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): October 26, 2000 USA NETWORKS, INC. (Exact Name of Registration business as Specified in Its Charter) Delaware 0-20570 59-2712887 (State or other Jurisdiction (Commission File (I.R.S. Employer of incorporation) Number) Identification Number) 152 West 57th Street, New York, New York 10019 (Address, including zip code, of Principal Executive Offices) (212) 314-7300 (Registrant's telephone number including area code)
Item 7(c). Exhibits. 99.1 Press Release dated October 26, 2000. 99.2 Forward-Looking Financial Information Item 9. Regulation FD Disclosure On October 26, 2000, the Registrant issued a press release announcing its results for the quarter ended September 30, 2000. The full text of this press release, appearing in Exhibit 99.1 hereto, and forward-looking financial information, appearing in Exhibit 99.2 hereto, are furnished and not filed pursuant to Regulation FD. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized. Date: October 26, 2000 USA NETWORKS, INC. By: /s/ Julius Genachowski ------------------------------------------ Name: Julius Genachowski Title: Senior Vice President and General Counsel
EXHIBIT INDEX 99.1 Press Release dated October 26, 2000. 99.2 Forward-Looking Financial Information.
Exhibit 99.1 USA NETWORKS INC FOR IMMEDIATE RELEASE OCTOBER 26, 2000 22% HIGHER EBITDA AT USA NETWORKS, INC. 7 CONSECUTIVE QUARTERS OF GREATER THAN 20% EBITDA GROWTH NEW YORK, NEW YORK, October 26, 2000 - USA Networks, Inc. (NASDAQ: USAI) announced today its financial results for the quarter ended September 30, 2000. On a pro forma comparative basis, USAi generated 22% higher EBITDA on 21% higher revenue from its operating businesses. - - USA NETWORK and SCI FI combined for a 9.9% increase in revenue to $265.1 million and 32.2% higher EBITDA to $109.6 million for Q3. - - USA averaged a 2.0 rating and delivered more adult viewers than any other cable network in primetime during the period. In the most recent period: - Sunday primetime is up more than 30% in household rating and in delivery of targeted adult demos even without WWF. - Newly acquired female targeted movies on Saturday have increased delivery to women 25-54 by 76%. - Recently acquired sitcoms have lifted daytime viewing in the top three adult demo categories. - Late night viewing among hard to reach adults 18-34 is up 21% - - SCI FI continues its extraordinary growth, increasing revenue by 40.4% to $64.6 million and EBITDA by 67% to $22.4 million in Q3. SCI FI increased its average primetime delivery by 26% to 578,000 households in Q3 and is now the #1 network in its concentration of adult viewers 25-54, ahead of all cable and broadcast television networks. - - SCI FIs 7 1/2 hours of weekly original programming helped lift the channel's average primetine Q3 rating by 13% to a record 0.9, including a 1.0 rating during the Olympics. Original episodes of INVISIBLE MAN, produced by Studios USA, are averaging a 1.3 rating on SCI FI, and an additional 0.5 national household rating from syndication through Studios USA. - - STUDIOS USA has become the 3rd largest producer of primetime network and first-run syndicated programming, delivering three new fall series - DEADLINE, WELCOME TO NEW YORK, and THE DISTRICT - all of which are among the major networks' top-rated new shows. ARREST & TRIAL is the #1 rated new first-run series on television. - - STUDIOS USA'S LAW & ORDER began its 11th season and is delivering more adult viewers 18 - 49 than WHO WANTS TO BE A MILLIONAIRE and WEST WING during Wednesday primetime. LAW & ORDER: SVU, the only new show last year to receive a multi-year renewal, premiered this fall as the #1 show on Friday night. USA Network's airing of SVU augments NBC's delivery by more than 10% every week. - - HSN strengthened its position as the world's #1 distributed television retailer, expanding to more than 130 million households during the period. - - HSN grew its combined operating revenue by 20.2% to $422.6 million and EBITDA by 9.0% to $58.7 million in Q3. - - HSN attracted 575,000 new U.S. customers during the quarter, a 17% increase versus Q3, increasing its active customer base with virtually zero customer acquisition cost or marketing expense. - - HOT GERMANY grew revenue by 36.4% to $53.8 million and EBITDA increased by 31.4% to $4.9 million. - - TICKETMASTER sold 20.2 million tickets during the period, a 14.4% increase versus Q3 1999, and grew ticketing revenue by 18.8% to $124.9 million. - - TICKETMASTER ONLINE accounted for 25.2% of tickets sold by Ticketmaster in the U.S., Canada and U.K. versus 15.0% in Q3 1999. For the sixth consecutive month, Ticketmaster.com was the #2 Web retailer among US home users with 595,000 buying customers in August 2000, according to PC Data Online. - - HOTEL RESERVATIONS NETWORK increased revenue by 99% to $94.6 million and increased EBITDA by 110% to $13.9 million for Q3. HRN grew its affiliate base to more than 3,400 affiliate web sites and expanded into 23 additional markets during the period. - - PRECISION RESPONSE increased revenue 23% to $70.2 million and EBITDA by 34% to $11.1 million versus Q3 1999.
FINANCIAL RESULTS On a comparative pro forma basis, USAi reported the following: THREE MONTHS ENDED SEPTEMBER 30, --------------------------------- ACTUAL PRO FORMA 2000 1999 GROWTH ---- ---- ------- ($ IN MILLIONS) REVENUES - OPERATING BUSINESSES Cable and studios................... $336.0 $307.1 9.4% Cable networks grew 9.9% Electronic retailing - domestic..... 368.8 312.3 18.1% Combined HSN domestic and Germany grew 20.2% Electronic retailing - Germany...... 53.8 39.5 36.4% Ticketing........................... 124.9 105.2 18.8% Hotel reservations.................. 94.6 47.7 98.6% Teleservices........................ 70.2 57.0 23.1% Other............................... 0.5 0.0 ------- -------- ------- SUB-TOTAL - OPERATING........... 1,048.9 868.7 20.7% REVENUES - EMERGING BUSINESSES Online city guides and related...... 21.6 9.7 Internet commerce................... 5.3 7.4 Electronic commerce services........ 7.2 6.2 Electronic retailing - other international...................... 3.9 2.5 Broadcasting........................ 5.3 2.3 Filmed entertainment................ 14.5 27.9 Emerging networks................... 8.6 0.3 --------- -------- ------- SUB-TOTAL - EMERGING............ 66.3 56.3 -------- -------- ------- TOTAL........................... $1,115.2 $924.9 20.6% ======== ======== ======= EBITDA - OPERATING BUSINESSES Cable and studios................... $118.5 $92.8 27.6% Cable networks grew 32.2% Electronic retailing - domestic..... 53.8 50.1 7.3% Combined HSN domestic and Germany grew 9.0% Electronic retailing - Germany...... 4.9 3.7 31.4% Ticketing........................... 20.1 21.3 (5.7%) (a) Hotel reservations.................. 13.9 6.6 110.4% Teleservices........................ 11.1 8.3 34.4% Corporate and other................. (7.5) (6.3) -------- -------- ------- SUB-TOTAL - OPERATING........... 214.8 176.5 21.7% EBITDA - EMERGING BUSINESSES Online city guides and related...... (14.3) (17.7) Internet commerce................... (8.7) 12.8 Electronic commerce services........ (8.0) 0.5 Electronic retailing - other international..................... (4.2) (1.7) Broadcasting........................ (13.6) (9.5) Filmed entertainment................ (5.8) 1.7 Emerging networks................... (0.3) (0.8) -------- -------- SUB-TOTAL - EMERGING............ (55.0) (40.2) -------- -------- ------- TOTAL........................... $159.8 $136.3 18.3% ======== ======== ======= - - Presented as if the acquisitions of Precision Response Corp., Hotel Reservations Network, October Films and Styleclick and the consolidation of HOT Germany had occurred at the beginning of the periods presented. - - EBITDA is defined as net income plus, (1) provision for income taxes, (2) minority interest, (3) interest income and expense, (4) depreciation and amortization, (5) amortization of cable distribution fees ($8.8 million and $6.9 million, respectively), and (6) amortization of non-cash distribution and marketing expense. - - Filmed entertainment classified as an emerging business because of the start-up nature of USA Films' operations. (a) Decline due primarily to costs related to recent acquisitions including TicketWeb and 2b Technology. -- More --
FINANCIAL RESULTS (CONTINUED) 65% of the company's Q3 revenue came from direct consumer transactions, 18% was derived from affiliate and production fees, and 17% was advertising-related. On a comparative pro forma basis for its three organizational units, USAi reported the following for its operating business: THREE MONTHS ENDED SEPTEMBER 30, ACTUAL PRO FORMA 2000 1999 GROWTH MIX ($ IN MILLIONS) REVENUES - OPERATING BUSINESSES Entertainment ....................... $ 336.0 $ 307.1 9.4% 32% Electronic retailing ................ 422.6 351.7 20.2% 40% Information and Services ............ 289.7 209.8 38.1% 28% Other ............................... (0.5) 0.0 ---------- -------- ------- ----- TOTAL ........................... $ 1,048.9 $ 868.7 20.7% 100% ========== ======== ======= ===== EBITDA - OPERATING BUSINESSES Entertainment ....................... $ 118.5 $ 92.8 27.6% 55% Electronic retailing ................ 58.7 53.9 9.0% 27% Information and Services ............ 45.1 36.1 24.7% 21% Corporate and other ................. (7.5) (6.3) (3%) ---------- -------- ------- ----- TOTAL ........................... $ 214.8 $ 176.5 21.7% 100% ========== ======== ======= ===== EPS AND CASH NET INCOME FULLY CONVERTED EARNINGS PER SHARE, pro forma, excluding non-operating gains and losses was ($.02) for the three months ended September 30, 2000, as compared to ($.01) excluding non-operating gains for the pro forma period in 1999. EPS growth was limited by higher income tax expense, equity losses in unconsolidated investments, higher depreciation charges, and amortization of goodwill in connection with Ticketmaster Online - Citysearch, Inc.'s acquisition of the arts and entertainment portion of Sidewalk.com in Q3 1999 and various other acquisitions by TMCS. The impact of the TMCS transactions would have reduced fully converted earnings per share excluding non-operating gains to ($.02) in the year ago period. DILUTED LOSS PER SHARE, pro forma, excluding non-operating gains was ($.10) for the three months ended September 30, 2000, as compared to a loss of ($.08) excluding non-operating gains for the pro forma period in 1999. EPS growth was limited by higher income tax expense, equity losses in unconsolidated investments, minority interest, higher depreciation charges, and amortization of goodwill in connection with Ticketmaster Online - Citysearch, Inc.'s acquisition of the arts and entertainment portion of Sidewalk.com in Q3 1999 and various other acquisitions by TMCS. The impact of the TMCS transactions would have increased diluted loss per share excluding non-operating gains to ($.11) in the year ago period. FULLY CONVERTED CASH NET INCOME, pro forma, or earnings before the amortization of goodwill, excluding non-operating gains was $74.2 million for the three months ended September 30, 2000, as compared to $70.2 million excluding non-operating gains for the pro forma period in 1999. -- More --
Operating Highlights - Pro Forma ENTERTAINMENT NETWORKS AND STUDIOS - - Networks' combined revenue grew by 9.9% to $265.1 million, and EBITDA improved by 32.2% to $109.6 million due primarily to increased advertising and affiliate revenue. THREE MONTHS ENDED SEPTEMBER 30, 2000 1999 GROWTH ---- ---- ------ REVENUE ($ IN MILLIONS) USA Network ................................ $ 200.5 $ 195.3 2.7% SCI FI ..................................... 64.6 46.0 40.4% -------- -------- ---- TOTAL .................................... $ 265.1 $ 241.3 9.9% ======== ======== ==== EBITDA ($ IN MILLIONS) USA Network ................................ $ 87.2 $ 69.5 25.5% SCI FI ..................................... 22.4 13.4 66.9% -------- -------- ---- TOTAL .................................... $ 109.6 $ 82.9 32.2% ======== ======== ==== HOUSEHOLDS (IN MILLIONS @ 9/30) USA Network ................................ 79.4 76.9 3% SCI FI ..................................... 65.1 58.4 11% Q3 programming highlights include: - - USA NETWORK Primetime...................... Tied for top rated basic cable network with average 2.0 rating Demos.......................... More adult viewers in primetime than any other basic cable network LAW & ORDER: SVU............... Adults 25-54 up 9% from Q3 99; repeat episodes averaged 1.2 rating COVER ME / THE HUNTRESS........ Among cable's highest rated original dramas; 1.4 average in Wednesday prime US Open........................ Adults 18-34 up 33% from last year; 1.4 average rating in primetime JAG ........................... Up 31% from last year; 1.7 average rating NASH BRIDGES................... Males 18-34 up 32% delivery for its time period versus last year; 1.7 average rating - - SCI FI Primetime...................... Record average rating 0.9, up 13% from Q3 99; 1.0 average rating during Olympics Delivery....................... Record 578,000 average households, up 26% from Q3 99 Demos.......................... Highest concentration of adults 25-54 of any network on television INVISIBLE MAN.................. Original episodes averaged 1.3 rating; syndication extends reach to 90% of U.S. FARSCAPE....................... 1.5 average rating, 50% improvement over 1999 CROSSING OVER.................. Average 0.8 rating at 11pm; 60% increase for its time period vs. Q3 99 -- More --
ENTERTAINMENT (CONTINUED) - - STUDIOS USA Production..................... 3rd largest producer of primetime network and first-run syndicated programming LAW & ORDER.................... Beats "Millionaire" and "West Wing" in Adults 18-49 delivery in Wednesday prime LAW & ORDER: SVU............... 2nd season premiere was #1 show on Friday night with 9.5 rating DEADLINE....................... Among NBC's top-rated new series; average rating up 60% from lead-in program WELCOME TO NEW YORK............ 12.7 million viewers watched premiere; most popular new CBS fall show in 6 years THE DISTRICT................... #1 show in Saturday primetime; among CBS's top-rated new series ARREST & TRIAL................. #1 new first-run series; 2.5 mm average delivery, up 13% since debut Talk shows..................... 3 of top 7; Maury is #1 among all talk shows in ratings growth, up 13% from `99/00 ELECTRONIC RETAILING ELECTRONIC RETAILING - DOMESTIC - - HSN's domestic business grew revenue by 18.1% to $368.8 million and EBITDA by 7.3% to $53.8 million due, primarily, to increased units shipped and a slightly higher average price point in Q3. - - HSN highlights include: THREE MONTHS ENDED SEPTEMBER 30, ------------------ 2000 1999 ---- ---- Units shipped (IN MILLIONS)............................. 8.2 7.8 Domestic on-air gross profit %.......................... 34.7% 35.4% (reflects new accounting rule*) Return rate............................................. 20.2% 19.1% HSN U.S. cable / DBS homes (IN MILLIONS @ 9/30) ........ 64.6 57.6 * In connection with new accounting regulations, HSN has reclassified shipping and handling revenue from cost of goods sold to revenue. This reclassification had no effect on HSN's reported EBITDA and no significant effect on revenue growth. The effect of the reclassification was to increase HSN revenue and decrease gross-profit for all periods presented. -- More --
ELECTRONIC RETAILING (CONTINUED) - - HSN highlights include: New customers............ Broader home category attracted majority of 1.7 million new customers in 9 months NFL Shop................. Exclusive programming has attracted 23% new customers since August launch Barbra Streisand......... Exclusive TV retailer for Timeless CD commemorating final live performance Betula by Birkenstock.... Launched men's show segment in August, sold an average 1,000 units per minute - - HSN.com highlights include: Sales.................... Nearly $10 million in Q3 sales and profitable EBITDA Customers................ Grew its active customers base by 60% Functionality............ 99% error-free operating rate since site redesign in August 2000 ELECTRONIC RETAILING - INTERNATIONAL - - HSN's international services' households, live hours per day, and ownership stake: TV HOUSEHOLDS LIVE HOURS ------------------- ---------- Consolidated: 9/00 9/99 GROWTH DAILY STAKE - ------------- ---- ---- ------ ----- ----- (IN MILLIONS) HOT Germany (includes Austria and Switzerland) 28.8 22.7 6.1 16 hours 42% Home Shopping en Espanol (U.S.) .............. 5.1 2.7 2.4 12 hours 100% Unconsolidated: TVSN (China) ................................. 22.4 -- 22.4 5 hours 21% Shop Channel (Japan) ......................... 8.6 6.6 2.0 8 hours 30% HOT LeGrand Magasin (Belgium) ................ 1.4 -- 1.4 6 hours 47% INFORMATION AND SERVICES TICKETING OPERATIONS / ONLINE TICKETING - - Combined Ticketmaster / Ticketmaster Online revenue increased by 18.8% to $124.9 million in Q3 due to market growth, including a 14.8% increase in tickets sold to 20.2 million. EBITDA fell 5.7% to $20.1 million in Q3 due primarily to costs related to recent acquisitions including TicketWeb and 2b Technology. - - Ticketmaster.com accounted for 25.2% of total tickets sold by Ticketmaster in the U.S., Canada, and U.K., versus 15.0% in the year ago period. The top-selling events during the period included Ringling Bros. and Barnum & Bailey, WWF, *NSYNC, Dixie Chicks, and Tina Turner. - - For the sixth consecutive month, Ticketmaster.com was the #2 Web retailer among US home users with 595,000 buying customers in August 2000, according to PC Data Online. -- More --
INFORMATION AND SERVICES (CONTINUED) - - Ticketing highlights include: THREE MONTHS ENDED SEPTEMBER 30, -------------------------------- 2000 1999 GROWTH ---- ---- ------ Number of tickets sold (IN MILLIONS)............. 20.2 17.6 14.8% Gross value of tickets sold (IN MILLIONS)........ $781.6 $650.8 20.1% Revenue per ticket - combined.................... $5.67 $5.34 6.2% Revenue per ticket - online...................... $6.72 $6.45 4.2% (United States, Canada, U.K.) Share of tickets sold online..................... 25.2% 15.0% HOTEL RESERVATIONS - - Hotel Reservations Network grew revenue by 99% to $94.6 million, increased EBITDA by 110% to $13.9 million, and sold 92% more hotel room nights versus Q3 1999. - - HRN increased its affiliate base to more than 3,400 affiliate web sites during the period. - - HRN sold 1,732,000 room nights during the first nine months of 2000, compared to 846,000 rooms for the same period last year. THREE MONTHS ENDED SEPTEMBER 30, -------------------------------- 2000 1999 GROWTH ---- ---- ------ Hotel room nights sold (ROUNDED)............. 717,000 374,000 92% Portion of total revenues generated online... 94% 85% Affiliate revenues as % of total revenue..... 53% 44% Cities served (AS OF 9/30)................... 83 38 118% ONLINE CITY GUIDES AND RELATED - - TMCS's total network traffic grew to an estimated 773 million page views during the period, an increase of 108% from Q3 1999. TMCS's combined reach among home and work users increased to 9.7%, and unique users grew 58% to 7.8 million in September. - - TMCS's combined personals sites, including Match.com and One and Only, attracted a monthly average of 1.7 million unique users in Q3 2000, a 73% annual increase from a year ago. The personals sites currently have nearly 9 million registrants, and approximately 165,000 affiliate sites. - - Citysearch launched its first national advertising television campaign on USA Network and SCI FI during the period. INFORMATION AND SERVICES HIGHLIGHTS ALSO INCLUDE: - - PRECISION RESPONSE grew revenue 23% to 70.2 million while reducing the concentration of its top ten revenue-producing clients to 65% from approximately 70% in the year-ago period. PRC's new clients include Amway, IDT, Nextlink and West AWS. - - STYLECLICK launched its new merchandising technology and announced strategic alliances with About, Inc., Barrow Industries, Diane von Furstenberg, and Dr. Jay's. - - ECS's Short Shopping generated $1.3 million in revenue during Q3 from contextual selling spots, including during USA Network's coverage of the US Open. - - NBA. com, in partnership with ECS, launched the 2000/2001 season with NBA On-Sale 2000, the first league-wide single game ticket sale. Year-to-date, ECS has processed more than 40,000 merchandise orders for NBA.com. -- More --
STATEMENTS OF OPERATIONS Due to regulatory restrictions, Universal and Liberty own a significant portion of their interests in USAi through USAi subsidiaries. This structure causes USAi to record net losses in situations where net income would otherwise have been recorded if their ownership were entirely in USAi common stock. Fully converted earnings per share reflect the impact as if all shares exchangeable into common stock had been exchanged during the period. The actual quarterly results are not comparable due to: 1) the acquisition of Hotel Reservations Network in May 1999; 2) the acquisition of October Films and certain assets of Polygram Filmed Entertainment in May 1999; 3) TMCS's acquisition of the arts and entertainment portion of Sidewalk.com, Match.Com, and One and Only Network; 4) the consolidation of Home Order Television as of January 1, 2000; and 5) the acquisition of Styleclick.com in August 2000. SHARES OUTSTANDING AND MARKET CAPITALIZATION As of October 20, 2000, USAi had outstanding 729.3 million shares, including exchangeable securities, with an aggregate market capitalization of approximately $13.1 BILLION. IMPORTANT DISCLOSURES This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the information relating to possible or assumed future results of operations of USAi, including those preceded by, followed by or that include the words "believes," "projects," "expects," "anticipates" or similar expressions. These statements reflect the current views of USAi with respect to future events. The following important factors, in addition to those described in USAi's filings with the Securities and Exchange Commission, could affect the future results of USAi, and could cause those results to differ materially from those expressed in the forward-looking statements: material adverse changes in economic conditions in the markets served by our businesses; future regulatory actions and conditions in our businesses' operating areas; competition from others; successful integration of our divisions, including recently acquired businesses; product demand and market acceptance; the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; and obtaining and retaining key executives and employees. These forward-looking statements are made as of the date of this press release, and USAi undertakes no obligation to update or revise them, whether as a result of new information, future events or any other reason. The financial, statistical and other information contained herein is unaudited. USA Network and SCI FI ratings and household delivery data per NMR Galaxy Explorer for NHI defined periods versus same weeks previous year. Subscriber counts based on Nielsen People Meter Installed Sample, September `00 vs. `99. 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. TMCS and competitor unique users and national reach data per Media Metrix (Digital Media Universe) Key Measures Report, September 2000. SCI FI.com user data per I/PRO Research, September 2000. Subject to qualifications. USA Networks, Inc. (NASDAQ: USAI) is focused on the new convergence of entertainment, information and direct selling. Formed in February 1998, the Company is organized into three distinct but interrelated units which include the following assets: USA Entertainment's USA Network, SCI FI Channel, TRIO, NWI, Studios USA, USA Films, USA Broadcasting and Interactive Entertainment; USA Electronic Retailing's HSN, HSN International, HSN Interactive; and USA Information and Services' Ticketmaster, Ticketmaster Online-Citysearch (NASDAQ: TMCS), Match.com, Hotel Reservations Network (NASDAQ: ROOM), Electronic Commerce Solutions, Styleclick, Inc. (NASDAQ: IBUY) and Precision Response Corporation. CONTACTS: MEDIA RELATIONS: INVESTOR RELATIONS: Adrienne Becker Roger Clark 212-314-7254 212-314-7400
USA NETWORKS, INC. AND SUBSIDIARIES Business Segment Information Unaudited ( $ IN THOUSANDS ) THREE MONTHS ENDED SEPTEMBER 30, PRO FORMA (a) ACTUAL PRO FORMA (a) ACTUAL ------------- ------ ------------- ------ 2000 2000 1999 1999 ---- ---- ---- ---- REVENUES - OPERATING BUSINESSES Cable and studios $ 336,047 $ 336,047 $ 307,094 $ 307,094 Electronic retailing - domestic 368,773 368,773 312,259 312,259 Electronic retailing - Germany 53,841 53,841 39,481 -- Ticketing 124,929 124,929 105,188 105,188 Hotel reservations 94,619 94,619 47,652 47,652 Teleservices 70,162 70,162 57,006 -- Other 509 509 -- -- ----------- ----------- ----------- ----------- SUB-TOTAL 1,048,880 1,048,880 868,680 772,193 REVENUES - EMERGING BUSINESSES Online city guides and related 21,562 21,562 9,673 9,673 Internet commerce 5,291 5,147 7,447 6,660 Electronic commerce services 7,174 7,174 6,168 6,168 Electronic retailing - other international 3,935 3,935 2,459 2,459 Broadcasting 5,263 5,263 2,341 2,341 Filmed entertainment (c) 14,468 14,468 27,912 27,912 Emerging networks 8,591 8,591 266 266 ----------- ----------- ----------- ----------- SUB-TOTAL 66,284 66,140 56,266 55,479 ----------- ----------- ----------- ----------- Total $ 1,115,164 $ 1,115,020 $ 924,946 $ 827,672 =========== =========== =========== =========== EBITDA - OPERATING BUSINESSES (b) Cable and studios $ 118,453 $ 118,453 $ 92,834 $ 92,834 Electronic retailing - domestic 53,798 53,798 50,130 50,130 Electronic retailing - Germany 4,922 4,922 3,746 -- Ticketing 20,055 20,055 21,262 21,262 Hotel reservations 13,907 13,907 6,610 6,654 Teleservices 11,120 11,120 8,275 -- Corporate and other (7,494) (7,494) (6,334) (6,334) ----------- ----------- ----------- ----------- SUB-TOTAL 214,761 214,761 176,523 164,546 EBITDA - EMERGING BUSINESSES Online city guides and related (14,307) (14,307) (17,680) (17,680) Internet commerce (8,734) (7,290) (12,807) (8,292) Electronic commerce services (8,001) (8,001) 483 483 Electronic retailing - other international (4,213) (4,213) (1,728) (1,728) Broadcasting (13,563) (13,563) (9,463) (9,463) Filmed entertainment (c) (5,819) (5,819) 1,735 1,735 Emerging networks (339) (339) (787) (787) ----------- ----------- ----------- ----------- SUB-TOTAL (54,976) (53,532) (40,247) (35,732) ----------- ----------- ----------- ----------- Total $ 159,785 $ 161,229 $ 136,276 $ 128,814 =========== =========== =========== =========== (a) Presented as if the acquisitions of Styleclick, Precision Response Corp., Hotel Reservations Network and October Films and the consolidation of HOT Germany had occurred at the beginning of the period presented. (b) EBITDA is defined as net income plus, (1) provision for income taxes, (2) interest income and expense, (3) depreciation and amortization, (4) amortization of cable distribution fees of $8,845 and $6,938, (5) amortization of non-cash distribution and marketing expense, and (6) minority interest. (c) Filmed entertainment classified as an emerging business because of the start-up nature of USA Films' operations.
USA NETWORKS, INC. AND SUBSIDIARIES BUSINESS SEGMENT INFORMATION UNAUDITED ( $ IN THOUSANDS ) NINE MONTHS ENDED SEPTEMBER 30, PRO FORMA (a) ACTUAL PRO FORMA (a) ACTUAL ---------------- --------------- ----------------- ------------- 2000 2000 1999 1999 ---------------- --------------- ----------------- ------------- REVENUES - OPERATING BUSINESSES Cable and studios $ 1,105,688 $ 1,105,688 $ 955,032 $ 955,032 Electronic retailing - domestic 1,071,203 1,071,203 935,192 935,192 Electronic retailing - Germany 162,220 162,220 116,216 -- Ticketing 395,909 395,909 324,614 324,614 Hotel reservations 227,964 227,964 108,371 70,670 Teleservices 210,023 140,374 153,344 -- Other 1,568 1,568 6,894 6,894 ---------------- --------------- ---------------- ------------- SUB-TOTAL 3,174,575 3,104,926 2,599,663 2,292,402 REVENUES - EMERGING BUSINESSES Online city guides and related 58,776 58,776 22,362 22,362 Internet commerce 19,444 17,555 26,641 21,489 Electronic commerce services 15,634 15,634 14,470 14,470 Broadcasting 13,620 13,620 5,691 5,691 Electronic retailing - other international 10,333 10,333 6,275 6,275 Filmed entertainment (d) 65,548 65,548 56,974 39,687 Emerging networks 12,862 12,862 693 693 ---------------- --------------- ---------------- ------------- SUB-TOTAL 196,217 194,328 133,106 110,667 ---------------- --------------- ---------------- ------------- Total $ 3,370,792 $ 3,299,254 $ 2,732,770 $ 2,403,070 ================ =============== ================ ============= EBITDA - OPERATING BUSINESSES (b) Cable and studios $ 396,580 $ 396,580 $ 308,024 $ 308,024 Electronic retailing - domestic 161,965 161,965 140,408 140,408 Electronic retailing - Germany 16,713 16,713 9,264 -- Ticketing 79,006 79,006 67,930 67,930 Hotel reservations 35,004 35,004 15,827 10,177 Teleservices 32,508 23,047 20,585 -- Corporate and other (26,181) (37,781) (25,560) (25,560) ---------------- --------------- ---------------- ------------- SUB-TOTAL 695,595 674,534 537,478 500,979 Executive consulting arrangement (c) (11,600) EBITDA - EMERGING BUSINESSES Online city guides and related (47,774) (47,774) (40,418) (40,418) Internet commerce (34,593) (23,628) (35,155) (26,010) Electronic commerce services (19,847) (19,847) 768 768 Electronic retailing - other international (7,467) (7,467) (3,975) (3,975) Broadcasting (41,258) (41,258) (30,367) (30,367) Filmed entertainment (d) (5,971) (5,971) 1,849 1,963 Emerging networks (4,602) (4,602) (1,885) (1,885) ---------------- --------------- ---------------- ------------ SUB-TOTAL (161,512) (150,547) (109,183) (99,924) ---------------- --------------- ---------------- ------------- Total $ 522,483 $ 523,987 $ 427,295 $ 401,055 ================ =============== ================= ============ (a) Presented as if the acquisitions of Styleclick, Precision Response Corp., Hotel Reservations Network and October Films and the consolidation of HOT Germany had occurred at the beginning of the period presented. (b) EBITDA is defined as net income plus, (1) provision for income taxes, (2) interest income and expense, (3) depreciation and amortization, (4) amortization of cable distribution fees of $25,335 and $19,214, (5) amortization of non-cash distribution and marketing expense, and (6) minority interest. (c) As part of a resignation agreement with a senior executive, the company recorded one-time compensation expense related to a consulting arrangement.
USA NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED ( $ IN THOUSANDS, EXCEPT PER SHARE DATA ) THREE MONTHS ENDED SEPTEMBER 30, PRO FORMA ACTUAL(b) PRO FORMA(a)(b) ACTUAL(b) -------------- -------------- --------------- --------------- 2000 2000 1999 1999 -------------- -------------- --------------- --------------- Revenues, net $ 1,115,164 $ 1,115,020 $ 924,946 $ 827,672 Operating costs and expenses: Costs related to revenues 673,600 673,539 494,728 427,362 Other costs and expenses 281,779 280,252 293,942 271,496 Amortization of non cash distribution and marketing expense (c) 2,693 2,693 -- -- Amortization of cable distribution fees 8,845 8,845 6,938 6,938 Depreciation and amortization 146,370 141,564 116,526 83,544 -------------- -------------- --------------- --------------- Total operating costs and expenses 1,113,288 1,106,894 912,134 789,340 -------------- -------------- --------------- --------------- Operating income 1,876 8,126 12,812 38,332 Interest expense, net (9,617) (9,555) (12,436) (12,222) Gain on sale of securities -- -- 39,451 39,451 Other, net (e) 69,907 69,907 (3,641) (509) -------------- -------------- --------------- --------------- 60,290 60,352 23,374 26,720 -------------- -------------- --------------- --------------- Earnings before income taxes and minority interest 62,166 68,478 36,186 65,052 Income tax expense (23,034) (23,640) (21,819) (24,947) Minority interest (58,619) (63,004) (33,889) (47,785) -------------- -------------- --------------- --------------- Net loss $ (19,486) $ (18,165) $ (19,522) $ (7,680) ============== ============== =============== =============== Fully converted net earnings (loss), excluding one-time charges and non-operating gains $ (17,774) $ (13,133) $ (5,674) $10,541 ============== ============== =============== =============== Weighted average shares 367,799 367,799 357,771 333,426 ============== ============== =============== =============== Weighted average diluted shares 367,799 367,799 357,771 333,426 ============== ============== =============== =============== Weighted average fully converted shares 754,750 754,750 757,291 732,946 ============== ============== =============== =============== Basic and diluted loss per share $ (.05) $ (.05) $ (.05) $ (.02) ============== ============== =============== =============== Basic and diluted loss per share, excluding one-time charges and non-operating gains $ (.10) $ (.09) $ (.08) $ (.05) ============== ============== =============== =============== Fully converted earnings (loss) per share, excluding one-time charges and non-operating gains $ (.02) $ (.02) $ (.01) $ .01 ============== ============== =============== =============== EBITDA (D) $159,785 $ 161,229 $ 136,276 $ 128,814 ============== ============== =============== =============== (a) Presented as if the acquisitions of Styleclick, Precision Response Corp., Hotel Reservations Network and October Films and the consolidation of HOT Germany had occurred at the beginning of the period presented. (b) Earnings (loss) per common share data and shares outstanding retroactively reflect the impact of two-for-one common stock and Class B common stock split paid on February 24, 2000. (c) Amortization of warrants and stock issued in exchange for distribution and marketing services. (d) EBITDA is defined as net income plus, (1) provision for income taxes, (2) interest income and expense, (3) depreciation and amortization, (4) amortization of cable distribution fees of $8,845 and $6,938, (5) amortization of non-cash distribution and marketing expense, and (6) minority interest. (e) Includes non-operating gain related to Styleclick merger of $104.6 million and non-operating losses related to equity investments of $30.5 million.
USA NETWORKS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED ( $ IN THOUSANDS, EXCEPT PER SHARE DATA ) NINE MONTHS ENDED SEPTEMBER 30, PRO FORMA (a)(b) ACTUAL (b) PRO FORMA (a)(b) ACTUAL (b) ---------------- ------------- ---------------- ----------- 2000 2000 1999 1999 ---------------- ------------- ---------------- ----------- Revenues, net $ 3,370,792 $ 3,299,254 $ 2,732,770 $ 2,403,070 Operating costs and expenses: Costs related to revenues 2,024,823 1,970,334 1,465,124 1,234,858 Other costs and expenses 823,486 804,933 840,351 767,157 Amortization of non cash distribution and marketing expense (c) 4,414 4,414 -- -- Amortization of cable distribution fees 25,335 25,335 19,213 19,213 Depreciation and amortization 429,924 380,830 337,449 230,582 -------------- ------------- --------------- ----------- Total operating costs and expenses 3,307,982 3,185,846 2,662,136 2,251,810 -------------- -------------- -------------- ------------ Operating income 62,810 113,408 70,634 151,260 Interest expense, net (27,696) (26,956) (43,759) (36,936) Gain on sale of securities -- -- 89,721 89,721 Other, net (e) 67,360 67,362 (5,726) 1,986 -------------- -------------- -------------- ------------ 39,664 40,406 40,236 54,771 -------------- -------------- -------------- ------------ Earnings before income taxes and minority interest 102,474 153,814 110,870 206,031 Income tax expense (74,993) (74,139) (56,069) (65,302) Minority interest (114,179) (145,299) (111,683) (150,582) -------------- -------------- -------------- ------------ Net loss $ (86,698) $ (65,624) $ (56,883) $ (9,853) ============== ============== ============== ============ Fully converted net earnings (loss), excluding one-time charges and non-operating gains $ (27,411) $ 3,580 $ (26,800) $ 29,385 ============== ============== ============== ============ Weighted average shares 363,980 355,184 349,833 324,842 ============== ============== ============== ============ Weighted average diluted shares 363,980 355,184 349,833 324,842 ============== ============== ============== ============ Weighted average fully converted shares 752,756 743,960 740,561 715,570 ============== ============== ============== ============ Basic and diluted loss per share $ (.24) $ (.18) $ (.16) $ (.03) ============== ============== ============== ============ Basic and diluted loss per share, excluding one-time charges and non-operating gains $ (.27) $ (.22) $ (.22) $ (.09) ============== ============== ============== ============ Fully converted earnings per share, excluding one-time charges and non-operating gains $ (.04) $ -- $ (.04) $ .04 ============== ============== ============== ============ EBITDA (d) $ 522,483 $ 523,987 $ 427,295 $ 401,055 ============== ============== ============== ============ (a) Presented as if the acquisitions of Styleclick, Precision Response Corp., Hotel Reservations Network and October Films and the consolidation of HOT Germany had occurred at the beginning of the period presented. (b) Earnings (loss) per common share data and shares outstanding retroactively reflect the impact of two-for-one common stock and Class B common stock split paid on February 24, 2000. (c) Amortization of warrants and stock issued in exchange for distribution and marketing services. (d) EBITDA is defined as net income plus, (1) provision for income taxes, (2) interest income and expense, (3) depreciation and amortization, (4) amortization of cable distribution fees of $25,335 and $19,214, (5) amortization of non-cash distribution and marketing expense, and (6) minority interest. (e) Includes non-operating gain related to Styleclick merger of $104.6 million and non-operating losses related to equity investments of $30.5 million.
USA NETWORKS, INC. AND SUBSIDIARIES SUPPLEMENTAL INFORMATION UNAUDITED ( $ IN THOUSANDS, EXCEPT PER SHARE DATA ) THREE MONTHS ENDED SEPTEMBER 30, PRO FORMA ACTUAL (b) PRO FORMA (a)(b) ACTUAL (b) ----------- ----------- ----------------- ------------ 2000 2000 1999 1999 ----------- ----------- ----------------- ------------ RECONCILIATION OF FULLY CONVERTED NET EARNINGS: Net earnings (loss) $ (19,486) $ (18,165) $ (19,522) $ (7,680) Impact of one-time charges and non-operating gains, net of tax (45,029) (45,029) (22,882) (22,882) --------- --------- --------- --------- Net loss, excluding one-time charges and non- operating gains (64,515) (63,194) (42,404) (30,562) Impact of minority interest, net of tax 46,741 50,061 36,730 41,103 --------- --------- --------- --------- FULLY CONVERTED NET EARNINGS (LOSS), EXCLUDING ONE-TIME CHARGES AND NON-OPERATING GAINS $ (17,774) $ (13,133) $ (5,674) $ 10,541 ========= ========= ========= ========= Weighted average shares 367,799 367,799 357,771 333,426 ========= ========= ========= ========= Weighted average diluted shares 367,799 367,799 357,771 333,426 ========= ========= ========= ========= Weighted average fully converted shares 754,750 754,750 757,291 732,946 ========= ========= ========= ========= Basic and diluted earnings (loss) per share, excluding one-time charges and non-operating gains $ (.09) $ (.09) $ (.08) $ (.05) ========= ========= ========= ========= Fully converted earnings per share, excluding one-time charges and non-operating gains $ (.02) $ (.02) $ (.01) $ .01 ========= ========= ========= ========= RECONCILIATION OF FULLY CONVERTED CASH NET INCOME: Net earnings (loss) $ (19,486) $ (18,165) $ (19,522) $ (7,680) Impact of minority interest, net of tax 46,741 50,061 36,730 41,103 Impact of goodwill amortization, net of tax and minority interest 91,948 91,905 75,914 36,317 --------- --------- --------- --------- Cash net income 119,203 123,801 93,122 69,740 Impact of one-time charges and non-operating gains, net of tax (45,029) (45,029) (22,882) (22,882) --------- --------- --------- --------- FULLY CONVERTED CASH NET INCOME, EXCLUDING ONE-TIME CHARGES AND NON-OPERATING GAINS $ 74,174 $ 78,772 $ 70,240 $ 46,858 ========= ========= ========= ========= (a) Presented as if the acquisitions of Styleclick, Precision Response Corp., Hotel Reservations Network and October Films and the consolidation of HOT Germany had occurred at the beginning of the period presented. (b) Earnings (loss) per common share data and shares outstanding retroactively reflect the impact of two-for-one common stock and Class B common stock split paid on February 24, 2000.
USA NETWORKS, INC. AND SUBSIDIARIES Supplemental Information Unaudited ( $ IN THOUSANDS, EXCEPT PER SHARE DATA ) NINE MONTHS ENDED SEPTEMBER 30, PRO FORMA (a)(b) ACTUAL (b) PRO FORMA (a)(b) ACTUAL (b) ----------------- ---------- ----------------- ---------- 2000 2000 1999 1999 ----------------- ---------- ----------------- ---------- RECONCILIATION OF FULLY CONVERTED NET EARNINGS: Net earnings (loss) $ (86,698) $ (65,624) $ (57,223) $ (9,853) Impact of one-time charges and non-operating gains, net of tax (38,301) (38,301) (52,038) (52,038) --------- --------- --------- --------- Net loss, excluding one-time charges and non-operating gains (124,999) (103,925) (108,921) (61,891) Impact of minority interest, net of tax 97,589 107,505 82,121 91,276 --------- --------- --------- --------- FULLY CONVERTED NET EARNINGS (LOSS), EXCLUDING ONE-TIME CHARGES AND NON-OPERATING GAINS $ (27,411) $ 3,580 $ (26,800) $ 29,385 ========= ========= ========= ========= Weighted average shares 363,980 355,184 349,833 324,842 ========= ========= ========= ========= Weighted average diluted shares 363,980 355,184 349,833 324,842 ========= ========= ========= ========= Weighted average fully converted shares 752,756 743,960 740,561 715,570 ========= ========= ========= ========= Basic and diluted loss per share, excluding one-time charges and non-operating gains $ (.27) $ (.22) $ (.22) $ (.09) ========= ========= ========= ========= Fully converted earnings per share, excluding one-time charges and non-operating gains $ (.04) $ .00 $ (.04) $ .04 ========= ========= ========= ========= (a) Presented as if the acquisitions of Styleclick, Precision Response Corp., Hotel Reservations Network and October Films and the consolidation of HOT Germany had occurred at the beginning of the period presented. (b) Earnings (loss) per common share data and shares outstanding retroactively reflect the impact of two-for-one common stock and Class B common stock split paid on February 24, 2000.
EXHIBIT 99.2 ($ in millions) Guidance Growth -------- ------ Q4 '00 2000 2001 2002 '99-'00 '00-'01 '01-'02 ------ ---- ---- ---- ------- ------- ------- REVENUE -- OPERATING BUSINESSES USA Network $ 195 $ 801 $ 850 $ 965 6% 6% 14% SCI FI 80 278 325 390 40% 17% 20% Studios USA, net 120 421 530 670 21% 26% 26% ------- ------- ------- ------- ------- ------- ------- a Cable and studios 395 1,501 1,705 2,025 15% 14% 19% Electronic retailing - domestic 450 1,521 1,700 2,010 14% 12% 18% b Electronic retailing - Germany 65 227 275 340 36% 21% 24% ------- ------- ------- ------- ------- ------- ------- Electronic retailing - operating 515 1,748 1,975 2,350 17% 13% 19% Ticketing 130 526 570 625 19% 8% 10% Hotel reservations 88 316 442 600 95% 40% 36% c Teleservices 67 277 383 450 28% 38% 17% Other -- 2 -- -- -77% nm nm ------- ------- ------- ------- ------- ------- ------- SUBTOTAL 1,195 4,370 5,075 6,050 20% 16% 19% REVENUE -- EMERGING BUSINESSES f Online city guides and related 22 81 100 135 122% 24% 35% b Electronic retailing - other international 12 22 35 50 150% 57% 43% Internet commerce 6 25 60 100 -28% 136% 67% Electronic commerce services 11 27 65 95 32% 144% 46% d Broadcasting 6 20 30 50 128% 53% 67% e Filmed entertainment 15 81 120 125 -2% 49% 4% Emerging networks 3 16 30 55 1235% 89% 83% ------- ------- ------- ------- ------- ------- ------- Subtotal 75 271 440 610 41% 62% 39% ======= ======= ======= ======= ======= ======= ======= TOTAL REVENUE $ 1,270 $ 4,641 $ 5,515 $ 6,660 21% 19% 21% ======= ======= ======= ======= ======= ======= ======= EBITDA -- OPERATING BUSINESSES USA Network $ 100 $ 390 $ 440 $ 505 25% 13% 15% g SCI FI 28 100 130 180 44% 31% 38% Studios USA, net 15 50 55 70 -5% 9% 27% ------- ------- ------- ------- ------- ------- ------- a Cable and studios 143 540 625 755 24% 16% 21% Electronic retailing - domestic 74 236 275 325 10% 17% 18% b Electronic retailing - Germany 7 24 30 35 46% 27% 17% ------- ------- ------- ------- ------- ------- ------- Electronic retailing - operating 81 260 305 360 12% 17% 18% Ticketing 25 104 115 130 11% 11% 13% Hotel reservations 14 49 69 93 100% 41% 35% c Teleservices 11 44 61 77 43% 40% 26% Corporate and other (8) (46) (35) (35) -27% 24% 0% ------- ------- ------- ------- ------- ------- ------- SUBTOTAL 266 950 1,140 1,380 22% 20% 21% EBITDA -- EMERGING BUSINESSES f Online city guides and related (16) (64) (50) (5) -5% 22% 90% b Electronic retailing - other international (3) (10) (20) (15) -132% -91% 25% Internet commerce (9) (44) (20) (5) 19% 54% 75% Electronic commerce services (6) (26) (5) 5 -972% 81% nm d Broadcasting (18) (59) (55) (50) -23% 7% 9% e Filmed entertainment (9) (15) (25) (20) nm -67% 20% Emerging networks 0 (5) (5) (10) -54% -9% -100% ------- ------- ------- ------- ------- ------- ------- Subtotal (61) (223) (180) (100) -33% 19% 44% ======= ======= ======= ======= ======= ======= ======= TOTAL EBITDA $ 205 $ 727 $ 960 $ 1,280 19% 32% 33% ======= ======= ======= ======= ======= ======= =======
($ in millions) Guidance -------- Q4 '00 2000 2001 2002 ------ ---- ---- ---- P&L: Total EBITDA $ 205 $ 727 $ 960 $ 1,280 Amortization of goodwill (122) (405) (520) (520) Depreciation and other amortization (44) (166) (180) (200) Interest income / (expense) (15) (45) (60) (60) Other income / (expense) 0 (25) (45) (35) ------- ------- ------- ------- Pre-tax net income / (loss) 24 86 155 465 Income tax expense (35) (95) (120) (304) Minority interest expense (60) (157) (275) (490) ======= ======= ======= ======= Net income / (loss) $ (71) $ (166) $ (240) $ (329) ======= ======= ======= ======= Average shares outstanding 370 370 380 390 ======= ======= ======= ======= EPS - diluted $ (0.19) $ (0.45) $ (0.63) $ (0.84) ======= ======= ======= ======= FULLY CONVERTED EPS: Pre-tax net income / (loss) $ 24 $ 86 $ 155 $ 465 Income tax expense (85) (237) (320) (420) Minority interest expense 17 82 50 30 ======= ======= ======= ======= Net income / (loss) $ (44) $ (70) $ (115) $ 75 ======= ======= ======= ======= Average shares outstanding 752 750 760 770 ======= ======= ======= ======= EPS - fully converted $ (0.06) $ (0.09) $ (0.15) $ 0.10 ======= ======= ======= ======= - ----------------- a Cable network guidance reflects anticipated slower advertising growth in the overall market. To be conservative, the revenue guidance for USA Network takes into consideration this market condition. b HSN's international operations have been classified into Electronic Retailing -- Germany, and Electronic Retailing -- Other International, the latter of which reflects current emerging services and HSN's international corporate overhead. Guidance reflects only current operating services and does not reflect anticipated new market expansion. c Teleservices guidance reflects Precision Responses's loss of Priceline's Webhouse business, which is ceasing operations. d Broadcasting guidance reflects the anticipated station rollout schedule. e Filmed Entertainment is classified as an emerging business because of the start-up nature of USA Films' operations. The guidance also reflects the estimated impact from new film accounting regulations effective in 2001. f For these purposes, Online City Guides and Related revenue for 2002 reflects the consensus estimate by Ticketmaster Online-Citysearch analysts. Online city guides and related EBITDA for all periods presented includes all corporate overhead costs for Tickemaster Online-Citysearch. g SCI FI guidance for Q4 reflects substantial marketing expense in connection with the mini-series event, DUNE. IMPORTANT: This guidance reflects estimates that USAi is comfortable releasing to analysts and the public, and contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include the information relating to possible or assumed future results of operations of USAi. This guidance reflects the current views of USAi with respect to future events. The following important factors, in addition to those described in USAi's filings with the Securities and Exchange Commission, could affect the future results of USAi, and could cause those results to differ materially from those expressed in the forward-looking statements: material adverse changes in economic conditions in the markets served by our businesses; future regulatory actions and conditions in our businesses' operating areas; competition from others; successful integration of our divisions, including recently acquired businesses; product demand and market acceptance; the ability to protect proprietary information and technology or to obtain necessary licenses on commercially reasonable terms; and obtaining and retaining key executives and employees. These forward-looking statements are made as of the date hereof and USAi undertakes no obligation to update or revise them, whether as a result of new information, future events or any other reason. These statements do not include the potential impact of any mergers, acquisitions or other business combinations that may be completed in the future.