Operator: Good day everyone and welcome to the Liberty Interactive Corporation Q4 2012 Earnings Conference Call. Just a reminder, today's call is being recorded.
For opening remarks and introductions, I would now like to turn the call over to Ms. Courtnee Ulrich, Vice President of Investor Relations. Please go ahead.
Courtnee Ulrich - VP, IR: Good afternoon. This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements about financial guidance, business strategies, and market potential, future financial performance, new service and product launches, and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitations, possible changes in market acceptance of new products or services, competitive issues, regulatory issues and continued access to capital on terms acceptable to Liberty Interactive. These forward-looking statements speak only as of the date of this call and Liberty Interactive expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Liberty Interactive's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
On today's call we will discuss certain non-GAAP financial measures including adjusted OIBDA. The required definitions and reconciliations, preliminary notes and Schedules 1 through 3, can be found at the end of this presentation.
Now, I'd like to introduce Greg Maffei, Liberty Interactive’s President and CEO.
Gregory B. Maffei - President & CEO: Thank you, Courtnee, and good afternoon to all of you. Besides myself today speaking on the call we will have, Liberty's CFO, Chris Shean; QVC's CEO, Mike George; and QVC U.S.'s CEO, Claire Watts.
Onto the highlights; QVC had solid results for the quarter. Notably in Q4, dotcom penetration in the U.S. was 43%, with 23% mobile penetration.
QVC is the second largest mobile commerce retailer in 2012 behind only Amazon, according to Internet Retailer magazine. Regarding Liberty Ventures in December, we purchased an additional 4.8 million TripAdvisor shares for $300 million. We now control 22% of the economics and 57% of the vote at TripAdvisor.
We are very pleased with the performance of Liberty Ventures, since its creation. The stock is up 58%. Notably during the quarter, we also ramped back up on LINTA repurchases buying back $177 million worth of stock.
So with those highlights, let me turn over it over to Chris Shean to discuss the financials.
Christopher W. Shean - SVP & CFO: Liberty Interactive Group's revenue increased 2% in the fourth quarter and 4% for the year to $10 billion, while adjusted OIBDA increased 1% from the fourth quarter and 4% for the year.
QVC increased net revenue by 2% for the quarter and 3% for the year, while adjusted OIBDA increased 4% for the quarter and 5% for the year. Liberty Interactive's other eCommerce businesses grew 5% for the quarter and 11% for the year, while their adjusted OIBDA for the quarter decreased 29% and 22% for the year. We had previously discussed some of the challenges that these businesses had faced this year which have negatively impacted adjusted OIBDA. The decrease for the full year was a result of principally increased spending in paid search as a percent of revenue, increased promotional activity to move some seasonal inventory, which negatively impacted gross margins and lower advertising revenue due to pricing and a shift to mobile applications.
Operating income has been reduced by $325 million and $323 million of non-tax deductible amortization related to Liberty's acquisition of QVC for the years ended 2011 and 2012 respectively. Let's take a quick look at liquidity, at the end of the year the Group had attributed cash $700 million and $4.6 billion in attributed debt. QVC's total debt to adjusted OIBDA ratio as defined in their credit agreement was approximately 1.9 times as compared to maximum allowable average of 3.25 times.
Now, I'll hand the call to Mike George for detailed commentary on QVC.
Mike George - President and CEO of QVC, Inc.: Thank you, Chris. We were pleased with our success driving revenue growth and increasing our adjusted OIBDA margins in the face of some external pressures in the quarter. Revenue increased 2% and adjusted OIBDA increased 4%, despite the continued FX headwinds that we face.
On a constant currency basis, we increased revenues 3% and adjusted OIBDA over 5%. We continued our strong eCommerce performance as Greg mentioned with worldwide penetration of 37% up 3 points from a year ago, and we continue to be a leader in mobile commerce. Our mobile orders were up 87% globally and well over 100% in the U.S., U.K. and Germany. Mobile orders now represent 24% total eCommerce and earlier this month QVC earned the number of two spot along with Apple in ForeSee's annual mobile retail customer satisfaction ranking. To further our digital strategy, we were delighted to announce the purchase in Q4 of Oodle, a leading social marketplace, which we will use as a platform to establish a leadership position in social commerce. Now, Claire will tell you more about this exciting opportunity shortly.
Our customer metrics also remained strong, and we enjoyed an increase in both the count and the spend of our existing customers, and the retention rate remained unchanged at a high 89%. In addition, revenue from new customers was up in the U.S., in Germany, and in Italy, although it was offset by continued soft results in Japan, driven by challenges with new customers located in our channel following the digital conversion last year. We do expect this negative trend in Japan to moderate in 2013.
Now turning to the results by market, in the U.S., we grew revenue 2% and adjusted OIBDA 7%. Now while we were generally pleased with our sales momentum, there was a number of highlights in the quarter that Claire will touch on. Our growth was adversely affected by Sandy, with approximately 25% of our sales coming from the areas directly affected by the storm, our revenue growth rate for the quarter was negatively impacted by 1% or 2%. Excluding the storm impact and some softness that we felt at the very end of the holiday selling season, we posted consistently strong results, with revenue growth rates comparable to the first half of the year.
Additionally, our return rate remained relatively flat, compared to the prior year at 17%, and we once again stuck to the fundamentals of our model and avoided the increased promotional frenzy at traditional retail. Our shipping and handling revenue per unit was stable and our use of Easy Pay was up just 1%.
eCommerce in the U.S. increased 3 points to 43% of our business and mobile jumped 5 points to represent over 10% of our total business and 23% of our eCommerce business. Our adjusted OIBDA margin increased nearly 110 basis points and that was primarily driven by a $20 million net legal settlement in the quarter.
Japan had another terrific quarter with revenue up 6% and adjusted OIBDA up 8% in local currency on top of a strong performance last Q4. While our new customer growth, as I mentioned, has been hampered by the digital conversion, we saw revenue from existing customers increase 11%. We have also substantially completed our new headquarters, broadcast studio, and call center, and will begin broadcasting from the new facility on April 1. With our new studios, we'll be able to significantly enhance the quality of our broadcast and our programming, for example through improved steps for kitchen and cooking, our first outdoor steps, and a new fashion runway experience. As with the U.K., we will incur some duplicate and incremental operating costs as we complete the move. These costs will adversely impact adjusted OIBDA by approximately $5 million through the course of 2013.
In Germany, while our revenue declined 3% in local currency, we were encouraged by the improvement in trend, relative to the 6% decline in Q3. In a somewhat sluggish consumer economy, the team is really focused on improving the diversity and the freshness of our products, our brand, and our programs, and we believe these efforts are beginning to pay off. Adjusted OIBDA declined 13% due to the anniversarying of some one-time benefits that we realized last year, and the cleanup of our jewellery inventory and reduction in the mix of high-margin health products.
In the U.K., we grew revenue by 3% in local currency in the face of the double-dip recession. Adjusted OIBDA margins increased slightly due to a significant reduction in inventory obsolescence rates and lower affiliate commissions, partially offset by a higher mix of lower margin consumer electronics products and higher costs associated with the move to the new headquarters earlier in 2012.
Italy continues on a very strong trajectory, with revenue up 119% over last year and 44% over Q3 in local currency. Our adjusted OIBDA loss fell to EUR4 million, that's a 44% improvement over the prior year, and we continue to be encouraged by the positive customer response in Italy with purchase frequency rates for our existing customers among the highest of any QVC market. We now anticipate achieving a positive OIBDA on a quarterly basis late this year or early next year. It's is about three to six months behind the guidance we gave prior to the launch a few years ago.
In China, our CNR Mall joint venture achieved revenue of RMB160 million or about $25 million, up 37% over Q3 in local currency. The venture's adjusted OIBDA loss was RMB14 million or about $2 million, approximately the same as the prior year. CNR Mall ended the year reaching over 48 million homes, that's up from 32 million at the start of the year. In just its first two and a half years of operation, CNR Mall has already served nearly 1 million customers. We're committed to evolving this format closer to a traditional QVC model, which we believe will further build customer trust and repeat purchase rates, enable the business to emerge as a market leader in China.
I'll wrap up my comments with a few brief reflections on the full year; we're proud of the financial results we achieved in a difficult year in the face of the worsening economic situation in most of our markets and some external events like the Olympics and Sandy, along with worsening FX rates. We still grew revenue 3% and adjusted OIBDA 5%. Normalizing for the FX impact, we grew revenue over 4% and adjusted OIBDA over 6%.
With adjusted OIBDA margins over 23% in the U.S. and over 21% worldwide and climbing; we once again demonstrated our ability to achieve industry leading financial results and to provide our shareholders with steady, consistent gains and profits and cash flow.
More important still, we invested in the future; offering our customers and viewers a compelling, immersive, multi-screen shopping experience. We rolled out our new eCommerce platform in the U.S. and Europe. We grew our mobile commerce business almost 100% and according to Internet Retailer, we were the second largest mobile commerce retailer in 2012 behind only Amazon, and also number two as I mentioned, in ForeSee's Mobile Retail customer satisfaction rate.
We acquired two highly innovative companies in the digital commerce space; Send the Trend and Oodle, which will help us extend our leadership in both eCommerce and social commerce. We completed our new headquarters and broadcast studios in the U.K., and in six weeks, we'll begin broadcasting from our new headquarters in Japan.
These new buildings were a reflection of our growth and success in each market, provide a significantly enhanced viewing experience for our customers and are designed to foster collaboration and creativity among our teams. In just its second full year of operation we ramped Italy to a nearly $90 million business, built on the strong loyalty and repeat purchase behavior of our new Italian customers, and the path resorting to commercial stimulants. We also launched our joint venture with China National Radio and in its second full year of operation, CNR Mall achieved over $80 million in revenue. We continue to actively explore additional markets for expansion.
Finally, our capital expenditures for 2012 were $246 million, that's below the guidance of $300 million to $320 million that we communicated at the start of the year. This lower spend reflects cost savings on our Japan headquarters and a reduction in new IT projects, as we focused our efforts on completing and deploying Websphere and other systems. For 2013, we anticipate capital expenditures of $250 million to $275 million.
With that, I'll turn it over to Claire to discuss our U.S. business in more detail.
Claire Watts - CEO, QVC U.S.: Thank you, Mike. QVC U.S. generated solid results to close up 2012. We continue to make progress on our efforts to enhance the real relationship we have with our customers and providing unique shopping and service expedience across all of our platforms. Our holiday brand campaign, All the Joy, None of the Craziness, offered our customers compelling and engaging product and programming across all platforms and positioned QVC as the destination for inspired gifting.
We were pleased with the strength of our home business in fourth quarter, we saw strong performance from a number of brand, including Duraflame, Oris, Lori Greiner, KitchenAid, Rachael Ray and (indiscernible). The HALO Pocket Power Charger which was a Today's Special Value that aired on Tuesday, November 27th, sold more than 305,000 units on the day making it the number one selling TSV of all time in terms of units.
Within our beauty, fashion and accessories businesses we saw strong performance from the following brand, Dooney & Bourke, Judith Ripka, Philosophy, Bronzo Italia, Joan Rivers (indiscernible) Dell Bose and Susan Graver.
During one of the busiest shopping weeks of the year Monday November 19, through Cyber Monday, QVC created the ultimate multimedia shopping experience for our customers across all platforms. Our customers responded. We achieved our biggest sales week in history, welcomed 5% more first-time customers than last year, and generated the highest number of web sessions and unique visitors in QVC.com's history.
Program host, David Venable's cookbook, 'Comfort Foods That Take You Home', was the third best-selling cookbook in 2012 according to Publisher's Weekly, to close to 265,000 units sold last year since it debuted on air in April. To promote his cookbook, David made appearances on the Rachael Ray show, The Today Show, (The Two) and was also featured on Anderson Cooper Live Show as part of the Family Dinner Challenge theory.
We've remained dedicated to improving customer experience at every touch-point. We implemented a click to call messaging in paid search ads to make it easier for customers to access QVC via their mobile devices. We refreshed our customer service webpage to make it faster for customers to find the information they're looking for, and we created efficiencies to improve speed of delivery of our products to our customers.
Our customers are taking advantage of our multi-platform shopping experience, as evidenced by our extraordinary growth in web and mobile penetration. As Mike noted, Q4 total eCommerce sales grew by 10% with penetration of 43%. Our mobile growth is explosive Q4 orders increased by 114% and penetration grew to 23% in the quarter. We continue to focus on optimizing the shopping experience on tablet routes, which continues to be the fastest growing portion of our mobile portfolio.
The QVC shopping experience is fundamentally social in nature. We have a strong community of hosts, designers, guests, and customers, who enjoy interacting on our community forum on QVC.com, on social platforms such as Facebook and Pinterest and of course on mobile applications. The acquisition of substantially all the assets of Oodle provides us a sophisticated technology platform that will enable QVC to capitalize on the growing consumer trends of discovering new products via social, and allow us to better leverage our brand essence of real relationships on all digital platforms. This opportunity will enable QVC to grow our customer base and strengthen our brand as an innovative retailer.
We're excited about the shopping experience that we've offered to our customers so far in 2013. Italian tenor Andrea Bocelli, debuted his much anticipated new album on QVC in front of a live studio audience. QVC was in L.A., this past Friday, February 22, for red carpet style with fashion icons, Heidi Klum, Nicole Richie, Joan Rivers, and Jennifer Hudson. We delivered a unique social shopping experience for our customers with a live video feed of celebrity guests walking the red carpet on QVC's iPad app, and social influencers showcasing in the moment fast shots of exclusive event on Instagram, creating QVC's very own Instagram experience. As we say hello to spring, we're helping our customers discover the latest fashion trends, fresh spring cleaning ideas, vibrant flowers, health plans and more.
With that, I will turn the call back to Chris.
Christopher W. Shean - SVP & CFO: Thanks, Claire. Let's take a quick look at the liquidity picture Liberty Ventures. As of December 11th we, as Greg had mentioned, gained control of TripAdvisor, now a consolidated subsidiary through our voting shares and going forward will be a permanently displayed operating unit within the Venture Group. I wanted to point out that full purchase accounting that reflected and as a result essentially we had to mark our historical ownership percentage to market, which resulted in a $800 million gain that you will see in the financial statements, but going forward full consolidation 78% of the economics will get allocated back out through the non-consolidating interest line item in both in the P&L.
At the end of the year, the Group had cash of $2.1 billion and $3.3 billion in attributed debt, which includes TripAdvisor's cash and $412 million of their debt facilities. We recently announced the full redemption of all of the outstanding three-quarter percent senior exchangeable debentures due 2031, which this will occur can be affected on March 8 and the outstanding principal amounts of these bonds at December 31, 2012 was $414 million.
The value of the equity method securities, I guess is principally Expedia and non-strategic AFS securities attributed to the Group was $1.8 billion for each, respectively, at the end of the year.
Now, with that, I'll turn it back over to Greg, to wrap up.
Gregory B. Maffei - President & CEO: Well, thanks to Mike, Claire and Chris. You may have heard from their tone, we're pleased with our results for the quarter and the year, and are excited for 2013. We appreciate your continued interest in Liberty Interactive.
With that operator, we'd like to open up for questions.
Operator: David Gober, Morgan Stanley.
David Gober - Morgan Stanley: One quick housekeeping question for Mike. You mentioned a $20 million net favorable settlement in the press release. Just curious what that was, and then I have a follow-up for Claire.
Mike George - President and CEO of QVC, Inc.: Yeah, David, the settlement related to credit card fees, we're not able to get into the details of it, but view it as sort of a one-time non-recurring benefit in the quarter.
David Gober - Morgan Stanley: Claire, you talked about the explosive growth on the mobile side of the business, I was wondering if you see any different characteristics of consumers either, are you seeing better acquisition of customers or are you seeing greater loyalty? Is there any difference between a customer that uses mobile devices versus somebody that just comes on the website or uses the standard phone interface?
Claire Watts - CEO, QVC U.S.: So, thank you for your question. Yes, we're really pleased with our growth in mobile crossing over $500 million for the year. Couple of things that I would tell you that we see. One, we have a high percent of our mobile purchases from new customers. So sitting at about 24% of our mobile customers are actually new customers. Then as we've stated year-after-year, our best customers are the ones that use all of our platforms and we see mobile as continuing that trend. When they add that to their portfolio we do see them become a very, very valuable customer. Within that though we see different behavior and activity coming from mobile phone versus tablet, web versus app, and we talked a little bit about that before that. The web is the fastest growing portion, both on mobile and on tablet and that is definitely a shopping more of what we call, buy any time experience, whereas our app on mobile continue to be more like an ordering mechanism for the customer. So, definitely adding mobile to the portfolio makes them a better customer and we have seen a high percent of the mobile customers being new.
David Gober - Morgan Stanley: Maybe just a quick one, not sure who would be best on this, maybe Greg; just on eCommerce side, obviously some challenging trends there. Just curious if you could give us any color on the performance of the various subsidiaries there and what's going on with the various sites.
Gregory B. Maffei - President & CEO: Well, I think we talked about some of these before; we were in a transition with a couple of the subsidiaries. We have a new CEO for example, Celebrate which is struggled through the Halloween season. We have had good top line growth but discounting by Bodybuilding as well as some legal expenses which showed its results. Backcountry had challenges around a tough environment for outdoor window retailers, a lot of discounting in the industry, from which they suffered commensurately. They actually are off to a very improved January with more snow in the west and that's a positive. Provide has a new CEO as of about a year ago who has made I think some good changes and we saw direction improvements at the Provide flower business for Valentine's Day and I think we're pleased with that, but there were some one-time charges around the new CEO and a retention program, some hiring charges and the like. It hurt that result, Company's results. The one that has done the strongest is CommerceHub, continues to have excellent result. So if I looked across the portfolio, we have two business or so which are doing quite well, two which are sort of banging along, while we're having issues around the weather, and which we cleaned up some items in one, which is probably the most challenging, Celebrate, but we're excited about the prospects with our new CEO there.
Operator: Tom Forte, Telsey Advisory Group.
Calvin Chan - Telsey Advisory Group: This is actually Calvin filling in for Tom. Thanks for taking my questions. You guys talked a little bit about the strength in Home and Beauty. Could you just talk about whether this is sustainable in 2013? Then just could you give some highlights for what you're seeing in Electronics?
Claire Watts - CEO, QVC U.S.: We are seeing our – within Home, our Cook and Dining business, our household business particularly floor care and the past season, particularly our seasonal and toy business, all very strong, consistent results throughout the year, and we do expect those categories to remain strength going into '13. Beauty is the same story. We've had year-over-year sustained growth. We are quite a player in the prestige beauty market and we have a big plan for our Beauty business in 2013 as well.
Calvin Chan - Telsey Advisory Group: And in Electronics?
Claire Watts - CEO, QVC U.S.: Yes. In Electronics, what we're seeing is pretty tough year for us, finished pretty soft. The categories that have been good, continue to be good and that is the tablet business, it's been particularly strong, particularly the Apple brand. Our camera business is pretty strong, but we continue to have a sluggish performance in televisions and computers, picked up a little bit in the fourth quarter but not anywhere close to our performance in the past couple of years. So we remained a little bit unsure of the growth for Electronics in '13 and we're viewing it fairly conservatively.
Operator: Trisha Dill, Wells Fargo Securities.
Trisha Dill - Wells Fargo Securities: Just a question on the eCommerce and mobile growth, although the penetration continues to increase at QVC, just wondering if you comment on just the slowdown in the year-over-year growth rate during the quarter and what you attribute that to?
Claire Watts - CEO, QVC U.S.: So yeah, 10% growth, we have a large site. So $2.6 billion for the year, but part of that is when the top line slowed and 2% as Mike talked about, we definitely experienced an unusual impact from external. So that affects the overall growth rate on the website as well. 10% is okay, but we expect it to be a little bit higher than that. So it's definitely reflected the overall performance of the business in the quarter.
Trisha Dill - Wells Fargo Securities: Then just a question on sort of a competitive free-shipping and promotional environment. It doesn't really sound like you participated in that and your gross margin in the U.S. business doesn't really reflect that but perhaps they contributed a little bit to the slower sales growth versus 3Q. Just wondering if you can comment on that and maybe what you're seeing so far in the first quarter in the commercial environment.
Claire Watts - CEO, QVC U.S.: Yeah, so, we did strategically make the decision, as Mike outlined, to stick with our brand story, which we are not a highly promotional brand. Free shipping and handling, when we offered in the fourth quarter, really has to do more with the competitive landscape, so in some cases national brands. We do offer free shipping and handling, because that's what it takes to be competitive, but for the most part, we see ourselves having differentiated product and experience, and we try to stay out of the promotional activity. As far as the impact on sales, I would tell you, where we strategically offered it, we felt like that was the right thing to do and we saw great performances where we didn't offer it. So, the top line for us at 2% was disappointing to us in some regards because of the significant impacts that we incurred through the year. So, bottom line is, we're going to stay as non-promotional as we can. We feel like that did pay the bills in the fourth quarter. We ended our season very clean, cleanest inventory we've had in a long time, and we're well positioned to be successful in '13.
Operator: Benjamin Mogil, Stifel Nicolaus.
Benjamin Mogil - Stifel Nicolaus: So, since January, between some of the payroll tax holiday going away and of course, rise in gasoline prices. So, just talk about where you see your customer sort of be a little bit more conservative. I know that you're obviously not the Wal-Mart customer, but sort of talk about what you're seeing, if any change in tone, sort of since Jan 1 from the consumer perspective?
Claire Watts - CEO, QVC U.S.: I can't at this point, tell you that we can trace change in behavior. It is something that we are watching very closely, because again, any money that comes out of the pocketbook is not good for retail and not good for us, but we haven't seen a notable change in our customer's behavior by category yet, but we remained very, very focused on that as some of them are really seeing paychecks diminish for the first and second time. So more to come on that, I would say.
Benjamin Mogil - Stifel Nicolaus: What about in Europe, I mean, obviously the payroll tax is not an issue there, but just given the European environment continues to be sort of very, very much up and down, Italy for example, is there anything you can sort of share there again since Jan 1 in terms of tone, et cetera?
Mike George - President and CEO of QVC, Inc.: Quite a similar answer to what Claire described for the U.S. It will be hard for us to see any sort of obvious impact, and as you pointed out, Europe has been – the economic pressures in Europe have been significant and sustained now for many quarters. So, certainly nothing we've seen would suggest any fundamental change in what continues to just be a relatively soft environment where you have to kind of outperform and take the share. In Italy, as we've said before, I think because we're so new and so small that (indiscernible) to the macroeconomic forces and the business might have ramped even faster in a healthy economy. We've nonetheless – seeing that we can continue to ramp that business from a fairly small share standpoint, even with all the challenges going on in Italy. So, nothing real specific that feels different this year relative to last year.
Operator: Matthew Harrigan, Wunderlich Securities.
Matthew Harrigan - Wunderlich Securities: I had a couple of questions, all under international. I think in the release, it says in China, you were up 14% year-over-year in Q4 and 85% for the full year, I mean you have some favorable seasonality Q3 to Q4. So, I was just curious if you could comment on that because that's sort of a quirky number. Then secondly, on Italy, I mean QVC I think you said it was a quarter or two behind plan but that's still impressive in the context of everything, but Italy is such a quirky country, I mean seemingly, it's round up Silvio Berlusconi again as the power-broker if not the next PM, and I think you commented before that you had some advances in that market in terms of the (indiscernible) and just kind of what the Italian consumer is used to dealing with, with retailers, do you feel confident that you can extrapolate from Italy going to some of the other markets, like Spain or France, and obviously you generate proportional results that there's huge buckets of value there for the taking or do you think that Italy was just low hanging fruit on kind of the underdeveloped retailing environment. Then lastly, particularly with this event program around fashion and beauty and all that, are you starting to see more things out of Italia and the U.K. in particular in terms of programming that you can use in the U.S. and in other markets as well as Europe?
Mike George - President and CEO of QVC, Inc.: Thank you, Matthew. Let me sort of take each one of those. China, as I mentioned in my comments, we're just really pleased with the partnership in China and the success we're seeing with a very strong growth from Q3 to Q4. The growth wasn't as strong as you know on a year-over-year basis, but prior to us operating the channel, they were probably doing some businesses last Q4 that were not the kind of businesses we wanted to be doing. So we've been gradually evolving the mix, increasing the product margins, trying to kind of build sort of business that we want to build that we think is sustainable for the long-term. So, we were pleased that we saw a nice lift over the Q3 performance, and for us just because we weren't engaged in the business a year ago. The year-over-year comps are a little less relevant. The other thing to keep in mind about China, is the seasonality will feel a little bit different in China than in the rest of the world, it is not as driven by Christmas and it is more driven by New Year's, which of course occurs in February. So, you really see the seasonality – if in most markets the heavy seasonality is November, December and China, it feels more like December, January. So, some of the sequential trends are going to look a little bit different in China, but overall very pleased with the progress there. In terms of Italy, whether we can extrapolate from Italy to Spain or France; the short answer is, we think we can. Certainly going into Italy, though we talked to, none of our internal work made us think that Italy would be an inherently stronger market than Spain or France from a consumer proposition. It was really more that we were able to get the right kind of carriage in Italy sooner than France, in particular, Spain is a little smaller market, so it was sort of one step behind Italy in all lists of priorities. So as we've said in past discussions, if we could get the right feel in Spain or in France, we would definitely explore that. We are working hard, and looking at those markets, France is a little more complicated to get into and we've been close to a couple of times and haven't quite gone over the finish line, but we're continuing to work on it and continuing to look very hard at Spain and have a variety of discussions in that market. So, we do think there's value creation in those markets and we'll pick harder ways to enter them. On your question about – I think your third question was around the ability to sort of export some of the successes we're having in Fashion in – let's say from Italy to another market. What we're trying to do is to – we spent a lot of time just trying to leverage best practices across markets to understand what the hot trends are and share those across markets. Leverage vendors where we can. We're also very conscious that specific products filing and what works in one market doesn't always work in the other market. So no, I won't say that there's – I could point to a lot of sort of directly leveragable activity out of Italy into the other markets, but nonetheless, having a presence in Italy, we think it's a good thing. We've got a good partnership with Vogue in, Vogue Italy. I think developing sort of a nice local supply base and we would certainly hope that over time, some of those local Italian suppliers we're developing in Italy will be attractive in our other markets as well. A little too early to read that at this point.
Matthew Harrigan - Wunderlich Securities: Then what about the event program in Milan Fashion Week and London Fashion Week? Are you actually showing them in U.S. now? I should know the answer to that but unfortunately I don't.
Mike George - President and CEO of QVC, Inc.: We don't directly broadcast Milan Fashion Week back into the U.S. on that specific line, although we have tried over the last couple of years to get more global leverage out of our fashion events. So, Claire talked about the red carpet event which was really extraordinary last week, with kind of viewer excitement we had and the kind of celebrity turnout we had. We had our teams from Germany and Italy broadcasting from the red carpet getting a lot of footage. So I think we'll continue – we haven't done it specifically on the Milan fashion's night out but I think we'll continue to look for ways to scale up these events globally and leverage the content across the markets, and we've had some early success doing so.
Operator: Victor Anthony, Topeka Capital Markets.
Victor Anthony - Topeka Capital Markets: Just two questions. So, during your prepared speech, you talked about the softness that you felt at the very end of the holiday season. Wanted to get an idea of what was that attributed to, and did you see a rebound as you headed into the first quarter? Second, if you could just discuss the results you've seen from the Websphere eCommerce platform that was launched in the U.S., Germany and the U.K.?
Mike George - President and CEO of QVC, Inc.: So on the end of the selling season softness, unfortunately it was really – it was a follow-on to the Newtown tragedy. We had extraordinary sales fall off in the five days after the tragedy and I don't know if (indiscernible) the Northeast and sort of in the midst of that but it's just – it really had an extraordinary impact on the psyche of our customers. I haven't quite frankly seen anything quite like it since October of 2008, in terms of the size and depth of the drop-off. It was, as you'd expect, it was relatively short-lived and it lasted for about five days, then business was back on track. So, it was very much a unique thing and not in any way continuing, but it definitely – just as we were finishing our selling season, had a meaningful impact on the quarter. In terms of Websphere, pleased with results Claire can add maybe some color on the U.S., but had to play that across Europe and U.S., that Germany has been the most significant beneficiary of it, because quite frankly, they have the furthest need for improvement, with the biggest functional gaps. So, we have seen just a significant uptick in their eCommerce performance, their growth rate, sort of increase in penetration rate has been about double the rate it was prior to the launch of Websphere. U.K., we're pleased with the results. It hasn't been as dramatic but good initial results and results, and Claire, do you want to add any color on the U.S. experience?
Claire Watts - CEO, QVC U.S.: Sure, what I would say is that we are very pleased that we had a smooth transition as we did. We have a very large site and didn't make the complete transition until the end of third quarter. So, smooth sailing as far as that goes. What we're looking forward to is, this was just to get it in and stabilize our very large eCommerce platform, which is done, and in '13, we're really looking forward to now pushing it forward. So, with enhancement, fine tuning, optimizing by category, so all of that work is underway.
Operator: That does conclude the question-and-answer session. That concludes today's conference. We do thank you, for your participation today.