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Table of Contents
HSN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Future minimum payments under operating lease agreements are as follows (in thousands):
Expenses charged to operations under these agreements were $24.7 million, $25.1 million and $25.8 million for the years ended
December 31, 2010, 2009 and 2008, respectively.
HSNi also has funding commitments that could potentially require its performance in the event of demands by third parties or contingent
events, as follows (in thousands):
The letters of credit (“LOCs”) primarily consist of trade LOCs, which are used for inventory purchases. Trade LOCs are guarantees of
payment based upon the delivery of goods. The surety bonds primarily consist of customs bonds, which relate to the import of merchandise into
the United States.
The purchase obligations primarily relate to cable contracts and include obligations for future cable distribution and commission
guarantees.
NOTE 15—RELATED PARTY TRANSACTIONS
Relationship Between IAC and HSNi Prior to the Spin-off
HSNi’s expenses prior to the spin-off include allocations from IAC of costs associated with IAC’s accounting, treasury, legal, tax,
corporate support, human resources and internal audit functions. These expenses were allocated in the pre-spin-off periods based on the ratio of
HSNi’s revenue as a percentage of IAC’s total revenue. Allocated costs were $3.3 million for the year ended December 31, 2008, and are
included in “General and administrative expense” in the accompanying consolidated statements of operations. It is not practicable to determine
the amounts of these expenses that would have been incurred had HSNi operated as an unaffiliated entity for the entire year of 2008. In the
opinion of management, the allocation method is reasonable.
During 2008, IAC provided HSNi with non-cash advertising totaling $8.0 million. See the amortization of non-cash marketing discussion
in Note 2 for a further description of this arrangement.
68
Years Ending December 31,
2011
$
27,583
2012
23,501
2013
21,805
2014
18,671
2015
16,683
Thereafter
51,571
Total
$
159,814
Amount of Commitments Expiration Per Period
Total Amounts
Committed
Less Than 1
Year
1 -
3 Years
3 -
5 Years
More Than
5 Years
Letters of credit and surety bonds
$
30,293
$
30,243
$
50
$
—
$
—
Purchase obligations
275,062
92,393
170,382
12,287
—
Total commercial commitments
$
305,355
$
122,636
$
170,432
$
12,287
$
—