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HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
61
$0.00 to $4.99 167,971 $ 3.65 6.5 84,585 $ 3.14
$5.00 to $9.99 1,090,351 5.94 9.4 92,851 7.89
$10.00 to $14.99 237,803 12.66 4.2 204,175 12.57
$15.00 to $19.99 2,251,303 16.85 7.6 534,527 18.08
$20.00 to $24.99 329,208 22.70 3.1 329,179 22.70
$25.00 to $73.11 1,540,877 34.23 7.7 61,996 36.36
5,617,513 19.27 7.6 1,307,313 17.56
Outstanding Exercisable
Weighted
Average
Exercise Price
Weighted
Average
Remaining
Contractual
Term in Years
Number
Exercisable at
December 31,
2008
Weighted
Average
Exercise
Price
Number
Outstanding at
December 31,
2008
Restricted Common Equity in Cornerstone Brands
In connection with the acquisition of Cornerstone Brands by IAC in 2005 certain members of Cornerstone
Brand’s management were granted restricted common equity in Cornerstone Brands. These awards were granted on
April 1, 2005 and were initially measured at fair value, which is being amortized to expense over the vesting period.
These awards vest ratably over four years, or earlier based upon the occurrence of certain prescribed events. The
awards vest in non-voting restricted common shares of Cornerstone Brands.
These shares are subject to a put right by the holders, which is not exercisable until the first quarter of 2010
and annually thereafter, and a call right by HSNi, which is not exercisable until the first quarter of 2012 and
annually thereafter. The value of these shares upon exercise of the put or call is equal to their fair market value,
determined by negotiation or arbitration, reduced by the accreted value of the preferred interest that was taken by
IAC upon the purchase of Cornerstone Brands. The initial value of the preferred interest was equal to the acquisition
price of Cornerstone Brands. The preferred interest accretes value at a 15% annual rate. Upon exercise of the put or
call the consideration is payable in HSNi shares or cash or a combination thereof at HSNi's option. As of
December 31, 2008, these awards were significantly out of the money and are not expected to result in any value.
NOTE 13—INCOME TAXES
Prior to the spin-off, HSNi’s results were included in IAC's consolidated federal and applicable state tax
returns. In all periods presented, current and deferred tax expense has been computed for HSNi on a separate return
basis. HSNi's share of IAC's consolidated federal and state tax return liabilities have been reflected within cash
flows from operating activities in the accompanying consolidated statements of cash flows.
The components of the provision for income taxes attributable to continuing operations are as follows (in
thousands):