a result of the Letter Agreement discussed in Note 8, during the nine months ended September 30, 2021, Qurate Retail granted 1.1 million time-based RSAs of Series B Qurate Retail common stock (“QRTEB”) to Mr. Maffei, which RSAs have a GDFV of $13.65 per share and vest in 2 equal tranches on December 10, 2024 and June 3, 2026, subject to earlier vesting under certain circumstances. During the nine months ended September 30, 2021, Qurate Retail also granted 423 thousand performance-based RSUs and 423 thousand time-based RSUs of QRTEA to Mike George, the former Chief Executive Officer (see note 8). Both the performance-based and time-based Series A RSUs had a ~~GDFV~~ of $12.90 per share at the time they were granted. The time-based RSUs vest on December 10, 2021, and the performance-based RSUs will cliff vest one year from the month of grant, subject to the satisfaction of certain performance objectives. Also during the nine months ended September 30, 2021, Qurate Retail granted 143 thousand performance-based RSUs and 509 thousand time-based RSUs of QRTEA to Mr. Rawlinson in connection with his employment agreement. Both the performance-based and time-based Series A RSUs had a ~~GDFV~~ of $10.50 per share at the time they were granted. The time-based RSUs vest over three years, and the performance-based RSUs cliff vest in March 2022, subject to the satisfaction of certain performance objectives. Performance objectives, which are subjective, are considered in determining the timing and amount of compensation expense recognized. When the satisfaction of the performance objectives becomes probable, the Company records compensation expense. The probability of satisfying the performance objectives is assessed at the end of each reporting period.

~~The Company has calculated~~Pursuant to the ~~GDFV for all of its equity classified Awards and any subsequent remeasurement of its liability classified Awards using the Black-Scholes-Merton Model. The Company estimates the expected term~~terms of the ~~Awards based~~Stock Exchange Agreement, dated as of June 3, 2021, by and between Mr. Maffei and the Company, on ~~historical exercise and forfeiture data. The volatility used in~~March 25, 2022, Mr. Maffei transferred to the ~~calculation for Awards is based on the historical volatility~~Company an aggregate of 229,022 shares of Series A common stock of Qurate ~~Retail's~~Retail (“QRTEA”) received by Mr. Maffei upon vesting of the performance-based restricted stock unit award granted to Mr. Maffei on March 10, 2021 and in exchange, the ~~implied volatility~~Company issued to Mr. Maffei an equivalent number of ~~publicly traded~~shares of Series B common stock of Qurate Retail ~~options. The Company uses a 0 dividend rate and~~(“QRTEB”). Each share of QRTEB stock is convertible, at the ~~risk-free rate for Treasury Bonds with a term similar to that~~option of the ~~subject options.~~holder, into one share of QRTEA.

Qurate Retail—Outstanding Awards

The following tables present the number and weighted average exercise price ("WAEP") of the ~~Awards~~options to purchase Qurate Retail common stock granted to certain officers, employees and directors of the Company, as well as the weighted average remaining life and aggregate intrinsic value of the ~~Awards.~~options.



				Weighted		Aggregate
				average		intrinsic
	Series A			remaining		value
	(000's)	WAEP		life		(millions)
Options outstanding at January 1, 2022	42,110	$	9.23
Granted	—	$	—
Exercised	(392)	$	2.26
Forfeited/Cancelled	(4,705)	$	10.70
Options outstanding at September 30, 2022	37,013	$	9.12	2.8	years	$	—
Options exercisable at September 30, 2022	25,260	$	10.81	2.0	years	$	—

I-12

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Weighted

Aggregate

average

intrinsic

Series A

remaining

value

(000's)

WAEP

life

(millions)

Outstanding at January 1, 2021

40,553

$
10.61

Granted

2,222

$
11.63

Exercised

(2,304)

$
5.94

Forfeited/Cancelled

(3,210)

$
12.96

Outstanding at September 30, 2021

37,261

$
10.76

3.7
years

$
79

Exercisable at September 30, 2021

22,420

$
13.65

2.5
years

$
17



				Weighted		Aggregate
				average		intrinsic
	Series B			remaining		value
	(000's)	WAEP		life		(millions)
Options outstanding at January 1, 2022	2,221	$	12.25
Granted	—	$	—
Exercised	—	$	—
Forfeited/Cancelled	—	$	—
Options outstanding at September 30, 2022	2,221	$	12.25	1.0	year	$	—
Options exercisable at September 30, 2022	2,221	$	12.25	1.0	year	$	—

Weighted

Aggregate

average

intrinsic

Series B

remaining

value

(000's)

WAEP

life

(millions)

Outstanding at January 1, 2021

3,243

$
15.39

Granted

—

$
—

Exercised

—

$
—

Forfeited/Cancelled

(1,335)

$
16.93

Outstanding at September 30, 2021

1,908

$
14.31

2.0
years

$
—

Exercisable at September 30, 2021

1,908

$
14.31

2.0
years

$
—

The following table presents the number and weighted average GDFV of RSUs granted to certain officers, employees and directors of the Company.


		Weighted			Weighted
	Series A	Average		Series B	Average
	(000's)	GDFV		(000's)	GDFV
RSUs outstanding at January 1, 2022	12,905	$	9.38	—	$	—
Granted	11,914	$	4.83	327	$	4.95
Vested	(3,859)	$	10.02	—	$	—
Forfeited/Cancelled	(3,479)	$	7.54	—	$	—
RSUs outstanding at September 30, 2022	17,481	$	6.50	327	$	4.95

As of September 30, ~~2021,~~2022, Qurate Retail also had ~~12.9 million QRTEA RSUs and~~ 1.1 million QRTEB RSAs ~~outstanding with~~and 95 thousand Qurate Retail 8.0% Series A Cumulative Redeemable Preferred Stock RSAs and RSUs outstanding. The QRTEB unvested RSAs had a weighted average GDFV of ~~$9.76 and~~ $13.65 per share, ~~respectively.~~and 82 thousand of the Qurate Retail 8.0% Series A Cumulative Redeemable Preferred Stock unvested RSUs had an incremental cost of $49.50 per share.

As of September 30, ~~2021,~~2022, the total unrecognized compensation cost related to unvested Awards was approximately ~~$121~~$105 million. Such amount will be recognized in the Company's consolidated statements of operations over a weighted average period of approximately ~~2.6~~2.3 years.

As of September 30, ~~2021,~~2022, Qurate Retail reserved for issuance upon exercise of outstanding stock options approximately ~~37.3~~37.0 million shares of QRTEA and ~~1.9~~2.2 million shares of QRTEB common stock.

(3) Earnings (Loss) Per Common Share

Basic earnings (loss) per common share ("EPS") is computed by dividing net earnings (loss) by the weighted average number of common shares outstanding ("WASO") for the period. Diluted EPS presents the dilutive effect on a per share basis of potential common shares as if they had been converted at the beginning of the periods presented. Potentially dilutive shares are excluded from the computation of diluted EPS during periods in which losses are reported since the result would be antidilutive.

Excluded from diluted EPS for the three months ended September 30, 2021 and 2020 are 22 million and 29 million potential common shares, respectively, because their inclusion would have been antidilutive. Excluded from diluted EPS for the nine months ended September 30, 2021 and 2020 are 22 million and 29 million potential common shares, respectively, because their inclusion would have been antidilutive.

Qurate Retail Common Stock

Three months ended

Nine months ended

September 30,

September 30,

2021

2020

2021

2020

number of shares in millions

Basic WASO

404

417

408

417

Potentially dilutive shares

12

4

12

3

Diluted WASO

416

421

420

420

I-13

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Excluded from diluted EPS for the three months ended September 30, 2022 and 2021 are 34 million and 22 million potential common shares, respectively, because their inclusion would have been antidilutive. Excluded from diluted EPS for the nine months ended September 30, 2022 and 2021 are 32 million and 22 million potential common shares, respectively, because their inclusion would have been antidilutive.


	Qurate Retail Common Stock
	Three months ended		Nine months ended
	September 30,		September 30,
	2022	2021	2022	2021

	number of shares in millions
Basic WASO	381	404	380	408
Potentially dilutive shares	1	12	3	12
Diluted WASO	382	416	383	420

(4) Assets and Liabilities Measured at Fair Value

For assets and liabilities required to be reported at fair value, GAAP provides a hierarchy that prioritizes inputs to valuation techniques used to measure fair value into three broad levels. Level 1 inputs are quoted market prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2 inputs are inputs, other than quoted market prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability.

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


	Fair Value Measurements at				Fair Value Measurements at			Fair Value Measurements at				Fair Value Measurements at
	September 30, 2021				December 31, 2020			September 30, 2022				December 31, 2021
			Quoted			Quoted				Quoted			Quoted
			prices			prices				prices			prices
			in active	Significant		in active	Significant			in active	Significant		in active	Significant
			markets for	other		markets for	other			markets for	other		markets for	other
			identical	observable		identical	observable			identical	observable		identical	observable
			assets	inputs		assets	inputs			assets	inputs		assets	inputs
Description	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)	Total		(Level 1)	(Level 2)	Total	(Level 1)	(Level 2)

	amounts in millions							amounts in millions
Cash equivalents	$	260	260	—	290	290	—	$	314	314	—	149	149	—
Indemnification asset	$	394	—	394	345	—	345	$	35	—	35	324	—	324
Financial instrument asset	$	92	—	92	23	—	23
Debt	$	1,983	—	1,983	1,750	—	1,750	$	699	—	699	1,315	—	1,315

The majority of the Company's Level 2 financial assets and liabilities are primarily debt instruments and derivative instruments with quoted market prices that are not considered to be traded on "active markets," as defined in GAAP. The fair values for such instruments are derived from a typical model using observable market data as the significant inputs.

The indemnification asset relates to Liberty Broadband’s agreement to indemnify Liberty Interactive LLC (“LI LLC”) and pertains to the ability of holders of LI LLC’s 1.75% exchangeable debentures due 2046 (the “1.75% Exchangeable Debentures”) 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 condensed consolidated balance sheets as of September 30, ~~2021~~2022 represents the fair value of the estimated exchange feature included in the 1.75% Exchangeable Debentures primarily based on market observable inputs (Level 2). As of September 30, ~~2021,~~2022, a holder of the 1.75% Exchangeable Debentures ~~has~~does not have the ability to exchange and, accordingly, such indemnification asset is included as a ~~current~~long-term asset in our condensed consolidated balance sheet as of that date.

~~Realized and Unrealized Gains (Losses) on Financial Instruments~~

~~Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:~~

Three months ended

Nine months ended

September 30,

September 30,


2021

2020

2021

2020

amounts in millions

Equity securities

48

2

98

(2)

Exchangeable senior debentures

(50)

(145)

(183)

(225)

Indemnification asset

8

94

49

107

Other financial instruments

35

37

137

(7)

$
41

(12)

101

(127)

I-14

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Realized and Unrealized Gains (Losses) on Financial Instruments

Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:


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

	amounts in millions
Equity securities		—	48	(5)	98
Exchangeable senior debentures		130	(50)	320	(183)
Indemnification asset		(138)	8	(287)	49
Other financial instruments		—	35	1	137
	$	(8)	41	29	101

The Company has elected to account for its exchangeable debt using the fair value option. Changes in the fair value of the exchangeable senior debentures recognized in the condensed consolidated statement of operations are primarily due to market factors primarily driven by changes in the fair value of the underlying shares into which the debt is exchangeable. The Company isolates the portion of the unrealized gain (loss) attributable to the change in the instrument specific credit risk and recognizes such amount in other comprehensive earnings (loss). The change in the fair value of the exchangeable senior debentures attributable to changes in the instrument specific credit risk was a ~~loss~~gain of ~~$16~~$22 million and a loss of ~~$90~~$16 million for the three months ended September 30, 2022 and 2021, respectively, and ~~2020, respectively,~~a gain of $246 million and a loss of $60 ~~million and a gain of $39~~ million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The cumulative change was a gain of ~~$133~~$394 million as of September 30, ~~2021.~~2022, net of the recognition of previously unrecognized gains and losses.

(5) Intangible Assets

Goodwill

Changes in the carrying amount of goodwill are as follows:


					Corporate and						Corporate and
	QxH		QVC Int'l	Zulily	Other	Total	QxH		QVC Int'l	Zulily	Other	Total

	amounts in millions						amounts in millions
Balance at January 1, 2021	$	5,228	921	477	12	6,638
Balance at January 1, 2022							$	5,228	855	244	12	6,339
Impairments								(2,535)	—	(226)	—	(2,761)
Foreign currency translation adjustments		—	(46)	—	—	(46)		—	(148)	—	—	(148)
Balance at September 30, 2021	$	5,228	875	477	12	6,592
Balance at September 30, 2022							$	2,693	707	18	12	3,430

~~Intangible Assets Subject~~As a result of recent financial performance of certain subsidiary businesses, macroeconomic conditions including inflation and higher interest rates and a decline in the Company’s stock price, the Company initiated a process to ~~Amortization~~

~~Amortization expense~~evaluate those subsidiaries’ current business models and long-term business strategies. It was determined during the third quarter of 2022 that an indication of impairment existed for the QxH and Zulily reporting units related to their tradenames and goodwill. With the assistance of a third party specialist, the fair value of the tradenames was determined using the relief from royalty method, primarily using a discounted cash flow model using QxH’s and Zulily’s projections of future operating performance (income approach) and applying a royalty rate (market approach) (Level 3), and impairments in the amounts of $180 million and $140 million for QxH (related to the HSN tradename) and Zulily, respectively, were recorded during the third quarter of 2022, in the impairment of intangible assets ~~with finite useful lives~~line item in the consolidated statements of operations. With the assistance of a third party specialist, the fair value of the QxH and Zulily reporting units was ~~$94~~determined using a discounted cash flow method (Level 3), and goodwill impairments in the amounts of $2,535 million and ~~$89~~$226 million for QxH and Zulily, respectively, were recorded during the ~~three months ended September 30, 2021 and 2020, respectively, and $261 million and $274 million for~~third quarter of 2022, in the ~~nine months ended September 30, 2021 and 2020, respectively. Based on its amortizable~~impairment of intangible assets asline item in the consolidated statements of ~~September 30, 2021, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions):~~

Remainder of 2021

$
97

2022

$
303

2023

$
179

2024

$
103

2025

$
51

operations.

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

As of September 30, 2022 the Company had accumulated goodwill impairment losses of $899 million attributed to the Zulily reporting unit, and goodwill impairment losses of $2,535 million attributed to the QxH reporting unit.

Based on the quantitative assessment performed during the third quarter and the resulting impairment losses recorded, the estimated fair values of the HSN and Zulily tradenames and the QxH and Zulily reporting units equal their carrying values as of September 30, 2022.

Intangible Assets Subject to Amortization

Amortization expense for intangible assets with finite useful lives was $81 million and $94 million for the three months ended September 30, 2022 and 2021, respectively, and $241 million and $261 million for the nine months ended September 30, 2022 and 2021, respectively. Based on its amortizable intangible assets as of September 30, 2022, Qurate Retail expects that amortization expense will be as follows for the next five years (amounts in millions):


Remainder of 2022	$	87
2023	$	254
2024	$	165
2025	$	79
2026	$	50

(6) Long-Term Debt

Debt is summarized as follows:


	Outstanding					Outstanding
	principal at		Carrying value			principal at		Carrying value
	September 30, 2021		September 30, 2021		December 31, 2020	September 30, 2022		September 30, 2022		December 31, 2021

	amounts in millions					amounts in millions
Corporate level debentures
8.5% Senior Debentures due 2029	$	287		286	285	$	287		286	286
8.25% Senior Debentures due 2030		505		502	502		505		503	503
4% Exchangeable Senior Debentures due 2029		429		363	362		354		176	328
3.75% Exchangeable Senior Debentures due 2030		431		357	346		430		213	347
1.75% Exchangeable Senior Debentures due 2046		332		714	649		330		310	640
Subsidiary level notes and facilities
QVC 4.375% Senior Secured Notes due 2023		750		750	750		214		214	750
QVC 4.85% Senior Secured Notes due 2024		600		600	600		600		600	600
QVC 4.45% Senior Secured Notes due 2025		600		599	599		600		599	599
QVC 4.75% Senior Secured Notes due 2027		575		575	575		575		575	575
QVC 4.375% Senior Secured Notes due 2028		500		500	500		500		500	500
QVC 5.45% Senior Secured Notes due 2034		400		399	399		400		399	399
QVC 5.95% Senior Secured Notes due 2043		300		300	300		300		300	300
QVC 6.375% Senior Secured Notes due 2067		225		225	225		225		225	225
QVC 6.25% Senior Secured Notes due 2068		500		500	500		500		500	500
3.5% Exchangeable Senior Debentures due 2031		210		549	393
QVC Senior Secured Credit Facility		120		120	—		545		545	481
Deferred loan costs		—		(45)	(49)		—		(39)	(44)
Total consolidated Qurate Retail debt	$	6,764		7,294	6,936	$	6,365		5,906	6,989
Less current classification				(1,983)	(1,750)				(603)	(1,315)
Total long-term debt			$	5,311	5,186			$	5,303	5,674

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

QVC Senior Secured Notes

In June 2022, QVC completed its purchase of $536 million of the outstanding 4.375% Senior Secured Notes due 2023 (the "2023 Notes") pursuant to a cash tender offer to purchase any and all of its outstanding 2023 Notes (the “Tender Offer”). As a result of the Tender Offer, the Company recorded a loss on extinguishment of debt in the condensed consolidated statements of operations of $6 million for the nine months ended September 30, 2022. As of September 30, 2022, the remaining outstanding 4.375% Senior Secured Notes due 2023 are classified within current portion of debt as they mature in less than one year.

QVC Senior Secured Credit Facility

On ~~December 31, 2018,~~October 27, 2021, QVC ~~entered~~amended and restated its latest credit agreement (as amended and restated, the “Fifth Amended and Restated Credit Agreement”) and refinanced QVC’s existing bank credit facility by entering into a fifth amended and restated agreement with QVC, Zulily, Cornerstone, and QVC Global Corporate Holdings, LLC (“QVC Global”), each a direct or indirect wholly owned subsidiary of Qurate Retail, as borrowers (QVC, Zulily, Cornerstone and QVC Global, collectively, the ~~Fourth~~“Borrowers”), JPMorgan Chase Bank, N.A., as administrative agent, and the other parties named therein.

The Fifth Amended and Restated Credit Agreement ~~with Zulily as co-borrower (collectively, the “Borrowers”) which~~ is a multi-currency facility ~~that provides~~providing for a ~~$2.95~~$3.25 billion revolving credit facility (the “New Credit Facility”), with a $450 million sub-limit for ~~standby~~ letters of credit and ~~$1.5 billion~~an alternative currency revolving sub-limit equal to 50% of ~~uncommitted incremental~~the revolving ~~loan~~ commitments ~~or incremental term loans.~~thereunder. The ~~Fourth~~New Credit Facility may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings under the Fifth Amended and Restated Credit Agreement ~~includes~~bear interest at either the alternate base rate (such rate, the “ABR Rate”) or a ~~$400 million tranche that may be borrowed by QVC or Zulily, with~~LIBOR-based rate (or the applicable non-U.S. Dollar equivalent rate) (such rate, the “Term Benchmark/RFR Rate”) at the applicable Borrower’s election in each case plus a ~~$50 million sub-limit for standby letters of credit. The remaining $2.55 billion and any incremental loans may be borrowed only by QVC.~~margin. Borrowings that are ~~alternate base rate~~ABR Rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between 0.25% ~~to 0.75%~~and 0.625% depending on the ~~Borrowers~~Borrowers’ combined ratio of ~~Consolidated Total Debt~~consolidated total debt to ~~Consolidated~~consolidated EBITDA (the ~~“Combined Consolidated Leverage Ratio”~~“consolidated leverage ratio”). Borrowings that are ~~London Interbank Offered~~Term Benchmark/RFR Rate ~~(“LIBOR”)~~ loans will bear interest at a per annum rate equal to the applicable ~~LIBOR~~ rate plus a margin that varies between 1.25% and ~~1.75%~~1.625% depending on the Borrowers’ ~~Combined Consolidated Leverage Ratio.~~consolidated leverage ratio. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if Zulily, ~~ceases to be controlled by Qurate Retail,~~Cornerstone, QVC Global or any other borrower under the New Credit Facility (other than QVC) is removed, at the election of QVC, as a borrower thereunder, all of its loans must be repaid and its letters of credit are terminated or cash collateralized. Any amounts prepaid on the New Credit Facility may be reborrowed.

The ~~facility matures~~loans under the New Credit Facility are scheduled to mature on ~~December 31, 2023.~~October 27, 2026. Payment of the loans may be accelerated following certain customary events of default.

The payment and performance of the Borrowers’ obligations ~~(including Zulily’s obligations)~~ under the ~~Fourth~~Fifth Amended and Restated Credit Agreement are guaranteed by each of QVC’s, QVC Global’s, Zulily’s and Cornerstone’s Material Domestic Subsidiaries (as defined in the ~~Fourth~~Fifth Amended and Restated Credit Agreement)., if any, and certain other subsidiaries of any Borrower that such Borrower has chosen to provide guarantees. Further, the borrowings under the ~~Fourth~~Fifth Amended and Restated

~~I-16~~

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~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

Credit Agreement are secured, pari passu with QVC’s existing notes, by a pledge of all of QVC’s equity interests. ~~In addition,~~The borrowings under the ~~payment~~Fifth Amended and ~~performance of the Borrowers’ obligations with respect to the $400 million tranche available to both QVC and Zulily~~Restated Credit Agreement are also ~~guaranteed by Zulily and~~ secured by a pledge of all of Zulily’s and Cornerstone’s equity interests.

The ~~Fourth~~Fifth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on ~~QVC and Zulily~~the Borrowers 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~~the Borrowers’ consolidated leverage ~~ratio, and the Borrowers’ Combined Consolidated Leverage Ratio.~~ratio.

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QURATE RETAIL, INC. AND SUBSIDIARIES

~~During the nine months ended September 30, 2021, Zulily borrowed $120 million~~Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Borrowings under the ~~Fourth~~Fifth Amended and Restated Credit Agreement may be used to repay outstanding indebtedness, pay certain fees and expenses, finance working capital needs and general purposes of the ~~interest rate was 1.6% at September 30, 2021.~~ Borrowers and their respective subsidiaries and make certain restricted payments and loans to the Borrowers’ respective parents and affiliates.

Availability under the ~~Fourth~~Fifth Amended and Restated Credit Agreement at September 30, ~~2021~~2022 was ~~$2,808 million, including~~$2,683 million. The interest rate on the ~~portion available under the $400 million tranche that Zulily may also borrow on.~~

~~On October 27, 2021, the Fourth~~Fifth Amended and Restated Credit Agreement was ~~further amended to, among other things, extend the maturity date to October 2026, improve the stated interest rates and financial covenants, and upsize the amount from $2.95 billion to $3.25 billion.~~ 4.5% at September 30, 2022.

Exchangeable Senior Debentures

The Company has elected to account for its exchangeable senior debentures 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. See note 4 for information related to unrealized gains (losses) on debt measured at fair value. As of September 30, ~~2021~~2022 the Company’s exchangeable debentures have been classified as current because the Company does not own shares to exchange the debentures or they are currently exchangeable, with the exception of the 1.75% Exchangeable Senior Debentures due 2046 which are classified as long-term as they are not currently exchangeable. The Company reviews the terms of the debentures on a quarterly basis to determine whether a triggering event has occurred to require current classification of the exchangeables upon a call event. Although we do not own shares underlying certain of the exchangeable senior debentures, the Company has entered into certain derivative transactions in order to hedge against upward price fluctuations on certain shares. Such derivative instruments are recognized in the other current assets line item in the condensed consolidated balance sheets, and are marked to fair value each reporting period. The changes in fair value are recognized in the realized and unrealized gains (losses) on financial instruments, net line item in the condensed statement of operations.

On October 27, 2021, the bondholders of the 3.5% Exchangeable Senior Debentures due 2031 were sent a redemption notice for redemption in full on December 13, 2021, and will have the ability to exchange their debentures through December 10, 2021.

Debt Covenants

Qurate Retail and its subsidiaries are in compliance with all debt covenants at September 30, ~~2021.~~2022.

Fair Value of Debt

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 Qurate Retail for debt of the same remaining maturities (Level 2). The QVC 6.375% Senior Secured Notes due 2067 (“2067 Notes”) and the QVC 6.25% Senior Secured Notes Due 2068 (“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 of Qurate Retail's publicly traded debt securities

~~I-17~~

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~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

that are not reported at fair value in the accompanying condensed consolidated balance sheet at September 30, ~~2021~~2022 are as follows (amounts in millions):


Senior debentures	$	889	$	547
QVC senior secured notes	$	4,699	$	3,068

Due to the variable rate nature, Qurate Retail believes that the carrying amount of its other debt, not discussed above, approximated fair value at September 30, ~~2021.~~2022.

(7) Preferred Stock

On September 14, 2020, Qurate Retail issued its 8.0% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Preferred Stock”). There were 13,500,000 shares of Preferred Stock authorized and ~~12,624,110~~12,671,984 shares of Preferred Stock issued and outstanding at September 30, ~~2021.~~2022.

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,

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

dissolution or 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 rate of 8.0% per annum of the liquidation price (as described below) on a cumulative basis, during the term. If declared, accrued dividends 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.

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)

~~I-18~~

~~Table of Contents~~

~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

on or after the seventh anniversary of the Original Issue Date, 0.zero. 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 2two 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 condensed consolidated balance sheets. The Preferred Stock was initially recorded at its fair value, which was determined to be the liquidation preference of $100 per share. Given the liability classification of the Preferred Stock, all dividends accrued will be classified as interest expense in the condensed consolidated statements of operations.

~~(8) Related Party Transactions with Officers and Directors~~

~~Malone Stock Exchange and Maffei Arrangements~~

On May 18, 2021, Gregory B. Maffei, the Chairman of the Board and a director of the Company, delivered a written offer (the “Offer”) to John C. Malone, a director of Qurate Retail, to acquire all of the outstanding shares of QRTEB beneficially owned by Mr. Malone, his wife Leslie Malone and certain trusts for the benefit of Mr. Malone, Mrs. Malone and/or their children (the “Malone Group,” and such shares, the “Subject Shares”) at a per share price of $14.00 payable in cash, securities or such other form of consideration as to which Mr. Maffei and Mr. Malone might mutually agree. The transfer by the Malone Group of the Subject Shares was subject to the terms of that certain call agreement, dated February 9, 1998 (the “Call Agreement”), among Qurate Retail, as successor-in-interest to the assignee of Tele-Communications, Inc., a Delaware corporation, Mr. Malone and Mrs. Malone, which provided Qurate Retail with the right to acquire all, but not less than all, of the Subject Shares at a per share price equal to the lower of (x) the Offer price or (y) 110% of the average closing prices of a share of QRTEA for the 30 consecutive trading days ending on May 17, 2021 (with the price calculated pursuant to clause (y) equal to $13.62 per share (the “Call Price”)) (the “Call Right”). As previously disclosed, on May 18, 2021, Mr. Malone provided written notice to Qurate Retail of his desire to accept the Offer, subject to the approval by the Board of Directors of the Company of the transactions contemplated thereby for purposes of Section 203 of the General Corporation Law of the State of Delaware, pursuant to the terms of the Call Agreement. However, in the event the Company determined to exercise the Call Right, Mr. Malone indicated a preference for the payment of the per share price in the form of shares of QRTEA such that he would continue to hold a substantial investment in the Company.

On June 2, 2021, Qurate Retail delivered written notice to Mr. Malone to exercise the Call Right and to pay the per share Call Price required by the Call Agreement in shares of QRTEA. On June 3, 2021, the Company and the Malone Group entered into a Stock Exchange Agreement (the “Malone Stock Exchange Agreement”) to effect the closing of the Call Right exercise, pursuant to which the Malone Group transferred to the Company an aggregate of 27,655,931 shares of QRTEB, and in exchange (the “Malone Exchange”), Qurate Retail issued to the Malone Group an aggregate of 30,421,522 shares of QRTEA. Under the terms of the Call Agreement, the aggregate Call Price converts into an equivalent ratio of 1.1 shares of QRTEA for each share of QRTEB with the aggregate number of shares of QRTEA issued to each member of the Malone Group rounded down to the nearest whole share.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

On June 3, 2021, the Company, LMC and Mr. Maffei entered into a Waiver Letter and Amendment of Employment Agreement (the “Letter Agreement”), pursuant to which, among other things, Mr. Maffei (x) waived his rights to assert that Qurate Retail’s exercise of the Call Right, the transactions to be consummated pursuant to the Malone Stock Exchange Agreement or the resulting reduction in the Malone Group’s voting power with respect to Qurate Retail (collectively, the “Specified Events”) would constitute a “Change in Control” or “Good Reason,” in each case, as defined in the Executive Employment Agreement, dated as of December 13, 2019, by and between LMC and Mr. Maffei (the “Employment Agreement”), with respect to Qurate Retail, and agreed not to terminate his employment with Qurate Retail for “Good Reason” in connection with or arising out of the Option Cancellation (as defined below) or any of the Specified Events, and (y) consented to the cancellation (the “Option Cancellation”) of stock option awards to purchase shares of QRTEB that had been granted to Mr. Maffei on each of December 24, 2014, and March 31, 2015 for 1,137,228 shares at an exercise price of $16.97 per share, and 197,783 shares at an exercise price of $16.71 per share, respectively. In consideration for the foregoing, pursuant to the Letter Agreement, (i) Mr. Maffei received a grant of 1,101,321 restricted shares of QRTEB that are scheduled to vest, subject to Mr. Maffei’s continued employment with the Company, in 2 equal tranches on December 10, 2024 and the fifth anniversary of the grant date, subject to earlier vesting under certain circumstances, and (ii) Qurate Retail agreed that the portion of the Annual Equity Awards (as defined in the Employment Agreement) to be granted by Qurate Retail to Mr. Maffei pursuant to Section 4.11 of the Employment Agreement for calendar years 2022, 2023 and 2024 shall be granted with respect to the QRTEB.

~~Exchange and Cap.~~ Also, on June 3, 2021, the Company and Mr. Maffei also entered into a Stock Exchange Agreement (the “Maffei Stock Exchange Agreement”) pursuant to which, among other things: (i) on June 3, 2021, Mr. Maffei transferred to Qurate Retail an aggregate of 5,378,308 shares of QRTEA, and in exchange Qurate Retail issued to Mr. Maffei an equivalent number of shares of QRTEB; (ii) Qurate Retail agreed that on the terms and subject to the conditions of the Maffei Stock Exchange Agreement, Mr. Maffei, at his option (during the six-month period following the vesting of the performance-based restricted stock unit award granted to Mr. Maffei on March 10, 2021), may transfer to the Company the number of shares of QRTEA actually received by Mr. Maffei upon vesting of such performance-based restricted stock unit award in exchange for an equivalent number of newly-issued shares of QRTEB (the “Subsequent Exchange”); (iii) Mr. Maffei agreed that until December 31, 2024 (the “Cap Period”), which is also the end of the current term of his employment as set forth in the Employment Agreement, he will not, and will not authorize or permit any of his affiliates that he controls (“Controlled Affiliates”) to, acquire or agree to acquire (or announce publicly an intent to acquire) by purchase or otherwise, beneficial ownership of voting securities of the Company (or direct or indirect rights or options to acquire any such voting securities) if, after giving effect to any such acquisition of securities, the aggregate voting power of the Company’s voting securities beneficially owned by Mr. Maffei and his Controlled Affiliates would exceed 20.0% of the voting power of all of the outstanding voting securities (assuming, for purposes of this calculation that all voting securities beneficially owned by Mr. Maffei which are not outstanding are included in the calculation) (the “Cap”); and (iv) the foregoing transactions by which Mr. Maffei and certain of his related persons became an “interested stockholder” were approved for purposes of Section 203 of the General Corporation Law of the State of Delaware. The Cap is subject to certain terms and exceptions, as described in the Maffei Stock Exchange Agreement. In addition, Mr. Maffei and his Controlled Affiliates may not transfer voting securities of Qurate Retail to any other Controlled Affiliate of Mr. Maffei unless such transferee has agreed to be bound by the terms of the Maffei Stock Exchange Agreement.

~~CEO Employment Agreement~~

On July 12, 2021, the compensation committee of the board of directors of Qurate Retail approved the Company’s entry into an employment agreement with David Rawlinson II, effective July 12, 2021. Effective August 1, 2021, Mr. Rawlinson began to serve as President and Chief Executive Officer-Elect of Qurate Retail, with Mike George continuing as Chief Executive Officer, and effective October 1, Mr. Rawlinson began to serve as President and Chief Executive Officer of Qurate Retail, with Mr. George assuming the role of Senior Advisor. Mr. Rawlinson concurrently assumed the same positions with QVC. Mr. George will resign from the board of directors effective January 1, 2022, at which time Mr. Rawlinson is expected to join the Board. With respect to his roles at Qurate Retail and QVC, Mr. George stepped down as President effective August 1, 2021 and as Chief Executive Officer effective October 1, 2021.

~~I-20~~

~~Table of Contents~~

~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

~~(9)~~(8) Commitments and Contingencies

Litigation

The Company 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 condensed consolidated financial statements.

Fire at Rocky Mount Fulfillment Center

On December 18, 2021, QVC experienced a fire at its Rocky Mount, Inc. fulfillment center in North Carolina. Rocky Mount was QVC’s second-largest fulfillment center for the operating segment comprised of QVC U.S. and HSN (“QxH”) and QVC’s primary returns center for hard goods.

QVC maintains property, general liability and business interruption insurance coverage. Based on provisions of QVC's insurance policies, the Company records estimated insurance recoveries for fire related costs for which recovery is deemed probable.

For the year ended December 31, 2021, QVC recorded $250 million of fire related costs and estimated insurance recoveries of $229 million for which recovery was deemed probable. As of December 31, 2021, the Company received $100 million of insurance proceeds and had an insurance receivable of $129 million which was recorded in Trade and other receivables, net in the condensed consolidated balance sheet.

For the nine months ended September 30, 2022, the Company recorded an additional $147 million of fire related costs, including $95 million for the write-down of inventory, and estimated insurance recoveries of $47 million for which recovery was deemed probable. For the nine months ended September 30, 2022, the Company received $280 million of insurance proceeds for inventory, fixed asset losses and other fire related costs and recorded a gain of $139 million in Restructuring and fire related costs, net of (recoveries) in the condensed consolidated statement of operations, representing the proceeds received in excess of losses recognized. The Company recorded an insurance receivable, net of advance proceeds received, for other fire related costs for which recovery was deemed probable of $35 million which was recorded in Trade and other receivables, net in the condensed consolidated balance sheet.

During the nine months ended September 30, 2022, inventory write-downs related to Rocky Mount inventory of $95 million were included in cost of goods sold. Due to the circumstances surrounding the write-downs of inventory, these write-downs have been excluded from Adjusted OIBDA (as defined in note 9). QVC is in the process of submitting its business interruption claim with the insurance company; however, there can be no guarantee that all business interruption losses will be recovered. QVC expects to continue to record additional costs and recoveries until the insurance claim is fully settled.

Zulily Restructuring

In the first quarter of 2022, Zulily began to execute a series of transformation initiatives, beginning with the announcement of the closure of its fulfillment center in Bethlehem, Pennsylvania, and reduction in corporate workforce. These initiatives are consistent with Zulily’s strategy to operate more efficiently as it implements its turnaround plan, and Zulily expects to incur additional expenses related to these transformation initiatives in future periods. Zulily recorded $3 million and $8 million of restructuring charges during the three and nine months ended September 30, 2022, respectively, principally related to its regional office space strategy and expenses associated with the Pennsylvania facility closure. Zulily recorded $3 million of restructuring charges during the nine months ended September 30, 2022 related to its reduction in corporate workforce.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

~~(10)~~Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

Gain on Sale of Fixed Assets

In June 2022, QVC modified the finance lease for its distribution center in Ontario, California which reduced the term of the lease and removed QVC’s ability to take ownership of the distribution center at the end of the lease term. QVC will make annual payments over the modified lease term. Since the lease was modified and removed QVC’s ability to take ownership at the end of the lease term, the Company accounted for the modification similar to a sale and leaseback transaction, and as a result, QVC recognized a $240 million gain on the sale of the distribution center during the second quarter of 2022 calculated as the difference between the aggregate consideration received (including cash and forgiveness of the remaining financing obligation of $84 million) and the carrying value of the distribution center. The gain is included in (gain) loss on sale of fixed assets, net in the condensed consolidated statement of operations. The Company accounted for the modified lease as an operating lease and recorded a $37 million right-of-use asset and a $31 million operating lease liability, with the difference attributable to prepaid rent.

In July 2022, QVC sold five owned and operated properties located in the U.S. to an independent third party and received net cash proceeds of $443 million. Concurrent with the sale, the Company entered into agreements to lease each of the properties back from the purchaser over an initial term of 20 years with the option to extend the terms of the property leases for up to four consecutive terms of five years. QVC recognized a $277 million gain related to the successful sale leaseback for the three and nine months ended September 30, 2022, calculated as the difference between the aggregate consideration received and the carrying value of the properties. The Company accounted for the leases as operating leases and recorded a $207 million right-of-use asset and a $205 million operating lease liability, with the difference attributable to initial direct costs.

On November 2, 2022 and November 3, 2022, QVC entered into agreements to sell two properties located in Germany and the U.K. to an independent third party. Under the terms of the agreements, QVC will receive cash payments of approximately €97 million related to its German facility and approximately £68 million related to its U.K. facility before fees, taxes and other expenses. The sale is expected to close in the first quarter of fiscal year 2023. Contingent on the closing of the sale, the Company entered into agreements to lease each of the properties back from the purchaser over an initial term of 20 years with the option to extend the terms of the property leases for up to four consecutive terms of five years. QVC expects to record a gain in 2023 at the close of the sale leaseback transaction.

(

(9) 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 online commerce industries. Qurate Retail identifies its reportable segments as (A) those operating segments that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA (as defined below) 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 Qurate Retail chief operating decision maker primarily evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted ~~OIBDA, gross margin, average sales price per unit and revenue or sales per customer equivalent.~~OIBDA. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, number of units shipped, conversion rates and active customers, as appropriate.

For the nine months ended September 30, ~~2021,~~2022, Qurate Retail has identified the following operating segments 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 – 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.

●

Zulily – Zulily markets and sells a wide variety of consumer products in the United States and several foreign

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

countries through flash sales and other curated 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 are the same as those described in the Company's Summary of Significant Accounting Policies in the ~~2020~~2021 10-K.

Performance Measures

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


		Three months ended
		September 30, 2022
			QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home		$	621	208	53	283	1,165
Apparel			330	100	79	44	553
Beauty			252	129	9	—	390
Accessories			190	49	47	—	286
Electronics			152	20	2	—	174
Jewelry			73	45	6	—	124
Other revenue			45	3	4	—	52
Total Revenue		$	1,663	554	200	327	2,744


		Nine months ended
		September 30, 2022
			QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home		$	1,950	729	167	825	3,671
Apparel			982	334	265	140	1,721
Beauty			766	419	30	—	1,215
Accessories			633	162	145	—	940
Electronics			411	71	5	—	487
Jewelry			231	139	23	—	393
Other revenue			128	8	17	—	153
Total Revenue		$	5,101	1,862	652	965	8,580

~~I-21~~I-22

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)


	Three months ended
	September 30, 2021
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	679	272	93	258	1,302
Apparel		336	119	132	46	633
Beauty		279	164	15	—	458
Accessories		210	62	66	—	338
Electronics		171	24	3	—	198
Jewelry		95	55	11	—	161
Other revenue		43	3	8	—	54
Total Revenue	$	1,813	699	328	304	3,144


		Nine months ended
		September 30, 2021
			QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home		$	2,229	905	336	748	4,218
Apparel			985	372	429	133	1,919
Beauty			859	521	50	—	1,430
Accessories			720	199	218	—	1,137
Electronics			539	89	10	—	638
Jewelry			269	169	37	—	475
Other revenue			137	9	22	—	168
Total Revenue		$	5,738	2,264	1,102	881	9,985

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses excluding stock-based compensation and, where applicable, separately identified items impacting comparability. Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of 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, and where applicable, separately identified impairments, litigation settlements, restructuring, acquisition-related costs, fire related costs, net (including Rocky Mount inventory losses) and gains (losses) on sales of fixed assets, net, that are included in the measurement of operating income (loss) pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income (loss), net earnings (loss), cash flows 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 sales or transfers were to third parties, that is, at current prices.

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Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

~~Performance Measures~~

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

~~��~~

Three months ended

September 30, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$
679

272

93

258

1,302

Apparel

336

119

132

46

633

Beauty

279

164

15

—

458

Accessories

210

62

66

—

338

Electronics

171

24

3

—

198

Jewelry

95

55

11

—

161

Other revenue

43

3

8

—

54

Total Revenue

$
1,813

699

328

304

3,144

Nine months ended

September 30, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$
2,229

905

336

748

4,218

Apparel

985

372

429

133

1,919

Beauty

859

521

50

—

1,430

Accessories

720

199

218

—

1,137

Electronics

539

89

10

—

638

Jewelry

269

169

37

—

475

Other revenue

137

9

22

—

168

Total Revenue

$
5,738

2,264

1,102

881

9,985

Three months ended

September 30, 2020

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions
Home

$
819

286

115

248

1,468
Apparel

312

115

147

37

611
Beauty

297

168

17

—

482
Accessories

219

67

94

—

380
Electronics

197

25

3

—

225
Jewelry

93

59

12

—

164
Other revenue

43

3

7

—

53
Total Revenue

$
1,980

723

395

285

3,383

~~I-22~~

~~Table of Contents~~

~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

Nine months ended

September 30, 2020

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$
2,303

829

326

631

4,089

Apparel

913

316

411

108

1,748

Beauty

910

499

50

—

1,459

Accessories

676

188

281

—

1,145

Electronics

588

78

10

—

676

Jewelry

273

155

34

—

462

Other revenue

119

6

21

—

146

Total Revenue

$
5,782

2,071

1,133

739

9,725

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 operational strength and performance of its businesses by identifying those items that are not directly a reflection of 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 acquisition accounting adjustments, separately reported litigation settlements, transaction related costs (including restructuring, integration, and 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 flows 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 sales or transfers were to third parties, that is, at current prices.

Adjusted OIBDA is summarized as follows:


	Three months ended September 30,			Nine months ended September 30,			Three months ended September 30,			Nine months ended September 30,
		2021	2020		2021	2020		2022	2021		2022	2021

	amounts in millions						amounts in millions
QxH	$	325	380		1,065	1,061	$	143	325		600	1,065
QVC International		115	132		402	348		62	115		261	402
Zulily		(17)	27		(2)	74		(25)	(17)		(61)	(2)
Corporate and other		9	27		65	32		5	9		67	65
Consolidated Qurate Retail	$	432	566		1,530	1,515	$	185	432		867	1,530

Other Information


	September 30, 2021			September 30, 2022
	Total assets		Capital expenditures	Total assets		Capital expenditures

	amounts in millions			amounts in millions
QxH	$	12,356	124	$	8,929	116
QVC International		2,267	21		1,767	19
Zulily		1,010	17		228	10
Corporate and other		1,327	7		872	26
Consolidated Qurate Retail	$	16,960	169	$	11,796	171

~~I-23~~

~~Table of Contents~~

~~QURATE RETAIL, INC. AND SUBSIDIARIES~~

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

~~(unaudited)~~

The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:

Three months ended

Nine months ended

September 30,

September 30,


2021

2020

2021

2020

amounts in millions

Adjusted OIBDA

$
432

566

1,530

1,515

Stock-based compensation

(19)

(19)

(54)

(46)

Depreciation and amortization

(139)

(141)

(396)

(427)

Operating income (loss)

$
274

406

1,080

1,042

Interest expense

(121)

(98)

(356)

(290)

Share of earnings (loss) of affiliates, net

(24)

(32)

(78)

(96)

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

41

(12)

101

(127)

Gains (losses) on transactions, net

—

223

—

224

Other, net

—

(65)

(10)

(65)

Earnings (loss) before income taxes

$
170

422

737

688


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

	amounts in millions
Adjusted OIBDA	$	185	432	867	1,530
Stock-based compensation		(15)	(19)	(46)	(54)
Depreciation and amortization		(107)	(139)	(371)	(396)
Restructuring and fire related costs, net of recoveries (including Rocky Mount inventory losses, see note 8)		134	—	28	—
Impairment of intangible assets		(3,081)		(3,081)
Gains (losses) on sales of fixed assets, net		277	—	520	—
Operating income (loss)	$	(2,607)	274	(2,083)	1,080
Interest expense		(107)	(121)	(343)	(356)
Share of earnings (loss) of affiliates, net		—	(24)	(1)	(78)
Realized and unrealized gains (losses) on financial instruments, net		(8)	41	29	101
Tax sharing income (expense) with Liberty Broadband		36	(3)	78	(16)
Other, net		37	3	83	6
Earnings (loss) before income taxes	$	(2,649)	170	(2,237)	737

I-24

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business strategies; COVID-19 (as defined below); the impact of the fire at Rocky Mount fulfillment center; the sale leaseback transactions; the remediation of a material weakness; revenue growth at QVC, Inc. ("QVC"); ~~the redemption or exchange of the 3.5% Exchangeable Senior Debentures due 2031;~~ our projected sources and uses of cash; the recoverability of our goodwill and other intangible assets; and fluctuations in interest rates and foreign currency exchange rates. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:

●

the impact of the novel coronavirus (“COVID-19”) pandemic and local, state and federal governmental responses to the pandemic on the economy, our customers, our vendors and our businesses generally;

●

customer demand for our products and services and our ability to attract new customers and retain existing customers by anticipating customer demand and adapting to changes in demand;

●

competitor responses to our products and services;

●

increased digital TV penetration and the impact on channel positioning of our programs;

●

the levels of online traffic to our businesses' websites and our ability to convert visitors into customers or contributors;

●

uncertainties inherent in the development and integration of new business lines and business strategies;

●

our future financial performance, including availability, terms, deployment of capital and our level of indebtedness;

●

our ability to effectively manage our installment sales plans and revolving credit card programs;

●

the cost and ability of shipping companies, manufacturers, suppliers, digital marketing channels, and vendors to deliver products, equipment, software and services;

●

the outcome of any pending or threatened litigation;

●

availability of qualified personnel;

●

the impact of the seasonality of our businesses;

●

changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission, and adverse outcomes from regulatory proceedings;

●

changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors;

●

domestic and international economic and business conditions and industry trends, including the impact of ~~Brexit (as defined below);~~inflation and the United Kingdom’s exit from the European Union;

●

changes in the trade policy and trade relations with China;

●

consumer spending levels, including the availability and amount of individual consumer debt and customer credit losses;

●

system interruption and the lack of integration and redundancy in the systems and infrastructures of our businesses;

●

advertising spending levels;

●

changes in distribution and viewing of television programming, including the expanded deployment of video on demand technologies and Internet protocol television and their impact on home shopping programming;

●

rapid technological changes;

●

failure to protect the security of personal information, subjecting us to potentially costly government enforcement actions and/or private litigation and reputational damage;

●

the regulatory and competitive environment of the industries in which we operate;

●

natural disasters, public health crises (including COVID-19), political crises, and other catastrophic events or other events outside of our control;

●

threatened terrorist attacks, political and economic unrest in international markets and ongoing military action around the world; and

●

fluctuations in foreign currency exchange rates.

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Table of Contents

For additional risk factors, please see Part II, Item 1A. of this Quarterly Report and Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~“2020~~“2021 10-K”). These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.

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 condensed consolidated financial statements and the notes thereto and the ~~2020~~2021 10-K.

The information herein relates to Qurate Retail, Inc. and its controlled subsidiaries (collectively “Qurate Retail,” the “Company,” “Consolidated Qurate Retail,” “us,” “we” or “our” unless the context otherwise requires).

Overview

We own controlling ~~and non-controlling~~ interests in ~~a broad range of~~ video and online commerce companies. Our largest businesses and reportable segments are our operating segment comprised of QVC U.S. and HSN (“QxH”) and QVC International. QVC 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 shopping programs and the Internet through its domestic and international websites and mobile applications. Zulily, LLC (“Zulily”), an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched every day, is a reportable segment.

Our “Corporate and other” category includes our consolidated subsidiary Cornerstone Brands, Inc. (“Cornerstone”), along with various cost and equity method investments.

In December 2019, ~~the~~ COVID-19 ~~pandemic~~ 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~~

QVC transitioned most administrative employees to ~~these stay at home restrictions, QVC has mandated that non-essential~~a hybrid work model and certain employees have moved to permanent work from home and 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,arrangements which has resulted in the reduction of office space. Due to ongoing staffing issues and labor shortages, QVC ~~has also mandated that all essential employees who do not feel comfortable coming~~increased wages and offered incentives, resulting in additional costs to ~~work will not be required to do so.~~the company. 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. 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.

Zulily has seen increased freight surcharges from China due to COVID-19 and in concert with QVC has made work accommodations in its fulfillment centers which has resulted in an increase in labor expense. Zulily has also incurred additional expenses to clean its fulfillment centers and office buildings. In addition, Zulily management cut travel expenses, and reduced capital expenditures due to uncertainty created by COVID-19.

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~~from the end of the first quarter of 2020 and continuing through the first quarter of 2021, QVC observed an increase in new customers and an increase in demand for certain categories, such as home. Beginning in the second quarter of 2021 through the third quarter of 2022, QVC observed a decline in new customers and a decline in demand for its home product category, while also seeing an increase in demand for its apparel product category.

~~I-26~~

~~Table of Contents~~

As a result, for the three and nine months ended September 30, 2020, QVC management had increased the amounts of certain estimated reserves including, but not limited to, uncollectible receivables in anticipation of higher defaults by customers billed through QVC’s installment payment option, inventory obsolescence due to decreased demand for certain categories, such as apparel, and sales returns due to QVC’s extended return policy. There were no remaining estimated reserves as of December 31, 2020 and September 30, 2021 as a direct result of COVID-19.

In addition, there are several potential adverse impacts of COVID-19 that could cause a material negative impact to ~~QVC’s~~the Company’s financial results, including its capital and liquidity. These include ~~governmental restrictions on QVC’s ability to continue to operate under stay at home restrictions and produce content;~~ reduced demand for products ~~it sells;~~we sell; decreases in the disposable income of existing and potential new customers; the impacts of any recession and other uncertainties with respect to ~~the continuity of~~ government ~~stimulus programs implemented in response~~responses to COVID-19; increased currency volatility resulting in adverse currency rate fluctuations; higher unemployment; labor shortages; and an adverse impact to ~~QVC’s~~our supply chain and shipping disruptions for both the products ~~it imports~~we import and ~~purchases~~purchase domestically and the products ~~it sells,~~we sell, including essential products experiencing higher demand, due to factory closures, labor shortages and other resource constraints. While the future impact is currently uncertain, the inability to control the spread of COVID-19 could cause any one of these adverse impacts, or combination of adverse impacts, to have a material impact on ~~QVC’s~~our financial results.

Beginning in the second quarter of 2021, QVC saw increased product shortages as a result of high market demand in some product categories such as home and electronics. QVC also experienced escalating shipping disruptions due to challenges in the global supply chain and labor ~~market.~~market causing extended lead time on inventory orders. As a result, the

I-26

Table of Contents

delayed receipt of inventory ordered in prior periods impacted QVC’s ability to have the right products at the right time and has contributed to higher inventory levels as of September 30, 2022. These factors also impacted QVC’s ability to offer certain goods and ship orders timely to its customers. In addition, QVC ~~began to see increased~~has seen increasing inflationary pressures during the ~~period.~~period including higher wages, freight, and merchandise costs. Russia’s invasion of Ukraine, as well as the related international response, is exacerbating inflationary pressures. If these pressures persist, itinflated costs may ~~result in certain increased costs outpacing~~continue to outpace QVC’s pricing power in the near term.

On June 23, 2016, the U.K. held a referendum in which British citizens approved an exit from the European Union (the “E.U.”), commonly referred to as “Brexit.” 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, and could potentially have a negative impact on QVC’s business. The potential impacts include, but are not limited to, unfavorable new trade agreements, the possible imposition of trade or other regulatory barriers which could result in shipping delays or shortages of products, and a negative impact to the global economy and consumer demand.

Early decisions by the Biden Administration confirm continuity of a bipartisan consensus in the U.S. government favoring increased confrontation of China in trade practices and economic matters, national security and human rights. The imposition of any new U.S. tariffs on Chinese imports or the taking of other actions against China in the future, and any responses by China, could impair ~~QVC’s~~the Company’s ability to meet customer demand and could result in lost sales or an increase in ~~QVC’s~~the Company’s cost of merchandise, which would have a material adverse impact on ~~QVC’s business~~the Company’s businesses and results of operations.

On December 18, 2021, QVC experienced a fire at its Rocky Mount, Inc. fulfillment center in North Carolina. Rocky Mount was QVC’s second-largest fulfillment center, processing approximately 25% to 30% of volume for QVC U.S., and also served as QVC U.S.’s primary returns center for hard goods. The building was significantly damaged as a result of the fire and related smoke and will not reopen. QVC has made a decision not to rebuild the facility; however, it is still in the process of determining future plans for the property. QVC has taken steps to mitigate disruption to operations including diverting inbound orders, leveraging its existing fulfillment centers and supplementing these facilities with short-term leased space as needed.

Based on the provisions of QVC’s insurance policies and discussions with insurance carriers, QVC determined that recovery of certain fire related costs is probable, and recorded an insurance receivable. For the year ended December 31, 2021, the Company recorded $250 million of fire related costs and estimated insurance recoveries of $229 million for which recovery was deemed probable. For the nine months ended September 30, 2022, the Company recorded $147 million of fire related costs, including $95 million for the write-down of inventory, and estimated insurance recoveries of $47 million for which recovery was deemed probable. For the nine months ended September 30, 2022, QVC received $280 million of insurance proceeds for inventory, fixed asset losses and other fire related costs and recorded a gain of $139 million in Restructuring and fire related costs, net of (recoveries) in the condensed consolidated statement of operations, representing the proceeds received in excess of losses recognized. The Company recorded an insurance receivable, net of advance proceeds received for other fire related costs for which recovery was deemed probable of $35 million in Trade and other receivables, net of allowance for credit losses in the condensed consolidated balance sheet.

During the nine months ended September 30, 2022, inventory write-downs related to Rocky Mount of $95 million were included in cost of goods sold. Due to the circumstances surrounding the write-downs of the inventory, these write-downs have been excluded from Adjusted OIBDA (as defined below). QVC is in the process of submitting its business interruption claim with the insurance company; however, there can be no guarantee that all business interruption losses will be recovered. QVC expects to continue to record additional costs and recoveries until the property damage and inventory recoverability assessment is completed and the insurance claim is fully settled. While QVC has taken steps to minimize the overall impact to the business, it experienced increased warehouse and logistics costs during the nine months ended September 30, 2022 and anticipates these increased warehouse and logistics costs to continue during 2022.

In June 2022, QVC modified the finance lease for its distribution center in Ontario, California which reduced the term of the lease and removed QVC’s ability to take ownership of the distribution center at the end of the lease term. QVC will make annual payments over the modified lease term. Since the lease was modified and removed QVC’s ability to take ownership at the end of the lease term, the Company concluded that a successful sale and leaseback transaction had occurred. QVC recognized a $240 million gain on the sale of the distribution center during the second quarter of 2022 calculated as the difference between the aggregate consideration received (including cash and forgiveness of the remaining financing obligation of $84 million) and the carrying value of the distribution center. The gain is included in (gain) loss on sale of fixed assets, net in the condensed consolidated statement of operations. The Company accounted for the modified lease as an operating lease and recorded a $37 million right-of-use asset and a $31 million operating lease liability, with the difference attributable to prepaid rent.

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of the properties back from the purchaser over an initial term of 20 years with the option to extend the terms of the property leases for up to four consecutive terms of five years. QVC will make initial base rent payments of $27 million per year and increasing to $39 million per year. QVC recognized a $277 million gain related to the successful sale leaseback for the three and nine months ended September 30, 2022, calculated as the difference between the aggregate consideration received and the carrying value of the properties. The Company accounted for the leases as operating leases and recorded a $207 million right-of-use asset and a $205 million operating lease liability, with the difference attributable to initial direct costs.

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 reporting segments. The "Corporate and other" category consists of those assets or businesses which we do not disclose separately. For a more detailed discussion and analysis of the financial results of the principal reporting segments, see "Results of Operations—Businesses" below.

Operating Results


	Three months ended			Nine months ended		Three months ended			Nine months ended
	September 30,			September 30,		September 30,			September 30,
	2021		2020	2021	2020	2022		2021	2022	2021

	amounts in millions					amounts in millions
Revenue
QxH	$	1,813	1,980	5,738	5,782	$	1,663	1,813	5,101	5,738
QVC International		699	723	2,264	2,071		554	699	1,862	2,264
Zulily		328	395	1,102	1,133		200	328	652	1,102
Corporate and other		304	285	881	739		327	304	965	881
Consolidated Qurate Retail	$	3,144	3,383	9,985	9,725	$	2,744	3,144	8,580	9,985

Operating Income (Loss)
QxH	$	219	274	771	744	$	(2,251)	219	(1,848)	771
QVC International		97	114	348	295		52	97	221	348
Zulily		(40)	3	(73)	3		(403)	(40)	(492)	(73)
Corporate and other		(2)	15	34	—		(5)	(2)	36	34
Consolidated Qurate Retail	$	274	406	1,080	1,042	$	(2,607)	274	(2,083)	1,080

Adjusted OIBDA
QxH	$	325	380	1,065	1,061	$	143	325	600	1,065
QVC International		115	132	402	348		62	115	261	402
Zulily		(17)	27	(2)	74		(25)	(17)	(61)	(2)
Corporate and other		9	27	65	32		5	9	67	65
Consolidated Qurate Retail	$	432	566	1,530	1,515	$	185	432	867	1,530

Revenue. Consolidated Qurate Retail revenue decreased ~~7.1%~~12.7% or ~~$239~~$400 million and ~~increased 2.7%~~14.1% or ~~$260~~$1,405 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding periods in the prior year. The decrease in the three months ended September 30, ~~2021~~2022 was due to decreased revenue at QxH of ~~$167~~$150 million, ~~decreased revenue at Zulily of $67 million and~~ decreased revenue at QVC International of ~~$24~~$145 million, and decreased revenue at Zulily of $128 million, partially offset

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by increased revenue in the Corporate and other segment of ~~$19~~$23 million, compared to the same period in the prior year. The increase in Corporate and other revenue was due to an increase in revenue at Cornerstone due to ~~strong~~ customer demand in the home category. The ~~increase~~decrease in the nine months ended September 30, ~~2021~~2022 was due to ~~increased~~decreased revenue at QxH of $637 million, decreased revenue at Zulily of $450 million, and decreased revenue at QVC International of ~~$193~~$402 million, ~~and~~partially offset by increased revenue in the Corporate and other segment of ~~$142 million, partially offset by decreased revenue at QxH of $44 million and decreased revenue at Zulily of $31~~$84 million, compared to the same period in the prior year. The increase in Corporate and other revenue was due to an increase in revenue at Cornerstone due to ~~growth in the home category.~~increased sales across all major product categories. See "Results of Operations—Businesses" below for a more complete discussion of the results of operations of QVC and Zulily.

Stock-based compensation. Stock-based compensation includes compensation primarily related to options, restricted stock awards and restricted stock units for shares of our common stock that are granted to certain of our officers and employees.

We recorded $15 million and $19 million of stock-based compensation for ~~both of~~ the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and ~~$54~~$46 million and ~~$46~~$54 million of stock-based compensation for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The ~~increase~~decrease of $4 million for the three months ended September 30, 2022 was primarily due to decreases at QxH, and the decrease of $8 million for the nine months ended September 30, ~~2021~~2022 was primarily due

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~~Table of Contents~~

to ~~increases~~decreases at QxH and ~~at the corporate level.~~Zulily. As of September 30, ~~2021,~~2022, the total unrecognized compensation cost related to unvested Qurate Retail equity awards was approximately ~~$121~~$105 million. Such amount will be recognized in our condensed consolidated statements of operations over a weighted average period of approximately ~~2.6~~2.3 years.

Operating income. Our consolidated operating income decreased ~~$132~~$2,881 million and ~~increased $38~~$3,163 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding periods in the prior ~~year.~~year, primarily due to impairments recognized at the QxH and Zulily reporting units. The decrease in operating results for the three months ended September 30, ~~2021~~2022 was primarily due to a decrease in operating income at QxH of ~~$55~~$2,470 million, a decrease in operating income at Zulily of ~~$43~~$363 million, a decrease in operating income at QVC International of ~~$17~~$45 million, and a decrease in operating income at the Corporate and other segment of ~~$17~~$3 million, compared to the corresponding period in the prior year. Operating income in the Corporate and other segment decreased for the three months ended September 30, ~~2021,~~2022, as compared to the corresponding period in the prior year, primarily related to ~~increased~~a decrease in operating income at Cornerstone due to higher supply chain costs and digital marketing investments despite revenue growth and product margin expansion, partially offset by fewer expenses at ~~Cornerstone, and an increase~~the corporate level.

The decrease in ~~corporate expenses relating to increased legal and professional service expenses and taxes. The increase~~operating results for the nine months ended September 30, ~~2021~~2022 was primarily due to ~~an increase~~a decrease in operating income at QxH of $2,619 million, a decrease in operating income at Zulily of $419 million, and a decrease in operating income at QVC International of ~~$53~~$127 million, ~~an increase in operating income at QxH of $27 million, and~~partially offset by an increase in operating income at the Corporate and other segment of ~~$34 million, partially offset by an increase in operating losses at Zulily of $76~~$2 million, compared to the ~~same~~corresponding period in the prior year. Operating income in the Corporate and other segment increased for the nine months ended September 30, ~~2021,~~2022, as compared to the corresponding period in the prior year, primarily related to ~~revenue growth across Cornerstone’s portfolio and lower promotional activity resulting in better margin performance,~~fewer expenses at the corporate level, partially offset by ~~an increase~~a decrease in ~~corporate expenses relating~~operating income at Cornerstone due to ~~increased legal~~higher supply chain costs and ~~professional services expenses~~digital marketing investments despite revenue growth and ~~taxes.~~product margin expansion. See "Results of Operations—Businesses" below for a more complete discussion of the results of operations of QVC and Zulily.

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 operating income (loss) plus depreciation and amortization, stock-based compensation, and where applicable, separately ~~reported~~identified impairments, litigation settlements, restructuring, ~~acquisition and other~~acquisition-related costs, fire related costs, net (including Rocky Mount inventory losses), and ~~impairments.~~(gain) loss on sale of fixed assets, net. 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 by identifying those items that are not directly a reflection of each 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. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net ~~income,~~earnings (loss), cash flows provided by operating activities and other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles.

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The following table provides a reconciliation of Operating income (loss) to Adjusted OIBDA:

Three months ended

Nine months ended

September 30,

September 30,


2021

2020

2021

2020

amounts in millions

Operating income (loss)

$
274

406

1,080

1,042

Depreciation and amortization

139

141

396

427

Stock-based compensation

19

19

54

46

Adjusted OIBDA

$
432

566

1,530

1,515


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

	amounts in millions
Operating income (loss)	$	(2,607)	274	(2,083)	1,080
Depreciation and amortization		107	139	371	396
Stock-based compensation		15	19	46	54
Restructuring and fire related costs, net of (recoveries) (including Rocky Mount inventory losses)		(134)	—	(28)	—
Impairment of intangible assets		3,081	—	3,081	—
(Gains) on sales of fixed assets, net		(277)	—	(520)	—
Adjusted OIBDA	$	185	432	867	1,530

Consolidated Adjusted OIBDA decreased ~~23.7%~~57.2% or ~~$134~~$247 million and ~~increased 1.0%~~43.3% or ~~$15~~$663 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding periods in the prior year. The decrease in Adjusted OIBDA for the three months ended September 30, ~~2021~~2022 was primarily due to a decrease at QxH of ~~$55~~$182 million, a decrease at QVC International of $53 million, a decrease at Zulily of ~~$44~~$8 million and a decrease at Corporate and other of ~~$18 million and a decrease at QVC International of $17~~$4 million, compared to the corresponding period in the prior year. The change in the Corporate and other segment for the three months ended September 30, ~~2021~~2022 was primarily due to ~~increased~~a decrease in Adjusted OIBDA at Cornerstone due to higher supply chain costs and digital marking investments despite revenue growth and product margin expansion, partially offset by fewer expenses at ~~Cornerstone, and an increase in~~the corporate ~~expenses relating to increased legal and professional service expenses and taxes.~~level. The ~~increase~~decrease in Adjusted OIBDA for the nine months ended September 30, ~~2021~~2022 was primarily due to ~~an increase~~a decrease at QxH of $465 million, a decrease at QVC International of ~~$54~~$141 million, and a decrease at Zulily of $59 million, partially offset by an increase at Corporate and other of ~~$33 million, and an increase at QxH of $4 million, partially offset by a decrease at Zulily of $76~~$2 million, compared to the corresponding period in the prior year. The change in the Corporate and other segment for the nine months ended September 30, ~~2021~~2022 was primarily due to ~~revenue growth across Cornerstone’s portfolio and lower promotional activity resulting in better margin performance,~~fewer expenses at the corporate level, partially offset by

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~~an increase~~ a decrease in ~~corporate expenses relating~~Adjusted OIBDA at Cornerstone due to ~~increased legal~~higher supply chain costs and ~~professional services expenses~~digital marketing investments despite revenue growth and ~~taxes.~~product margin expansion. See "Results of Operations—Businesses" below for a more complete discussion of the results of operations of QVC and Zulily.

Other Income and Expense

Components of Other income (expense) are presented in the table below.


	Three months ended			Nine months ended		Three months ended			Nine months ended
	September 30,			September 30,		September 30,			September 30,
	2021		2020	2021	2020	2022		2021	2022	2021

	amounts in millions					amounts in millions

Interest expense	$	(121)	(98)	(356)	(290)	$	(107)	(121)	(343)	(356)
Share of earnings (losses) of affiliates		(24)	(32)	(78)	(96)		—	(24)	(1)	(78)
Realized and unrealized gains (losses) on financial instruments, net		41	(12)	101	(127)		(8)	41	29	101
Gains (losses) on transactions, net		—	223	—	224
Tax sharing income (expense) with Liberty Broadband							36	(3)	78	(16)
Other, net		—	(65)	(10)	(65)		37	3	83	6
Other income (expense)	$	(104)	16	(343)	(354)	$	(42)	(104)	(154)	(343)

Interest expense. Interest expense ~~increased $23~~decreased $14 million and ~~$66~~$13 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding periods in the prior year. The ~~increases were primarily related to~~ ~~dividends incurred and paid related to our 8.0% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share (the “Preferred Stock”) recorded through~~decrease in interest expense for the three and nine months ended September 30, 2022, compared to the same periods in the prior year, is due to ~~the accounting treatment.~~lower outstanding debt at QVC, including finance lease obligations.

Share of earnings (losses) of affiliates. Share of losses of affiliates decreased $8$24 million and ~~$18~~$77 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding periods in the prior year. The losses decreased during the three and nine months ended September 30, ~~2021~~2022 due to ~~improved results at~~the sale and wind down of the Company’s alternative energy ~~entities. These~~entities as the federal tax credits expire. Historically, the alternative energy entities typically ~~operate~~

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operated at a loss, and the Company ~~records~~recorded its share of such losses, but ~~have~~had favorable tax attributes and credits, which ~~are~~were recorded in the Company’s tax accounts.

Realized and unrealized gains (losses) on financial instruments, net. Realized and unrealized gains (losses) on financial instruments, net are comprised of changes in the fair value of the following:


	Three months ended			Nine months ended		Three months ended			Nine months ended
	September 30,			September 30,		September 30,			September 30,
	2021		2020	2021	2020	2022		2021	2022	2021

	amounts in millions					amounts in millions
Equity securities		48	2	98	(2)		—	48	(5)	98
Exchangeable senior debentures		(50)	(145)	(183)	(225)		130	(50)	320	(183)
Indemnification asset		8	94	49	107		(138)	8	(287)	49
Other financial instruments		35	37	137	(7)		—	35	1	137
	$	41	(12)	101	(127)	$	(8)	41	29	101

The changes in realized and unrealized gains (losses) on financial instruments, net are due to market activity in the applicable period related to the financial instruments that are marked to market on a periodic basis. The ~~increase~~decrease in realized and unrealized gains for the three and nine months ended September 30, ~~2021,~~2022, compared to the corresponding period in the prior year, was primarily driven ~~by a reduction in unrealized losses on the exchangeable senior debentures driven~~ ~~by less growth in stock prices of the securities underlying the debentures than the prior year, partially offset~~ by a decrease in unrealized gains on the indemnification asset (described in note 4 of the accompanying condensed consolidated financial statements) ~~and~~, a decrease in unrealized gains related to derivative instruments. The increase in realized and unrealized gains for the nine months ended September 30, 2021, compared to the corresponding period in the prior year, was primarily driven by an increase in unrealized gains related to derivative instruments and a ~~reduction~~decrease in unrealized ~~losses~~gains related to several of the Company’s equity securities, partially offset by an increase in unrealized gains on the exchangeable senior debentures driven by ~~less growth~~declines in stock prices of the securities underlying the debentures ~~than~~compared to the prior year~~, partially offset by~~.

Tax sharing income (expense) with Liberty Broadband. The Company has a ~~decrease in unrealized gains on the indemnification asset (described in note 4 of the accompanying condensed consolidated financial statements). In addition,~~tax sharing agreement with Liberty Broadband. As a result, the Company ~~has several small equity investments in entities that went through initial public offerings~~recognized tax sharing income of $36 million and ~~allowed the investments to be marked to market with unrealized gains recognized, which impacted both~~$78 million for the three and nine months ended September 30, ~~2021.~~

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~~Table~~2022, respectively, and tax sharing expense of ~~Contents~~

~~Gains (losses) on transactions, net.~~ ~~Gains (losses) on transactions, net during~~$3 million and $16 million for the three and nine months ended September 30, 2020 were the result of 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.2021, respectively.

Other, net. Other, net ~~loss decreased $65~~income increased $34 million and ~~$55~~$77 million for of the three and nine months ended September 30, ~~2021,~~2022, respectively, compared to the corresponding periods in the prior year. The decreased losses in both periods were primarily the result of a loss on the early extinguishment of debt in the prior year and no similar loss in the current year, decreased tax sharing expense with Liberty Broadband Corporation (“Liberty Broadband”) and increased interest and dividend income, partially offset by increased foreign exchange losses.

~~Income taxes.~~ ~~We had income tax expense of $20 million and $70 million~~increase for the three months ended September 30, ~~2021~~2022, compared to the same period in the prior year, was primarily the result of an increase in foreign currency exchange gains, and ~~2020, respectively, and income tax expense~~a gain on early extinguishment of ~~$113 million and $111 million~~debt in the current year. The increase for the nine months ended September 30, 2022, compared to the same period in the prior year, was primarily the result of an increase in foreign currency exchange gains, the sale of warrants at QVC in the current year, and a gain on early extinguishment of debt in the current year.

Income taxes. During the three months ended September 30, 2022 and 2021, we had losses before income taxes of $2,649 million and ~~2020, respectively. Income~~income before income taxes of $170 million, respectively, and income tax expense ~~was lower than~~of $87 million and $20 million, respectively. The most significant portion of the ~~U.S. statutory tax rate of 21%~~losses before income taxes during the three months ended September 30, 2022 relate to a goodwill impairment that is not deductible for tax purposes. During the three months ended September 30, 2021, the Company recognized additional tax benefit due to tax benefits from tax credits generated by our alternative energy investments, partially offset by state and foreign income tax expense, and an increase in the valuation allowance against certain deferred taxes. ~~Income tax expense was lower than~~ During the ~~U.S. statutory tax rate of 21% during the three~~nine months ended September 30, ~~2020 due~~2022 and 2021, we had losses before income taxes of $2,237 million and income before income taxes of $737 million, respectively, and income tax expense of $265 million and $113 million, respectively. The most significant portion of the losses before income taxes during the nine months ended September 30, 2022 relate to a goodwill impairment that is not deductible for tax purposes. During the nine months ended September 30, 2021, the Company recognized additional tax benefits from tax credits generated by our alternative energy investments, partially offset by state and foreign income tax expense.Income tax expense was lower than the U.S. statutory tax rate of 21% during the nine months ended September 30, 2021 due to tax benefits from tax credits generated by our alternative energy investments, partially offset by state and foreign income tax expense. Income tax expense was lower than the U.S. statutory tax rate of 21% during the nine months ended September 30, 2020 due to tax benefits from tax credits generated by our alternative energy investments, partially offset by state and foreign income tax expense.

Net earnings. We had net losses of $2,736 million and net earnings of $150 ~~million and $352~~ million for the three months ended September 30, 2022 and 2021, respectively, and ~~2020, respectively,~~net losses of $2,502 million and net earnings of $624 ~~million and $577~~ million for the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The change in net earnings (loss) was the result of the above-described fluctuations in our revenue, expenses and other gains and losses.

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Material Changes in Financial Condition

As of September 30, ~~2021,~~2022, substantially all of our cash and cash equivalents are invested in U.S. Treasury securities, securities of other government agencies, 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, debt (including availability under QVC’s ~~Senior Secured Credit Facility,~~bank credit facilities, as discussed in note 6 of the accompanying ~~condensed~~ consolidated financial ~~statements, debt issuances, equity issuances, interest receipts, proceeds from asset sales,~~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. For example, under QVC’s bond indentures, it is able to pay dividends or make other restricted ~~such as,~~payments if it is not in default on its senior secured notes and its consolidated leverage ratio is no greater than 3.5 to 1.0. In addition, under QVC’s bank credit facility it is able to pay dividends or make other restricted payments if it is not in default on the ~~case~~bank credit facility and the consolidated leverage ratio of QVC, QVC Global Corporate Holdings, LLC, Zulily and ~~Zulily, due~~Cornerstone is no greater than 4.0 to ~~a requirement that a~~1.0. Further, under QVC’s bond indentures and the bank credit facility credit agreement, unlimited dividends are permitted to service the debt of Qurate Retail so long as there is no default (i.e., no leverage ratio (calculated in accordance with the terms of such indebtedness) of less than 3.5 must be maintained as of September 30, 2021. On October 27, 2021, QVC’s Senior Secured Credit Facility was amended to, among other things, extend the maturity date to October 2026, improve the stated interest rates and financial covenants, and upsize the amount from $2.95 billion to $3.25 billion.

test is needed).

~~I-31~~

~~Table of Contents~~

As of September 30, ~~2021,~~2022, Qurate Retail's liquidity position included the following:


	~~Cash and cash~~
	~~equivalents~~

	~~amounts in millions~~
~~QVC~~	$	~~628~~
~~Zulily~~		8
~~Corporate and other~~		~~162~~
~~Total Qurate Retail~~	$	~~798~~

		~~Borrowing capacity~~
		~~amount in millions~~
~~QVC Senior Secured Credit Facility~~	$	~~2,808~~


	Cash and cash
	equivalents

	amounts in millions
QVC	$	517
Zulily		5
Corporate and other		102
Total Qurate Retail	$	624

		Borrowing capacity
		amount in millions
QVC Senior Secured Credit Facility	$	2,683

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. As of September 30, ~~2021,~~2022, the Company had approximately ~~$279~~$219 million of cash, cash equivalents and restricted cash held in foreign subsidiaries that is available for domestic purposes with no significant tax consequences upon repatriation to the United States. QVC accrues foreign taxes on the unremitted earnings of its international subsidiaries. Approximately ~~73%~~82% of QVC’s foreign cash balance was that of QVC-Japan (as defined below). QVC owns 60% of QVC-Japan and shares all profits and losses with the 40% minority interest holder, Mitsui & Co., LTD (“Mitsui”).

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 although we ~~do not~~believe our businesses will generate positive cash flow from operations we anticipate ~~any~~ significant reductions ~~in that amount in future periods.~~from the historical average during 2022.


	Nine months ended			Nine months ended
	September 30,			September 30,
	2021		2020	2022		2021

	amounts in millions			amounts in millions
Cash Flow Information
Net cash provided (used) by operating activities	$	715	1,855	$	(37)	715
Net cash provided (used) by investing activities	$	(483)	(25)	$	704	(483)
Net cash provided (used) by financing activities	$	(219)	(1,464)	$	(571)	(219)

During the nine months ended September 30, ~~2021,~~2022, Qurate Retail's primary ~~uses~~sources of cash were ~~repurchases~~proceeds from the sale of ~~Series A Qurate Retail common stock~~fixed assets of ~~$216 million, expenditures for television distribution rights of $184 million, investments in and loans to cost and equity method investments of $177~~$701 million and ~~capital expenditures~~insurance proceeds related to the Rocky Mount fire of ~~$169~~$280 million (see note 8 to the accompanying condensed consolidated financial statements), partially offset by net debt ~~borrowings~~repayments of ~~$110~~$508 million, capital expenditures of $171 million and dividends paid to noncontrolling interests of $38 million. The cash proceeds from

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the sale of fixed assets of $701 million were used to repay amounts outstanding under QVC’s Senior Secured Credit Facility.

The projected uses of Qurate Retail cash for the remainder of ~~2021~~2022 are continued capital improvement spending between ~~$75~~$100 million and ~~$105~~$127 million, debt service payments (including approximately ~~$35~~$42 million for interest payments on outstanding debt), repayment of debt, payment of dividends to the holders of Qurate Retail 8.0% Series A Cumulative Redeemable Preferred Stock (the “Preferred Stock”), the potential buyback of common stock under the approved share buyback program, ~~payment of dividends to the holders of the Preferred Stock~~ and additional investments in existing or new businesses. We also may be required to make net payments of income tax liabilities to settle items under discussion with tax authorities. We expect that cash on hand and cash provided by operating activities and borrowing capacity in future periods will be sufficient to fund projected uses of cash.

~~On November 4, 2021, Qurate Retail announced that its Board~~In July 2022, QVC generated cash through a series of ~~Directors declared a special~~sale-leaseback transactions (see note 8 to the accompanying condensed consolidated financial statements), and used this cash ~~dividend in the amount of $1.25 per common share for an aggregate cash dividend of approximately $495 million based on shares~~to repay amounts outstanding as of October 31, 2021 (to be updated for actual shares outstanding as of the record date). The dividend is payable on November 22, 2021 to stockholders of record of Qurate Retail’s Series A and Series B common stock as of the close of business on November 15, 2021. under QVC’s Senior Secured Credit Facility.

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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 televised shopping programs, including live and recorded content, are ~~distributed~~broadcast across multiple channels nationally on a full-time basis, including QVC, QVC 2, QVC 3, HSN and HSN2. QVC U.S. programming is also available on QVC.com and HSN.com, QVC’s U.S. websites; virtual multichannel video programming distributors (including Hulu + Live TV, AT&T TV, and You Tube TV); applications via streaming video; Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex and ~~Xfinity Flex;~~Samsung TV Plus; mobile applications; social pages and over-the-air broadcasters.

QVC’s digital platforms enable consumers to purchase goods offered on its ~~televised~~broadcast programming, along with a wide assortment of products that are available only on its U.S. websites. QVC.com and ~~HSN.com. QVC.com and HSN.com and QVC’s~~its other digital platforms (including its 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.com and HSN.com~~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.

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 and Italy. In some of the countries where QVC operates, its televised shopping programs are ~~distributed~~broadcast across multiple QVC channels: QVC Style and QVC2 in Germany and QVC Beauty, QVC Extra, and QVC Style in the U.K. Similar to the U.S., QVC’s international businesses also engage customers via 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's Japanese operations (“QVC-Japan”) are conducted through a joint venture with Mitsui. QVC-Japan is owned 60% by QVC and 40% by Mitsui. QVC and Mitsui share in all profits and losses based on their respective ownership interests. During ~~both of~~ the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, QVC-Japan paid dividends to Mitsui of $39 million and $46 ~~million.~~million, respectively.

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QVC's operating results were as follows:


	Three months ended			Nine months ended		Three months ended			Nine months ended
	September 30,			September 30,		September 30,			September 30,
	2021		2020	2021	2020	2022		2021	2022	2021

	amounts in millions					amounts in millions
Net revenue	$	2,512	2,703	8,002	7,853	$	2,217	2,512	6,963	8,002
Cost of sales		(1,617)	(1,722)	(5,130)	(5,041)
Cost of goods sold (excluding depreciation, amortization and Rocky Mount inventory losses shown below)							(1,526)	(1,617)	(4,680)	(5,130)
Operating expenses		(183)	(184)	(565)	(548)		(186)	(183)	(543)	(565)
SG&A expenses (excluding stock-based compensation and transaction related costs)		(272)	(285)	(840)	(855)
SG&A expenses (excluding stock-based compensation)							(300)	(272)	(879)	(840)
Adjusted OIBDA		440	512	1,467	1,409		205	440	861	1,467
Fire related costs, net of (recoveries) (including Rocky Mount inventory losses)							137	—	39	—
Gains (losses) on sales of fixed assets, net							277	—	520	—
Impairment of intangible assets							(2,715)		(2,715)
Stock-based compensation		(13)	(10)	(33)	(26)		(9)	(13)	(27)	(33)
Depreciation and amortization		(111)	(114)	(315)	(344)		(94)	(111)	(305)	(315)
Operating income	$	316	388	1,119	1,039	$	(2,199)	316	(1,627)	1,119

Net revenue was generated in the following geographical areas:


	Three months ended				Nine months ended				Three months ended				Nine months ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021

	amounts in millions								amounts in millions
QxH	$	1,813		1,980		5,738		5,782	$	1,663		1,813		5,101		5,738
QVC International		699		723		2,264		2,071		554		699		1,862		2,264
Consolidated QVC	$	2,512		2,703		8,002		7,853	$	2,217		2,512		6,963		8,002

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QVC's consolidated net revenue decreased ~~7.1%~~11.7% and ~~increased 1.9%~~13.0% for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding ~~period~~periods in the prior year. The three month decrease in net revenue is primarily due to ~~an 8.2%~~a 6.6% decrease in units shipped, ~~and~~$113 million in unfavorable foreign exchange rates, a ~~$29~~$23 million decrease in shipping and handling revenue ~~which was partially offset~~driven by QxH and a ~~1.5% increase~~slight decline in average selling price per unit ~~("ASP"~~(“ASP”), primarily at QxH, partially offset by an increase in ASP at QVC-International. These decreases were partially offset by a $30 million decrease in estimated product returns driven by ~~QxH~~QxH. The nine month decrease in net revenue is primarily due to an 8.5% decrease in units shipped, $256 million in unfavorable foreign exchange rates, a $77 million decrease in shipping and ~~QVC Japan~~handling revenue, and a ~~$34~~slight decline in ASP primarily at QxH, partially offset by an increase in ASP at QVC-International. These declines were partially offset by a $92 million decrease in estimated product returns primarily driven by QxH. The nine month increase in net revenue is primarily due to a 0.8% increase in units shipped, a $74 million decrease in estimated product returns primarily driven by QxH and $92 million in favorable foreign exchange rates, which was partially offset by a 1% decline in ASP, primarily driven by QxH, and a $15 million decrease in shipping and handling revenue.

During the ~~three and~~ nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the changes in revenue and expenses were affected by changes in the exchange rates for the U.K. Pound Sterling, the Euro and the Japanese Yen. 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.

In describing 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. QVC refers to the results of this calculation as the impact of currency exchange rate fluctuations. Constant currency operating results refers to operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand QVC’s underlying performance without the effects of currency exchange rate fluctuations.

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The percentage change in net revenue for each of QVC's geographic areas in U.S. Dollars and in constant currency was as follows:


	Three months ended						Nine months ended						Three months ended						Nine months ended
	September 30, 2021						September 30, 2021						September 30, 2022						September 30, 2022
	U.S. Dollars		Foreign Currency Exchange Impact		Constant Currency		U.S. Dollars		Foreign Currency Exchange Impact		Constant currency		U.S. Dollars		Foreign Currency Exchange Impact		Constant Currency		U.S. Dollars		Foreign Currency Exchange Impact		Constant currency
QxH	(8.4)	%	—	%	(8.4)	%	(0.8)	%	—	%	(0.8)	%	(8.3)	%	—	%	(8.3)	%	(11.1)	%	—	%	(11.1)	%
QVC International	(3.3)	%	0.4	%	(3.7)	%	9.3	%	4.4	%	4.9	%	(20.7)	%	(16.0)	%	(4.7)	%	(17.8)	%	(11.3)	%	(6.5)	%

The decrease in QxH net revenue for the three months ended September 30, ~~2021~~2022 was primarily due to a ~~9.4%~~6.4% decrease in units shipped, a 1.9% decline in ASP and a ~~$25~~$19 million decrease in shipping and handling ~~revenue, which was~~revenue. These declines were partially offset by a ~~1.3% increase in ASP and a $29~~$27 million decrease in estimated product returns. For the three months ended September 30, ~~2021,~~2022, QxH experienced shipped sales declines ~~in home, electronics, beauty and accessories with growth in~~across all ~~other~~ categories. For the nine months ended September 30, ~~2021,~~2022, QxH net revenue decreased due to a ~~2.5%~~9.3% decrease in units shipped, a 1.5% decline in ASP, and a ~~$14~~$61 million decrease in shipping and handling ~~revenue,~~revenue. These declines were partially offset by ~~a $68~~an $83 million decrease in estimated product ~~returns and a 0.7% increase in units shipped.~~returns. For the nine months ended September 30, ~~2021,~~2022, QxH experienced shipped sales ~~growth in apparel and accessories with~~ declines inacross all ~~other~~ categories. The decrease in estimated product returns for the three and nine months ended September 30, ~~2021~~2022 was primarily due to a decrease in sales volume. The ~~decrease~~decline in ~~estimated product returns~~ASP for the three and nine months ended September 30, ~~2021~~2022 was primarily ~~driven by lower return rates across all categories.~~due to inventory reduction actions.

QVC International net revenue decline in constant currency for the three months ended September 30, ~~2021~~2022 was primarily due to ~~a 5.3%~~7.1% decrease in units shipped driven by ~~decreases~~Germany and the U.K. and a $4 million decrease in ~~units shipped across all markets,~~shipping and handling revenue. These declines were partially offset by a ~~2.1%~~3.5% increase in ASP ~~driven by ASP increases in Japan and the U.K.~~across all markets except Italy. For the three months ended September 30, ~~2021,~~2022, QVC International experienced shipped sales growth in constant currency in apparel and jewelry with declines across all product categories except electronics which remained flat. QVC International net revenue decline in constant currency for the nine months ended September 30, 2022 was primarily due to a 6.7% decrease in units shipped across all markets except Japan and a $16 million decrease in shipping and handling revenue. These declines were partially offset by a 1.4% increase in ASP driven by the U.K. and a $10 million decrease in estimated product returns across all markets except the U.K. For the nine months ended September 30, 2022, QVC-International experienced shipped sales decline in constant currency across all product categories except apparel. QVC-International net revenue growth in constant currency for the nine months ended September 30, 2021 was primarily due to a 3.0% increase in ASP, driven by ASP increases across all markets except Germany, and a 0.9% increase in units shipped, driven by increases in units shipped in Germany and Japan. For the nine months ended September 30, 2021, QVC-International experienced shipped sales growth in constant currency across all product categories.

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QVC's future net revenue growth will primarily depend on sales growth from e-commerce, mobile platforms, and applications via streaming video, additions of new customers from households already receiving QVC's televised programming and increased spending from existing customers. QVC's future net revenue may also be affected by (i) the willingness of cable television and direct-to-home satellite system operators to continue carrying QVC's programming service; (ii) 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 video-on-demand technologies and Internet video services; (iv) QVC’s ability to source new and compelling products; and (v) general economic conditions.

QVC's cost of ~~sales~~goods sold as a percentage of net revenue was 68.8% and 67.2% for the three and nine months ended September 30, 2022, respectively, compared to 64.4% and 64.1% for the three and nine months ended September 30, 2021, ~~respectively, compared to 63.7% and 64.2%~~respectively. The increase in cost of goods sold as a percentage of revenue for the three and nine months ended September 30, ~~2020, respectively.~~2022 is primarily due to higher fulfillment costs driven by QxH due to increased freight and warehousing costs. QVC also experienced product margin pressure at QxH and increased inventory obsolescence across both segments. The increase in cost of sales as a percentage of revenue for the three months ended September 30, 2021 is primarily due to increased warehouse expenses driven by higher wages at QxH, increased freight costs and lower shipping and handling revenue at QxH. These increases were partially offset by decreased obsolescence as a result of less aged inventory at QxH. The decrease in cost of salesgoods sold as a percentage of revenue for the nine months ended September 30, ~~2021~~2022 is primarily due to ~~decreased obsolescence as a result of less aged inventory at QxH, and favorable estimated product returns at QxH. These decreases were partially offset~~higher fulfillment costs across both segments driven by increased freight ~~charges~~ and ~~warehouse expenses~~warehousing costs. The increase in cost of goods sold was also impacted by increased inventory obsolescence at QxH. Higher fulfillment costs at QxH ~~and lower shipping and handling revenue at QxH. Product margin~~ for the three and nine months ended September 30, ~~2021 was flat~~2022 were also impacted by strains on our fulfillment network due to ~~margin favorability primarily in Japan,~~the loss of the Rocky Mount fulfillment center, and rent related to warehouses sold and leased back during the period, partially offset by ~~margin pressure at QxH.~~efficiencies from fulfillment centers closed in the prior year.

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QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees and telecommunications expenses. Operating expenses ~~decreased $1 million~~were 8.4% and ~~increased $17 million~~7.8% of net revenue for the three and nine months ended September 30, ~~2021,~~2022, respectively, ~~as compared to the same periods in the prior year. The nine month increase is primarily due to a $9 million increase in customer service expenses primarily at QxH~~ and ~~a $5 million increase due to unfavorable exchange rates. As a percentage of net revenue, such expenses~~ were 7.3% and 7.1% for the three and nine months ended September 30, 2021, ~~respectively,~~respectively. Operating expenses increased $3 million and ~~were 6.8% and 7.0%~~decreased $22 million for the three and nine months ended September 30, ~~2020, respectively.~~2022, as compared to the same periods in the prior year. The three month increase is primarily due to a $6 million increase in telecommunications expenses, and a $3 million increase in personnel costs driven by higher wages at QxH. The increase in costs was partially offset by $10 million as a result of favorable exchange rates. The nine month decrease is primarily due to a $22 million decrease as a result of favorable exchange rates.

QVC's SG&A expenses (excluding stock-based compensation) include personnel, information technology, provision for doubtful accounts, production costs, and marketing and advertising expenses. Such expenses ~~decreased $13~~increased $28 million and ~~$15~~increased $39 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the same periods in the prior year, and as a percentage of net revenue, increased from 10.8% to 13.5% and from 10.5% to ~~10.8% and decreased from 10.9% to 10.5%~~12.6% for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the three and nine months ended September 30, ~~2020.~~2021. For the three months ended September 30, ~~2021,~~2022, there was a ~~$29~~$14 million ~~decrease~~increase in personnel costs ~~primarily at QxH. This decrease was partially offset by an $11~~across both segments, a $14 million increase in ~~online~~ marketing primarily at QxH and to a $3lesser extent QVC International, a $5 million increase in ~~credit losses~~consulting expenses at QxH, and a $4 million increase in rent expense, primarily at QxH. These increases were partially offset by a $17 million decrease due to favorable ~~adjustments~~exchange rates. The increase in personnel costs for the ~~prior year based on actual collections and the release of the credit loss reserve that~~three months ended September 30, 2022 was ~~recorded as a result of the additional risk~~ due to ~~COVID-19.~~

higher wages across both segments. For the nine months ended September 30, ~~2021,~~2022, the ~~decrease~~increase was primarily due to a ~~$43~~$28 million ~~decrease~~increase in credit losses, ~~and a $34 million decrease in personnel costs, both~~ primarily at ~~QxH.~~QxH, a $14 million increase in marketing expenses primarily at QxH and to a lesser extent QVC International, a $13 million increase in consulting expenses primarily at QxH, and increases in IT expenses, non-income related taxes and rent expenses. These ~~decreases~~increases were partially offset by a ~~$48~~$35 million ~~increase in online marketing primarily at QxH, and a $13 million increase~~decrease due to ~~unfavorable~~favorable exchange rates. The ~~decrease~~increase to estimated credit losses for the nine months ended September 30, ~~2021~~2022 was due to lower expected collections in the current year compared to favorable adjustments recognized in the prior year based on actual collections ~~and enhanced risk screening. The decrease~~experience.

For the three months ended September 30, 2022, the gain in the fire related costs, net of (recoveries) line primarily related to ~~personnel~~insurance proceeds received for inventory and fixed asset losses. For the nine months ended September 30, 2022, the gain primarily related to insurance proceeds received for inventory and fixed asset losses partially offset by write-downs on Rocky Mount inventory. Fire related costs, net of (recoveries) includes expenses directly related to the Rocky Mount fulfillment center fire net of expected and received insurance recoveries. Expenses indirectly related to the Rocky Mount fulfillment center fire, including operational inefficiencies, are primarily included in Cost of goods sold. These indirect expenses will be submitted as part of QVC’s business interruption insurance claim; however, there can be no guarantee they will be recovered.

QVC recorded $277 million and $520 million of gains on sales of fixed assets for the three and nine months ended September 30, ~~2021~~2022, respectively. For the three months ended September 30, 2022, the gain related to the sale leaseback of five owned and operated U.S. properties. For the nine months ended September 30, 2022, the gain was primarily ~~due~~related to athe sale leaseback of five U.S. properties and the Ontario, California distribution center.

QVC recorded impairment losses of $2,715 million for the three and nine months ended September 30, 2022, related to the decrease in ~~incentive pay for 2021 in addition to severance~~the fair value of the HSN indefinite-lived tradename and ~~a work from home allowance~~the QxH reporting unit as a result of ~~COVID-19, which~~the quantitative assessments that were ~~both recorded in~~performed by the ~~second quarter of 2020.~~Company (see note 5 to the accompanying consolidated financial statements).

Stock-based compensation includes compensation related to options and restricted stock units granted to certain officers and employees. QVC recorded ~~$13~~$9 million and ~~$33~~$27 million of stock-based compensation expense for the three and nine months ended September 30, ~~2021,~~2022, respectively, and ~~$10~~$13 million and $26 million for the three and nine months ended September 30, 2020, respectively. The increase in stock compensation expense for the nine months ended September 30, 2021 is primarily related to certain officers not reaching performance targets for restricted stock units for the nine months ended September 30, 2020.

~~Depreciation and amortization decreased $3 million and $29~~$33 million for the three and nine months ended September 30, 2021, respectively. The decrease in stock-compensation expense is primarily due to the retirement of QVC’s former Chief Executive Officer.

Depreciation and amortization decreased $17 million and $10 million for the three and nine months ended September 30, 2022, respectively, and included $15 ~~million and $17~~ million of acquisition related amortization for both of the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and $46 million for both of the nine months ended September 30, 2022 and ~~$50 million of acquisition~~2021. The decrease for the three and nine months ended September 30, 2022 was primarily related to a decrease in

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depreciation due to assets disposed of related to the Rocky Mount fulfillment center fire and assets sold as part of the Ontario distribution center and U.S. properties sale leasebacks, partially offset by an increase in software amortization ~~for the nine months ended September 30, 2021~~associated with QVC’s new enterprise resource planning system and ~~2020, respectively. Channel~~increased channel placement amortization ~~decreased due to certain channel placement agreements becoming fully amortized.~~and related expenses.

Zulily. Zulily is an online retailer offering customers a fun and entertaining shopping experience with a fresh selection of new product styles launched each day. The Zulily website was launched in January 2010 with the goal of revolutionizing the way consumers shop. Through its app, mobile and desktop experiences, Zulily helps its customers discover new and unique products at great values that they would likely not find elsewhere. Zulily’s merchandise includes women’s, children’s and men’s apparel and other products such as home, accessories and beauty products.

Zulily's stand-alone operating results for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 were as follows:


	Three months ended			Nine months ended		Three months ended			Nine months ended
	September 30,			September 30,		September 30,			September 30,
	2021		2020	2021	2020	2022		2021	2022	2021

	amounts in millions					amounts in millions
Net revenue	$	328	395	1,102	1,133	$	200	328	652	1,102
Costs of sales		(262)	(288)	(851)	(836)
Costs of goods sold							(160)	(262)	(508)	(851)
Operating expenses		(10)	(11)	(30)	(31)		(6)	(10)	(20)	(30)
SG&A expenses (excluding stock-based compensation)		(73)	(69)	(223)	(192)		(59)	(73)	(185)	(223)
Adjusted OIBDA		(17)	27	(2)	74		(25)	(17)	(61)	(2)
Restructuring charges							(3)	—	(11)	—
Stock-based compensation		(3)	(4)	(11)	(11)		(2)	(3)	(8)	(11)
Depreciation and amortization		(20)	(20)	(60)	(60)		(7)	(20)	(46)	(60)
Impairment of intangible assets							(366)	—	(366)	—
Operating income (loss)	$	(40)	3	(73)	3	$	(403)	(40)	(492)	(73)

Zulily's consolidated net revenue decreased ~~17.0%~~39.0% and ~~2.7%~~40.8% for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding ~~period~~periods in the prior year. The decrease in net revenue for the three and nine months ended September 30, ~~2021~~2022 was ~~primarily related to~~the result of a ~~decrease of 19.2%~~46.0% and 47.5% decline, respectively, in total units shipped ~~driven~~offset by a ~~1.3% decrease~~13.6% and 12.7% increase, respectively, in ASP. The decline in shipped units primarily resulted from a 42.9% decline in active customers ~~coupled with~~due to a ~~decrease~~reduction in ~~new customers~~total marketing spend and ~~lower purchasing frequency from existing customers when compared to~~product scarcity.

Zulily's cost of goods sold as a percentage of net revenue was 80.0% and 79.9% for the ~~surge in the prior year’s demand for online shopping~~three months ended September 30, 2022 and ~~Zulily’s merchandise, partially offset by a 3.7% increase in ASP primarily to offset shipping costs. The decrease in net revenue~~2021, respectively, and 77.9% and 77.2% for the nine months ended September 30, ~~2021 was primarily related to a decrease of 5.5% in total units shipped, partially offset by a 4.4% increase is ASP.~~

~~Zulily's cost of sales as a percentage of net revenue was 79.9%~~2022 and ~~72.9% for the three months ended September 30,~~ 2021, ~~and 2020, respectively, and 77.2% and 73.8% for the nine months ended September 30, 2021 and 2020,~~ respectively. For the three months ended September 30, ~~2021,~~2022, the increase was primarily due to ~~higher shipping and fulfillment costs, coupled with~~ unfavorable ~~product margins. Higher fulfillment costs were the result of higher wages and benefits for warehouse employees, and a deleverage on~~ fixed costs ~~at the fulfillment centers. Higher shipping costs were due to higher inbound costs, heavier items, higher fuel costs, truckload volume increases, and higher surcharges.~~driven mostly by sales deleverage. For the nine months ended September 30, ~~2021,~~2022, the increase was primarily due to ~~higher shipping~~unfavorable fixed costs ~~due to the same factors discussed above.~~driven mostly by sales deleverage, partially offset by favorable product margin.

Operating expenses are principally comprised of credit card processing fees and customer service expenses. For the three and nine months ended September 30, ~~2021,~~2022, operating expenses decreased ~~slightly~~ compared to the corresponding period in the prior year due to decreased sales volumes.

Zulily’s SG&A expenses (excluding stock-based compensation) include personnel related costs for general corporate functions, marketing and advertising expenses, information technology, and the costs associated with the use by these functions of facilities and equipment, including rent. For the three months ended September 30, ~~2021,~~2022, as a percentage of net revenue, these expenses increased from ~~17.5%~~22.3% to ~~22.3%~~29.5% and for the nine months ended September 30, ~~2021,~~2022, as a percentage of net revenue, these expenses increased from ~~16.9%~~20.2% to ~~20.2%~~28.4%. ~~The increases were~~For the three and nine months ended September 30, 2022, the increase was primarily attributable to sales deleverage and an increase in technology spend partially offset by reduced marketing ~~spend, due~~spend.

Zulily recorded $3 million and $11 million of restructuring charges during the three and nine months ended September 30, 2022, respectively, principally related to ~~higher costs for web-based advertising.~~ its regional office space strategy and expenses associated with its Pennsylvania facility closure, coupled with reduction in corporate workforce.

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Zulily’s total depreciation and amortization expense ~~remained flat~~decreased $13 million and $14 million for the three and nine months ended September 30, ~~2021,~~2022, respectively, as compared to the corresponding periods in the prior year. The decrease for the three months ended September 30, 2022 was primarily due to amortization of Zulily’s customer relationship asset reaching the end of its useful life on December, 31, 2021. The decrease for the nine months ended September 30, 2022 was primarily due to amortization of Zulily’s customer relationship asset reaching the end of its useful life on December, 31, 2021, partially offset by accelerated depreciation resulting from its Pennsylvania facility closure.

~~Zulily’s current business trends~~Zulily recorded impairments of its trademarks and ~~results are making it a challenge for~~goodwill in the ~~business to be able to realize its current long-term forecast. Zulily is reevaluating its long term forecast~~amounts of $140 million and ~~business model due~~$226 million, respectively, during the three and nine months ended September 30, 2022. See note 5 in the accompanying notes to the impact of supply chain constraints and cooresponding impact to product availability as well as increasing marketing costs. The Company will continue to monitor Zulily’s current business performance versus the current and updated long-term forecasts, among other relevant considerations, to determine if the carrying value of its assets are appropriate. Future outlook declines in revenue, cash flows, or other factors could result in a sustained decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material.condensed consolidated financial statements for additional information.

Item 3. 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 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 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 September 30, ~~2021,~~2022, our debt is comprised of the following amounts:


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

	dollar amounts in millions								dollar amounts in millions
QxH and QVC International	$	NA	NA	%	$	4,660	4.9	%	$	244	4.5	%	$	3,914	5.1	%
Zulily	$	120	1.6	%	$	—	—	%	$	261	4.5	%	$	—	—	%
Corporate and other	$	—	—	%	$	1,984	5.3	%	$	40	4.5	%	$	1,906	5.4	%

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, Qurate Retail may experience economic loss and a negative impact on earnings and equity with respect to our holdings solely as a result of foreign currency exchange rate fluctuations. QVC's reported Adjusted OIBDA for the nine months ended September 30, ~~2021~~2022 would have been impacted by approximately $4$3 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 of the interest rate swap yields, in

~~I-37~~I-38

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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.

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Item 4. Controls and Procedures.

Disclosure Controls and Procedures

In accordance with Rules 13a-15 and 15d-15 under the Securities 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 not effective as of September 30, ~~2021~~2022 because of the material weakness in its internal control over financial reporting that is described below in “Material Weakness in Internal Control over Financial Reporting.”

However, giving full consideration to ~~provide reasonable assurance that information required to be~~the material weakness, the Company’s management believes the consolidated financial statements included in this Quarterly Report on Form 10-Q present fairly, in all material respects, the Company’s financial position, results of operations and cash flows for the periods 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.~~

conformity with U.S. generally accepted accounting principles (“GAAP”).

Changes in Internal Control Over Financial Reporting

In ~~May 2021, QVC completed~~response to the ~~implementation~~material weakness described below, the Company reviewed the design of Zulily’s and QVC’s controls and began remediation activities to alleviate the initial phase of its new Enterprise Resource Planning (“ERP”) system, which has enabled standardization, modernization and best practice in QVC’s financial processes across its global markets and most brands. As a result of the implementation of phase one of a new ERP system, QVC has continued to refine certain related process-level and information technology general controls.

~~Except as described above,~~noted control deficiencies. Other than these items, there ~~has been~~was no change in the Company’s internal control over financial reporting that occurred during the ~~three months~~Company’s quarter ended September 30, ~~2021~~2022, that has materially affected, or is reasonably likely to materially affect, ~~its~~the Company’s internal control over financial reporting.

Material Weakness in Internal Control over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. We have identified a material weakness related to information technology general controls (“ITGCs”) at Zulily which also impact an inventory management system in place for certain QVC and HSN fulfillment centers. These ITGCs were not designed and operating effectively to ensure (i) that access to applications and data, and the ability to make program changes, were adequately restricted to appropriate personnel, (ii) that the activities of individuals with access to modify data and make program and job changes were appropriately monitored and (iii) that changes introduced in the production environment had undergone sufficient testing and review. Our business process controls (automated and manual) and reports and information that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted.

We believe these control deficiencies are due to:

●

Inadequate risk assessment to fully understand the nature and extent of risk related to certain segregation of duties, provisioning and the design of the change control environment.

●

Insufficient training of IT personnel related to change management and logical access processes.

●

Lack of adequate resources with knowledge of our internal controls over financial reporting related to general information technology systems.

●

Failure to select and apply appropriate ITGCs with accountability enforced through formal policies and procedures.

The control deficiencies did not result in any identified misstatements.

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Remediation Plan for Material Weakness in Internal Control over Financial Reporting

In response to the material weakness described above, the Company has developed a plan with oversight from the Audit Committee of the Board of Directors to remediate the material weakness. The remediation efforts are underway and include the following:

●

Enhancing the ITGC risk assessment process;

●

Evaluating talent and addressing identified gaps;

●

Delivering training on internal control over financial reporting;

●

Improving change management and logical access control activities that contributed to the ITGC material weakness including removing all inappropriate IT system access associated with the ITGC material weakness;

●

Implementing user activity monitoring for control activities contributing to the ITGC material weakness; and

●

Implementing additional compensating control activities over the completeness and accuracy of data provided by the affected systems.

The Company believes the foregoing efforts will remediate the material weakness described above. Because the reliability of the internal control process requires repeatable execution, the successful on-going remediation of the material weakness will require on-going review and evidence of effectiveness prior to concluding that the controls are effective.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

Any further impairment of our goodwill or other intangible assets could have a material adverse effect on our business, results of operations and financial condition.

From time to time we review the recoverability of goodwill and other certain identifiable intangible assets, including whenever events or circumstances indicate that the carrying value of a reporting unit, including goodwill, or an identifiable intangible asset may not be recoverable. We may incur impairment charges on goodwill or identifiable intangible assets if we determine that the fair values of a reporting unit, including goodwill, or identifiable intangible assets are less than their current carrying values. We evaluate, on a regular basis, whether events or circumstances have occurred that indicate all, or a portion, of the carrying amount of goodwill may no longer be recoverable, in which case an impairment charge to earnings would become necessary.

As a result of recent financial performance of certain subsidiary businesses, macroeconomic conditions (including inflation and higher interest rates) and a decline in the Company’s stock price, the Company identified significant goodwill impairments for the quarter ended September 30, 2022 for the QxH and Zulily reporting units relating to their tradenames and goodwill. These impairment charges resulted in a substantial reduction in our total stockholders’ equity.

Recent business trends and global economic conditions may continue to make it a challenge for certain subsidiary businesses to be able to realize their current long-term forecast. The Company will continue to monitor its subsidiary businesses’ current business performance versus the current and updated long-term forecasts, among other relevant considerations, to determine if the carrying value of its assets (including goodwill and trademarks) is appropriate. Future outlook declines in revenue, cash flows, or other factors could result in a further decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material, and we could be required to record additional impairment charges on our goodwill or other identifiable intangible assets in the future, which could result in further reductions to stockholders’ equity and material non-cash charges to our earnings and may negatively impact our stock price and financial condition.

We have identified a material weakness in our internal control over financial reporting, that, if not properly remediated, could adversely affect our business and results of operations.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis. As described in “Item 4. Controls and Procedures,” we have concluded that our disclosure controls and procedures were ineffective as of September 30, 2022 due to a material weakness in our internal control over financial reporting. The identified material weakness relates to information technology general controls (“ITGCs”) at Zulily, which also include an inventory management system in place for certain QVC and HSN fulfillment centers. Specifically, the ITGCs were not designed and operating effectively to ensure (i) that access to applications and data, and the ability to make program changes, were adequately restricted to appropriate personnel, (ii) that the activities of individuals with access to modify data and make program and job changes were appropriately monitored and (iii) that changes introduced in the production environment had undergone sufficient testing and review. Our business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been adversely impacted.

While the control deficiencies identified did not result in any identified misstatements, a reasonable possibility exists that a material misstatement to the annual or interim consolidated financial statements and disclosures will not be prevented or detected on a timely basis.

As further described in “Item 4. Controls and Procedures,” we are taking the necessary steps to remediate the material weakness. However, as the reliability of the internal control process requires repeatable execution, the successful on-going

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remediation of this material weakness will require on-going review and evidence of effectiveness prior to concluding that the controls are effective. Therefore, we cannot assure you that the remediation efforts will remain effective following their completion in the future or that additional or a similar material weakness will not develop or be identified.

Implementing any further changes to our internal controls may distract our officers and employees and entail material costs to implement new processes and/or modify our existing processes. Moreover, these changes do not guarantee that we will be effective in maintaining the adequacy of our internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could harm our business. In addition, investors’ perceptions that our internal controls are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm the price of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Programs

In May 2019, the board authorized the repurchase of $500 million of Series A Qurate Retail common stock (“QRTEA”) or Series B Qurate Retail common stock (“QRTEB”). In August 2021, the board authorized the repurchase of $500 million of QRTEA or QRTEB.

Series A Qurate Retail Common Stock






(c) Total Number

(d) Maximum Number

of Shares

(or Approximate Dollar

Purchased as

Value) of Shares that

(a) Total Number

(b) Average

Part of Publicly

May Yet Be Purchased

of Shares

Price Paid per

Announced Plans or

Under the Plans or

Period

Purchased

Share

Programs

Programs

July 1 - 31, 2021

3,404,055

$
12.22

3,404,055

$280
million
August 1 - 31, 2021

3,585,235

$
11.33

3,585,235

$739
million
September 1 - 30, 2021¹

4,587,483

$
11.18

4,587,483

$688
million
Total

11,576,773

$
11.53

11,576,773

~~(1)~~

~~Includes 1,923,077 shares repurchased as a result of the physical settlement of financial instruments during September 2021.~~

There were no repurchases of ~~QRTEB~~QRTEA or ~~Preferred Stock~~QRTEB during the three months ended September 30, ~~2021~~2022 under the Company’s share repurchase program.

During the three months ended September 30, ~~2021,~~2022, 366 shares of QRTEA, no shares of ~~QRTEA,~~ QRTEB orand 11 shares of Preferred Stock were surrendered by our officers and employees to pay withholding taxes and other deductions in connection with the vesting of their restricted stock, restricted stock units, and options.

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Item 6. Exhibits

(a) Exhibits

Listed below are the exhibits which are filed as a part of this Quarterly Report (according to the number assigned to them in Item 601 of Regulation S-K):


~~10.1~~		Employment Agreement, effective as of July 12, 2021, by and between David Rawlinson and Qurate Retail, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 13, 2021 (File No. 001-33982)).
~~10.2~~		Fifth Amended and Restated Credit Agreement, dated as of October 27, 2021, among QVC, Inc., Zulily, LLC, QVC Global Corporate Holdings, LLC and Cornerstone Brands, Inc., 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 October 28, 2021 (File No. 001-38654)).
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		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

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SIGNATURES

Pursuant to the requirements 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.

	QURATE RETAIL, INC.
Date: November 4, ~~2021~~2022	By:	/s/ DAVID RAWLINSON II
		David Rawlinson II President and Chief Executive Officer
Date: November 4, ~~2021~~2022	By:	/s/ BRIAN J. WENDLING
		Brian J. Wendling Chief Accounting Officer and Principal Financial Officer

~~II-3~~II-4


	Three months ended
	September 30, 2020
		QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home	$	819	286	115	248	1,468
Apparel		312	115	147	37	611
Beauty		297	168	17	—	482
Accessories		219	67	94	—	380
Electronics		197	25	3	—	225
Jewelry		93	59	12	—	164
Other revenue		43	3	7	—	53
Total Revenue	$	1,980	723	395	285	3,383


	Series A Qurate Retail Common Stock
				(c) Total Number	(d) Maximum Number
				of Shares	(or Approximate Dollar
				Purchased as	Value) of Shares that
	(a) Total Number	(b) Average		Part of Publicly	May Yet Be Purchased
	of Shares	Price Paid per		Announced Plans or	Under the Plans or
Period	Purchased	Share		Programs	Programs
July 1 - 31, 2021	3,404,055	$	12.22	3,404,055		$280	million
August 1 - 31, 2021	3,585,235	$	11.33	3,585,235		$739	million
September 1 - 30, 2021¹	4,587,483	$	11.18	4,587,483		$688	million
Total	11,576,773	$	11.53	11,576,773