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Table of Contents
HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7—DISCONTINUED OPERATIONS
Loss from discontinued operations for all periods presented includes the income and losses for HSNi’s international subsidiaries that
previously conducted business in the United Kingdom (which was dissolved in September 2009), Belgium and Mexico.
The net sales and net loss for the aforementioned discontinued operations for the applicable periods are as follows (in thousands):
NOTE 8—FAIR VALUE
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants. HSNi applies the following framework for measuring fair value which is based on a three-level hierarchy:
Level 1 —Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 —Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are
observable or can be corroborated by observable market data.
Level 3 —Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by
other market participants. These valuations require significant judgment.
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of the short
maturity of these items. The following table summarizes the fair value of the Company’s financial assets and liabilities which are carried at cost
(in thousands):
55
Year Ended December 31,
2010
2009
2008
Net sales
$
—
$
—
$
—
Loss before income taxes
$
(62
)
$
(145
)
$
(749
)
Income tax benefit (expense)
23
55
(2,661
)
Loss from discontinued operations, net of tax
$
(39
)
$
(90
)
$
(3,410
)
December 31, 2010
Carrying
Value
Fair Value
Fair Value Measurement Category
Level 1
Level 2
Level 3
Senior Notes
$
240,000
$
273,900
$
273,900
$
—
—
Term Loan
69,841
69,841
—
—
69,841
December 31, 2009
Carrying
Value
Fair Value
Fair Value Measurement Category
Level 1
Level 2
Level 3
Senior Notes
$
240,000
$
264,000
$
264,000
$
—
—
Term Loan
100,000
96,072
—
—
96,072