USA Reports Third Quarter Results.Business Editors NEW YORK--(BUSINESS WIRE)--Oct. 24, 2002 USA Interactive (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : USAI USAI United States Army Intelligence USAI United States Association of Immigrants ): Cash Net Income from Operating Businesses Grows 56% to $83 Million Margins Expand 490 Basis Points to 18.2% for Operating Businesses Interactive Gross Transactions Increase 74% to $2.8 Billion $469 Million in Free Cash Flow Generated Year-to-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. Preliminary Budget Projects Cash EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. Growing 96% in 2003
Pro forma
----------------------------------------
----------------------------------------
Q3 2002 Q3 2001 Growth
----------------------------------------
$ in millions, except per share
Gross Transaction Value:
Interactive Businesses $2,839 $1,632 74%
Total $3,391 $2,135 59%
Revenue:
Operating Businesses $1,088 $825 32%
Total $1,192 $917 30%
Operating Margins:
Operating Businesses 18.2% 13.3% 490 bps
Total 15.5% 8.2% 730 bps
Cash Net Income:
Operating Businesses $83.4 $53.5 56%
Total $65.7 $6.0 993%
Cash EPS:
Operating Businesses $0.18 $0.12 50%
Total $0.14 $0.01 978%
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USA Interactive (NASDAQ: USAI) reported results today for its quarter ended September September: see month. 30, 2002. -- exceed Operating Revenue by 4% and exceed Total Revenue by 2%; and -- exceed Operating EBITDA by 15% and exceed Total EBITDA by 10%. ---------------------------------------------------------------------- DEFINITIONS: - Interactive Businesses include HSN HSN Home Shopping Network HSN High Speed Network HSN Hereditary Sensory Neuropathy HSN Highly Saturated Nitrile HSN Healthy Schools Network, Inc. HSN Hopping Sequence Number HSN Historical Sample of the Netherlands HSN Haiti Support Network , HSN.com, Expedia, Hotels.com Hotels.com provides reservation services for hotel rooms and other places to stay. The company was founded in Dallas, TX in 1991 as Hotel Reservations Network (HRN) by Dave Litman and Bob Diener as a toll-free telephone service, offering consumers a one-stop source for discounted , Ticketmaster This article or section may contain original research or unverified claims. Please help Wikipedia by adding references. See the for details. This article has been tagged since October 2007. .com, Match.com Match.com is an online dating service. The company reportedly has more than 15 million members and Web sites serving 37 countries in more than 12 different languages. Its headquarters is in Dallas, Texas and the company also has offices in London, Paris, Tokyo, Beijing, Munich, and TV Travel Group. - Operating Businesses include HSN-U.S., Ticketing, Match.com, Hotels.com, Expedia, Interval interval, in music, the difference in pitch between two tones. Intervals may be measured acoustically in terms of their vibration numbers. They are more generally named according to the number of steps they contain in the diatonic scale of the piano; e.g. , PRC, Corporate and other. - Operating Margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: refer to Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (see page 3) as a percentage of revenue. - Cash Net Income generally captures all income statement items that have been, or will ultimately be, settled in cash and is defined as net income available to common shareholders plus amortization of: (1) non-cash distribution and marketing expense (2) non-cash compensation expense and (3) intangibles Property that is a "right" such as a patent, Copyright, or trademark, or one that is lacking physical existence, such as good will. (and goodwill in 2001), net of related tax and minority interest expense. All amounts are presented on a fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. , treasury method basis. See page 2 for more detail. IMPORTANT: All results herein are presented on a comparative pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis reflecting the Vivendi
VIVENDI® is a software package for care management and staff organisation published by the German software company CONNEXT and introduced in 1995. transaction and USA's acquisition of a majority stake in Expedia as if those transactions had been completed as of January January: see month. 1, 2001, and reflect continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the and exclude one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. items, unless otherwise noted. 2001 data is not pro forma for the acquisitions of TV Travel Group and Interval. Read all footnotes and important disclaimer (networking) disclaimer - Statement ritually appended to many Usenet postings (sometimes automatically, by the posting software) reiterating the fact (which should be obvious, but is easily forgotten) that the article reflects its author's opinions and not necessarily those of the at the end of this release. FINANCIAL RESULTS As USA has indicated in previous filings, the company has switched its focus from Adjusted EBITDA ("EBITDA") to Cash Net Income as its most relevant `bottom line' metric. In addition, for segment reporting segment reporting A type of financial reporting in which the firm discloses information by identifiable industry segments. For example, Union Pacific Corporation reports revenues, income, assets, depreciation, and capital expenditures for each of four purposes in USA's Preliminary Budget filed today, the company is replacing EBITDA with EBITA EBITA Earnings Before Interest Taxes Amortization , defined as operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. plus amortization of (1) non-cash compensation, (2) distribution and marketing, and (3) other intangibles (and goodwill in 2001). Segment results in this release are presented on an EBITDA basis for purposes of comparison with prior periods.
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CASH NET INCOME
----------------------------------------------------------------------
Cash Net Income generally captures all income statement items that
are ultimately settled in cash. The following table shows the
reconciliation from Net Income to Cash Net Income. All results are pro
forma for the Vivendi and Expedia transactions. See pages F-2 and F-3
for full details on actual and adjusted results.
Q3 2002 Q3 2001 Growth
------- --------- --------
$ in millions
Diluted net income available
to common shareholders $(5.2) $(28.6) 82%
One-time items (a) 13.8 12.3 12%
-------- ------- --------
Net Income before
one-time items 8.6 (16.3) 153%
Amortization of non-cash
compensation 3.0 4.8 -38%
Amortization of non-cash
distribution and marketing 10.4 7.1 48%
Amortization of other
intangibles (non-cash) 63.1 31.6 100%
Less: related tax and
minority interest (19.5) (21.2) 8%
---------- -------- ---------
Cash Net Income $65.7 $6.0 993%
========== ======== =========
Cash EPS $0.14 $0.01 978%
========== ======== =========
----------------------------------------------------------------------
(a) Includes restructuring and one-time items in 2002 related to the
write-down of certain investments, costs of ECS contract
terminations, and costs incurred by the special committees of
Expedia, Hotels.com and Ticketmaster. 2001 represents
non-recurring costs related to restructuring operations,
employee terminations and benefits.
FREE CASH FLOW
----------------------------------------------------------------------
Free Cash Flow for the nine months ended September 30, 2002 is
presented on an actual basis, excluding discontinued operations.
2002 YTD
-----------------
$in millions
Earnings before preferred dividend $(109.3)
Depreciation and amortization 340.5
5% PIK interest on Class A Preferred (14.0)
Equity in losses of unconsolidated
affiliates and other investment
write-offs 132.8
Minority interest (benefit)/expense 18.0
Changes in working capital and other 243.2
-----------------
Operating Cash Flow 611.1
Capital expenditures (110.9)
Investments to fund HSN International (31.3)
-----------------
Free Cash Flow $468.9
=================
----------------------------------------------------------------------
DEFINITIONS:
- Free Cash Flow is defined as operating cash flow from
continuing operations, less capital expenditures and
investments to fund HSN International continuing operations.
Excludes tax payment of $156.9 million related to the sale
of USA Broadcasting.
SEGMENT RESULTS
----------------------------------------------------------------------
USA reported the following segment results on a comparative pro
forma basis reflecting the Vivendi transaction and USA's acquisition
of a majority stake in Expedia as if those transactions had been
completed as of January 1, 2001:
----------------------------------------------------------------------
Revenue Adjusted EBITDA
--------------------------------------------------------
--------------------------------------------------------
Q3 2002 Q3 2001 Growth Q3 2002 Q3 2001 Growth
--------------------------------------------------------
--------------------------------------------------------
$in millions $in millions
Operating
Businesses:
HSN-U.S. $370.7 $375.2 -1% $67.4 $46.7 44%
Ticketing 162.1 133.9 21% 36.3 19.0 91%
Match.com 33.4 12.5 168% 7.0 5.8 20%
Hotels.com 277.4 151.2 83% 40.1 21.8 84%
Expedia 166.6 79.5 110% 48.9 16.4 198%
Interval (a) 2.3 N/A N/A 0.4 N/A N/A
PRC 75.0 72.6 3% 9.6 7.9 22%
Corporate and
other (11.2) (8.2) -36%
------- ------ ------ ------- ------- ------
Sub-total 1,087.6 824.9 32% 198.4 109.3 82%
Emerging
Businesses:
Citysearch
and related 7.6 11.1 -31% (8.5) (10.7)
International
TV shopping
and other (b) 96.7 66.1 46% 0.4 (12.4)
ECS/Styleclick 7.6 5.4 42% (5.2) (14.4)
------- -------- ------ ------ -------- ------
Sub-total 111.9 82.6 35% (13.2) (37.4)
Foreign exchange
rate
fluctuation (c) (4.9) (9.1) (0.1) 0.9
HSN
Disengagement(d) - 21.3 - 2.2
Intersegment
Elimination (2.2) (2.3) - -
-------- ------- ------ --------- ------- -------
Total $1,192.5 $917.3 30% $185.1 $75.0 147%
========= ======== ======= ========= ======= =======
Attributable Adjusted
EBITDA - Operating
Businesses $149.2 $86.6 72%
======= ======== ======
Supplemental disclosure:
Total EBITDA $185.1 $75.0 147%
Non-recurring
items (e) (6.5) (12.3)
-------- -------- ------
EBITDA including
non-recurring
items $178.6 $62.8 185%
======== ======== ======
--------------------------------------------
DEFINITIONS:
- Adjusted EBITDA, also referred to as EBITDA in this release,
is defined as operating income plus (1) depreciation ($47.7
million and $38.5 million in Q3 2002 and Q3 2001,
respectively), (2) amortization of cable distribution fees
($12.6 million and $10.0 million, in Q3 2002 and 2001,
respectively), (3) amortization of non-cash distribution,
marketing, and compensation expense ($13.4 million and $11.9
million in Q3 2002 and Q3 2001, respectively), (4)
amortization of other intangibles ($63.1 million and $31.6
million in Q3 2002 and Q3 2001, respectively), and (5)
disengagement related payments to cable operators and
marketing expenses ($4.6 million in Q3 2002) related to the
transfer of HSN's distribution to cable (which has been
accomplished).
- Attributable Adjusted EBITDA - Operating Businesses is defined
as Adjusted EBITDA from Operating Businesses, less the
percentage of Adjusted EBITDA attributable to minority
shareholders of USA's public subsidiaries. This percentage is
determined based on the Q3 weighted average of USA's fully
diluted, treasury method ownership in each of its public
subsidiaries (see page 4 for detail).
(a) Includes the results of Interval from September 24, 2002.
(b) International TV Shopping and Other includes HSE Germany, Euvia,
HOT Networks, TV Travel Group, HSN emerging businesses and
overhead costs related to HSN International.
(c) In order to present comparable results for International TV
Shopping and other, results have been translated from foreign
currencies to U.S. dollars at a constant exchange rate.
(d) 2001 amounts reflect estimated results generated by homes lost by
HSN following the sale of USA Broadcasting to Univision.
(e) Please see footnotes on pages F-2 and F-3 for details on
restructuring and one-time items.
CAPITALIZATION
----------------------------------------------------------------------
USA reported capitalization of the following (amounts in millions)
(a):
As of 9/30/02
-------------------
Cash and marketable securities:
USA $1,940
Expedia 525
Hotels.com 397
Ticketmaster 177
-------------------
Total cash $3,039
===================
Attributable cash (b) $2,618
Securities in VUE (c) 2,111
Long-term debt (d) (546)
Preferred stock (e) (656)
-------------------
Net attributable cash
and securities $3,528
===================
As of 10/15/02
-------------------
Fully diluted shares outstanding (f) 473.1
Market capitalization $9,841
----------------------------------------------------------------------
(a) Not pro forma for USA's pending merger with Ticketmaster.
(b) Includes attributable cash from USA's public subsidiaries, based
on the Q3 weighted average of USA's fully diluted, treasury
method ownership in each of its public subsidiaries, which was
66% for Ticketmaster, 67% for Hotels.com and 56% for Expedia.
Excludes cash due to clients at Ticketmaster.
(c) Includes securities issued to USA in the Vivendi transaction, as
follows: Class A and Class B preferred interests and 5.44%
common interest in Vivendi Universal Entertainment ("VUE") at
balance sheet carrying values, less the estimated present value
of taxes on the above securities.
(d) Consists primarily of $500 million face value 6.75% Senior Notes
due November 15, 2005. Subsequent to September 30, 2002, USA
purchased approximately $47 million of its Senior Notes in the
open market. Amounts exclude $115.7 million of redeemable equity
interests issued by Euvia which are due in 2006. Euvia has the
right to extend maturity to 2016, and the amount is only due to
the holder to the extent sufficient funds at Euvia are
available. Otherwise, the instrument is on par with Euvia's
common equity interests.
(e) Represents face value of 1.99% convertible preferred stock issued
in the Expedia transaction.
(f) Fully diluted shares includes treasury method options and warrants
and restricted stock, and includes Vivendi's remaining 56.6
million shares that may be delivered to USA in connection with
USA's Series B preferred interest in VUE.
EARNINGS PER SHARE ---------------------------------------------------------------------- Cash EPS was $0.14 in Q3 of 2002, versus $0.01 in Q3 of 2001. 2001 data is pro forma for the adoption of FAS 141/142, the new accounting rules that eliminate amortization of goodwill. All amounts are pro forma for the Expedia and Vivendi transactions, and exclude one-time gains and losses. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). EPS basis, before giving effect to all non-operating and one-time items (described above and in footnotes on pages F-2 and F-3) and discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. (consisting principally of a gain from the sale of USA Broadcasting USA Broadcasting was an American media company owned by veteran entertainment industry executive Barry Diller. USAB dates back to the mid-1990s when Diller purchased Silver King Broadcasting from Lowell W. "Bud" Paxson and Roy Speer. to Univision  This article or section needs copy editing for grammar, style, cohesion, tone and/or spelling.You can assist by [ editing it] now. , the results of USA Entertainment, which had net income of $22.4 million in Q3 of 2001 and the results of electronic retailing operations in Italy Italy (ĭt`əlē), Ital. Italia, officially Italian Republic, republic (2005 est. pop. 58,103,000), 116,303 sq mi (301,225 sq km), S Europe. , which had a net loss in 2002 of $31.4 million.), diluted EPS available to common shareholders for Q3 of 2002 was $0.02 versus ($0.04) in Q3 of 2001. ANTICIPATED PERFORMANCE VERSUS 2002 BUDGET USA filed its 2002 budget with the SEC on January 29, 2002. Factors significantly impacting USA's currently anticipated performance versus its budget include: stronger than expected results for certain of its operating businesses (primarily Expedia, Hotels.com and Match.com); the inclusion of Interval International Interval International is an affiliated exchange company that arranges vacation exchanges for timeshare owners. Their exchange network includes more than 2,200 resorts and nearly 2 million member families worldwide. Similar to RCI, Interval International, I.I. as of the acquisition closing date of September 24, 2002, and other factors listed below. As against its 2002 budget, USA currently expects to (a): -- exceed Operating Revenue by 4% and exceed Total Revenue by 2%; and -- exceed Operating EBITDA by 15% and exceed Total EBITDA by 10%. Subsequent to the budget filing in January, certain items of a non-operating, non-cash nature offset the better than expected operating results. As such, against its 2002 budget, USA expects to (a): -- exceed Cash Net Income by 9% and achieve Cash EPS of $0.41; -- exceed Operating Income by 29%, not including a significant increase in non-cash amortization of intangibles relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its acquisition of Expedia and as a result of a step up in certain of its assets for book purposes relating to the Vivendi transaction. Including these items, USA expects to perform below its budget for Operating Income by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 16%; -- exceed Net Income by 11%, not including the impact of the non-cash items mentioned above. USA will also record lower non-cash interest income than budgeted due to the fact that the 1.4% PIK PIK See: Payment-in-kind bond PIK See payment-in-kind security (PIK). dividend related to USA's Class B Preferred interest in VUE See HP-VUE. VUE - Visual User Environment: a desktop manager for Unix from Hewlett-Packard. had been budgeted as income on USA's P&L, which has been revised to exclude that item. Including the impact of those items, USA expects to be below its budget for Net Income by approximately 77%. ----------------------------- (a) Presented on a comparative pro forma basis reflecting the Vivendi and Expedia transactions, reflecting continuing operations and excluding one-time items. Pro forma USA's pending merger with Ticketmaster, USA anticipates Operating Income of $149 million, Cash Net Income of $206 million, Cash EPS of $0.40 and Net Income of $26 million in 2002. PRELIMINARY 2003 BUDGET AND 2004 OUTLOOK USA is filing its Preliminary 2003 Budget with the SEC today, October October: see month. 24, 2002. Based on that filing, pro forma for USA's pending merger with Ticketmaster, USA currently expects to: -- grow Revenue by 28% in 2003 and 24% in 2004; -- grow EBITA by 66% in 2003 and 46% in 2004; -- grow Cash Net Income by 105% in 2003 and approximately 35% in 2004, and Cash EPS by 96% in 2003 and approximately 35% in 2004; and -- grow Net Income by 35% in 2003 and more than 400% in 2004, and Diluted EPS by 33% in 2003 and more than 400% in 2004. Please see Preliminary 2003 Budget and important related footnotes. OPERATING HIGHLIGHTS HSN - U.S. ---------------------------------------------------------------------- -- HSN's gross margins increased 380 bps to 38.1% from 34.3% last year, driven by the continued shift in product mix towards higher margin products and improved margins in all of lines of business. -- Sales were slightly lower in Q3 compared to the prior year, due mainly to the challenging retail environment and the changing shift in product mix towards higher margin merchandise MERCHANDISE. By this term is understood all those things which merchants sell either wholesale or retail, as dry goods, hardware, groceries, drugs, &c. It is usually applied to personal chattels only, and to those which are not required for food or immediate support, but such as remain with less emphasis on higher priced electronics. -- HSN.com grew significantly, with sales up 25% over the prior year in Q3, while traffic on the site increased 29% year-over-year. HSN.com represented 11% of Q3 sales. -- Off-air off-air adj. Spoken, occurring, or used not during broadcasting or not while being recorded for broadcasting: an off-air argument; off-air discussion. sales grew 34% over last year due to strong growth in upsells and the auto-ship program, which had its strongest quarter ever, propelled by the expansion of its enrollment programs. -- Customer Service calls are down by 19% from the same period last year, indicative indicative: see mood. of higher customer satisfaction. -- My Virtual Model launched on hsn.com in August, allowing customers to "try on" selected garments before purchasing. Over 40,000 models have been created and customers on average try on 22 garments per session, totaling over 1.7 million garments to date. -- HSN staged 32 major product launches during Q3, including new product lines from celebrity chef In its strictest sense, a celebrity chef is a someone who has become well-known for his/her cooking. The first historical personality that fits this description is Martino da Como but in practical terms the term grew in popularity during the 1990s. Rocco Dispirito Rocco DiSpirito (born November 19, 1966) is an American chef based in New York City. Born in Jamaica, Queens, New York City, New York, he is a 1986 graduate of the Culinary Institute of America in Hyde Park, New York, and a 1990 graduate of Boston University with a bachelor's and former supermodel Lauren Lauren as a surname may refer to:
Scottish physician and geologist whose ideas, presented in A Theory of the Earth (1785), form the basis of modern geology. Noun 1. , who both sold out during their first airings. The debut of former QVC QVC Quality Value Convenience QVC Question Valid Command show host Kathy Kathy is a feminine first name. It may refer to: In sports:
Request" apparel line was a huge success, bringing in close to $2 million in revenue on its first outing. TICKETMASTER/MATCH.COM/CITYSEARCH ---------------------------------------------------------------------- -- Ticketing revenue grew 21% in Q3, mainly due to increased tickets sold (also eased by the weakness in the prior period related to 9/11). International expansion, particularly in the U.K., Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. and The Netherlands Netherlands (nĕth`ərləndz), Du. Nederland or Koninkrijk der Nederlanden, officially Kingdom of the Netherlands, constitutional monarchy (2005 est. pop. 16,407,000), 15,963 sq mi (41,344 sq km), NW Europe. , was also a key growth driver. -- Ticketmaster.com was relaunched this quarter, improving the overall look and feel of the site, enhancing localization Customizing software and documentation for a particular country. It includes the translation of menus and messages into the native spoken language as well as changes in the user interface to accommodate different alphabets and culture. See internationalization and l10n. and search, increasing performance and rolling out new content management tools that will provide greater value to our venue venue In law, the place or county in which the events giving rise to a legal action take place and from which a jury may be drawn to try the case. Venue statutes usually specify that a trial must take place in the district that has jurisdiction over the matter. partners. -- Online ticket sales were 41% of total tickets during Q3, which reflects a slight traffic decrease at the beginning of the period due to the re-launch and a strong rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective towards the end of the quarter as consumers became more familiar with the site's new features. -- The Ticketmaster rollout and installation of new products continues to gain momentum with TicketFastTM now installed in 218 venues, eEntry in 79 and Access Manager in 155. -- Revenue growth at Match.com was strong, while bottom line growth reflected some carried over marketing costs from Q2, and other offline (1) Not connected to the Internet, online service or internal network. See offline file. (2) Not connected to or not installed in the computer. If a terminal, printer or other device is physically connected to the computer, but is not turned on or in ready mode, it is and online marketing spending in Q3, which management expects will drive revenues in future periods. -- Match.com added Earthlink's Romance romance [O.Fr.,=something written in the popular language, i.e., a Romance language]. The roman of the Middle Ages was a form of chivalric and romantic literature widely diffused throughout Europe from the 11th cent. Center to its growing list of distribution partners. -- Citysearch Citysearch is a local online search service, providing information on businesses in the categories of dining, entertainment, retail, travel, and professional services in cities throughout the United States. unveiled Best of Citysearch winners in a record 68 cities (21 more than in 2001), helping increase Consumer Ratings on the site by more than 177 percent. -- Citysearch recently signed a new distribution deal with Yahoo! Get Local. -- Evite E`vite´ v. t. 1. To shun. was tapped to design and host custom invitations for ABC's See Win abc's, MSW abc's, XL abc's, DOS abc's and PKZIP abc's. fall lineup A criminal investigation technique in which the police arrange a number of individuals in a row before a witness to a crime and ask the witness to identify which, if any, of the individuals committed the crime. , including links to Evite from the shows' sites. EXPEDIA ---------------------------------------------------------------------- -- Expedia, the world's leading online travel service, reached gross travel bookings of $1.47 billion, more than doubling year-over-year and up 10% sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen . -- Merchant revenue nearly tripled year-over-year and rose 14% sequentially to $98.5 million, due mainly to increased revenue from Expedia(R) Special Rate hotels and the addition of the Classic Custom Vacations(R) business. Merchant room nights rose 22% sequentially and 168% year-over-year to 2.6 million. Despite a decline in revenue per ticket, agency revenue rose 59% year-over-year to $62.5 million. -- International revenue nearly tripled year-over-year, as Expedia's international points of sale gained market share and introduced new content, including packages, driving additional sales. -- Expedia recently announced the acquisition of Newtrade Technologies Inc. to provide enhanced connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. to hotels and improve Expedia's efficiency and reliability as a merchant of hotel rooms. -- Enhanced content, including 360-degree videos of rooms and grounds, was added to Expedia's hotel displays, giving consumers more information by which to choose from the more than 6,000 merchant hotels on its sites. -- Expedia expects to launch its corporate product launch in Q4 2002. This will be the first such corporate travel solution to fully integrate customer service, reporting and policy management tools, and an online booking tool. HOTELS.COM ---------------------------------------------------------------------- -- Hotels.com grew revenue 83% year-over-year, driven mainly by the huge success of the hotels.com marketing campaign. The company spent $12.6 million on advertising in Q3, up from $8.9 million in Q2. 20% of Q3 revenue was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to www.hotels.com. -- Hotels.com sold over 2.3 million merchant room nights in Q3, up 22% sequentially and 89% over the prior year. -- International expansion continues to be an area of strong growth. The company added 31 new international destinations during Q3, to a total of 120. Revenue from hotels and vacation VACATION. That period of time between the end of one term and beginning of another. During vacation, rules and orders are made in such cases as are urgent, by a judge at his chambers. properties outside the U.S. was 15.7% of total revenue in the quarter, up from 12.2% in Q2 and 10.2% in the prior year's period. -- Hotels.com and Administaff, the nation's leading Professional Employer Organization (PEO), announced a new 5-year strategic alliance. The agreement provides Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the and telephone access to Hotels.com's discount lodging Lodging or holiday accommodation is a type of accommodation. People who travel and stay away from home for more than a day need lodging mainly for sleeping. Other purposes are safety, shelter from cold and rain, having a place to store luggage and being able to take a properties for Administaff's more than 4,400 corporate clients and 75,000 worksite employees. -- On October 9, 2002, Hotels.com announced the acquisition of Turbotrip, a New Orleans-based hotel consolidator, including a ten-year exclusive affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. agreement with NewOrleans.com. PRECISION RESPONSE CORPORATION --------------------------------------------------------------------- -- PRC's business environment continued to improve. The company grew revenue 3% vs. last year while at the same time expanding margins, and had positive sequential One after the other in some consecutive order such as by name or number. growth for the third consecutive quarter. The improved results reflect the operating efficiency initiatives implemented earlier in the year that have improved profitability substantially despite modest revenue growth. -- PRC launched PRC Energy, a new operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon dedicated to providing energy specific outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. services to handle the unique customer care needs of the energy industry. INTERNATIONAL TV SHOPPING AND OTHER ---------------------------------------------------------------------- -- International TV Shopping and Other consists primarily of HSN International (HSE HSE House HSE Health and Safety Executive HSE Helsinki School of Economics HSE Hamilton Southeastern (High School) HSE Health, Safety & Environment HSE Higher School of Economics (Moscow, Russia) Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). and Euvia) and TV Travel Group. -- HSE Germany is making progress, with growth in sales and gross margins, and decreased return rates as compared to last year. HSE Germany reported revenue and EBITDA of $72.9 million and $1.1 million, respectively, in Q3 2002, versus revenue and EBITDA of $60.0 million and ($5.6) million, respectively, in the prior year. -- During the quarter, USA decided to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: its active majority interest in Italy and wrote down its investment in Italy, resulting in a non-recurring charge of $31.4 million. OTHER HIGHLIGHTS ---------------------------------------------------------------------- -- On September 24, USA closed its acquisition of Interval International for $533 million in cash. -- On October 10, USA and Ticketmaster announced an agreement by which Ticketmaster would be merged into USA. The deal is expected to close by the end of 2002 and would result in USA issuing approximately 45.1 million new USA common shares to former Ticketmaster shareholders. At the same time, USA announced it has ended the processes to acquire 100% of Expedia and Hotels.com. -- Hotels.com and Expedia, USA being the controlling shareholder of both companies, are actively exploring areas where they might work together in a way that would benefit all their customers and stockholders. Although there continue to be many areas of their businesses where the companies can best achieve their goals through separate strategies and practices, there have been instances where, fully consistent with their existing contractual agreements, they have worked cooperatively co·op·er·a·tive adj. 1. Done in cooperation with others: a cooperative effort. 2. Marked by willingness to cooperate; compliant: a cooperative patient. , and we anticipate that they will continue to explore such possibilities in the future. -- USA maintained its rank as the 8th largest group in terms of online reach, with 26.2 million unduplicated unique visitors A count of how many different people access a Web site. For example, if a user leaves and comes back to the site five times during the measurement period, that person is counted as one unique visitor, but would count as five "user sessions. (source: comScore comScore is an internet marketing research company that provides marketing data and services to many of the internet's largest businesses [1]. comScore tracks all internet data on its surveyed computers in order to study online behavior. Media Metrix). (a) ---------------------------------------------------------------------- (a) Data for USA is from a comScore Media Metrix unranked custom entity report defined by USA, representing combined home / work unduplicated reach for all of USA's subsidiaries, and is compared to the comScore Media Metrix Top 100 Properties list.
OPERATING METRICS
All household numbers as
of end of period. Q3 2002 Q3 2001 Growth
------- -------- -------
HSN - U.S.
Units Shipped (mm) 9.1 9.5 -4.2%
Gross Profit % 38.1% 34.3%
Return Rate 18.5% 19.0%
Average price point $44.46 $46.21
Product mix:
Home Licensing (a) 29% 36%
Home Fashions 8% 5%
Jewelry 25% 25%
Health/Beauty 23% 20%
Apparel/Accessories 15% 14%
HSN total FTEs (mm) (b) 77.8 82.8 -6.0%
America's Store total
FTEs (mm) (c) 8.7 11.0 -20.9%
(a) Home Licensing includes electronics, computers, and other
homegoods.
(b) DBS and total homes have been restated to reflect a 50%
weighting towards DBS homes, in order to more accurately reflect
the actual performance of these subs and adjust for the impact of
their significant growth as a percentage of total HSN distribution.
(c) The decline in homes from the prior year reflects the
disengagement of broadcast-only homes following the sale of
USA Broadcasting to Univision which was completed in January 2002.
----------------------------------------------------------------------
INTERNATIONAL TV SHOPPING
AND OTHER - Households (mm) Avg. 9/30/02
HSN International: Hrs. Daily Stake
------------------
HSE - Germany (includes Austria/
Switzerland) 30.4 29.5 16 90%
TVSN (China) (HH airing at least
14 hrs/week) 12.9 23.8 10 21%
Shop Channel (Japan) 13.6 10.9 16 30%
Euvia: (a)
Euvia Travel (b) 28.7 28.8 2 49%
Neun Live (b) 26.1 28.8 9 49%
TV Travel Shop
U.K. (a) 10.8 10.2 24 100%
(a) Not owned by USA in prior year's period.
(b) It is expected that HOT Networks will convey a 3% interest in
Euvia to a former shareholder, in which case HSN's effective
stake in Euvia would be reduced to 45.6%.
----------------------------------------------------------------------
TICKETMASTER
Number of tickets
sold (mm) 22.8 19.3 18.1%
Gross value of tickets
sold (mm) $1,041 $788 32.2%
Share of tickets sold
online 40.8% 31.9% 890 bps
----------------------------------------------------------------------
MATCH.COM (a)
Paid Subscribers 653,182 252,700 158.5%
New Registrations 3,422,594 1,216,035 181.5%
New Subscriptions 328,516 154,159 113.1%
Conversion rate -
registrations to
subscriptions 9.6% 12.7%
(a) The operating metrics and financial results presented for
Match.com include the impact of Soulmates, acquired on
April 12, 2002. The 2001 operating metrics and financial
information do not include Soulmates.
----------------------------------------------------------------------
HOTELS.COM
Merchant hotel room nights
(net of cancels)(000s) 2,320 1,227 89.0%
Average daily rate $115.88 $120.64 -3.9%
Cities served: 285 171 66.7%
U.S. 165 119 38.7%
International 120 52 130.8%
Properties under contract 6,571 3,890 68.9%
Affiliates (including
TravelNow) 30,646 22,793 34.5%
----------------------------------------------------------------------
EXPEDIA
Gross bookings (mm) (a) $1,470 $720 104.2%
Total transactions
(000s) (b) 4,238 2,222 90.7%
Average Media Metrix
reach (000s) (c) 12,615 9,410 34.1%
Expedia.com conversion (d) 6.7% 5.5% 120 bps
New purchasing customers
(000s) (e) 1,693 918 84.4%
Cumulative purchasing
customers (000s) (f) 10,832 5,424 99.7%
Unique purchasing
customers (000s) (g) 2,492 1,393 78.9%
(a) Gross bookings represents the total value of travel booked
through the Expedia, VacationSpot, and WWTE sites.
(b) Transactions represents the number of reservations and purchases
transacted through the Expedia and WWTE sites.
(c) Average monthly Media Metrix reach represents the unduplicated
reach for the Expedia and VacationSpot sites.
(d) Conversion represents the monthly average Expedia.com unique
monthly purchasers divided by the monthly average Media Metrix
reach for the Expedia.com site.
(e) Expedia new purchasing customers represents the number of new
customers transacting through the Expedia sites in a quarter.
(f) Expedia cumulative purchasing customers represents the cumulative
number of customers that have ever transacted through the Expedia
sites as of the end of a quarter.
(g) Expedia quarterly unique purchasing customers represents the
number of unique customers transacting through the Expedia sites
over the course of a quarter.
----------------------------------------------------------------------
INTERVAL
Active members 166,771 154,565 7.9%
Exchange transactions 1,470,582 1,292,668 13.8%
Analyst Conference Call USA Interactive will audiocast See streaming audio. its conference call with analysts and investors discussing the company's third quarter financial results on Thursday Thursday: see week. , October 24, 2002, at 11:00 a.m. Eastern Time (ET). The live audiocast is open to the public, and a replay will be available for 48 hours, beginning approximately one hour after completion of the call, at www.usainteractive.com/investor.relations. Additional Information And Where To Find It In connection with the proposed transaction with Ticketmaster, USA will file a registration statement with a prospectus A document, notice, circular, advertisement, letter, or communication in written form or by radio or television that offers any security for sale, or confirms the sale of any security. , which also will contain an information statement of Ticketmaster, with the SEC. Investors and security holders are urged to read the prospectus and information statement carefully when they become available, because they will contain important information. Investors and security holders may obtain free copies the prospectus and information statement, once available, and other documents filed by USA and Ticketmaster with the SEC, at the SEC's web site at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . Free copies of the prospectus and information statement, once available, and other filings made by USA or Ticketmaster with the SEC, may also be obtained from USA by directing a request to USA Interactive, 152 West 57th West 57th can refer to:
New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , New York 10019, Attention: Investor Relations Investor relations The process by which the corporation communicates with its investors. . Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Under The Private Securities Litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. Reform Act Of 1995 This press release contains "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These forward-looking statements include statements relating to USA's anticipated financial performance, business prospects, new developments, new merchandising merchandising Element of marketing concerned especially with the sale of goods and services to customers. One aspect of merchandising is advertising, which aims to capture the interest of the segment of the population most likely to buy the product. strategies and similar matters, and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. statements preceded by, followed by or that include the words "believes," "could," "expects," "anticipates," "estimates," "intends," "plans," "projects," "seeks," or similar expressions. These forward-looking statements are necessarily estimates reflecting the best judgment of USA'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 forward-looking statements are subject to risks, uncertainties and assumptions that could have a material adverse effect on USA's business, financial condition or results of operations. You should understand that the following important factors could affect USA's future results and could cause those results to differ materially from those expressed in the forward-looking statements: (1) the risk that USA's and Ticketmaster's businesses will not be integrated successfully; (2) costs related to the proposed transaction; (3) material adverse changes in economic conditions generally or in USA's markets or industries; (4) future regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. and legislative actions and conditions affecting USA's operating areas; (5) competition from others; (6) successful integration of our divisions' management structures; (7) product demand and market acceptance; (8) the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; (9) the ability to expand into and successfully operate in foreign markets; and (10) obtaining and retaining skilled workers and key executives. In addition, investors should consider the other information contained in or incorporated by reference into USA's filings with the U.S. Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended 2001, especially in the Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial section, its most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. and its Current Reports on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Other unknown or unpredictable factors also could have material adverse effects on USA's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. events discussed in this press release 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 press release. USA is not under any obligation and does not intend to make publicly available any update or other revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to any of the forward-looking statements contained in this press release to reflect circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or existing after the date of this press release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by those forward-looking statements will not be realized. About USA Interactive USA Interactive (Nasdaq: USAI), via the Internet, the Internet, the, international computer network linking together thousands of individual networks at military and government agencies, educational institutions, nonprofit organizations, industrial and financial corporations of all sizes, and commercial enterprises television and the telephone, engages worldwide in the business of interactivity across electronic retailing, travel services, ticketing services, personals services, local information services See Information Systems. and teleservices (1) Refers to a variety of enhanced services via telephone, including fax-on-demand, voice mail and computer telephone integration. See CTI and IVR. (2) Services by human operators for taking orders and providing customer assistance and other tasks via telephone. . USA is comprised of HSN; Expedia, Inc. (Nasdaq: EXPE); Hotels.com (Nasdaq: ROOM); Interval International; TV Travel Group; Ticketmaster (Nasdaq: TMCS TMCS Trimethylchlorosilane (derivatization reagent) TMCS Telecommunications Management & Control Subsystem TMCS Taylor Made Computer Solutions, Ltd. ), which operates Match.com and Citysearch; Precision Response Corporation; Electronic Commerce Solutions; and Styleclick, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : IBUYA).
USA INTERACTIVE
UNAUDITED BUSINESS SEGMENT INFORMATION - CONTINUING OPERATIONS
($ in thousands)
THREE Months Ended NINE Months Ended
September 30, September 30,
-------------------------------------------------
-------------------------------------------------
Actual Pro Forma Pro Forma Pro Forma
2002 2001 2002 2001
-------------------------------------------------
-------------------------------------------------
Revenues - Operating
Businesses
HSN - U.S. $370,742 $375,185 $1,143,070 $1,080,732
Ticketing 162,140 133,897 490,925 447,903
Match.com 33,394 12,478 88,182 31,687
Hotels.com 277,386 151,241 672,814 394,829
Expedia 166,619 79,478 425,352 215,174
Interval(a) 2,319 0 2,319 0
PRC 75,001 72,610 217,212 228,926
---------- --------- ----------- ---------
---------- --------- ----------- ---------
Sub-total 1,087,601 824,889 3,039,874 2,399,251
Revenues - Emerging
Businesses
Citysearch and
related 7,617 11,078 22,479 35,851
International TV
shopping and
other(b) 96,695 66,146 266,077 237,218
ECS/Styleclick 7,615 5,379 30,386 21,783
----------- -------- ---------- ----------
----------- -------- ---------- ----------
Sub-total 111,927 82,603 318,942 294,852
Foreign exchange rate
fluctuation(c) (4,856) (9,134) (31,520) (36,600)
HSN disengagement(d) 21,250 (1,800) 82,898
Intersegment
elimination (2,176) (2,291) (7,773) (4,873)
--------- -------- ----------- ---------
--------- -------- ----------- ---------
Total Revenue $1,192,496 $917,317 $3,317,723 $2,735,528
========= ======== =========== =========
========= ======== =========== =========
EBITDA - Operating
Businesses(e)
HSN - U.S. $67,400 $46,652 $187,738 $144,106
Ticketing 36,279 19,021 113,643 84,775
Match.com 6,950 5,801 23,522 8,908
Hotels.com 40,067 21,775 98,717 58,591
Expedia 48,853 16,374 126,686 38,659
Interval(a) 431 0 431 0
PRC 9,607 7,879 23,441 28,079
Corporate and other (11,184) (8,196) (29,560) (24,440)
-------- -------- ---------- --------
-------- -------- ---------- --------
Sub-total 198,403 109,306 544,618 338,678
EBITDA - Emerging
Businesses
Citysearch and
related (8,469) (10,659) (27,817) (33,328)
International TV
shopping and
other(b) 424 (12,366) (10,499) (14,792)
ECS/Styleclick (5,162) (14,412) (19,777) (45,784)
------- --------- -------- --------
Sub-total (13,207) (37,437) (58,093) (93,904)
Foreign exchange
rate fluctuation(c) (74) 900 (493) (1,000)
HSN disengagement(d) 0 2,247 0 11,734
------- -------- ------- -------
------- -------- ------- -------
Total Adjusted EBITDA $185,122 $75,016 $486,032 $255,508
======== ======== ======== ========
======== ======== ======== ========
Supplemental disclosure:
Non-recurring items(f) (6,532) (12,250) (49,115) (17,023)
-------- -------- -------- --------
-------- -------- -------- --------
EBITDA less non-
recurring items $178,590 $62,766 $436,917 $238,485
========= ======== ======== ========
Attributable Adjusted
EBITDA - Operating
Businesses(g) $149,210 $86,552 $410,306 $270,715
========= ========= ========= ========
========= ========= ========= ========
-----------------------
(a) Includes the results of Interval from September 24, 2002.
(b) Includes HSE Germany, Euvia, HOT Networks, TV Travel Group,
HSN emerging businesses and overhead costs related to HSN
International
(c) In order to present comparable results fo for International TV
Shopping and other, results have been translated from foreign
currencies to U.S. dollars at a constant exchange rate.
(d) 2001 amounts reflect estimated results generated by homes lost
by HSN following disengagement of USA Broadcasting to Univision.
2002 amounts reflect disengagement related sales rebates offered
to customers impacted by disengagement. The coupon program was
discontinued in Q3 2002.
(e) Adjusted EBITDA is defined as operating income plus (1)
depreciation, (2) amortization, (3) amortization of cable
distribution fees ($12.6 million and $10.0 million, in Q3 2002
and 2001, respectively), (4) amortization of non-cash distribution
and marketing expense and non-cash compensation expense and (5)
disengagement related payments to cable operators, marketing
expenses and sales rebates ($4.6 million in Q3 2002) related to
the transfer of HSN's distribution to cable (which has been
accomplished).
(f) Non-recurring items in 2002 include the write-down of certain
investments, costs of ECS contract terminations and costs incurred
by the special committees of Expedia, Hotels.com and Ticketmaster.
2001 represents non-recurring costs related to restructuring
operations, employee terminations and benefits.
(g) Attributable Adjusted EBITDA - Operating Businesses is defined
as Adjusted EBITDA from Operating Businesses less the percentage
of Adjusted EBITDA attributable to minority shareholders of USA's
public subsidiaries. This percentage is determined based on Q3
weighted average of USA's fully diluted, treasury method ownership
in each of its public subsidiaries as of September 30, 2002.
USA INTERACTIVE
RECONCILIATION FROM ACTUAL TO ADJUSTED RESULTS
($ in thousands except per share amounts)
For THREE Months Ended September 30, 2002:
--------------------------------------------
--------------------------------------------
Adjustments:
Actual One-time items(a) Adjusted
--------------------------------------------
Revenues, net $1,192,496 0 $1,192,496
Costs related to
revenues 713,157 0 713,157
------------- ---------- ----------
Gross Profit 479,339 0 479,339
Other operating costs 300,748 (6,532) 294,216
------------- ------------ ----------
------------- ------------ ----------
EBITDA 178,591 6,532 185,123
Depreciation 47,679 0 47,679
HSN cable distribution fees 12,615 0 12,615
Amortization of non-cash
items: 0
Distribution and marketing 10,416 0 10,416
Compensation expense 2,998 0 2,998
Other intangibles 63,149 0 63,149
HSN disengagement costs 4,560 0 4,560
------------ ----------- ---------
------------ ----------- ---------
Operating income 37,174 6,532 43,706
Interest and other 27,958 0 27,958
Equity losses in affiliates
and other (18,082) 11,464 (6,618)
------------- ------------ ---------
------------- ------------ ---------
Earnings before income taxes
and minority interest 47,050 17,996 65,046
Income taxes (31,849) (2,004) (33,853)
Minority interest (17,155) (1,036) (18,191)
------------- ------------ ---------
------------- ------------ ---------
Earnings before preferred
dividend (1,954) 14,956 13,002
Preferred dividend (3,264) 0 (3,264)
------------- ------------ ---------
------------- ------------ ---------
Basic Net income available
to common shareholders (5,218) 14,956 9,738
Impact of dilutive securities 0 (1,122) (1,122)
------------- ------------ ---------
------------- ------------ ---------
Diluted Net income
available - continuing
operations (5,218) 13,834 8,616
Discontinued operations(b) (31,411) 31,411 0
------------ ------------ ----------
------------ ------------ ----------
Diluted Net income $(36,629) $45,245 $8,616
============ ============ ==========
============ ============= ==========
Basic and Diluted
EPS - continuing operations $(0.01) $0.02
Basic and Diluted EPS $(0.08) $0.02
Diluted Net income available
- continuing operations 8,616
Amortization of non-cash items 76,563
Less: related tax and minority
interest (19,482)
----------
----------
Cash Net Income $65,697
----------
----------
Cash EPS $0.14
==========
==========
Shares Outstanding:
Weighted average basic -
continuing operations 448,383 448,383
Weighted average diluted -
continuing operations 448,383 468,700
Weighted average diluted 448,383 468,700
Weighted average - cash net
income 468,700
(a) Non-recurring items include the write-down of certain
investments, costs of ECS contract terminations and costs
incurred by the special committees of Expedia, Hotels.com
and Ticketmaster.
(b) Discontinued operations relates to an international TV shopping
venture in Italy.
USA INTERACTIVE
RECONCILIATION FROM ACTUAL TO ADJUSTED RESULTS
($ in thousands except per share amounts)
For THREE Months Ended September 30, 2001:
----------------------------------------------------
----------------------------------------------------
Pro Forma Adjustments: Pro Forma
Actual Adjustments(a) Pro One-time Adjusted
Forma items(b)
----------------------------------------------------
----------------------------------------------------
Revenues, net $837,839 $79,478 $917,317 $917,317
Costs related to
revenues 570,526 26,287 596,813 596,813
--------- -------- ----------- -------- -------
--------- -------- ----------- -------- -------
Gross Profit 267,313 53,191 320,504 0 320,504
Other operating
costs 220,921 36,817 257,738 (12,250) 245,488
-------- --------- ---------- -------- -------
-------- --------- ---------- -------- -------
EBITDA 46,392 16,374 62,766 12,250 75,016
Depreciation 35,876 2,644 38,520 0 38,520
HSN cable
distribution
fees 9,986 0 9,986 0 9,986
Amortization of
non-cash items:
Distribution
and marketing 5,218 1,837 7,055 0 7,055
Compensation
expense 1,268 3,564 4,832 0 4,832
Other
intangibles 19,342 12,278 31,620 0 31,620
Amortization of
goodwill 54,633 (54,633) 0 0 0
--------- -------- -------- -------- ------
--------- -------- -------- -------- ------
Operating income (79,931) 50,684 (29,247) 12,250(16,997)
Interest and other (3,217) 26,529 23,312 23,312
Equity losses in
affiliates
and other (12,937) (6,341) (19,278) 6,678(12,600)
--------- --------- --------- ------ -------
--------- --------- --------- ------ -------
Earnings before
income taxes
and minority
interest (96,085) 70,872 (25,213) 18,928 (6,285)
Income taxes 878 (11,303) (10,425) (4,423)(14,848)
Minority interest 32,332 (22,030) 10,302 (2,160) 8,142
--------- -------- -------- ------- -------
--------- -------- -------- ------- -------
Earnings before
preferred
dividend (62,875) 37,539 (25,336) 12,345(12,991)
Preferred dividend 0 (3,264) (3,264) 0 (3,264)
-------- --------- -------- ------ -------
-------- --------- -------- ------ -------
Basic Net income
available to
common
shareholders (62,875) 34,275 (28,600) 12,345(16,255)
Impact of dilutive
securities 0 0 0 0 0
-------- -------- --------- ------ -------
-------- -------- --------- ------ -------
Diluted Net income
available -
continuing
operations (62,875) 34,275 (28,600) 12,345(16,255)
Discontinued
operations(c) 490,450 (490,450) 0 0 0
Impact of dilutive
securities 23,346 (23,346) 0 0 0
--------- --------- --------- ------- -----
--------- --------- --------- ------- -----
Diluted Net
income $450,921 $(479,521) $(28,600) $12,345$(16,255)
========= ========== ======== ======== =======
========= ========== ======== ======== =======
Basic and Diluted
EPS - continuing
operations $(0.17) $(0.07) $(0.04)
Basic and Diluted
EPS $0.59 $(0.07) $(0.04)
Diluted Net income
available -
continuing
operations (16,255)
Amortization of
non-cash items 43,507
Less: related tax
and minority
interest (21,242)
---------
---------
Cash Net Income $6,010
---------
---------
Cash EPS $0.01
=========
=========
Shares Outstanding:
Weighted average
basic -
continuing
operations 376,415 60,880 437,295 437,295
Weighted average
diluted -
continuing
operations 376,415 60,880 437,295 437,295
Weighted average
diluted 762,361 (325,066) 437,295 437,295
Weighted average
- cash net
income 462,088
-----------------------
(a) Pro forma adjustments represent the impacts of the Expedia
transaction which occurred in February 2002, the contribution
of USA Entertainment to VUE which occurred in May 2002, the
roll-up of USANi LLC which occurred in conjunction with the VUE
deal and the roll-up of Home Shopping Network, Inc., which
occurred in June 2002, as if the transactions occurred as of the
beginning of the period presented. Also included is the impact of
these transactions on shares outstanding.
(b) Non-recurring items include restructuring and one-time items
related to restructuring operations, employee terminations and
benefits and a write-down of investments.
(c) Discontinued operations relates to a gain on sale of USAB to
Univision of $468.0 million and the results of USA Entertainment
of $22.4 million.
USA INTERACTIVE
RECONCILIATION FROM ACTUAL TO ADJUSTED RESULTS
($ in thousands except per share amounts)
For NINE Months Ended September 30, 2002:
----------------------------------------------------
----------------------------------------------------
Pro Forma Adjustments: Pro Forma
Actual Adjustments(a) Pro One-time Adjusted
Forma items(b)
----------------------------------------------------
----------------------------------------------------
Revenues, net $3,282,236 $35,487 $3,317,723 $3,317,723
Costs related
to revenues 2,012,856 10,586 2,023,442 2,023,442
--------- ------- ---------- -------- ---------
--------- ------- ---------- -------- ---------
Gross Profit 1,269,380 24,901 1,294,281 1,294,281
Other operating
costs 843,441 15,723 859,164 (49,115) 810,049
Disengagement
coupons included
as net revenues (1,800) (1,800) (1,800)
--------- ------- ----------- ---------- --------
--------- ------- ----------- ---------- --------
EBITDA 427,739 9,178 436,917 49,115 486,032
Depreciation 128,042 919 128,961 128,961
HSN cable
distribution
fees 38,679 0 38,679 38,679
Amortization of
non-cash items:
Distribution
and marketing 27,485 4,059 31,544 0 31,544
Compensation
expense 10,199 930 11,129 0 11,129
Other intangibles 136,122 6,746 142,868 (22,247) 120,621
Non-recurring items
-- non-EBITDA 5,497 0 5,497 (5,497) 0
HSN disengagement
costs(c) 22,326 0 22,326 22,326
------- -------- ------- --------- --------
------- -------- -------- --------- --------
Operating income 59,389 (3,476) 55,913 76,859 132,772
Interest and
other 39,629 35,857 75,486 75,486
Equity losses
in affiliates
and other (131,975) (120) (132,095) 99,792 (32,303)
--------- -------- --------- --------- --------
--------- -------- --------- --------- --------
Earnings before
income taxes
and minority
interest (32,957) 32,261 (696) 176,651 175,955
Income taxes (58,407) (9,735) (68,142) (21,631) (89,773)
Minority interest (17,964) (21,796) (39,760) (1,036) (40,796)
---------- --------- -------- -------- --------
---------- --------- -------- -------- --------
Earnings before
preferred
dividend (109,328) 730 (108,598) 153,984 45,386
Preferred
dividend (8,495) (1,297) (9,792) (9,792)
--------- -------- --------- -------- -------
--------- -------- --------- -------- -------
Basic Net income
available to
common
shareholders (117,823) (567) (118,390) 153,984 35,594
Impact of dilutive
securities 0 0 0 (5,258)(5,258)
--------- -------- --------- --------- ------
--------- -------- --------- --------- ------
Diluted Net
income available
- continuing
operations (117,823) (567) (118,390) 148,726 30,336
Discontinued
operations(d) 1,914,314 (1,914,314) 0 0 0
Impact of
dilutive
securities 33,660 (33,660) 0 0 0
--------- ------------ --------- -------- -----
--------- ------------ --------- -------- -----
Diluted Net
income $1,830,151 $(1,948,541) $(118,390) $148,726 $30,336
========== =========== ========== ======== ======
========== =========== ========== ======== ======
Basic EPS -
continuing
operations $(0.28) $(0.27) $0.08
Diluted EPS -
continuing
operations $(0.28) $(0.27) $0.06
Diluted EPS $3.96 $(0.27) $0.06
Diluted Net income
available -
continuing
operations 30,336
Amortization
of non-cash
items 163,294
Less: related
tax and
minority interest (56,415)
---------
---------
Cash Net Income $137,215
---------
---------
Cash EPS $0.29
=========
=========
Shares Outstanding:
Weighted average basic
- continuing
operations 418,559 27,590 446,149 446,149
Weighted average
diluted -
continuing
operations 418,559 27,590 446,149 470,500
Weighted average
diluted 462,344 (16,195) 446,149 470,500
Weighted average
- cash net
income 470,500
---------------------------------
(a) Pro forma adjustments represent the impacts of the Expedia
transaction which occurred in February 2002, the contribution
of USA Entertainment to VUE which occurred in May 2002, the
roll-up of USANi LLC which occurred in conjunction with the VUE
deal and the roll-up of Home Shopping Network, Inc., which
occurred in June 2002, as if the transactions occurred as of the
beginning of the period presented. Also included is the impact of
these transactions on shares outstanding.
(b) Non-recurring items include the write-down of certain
investments, costs of ECS contract terminations, costs to
shut-down HSN Espanol, a write-down of goodwill for PRC as well
as costs to shut-down certain PRC call centers, and costs incurred
by the special committees of Expedia, Hotels.com and Ticketmaster.
(c) Costs relate to marketing and related activities in the
disengagement markets. In addition to this amount, the Company
incurred $1.8 mm of disengagement expense related to coupon
redemptions by customers impacted by disengagement which is recorded
as net revenue.
(d) Discontinued operations relates to the gain on the
contribution of USA Entertainment to VUE of $2.4 billion, the
results of USA Entertainment prior to May 7, 2002 of $28.8
million, the cumulative effect of accounting change for the new
goodwill rules of $(461.4) million and the impact of the
electronic retailing operations in Italy of $(31.4) million.
USA INTERACTIVE
RECONCILIATION FROM ACTUAL TO ADJUSTED RESULTS
($ in thousands except per share amounts)
For NINE Months Ended September 30, 2001:
----------------------------------------------------
----------------------------------------------------
Pro Forma Adjustments: Pro Forma
Actual Adjustments(a) Pro One-time Adjusted
Forma items(b)
----------------------------------------------------
----------------------------------------------------
Revenues, net $2,520,354 $215,174 $2,735,528 $2,735,528
Costs related
to revenues 1,698,663 67,535 1,766,198 1,766,198
--------- ------- --------- --------- ---------
--------- ------- --------- --------- ---------
Gross Profit 821,691 147,639 969,330 0 969,330
Other operating
costs 616,086 108,980 725,066 (17,023) 708,043
--------- -------- -------- ---------- --------
--------- -------- -------- ---------- --------
EBITDA 205,605 38,659 244,264 17,023 261,287
Depreciation 106,746 7,300 114,046 114,046
Amortization of
non-cash items:
Distribution
and marketing 19,866 5,786 25,652 0 25,652
Compensation expense 5,431 13,980 19,411 0 19,411
HSN cable
distribution fees 29,384 0 29,384 29,384
Other intangibles 219,545 (124,265) 95,280 0 95,280
Non-recurring
items -- non-
EBITDA 5,779 0 5,779 (5,779) 0
--------- -------- --------- -------- --------
--------- -------- --------- -------- --------
Operating income (181,146) 135,858 (45,288) 22,802 (22,486)
Interest and
other (13,008) 78,709 65,701 65,701
Equity losses
in affiliates
and other (25,406) (6,341) (31,747) 6,678 (25,069)
--------- -------- ---------- --------- --------
--------- -------- ----------- --------- --------
Earnings before
income taxes
and minority
interest (219,560) 208,226 (11,334) 29,480 18,146
Income taxes (3,563) (42,970) (46,533) (4,423) (50,956)
Minority interest 82,765 (60,780) 21,985 (5,082) 16,903
---------- -------- ---------- -------- -------
---------- -------- ---------- -------- -------
Earnings before
preferred
dividend (140,358) 104,476 (35,882) 19,975 (15,907)
Preferred
dividend 0 (9,792) (9,792) 0 (9,792)
--------- --------- --------- --------- ------
-------- --------- -------- --------- ------
Basic Net income
available to common
shareholder (140,358) 94,684 (45,674) 19,975 (25,699)
Impact of dilutive
securities 0 0 0 0 0
---------- -------- -------- ------- -------
---------- -------- -------- ------- -------
Diluted Net income
available -
continuing
operations (140,358) 94,684 (45,674) 19,975 (25,699)
Discontinued
operations(c) 580,914 (580,914) 0
Impact of dilutive
securities 84,131 (84,131) 0
---------- ---------- -------- -------- ------
---------- ---------- -------- -------- ------
Diluted Net
income $524,687 $(570,361) $(45,674) $19,975 $(25,699)
========= ========== ========== ======= =========
========= ========== ========== ======= =========
Basic and Diluted
EPS - continuing
operations $(0.38) $(0.11) $(0.06)
Diluted EPS $ 0.69 $(0.11) $(0.06)
Diluted Net
income available
- continuing
operations (25,699)
Amortization of
non-cash items 140,343
Less: related tax and
minority interest (61,949)
--------
--------
Cash Net Income $52,695
--------
--------
Cash EPS $0.11
========
========
Shares Outstanding:
Weighted average
basic - continuing
operations 373,227 60,880 434,107 434,107
Weighted average
diluted -
continuing
operations 373,227 60,880 434,107 434,107
Weighted average
diluted 759,661 (325,554) 434,107 434,107
Weighted average
- cash net
income 459,388
(a) Pro forma adjustments represent the impacts of the Expedia
transaction which occurred in February 2002, the contribution of
USA Entertainment to VUE which occurred in May 2002, the roll-up
of USANi LLC which occurred in conjunction with the VUE deal, the
roll-up of Home Shopping Network, Inc., which occurred in
June 2002, and the merger of TM and TMCS, which occurred on
January 31, 2001, as if the transactions occurred as of the
beginning of the period presented. Also included is the impact of
these transactions on shares outstanding.
(b) Non-recurring items include one-time items related to
restructuring operations, employee terminations and benefits and a
write-down of investments.
(c) Discontinued operations relates to a gain on sale of USAB to
Univision of $517.8 million, the results of USA Entertainment
of $72.3 million and the cumulative effect of accounting change
for the new rules on film accounting of $(9.2) million.
USA PROVIDES PRELIMINARY BUDGET TO INVESTMENT COMMUNITY As filed with the Securities and Exchange Commission on October 24, 2002 In connection with our decision last year to do away with the system of `guidance,' we instituted the process of releasing our internal budgets for the next year. We spend a good part of the fall months rigorously rig·or·ous adj. 1. Characterized by or acting with rigor: a rigorous program to restore physical fitness. 2. Full of rigors; harsh: a rigorous climate. analyzing each area of USA's operations, each profit and cost center, and then roll them up into operating budgets Noun 1. operating budget - a budget for current expenses as distinct from financial transactions or permanent improvements budget items, operating cost, operating expense, overhead - the expense of maintaining property (e.g. for the following year. Today we are providing our preliminary budget for 2003. In January, we will release our final budget along with the release of our final year 2002 results. This communication is meant to explain the evolution of our financial reporting, an evolution that will continue as our still young company grows - as we give shape to our policies and values, adapting in a fairly dynamic way as we gain strength and fiber. Our goal is for our financial reporting to represent our core values to help our shareholders come to fully understand our business and how it is conducted with increasing consistency Consistency can refer to:
Now for the important changes we have made since our last report: Classification of Operating Businesses and Emerging Businesses Eliminated Since our company was formed seven years ago, USA and its subsidiaries have completed more than five-dozen acquisitions and launched several new business projects. Some of these were for already `going' businesses and some were in their infancy infancy, stage of human development lasting from birth to approximately two years of age. The hallmarks of infancy are physical growth, motor development, vocal development, and cognitive and social development. , yet to prove themselves as sustainable businesses A business is sustainable if it has adapted its practices for the use of renewable resources and holds itself accountable for the environmental and human rights impacts of its activities. . For reporting purposes, we thought it appropriate therefore to distinguish `operating' businesses from `emerging' businesses. Now that we have some size and experience, we no longer believe this selective distinction is necessary. We'll we'll Contraction of we will. we'll we will or we shall we'll will ~shall of course continue investing in new interactive ideas - that's part of our DNA DNA: see nucleic acid. DNA or deoxyribonucleic acid One of two types of nucleic acid (the other is RNA); a complex organic compound found in all living cells and many viruses. It is the chemical substance of genes. , but we've we've Contraction of we have. we've have reached a level of maturity that gives us the discipline to do that and be confident we'll also be growing total profits for the enterprise. Cash EPS is New Primary Bottom Line Metric Our flow of acquisitions created goodwill and other intangibles (e.g., distribution agreements and customer lists) that resulted in significant charges against earnings. Accounting rules have recently changed to eliminate goodwill charges on the income statement, but amortization of other intangibles and other non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) are still recognized for GAAP purposes. To us, bottom line earnings on a cash basis is more relevant than traditional GAAP because it captures all items that have been, or ultimately will be, settled in cash. We therefore adopted earlier this year Cash EPS as our primary metric. EBITA Replaces EBITDA for Segment Reporting Purposes We also concluded that EBITDA was not the best way to look at divisional performance because it does not include certain operating costs operating costs npl → gastos mpl operacionales such as depreciation and can be subject to manipulation Manipulation Dealing in a security to create a false appearance of active trading, in order to bring in more traders. Illegal. . As much as we believe this EBITDA is a bad business, we have continued to report it with respect to 2002 results in order to compare segment results against our 2002 budget and prior periods. Beginning with this 2003 budget, we have forever removed EBITDA from our vocabulary vocabulary, n 1. the stock or range of words possessed by an individual or a culture used for self-expression or communication. n 2. the sum of the distinct words related to a discipline or profession. . We are instead using EBITA, which includes depreciation for segment reporting purposes. And in order for analysts to change their financial models from EBITDA to EBITA, the budget also reflects depreciation expense by segment. Free Cash Flow Presentation Conforms with GAAP Statement of Cash Flows Free Cash Flow is also a key metric for us. It measures the cash generated from continuing operations during the period, net of capital expenditures and other investments relating to operations. In terms of presentation, we are now conforming con·form v. con·formed, con·form·ing, con·forms v.intr. 1. To correspond in form or character; be similar. 2. Free Cash Flow more closely with our GAAP statement of cash flows per our 10-Q filings. Restricted Stock to Replace Stock Options We announced in July July: see month. that newly issued stock options will be expensed beginning in 2003. However, going forward we intend to issue restricted stock instead of stock options in order to more align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. the interests of executives with those of long-term investors Long-term investor A person who makes investments for a period of at least five years in order to finance his or her long-term goals. . Accounting for restricted stock is also more straightforward than it is for stock options. Restricted stock is amortized over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period based on the market value at the time of grant, whereas stock options can be valued based on any number of subjective subjective /sub·jec·tive/ (sub-jek´tiv) pertaining to or perceived only by the affected individual; not perceptible to the senses of another person. sub·jec·tive adj. 1. measures. We are still planning our compensation program for next year and therefore our budget in this regard will likely change, albeit not materially. In our final budget and in future earnings announcements, we will disclose very clearly the impact of restricted stock on both diluted GAAP EPS and Cash EPS. Now, with what we hope is the background for shared understanding, to the numbers...
USA INTERACTIVE
PRELIMINARY BUDGET
Pro Forma for Vivendi and Expedia transactions and pending
Ticketmaster merger
($ in millions except per share amounts)
Pro Forecast Budget Growth
Forma
----------------
2001 2002 2003 '01-'02 '02-'03
------- -------- ------- ---------- -----
REVENUE
HSN - U.S. $1,557 $1,623 $1,818 4% 12%
Ticketing (a) 580 642 679 11% 6%
Match.com (b) 49 126 186 155% 47%
Hotels.com 536 958 1,401 79% 46%
Expedia 297 585 819 97% 40%
PRC 299 293 316 -2% 8%
Interval (c) N/A 39 226 N/A N/A
Citysearch 46 31 42 -33% 37%
International TV (d)
shopping and
other 319 365 486 14% 33%
ECS / Styleclick 34 39 32 15% -19%
Foreign exchange
conversion (47) (36) (36) 24% -1%
Disengaged HSN
homes 102 (2) -
Intersegment
elimination (7) (11) (16)
------- -------- ------- ---------- -----
TOTAL REVENUE (e) $3,766 $4,653 $5,952 24% 28%
======= ======== ======= ========== =====
EBITA (f)
HSN - U.S. $126 $172 $209 36% 22%
Ticketing (a) 83 113 124 36% 10%
Match.com (b) 15 28 38 93% 35%
Hotels.com 80 135 205 70% 52%
Expedia 50 149 199 200% 33%
PRC (6) (6) 7 N/A N/A
Interval (c) N/A (2) 58 N/A N/A
Citysearch (39) (30) (13) 24% 57%
International TV (d)
shopping and
other (31) (33) (21) -8% 38%
ECS / Styleclick (73) (26) (12) 64% 55%
USA corporate and
other (note) (39) (49) (54) -25% -10%
TMCS corporate (note) (12) (14) (15) -20% -4%
Foreign exchange
conversion (1) 0 (1)
Disengaged HSN
homes 14 - -
------- -------- ------- ---------- -----
Total EBITA (e) $167 $437 $725 162% 66%
======= ======== ======= ========== =====
Attributable EBITA (c)(g)
excluding
Interval $119 $330 $513 178% 56%
For 2004, USA currently anticipates growth in revenue and EBITA of
approximately 24% and 46%, respectively.
(note) USA is currently determining whether to subsume TMCS
corporate costs into USA's own corporate group or within the operating
subsidiaries, to the extent applicable. This determination is expected
to be made when USA files its final budget in January 2003.
Pro Forecast Budget Growth
Forma
----------------
2001 2002 2003 '01-'02 '02-'03
------- -------- ------- ---------- -----
DEPRECIATION
HSN - U.S. $42 $52 $48 25% -7%
Ticketing 23 29 31 24% 8%
Match.com 2 8 12 323% 53%
Hotels.com 2 4 6 113% 38%
Expedia 11 17 25 52% 46%
PRC 32 38 26 18% -31%
Interval (c) N/A 2 9 N/A N/A
Citysearch 6 4 5 -30% 29%
International TV (d)
shopping and
other 3 11 20 267% 79%
ECS / Styleclick 15 3 3 -80% 6%
USA corporate and
other 5 7 6 47% -13%
TMCS corporate 1 2 2 47% -2%
Cable distribution
amortization 42 51 48 23% -6%
Foreign exchange
conversion (1) (1) (1)
------- -------- ------- ---------- -----
Total Depreciation $183 $228 $239 25% 5%
======= ======== ======= ========== =====
Forecast Budget Growth
FREE CASH FLOW (h) 2002 2003 '02 - '03
-------- ------- ----------
GAAP Net Income $(109) $48
Depreciation
and
amortization 480 685
Noncash
interest
income (23) (37)
Equity losses of
unconsolidated affiliates 133 (3)
Minority interest
(benefit) / expense 32 79
Changes in working
capital and other 273 285
-------- ------- ----------
Operating Cash
Flow $785 $1,056 35%
Capital
expenditures (157) (207)
Investments in
HSN
International (31) -
-------- ------- ----------
Free Cash Flow $597 $848 42%
======== ======= ==========
For 2004, USA currently anticipates growth in Free Cash Flow of
approximately 25% to approximately $1 billion.
CAPITALIZATION
In connection with the Expedia transaction which was completed in
February 2002, USA issued $656 million face value 1.99% convertible
preferred stock, which is initially convertible at $33.75 into
approximately 19.4 million shares. The company anticipates that the
preferred stock will have a dilutive impact in 2003, thus 19.4 million
shares will be treated on an as converted basis for purposes of Cash
EPS in 2003 (see "Shares outstanding calculation" on next page for
further detail). Therefore, the schedule below of USA's capitalization
as of September 30, 2002, is pro forma for the conversion of the
convertible preferred and for USA's pending merger with Ticketmaster:
Cash and
marketable
securities:
USA $2,117
Expedia 525
Hotels.com 397
--------
Total cash $3,039
========
Attributable cash (i) $2,679
Securities in VUE (j) 2,111
Long-term debt (k) (546)
--------
Net attributable
cash and
securities $4,244
========
Forecast Budget Growth
2002 2003 '02 - '03
-------- ------- ----------
P&L
Revenue $4,653 $5,952
Operating expenses (4,215) (5,226)
-------- ------- ----------
EBITA $437 $725 66%
Amortization of non-cash
compensation, distribution and
marketing (66) (104)
Amortization of other (l)
intangibles (non-cash) (191) (336)
Disengagement
costs (31) (21)
-------- ------- ----------
Operating income 149 265 78%
Interest and
dividend income 105 106
Equity losses of unconsolidated
affiliates and other (m) (33) (20)
-------- ------- ----------
Income before taxes and
minority interest 221 352 59%
Income tax expense (133) (225)
Minority interest (n)
expense (49) (79)
-------- ------- ----------
Net income before
preferred dividend 39 48 23%
Preferred dividend (13) (13)
-------- ------- ----------
Net income available to common
shareholders $26 $35 35%
======== ======= ==========
Diluted EPS $0.05 $0.07 33%
======== ======= ==========
Cash Net Income
calculation:
Net income before
preferred dividend $39 $48
Preferred dividend (13) -
Amortization of
non-cash items 257 439
Less: related tax and
minority interest (77) (63)
-------- ------- ----------
Cash net income (o) $206 $424 105%
======== ======= ==========
Cash EPS $0.40 $0.78 96%
======== ======= ==========
Shares outstanding
calculation:
Basic shares
outstanding 494 494
Treasury method options,
warrants and restricted stock (p) 23 28
-------- -------
Diluted shares
outstanding 517 521
Common shares issuable for
convertible preferred - 19
-------- -------
Cash EPS shares
outstanding 517 541
======== =======
For 2004, USA currently anticipates growth in Cash Net Income and
Cash EPS of approximately 35%, and growth in Net Income and Diluted
EPS of more than 400%.
Forecast Budget
NET INCOME BY SEGMENT (q) 2002 2003
-------- -------
HSN - U.S. $49 $14
Ticketing 46 101
Match.com 11 32
Hotels.com 50 78
Expedia 9 11
PRC 3 0
Interval (10) 4
Citysearch (34) (60)
International TV
shopping and other (90) (33)
ECS / Styleclick (23) (7)
USA corporate and other
adjustments 35 (85)
TMCS corporate (9) (7)
-------- -------
Net income before non-recurring
items and preferred dividend $39 $48
======== =======
USA INTERACTIVE PRELIMINARY BUDGET Pro Forma for Vivendi and Expedia transactions and pending Ticketmaster merger ($ in millions except per share amounts) Footnotes (a) USA expects Ticketing growth in 2003 to be slower than 2002 due mainly to investment in new products, which it believes will begin to positively impact results in 2004. (b) USA expects Match.com growth in 2003 to be slower than 2002 due mainly to increased consumer marketing to grow the subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base, which it believes will begin to positively impact results in 2004. (c) 2002 and 2001 data is not pro forma for USA's acquisition of Interval on September 24, 2002. Excluding the effects of that transaction, revenues and EBITA are expected to grow by 24% and 52%, respectively, in 2003. (d) International TV Shopping and Other includes HSE Germany, Euvia, Hot Networks, HSN emerging businesses, TV Travel Group and overhead costs overhead costs see fixed costs. related to HSN International. (e) USA has eliminated the distinction between its "Operating" and "Emerging" businesses for segment reporting purposes. (Operating businesses had consisted of HSN-U.S., Ticketing, Match.com, Hotels.com, Expedia, PRC, Interval and Corporate; Emerging businesses had consisted of Citysearch, International TV shopping and other, and ECS/Styleclick.) Revenue and EBITA from Operating businesses is expected to grow 29% and 50%, respectively, in 2002 and 28% and 45%, respectively, in 2003. (f) EBITA is defined as operating income plus: amortization of (1) non-cash distribution and marketing expense, (2) non-cash compensation expense, (3) other intangibles (and goodwill in 2001), and (4) disengagement disengagement /dis·en·gage·ment/ (dis?en-gaj´ment) emergence of the fetus from the vaginal canal. dis·en·gage·ment n. related payments to cable operators and marketing expenses related to the transfer of HSN's distribution to cable (which has been accomplished). (g) Attributable EBITA is defined as EBITA, less the percentage of EBITA attributable to minority shareholders of USA's public subsidiaries. This percentage is determined based on the Q3 2002 weighted average of USA's fully diluted, treasury method ownership in USA's public subsidiaries, which was 67% for Hotels.com and 56% for Expedia. (h) Free cash flow is defined as operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. from continuing operations, less capital expenditures and other investments relating to operations. Free cash flow also includes cash received and tax payments related to the VUE securities. Free cash flow excludes tax payments of $157 million in 2002 and $172 million in 2003 related to the sale of USA Broadcasting to Univision, which closed in August 2001. (i) Includes attributable cash from USA's public subsidiaries, based on the Q3 2002 weighted average of USA's fully diluted, treasury method ownership in each of its public subsidiaries (see note g above). Excludes cash due to clients at Ticketmaster. (j) Includes securities issued to USA in connection with the Vivendi transaction, as follows: Class A and Class B preferred interests and 5.44% common interest in Vivendi Universal Entertainment ("VUE") at balance sheet carrying values Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. , less the estimated present value of taxes on the above securities. (k) Consists primarily of $500 million face value 6.75% Senior Notes due November November: see month. 15, 2005. Subsequent to September 30, 2002, USA purchased approximately $47 million of its Senior Notes in the open market. (l) The increase in amortization of intangibles relates primarily to the step-up in basis Step-Up In Basis The readjustment of the value of an appreciated asset for tax purposes upon inheritance. With a step-up in basis, the value of the asset is determined to be the higher market value of the asset at the time of inheritance, not the value at which the original party of HSN related to the Vivendi transaction, which closed in May 2002. The company is in the process of evaluating the intangibles related to this and other acquisitions completed in 2002, including Interval and TV Travel Group, and expects to be completed by year end. To the extent additional acquisitions are completed in the future, amortization of intangibles could increase. (m) Assumes no impact from 5.44% investment in Vivendi Universal Entertainment ("VUE"). (n) Ownership in public subsidiaries is calculated on a fully diluted basis (see note g above). (o) Cash Net Income is defined as net income available to common shareholders plus: amortization of (1) non-cash distribution and marketing expense, (2) non-cash compensation, and (3) other intangibles (and goodwill in 2001), net of related tax and minority interest expense. Excludes non-recurring items, such as restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. . All amounts are presented on a fully diluted, treasury method basis. (p) For purposes of calculating Diluted EPS, restricted stock will be treated on a treasury method basis. For purposes of calculating Cash EPS, restricted stock will include all restricted shares issued. USA is still in the process of planning its compensation program for next year and will disclose the final projected impact of restricted stock to both Diluted EPS and Cash EPS when it issues its final budget in January and in future earnings releases. (q) Net income by segment is net of amortization of (1) non-cash distribution and marketing expense, (2) non-cash compensation expense, and (3) other intangibles, including purchase accounting adjustments, net of related taxes; and minority interest. Excludes non-recurring items, such as restructuring charges. All amounts are presented on a fully diluted, treasury method basis. Taxes have been allocated to wholly-owned subsidiaries, and the amounts may not be representative as if the subsidiary operated on a standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. basis. ADDITIONAL INFORMATION AND WHERE TO FIND IT In connection with the proposed transaction with Ticketmaster, USA will file a registration statement with a prospectus, which also will contain an information statement of Ticketmaster, with the SEC. Investors and security holders are urged to read the prospectus and information statement carefully when they become available, because they will contain important information. Investors and security holders may obtain free copies the prospectus and information statement, once available, and other documents filed by USA and Ticketmaster with the SEC, at the SEC's web site at www.sec.gov. Free copies of the prospectus and information statement, once available, and other filings made by USA or Ticketmaster with the SEC, may also be obtained from USA by directing a request to USA Interactive, 152 West 57th Street, New York, New York 10019, Attention: Investor Relations. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This business outlook contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements relating to USA's anticipated financial performance, business prospects, new developments, new merchandising strategies and similar matters, and/or statements preceded by, followed by or that include the words "believes," "could," "expects," "anticipates," "estimates," "intends," "plans," "projects," "seeks," or similar expressions. These forward-looking statements are necessarily estimates reflecting the best judgment of USA'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 forward-looking statements are subject to risks, uncertainties and assumptions that could have a material adverse effect on USA's business, financial condition or results of operations. You should understand that the following important factors could affect USA's future results and could cause those results to differ materially from those expressed in the forward-looking statements: (1) the risk that USA's and Ticketmaster's businesses will not be integrated successfully; (2) costs related to the proposed transaction; (3) material adverse changes in economic conditions generally or in USA's markets or industries; (4) future regulatory and legislative actions and conditions affecting USA's operating areas; (5) competition from others; (6) successful integration of our divisions' management structures; (7) product demand and market acceptance; (8) the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; (9) the ability to expand into and successfully operate in foreign markets; and (10) obtaining and retaining skilled workers and key executives. In addition, investors should consider the other information contained in or incorporated by reference into USA's filings with the U.S. Securities and Exchange Commission (the "SEC"), including its Annual Report on Form 10-K for the fiscal year ended 2001, especially in the Management's Discussion and Analysis section, its most recent Quarterly Report on Form 10-Q and its Current Reports on Form 8-K. Other unknown or unpredictable factors also could have material adverse effects on USA's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this business outlook may not occur. These forward-looking statements should not be regarded as an indication that USA considers them to be a reliable prediction "Prediction is very difficult, especially if it's about the future." - Niels Bohr A prediction is a statement or claim that a particular event will occur in the future in more certain terms than a forecast. of future events. 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 business outlook. USA does not make any representations to any person regarding the ultimate performance of USA compared to the information contained in this business outlook and USA 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 business outlook to reflect circumstances existing after the date of this business outlook or to reflect the occurrence of future events even if experience or future events make it clear that any or all of the assumptions underlying the business outlook are shown to be in error or any expected results expressed or implied by those forward-looking statements will not be realized. |
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