Quarterly report pursuant to Section 13 or 15(d)

Fair Value Measurements

v2.3.0.15
Fair Value Measurements
 9 Months Ended
Sep. 30, 2011
Fair Value Measurements [Abstract]  
Fair Value Measurements

NOTE 9—FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. HSNi applies the following framework for measuring fair value which is based on a three-level hierarchy:

Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

 

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these items. The following table summarizes the fair value of HSNi's other financial assets and liabilities which are carried at cost (in thousands):

 

     September 30, 2011  
                   Fair Value Measurement Category  
     Carrying
Value		      Fair Value      Level 1      Level 2      Level 3  

Senior Notes

    $ 240,000       $ 264,000       $ 264,000       $ —         $ —     

Term Loan

      69,841         69,609         —           —           69,609   
     December 31, 2010  
                   Fair Value Measurement Category  
     Carrying
Value		      Fair Value      Level 1      Level 2      Level 3  

Senior Notes

    $ 240,000       $ 273,900       $ 273,900       $ —         $ —     

Term Loan

      69,841         69,841         —           —           69,841   
     September 30, 2010  
                   Fair Value Measurement Category  
     Carrying
Value		      Fair Value      Level 1      Level 2      Level 3  

Senior Notes

    $ 240,000       $ 273,600       $ 273,600       $ —         $ —     

Term Loan

      95,238         95,238         —           —           95,238   

The fair value of the Senior Notes is based upon quoted market information (level 1 criteria) and the fair value of the term loan is based upon discounted cash flows (level 3 criteria).

HSNi measures certain assets, such as intangible assets and property and equipment, at fair value on a non-recurring basis. These assets are recognized at fair value if they are deemed to be impaired. During the nine months ended September 30, 2011 and the year ended December 31, 2010, there were no assets that were required to be recorded at fair value as no impairment indicators were present.