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Long-lived assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not
be recoverable. As a result of the impairment charge recognized in the fourth quarter of 2011 related to the indefinite-lived intangible assets of
The Territory Ahead, HSNi assessed if there was an impairment of any of this brand’s long-lived assets. As a result of this assessment, HSNi
recognized an impairment charge of $0.8 million in 2011. This charge is included in the line item “Loss from discontinued operations, net of
tax” in the accompanying consolidated statements of operations. As we periodically reassess estimated future cash flows and asset fair values,
changes in our estimates and assumptions may cause us to realize additional impairment charges in the future.
NOTE 5—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of the following (in thousands):
NOTE 6—SEGMENT INFORMATION
HSNi presents its operating segments and related financial information in a manner consistent with how the chief operating decision maker
and executive management view the businesses, how the businesses are organized as to segment management, and the focus of the businesses
with regards to the types of products or services offered or the target market. HSNi has two operating segments, HSN and Cornerstone. The
accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies. Intercompany
accounts and transactions have been eliminated in consolidation.
HSNi’s primary metric is Adjusted EBITDA, which is defined as operating income excluding, if applicable: (1) non-cash charges
including: (a) stock-
based compensation expense, (b) amortization of intangibles, (c) depreciation and gains and losses on asset dispositions, and
(d) goodwill, long-lived asset and intangible asset impairments; (2) pro forma adjustments for significant acquisitions; and (3) other significant
items. Significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect
in a given period, thereby affecting the comparability of results. Adjusted EBITDA is not a measure determined in accordance with GAAP, and
should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with
GAAP. Adjusted EBITDA is used as a measurement of operating efficiency and overall financial performance and HSNi believes it to be a
helpful measure for those evaluating companies in the retail and media industries. Adjusted EBITDA has certain limitations in that it does not
take into account the impact to HSNi’s consolidated statements of operations of certain expenses, including stock-based compensation,
amortization of intangibles, depreciation, gains and losses on asset dispositions, asset impairment charges, acquisition-related accounting
expenses and other significant items.
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December 31,
2012 2011
Accrued sales returns
$
40,554
$
39,563
Accrued cable and satellite related fees
23,874
27,621
Accrued freight and fulfillment expenses
20,682
16,384
Accrued compensation and benefits
53,933
40,983
Income taxes payable
13,663
3,417
Other accrued expenses and current liabilities
62,683
66,023
Total accrued expenses and other current liabilities
$
215,389
$
193,991