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What changed in QVC INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of QVC INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+373 added−375 removedSource: 10-K (2024-02-28) vs 10-K (2023-03-01)

Top changes in QVC INC's 2023 10-K

373 paragraphs added · 375 removed · 300 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

70 edited+12 added−8 removed95 unchanged
Biggest changeThe following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated: • the continuing global and regional economic impacts of the COVID-19 pandemic and other public health-related risks and events, on 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 on our websites and our ability to convert visitors into consumers or contributors; • uncertainties inherent in the development and integration of new business lines and business strategies; • our future financial performance, including availability, terms and deployment of capital; • 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 business; • 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 inflation and increased labor costs; • increases in market interest rates; • changes in tariffs, trade policy and trade relations and the U.K.'s exit from the European Union; I-1 Table of Contents • changes in trade policy and trade relations with China; • consumer spending levels, including the availability and amount of individual consumer debt; • the effects of our debt obligations; • advertising spending levels; • system interruption and the lack of integration and redundancy in the systems and infrastructures of our business; • 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; • 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; • threatened terrorist attacks, political unrest in international markets and ongoing military action around the world; • fluctuations in foreign currency exchange rates; • natural disasters, public health crises (including resurgences of COVID-19 and its variants), political crises, and other catastrophic events or other events outside of our control, including climate change; • failure to successfully implement Project Athens (defined below); and • Qurate Retail's dependence on our cash flow for servicing its debt.
Biggest changeThe following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated: • 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 on our websites and our ability to convert visitors into consumers or contributors; • uncertainties inherent in the development and integration of new business lines and business strategies; • our future financial performance, including availability, terms and deployment of capital; • 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 business; • changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission and Environmental, Social, and Governance (“ESG”) commitments and adverse outcomes from regulatory proceedings; • changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors, including our increased reliance on social media platforms as a marketing tool; • domestic and international economic and business conditions and industry trends, including the impact of inflation and increased labor costs; • increases in market interest rates; • changes in tariffs, trade policy and trade relations and the U.K.'s exit from the European Union; • changes in trade policy and trade relations with China; • consumer spending levels, including the availability and amount of individual consumer debt; I-1 Table of Contents • the effects of our debt obligations; • advertising spending levels; • system interruption and the lack of integration and redundancy in the systems and infrastructures of our business; • 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; • failure to protect the security of personal information, including as a result of cybersecurity threats and cybersecurity incidents, 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; • threatened terrorist attacks, political unrest in international markets and ongoing military action around the world; • fluctuations in foreign currency exchange rates; • natural disasters, public health crises (including resurgences of COVID-19 and its variants or future pandemics or epidemics), political crises, and other catastrophic events or other events outside of our control, including climate change; • failure to successfully implement Project Athens (defined below); and • Qurate Retail's dependence on our cash flow for servicing its debt.
Some examples of regulatory agencies and regulations that affect the manner in which we sell and promote merchandise include the following: • The Federal Trade Commission ("FTC") and the state attorneys general regulate the advertising of retail products and services offered for sale in the U.S., including, for example, the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising and Guides for the Use of Environmental Marketing Claims. • The Food and Drug Administration has specific regulations regarding claims that can be made about food products and regulates marketing claims that can be made for cosmetic beauty products, medical devices and over-the-counter drugs. • The Environmental Protection Agency ("EPA") requires products that make certain types of claims, such as "anti-bacterial," to be registered with the EPA prior to making such claims. • Each of the FTC's Telemarketing Sales Rules, the Federal Communication Commission's ("FCC") rules implementing the Telephone Consumer Protection Act and similar state laws, establish procedures that must be followed when telemarketing or placing particular types of calls to consumers. • The Consumer Product Safety Commission has specific regulations regarding products that present unreasonable risks of injuries to consumers. • Import and export laws, including U.S. economic sanction and embargo regulations, U.S. homeland security laws and regulations and other laws such as the U.S. anti-boycott law and U.S. export controls regulations may limit foreign sales. • Comparable regulatory agencies and regulations in countries in which we have our non-U.S. operations may be applicable.
Some examples of regulatory agencies and regulations that affect the manner in which we sell and promote merchandise include the following: • The Federal Trade Commission ("FTC") and the state attorneys general regulate the advertising of retail products and services offered for sale in the U.S., including, for example, the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising and Guides for the Use of Environmental Marketing Claims. • The Food and Drug Administration has specific regulations regarding claims that can be made about food products and regulates marketing claims that can be made for cosmetic beauty products, medical devices and over-the-counter drugs. • The Environmental Protection Agency ("EPA") requires products that make certain types of claims, such as "anti-bacterial," to be registered with the EPA prior to making such claims. • Each of the FTC's Telemarketing Sales Rules, the Federal Communication Commission's ("FCC") rules implementing the Telephone Consumer Protection Act and similar state laws, establish procedures that must be followed when telemarketing or placing particular types of calls to consumers. • The Consumer Product Safety Commission (“CPSC”) has specific regulations regarding products that present unreasonable risks of injuries to consumers. • Import and export laws, including U.S. economic sanction and embargo regulations, U.S. homeland security laws and regulations and other laws such as the U.S. anti-boycott law and U.S. export controls regulations may limit foreign sales. • Comparable regulatory agencies and regulations in countries in which we have our non-U.S. operations may be applicable.
The Company also transmits its programmings over digital terrestrial broadcast television to viewers throughout Italy, Germany, and the U.K. and to viewers in certain geographic regions in the U.S. In the U.S., the Company uplinks its digital programming transmissions using a third party service or internal resources. The transmissions are uplinked to protected, non-preemptible transponders on U.S. satellites.
The Company also transmits its programming over digital terrestrial broadcast television to viewers throughout Italy, Germany, and the U.K. and to viewers in certain geographic regions in the U.S. In the U.S., the Company uplinks its digital programming transmissions using a third party service or internal resources. The transmissions are uplinked to protected, non-preemptible transponders on U.S. satellites.
Our business is also dependent upon our continued ability to transmit our programming to television distributors from our third party FCC-licensed satellite uplink facilities, which are subject to FCC compliance in the U.S. and foreign regulatory requirements in our international operations.
Our business is also dependent upon our continued ability to transmit our programming to television distributors from our third party FCC-licensed satellite uplink and downlink facilities, which are subject to FCC compliance in the U.S. and foreign regulatory requirements in our international operations.
An additional 5% of shipped sales in that period came from new customers and the remaining 6% of shipped sales came from reactivated customers (i.e., customers who previously made a purchase from us, but not during the prior twelve months).
An additional 5% of shipped sales in that period came from new customers and the remaining 5% of shipped sales came from reactivated customers (i.e., customers who previously made a purchase from us, but not during the prior twelve months).
As a result, we are subject to a wide variety of statutes, rules, regulations, policies and procedures in various jurisdictions that are subject to change at any time, including laws regarding consumer protection, privacy, the regulation of retailers generally, the importation, sale and promotion of merchandise and the operation of retail stores and warehouse facilities, as well as laws and regulations applicable to the Internet and businesses engaged in online commerce, such as those regulating the sending of unsolicited, commercial electronic mail and texts.
As a result, we are subject to a wide variety of statutes, rules, regulations, policies and procedures in various jurisdictions that are subject to change at any time, including laws regarding consumer protection, privacy, the regulation of retailers generally, the importation, sale and promotion of merchandise and the operation of retail stores and warehouse facilities, as well as laws and regulations applicable to the Internet and businesses engaged in e-commerce, such as those regulating the sending of unsolicited, commercial electronic mail and texts.
The Fifth Amended and Restated Credit Agreement may be borrowed on by QVC, Zulily, CBI, and QVC Global (collectively, the “Borrowers”). Under the terms of the Fifth Amended and Restated Credit Agreement, the Borrowers are jointly and severally liable for all outstanding borrowings.
The Fifth Amended and Restated Credit Agreement may be borrowed on by QVC, CBI, and QVC Global (collectively, the “Borrowers”). Under the terms of the Fifth Amended and Restated Credit Agreement, the Borrowers are jointly and severally liable for all outstanding borrowings.
Overview QVC, Inc. and its consolidated subsidiaries (unless otherwise indicated or required by the context, the terms "we," "our," "us," the "Company," and "QVC" refer to QVC, Inc. and its consolidated subsidiaries) curates and sells a wide variety of consumer products via highly engaging, video-rich, interactive shopping experiences, distributed to approximately 217 million worldwide households each day through our broadcast networks.
Overview QVC, Inc. and its consolidated subsidiaries (unless otherwise indicated or required by the context, the terms "we," "our," "us," the "Company," and "QVC" refer to QVC, Inc. and its consolidated subsidiaries) curates and sells a wide variety of consumer products via highly engaging, video-rich, interactive shopping experiences, distributed to approximately 216 million worldwide households each day through our broadcast networks.
We do not depend on any single supplier or designer for a significant portion of our inventory purchases. Distribution QVC distributes its programmings via satellite and optical fiber, to cable television and direct-to-home satellite system operators for retransmission to its subscribers in the U.S., Germany, Japan, the U.K., Italy and neighboring countries.
We do not depend on any single supplier or designer for a significant portion of our inventory purchases. Distribution QVC distributes its programming via satellite and optical fiber, to cable television and direct-to-home satellite system operators for retransmission to its subscribers in the U.S., Germany, Japan, the U.K., Italy and neighboring countries.
"Non-preemptible" status means that, in the event of a transponder failure, QVC's transponders cannot be preempted in favor of a user of a failed transponder, even another user with "protected status." The Company's international business units each obtain uplinking services from third parties and transmit their programming to non-preemptible transponders on international satellites and terrestrial transmitters.
"Non-preemptible" status means that, in the event of a transponder failure, QVC's transponders cannot be preempted in favor of a user of a failed transponder, even another user with "protected” status. The Company's international business units each obtain uplinking services from third parties and transmit their programming to non-preemptible transponders on international satellites and terrestrial transmitters.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." I-3 Table of Contents QxH QxH's programming is distributed in the U.S., 20 hours per day of live programming, 364 days per year, to approximately 93 million television households and is distributed to approximately 99% of households subscribing to services offered by television distributors.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." I-3 Table of Contents QxH QxH's programming is distributed in the U.S., 20 hours per day of live programming, 364 days per year, to approximately 92 million television households and is distributed to approximately 99% of households subscribing to services offered by television distributors.
We are currently providing programming without affiliation agreements to distributors representing approximately 7% of our QVC channel distribution and 1% of our HSN channel distribution. Some of our international programming may continue to be carried by distributors after the expiration dates on our affiliation agreements with them have passed.
We are currently providing programming without affiliation agreements to distributors representing approximately 6% of our QVC channel distribution and 1% of our HSN channel distribution. Some of our international programming may continue to be carried by distributors after the expiration dates on our affiliation agreements with them have passed.
These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Annual Report, 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.
These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Annual Report on Form 10-K, 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.
We have registered, or applied for the registration of, a number of tradenames, service marks, patents, copyrights and domain names through U.S. and foreign governmental authorities and vigorously protect our proprietary rights against infringement.
We have registered, or applied for the registration of, a number of trademarks, service marks, patents, copyrights and domain names through U.S. and foreign governmental authorities and vigorously protect our proprietary rights against infringement.
We rely on a combination of tradename, patent and copyright law, trade-secret protection, and confidentiality and/or license agreements with our employees, customers, suppliers, affiliates and others to protect these proprietary rights.
We rely on a combination of trademark, patent and copyright law, trade-secret protection, and confidentiality and/or license agreements with our employees, customers, suppliers, affiliates and others to protect these proprietary rights.
QVC's transponder service agreements for the Company's U.S. transponders expire at the earlier of the end of the lives of the satellites or the service agreements. The service agreements for QxH expire between 2023 and 2025. The service agreements for QVC-International transponders and terrestrial transmitters expire between 2023 and 2029.
QVC's transponder service agreements for the Company's U.S. transponders expire at the earlier of the end of the lives of the satellites or the service agreements. The service agreements for QxH expire between 2024 and 2025. The service agreements for QVC-International transponders and terrestrial transmitters expire between 2024 and 2029.
In accordance with the accounting guidance for obligations resulting from joint and several liability arrangements, QVC will record a liability for amounts it has borrowed under the credit facility plus any additional amount it expects to repay on behalf of Zulily and CBI.
In accordance with the accounting guidance for obligations resulting from joint and several liability arrangements, QVC will record a liability for amounts it has borrowed under the senior secured credit facility plus any additional amount it expects to repay on behalf of CBI.
We primarily utilize home based customer service agents to handle calls, e-mail contacts and social contacts, allowing staffing flexibility for peak volume hours. In addition, we utilize computerized interactive voice response order systems for telephonic orders, which handle approximately 24% of all orders taken on a worldwide basis. QxH has eight distribution centers and QVC-International has four distribution centers.
We primarily utilize home based customer service agents to handle calls, e-mail contacts and social contacts, allowing staffing flexibility for peak volume hours. In addition, we utilize computerized interactive voice response order systems for telephonic orders, which handle approximately 25% of all orders taken on a worldwide basis. QxH has seven distribution centers and QVC-International has four distribution centers.
In addition, our Websites and mobile applications 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. For the year ended December 31, 2022, approximately 85% of our new QxH customers made their first purchase through our digital platforms.
In addition, our Websites and mobile applications 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. For the year ended December 31, 2023, approximately 88% of our new QxH customers made their first purchase through our digital platforms.
When considering such forward-looking statements, one should keep in mind the factors described in Item 1A. “Risk Factors” and other cautionary statements contained in this Annual Report. Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement.
When considering such forward-looking statements, one should keep in mind the factors described in Item 1A. “Risk Factors” and other cautionary statements contained in this Annual Report on Form 10-K. Such risk factors and statements describe circumstances which could cause actual results to differ materially from those contained in any forward-looking statement.
Our global sales mix is provided in the table below: Years ended December 31, Product category 2022 2021 2020 Home 40 % 40 % 42 % Apparel 18 % 16 % 14 % Beauty 17 % 18 % 18 % Accessories 11 % 11 % 11 % Electronics 9 % 10 % 10 % Jewelry 5 % 5 % 5 % Total 100 % 100 % 100 % Unlike traditional brick-and-mortar retailers with inventories across a network of stores, we are able to quickly adapt our offerings in direct response to changes in our customer's purchasing patterns.
Our global sales mix is provided in the table below: Years ended December 31, Product category 2023 2022 2021 Home 41 % 40 % 40 % Apparel 18 % 18 % 16 % Beauty 18 % 17 % 18 % Accessories 11 % 11 % 11 % Electronics 7 % 9 % 10 % Jewelry 5 % 5 % 5 % Total 100 % 100 % 100 % Unlike traditional brick-and-mortar retailers with inventories across a network of stores, we are able to quickly adapt our offerings in direct response to changes in our customer's purchasing patterns.
In the U.S., we have registered tradenames and service marks including, but not limited to our brand names and logo, "QVC," "Quality Value Convenience," the "Q Logo," and "Q" and trademarks for our proprietary products sold such as "Arte D’Oro," "Cook’s Essentials," "Denim & Co.," "Diamonique," "Nature's Code," "Northern Nights" and "Ultrafine Silver." Similarly, foreign registrations have been obtained for many tradenames and service marks for our brand names, logo and propriety products including, but not limited to, "QVC," the "Q Logo," "Q," "Cook’s Essentials," "Denim & Co.," "Diamonique" and "Northern Nights." HSN has numerous tradename registrations or pending applications in the U.S. which help to expand HSN’s brand awareness.
In the U.S., we have registered trademarks and service marks including, but not limited to our brand names and logo, "QVC," "Quality Value Convenience," the "Q Logo," and "Q" and trademarks for our proprietary products sold such as "Arte D’Oro," "Cook’s Essentials," "Denim & Co.," "Diamonique," "Nature's Code," "Northern Nights" and "Zuda." Similarly, foreign registrations have been obtained for many trademarks and service marks for our brand names, logo and propriety products including, but not limited to, "QVC," the "Q Logo," "Q," "Cook’s Essentials," "Denim & Co.," "Diamonique" and "Northern Nights." HSN has numerous trademark registrations or pending applications in the U.S. which help to expand HSN’s brand awareness.
Previously adopted FCC channel occupancy rules, which limited carriage by a cable operator of national programming services in which that operator holds an attributable interest, were vacated and remanded by the U.S. Court of Appeals for the District of Columbia Circuit in 2001.
Previously adopted FCC channel occupancy rules, which limited carriage by a cable operator of national programming services in which that operator holds an attributable interest, were vacated and remanded by the U.S. Court of Appeals for the District of Columbia Circuit in 2001 and have not been readopted by the FCC.
For information regarding regulations related to U.S. trade policy with China, see the risk factor "Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China may adversely impact our business and operating results" in Item 1A., "Risk Factors." Intellectual property We regard our tradenames, service marks, patents, copyrights, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as critical to our success.
For information regarding regulations related to U.S. trade policy with China, see the risk factor "Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China may adversely impact our business and operating results" in Item 1A., "Risk Factors." I-11 Table of Contents Intellectual property We regard our trademarks, service marks, patents, copyrights, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as critical to our success.
For the year ended December 31, 2022, approximately 95% of QVC's worldwide shipped sales were from repeat and reactivated customers (i.e., customers who made a purchase from us during the prior twelve months and customers who previously made a purchase from us but not during the prior twelve months).
For the year ended December 31, 2023, approximately 96% of QVC's worldwide shipped sales were from repeat and reactivated customers (i.e., customers who made a purchase from us during the prior twelve months and customers who previously made a purchase from us but not during the prior twelve months).
These segments reflect the way the Company evaluates its business performance and manages its operations. For financial information about our operating segments, please refer to note 16 of our accompanying consolidated financial statements, as well as to Item 7.
These segments reflect the way the Company evaluates its business performance and manages its operations. For financial information about our operating segments, please refer to note 15 of our accompanying consolidated financial statements, as well as to Part II, Item 7.
During the year ended December 31, 2022, QVC and CBI engaged in multiple transactions relating to sourcing of merchandise, personnel and business advisory services. Refer to note 14 to the accompanying consolidated financial statements for further details.
During the year ended December 31, 2023, QVC and CBI engaged in multiple transactions relating to sourcing of merchandise, personnel and business advisory services. Refer to note 13 to the accompanying consolidated financial statements for further details.
We paid $1,270 million, $963 million, and $1,184 million of dividends to Qurate Retail during the years ended December 31, 2022, 2021, and 2020, respectively. See also Item 1A. "Risk Factors." I-13 Table of Contents
We paid $437 million, $1,270 million, and $963 million of dividends to Qurate Retail during the years ended December 31, 2023, 2022, and 2021, respectively. See also Item 1A. "Risk Factors." I-13 Table of Contents
Demographics of customers We enjoy a very loyal customer base, as demonstrated by the fact that for the twelve months ended December 31, 2022, approximately 89% of our shipped sales came from repeat customers (i.e., customers who made a purchase from us during the prior twelve months), who spent an average of $1,324 each during this period.
Demographics of customers We enjoy a very loyal customer base, as demonstrated by the fact that for the twelve months ended December 31, 2023, approximately 90% of our shipped sales came from repeat customers (i.e., customers who made a purchase from us during the prior twelve months), who spent an average of $1,442 each during this period.
These registrations and applications include the “HSN” brand name and the “HSN logo” as well as registrations for HSN’s propriety products and services, including, but not limited to, “HSN Shop By Remote,” “Technibond,” and “Concierge Collection.” I-11 Table of Contents We consider the "QVC" and "HSN" names the most significant tradenames and service marks held by us because of their impact on market awareness across all of our geographic markets and on customers’ identification with us.
These registrations and applications include the “HSN” brand name and the “HSN logo” as well as registrations for HSN’s propriety products and services, including, but not limited to, “HSN Shop By Remote,” “Technibond,” and “Concierge Collection.” We consider the "QVC" and "HSN" brands the most significant trademarks and service marks held by us because of their impact on market awareness across all of our geographic markets and on customers’ identification with us.
As a result of the exchange and the redemption, the Company recorded a loss on extinguishment of debt in the accompanying consolidated statements of operations of $7 million for the year ended December 31, 2021.
As a result of the exchange I-12 Table of Contents and the redemption, the Company recorded a loss on extinguishment of debt in the accompanying consolidated statements of operations of $7 million for the year ended December 31, 2021.
Federal legislation enacted in 2016 permanently extended the moratorium on state and local taxes on Internet access. Our online commerce businesses are subject to domestic and foreign laws governing the collection, use, retention, security and transfer of personally-identifiable information about their users.
Federal legislation enacted in 2016 permanently extended the moratorium on state and local taxes on Internet access. I-10 Table of Contents Our e-commerce businesses are subject to domestic and foreign laws governing the collection, use, retention, security and transfer of personally-identifiable information about their users.
On June 27, 2022, Qurate Retail announced a five-point turnaround plan designed to stabilize and differentiate its core HSN and QVC- U.S. brands and expand the company's leadership in video streaming commerce (“Project Athens”).
On June 27, 2022, Qurate Retail announced a five-point turnaround plan designed to stabilize and differentiate its core HSN and QVC-US businesses and expand the Company's leadership in video streaming commerce (“Project Athens”).
The table below illustrates QxH's digital sales since 2020: Years ended December 31, (in millions) 2022 2021 2020 QxH digital platform revenue $ 4,450 5,003 5,089 Total QxH net revenue 7,359 8,277 8,505 QxH digital platform % of total QxH net revenue 60.5 % 60.4 % 59.8 % QVC-International Our international business brings the QVC shopping experience to approximately 124 million households outside the U.S., primarily in Germany, Austria, Japan, the U.K., the Republic of Ireland, and Italy.
The table below illustrates QxH's digital sales since 2021: Years ended December 31, (in millions) 2023 2022 2021 QxH digital platform revenue $ 4,321 4,450 5,003 Total QxH net revenue 6,995 7,359 8,277 QxH digital platform % of total QxH net revenue 61.8 % 60.5 % 60.4 % QVC-International Our international business brings the QVC shopping experience to approximately 124 million households outside the U.S., primarily in Germany, Austria, Japan, the U.K., the Republic of Ireland, and Italy.
Based on internal customer data for QxH, approximately 39% of our 8.9 million customers for the twelve months ended December 31, 2022 were women between the ages of 35 and 64. We do not depend on any single customer for a significant portion of our revenue.
Based on internal customer data for QxH, approximately 36% of our 8.1 million customers for the twelve months ended December 31, 2023 were women between the ages of 35 and 64. We do not depend on any single customer for a significant portion of our revenue.
Order taking and fulfillment We take a majority of our orders via our websites and via mobile applications on iPhone, iPad, Apple Watch, Android and other devices. QxH and QVC-International customers placed appr oximately 42% and 35%, respectively, of all orders directly through their mobile devices in 2022.
Order taking and fulfillment We take a majority of our orders via our websites and via mobile applications on iPhone, iPad, Apple Watch, Android and other devices. QxH and QVC-International customers placed appr oximately 43% and 36%, respectively, of all orders directly through their mobile devices in 2023.
Our distribution centers and drop ship partners have shipped on average 413,000 units per day at QxH and 178,000 units per day for QVC-International during 2022. QVC has built a scalable operating infrastructure focused on sustaining efficient, flexible and cost-effective sale and distribution of our products.
Our distribution centers and drop ship partners have shipped on average 388,000 units per day at QxH and 172,000 units per day for QVC-International during 2023. QVC has built a scalable operating infrastructure focused on sustaining efficient, flexible and cost-effective sale and distribution of our products.
Business * * * * * Cautionary Note Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, product and marketing strategies; the direct and indirect impacts of COVID-19; the impact of the fire at the Rocky Mount fulfillment center; insurance recoveries; the sale leaseback transactions; the remediation of a material weakness; capital expenditures; revenue growth; the recoverability of our goodwill and other long-lived assets; our projected sources and uses of cash; repayment of debt; and the anticipated impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business.
Business * * * * * Cautionary Note Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, product and marketing strategies; the impact of the fire at the Rocky Mount fulfillment center; insurance recoveries; capital expenditures; revenue growth; the recoverability of our goodwill and other long-lived assets; our projected sources and uses of cash; repayment of debt; and the anticipated impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business.
For the year ended December 31, 2022, our international operations, including our Digital platforms, generated $2.5 billion, or 26%, of consolidated net revenue and $358 million of Adjusted OIBDA (defined in note 16 to the accompanying notes to our consolidated financial statements).
For the year ended December 31, 2023, our international operations, including our Digital platforms, generated $2.5 billion, or 26%, of consolidated net revenue and $325 million of Adjusted OIBDA (defined in note 15 to the accompanying notes to our consolidated financial statements).
I-12 Table of Contents On October 27, 2021, QVC amended and restated its senior secured credit facility (the "Fifth Amended and Restated Credit Agreement") which is a multi-currency facility that provides for a $3.25 billion revolving credit facility (see note 8 to the accompanying consolidated financial statements).
On October 27, 2021, QVC amended and restated its senior secured credit facility (the "Fifth Amended and Restated Credit Agreement") which is a multi-currency facility that provides for a $3.25 billion revolving credit facility (see note 7 to the accompanying consolidated financial statements).
In 2022 we launched on The Roku Channel, a leader in free, ad-supported streaming TV. Affiliation agreements QVC enters into long-term affiliation agreements with certain of our television distributors who downlink our programming and distribute the programming to their customers. Our affiliation agreements with QVC distributors have termination dates ranging from 2023 to 2026.
In 2022 we launched on The Roku Channel, a leader in free, ad-supported streaming TV. Affiliation agreements We enter into long-term affiliation agreements with certain of our television distributors who downlink our programming and distribute the programming to their customers. The majority of our affiliation agreements with distributors have termination dates ranging from 2024 to 2029.
On a trailing twelve month basis, total consolidated customers were approximately 13.2 million which includes 8.9 million QxH customers and 4.3 million QVC-International customers. We believe our core customer base represents an attractive demographic target market.
On a trailing twelve month basis, total consolidated customers were approximately 12.1 million which includes 8.1 million QxH customers and 4.0 million QVC-International customers. We believe our core customer base represents an attractive demographic target market.
QxH's closest video shopping competitor is ShopHQ and our international operations face similar competition in their respective markets, such as Jupiter Shop Channel in Japan, HSE in Germany and Austria, GM24 in Italy, and Ideal World in the U.K.
QxH's closest video shopping competitor is ShopHQ and our international operations face similar competition in their respective markets, such as Jupiter Shop Channel in Japan, HSE in Germany and Austria, GM24 in Italy, and The Jewellery Channel, Gems TV, and JML Direct in the U.K.
QVC and Zulily engaged in multiple transactions relating to sales, sourcing of merchandise, marketing initiatives, and business advisory services. Refer to note 14 to the consolidated financial statements for further details.
Prior to Qurate Retail’s divestiture of Zulily, QVC and Zulily engaged in multiple transactions relating to sales, sourcing of merchandise, marketing initiatives, and business advisory services. Refer to note 13 to the consolidated financial statements for further details.
QVC employed approximately 20,800 full-time and part-time employees as of December 31, 2022, which includes 13,600 employees at QxH and 7,200 employees at QVC-International. Employment levels fluctuate due to seasonal factors affecting our business. Additionally, we utilize independent contractors and temporary staffing personnel to supplement our workforce, particularly on a seasonal basis.
QVC employed approximately 18,400 full-time and part-time employees as of December 31, 2023, which includes 11,600 employees at QxH and 6,800 employees at QVC-International. Employment levels fluctuate due to seasonal factors affecting our business. Additionally, we utilize independent contractors and temporary staffing personnel to supplement our workforce, particularly on a seasonal basis.
QxH, including our Digital Platforms, contributed $7.4 billion, or 74%, of consolidated net revenue and $750 million of Adjusted OIBDA (defined in note 16 to the accompanying notes to our consolidated financial statements) for the year ended December 31, 2022.
QxH, including our Digital Platforms, contributed $7.0 billion, or 74%, of consolidated net revenue and $746 million of Adjusted OIBDA (defined in note 15 to the accompanying notes to our consolidated financial statements) for the year ended December 31, 2023.
As with all U.S. tradenames or service marks, our tradename and service mark registrations in the U.S. are for a ten year period and are renewable every ten years, prior to their respective expirations, as long as the tradenames or service marks are used in the regular course of trade.
Our trademark and service mark registrations in the U.S. for “QVC” and “HSN” are for a ten year period and are renewable every ten years, prior to their respective expirations, as long as the trademarks or service marks are used in the regular course of trade.
In the same period, QVC attracted approximately 2.8 million new customers and the global e-commerce operation comprised $5.7 billion, or 57.2%, of QVC's consolidated net revenue for the year ended December 31, 2022. We operate twelve distribution centers and five contact centers worldwide.
In the same period, QVC attracted approximately 2.7 million new customers and the global e-commerce operation comprised $5.5 billion, or 58.6%, of QVC's consolidated net revenue for the year ended December 31, 2023. We operate eleven distribution centers and four contact centers worldwide.
As of December 31, 2022, there was $18 million borrowed by CBI on the senior secured credit facility, none of which the Company expects to repay on behalf of CBI. There were no borrowings by CBI on the Fifth Amended and Restated Credit Agreement as of December 31, 2021.
There were no borrowings by CBI outstanding on the Fifth Amended and Restated Credit Agreement as of December 31, 2023. As of December 31, 2022, there was $18 million borrowed by CBI on the Fifth Amended and Restated Credit Agreement, none of which the Company expected to repay on behalf of CBI.
We seek to offer our customers an assortment of compelling, high-quality products. In the U.S., the QVC and HSN brands present on average 664 products and 537 products, respectively, every week on our live programming, approximately 38.1% and 23.1%, respectively, of which have not been presented previously to our television audience.
We seek to offer our customers an assortment of compelling, high-quality products. In the U.S., the QVC and HSN brands present on average 696 products and 533 products, respectively, every week on our live programming, approximately 42.0% and 28.3%, respectively, of which have not been presented previously to our television audience.
The table below illustrates QVC-International's digital sales since 2020: Years ended December 31, (in millions) 2022 2021 2020 QVC - International digital platform revenue $ 1,202 1,458 1,359 Total QVC - International net revenue 2,528 3,077 2,967 QVC - International digital platform % of total QVC - International net revenue 47.5 % 47.4 % 45.8 % QVC-Japan.
The table below illustrates QVC-International's digital sales since 2021: Years ended December 31, (in millions) 2023 2022 2021 QVC - International digital platform revenue $ 1,218 1,202 1,458 Total QVC - International net revenue 2,454 2,528 3,077 QVC - International digital platform % of total QVC - International net revenue 49.6 % 47.5 % 47.4 % QVC-Japan.
Project Athens main initiatives include: (i) improve customer experience and grow relationships; (ii) rigorously execute core processes; (iii) lower cost to serve; (iv) optimize the brand portfolio; and (v) build new high growth businesses anchored in strength. During 2022 QVC commenced the first phase of Project Athens including actions to reduce inventory and a planned workforce reduction.
Project Athens main initiatives include: (i) improve customer experience and grow relationships; (ii) rigorously execute core processes; (iii) lower cost to serve; (iv) optimize the brand portfolio; and (v) build new high growth businesses anchored in strength.
Violation of the QVC consent decree may result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited activities. I-9 Table of Contents Congress enacted the Commercial Advertisement Loudness Mitigation ("CALM") Act in 2010.
Violation of the QVC consent decree may result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited activities.
Concurrently, LIC issued a promissory note to the Company with an initial face amount of $1.8 billion, a stated interest rate of 0.48%, payable annually, and a maturity of December 29, 2029.
As part of the common control transaction, LIC issued a promissory note (“LIC Note”) to a subsidiary of the Company with an initial face amount of $1.8 billion, a stated interest rate of 0.48% and a maturity of December 29, 2029. Interest on the LIC Note is paid annually.
I-8 Table of Contents Government regulation The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is regulated by federal and state law.
Where applicable, we continue to comply with country, state and local restrictions related to addressing COVID-19 and similar health risks. I-8 Table of Contents Government regulation The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is regulated by federal and state law.
During the fourth quarter of 2021, QVC Global delivered MSI shares, which were acquired pursuant to a forward purchase contract, to holders of the MSI Exchangeables with a fair value of approximately $573 million to settle the exchanges of the MSI Exchangeables.
Bondholders had until the close of business on December 10, 2021 to exchange their bonds. During the fourth quarter of 2021, QVC Global delivered Motorola Solutions Inc. shares, which were acquired pursuant to a forward purchase contract, to holders of the MSI Exchangeables with a fair value of approximately $573 million to settle the exchanges of the MSI Exchangeables.
In addition, the FCC regulates the cable television systems, direct broadcast satellite ("DBS") distributors and other multichannel video programming distributors ("MVPDs") that distribute the Company’s services, has adopted various requirements related to the Company’s programming, and also licenses radio transmission facilities that the Company uses in connection with its business, such as satellite uplink facilities and internal private radio systems.
The FCC has adopted various requirements related to the Company’s programming, and also licenses radio transmission facilities that the Company uses in connection with its business, such as television stations, satellite uplink/downlink facilities and internal private radio systems.
Qurate Retail relationship and related party transactions The Company is an indirect wholly-owned subsidiary of Qurate Retail (Nasdaq: QRTEA, QRTEB and QRTEP), which owns interests in a broad range of digital commerce businesses, including Qurate Retail's other wholly-owned subsidiaries Zulily, LLC ("Zulily") and Cornerstone Brands, Inc. ("CBI"), as well as other minority investments.
Qurate Retail relationship and related party transactions The Company is an indirect wholly-owned subsidiary of Qurate Retail (Nasdaq: QRTEA, QRTEB and QRTEP), which owns Cornerstone Brands, Inc. ("CBI"), as well as other minority investments. QVC is part of Qurate Retail Group ("QRG"), a portfolio of brands including QVC and CBI.
The FCC issued further notices of proposed rulemaking in 2001 and 2005 to consider channel occupancy limitations, but has not adopted any rules. In 2000, we became subject to a consent decree issued by the FTC barring us from making certain deceptive claims for dietary supplements and specified products related to the common cold, pneumonia, hay fever and allergies.
In 2000, we became subject to a consent decree issued by the FTC barring us from making certain deceptive claims for dietary supplements and specified products related to the common cold, pneumonia, hay fever and allergies.
In November 2020, California voters approved the California Privacy Rights Act of 2020 (“CPRA”), which amends and extends the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws. Most of the CPRA’s provisions became effective on January 1, 2023.
The CCPA took effect on January 1, 2020. The California Attorney General has issued implementation regulations and guidance regarding the law. In November 2020, California voters approved the California Privacy Rights Act of 2020 (“CPRA”), which amends and extends the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws.
I-7 Table of Contents We believe that QxH is a leader in video shopping, e-commerce, mobile commerce and social commerce by curating quality products at outstanding values, providing exceptional customer service, establishing favorable channel positioning and multiple touchpoints across digital platforms and generating repeat business from our core customer base and that it also compares favorably in terms of sales to general, non-video based retailers due to our extensive customer reach and efficient cost structure.
I-7 Table of Contents We believe that QxH is a leader in video shopping, e-commerce, mobile commerce and social commerce. QxH curates quality products at outstanding values, provides exceptional customer service, establishes favorable channel positioning and multiple touchpoints across digital platforms and generates repeat business from our core customer base.
For example, the Children's Online Privacy Protection Act prohibits web sites from collecting personally identifiable information online from children under age 13 without parental consent and imposes a number of operational requirements. Certain email activities are subject to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, commonly known as the CAN-SPAM Act.
For example, the Children's Online Privacy Protection Act (“COPPA”) prohibits web sites from collecting personally identifiable information online from children under age 13 without parental consent and imposes a number of operational requirements.
In 2022, our work force consisted of approximately 20,800 employees who handled approximately 112 million customer calls, shipped approximately 216 million units globally and served approximately 13.2 million unique customers.
In 2023, our work force consisted of approximately 18,400 employees who handled approximately 90 million customer calls, shipped approximately 204 million units globally and served approximately 12.1 million unique customers.
Privacy Shield. On December 13, 2022, the European Commission issued an adequacy decision initiating the formal adoption process I-10 Table of Contents for the DPF.
Privacy Shield. On December 13, 2022, the European Commission issued an adequacy decision initiating the formal adoption process for the DPF, and the E.U. formally adopted the adequacy decision on July 10, 2023. The U.S. and the E.U. implemented the DPF in July 2023.
QVC is part of Qurate Retail Group ("QRG"), formerly QVC Group, a portfolio of brands including QVC, HSN, Zulily and CBI. QVC engages with Zulily, which has been a wholly-owned subsidiary of Qurate Retail since October 2015. Zulily is not part of the results of operations or financial position of QVC presented in this Form 10-K.
Zulily, LLC (“Zulily”) was a wholly owned subsidiary of Qurate Retail until its divestiture on May 24, 2023. QVC engaged with Zulily, which had been a wholly-owned subsidiary of Qurate Retail since October 2015. Zulily is not part of the results of operations or financial position of QVC presented in this Form 10-K.
QVC recorded $9 million of related party interest income for each of the years ended December 31, 2022 and 2021, included in interest expense, net in the consolidated statement of operations. LIC also repaid $85 million of the note receivable to QVC during the year ended December 31, 2021.
QVC recorded $9 million of related party interest income for each of the years ended December 31, 2023 and 2022, included in interest expense, net in the consolidated statement of operations. On October 27, 2021, a notice was issued to all holders to redeem any and all outstanding MSI Exchangeables (as defined below) on December 13, 2021.
These initiatives are consistent with QVC’s strategy to operate more efficiently as it implements its turnaround plan. QVC recorded restructuring charges of $24 million in Restructuring and fire related costs, net of (recoveries) in the consolidated statement of operations during the year ended December 31, 2022, related to workforce reduction.
QVC implemented a workforce reduction and recorded restructuring charges of $13 million and $24 million in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statement of operations during the years ended December 31, 2023 and 2022, respectively.
In the U.S., Congress may consider legislation that would require organizations that suffer a breach of security related to personal information to notify owners of such information. Many states have adopted laws requiring notification to users when there is a security breach affecting personal data, such as California's Information Practices Act.
In the U.S., Congress may consider a range of legislation that would impose federal privacy obligations on organizations including obligations that could require organizations that suffer a breach of security related to personal information to notify owners of such information.
California also has enacted the California Consumer Privacy Act of 2018 (“CCPA”), which, among other things, allows California consumers to request that certain companies disclose the types of personal information collected by such companies. The CCPA took effect on January 1, 2020. The California Attorney General has issued implementation regulations and guidance regarding the law.
Many states have adopted laws requiring notification to users when there is a security breach affecting personal data, such as California's Information Practices Act. California also has enacted the California Consumer Privacy Act of 2018 (“CCPA”), which, among other things, allows California consumers to request that certain companies disclose the types of personal information collected by such companies.
Utah and Connecticut also have enacted consumer privacy statutes, and other states likely will consider similar legislation in 2023. Complying with these different national and state privacy requirements may cause us to incur substantial costs. In addition, we generally have and post on our websites privacy policies and practices regarding the collection, use and disclosure of user data.
In addition, we generally have and post on our websites privacy policies and practices regarding the collection, use and disclosure of user data.
Removed
We also continue to monitor governmental response to the COVID-19 pandemic, and where applicable, continue to comply with country, state and local restrictions related to addressing COVID-19 risks.
Added
Seasonality QVC's business is seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping. In recent years, QVC has earned, on average, between 22% and 24% of its revenue in each of the first three quarters of the year and 30% of its revenue in the fourth quarter of the year.
Removed
On February 10, 2021, the Council of the E.U, adopted final regulations regarding privacy and electronic communications that would complement the GDPR, including additional regulation of the Internet tracking tools known as “cookies.” The final regulations are subject to review by the European Parliament and European Commission, and may be enacted in 2023.
Added
QxH sales compare favorably to general, non-video based retailers due to our extensive customer reach and efficient cost structure.
Removed
In addition, Virginia enacted the Consumer Data Protection Act in March 2021, which regulates the handling of personal data and became effective on January 1, 2023, and Colorado enacted a personal data protection law in July 2021, the Colorado Privacy Act, which takes effect on July 1, 2023.
Added
In addition, the FCC regulates the television stations, cable television systems, direct broadcast satellite ("DBS") distributors and other multichannel video programming distributors ("MVPDs") that distribute the Company’s services.
Removed
As part of this realignment and upon entering into a payment agreement, QVC Global Corporate Holdings, LLC ("QVC Global"), a subsidiary of the Company, became the primary co-obligor on LIC’s 3.5% Senior Exchangeable Debentures Due 2031 (the “MSI Exchangeables”), which allowed the MSI Exchangeables to be serviced directly by cash generated from the Company’s foreign operations (see note 8 to the accompanying consolidated financial statements).
Added
I-9 Table of Contents In October 2023, HSN entered into a settlement agreement with the CPSC in which HSN agreed to pay a civil penalty of $16 million to settle the CPSC’s claim that HSN allegedly failed to timely submit a report under the Consumer Product Safety Act (“CPSA”) in relation to handheld clothing steamers sold by HSN under the Joy Mangano brand names My Little Steamer® and My Little Steamer® Go Mini that were subject to a voluntary recall previously announced on May 26, 2021.
Removed
On October 27, 2021, a notice was issued to all holders to redeem any and all outstanding MSI Exchangeables on December 13, 2021. Bondholders had until the close of business on December 10, 2021 to exchange their bonds.
Added
The settlement agreement also requires HSN to implement and maintain a compliance program to ensure compliance with the CPSA. Congress enacted the Commercial Advertisement Loudness Mitigation ("CALM") Act in 2010.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThese include reduced demand for products we sell; decreases in the disposable income of existing and potential new customers; the impacts of inflation or recession; increased currency volatility resulting in adverse currency rate fluctuations; higher interest rates, higher unemployment; labor shortages; and an adverse impact to our supply chain and shipping disruptions for both the products we import and purchase domestically and the products we sell, including essential products experiencing higher demand, due to factory closures, labor shortages and other resource constraints.
Biggest changeIn addition, as a result of COVID-19 we experienced material negative impacts to our financial results, including our capital and liquidity, decreases in the disposable income of existing and potential new customers, heightened inflation, increased currency volatility resulting in adverse currency rate fluctuations and higher interest rates.
This installment payment option is called “Easy-Pay” at QVC-U.S. and in the U.K., “Q-Pay” in Germany and Italy, and “Flex-Pay” at HSN. Our installment payment option is currently offered on most of our merchandise and, for QVC-U.S. website and mobile sales and QVC-U.K. mobile sales, is the default payment option on all products on which it is offered.
This installment payment option is called “Easy-Pay” at QVC-U.S. and in the U.K., “Q-Pay” in Germany and Italy, and “Flex-Pay” at HSN. Our installment payment option is currently offered on most of our merchandise and, for QVC-U.S. website and mobile sales, is the default payment option on all products on which it is offered.
As a result, we are subject to a wide variety of statutes, rules, regulations, policies and procedures in various jurisdictions, including foreign jurisdictions, which are subject to change at any time, including laws regarding consumer protection, privacy, the regulation of retailers generally, the license requirements for television retailers in foreign jurisdictions, the importation, sale and promotion of merchandise and the operation of retail stores and warehouse facilities, as well as laws and regulations applicable to the Internet and businesses engaged in online and mobile commerce, such as those regulating the sending of unsolicited, commercial electronic mail and texts.
As a result, we are subject to a wide variety of laws, rules, regulations, policies and procedures in various jurisdictions, including foreign jurisdictions, which are subject to change at any time, including laws regarding consumer protection, privacy, the regulation of retailers generally, the license requirements for television retailers in foreign jurisdictions, the importation, sale and promotion of merchandise and the operation of retail stores and warehouse facilities, as well as laws and regulations applicable to the Internet and businesses engaged in online and mobile commerce, such as those regulating the sending of unsolicited, commercial electronic mail and texts.
Consequently, until our leverage ratio under our senior secured notes is not greater than 3.5 to 1.0, Qurate Retail will not be able to rely on our cash flow for any purposes other than the service of its debt, or to pay certain tax obligations related to us and our subsidiaries (which payments may be made by us under an intercompany tax sharing agreement).
Consequently, until our leverage ratio under our senior secured notes is not greater than 3.5 to 1.0, Qurate Retail will not be able to rely on our cash flow for any purposes other than the service of its debt and to pay certain tax obligations related to us and our subsidiaries (which payments may be made by us under an intercompany tax sharing agreement).
Our insurance coverage may not be applicable to, or sufficient to cover, all claims, costs, and damages we may incur as a result of COVID-19, or future pandemic or epidemic, related claims, which would result in our bearing such costs and could have a material adverse effect on our business, financial condition and results of operations.
Our insurance coverage may not be applicable to, or sufficient to cover, all claims, costs, and damages we may incur as a result of COVID-19, or future pandemic or epidemic, which would result in our bearing such costs and could have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Economic Conditions We have operations outside of the U.S. that are subject to numerous operational and financial risks We have operations in countries other than the U.S. and we are subject to the following risks inherent in international operations: • fluctuations in currency exchange rates; • longer payment cycles for sales in foreign countries that may increase the uncertainty associated with recoverable accounts; • recessionary conditions and economic instability, including fiscal policies that are implementing austerity measures in certain countries, which are affecting markets overseas; • inflationary pressures, such as those the market is currently experiencing, which may increase the costs of the products we sell, as well as the shipping and delivery of these products; • our ability to repatriate funds held by our foreign subsidiaries to the U.S. at favorable tax rates; • potentially adverse tax consequences; • export and import restrictions, changes in tariffs, trade policies and trade relations; • disruptions to international shipping and supply chains; • increases in taxes and governmental royalties and fees; • our ability to obtain and maintain required licenses or certifications, such as for web services and electronic devices, that enable us to operate our business in foreign jurisdictions; • changes in foreign and U.S. laws, regulations and policies that govern operations of foreign-based companies; • changes to general consumer protection laws and regulations; • difficulties in staffing and managing international operations; and • threatened and actual terrorist attacks, political unrest in international markets and ongoing military action around the world that may result in disruptions of services that are critical to our international businesses.
I-26 Table of Contents Risks Related to Economic Conditions We have operations outside of the U.S. that are subject to numerous operational and financial risks We have operations in countries other than the U.S. and we are subject to the following risks inherent in international operations: • fluctuations in currency exchange rates; • longer payment cycles for sales in foreign countries that may increase the uncertainty associated with recoverable accounts; • recessionary conditions and economic instability, including fiscal policies that are implementing austerity measures in certain countries, which are affecting markets overseas; • inflationary pressures, such as those the market is currently experiencing, which may increase the costs of the products we sell, as well as the shipping and delivery of these products; • our ability to repatriate funds held by our foreign subsidiaries to the U.S. at favorable tax rates; • potentially adverse tax consequences; • export and import restrictions, changes in tariffs, trade policies and trade relations; • disruptions to international shipping and supply chains; • increases in taxes and governmental royalties and fees; • our ability to obtain and maintain required licenses or certifications, such as for web services and electronic devices, that enable us to operate our business in foreign jurisdictions; • changes in foreign and U.S. laws, regulations and policies that govern operations of foreign-based companies; • changes to general consumer protection laws and regulations; • difficulties in staffing and managing international operations; and • threatened and actual terrorist attacks, political unrest in international markets and ongoing military action around the world that may result in disruptions of services that are critical to our international businesses.
Any disruptions of our computer systems or misappropriation or misuse of customer, employee or other personal information, whether at our company or any of our vendors, could cause interruptions in the operations of our business and subject us to increased costs, fines, litigation, regulatory actions and other liabilities.
Any disruptions of our information systems or misappropriation or misuse of customer, employee or other personal information, whether at our company or any of our vendors, could cause interruptions in the operations of our business and subject us to increased costs, fines, litigation, regulatory actions and other liabilities.
We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties We regard our intellectual property rights, including service marks, trademarks and domain names, copyrights (including our programming and our websites), trade secrets and similar intellectual property, as critical to our success.
We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties We regard our intellectual property rights, including our service marks, trademarks, patents and domain names, copyrights (including our programming and our websites), trade secrets and similar intellectual property, as critical to our success.
Although we are the U.S.’s largest television shopping retailer, we have numerous and varied competitors at the national and local levels, ranging from large department stores to specialty shops, electronic retailers, direct marketing retailers, wholesale clubs, discount retailers, other televised shopping retailers such as ShopHQ in the U.S., Jupiter Shop Channel in Japan, HSE in Germany and Austria, GM24 in Italy, and Ideal World in the U.K., infomercial retailers, Internet retailers, including livestream shopping retailers, and mail-order and catalog companies.
Although we are the U.S.’s largest television shopping retailer, we have numerous and varied competitors at the national and local levels, ranging from large department stores to specialty shops, electronic retailers, direct marketing retailers, wholesale clubs, discount retailers, other televised shopping retailers such as ShopHQ and Jewelry TV in the U.S., Jupiter Shop Channel in Japan, HSE in Germany and Austria, GM24 in Italy, and Ideal World in the U.K., infomercial retailers, Internet retailers, including livestream shopping retailers, and mail-order and catalog companies.
Although we have not detected a material security breach or cybersecurity incident to date, we have been the target of events of this nature and expect to be subject to similar attacks in the future.
Although we have not detected a material security breach or other cybersecurity incident to date, we have been the target of events of this nature and expect to be subject to similar attacks in the future.
Our Ecommerce business could be negatively affected by changes in third-party digital platform algorithms and dynamics as well as our inability to monetize the resulting web traffic The success of our Ecommerce business depends on a high degree of website traffic, which is dependent on many factors, including the availability of appealing website content, user loyalty and new user generation from various digital marketing channels that charge a fee.
Our Ecommerce business could be negatively affected by changes in third-party digital platform algorithms and dynamics as well as our inability to monetize the resulting web traffic The success of our Ecommerce business and our online marketing efforts depends on a high degree of website traffic, which is dependent on many factors, including the availability of appealing website content, user loyalty and new user generation from various digital marketing channels that charge a fee.
As of December 31, 2022, our leverage ratio (as calculated under our senior secured notes) was greater than 3.5 to 1.0 and as a result, there are restrictions on our ability to pay certain dividends or make other restricted payments to Qurate Retail.
As of December 31, 2023, our leverage ratio (as calculated under our senior secured notes) was greater than 3.5 to 1.0 and as a result, there are restrictions on our ability to pay certain dividends or make other restricted payments to Qurate Retail.
Additionally, the COVID-19 pandemic, or a future pandemic or epidemic, may adversely impact our ability to comply with various legal and contractual obligations and may expose us to increased litigation, including labor and employment claims, breach of contract claims and consumer claims by our customers.
Additionally, a future pandemic or epidemic, including a resurgence of COVID-19, may adversely impact our ability to comply with various legal and contractual obligations and may expose us to increased litigation, including labor and employment claims, breach of contract claims and consumer claims by our customers.
Our failure, and/or the failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations, or changes in applicable laws and regulations, or any compromise of security that results in the unauthorized I-26 Table of Contents release of personally identifiable information or other user data could damage our reputation and the reputation of our third party vendors and service providers, discourage potential users from trying our products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers, any one or all of which could adversely affect our business, financial condition and results of operations.
Our failure, and/or the failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations, or changes in applicable laws and regulations, or any compromise of security that results in the unauthorized release of personally identifiable information or other user data could damage our reputation and the reputation of our third party vendors and service providers, discourage potential users from trying our products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers, any one or all of which could adversely affect our business, financial condition and results of operations.
Like many e-commerce companies, we frequently encounter unauthorized parties attempting to gain access to our or our vendors’ computer systems by, among other things, hacking those systems, through fraud or other means of deceiving our employees or vendors, or burglaries.
Like many e-commerce companies, we frequently encounter unauthorized parties attempting to gain access to our or our vendors’ information systems by, among other things, hacking those systems, through fraud or other means of deceiving our employees or vendors, or burglaries.
Delays by manufacturers and vendors could also result in delays to delivery dates to our customers, which could result in the cancellation of orders, customers’ refusal to accept deliveries, a reduction in purchase prices and ultimately, termination of customer relationships.
Future delays by manufacturers and vendors could result in delays to delivery dates to our customers, which could result in the cancellation of orders, customers’ refusal to accept deliveries, a reduction in purchase prices and ultimately, termination of customer relationships.
While our bond indentures and our senior secured credit facility credit agreement both allow for unlimited dividends to service the debt of Qurate Retail so long as there is no default (i.e., no leverage test is needed), we will remain limited in our ability to distribute cash to Qurate for any other purpose.
While our bond indentures and our senior I-34 Table of Contents secured credit facility credit agreement both allow for unlimited dividends to service the debt of Qurate Retail so long as there is no default (i.e., no leverage test is needed), we will remain limited in our ability to distribute cash to Qurate for any other purpose.
Although we believe we take reasonable and customary measures to ensure continued satellite transmission capability and that these international transponder service agreements can be renewed (or replaced, if necessary) in the ordinary course of business, termination or interruption of satellite transmissions may occur, particularly if we are not able to successfully negotiate renewals or replacements of any of our expiring transponder service agreements in the future.
Although we believe we take reasonable and customary measures to ensure continued satellite transmission capability and that these international transponder service agreements can be renewed (or replaced, if necessary) in the ordinary course of business, termination or interruption of satellite I-23 Table of Contents transmissions may occur, particularly if we are not able to successfully negotiate renewals or replacements of any of our expiring transponder service agreements in the future.
Our Ecommerce business may experience difficulty in the ongoing development, implementation and customer acceptance of applications for personal electronic devices, which could harm our business Although our Ecommerce business has developed services and applications to address user and consumer interaction with website content on personal electronic devices, such as smartphones and tablets, the ways in which consumers use or rely on I-24 Table of Contents these personal electronic devices is continually changing.
Our Ecommerce business may experience difficulty in the ongoing development, implementation and customer acceptance of applications for personal electronic devices, which could harm our business Although our Ecommerce business has developed services and applications to address user and consumer interaction with website content on personal electronic devices, such as smartphones and tablets, the ways in which consumers use or rely on these personal electronic devices is continually changing.
For example, any resurgence of COVID-19, or a future pandemic or epidemic, in the areas where our distribution facilities are located, or if we are unable to adequately staff our distribution facilities to meet demand in the future, or if the cost of such staffing is higher than historical or projected costs due to wage increases, labor shortages, regulatory changes, or other factors, could harm our operating results.
For example, a future pandemic or epidemic, in the areas where our distribution facilities are located, or if we are unable to adequately staff our distribution facilities to meet demand in the future, or if the cost of such staffing is higher than historical or projected costs due to wage increases, labor shortages, regulatory changes, or other factors, could harm our operating results.
I-19 Table of Contents We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm experienced by customers who purchase merchandise from us The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is regulated by federal, state and local law, as well as the laws of the foreign countries in which we operate.
We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm experienced by customers who purchase merchandise from us The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is regulated by federal, state and local law, as well as the laws of the foreign countries in which we operate.
Impairment of our goodwill or other intangible assets could have a material adverse effect on our business, results of operations and financial condition I-22 Table of Contents 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.
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.
Although we consider our current levels of distribution without written agreement to be ordinary I-18 Table of Contents course, the failure to successfully renew or negotiate new affiliation agreements covering a material portion of television households could result in a discontinuation of carriage that may adversely affect our viewership, growth, net revenue and earnings.
Although we consider our current levels of distribution without written agreement to be ordinary course, the failure to successfully renew or negotiate new affiliation agreements covering a material portion of television households could result in a discontinuation of carriage that may adversely affect our viewership, growth, net revenue and earnings.
Accordingly, our ability to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments decline. We currently are unable to predict the extent of any of these potential adverse effects. I-27 Table of Contents Additionally, there is ongoing uncertainty and potential economic disruptions relating to the U.K.’s withdrawal from the E.U.
Accordingly, our ability to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments decline. We currently are unable to predict the extent of any of these potential adverse effects. Additionally, there is ongoing uncertainty and potential economic disruptions relating to the U.K.’s withdrawal from the E.U.
Implementing these changes may increase our costs to maintain our installment payment options and may make our installment payment options less desirable to our customers which could I-21 Table of Contents lead to a decline in sales; additionally, failure to comply with these laws and regulations could result in the imposition of fines and penalties, any of which could have an adverse effect on our results of operations.
Implementing these changes may increase our costs to maintain our installment payment options and may make our installment payment options less desirable to our customers which could lead to a decline in sales; additionally, failure to comply with these laws and regulations could result in the imposition of fines and penalties, any of which could have an adverse effect on our results of operations.
The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue We are dependent upon the continued ability of our programming to compete for viewers.
I-17 Table of Contents The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue We are dependent upon the continued ability of our programming to compete for viewers.
I-31 Table of Contents We have not voluntarily implemented various corporate governance measures, in the absence of which you may have more limited protections against interested transactions, conflicts of interest and similar matters Federal legislation, including the Sarbanes-Oxley Act of 2002, encourages the adoption of various corporate governance measures designed to promote the integrity of corporate management and the securities markets.
We have not voluntarily implemented various corporate governance measures, in the absence of which you may have more limited protections against interested transactions, conflicts of interest and similar matters Federal legislation, including the Sarbanes-Oxley Act of 2002, encourages the adoption of various corporate governance measures designed to promote the integrity of corporate management and the securities markets.
Our inability to compete effectively with regard to the assortment, product price, shipping terms, shipping pricing or free shipping and quality of the merchandise we offer for sale or to keep pace with competitors in our marketing, service, location, reputation, credit availability and technologies, could have a material adverse effect.
Our inability to compete effectively with regard to the assortment, product price, shipping terms, shipping pricing or free shipping and quality of the merchandise we offer for sale or to keep pace with I-16 Table of Contents competitors in our marketing, service, location, reputation, credit availability and technologies, could have a material adverse effect.
Such process could result in a delay or complete inability to import such goods, which could result in inventory shortages and lost sales. Additionally, the United States Treasury Department placed sanctions on China’s Xinjiang Production and Construction Corporation (“XPCC”) for serious human rights abuses against ethnic minorities in the XUAR.
Such process could result in a delay or complete inability to import such goods, which could result in inventory shortages and lost sales. Additionally, the U.S. Treasury Department placed sanctions on China’s Xinjiang Production and Construction Corporation (“XPCC”) for serious human rights abuses against ethnic minorities in the XUAR.
Fire, flood, power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, public health crises (such as pandemics and epidemics), acts of war or terrorism, acts of God and similar events or disruptions may damage or interrupt television transmissions, computer, broadband or other communications systems and infrastructures at any time.
Fire, flood, power loss, I-25 Table of Contents telecommunications failure, hurricanes, tornadoes, earthquakes, public health crises (such as pandemics and epidemics), acts of war or terrorism, acts of God and similar events or disruptions may damage or interrupt television transmissions, computer, broadband or other communications systems and infrastructures at any time.
The unanticipated loss of certain larger vendors or the consolidation of our vendors could negatively impact our sales and profitability on a short term basis It is possible that one or more of our larger vendors could experience financial difficulties, including bankruptcy, or otherwise could elect to cease doing business with us.
I-30 Table of Contents The unanticipated loss of certain larger vendors or the consolidation of our vendors could negatively impact our sales and profitability on a short term basis It is possible that one or more of our larger vendors could experience financial difficulties, including bankruptcy, or otherwise could elect to cease doing business with us.
In total, we are currently providing programming without affiliation agreements to distributors representing approximately 7% of our QVC-U.S. distribution and approximately 1% of our HSN distribution. Some of our international programming may continue to be carried by distributors after the expiration dates on our affiliation agreements with them have passed.
In total, we are currently providing programming without affiliation agreements to distributors representing approximately 6% of our QVC-U.S. distribution and approximately 1% of our HSN cable television distribution. Some of our international programming may continue to be carried by distributors after the expiration dates on our affiliation agreements with them have passed.
Legislation or regulations related to climate change that potentially impose restrictions, caps, taxes or other controls on energy use, packaging and waste, sustainable supply chain practices, animal health and welfare and water use may have a material I-20 Table of Contents adverse effect on our results of operations.
Legislation or regulations related to climate change that potentially impose restrictions, caps, taxes or other controls on energy use, packaging and waste, sustainable supply chain practices, animal health and welfare and water use may have a material adverse effect on our results of operations.
Privacy Shield, and imposed new obligations on the use of standard contractual clauses (“SCCs”) - another key mechanism to allow data transfers between the U.S. and the E.U. The European Commission adopted revised SCCs on June 4, 2021. In March 2022, the U.S. and the European Commission announced a new Transatlantic Data Privacy Framework (“DPF”) to replace the E.U.-U.S.
Privacy Shield, and imposed new obligations on the use of standard contractual clauses (“SCCs”) - another key mechanism to allow data transfers between the U.S. and the E.U. The European Commission adopted revised SCCs on June 4, 2021. In March 2022, the U.S. and the European Commission announced a new DPF to replace the E.U.-U.S. Privacy Shield.
There was $2.15 billion of unused capacity under our senior secured credit facility. In addition, we had $4 million of finance lease obligations and $412 million of operating lease liabilities. We may incur significant additional indebtedness in the future. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.
There was $2.28 billion of unused capacity under our senior secured credit facility. In addition, we had $2 million of finance lease obligations and $515 million of operating lease liabilities. We may incur significant additional indebtedness in the future. If new indebtedness is added to our current debt levels, the related risks that we now face could intensify.
Risks Related to Economic Conditions • We have operations outside of the U.S. that are subject to numerous operational and financial risks. • Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services. • Increases in market interest rates could increase our operating costs and decrease consumer demand, which may adversely affect our business. • Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results.
Risks Related to Economic Conditions • We have operations outside of the U.S. that are subject to numerous operational and financial risks. • Fluctuations in currency exchange rates may lead to lower revenues and earnings. • Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services. • Increases in market interest rates could increase our operating costs and decrease consumer demand, which may adversely affect our business. • Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results.
Increases in market interest rates could increase our operating costs and decrease consumer demand, which may adversely affect our business Interest rates rose substantially in 2022 and may continue to rise. Increases in interest rates could increase our operating costs by increasing the cost of shipping, materials for our products, and/or labor.
Increases in market interest rates could increase our operating costs and decrease consumer demand, which may adversely affect our business Interest rates have risen substantially since 2022 and may continue to rise. Increases in interest rates could increase our operating costs by increasing the cost of shipping, materials for our products, and/or labor.
Although we do not knowingly do business with XPCC, we could be subject to penalties, fines or sanctions if any of the vendors from which we purchase goods is found to have dealings, directly or indirectly with XPCC or entities it controls.
Although we do not knowingly do business with XPCC, we could be subject to penalties, I-28 Table of Contents fines or sanctions if any of the vendors from which we purchase goods is found to have dealings, directly or indirectly with XPCC or entities it controls.
Security breaches could also significantly damage our reputation with consumers and third parties with whom we do business, which could result in lost sales and customer and vendor attrition.
Security breaches and other cybersecurity incidents could also significantly damage our reputation with consumers and third parties with whom we do business, which could result in lost sales and customer and vendor attrition.
We have implemented measures and processes intended to secure our computer systems and prevent disruptions in services or unauthorized access to or loss of sensitive data, but as with all companies, these security measures may not be sufficient for all eventualities and there is no guarantee that they will be adequate to safeguard against all cyber attacks, system compromises or misuses of data.
We have implemented measures and processes intended to secure our computer systems and prevent disruptions in services or unauthorized access to or loss of sensitive data, but as with all companies, these security measures may not be sufficient for all eventualities and there is no guarantee that they will be adequate to safeguard against all cybersecurity threats or cybersecurity incidents, information system compromises or misuses of data.
Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services Prolonged economic uncertainty in various regions of the world in which our subsidiaries and affiliates operate could adversely affect demand for our products and services since a substantial portion of our revenue is derived from discretionary spending by individuals, which typically falls during times of inflation, recession and economic instability.
I-27 Table of Contents Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services Prolonged economic weakness and uncertainty in various regions of the world in which we and our subsidiaries and affiliates operate could adversely affect demand for our products and services since a substantial portion of our revenue is derived from discretionary spending by individuals, which typically falls during times of inflation, recession and economic instability.
During 2022 the first phase of Project Athens was commenced, and included actions to reduce inventory and a planned workforce reduction. It is expected that Project Athens will complete its objectives by the end of 2025.
During 2022 the first phase of Project Athens was commenced, and included actions to reduce inventory and a planned workforce reduction that was completed in February 2023. It is expected that Project Athens will complete its objectives by the end of 2025.
Violation of the QVC consent decree may result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited activities.
Violation of the I-18 Table of Contents QVC consent decree may result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited activities.
Among other things, the UFLPA imposes a presumptive ban on the import of goods to the United States that are made, wholly or in part, in the XUAR or by persons that participate in certain programs in the XUAR that entail the use of forced labor.
Among other things, the UFLPA imposes a presumptive ban on the import of goods to the U.S. that are made, wholly or in part, in the XUAR or by persons that participate in certain programs in the XUAR that entail the use of forced labor.
We cannot assure you that if we experience turnover of our key employees we will be able to recruit and retain acceptable replacements because the market for such employees is very competitive and limited.
We cannot assure you that if we experience turnover of our key employees we will I-31 Table of Contents be able to recruit and retain acceptable replacements because the market for such employees is very competitive and limited.
Item 1A. Risk Factors The risks described below and elsewhere in this annual report are not the only ones that relate to our businesses or our capitalization. The risks described below are considered to be the most material.
Item 1A. Risk Factors The risks described below and elsewhere in this Annual Report on Form 10-K are not the only ones that relate to our businesses or our capitalization. The risks described below are considered to be the most material.
Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations.
Any litigation of this nature, regardless of outcome or merit, could result in I-20 Table of Contents substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations.
We may experience shipping delays should there be any disruptions in our new warehouse management systems or warehouses themselves. In December 2021, our distribution facility located in Rocky Mount, North Carolina suffered significant fire damage. Rocky Mount was our second largest distribution facility and processed most of our returned merchandise. We do not plan to reopen the Rocky Mount facility.
We may experience shipping delays should there be any disruptions in our new warehouse management systems or warehouses themselves. In December 2021, our distribution facility located in Rocky Mount, North Carolina suffered significant fire damage. Rocky Mount was our second largest distribution facility and processed most of our returned merchandise.
I-28 Table of Contents The full potential impact to us of the UFPLA and similar potential legislations in other countries and jurisdictions remains uncertain and could have an adverse effect on our business and results of operations.
The full potential impact to us of the UFPLA and similar potential legislations in other countries and jurisdictions remains uncertain and could have an adverse effect on our business and results of operations.
There can be no assurance that Qurate Retail will be able to obtain such alternative funding sources on satisfactory terms or at all. See Item 1. “Business – Qurate Retail relationship and related party transactions.”
There can be no assurance that Qurate Retail will be able to obtain such alternative funding sources on satisfactory terms or at all. See Item 1. “Business – Qurate Retail relationship and related party transactions.” Item 1B. Unresolved Staff Comments None.
We may not be able to generate sufficient cash to service our debt obligations Our ability to make payments on our indebtedness will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions, the pendency of the COVID-19 pandemic, and to certain financial, business and other factors beyond our control.
We may not be able to generate sufficient cash to service our debt obligations Our ability to make payments on our indebtedness will depend on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control.
Risk Factor Summary The following is a summary of the material risk factors that could adversely affect our business, financial condition, and results of operations: Risks Related to Our Financial Condition and Business • Improvements in operating results from expected savings in operating costs from Project Athens and other cost saving and business improvement initiatives may not be realized in the anticipated amounts, may take longer to be realized, or could be realized only for a limited period. • The retail business environment is subject to intense competition, and we may not be able to effectively compete for customers. • The COVID-19 pandemic negatively impacted, and future pandemics or epidemics may negatively impact, our business, key financial and operating metrics, and results of operations in numerous ways that remain unpredictable. • Our net revenue and operating results depend on our ability to predict or respond to consumer preferences. • Our long-term success depends in large part on our continued ability to attract new customers and retain existing customers and we may not be able to do that in a cost-effective manner. • We depend on the television distributors that carry our programming and no assurance can be given that we will be able to maintain and renew our affiliation agreements on favorable terms or at all. • The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue. • We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm experienced by customers who purchase merchandise from us. • Failure to comply with existing laws, rules and regulations, including any new legislation or regulations related to climate change, or to obtain and maintain required licenses and rights, could subject us to additional liabilities. • We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties. • We offer our installment payment option on most of our merchandise and, in certain circumstances, offer it as the default payment option.
Risk Factor Summary The following is a summary of the material risk factors that could adversely affect our business, financial condition, and results of operations: Risks Related to Our Financial Condition and Business • Improvements in operating results from expected savings in operating costs from Project Athens and other cost saving and business improvement initiatives may not be realized in the anticipated amounts, may take longer to be realized, or could be realized only for a limited period. • The retail business environment is subject to intense competition, and we may not be able to effectively compete for customers. • Our net revenue and operating results depend on our ability to predict or respond to consumer preferences. • Our long-term success depends in large part on our continued ability to attract new customers and retain existing customers and we may not be able to do that in a cost-effective manner. • We depend on the television distributors that carry our programming and no assurance can be given that we will be able to maintain and renew our affiliation agreements on favorable terms or at all. • The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue. • We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm experienced by customers who purchase merchandise from us. • Failure to comply with existing laws, rules and regulations, including any new legislation or regulations related to climate change, or to obtain and maintain required licenses and rights, could subject us to additional liabilities. • Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties. • Environmental, Social, and Governance (“ESG”) risks could threaten our businesses’ financial outcomes, partnerships, and reputation. • We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties. • We offer our installment payment option on most of our merchandise and, in certain circumstances, offer it as the default payment option.
Less favorable channel position for our programming, such as placement adjacent to programming that does not complement our programming, a position next to our televised home shopping competitors or isolation in a "shopping" tier could adversely affect our ability to attract television viewers to our programming.
Less favorable channel position for our programming, such as placement adjacent to programming that does not complement our programming, a position next to our televised home shopping competitors or isolation in a "shopping" tier, or lack of a high-definition formatted presentation could adversely affect our ability to attract television viewers to our programming.
Most major retailers either directly or through third parties offer some form of Buy Now Pay Later (“BNPL”) financing arrangements that typically charge interest or late fees. Recently, a number of jurisdictions in which we operate have indicated that these BNPL financing arrangements will be subject to increased regulation to ensure compliance with various consumer protection laws and regulations.
Most major retailers either directly or through third parties offer some form of Buy Now Pay Later (“BNPL”) financing arrangements that typically charge interest or late fees. Recently, a number of jurisdictions in Europe and the U.S. have indicated that these BNPL financing arrangements could be subject to increased regulation to ensure compliance with various consumer protection laws and regulations.
Failure to effectively manage our installment sales plans and revolving credit card programs could negatively impact our results of operations. • Increases in labor costs could adversely affect our business, financial condition and results of operations. • Natural disasters, political crises, and other catastrophic events or other events outside of our control, including climate change, may damage our facilities or the facilities of third parties on which we depend, adversely affect our ability to operate our businesses and have broader effects. • Impairment of our goodwill or other intangible assets could have a material adverse effect on our business, results of operations and financial condition.
Failure to effectively manage our installment sales plans and revolving credit card programs could negatively impact our results of operations. • Increases in labor costs could adversely affect our business, financial condition and results of operations. • Natural disasters, political crises, and other catastrophic events or other events outside of our control, including climate change, may damage our facilities or the facilities of third parties on which we depend, adversely affect our ability to operate our businesses and have broader effects. • The COVID-19 pandemic negatively impacted, and future pandemics or epidemics may negatively impact, our business, key financial and operating metrics, and results of operations in numerous ways. • Impairment of our goodwill or other intangible assets could have a material adverse effect on our business, results of operations and financial condition.
In addition, our revenues could decrease if we are unable to meet customer sustainability requirements or competitive pressures to source products that are perceived as “green.” These additional costs, changes in operations or loss of revenues may have a material adverse effect on our business and results of operations.
In addition, our revenues could decrease if we are unable to meet customer sustainability requirements or competitive pressures to source products that are perceived as “green.” These additional costs, changes in operations or loss of revenues may have a material adverse effect on our business and results of operations. ESG risks could threaten our businesses’ financial outcomes, partnerships, and reputation.
Our business is subject to cyber security risks, including security breaches and identity theft Through our operations, sales, marketing activities, and use of third-party information, we collect and store certain non-public personal information that customers provide to purchase products, enroll in promotional programs, register on websites, or otherwise communicate with us.
I-24 Table of Contents Our business is subject to cyber security risks, including cyber security threats and cybersecurity incidents, such as security breaches and identity theft Through our operations, sales, marketing activities, and use of third-party information, we collect and store certain non-public personal information that customers provide to purchase products, enroll in promotional programs, register on websites, or otherwise communicate with us.
On March 21, 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks. We are currently assessing the proposed rule, but at this time we cannot predict the costs of implementation or any potential adverse impacts resulting from the rule as proposed.
On March 21, 2022, the SEC proposed new rules relating to the disclosure of a range of climate-related risks with final rules expected to be adopted in April 2024. We are currently assessing the proposed rule, but at this time we cannot predict the costs of implementation or any potential adverse impacts resulting from the rule as proposed.
We also face similar risks associated with security breaches affecting third parties with which we are affiliated or otherwise conduct business.
We also face similar risks associated with security breaches and other cybersecurity incidents affecting third parties with which we are affiliated or otherwise conduct business.
As of December 31, 2022, we had total debt, other than our finance lease obligations, of $4,969 million, consisting of $3,912 million of secured indebtedness under our existing notes and $1,057 million of secured indebtedness under our senior secured credit facility, in each case, secured by a first priority perfected lien on all shares of our capital stock.
As of December 31, 2023, we had total debt, other than our finance lease obligations, of $4,364 million, consisting of $3,507 million of secured indebtedness under our existing notes and $857 million of secured indebtedness under our senior secured credit facility, in each case, secured by a first priority perfected lien on all shares of our capital stock.
In November 2020, California voters approved the California Privacy Rights Act of 2020 (“CPRA”), which amends and expands the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws. Most of the CPRA’s provisions became effective on January 1, 2023.
In November 2020, California voters approved the California Privacy Rights Act of 2020 (“CPRA”), which amends and expands the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws. Most of the CPRA’s provisions became effective on January 1, 2023. A growing number of states have enacted privacy laws in recent years.
I-23 Table of Contents Any continued or permanent inability to transmit our programming via satellite would result in lost revenue and could result in lost customers Our success is dependent upon our continued ability to transmit our programming to television providers from our satellite uplink facilities, and for our distributors to continue to receive our programming at their satellite earth station downlink facilities.
Risks Related to Technology and Information Security Any continued or permanent inability to transmit our programming via satellite would result in lost revenue and could result in lost customers Our success is dependent upon our continued ability to transmit our programming to television providers from our satellite uplink facilities, and for our distributors to continue to receive our programming at their satellite earth station downlink facilities.
If we are unable to maintain the security of our retail commerce websites and mobile commerce applications, we could suffer loss of sales, reductions in traffic, diversion of management attention, and deterioration of our competitive position and incur liability for any damage to customers whose personal information is accessed without authorization.
If we are unable to maintain the security of our retail commerce websites and mobile commerce applications, we could suffer loss of sales, reductions in traffic, damage to our reputation, loss of consumer confidence, diversion of management attention, and deterioration of our competitive position and incur liability for any damage to customers whose personal information is accessed without authorization or claims, investigation, penalties and fines imposed by governmental regulators.
COVID-19 also has had an adverse impact on our supply chain due to factory closures, shipping and trucking delays and labor shortages, resulting in shipping delays and other resource constraints related to the products we import and those we produce domestically.
COVID-19 also had an adverse impact on our supply chain due to factory closures, shipping and trucking delays and labor shortages, resulting in delays and other resource constraints related to both imported and domestically produced products.
If the services or applications we develop in response to changes in consumer behavior are less effective or are not accepted by consumers, our Ecommerce business may experience difficulty attracting and retaining traffic on these platforms.
If the services or applications we develop in response to changes in consumer behavior are defective, unstable or viewed as ineffective by consumers, our Ecommerce business may experience difficulty attracting and retaining traffic on these platforms.
Termination of an existing agreement resulting in the loss of distribution of our programming to a material portion of our television households may adversely affect our growth, net revenue and earnings. The renewal negotiation process for affiliation agreements is typically lengthy.
If not resolved through business negotiation, such disagreements could result in litigation or termination of an existing agreement. Termination of an existing agreement resulting in the loss of distribution of our programming to a material portion of our television households may adversely affect our growth, net revenue and earnings. The renewal negotiation process for affiliation agreements is typically lengthy.
Failure to comply with existing laws, rules and regulations, or to obtain and maintain required licenses and rights, could subject us to additional liabilities We market and provide a broad range of merchandise through television shopping programs and our websites.
The settlement agreement also requires HSN to implement and maintain a compliance program to ensure compliance with the CPSA. Failure to comply with existing laws, rules and regulations, or to obtain and maintain required licenses and rights, could subject us to additional liabilities We market and provide a broad range of merchandise through television shopping programs and our websites.
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.
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. For the year ended December 31, 2023 the Company identified an impairment for the QxH reporting unit related to goodwill.
The techniques used to gain access to our or our vendors’ computer systems, data or customer information, disable or degrade service, or sabotage systems are constantly evolving, may be difficult to detect quickly, and often are not recognized until launched against a target.
The techniques used to gain access to our or our vendors’ computer systems, data or customer information, disable or degrade service, or sabotage systems are constantly evolving, including from emerging technologies such as advanced forms of artificial intelligence. These techniques may be difficult to detect quickly, and often are not recognized until launched against a target.
We also face cybersecurity risks from errors by our or our vendors’ employees, misappropriation of data by employees, vendors or unaffiliated third-parties, or other irregularities that may result in disruption of services or persons obtaining unauthorized access to our company’s data. As part of our response to the COVID-19 pandemic, we significantly increased the number of employees working remotely.
We also face cybersecurity risks from errors by our or our vendors’ employees, misappropriation of data by employees, vendors or unaffiliated third-parties, or other irregularities that may result in disruption of services or persons obtaining unauthorized access to our company’s data.
While we have periodically experienced the loss of a major vendor, if multiple major vendors ceased doing business with us, or did not perform consistently with past practice, this could have a material adverse impact on our business, financial condition and operating results.
While we have periodically experienced the loss of a major vendor, if multiple major vendors ceased doing business with us, or did not perform consistently with past practice, this could have a material adverse impact on our business, financial condition and operating results. Further, there has been a trend among our vendors towards consolidation in recent years that may continue.
I-16 Table of Contents The COVID-19 pandemic negatively impacted our business, and future pandemics or epidemics may negatively impact, our business, key financial and operating metrics, and results of operations in numerous ways that remain unpredictable The COVID-19 pandemic, resulted in significant disruption to the global economy, has negatively impacted us and our operations, and is expected to continue to impact us and our operations in 2023.
The COVID-19 pandemic negatively impacted our business, and future pandemics or epidemics may negatively impact, our business, key financial and operating metrics, and results of operations in numerous ways The COVID-19 pandemic, resulted in significant disruption to the global economy and negatively impacted us and our operations.
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 our ability to meet customer demand and could result in lost sales or an increase in our cost of merchandise, which would have a material adverse impact on our business and results of operations.
Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results 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 our ability to meet customer demand and could result in lost sales or an increase in our cost of merchandise, which would have a material adverse impact on our business and results of operations.
For example, on December 23, 2021, President Biden signed the Uyghur Forced Labor Prevention Act (the “UFLPA”) into law, which is intended to address the use of forced labor in China’s Xinjiang Uyghur Autonomous Region (“XUAR”).
Recently there have been heightened tensions in relations between Western nations and China. For example, on December 23, 2021, President Biden signed the Uyghur Forced Labor Prevention Act (the “UFLPA”) into law, which is intended to address the use of forced labor in China’s Xinjiang Uyghur Autonomous Region (“XUAR”).
Any one of the inventory risk factors set forth above may adversely affect our operating results. The seasonality of our business places increased strain on our operations Our net revenue in recent years indicates that our business is seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.
The seasonality of our business places increased strain on our operations Our net revenue in recent years indicates that our business is seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.
We may experience occasional system interruptions that make some or all transmissions, systems or data I-25 Table of Contents unavailable or prevent us from transmitting our signal or efficiently providing services or fulfilling orders. We maintain an ongoing process of implementing new technology systems and upgrading others.
We may experience occasional system interruptions that make some or all transmissions, systems or data unavailable or prevent us from transmitting our signal or efficiently providing services or fulfilling orders. We rely on legacy systems that are often difficult to update and maintain. As a result, we maintain an ongoing process of implementing new technology systems and upgrading others.
In addition, many retailers, especially online retailers with whom we compete, are increasingly offering customers aggressive shipping terms, including free or discounted expedited shipping. As these practices become more prevalent, we may experience further competitive pressures to attract customers and/or to change our shipping program.
In addition, many retailers, especially online retailers with whom we compete, are currently offering customers more competitive shipping and returns terms than QVC, including faster delivery and free or discounted shipping and returns. As a result of these practices, we may experience further competitive pressures to attract customers and/or to change our shipping program.
I-14 Table of Contents • System interruption and the lack of integration and redundancy in these systems and infrastructures may adversely affect our ability to transmit our television programs, operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations. • The processing, storage, sharing, use, disclosure and protection of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights.
I-14 Table of Contents • Our Ecommerce business may experience difficulty in the ongoing development, implementation and customer acceptance of applications for personal electronic devices, which could harm our business. • Our business is subject to cyber security risks, including cybersecurity threats and cybersecurity incidents, such as security breaches and identity theft. • System interruption and the lack of integration and redundancy in these systems and infrastructures may adversely affect our ability to transmit our television programs, operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations. • The processing, storage, sharing, use, disclosure and protection of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights.
This could exacerbate the risks associated with our existing indebtedness. • Covenants in our debt agreements restrict our business in many ways. • We may be adversely affected by the discontinuance of the London Inter-Bank Offered Rate and the transition to alternative reference rates. • We may be limited in our ability to pay dividends or make other restricted payments to Qurate Retail.
This could exacerbate the risks associated with our existing indebtedness. • Covenants in our debt agreements restrict our business in many ways. • We may be limited in our ability to pay dividends or make other restricted payments to Qurate Retail.
Privacy Shield. On December 13, 2022, the European Commission issued an adequacy decision initiating the formal adoption process for the DPF. Further, the General Data Protection Regulation (“GDPR”), which became effective in 2018, gives consumers in the E.U. additional rights and imposes additional restrictions and penalties on companies for illegal collection and misuse of personal information.
Further, the General Data Protection Regulation (“GDPR”), which became effective in 2018, gives consumers in the E.U. additional rights and imposes additional restrictions and penalties on companies for illegal collection and misuse of personal information.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Company leveraged its existing fulfillment centers and supplemented these facilities with short-term leased space as needed during 2022. We are currently evaluating long-term alternatives to alleviate the strain on our network caused by the loss of the Rocky Mount distribution center. In November 2022, QVC entered into agreements to sell its Hückelhoven, Germany and Knowsley, U.K. properties.
Biggest changeThe Company leveraged its existing fulfillment centers and supplemented these facilities with short-term leased space as needed during 2022 and 2023. We continue to assess our network footprint and are making investments to expand capacity and increase throughput as a result of the loss of the Rocky Mount fulfillment center.
Petersburg, Florida Multi-functional Own QxH Knowsley, U.K. Multi-functional Own QVC-International Chiba, Japan Multi-functional Own QVC-International Brugherio, Italy Multi-functional Own QVC-International Düsseldorf, Germany Multi-functional Own QVC-International London, U.K. Multi-functional Lease QVC-International We supplement the facilities listed above by leasing various facilities worldwide.
Petersburg, Florida Multi-functional Own QxH Knowsley, U.K. Multi-functional Lease QVC-International Chiba, Japan Multi-functional Own QVC-International Brugherio, Italy Multi-functional Own QVC-International Düsseldorf, Germany Multi-functional Own QVC-International London, U.K. Multi-functional Lease QVC-International We supplement the facilities listed above by leasing various facilities worldwide.
Our corporate headquarters and the remainder of our material properties are summarized as follows: Properties Location Type Own or Lease Operating Segment West Chester, Pennsylvania Corporate Headquarters Lease QxH Bochum, Germany Contact Center Own QVC-International Kassel, Germany Contact Center Own QVC-International Chiba-Shi, Japan Contact Center Own QVC-International Bethlehem, Pennsylvania Distribution Center Lease QxH Suffolk, Virginia Distribution Center Lease QxH Florence, South Carolina Distribution Center Lease QxH Ontario, California Distribution Center Lease QxH Piney Flats, Tennessee Distribution Center Lease QxH Chiba, Japan Distribution Center Own QVC-International Hückelhoven, Germany Distribution Center Own QVC-International St.
Our corporate headquarters and the remainder of our material properties are summarized as follows: Properties Location Type Own or Lease Operating Segment West Chester, Pennsylvania Corporate Headquarters Lease QxH Kassel, Germany Contact Center Own QVC-International Bethlehem, Pennsylvania Distribution Center Lease QxH Suffolk, Virginia Distribution Center Lease QxH Florence, South Carolina Distribution Center Lease QxH Ontario, California Distribution Center Lease QxH Piney Flats, Tennessee Distribution Center Lease QxH Chiba, Japan Distribution Center Own QVC-International Hückelhoven, Germany Distribution Center Lease QVC-International St.
These properties are owned as of December 31, 2022 but included in assets held for sale noncurrent in the accompanying consolidated balance sheet. Refer to note 20 in the accompanying notes to our consolidated financial statements for further details.
Refer to note 18 in the accompanying notes to our consolidated financial statements for further details.
Added
In December 2023, QVC entered into an agreement to sell an owned and operated property in Germany to an independent third party. This property is owned as of December 31, 2023, but included as an assets held for sale noncurrent in the accompanying consolidated balance sheet.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities There is no established trading market for our equity securities. There is one holder of record of our equity, Qurate Retail Group, Inc., an indirect wholly-owned subsidiary of Qurate Retail, Inc. ("Qurate Retail") (formerly Liberty Interactive Corporation). See also "Item 1.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities There is no established trading market for our equity securities. There is one holder of record of our equity, Qurate Retail Group, Inc., an indirect wholly-owned subsidiary of Qurate Retail, Inc. ("Qurate Retail"). See also Item 1.
Business - Qurate Retail relationship and related party transactions" for information related to our dividends to Qurate Retail and note 8 to our consolidated financial statements for our debt issuance descriptions. Item 6. [Reserved]
“Business - Qurate Retail relationship and related party transactions" for information related to our dividends to Qurate Retail and note 7 to our consolidated financial statements for our debt issuance descriptions. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeII-4 Table of Contents Results of Operations- QVC Consolidated QVC's operating results were as follows: Years ended December 31, (in millions) 2022 2021 2020 Net revenue $ 9,887 11,354 11,472 Operating costs and expenses: Cost of goods sold (exclusive of depreciation, amortization and Rocky Mount inventory losses shown below) 6,751 7,368 7,418 Operating 760 791 786 Selling, general and administrative excluding stock-based compensation 1,268 1,194 1,211 Adjusted OIBDA (defined below) 1,108 2,001 2,057 Restructuring and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) (see note 19) (10) 21 — Gains on sale leaseback transactions (520) — — Impairment losses 2,600 — — Stock-based compensation 36 44 37 Depreciation 111 159 171 Amortization 290 270 282 Operating (loss) income (1,399) 1,507 1,567 Other (expense) income: Equity in losses of investee — (2) (30) (Losses) gains on financial instruments (9) 8 3 Interest expense, net (228) (249) (257) Foreign currency gain (loss) 32 (9) 6 Loss on extinguishment of debt (6) (7) (42) Other income 20 11 — (191) (248) (320) (Loss) income before income taxes (1,590) 1,259 1,247 Income tax expense (220) (408) (345) Net (loss) income (1,810) 851 902 Less net income attributable to the noncontrolling interest (57) (64) (58) Net (loss) income attributable to QVC, Inc. stockholder $ (1,867) 787 844 Net revenue Net revenue for each of QVC's segments was as follows: Years ended December 31, (in millions) 2022 2021 2020 QxH $ 7,359 8,277 8,505 QVC-International 2,528 3,077 2,967 Consolidated QVC $ 9,887 11,354 11,472 II-5 Table of Contents QVC's consolidated net revenue decreased 12.9% and 1.0% for the years ended December 31, 2022 and 2021, respectively, as compared to the corresponding prior years.
Biggest changeII-4 Table of Contents Results of Operations- QVC Consolidated QVC's operating results were as follows: Years ended December 31, (in millions) 2023 2022 2021 Net revenue $ 9,449 9,887 11,354 Operating costs and expenses: Cost of goods sold (exclusive of depreciation, amortization and Rocky Mount inventory losses shown below) 6,273 6,751 7,368 Operating 739 760 791 Selling, general and administrative excluding stock-based compensation 1,366 1,268 1,194 Adjusted OIBDA (defined below) 1,071 1,108 2,001 Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) (196) (10) 21 Gains on sale of assets and sale leaseback transactions (113) (520) — Impairment losses 326 2,600 — Stock-based compensation 37 36 44 Depreciation 90 111 159 Amortization 282 290 270 Operating income (loss) 645 (1,399) 1,507 Other (expense) income: Equity in losses of investee — — (2) (Losses) gains on financial instruments (1) (9) 8 Interest expense, net (228) (228) (249) Foreign currency (loss) gain (10) 32 (9) Gain (loss) on extinguishment of debt 10 (6) (7) Other income — 20 11 (229) (191) (248) Income (loss) before income taxes 416 (1,590) 1,259 Income tax expense (205) (220) (408) Net income (loss) 211 (1,810) 851 Less net income attributable to the noncontrolling interest (52) (57) (64) Net income (loss) attributable to QVC, Inc. stockholder $ 159 (1,867) 787 Net revenue Net revenue for each of QVC's segments was as follows: Years ended December 31, (in millions) 2023 2022 2021 QxH $ 6,995 7,359 8,277 QVC-International 2,454 2,528 3,077 Consolidated QVC $ 9,449 9,887 11,354 QVC's consolidated net revenue decreased 4.4% and 12.9% for the years ended December 31, 2023 and 2022, respectively, as compared to the corresponding prior years.
QVC's international business employs product sourcing teams who select products tailored to the interests of each local market. The Company's Japanese operations ("QVC-Japan") are conducted through a joint venture with Mitsui & Co., LTD ("Mitsui"). QVC-Japan is owned 60% by the Company and 40% by Mitsui.
QVC's international business employs product sourcing teams who select products tailored to the interests of each local market. The Company's Japanese operations ("QVC-Japan") are conducted through a joint venture with Mitsui & Co. LTD. QVC-Japan is owned 60% by the Company and 40% by Mitsui.
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.
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.
Impairment losses QVC recorded impairment losses of $2,600 million for the year ended December 31, 2022, including $180 million related to a decrease in the fair value of the HSN indefinite-lived tradename and $2,420 million related to a decrease in the fair value of the QxH reporting unit goodwill (refer to note 6 to the accompanying consolidated financial statements).
QVC recorded impairment losses of $2,600 million for the year ended December 31, 2022, including $180 million related to a decrease in the fair value of the HSN indefinite-lived tradename and $2,420 million related to a decrease in the fair value of the QxH reporting unit (refer to note 6 to the accompanying consolidated financial statements).
The payment and performance of the Borrowers’ obligations under the Fifth Amended and Restated Credit Agreement are guaranteed by each of QVC’s, QVC Global’s, Zulily’s and CBI’s Material Domestic Subsidiaries (as defined in the Fifth Amended and Restated Credit Agreement), if any, and certain other subsidiaries of any Borrower that such Borrower has chosen to provide guarantees.
The payment and performance of the Borrowers’ obligations under the Fifth Amended and Restated Credit Agreement are guaranteed by each of QVC’s, QVC Global’s and CBI’s Material Domestic Subsidiaries (as defined in the Fifth Amended and Restated Credit Agreement), if any, and certain other subsidiaries of any Borrower that such Borrower has chosen to provide guarantees.
The gain is included in gains on sale leaseback transactions in the 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.
The gain is included in gains on sale of intangible asset and sale leaseback transactions in the 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.
When we refer to "constant currency operating results", this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to understand better QVC’s underlying performance without the effects of currency exchange rate fluctuations. The percentage change in net revenue for QVC's segments in U.S.
When we refer to "constant currency operating results", this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to understand better QVC’s underlying performance without the effects of currency exchange rate fluctuations. The percentage change in net revenue for each of QVC's segments in U.S.
Accordingly, changes in the fair value of these instruments were recognized as losses on financial instruments in the statements of operations and in other comprehensive income as it related to instrument specific credit risk on the consolidated statements of comprehensive income.
Accordingly, changes in the fair value of these instruments were recognized as losses on financial instruments in the statements of operations and in other comprehensive income as it related to instrument specific credit risk on the consolidated statements of comprehensive income (loss).
The increase in cost of goods sold as a percentage of revenue in 2022 is primarily due to higher fulfillment costs across both segments driven by increased freight and warehousing costs.
For 2022, the increase in cost of goods sold as a percentage of revenue is primarily due to higher fulfillment costs across both segments driven by increased freight and warehousing costs.
Further, the borrowings under the Fifth Amended and Restated Credit Agreement are secured, pari passu with QVC’s existing notes, by a pledge of all of QVC’s equity interests. The borrowings under the Fifth Amended and Restated Credit Agreement are also secured by a pledge of all of Zulily’s and CBI’s equity interests.
Further, the borrowings under the Fifth Amended and Restated Credit Agreement are secured, pari passu with QVC’s existing notes, by a pledge of all of QVC’s equity interests. The borrowings under the Fifth Amended and Restated Credit Agreement are also secured by a pledge of all of CBI’s equity interests.
A discussion of our results of operations for the year ended December 31, 2020 is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations-QVC Consolidated” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov.
A discussion of our results of operations for the year ended December 31, 2021 is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations-QVC Consolidated” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov.
Although these product shortages and supply chain disruptions have moderated, in the event of ongoing or heightened resurgences of COVID-19, including new variants in the future, or the occurrence of another pandemic or epidemic, we cannot be certain that we will be able to identify alternative sources for our products without delay or without greater cost to us.
Although these product shortages and supply chain disruptions have moderated, in the event of resurgences of COVID-19, including new variants in the future, or the occurrence of another pandemic or epidemic, we cannot be certain that we will be able to identify alternative sources for our products without delay or without greater cost to us.
In order to improve customer experience and grow relationships, QVC is working to optimize programming using advanced analytics to align product offerings, promotions and airtime with customer preferences. In addition, we expect to invest in infrastructure which will endeavor to improve the customer's order to delivery experience by increasing personalization, reducing shipping time and improving shipment tracking visibility.
In order to improve customer experience and grow relationships, QVC is working to optimize programming using advanced analytics to align product offerings, promotions and airtime with customer preferences. In addition, we expect to invest in infrastructure which will endeavor to improve the customer's order to delivery experience by reducing shipping time and improving shipment tracking visibility.
Rocky Mount was the Company’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.
Rocky Mount was the Company’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 would not reopen.
There are no restrictions under the debt agreements on QVC’s ability to pay dividends or make other restricted payments if QVC is not in default on its senior secured notes or the Fifth Amended and Restated Credit Agreement and (i) with respect to QVC’s senior secured notes, QVC’s consolidated leverage ratio would be no greater than 3.5 to 1.0 (“senior secured notes leverage basket”) and (ii) with respect to the Fifth Amended and Restated Credit Agreement, the consolidated net leverage basket for QVC, QVC Global, Zulily and CBI, would be no greater than 4.0 to 1.0.
There are no restrictions under the debt agreements on QVC’s ability to pay dividends or make other restricted payments if QVC is not in default on its senior secured notes or the Fifth Amended and Restated Credit Agreement and (i) with respect to QVC’s senior secured notes, QVC’s consolidated leverage ratio would be no greater than 3.5 to 1.0 and (ii) with respect to the Fifth Amended and Restated Credit Agreement, the consolidated net leverage basket for QVC, QVC Global and CBI, would be no greater than 4.0 to 1.0.
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 received net cash proceeds of $250 million and 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.
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, 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 of $250 million and forgiveness of the remaining financing obligation of $84 million) and the carrying value of the distribution center.
As of December 31, 2022, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
As of December 31, 2023, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
As of December 31, 2022, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
As of December 31, 2023, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
For the year ended December 31, 2021 there was $8 million in gains on financial instruments primarily due to gains on derivative instruments used to hedge upward price fluctuations of the MSI Exchangeables partially offset by losses on the MSI Exchangeables.
For the year ended December 31, 2021 there was $8 million in gains on financial instruments primarily due to gains on derivative instruments used to hedge upward price fluctuations of the MSI Exchangeables (defined below) partially offset by losses on the MSI Exchangeables.
Additional Cash Flow Information During the year ended December 31, 2022, QVC's primary uses of cash were $2,030 million of principal payments on debt and finance lease obligations, $1,270 million of dividends to Qurate Retail, $536 million of principal repayment of senior secured notes, $261 million of capital and television distribution rights expenditures and $68 million in dividend payments from QVC-Japan to Mitsui.
During the year ended December 31, 2022, QVC's primary uses of cash were $2,030 million of principal payments on debt and finance lease obligations, $1,270 million of dividends to Qurate Retail, $536 million of principal repayment of senior secured notes, $261 million of capital and television distribution rights expenditures and $68 million in dividend payments from QVC-Japan to Mitsui.
The Fifth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on 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 the Borrowers’ consolidated leverage ratio.
II-12 Table of Contents The Fifth Amended and Restated Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on 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 the Borrowers’ consolidated leverage ratio.
As of December 31, 2022, substantially all of QVC's cash and cash equivalents were invested in AAA rated money market funds and time deposits with banks rated equal to or above A.
As of December 31, 2023, substantially all of QVC's cash and cash equivalents were invested in AAA rated money market funds and time deposits with banks rated equal to or above A.
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 discussing our operating results, the term "currency exchange rates" refers to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. Dollar.
Dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow will be negatively affected. In discussing our operating results, the term “currency exchange rates” refers to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. Dollar.
The Company and Mitsui share in all profits and losses based on their respective ownership interests. QVC-Japan paid dividends to Mitsui of $68 million, $60 million, and $62 million in the years ended December 31, 2022, 2021 and 2020, respectively. II-1 Table of Contents The Company is an indirect wholly-owned subsidiary of Qurate Retail, Inc.
The Company and Mitsui share in all profits and losses based on their respective ownership interests. QVC-Japan paid dividends to Mitsui of $53 million, $68 million, and $60 million in the years ended December 31, 2023, 2022 and 2021, respectively. II-1 Table of Contents The Company is an indirect wholly-owned subsidiary of Qurate Retail, Inc.
QVC defines Adjusted OIBDA as operating income plus depreciation and amortization, impairment losses, stock-based compensation and excluding restructuring and fire related costs, net of recoveries (including Rocky Mount inventory losses) and gains on sale leaseback transactions.
QVC defines Adjusted OIBDA as operating income plus depreciation and amortization, impairment losses, stock-based compensation and excluding restructuring, penalties and fire related costs, net of recoveries (including Rocky Mount inventory losses) and gains on sale of intangible asset and sale leaseback transactions.
In order to rigorously execute core processes, QVC will optimize pricing and assortment by investing in Information Technology systems that will support real-time pricing and promotion adjustments at an item level. We will also focus on growing our private label brands to drive revenue and margin at productive scale.
In order to rigorously execute core processes, QVC will optimize pricing and assortment by investing in enhanced Information Technology systems that will support real-time pricing and promotion adjustments at an item level. We will also focus on growing our private label brands to drive revenue and margin at productive scale. Lower cost to serve.
Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S generally accepted accounting principles (" U.S. GAAP"). The primary material limitations associated with the use of Adjusted OIBDA as compared to U.S.
Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. GAAP. The primary material limitations associated with the use of Adjusted OIBDA as compared to U.S.
Other QVC’s material cash requirements for the next year, outside of normal operating expenses, include the costs to service outstanding debt, expenditures for affiliation agreements with television providers, and capital expenditures expected to be between $200 and $245 million. The Company also may make dividend payments to Qurate Retail.
Other QVC’s material cash requirements for the next year, outside of normal operating expenses, include the costs to service outstanding debt, expenditures for affiliation agreements with television providers, and capital expenditures expected to be between $210 and $225 million. The Company also may make dividend payments to Qurate Retail.
Each of these adjustments is estimated based on historical experience. Sales returns are calculated as a percent of sales and are netted against revenue in the consolidated statement of operations. Sales returns represented 15.3% of gross product revenue for the years ended December 31, 2022 and 2021, respectively, and 15.6% for the year ended December 31, 2020.
Each of these adjustments is estimated based on historical experience. Sales returns are calculated as a percent of sales and are netted against revenue in the consolidated statement of operations. Sales returns represented 16.3% and 15.3% of gross product revenue for the years ended December 31, 2023 and 2022, respectively, and 15.3% for the year ended December 31, 2021.
The current economic uncertainty in various regions of the world in which our subsidiaries and affiliates operate could adversely affect demand for our products and services since a substantial portion of our revenue is derived from discretionary spending by individuals, which typically falls during times of economic instability.
II-2 Table of Contents The current economic uncertainty in various regions of the world in which our subsidiaries and affiliates operate could adversely affect demand for our products and services since a substantial portion of our revenue is derived from discretionary spending by individuals, which typically falls during times of economic instability.
Dollars and in constant currency was as follows: Year ended December 31, 2022 Year ended December 31, 2021 U.S. Dollars Foreign Currency Exchange Impact Constant Currency U.S.
Dollars and in constant currency was as follows: Year ended December 31, 2023 Year ended December 31, 2022 U.S. Dollars Foreign Currency Exchange Impact Constant Currency U.S.
If deemed necessary based on qualitative factors, a quantitative test is used to determine if the carrying value of an indefinite-lived intangible asset exceeds its fair value. If the carrying value exceeds the fair value, an impairment loss is recognized in an amount equal to that excess in accordance with FASB Accounting Standards Codification 350-30-35.
If deemed necessary based on qualitative factors, a quantitative test is used to determine if the carrying value of an indefinite-lived intangible asset exceeds its fair value. If the carrying value exceeds the fair value, an impairment loss is recognized in an amount equal to that excess in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-30-35.
The senior secured notes contains certain covenants, including certain restrictions on QVC and its 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; consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; and restricting subsidiary distributions.
II-11 Table of Contents The senior secured notes contain certain covenants, including certain restrictions on QVC and its 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; consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; and restricting subsidiary distributions.
The increase in software amortization for the year ended December 31, 2021 is due to software additions including QVC's Enterprise Resource Planning (“ERP”) system that was placed into service in the second quarter of 2021.
The increase in software amortization for the year ended December 31, 2023 is due to software additions including an enhancement to QVC’s Enterprise Resource Planning (“ERP”) system that was placed into service in the second quarter of 2023.
Working capital at any specific point in time is subject to many variables, including seasonality, inventory management, the timing of cash receipts and payments, vendor payment terms, and fluctuations in foreign exchange rates. As of December 31, 2021, $272 million of the $519 million in cash, cash equivalents and restricted cash was held by foreign subsidiaries.
Working capital at any specific point in time is subject to many variables, including seasonality, inventory management, the timing of cash receipts and payments, vendor payment terms and fluctuations in foreign exchange rates. As of December 31, 2022, $238 million of the $367 million in cash, cash equivalents and restricted cash was held by foreign subsidiaries.
Loss on extinguishment of debt For the year ended December 31, 2022, QVC recorded a loss on extinguishment of debt of $6 million related to the repayment of $536 million of the outstanding 4.375% Senior Secured Notes due 2023.
QVC recorded a $6 million loss on extinguishment of debt during the year ended December 31, 2022 related to the repurchase of $536 million of the outstanding 4.375% Senior Secured Notes due 2023.
II-16 Table of Contents Goodwill and long-lived assets QVC's long-lived asset valuations are primarily comprised of the annual assessment of the recoverability of goodwill and other nonamortizable intangibles, such as tradenames, and the evaluation of the recoverability of other long-lived assets upon certain triggering events.
Goodwill and long-lived assets QVC's long-lived asset valuations are primarily comprised of the annual assessment of the recoverability of goodwill and other nonamortizable intangibles, such as tradenames, and the evaluation of the recoverability of other long-lived assets upon certain triggering events.
Project Athens main initiatives include: (i) improve customer experience and grow relationships; (ii) rigorously execute core processes; (iii) lower cost to serve; (iv) optimize the brand portfolio; and (v) build new high growth businesses anchored in strength. In support of Project Athens QVC’s strategies are as follows. QVC is focused on rebuilding stronger connections with their customers.
Project Athens main initiatives include: (i) improve customer experience and grow relationships; (ii) rigorously execute core processes; (iii) lower cost to serve; (iv) optimize the brand portfolio; and (v) build new high growth businesses anchored in strength. Improve customer experience and grow relationships. QVC is focused on rebuilding stronger connections with their customers.
II-9 Table of Contents (Losses) gains on financial instruments (Losses) gains on financial instruments are comprised of changes in the fair value of the following: Years ended December 31, (in millions) 2022 2021 2020 Exchangeable senior debentures $ — (144) — Financial instruments (10) 150 — Interest rate swap 1 2 3 (Losses) gains on financial instruments $ (9) 8 3 For the year ended December 31, 2022 there was $9 million in losses on financial instruments primarily related to the change in fair value of the foreign currency forward contracts (see note 15 of the accompanying consolidated financial statements).
(Losses) gains on financial instruments (Losses) gains on financial instruments are comprised of changes in the fair value of the following: Years ended December 31, (in millions) 2023 2022 2021 Exchangeable senior debentures $ — — (144) Financial instruments (1) (10) 150 Interest rate swap — 1 2 (Losses) gains on financial instruments $ (1) (9) 8 For the year ended December 31, 2023 and 2022 there was $1 million and $9 million in losses on financial instruments primarily related to the change in fair value of the foreign currency forward contracts (see note 14 of the accompanying consolidated financial statements).
We are also building a next generation shopping app featuring vendors with self-made content. During 2022 QVC commenced the first phase of Project Athens, including actions to reduce inventory and a planned workforce reduction.
We are also building a next generation shopping app featuring vendors with self-made content. During 2022, QVC commenced the first phase of Project Athens, including actions to reduce inventory and a planned workforce reduction that was completed in February 2023.
II-7 Table of Contents Restructuring and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) QVC recorded a gain of $10 million and a loss of $21 million for the years ended December 31, 2022 and 2021, respectively, in restructuring and fire related costs, net of recoveries.
II-7 Table of Contents Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) QVC recorded a gain of $196 million and a gain of $10 million for the years ended December 31, 2023 and 2022, respectively, in restructuring, penalties and fire related costs, net of recoveries.
II-17 Table of Contents The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2022 and 2021 were as follows: (in millions) QxH QVC-International Total Balance as of December 31, 2020 $ 5,112 922 6,034 Exchange rate fluctuations — (66) (66) Balance as of December 31, 2021 5,112 856 5,968 Impairment (2,420) — (2,420) Exchange rate fluctuations — (78) (78) Balance as of December 31, 2022 $ 2,692 778 3,470 Retail related adjustments and allowances QVC records adjustments and allowances for sales returns, inventory obsolescence and uncollectible receivables.
II-17 Table of Contents The changes in the carrying amount of goodwill by operating segment for the years ended December 31, 2023 and 2022 were as follows: (in millions) QxH QVC-International Total Balance as of December 31, 2021 $ 5,112 856 5,968 Impairment (2,420) — (2,420) Exchange rate fluctuations — (78) (78) Balance as of December 31, 2022 2,692 778 3,470 Impairment (326) — (326) Exchange rate fluctuations — 7 7 Balance as of December 31, 2023 $ 2,366 785 3,151 Retail related adjustments and allowances QVC records adjustments and allowances for sales returns, inventory obsolescence and uncollectible receivables.
Interest expense, net For the years ended December 31, 2022 and 2021, consolidated net interest expense decreased $21 million and $8 million, respectively, as compared to the corresponding prior years. The decrease in interest expense in 2022 is primarily due to lower outstanding debt throughout 2022, including finance lease obligations.
For the year ended December 31, 2022 consolidated net interest expense decreased $21 million, as compared to the corresponding prior year. The decrease in net interest expense in 2022 is primarily due to lower outstanding debt throughout 2022, including finance lease obligations.
Approximately 79% of this foreign cash balance was that of QVC-Japan.
Approximately 67% of this foreign cash balance was that of QVC-Japan.
Trade accounts receivable (including installment payment, credit card and customer receivables) were $1,319 million and $1,521 million, as of December 31, 2022 and 2021, respectively. Allowance for credit losses related to uncollectible trade accounts receivable was $87 million and $86 million as of December 31, 2022 and 2021, respectively. Each of these adjustments requires management judgment.
Trade accounts receivable (including installment payment, credit card and customer receivables) was $1,294 million and $1,319 million, as of December 31, 2023 and 2022, respectively. Allowance for credit losses related to uncollectible trade accounts receivable was $82 million and $87 million as of December 31, 2023 and 2022, respectively. Each of these adjustments requires management judgment.
The Company has seen increasing inflationary pressures during the period. including higher wages, freight, and merchandise costs. If these pressures persist, inflated costs may result in certain increased costs continuing to outpace our pricing power in the near term. On December 18, 2021, QVC experienced a fire at its Rocky Mount, Inc. distribution center in North Carolina.
The Company has seen inflationary pressures during the period including higher wages and merchandise costs. If these pressures persist, inflated costs may result in certain increased costs outpacing our pricing power in the near term. On December 18, 2021, QVC experienced a fire at its Rocky Mount fulfillment center in North Carolina.
The $1,467 million decrease in 2022 net revenue was primarily due to an 8.5% decrease in units shipped driven by QxH, $373 million in unfavorable foreign exchange rates, a $124 million decrease in shipping and handling revenue driven by QxH, and a decline of 0.8% in average selling price per unit ("ASP") primarily at QxH, partially offset by an increase in ASP at QVC-International.
II-5 Table of Contents For 2022, the $1,467 million decrease in net revenue was primarily due to an 8.5% decrease in units shipped driven by QxH, $373 million in unfavorable foreign exchange rates, a $124 million decrease in shipping and handling revenue driven by QxH, and a decline of 0.8% in ASP primarily at QxH, partially offset by an increase in ASP at QVC-International.
QVC utilizes a qualitative assessment for determining whether step one of the goodwill impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether an impairment exists.
The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether an impairment exists.
The change in the reserve is included in cost of goods sold in the consolidated statements of operations. As of December 31, 2022, inventory was $1,035 million, which was net of the obsolescence reserve of $143 million. As of December 31, 2021, inventory was $1,355 million, which was net of the obsolescence reserve of $122 million.
The change in the reserve is included in cost of goods sold in the consolidated statements of operations. As of December 31, 2023, inventory was $860 million, which was net of the obsolescence reserve of $115 million. As of December 31, 2022, inventory was $1,035 million, which was net of the obsolescence reserve of $143 million.
Years ended December 31, (in millions) 2022 2021 2020 Operating (loss) income $ (1,399) 1,507 1,567 Depreciation and amortization 401 429 453 Stock-based compensation 36 44 37 Restructuring and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) (10) 21 — Impairment losses 2,600 — — Gains on sale leaseback transactions (520) — — Adjusted OIBDA $ 1,108 2,001 2,057 QVC Adjusted OIBDA decreased by $893 million and $56 million for the years ended December 31, 2022 and 2021, respectively, as compared to the corresponding prior year.
Years ended December 31, (in millions) 2023 2022 2021 Operating income (loss) $ 645 (1,399) 1,507 Depreciation and amortization 372 401 429 Stock-based compensation 37 36 44 Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) (196) (10) 21 Impairment losses 326 2,600 — Gains on sale of assets and sale leaseback transactions (113) (520) — Adjusted OIBDA $ 1,071 1,108 2,001 II-10 Table of Contents QVC Adjusted OIBDA decreased by $37 million and $893 million for the years ended December 31, 2023 and 2022, respectively, as compared to the corresponding prior year.
These declines were partially offset by an $84 million decrease in estimated product returns, primarily driven by QxH, and $57 million in favorable foreign exchange rates. During the years ended December 31, 2022 and 2021, the changes in revenue and expenses were affected by changes in the exchange rates for the Japanese Yen, the Euro and the U.K. Pound Sterling.
These declines were partially offset by a $161 million decrease in estimated product returns, primarily driven by QxH. During the years ended December 31, 2023 and 2022, 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.
Such expenses increased $74 million to 12.8% of net revenue for the year ended December 31, 2022 as compared to the prior year and decreased $17 million to 10.5% of net revenue for the year ended December 31, 2021 as compared to the prior year.
Such expenses increased $98 million to 14.5% of net revenue for the year ended December 31, 2023 as compared to the prior year and increased $74 million to 12.8% of net revenue for the year ended December 31, 2022 as compared to the prior year.
Stockholder (1,867) Other Debt Related Information QVC was in compliance with all of its debt covenants as of December 31, 2022. The weighted average interest rate applicable to all of the outstanding debt (excluding finance leases) prior to amortization of bond discounts and related debt issuance costs was 5.2% as of December 31, 2022.
Stockholder 159 II-13 Table of Contents Other Debt Related Information QVC was in compliance with all of its debt covenants as of December 31, 2023. The weighted average interest rate applicable to all of the outstanding debt (excluding finance leases) prior to amortization of bond discounts and related debt issuance costs was 5.7% as of December 31, 2023.
QVC recorded restructuring charges of $24 million in Restructuring and fire related costs, net of (recoveries) in the consolidated statement of operations during the year ended December 31, 2022, related to workforce reduction. II-2 Table of Contents QVC’s future net revenue will depend on its ability to grow through digital platforms, attract new customers and retain existing customers.
During the year ended December 31, 2023, QVC implemented a workforce reduction and recorded restructuring charges of $13 million in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statements of operations. QVC’s future net revenue will depend on its ability to grow through digital platforms, retain and grow revenue from existing customers, and attract new customers.
II-12 Table of Contents Senior Secured Credit Facility On October 27, 2021, QVC entered into the Fifth Amended and Restated Credit Agreement with QVC, Zulily, CBI, and QVC Global, each a direct or indirect wholly owned subsidiary of Qurate Retail.
Senior Secured Credit Facility On October 27, 2021, QVC entered into the Fifth Amended and Restated Credit Agreement (the "Fifth Amended and Restated Credit Agreement") with Zulily, CBI, and QVC Global, each a direct or indirect (or former in the case of Zulily) wholly owned subsidiary of Qurate Retail, as borrowers (collectively, the “Borrowers”).
Operating expenses decreased $31 million or 4% and increased $5 million or 1% for the years ended December 31, 2022 and 2021, respectively as compared to the corresponding prior year. Operating expenses were 7.7%, 7.0% and 6.9% of net revenue for the years ended December 31, 2022, 2021 and 2020, respectively.
Operating expenses decreased $21 million or 3% and decreased $31 million or 4% for the years ended December 31, 2023 and 2022, respectively as compared to the corresponding prior year. Operating expenses were 7.8%, 7.7% and 7.0% of net revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
II-11 Table of Contents Financial Position, Liquidity and Capital Resources Exchangeable Senior Debentures 3.5% Exchangeable Senior Debentures As part of the common control transaction with Qurate Retail completed in December 2020, QVC Global, a subsidiary of the Company, became the primary co-obligor of the MSI Exchangeables, exchangeable for common stock of Motorola Solutions, Inc.
Financial Position, Liquidity and Capital Resources Exchangeable Senior Debentures 3.5% Exchangeable Senior Debentures As part of the common control transaction with Qurate Retail completed in December 2020, QVC Global, a subsidiary of the Company, became the primary co-obligor of the Liberty Interactive LLC’s (“LIC”) 3.5% Senior Exchangeable Debentures due 2031 (“MSI Exchangeables”), exchangeable for common stock of Motorola Solutions, Inc.
Dollars Foreign Currency Exchange Impact Constant Currency QxH (11.1) % — % (11.1) % (2.7) % — % (2.7) % QVC-International (17.8) % (12.1) % (5.7) % 3.7 % 1.9 % 1.8 % In 2022, the QxH net revenue decrease was primarily due to a 9.3% decrease in units shipped, a 1.8% decline in ASP and a $104 million decrease in shipping and handling revenue, partially offset by a $149 million decrease in estimated product returns.
Dollars Foreign Currency Exchange Impact Constant Currency QxH (5.0) % — % (5.0) % (11.1) % — % (11.1) % QVC-International (2.9) % (1.6) % (1.3) % (17.8) % (12.1) % (5.7) % In 2023, the QxH net revenue decrease was primarily due to a 6.3% decrease in units shipped, a $55 million increase in estimated product returns, and a $34 million decrease in shipping and handling revenue.
We expect to develop a customer loyalty program which will provide customers with a more personalized experience. QVC is enhancing its core processes to deliver the human story telling experience behind a product while also sharing a clear and compelling value proposition.
We will continue to focus on customer loyalty through providing customers with a more personalized experience. Rigorously execute core processes. QVC is enhancing its core processes to deliver the human story telling experience behind a product while also sharing a clear and compelling value proposition.
The Fifth Amended and Restated Credit Agreement may be borrowed by any Borrower (see note 14 to the accompanying consolidated financial statements), with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings bear interest at either the alternate base rate (“ABR Rate”) or a LIBOR-based rate (or the applicable non-U.S.
The Fifth Amended and Restated Credit Agreement may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings bear interest at either the alternate base rate (“ABR Rate”) or a London Inter-bank Offered Rate (“LIBOR”)-based rate (or the applicable non-U.S.
The decrease in net interest expense in 2021 is primarily related to related party interest income on the LIC note. Foreign currency gain (loss) Certain loans between QVC and its subsidiaries are deemed to be short-term in nature, and accordingly, the translation of these loans is recorded in the consolidated statements of operations.
Foreign currency gain (loss) Certain loans between QVC and its subsidiaries are deemed to be short-term in nature, and accordingly, the translation of these loans is recorded in the consolidated statements of operations.
II-8 Table of Contents Depreciation and amortization Depreciation and amortization consisted of the following: Years ended December 31, (in millions) 2022 2021 2020 Affiliate agreements $ — — 2 Customer relationships 47 47 49 Other technology 15 15 15 Acquisition related amortization 62 62 66 Property and equipment 111 159 171 Software amortization 112 101 85 Channel placement amortization and related expenses 116 107 131 Total depreciation and amortization $ 401 429 453 For the year ended December 31, 2022, property and equipment depreciation decreased primarily due to assets disposed of related to the Rocky Mount fulfillment center fire and the six owned and operated U.S. properties sold and leased back.
Depreciation and amortization Depreciation and amortization consisted of the following: Years ended December 31, (in millions) 2023 2022 2021 Customer relationships 47 47 47 Other technology 15 15 15 Acquisition related amortization 62 62 62 Property and equipment 90 111 159 Software amortization 129 112 101 Channel placement amortization and related expenses 91 116 107 Total depreciation and amortization $ 372 401 429 II-8 Table of Contents For the year ended December 31, 2023, property and equipment depreciation decreased primarily due to assets disposed of related to the six owned and operated U.S. properties sold and leased back during 2022 and the Germany and U.K properties sold and leased back during the first quarter of 2023.
Excluding goodwill impairment loss, our effective tax rate would be 26.5%, 32.4% and 27.7% for the years ended December 31, 2022, 2021 and 2020, respectively.
Excluding the goodwill impairment losses, our effective tax rate would be 27.6% and 26.5% for the years ended December 31, 2023 and 2022, respectively.
While the Company took steps to minimize the overall impact to the business, we experienced increased warehouse and logistics costs during the year ended December 31, 2022 and anticipate these increased warehouse and logistics costs to continue during 2023.
While the Company took steps to minimize the overall impact to the business, we experienced increased warehouse and logistics costs during the years ended December 31, 2023 and 2022. We do not anticipate these increased warehouse and logistics costs will have a material impact on future periods.
For the year ended December 31, 2022, the gain primarily related to insurance proceeds received for inventory and fixed asset losses partially offset by write-downs on Rocky Mount inventory and restructuring costs primarily related to workforce reduction.
For the year ended December 31, 2022, the gain primarily related to insurance proceeds received for inventory and fixed asset losses partially offset by write-downs on Rocky Mount inventory and restructuring costs primarily related to workforce reduction. Expenses indirectly related to the Rocky Mount fulfillment center fire, including operational inefficiencies, are primarily included in Cost of goods sold.
II-10 Table of Contents Adjusted Operating Income before Depreciation and Amortization ("Adjusted OIBDA") To provide investors with additional information regarding our financial statements, we disclose Adjusted OIBDA, which is a non-GAAP measure.
Adjusted Operating Income before Depreciation and Amortization ("Adjusted OIBDA") To provide investors with additional information regarding our financial statements, we disclose Adjusted OIBDA (defined below), which is a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure.
The decrease for the year ended December 31, 2022 is due to a $689 million decrease at QxH and a $204 million decrease at QVC-International. The decrease for the year ended December 31, 2021 is due to a $108 million decrease at QxH partially offset by a $52 million increase at QVC-International.
The decrease for the year ended December 31, 2023 is due to a $4 million decrease at QxH and a $33 million decrease at QVC-International. The decrease for the year ended December 31, 2022 is due to a $689 million decrease at QxH and a $204 million decrease at QVC-International.
Business - Qurate Retail Relationship and Related Party Transactions.” II-14 Table of Contents QVC’s debt credit ratings were downgraded during the year ended December 31, 2022 as follows: (i) Fitch Ratings downgraded QVC’s long-term issuer default ratings from “BB” to “BB-”; (ii) S&P Global downgraded QVC’s issue-level rating from “BB+” to “BB”; and (iii) Moody’s downgraded QVC’s debt ratings from “Ba2” to “Ba3.” Subsequent to December 31, 2022, S&P Global further downgraded QVC’s issue-level rating from “BB” to “B+ .
“Business - Qurate Retail relationship and related party transactions.” QVC’s debt credit ratings were downgraded during the year ended December 31, 2023 as follows: (i) Fitch Ratings downgraded QVC’s long-term issuer default ratings from “BB-” to “B” and QVC’s senior secured rating from “BB+” to “B+”; (ii) S&P Global downgraded QVC’s senior secured rating from “B+” to “B-”; and (iii) Moody’s downgraded QVC’s senior secured debt ratings from “Ba3” to “B2”.
All MSI Exchangeables not surrendered for exchange were redeemed on December 13, 2021 and the related hedges were unwound in the fourth quarter of 2021 (see "Exchangeable Senior Debentures" below).
All MSI Exchangeables not surrendered for exchange were redeemed on December 13, 2021 and the related hedges were unwound in the fourth quarter of 2021 (see "Exchangeable Senior Debentures" below). Interest expense, net For the year ended December 31, 2023 consolidated net interest expense remained flat, as compared to the prior year.
With the exception of the 6.375% Senior Secured Notes due 2067 (the "2067 Notes") and the 6.25% Senior Secured Notes due 2068 (the "2068 Notes"), for which interest is payable quarterly, the interest on QVC's senior secured notes is payable semi-annually.
The interest on QVC's senior secured notes is payable semi-annually with the exception of the 6.375% Senior Secured Notes due 2067 (the "2067 Notes") and the 6.25% Senior Secured Notes due 2068 (the "2068 Notes"), which are payable quarterly. The remaining outstanding 4.375% Senior Secured Notes due 2023 were repaid at maturity in March 2023.
Critical Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires QVC to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
(3) Amounts include open purchase orders for inventory and non-inventory purchases along with other contractual obligations, regardless of our ability to cancel such obligations Critical Accounting Estimates The preparation of consolidated financial statements in conformity with GAAP requires QVC to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.
QVC accrues taxes on the unremitted earnings of its international subsidiaries. Approximately 67% of this foreign cash balance was that of QVC-Japan. QVC owns 60% of QVC-Japan and shares all profits and losses with the 40% minority interest holder, Mitsui.
Cash in foreign subsidiaries is available for domestic purposes with no significant tax consequences upon repatriation to the U.S. QVC accrues taxes on the unremitted earnings of its international subsidiaries. Approximately 76% of this foreign cash balance was that of QVC-Japan. QVC owns 60% of QVC-Japan and shares all profits and losses with the 40% minority interest holder, Mitsui.
For the year ended December 31, 2022, QxH experienced shipped sales declines across all categories. The decrease in estimated product returns was primarily driven by a decrease in sales volume. The decline in ASP was primarily due to discounting as a result of inventory reduction actions.
The decrease in estimated product returns was primarily driven by a decrease in sales volume. The decline in ASP was primarily due to discounting as a result of inventory reduction actions.
The effective tax rate for 2021 differed from 2022 and 2020 due to the impact of the U.S. global intangible low-taxed income rules (which the Company treats as a period cost), relating to the redemption and exchange of the outstanding MSI Exchangeables during 2021.
The effective tax rate for 2021 differs from the U.S. federal income tax rate of 21% due to state and foreign tax expense and permanent items, along with the impact of the U.S. global intangible income rules (which the Company treats as a period cost), relating to the redemption and exchange of the outstanding MSI Exchangeable during 2021.
II-15 Table of Contents During the year ended December 31, 2020, QVC's primary uses of cash were $1,236 million of principal payments on debt and finance lease obligations, $1,184 million of dividends to Qurate Retail, $500 million of principal repayments of our senior secured notes, $274 million of capital and television distribution rights expenditures and $62 million in dividend payments from QVC-Japan to Mitsui.
Additional Cash Flow Information During the year ended December 31, 2023, QVC's primary uses of cash were $1,354 million of principal payments on debt and finance lease obligations, $437 million of dividends to Qurate Retail, $396 million of principal repayment of senior secured notes, $295 million of capital and television distribution rights expenditures and $53 million in dividend payments from QVC-Japan to Mitsui.
II-13 Table of Contents Summarized financial information for the most recent annual period was as follows: Combined Parent-QVC, Inc. and Subsidiary Guarantors December 31, 2022 Current assets $ 2,086 Intercompany payable to non-guarantor subsidiaries (2,746) Note receivable - related party 1,740 Noncurrent assets 6,316 Current liabilities 1,495 Noncurrent liabilities 5,612 Combined Parent-QVC, Inc. and Subsidiary Guarantors Year ended December 31, 2022 Net revenue $ 8,043 Net revenue less cost of goods sold 3,030 Loss before taxes (2,018) Net loss (1,810) Net loss attributable to QVC, Inc.
Summarized financial information for the most recent annual period was as follows: Combined Parent-QVC, Inc. and Subsidiary Guarantors December 31, 2023 Current assets $ 1,849 Intercompany payable to non-guarantor subsidiaries (2,672) Note receivable - related party 1,740 Noncurrent assets 5,888 Current liabilities 1,712 Noncurrent liabilities 4,809 Combined Parent-QVC, Inc. and Subsidiary Guarantors Year ended December 31, 2023 Net revenue $ 7,657 Net revenue less cost of goods sold 3,160 Income before taxes 192 Net income 211 Net income attributable to QVC, Inc.
The increase in channel placement amortization and related expenses for the year ended December 31, 2022 was due to adjustments recognized in the prior year related to lower subscriber counts. For the year ended December 31, 2021, property and equipment depreciation decreased primarily due to the sale of QVC's Lancaster and San Antonio facilities during 2021.
The increase in channel placement amortization and related expenses for the year ended December 31, 2022 was due to adjustments recognized in the prior year related to lower subscriber counts.
There were no impairment losses recorded by QVC for the years ended December 31, 2021 and 2020. Stock-based compensation Stock-based compensation includes compensation related to options and restricted stock granted to certain officers and employees. QVC recorded $36 million, $44 million and $37 million of stock-based compensation expense for the years ended December 31, 2022, 2021 and 2020, respectively.
Stock-based compensation Stock-based compensation includes compensation related to options and restricted stock granted to certain officers and employees. QVC recorded $37 million, $36 million and $44 million of stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021, respectively. The decrease in 2022 was primarily due to the retirement of our former Chief Executive Officer.
QVC decided not to rebuild the facility and entered into an agreement to sell the property which closed in February 2023. The Company took 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.
The Company took 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. QVC sold the property in February 2023 and as of December 31, 2023 received net cash proceeds of $19 million.
(2) Amounts (i) are based on the terms of our senior secured notes, (ii) assumes that our existing debt is repaid at maturity and (iii) exclude finance lease obligations. (3) Amounts include open purchase orders for inventory and non-inventory purchases along with other contractual obligations, regardless of our ability to cancel such obligations.
(2) Amounts (i) are based on the terms of our senior secured notes, (ii) assumes that our existing debt is repaid at maturity and (iii) exclude finance lease obligations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeChanges in the fair value of the forward are reflected in (losses) gains on financial instruments in the consolidated statements of operations. The forward expired in January 2023 and was in a net liability position of $10 million as of December 31, 2022, which was included in accrued liabilities.
Biggest changeChanges in the fair value of the forwards are reflected in (losses) gains on financial instruments in the consolidated statements of operations. The forwards were in a net liability position of $10 million as of December 31, 2022, which was included in accrued liabilities. The contracts expired in January 2023 which resulted in a net cash settlement of $12 million.
On October 31, 2022, the Company entered into foreign currency forward contracts with an aggregate notional amount of $167 million to mitigate the foreign currency risk associated with the sale and leaseback of Germany and U.K. properties. The forward did not qualify as a cash flow hedge under U.S. GAAP.
On October 31, 2022, the Company entered into foreign currency forward contracts with an aggregate notional amount of $167 million to mitigate the foreign currency risk associated with the sale and leaseback of Germany and U.K. properties. The forwards did not qualify as a cash flow hedge under U.S. GAAP.
This allows QVC to somewhat mitigate foreign currency exchange rate risks. As of December 31, 2022, 2021 and 2020, no borrowings in foreign currencies were outstanding.
This allows QVC to somewhat mitigate foreign currency exchange rate risks. As of December 31, 2023, 2022 and 2021, no borrowings in foreign currencies were outstanding.
Over the long-term, QVC manages the exposure to interest rates by maintaining what QVC believes is an appropriate mix of fixed and variable rate debt. QVC believes this best protects itself from interest rate risk.
Over the long-term, QVC manages the exposure to interest rates by maintaining what QVC believes is an appropriate mix of fixed and variable rate debt.
QVC's reported Adjusted OIBDA for the years ended December 31, 2022, 2021 and 2020 would have been impacted by approximately $4 million, $6 million, and $5 million, respectively, for every 1% change in foreign currency exchange rates relative to the U.S. Dollar. The senior secured credit facility provides QVC with the ability to borrow in multiple currencies.
QVC's reported Adjusted OIBDA for the years ended December 31, 2023, 2022 and 2021 would have been impacted by approximately $3 million, $4 million, and $6 million, respectively, for every 1% change in foreign currency exchange rates relative to the U.S. Dollar. The Fifth Amended and Restated Credit Agreement provides QVC with the ability to borrow in multiple currencies.
The table below summarizes the Company’s debt obligations, related interest rates and fair value of debt at December 31, 2022: (in millions, except percentages) 2023 2024 2025 2026 2027 Thereafter Total Fair Value Fixed rate debt (1) (2) $ 214 600 600 — 575 1,925 3,914 2,676 Weighted average interest rate on fixed rate debt 4.4 % 4.9 % 4.5 % — % 4.8 % 5.6 % 5.1 % N/A Variable rate debt (1) $ — — — 1,057 — — 1,057 1,057 Average interest rate on variable rate debt — % — % — % 5.8 % — % — % 5.8 % N/A (1) Amounts exclude finance lease obligations and the issue discounts on the 4.375%, 4.45%, 4.85%, 5.45% and 5.95% Senior Secured Notes.
The table below summarizes the Company’s debt obligations, related interest rates and fair value of debt at December 31, 2023: (in millions, except percentages) 2024 2025 2026 2027 2028 Thereafter Total Fair Value Fixed rate debt (1) (2) $ 423 586 — 575 500 1,425 3,509 2,513 Weighted average interest rate on fixed rate debt 4.9 % 4.5 % — % 4.8 % 4.4 % 6.0 % 5.2 % N/A Variable rate debt (1) $ — — 857 — — — 857 857 Average interest rate on variable rate debt — % — % 7.0 % — % — % — % 7.0 % N/A (1) Amounts exclude finance lease obligations and the issue discounts on the 4.45%, 4.85%, 5.45% and 5.95% senior secured notes.

Other QVCD 10-K year-over-year comparisons