Home Shopping Network 2012 Annual Report Download - page 43

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—ORGANIZATION
Company Overview
HSN, Inc. (“HSNi”) is an interactive multi-
channel retailer that markets and sells a wide range of third party and private label merchandise
directly to consumers through various platforms including (i) television home shopping programming broadcast on the HSN television networks;
(ii) catalogs, which consist primarily of the Cornerstone portfolio of leading print catalogs which includes, Ballard Designs, Chasing Fireflies,
Frontgate, Garnet Hill, Grandin Road, Improvements and TravelSmith; (iii) websites, which consist primarily of HSN.com and the eight branded
websites operated by Cornerstone; (iv) retail and outlet stores; and (v) mobile devices. HSNi’
s television home shopping business, related digital
sales and outlet stores are referred to herein as “HSN” and all catalog operations, including related digital sales and stores, are collectively
referred to herein as “Cornerstone.” Smith+Noble, a Cornerstone brand that specializes in window treatments, was sold in May 2012 and The
Territory Ahead, a Cornerstone brand that specializes in casual apparel, was sold in July 2012.
HSN offerings primarily consist of jewelry, fashion (apparel & accessories), beauty & wellness, and home & other (including household,
home design, electronics, culinary, fitness and other). Merchandise offered by Cornerstone primarily consists of home furnishings (including
indoor/outdoor furniture, home décor, tabletop, textiles, window treatments and other home related goods) and apparel & accessories.
Basis of Presentation
HSNi was incorporated in Delaware in May 2008 in connection with the spin-off of several businesses previously owned by
IAC/InterActiveCorp, or IAC. The spin-off from IAC occurred August 20, 2008 concurrent with the spin-offs from IAC of Interval Leisure
Group, Inc., Ticketmaster Entertainment, Inc. (now a wholly-owned subsidiary of Live Nation Entertainment, Inc.), and Tree.com, Inc.
Throughout these financial statements, the separation transaction is referred to as the “Spin-off” and each of these companies as “Spincos.” In
connection with the Spin-off, HSNi's shares began trading on the NASDAQ Global Select Market under the symbol “HSNI.”
The consolidated financial statements include the accounts of HSN, Inc. and its subsidiaries. Intercompany accounts and transactions have
been eliminated. The operating results of Smith+Noble and The Territory Ahead are presented as discontinued operations in the consolidated
statements of operations and the consolidated statements of cash flows for all periods presented. See Note 17 for further discussion of
discontinued operations.
Fiscal Year
HSNi’s consolidated financial results are reported on a calendar year basis ending on December 31. HSN’s reporting period is the same as
HSNi. Cornerstone has a 4-4-5 week accounting cycle with the fiscal year ending on the Saturday on or immediately preceding December 31.
Cornerstone’
s fiscal years 2012, 2011, and 2010 include 52, 53 and 52 weeks, respectively. There are no intervening events that materially affect
HSNi’s consolidated balance sheets or consolidated statements of operations.
Reclassifications
In addition to the reclassifications made in the consolidated statements of operations and cash flows to present Smith+Noble and The
Territory Ahead as discontinued operations, certain other reclassifications were made to prior period amounts in the consolidated statements of
operations and cash flows to conform to the current year presentation. Specifically, expenses previously included within the line "Production and
programming" in the consolidated statements of operations are now included in the line "Selling and marketing." See Note 17 for further
discussion of discontinued operations.
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