QVC INC

Previous wording

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. In order to rigorously execute core processes, QVC continues to optimize pricing and assortment by investing in enhanced Information Technology systems that support real-time pricing and promotion adjustments at an item level. QVC is also focused on growing our private label brands in effort to drive revenue and margin at a productive scale.

Current wording

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. In order to rigorously execute core processes, QVC continues to optimize pricing and assortment by investing in enhanced Information Technology ("IT") systems that support real-time pricing and promotion adjustments at an item level. QVC is also focused on growing our private label brands in effort to drive revenue and margin at a productive scale.

Previous wording

Lower cost to serve. QVC is right sizing its cost base to improve profitability and cash generation. In order to lower cost to serve, QVC has enhanced the review of spending to identify cost savings opportunities and opportunities to create new operational efficiencies, through end-to-end product and process reviews and leveraging technology and process automation. Additionally, we will improve product margin through lower fulfillment costs, freight optimization and higher productivity.

Current wording

Lower cost to serve. QVC is right sizing its cost base to improve profitability and cash generation. In order to lower cost to serve, QVC has enhanced the review of spending to identify cost savings opportunities and opportunities to create new operational efficiencies, through end-to-end product and process reviews and leveraging technology and process automation. Additionally, we have improved product margin through lower fulfillment costs, freight optimization and higher productivity.

Previous wording

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. QVC recorded restructuring charges of $13 million during the three months ended March 31, 2023 in restructuring, penalties and fire related costs, net of (recoveries) in the condensed consolidated statement of operations. These initiatives are consistent with QVC’s strategy to operate more efficiently as it implements its turnaround plan.

Current wording

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. QVC recorded restructuring charges of $13 million during the six months ended June 30, 2023 in restructuring, penalties and fire related costs, net of (recoveries) in the condensed consolidated statement of operations. These initiatives are consistent with QVC’s strategy to operate more efficiently as it implements its turnaround plan.

Previous wording

On December 18, 2021, QVC experienced a fire at its Rocky Mount fulfillment center in North Carolina. 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 did not reopen. 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 received cumulative net cash proceeds of $19 million as of December 31, 2023 of which $15 million was received during the three months ended March 31, 2023. We assessed 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.

Current wording

On December 18, 2021, QVC experienced a fire at its Rocky Mount fulfillment center in North Carolina. 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 did not reopen. 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 received cash proceeds of $2 million and $17 million during the three and six months ended June 30, 2023, respectively and recognized gains on the sale of $2 million and $15 million during the three and six months ended June 30, 2023, respectively. We assessed 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.

Previous wording

Based on the provisions of QVC’s insurance policies certain fire related costs were recoverable. In June 2023, the Company agreed to a final insurance settlement with its insurance company and received all remaining proceeds related to the Rocky Mount claim. As of December 31, 2023, the Company recorded cumulative fire related costs of $439 million which included $119 million of costs that were not reimbursable by QVC’s insurance policies. As of December 31, 2023, the Company received cumulative insurance proceeds of $660 million and recorded net gains, representing the proceeds received in excess of recoverable losses recognized, of $208 million. Of the $280 million of insurance proceeds received during the year ended December 31, 2023, $210 million represents recoveries for business interruption losses. The fire related costs and gains related to insurance recoveries are included in restructuring, penalties and fire related costs, net of (recoveries) in the condensed consolidated statement of operations.

Current wording

Based on the provisions of QVC’s insurance policies certain fire related costs were recoverable. In June 2023, the Company agreed to a final insurance settlement with its insurance company and received all remaining proceeds related to the Rocky Mount claim. During the three and six months ended June 30, 2023, the Company received $225 million and $280 million of insurance proceeds, of which $210 million represented recoveries for business interruption losses. During the three and six months ended June 30, 2023, the Company recorded $16 million and $27 million of fire related costs, respectively, and recognized net gains of $209 million and $213 million, respectively, representing proceeds received in excess of recoverable losses in restructuring, penalties and fire related costs, net of (recoveries) in the condensed consolidated statement of operations.

Previous wording

QVC's consolidated net revenue decreased 3.7% for the three months ended March 31, 2024, as compared to the corresponding period in the prior year. The three month decrease in net revenue is primarily due to a 2.0% decrease in average selling price per unit ("ASP") primarily driven by QVC-International and to a lesser extent QxH, and a 1.5% decrease in units shipped driven by QxH, partially offset by QVC-International. The decrease was also related to $17 million in unfavorable foreign exchange rates. These decreases to net revenue were partially offset by a $27 million decrease in estimated product returns primarily at QxH and to a lesser extent at QVC-International.

Current wording

QVC's consolidated net revenue decreased 4.0% and 3.9% for the three and six months ended June 30, 2024, respectively, as compared to the corresponding periods in the prior year. The three month decrease in net revenue is primarily due to a 2.4% decrease in units shipped primarily at QxH, partially offset by an increase in units shipped at QVC-International. The decrease was also driven by $31 million in unfavorable foreign exchange rates and a $10 million decrease in shipping and handling revenue primarily at QxH. These decreases were partially offset by a 0.6% increase in average selling price per unit ("ASP") driven by QxH, partially offset by a decrease in ASP at QVC-International. The six month decrease in net revenue is primarily due to a 2.0% decrease in units shipped primarily at QxH, partially offset by an increase in units shipped at QVC-International. The decrease was also driven by $48 million in unfavorable foreign exchange rates and a 0.7% decrease in ASP primarily at QVC-International, partially offset by an increase in ASP at QxH. These decreases to net revenue were partially offset by a $30 million decrease in estimated product returns at QxH.

Previous wording

During the three months ended March 31, 2024 and 2023, the changes in revenue and expenses were affected by changes in the exchange rates for the U.K. Pound Sterling, the Euro and the Japanese Yen. In the event the U.S. Dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow will be negatively affected.

Current wording

During the three and six months ended June 30, 2024 and 2023, the changes in revenue and expenses were affected by changes in the exchange rates for the Japanese Yen, the Euro and the U.K. Pound Sterling. In the event the U.S. Dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow will be negatively affected.

Previous wording

QxH net revenue decline for the three months ended March 31, 2024 was primarily due to a 4.0% decrease in units shipped and a 0.5% decrease in ASP. These declines were partially offset by a $22 million decrease in estimated product returns. For the three months ended March 31, 2024, QxH experienced shipped sales growth in jewelry and accessories, with declines in all other categories.

Current wording

QxH's net revenue decline for the three months ended June 30, 2024 was primarily due to a 5.2% decrease in units shipped and a $9 million decrease in shipping and handling revenue. These declines were partially offset by a 2.4% increase in ASP. For the three months ended June 30, 2024, QxH experienced shipped sales growth in jewelry with declines across all other categories. For the six months ended June 30, 2024, QxH net revenue decreased due to a 4.6% decrease in units shipped. This decline was partially offset by a 0.9% increase in ASP and a $30 million decrease in estimated product returns. For the six months ended June 30, 2024, QxH experienced shipped sales growth in jewelry with declines across all other categories.

Previous wording

QVC-International net revenue decline in constant currency for the three months ended March 31, 2024 was primarily due to a 4.7% decrease in ASP across all markets. This decrease was partially offset by a 3.9% increase in units shipped primarily driven by the U.K. and Japan partially offset by Italy. For the three months ended March 31, 2024, QVC-International experienced shipped sales growth in constant currency in home with declines in all other product categories.

Current wording

QVC-International's net revenue was flat in constant currency for the three months ended June 30, 2024 primarily due to a 3.7% increase in units shipped across all markets except Italy offset by a 2.6% decrease in ASP across all markets. For the three months ended June 30, 2024, QVC-International experienced shipped sales growth in constant currency in jewelry, beauty and electronics with declines across all other product categories except apparel which remained flat. QVC-International's net revenue decline in constant currency for the six months ended June 30, 2024 was primarily due to a 3.6% decrease in ASP across all markets. These declines were partially offset by a 3.8% increase in units shipped across all markets except Italy. For the six months ended June 30, 2024, QVC-International experienced shipped sales growth in constant currency across beauty, jewelry and electronics with declines in all other categories.

Previous wording

QVC's cost of goods sold as a percentage of net revenue was 65.0% and 67.9% for the three months ended March 31, 2024 and 2023, respectively. The decrease in cost of goods sold as a percentage of revenue for the three months ended March 31, 2024 is primarily due to product margin improvement and lower warehouse costs across both segments and lower freight costs at QxH. The product margin improvement for the three months ended March 31, 2024 was driven by lower product costs and less inventory liquidation in the current period.

Current wording

QVC's cost of goods sold as a percentage of net revenue was 64.4% and 64.7% for the three and six months ended June 30, 2024, respectively, compared to 65.5% and 66.7% for the three and six months ended June 30, 2023, respectively. The decrease in cost of goods sold as a percentage of revenue for the three and six months ended June 30, 2024 is primarily due to product margin favorability across both segments and lower freight costs at QxH, partially offset by higher freight costs at QVC-International. The product margin favorability for the three and six months ended June 30, 2024 was driven by the net impact of merchandising efforts including cost reduction and pricing actions, as well as mix within product categories and less inventory liquidation in the current period at QxH.

Previous wording

QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees and telecommunications expenses. Operating expenses were 8.1% of net revenue for each of the three months ended March 31, 2024 and 2023, respectively.

Current wording

QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees and telecommunications expenses. Operating expenses were 7.8% and 7.9% of net revenue for the three and six months ended June 30, 2024, respectively, and were 8.0% for each of the three and six months ended June 30, 2023. For the three and six months ended June 30, 2024, the decreases in operating expenses as a percent of sales are driven by lower commissions expense at QxH.

Previous wording

QVC's selling, general, and administrative expenses (excluding stock-based compensation) include personnel, information technology, provision for doubtful accounts, production costs, and marketing and advertising expenses. Such expenses decreased $8 million and increased slightly as a percentage of net revenue for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023. The decrease in expenses was driven by a $17 million decrease in consulting expenses primarily at QxH and to a lesser extent decreases in non-income related taxes and building maintenance costs and favorability from foreign exchange rates. These decreases were partially offset by a $17 million increase in marketing costs at QxH. The decrease in consulting expenses related to investments in Project Athens made in the prior year.

Current wording

For the three months ended June 30, 2024, the decrease was primarily due to an $11 million decrease in consulting expenses primarily at QxH and $4 million of favorability from foreign exchange rates. These decreases were partially offset by an $8 million increase in marketing costs, mainly at QxH. For the six months ended June 30, 2024, the decrease was primarily driven by a $28 million decrease in consulting expenses primarily at QxH and $6 million of favorability from foreign exchange rates. These decreases were partially offset by a $25 million increase in marketing costs at QxH. The decrease in consulting expenses for the three and six months ended June 30, 2024 related to investments in Project Athens made in the prior year.

Previous wording

QVC recorded a gain of $4 million for the three months ended March 31, 2023, related to a $15 million gain on insurance proceeds received in excess of fire losses and a $13 million gain on the sale of the Rocky Mount property partially offset by $13 million of restructuring costs related to workforce reduction and $11 million of other fire related costs. Fire related costs, net included expenses directly related to the Rocky Mount fulfillment center fire net of expected and received insurance recoveries and gain on the sale of the Rocky Mount property. Expenses indirectly related to the Rocky Mount fulfillment center fire, including operational inefficiencies, were primarily included in Cost of goods sold.

Current wording

QVC recorded restructuring costs of $18 million for the three and six months ended June 30, 2024 related to the shift in its IT operating model. QVC recorded a gain of $211 million and $215 million for the three and six months ended June 30, 2023, respectively, in restructuring, penalties and fire related costs, net of recoveries. For the three months ended June 30, 2023, the gain primarily related to a $225 million gain on insurance proceeds received in excess of fire losses partially offset by $16 million of other fire related costs. For the six months ended June 30, 2023, the gain related to a $240 million gain on insurance proceeds received in excess of fire losses and a $15 million gain on the sale of the Rocky Mount property, partially offset by $27 million of other fire related costs and $13 million of restructuring costs related to workforce reduction.

Previous wording

QVC recorded a $1 million gain on sale for the three months ended March 31, 2024 related to the sale leaseback of a property in Germany. QVC recorded $113 million of gains on sale leaseback transactions for the three months ended March 31, 2023 related to the sale leaseback of two properties located in Germany and the U.K.

Current wording

QVC recorded a $1 million gain on sale of assets and sale leaseback transactions for the six months ended June 30, 2024 related to the sale leaseback of a property in Germany. QVC recorded $6 million and $119 million of gains on sales of assets and sale leaseback transactions for the three and six months ended June 30, 2023, respectively. The $6 million gain for the three months ended June 30, 2023 is primarily related to the sale of a channel positioning right. The $119 million gain for the six months ended June 30, 2023 is primarily related to the sale leaseback of two properties located in Germany and the U.K.

Previous wording

Stock-based compensation includes compensation related to options and restricted stock units granted to certain officers and employees. QVC recorded $12 million and $9 million of stock-based compensation expense for the three months ended March 31, 2024 and 2023, respectively. The increase in stock compensation expense for the three months ended March 31, 2024 is primarily related to new awards granted during the three months ended March 31, 2024.

Current wording

Stock-based compensation includes compensation related to options and restricted stock units granted to certain officers and employees. QVC recorded $2 million and $14 million of stock-based compensation expense for the three and six months ended June 30, 2024, respectively, and recorded $11 million and $20 million of stock-based compensation expense for the three and six months ended June 30, 2023, respectively. The decrease in stock-based compensation expense for the three and six months ended June 30, 2024 is primarily related to changes in the market price of Qurate Retail’s Series A common stock.

Previous wording

For the three months ended March 31, 2024 property and equipment depreciation decreased primarily due to assets that are fully depreciated in the current period. The increase in software amortization for the three months ended March 31, 2024 is due to software additions including an enhancement to QVC’s Enterprise Resource Planning system that was placed into service in the second quarter of 2023. The decrease in channel placement amortization and related expenses for the three months ended March 31, 2024 is primarily due to adjustments recognized related to lower subscriber counts.

Current wording

For the three and six months ended June 30, 2024, property and equipment depreciation decreased primarily due to assets that are fully depreciated in the current period. The increase in software amortization for the six months ended June 30, 2024 is due to software additions including an enhancement to QVC’s Enterprise Resource Planning system that was placed into service in the second quarter of 2023. The decrease in channel placement amortization and related expenses for the three and six months ended June 30, 2024 is primarily due to lower subscriber counts.

Previous wording

For the three months ended March 31, 2024, consolidated interest expense, net increased $25 million or 67.6% as compared to the corresponding period in the prior year. The increase in interest expense is primarily due to the reversal of interest expense related to the settlement of state income tax reserves during the prior year.

Current wording

For the three months ended June 30, 2024, there was no change in consolidated interest expense as compared to the corresponding period in the prior year. For the six months ended June 30, 2024, consolidated interest expense, net increased $25 million as compared to the corresponding period in the prior year primarily due to the reversal of interest expense related to the settlement of state income tax reserves during the prior year.

Previous wording

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 condensed consolidated statements of operations. For the three months ended March 31, 2024, the change in foreign currency loss was also due to variances in interest and operating payables balances between QVC and its international subsidiaries denominated in the currency of the subsidiary and the effects of currency exchange rate changes on those balances.

Current wording

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 condensed consolidated statements of operations. For the three and six months ended June 30, 2024, the change in foreign currency gain (loss) was also due to variances in interest and operating payables balances between QVC and its international subsidiaries denominated in the currency of the subsidiary and the effects of currency exchange rate changes on those balances.

Previous wording

Our effective tax rate was 34.0% and 27.4% for the three months ended March 31, 2024 and 2023, respectively. The 2024 rate differs from the U.S. federal income tax rate of 21% primarily due to state and foreign tax expense and permanent items. The 2023 effective tax rate differs from the U.S. federal income tax rate of 21% primarily due to state and foreign tax expense and permanent items and includes a reversal of tax expense accrued in prior periods related to the settlement of state income tax reserves, resulting in a reduction to the 2023 rate.

Current wording

Our effective tax rate was 32.0% and 33.0% for the three and six months ended June 30, 2024, respectively, compared to an effective tax rate of 28.0% and 27.8% for the three and six months ended June 30, 2023, respectively. The 2024 rate differs from the U.S. federal income tax rate of 21% primarily due to state and foreign tax expense and permanent items. The 2023 effective tax rate differs from the U.S. federal income tax rate of 21% primarily due to state and foreign tax expense and permanent items and includes a reversal of tax expense accrued in prior periods related to the settlement of state income tax reserves, resulting in a reduction to the 2023 rate.

Previous wording

QVC Adjusted OIBDA increased by $49 million for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The increase is comprised of a $46 million increase at QxH and a $3 million increase at QVC-International.

Current wording

QVC Adjusted OIBDA increased by $58 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. The increase is comprised of a $55 million increase at QxH and a $3 million increase at QVC-International.

Previous wording

All of QVC's senior secured notes are secured by the capital stock of QVC and have equal priority to the senior secured credit facility. The interest on QVC's senior secured notes is payable semi-annually with the exception of the 6.375% Senior Secured Notes due 2067 and the 6.25% Senior Secured Notes due 2068, which is payable quarterly. As of March 31, 2024, the remaining outstanding 4.45% Senior Secured Notes due 2025 are classified within the current portion of long term debt as they mature in less than one year.

Current wording

All of QVC's senior secured notes are secured by the capital stock of QVC and have equal priority to the senior secured credit facility. 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 is payable quarterly.

Previous wording

On February 27, 2024, QVC delivered a notice of redemption to the trustee and holders of the 4.85% Senior Secured Notes due 2024 (the "2024 Notes"). Pursuant to the notice of redemption, QVC redeemed the remaining outstanding 2024 Notes in full on March 28, 2024.

Current wording

During the second quarter of 2023, QVC purchased $177 million of the outstanding 4.85% Senior Secured Notes due 2024 (the "2024 Notes") and $15 million of the outstanding 4.45% Senior Secured Notes due 2025 (the "2025 Notes"). As a result of the repurchases, QVC recorded a gain on extinguishment of debt in the condensed consolidated statements of operations of $10 million for the three and six months ended June 30, 2023. On February 27, 2024, QVC delivered a notice of redemption to the trustee and holders of the 2024 Notes. Pursuant to the notice of redemption, QVC redeemed the remaining outstanding 2024 Notes in full on March 28, 2024. As of June 30, 2024, the remaining outstanding 2025 Notes are classified within the current portion of long term debt as they mature in less than one year.

Previous wording

Availability under the Fifth Amended and Restated Credit Agreement at March 31, 2024 was $1.87 billion. The interest rate on the senior secured credit facility was 6.8% and 6.3% at March 31, 2024 and 2023, respectively.

Current wording

Availability under the Fifth Amended and Restated Credit Agreement at June 30, 2024 was $1.86 billion. The interest rate on the senior secured credit facility was 6.9% and 6.6% at June 30, 2024 and 2023, respectively.

Previous wording

During the three months ended March 31, 2024, QVC's primary uses of cash were $1,132 million of principal payments of the senior secured credit facility and finance lease obligations, $423 million of principal repayment of senior secured notes, $42 million of dividends to Qurate Retail, $34 million of capital and television distribution rights expenditures and $11 million in dividend payments from the Company’s Japanese operations ("QVC-Japan") to Mitsui & Co. LTD (“Mitsui”). These uses of cash were funded primarily with $1,570 million of principal borrowings from the senior secured credit facility and $84 million of cash provided by operating activities. As of March 31, 2024, QVC's cash, cash equivalents and restricted cash balance was $326 million.

Current wording

During the six months ended June 30, 2024, QVC's primary uses of cash were $1,292 million of principal payments of the senior secured credit facility and finance lease obligations, $423 million of principal repayment of senior secured notes, $94 million of capital and television distribution rights expenditures, $50 million of dividends to Qurate Retail and $22 million in dividend payments from the Company’s Japanese operations ("QVC-Japan") to Mitsui & Co. LTD (“Mitsui”). These uses of cash were funded primarily with $1,660 million of principal borrowings from the senior secured credit facility, and $248 million of cash provided by operating activities. As of June 30, 2024, QVC's cash, cash equivalents and restricted cash balance was $330 million.

Previous wording

During the three months ended March 31, 2023, QVC's primary uses of cash were $403 million of principal payments of the senior secured credit facility and finance lease obligations, $214 million of principal repayment of senior secured notes, $199 million of dividends to Qurate Retail, $78 million of capital and television distribution rights expenditures and $12 million in dividend payments from QVC-Japan to Mitsui. These uses of cash were funded primarily with $585 million of principal borrowings from the senior secured credit facility, $198 million in proceeds from sale of fixed assets and $177 million of cash provided by operating activities. As of March 31, 2023, QVC's cash, cash equivalents and restricted cash balance was $430 million.

Current wording

During the six months ended June 30, 2023, QVC's primary uses of cash were $515 million of principal payments of the senior secured credit facility and finance lease obligations, $396 million of principal repayment of senior secured notes, $300 million of dividends to Qurate Retail, $186 million of capital and television distribution rights expenditures and $24 million in dividend payments from QVC-Japan to Mitsui. These uses of cash were funded primarily with $887 million of principal borrowings from the senior secured credit facility, $200 million in proceeds from sale of fixed assets, $54 million of insurance proceeds for fixed asset loss, and $591 million of cash provided by operating activities. As of June 30, 2023, QVC's cash, cash equivalents and restricted cash balance was $658 million.

Previous wording

The change in cash provided by operating activities for the three months ended March 31, 2024 compared to the previous year was primarily due to changes in working capital and lower net income. 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.

Current wording

The change in cash provided by operating activities for the six months ended June 30, 2024 compared to the previous year was primarily due to changes in working capital and lower net income. 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.

Previous wording

As of March 31, 2024, $192 million of the $326 million in cash, cash equivalents and restricted cash was held by foreign subsidiaries. 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 68% 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. We believe that we currently have appropriate legal structures in place to repatriate foreign cash as tax efficiently as possible and meet the business needs of QVC.

Current wording

As of June 30, 2024, $207 million of the $330 million in cash, cash equivalents and restricted cash was held by foreign subsidiaries. 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 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. We believe that we currently have appropriate legal structures in place to repatriate foreign cash as tax efficiently as possible and meet the business needs of QVC.

Previous wording

QVC’s material cash requirements for 2024, outside of normal operating expenses, include the costs to service outstanding debt, expenditures for affiliation agreements with television providers, and capital expenditures. Capital expenditures are expected to be between $200 and $215 million, including $32 million already expended for the three months ended March 31, 2024. The Company also may make dividend payments to Qurate Retail. Refer to the off-balance sheet arrangements and aggregate contractual obligations table below for a summary of other material cash requirements as of March 31, 2024. The Company expects that cash on hand and cash provided by operating activities in future periods and outstanding borrowing capacity will be sufficient to fund projected uses of cash.

Current wording

payments to Qurate Retail. Refer to the off-balance sheet arrangements and aggregate contractual obligations table below for a summary of other material cash requirements as of June 30, 2024. The Company expects that cash on hand and cash provided by operating activities in future periods and outstanding borrowing capacity will be sufficient to fund projected uses of cash.