Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | HSN, Inc. | |
Trading Symbol | HSNI | |
Entity Central Index Key | 1,434,729 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 52,434,629 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes |
Consolidated Statements Of Oper
Consolidated Statements Of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Net sales | $ 782,562 | $ 823,023 | $ 2,389,358 | $ 2,494,096 |
Cost of sales | 513,377 | 542,947 | 1,550,662 | 1,612,718 |
Gross profit | 269,185 | 280,076 | 838,696 | 881,378 |
Operating expenses: | ||||
Selling and marketing | 174,019 | 178,785 | 518,078 | 546,002 |
General and administrative | 49,783 | 42,703 | 153,812 | 139,118 |
Depreciation and amortization | 11,134 | 10,518 | 33,058 | 31,745 |
Loss on sale of businesses and asset impairment | 0 | 11,195 | 0 | 31,595 |
Transaction costs | 1,305 | 0 | 6,643 | 0 |
Total operating expenses | 236,241 | 243,201 | 711,591 | 748,460 |
Operating income | 32,944 | 36,875 | 127,105 | 132,918 |
Other income (expense): | ||||
Interest income | 164 | 125 | 590 | 223 |
Interest expense | (4,181) | (4,126) | (12,316) | (12,211) |
Total other expense, net | (4,017) | (4,001) | (11,726) | (11,988) |
Income before income taxes | 28,927 | 32,874 | 115,379 | 120,930 |
Income tax provision | (12,700) | (12,716) | (45,130) | (45,742) |
Net income | $ 16,227 | $ 20,158 | $ 70,249 | $ 75,188 |
Net income per share: | ||||
Basic (usd per share) | $ 0.31 | $ 0.39 | $ 1.34 | $ 1.44 |
Diluted (usd per share) | $ 0.31 | $ 0.38 | $ 1.33 | $ 1.42 |
Shares used in computing earnings per share: | ||||
Basic (shares) | 52,555 | 52,356 | 52,494 | 52,376 |
Diluted (shares) | 52,983 | 52,844 | 52,860 | 52,901 |
Dividends declared per share | $ 0.35 | $ 0.35 | $ 1.05 | $ 1.05 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 16,227 | $ 20,158 | $ 70,249 | $ 75,188 |
Change in fair value of derivative instrument, net of tax | 13 | 857 | (47) | (630) |
Other comprehensive loss, net of tax | 13 | 857 | (47) | (630) |
Comprehensive income | $ 16,240 | $ 21,015 | $ 70,202 | $ 74,558 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Current assets: | |||
Cash and cash equivalents | $ 20,574 | $ 42,734 | $ 67,442 |
Accounts receivable, net of allowance of $15,862, $19,086 and $15,487, respectively | 216,620 | 335,005 | 226,589 |
Inventories | 439,034 | 391,106 | 450,671 |
Prepaid expenses and other current assets | 48,107 | 44,173 | 56,309 |
Total current assets | 724,335 | 813,018 | 801,011 |
Property and equipment, net | 212,148 | 211,106 | 207,216 |
Intangible assets, net | 253,655 | 253,623 | 253,619 |
Goodwill | 9,858 | 9,858 | 9,858 |
Other non-current assets | 16,187 | 16,928 | 12,809 |
TOTAL ASSETS | 1,216,183 | 1,304,533 | 1,284,513 |
Current liabilities: | |||
Accounts payable, trade | 228,324 | 293,816 | 241,637 |
Current maturities of long-term debt | 34,375 | 25,000 | 25,000 |
Accrued expenses and other current liabilities | 211,073 | 225,265 | 191,775 |
Total current liabilities | 473,772 | 544,081 | 458,412 |
Long-term debt, less current maturities and net of unamortized deferred financing costs | 438,048 | 484,878 | 600,687 |
Deferred income taxes | 66,899 | 59,760 | 43,145 |
Other long-term liabilities | 20,466 | 20,328 | 20,199 |
Total liabilities | 999,185 | 1,109,047 | 1,122,443 |
Commitments and contingencies (Note 12) | |||
SHAREHOLDERS’ EQUITY: | |||
Preferred stock $0.01 par value; 25,000,000 authorized shares; no issued shares | 0 | 0 | 0 |
Common stock $0.01 par value; 300,000,000 authorized shares; 52,432,249, 52,239,795 and 52,187,351 issued shares September 30, 2017, December 31, 2016 and September 30, 2016, respectively | 524 | 522 | 522 |
Additional paid-in capital | 964,996 | 1,013,688 | 1,026,737 |
Accumulated deficit | (750,695) | (820,944) | (864,464) |
Accumulated other comprehensive income (loss) | 2,173 | 2,220 | (725) |
Total shareholders’ equity | 216,998 | 195,486 | 162,070 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 1,216,183 | $ 1,304,533 | $ 1,284,513 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Statement of Financial Position [Abstract] | |||
Accounts receivable, allowance | $ 15,862 | $ 19,086 | $ 15,487 |
Preferred stock, par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (shares) | 25,000,000 | 25,000,000 | 25,000,000 |
Preferred stock, issued shares (shares) | 0 | 0 | 0 |
Common stock, par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 |
Common stock, authorized shares (shares) | 300,000,000 | 300,000,000 | 300,000,000 |
Common stock, issued shares (shares) | 52,432,249 | 52,239,795 | 52,187,351 |
Consolidated Statements Of Shar
Consolidated Statements Of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive (Loss) Income [Member] |
Balance, shares at Dec. 31, 2015 | 0 | 52,378 | ||||
Balance, value at Dec. 31, 2015 | $ 146,562 | $ 0 | $ 524 | $ 1,085,785 | $ (939,652) | $ (95) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 75,188 | |||||
Other comprehensive income (loss) | (630) | |||||
Balance, value at Sep. 30, 2016 | 162,070 | |||||
Balance, shares at Dec. 31, 2015 | 0 | 52,378 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock from stock-based compensation awards, including tax benefit, shares | 219 | |||||
Repurchases of common stock, shares | (357) | |||||
Balance, shares at Dec. 31, 2016 | 0 | 52,240 | ||||
Balance, value at Dec. 31, 2015 | 146,562 | $ 0 | $ 524 | 1,085,785 | (939,652) | (95) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 118,708 | 118,708 | ||||
Other comprehensive income (loss) | 2,315 | 2,315 | ||||
Stock-based compensation expense for equity awards | 19,233 | 19,233 | ||||
Cash dividends declared on common stock | (73,151) | (73,151) | ||||
Issuance of common stock from stock-based compensation awards, including tax benefit | (1,614) | 2 | (1,616) | |||
Repurchases of common stock | (16,567) | (4) | (16,563) | |||
Balance, value at Dec. 31, 2016 | 195,486 | $ 0 | $ 522 | 1,013,688 | (820,944) | 2,220 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Issuance of common stock from stock-based compensation awards, including tax benefit, shares | 192 | |||||
Balance, shares at Sep. 30, 2017 | 0 | 52,432 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 70,249 | 70,249 | ||||
Other comprehensive income (loss) | (47) | (47) | ||||
Stock-based compensation expense for equity awards | 7,633 | 7,633 | ||||
Cash dividends declared on common stock | (55,013) | (55,013) | ||||
Issuance of common stock from stock-based compensation awards, including tax benefit | (1,310) | $ 2 | (1,312) | |||
Balance, value at Sep. 30, 2017 | $ 216,998 | $ 0 | $ 524 | $ 964,996 | $ (750,695) | $ 2,173 |
Consolidated Statements Of Sha7
Consolidated Statements Of Shareholders' Equity (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Issuance of common stock from stock-based compensation awards, income tax effect | $ 658 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 70,249 | $ 75,188 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 33,058 | 31,745 |
Stock-based compensation expense | 7,633 | 14,698 |
Adjustments, Noncash Items, to Reconcile Net Income (Loss) to Cash Provided by (Used in) Operating Activities | 0 | 27,768 |
Amortization of debt issuance costs | 1,295 | 1,329 |
Deferred income taxes | 7,188 | (1,420) |
Bad debt expense | 18,343 | 13,664 |
Other | 23 | (52) |
Changes in current assets and liabilities: | ||
Accounts receivable | 100,042 | 65,796 |
Inventories | (47,928) | (51,935) |
Prepaid expenses and other assets | (2,059) | (14,347) |
Accounts payable, accrued expenses and other current liabilities | (78,275) | (48,299) |
Net cash provided by operating activities | 109,569 | 114,135 |
Cash flows from investing activities: | ||
Capital expenditures | (36,256) | (28,504) |
Other | (807) | (627) |
Net cash used in investing activities | (37,063) | (29,131) |
Cash flows from financing activities: | ||
Repayments of term loan | (18,750) | (18,750) |
Borrowings under revolving credit facility | 145,000 | 152,000 |
Repayments of revolving credit facility | (165,000) | (142,000) |
Repurchase of common stock | 0 | (16,566) |
Cash dividends paid | (55,013) | (54,880) |
Proceeds from issuance of common stock | 1,379 | 1,824 |
Payments of tax withholdings related to stock-based awards | (2,282) | (3,116) |
Net cash used in financing activities | (94,666) | (81,488) |
Net (decrease) increase in cash and cash equivalents | (22,160) | 3,516 |
Cash and cash equivalents at beginning of period | 42,734 | 63,926 |
Cash and cash equivalents at end of period | $ 20,574 | $ 67,442 |
Organization (Note)
Organization (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | ORGANIZATION Company Overview HSN, Inc. (“HSNi”) is an interactive multi-channel retailer that markets and sells a wide range of third party and proprietary merchandise directly to consumers through various platforms including (i) television home shopping programming broadcast on the HSN television networks; (ii) catalogs, consisting primarily of the Cornerstone portfolio of leading print catalogs which includes Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements; (iii) websites, which consist primarily of HSN.com, the five branded websites operated by Cornerstone and joymangano.com; (iv) mobile applications; (v) retail and outlet stores; and (vi) wholesale distribution of certain proprietary products to other retailers. HSNi’s television home shopping business, related digital sales, outlet stores and wholesale distribution are referred to herein as “HSN” and all catalog operations, including related digital sales and stores, are collectively referred to herein as “Cornerstone.” Chasing Fireflies and TravelSmith, two of the apparel brands in the Cornerstone portfolio, were sold in September 2016. See Note 14 of Notes to Consolidated Financial Statements for further discussion. HSN offerings primarily consist of jewelry, fashion (apparel & accessories), beauty & health (including beauty, wellness and fitness), and home & other (including home, electronics, culinary and other). Merchandise offered by Cornerstone primarily consists of home furnishings (including indoor/outdoor furniture, home décor, tabletop, textiles and other home related goods) and apparel & accessories. On July 6, 2017, HSNi and Liberty Interactive Corporation ("Liberty") jointly announced that they had entered into an agreement whereby Liberty will acquire the approximately 62% of HSNi it does not already own in an all-stock transaction ("Liberty Merger Agreement"). For additional information on the Liberty Merger Agreement, see Note 15 of Notes to Consolidated Financial Statements. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of HSNi's management, all normal recurring adjustments considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for a full year. The accompanying unaudited consolidated financial statements should be read in conjunction with HSNi's audited consolidated financial statements and notes thereto for the year ended December 31, 2016 . The consolidated balance sheet as of December 31, 2016 and the consolidated statement of shareholders' equity for the year ended December 31, 2016 were derived from the audited consolidated financial statements at that date but may not include all disclosures required by GAAP. Intercompany transactions and accounts have been eliminated in consolidation. Recent Accounting Developments Recently Adopted Accounting Standard Updates In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11"). The amendments, which apply to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail inventory method, require that entities measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should be applied on a prospective basis. HSNi adopted ASU 2015-11 on January 1, 2017. The adoption of ASU 2015-11 did not have a material impact to HSNi's consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) ("ASU 2016-09"). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits and deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The effective date for the standard is for interim and annual reporting periods beginning after December 15, 2016. HSNi adopted ASU 2016-09 on January 1, 2017. Amendments related to accounting for excess tax benefits and deficiencies have been adopted prospectively resulting in the recognition of $3.1 million of tax expense within HSNi's consolidated statements of earnings rather than as a reduction to additional paid in capital for the nine months ended September 30, 2017. Also, excess tax benefits related to share-based payments are now included in operating cash flows rather than financing cash flows in the statement of cash flows. This change has been applied retrospectively in accordance with ASU 2016-09 and prior period amounts which are considered immaterial have been reclassified. We have previously classified cash paid for tax withholding purposes as a financing activity in the statement of cash flows; therefore there is no change related to this requirement. The amendments allow for a one-time accounting policy election to either account for forfeitures as they occur or continue to estimate forfeitures as required by previous guidance. HSNi has elected to continue estimating forfeitures under the previous guidance. Accounting Standard Updates Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Additionally, ASU 2014-09 will disallow the capitalization of direct-response advertising costs. This standard will become effective for HSNi in the first quarter of 2018. In 2015, HSNi established an implementation team ("team") to assess the overall impact the adoption of ASU 2014-09 will have on its consolidated financial statements, processes, systems and controls. The team is in the process of finalizing its conclusions and assessing the impact of the standard. Based on its current evaluation, HSNi expects certain changes to be made to its accounting policies, including the timing of recognition of Cornerstone's catalog production and distribution costs and the presentation of estimated merchandise returns as both an asset (equal to the inventory value expected to be returned) and a corresponding return liability, compared to the current practice of recording an estimated net return liability. HSNi will adopt ASU 2014-09 on January 1, 2018 and will apply the modified retrospective transition method. HSNi is still evaluating the quantitative and disclosure impacts of the new standard. In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The standard is to be applied on a modified retrospective method. HSNi is currently assessing the timing of adoption of ASU 2016-02 and the impact it will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. ASU No. 2017-04 is effective for HSNi in the first quarter of 2020, with early adoption permitted and is to be applied on a prospective basis. The adoption of the provisions of ASU No. 2017-04 is not expected to have a material impact on HSNi's consolidated financial position or results of operations. |
Significant Accounting Policies
Significant Accounting Policies Significant Accounting Policies (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | SIGNIFICANT ACCOUNTING POLICIES Accounting Estimates HSNi prepares its financial statements in conformity with GAAP. These principles require management to make certain estimates and assumptions during the preparation of its consolidated financial statements. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. In the opinion of HSNi's management, the assumptions underlying these interim unaudited financial statements are reasonable. Significant estimates underlying the accompanying consolidated financial statements include: the determination of the lower of cost or net realizable value adjustment for inventory; sales returns and other revenue allowances; the allowance for doubtful accounts; the recoverability of long-lived assets; the impairment of intangible assets; the annual expected effective tax rate; the determination of deferred income taxes, including related valuation allowances; the accrual for actual, pending or threatened litigation, claims and assessments; and assumptions related to the determination of incentive compensation. |
Property And Equipment (Note)
Property And Equipment (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Property And Equipment | PROPERTY AND EQUIPMENT The balance of property and equipment, net, is as follows (in thousands): September 30, December 31, September 30, 2017 2016 2016 Capitalized software $ 270,385 $ 252,741 $ 248,389 Computer and broadcast equipment 86,162 91,119 98,842 Buildings and leasehold improvements 127,949 113,731 110,711 Furniture and other equipment 131,196 124,518 123,799 Projects in progress 19,753 27,666 25,806 Land and land improvements 10,593 10,584 10,615 646,038 620,359 618,162 Less: accumulated depreciation and amortization (433,890 ) (409,253 ) (410,946 ) Total property and equipment, net $ 212,148 $ 211,106 $ 207,216 |
Segment Information (Note)
Segment Information (Note) | 9 Months Ended |
Sep. 30, 2017 | |
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 and/or the target market. HSNi has two reportable 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, 2016 . Corporate overhead expenses, including compensation for corporate employees, board of director expenses and fees for third-party accounting, legal and advisory services, are allocated to the segments based upon specific usage or other reasonable allocation methods. 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; including stock-based compensation, amortization of intangibles, depreciation, gains and losses on asset dispositions, asset impairment charges, acquisition-related accounting expenses and other significant items. The following tables reconcile HSNi’s consolidated net income to operating income for HSNi's operating segments and Adjusted EBITDA (in thousands): Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 HSN Cornerstone Total HSN Cornerstone Total Net income $ 16,227 $ 20,158 Income tax provision 12,700 12,716 Income before income taxes 28,927 32,874 Total other expense, net 4,017 4,001 Operating income (loss) $ 30,999 $ 1,945 32,944 $ 46,963 $ (10,088 ) 36,875 Non-cash charges: Stock-based compensation expense 2,978 1,048 4,026 3,671 568 4,239 Depreciation and amortization 7,690 3,444 11,134 7,304 3,214 10,518 Loss on sale of businesses and asset impairment (a) — — — — 11,195 11,195 Loss on disposition of fixed assets (15 ) 1 (14 ) 82 — 82 Transaction costs (b) 921 384 1,305 — — — Adjusted EBITDA $ 42,573 $ 6,822 $ 49,395 $ 58,020 $ 4,889 $ 62,909 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 HSN Cornerstone Total HSN Cornerstone Total Net income $ 70,249 $ 75,188 Income tax provision 45,130 45,742 Income before income taxes 115,379 120,930 Total other expense, net 11,726 11,988 Operating income (loss) $ 107,722 $ 19,383 127,105 $ 151,745 $ (18,827 ) 132,918 Non-cash charges: Stock-based compensation expense (c) 5,693 1,940 7,633 11,577 3,121 14,698 Depreciation and amortization 23,213 9,845 33,058 21,582 10,163 31,745 Loss on sale of businesses and asset impairment (a) — — — — 31,595 31,595 Loss on disposition of fixed assets 368 92 460 86 — 86 Transaction costs (b) 4,657 1,986 6,643 — — — Adjusted EBITDA $ 141,653 $ 33,246 $ 174,899 $ 184,990 $ 26,052 $ 211,042 (a) Cornerstone recorded a loss on the sale of TravelSmith and Chasing Fireflies of $11.2 million in the third quarter of 2016. In the second quarter of 2016, Cornerstone classified the two brands as held for sale and recorded a non-cash asset impairment charge of $20.4 million. See Note 14 of Notes to Consolidated Financial Statements for further information. (b) HSNi incurred approximately $1.3 million and $6.6 million for the three and nine months ended September 30, 2017, respectively, in transactions costs related to the Liberty Merger Agreement. (c) In the second quarter of 2017, HSNi reversed stock-based compensation expense of approximately $4.5 million (allocated $3.4 million and $1.1 million to HSN and CBI, respectively) as a result of the former Chief Executive Officer's resignation. The net sales for each of HSNi's reportable segments are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net sales: HSN $ 536,200 $ 569,669 $ 1,628,880 $ 1,705,215 Cornerstone 246,362 253,354 760,478 788,881 Total $ 782,562 $ 823,023 $ 2,389,358 $ 2,494,096 |
Earnings Per Share (Note)
Earnings Per Share (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | EARNINGS PER SHARE HSNi computes basic earnings per share using the weighted average number of common shares outstanding for the period. HSNi computes diluted earnings per share using the treasury stock method, which includes the weighted average number of common shares outstanding for the period plus the potential dilution that could occur if various equity awards to issue common stock were exercised or restricted equity awards were vested resulting in the issuance of common stock that could share in HSNi’s earnings. The following table presents HSNi’s basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income $ 16,227 $ 20,158 $ 70,249 $ 75,188 Weighted average number of shares outstanding: Basic 52,555 52,356 52,494 52,376 Dilutive effect of stock-based compensation awards 428 488 366 525 Diluted 52,983 52,844 52,860 52,901 Net income per share: Basic $ 0.31 $ 0.39 $ 1.34 $ 1.44 Diluted $ 0.31 $ 0.38 $ 1.33 $ 1.42 Unexercised employee stock options and stock appreciation rights and unvested restricted stock units excluded from the diluted EPS calculation because their effect would have been antidilutive 2,488 2,121 3,352 1,963 |
Long-Term Debt (Note)
Long-Term Debt (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Long-term Debt, Unclassified [Abstract] | |
Long-Term Debt | LONG-TERM DEBT The balance of long-term debt, including current maturities, is as follows (in thousands): September 30, December 31, September 30, 2017 2016 2016 Secured credit agreement expiring January 27, 2020: Term loan $ 456,250 $ 475,000 $ 481,250 Revolving credit facility 20,000 40,000 150,000 Long-term debt 476,250 515,000 631,250 Unamortized deferred financing costs (3,827 ) (5,122 ) (5,563 ) Long-term debt, net of unamortized deferred financing costs 472,423 509,878 625,687 Less: current maturities (34,375 ) (25,000 ) (25,000 ) Long-term debt, less current maturities and net of unamortized deferred financing costs $ 438,048 $ 484,878 $ 600,687 On January 27, 2015, HSNi entered into a $1.25 billion five -year syndicated credit agreement ("Credit Agreement") which is secured by 100% of the voting equity securities of HSNi's U.S. subsidiaries and 65% of HSNi's first-tier foreign subsidiaries. Certain HSNi subsidiaries have unconditionally guaranteed HSNi's obligations under the Credit Agreement. The Credit Agreement, which includes a $750 million revolving credit facility and a $500 million term loan, may be increased up to $1.75 billion subject to certain conditions and expires January 27, 2020. The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities including a maximum leverage ratio of 3.50 x and a minimum interest coverage ratio of 3.00 x (both as defined in the Credit Agreement). HSNi was in compliance with all such covenants as of September 30, 2017 with a leverage ratio of 1.8 x and an interest coverage ratio of 17.9 x. Loans under the Credit Agreement bear interest at a per annum rate equal to LIBOR plus a predetermined margin that ranges from 1.25% to 2.25% or the Base Rate (as defined in the Credit Agreement) plus a predetermined margin that ranges from 0.25% to 1.25% . HSNi can elect to borrow at either LIBOR or the Base Rate plus a predetermined margin which is determined by HSNi's leverage ratio. The interest rate on the $476.3 million outstanding long-term debt balance as of September 30, 2017 was 2.74% . HSNi pays a commitment fee ranging from 0.20% to 0.40% (based on the leverage ratio) on the unused portion of the revolving credit facility. The amount available to HSNi under the revolving credit facility portion of the Credit Agreement is reduced by the amount of outstanding letters of credit issued under the revolving credit facility, which totaled $14.5 million as of September 30, 2017 . The ability to draw funds under the revolving credit facility is dependent upon meeting the aforementioned financial covenants. As of September 30, 2017 , the amount that could be borrowed under the revolving credit facility, after consideration of the financial covenants and the outstanding letters of credit, was approximately $429.8 million . |
Derivative Instruments (Note)
Derivative Instruments (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | DERIVATIVE INSTRUMENTS HSNi uses derivatives in the management of its interest rate risk with respect to its variable rate debt. HSNi's strategy is to eliminate the cash flow risk on a portion of its variable rate debt caused by changes in the benchmark interest rate (LIBOR). Derivative instruments are not entered into for speculative purposes. HSNi uses interest rate swap contracts to eliminate the cash flow risk on a portion of its variable rate debt. HSNi pays at a fixed rate and receives payments at a variable rate based on one-month LIBOR. The swaps effectively fix the floating LIBOR-based interest of our outstanding LIBOR-based debt. The interest rate swaps were designated and qualified as cash flow hedges; therefore, the effective portions of the changes in fair value are recorded in accumulated other comprehensive income (loss). Any ineffective portions of the changes in fair value of the interest rate swaps will be immediately recognized in earnings in the consolidated statements of operations. The interest rate swaps effectively converted $187.5 million of our variable rate term loan to a fixed rate of 0.8525% through April 2017, and then increased to $250.0 million in April 2017 with a maturity date in January 2020 with a fixed rate of 1.05% (in both cases the swapped fixed rate is exclusive of the credit spread under the Credit Agreement). Based on HSNi's leverage ratio as of September 30, 2017 , the all-in fixed rate was 2.3525% . The changes in fair value of the interest rate swaps (inclusive of reclassifications to net income and net of tax) for the three months ended September 30, 2017 and 2016 were gains of less than $0.1 million and approximately $0.9 million , respectively, and were included in other comprehensive income (loss). The changes in fair value of the interest rate swaps (inclusive of reclassifications to net income and net of tax) for the nine months ended September 30, 2017 and 2016 were losses of less than $0.1 million and approximately $0.6 million , respectively, and were included in other comprehensive income (loss). The fair values of the interest rate swaps at September 30, 2017 and December 31, 2016 were assets of $3.5 million and $3.6 million , respectively, and were recorded in "Other non-current assets." The fair value of the interest rate swaps at September 30, 2016 was a liability of $1.2 million and was recorded in "Other long-term liabilities" in the consolidated balance sheets. HSNi estimates that approximately $1.0 million of unrealized income included in accumulated other comprehensive income related to these swaps will be realized and reported in earnings within the next twelve months. See Note 8 of Notes to Consolidated Financial Statements for discussion of the fair value measurements concerning these interest rate swaps. |
Fair Value Measurements (Note)
Fair Value Measurements (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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. Fair value assumptions are made at a specific point in time and changes in underlying assumptions could significantly affect these estimates. 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 and accounts payable approximate fair value because of the short maturity of these items. The following table summarizes the fair value of HSNi's financial assets and liabilities which are measured at fair value on a recurring basis in the consolidated balance sheets (in thousands): September 30, 2017 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 1 Level 2 Level 3 Assets: Interest rate swaps $ 3,481 $ — $ 3,481 $ — December 31, 2016 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 1 Level 2 Level 3 Assets: Interest rate swaps $ 3,577 $ — $ 3,577 $ — September 30, 2016 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 1 Level 2 Level 3 Liabilities: Interest rate swaps $ 1,160 $ — $ 1,160 $ — HSNi's interest rate swaps are carried on the balance sheet at fair value. The swaps are entered into for the purpose of hedging the variability of interest expense and interest payments on HSNi's long-term variable rate debt. The fair value is based on a valuation model which utilizes interest rate yield curves and credit spreads as the significant inputs to the model. These inputs are observable in active markets (level 2 criteria). HSNi considers credit risk associated with its own standing as well as the credit standing of any counterparties involved in the valuation of its financial instruments. The carrying amount of the term loan and revolving credit facility outstanding under the Credit Agreement approximates fair value as these instruments have variable interest rates which approximate current market rates (level 2 criteria). |
Income Taxes (Note)
Income Taxes (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES HSNi calculates its interim income tax provision in accordance with the accounting guidance for income taxes in interim periods. At the end of each interim period, HSNi makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date income or loss. The tax expense or benefit related to significant or unusual items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, excess tax benefits and deficiencies related to share-based awards and the effect of changes in enacted tax laws or rates, tax status, or judgment on the realizability of beginning-of-the-year deferred taxes in future years are recognized in the interim period in which the change occurs. The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year and permanent and temporary differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in tax expense for the current quarter. For the three and nine months ended September 30, 2017 , HSNi recorded a tax provision of $12.7 million and $45.1 million , respectively, which represents effective tax rates of 43.9% and 39.1% . For the three and nine months ended September 30, 2016 , HSNi recorded a tax provision of $12.7 million and $45.7 million , respectively, which represents effective tax rates of 38.7% and 37.8% . The increase in the effective tax rates is primarily due to the write-off of approximately $3.1 million of deferred tax assets associated with equity awards that expired unexercised during the third quarter of 2017, including $2.4 million associated with HSNi's former Chief Executive Officer's equity awards. The increase in the effective tax rate was partially offset by a decrease of $0.9 million related to the release of tax reserves for uncertain tax positions for which the statute of limitations has expired. The Internal Revenue Service ("IRS") has concluded its examination of HSNi's consolidated federal income tax return for the year ended December 31, 2010 and its limited scope examination of HSNi's consolidated federal income tax return for the year ended December 31, 2011. No material adjustments resulted from these IRS examinations. The State of Florida has completed its audit of HSNi’s 2013 through 2015 tax returns. There was no adjustment to our tax liabilities as a result of this examination. HSNi and several companies previously owned by IAC/InterActiveCorp, or IAC, were spun-off from IAC on August 20, 2008. In connection with the spin-off, HSNi entered into a Tax Sharing Agreement with IAC. Pursuant to this agreement, each of the companies included in the spin-off (the "Spincos") was indemnified by IAC for additional tax liabilities related to consolidated or combined federal and state tax returns prepared and filed by IAC prior to the spin-off. However, each Spinco agreed to, among other things, assume any additional tax liabilities related to their separately filed state income tax returns. All examinations have concluded or statutes of limitations have expired related to IAC's consolidated or combined federal and state tax returns for years including HSNi operations prior to the spin-off. The Tax Sharing Agreement also provides, among other things, that each Spinco indemnifies IAC and the other Spincos for any taxes resulting from the spin-off of such Spinco (and any related interest, penalties, legal and professional fees, and all costs and damages associated with related shareholder litigation or controversies) to the extent such amounts result from any post spin-off (i) act or failure to act by such Spinco described in the covenants in the Tax Sharing Agreement, (ii) acquisition of equity, securities, or assets of such Spinco or a member of its group, and (iii) breach by such Spinco or any member of its group of any representation or covenant contained in the separation documents or in the documents relating to the IRS private letter ruling and/or tax opinions. This indemnification remains effective until IAC's tax returns for the two year period after the spin-off are no longer subject to examination. |
Stock-Based Awards (Note)
Stock-Based Awards (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation [Abstract] | |
Stock-Based Awards | STOCK-BASED AWARDS Stock-based compensation expense is included in the following line items in the accompanying consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Selling and marketing $ 1,777 $ 1,369 $ 4,941 $ 4,880 General and administrative (a) 2,249 2,870 2,693 9,818 Stock-based compensation expense before income taxes 4,026 4,239 7,634 14,698 Income tax expense (benefit) (b) 1,308 (1,493 ) 163 (5,134 ) Stock-based compensation expense after income taxes $ 5,334 $ 2,746 $ 7,797 $ 9,564 (a) In the nine months ended September 30, 2017, HSNi reversed approximately $4.5 million of expense related to the forfeiture of unvested awards as a result of HSNi's former Chief Executive Officer's resignation in the second quarter of 2017. (b) In the three months ended September 30, 2017, HSNi wrote-off approximately $3.1 million of deferred tax assets associated with equity awards that expired unexercised. As of September 30, 2017 , there was approximately $23.4 million of unrecognized compensation cost, net of estimated forfeitures, related to all equity-based awards which is currently expected to be recognized on a straight-line basis over a weighted average period of approximately 2.1 years. The shareholders of HSNi approved the HSN, Inc. 2017 Omnibus Incentive Plan (the "Plan") effective May 24, 2017. The purpose of this Plan is to give HSNi a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to provide HSNi with a stock and incentive plan. The Plan authorizes the issuance of 10.1 million newly authorized shares. The Plan also authorized approximately 5.5 million unissued shares subject to outstanding awards granted prior to December 31, 2016 under the Second Amended and Restated 2008 Stock and Annual Incentive Plan which may become available for issuance under the 2017 Plan if such awards terminate by expiration, cancellation or otherwise. As of September 30, 2017 , there were approximately 10.2 million shares of common stock available for grants under the Plan. A summary of the stock-based awards granted during the nine months ended September 30, 2017 is as follows: Nine Months Ended September 30, 2017 Number of Awards Granted Weighted Average per Share Fair Value Maximum value stock appreciation rights (a) 1,144,049 $6.36 Restricted stock units 359,097 $37.41 Performance share units (b) 96,439 $57.36 Employee stock purchase plan options 54,159 $8.10 Dividend equivalents due to quarterly dividend 22,309 - (a) Maximum value SARs are similar to traditional SARs, except these instruments contain a predetermined cap of 200% on the maximum earnings potential a recipient can expect to receive upon exercise. (b) Performance share units ("PSUs") have vesting percentages that between 0% and 200% of the target award based on HSNi's Total Shareholder Return relative to a peer group at the end of the three-year performance period. The compensation expense for these PSUs is based on the fair value of the awards measured at the grant date and is expensed ratably over the vesting term. PSUs are reflected at the target number of awards granted. The fair values of the options granted under the HSN, Inc. 2010 Employee Stock Purchase Plan are estimated on the grant date using the Black-Scholes option pricing model. The fair values of the maximum value stock appreciation rights and PSUs are estimated on the grant date using a Monte-Carlo simulation pricing model which estimates the potential outcome of reaching the market condition based on simulated future stock prices. The weighted average assumptions used in the valuation of each for the nine months ended September 30, 2017 are as follows: Nine Months Ended September 30, 2017 Maximum Value Stock Appreciation Rights Employee Stock Purchase Plan Options Performance Share Units Volatility factor 27.4 % 35.0 % 30.0 % Risk-free interest rate 1.79 % 0.85 % 1.40 % Expected term 4.7 0.5 2.9 Dividend yield 3.6 % 4.2 % 0.0 % |
Shareholders' Equity (Note)
Shareholders' Equity (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | SHAREHOLDERS’ EQUITY Share Repurchase Program Effective January 27, 2015, HSNi’s Board of Directors approved a share repurchase program which allows HSNi to purchase up to 4 million shares of its common stock from time to time through privately negotiated and/or open market transactions. The timing of repurchases and actual number of shares repurchased depends on a variety of factors, including the stock price, corporate and regulatory requirements, restrictions under HSNi’s debt obligations and other market and economic conditions. During the nine months ended September 30, 2017 , there were no share repurchases. During the nine months ended September 30, 2016 , HSNi acquired approximately 357,000 shares of its outstanding common stock for $16.6 million at an average price of $46.45 . All shares were retired immediately following purchase. As of September 30, 2017 , approximately 2.7 million shares remain authorized for repurchase under the program. As a result of the pending merger contemplated by the Liberty Merger Agreement, HSNi has agreed not to make additional repurchases. For additional information of the Liberty Merger Agreement, see Note 15 of Notes to Consolidated Financial Statements. Dividend Policy In the third quarter of 2017, HSNi's Board of Directors approved a quarterly cash dividend of $0.35 per common share resulting in a payment of $18.3 million on September 22, 2017 to HSNi's shareholders of record as of September 6, 2017. In the fourth quarter of 2017, HSNi's Board of Directors approved a quarterly cash dividend of $0.35 per common share. The dividend will be paid on December 15, 2017 to HSNi's shareholders of record as of December 6, 2017. Under the terms of the Liberty Merger Agreement, HSNi may continue to pay regular dividends on a quarterly basis not to exceed $0.35 per share provided that such dividends may not be paid using funds borrowed specifically for that purpose. For additional information of the Liberty Merger Agreement, refer to Note 15 of Notes to Consolidated Financial Statements. Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) includes the cumulative gains and losses of derivative instruments that qualify as cash flow hedges. The following table provides a rollforward of accumulated other comprehensive income (loss) (in thousands): Nine Months Ended September 30, 2017 2016 Accumulated other comprehensive income (loss) as of January 1, $ 2,220 $ (95 ) Other comprehensive loss before reclassifications (718 ) (1,579 ) Amounts reclassified from accumulated other comprehensive income to interest expense in the consolidated statements of operations 622 567 Income tax benefit 49 382 Other comprehensive loss, net of tax (47 ) (630 ) Accumulated other comprehensive income (loss) as of September 30, $ 2,173 $ (725 ) |
Commitments And Contingencies (
Commitments And Contingencies (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | COMMITMENTS AND CONTINGENCIES On September 7, 2017, a putative class action complaint was filed by a purported HSNi stockholder in the United States District Court for the District of Delaware: McClure v. HSN, Inc., et al. , Case No. 1:17-cv-01279. The complaint names as defendants HSNi and members of the HSNi board. The complaint asserts claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and rules and regulations promulgated thereunder, and alleges that HSNi and the members of the HSNi board caused a registration statement that allegedly omitted material information to be filed in connection with the merger, which allegedly rendered the registration statement false and misleading. The complaint further alleges that the members of the HSNi board acted as controlling persons of HSNi and had knowledge of the allegedly false statements contained in the registration statement or were negligent in not knowing that material information was allegedly omitted from the registration statement. Among other relief, the complaint seeks a declaration certifying a class, an injunction to prevent the merger from proceeding unless and until HSNi discloses the material information allegedly omitted from the registration statement, unspecified damages, and unspecified costs, expenses and attorneys’ fees. Defendants believe the claims are without merit and intend to defend vigorously against all claims asserted. Defendant's deadline to respond to the complaint is on or before November 13, 2017. On September 28, 2017, a putative class action complaint was filed by a purported HSNi stockholder in the United States District Court for the Middle District of Florida: Palkon v. HSN, Inc., et al. , Case No. 8:17-cv-2271. The complaint names as defendants HSNi, members of the HSNi board, Liberty Interactive Corporation, and Liberty Horizon, Inc. The complaint asserts claims under Sections 14(a) and 20(a) of the Securities Exchange Act of 1934 and rules and regulations promulgated thereunder, and alleges that HSNi and the members of the HSNi board caused a registration statement that omitted material information to be filed in connection with the merger, which allegedly rendered the registration statement false and misleading. The complaint further alleges that the members of the HSNi board, Liberty Interactive Corporation, and Liberty Horizon, Inc. acted as controlling persons of HSNi, were involved in the making and composition of the registration statement, and had knowledge of the allegedly false statements contained in the registration statement. The complaint seeks, among other relief, an injunction to prevent the merger from proceeding, rescission of the merger, an order directing HSNi to disseminate a registration statement that does not contain any untrue statements of material fact, a judgment declaring a violation of Sections 14(a) and/or 20(a) of the Exchange Act, as well as Rule 14a-9 promulgated thereunder, unspecified damages, and unspecified costs, expenses, and attorneys’ fees. Defendants believe the claims are without merit and intend to defend vigorously against all claims asserted. In the ordinary course of business, HSNi is a party to various audits, claims and lawsuits. These audits or litigation may relate to claims involving property, personal injury, contract, intellectual property (including patent infringement), sales tax, product recalls, regulatory compliance, employment matters and other claims. HSNi has established reserves for specific legal, tax or other compliance matters for which it has determined the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. Management has also identified certain legal, tax or other matters where it believes an unfavorable outcome is not probable and, therefore, no reserve is established. Although management currently believes that an unfavorable resolution of claims against HSNi, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on its liquidity, results of operations, financial condition or cash flows, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future and an unfavorable resolution of such a proceeding could have a material impact. Moreover, any claims or regulatory actions against HSNi, whether meritorious or not, could be time-consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. |
Costs Associated with an Exit A
Costs Associated with an Exit Activity Costs Associated with an Exit Activity (Note) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Activities Disclosure | COSTS ASSOCIATED WITH AN EXIT ACTIVITY As part of its supply chain optimization initiative, HSNi announced in June 2015 its plan to close the HSN distribution center in Roanoke, Virginia and expand the capabilities of its distribution center in Piney Flats, Tennessee. HSNi expects the closure to be completed in 2018. HSNi expects to incur approximately $4 million to $5 million in total charges related to the closure. These charges include approximately $3 million to $4 million in employee-related expenses, including severance payments and retention incentives, $3.2 million of which were recognized in fiscal 2015. A summary of HSNi’s liability associated with exit activities, which is recorded in "Accrued expenses and other current liabilities" as of September 30, 2017 and 2016 in the accompanying consolidated balance sheets, are presented in the following table (in thousands): Employee Related Costs 2017 2016 Balance at January 1 $ 3,100 $ 3,221 Provisions — — Payments (63 ) (65 ) Adjustments — — Balance at September 30 $ 3,037 $ 3,156 |
Divestitures Divestitures (Note
Divestitures Divestitures (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Disposal Group, Not Discontinued Operation, Disposal Disclosures [Abstract] | |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | DIVESTITURES On September 8, 2016, HSNi completed the sale of substantially all of the assets and certain liabilities of Chasing Fireflies and TravelSmith, two of the apparel brands included within the Cornerstone segment for a sale price of $1 million . The sales agreement included contingent consideration of $2 million that was based on the achievement of certain performance metrics in 2016 which were not achieved. No value was assigned to the contingent consideration as it was not considered probable of being earned. The assets and liabilities of the two brands were classified as held for sale as of June 30, 2016 which resulted in a non-cash asset impairment charge of $20.4 million recorded in the second quarter of 2016 within the Cornerstone segment. During the third and fourth quarters of 2016, Cornerstone recorded an additional pre-tax loss on sale of $10.8 million . The transaction included cash charges of approximately $3.5 million related to transaction costs and employee and lease liabilities. HSNi entered into a transition services agreement with the buyer to provide fulfillment and various back office support services through February 2017. Fees earned by HSNi under this transition services agreement were $0 and approximately $0.9 million during the three months ended September 30, 2017 and 2016, respectively, and were $0.9 million and $0.9 million during the nine months ended September 30, 2017 and 2016, respectively. These fees were included in net sales in the consolidated statements of operations. HSNi determined the sale of these businesses would not represent a strategic shift in its business nor would it have a major effect on its consolidated results of operations, financial position or cash flows. Accordingly, the disposal group is not presented in the consolidated financial statements as a discontinued operation. |
Merger (Notes)
Merger (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Merger [Abstract] | |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | MERGER On July 6, 2017, HSNi and Liberty Interactive Corporation ("Liberty") jointly announced that they had entered into an agreement whereby Liberty will acquire the approximately 62% of HSNi it does not already own in an all-stock transaction ("Liberty Merger Agreement"). At the closing of the merger contemplated by the Liberty Merger Agreement, Liberty will issue to HSNi shareholders 1.65 shares of Series A QVC Group common stock for each share of HSNi common stock outstanding (other than shares held by Liberty and its wholly-owned subsidiaries), for a total of approximately 53.4 million shares of Series A QVC Group common stock, resulting in former HSNi shareholders, excluding Liberty and its wholly-owned subsidiaries, owning approximately 10.6% of the QVC Group's undiluted equity and 6.9% of the QVC Group’s undiluted voting power, based on information provided by Liberty regarding the number of shares outstanding as of April 30, 2017. Upon closing, the Liberty Board of Directors will be expanded by one to include one director from the HSNi Board of Directors; this director will be selected by Liberty. The transaction is subject to HSNi shareholder approval, regulatory approvals and the satisfaction of other customary closing conditions. The parties currently expect the transaction to close in the fourth quarter of 2017. As a result of the pending merger with Liberty, the Board of Directors of HSNi has suspended its search for a successor Chief Executive Officer. Shareholder Rights Plan Amendment On July 5, 2017, in connection with the transactions contemplated by the Liberty Merger Agreement, HSNi amended its shareholder rights plan. The amendment provides, among other things, that the announcement of the pending merger with Liberty and the related Liberty Merger Agreement will not cause the rights to become exercisable. The rights will expire and the shareholders rights plan will terminate immediately prior to the consummation of the pending merger with Liberty. |
Organization Basis of Presentat
Organization Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of HSNi's management, all normal recurring adjustments considered necessary for a fair presentation have been included. Interim results are not necessarily indicative of the results that may be expected for a full year. The accompanying unaudited consolidated financial statements should be read in conjunction with HSNi's audited consolidated financial statements and notes thereto for the year ended December 31, 2016 . The consolidated balance sheet as of December 31, 2016 and the consolidated statement of shareholders' equity for the year ended December 31, 2016 were derived from the audited consolidated financial statements at that date but may not include all disclosures required by GAAP. Intercompany transactions and accounts have been eliminated in consolidation. |
Organization Recent Accounting
Organization Recent Accounting Developments (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Developments Recently Adopted Accounting Standard Updates In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory (Topic 330) ("ASU 2015-11"). The amendments, which apply to inventory that is measured using any method other than the last-in, first-out (LIFO) or retail inventory method, require that entities measure inventory at the lower of cost or net realizable value. ASU 2015-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016 and should be applied on a prospective basis. HSNi adopted ASU 2015-11 on January 1, 2017. The adoption of ASU 2015-11 did not have a material impact to HSNi's consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718) ("ASU 2016-09"). This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits and deficiencies. ASU 2016-09 also clarifies the statement of cash flows presentation for certain components of share-based awards. The effective date for the standard is for interim and annual reporting periods beginning after December 15, 2016. HSNi adopted ASU 2016-09 on January 1, 2017. Amendments related to accounting for excess tax benefits and deficiencies have been adopted prospectively resulting in the recognition of $3.1 million of tax expense within HSNi's consolidated statements of earnings rather than as a reduction to additional paid in capital for the nine months ended September 30, 2017. Also, excess tax benefits related to share-based payments are now included in operating cash flows rather than financing cash flows in the statement of cash flows. This change has been applied retrospectively in accordance with ASU 2016-09 and prior period amounts which are considered immaterial have been reclassified. We have previously classified cash paid for tax withholding purposes as a financing activity in the statement of cash flows; therefore there is no change related to this requirement. The amendments allow for a one-time accounting policy election to either account for forfeitures as they occur or continue to estimate forfeitures as required by previous guidance. HSNi has elected to continue estimating forfeitures under the previous guidance. Accounting Standard Updates Not Yet Adopted In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Additionally, ASU 2014-09 will disallow the capitalization of direct-response advertising costs. This standard will become effective for HSNi in the first quarter of 2018. In 2015, HSNi established an implementation team ("team") to assess the overall impact the adoption of ASU 2014-09 will have on its consolidated financial statements, processes, systems and controls. The team is in the process of finalizing its conclusions and assessing the impact of the standard. Based on its current evaluation, HSNi expects certain changes to be made to its accounting policies, including the timing of recognition of Cornerstone's catalog production and distribution costs and the presentation of estimated merchandise returns as both an asset (equal to the inventory value expected to be returned) and a corresponding return liability, compared to the current practice of recording an estimated net return liability. HSNi will adopt ASU 2014-09 on January 1, 2018 and will apply the modified retrospective transition method. HSNi is still evaluating the quantitative and disclosure impacts of the new standard. In February 2016, the FASB issued ASU No. 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires lessees to reflect most leases on their balance sheet as assets and obligations. The effective date for the standard is for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. The standard is to be applied on a modified retrospective method. HSNi is currently assessing the timing of adoption of ASU 2016-02 and the impact it will have on its consolidated financial statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350) ("ASU 2017-04"). ASU 2017-04 simplifies the subsequent measurement of goodwill by removing the second step of the two-step impairment test. ASU No. 2017-04 is effective for HSNi in the first quarter of 2020, with early adoption permitted and is to be applied on a prospective basis. The adoption of the provisions of ASU No. 2017-04 is not expected to have a material impact on HSNi's consolidated financial position or results of operations. |
Significant Accounting Polici26
Significant Accounting Policies Signficant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Use of Estimates, Policy [Policy Text Block] | Accounting Estimates HSNi prepares its financial statements in conformity with GAAP. These principles require management to make certain estimates and assumptions during the preparation of its consolidated financial statements. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. In the opinion of HSNi's management, the assumptions underlying these interim unaudited financial statements are reasonable. Significant estimates underlying the accompanying consolidated financial statements include: the determination of the lower of cost or net realizable value adjustment for inventory; sales returns and other revenue allowances; the allowance for doubtful accounts; the recoverability of long-lived assets; the impairment of intangible assets; the annual expected effective tax rate; the determination of deferred income taxes, including related valuation allowances; the accrual for actual, pending or threatened litigation, claims and assessments; and assumptions related to the determination of incentive compensation. |
Property And Equipment (Tables)
Property And Equipment (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule Of Property And Equipment | The balance of property and equipment, net, is as follows (in thousands): September 30, December 31, September 30, 2017 2016 2016 Capitalized software $ 270,385 $ 252,741 $ 248,389 Computer and broadcast equipment 86,162 91,119 98,842 Buildings and leasehold improvements 127,949 113,731 110,711 Furniture and other equipment 131,196 124,518 123,799 Projects in progress 19,753 27,666 25,806 Land and land improvements 10,593 10,584 10,615 646,038 620,359 618,162 Less: accumulated depreciation and amortization (433,890 ) (409,253 ) (410,946 ) Total property and equipment, net $ 212,148 $ 211,106 $ 207,216 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting Information, Profit (Loss) [Abstract] | |
Adjusted EBITDA To Operating Income (Loss) And Consolidated Net Income | The following tables reconcile HSNi’s consolidated net income to operating income for HSNi's operating segments and Adjusted EBITDA (in thousands): Three Months Ended September 30, 2017 Three Months Ended September 30, 2016 HSN Cornerstone Total HSN Cornerstone Total Net income $ 16,227 $ 20,158 Income tax provision 12,700 12,716 Income before income taxes 28,927 32,874 Total other expense, net 4,017 4,001 Operating income (loss) $ 30,999 $ 1,945 32,944 $ 46,963 $ (10,088 ) 36,875 Non-cash charges: Stock-based compensation expense 2,978 1,048 4,026 3,671 568 4,239 Depreciation and amortization 7,690 3,444 11,134 7,304 3,214 10,518 Loss on sale of businesses and asset impairment (a) — — — — 11,195 11,195 Loss on disposition of fixed assets (15 ) 1 (14 ) 82 — 82 Transaction costs (b) 921 384 1,305 — — — Adjusted EBITDA $ 42,573 $ 6,822 $ 49,395 $ 58,020 $ 4,889 $ 62,909 Nine Months Ended September 30, 2017 Nine Months Ended September 30, 2016 HSN Cornerstone Total HSN Cornerstone Total Net income $ 70,249 $ 75,188 Income tax provision 45,130 45,742 Income before income taxes 115,379 120,930 Total other expense, net 11,726 11,988 Operating income (loss) $ 107,722 $ 19,383 127,105 $ 151,745 $ (18,827 ) 132,918 Non-cash charges: Stock-based compensation expense (c) 5,693 1,940 7,633 11,577 3,121 14,698 Depreciation and amortization 23,213 9,845 33,058 21,582 10,163 31,745 Loss on sale of businesses and asset impairment (a) — — — — 31,595 31,595 Loss on disposition of fixed assets 368 92 460 86 — 86 Transaction costs (b) 4,657 1,986 6,643 — — — Adjusted EBITDA $ 141,653 $ 33,246 $ 174,899 $ 184,990 $ 26,052 $ 211,042 (a) Cornerstone recorded a loss on the sale of TravelSmith and Chasing Fireflies of $11.2 million in the third quarter of 2016. In the second quarter of 2016, Cornerstone classified the two brands as held for sale and recorded a non-cash asset impairment charge of $20.4 million. See Note 14 of Notes to Consolidated Financial Statements for further information. (b) HSNi incurred approximately $1.3 million and $6.6 million for the three and nine months ended September 30, 2017, respectively, in transactions costs related to the Liberty Merger Agreement. (c) In the second quarter of 2017, HSNi reversed stock-based compensation expense of approximately $4.5 million (allocated $3.4 million and $1.1 million to HSN and CBI, respectively) as a result of the former Chief Executive Officer's resignation. |
Financial Information By Segment | The net sales for each of HSNi's reportable segments are as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net sales: HSN $ 536,200 $ 569,669 $ 1,628,880 $ 1,705,215 Cornerstone 246,362 253,354 760,478 788,881 Total $ 782,562 $ 823,023 $ 2,389,358 $ 2,494,096 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Basic And Diluted Earnings Per Share | The following table presents HSNi’s basic and diluted earnings per share (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income $ 16,227 $ 20,158 $ 70,249 $ 75,188 Weighted average number of shares outstanding: Basic 52,555 52,356 52,494 52,376 Dilutive effect of stock-based compensation awards 428 488 366 525 Diluted 52,983 52,844 52,860 52,901 Net income per share: Basic $ 0.31 $ 0.39 $ 1.34 $ 1.44 Diluted $ 0.31 $ 0.38 $ 1.33 $ 1.42 Unexercised employee stock options and stock appreciation rights and unvested restricted stock units excluded from the diluted EPS calculation because their effect would have been antidilutive 2,488 2,121 3,352 1,963 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long-term Debt, Unclassified [Abstract] | |
Schedule Of Long-Term Debt | The balance of long-term debt, including current maturities, is as follows (in thousands): September 30, December 31, September 30, 2017 2016 2016 Secured credit agreement expiring January 27, 2020: Term loan $ 456,250 $ 475,000 $ 481,250 Revolving credit facility 20,000 40,000 150,000 Long-term debt 476,250 515,000 631,250 Unamortized deferred financing costs (3,827 ) (5,122 ) (5,563 ) Long-term debt, net of unamortized deferred financing costs 472,423 509,878 625,687 Less: current maturities (34,375 ) (25,000 ) (25,000 ) Long-term debt, less current maturities and net of unamortized deferred financing costs $ 438,048 $ 484,878 $ 600,687 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Liabilities Measured on Recurring Basis | The following table summarizes the fair value of HSNi's financial assets and liabilities which are measured at fair value on a recurring basis in the consolidated balance sheets (in thousands): September 30, 2017 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 1 Level 2 Level 3 Assets: Interest rate swaps $ 3,481 $ — $ 3,481 $ — December 31, 2016 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 1 Level 2 Level 3 Assets: Interest rate swaps $ 3,577 $ — $ 3,577 $ — September 30, 2016 Total Fair Value and Carrying Value on Balance Sheet Fair Value Measurement Category Level 1 Level 2 Level 3 Liabilities: Interest rate swaps $ 1,160 $ — $ 1,160 $ — |
Stock-Based Awards (Tables)
Stock-Based Awards (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Share-based Compensation [Abstract] | |
Stock-Based Compensation Expense | Stock-based compensation expense is included in the following line items in the accompanying consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Selling and marketing $ 1,777 $ 1,369 $ 4,941 $ 4,880 General and administrative (a) 2,249 2,870 2,693 9,818 Stock-based compensation expense before income taxes 4,026 4,239 7,634 14,698 Income tax expense (benefit) (b) 1,308 (1,493 ) 163 (5,134 ) Stock-based compensation expense after income taxes $ 5,334 $ 2,746 $ 7,797 $ 9,564 (a) In the nine months ended September 30, 2017, HSNi reversed approximately $4.5 million of expense related to the forfeiture of unvested awards as a result of HSNi's former Chief Executive Officer's resignation in the second quarter of 2017. (b) In the three months ended September 30, 2017, HSNi wrote-off approximately $3.1 million of deferred tax assets associated with equity awards that expired unexercised. |
Summary of Stock-Based Awards Granted | A summary of the stock-based awards granted during the nine months ended September 30, 2017 is as follows: Nine Months Ended September 30, 2017 Number of Awards Granted Weighted Average per Share Fair Value Maximum value stock appreciation rights (a) 1,144,049 $6.36 Restricted stock units 359,097 $37.41 Performance share units (b) 96,439 $57.36 Employee stock purchase plan options 54,159 $8.10 Dividend equivalents due to quarterly dividend 22,309 - (a) Maximum value SARs are similar to traditional SARs, except these instruments contain a predetermined cap of 200% on the maximum earnings potential a recipient can expect to receive upon exercise. (b) Performance share units ("PSUs") have vesting percentages that between 0% and 200% of the target award based on HSNi's Total Shareholder Return relative to a peer group at the end of the three-year performance period. The compensation expense for these PSUs is based on the fair value of the awards measured at the grant date and is expensed ratably over the vesting term. PSUs are reflected at the target number of awards granted. |
Weighted Average Assumptions Used In Black-Scholes Option Pricing Model | The weighted average assumptions used in the valuation of each for the nine months ended September 30, 2017 are as follows: Nine Months Ended September 30, 2017 Maximum Value Stock Appreciation Rights Employee Stock Purchase Plan Options Performance Share Units Volatility factor 27.4 % 35.0 % 30.0 % Risk-free interest rate 1.79 % 0.85 % 1.40 % Expected term 4.7 0.5 2.9 Dividend yield 3.6 % 4.2 % 0.0 % |
Shareholders' Equity Shareholde
Shareholders' Equity Shareholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table provides a rollforward of accumulated other comprehensive income (loss) (in thousands): Nine Months Ended September 30, 2017 2016 Accumulated other comprehensive income (loss) as of January 1, $ 2,220 $ (95 ) Other comprehensive loss before reclassifications (718 ) (1,579 ) Amounts reclassified from accumulated other comprehensive income to interest expense in the consolidated statements of operations 622 567 Income tax benefit 49 382 Other comprehensive loss, net of tax (47 ) (630 ) Accumulated other comprehensive income (loss) as of September 30, $ 2,173 $ (725 ) |
Costs Associated with an Exit34
Costs Associated with an Exit Activity Costs Associated with an Exit Activity (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Reserve by Type of Cost | A summary of HSNi’s liability associated with exit activities, which is recorded in "Accrued expenses and other current liabilities" as of September 30, 2017 and 2016 in the accompanying consolidated balance sheets, are presented in the following table (in thousands): Employee Related Costs 2017 2016 Balance at January 1 $ 3,100 $ 3,221 Provisions — — Payments (63 ) (65 ) Adjustments — — Balance at September 30 $ 3,037 $ 3,156 |
Organization Summary of Signifi
Organization Summary of Significant Accounting Policies Recently Issued Accounting Guidance (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Accounting Standards Update 2016-09 [Member] | |
Impact of New Accounting Pronouncements | |
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification | $ 3.1 |
Organization Acquisition by Lib
Organization Acquisition by Liberty (Details) | Jul. 06, 2017 |
Acquisition by Liberty [Abstract] | |
Business Acquisition, Percentage of Voting Interests Acquired | 62.00% |
Property And Equipment (Schedul
Property And Equipment (Schedule Of Property And Equipment) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 646,038 | $ 620,359 | $ 618,162 |
Less: accumulated depreciation and amortization | (433,890) | (409,253) | (410,946) |
Total property and equipment, net | 212,148 | 211,106 | 207,216 |
Capitalized software | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 270,385 | 252,741 | 248,389 |
Computer and broadcast equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 86,162 | 91,119 | 98,842 |
Buildings and leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 127,949 | 113,731 | 110,711 |
Furniture and other equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 131,196 | 124,518 | 123,799 |
Projects in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | 19,753 | 27,666 | 25,806 |
Land and land improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, Plant and Equipment, Gross | $ 10,593 | $ 10,584 | $ 10,615 |
Segment Information (Adjusted E
Segment Information (Adjusted EBITDA To Operating Income (Loss) And Consolidated Net Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | ||||||
Net income | $ 16,227 | $ 20,158 | $ 70,249 | $ 75,188 | $ 118,708 | |
Income tax provision | (12,700) | (12,716) | (45,130) | (45,742) | ||
Income before income taxes | 28,927 | 32,874 | 115,379 | 120,930 | ||
Total other expense, net | 4,017 | 4,001 | 11,726 | 11,988 | ||
Operating income (loss) | 32,944 | 36,875 | 127,105 | 132,918 | ||
Stock-based compensation expense | 4,026 | 4,239 | 7,633 | 14,698 | ||
Depreciation and amortization | (11,134) | (10,518) | (33,058) | (31,745) | ||
Loss on sale of businesses and asset impairment | 0 | 11,195 | 0 | 31,595 | ||
Loss on disposition of fixed assets | (14) | 82 | 460 | 86 | ||
Transaction costs | 1,305 | 0 | 6,643 | 0 | ||
Adjusted EBITDA | 49,395 | 62,909 | 174,899 | 211,042 | ||
Restricted Stock Award, Forfeitures | 4,500 | |||||
HSN [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Operating income (loss) | 30,999 | 46,963 | 107,722 | 151,745 | ||
Stock-based compensation expense | 2,978 | 3,671 | 5,693 | 11,577 | ||
Depreciation and amortization | (7,690) | (7,304) | (23,213) | (21,582) | ||
Loss on sale of businesses and asset impairment | 0 | 0 | 0 | 0 | ||
Loss on disposition of fixed assets | (15) | 82 | 368 | 86 | ||
Transaction costs | 921 | 0 | 4,657 | 0 | ||
Adjusted EBITDA | 42,573 | 58,020 | 141,653 | 184,990 | ||
Restricted Stock Award, Forfeitures | 3,400 | |||||
Cornerstone [Member] | ||||||
Segment Reporting Information [Line Items] | ||||||
Operating income (loss) | 1,945 | (10,088) | 19,383 | (18,827) | ||
Stock-based compensation expense | 1,048 | 568 | 1,940 | 3,121 | ||
Depreciation and amortization | (3,444) | (3,214) | (9,845) | (10,163) | ||
Loss on sale of businesses and asset impairment | 0 | 11,195 | $ 20,400 | 0 | 31,595 | |
Loss on disposition of fixed assets | 1 | 0 | 92 | 0 | ||
Transaction costs | 384 | 0 | 1,986 | 0 | ||
Adjusted EBITDA | $ 6,822 | $ 4,889 | 33,246 | $ 26,052 | ||
Restricted Stock Award, Forfeitures | $ 1,100 |
Segment Information (Financial
Segment Information (Financial Information By Segment) (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of Reportable Segments | 2 | |||
Net sales | $ 782,562 | $ 823,023 | $ 2,389,358 | $ 2,494,096 |
HSN [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 536,200 | 569,669 | 1,628,880 | 1,705,215 |
Cornerstone [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 246,362 | $ 253,354 | $ 760,478 | $ 788,881 |
Earnings Per Share (Basic And D
Earnings Per Share (Basic And Diluted Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Earnings Per Share [Abstract] | |||||
Net income | $ 16,227 | $ 20,158 | $ 70,249 | $ 75,188 | $ 118,708 |
Basic (shares) | 52,555 | 52,356 | 52,494 | 52,376 | |
Dilutive effect of stock-based compensation awards, shares | 428 | 488 | 366 | 525 | |
Diluted (shares) | 52,983 | 52,844 | 52,860 | 52,901 | |
Basic (usd per share) | $ 0.31 | $ 0.39 | $ 1.34 | $ 1.44 | |
Diluted (usd per share) | $ 0.31 | $ 0.38 | $ 1.33 | $ 1.42 | |
Unexercised employee stock options and stock appreciation rights and unvested restricted stock units excluded from the diluted EPS calculation because their effect would have been antidilutive | 2,488 | 2,121 | 3,352 | 1,963 |
Long-Term Debt (Schedule Of Lon
Long-Term Debt (Schedule Of Long-Term Debt) (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jan. 27, 2015 |
Debt Instrument [Line Items] | ||||
Long-term debt, net of unamortized deferred financing costs | $ 472,423,000 | $ 509,878,000 | $ 625,687,000 | |
Less: current maturities | (34,375,000) | (25,000,000) | (25,000,000) | |
Long-term debt, less current maturities and net of unamortized deferred financing costs | 438,048,000 | 484,878,000 | 600,687,000 | |
Credit Agreement 1.25B [Member] | ||||
Debt Instrument [Line Items] | ||||
Secured credit | $ 1,250,000,000 | |||
Long-term Debt, Gross | 476,250,000 | 515,000,000 | 631,250,000 | |
Unamortized deferred financing costs | (3,827,000) | (5,122,000) | (5,563,000) | |
Credit Agreement 1.25B [Member] | Long-term Debt [Member] | ||||
Debt Instrument [Line Items] | ||||
Secured credit | 456,250,000 | 475,000,000 | 481,250,000 | $ 500,000,000 |
Credit Agreement 1.25B [Member] | Revolving credit facility [Member] | ||||
Debt Instrument [Line Items] | ||||
Secured credit | $ 20,000,000 | $ 40,000,000 | $ 150,000,000 |
Long-Term Debt (Narrative) (Det
Long-Term Debt (Narrative) (Details) | Jan. 27, 2015USD ($) | Sep. 30, 2017USD ($)Rate | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)Rate | Sep. 30, 2016USD ($) | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | ||||||
Change in fair value of derivative instrument, net of tax | $ 13,000 | $ 857,000 | $ (47,000) | $ (630,000) | ||
Credit Agreement 1.25B [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Secured credit | $ 1,250,000,000 | |||||
Long-term Debt, Gross | $ 476,250,000 | 631,250,000 | $ 476,250,000 | 631,250,000 | $ 515,000,000 | |
Debt Instrument, Term | 5 years | |||||
Maximum borrowing capacity | $ 1,750,000,000 | |||||
Maximum leverage ratio, required | 3.50 | |||||
Minimum interest coverage ratio, required | 3 | |||||
Actual leverage ratio | 1.8 | |||||
Actual interest coverage ratio | 17.9 | |||||
Debt Instrument, Interest Rate, Effective Percentage | Rate | 2.74% | 2.74% | ||||
Credit Agreement 1.25B [Member] | Long-term Debt [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Secured credit | $ 500,000,000 | $ 456,250,000 | 481,250,000 | $ 456,250,000 | 481,250,000 | 475,000,000 |
Credit Agreement 1.25B [Member] | Revolving credit facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Secured credit | 20,000,000 | $ 150,000,000 | 20,000,000 | $ 150,000,000 | $ 40,000,000 | |
Revolving credit facility | $ 750,000,000 | |||||
Letters of Credit Outstanding, Amount | 14,500,000 | 14,500,000 | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 429,800,000 | $ 429,800,000 | ||||
Credit Agreement 1.25B [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Commitment Fee Percentage | 0.20% | |||||
Credit Agreement 1.25B [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Line of Credit Facility, Commitment Fee Percentage | 0.40% | |||||
HSNi Subsidiaries [Member] | Credit Agreement 1.25B [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Secured rate | 100.00% | |||||
First Tier Subsidiaries [Member] | Credit Agreement 1.25B [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Secured rate | 65.00% | |||||
London Interbank Offered Rate (LIBOR) [Member] | Credit Agreement 1.25B [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.25% | |||||
London Interbank Offered Rate (LIBOR) [Member] | Credit Agreement 1.25B [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.25% | |||||
Base Rate [Member] | Credit Agreement 1.25B [Member] | Minimum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 0.25% | |||||
Base Rate [Member] | Credit Agreement 1.25B [Member] | Maximum [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 1.25% |
Derivative Instruments (Details
Derivative Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Apr. 24, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Dec. 20, 2012 | |
Derivative [Line Items] | ||||||||
Derivative, notional amount | $ 250,000 | $ 250,000 | $ 187,500 | |||||
Derivative, fixed interest rate | 2.3525% | 2.3525% | 1.05% | 0.8525% | ||||
Change in fair value of derivative instrument, net of tax | $ 13 | $ 857 | $ (47) | $ (630) | ||||
Interest Rate Derivative Assets, at Fair Value | $ 3,481 | 3,481 | $ 3,577 | |||||
Interest Rate Derivative Liabilities, at Fair Value | $ 1,160 | $ 1,160 | ||||||
Estimated unrealized income to be realized in the next twelve months | $ 1,000 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value, Liabilities Measured on Recurring Basis) (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest Rate Derivative Assets, at Fair Value | $ 3,481 | $ 3,577 | |
Interest Rate Derivative Liabilities, at Fair Value | $ 1,160 | ||
Level 1 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest Rate Derivative Assets, at Fair Value | 0 | 0 | |
Interest Rate Derivative Liabilities, at Fair Value | 0 | ||
Level 2 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest Rate Derivative Assets, at Fair Value | 3,481 | 3,577 | |
Interest Rate Derivative Liabilities, at Fair Value | 1,160 | ||
Level 3 [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Interest Rate Derivative Assets, at Fair Value | $ 0 | $ 0 | |
Interest Rate Derivative Liabilities, at Fair Value | $ 0 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | ||||
Income Tax Expense (Benefit) | $ (12,700) | $ (12,716) | $ (45,130) | $ (45,742) |
Effective Income Tax Rate, Continuing Operations | 43.90% | 38.70% | 39.10% | 37.80% |
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ 3,100 | |||
Effective Income Tax Rate Reconciliation, Other Adjustments, Amount | 2,400 | |||
Effective Income Tax Rate Reconciliation, Tax Settlement, Other, Amount | $ 900 |
Stock-Based Awards (Stock-Based
Stock-Based Awards (Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Restricted Stock Award, Forfeitures | $ 4,500 | |||
Effective Income Tax Rate Reconciliation, Change in Deferred Tax Assets Valuation Allowance, Amount | $ 3,100 | |||
Allocated Share-based compensation expense | 4,026 | $ 4,239 | 7,634 | $ 14,698 |
Income tax benefit | 1,308 | (1,493) | 163 | (5,134) |
Stock-based compensation expense after income taxes | 5,334 | 2,746 | 7,797 | 9,564 |
Selling and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Allocated Share-based compensation expense | 1,777 | 1,369 | 4,941 | 4,880 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Allocated Share-based compensation expense | $ 2,249 | $ 2,870 | $ 2,693 | $ 9,818 |
Stock-Based Awards Stock-Based
Stock-Based Awards Stock-Based Awards (Summary of Stock-Based Awards Granted) (Details) $ / shares in Units, $ in Millions | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesRateshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 10,200,000 |
Restricted Stock Award, Forfeitures | $ | $ 4.5 |
Stock appreciation rights (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Awards Granted (in shares) | 1,144,049 |
Weighted Average per Share Fair Value | $ / shares | $ 6.36 |
Restricted stock units (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Awards Granted (in shares) | 359,097 |
Weighted Average per Share Fair Value | $ / shares | $ 37.41 |
Performance Shares (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Awards Granted (in shares) | 96,439 |
Weighted Average per Share Fair Value | $ / shares | $ 57.36 |
Employee stock purchase plan options (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Awards Granted (in shares) | 54,159 |
Weighted Average per Share Fair Value | $ / shares | $ 8.10 |
Dividend equivalents due to quarterly dividend (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of Awards Granted (in shares) | 22,309 |
Maximum [Member] | Stock appreciation rights (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | Rate | 200.00% |
Maximum [Member] | Performance Shares (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | Rate | 200.00% |
Minimum [Member] | Performance Shares (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage | Rate | 0.00% |
Stock-Based Awards (Weighted Av
Stock-Based Awards (Weighted Average Assumptions Used In Black-Scholes Option Pricing Model) (Details) | 9 Months Ended |
Sep. 30, 2017Rate | |
Maximum Value Stock Appreciation Rights | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility factor | 27.40% |
Risk-free interest rate | 1.79% |
Expected term | 4 years 8 months |
Dividend yield | 3.60% |
Employee stock purchase plan options (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility factor | 35.00% |
Risk-free interest rate | 0.85% |
Expected term | 6 months |
Dividend yield | 4.20% |
Performance Shares (in shares) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Volatility factor | 30.00% |
Risk-free interest rate | 1.40% |
Expected term | 2 years 11 months |
Dividend yield | 0.00% |
Stock-Based Awards (Narrative)
Stock-Based Awards (Narrative) (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2017 | May 24, 2017 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Unrecognized compensation cost | $ 23.4 | ||
Weighted average period of recognition of unrecognized compensation cost, years | 2 years 1 month | ||
New awards authorized | 10,100,000 | 5,500,000 | |
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 10,200,000 |
Shareholders' Equity Sharehol50
Shareholders' Equity Shareholders' Equity (Schedule of Accumulated Other Comprehensive Income(Loss)) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||
Other comprehensive loss before reclassifications | $ (718) | $ (1,579) | ||
Amounts reclassified from accumulated other comprehensive income to interest expense in the consolidated statements of operations | 622 | 567 | ||
Income tax benefit | 49 | 382 | ||
Other comprehensive loss, net of tax | (47) | (630) | ||
Accumulated other comprehensive income (loss) | $ 2,173 | $ (725) | $ 2,220 | $ (95) |
Shareholders' Equity (Narrative
Shareholders' Equity (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 22, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Dec. 15, 2017 | Jan. 27, 2015 |
Share Repurchase Program [Line Items] | ||||||
Share repurchased and retired (in shares) | 357,000 | |||||
Value of shares repurchased and retired | $ 16,600 | |||||
Outstanding common stock acquired, average price (in dollars per share) | $ 46.45 | |||||
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased (in shares) | 2,700,000 | |||||
Common Stock, Dividends, Per Share, Cash Paid (in dollars per share) | $ 0.35 | |||||
Dividends, Common Stock, Cash | $ 18,300 | $ 55,013 | $ 73,151 | |||
Dividends Payable, Amount Per Share (in dollars per share) | $ 0.35 | |||||
4 Million Share Program Approved 1/27/2015 [Member] | ||||||
Share Repurchase Program [Line Items] | ||||||
Stock Repurchase Program, Number of Shares Authorized to be Repurchased (in shares) | 4,000,000 | |||||
Subsequent Event [Member] | ||||||
Share Repurchase Program [Line Items] | ||||||
Dividends Payable, Amount Per Share (in dollars per share) | $ 0.35 |
Commitments And Contingencies52
Commitments And Contingencies (Narrative) (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Contingency reserve | $ 0 |
Costs Associated with an Exit53
Costs Associated with an Exit Activity Costs Associated with an Exit Activity (Schedule of Restructuring Reserve by Type) (Details) - HSN [Member] - Employee Severance [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Reserve [Roll Forward] | ||
Balance at January 1 | $ 3,100 | $ 3,221 |
Provisions | 0 | 0 |
Payments | (63) | (65) |
Adjustments | 0 | 0 |
Balance at September 30 | $ 3,037 | $ 3,156 |
Costs Associated with an Exit54
Costs Associated with an Exit Activity Costs Associated with an Exit Activity (Narrative) (Details) - HSN [Member] $ in Millions | Sep. 30, 2017USD ($) |
Minimum [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Expected Cost | $ 4 |
Maximum [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Expected Cost | 5 |
Employee Severance [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Cost Incurred to Date | 3.2 |
Employee Severance [Member] | Minimum [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Expected Cost | 3 |
Employee Severance [Member] | Maximum [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Restructuring and Related Cost, Expected Cost | $ 4 |
Divestitures Divestitures (Deta
Divestitures Divestitures (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Sep. 08, 2016 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Disposal Group, Including Discontinued Operation, Consideration | $ 0 | $ 0 | |||||
Asset impairment | 0 | $ (11,195) | 0 | $ (31,595) | |||
Other Nonoperating Income | $ 0 | $ 900 | $ 900 | $ 900 | |||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | |||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||
Disposal Group, Including Discontinued Operation, Consideration | $ 1,000 | ||||||
Gain Contingency, Unrecorded Amount | $ 2,000 | ||||||
Disposal Group, Not Discontinued Operation, Loss (Gain) on Write-down | $ 20,400 | ||||||
Asset impairment | $ (10,800) | ||||||
Transaction and Exit Costs | $ 3,500 |
Merger (Details)
Merger (Details) shares in Millions | Jul. 06, 2017Rateshares |
Merger [Abstract] | |
Business Acquisition, Percentage of Voting Interests Acquired | 62.00% |
Series A QVC Group Common Stock | Rate | 165.00% |
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares | shares | 53.4 |
Ownership Interest in QVC Group | 10.60% |
Voting interest of QVC Group | 6.90% |