Quarterly report pursuant to Section 13 or 15(d)

DISCONTINUED OPERATIONS

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DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2012
DISCONTINUED OPERATIONS

NOTE 10—DISCONTINUED OPERATIONS

In May 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. 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 “Income (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. Cornerstone recorded an after-tax gain on the sale of $0.1 million in the second quarter of 2012, which is included in “Income (loss) from discontinued operations, net of tax” in the accompanying consolidated statements of operations.

In July 2012, substantially all of the assets and certain liabilities of The Territory Ahead, a Cornerstone brand specializing in casual apparel for men and women, were sold for approximately $1.1 million. HSNi does not expect to have any significant continuing involvement or cash flows from The Territory Ahead; therefore, the results of operations for The Territory Ahead are presented separately as “Income (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 $6.3 million, or $3.9 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 “Income (loss) from discontinued operations, net of tax” in the accompanying statements of operations.

 

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
September 30,		     Nine Months Ended
September 30,		  
     2012     2011     2012     2011  

Net sales

    $ —        $ 24,127      $ 40,153      $ 74,770   
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) from discontinued operations (including loss on sale of $6.0 million recognized in the second quarter of 2012)

    $ 228      $ (2,128 )    $ (9,398 )    $ (4,712 ) 

Income tax (expense) benefit

      (100 )      804        3,544        1,778   
  

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss) from discontinued operations, net of tax

    $ 128      $ (1,324 )    $ (5,854 )    $ (2,934 )