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Table of Contents
NOTE 17—DISCONTINUED OPERATIONS
In May 2012, substantially all of the assets and certain liabilities of Smith+Noble, a Cornerstone brand specializing in window
treatments, were sold for $5.5 million . HSNi does not expect to have any significant continuing involvement or cash flows from Smith+Noble;
therefore, the results of operations for Smith+Noble are presented separately as “Loss from discontinued operations, net of tax” in the
consolidated statements of operations for all periods presented, and the cash flows from Smith+Noble are presented separately as discontinued
operations in the consolidated statements of cash flows for all periods presented. Cornerstone recorded an after-tax loss on the sale of $0.1
million in the second quarter of 2012, which is included in “Loss from discontinued operations, net of tax” in the accompanying consolidated
statements of operations.
In July 2012, substantially all of the assets and certain liabilities of The Territory Ahead, a Cornerstone brand specializing in casual
apparel for men and women, were sold for approximately $1.1 million . HSNi does not expect to have any significant continuing involvement or
cash flows from The Territory Ahead; therefore, the results of operations for The Territory Ahead are presented separately as “Loss from
discontinued operations, net of tax” in the consolidated statements of operations for all periods presented, and the cash flows from The Territory
Ahead are presented separately as discontinued operations in the consolidated statements of cash flows for all periods presented. An impairment
charge of $5.9 million , or $3.7 million net of taxes, was recorded in the second quarter of 2012 to reduce the carrying value of the net assets to
their estimated net realizable value and is included in “Loss from discontinued operations, net of tax” in the accompanying statements of
operations.
The following table reflects the results of Smith+Noble and The Territory Ahead that are reported as discontinued operations for all
periods presented (in thousands):
NOTE 18-ACQUISITION
In April 2012, HSNi, through Cornerstone, acquired substantially all of the assets and liabilities of Chasing Fireflies, LLC, a leading
direct-to-consumer premium children's and family lifestyle brand. The purchase price was $22.9 million in cash and contingent consideration
valued at $6.5 million as of the acquisition date. The acquisition has been accounted for as a business combination and the total purchase
consideration has been assigned to the assets acquired, primarily inventory and other assets totaling $8.6 million and liabilities assumed totaling
$2.6 million , at their estimated fair value as of the acquisition date. The allocation of the identifiable intangible assets and goodwill includes
$13.5 million primarily for trade names and customer relationships and $9.9 million for goodwill. Proforma information has not been presented
for this acquisition as it was not material to HSNi's consolidated results of operations or financial position.
60
Year Ended December 31,
2012
2011
2010
Net sales
$
40,154
$
107,798
$
112,472
Loss from discontinued operations (including loss on sale of $6.0 million recognized in the second
quarter of 2012)
$
(9,370
)
$
(7,353
)
$
(3,054
)
Income tax benefit
3,548
2,771
1,136
Net loss from discontinued operations, net of tax
$
(5,822
)
$
(4,582
)
$
(1,918
)