Qurate Retail(US:QRTEA)2023-02-28 16:00Part I Item 1. Business. Qurate Retail, Inc. is primarily engaged in video and online commerce through its subsidiaries QVC, Cornerstone Brands (CBI), and Zulily, operating across North America, Europe, and Asia - Qurate Retail operates primarily in video and online commerce through its consolidated subsidiaries: QVC, Cornerstone Brands (CBI), and Zulily13 - QVC's business model focuses on highly engaging, video-rich, interactive shopping experiences distributed to approximately 217 million worldwide households daily, complemented by e-commerce, mobile, and social commerce platforms25 - For the year ended December 31, 2022, approximately 95% of QVC's worldwide shipped sales came from repeat and reactivated customers, with 2.8 million new customers acquired282930 - QVC's global e-commerce operations comprised $5.7 billion, or 57.2%, of its consolidated net revenue for the year ended December 31, 202230 - Qurate Retail launched 'Project Athens' on June 27, 2022, a five-point turnaround plan to stabilize and differentiate its core HSN and QVC U.S. brands and expand leadership in video streaming commerce; initial phases in 2022 included inventory reduction and workforce reduction, incurring $24 million in restructuring charges32294295 QVC Global Sales Mix by Product Category (2020-2022) | 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% | - QVC's business is seasonal, with 30%-32% of global revenue typically earned in the fourth calendar quarter due to holiday shopping, compared to 21%-24% in each of the first three quarters64 - Zulily operates as an online retailer offering daily flash sales events, typically lasting 72 hours, featuring thousands of product styles from various vendors at significant discounts727374 Item 1A. Risk Factors. The company faces significant risks including the potential failure of its turnaround plan, dependence on television distributors, pandemic impacts, competition, and internal control weaknesses - Project Athens, a five-point turnaround plan, may not realize anticipated cost savings or business improvements in the expected amounts or timeframe, potentially incurring additional expenses and management distraction116125127 - QVC's dependence on television distributors for programming carriage poses a risk, as failure to maintain or renew affiliation agreements on favorable terms could adversely affect growth, net revenue, and earnings; approximately 7% of QVC U.S. distribution and 1% of HSN distribution currently operate without formal affiliation agreements116129131132 - The COVID-19 pandemic negatively impacted QVC's business, leading to a decline in customers and product demand from Q2 2021 through Q4 2022, and caused supply chain disruptions, shipping delays, and increased costs116133135136138 - The company faces significant competition from various retailers, including large department stores, e-commerce giants like Amazon and Walmart, and other video shopping networks, competing on factors such as product quality, brand recognition, price, and customer service121149150 - A material weakness in internal control over financial reporting was identified, specifically related to IT general controls (ITGCs) at Zulily and an inventory management system for certain QVC/HSN fulfillment centers, which could lead to undetected material misstatements if not remediated121179400 - QVC's Rocky Mount fulfillment center fire in December 2021, its second-largest facility, caused significant damage and closure, leading to increased warehouse and logistics costs and potential business interruption losses, despite insurance recoveries121171199280 - QVC has significant indebtedness, totaling $6,895 million in outstanding principal as of December 31, 2022, which could limit financial flexibility, require substantial cash flow for debt service, and restrict business activities124225529 - As of December 31, 2022, QVC's consolidated leverage ratio exceeded 3.5 to 1.0, restricting its ability to pay certain dividends or make other restricted payments to Qurate Retail, except for debt service and specific tax obligations235330548 Item 1B. Unresolved Staff Comments. There are no unresolved staff comments from the SEC - No unresolved staff comments were reported245 Item 2. Properties. The company and its subsidiaries own or lease various operational facilities globally, with notable property sales and a distribution center closure due to fire damage in 2022 - Qurate Retail leases its corporate headquarters in Englewood, Colorado, under a facilities agreement with LMC246 - QxH operates its corporate headquarters and operations center in West Chester, Pennsylvania, and leases distribution centers in Suffolk, VA; Florence, SC; Ontario, CA; Bethlehem, PA; and Piney Flats, TN247 - QVC International owns contact centers in Germany and Japan, distribution centers in Japan and Germany, and multi-functional buildings in the U.K., Japan, Italy, and Germany, while leasing a multi-functional building in London, U.K248 - In November 2022, QVC entered agreements to sell its Hückelhoven, Germany, and Knowsley, U.K. properties, which were classified as held for sale as of December 31, 2022249 - QxH's Rocky Mount distribution center in North Carolina closed due to a fire on December 18, 2021, and QVC is evaluating long-term alternatives to address the network strain250 - Zulily leases its corporate headquarters in Seattle, WA, and fulfillment centers in Lockbourne, OH, and McCarran, NV; it closed its Bethlehem, PA, fulfillment center in 2022 and sublet the property251 - CBI owns an office in Franconia, NH, and leases fulfillment centers in Butler and Warren Counties, OH, and Phoenix, AZ, along with 22 retail stores and outlets across the U.S254 Item 3. Legal Proceedings. The company has no material legal proceedings to report - No material legal proceedings were reported256 Item 4. Mine Safety Disclosures. Mine safety disclosures are not applicable to the company's operations - Mine safety disclosures are not applicable257 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The company's common stock trades on Nasdaq, and it declared special cash and preferred stock dividends in 2020 and 2021, with no common stock repurchases in Q4 2022 - Qurate Retail's Series A (QRTEA) and Series B (QRTEB) common stock trade on the Nasdaq Global Select Market; Series B is not actively traded4260 Series B Common Stock High and Low Sales Prices (2021-2022) | Quarter | High | Low | | :--------------- | :---- | :---- | | 2021 | | | | First quarter | $15.77 | $10.40 | | Second quarter | $17.39 | $11.25 | | Third quarter | $13.74 | $10.18 | | Fourth quarter | $12.16 | $7.07 | | 2022 | | | | First quarter | $8.08 | $4.75 | | Second quarter | $5.80 | $3.61 | | Third quarter | $21.93 | $3.04 | | Fourth quarter | $13.56 | $4.20 | - As of January 31, 2023, there were 2,185 record holders for Series A common stock and 57 for Series B common stock262 - In August 2020, Qurate Retail declared a special dividend of $1.50 cash per common share and 0.03 shares of 8.0% Series A Cumulative Redeemable Preferred Stock (QRTEP) per common share, with an initial liquidation price of $100 per share263 - In November 2020, a special cash dividend of $1.50 per common share was declared, and in November 2021, another special cash dividend of $1.25 per common share was declared264266267 - The board authorized $500 million share repurchase programs in May 2019 and August 2021; no repurchases of Series A or Series B common stock or Preferred Stock occurred during the three months ended December 31, 2022269 Item 6. [Reserved] This item is reserved and contains no information Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The company's financial performance declined significantly in 2022 due to pandemic effects, inflation, and supply chain issues, prompting the 'Project Athens' turnaround plan - The COVID-19 pandemic continued to negatively impact operations in 2022, leading to a decline in QVC customers and product demand from Q2 2021 through Q4 2022, and causing product shortages and shipping disruptions273274 - QVC experienced increasing inflationary pressures in 2022, including higher wages, freight, and merchandise costs, which outpaced pricing power276 - The Rocky Mount distribution center fire in December 2021 resulted in $157 million of fire-related costs in 2022, including $95 million for inventory write-downs not covered by insurance; QVC received $280 million in insurance proceeds in 2022 and recorded a $132 million gain277278280 - In 2022, QVC completed sale-leaseback transactions for its Ontario, California distribution center and five other U.S. properties, generating $250 million and $443 million in net cash proceeds, respectively, and recognizing total gains of $517 million281282 - Qurate Retail's 'Project Athens' aims to improve customer experience, rigorously execute core processes, lower cost to serve, optimize the brand portfolio (including Zulily and Cornerstone), and build new high-growth streaming businesses285287288289290291 Consolidated Operating Results (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :--------------------- | :-------------- | :-------------- | :-------------- | | Revenue | $12,106 | $14,044 | $14,177 | | Operating Income (Loss)| $(2,041) | $1,087 | $1,572 | | Adjusted OIBDA | $1,064 | $2,080 | $2,198 | - Consolidated revenue decreased 13.8% in 2022, primarily due to a $918 million decrease in QxH and a $549 million decrease in QVC International, partially offset by a $75 million increase in CBI301302 - Consolidated operating income decreased by $3,128 million in 2022, mainly due to goodwill impairments at QxH and Zulily and a decline in operating results, partially offset by gains on asset sales306 - Consolidated Adjusted OIBDA decreased $1,016 million in 2022, with QxH, QVC International, and CBI experiencing decreases of $689 million, $204 million, and $59 million, respectively311312 Key Financial Metrics (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Net cash provided (used) by operating activities | $194 | $1,225 | $2,455 | | Net cash provided (used) by investing activities | $601 | $(501) | $(161) | | Net cash provided (used) by financing activities | $(72) | $(914) | $(2,181) | - As of December 31, 2022, Qurate Retail had $1,275 million in cash and cash equivalents and $2.15 billion available under its Credit Facility333334 Consolidated Material Cash Requirements (as of Dec 31, 2022) | Category | Total (millions) | Less than 1 year (millions) | 2 - 3 years (millions) | 4 - 5 years (millions) | After 5 years (millions) | | :------------------------------ | :--------------- | :-------------------------- | :--------------------- | :--------------------- | :----------------------- | | Long-term debt | $6,895 | $216 | $1,206 | $1,656 | $3,817 | | Interest payments | $4,173 | $364 | $662 | $515 | $2,632 | | Finance and operating lease obligations | $1,078 | $128 | $196 | $140 | $614 | | Preferred Stock | $2,104 | $101 | $203 | $203 | $1,597 | | Purchase orders and other obligations | $3,079 | $3,033 | $36 | $10 | — | | Total | $17,329 | $3,842 | $2,303 | $2,524 | $8,660 | Overview The company's core businesses faced significant headwinds from the COVID-19 pandemic, supply chain disruptions, and inflation, while a major fire impacted operations - Qurate Retail's main businesses are QxH (QVC U.S. and HSN), QVC International, and Cornerstone Brands (CBI); Zulily is included in 'Corporate and other'272 - The COVID-19 pandemic led to an initial increase in QVC customers and demand for home/electronics products, but this reversed from Q2 2021 through Q4 2022, with a decline in customers and demand as brick-and-mortar stores reopened273 - QVC experienced increased product shortages and escalating shipping disruptions from Q2 2021 due to global supply chain and labor market challenges, impacting its ability to offer and ship products timely274 - Inflationary pressures in 2022 resulted in higher wages, freight, and merchandise costs, which QVC's pricing power could not fully offset276 - The Rocky Mount distribution center fire in December 2021 caused significant damage and closure; in 2022, QVC recorded $157 million in fire-related costs (including $95 million inventory write-downs) and received $280 million in insurance proceeds, resulting in a $132 million gain277278280 - QVC completed sale-leaseback transactions in 2022 for its Ontario, California distribution center and five other U.S. properties, generating $250 million and $443 million in net cash proceeds, respectively, and recognizing total gains of $517 million281282 - Two properties in Germany and the U.K. were agreed to be sold in November 2022, with sales closing in January 2023, expected to generate $182 million in net cash proceeds and a gain in Q1 2023283 Strategies and Challenges The company is executing the 'Project Athens' turnaround plan for its core televised shopping businesses while facing economic uncertainty and rising operational costs - Qurate Retail's 'Project Athens' includes five main initiatives: (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 strength285 - Key strategies for QVC include optimizing programming with advanced analytics, investing in infrastructure for improved order-to-delivery experience, developing a customer loyalty program, and expanding streaming viewership with enhanced video and exclusive content287288291 - QVC is focused on cost reduction through spending review, workforce reduction, and improving product margin via vendor efficiency and freight optimization289 - CBI's strategies include acquiring new customers through direct-to-consumer marketing, expanding brick-and-mortar retail, developing unique proprietary products, investing in cross-brand loyalty programs and mobile platforms, and building a low-cost supply chain297 - Both QVC and CBI face challenges from current economic uncertainty, which could reduce discretionary spending, and the need to manage marketing costs effectively while expanding customer reach293299 - QVC incurred $24 million in restructuring charges in 2022 related to workforce reduction as part of Project Athens294295 Results of Operations—Consolidated Consolidated results show a significant decline in 2022, with revenue decreasing by 13.8% and operating income shifting to a substantial loss due to major asset impairments Consolidated Operating Results (2020-2022) | Segment | 2022 Revenue (millions) | 2021 Revenue (millions) | 2020 Revenue (millions) | 2022 Operating Income (Loss) (millions) | 2021 Operating Income (Loss) (millions) | 2020 Operating Income (Loss) (millions) | 2022 Adjusted OIBDA (millions) | 2021 Adjusted OIBDA (millions) | 2020 Adjusted OIBDA (millions) | | :---------------------- | :---------------------- | :---------------------- | :---------------------- | :-------------------------------------- | :-------------------------------------- | :-------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | QxH | $7,359 | $8,277 | $8,505 | $(1,820) | $1,018 | $1,128 | $750 | $1,439 | $1,547 | | QVC International | $2,528 | $3,077 | $2,967 | $306 | $489 | $439 | $358 | $562 | $510 | | CBI | $1,313 | $1,238 | $1,070 | $48 | $108 | $64 | $78 | $137 | $94 | | Corporate and other | $906 | $1,453 | $1,636 | $(575) | $(528) | $(59) | $(122) | $(58) | $47 | | Inter-segment eliminations| — | $(1) | $(1) | — | — | — | — | — | — | | Consolidated Qurate Retail | $12,106 | $14,044 | $14,177 | $(2,041) | $1,087 | $1,572 | $1,064 | $2,080 | $2,198 | - Consolidated revenue decreased 13.8% in 2022 and 0.9% in 2021; the 2022 decrease was driven by QxH ($918 million) and QVC International ($549 million), partially offset by CBI ($75 million increase); Zulily's revenue decreased $547 million due to a 44% decrease in units shipped and 40% decrease in active customers301302 - Consolidated operating income decreased by $3,128 million in 2022, primarily due to impairments at QxH and Zulily reporting units and a decline in operating results, partially offset by gains on fixed asset sales306 - Consolidated Adjusted OIBDA decreased $1,016 million in 2022 and $118 million in 2021; the 2022 decrease was driven by QxH ($689 million), QVC International ($204 million), and CBI ($59 million)311312 Reconciliation of Operating Income (Loss) to Adjusted OIBDA (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Operating income (loss) | $(2,041) | $1,087 | $1,572 | | Depreciation and amortization | $481 | $537 | $562 | | Stock-based compensation | $60 | $72 | $64 | | Restructuring and fire related costs, net of (recoveries) | $3 | $21 | — | | Gains on sale leaseback transactions | $(520) | — | — | | Impairment of intangible assets | $3,081 | $363 | — | | Adjusted OIBDA | $1,064 | $2,080 | $2,198 | - Net losses of $2,532 million were reported in 2022, compared to net earnings of $421 million in 2021 and $1,254 million in 2020, reflecting fluctuations in revenue, expenses, and other gains/losses327 Liquidity and Capital Resources The company maintains liquidity through cash, asset sales, and credit facilities, but a high leverage ratio at QVC restricts dividend payments to the parent company - As of December 31, 2022, Qurate Retail's liquidity included $1,275 million in cash and cash equivalents and $2.15 billion available under the Credit Facility333334 - QVC's consolidated leverage ratio (under senior secured notes) exceeded 3.5 to 1.0 as of December 31, 2022, restricting its ability to make certain dividends or restricted payments to Qurate Retail, except for debt service and specific tax obligations330 - Qurate Retail and its subsidiaries' debt credit ratings were downgraded in 2022 by Fitch, S&P Global, and Moody's, with further downgrades by S&P Global post-December 31, 2022331 - Qurate Retail's primary cash sources in 2022 were $704 million from fixed asset sales and $280 million from insurance proceeds, partially offset by $268 million in capital expenditures336 - Projected cash uses for the next year include approximately $365 million for interest payments, $250-$300 million for capital improvements, debt repayments, television distribution rights, Preferred Stock dividends, and new investments337 Off-Balance Sheet Arrangements and Aggregate Material Cash Requirements The company has contingent liabilities from legal proceedings and asset sales, with total material cash requirements of $17.3 billion, of which $3.8 billion is due within one year - Qurate Retail retains liabilities for events prior to asset sales, such as tax, environmental, litigation, and employment matters, with indemnification obligations that may extend for years and for which maximum potential liability is not estimable338339 - Contingent liabilities from legal and tax proceedings are not expected to be material to the consolidated financial statements341 Consolidated Material Cash Requirements (as of Dec 31, 2022) | Category | Total (millions) | Less than 1 year (millions) | 2 - 3 years (millions) | 4 - 5 years (millions) | After 5 years (millions) | | :------------------------------ | :--------------- | :-------------------------- | :--------------------- | :--------------------- | :----------------------- | | Long-term debt | $6,895 | $216 | $1,206 | $1,656 | $3,817 | | Interest payments | $4,173 | $364 | $662 | $515 | $2,632 | | Finance and operating lease obligations | $1,078 | $128 | $196 | $140 | $614 | | Preferred Stock | $2,104 | $101 | $203 | $203 | $1,597 | | Purchase orders and other obligations | $3,079 | $3,033 | $36 | $10 | — | | Total | $17,329 | $3,842 | $2,303 | $2,524 | $8,660 | Critical Accounting Estimates Critical accounting estimates involve significant management judgment regarding fair value of non-financial instruments, retail-related adjustments, and income taxes - Critical accounting estimates include fair value measurements of non-financial instruments (goodwill, non-amortizable intangible assets, long-lived assets), retail-related adjustments (sales returns, inventory obsolescence, uncollectible receivables), and income taxes345511 Intangible Assets Not Subject to Amortization (as of Dec 31, 2022) | Segment | Goodwill (millions) | Tradenames (millions) | Total (millions) | | :------------------ | :------------------ | :-------------------- | :--------------- | | QxH | $2,693 | $2,698 | $5,391 | | QVC International | $778 | — | $778 | | CBI | $12 | — | $12 | | Corporate and other | $18 | $20 | $38 | | Total | $3,501 | $2,718 | $6,219 | - In 2022, impairments of $2,535 million were recorded to QxH's goodwill and $180 million to the HSN tradename; Zulily's goodwill and tradename also saw impairments of $226 million and $140 million, respectively346525 - Sales returns for QVC represented 15.3% of gross product revenue in both 2022 and 2021; inventory obsolescence reserves were $143 million in 2022 and $122 million in 2021; allowance for credit losses was $87 million in 2022 and $86 million in 2021347348349 - Income tax estimates involve judgments on future tax consequences, deferred tax assets/liabilities, and valuation allowances, which can be significantly impacted by changes in tax law or operating jurisdictions350 Results of Operations—Businesses QVC's revenue declined 12.9% in 2022 due to lower unit sales and unfavorable foreign exchange, while CBI's revenue grew 6.1% driven by higher average selling prices QVC Operating Results (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :------------------------------------------------------------------ | :-------------- | :-------------- | :-------------- | | Net revenue | $9,887 | $11,354 | $11,472 | | Cost of goods sold (excluding depreciation, amortization and Rocky Mount inventory losses) | $(6,751) | $(7,368) | $(7,418) | | Operating expenses | $(760) | $(791) | $(786) | | SG&A expenses (excluding stock-based compensation) | $(1,268) | $(1,194) | $(1,211) | | Adjusted OIBDA | $1,108 | $2,001 | $2,057 | | Restructuring and fire related (costs), net of recoveries (including Rocky Mount inventory losses) | $10 | $(21) | — | | Gains on sale leaseback transactions | $520 | — | — | | Impairment of intangible assets | $(2,715) | — | — | | Stock-based compensation | $(36) | $(44) | $(37) | | Depreciation and amortization | $(401) | $(429) | $(453) | | Operating income (loss) | $(1,514) | $1,507 | $1,567 | - QVC's consolidated net revenue decreased 12.9% in 2022, driven by an 8.5% decrease in units shipped (QxH), $373 million in unfavorable foreign exchange rates, and a $124 million decrease in shipping and handling revenue (QxH)355 - QVC's cost of goods sold as a percentage of net revenue increased to 68.3% in 2022 (from 64.9% in 2021), primarily due to higher fulfillment costs (freight, warehousing) and product margin pressure from inventory reduction discounting362 - QVC's SG&A expenses (excluding stock-based compensation) increased $74 million in 2022, driven by higher personnel costs, estimated credit losses, consulting expenses, and marketing costs, partially offset by favorable exchange rates366367 - QVC recorded a $2,715 million impairment loss in 2022 related to the HSN indefinite-lived tradename and the QxH reporting unit371 CBI Operating Results (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Net revenue | $1,313 | $1,238 | $1,070 | | Cost of goods sold | $(850) | $(734) | $(645) | | Operating expenses | $(48) | $(46) | $(38) | | SG&A expenses (excluding stock-based compensation) | $(337) | $(321) | $(293) | | Adjusted OIBDA | $78 | $137 | $94 | | Stock-based compensation | $(3) | $(2) | $(1) | | Depreciation and amortization | $(27) | $(27) | $(29) | | Operating income (loss) | $48 | $108 | $64 | - CBI's consolidated net revenue increased 6.1% in 2022, primarily due to an increase in average selling price (ASP) driven by a mix shift to higher-priced home furnishings, despite an increase in product returns376 - CBI's cost of goods sold as a percentage of net revenue increased to 64.7% in 2022 (from 59.3% in 2021), mainly due to higher inbound logistics costs (storage fees, ocean container rates)377 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. The company is exposed to market risks from interest rate and foreign currency exchange rate fluctuations, which it manages through debt mix and derivative instruments - Qurate Retail is exposed to market risks from changes in stock prices, interest rates, and foreign currency exchange rates383 - The company manages interest rate risk by maintaining a mix of fixed and variable rate debt and using interest rate swap arrangements384385 Debt Composition by Interest Rate Type (as of Dec 31, 2022) | Segment | Variable Rate Debt Principal (millions) | Variable Rate Weighted Avg Interest Rate | Fixed Rate Debt Principal (millions) | Fixed Rate Weighted Avg Interest Rate | | :---------------------- | :-------------------------------------- | :--------------------------------------- | :----------------------------------- | :------------------------------------ | | QxH and QVC International | $1,057 | 5.8% | $3,914 | 5.1% | | CBI | $18 | 5.8% | — | — | | Corporate and other | — | — | $1,906 | 5.4% | - Qurate Retail is exposed to foreign exchange rate fluctuations, primarily from the Japanese Yen, Euro, and U.K. Pound Sterling, which can negatively impact revenue and operating cash flow384 - A 1% change in foreign currency exchange rates relative to the U.S. Dollar would have impacted QVC's Adjusted OIBDA by approximately $4 million in 2022384 Item 8. Financial Statements and Supplementary Data. This item references the consolidated financial statements and required schedules included elsewhere in the report - The consolidated financial statements of Qurate Retail are filed under this Item, beginning on page II-28387 - Financial statement schedules required by Regulation S-X are filed under Item 15387 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. There were no changes in or disagreements with accountants on accounting and financial disclosure - No changes in or disagreements with accountants on accounting and financial disclosure were reported388 Item 9A. Controls and Procedures. Disclosure controls were deemed ineffective due to a material weakness in IT general controls at Zulily and a QVC/HSN inventory system, with a remediation plan underway - The company's disclosure controls and procedures were not effective as of December 31, 2022, due to a material weakness in internal control over financial reporting389 - The material weakness is related to information technology general controls (ITGCs) at Zulily, which also impact an inventory management system for certain QVC and HSN fulfillment centers179400 - Specifically, ITGCs were not designed and operating effectively to ensure restricted access to applications/data, appropriate monitoring of access activities, and sufficient testing/review of production environment changes179400 - Management believes the consolidated financial statements present fairly, despite the material weakness389 - A remediation plan is underway, including enhancing ITGC risk assessment, evaluating talent, delivering training, improving change management and logical access control activities, implementing user activity monitoring, and adding compensating control activities392397 Item 9B. Other Information. This item states that there is no other information to report - No other information was reported395 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. This item is not applicable to the company - This item is not applicable396 MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management concluded that internal control over financial reporting was not effective due to a material weakness in IT general controls at Zulily and a QVC/HSN inventory system - Management concluded that the company's internal control over financial reporting was not effective as of December 31, 2022399 - A material weakness was identified related to information technology general controls (ITGCs) at Zulily, which also impacted an inventory management system for certain QVC and HSN fulfillment centers400 - The ITGCs were ineffective in ensuring restricted access to applications/data, appropriate monitoring of access activities, and sufficient testing/review of production environment changes400 - Control deficiencies were attributed to inadequate risk assessment, insufficient IT personnel training, lack of adequate resources, and failure to select and apply appropriate ITGCs401 Report of Independent Registered Public Accounting Firm KPMG LLP issued an adverse opinion on internal controls due to a material weakness but an unqualified opinion on the consolidated financial statements - KPMG LLP issued an adverse opinion on the effectiveness of Qurate Retail's internal control over financial reporting as of December 31, 2022402 - The adverse opinion is due to a material weakness related to the ineffective design and operating effectiveness of IT general controls (ITGCs) at Zulily, impacting an inventory management system for certain QVC and HSN fulfillment centers404 - KPMG LLP also issued an unqualified opinion on the consolidated financial statements for the three-year period ended December 31, 2022403 Report of Independent Registered Public Accounting Firm (Consolidated Financial Statements) KPMG LLP issued an unqualified opinion on the financial statements and identified critical audit matters related to revenue evidence and the fair value of the QxH reporting unit - KPMG LLP issued an unqualified opinion on the consolidated financial statements of Qurate Retail, Inc. and subsidiaries as of December 31, 2022 and 2021, and for the three-year period ended December 31, 2022412 - Two critical audit matters were identified: (1) sufficiency of audit evidence over revenue, due to reliance on multiple IT systems and high data volumes, and (2) fair value of the QxH reporting unit and indefinite-lived tradenames, requiring subjective judgment on discount rates416419421422 - The QxH operating segment goodwill balance was $2,693 million and indefinite-lived tradenames were $2,698 million as of December 31, 2022; impairments of $2,535 million for goodwill and $180 million for tradenames were recorded in Q3 2022421 QURATE RETAIL, INC. AND SUBSIDIARIES Consolidated Balance Sheets Total assets decreased to $12.6 billion in 2022 from $16.2 billion in 2021, primarily due to significant goodwill and tradename impairments, leading to a sharp decline in total equity Consolidated Balance Sheet Highlights (as of Dec 31, 2022 and 2021) | Category | 2022 (millions) | 2021 (millions) | | :---------------------------------------- | :-------------- | :-------------- | | Assets: | | | | Cash and cash equivalents | $1,275 | $587 | | Trade and other receivables, net | $1,394 | $1,679 | | Inventory, net | $1,346 | $1,623 | | Total current assets | $4,275 | $4,448 | | Property and equipment, net | $570 | $1,030 | | Goodwill | $3,501 | $6,339 | | Tradenames | $2,718 | $3,038 | | Total assets | $12,571 | $16,202 | | Liabilities and Equity: | | | | Accounts payable | $976 | $1,429 | | Current portion of debt | $828 | $1,315 | | Total current liabilities | $3,099 | $4,224 | | Long-term debt | $5,525 | $5,674 | | Deferred income tax liabilities | $1,440 | $1,350 | | Preferred stock | $1,266 | $1,261 | | Total liabilities | $12,046 | $13,216 | | Total equity | $525 | $2,986 | - Total assets decreased by $3,631 million from $16,202 million in 2021 to $12,571 million in 2022, primarily due to a $2,838 million decrease in goodwill and a $320 million decrease in tradenames427521 - Total equity decreased by $2,461 million from $2,986 million in 2021 to $525 million in 2022430 QURATE RETAIL, INC. AND SUBSIDIARIES Consolidated Statements Of Operations The company reported a net loss of $2.5 billion in 2022, a sharp reversal from net earnings in prior years, driven by lower revenue and substantial intangible asset impairments Consolidated Statements of Operations Highlights (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Total revenue, net | $12,106 | $14,044 | $14,177 | | Cost of retail sales | $8,417 | $9,231 | $9,291 | | Operating expense | $835 | $875 | $867 | | Selling, general and administrative | $1,945 | $1,930 | $1,885 | | Impairment of intangible assets and long lived assets | $3,081 | $363 | — | | Gains on sale leaseback transactions | $(520) | — | — | | Restructuring and fire related costs, net of (recoveries) | $(92) | $21 | — | | Depreciation and amortization | $481 | $537 | $562 | | Operating income (loss) | $(2,041) | $1,087 | $1,572 | | Interest expense | $(456) | $(468) | $(408) | | Net earnings (loss) | $(2,532) | $421 | $1,254 | | Basic net earnings (loss) per common share | $(6.83) | $0.84 | $2.88 | | Diluted net earnings (loss) per common share | $(6.83) | $0.82 | $2.84 | - Total revenue decreased by $1,938 million (13.8%) in 2022 compared to 2021433 - Operating income shifted from $1,087 million in 2021 to a loss of $2,041 million in 2022, primarily due to $3,081 million in impairment of intangible assets433 - Net earnings (loss) attributable to Qurate Retail, Inc. shareholders was $(2,594) million in 2022, compared to $340 million in 2021433 QURATE RETAIL, INC. AND SUBSIDIARIES Consolidated Statements Of Comprehensive Earnings (Loss) The company reported a comprehensive loss of $2.5 billion in 2022, driven by the net loss and negative foreign currency adjustments Consolidated Statements of Comprehensive Earnings (Loss) Highlights (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Net earnings (loss) | $(2,532) | $421 | $1,254 | | Foreign currency translation adjustments | $(182) | $(128) | $118 | | Comprehensive earnings (loss) attributable to debt credit risk adjustments | $277 | $(36) | $17 | | Other comprehensive earnings (loss) | $81 | $(165) | $134 | | Comprehensive earnings (loss) | $(2,451) | $256 | $1,388 | | Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders | $(2,497) | $189 | $1,323 | - Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders was $(2,497) million in 2022, compared to $189 million in 2021436 - Foreign currency translation adjustments resulted in a loss of $182 million in 2022, exacerbating the net loss436 QURATE RETAIL, INC. AND SUBSIDIARIES Consolidated Statements Of Cash Flows Operating cash flow decreased significantly in 2022, while investing cash flow turned positive due to asset sales and insurance proceeds Consolidated Statements of Cash Flows Highlights (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Net earnings (loss) | $(2,532) | $421 | $1,254 | | Depreciation and amortization | $481 | $537 | $562 | | Impairment of intangible assets | $3,081 | $363 | — | | Gains on sale leaseback transactions | $(520) | — | — | | Net cash provided (used) by operating activities | $194 | $1,225 | $2,455 | | Net cash provided (used) by investing activities | $601 | $(501) | $(161) | | Net cash provided (used) by financing activities | $(72) | $(914) | $(2,181) | | Net increase (decrease) in cash, cash equivalents and restricted cash | $689 | $(218) | $133 | | Cash, cash equivalents and restricted cash at end of period | $1,285 | $596 | $814 | - Net cash provided by operating activities decreased significantly from $1,225 million in 2021 to $194 million in 2022439 - Net cash provided by investing activities was $601 million in 2022, a reversal from a net use of $501 million in 2021, driven by $704 million from fixed asset sales and $184 million from insurance proceeds for fixed assets439 - Net cash used by financing activities decreased to $72 million in 2022 from $914 million in 2021, with $3,029 million in debt borrowings largely offsetting $3,008 million in debt repayments439 QURATE RETAIL, INC. AND SUBSIDIARIES Consolidated Statements Of Equity Total equity declined substantially to $525 million in 2022 from $3.0 billion in 2021, primarily due to the significant net loss for the year Consolidated Statements of Equity Highlights (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :----------------------------------------- | :-------------- | :-------------- | :-------------- | | Balance at January 1 | $2,986 | $3,689 | $4,936 | | Net earnings (loss) | $(2,532) | $421 | $1,254 | | Other comprehensive earnings (loss) | $81 | $(165) | $134 | | Stock-based compensation | $58 | $67 | $59 | | Distribution to noncontrolling interest | $(69) | $(66) | $(62) | | Distribution of dividends to common and preferred shareholders | $6 | $(499) | $(2,541) | | Balance at December 31 | $525 | $2,986 | $3,689 | - Total equity decreased by $2,461 million from $2,986 million at December 31, 2021, to $525 million at December 31, 2022441 - Retained earnings decreased significantly from $2,925 million in 2021 to $337 million in 2022, primarily due to the net loss for the year430 - Accumulated other comprehensive earnings (loss), net of taxes, shifted from a loss of $(79) million in 2021 to earnings of $18 million in 2022430 QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements The notes detail accounting policies, significant asset impairments, debt structure and covenants, and the material weakness in internal controls - Qurate Retail's consolidated financial statements include QVC, Cornerstone Brands (CBI), Zulily, and other investments, operating in video and online commerce across North America, Europe, and Asia444 - The company has a tax sharing agreement with Liberty Broadband and a services agreement with LMC for general and administrative support445446 - In 2022, Qurate Retail recorded $3,081 million in impairment of intangible assets, including $2,535 million for QxH goodwill and $180 million for the HSN tradename, and $226 million for Zulily goodwill and $140 million for its tradename433525 - As of December 31, 2022, total goodwill was $3,501 million and tradenames were $2,718 million, with QxH accounting for the majority521 - Qurate Retail's total consolidated debt was $6,895 million in principal amount as of December 31, 2022, including corporate-level exchangeable senior debentures and QVC senior secured notes529 - QVC's consolidated leverage ratio exceeded 3.5 to 1.0 as of December 31, 2022, restricting its ability to pay certain dividends to the parent company548 - The company has operating and finance leases, with total lease liabilities of $594 million for operating leases and $4 million for finance leases as of December 31, 2022573 - A material weakness in IT general controls at Zulily, impacting QVC/HSN inventory systems, was identified as of December 31, 2022400 (1) Basis of Presentation This section outlines the consolidation basis, agreements with Liberty Media, and details of special dividends declared in 2020 and 2021 - Qurate Retail's consolidated financial statements include QVC, Cornerstone Brands (CBI), Zulily, and other cost and equity method investments, primarily engaged in video and online commerce444 - The company has a tax sharing agreement with Liberty Broadband and a services agreement with LMC for general and administrative services, with Qurate Retail reimbursing LMC for allocable costs445446 - The Chairman's compensation arrangement with LMC involves allocation percentages for Qurate Retail (13% in 2022, 17% in 2021) for base salary, cash performance bonuses, and equity awards16447 - Special dividends were declared in 2020: a cash dividend of $1.50 per common share and 0.03 shares of 8.0% Series A Cumulative Redeemable Preferred Stock (QRTEP) per common share, followed by another $1.50 cash dividend; in 2021, a special cash dividend of $1.25 per common share was declared263264267452453454 - In 2020, the company sold an alternative energy investment for $272 million cash, recording a $224 million gain455 (2) Summary of Significant Accounting Policies This section details key accounting policies for assets, liabilities, revenue recognition, and impairment testing for goodwill and intangible assets - Cash equivalents are investments with maturities of three months or less458 - Trade receivables are net of allowances for credit losses and sales returns; the allowance for credit losses was $111 million in 2022 and $107 million in 2021349459460 - Inventory is stated at the lower of cost or market, with obsolescence reserves of $154 million in 2022 and $135 million in 2021461 - Investments are carried at fair value for marketable securities or using the equity method for significant influence, with annual qualitative impairment assessments462463466 - All derivatives are recorded at fair value on the balance sheet, with changes recognized in earnings or other comprehensive earnings depending on hedge designation467468 - Property and equipment are stated at amortized cost, with depreciation computed using the straight-line method over estimated useful lives (2-8 years for support equipment, 8-20 years for buildings); depreciation expense was $158 million in 2022471 - Goodwill and indefinite-lived intangible assets are tested for impairment at least annually using qualitative and quantitative assessments (discounted cash flow method for reporting units, relief from royalty method for tradenames)472473474476 - Revenue is recognized when obligations are satisfied, generally at shipment, net of allowances for returns; shipping and handling are treated as fulfillment costs487489 Disaggregated Revenue by Segment and Product Category (2022) | Product Category | QxH (millions) | QVC Int'l (millions) | CBI (millions) | Corp and other (millions) | Total (millions) | | :--------------- | :------------- | :------------------- | :------------- | :------------------------ | :--------------- | | Home | $2,866 | $998 | $1,112 | $241 | $5,217 | | Apparel | $1,243 | $445 | $201 | $351 | $2,240 | | Beauty | $1,108 | $579 | — | $42 | $1,729 | | Accessories | $867 | $217 | — | $210 | $1,294 | | Electronics | $775 | $92 | — | $7 | $874 | | Jewelry | $311 | $185 | — | $32 | $528 | | Other revenue | $189 | $12 | — | $23 | $224 | | Total Revenue| $7,359 | $2,528 | $1,313 | $906 | $12,106 | (3) Supplemental Disclosures to Consolidated Statements of Cash Flows This section provides supplemental details on cash paid for interest and income taxes and reconciles cash balances Cash Paid for Interest and Income Taxes (2020-2022) | Metric | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :---------------------- | :-------------- | :-------------- | :-------------- | | Cash paid for interest | $447 | $458 | $392 | | Cash paid for income taxes, net | $284 | $29 | $116 | Reconciliation of Cash, Cash Equivalents and Restricted Cash (as of Dec 31, 2022 and 2021) | Category | 2022 (millions) | 2021 (millions) | | :------------------------------------------- | :-------------- | :-------------- | | Cash and cash equivalents | $1,275 | $587 | | Restricted cash included in other current assets | $10 | $9 | | Total cash, cash equivalents and restricted cash | $1,285 | $596 | (4) Assets and Liabilities Measured at Fair Value This section details assets and liabilities measured at fair value, including cash equivalents, an indemnification asset, and debt, along with gains and losses on financial instruments Assets and Liabilities Measured at Fair Value (as of Dec 31, 2022 and 2021) | Description | 2022 Total (millions) | 2022 Level 1 (millions) | 2022 Level 2 (millions) | 2021 Total (millions) | 2021 Level 1 (millions) | 2021 Level 2 (millions) | | :------------------ | :-------------------- | :---------------------- | :---------------------- | :-------------------- | :---------------------- | :---------------------- | | Cash equivalents | $938 | $938 | — | $149 | $149 | — | | Indemnification asset | $50 | — | $50 | $324 | — | $324 | | Debt | $614 | — | $614 | $1,315 | — | $1,315 | - The indemnification asset of $50 million (Level 2) as of December 31, 2022, relates to payments to holders of LI LLC's 1.75% Exchangeable Debentures due 2046517 Realized and Unrealized Gains (Losses) on Financial Instruments (2020-2022) | Category | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :---------------------------- | :-------------- | :-------------- | :-------------- | | Equity securities | $13 | $77 | $(1) | | Exchangeable senior debentures| $310 | $(130) | $(277) | | Indemnification asset | $(273) | $(21) | $143 | | Other financial instruments | $(9) | $173 | $25 | | Total | $41 | $99 | $(110) | - Changes in the fair value of exchangeable senior debentures, accounted for using the fair value option, are recognized as unrealized gains/losses in the statements of operations, with credit risk changes recognized in other comprehensive earnings (loss)520 (5) Goodwill and Other Intangible Assets Significant goodwill and tradename impairments were recorded in 2022 for the QxH and Zulily reporting units due to poor financial performance and macroeconomic factors Changes in Carrying Amount of Goodwill (2021-2022) | Segment | Balance at Jan 1, 2021 (millions) | Foreign Currency Translation Adjustments (millions) | Impairments (millions) | Balance at Dec 31, 2021 (millions) | Foreign Currency Translation Adjustments (millions) | Impairments (millions) | Balance at Dec 31, 2022 (millions) | | :------------------ | :-------------------------------- | :------------------------------------------ | :--------------------- | :--------------------------------- | :------------------------------------------ | :--------------------- | :--------------------------------- | | QxH | $5,228 | — | — | $5,228 | — | $(2,535) | $2,693 | | QVC International | $921 | $(66) | — | $855 | $(77) | — | $778 | | CBI | $12 | — | — | $12 | — | — | $12 | | Corporate and Other | $477 | — | $(233) | $244 | — | $(226) | $18 | | Total | $6,638 | $(66) | $(233) | $6,339 | $(77) | $(2,761) | $3,501 | - In Q3 2022, goodwill impairments of $2,535 million for QxH and $226 million for Zulily were recorded due to financial performance, macroeconomic conditions, and stock price decline525 - Tradenames with indefinite lives, primarily related to QxH ($2,698 million), also saw impairments of $180 million for HSN and $140 million for Zulily in Q3 2022521525 Intangible Assets Subject to Amortization (as of Dec 31, 2022 and 2021) | Category | 2022 Gross Carrying Amount (millions) | 2022 Accumulated Amortization (millions) | 2022 Net Carrying Amount (millions) | 2021 Gross Carrying Amount (millions) | 2021 Accumulated Amortization (millions) | 2021 Net Carrying Amount (millions) | | :-------------------------- | :------------------------------------ | :--------------------------------------- | :---------------------------------- | :------------------------------------ | :--------------------------------------- | :---------------------------------- | | Television distribution rights | $664 | $(592) | $72 | $818 | $(673) | $145 | | Customer relationships | $3,307 | $(3,120) | $187 | $3,321 | $(3,087) | $234 | | Other | $1,473 | $(1,120) | $353 | $1,443 | $(1,077) | $366 | | Total | $5,444 | $(4,832) | $612 | $5,582 | $(4,837) | $745 | - Amortization expense for intangible assets with finite useful lives was $323 million in 2022524 (6) Debt The company's debt totals $6.9 billion, with covenants restricting dividend payments from its subsidiary QVC due to a high leverage ratio Debt Summary (as of Dec 31, 2022 and 2021) | Debt Category | 2022 Outstanding Principal (millions) | 2022 Carrying Value (millions) | 2021 Carrying Value (millions) | | :-------------------------------- | :------------------------------------ | :----------------------------- | :----------------------------- | | Corporate level debentures | $2,406 | $1,303 | $1,804 | | Subsidiary level notes and facilities | $4,714 | $4,713 | $4,720 | | Deferred loan costs | — | $(37) | $(44) | | Total consolidated Qurate Retail debt | $6,895 | $6,353 | $6,989 | | Less debt classified as current | | $(828) | $(1,315) | | Total long-term debt | | $5,525 | $5,674 | - QVC purchased approximately $536 million of its 4.375% Senior Secured Notes due 2023 in June 2022, resulting in a $6 million loss on extinguishment of debt543 - The Credit Facility was refinanced in October 2021, providing a $3.25 billion revolving credit facility maturing on October 27, 2026; borrowings bear interest at ABR Rate or LIBOR-based rates plus a margin549550551 - As of December 31, 2022, QVC's consolidated leverage ratio exceeded 3.5 to 1.0, restricting its ability to make certain dividends or restricted payments to Qurate Retail, except for debt service and specific tax obligations548 - The discontinuance of LIBOR and transition to alternative reference rates (like SOFR) could impact QVC's borrowing costs under the Credit Facility236 Annual Principal Maturities of Debt (Next 5 Years) | Year | Amount (millions) | | :--- | :---------------- | | 2023 | $216 | | 2024 | $603 | | 2025 | $603 | | 2026 | $1,078 | | 2027 | $578 | (7) Leases The company utilizes operating and finance leases and executed several sale-leaseback transactions in 2022, generating significant cash proceeds and gains - Right-of-use assets and lease liabilities are recognized based on the present value of future lease payments, using the incremental borrowing rate when the implicit rate is not determinable564 - In June 2022, QVC modified a finance lease for its Ontario, California distribution center, accounting for it as a sale-leaseback and recognizing a $240 million gain and $250 million net cash proceeds577 - In July 2022, QVC sold five U.S. properties and leased them back for 20 years, receiving $443 million net cash proceeds and recognizing a $277 million gain578 - In November 2022, QVC agreed to sell two properties in Germany and the U.K. for $182 million net cash proceeds, with sales closing in January 2023 and an expected gain in Q1 2023579 Lease Cost Components (2020-2022) | Lease Cost Component | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :------------------------ | :-------------- | :-------------- | :-------------- | | Operating lease cost | $127 | $96 | $87 | | Finance lease depreciation| $5 | $19 | $19 | | Finance lease interest | $3 | $8 | $8 | | Total finance lease cost| $8 | $27 | $27 | Future Lease Payments (as of Dec 31, 2022) | Year | Finance Leases (millions) | Operating Leases (millions) | | :--------- | :------------------------ | :-------------------------- | | 2023 | $3 | $125 | | 2024 | $1 | $106 | | 2025 | — | $89 | | 2026 | — | $75 | | 2027 | — | $65 | | Thereafter | — | $614 | | Total lease payments | $4 | $1,074 | | Less: imputed interest | — | $480 | | Total lease liabilities | $4 | $594 | (8) Income Taxes The company reported a $224 million income tax expense in 2022, primarily due to a non-deductible goodwill impairment, and maintains reserves for uncertain tax positions Income Tax Benefit (Expense) (2020-2022) | Category | 2022 (millions) | 2021 (millions) | 2020 (millions) | | :-------------- | :-------------- | :-------------- | :-------------- | | Current | $(212) | $(221) | $(145) | | Deferred | $(12) | $4 | $348 | | Total Income tax benefit (expense) | $(224) | $(217) | $203 | - The income tax expense of $224 million in 2022 was primarily due to a goodwill impairment that is not deductible for tax purposes324585 Deferred Income Tax Assets and Liabilities (as of Dec 31, 2022 and 2021) | Category | 2022 (millions) | 2021 (millions) | | :------------------------ | :-------------- | :-------------- | | Deferred tax assets: | | | | Tax losses and credit carryforwards | $246 | $240 | | Foreign tax credit carryforwards | $93 | $95 | | Operating lease liability | $104 | $71 | | Other accrued liabilities | $59 | $63 | | Prepaid royalty | $70 | $94 | | Other | $150 | $131 | | Deferred tax assets | $737 | $709 | | Valuation allowance | $(264) | $(264) | | Net deferred tax assets | $473 | $445 | | Deferred tax liabilities: | | | | Intangible assets | $675 | $758 | | Fixed assets | $106 | $142 | | Discount on exchangeable debentures | $970 | $768 | | Other | $131 | $94 | | Deferred tax liabilities | $1,882 | $1,762 | | Net deferred tax liabilities | $1,409 | $1,317 | - As of December 31, 2022, the company had $97 million in tax reserves for unrecognized tax benefits related to uncertain tax positions596 - The company's tax years prior to 2019 are closed for federal income tax purposes, and 2019 and 2020 remain open until October 2023 and 2024, respectively597 (9) Stockholders' Equity The company's equity structure includes mandatorily redeemable preferred stock classified as a liability and two classes of common stock with different voting rights - Qurate Retail's 8.0% Series A Cumulative Redeemable Preferred Stock (QRTEP) is classified as a liability due to mandatory redemption on March 15, 2031, and pays quarterly cash dividends599601604608612 - Series A common sto