UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

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

Date of Report (Date of earliest event reported):  August 2, 2005

IAC/INTERACTIVECORP

(Exact name of Registrant as specified in charter)

Registrant’s telephone number, including area code: (212) 314-7300

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

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

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

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

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

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

ITEM 2.02   RESULTS OF OPERATIONS AND FINANCIAL CONDITION/ ITEM 7.01 REGULATION FD DISCLOSURE

On August 2, 2005, the Registrant issued a press release announcing its results for the quarter ended June 30, 2005.  The full text of this press release, appearing in Exhibit 99.1 hereto, is incorporated herein by reference.

The attached document is furnished under both Item 2.02 “Results of Operations and Financial Condition” and Item 7.01 “Regulation FD Disclosure.”

The attached document refers to non-GAAP measures, within the meaning of Regulation G.  Below is additional information regarding those non-GAAP measures.

IAC’S PRINCIPLES OF FINANCIAL REPORTING

IAC reports Operating Income Before Amortization, Adjusted Net Income, Adjusted EPS and Free Cash Flow, all of which are supplemental measures to GAAP. These measures are among the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We provide and encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures as set forth in the exhibit attached hereto and which we discuss below.

Definitions of IAC’s Non-GAAP Measures

Operating Income Before Amortization is defined as operating income excluding: (1) amortization of non-cash distribution, marketing and compensation expense, (2) amortization of intangibles and goodwill impairment, if applicable, (3) pro forma adjustments for significant acquisitions, if applicable, and (4) one-time items, if applicable. See below for explanations of these adjustments. We believe this measure is useful to investors because it represents the consolidated operating results from IAC’s segments, taking into account depreciation, which we believe is an ongoing cost of doing business, but excluding the effects of any other non-cash expenses. Operating Income Before Amortization has certain limitations in that it does not take into account the impact to IAC’s statement of operations of certain expenses, including non-cash compensation, non-cash payments to partners, and acquisition-related accounting.

Adjusted Net Income generally captures all items on the statement of operations that have been, or ultimately will be, settled in cash and is defined as net income available to common shareholders excluding: (1) amortization of non-cash distribution, marketing and compensation expense, (2) amortization of intangibles and goodwill impairment, if applicable, (3) pro forma adjustments for significant acquisitions, if applicable, (4) equity income or loss from IAC’s 5.44% interest in Vivendi Universal Entertainment LLLP (“VUE”) and gain on the sale of IAC’s interest in VUE, (5) one-time items, net of related tax, and minority interest, if applicable, and

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(6) discontinued operations, net of tax. We believe Adjusted Net Income is useful to investors because it represents IAC’s consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other charges which are not allocated to the operating businesses such as interest expense, taxes and minority interest, but excluding the effects of any other non-cash expenses.

Adjusted EPS is defined as Adjusted Net Income divided by weighted fully diluted shares outstanding for Adjusted EPS purposes. We include dilution from options and warrants per the treasury stock method and include all shares relating to restricted stock/share units (“RSUs”) in shares outstanding for Adjusted EPS. This differs from the GAAP method for including RSUs, which treats them on a treasury method basis. In addition, convertible instruments are assumed to be converted in determining shares outstanding for Adjusted EPS, if the effect is dilutive. Shares outstanding for Adjusted EPS purposes are therefore higher than shares outstanding for GAAP EPS purposes. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, IAC’s consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other charges which are not allocated to the operating businesses such as interest expense, taxes and minority interest, but excluding the effects of any other non-cash expenses. Adjusted Net Income and Adjusted EPS have the same limitations as Operating Income Before Amortization, and in addition Adjusted Net Income and Adjusted EPS do not account for IAC’s passive former ownership in VUE. Therefore, we think it is important to evaluate these measures along with our consolidated statement of operations.

Free Cash Flow is defined as net cash provided by operating activities, including preferred dividends received from VUE, less capital expenditures, investments to fund HSN International unconsolidated operations and preferred dividends paid by IAC. In addition, Free Cash Flow includes tax distributions on the VUE common and preferred interests upon receipt of the distributions by IAC. For purposes of Free Cash Flow, we also include changes in warehouse loans payable in Financial Services and Real Estate due to the close connection that exists with changes in loans held by sale which are included in cash provided by operations.  We believe Free Cash Flow is useful to investors because it represents the cash that our operating businesses generate, before taking into account cash movements that are non-operational.

Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. For example, it does not take into account stock repurchases. Therefore, we think it is important to evaluate Free Cash Flow along with our consolidated statement of cash flows.

We endeavor to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measures, GAAP financial statements, and descriptions of the reconciling items and adjustments, including quantifying such items, to derive the non-GAAP measures.

Pro Forma Results

We will only present Operating Income Before Amortization, Adjusted Net Income and Adjusted EPS on a pro forma basis if we view a particular transaction as significant in size or

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transformational in nature. For the periods presented in the attached exhibit, there are no transactions that we have included on a pro forma basis.

One-Time Items

Operating Income Before Amortization is presented before one-time items, if applicable. These items are truly one-time in nature and non-recurring, infrequent or unusual, and have not occurred in the past two years or are not expected to recur in the next two years, in accordance with SEC rules. GAAP results include one-time items.  For the periods presented in the attached exhibit, Operating Income Before Amortization is not adjusted for any one-time items.

Non-Cash Expenses That Are Excluded From Our Non-GAAP Measures

Amortization of non-cash compensation expense consists of restricted stock and options expense, which relates mostly to unvested options assumed by IAC in the Ticketmaster, Hotels.com and Expedia mergers. We view this expense as part of transaction costs, which are not paid in cash, and we include the related shares in our fully diluted shares outstanding. Non-cash compensation also includes the expense associated with IAC’s RSU program. We view the true cost of these RSUs as the dilution to our share base, and as such all RSUs are included in our shares outstanding for Adjusted EPS purposes.

Amortization of non-cash distribution and marketing expense consists mainly of Hotels.com performance warrants issued to obtain distribution and non-cash advertising secured from Universal Television as part of the transaction pursuant to which VUE was created (the “VUE transaction”). The Hotels.com warrants were principally issued as part of its initial public offering, and we do not anticipate replicating these arrangements.  The non-cash advertising from Universal has historically been used for the benefit of Expedia, which runs television advertising primarily on the USA and Sci Fi cable channels without any cash cost. Ticketmaster and Match.com also recognized non-cash distribution and marketing expense related to barter arrangements, which expired in March 2004, for distribution secured from third parties, whereby advertising was provided by Ticketmaster and Match.com to a third party in return for distribution over the third party’s network.  The advertising provided has been secured by IAC through an agreement with Universal as part of the VUE transaction.  Sufficient advertising has been secured to satisfy existing obligations.  We do not expect to replace this non-cash marketing with an equivalent cash expense after it runs out in 2007, nor would IAC incur such amounts absent the advertising received in the VUE transaction.

Amortization of intangibles is a non-cash expense relating primarily to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as supplier contracts and customer relationships, are valued and amortized over their estimated lives. While it is likely that we will have significant intangible amortization expense as we continue to acquire companies, we believe that since intangibles represent costs incurred by the acquired company to build value prior to acquisition, they were part of transaction costs and will not be replaced with cash costs when the intangibles are fully amortized.

Equity income or loss from IAC’s 5.44% common interest in VUE is excluded from Adjusted Net Income and Adjusted EPS because IAC has no operating control over VUE, has no way to

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forecast this business, and does not consider the results of VUE in evaluating the performance of IAC’s businesses.  The gain from the sale of IAC’s interest in VUE is excluded from Adjusted Net Income and Adjusted EPS for similar reasons.

Free Cash Flow

IAC has significant positive working capital balances that benefit Free Cash Flow and are largely due to deferred merchant bookings and deferred revenue related to the merchant lodging business at Expedia and Hotels.com, respectively. In our merchant lodging business, cash is collected in advance of stay, and revenue is recognized at the date of travel, after which hotel suppliers invoice Expedia and Hotels.com. Working capital consists of cash deposits from customers, net of revenue recognized as a result of a customer stay, plus the increase in payables to hotel suppliers net of cash paid out in the period.

These balances are comparable to payable and receivable balances in any other company, except that the benefit, or “float”, that we get is inherent in our business model. It represents the real cash earning power of our company, and is reflected in increased working capital purely because we recognize revenue at the customer stay date rather than at the booking date. It is similar to any other cash inflow in the normal course of business and we view this as permanent cash that we can put to work.

We look at Free Cash Flow as a measure of the strength and performance of our businesses, not for valuation purposes. In our view, applying “multiples” to Free Cash Flow is inappropriate because it is subject to timing, seasonality and one-time events. We manage our business for cash and we think it is of utmost importance to maximize cash – but our primary valuation metrics are Operating Income Before Amortization and Adjusted EPS.  In addition, because Free Cash Flow is subject to timing, seasonality and one-time events, we believe it is not appropriate to annualize quarterly Free Cash Flow results.

SIGNATURES

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

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EXHIBIT INDEX

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Exhibit 99.1

August 2, 2005

IAC REPORTS Q2 RESULTS

IAC/InterActiveCorp (Nasdaq: IACI) reported Q2 results today.  The previously announced spin-off of Expedia, Inc. (“Expedia”) is expected to occur next week, with IAC and Expedia beginning trading as independent public companies on August 9, 2005.  Given the short time between our quarterly results and the spin-off date, we are providing below IAC’s operating results excluding Expedia.  Expedia’s results are available in a separate release, also issued today. IAC’s consolidated results (including Expedia) are summarized further below and provided in full later in this release.

Excluding Expedia’s results, IAC reported the following:

In line with our goal of simplifying and streamlining how we view and report IAC, we have introduced sector reporting that corresponds to the broad areas of interactivity in which we operate: Retailing, Services, Media & Advertising, and Membership & Subscriptions.  We also report the performance of our Emerging Businesses and our corporate expenses.  Please see page 2 for these sector results.

Each of the IAC sectors delivered double digit gains despite softness at HSN – U.S.  The two largest sectors, Retailing and Services, grew by more than 40% driven primarily by the acquisition of Cornerstone Brands, a strong contribution from LendingTree and a robust summer concert season.

“This is an excellent beginning for the new IAC in our first report as a  balanced enterprise of interactive businesses – and the first rate results of Expedia underscore the positive rationale for separating the assets, providing clarity in the growth of both the IAC businesses as well as the purely travel Expedia,” said Chairman and CEO, Barry Diller.

Including Expedia’s results, IAC reported the following:

•                  Revenue up 34% to $2.0 billion

•                  Operating Income Before Amortization up 24% to $308.2 million

•                  Operating income up 58% to $172.6 million

•                  Net income of $618.1 million; Diluted EPS of $0.89.  These include after-tax gains from the sale of Euvia and the VUE interests of $79.6 million and $322.1 million, respectively

•                  Adjusted Net Income up 23% to $214.9 million; Adjusted EPS up 34% to $0.30

Please see page 8 for GAAP financial statements and page 15 for definitions of non-GAAP measures.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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SECTOR RESULTS

The sector results below are presented as if IAC treated Expedia as a discontinued operation in Q2. Accordingly, certain corporate expenses, primarily non-cash compensation recognized by IAC related to Expedia employees have been excluded from these results ($ in millions).

For GAAP purposes Expedia will be treated as a discontinued operation by IAC beginning in Q3.

Please see page 13 for further segment detail and reconciliations to the comparable GAAP measure.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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DISCUSSION OF FINANCIAL AND OPERATING RESULTS

Retailing:

Retailing results were driven primarily by the acquisition of Cornerstone Brands (“Cornerstone”) in April.

The U.S. segment consists of HSN and the Cornerstone catalog and internet brands.  HSN had a disappointing second quarter with modest year over year sales growth as performance was impacted by disappointing sales productivity in several merchandise categories, and certain product mix effects.  Operating income before amortization grew at a slower rate than revenue for the U.S. segment because the Cornerstone brands typically operate at lower percentage margins than HSN and they were included in Q2 2005, but not in the prior year period.

Stronger performance at HSE Germany contributed to higher International revenue, which increased 14% excluding the benefit of foreign exchange.  International profit declined due to an arbitration settlement in connection with a former Spanish language service.  Results for Euvia, the sale of which was completed in Q2, are included in discontinued operations and prior periods have been restated accordingly.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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Services:

Services results were driven primarily by contribution from LendingTree and higher ticket sales.

Ticketing results were driven by 32% higher worldwide ticket sales. Domestic ticketing revenue increased 28%, benefiting from a considerably stronger summer concert season as compared to the prior year period and 5% higher average revenue per ticket.  International revenue grew by 45%, or 39% excluding the benefit of foreign exchange, driven primarily by Ticketmaster’s purchase of the remaining interest in its Australian joint venture in April 2005, acquisitions in Sweden and Finland in 2004, and strong ticket sales in Canada and Ireland.  These effects on international revenue were offset by lower revenue per ticket due to geographic mix and the absence of license income related to the 2004 Olympics. Ticketing profit growth reflects higher revenue, partially offset by higher domestic ticket royalties and increased costs associated with the development and support of ticketing technology.

Financial Services and Real Estate results were driven principally by 194% higher revenue per transaction, reflecting LendingTree’s strategy to close in its own name a portion of the loans sourced through the LendingTree network.  The dollar value of closed loans rose 7% in the period to $8.4 billion, with higher purchase activity and flat refinance activity.  Real Estate revenue increased due to a higher number of closings and referrals, which partially benefited from the acquisition of iNest and integration of ServiceMagic’s real estate business. Financial Services and Real Estate profit growth was due primarily to higher revenue per closing, partially offset by increased marketing costs and Real Estate customer rebates.  Operating income was further impacted by increased amortization of intangible assets.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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Media & Advertising

Media & Advertising results were driven primarily by higher revenue at Citysearch which benefited from strength in its pay-for-performance business, lower operating costs and decreased amortization of intangibles.  This was Citysearch’s first-ever profitable quarter.  Media & Advertising will include Ask Jeeves beginning in Q3.

Membership & Subscriptions:

Membership & Subscriptions results were driven primarily by membership and subscriber growth.

Vacations results were driven primarily by increases in membership revenue, higher exchange confirmations and higher average fees. Vacations profit growth was due to higher revenue, lower selling and marketing expenses, and a higher percentage of online transactions, partially offset by higher general and administrative expenses.

Personals results were driven largely by a 13% increase in paid subscribers and higher average revenue per paid subscriber.  Personals profit growth was the result of higher revenue and lower operating expenses, including depreciation, partially offset by higher marketing expenses in connection with Match.com’s marketing campaign which began in Q1.  Lower amortization of intangibles also contributed to higher operating income.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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OTHER ITEMS

Excluding the results of Expedia, which have been presented here as a discontinued operation in Q2, Operating Income Before Amortization was impacted by a 73% increase in corporate and other expense to $40.2 million, driven mainly by transaction expenses related to the spin-off of $9.1 million in Q2 and $14 million year-to-date. Operating income was impacted by the increase noted above, plus slightly higher non-cash compensation expense.

As noted on page 1, net income was impacted by the sale of Euvia and the VUE common and preferred interests in Q2, resulting in pre-tax gains of $129.3 million and $523.5 million, and after-tax gains of $79.6 million and $322.1 million, respectively. Net income was also impacted by a $62.8 million tax benefit related to the write-off of the Company’s investment in TVTS.

The consolidated effective tax rates for continuing operations and adjusted net income were 39% in Q2 2005 compared to 39% and 37%, respectively, in Q2 2004.  Q2 2005 effective tax rates were higher than the federal statutory rate of 35% due principally to state taxes and non-deductible transaction expenses related to the spin-off.  The Q2 2005 effective tax rate for continuing operations was further impacted by the non-deductible amortization of non-cash compensation.  Q2 2004 effective tax rates were higher than the federal statutory rate principally due to state taxes and the effective tax rate for continuing operations was further impacted by non-deductible amortization of intangibles.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2005, IAC, on a consolidated basis, had $4.7 billion in cash and marketable securities.  This includes $264 million in net funds collected on behalf of clients by Ticketing and $758.3 million in combined deferred merchant bookings and deferred revenue at Expedia.  As of June 30, 2005, IAC had total debt of $1.6 billion, $789.9 million of which is included in current maturities.  Total debt consists mainly of 7.00% Senior Notes due 2013, 6.75% Senior Notes due 2005, and short-term borrowings at LendingTree Loans, and does not include IAC’s convertible preferred stock with a balance sheet carrying value based on the par value of $0.01 per share and an aggregate face value of $656 million.  Substantially all of the shares of the convertible preferred stock will be redeemed in connection with the spin-off.

As of June 30, 2005, IAC would have had approximately $1.8 billion in net cash and marketable securities, pro forma for the acquisition of Ask Jeeves (including the assumption of cash and convertible debt), the spin-off of Expedia, redemption of substantially all of IAC’s convertible preferred, taxes to be paid in connection with IAC’s sale of the VUE interests, the maturity of IAC’s 6 3/4 % Senior Notes, and excluding LendingTree Loans’ debt that is non-recourse to IAC.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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OPERATING METRICS

(a)          Internet % is Internet demand as a percent of total Retailing - U.S. demand excluding Liquidations and Services.

(b)         Loan closings consist of direct loans and loans through the exchange.

(c)          Transactions are comprised of lending and real estate transmits and closings.  For qualifying forms sent to multiple parties, each transmit is counted as a transaction.

(d)         Internal estimate.

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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GAAP FINANCIAL STATEMENTS

IAC CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited; $ in thousands except per share amounts)

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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IAC CONSOLIDATED BALANCE SHEET

(unaudited; $ in thousands)

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

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IAC CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited; $ in thousands)