NOTE 13—SUBSEQUENT EVENTS

Acquisition

On April 2, 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. Chasing Fireflies generated net sales of approximately $39 million in 2011, and the results of its operations will be included in the Cornerstone segment results beginning in the second quarter of 2012.

New Credit Facility

On April 24, 2012, HSNi entered into a new $600 million five-year Credit Facility ("Credit Facility") with a syndicate of banks, replacing the credit facility that was set to expire in July 2013. The new Credit Facility, which includes a $350 million revolving credit facility and a $250 million delayed draw term loan, expires April 24, 2017. The Credit Facility may be increased up to a maximum of $850 million, subject to certain conditions.

Loans under the Credit Facility bear interest at a per annum rate equal to (at HSNi's election) either LIBOR plus a predetermined margin that ranges from 1.50% to 2.25% or the Base Rate (as defined in the Credit Agreement), in each case, based on HSNi's leverage ratio (the beginning LIBOR margin will be 1.50%). The term loan must be drawn by December 31, 2012. Proceeds from the Credit Facility are available for general corporate purposes, including working capital, capital expenditures, acquisitions, share repurchases and redemption of HSNi's $240 million 11.25% Senior Notes due August 2016 and callable August 1, 2012 at a price of 105.625%.

Certain HSNi subsidiaries have unconditionally guaranteed HSNi's obligations under the Credit Facility. In addition, HSNi and certain HSNi subsidiaries pledged, subject to certain exceptions, 100% of the voting equity securities of their U.S. subsidiaries and 65% of their first-tier foreign subsidiaries. The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers including a maximum leverage ratio of 3.00x and a minimum interest coverage ratio of 3.00x.

In connection with the termination of the prior credit facility, of the unamortized deferred financing costs of $1.2 million, $0.3 million will be written-off in the second quarter of 2012 and the balance of $0.9 million will be amortized over the five-year life of the new Credit Facility.