Home Shopping Network 2015 Annual Report Download - page 42

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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
proprietary merchandise directly to consumers through various platforms including (i) television home shopping programming
broadcast on the HSN television networks; (ii) catalogs, consisting 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, joymangano.com and the seven branded websites operated by
Cornerstone; (iv) mobile devices; (v) retail and outlet stores; and (vi) wholesale distribution of certain proprietary products to
other retailers. HSNi’s television home shopping business, related digital sales, outlet stores and wholesale distribution are
referred to herein as “HSN” and all catalog operations, including related digital sales and stores, are collectively referred to
herein as “Cornerstone.”
HSN offerings primarily consist of jewelry, fashion (apparel & accessories), beauty & health (including beauty, wellness
and fitness), and home & other (including home, electronics, culinary and other). Merchandise offered by Cornerstone
primarily consists of home furnishings (including indoor/outdoor furniture, home décor, tabletop, textiles 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 ("IAC"). The spin-off from IAC ("Spin-off") occurred August 20, 2008 and 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.
Recent Accounting Developments
In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2014-09,
Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model for entities
to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition
guidance, including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when a
customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain
the benefits from the good or service. Additionally, ASU 2014-09 will disallow the capitalization of direct-response advertising
costs which will impact the timing of recognition of Cornerstone's catalog production and distribution costs. In July 2015, the
FASB approved a one-year deferral of the effective date of ASU 2014-09. This standard will now become effective for HSNi
in the first quarter of 2018. Early adoption is permitted in the first quarter of 2017. HSNi is in the process of assessing the
impact of the adoption of ASU 2014-09 to its consolidated financial statements and is evaluating its accounting, transition and
disclosure requirements.
In April 2015, the FASB issued Accounting Standards Update No. 2015-03, Interest - Imputation of Interest (Subtopic
835-30) - Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"). ASU 2015-03 simplifies the presentation of
debt issuance costs by requiring debt issuance costs to be presented as a deduction from the corresponding debt liability. The
new standard is limited to the presentation of debt issuance costs and does not affect their recognition and measurement. ASU
2015-03 is effective for periods beginning after December 15, 2015, including interim periods within that annual period. HSNi
will adopt ASU 2015-03 in the first quarter of 2016.
In April 2015, the FASB issued Accounting Standards Update No. 2015-05, Customer's Accounting for Fees Paid in a
Cloud Computing Arrangement ("ASU 2015-05"), which provides guidance to customers about whether a cloud computing
arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should
account for the software license element of the arrangement consistent with the acquisition of other software licenses. If the
arrangement does not include a software license, the customer should account for a cloud computing arrangement as a service
contract. ASU 2015-05 is effective for HSNi beginning on January 1, 2016. HSNi is currently assessing the impact of the
adoption of this ASU to its consolidated financial statements.