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is determined by using a discounted cash flow analysis with consideration of an equity analysis based on the trading value of its
common stock. The discounted cash flow analysis indicates the fair value of the reporting units based on the present value of
the cash flows expected to be generated in the future. The equity analysis is based on the trading value of its common stock as
of the valuation date or the average stock price over a range of dates prior to the valuation date, plus an estimated control
premium. HSNi utilizes a relief from royalty method to assess the fair values of its trademarks and trade names.
In assessing fair value, HSNi considers, among other indicators, differences between estimated and actual cash flows and
revenue streams; changes in the related discount, royalty and terminal growth rate; and the relationship between the trading
price of its common stock and its per-share book value. Determining fair value requires the exercise of significant judgments.
These factors used in the determination of fair value are sensitive to, among other things, changes in the retail consumer market
and the general economy.
Intangible Assets
Intangible assets with indefinite lives relate principally to trade names and trademarks. Definite-lived intangible assets
consist primarily of customer relationships which are amortized on an accelerated basis over their useful lives. When definite-
lived intangible assets are sold or expire, the cost of the asset and the related accumulated amortization are eliminated and any
gain or loss is recognized at such time.
In the second quarter of 2012, $9.7 million of indefinite-lived intangible assets (excluding goodwill) and $3.8 million of
definite-lived intangible assets were recorded in connection with the acquisition of substantially all of the assets and liabilities
of Chasing Fireflies. The total balance of HSNi's intangible assets, net, is as follows (in thousands):
December 31,
2013 2012
Intangible assets with indefinite lives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 261,809 $ 264,849
Intangible assets with definite lives, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 651 2,027
Total intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 262,460 $ 266,876
In the fourth quarter of 2013, HSNi performed qualitative and quantitative assessments (as applicable) of its intangible
assets and concluded an adjustment was necessary related to trademarks associated with the 2012 acquisition of Chasing
Fireflies. An impairment charge of $3.0 million was recorded in the fourth quarter of 2013 within the Cornerstone segment and
is included in "General and administrative" expense in the accompanying consolidated statements of operations. In the fourth
quarter of 2012, HSNi elected to perform qualitative and quantitative assessments (as applicable) of its indefinite-lived
intangible assets and concluded there were no impairments.
Amortization expense for the definite-lived intangible assets was $1.4 million, $1.8 million, and $0.4 million for the
years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013 and 2012, the following is information on
intangible assets with definite lives (in thousands):
Cost
Accumulated
Amortization Net
Weighted
Average
Amortization
Life (Years)
As of December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,800 $ (3,149) $ 651 1.1
As of December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,800 $ (1,773) $ 2,027 1.4
Goodwill
In the second quarter of 2012, $9.9 million of goodwill was recorded in connection with the acquisition of Chasing
Fireflies which was allocated to the Cornerstone reporting unit. No adjustments have been made to the goodwill balance
subsequent to the acquisition. In the fourth quarter of 2013 and 2012, HSNi performed a qualitative assessment of its goodwill
and concluded there was no impairment.