Home Shopping Network 2012 Annual Report Download - page 31

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Table of Contents
Contractual Obligations and Commercial Commitments
The following table presents HSNi’s contractual obligations as of December 31, 2012:
We issue inventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancelable by
their terms. We do not consider purchase orders to be firm inventory commitments; therefore, they are excluded from the table above. If we
choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.
At December 31, 2012, we had $0.9 million, including penalties and interest, recorded for uncertain tax positions. We are not able to
reasonably estimate the timing of payments in future periods; therefore, the liability of $0.9 million has not been included in the contractual
obligations table above.
Off-Balance Sheet Arrangements
Other than the items described above, HSNi does not have any material off-balance sheet arrangements as of December 31, 2012.
Seasonality
HSNi is affected by seasonality, although historically our business has exhibited less seasonality than many other retail businesses. Our
sales levels are generally higher in the fourth quarter. Reported revenues in the fourth quarter were 30%, 30% and 31% of total reported annual
revenues in 2012, 2011 and 2010, respectively.
27
Payments Due by Period
Contractual Obligations
Total
Amounts
Committed
Less Than
1 Year
1 - 3 Years
3 - 5 Years
More Than
5 Years
(In thousands)
Long-term debt, including current maturities
$
250,000
$
9,375
$
29,688
$
210,937
$
—
Interest on debt (a)
20,908
4,394
10,335
6,179
—
Operating leases
115,687
23,578
38,180
27,370
26,559
Purchase obligations (b)
99,337
83,467
15,729
141
—
Total contractual obligations
$
485,932
$
120,814
$
93,932
$
244,627
$
26,559
(a)
Includes interest on variable rate debt estimated using the rate in effect as of December 31, 2012 through January 31, 2014, at which time
the forward-staring interest rate swap goes into effect. An all-
in fixed rate of 2.3525% based on HSNi's leverage ratio as of December 31,
2012 is then assumed from February 1, 2014 through April 2017, the date of expiration of the variable rate debt.
(b) The purchase obligations primarily relate to contracts with pay television operators and include obligations for future cable distribution
and commission guarantees.
Amount of Commitments Expiration Per Period
Commercial Commitments
Total
Amounts
Committed
Less Than
1 Year
1 - 3 Years
3 - 5 Years
More Than
5 Years
(In thousands)
Letters of credit and surety bonds (c)
$
32,674
$
32,624
$
50
$
—
$
—
(c) 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 custom bonds which relate to the import of
merchandise into the United States.