Quarterly report pursuant to Section 13 or 15(d)

Segment Information (Note)

v2.4.0.8
Segment Information (Note)
 6 Months Ended
Jun. 30, 2013
Segment Reporting Information, Profit (Loss) [Abstract]  
Segment Information
SEGMENT INFORMATION
HSNi presents its operating segments and related financial information in a manner consistent with how the chief operating decision maker and executive management view the businesses, how the businesses are organized as to segment management, and the focus of the businesses with regards to the types of products or services offered or the target market. HSNi has two operating segments, HSN and Cornerstone. The accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies included in HSNi's Annual Report on Form 10-K for the year ended December 31, 2012. Intercompany accounts and transactions have been eliminated in consolidation.
HSNi’s primary performance metric is Adjusted EBITDA, which is defined as operating income excluding, if applicable: (1) non-cash charges including: (a) stock-based compensation expense, (b) amortization of intangibles, (c) depreciation and gains and losses on asset dispositions, and (d) goodwill, long-lived asset and intangible asset impairments; (2) pro forma adjustments for significant acquisitions; and (3) other significant items. Significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, thereby affecting the comparability of results. Adjusted EBITDA is not a measure determined in accordance with GAAP, and should not be considered in isolation or as a substitute for operating income, net income or any other measure determined in accordance with GAAP. Adjusted EBITDA is used as a measurement of operating efficiency and overall financial performance and HSNi believes it to be a helpful measure for those evaluating companies in the retail and media industries. Adjusted EBITDA has certain limitations in that it does not take into account the impact to HSNi’s consolidated statements of operations of certain expenses, gains and losses that are excluded from the company's definition of Adjusted EBITDA.
The following tables reconcile Adjusted EBITDA to operating income for HSNi’s operating segments and to HSNi’s consolidated net income (in thousands):

 
Three Months Ended June 30, 2013
 
Three Months Ended June 30, 2012
 
HSN
 
Cornerstone
 
Total
 
HSN
 
Cornerstone
 
Total
Adjusted EBITDA
$
57,135

 
$
28,017

 
$
85,152

 
$
52,709

 
$
26,903

 
$
79,612

Stock-based compensation expense
(2,761
)
 
(784
)
 
(3,545
)
 
(2,752
)
 
(1,898
)
 
(4,650
)
Depreciation and amortization
(7,037
)
 
(2,914
)
 
(9,951
)
 
(6,609
)
 
(2,980
)
 
(9,589
)
Loss on disposition of fixed assets
(357
)
 
—

 
(357
)
 
(31
)
 
—

 
(31
)
Operating income
$
46,980

 
$
24,319

 
71,299

 
$
43,317

 
$
22,025

 
65,342

Total other expense, net
 
 
 
 
(1,661
)
 
 
 
 
 
(7,849
)
Income from continuing operations before income taxes
 
 
 
 
69,638

 
 
 
 
 
57,493

Income tax provision
 
 
 
 
(26,367
)
 
 
 
 
 
(21,882
)
Income from continuing operations
 
 
 
 
43,271

 
 
 
 
 
35,611

Income (loss) from discontinued operations, net of tax
 
 
 
 
9

 
 
 
 
 
(4,864
)
Net income
 
 
 
 
$
43,280

 
 
 
 
 
$
30,747


 
Six Months Ended June 30,
 
Six Months Ended June 30,
 
HSN
 
Cornerstone
 
Total
 
HSN
 
Cornerstone
 
Total
Adjusted EBITDA
$
116,069

 
$
35,925

 
$
151,994

 
$
110,031

 
$
35,849

 
$
145,880

Stock-based compensation expense
(5,584
)
 
(1,670
)
 
(7,254
)
 
(6,039
)
 
(4,611
)
 
(10,650
)
Depreciation and amortization
(13,858
)
 
(6,046
)
 
(19,904
)
 
(13,174
)
 
(5,381
)
 
(18,555
)
Loss on disposition of fixed assets
(1,018
)
 
(1
)
 
(1,019
)
 
(45
)
 
(29
)
 
(74
)
Operating income
$
95,609

 
$
28,208

 
123,817

 
$
90,773

 
$
25,828

 
116,601

Total other expense, net
 
 
 
 
(3,301
)
 
 
 
 
 
(15,184
)
Income from continuing operations before income taxes
 
 
 
 
120,516

 
 
 
 
 
101,417

Income tax provision
 
 
 
 
(45,692
)
 
 
 
 
 
(38,518
)
Income from continuing operations
 
 
 
 
74,824

 
 
 
 
 
62,899

Income (loss) from discontinued operations, net of tax
 
 
 
 
—

 
 
 
 
 
(5,982
)
Net income
 
 
 
 
$
74,824

 
 
 
 
 
$
56,917

 
The net sales for each of HSNi's reportable segments are as follows (in thousands):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2013
 
2012
 
2013
 
2012
Net sales:
 
 
 
 
 
 
 
 
HSN
 
$
526,181

 
$
501,943

 
$
1,076,310

 
$
1,043,875

Cornerstone
 
286,425

 
265,244

 
508,947

 
461,220

Total
 
$
812,606

 
$
767,187

 
$
1,585,257

 
$
1,505,095