Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

v2.4.0.6
DISCONTINUED OPERATIONS
 9 Months Ended
Jun. 30, 2012
DISCONTINUED OPERATIONS

NOTE 10—DISCONTINUED OPERATIONS

During the second quarter of 2012, Cornerstone completed the sale of substantially all of the assets and certain liabilities of Smith+Noble, a brand specializing in window treatments. The total consideration from the sale was $5.5 million. Cornerstone recorded an after-tax gain on the sale of $0.1 million, which is included in “Loss on sale of discontinued operations, net of tax” in the accompanying consolidated statements of operations. 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.

During the second quarter of 2012, Cornerstone initiated a formal plan to divest The Territory Ahead, a brand specializing in casual apparel for men and women, as it was determined that the brand was no longer consistent with Cornerstone’s long-term strategic objectives. On July 1, 2012, substantially all of the assets and certain liabilities of The Territory Ahead were sold for approximately $1.1 million. HSNi does not expect to have any significant continuing involvement or cash flows from The Territory Ahead after it is sold. HSNi concluded that it has met the criteria for presenting The Territory Ahead as held for sale and as discontinued operations as of June 30, 2012. Accordingly, 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 $5.3 million, or $3.3 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 on sale of discontinued operations, net of tax” in the accompanying statements of operations. The assets, net of impairment charges, and liabilities of The Territory Ahead have been reclassified and included in “Prepaid expenses and other current assets” and “Accrued expenses and other current liabilities” as of June 30, 2012 in the accompanying balance sheet.

 

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):

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  
     2012     2011     2012     2011  

Net sales

    $ 18,143      $ 25,876      $ 40,153      $ 50,643   
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss before income taxes

    $ (2,715 )    $ (948 )    $ (4,519 )    $ (2,584 ) 

Income tax benefit

      1,025        358        1,711        974   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss

    $ (1,690 )    $ (590 )    $ (2,808 )    $ (1,610 )