SCHEDULE 14A (RULE 14A-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant /X/ Filed by a party other than the Registrant / / Check the appropriate box: / / Preliminary Proxy Statement / / Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) / / Definitive Proxy Statement / / Definitive Additional Materials /X/ Soliciting Material Pursuant to Section 240.14a-12 USA NETWORKS, INC. - -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter) - -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, if other than the Registrant) Payment of Filing Fee (Check the appropriate box): /X/ No fee required. / / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1) Title of each class of securities to which transaction applies: ------------------------------------------------------------------------ (2) Aggregate number of securities to which transaction applies: ------------------------------------------------------------------------ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): ------------------------------------------------------------------------ (4) Proposed maximum aggregate value of transaction: ------------------------------------------------------------------------ (5) Total fee paid: ------------------------------------------------------------------------ / / Fee paid previously with preliminary materials. / / Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. (1) Amount Previously Paid: ------------------------------------------------------------------------ (2) Form, Schedule or Registration Statement No.: ------------------------------------------------------------------------ (3) Filing Party: ------------------------------------------------------------------------ (4) Date Filed: ------------------------------------------------------------------------ [GRAPHIC OMITTED] USA NETWORKS INC FOR IMMEDIATE RELEASE JANUARY 29, 2002 25% Q4 PRO FORMA EBITDA GROWTH FROM USA'S OPERATING BUSINESSES 34% EBITDA GROWTH BUDGETED FOR OPERATING BUSINESSES FOR FULL YEAR 2002 NEW YORK, January 29, 2002 - USA Networks, Inc. (NASDAQ: USAI), to be renamed USA Interactive upon closing of the contribution of USA Entertainment to a joint venture to be controlled by Vivendi Universal, reported results today for its quarter ended December 31, 2001. Highlights are presented on a pro forma comparative Q4 basis, reflecting the pending Expedia and Vivendi transactions. o USA'S INTERACTIVE OPERATING BUSINESSES increased revenue by 17% to $937.8 million and EBITDA by 25% to $149.0 million. Total revenue increased by 14% to $1,030 million and total EBITDA increased by 33% to $120.3 million. o HSN increased its U.S. revenue by 9% to $495.3 million and EBITDA by 3% to $75.7 million, as expected, while reducing inventory levels by $30.1 million, or 14%, to $156.5 million, during the year. As evidenced that HSN is on track for a strong year, its U.S. revenue in January 2002 is up approximately 20% versus January 2001. o HOTEL RESERVATIONS NETWORK increased revenue by 42% to $141.7 million and EBITDA by 30% to $22.9 million. HRN added a record number of properties, 667, and increased its number of affiliates to over 23,800 during Q4. HRN is already having an outstanding 2002, having sold a record $2.5 million in hotel rooms on January 9th. o TICKETMASTER increased ticketing revenue by 7% to $131.8 million although EBITDA declined by 12%, primarily due to reduced profitability in selected international operations; declines in software sales which are sensitive to economic conditions; and the inclusion of Reserve America, a seasonal business. Ticketmaster also launched TICKETFAST -TM-, for print-at-home ticketing, and Ticketmaster Marketplace -TM-, a service for buying, selling and forwarding tickets. o EXPEDIA (transaction pending) increased revenue by 84% to $81.8 million and reversed an EBITDA loss of $2.9 million in Q4 2000 to an EBITDA profit of $22.2 million. Expedia took the lead among online travel agencies, with $704 million in gross bookings in Q4. o MATCH, one of the company's fastest-growing assets, increased revenue by 145% to $17.6 million and EBITDA by 451% to $7.6 million. Match ended Q4 with total paid subscribers of 382,150, an increase of 51% over Q3. o USA is filing its REVISED BUDGET with the SEC, based on its strong fourth quarter results and additional information regarding the state of the travel and leisure markets. The revised budget projects EBITDA for USA's Interactive Operating Businesses to grow by 34% to $648 million and total EBITDA to grow by 69% to $607 million in 2002. o USA also today reiterated its goal of reaching 20% OF INTERACTIVE COMMERCE over the next several years through a combination of organic growth, investing in new initiatives, and significant acquisition activity. USA is filing material with the SEC, pursuant to Reg FD, which contains more detail on its strategy and goals. o USA ENTERTAINMENT (which is not reflected in the comparative pro forma results due to its pending contribution to a joint venture to be controlled by Vivendi Universal) Operating Businesses decreased revenue by 15% to $357.0 million and EBITDA by 16% to $126.8 million, due largely to a continuing weak advertising market. SEE IMPORTANT FOOTNOTES AT END OF THIS RELEASE. M E D I A R E L E A S E 152 West 57th Street, 42nd Floor New York, New York 10019 212.314.7300 Fax 212.314.7309 2 of 9 FINANCIAL RESULTS On a comparative pro forma basis reflecting pending transactions, USA reported the following: PRO FORMA PRO FORMA ($ IN MILLIONS) Q4 01 Q4 00 GROWTH ------ ------ ----- REVENUES - OPERATING BUSINESSES HSN - U.S.............................. $495.3 $455.8 9% Ticketing.............................. 131.8 122.7 7% Hotel Reservations Network............. 141.7 100.0 42% Expedia (TRANSACTION PENDING).......... 81.8 44.4 84% Precision Response..................... 69.8 72.1 (3%) Match.com.............................. 17.6 7.2 145% -------- ------ ---- SUB-TOTAL - OPERATING.............. 937.8 802.2 17% REVENUES - EMERGING BUSINESSES Citysearch and related................. 10.3 14.0 ECS / Styleclick....................... 12.5 13.5 HSN - International and other (d)...... 82.2 83.4 -------- ------ SUB-TOTAL - EMERGING............... 104.9 110.9 -------- ------ Foreign exchange conversion (a)........ (10.2) (11.8) Disengaged HSN homes (c)............... -- 6.2 Intersegment elimination............... (2.2) -- -------- ------ TOTAL.............................. $1,030.3 $907.5 14% ======== ====== ==== EBITDA - OPERATING BUSINESSES HSN - U.S................................... $75.7 $73.8 3% Ticketing.............................. 21.5 24.4 (12%) Hotel Reservations Network............. 22.9 17.6 30% Expedia (TRANSACTION PENDING).......... 22.2 (2.9) NM Precision Response..................... 6.2 11.0 (44%) Match.com.............................. 7.6 1.4 451% Corporate and other.................... (7.0) (6.0) NM -------- ------ ----- SUB-TOTAL - OPERATING.............. 149.0 119.4 25% EBITDA - EMERGING BUSINESSES Citysearch and related................. (9.9) (12.4) ECS / Styleclick....................... (7.8) (16.7) HSN - International and other (d)...... (7.7) 4.1 -------- ------ SUB-TOTAL - EMERGING............... (25.4) (25.1) Non-recurring items (b)................ (3.1) (3.2) Foreign exchange conversion (a)........ (0.2) (1.5) Disengaged HSN homes (c)............... -- 0.9 -------- ------ TOTAL.............................. $120.3 $90.5 33% ======== ====== ==== o Includes pro forma results for Expedia, the acquisition of which is expected to close in February 2002. Does not include results for USA Entertainment, the contribution of which to a joint venture with Vivendi Universal is expected to close by Q2 2002. Excludes results from USA Broadcasting, the sale of which to Univision was completed in August 2001. o EBITDA is defined as operating income plus (1) depreciation and amortization, (2) amortization of cable distribution fees ($14.6 million & $11.0 million, respectively), (3) amortization of non-cash distribution, marketing, and compensation expense, and (4) disengagement related payments to cable operators and marketing expenses ($4.1 million) related to the transfer of HSN's distribution to cable (which has been accomplished). (a) In order to present comparable results for HSN Germany, the results have been translated from Euros to U.S. dollars at a constant exchange rate. (b) Represents non-recurring costs related to restructuring operations at HSN, HSN International and PRC, including costs for employee terminations. (c) Reflects estimated results generated by homes lost by HSN following the sale of USA Broadcasting to Univision. (d) HSN - International and other includes primarily Home Shopping Espanol and HSN Germany. USA was premature in its inclusion previously of HSN Germany as an Operating Business. Although we believe that HSN Germany will be profitable this year (and exceed its performance from last year), it continues to experience significant growing pains and is not close to operating at a stable, consistent basis (although there could be future variations in results). We, therefore, intend to include HSN Germany as part of HSN International and other for the foreseeable future, and we do not intend to move it back to an Operating Business based on any short-term improvement in results. For the fourth quarter, HSN Germany's sales and EBITDA were $75.2 million and $1.7 million, respectively, as compared to $74.0 million and $9.0 million, respectively, in the year ago period. We believe this change will result in a better understanding of the results of our Operating Businesses taken as a whole. -- More -- 3 of 9 CASH NET INCOME AND EARNINGS PER SHARE PRO FORMA FOR VIVENDI CURRENT STRUCTURE (b) AND EXPEDIA TRANSACTIONS (A) (C) ACTUAL PRO FORMA -------------------------------- ------ --------- Q4 01 Q4 00 Q4 01 Q4 00 (D) ----- ----- ----- --------- Cash net income per share - diluted.................. 0.10 0.09 0.04 0.13 Basic loss per share................................. (0.06) (0.16) (0.13) (0.09) (a) Excluding one-time income / (expense) of ($17.6 million), pre-tax in Q4 '01, and ($184.4 million), pre-tax, in Q4 '00, including the write-down of Styleclick goodwill in Q4 '00 of ($145.6 million), pre-tax. (b) Excluding one-time income / (expense) of ($25.7 million), pre-tax in Q4 '01, including $8.1 million related to the Entertainment operations, and ($184.4 million), pre-tax, in Q4 '00, including the write-down of Styleclick goodwill in Q4 '00 of ($145.6 million), pre-tax. (c) Presented based upon net income available to common shareholders, giving effect to the preferred dividend related to the Expedia transaction. (d) Amounts based on net income before loss from discontinued operations in Q4 '00 of $18.0 million. Cash net income ("CNI") is defined as net income plus (1) amortization of non-cash distribution, marketing, and compensation expense (2) amortization of goodwill and intangibles and (3) minority interest related to Holdco, minus the 1.4% PIK dividend on the $1.75 billion preferred security ($24.5 million, pre-tax). Shares outstanding to compute CNI EPS is defined as actual shares outstanding plus 33.2 million shares of Holdco that are exchangeable into USA common stock minus 56.6 million shares of common stock held by Vivendi, as the Company believes these shares should be viewed as treasury, although the amount of shares treated as treasury will be lower at stock prices greater than $40.82, as discussed in USA's 8-K filing with the SEC dated December 17, 2001. Related to Holdco, the Company intends to issue common stock for all remaining exchangeable shares upon completion of the Vivendi transaction. CNI EPS amounts are shown on a diluted basis, including the impact of dilutive securities. ADOPTION OF NEW ACCOUNTING RULES FOR GOODWILL Effective January 1, 2002, all calendar year companies will be required to adopt FAS 142, the new accounting rules for goodwill. The new rules eliminate amortization of goodwill and other intangible assets with indefinite lives and establish new measurement criterion for these assets. Although it has not completed its assessment, the Company anticipates a write-off of $325 million to $425 million primarily related to the Citysearch and Precision Response (PRC) businesses. Although Citysearch and PRC are expected to generate positive cash flows in the future, due to cash flow discounting techniques required by the new rules, the future cash flows do not support current carrying values. The expected range for the Citysearch write-off is $75 million to $125 million and for PRC $250 million to $300 million. The rules are expected to reduce USA's annual amortization expense by approximately $230 million. -- More -- 4 of 9 ELECTRONIC RETAILING HIGHLIGHTS HSN's EBITDA increased by 3% to $75.7 million on 9% higher revenue of $495.3 million in the United States. o In a challenging environment, HSN continues to grow faster than virtually every major traditional retailer. In fact, HSN had one of its best quarters ever in terms of new business, adding approximately 735,000 new customers during Q4. o As compared to Q4 2000, EBITDA grew slower than revenue due to the build out its new California fulfillment facility to reduce shipping times to west coast customers, investments in alternative distribution channels, and continuing technology investments in HSN.com as the business scales. o HSN.com, which now represents approximately 10% of HSN's U.S. sales, grew revenue by 125% in Q4, generating more sales than in all of 2000. Its affiliate program, which began in August, now includes more than 3,000 affiliates. o Off-air sales (including continuity, upsells, waitlist, and SHOP THE SOAPS), which require little or no HSN TV airtime, generated more than $100 million in sales during 2001, and are expected to grow by more than 25% in 2002. o In partnership with Carnival Cruise Lines and celebrity host Suzanne Somers, HSN's GODDESS CRUISE event generated 1,100 cabin bookings in 36 hours, becoming the fastest selling cruise in Carnival's history. And during the cruise, travelers placed more than 2,000 orders with HSN. o HSN recently announced deals with star personalities. Christopher Lowell, noted home authority and Emmy-winning host of the Discovery Channel's THE CHRISTOPHER LOWELL SHOW, will debut an exclusive line of home makeover items; Christine Alt, celebrity plus-size fashion model, will introduce an exclusive new collection of clothing for women of all sizes; and Michael Corbett, host of the syndicated television programs EXTRA! And EXTRA!'S MANSIONS AND MILLIONAIRES, is launching a new line of indoor and outdoor home essentials. o HSN has also expanded its exclusive product line offerings in conjunction with Betty Crocker, Serta, Coleman, Hewlett Packard, Panasonic, Major League Baseball, Hoover, RCA, and Cosmopolitan, which will launch an exclusive line of personal care products featuring guest appearances by the magazine's beauty editors. -- More -- 5 of 9 ELECTRONIC RETAILING HIGHLIGHTS (CONTINUED) Q4 01 Q4 00 GROWTH ----- ----- ------ Units shipped (IN MILLIONS).......................... 11.4 10.0 14% Gross profit % *................................ 33.9% 33.6% Return rate..................................... 17.9% 18.8% Average price point............................. $47.36 $51.59 Product mix: Homegoods................................... 53% 54% Jewelry..................................... 25% 24% Health / Beauty............................. 10% 10% Apparel / Accessories....................... 12% 12% * Gross margin increase is due to the inclusion of a small catalogue operation in Q4 2001. Without the catalogue business, HSN's gross margins would have been 33.2%. HSN cable / DBS homes (IN MILLIONS @ 12/31).......... 73.4 65.9 11% HSN total homes (IN MILLIONS @ 12/31)................ 83.0 77.1 8% HSN total homes pro forma disengagement (IN MILLIONS) 72.6 HSN - INTERNATIONAL AND OTHER o HSN - International and other includes primarily Home Shopping Espanol and HSN Germany. o System integration and operational challenges continued to adversely impact revenue and EBITDA growth at HSN Germany, which generated $1.7 million in EBITDA during Q4, down from $9 million in the year-ago period. o During 2001, HSN expanded its global leadership, launching new services in the United Kingdom, Belgium, the Netherlands, and Mexico. TV HOUSEHOLDS AVG. LIVE HRS. --------------------------------- 12/01 12/00 GROWTH DAILY 12/01 STAKE ----- ----- ------ ----------- ----- (IN MILLIONS @ 12/31) Consolidated Services: HSE - Germany (includes Austria / Switzerland)........ 29.7 29.3 0.4 16 hours 42% Home Shopping Espanol (U.S. / Puerto Rico)............ 5.8 5.1 0.7 18 hours 100% Home Shopping Espanol (Mexico)........................ 2.4 -- 2.4 4 hours 100% Unconsolidated Services: TVSN (China) -- HH airing at least 14 hours per week.. 28.9 18.9 10.0 10 hours 21% Shop Channel (Japan) ................................. 11.6 9.2 2.4 16 hours 30% HSE - Italy........................................... 9.4 6.0 3.4 11 hours 41% HSE - Netherlands (includes Belgium).................. 3.5 -- 3.5 8 hours 47% HSE - France (includes Belgium / Luxembourg).......... 3.5 1.4 2.1 5 hours 47% HSE - U.K............................................. 5.8 -- 5.8 12 hours 47% -- More -- 6 of 9 INFORMATION & SERVICES HIGHLIGHTS TICKETMASTER increased ticketing revenue by 7% to $131.8 million as EBITDA declined by 12%, primarily due to reduced profitability in selected international operations; declines in software sales which are more sensitive to economic conditions; and the inclusion of Reserve America, which was profitable on an EBITDA basis for the year, but due to seasonality loses money in the fourth quarter. o Ticketmaster launched TICKETFAST -TM-, for print-at-home ticketing, and Ticketmaster Marketplace -TM-, a ticket exchange service for buying, selling and forwarding tickets. o Online ticket sales accounted for 33.9% of total tickets sold by Ticketmaster, compared to 27.9% in Q4 '00. o MATCH.COM increased the number of paying subscribers to 382,150, a 144% increase from one year ago, and a 51% increase over Q3. Match.com earned $7.6 million in EBITDA in Q4. o CITYSEARCH was named the Best Cityguide 2002 by Yahoo! Internet Life and was ranked among the Top 100 Websites by PC Magazine. Q4 01 Q4 00 GROWTH ----- ----- ------ Number of tickets sold (IN MILLIONS)............ 20.3 18.7 8.6% Gross value of tickets sold (IN MILLIONS)....... $870.3 $781.8 11.3% Revenue per ticket.............................. $6.00 $5.87 2.2% Share of tickets sold online.................... 33.9% 27.9% Top-selling events in Q4 '01.................... NUTCRACKER, RINGLING BROTHERS, RADIO CITY CHRISTMAS SPECTACULAR, DISNEY ON ICE and WWF. EXPEDIA (transaction pending) increased EBITDA to $22.2 million, on 84% higher revenue of $81.8 million. o Expedia led all online travel agencies for the first time with $704 million in gross bookings in Q4. o Expedia was named Best Overall Travel Site by Yahoo! Internet Life. o Expedia announced the acquisition of Classic Custom Vacations, the biggest high-end vacation packager to Hawaii. o Expedia introduced visa and passport service for travelers and opened the "Travel Right" Cafe in LAX. Q4 01 Q4 00 GROWTH ----- ----- ------ Gross bookings (IN 000S)........................ $704 $475 48% Total transactions (IN 000S).................... 2,229 1,318 69% Average Media Metrix reach (IN 000S)............ 9,238 5,417 70% Expedia.com conversion.......................... 5.2% 6.0% New purchasing customers (IN 000S).............. 870 504 73% Unique purchasing customers (IN 000S)........... 1,383 790 75% Cumulative purchasing customers (IN 000S)....... 6,294 2,932 115% SEE IMPORTANT FOOTNOTES AT END OF THIS RELEASE. -- More -- 7 of 9 INFORMATION & SERVICES HIGHLIGHTS (CONTINUED) HOTEL RESERVATIONS NETWORK increased EBITDA by 30% to $22.9 million on 42% higher revenue of $141.7 million. o HRN added a record number of hotel properties, 667, to total over 4,500 properties. o HRN completed the acquisition of AceNet, a leading hotel consolidator in Atlantic City. o HRN now has over 23,800 mostly-exclusive affiliates under contract. Q4 01 Q4 00 GROWTH ----- ----- ------ Hotel room nights sold....................... 1,187,000 699,900 70% Affiliates (including TravelNow)............. 23,808 16,200 47% Properties................................... 4,567 2,600 76% Cities served (AS OF 12/31).................. 178 97 84% PRECISION RESPONSE decreased EBITDA by 44% to $6.2 million on 3% lower revenue of $69.8 million. o PRC's business continued to be adversely affected by an economy-related slowdown in the outsourcing of customer care programs, particularly in the telecom and financial services industries. In addressing this, the Company engaged in cost reduction initiatives during Q4 to better position itself for 2002. o PRC signed consumer service deals with Schwan's and Household Credit, both of which will commence in 2002. ENTERTAINMENT HIGHLIGHTS USA NETWORK decreased EBITDA by 20% to $84.9 million on 7% lower revenue of $184.7 million. o USA finished the year tied for second place among all basic cable networks in primetime with a 1.7 rating. o USA averaged a 1.5 primetime rating in Q4 '01. o The PRIMETIME MOVIE increased delivery of Adults 18-34 by 18%. o PRANCER RETURNS earned a 3.0 rating as USA's highest rated Original Movie in Q4 '01. SCI FI decreased EBITDA by 13% to $26.1 million on 8% lower revenue of $71.4 million. o SCI FI averaged a 0.7 rating in primetime and its average household delivery decreased by 8% to 524,000. Excluding the effects in Q4 `00 of SCI FI's hit mini-series DUNE, SCI FI's average household delivery decreased by 2%. o SCI FI continues to have the highest concentration of adult viewers 25-54 of any network on TV, while ranking in the top 10 among basic cable networks in its delivery of Adults, Women and Men 25-54 and Adults and Men 18-49. STUDIOS USA, net, increased EBITDA by 3% to $15.8 million on 30% lower revenue of $100.9 million. o LAW & ORDER is generating the highest ratings in its 12-year history, averaging 18.9 million viewers weekly on NBC this season, ranking as the fifth highest rated television series. o LAW & ORDER: CRIMINAL INTENT, airing on NBC, was the most watched new primetime series in the November sweeps. o LAW & ORDER: SPECIAL VICTIMS UNIT, airing on NBC, is the most watched show in Friday primetime. o THE DISTRICT, airing on CBS, continues as the most watched show in Saturday primetime. o MAURY is the #2 talk show among Women 18-49, averaging a 2.3 rating in this demographic during the sweeps. o CROSSING OVER WITH JOHN EDWARD is this season's highest rated new daily first-run syndicated series. -- More -- 8 of 9 ENTERTAINMENT HIGHLIGHTS (CONTINUED) CABLE AND STUDIOS: Q4 01 Q4 00 GROWTH ----- ----- ------ Revenue ($ IN MILLIONS): USA Network................................. $184.7 $199.4 (7%) SCI FI...................................... 71.4 77.8 (8%) Studios, net................................ 100.9 145.0 (30%) ------ ------ ----- Total................................. $357.0 $422.2 (15%) ====== ====== ===== EBITDA ($ IN MILLIONS): USA Network................................. $84.9 $105.6 (20%) SCI FI...................................... 26.1 30.2 (13%) Studios, net................................ 15.8 15.3 3% ------ ------ ----- Total................................. $126.8 $151.1 (16%) ====== ====== ===== Households (IN MILLIONS @ 12/31): USA Network................................. 85.2 79.9 7% SCI FI...................................... 76.4 66.7 15% Advertising and other revenue / affiliate revenue: USA Network mix............................. 48:52 57:43 SCI FI mix.................................. 59:41 67:33 USA FILMS USA Films' theatrical releases in Q4 were THE MAN WHO WASN'T THERE and GOSFORD PARK. THE MAN WHO WASN'T THERE was nominated for three GOLDEN GLOBES, including Best Picture (Drama) and Best Actor (Drama). GOSFORD PARK was nominated for five GOLDEN GLOBES, including Best Picture (Comedy or Musical), and was awarded Best Director. USA Home Entertainment's release ULTIMATE JORDAN is its best selling sports DVD to date, shipping over 200,000 units. SHARES OUTSTANDING, MARKET CAPITALIZATION, NET DEBT As of January 23, 2002, USA has outstanding 764.7 million shares, including exchangeable securities and treasury method options, with an aggregate market capitalization of $19.9 billion. Pro forma for the Expedia and Vivendi transactions, USA has outstanding 414.3 million shares, including exchangeable securities and treasury method options, with an aggregate market capitalization of $10.8 billion. Pro forma shares outstanding excludes Vivendi's remaining 56.6 million shares, as the Company believes these shares should be viewed as treasury, although the amount of shares treated as treasury will be lower at stock prices greater than $40.82, as discussed in USA's 8-K filing with the SEC dated December 17, 2001. USA has no net debt and $550 million in consolidated net cash, including that of its public subsidiaries and an advance receivable to Universal. This excludes the final cash payment on the sale of USA Broadcasting of $214 million, net of tax, and $1.6 billion related to the pending Vivendi transaction and Expedia's cash balance of $250 million. -- More -- 9 of 9 ANALYST CONFERENCE CALL USA Networks, Inc. will audiocast its conference call with analysts and investors discussing the company's fourth quarter financial results on Tuesday, January 29, 2002, at 11:00 a.m. Eastern Time (ET). The live audiocast is open to the public, and a replay will be available approximately one hour after its completion, at WWW.USANETWORKS.COM/INVESTOR.RELATIONS. IMPORTANT DISCLOSURES / LEGEND AND FORWARD LOOKING STATEMENTS / FOOTNOTES USA and Expedia have filed a joint prospectus/proxy statement and will file other relevant documents concerning USA's acquisition of Expedia with the Securities and Exchange Commission ("SEC"). INVESTORS ARE URGED TO READ THE JOINT PROSPECTUS/PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE WITH THE SEC BECAUSE THOSE DOCUMENTS CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain such documents free of charge at the SEC's website at www.sec.gov. In addition, such documents may also be obtained free of charge by contacting USA Networks, Inc., 152 West 57th Street, New York, New York, 10019, Attention: Investor Relations, or Expedia, Inc., 13810 SE Eastgate Way, Suite 400, Bellevue, WA 98005, Attention: Investor Relations. USA has filed a preliminary proxy statement and will file other relevant documents concerning USA's contribution of its Entertainment Group to a joint venture with Vivendi Universal and certain related transactions with the Securities and Exchange Commission ("SEC"). INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE WITH THE SEC BECAUSE THOSE DOCUMENTS CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain such documents free of charge at the SEC's website at www.sec.gov. In addition, such documents may also be obtained free of charge by contacting USA Networks, Inc., 152 West 57th Street, New York, NY, 10019, Attn: Investor Relations. INVESTORS SHOULD READ THE PROXY STATEMENT CAREFULLY WHEN AVAILABE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION CONCERNING THE PROPOSED TRANSACTIONS. USA and its directors and officers may be deemed to be participants in the solicitation of proxies from USA shareholders to adopt the agreement providing for USA's contribution of its Entertainment Group to a joint venture with Vivendi Universal and the other related transactions described therein. A detailed list of the names and interests of USA's directors and executive officers is contained in the definitive proxy statement on Schedule 14A filed by SUA with the SEC on April 9, 2001. Copies of USA filings may be obtained free of charge at the SEC's website at www.sec.gov. This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of the senior management of USA 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 should, therefore, be considered in light of various important factors, including those set forth herein and in the documents USA files with the Securities and Exchange Commission. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: material adverse changes in economic conditions generally or in the markets served by USA, material changes in inflation, future regulatory and legislative actions affecting USA's operating areas, competition from others, product demand and market acceptance, the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms, the ability to expand into and successfully operate in foreign markets, and obtaining and retaining skilled workers and key executives. The words "estimate," "project," "intend," "expect," "believe" and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. USA does not undertake any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or any other reason. The financial, statistical and other information contained in this press release and its attachments is unaudited. USA Network and SCI FI ratings and household delivery data per NMR Galaxy Explorer for NHI defined periods versus comparable periods. Subscriber counts based on Nielsen People Meter Installed Sample, December `01 vs. `00. All ratings within each network's coverage area. Studios' syndicated program ratings per NSS (GAA % where applicable), and broadcast network data per NTI for comparable time periods. Subject to qualifications. Operating metrics in this press release are pro forma for pending Expedia transaction. For operating metrics relating to Expedia, gross bookings represent the total value of travel booked through the Expedia, VacationSpot, and WWTE sites. Transactions represents the number of reservations and purchases transacted through the Expedia and WWTE sites. Average monthly Media Metrix reach represents the unduplicated reach for the Expedia and VacationSpot sites. Conversion represents the monthly average Expedia.com unique monthly purchasers divided by the monthly average Media Metrix reach for the Expedia.com site. Expedia new purchasing customers represents the number of new customers transacting through the Expedia sites in a quarter. 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. Expedia quarterly unique purchasing customers represents the number of unique customers transacting through the Expedia sites over the course of a quarter. ABOUT USA NETWORKS, INC. USA Networks, Inc. (Nasdaq: USAI), to be renamed USA Interactive upon close of its pending transaction with Vivendi Universal, is organized into two groups, the Interactive Group and the Entertainment Group. The Interactive Group consists of Home Shopping Network (including HSN International and HSN Interactive); Ticketmaster (Nasdaq: TMCS), which operates CitySearch and Match.com; Hotel Reservations Network (Nasdaq: ROOM); Electronic Commerce Solutions; Styleclick; Precision Response Corporation; and Expedia, Inc. (Nasdaq: EXPE) upon the close of USA's previously announced transaction. The Entertainment Group consists of USA Cable, including USA Network, SCI FI Channel, TRIO, Newsworld International, and Crime; Studios USA, which produces and distributes television programming; and USA Films, which produces and distributes films. On December 17, 2001, USA and Vivendi Universal announced a transaction in which the assets of the Entertainment Group would be contributed to Vivendi Universal Entertainment, a new joint venture. CONTACTS: USA COMMUNICATIONS: USA INVESTOR RELATIONS: Ron Sato Roger Clark / Lauren Rosenfield 212-314-7254 212-314-7400 USA INTERACTIVE AND SUBSIDIARIES PRO FORMA FOR THE PENDING EXPEDIA AND VIVENDI TRANSACTIONS UNAUDITED BUSINESS SEGMENT INFORMATION ($ IN THOUSANDS) (a) In order to present comparable results for HSN Germany, the results have been translated from Euros to U.S. dollars at a constant exchange rate. (b) Reflects estimated results generated by homes lost by HSN following disengagement of USA Broadcasting to Univision. (c) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $14,591 and $10,987, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. (d) Represents non-recurring costs related to restructuring operations and employee terminations. 13
THREE MONTHS ENDED DECEMBER 31, PRO FORMA PRO FORMA ---------- ---------- 2001 2000 ---------- ---------- REVENUES - OPERATING BUSINESSES Electronic retailing - U.S. $ 495,275 $ 455,840 Ticketing 131,776 122,656 Hotel reservations 141,668 100,014 Online travel (transaction pending) 81,762 44,419 Teleservices 69,752 72,097 Personals 17,561 7,173 ---------- ---------- SUB-TOTAL 937,794 802,199 REVENUES - EMERGING BUSINESSES Citysearch and related 10,256 14,062 Electronic Commerce Solutions/Styleclick 12,448 13,413 HSN - all consolidated international and other 82,192 83,407 ---------- ---------- SUB-TOTAL 104,896 110,882 ---------- ---------- Euro's exchange rate fluctuation (a) (10,242) (11,814) Disengaged HSN homes (b) -- 6,229 Intersegment Elimination (2,180) -- ---------- ---------- TOTAL $1,030,268 $ 907,496 ======================== EBITDA - OPERATING BUSINESSES (c) Electronic retailing - U.S. $ 75,667 $ 73,758 Ticketing 21,473 24,419 Hotel reservations 22,858 17,637 Online Travel (transaction pending) 22,205 (2,872) Teleservices 6,221 11,048 Personals 7,604 1,379 Corporate and other (7,027) (5,988) ---------- ---------- SUB-TOTAL 149,001 119,381 EBITDA - EMERGING BUSINESSES (c) Citysearch (9,853) (12,426) Electronic Commerce Solutions/Styleclick (7,803) (16,752) HSN - all consolidated international and other (7,745) 4,051 ---------- ---------- SUB-TOTAL (25,401) (25,127) ---------- ---------- Restructuring charge and one-time items (d) (3,075) (3,187) Euro's exchange rate fluctuation (a) (218) (1,454) Disengaged HSN homes (b) -- 856 ---------- ---------- TOTAL $ 120,307 $ 90,469 ======================== USA INTERACTIVE AND SUBSIDIARIES PRO FORMA FOR THE PENDING EXPEDIA AND VIVENDI TRANSACTIONS UNAUDITED BUSINESS SEGMENT INFORMATION ($ IN THOUSANDS) (a) Presented as if the acquisitions of Precision Response and Styleclick had occurred at the beginning of the period presented. (b) In order to present comparable results for HSN Germany, the results have been translated from Euros to U.S. dollars at a constant exchange rate. (c) Reflects estimated results generated by homes lost by HSN following disengagement of USA Broadcasting to Univision. (d) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $43,975 and $36,322, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. (e) Represents non-recurring costs related to restructuring operations and employee terminations and benefits. 14
TWELVE MONTHS ENDED DECEMBER 31, ACTUAL PRO FORMA (a) ----------- ------------- 2001 2000 ----------- ------------- REVENUES - OPERATING BUSINESSES Electronic retailing - U.S. $ 1,658,904 $ 1,527,042 Ticketing 579,679 518,565 Hotel reservations 536,497 327,977 Online Travel (transaction pending) 296,936 156,656 Teleservices 298,678 282,120 Personals 49,249 29,122 ----------- ----------- SUB-TOTAL 3,419,943 2,841,482 REVENUES - EMERGING BUSINESSES Citysearch 46,107 50,889 Electronic Commerce Solutions/Styleclick 34,230 48,492 HSN - all consolidated international and other 319,424 280,985 -------------------------- SUB-TOTAL 399,761 380,366 -------------------------- Euro's exchange rate fluctuation (b) (46,855) (35,271) Disengaged HSN homes (c) -- 6,229 Intersegment Elimination (7,053) -- -------------------------- TOTAL $ 3,765,796 $ 3,192,806 ========================== EBITDA - OPERATING BUSINESSES (d) Electronic retailing - U.S. $ 231,507 $ 229,582 Ticketing 106,248 100,025 Hotel reservations 81,449 52,641 Online Travel (transaction pending) 60,864 (38,770) Teleservices 34,299 44,626 Personals 16,512 6,241 Corporate and other (31,203) (29,879) -------------------------- SUB-TOTAL 499,676 364,466 EBITDA - EMERGING BUSINESSES (d) Citysearch (43,441) (63,879) Electronic Commerce Solutions/Styleclick (53,591) (71,193) HSN - all consolidated international and other (22,555) 14,679 -------------------------- SUB-TOTAL (119,587) (120,393) -------------------------- Restructuring charge and one-time items (e) (20,098) (4,685) Euro's exchange rate fluctuation (b) (1,200) (3,939) Disengaged HSN homes (c) -- 856 -------------------------- TOTAL $ 358,791 $ 236,305 ========================== USA INTERACTIVE AND SUBSIDIARIES PRO FORMA FOR THE PENDING EXPEDIA AND VIVENDI TRANSACTIONS UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Represents costs incurred related to the disengagement of HSN from the USA Broadcasting stations. Amounts primarily relate to payments to cable operators and related marketing expenses in the disengaged markets. (b) Amortization of warrants and stock issued in exchange for distribution and marketing services. (c) Expense relates to the Company's bonus stock purchase program, restricted stock awards and certain stock option grants. (d) In relation to the pending Expedia transaction, the Company will issue preferred stock with a dividend of 1.99%, payable in cash or stock. (e) Represents non-recurring costs related to restructuring operations at HSN, HSN International and PRC, including costs for employee terminations. (f) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $14,591 and $10,987, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. 15
THREE MONTHS ENDED DECEMBER 31, PRO FORMA PRO FORMA ----------- ----------- 2001 2000 ----------- ----------- Revenues, net $ 1,030,268 $ 907,496 Operating costs and expenses: Costs related to revenues 667,944 602,673 Other costs and expenses 242,017 214,354 Disengagement costs (a) 4,052 -- Amortization of non cash distribution and marketing expense (b) 6,518 7,099 Amortization of non cash compensation expense (c) 4,793 12,497 Amortization of cable distribution fees 14,591 10,987 Depreciation and amortization 119,502 306,498 ----------- ----------- Total operating costs and expenses 1,059,417 1,154,108 ----------- ----------- Operating income (29,149) (246,612) Interest expense, net (4,017) 1,418 Other, net 8,940 19,149 ----------- ----------- Earnings before income taxes and minority interest (24,226) (226,045) Income tax expense (18,671) (20,564) Minority interest 12,663 82,572 ----------- ----------- Loss before preferred dividend $ (30,234) $ (164,037) Preferred dividend (d) (3,265) (3,265) ----------- ----------- Net loss available to common shareholders $ (33,499) $ (167,302) =========== =========== Net loss available to common shareholders ex. one time charges (e) $ (25,145) $ (63,627) =========== =========== Cash net income available to common shareholders, excluding one-time charges $ 40,514 $ 37,644 =========== =========== Weighted average basic shares 412,753 403,878 =========== =========== Weighted average CNI shares 410,485 401,400 =========== =========== EPS AVAILABLE TO COMMON SHAREHOLDERS Basic and diluted loss per share $ (.08) $ (.41) =========== =========== Basic loss per share, excluding one-time charges $ (.06) $ (.16) =========== =========== Cash net income per share, excluding one-time charges $ .10 $ .09 =========== =========== EBITDA (F) $ 120,307 $ 90,469 =========== =========== USA INTERACTIVE AND SUBSIDIARIES PRO FORMA FOR THE PENDING EXPEDIA AND VIVENDI TRANSACTIONS UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Presented as if the merger of Ticketmaster and TMCS had occurred at the beginning of the period presented. The merger has no impact on revenues or EBITDA. Pro forma results reflect the impact of the merger on minority interest and income taxes. (b) Presented as if the acquisitions of Precision Response and Styleclick had occurred at the beginning of the period presented. (c) Represents costs incurred related to the disengagement of HSN from the USA Broadcasting stations. Amounts primarily relate to payments to cable operators and related marketing expenses in the disengaged markets. (d) Amortization of warrants and stock issued in exchange for distribution and marketing services. (e) Expense relates to the Company's bonus stock purchase program, restricted stock awards and certain stock option grants. (f) In relation to the pending Expedia transaction, the Company will issue preferred stock with a dividend of 1.99%, payable in cash or stock. (g) Represents non-recurring costs related to restructuring operations at HSN, HSN International and PRC, including costs for employee terminations. (h) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $43,975 and $36,322, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. 16
TWELVE MONTHS ENDED DECEMBER 31, PRO FORMA (a) PRO FORMA (a) (b) ------------- ----------------- 2001 2000 ------------- ----------------- Revenues, net $ 3,765,796 $ 3,192,806 Operating costs and expenses: Costs related to revenues 2,424,580 2,117,995 Other costs and expenses 982,425 838,506 Disengagement costs (c) 4,052 -- Amortization of non cash distribution and marketing expense (d) 26,384 11,665 Amortization of non cash compensation expense (e) 24,204 76,941 Amortization of cable distribution fees 43,975 36,322 Depreciation and amortization 493,959 648,408 ----------- ----------- Total operating costs and expenses 3,999,579 3,729,837 ----------- ----------- Operating income (233,783) (537,031) Interest expense, net (8,902) (2,504) Other, net 92,664 174,145 ----------- ----------- Earnings before income taxes and minority interest (150,021) (365,390) Income tax expense (65,182) (120,217) Minority interest 69,285 161,642 ----------- ----------- Loss before preferred dividend $ (145,918) $ (323,965) Preferred dividend (f) $ (13,059) (13,059) ----------- ----------- Net loss available to common shareholders $ (158,977) $ (337,024) =========== =========== Net loss available to common shareholders ex. one time charges (g) ($ 131,556) ($ 275,337) =========== =========== Cash net income available to common shareholders, excluding one-time charges $ 137,939 $ 51,581 =========== =========== Weighted average basic shares 409,715 395,302 =========== =========== Weighted average CNI shares 414,962 403,379 =========== =========== EPS AVAILABLE TO COMMON SHAREHOLDERS Basic and diluted loss per share $ (.39) $ (.85) ----------- ----------- Basic loss per share, excluding one-time charges $ (.32) $ (.70) =========== =========== Cash net income per share, excluding one-time charges $ .33 $ .13 =========== =========== EBITDA (h) $ 358,791 $ 236,305 =========== =========== USA INTERACTIVE AND SUBSIDIARIES EPS AND CASH NET INCOME RECONCILIATION INFORMATION UNAUDITED ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Excludes one time charges and non-operating gains. (b) Cash net income shares exclude Vivendi's remaining 56.6 million shares, as the Company believes these shares should be viewed as treasury, although the amount of treasury shares will be lower at stock prices greater than $40.82, as discussed in the Company's 8-K filing with the SEC dated December 17, 2001. The 1.4% PIK dividend on the preferred security that relates to these shares has been deducted from net income. ================================================================================ 17
THREE MONTHS ENDED DECEMBER 31, PRO FORMA PRO FORMA --------- --------- 2001 2000 --------- --------- BASIC LOSS PER SHARE: Net loss before preferred dividend $ (30,234) $(164,037) Preferred Dividend (3,265) (3,265) --------- --------- Net loss available to common shareholders ($ 33,499) ($167,302) Impact of unusual items, net of tax and minority interest (a) 8,354 103,675 --------- --------- BASIC LOSS, EXCLUDING UNUSUAL ITEMS (a) $ (25,145) $ (63,627) ========= ========= Weighted average basic shares 412,753 403,878 ========= ========= Basic loss per share before preferred dividend $ (.07) $ (.41) --------- --------- Basic loss per share before preferred dividend, ex. one-time items $ (.05) $ (.15) ========= ========= --------- --------- Basic loss per share available to common shareholders $ (.08) $ (.41) ========= ========= Basic loss per share available to common shareholders, ex. one-time items $ (.06) $ (.16) ========= ========= ========================================================================================================= CASH NET INCOME: Net loss available to common shareholders ($ 33,499) ($167,302) Impact of non-cash items, net of tax and minority interest 68,743 208,525 1.4% PIK dividend (b) (3,721) (3,721) Minority Interest (843) (9,018) --------- --------- CASH NET INCOME 30,680 28,484 Impact of unusual items, net of tax and minority interest (a) 9,834 9,159 --------- --------- CASH NET INCOME, EXCLUDING UNUSUAL ITEMS (a) $ 40,514 $ 37,644 ========= ========= Weighted average CNI shares 410,485 401,400 ========= ========= Cash net income per share $ .07 $ .07 ========= ========= Cash net income per share, excluding unusual items (a) $ .10 $ .09 ========= ========= ========================================================================================================= RECONCILIATION OF BASIC AND CASH NET INCOME OUTSTANDING SHARES Basic weighted average shares 412,753 403,878 Exchangeable Holdco shares 33,217 33,217 Treasury Method Stock Options 21,126 20,916 Vivendi shares treated as treasury (b) (56,611) (56,611) --------- --------- 410,485 401,400 ========= ========= ========================================================================================================= USA INTERACTIVE AND SUBSIDIARIES EPS AND CASH NET INCOME RECONCILIATION INFORMATION UNAUDITED ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Excludes one time charges and non-operating gains. (b) Cash net income shares exclude Vivendi's remaining 56.6 million shares, as the Company believes these shares should be viewed as treasury, although the amount of treasury shares will be lower at stock prices greater than $40.82, as discussed in the Company's 8-K filing with the SEC dated December 17, 2001. The 1.4% PIK dividend on the preferred security that relates to these shares has been deducted from net income. ================================================================================ 18
TWELVE MONTHS ENDED DECEMBER 31, PRO FORMA PRO FORMA --------- --------- 2001 2000 --------- --------- BASIC LOSS PER SHARE: Net loss before preferred dividend $(145,918) $(323,965) Preferred Dividend (13,059) (13,059) --------- --------- Net loss available to common shareholders ($158,977) ($337,024) Impact of unusual items, net of tax and minority interest (a) 27,421 61,687 --------- --------- BASIC LOSS, EXCLUDING UNUSUAL ITEMS (a) $(131,556) $(275,337) ========= ========= Weighted average basic shares 409,715 395,302 ========= ========= Basic loss per share before preferred dividend $ (.36) $ (.82) --------- --------- Basic loss per share before preferred dividend, ex. one-time items $ (.29) $ (.66) ========= ========= --------- --------- Basic loss per share available to common shareholders $ (.39) $ (.85) ========= ========= Basic loss per share available to common shareholders, ex. one-time items $ (.32) $ (.70) ========= ========= ========================================================================================================= CASH NET INCOME: Net loss available to common shareholders ($158,977) ($337,024) Impact of non-cash items, net of tax and minority interest 286,925 441,402 1.4% PIK dividend (b) (14,884) (14,884) Minority Interest (4,937) (2,171) --------- --------- CASH NET INCOME 108,127 87,323 Impact of unusual items, net of tax and minority interest (a) 29,812 (35,742) --------- --------- CASH NET INCOME, EXCLUDING UNUSUAL ITEMS (b) $ 137,939 $ 51,581 ========= ========= Weighted average CNI shares 414,962 403,379 ========= ========= Cash net income per share $ .26 $ .22 ========= ========= Cash net income per share, excluding unusual items (a) $ .33 $ .13 ========= ========= ========================================================================================================= RECONCILIATION OF BASIC AND CASH NET INCOME OUTSTANDING SHARES Basic weighted average shares 409,715 395,302 Exchangeable Holdco shares 33,217 33,217 Treasury Method Stock Options 28,641 31,471 Vivendi shares treated as treasury (b) (56,611) (56,611) --------- --------- 414,962 403,379 ========= ========= ========================================================================================================= USA NETWORKS, INC. AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION - CONTINUING OPERATIONS UNAUDITED ($ IN THOUSANDS) (a) In order to present comparable results for HSN Germany, the results have been translated from Euros to U.S. dollars at a constant exchange rate. (b) Reflects estimated results generated by homes lost by HSN following disengagement of USA Broadcasting to Univision. (c) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $14,591 and $10,987, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. (d) Represents non-recurring costs related to restructuring operations and employee terminations. 19
THREE MONTHS ENDED DECEMBER 31, ACTUAL ACTUAL ----------- ----------- 2001 2000 ----------- ----------- REVENUES - OPERATING BUSINESSES Cable and studios $ 357,053 $ 422,133 Electronic retailing - U.S. 495,275 455,840 Ticketing 131,776 122,656 Hotel reservations 141,668 100,014 Teleservices 69,752 72,097 Personals 17,561 7,173 ----------- ----------- SUB-TOTAL 1,213,085 1,179,913 REVENUES - EMERGING BUSINESSES Citysearch and related 10,256 14,062 Electronic Commerce Solutions/Styleclick 12,448 13,413 HSN - all consolidated international and other 82,192 83,407 USA Films 37,476 20,536 Trio, NWI, Crime, other emerging media 5,961 7,470 ----------- ----------- SUB-TOTAL 148,333 138,888 ----------- ----------- Euro's exchange rate fluctuation (a) (10,242) (11,814) Disengaged HSN homes (b) -- 6,229 Intersegment Elimination (4,701) -- ----------- ----------- TOTAL $ 1,346,475 $ 1,313,216 =========== =========== EBITDA - OPERATING BUSINESSES (c) Cable and studios $ 126,855 $ 151,102 Electronic retailing - U.S. 75,667 73,758 Ticketing 21,473 24,419 Hotel reservations 22,858 17,637 Teleservices 6,221 11,048 Personals 7,604 1,379 Corporate and other (7,027) (5,988) ----------- ----------- SUB-TOTAL 253,651 273,355 EBITDA - EMERGING BUSINESSES (c) Citysearch (9,853) (12,426) Electronic Commerce Solutions/Styleclick (7,803) (16,752) HSN - all consolidated international and other (7,745) 4,051 USA Films 1,930 (621) Trio, NWI, Crime, other emerging media (4,359) (2,518) ----------- ----------- SUB-TOTAL (27,830) (28,266) ----------- ----------- Restructuring charge and one-time items (d) (6,249) (3,187) Euro's exchange rate fluctuation (a) (218) (1,454) Disengaged HSN Homes (b) -- 856 Intersegment Elimination (2,521) -- ----------- ----------- TOTAL $ 216,833 $ 241,304 ========================== USA NETWORKS, INC. AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION - CONTINUING OPERATIONS UNAUDITED ($ IN THOUSANDS) (a) Presented as if the acquisitions of Precision Response and Styleclick had occurred at the beginning of the period presented. (b) In order to present comparable results for HSN Germany, the results have been translated from Euros to U.S. dollars at a constant exchange rate. (c) Reflects estimated results generated by homes lost by HSN following disengagement of USA Broadcasting to Univision. (d) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $43,975 and $36,322, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. (e) Represents non-recurring costs related to restructuring operations and employee terminations and benefits. 20
TWELVE MONTHS ENDED DECEMBER 31, ACTUAL PRO FORMA (a) ACTUAL ----------- ------------- ----------- 2001 2000 2000 ----------- ------------- ----------- REVENUES - OPERATING BUSINESSES Cable and studios $ 1,633,130 $ 1,525,124 $ 1,525,124 Electronic retailing - U.S. 1,658,904 1,527,042 1,527,042 Ticketing 579,679 518,565 518,565 Hotel reservations 536,497 327,977 327,977 Teleservices 298,678 282,120 212,471 Personals 49,249 29,122 29,122 ----------- ------------- ----------- SUB-TOTAL 4,756,137 4,209,950 4,140,301 REVENUES - EMERGING BUSINESSES Citysearch 46,107 50,889 50,889 Electronic Commerce Solutions/Styleclick 34,230 48,492 46,603 HSN - all consolidated international and other 319,424 280,985 280,985 USA Films 167,038 86,084 86,084 Trio, NWI, Crime, other emerging media 24,086 20,332 20,332 ----------- ------------- ----------- SUB-TOTAL 590,885 486,782 484,893 ----------- ------------- ----------- Euro's exchange rate fluctuation (b) (46,855) (35,271) (35,271) Disengaged HSN homes (c) -- 6,229 6,229 Intersegment Elimination (15,360) -- -- ----------- ------------- ----------- TOTAL $ 5,284,807 $ 4,667,690 $ 4,596,152 =========== ============= =========== EBITDA - OPERATING BUSINESSES (d) Cable and studios $ 616,761 $ 547,684 $ 547,684 Electronic retailing - U.S. 231,507 229,582 229,582 Ticketing 106,248 100,025 100,025 Hotel reservations 81,449 52,641 52,641 Teleservices 34,299 44,626 35,165 Personals 16,512 6,241 6,241 Corporate and other (31,203) (29,879) (29,736) ----------- ------------- ----------- SUB-TOTAL 1,055,573 950,920 941,602 EBITDA - EMERGING BUSINESSES (d) Citysearch (43,441) (63,879) (63,879) Electronic Commerce Solutions/Styleclick (53,591) (71,193) (60,227) HSN - all consolidated international and other (22,555) 14,679 14,679 USA Films 1,973 (6,592) (6,592) Trio, NWI, Crime, other emerging media (11,467) (7,120) (7,120) ----------- ------------- ----------- SUB-TOTAL (129,081) (134,105) (123,139) ----------- ------------- ----------- Restructuring charge and one-time items (e) (23,272) (4,685) (4,685) Euro's exchange rate fluctuation (b) (1,200) (3,939) (3,939) Disengaged HSN homes (c) -- 856 856 Intersegment Elimination (8,307) -- -- ----------- ------------- ----------- TOTAL $ 893,713 $ 809,047 $ 810,695 =========== ============= =========== USA NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Presented as if the merger of Ticketmaster and TMCS had occurred at the beginning of the period presented. The merger has no impact on revenues or EBITDA. Pro forma results reflect the impact of the merger on minority interest and income taxes. (b) Represents costs incurred related to the disengagement of HSN from the USA Broadcasting stations. Amounts primarily relate to payments to cable operators and related marketing expenses in the disengaged markets. (c) Amortization of warrants and stock issued in exchange for distribution and marketing services. (d) Expense relates to the Company's bonus stock purchase program, restricted stock awards and certain stock option grants. (e) Q4 ' 00 excludes the results of USA Broadcasting. The results for the discontinued operations was an after tax loss of $17,988. (f) Represents non-recurring costs related to restructuring operations at HSN, HSN International and PRC, including costs for employee terminations. (g) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $14,591 and $10,987, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. 21
THREE MONTHS ENDED DECEMBER 31, ACTUAL PRO FORMA (a) ACTUAL ----------- ------------- ----------- 2001 2000 2000 ----------- ------------- ----------- Revenues, net $ 1,346,475 $ 1,313,216 $ 1,313,216 Operating costs and expenses: Costs related to revenues 831,335 801,302 801,302 Other costs and expenses 298,307 270,610 270,610 Disengagement costs (b) 4,052 -- -- Amortization of non cash distribution and marketing expense (c) 6,518 7,099 7,099 Amortization of non cash compensation expense (d) 7,281 5,347 5,347 Amortization of cable distribution fees 14,591 10,987 10,987 Depreciation and amortization 138,275 323,672 323,672 ----------- ------------- ----------- Total operating costs and expenses 1,300,359 1,419,017 1,419,017 ----------- ------------- ----------- Operating income 46,116 (105,801) (105,801) Interest expense, net (13,973) (10,263) (10,263) Other, net (26,440) (18,063) (18,063) ----------- ------------- ----------- Earnings before income taxes and minority interest 5,703 (134,127) (134,127) Income tax expense (37,686) (26,346) (26,346) Minority interest (24,965) 82,933 98,176 ----------- ------------- ----------- Net loss from continuing operations (e) $ (56,948) $ (77,540) $ (62,297) =========== ============= =========== Loss from continuing operations, excluding one-time charges and non-operating gains (f) ($49,441) ($32,901) ($11,170) =========== ============= =========== Cash net income, excluding one-time charges and non-operating gains $ 33,440 $ 100,112 $ 111,776 =========== ============= =========== Weighted average basic shares 377,139 368,264 368,264 =========== ============= =========== Weighted average cash net income shares 760,866 751,781 751,781 =========== ============= =========== EPS FROM CONTINUING OPERATIONS Basic loss per share $ (.15) $ (.21) $ (.17) =========== ============= =========== Basic loss per share, excluding one-time charges and non-operating gains $ (.13) $ (.09) $ (.03) =========== ============= =========== Cash net income per share, excluding one-time charges $ .04 $ .13 $ .15 =========== ============= =========== EBITDA (g) $ 216,833 $ 241,304 $ 241,304 =========== ============= =========== USA NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Presented as if the merger of Ticketmaster and TMCS had occurred at the beginning of the period presented. The merger has no impact on revenues or EBITDA. Pro forma results reflect the impact of the merger on minority interest and income taxes. (b) Presented as if the acquisitions of Precision Response and Styleclick had occurred at the beginning of the period presented. (c) Represents estimated costs incurred related to the disengagement of HSN from the USA Broadcasting stations. Amounts primarily relate to payments to cable operators and related marketing expenses in the disengaged markets. (d) Amortization of warrants and stock issued in exchange for distribution and marketing services. (e) Expense relates to the Company's bonus stock purchase program, restricted stock awards and certain stock option grants. (f) 2001 loss from continuing operations is calculated before the impact of the cumulative effect of adoption of SOP 00-2, "Accounting by Producers and Distributors of Films", of $9.2 million and the gain on sale of of broadcasting stations, the sale of which to Univision was announced in December 2000. The Company recorded a gain of $517.8 million in 2001 related to the sale. 2000 excludes the results of USA Broadcasting. The results for the discontinued operations in 2000 was an after tax loss of $59.4 million. (g) Represents non-recurring costs related to restructuring operations at HSN, HSN International and PRC, including costs for employee terminations. (h) EBITDA is defined as operating income plus, (1) depreciation and amortization, (2) amortization of cable distribution fees of $43,975 and $36,322, respectively, (3) amortization of non-cash distribution and marketing expense and non-cash compensation expense and (4) disengagement expense of $4.1 million in Q4 '01. 22
TWELVE MONTHS ENDED DECEMBER 31, PRO FORMA (a) ACTUAL PRO FORMA (a) (b) ACTUAL ------------- ----------- ----------------- ----------- 2001 2001 2000 2000 ------------- ----------- ----------------- ----------- Revenues, net $ 5,284,807 $ 5,284,807 $ 4,667,690 $ 4,596,152 Operating costs and expenses: Costs related to revenues 3,208,430 3,208,430 2,812,382 2,757,893 Other costs and expenses 1,182,664 1,182,664 1,046,261 1,027,564 Disengagement costs (c) 4,052 4,052 -- -- Amortization of non cash distribution and marketing expense (d) 26,384 26,384 11,665 11,665 Amortization of non cash compensation expense (e) 12,712 12,712 12,738 12,738 Amortization of cable distribution fees 43,975 43,975 36,322 36,322 Depreciation and amortization 565,352 565,352 709,775 693,642 ------------ ----------- ------------ ----------- Total operating costs and expenses 5,043,569 5,043,569 4,629,143 4,539,824 ------------ ----------- ------------ ----------- Operating income 241,238 241,238 38,547 56,328 Interest expense, net (48,438) (48,438) (34,812) (34,218) Other, net (59,636) (59,636) 49,291 49,297 ------------ ----------- ------------ ----------- Earnings before income taxes and minority interest 133,164 133,164 53,026 71,407 Income tax expense (107,265) (108,877) (102,921) (112,869) Minority interest (152,487) (149,339) (81,275) (47,124) ------------ ----------- ------------ ----------- Loss from continuing operations (f) $ (126,588) $ (125,052) $ (131,170) $ (88,586) ============ =========== ============ =========== Loss from continuing operations, excluding one-time charges and non-operating gains (g) ($105,516) ($103,980) ($99,248) ($50,177) ============ =========== ============ =========== Cash net income, excluding one-time charges and non-operating gains $ 309,500 $ 311,036 $ 331,312 $ 379,134 ============ =========== ============ =========== Weighted average basic shares 374,101 374,101 366,045 359,688 ============ =========== ============ =========== Weighted average cash net income shares 765,343 765,343 753,760 747,403 ============ =========== ============ =========== EPS FROM CONTINUING OPERATIONS Basic loss per share $ (.34) $ (.33) $ (.36) $ (.25) ============ =========== ============ =========== Basic loss per share, excluding one-time charges and non-operating gains $ (.28) $ (.28) $ (.27) $ (.14) ============ =========== ============ =========== Cash net income per share, excluding one-time charges $ .40 $ .41 $ .44 $ .51 ============ =========== ============ =========== EBITDA (h) $ 893,713 $ 893,713 $ 809,047 $ 810,695 ============ =========== ============ =========== USA NETWORKS AND SUBSIDIARIES EPS AND CASH NET INCOME RECONCILIATION INFORMATION - CONTINUING OPERATIONS UNAUDITED ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Presented as if the Ticketmaster and TMCS merger had occurred as of the beginning of the period. The merger had no impact on EBITDA, but did impact minority interest. (b) Excludes one time charges and non-operating gains. ================================================================================ 23
THREE MONTHS ENDED DECEMBER 31, PRO FORMA PRO FORMA ACTUAL --------- --------- --------- 2001 2000 (a) 2000 --------- --------- --------- BASIC LOSS PER SHARE: Net loss $ (56,948) $ (77,540) $ (62,297) Impact of unusual items, net of tax and minority interest (b) 7,507 44,639 51,127 --------- --------- --------- BASIC LOSS, EXCLUDING UNUSUAL ITEMS (b) $ (49,441) $ (32,901) $ (11,170) ========= ========= ========= Weighted average basic shares 377,139 368,264 368,264 ========= ========= ========= Basic loss per share before preferred dividend $ (.15) $ (.21) $ (.17) --------- --------- --------- Basic loss per share before preferred dividend, ex. one-time items $ (.13) $ (.09) $ (.03) ========= ========= ========= ============================================================================================================== CASH NET INCOME: Net loss $ (56,948) $ (77,540) $ (62,297) Impact of non-cash items, net of tax and minority interest 90,130 226,159 226,159 Minority Interest (15,033) (61,473) (61,473) --------- --------- --------- CASH NET INCOME 18,149 87,146 102,389 Impact of unusual items, net of tax and minority interest (b) 15,291 12,966 9,387 --------- --------- --------- CASH NET INCOME, EXCLUDING UNUSUAL ITEMS (b) $ 33,440 $ 100,112 $ 111,776 ========= ========= ========= Weighted average CNI shares 760,866 751,781 751,781 ========= ========= ========= Cash net income per share $ .02 $ .12 $ .14 ========= ========= ========= Cash net income per share, excluding unusual items (b) $ .04 $ .13 $ .15 ========= ========= ========= ============================================================================================================== RECONCILIATION OF BASIC AND CASH NET INCOME OUTSTANDING SHARES Basic weighted average shares 377,139 368,264 368,264 Exchangeable LLC and Holdco shares 361,153 361,153 361,153 Treasury Method Stock Options 22,574 22,364 22,364 --------- --------- --------- 760,866 751,781 751,781 ========= ========= ========= ============================================================================================================== USA NETWORKS AND SUBSIDIARIES EPS AND CASH NET INCOME RECONCILIATION INFORMATION - CONTINUING OPERATIONS, BEFORE CUM. EFFECT OF ACCOUNTING CHANGE UNAUDITED ($ IN THOUSANDS, EXCEPT PER SHARE DATA) (a) Presented as if the Ticketmaster and TMCS merger had occurred as of the beginning of the period. The merger had no impact on EBITDA, but did impact minority interest. Also, 2000 includes the results of PRC and Styleclick for the entire period. (b) Excludes one time charges and non-operating gains. ================================================================================ 24
TWELVE MONTHS ENDED DECEMBER 31, PRO FORMA ACTUAL PRO FORMA ACTUAL --------- --------- --------- --------- 2001 (a) 2001 2000 (a) 2000 --------- --------- --------- --------- BASIC LOSS PER SHARE: Net loss $(126,588) $(125,052) $(131,170) $ (88,586) Impact of unusual items, net of tax and minority interest (b) 21,072 21,072 31,922 38,409 --------- --------- --------- --------- BASIC LOSS, EXCLUDING UNUSUAL ITEMS (b) $(105,516) $(103,980) $ (99,248) $ (50,177) ========= ========= ========= ========= Weighted average basic shares 374,101 374,101 366,045 359,688 ========= ========= ========= ========= Basic loss per share before preferred dividend $ (.34) $ (.33) $ (.36) $ (.25) --------- --------- --------- --------- Basic loss per share before preferred dividend, ex. one-time items $ (.28) $ (.28) $ (.27) $ (.14) ========= ========= ========= ========= ============================================================================================================================ CASH NET INCOME: Net loss $(126,588) $(125,052) $(131,170) $ (88,586) Impact of non-cash items, net of tax and minority interest 198,951 198,951 305,237 305,237 Minority Interest 211,471 211,471 194,002 199,240 --------- --------- --------- --------- CASH NET INCOME 283,834 285,370 368,069 415,891 Impact of unusual items, net of tax and minority interest (b) 25,666 25,666 (36,757) (36,757) --------- --------- --------- --------- CASH NET INCOME, EXCLUDING UNUSUAL ITEMS (b) $ 309,500 $ 311,036 $ 331,312 $ 379,134 ========= ========= ========= ========= Weighted average CNI shares 765,343 765,343 753,760 747,403 ========= ========= ========= ========= Cash net income per share $ .37 $ .37 $ .49 $ .56 ========= ========= ========= ========= Cash net income per share, excluding unusual items (b) $ .40 $ .41 $ .44 $ .51 ========= ========= ========= ========= ============================================================================================================================ RECONCILIATION OF BASIC AND CASH NET INCOME OUTSTANDING SHARES Basic weighted average shares 374,101 374,101 366,045 359,688 Exchangeable LLC and Holdco shares 361,153 361,153 361,153 361,153 Treasury Method Stock Options 30,089 30,089 26,562 26,562 --------- --------- --------- --------- 765,343 765,343 753,760 747,403 ========= ========= ========= ========= ============================================================================================================================ USA PROVIDES REVISED BUDGET TO INVESTMENT COMMUNITY As filed with the Securities and Exchange Commission on January 29, 2002 Based on its strong fourth quarter results, additional information regarding the state of the travel and leisure markets, and to give pro forma effect for its pending contribution of USA Entertainment to a joint venture to be controlled by Vivendi Universal, USA Networks, Inc. ("USA" and to be renamed USA Interactive) has revised its 2002 budget and 2003 outlook from what it furnished to the SEC on October 24, 2001. The revised budget, which is presented in detail on the following pages, calls for EBITDA from Operating Businesses to increase by 34% in 2002 on 24% higher revenue. READ IMPORTANT FOOTNOTES AND DISCLAIMER As filed with the Securities and Exchange Commission on January 29, 2002. 25 USA NETWORKS, INC. (to be renamed USA Interactive) REVISED BUDGET ($ IN MILLIONS EXCEPT PER SHARE AMOUNTS) READ IMPORTANT FOOTNOTES AND DISCLAIMER As filed with the Securities and Exchange Commission on January 29, 2002. 26
2002 REVISED BUDGET PRO FORMA ------------------------------------------------------ 2001 Q1 Q2 Q3 Q4 FULL YEAR --------- ----- ------- ------- ------- --------- REVENUE -- OPERATING BUSINESSES HSN - U.S. $ 1,550 $ 422 $ 418 $ 441 $ 561 $ 1,842 Ticketing 580 157 170 148 146 620 Hotel Reservations 536 150 197 212 216 775 Expedia 297 87 116 127 120 450 Precision Response 299 69 78 88 98 333 Match.com 49 18 22 23 25 88 ------- ----- ------- ------- ------- ------- SUBTOTAL 3,311 903 1,000 1,039 1,166 4,108 REVENUE -- EMERGING BUSINESSES Citysearch and related 46 8 9 11 13 40 HSN - other international (b) 319 87 95 99 124 404 ECS / Styleclick 34 11 18 17 29 75 ------- ----- ------- ------- ------- ------- Subtotal 400 106 123 126 165 519 Foreign exchange conversion (47) (17) (15) (15) (16) (62) Disengaged HSN homes 109 0 0 0 0 0 Intersegment elimination (7) (3) (3) (3) (3) (10) ------- ----- ------- ------- ------- ------- TOTAL REVENUE $ 3,766 $ 989 $ 1,105 $ 1,147 $ 1,313 $ 4,555 ======= ===== ======= ======= ======= ======= EBITDA -- OPERATING BUSINESSES HSN - domestic $ 216 $ 58 $ 62 $ 70 $ 95 $ 285 Ticketing 106 32 39 27 27 125 Hotel Reservations 81 18 28 29 35 110 Expedia 61 16 23 27 25 91 Precision Response 34 6 8 12 15 41 Match.com 17 3 7 9 11 30 Corporate and other (31) (9) (9) (9) (9) (34) ------- ----- ------- ------- ------- ------- SUBTOTAL 485 125 159 165 199 648 EBITDA -- EMERGING BUSINESSES Citysearch and related (43) (10) (9) (8) (6) (32) HSN - other international (b) (23) (1) 2 2 9 12 ECS / Styleclick (54) (8) (4) (3) (1) (16) ------- ----- ------- ------- ------- ------- Subtotal (120) (19) (11) (9) 2 (37) Non-recurring items (19) 0 0 0 0 0 Foreign exchange conversion (1) (1) (1) (1) (2) (5) Disengaged HSN homes 15 0 0 0 0 0 ------- ----- ------- ------- ------- ------- TOTAL EBITDA $ 359 $ 105 $ 148 $ 155 $ 199 $ 607 ======= ===== ======= ======= ======= ======= EARNINGS PER SHARE - ALL AMOUNTS ARE DILUTED Basic $ 0.22 $ -- $ 0.06 $ 0.07 $ 0.12 $ 0.26 Cash net income $ 0.33 $0.04 $ 0.10 $ 0.11 $ 0.17 $ 0.43 GROWTH OUTLOOK --------------------- 2003 '01 - '02 '02 - '03 ------- --------- --------- REVENUE -- OPERATING BUSINESSES HSN - U.S. $ 2,070 19% 12% Ticketing 680 7% 10% Hotel Reservations 1,100 44% 42% Expedia 560 51% 24% Precision Response 416 12% 25% Match.com 135 79% 54% ------- ----- ----- SUBTOTAL 4,961 24% 21% REVENUE -- EMERGING BUSINESSES Citysearch and related 70 -13% 75% HSN - other international (b) 491 27% 21% ECS / Styleclick 117 120% 56% ------- ----- ----- Subtotal 678 30% 31% Foreign exchange conversion (72) Disengaged HSN homes 0 Intersegment elimination (10) ------- ----- ----- TOTAL REVENUE $ 5,557 21% 22% ======= ===== ===== EBITDA -- OPERATING BUSINESSES HSN - domestic $ 350 32% 23% Ticketing 145 18% 16% Hotel Reservations 156 35% 42% Expedia 120 50% 31% Precision Response 61 19% 50% Match.com 55 82% 83% Corporate and other (36) ------- ----- ----- SUBTOTAL 851 34% 31% EBITDA -- EMERGING BUSINESSES Citysearch and related (13) HSN - other international (b) 24 ECS / Styleclick (6) ------- Subtotal 5 Non-recurring items 0 Foreign exchange conversion (6) Disengaged HSN homes 0 ------- ----- ----- TOTAL EBITDA $ 850 69% 40% ======= ===== ===== EARNINGS PER SHARE - ALL AMOUNTS ARE DILUTED Basic $ 0.52 Cash net income $ 0.75 USA NETWORKS, INC. (to be renamed USA Interactive) REVISED BUDGET ($ IN MILLIONS EXCEPT PER SHARE AMOUNTS) ($ IN MILLIONS EXCEPT PER SHARE AMOUNTS)
REVISED BUDGET OUTLOOK FREE CASH FLOW 2002 2003 ------- ------- Total EBITDA $ 607 $ 850 Capital expenditures (135) (160) Taxes, including distributions to LLC partners (264) (249) Cable distribution fees (67) (70) Cash interest 93 109 HSN disengagement costs (36) (18) Other, net (includes changes in working capital, investments, and other items) (78) (90) ----- ----- Total Free Cash Flow $ 120 $ 372 ===== ===== READ IMPORTANT FOOTNOTES AND DISCLAIMER As filed with the Securities and Exchange Commission on January 29, 2002. 27
REVISED PRO FORMA BUDGET OUTLOOK 2001 (a) 2002 2003 --------- ------- ------- P&L Total EBITDA $ 359 $ 607 $ 850 Depreciation and other (194) (249) (271) Amortization of intangibles and other non-cash charges (131) (134) (142) Disengagement costs (4) (36) (18) Interest and other income / (expense) 129 129 159 ----- ----- ----- Pre-tax net income / (loss) 159 317 579 Income tax expense (60) (137) (245) Minority interest benefit/ (expense) 9 (54) (95) ----- ----- ----- Net income before preferred dividend $ 108 $ 126 $ 239 ===== ===== ===== Preferred dividend $ (13) $ (13) $ (13) ----- ----- ----- Net income available to common shareholders $ 95 $ 113 $ 226 ===== ===== ===== Holdco Minority Interest (5) 22 33 1.4% PIK dividend on $1.75 billion preferred interest, net of tax (15) (15) (15) Amortization of intangibles and other non-cash charges , net of tax and minority interest 63 58 66 ----- ----- ----- Cash net income $ 138 $ 178 $ 310 EPS EPS - diluted $0.22 $0.26 $0.52 Cash EPS - diluted $0.33 $0.43 $0.75 Average weighted average diluted shares outstanding 438 438 438 Average cash net income shares outstanding 415 415 414 RECONCILIATION OF SHARES Shares outstanding 438 Holdco exchangeable shares 33 Vivendi remaining shares (57) ----- 415 USA NETWORKS, INC. (to be renamed USA Interactive) REVISED BUDGET ($ IN MILLIONS EXCEPT PER SHARE AMOUNTS) IMPORTANT DISCLOSURES / LEGEND AND FORWARD LOOKING STATEMENTS / FOOTNOTES (a) 2001 PRO FORMA INFORMATION PRESENTED IN ACCORDANCE WITH THE NEW ACCOUNTING RULES, WHEREBY GOODWILL AND INTANGIBLE ASSETS WITH INDEFINITE LIVES ARE NOT AMORTIZED. THE AMOUNT OF AMORTIZATION OF GOODWILL RECORDED IN 2001 WAS $215 MILLION. NET INCOME ALSO EXCLUDES ONE-TIME ITEMS RELATED TO ONE-TIME RESTRUCTURING CHARGES, EMPLOYEE TERMINATIONS AND BENEFITS AND INVESTMENT WRITE-DOWNS. (b) ADJUSTED EPS IS COMPUTED EXCLUDING VIVENDI'S REMAINING 56.6 MILLION SHARES AS WELL AS THE PIK OF 1.4% EARNED ON THE $1.75 BILLION PREFERRED SECURITY THAT RELATES TO THESE SHARES. THE PIK ($24.5 MILLION PRE-TAX) HAS BEEN DEDUCTED FROM INCOME. (c) THE COMPANY INTENDS TO ISSUE COMMON STOCK FOR ALL REMAINING EXCHANGEABLE HOLDCO SHARES (33.2 MILLION) UPON COMPLETION OF THE VIVENDI TRANSACTION, THUS ELIMINATING THE LLC AND HOLDCO STRUCTURES FOR REPORTING PURPOSES. THE AMOUNTS DENOTED AS FULLY CONVERTED REPRESENT THIS STRUCTURE. USA and Expedia have filed a joint prospectus/proxy statement and will file other relevant documents concerning USA's acquisition of Expedia with the Securities and Exchange Commission ("SEC"). INVESTORS ARE URGED TO READ THE JOINT PROSPECTUS/PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE WITH THE SEC BECAUSE THOSE DOCUMENTS CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain such documents free of charge at the SEC's website at www.sec.gov. In addition, such documents may also be obtained free of charge by contacting USA Networks, Inc., 152 West 57th Street, New York, New York, 10019, Attention: Investor Relations, or Expedia, Inc., 13810 SE Eastgate Way, Suite 400, Bellevue, WA 98005, Attention: Investor Relations. USA has filed a preliminary proxy statement and will file other relevant documents concerning USA's contribution of its Entertainment Group to a joint venture with Vivendi Universal and certain related transactions with the Securities and Exchange Commission ("SEC"). INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED IN THE FUTURE WITH THE SEC BECAUSE THOSE DOCUMENTS CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors will be able to obtain such documents free of charge at the SEC's website at www.sec.gov. In addition, such documents may also be obtained free of charge by contacting USA Networks, Inc., 152 West 57th Street, New York, New York, 10019, Attention: Investor Relations. INVESTORS SHOULD READ THE PROXY STATEMENT CAREFULLY WHEN AVAILABLE BEFORE MAKING ANY VOTING OR INVESTMENT DECISION CONCERNING THE PROPOSED TRANSACTIONS. USA and its directors and officers may be deemed to be participants in the solicitation of proxies from USA shareholders to adopt the agreement providing for USA's contribution of its Entertainment Group to a joint venture with Vivendi Universal and the other related transactions described therein. A detailed list of the names and interests of USA's directors and executive officers is contained in the definitive proxy statement on Schedule 14A filed by SUA with the SEC on April 9, 2001. Copies of USA filings may be obtained free of charge at the SEC's website at www.sec.gov. This revised budget contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of the senior management of USA 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 should, therefore, be considered in light of various important factors, including those set forth herein and in the documents USA files with the Securities and Exchange Commission. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: material adverse changes in economic conditions generally or in the markets served by USA, material changes in inflation, future regulatory and legislative actions affecting USA's operating areas, competition from others, product demand and market acceptance, the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms, the ability to expand into and successfully operate in foreign markets, and obtaining and retaining skilled workers and key executives. The words "estimate," "project," "intend," "expect," "believe" and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. USA does not undertake any obligation to update or revise these forward-looking statements, whether as a result of new information, future events or any other reason. READ IMPORTANT FOOTNOTES AND DISCLAIMER As filed with the Securities and Exchange Commission on January 29, 2002. 28 USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) PRO FORMA SEGMENT RESULTS $ IN MILLIONS; ROUNDING DIFFERENCES MAY EXIST. UNAUDITED. THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. ** Quarterly HSN disengagement amounts will be pro forma'd fully beginning in 2002. As filed with the Securities and Exchange Commission on January 29, 2002. THESE REVENUE FIGURES ARE PRO FORMA FOR PENDING EXPEDIA AND VIVENDI TRANSACTIONS. 29
---------- ------------------------------------------------- REVENUE 1999 2000 ---------- ------------------------------------------------- YE 12/31 Q1 Q2 Q3 Q4 YE 12/31 -------- -- -- -- -- -------- OPERATING BUSINESSES HSN - U.S.** $ 1,332.9 $ 358.5 $ 344.0 $ 368.8 $ 455.8 $ 1,527.0 Ticketing 442.7 128.0 143.0 124.9 122.7 518.6 Hotel Reservations 161.8 55.3 78.1 94.6 100.0 328.0 Expedia (transaction pending) 73.0 33.2 37.0 42.1 44.4 156.7 Precision Response 215.9 69.6 70.2 70.2 72.1 282.1 Personals 9.0 6.9 7.5 7.6 7.2 29.2 ---------- -------- -------- -------- -------- ---------- SUB-TOTAL 2,235.4 651.4 679.7 708.2 802.2 2,841.5 EMERGING BUSINESSES Citysearch and related 27.3 10.1 12.8 14.0 14.0 50.8 HSN - international and other 175.7 69.6 60.8 67.2 83.4 281.0 ECS/Styleclick 55.4 12.5 10.1 12.5 13.4 48.5 ---------- -------- -------- -------- -------- ---------- SUB-TOTAL 258.4 92.2 83.6 93.6 110.9 380.3 ---------- -------- -------- -------- -------- ---------- Non-recurring items 6.9 -- -- -- -- -- Foreign exchange conversion -- (7.9) (6.7) (8.9) (11.8) (35.3) Disengaged HSN Homes** -- 0.0 0.0 0.0 6.2 6.2 Intersegment Elimination -- -- -- -- -- -- ---------- -------- -------- -------- -------- ---------- TOTAL $ 2,500.7 $ 735.8 $ 756.6 $ 792.9 $ 907.5 $ 3,192.8 ========== ======== ======== ======== ======== ========== USA ENTERTAINMENT USA Network $ 757.7 $ 196.9 $ 207.9 $ 200.0 $ 199.4 $ 804.2 Sci-Fi Channel 198.5 62.4 70.7 64.1 77.8 274.9 Studios, net 348.6 119.6 110.5 71.0 144.9 446.0 Trio, NWI, Crime, other emerging 1.2 0.6 3.7 8.6 7.5 20.3 USA Films 82.1 30.3 20.8 14.5 20.5 86.1 ---------- -------- -------- -------- -------- ---------- SUB-TOTAL 1,387.9 409.8 413.5 358.1 450.1 1,631.5 ---------- -------- -------- -------- -------- ---------- ---------------------------------------------------- REVENUE 2001 ---------------------------------------------------- Q1 Q2 Q3 Q4 YE 12/31 -- -- -- -- -------- OPERATING BUSINESSES HSN - U.S.** $ 385.4 $ 381.8 $ 396.4 $ 495.3 $ 1,549.9** Ticketing 150.1 163.9 133.9 131.8 579.7 Hotel Reservations 105.3 138.3 151.2 141.7 536.5 Expedia (transaction pending) 57.2 78.5 79.5 81.8 296.9 Precision Response 80.7 75.6 72.6 69.8 298.7 Personals 8.5 10.7 12.5 17.6 49.2 -------- -------- -------- ---------- ---------- SUB-TOTAL 787.2 848.8 846.1 937.8 3,310.9 EMERGING BUSINESSES Citysearch and related 12.4 12.4 11.1 10.3 46.1 HSN - international and other 83.4 87.7 66.1 82.2 319.4 ECS/Styleclick 8.6 7.8 5.4 12.4 34.2 -------- -------- -------- ---------- ---------- SUB-TOTAL 104.4 107.9 82.6 104.9 399.8 -------- -------- -------- ---------- ---------- Non-recurring items -- -- 0.0 0.0 Foreign exchange conversion (13.7) (13.8) (9.1) (10.2) (46.9) Disengaged HSN Homes** 0.0 0.0 0.0 0.0 109.0** Intersegment Elimination -- (2.6) (2.3) (2.2) (7.1) -------- -------- -------- ---------- ---------- TOTAL $ 877.9 $ 940.3 $ 917.3 $ 1,030.3 $ 3,765.8 ======== ======== ======== ========== ========== USA ENTERTAINMENT USA Network $ 214.1 $ 220.6 $ 213.8 $ 184.7 $ 833.3 Sci-Fi Channel 69.3 70.0 63.1 71.4 273.9 Studios, net 151.5 152.5 121.1 100.9 526.0 Trio, NWI, Crime, other emerging 6.2 6.2 5.8 6.0 24.1 USA Films 51.0 62.6 16.0 37.5 167.0 -------- -------- -------- ---------- ---------- SUB-TOTAL 492.1 511.8 419.8 400.5 1,824.3 -------- -------- -------- ---------- ---------- USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) PRO FORMA SEGMENT RESULTS $ IN MILLIONS; ROUNDING DIFFERENCES MAY EXIST. UNAUDITED. THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. ** Quarterly HSN disengagement amounts will be pro forma'd fully beginning in 2002. As filed with the Securities and Exchange Commission on January 29, 2002. THESE EBITDA FIGURES ARE PRO FORMA FOR PENDING EXPEDIA AND VIVENDI TRANSACTIONS. 30
---------- ---------------------------------------------- EBITDA 1999 2000 ---------- ---------------------------------------------- YE 12/31 Q1 Q2 Q3 Q4 YE 12/31 -------- -- -- -- -- -------- OPERATING BUSINESSES HSN - U.S.** $ 214.7 $ 49.4 $ 52.6 $ 53.9 $ 73.8 $ 229.6 Ticketing 93.3 27.4 31.6 16.7 24.4 100.0 Hotel Reservations 24.2 8.2 12.9 13.9 17.6 52.6 Expedia (transaction pending) (44.3) (21.3) (12.4) (2.2) (2.9) (38.8) Precision Response 30.4 9.5 11.9 12.2 11.0 44.6 Personals (0.4) 0.9 1.7 2.3 1.4 6.3 Corporate and other (36.1) (9.6) (6.8) (7.5) (6.0) (29.9) -------- -------- -------- -------- -------- -------- SUB-TOTAL 281.7 64.4 91.4 89.3 119.4 364.5 EMERGING BUSINESSES Citysearch and related (60.4) (18.3) (16.9) (16.3) (12.4) (63.9) HSN - international and other 11.8 7.2 2.3 1.2 4.1 14.7 ECS/Styleclick (56.0) (16.3) (21.4) (16.7) (16.8) (71.2) -------- -------- -------- -------- -------- -------- SUB-TOTAL (104.6) (27.4) (36.1) (31.8) (25.1) (120.4) Non recurring items -- 6.3 (7.8) -- (3.2) (4.7) Foreign exchange conversion -- (1.0) (0.6) (0.9) (1.5) (3.9) Disengaged HSN Homes** -- 0.0 0.0 0.0 0.9 0.9 -------- -------- -------- -------- -------- -------- TOTAL $ 177.0 $ 42.3 $ 46.9 $ 56.6 $ 90.5 $ 236.3 ======== ======== ======== ======== ======== ======== USA ENTERTAINMENT USA Network $ 312.1 $ 97.2 $ 105.3 $ 87.2 $ 105.6 $ 395.2 Sci-Fi Channel 68.9 24.2 24.9 22.4 30.2 101.7 Studios, net 46.1 17.5 9.1 8.8 15.4 50.8 Trio, NWI, Crime, other emerging (3.0) (2.3) (2.0) (0.3) (2.5) (7.1) USA Films 6.4 2.2 (2.3) (5.8) (0.6) (6.6) -------- -------- -------- -------- -------- -------- TOTAL 430.5 138.8 134.9 112.3 148.0 534.0 ------------------------------------------------ EBITDA 2001 ------------------------------------------------ Q1 Q2 Q3 Q4 YE 12/31 -- -- -- -- -------- OPERATING BUSINESSES HSN - U.S.** $ 51.7 $ 55.2 $ 48.9 $ 75.7 $ 216.5** Ticketing 30.2 35.5 19.0 21.5 106.2 Hotel Reservations 15.8 21.0 21.8 22.9 81.5 Expedia (transaction pending) 4.5 17.7 16.4 22.2 60.9 Precision Response 10.0 10.2 7.9 6.2 34.3 Personals 0.3 2.8 5.8 7.6 16.5 Corporate and other (7.9) (8.2) (8.1) (7.0) (31.2) -------- -------- -------- -------- -------- SUB-TOTAL 104.7 134.3 111.7 149.0 484.7 EMERGING BUSINESSES Citysearch and related (11.8) (11.0) (10.8) (9.9) (43.4) HSN - international and other (0.8) (1.6) (12.4) (7.7) (22.6) ECS/Styleclick (16.9) (14.5) (14.4) (7.8) (53.6) -------- -------- -------- -------- -------- SUB-TOTAL (29.4) (27.1) (37.6) (25.4) (119.6) Non recurring items -- (4.8) (12.3) (3.1) (20.1) Foreign exchange conversion (0.9) (1.0) 0.9 (0.2) (1.2) Disengaged HSN Homes** 0.0 0.0 0.0 0.0 15.0** -------- -------- -------- -------- -------- TOTAL $ 74.3 $ 101.5 $ 62.7 $ 120.3 $ 358.8 ======== ======== ======== ======== ======== USA ENTERTAINMENT USA Network $ 112.2 $ 119.3 $ 113.7 $ 84.9 $ 430.1 Sci-Fi Channel 29.7 27.8 23.9 26.1 107.5 Studios, net 21.5 20.2 17.6 15.9 75.2 Trio, NWI, Crime, other emerging (1.7) (2.4) (3.1) (4.4) (11.5) USA Films (1.0) 0.6 0.4 1.9 2.0 -------- -------- -------- -------- -------- TOTAL 160.7 165.6 152.6 124.4 603.3 USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) PRO FORMA RESULTS OF OPERATIONS (AS REPORTED) $ IN MILLIONS; ROUNDING DIFFERENCES MAY EXIST. UNAUDITED. * AS REPORTED. MAY NOT AGREE WITH PROFORMA REVENUE AND EBITDA RESULTS ABOVE. THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002. THIS P&L DOES NOT GIVE AFFECT TO PENDING EXPEDIA AND VIVENDI TRANSACTIONS. 31
--------- ------------------------------------------------------------- P&L 1999 2000 --------- ------------------------------------------------------------- YE 12/31* Q1* Q2* Q3* Q4 YE 12/31 --------- --------- --------- --------- --------- --------- Date Reported: 02/01/01 04/25/01 07/25/01 10/24/01 01/29/02 01/29/02 Revenues, net 3,815.6 1,112.4 1,134.9 1,109.9 1,313.2 4,667.7 Operating costs and expenses: Costs related to revenues 2,301.7 665.6 676.3 669.1 801.3 2,812.4 Other costs and expenses 855.1 244.9 264.1 269.6 270.6 1,046.3 Amort. of non-cash distribution and marketing expense 0.0 1.6 1.3 2.7 7.1 11.7 Depreciation 119.2 36.5 44.6 38.3 59.3 179.8 Amortization of goodwill 374.0 108.0 110.5 113.6 280.7 579.0 --------- --------- --------- --------- --------- --------- Total operating costs 3,650.1 1,056.5 1,096.8 1,093.2 1,419.0 4,629.1 --------- --------- --------- --------- --------- --------- Operating income 165.4 55.9 38.0 16.7 (105.8) 38.6 Interest expense, net (50.2) (8.6) (7.9) (8.2) (10.3) (34.8) Gain on disposition of television station 0.0 0.0 0.0 0.0 0.0 0.0 Gain on sale of securities 89.7 0.0 0.0 0.0 0.0 0.0 Other, net (4.9) (0.6) (1.9) 69.9 (18.1) 49.3 --------- --------- --------- --------- --------- --------- 34.6 (9.2) (9.8) 61.7 (28.3) 14.5 --------- --------- --------- --------- --------- --------- Earnings before income taxes and minority interest 200.1 46.7 28.2 78.4 (134.1) 53.1 Income tax expense (83.9) (30.3) (29.6) (25.6) (26.3) (102.9) Minority interest (136.7) (40.4) (30.2) (66.7) 82.9 (81.3) --------- --------- --------- --------- --------- --------- Loss before cumulative effect of accounting change (20.5) (23.9) (31.6) (13.9) (77.5) (131.1) ========= ========= ========= ========= ========= ========= Cumulative effect of accounting change, net of tax 0.0 0.0 0.0 0.0 0.0 0.0 --------- --------- --------- --------- --------- --------- Net loss from continuing operations (20.5) (23.9) (31.6) (13.9) (77.5) (131.1) ========= ========= ========= Weighted average diluted shares 352.6 361.9 363.6 367.8 368.3 366.0 ========= ========= ========= ========= ========= ========= Weighted average fully converted shares 745.8 752.5 724.7 729.0 751.8 753.8 ========= ========= ========= ========= ========= ========= Basic earnings per share $ (.06) $ .07 $ (.09) $ (.04) $ (.21) $ (.36) ========= ========= ========= ========= ========= ========= Diluted earnings per share $ (.06) $ .07 $ (.09) $ (.04) ========= ========= ========= ========= ========= ========= Fully converted earnings per share $ .12 $ .01 $ (.02) $ (.02) ========= ========= ========= ========= ========= ========= EBITDA 658.7 201.9 194.4 171.2 241.3 809.0 ========= ========= ========= ========= ========= ========= Excluding one-time charges and non-operating gains: Basic and diluted earnings per share $ (.11) $ (.07) $ (.07) $ (.08) $ (.09) $ (.36) ========= ========= ========= ========= ========= ========= Cash net income earnings per share $ .11 $ .17 $ .16 $ .13 $ (.27) ========= ========= ========= ========= ========= ========= Fully converted earnings per share $ .05 $ (.01) $ (.01) $ (.02) ========= ========= ========= ========= ========= ========= Fully converted cash net income earnings per share $ .09 $ .11 $ .10 ========= ========= ========= ========= ========= ========= ------------------------------------------------------------- P&L 2001 ------------------------------------------------------------- Q1* Q2* Q3* Q4 YE 12/31 --------- --------- --------- --------- --------- Date Reported: 04/25/01 07/25/01 10/24/01 01/29/02 01/29/02 Revenues, net 1,315.7 1,371.4 1,256.3 1,346.5 5,284.8 Operating costs and expenses: Costs related to revenues 800.2 831.7 746.7 831.3 3,208.4 Other costs and expenses 285.4 290.5 312.5 298.3 1,182.7 Amort. of non-cash distribution and marketing expense 8.0 6.6 5.2 6.5 26.4 Depreciation 48.7 57.6 51.2 63.4 223.0 Amortization of goodwill 100.2 100.8 103.0 100.8 403.1 --------- --------- --------- --------- --------- Total operating costs 1,242.5 1,287.3 1,218.6 1,300.4 5,048.7 --------- --------- --------- --------- --------- Operating income 73.2 84.2 37.7 46.1 241.2 Interest expense, net (11.4) (12.9) (10.1) (14.0) (48.4) Gain on disposition of television station 0.0 0.0 0.0 0.0 0.0 Gain on sale of securities 0.0 0.0 0.0 0.0 0.0 Other, net (6.5) (13.7) (12.9) (26.4) (59.6) --------- --------- --------- --------- --------- (17.9) (26.6) (23.1) (40.4) (108.1) --------- --------- --------- --------- --------- Earnings before income taxes and minority interest 55.3 57.5 14.7 5.7 133.2 Income tax expense (25.5) (22.8) (21.9) (37.7) (107.3) Minority interest (49.3) (45.0) (33.2) (25.0) (152.5) --------- --------- --------- --------- --------- Loss before cumulative effect of accounting change (19.5) (10.3) (40.4) (56.9) (127.2) Cumulative effect of accounting change, net of tax (9.2) 0.0 0.0 0.0 (9.2) --------- --------- --------- --------- --------- Net loss from continuing operations (28.7) (10.3) (40.4) (56.9) (136.4) ========= ========= ========= ========= ========= Weighted average diluted shares 370.2 373.8 376.4 377.1 374.1 ========= ========= ========= ========= ========= Weighted average fully converted shares 758.0 763.4 737.6 760.9 765.3 ========= ========= ========= ========= ========= Basic earnings per share $ (.05) $ (.03) $ (.11) $ (.15) $ (.34) ========= ========= ========= ========= ========= Diluted earnings per share $ (.05) $ (.03) $ (.08) ========= ========= ========= ========= ========= Fully converted earnings per share $ .02 $ .03 $ (.01) ========= ========= ========= ========= ========= EBITDA 230.1 249.3 197.1 216.8 893.7 ========= ========= ========= ========= ========= Excluding one-time charges and non-operating gains: Basic and diluted earnings per share $ (.05) $ (.02) $ (.08) $ (.13) $ (.34) ========= ========= ========= ========= ========= Cash net income earnings per share $ .16 $ .20 $ .13 $ .04 $ .40 ========= ========= ========= ========= ========= Fully converted earnings per share $ .02 $ .04 (.01) ========= ========= ========= ========= ========= Fully converted cash net income earnings per share $ .12 $ .14 $ .10 ========= ========= ========= ========= ========= USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) OPERATING METRICS IN MILLIONS EXCEPT PERCENTAGES. THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002. 32
--------------------------------------------- --------------------------------------- 2000 2001 --------------------------------------------- --------------------------------------- Q1 Q2 Q3 Q4 YE Q1 Q2 Q3 Q4 YE -- -- -- -- -- -- -- -- -- -- HSN-US Units shipped 8.5 8.1 8.6 10.0 35.2 8.6 9.0 9.5 11.4 38.5 Gross profit % 34.9% 35.7% 35.8% 33.6% 34.9% 33.5% 34.4% 34.3% 33.9% 34.0% Return rate 20.6% 19.4% 19.8% 18.8% 19.6% 19.6% 19.6% 19.0% 17.9% 19.0% Product mix: Homegoods 49% 46% 48% 54% 50% 50% 49% 52% 53% 51% Jewelry 24% 27% 26% 24% 25% 25% 26% 24% 25% 25% Health / Beauty 13% 15% 12% 10% 12% 11% 12% 10% 10% 11% Apparel / Accessories 14% 12% 14% 12% 13% 14% 13% 14% 12% 13% HSN cable / DBS HH (end of period) 62.3 63.5 64.9 65.9 65.9 68.4 69.5 71.5 73.4 73.4 HSN total HH (end of period) 75.5 76.7 76.2 77.1 77.1 80.2 82.8 82.8 83.0 83.0 America's Store FTE's (end of period) 8.5 8.8 8.9 8.8 8.8 8.4 9.4 10.8 11.6 11.6 USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) OPERATING METRICS IN MILLIONS EXCEPT REVENUE PER TICKET AND PERCENTAGES. THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002. 33
------ -------------------------------------- ----------------------------------------- 1999 2000 2001 ------ -------------------------------------- ----------------------------------------- YE Q1 Q2 Q3 Q4 YE Q1 Q2 Q3 Q4 YE ------ -------------------------------------- ----------------------------------------- TICKETMASTER Number of tickets sold (mm) 75.0 21.8 22.3 20.2 18.7 83.0 23.6 23.5 19.3 20.3 86.7 Gross value of tickets sold (mm) $2,781 $ 812 $ 881 $ 782 $ 782 $3,256 $ 937 $1,016 $ 788 $ 870 $3,611 Share of tickets sold online 13.4% 19.6% 25.5% 25.6% 27.9% 24.5% 29.5% 33.2% 31.9% 33.9% 32.1% Revenue per ticket $ 5.25 $5.44 $5.89 $5.67 $5.87 $ 5.71 $5.96 $ 6.29 $6.20 $6.00 $ 6.11 USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) OPERATING METRICS THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002 34
----- --------------------------------------------- --------------------------------------------- 1999 2000 2001 ----- --------------------------------------------- --------------------------------------------- YE Q1 Q2 Q3 Q4 YE Q1 Q2 Q3 Q4 YE ----- --------------------------------------------- --------------------------------------------- HOTEL RESERVATIONS NETWORK Hotel room nights sold (thousands) 1,229 429 587 717 700 2,433 799 1,030 1,227 1,187 4,243 Affiliates (including TravelNow) 6,000 10,500 13,400 16,200 16,200 18,649 20,857 22,793 23,808 23,808 Properties 1,500 1,750 1,925 2,100 2,600 2,600 3,084 3,374 3,890 4,567 4,567 Cities served 40 49 60 83 97 97 135 146 171 178 178 USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) OPERATING METRICS IN THOUSANDS a Expedia's fiscal year end is June 30. Presented here as Calender Year Ended December 31. b Gross bookings represents the total value of travel booked through the Expedia, VacationSpot, and WWTE sites. c Transactions represents the number of reservations and purchases transacted through the Expedia and WWTE sites. d Average monthly Media Metrix reach represents the unduplicated reach for the Expedia and VacationSpot sites. e Conversion represents the monthly average Expedia.com unique monthly purchasers divided by the monthly average Media Metrix reach for the Expedia.com site. f Expedia new purchasing customers represents the number of new customers transacting through the Expedia sites in a quarter. g 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. h Expedia quarterly unique purchasing customers represents the number of unique customers transacting through the Expedia sites over the course of a quarter. THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002. 35
-------------------------------------------- -------------------------------------------- CY 2000 (a) CY 2001 (a) -------------------------------------------- -------------------------------------------- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 -------------------------------------------- -------------------------------------------- EXPEDIA (TRANSACTION PENDING) Total gross bookings (b) $401,000 $450,000 $467,000 $475,000 $674,000 $802,000 $723,000 $704,000 Total transactions (c) 1,022 1,186 1,306 1,318 1,780 2,241 2,222 2,229 Average monthly Media Metrix reach (d) 5,933 6,819 6,389 5,417 6,969 7,502 9,410 9,238 Expedia.com conversion (e) 3.8% 4.1% 4.8% 6.0% 5.7% 7.0% 5.5% 5.2% Expedia new purchasing customers (f) 355 447 464 504 671 904 918 870 Expedia cumulative purchasing customers (g) 1,518 1,965 2,428 2,932 3,603 4,507 5,424 6,294 Expedia quarterly unique purchasing customers (h) 540 670 741 790 1,007 1,336 1,393 1,383 USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) OPERATING METRICS OPERATING ESTIMATES (PRO FORMA FOR PENDING TRANSACTIONS) FOR THE NEXT TWELVE MONTHS (ROUNDED) Primary consumer web sites 15 Average number of new customers added daily 30,000 Active / registered customers 17 million Customer database 65 million Customer inbound telephone minutes 1 billion Customer inbound telephone calls 315 million Orders processed 75 million Credit card transactions 60 million Items shipped 40 million In-house merchants 200 Merchandise SKUs processed 60,000 Telephone operator positions 10,000 Ticketing outlets 3,430 Call centers 34 Fulfillment center square feet 2.5 million
THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002. 36USA NETWORKS, INC. (TO BE RENAMED USA INTERACTIVE) OPERATING METRICS IN MILLIONS CAPITALIZATION (pro forma for pending transactions) (AS OF 1/23/02) EXCLUDES VIVENDI'S REMAINING 56.6 MILLION SHARES PRO FORMA THE PENDING TRANSACTION, AS THE COMPANY BELIEVES THESE SHARES SHOULD BE VIEWED AS TREASURY, ALTHOUGH THE AMOUNT OF SHARES TREATED AS TREASURY WILL BE LOWER AT STOCK PRICES GREATER THAN $40.82, AS DISCUSSED IN USA'S 8-K FILING WITH THE SEC DATED DECEMBER 17, 2001. - -------------------------------------------------------------------------------- BUSINESS MIX (pro forma for pending transaction)
Ticker (NASDAQ) USAI USAi Common Stock 307.5 USAi Class B 49.6 USAi Exchangeable Common Stock 31.6 USAi Exchangeable Class B 1.6 ---------- Total Shares Outstanding 390.3 Estimated dilutive options (treasury 25.0 method) ---------- Fully diluted shares 415.3 ========== Outstanding equity cap $10.2 billion Fully diluted equity cap $10.8 billion Revenue sources (Q4 '01): Merchandise 55% Online travel/hotel rooms 22% Ticketing 13% Teleservices / ECS 8% Personals 2% ---------- Commerce 100% ========== Interactive (online and TV) (% of total) 85% International (% of total) 12%
THE FINANCIAL, STATISTICAL AND OTHER INFORMATION CONTAINED HEREIN IS UNAUDITED. As filed with the Securities and Exchange Commission on January 29, 2002. 37