UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported):  July 12, 2005

 

IAC/INTERACTIVECORP

(Exact name of Registrant as specified in charter)

 

Delaware

 

0-20570

 

59-2712887

(State or other jurisdiction
of incorporation)

 

(Commission File
Number)

 

(IRS Employer
Identification No.)

 

 

 

 

 

152 West 57th Street, New York, NY

 

10019

(Address of principal executive offices)

 

(Zip Code)

 

 

 

 

 

Registrant’s telephone number, including area code:

(212) 314-7300

 

 

 

 

 

 

 

 

 

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

ý Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

ý Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 



 

ITEM 7.01  REGULATION FD DISCLOSURE

 

On July 12, 2005, the Registrant posted supplemental financial information, together with a related explanatory narrative, on its website (www.iac.com) to communicate certain prospective changes in its financial reporting structure to investors, among other matters.  The supplemental financial information and related narrative, which are attached hereto as Exhibit 99.1, are being furnished by the Registrant pursuant to Regulation FD.  The information set forth in Exhibit 99.1 refers to non-GAAP measures within the meaning of Regulation G.  Additional information regarding those non-GAAP measures can be found in the Registrant’s public filings, including its Current Report on Form 8-K filed May 4, 2005.

 

ITEM 9.01  FINANCIAL STATEMENTS AND EXHIBITS

 

Exhibit No.

 

Description

 

 

 

99.1

 

Supplemental financial information and related materials.

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

IAC/INTERACTIVECORP

 

 

 

 

 

By:

/s/

Gregory R. Blatt

 

 

Name:

Gregory R. Blatt

 

Title:

Executive Vice President and
General Counsel

 

 

Date: July 12, 2005

 

 

3



Exhibit 99.1

 

 

IAC Provides Supplemental Information to Shareholders

 

IAC has evolved significantly in the recent one-half decade...moving our center away from the business of traditional entertainment media and towards that of consumer interactivity.  The mechanics of our currently pending transactions – the acquisition of Ask Jeeves, Inc. (“Ask Jeeves”) and the spin-off of Expedia, Inc. (“Expedia”) – are anticipated to be completed in late July and early August\, respectively.   These events, along with our recent purchase of Cornerstone Brands and the sale of our remaining interests in VUE, are profound in their own right.  They also have a very significant impact on IAC’s financial results and capital position.  The proxy statements recently furnished by IAC and Ask Jeeves describe these matters in detail and should be read carefully.

 

Today’s communication is meant to provide a historical look at our operating businesses in a new reporting configuration which will form the basis for future presentation of IAC’s financial results, and to summarily show how we view our current capital structure.

 

Our goal with external reporting is to communicate our business performance and financial position such that our stakeholders may come to fairly understand IAC in the manner in which we do.  We realize that a change in reporting structure is not in and of itself desirable, but with the launch of the “new” IAC post the spin-off of Expedia, now is the appropriate time to make this change, and we believe it will provide additional clarity into IAC’s areas of operation.

 

Now for the changes:

 

New Sectors

We are introducing new sectors for reporting our operating results…sectors which correspond to the broad areas of interactivity in which we operate: Retailing, Services, Membership & Subscriptions, and Media & Advertising.  We will also show the performance of our collective Emerging businesses (i.e., stand-alone start-ups which are not fully incubated, such as Gifts.com and our Quiz TV venture in the U.K.), as well as our corporate expenses.  These four sectors plus our Emerging area are the principal lens through which we view our operations – however, we will also continue to provide additional segment results for those who want to dive more deeply.

 

We are breaking out three segments for the first time: Home Services, which consists of ServiceMagic and previously had been part of IAC Local and Media Services, will be within our Services sector; Discounts, which consists of Entertainment Publications, Inc., also formerly part of Local, will be within our Membership & Subscriptions sector; and Vacations, which had been part of IAC Travel and consists of Interval International (“Interval”), will also be within Membership & Subscriptions.  Citysearch and Evite, the remaining former components of Local, will be part of Media & Advertising, as will be Ask Jeeves (pending).

 

As indicated in our Q1 and proxy filings, Expedia’s results are different from IAC Travel’s results.  This is principally due to the inclusion of non-cash compensation expense for Expedia as a stand-alone company, the inclusion of Trip Advisor, which previously had been part of IAC Local and Media Services, and the exclusion of Interval and TV Travel Shop (“TVTS”), both of which will remain with IAC following the spin-off. (TVTS has substantially reduced operations and thus is expected to be treated as a discontinued operation beginning in Q2.)

 

There are differences between this information and the pro forma financial statements and related footnotes in the proxy statements.  For example, historical results for Cornerstone and Ask Jeeves (pending) are not reflected herein, as we do not intend to “pro forma” these businesses in future quarterly reporting. (Though as is our practice, we will identify the impact significant acquisitions have on our reported figures.)  There are also items which are expected to impact future results which are not reflected in the attached schedules.  These include adjustments for non-cash compensation expense and changes to interest income and expense.

 

Capitalization and Shares

We are also providing supplemental capitalization and weighted share information to give effect to the recently completed and pending transactions.  This information reflects a reverse, 1-for-2 stock split which we anticipate will occur immediately prior to the spin-off.

 

Presentation of Q2 and Q3 Results

Because the spin-off will, assuming satisfaction of all conditions, occur after our fiscal June quarter, GAAP requires that Expedia’s Q2 results be included in IAC’s consolidated reported results.  But we also intend to show our figures in their new sector configuration, with Travel comprising an additional sector for this one quarter only.  (Results for Expedia will be treated as a discontinued operation by IAC beginning in Q3, assuming the spin-off is effected.)

 

Please see the following pages and read the important footnotes and legend at the end of this document.

 

NASDAQ: IACI

July 12, 2005

 



 

IAC/InterActiveCorp

Segment Results and Reconciliations

($ in thousands, rounding differences may exist)

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

1,763,689

 

$

467,764

 

$

438,202

 

$

437,060

 

$

562,877

 

$

1,905,903

 

$

497,956

 

International

 

348,442

 

93,295

 

79,286

 

72,002

 

97,454

 

342,037

 

100,921

 

Total Retailing

 

2,112,131

 

561,059

 

517,488

 

509,062

 

660,331

 

2,247,940

 

598,877

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ticketing

 

743,232

 

202,260

 

195,104

 

181,979

 

188,856

 

768,199

 

211,295

 

Financial Services and Real Estate

 

55,795

 

39,748

 

44,601

 

47,937

 

57,497

 

189,783

 

105,813

 

Teleservices

 

294,273

 

71,835

 

72,513

 

74,531

 

75,016

 

293,895

 

77,138

 

Home Services

 

 

 

 

1,877

 

5,026

 

6,903

 

7,663

 

Total Services

 

1,093,300

 

313,843

 

312,218

 

306,324

 

326,395

 

1,258,780

 

401,909

 

Media & Advertising

 

28,715

 

5,780

 

6,940

 

7,890

 

9,853

 

30,463

 

8,992

 

Membership & Subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacations

 

222,757

 

69,436

 

63,702

 

63,602

 

60,106

 

256,846

 

75,020

 

Personals

 

185,294

 

48,835

 

48,473

 

49,741

 

50,944

 

197,993

 

54,194

 

Discounts

 

201,550

 

26,274

 

34,046

 

25,570

 

132,047

 

217,937

 

24,586

 

Intra-sector elimination

 

(1,438

)

 

(618

)

 

(692

)

(1,310

)

(27

)

Total Membership & Subscriptions

 

608,163

 

144,545

 

145,603

 

138,913

 

242,405

 

671,466

 

153,773

 

TVTS

 

46,920

 

11,334

 

9,790

 

10,074

 

3,584

 

34,782

 

4,044

 

Emerging Businesses

 

 

 

247

 

1,691

 

4,654

 

6,592

 

3,769

 

Inter-segment eliminations

 

(10,670

)

(2,639

)

(2,239

)

(2,144

)

(4,052

)

(11,074

)

(3,552

)

Total - “New” IAC

 

$

3,878,559

 

$

1,033,922

 

$

990,047

 

$

971,810

 

$

1,243,170

 

$

4,238,949

 

$

1,167,812

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - Expedia, Inc. (a)

 

$

2,339,813

 

$

413,262

 

$

486,959

 

$

503,793

 

$

438,999

 

$

1,843,013

 

$

485,046

 

 


The combined revenue presented for “New” IAC and Expedia, Inc. is greater than the consolidated revenue presented in IAC’s historical consolidated financial statements as certain amounts that were historically eliminated in consolidation (i.e., revenues generated by “New” IAC subsidiaries from Expedia, Inc. subsidiaries) will no longer be eliminated.  In addition, effective in Q1 2005, Euvia has been treated as a discontinued operation of IAC and is excluded from the amounts presented above.

 

(a)       Beginning January 1, 2004, IAC commenced reporting revenue for Hotels.com on a net basis, consistent with Expedia’s historical practice.  Prior period results were not restated for GAAP purposes.  There was no impact to operating income or Operating Income Before Amortization from the change in reporting.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

1 of 10



 

IAC/InterActiveCorp

Segment Results and Reconciliations

($ in thousands, rounding differences may exist)

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income Before Amortization

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

168,260

 

$

41,588

 

$

41,576

 

$

43,125

 

$

68,380

 

$

194,669

 

$

56,491

 

International

 

4,699

 

1,278

 

384

 

(2,933

)

5,560

 

4,289

 

2,799

 

Total Retailing

 

172,959

 

42,866

 

41,960

 

40,192

 

73,940

 

198,958

 

59,290

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ticketing

 

144,502

 

46,847

 

46,680

 

32,450

 

38,349

 

164,326

 

46,990

 

Financial Services and Real Estate

 

1,197

 

3,093

 

5,646

 

6,502

 

6,184

 

21,425

 

9,736

 

Teleservices

 

12,460

 

3,166

 

4,200

 

5,899

 

3,786

 

17,051

 

4,221

 

Home Services

 

 

 

 

218

 

71

 

289

 

2,005

 

Total Services

 

158,159

 

53,106

 

56,526

 

45,069

 

48,390

 

203,091

 

62,952

 

Media & Advertising

 

(19,865

)

(4,686

)

(4,323

)

(2,362

)

(1,953

)

(13,324

)

(926

)

Membership & Subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacations

 

66,197

 

26,066

 

21,516

 

22,490

 

20,159

 

90,231

 

33,112

 

Personals

 

31,019

 

6,334

 

9,536

 

4,490

 

7,209

 

27,569

 

5,440

 

Discounts

 

46,092

 

(8,605

)

(11,616

)

(10,261

)

52,505

 

22,023

 

(11,991

)

Total Membership & Subscriptions

 

143,308

 

23,795

 

19,436

 

16,719

 

79,873

 

139,823

 

26,561

 

TVTS

 

(14,511

)

(155

)

(2,004

)

(2,449

)

(5,770

)

(10,378

)

(4,598

)

Emerging Businesses

 

(3,779

)

(717

)

(1,058

)

21

 

695

 

(1,059

)

(2,475

)

Corporate

 

(76,218

)

(21,734

)

(20,457

)

(18,730

)

(29,885

)

(90,806

)

(27,831

)

Total - “New” IAC

 

$

360,053

 

$

92,475

 

$

90,080

 

$

78,460

 

$

165,290

 

$

426,305

 

$

112,973

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - Expedia, Inc.

 

$

469,010

 

$

98,673

 

$

152,118

 

$

159,610

 

$

143,291

 

$

553,692

 

$

136,722

 

 


The combined Operating Income Before Amortization presented for “New” IAC and Expedia, Inc. will not add to the total consolidated Operating Income Before Amortization presented in IAC’s historical consolidated financial statements as certain costs which are included in IAC’s historical consolidated financial statements have also been included in Expedia, Inc.’s stand-alone financial statements.  In addition, effective in Q1 2005, Euvia has been treated as a discontinued operation of IAC and is excluded from the amounts presented above.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

2 of 10



 

IAC/InterActiveCorp

Segment Results and Reconciliations

($ in thousands, rounding differences may exist)

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization and merger costs (a)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

50,792

 

$

13,234

 

$

13,233

 

$

13,233

 

$

13,232

 

$

52,932

 

$

13,232

 

International

 

1,296

 

328

 

328

 

328

 

326

 

1,310

 

326

 

Total Retailing

 

52,088

 

13,562

 

13,561

 

13,561

 

13,558

 

54,242

 

13,558

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ticketing

 

28,031

 

6,175

 

6,206

 

7,240

 

6,777

 

26,398

 

6,959

 

Financial Services and Real Estate

 

17,669

 

6,649

 

6,797

 

6,714

 

8,842

 

29,002

 

13,025

 

Teleservices (b)

 

 

 

 

 

184,780

 

184,780

 

 

Home Services

 

 

 

 

 

2,531

 

2,531

 

(428

)

Total Services

 

45,700

 

12,824

 

13,003

 

13,954

 

202,930

 

242,711

 

19,556

 

Media & Advertising

 

49,964

 

12,102

 

11,711

 

9,781

 

175

 

33,769

 

53

 

Membership & Subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacations

 

25,220

 

6,305

 

6,305

 

6,305

 

6,305

 

25,220

 

6,305

 

Personals

 

16,889

 

3,487

 

1,731

 

1,733

 

1,768

 

8,719

 

1,054

 

Discounts

 

5,684

 

2,131

 

2,131

 

1,868

 

1,855

 

7,985

 

1,635

 

Total Membership & Subscriptions

 

47,793

 

11,923

 

10,167

 

9,906

 

9,928

 

41,924

 

8,994

 

TVTS (c)

 

5,712

 

1,420

 

1,420

 

1,419

 

32,719

 

36,978

 

 

Emerging Businesses

 

2,143

 

 

282

 

202

 

3,447

 

3,931

 

108

 

Corporate

 

30,947

 

21,197

 

11,266

 

12,696

 

20,060

 

65,219

 

12,671

 

Total - “New” IAC

 

$

234,347

 

$

73,028

 

$

61,410

 

$

61,519

 

$

282,817

 

$

478,774

 

$

54,940

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - Expedia, Inc.

 

$

225,492

 

$

81,996

 

$

78,596

 

$

79,349

 

$

73,278

 

$

313,219

 

$

70,397

 

 


The total amortization and merger costs presented for Expedia, Inc. includes non-cash compensation originally recognized by IAC related to Expedia, Inc. employees.  This non-cash compensation has been reclassified from Corporate to conform to the presentation in Expedia, Inc.’s stand-alone financial statements.  In addition, effective in Q1 2005, Euvia has been treated as a discontinued operation of IAC and is excluded from the amounts presented above.

 

(a)       Merger costs incurred by Expedia.com, Hotels.com and Ticketmaster in 2003 for investment banking, legal and accounting fees were related directly to the mergers and are treated as non-recurring for calculating Operating Income Before Amortization.  These costs were incurred solely in relation to the mergers, but may not be capitalized since  Expedia.com, Hotels.com and Ticketmaster were considered the targets in the transaction for accounting purposes.  These costs do not directly benefit operations in any manner, would not normally be recorded by IAC if not for the fact it already consolidated these entities, and are all related to the same transaction, as IAC simultaneously announced its intention to commence its exchange offer for the companies in 2002.  The majority of costs are for advisory services provided by investment bankers, and the amounts incurred in 2003 were pursuant to the same fee letters  entered into by each company in 2002.  Given these factors, IAC believes it is appropriate to consider these costs as one-time.  Operating Income Before Amortization is presented before one-time items.

 

(b)       Teleservices Q4 2004 amortization includes a $184.8 million impairment charge related to goodwill.

 

(c)        TVTS Q4 2004 amortization includes a $32.7 million impairment charge related to intangible assets.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

3 of 10



 

IAC/InterActiveCorp

Segment Results and Reconciliations

($ in thousands, rounding differences may exist)

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

117,468

 

$

28,354

 

$

28,343

 

$

29,892

 

$

55,148

 

$

141,737

 

$

43,259

 

International

 

3,403

 

950

 

56

 

(3,261

)

5,234

 

2,979

 

2,473

 

Total Retailing

 

120,871

 

29,304

 

28,399

 

26,631

 

60,382

 

144,716

 

45,732

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ticketing

 

116,471

 

40,672

 

40,474

 

25,210

 

31,572

 

137,928

 

40,031

 

Financial Services and Real Estate

 

(16,472

)

(3,556

)

(1,151

)

(212

)

(2,658

)

(7,577

)

(3,289

)

Teleservices

 

12,460

 

3,166

 

4,200

 

5,899

 

(180,994

)

(167,729

)

4,221

 

Home Services

 

 

 

 

218

 

(2,460

)

(2,242

)

2,433

 

Total Services

 

112,459

 

40,282

 

43,523

 

31,115

 

(154,540

)

(39,620

)

43,396

 

Media & Advertising

 

(69,829

)

(16,788

)

(16,034

)

(12,143

)

(2,128

)

(47,093

)

(979

)

Membership & Subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacations

 

40,977

 

19,761

 

15,211

 

16,185

 

13,854

 

65,011

 

26,807

 

Personals

 

14,130

 

2,847

 

7,805

 

2,757

 

5,441

 

18,850

 

4,386

 

Discounts

 

40,408

 

(10,736

)

(13,747

)

(12,129

)

50,650

 

14,038

 

(13,626

)

Total Membership & Subscriptions

 

95,515

 

11,872

 

9,269

 

6,813

 

69,945

 

97,899

 

17,567

 

TVTS

 

(20,223

)

(1,575

)

(3,424

)

(3,868

)

(38,489

)

(47,356

)

(4,598

)

Emerging Businesses

 

(5,922

)

(717

)

(1,340

)

(181

)

(2,752

)

(4,990

)

(2,583

)

Corporate

 

(107,165

)

(42,931

)

(31,723

)

(31,426

)

(49,945

)

(156,025

)

(40,502

)

Total - “New” IAC

 

$

125,706

 

$

19,447

 

$

28,670

 

$

16,941

 

$

(117,527

)

$

(52,469

)

$

58,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - Expedia, Inc.

 

$

243,518

 

$

16,677

 

$

73,522

 

$

80,261

 

$

70,013

 

$

240,473

 

$

66,325

 

 


The total operating income presented for Expedia, Inc. includes non-cash compensation originally recognized by IAC related to Expedia, Inc. employees.  This non-cash compensation has been reclassified from Corporate to conform to the presentation in Expedia, Inc.’s stand-alone financial statements.  In addition, the combined operating income of “New” IAC and Expedia, Inc. will not add to the total consolidated operating income presented in IAC’s historical consolidated financial statements as certain costs which are included in IAC’s historical consolidated financial statements have also been included in Expedia, Inc.’s stand-alone financial statements.  In addition, effective in Q1 2005, Euvia has been treated as a discontinued operation of IAC and is excluded from the amounts presented above.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

4 of 10



 

IAC/InterActiveCorp

Segment Results and Reconciliations

($ in thousands, rounding differences may exist)

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation Expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retailing:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

 

$

44,325

 

$

10,194

 

$

10,188

 

$

10,414

 

$

11,436

 

$

42,232

 

$

10,179

 

International

 

9,734

 

2,554

 

2,547

 

2,618

 

2,575

 

10,294

 

2,338

 

Total Retailing

 

54,059

 

12,748

 

12,735

 

13,032

 

14,011

 

52,526

 

12,517

 

Services:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ticketing

 

30,323

 

7,341

 

7,705

 

8,615

 

9,726

 

33,387

 

8,799

 

Financial Services and Real Estate

 

1,180

 

859

 

904

 

840

 

940

 

3,543

 

1,385

 

Teleservices

 

23,530

 

4,839

 

4,576

 

4,308

 

3,994

 

17,717

 

3,788

 

Home Services

 

 

 

 

43

 

137

 

180

 

178

 

Total Services

 

55,033

 

13,039

 

13,185

 

13,806

 

14,797

 

54,827

 

14,150

 

Media & Advertising

 

3,332

 

977

 

1,057

 

825

 

1,275

 

4,134

 

1,263

 

Membership & Subscriptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacations

 

9,269

 

2,336

 

2,095

 

2,055

 

2,058

 

8,544

 

1,789

 

Personals

 

10,734

 

3,255

 

3,323

 

3,420

 

4,810

 

14,808

 

2,996

 

Discounts

 

2,391

 

840

 

911

 

843

 

1,103

 

3,697

 

1,092

 

Total Membership & Subscriptions

 

22,394

 

6,431

 

6,329

 

6,318

 

7,971

 

27,049

 

5,877

 

TVTS

 

2,589

 

522

 

407

 

326

 

295

 

1,550

 

1,008

 

Emerging Businesses

 

5

 

2

 

10

 

 

141

 

153

 

48

 

Corporate

 

5,759

 

1,301

 

1,323

 

1,532

 

1,729

 

5,885

 

1,795

 

Total - “New” IAC

 

$

143,171

 

$

35,020

 

$

35,046

 

$

35,839

 

$

40,219

 

$

146,124

 

$

36,658

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total - Expedia, Inc.

 

$

27,582

 

$

7,131

 

$

7,646

 

$

8,297

 

$

8,489

 

$

31,563

 

$

8,492

 

 


Effective in Q1 2005, Euvia has been treated as a discontinued operation of IAC and is excluded from the amounts presented above.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

5 of 10



 

IAC/InterActiveCorp

Segment Results and Reconciliations

($ in thousands, rounding differences may exist)

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

Reconciliation of consolidated segment Operating Income Before Amortization to consolidated segment operating income to net earnings available to common shareholders

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before amortization - “New” IAC

 

$

360,053

 

$

92,475

 

$

90,080

 

$

78,460

 

$

165,290

 

$

426,305

 

$

112,973

 

Amortization of non-cash distribution and marketing expense

 

(9,458

)

(1,301

)

 

 

 

(1,301

)

 

Amortization of non-cash compensation expense

 

(32,404

)

(22,099

)

(12,167

)

(13,495

)

(22,565

)

(70,326

)

(12,229

)

Amortization of intangibles

 

(192,389

)

(49,628

)

(49,243

)

(48,024

)

(75,472

)

(222,367

)

(42,711

)

Goodwill impairment

 

 

 

 

 

(184,780

)

(184,780

)

 

Merger costs

 

(96

)

 

 

 

 

 

 

Operating income - “New” IAC

 

125,706

 

19,447

 

28,670

 

16,941

 

(117,527

)

(52,469

)

58,033

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before amortization - Expedia, Inc.

 

469,010

 

98,673

 

152,118

 

159,610

 

143,291

 

553,692

 

136,722

 

Amortization of non-cash distribution and marketing expense

 

(41,974

)

(5,038

)

(4,733

)

(3,256

)

(3,701

)

(16,728

)

(432

)

Amortization of non-cash compensation expense

 

(95,781

)

(46,869

)

(43,175

)

(44,350

)

(37,006

)

(171,400

)

(38,300

)

Amortization of intangibles

 

(76,073

)

(30,089

)

(30,688

)

(31,743

)

(32,571

)

(125,091

)

(31,665

)

Goodwill impairment

 

 

 

 

 

 

 

 

Merger costs

 

(11,664

)

 

 

 

 

 

 

Operating income - Expedia, Inc.

 

243,518

 

16,677

 

73,522

 

80,261

 

70,013

 

240,473

 

66,325

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Certain costs which have also been included in Expedia, Inc.

 

3,054

 

2,984

 

3,267

 

3,420

 

3,359

 

13,030

 

3,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income - IAC

 

372,278

 

39,108

 

105,459

 

100,622

 

(44,155

)

201,034

 

127,638

 

Other income (expenses), net

 

(133,249

)

32,707

 

45,095

 

31,504

 

41,535

 

150,841

 

16,104

 

Earnings from continuing operations before income taxes and minority interest

 

239,029

 

71,815

 

150,554

 

132,126

 

(2,620

)

351,875

 

143,742

 

Income tax expense

 

(66,310

)

(28,444

)

(58,504

)

(43,568

)

(42,835

)

(173,351

)

(73,967

)

Minority interest in income of consolidated subsidiaries

 

(52,822

)

(511

)

(974

)

(87

)

(1,286

)

(2,858

)

(351

)

Earnings from continuing operations

 

119,897

 

42,860

 

91,076

 

88,471

 

(46,741

)

175,666

 

69,424

 

Discontinued operations

 

47,499

 

(1,333

)

(17,880

)

4,270

 

4,138

 

(10,805

)

2,788

 

Earnings before preferred dividend

 

167,396

 

41,527

 

73,196

 

92,741

 

(42,603

)

164,861

 

72,212

 

Preferred dividends

 

(13,055

)

(3,264

)

(3,262

)

(3,263

)

(3,264

)

(13,053

)

(3,263

)

Net earnings available to common shareholders - IAC

 

$

154,341

 

$

38,263

 

$

69,934

 

$

89,478

 

$

(45,867

)

$

151,808

 

$

68,949

 

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

Reconciliation of Expedia, Inc. Operating Income Before Amortization to net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income before amortization - Expedia, Inc.

 

$

469,010

 

$

98,673

 

$

152,118

 

$

159,610

 

$

143,291

 

$

553,692

 

$

136,722

 

Amortization of non-cash distribution and marketing expense

 

(41,974

)

(5,038

)

(4,733

)

(3,256

)

(3,701

)

(16,728

)

(432

)

Amortization of non-cash compensation expense

 

(95,781

)

(46,869

)

(43,175

)

(44,350

)

(37,006

)

(171,400

)

(38,300

)

Amortization of intangibles

 

(76,073

)

(30,089

)

(30,688

)

(31,743

)

(32,571

)

(125,091

)

(31,665

)

Goodwill impairment

 

 

 

 

 

 

 

 

Merger costs

 

(11,664

)

 

 

 

 

 

 

Operating income - Expedia, Inc.

 

243,518

 

16,677

 

73,522

 

80,261

 

70,013

 

240,473

 

66,325

 

Other income (expense), net

 

11,980

 

4,386

 

7,430

 

14,701

 

2,553

 

29,070

 

10,833

 

Earnings from continuing operations before income taxes and minority interest

 

255,498

 

21,063

 

80,952

 

94,962

 

72,566

 

269,543

 

77,158

 

Income tax expense

 

(97,202

)

(8,344

)

(31,938

)

(37,455

)

(28,634

)

(106,371

)

(29,385

)

Minority interest in (income) loss of consolidated subsidiaries

 

(46,889

)

 

(472

)

585

 

188

 

301

 

256

 

Net income - Expedia, Inc.

 

$

111,407

 

$

12,719

 

$

48,542

 

$

58,092

 

$

44,120

 

$

163,473

 

$

48,029

 

 


Effective in Q1 2005, Euvia has been treated as a discontinued operation of IAC and is excluded from the amounts presented above.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

6 of 10



 

IAC/InterActiveCorp

Supplemental Information

($ in billions; rounding differences may exist)

 

Capitalization

 

 

 

Cash &
Marketable
Securities

 

Debt &
Preferred

 

Net Cash &
Marketable
Securities

 

 

 

 

 

 

 

 

 

As reported as of 3/31/05

 

$

4.2

 

$

2.2

 

$

2.0

 

Non-recourse debt (a)

 

 

(0.4

)

0.4

 

Cornerstone acquisition

 

(0.7

)

 

(0.7

)

Euvia sale

 

0.2

 

 

0.2

 

VUE

 

1.0

 

 

1.0

 

Ask Jeeves acquisition

 

0.1

 

0.1

 

(0.0

)

Share buy-back

 

(1.2

)

 

(1.2

)

Expedia spin-off

 

(0.2

)

 

(0.2

)

Subtotal

 

$

3.3

 

$

1.9

 

$

1.4

 

Preferred redemption

 

(0.7

)

(0.7

)

 

Senior notes maturity

 

(0.4

)

(0.4

)

 

Pro forma as of 3/31/05

 

$

2.3

 

$

0.9

 

$

1.4

 

 


As of March 31, 2005, pro forma for the acquisition of Cornerstone (4/1/05); the sale of Euvia (6/1/05); the expected after-tax proceeds from the sale of IAC’s interests in VUE (6/7/05); the proposed acquisition of Ask Jeeves, Inc. and related buy back of 52.8 million shares; the proposed Expedia spin-off; the assumed redemption of the IAC Series A preferred stock at the time of the spin-off (collectively, the “Transactions”); and the maturity of the 6 3/4% Senior Notes (11/15/05), IAC would have $1.4 billion in net cash and securities.

 

(a)       To exclude LendingTree Loans’ debt that is non-recourse to IAC.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

7 of 10



 

IAC/InterActiveCorp

Supplemental Information

(shares in millions; rounding differences may exist)

 

 

 

Weighted Average Shares 3ME 3/31/05

 

Shares

 

Basic
Shares

 

Dilutive
Securities

 

Diluted
Shares

 

 

 

 

 

 

 

 

 

GAAP as reported

 

699

 

37

 

735

 

VUE sale

 

(57

)

 

(57

)

Ask Jeeves acquisition

 

75

 

11

 

86

 

Share buy-back

 

(53

)

 

(53

)

Other

 

 

(1

)

(1

)

Pro Forma GAAP

 

664

 

47

 

711

 

 

 

÷ 2

 

÷ 2

 

÷ 2

 

1-for-2 reverse split adjusted

 

332

 

24

 

356

 

 

 

 

 

 

 

 

 

Pro Forma GAAP

 

664

 

47

 

711

 

Additional restricted shares (a)

 

 

11

 

11

 

Pro forma Adjusted

 

664

 

58

 

722

 

 

 

÷ 2

 

÷ 2

 

÷ 2

 

1-for-2 reverse split adjusted

 

332

 

29

 

361

 

 


                  For the three months ended March 31, 2005, pro forma for the Transactions and the proposed one-for-two reverse stock split to occur immediately prior to the proposed Expedia spin-off, IAC would have approximately 356 million GAAP diluted weighted average shares and 361 million Adjusted EPS weighted average shares.

 

                  Certain estimates have been made related to the proposed Expedia spin-off, which are approximate and not yet final.

 

                  IAC expects its GAAP diluted and Adjusted EPS weighted average shares to be approximately 2% lower in Q3 ‘05 and 1% higher in Q4 ‘05 than the pro forma figures above.

 

(a)       For Adjusted EPS purposes, the impact of RSUs is based on the weighted average number of RSUs outstanding, as compared with shares outstanding for GAAP EPS purposes, which includes RSUs on a treasury method basis.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

8 of 10



 

Expedia, Inc.

Supplemental Information

($ in thousands, shares in millions, rounding differences may exist)

 

Gross Bookings

 

 

 

2003

 

2004

 

2005

 

 

 

FYE 12/31

 

Q1

 

Q2

 

Q3

 

Q4

 

FYE 12/31

 

Q1

 

Gross Bookings by Geography (‘000’s) (a) (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$

8,428,719

 

$

2,770,261

 

$

2,754,008

 

$

2,630,245

 

$

2,300,123

 

$

10,454,637

 

$

3,183,590

 

International

 

1,140,601

 

563,409

 

525,083

 

635,563

 

594,806

 

2,318,861

 

902,488

 

Total

 

$

9,569,320

 

$

3,333,670

 

$

3,279,091

 

$

3,265,808

 

$

2,894,929

 

$

12,773,498

 

$

4,086,078

 

 


(a)       Includes actual results for Hotwire from its acquisition date of November 5, 2003.

(b)       Total retail value of transactions booked during a specified time period, including taxes and fees, for both agency and merchant transactions.

 

Capitalization

 

                  As of March 31, 2005, pro forma for the proposed terms of the spin-off, Expedia, Inc. would have $0.2 billion in cash.

 

                  At the time the proposed spin-off is effective, Expedia, Inc. expects to have in place an approximate $1 billion, five year revolving credit facility.

 

 

 

Weighted Average Shares 3ME 3/31/05

 

Shares

 

Basic
Shares

 

Dilutive
Securities

 

Diluted
Shares

 

 

 

 

 

 

 

 

 

Pro Forma GAAP

 

332

 

24

 

355

 

Additional restricted shares (a)

 

 

4

 

4

 

Pro forma Adjusted

 

332

 

27

 

359

 

 

 

(already adjusted for 1-for-2 reverse stock split)

 

 


                  For the three months ended March 31, 2005, pro forma for the Transactions (other than the sale of Euvia) and the proposed one-for-two reverse stock split to occur immediately prior to the proposed spin-off, Expedia, Inc. would have approximately 355 million GAAP diluted weighted average shares outstanding and 359 million Adjusted EPS weighted average shares.

 

                  Certain estimates have been made related to the proposed Expedia spin-off, which are approximate and not yet final.

 

                  Expedia, Inc. expects its GAAP diluted and Adjusted EPS weighted average shares to be approximately 2% lower in Q3 ‘05 and 1% higher in Q4 ‘05 than the pro forma figures above.

 

(a)       For Adjusted EPS purposes, the impact of RSUs is based on the weighted average number of RSUs outstanding, as compared with shares outstanding for GAAP EPS purposes, which includes RSUs on a treasury method basis.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

9 of 10



 

IAC/InterActiveCorp

Supplemental Information

 

Important Safe Harbor Statement Under The Private Securities Litigation Reform Act of 1995

 

This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements relating to anticipated financial performance, business prospects, new developments, pending transactions and similar matters, and/or statements that use words such as “anticipates,” “estimates,” “expects,” “intends,” “believes” and similar expressions. These forward-looking statements are necessarily estimates reflecting the best judgment of IAC’s senior management, and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties are described in IAC’s and Ask Jeeves’ filings with the U.S. Securities and Exchange Commission (the “SEC”), including their respective Annual Reports on Form 10-K for the fiscal year ended 2004, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Other unknown or unpredictable factors also could have material adverse effects on IAC’s future results, performance or achievements. In light of these risks and uncertainties, the forward-looking events discussed in this presentation may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this presentation.

 

IAC is not under any obligation and does not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this presentation to reflect circumstances existing after the date of this presentation or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

 

Additional Information

 

In connection with the proposed spin-off, IAC filed a definitive proxy statement/prospectus with the SEC.  Stockholders of IAC are urged to read the definitive proxy statement/prospectus because it contains important information about IAC, the proposed spin-off transaction and related matters.  Investors and security holders can obtain free copies of the definitive proxy statement/prospectus by contacting Investor Relations, IAC/InterActiveCorp, Carnegie Hall Tower, 152 W. 57th Street, 42nd Floor, New York, NY 10019 (Telephone: (212) 314-7400).  Investors and security holders can also obtain free copies of the definitive proxy statement/prospectus and other documents filed by IAC and Expedia with the SEC in connection with the proposed spin-off transaction at the SEC’s web site at www.sec.gov.  In addition to the definitive proxy statement/prospectus, IAC files annual, quarterly and current reports, proxy statements and other information with the SEC, each of which should be available at the SEC’s web site at www.sec.gov.  You may also read and copy any reports, statements and other information filed by IAC at the SEC public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.  Please call the SEC at 1-800-SEC-0330 for further information. IAC and its directors, executive officers and certain members of management and other employees may be deemed to be participants in the solicitation of proxies of IAC stockholders to approve the proposed spin-off transaction, which transaction will be considered for approval by IAC stockholders at the 2005 Annual Meeting of Stockholders on July 19, 2005.  Directors, executive officers and certain members of management and other employees of IAC may have interests in the transaction as described in the definitive proxy statement/prospectus, including as a result of current holdings of options or shares of IAC stock and future holdings of options or shares of Expedia stock, which will be impacted in the transaction.  Information regarding IAC and the equity interests of its directors and officers who may be deemed to be participants in the solicitation of proxies is contained in the definitive proxy statement/prospectus, which was filed with the SEC on June 17, 2005 and first mailed to stockholders of IAC on or around June 20, 2005.  Additional information regarding the interests of such potential participants may be included in other relevant documents to be filed with the SEC in connection with the proposed spin-off transaction.

 

In connection with its previously announced, pending acquisition of Ask Jeeves, Inc. (“Ask Jeeves”), IAC filed a definitive proxy statement/prospectus of Ask Jeeves and IAC and other relevant documents with the SEC.   Ask Jeeves stockholders should read the definitive proxy statement/prospectus and other related materials because they contain important information about Ask Jeeves, IAC and the proposed merger. In addition to the documents described above, Ask Jeeves and IAC file annual, quarterly and current reports, proxy statements and other information with the SEC.  The definitive combined proxy statement/prospectus and other related materials, and any other documents filed with the SEC by Ask Jeeves or IAC, are available without charge at the SEC’s website at www.sec.gov, or from the companies’ websites, at www.ask.com and www.iac.com, respectively.  Ask Jeeves, IAC and their respective officers and directors may be deemed to be participants in the solicitation of proxies from Ask Jeeves stockholders in connection with the proposed merger, which transaction will be considered for approval by stockholders of Ask Jeeves at a special meeting on July 19, 2005.  A description of certain interests of the directors and executive officers of Ask Jeeves and a description of certain interests of the directors and executive officers of IAC is set forth in the definitive combined proxy statement/prospectus filed with the SEC on June 16, 2005, which was mailed to stockholders of Ask Jeeves on or around June 17, 2005.  Additional information regarding the interests of such potential participants may be included in other relevant documents to be filed with the SEC in connection with the proposed merger.

 

Prepared July 11, 2005.  The information contained herein is unaudited.

 

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