Filed by USA Networks, Inc. Pursuant to Rule 165 and Rule 425 Under the Securities Act of 1933 Subject Company: Expedia, Inc. Commission File No. 000-27429 SUPPLEMENTAL FINANCIAL INFORMATION USA INTERACTIVE REVENUE - OPERATING BUDGET (PRO FORMA $ IN MILLIONS) USA INTERACTIVE EBITDA - OPERATING BUDGET (PRO FORMA $ IN MILLIONS)
Growth ---------------------------- 2001 2002 2003 '01 - '02 '02 - '03 ------------ ------------ ------------ ------------ ------------ OPERATING BUSINESSES HSN - US $ 1,555 $ 1,843 $ 2,070 19% 12% HSN - Germany 294 374 450 27% 20% Ticketing 578 620 680 7% 10% Hotel Reservations 510 700 980 37% 40% Expedia (a) 280 360 470 29% 31% Precision Response 303 352 440 16% 25% Match.com 45 60 80 33% 33% ------------ ------------ ------------ ------------ ------------ SUBTOTAL 3,565 4,309 5,170 21% 20% EMERGING BUSINESSES Citysearch & related 47 50 70 6% 40% HSN - Other International 27 45 60 67% 33% ECS/ Styleclick 45 74 117 64% 58% ------------ ------------ ------------ ------------ ------------ SUBTOTAL 119 169 247 42% 46% Non-recurring items (d) 0 0 0 Foreign exchange conversion (b) (58) (91) (110) Disengaged HSN homes (c) 108 0 0 Intersegment elimination (5) (10) (10) ------------ ------------ ------------ ------------ ------------ TOTAL $ 3,729 $ 4,377 $ 5,297 17% 21% ============ ============ ============ ============ ============ BY GROUP -- Operating Businesses Electronic Retailing $ 1,849 $ 2,217 $ 2,520 20% 14% Information & Services 1,716 2,092 2,650 22% 27% ------------ ------------ ------------ ------------ ------------ $ 3,565 $ 4,309 $ 5,170 21% 20% ============ ============ ============ ============ ============ (a) EXPEDIA ESTIMATES ARE PRO FORMA FOR USA'S ACQUISITION OF EXPEDIA. (b) 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 RESULTS GENERATED BY HOMES LOST BY HSN FOLLOWING DISENGAGEMENT OF USA BROADCASTING TO UNIVISION. (d) 2001 AND 2000 NON-RECURRING ITEMS REFLECT ONE-TIME INCOME AND EXPENSE ITEMS. FOR 2001, $17 MILLION OF EXPENSE WAS RECORDED FOR NON-RECURRING COSTS RELATED TO RESTRUCTURING OPERATIONS, EMPLOYEE TERMINATIONS, AND BENEFITS. FOR 2000, $6 MILLION OF EXPENSE RELATES TO ONE-TIME EXPENSES OF THE TICKETMASTER AND TMCS MERGER, AN EXECUTIVE CONSULTING ARRANGEMENT AS PART OF A RESIGNATION AGREEMENT, OFFSET BY A ONE-TIME CREDIT RECOGNIZED BY HSN IN CONNECTION WITH A FAVORABLE SETTLEMENT. USA INTERACTIVE IMPLIED VALUE OF HSN, PRC, ECS (ALL FIGURES ASSUME COMPLETION OF THE EXPEDIA TRANSACTION) ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Growth ---------------------------- 2001 2002 2003 '01 - '02 '02 - '03 ------------ ------------ ------------ ------------ ------------ OPERATING BUSINESSES HSN - US $ 216 $ 285 $ 350 32% 23% HSN - Germany 12 38 47 230% 24% Ticketing 105 125 145 19% 16% Hotel Reservations 73 87 120 19% 38% Expedia (a) 42 60 85 43% 42% Precision Response 37 41 61 9% 50% Match.com 14 20 30 43% 50% Corporate and other (33) (34) (36) -3% -6% ------------ ------------ ------------ ------------ ------------ SUBTOTAL 466 622 802 32% 29% EMERGING BUSINESSES Citysearch & related (45) (30) (13) HSN - Other International (26) (20) (20) READ IMPORTANT FOOTNOTES AND DISCLAIMER. As furnished to the Securities and Exchange Commission on December 17, 2001. 1 ECS/ Styleclick (49) (19) (6) ------------ ------------ ------------ SUBTOTAL (120) (69) (39) Non-recurring items (d) (17) 0 0 Foreign exchange conversion (b) (4) (9) (11) Disengaged HSN homes (c) 15 0 0 ------------ ------------ ------------ ------------ ------------ TOTAL $ 340 $ 544 $ 752 60% 38% ============ ============ ============ ============ ============ BY GROUP -- Operating Businesses Electronic Retailing $ 228 $ 323 $ 397 42% 23% Information & Services 272 333 441 22% 33% Corporate and other (33) (34) (36) -2% -6% ------------ ------------ ------------ ------------ ------------ $ 467 $ 622 $ 802 33% 29% ============ ============ ============ ============ ============ (a) INCLUDES FACE VALUE OF PREFERRED STOCK TO BE ISSUED AS PART OF EXPEDIA TRANSACTION. (b) CLOSING PRICES AS OF 12/14/01. (c) THE VALUE OF USAI'S INTEREST IN THE PARTNERSHIP IS BASED ON AN ASSUMED $22 BILLION PRIVATE MARKET VALUE FOR THE ASSETS. (d) INCLUDES CONSOLIDATED EBITDA FROM HSN GERMANY. DOES NOT INCLUDE EMERGING BUSINESSES. USA INTERACTIVE TRANSACTION VALUE BUILDUP (ALL FIGURES ASSUME COMPLETION OF THE EXPEDIA TRANSACTION) ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
------------ ------------ ------------ PRO FORMA SHARE PRICE $ 24.00 $ 28.00 $ 30.00 ------------ ------------ ------------ Pro Forma shares outstanding calculation (using treasury dilution method) Shares outstanding prior to transaction 804.6 808.4 810.3 Shares retired (320.9) (320.9) (320.9) Shares underlying Partnership Series B Preferred (56.6) (56.6) (56.6) Dilution from new warrants issued to VU -- 0.4 2.0 ------------ ------------ ------------ PRO FORMA SHARES OUTSTANDING 427.1 430.9 434.9 Market Capitalization $ 10,251 $ 12,065 $ 13,046 Net debt prior to transaction (a) 56 56 56 ------------ ------------ ------------ ENTERPRISE VALUE $ 10,307 $ 12,121 $ 13,102 PUBLIC COMPANY VALUES PRICE (b) SHARES VALUE ------------ ------------ ------------ Ticketmaster $ 16.16 95.5 1,543 HRN $ 38.23 39.0 1,491 Expedia $ 36.76 37.5 1,379 ------------ ------------ ------------ $ 4,413 $ 4,413 $ 4,413 SECURITIES RECEIVED IN TRANSACTION: Cash from partnership distribution 1,619 Series A Preferred 750 5.4% Partnership Interest (c) 1,000 ------------ ------------ ------------ $ 3,369 $ 3,369 $ 3,369 VALUE OF PUBLIC SUBSIDIARIES AND SECURITIES $ 7,781 $ 7,781 $ 7,781 IMPLIED VALUE OF HSN, PRC AND ECS $ 2,526 $ 4,339 $ 5,320 2 2002 EBITDA Multiple (d) $ 364 6.9 x 11.9 x 14.6 x
TRANSACTION VALUE SHARES PRICE VALUE - --------------------------------------------- ------------ ------------ ------------ Shares retired 320.9 $ 22.00 $ 7,059 Shares underlying preferred (a) 56.6 22.00 1,245 ------------ ------------ ------------ TOTAL SHARES RETIRED 377.5 $ 22.00 8,304 Cash from partnership distribution 1,619 Series A Preferred 750 5.4% Partnership Interest (b) 1,000 ------------ $ 3,369 ------------ TOTAL VALUE RECEIVED $ 11,673 ============
EXERCISE WARRANTS ISSUED TO VU WARRANTS PRICE - ----------------------------------------------- ------------ ------------ 24.2 $ 27.50 24.2 32.50 12.1 37.50 56.6 (a) 40.82 ------------ ------------ 117.1 $ 36.01 (a) THE $1.75 BILLION FACE VALUE SERIES B PREFERRED IS CONVERTIBLE INTO A MAXIMUM OF 56.6 USAI SHARES AT MATURITY. WE BELIEVE THAT THE BEST WAY TO LOOK AT THE STOCK PORTION OF THIS SECURITY IS TO TREAT 56.6 SHARES AS RETIRED AND CREDIT VU WITH AN ADDITIONAL 56.6 WARRANTS WITH A $40.82 EXERCISE PRICE. (b) THE VALUE OF USAI'S INTEREST IN THE PARTNERSHIP IS BASED ON AN ASSUMED $22 BILLION PRIVATE MARKET VALUE FOR THE ASSETS. (c) REPRESENTS ADDITIONAL DILUTION OF USAI SHAREHOLDERS AS A RESULT OF THE WARRANTS ISSUED TO VU AT VARIOUS USAI SHARE PRICES. USA INTERACTIVE IMPLIED SHARE PRICE (ALL FIGURES ASSUME COMPLETION OF THE EXPEDIA TRANSACTION) ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
DILUTION AT VARIOUS SHARE PRICES (c) SHARES DILUTION - ----------------------------------------------- ------------ ------------ $ 30.00 0.5% 40.00 2.9% 50.00 7.1% 75.00 12.5% 100.00 14.9% (a) INCLUDES FACE VALUE OF PREFERRED STOCK TO BE ISSUED AS PART OF EXPEDIA TRANSACTION. (b) THE VALUE OF USAI'S INTEREST IN THE PARTNERSHIP IS BASED ON AN ASSUMED $22 BILLION PRIVATE MARKET VALUE FOR THE ASSETS. USA INTERACTIVE TOTAL CAPACITY AND LIQUIDITY (ALL FIGURES ASSUME COMPLETION OF THE EXPEDIA TRANSACTION) ($ IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Pro Forma 2003 EBITDA - Operating Businesses $ 802 $ 802 $ 802 EBITDA Multiple 9.2 x 12.1 x 15.0 x ------------ ------------ ------------ 3 ENTERPRISE VALUE $ 7,370 $ 9,732 $ 12,030 Net debt (a) (56) (56) (56) Cash from partnership distribution 1,619 1,619 1,619 Series A Preferred 750 750 750 5.4% Partnership Interest (b) 1,000 1,000 1,000 ------------ ------------ ------------ IMPLIED MARKET CAPITALIZATION $ 10,683 $ 13,045 $ 15,343 Pro Forma shares outstanding (treasury method) 427.4 434.9 443.0 IMPLIED PRICE PER SHARE $ 25.00 $ 30.00 $ 34.64 ============ ============ ============ (a) BORROWING CAPACITY BASED ON NOT HAVING DEBT EXCEED 2 TIMES OPERATING EBITDA. (b) DOES NOT INCLUDE EXPEDIA PREFERRED, WHICH IS CONVERTIBLE EQUITY INSTRUMENT. (c) USA INTERACTIVE BELIEVES IT WILL BE ABLE TO MONETIZE THE PREFERRED AT FULL FACE VALUE. IMPORTANT This presentation contains forward looking statements relating to possible or assumed future results of USAi. It reflects the current views of USAi with respect to future events, and is subject to risks that could cause future results to materially differ. These risks are described in USAi's Securities and Exchange Commission filings. Information contained herein about entities other than USAi has been obtained from sources believed to be reliable, but no independent verification has been made and no representation is made as to its accuracy or completeness. Any statements non-factual in nature constitute current opinions, which are subject to change without notice. The forward looking statements and opinions in this presentation are made as of the date of this presentation, and USAi undertakes no obligation to update or revise them for any reason. These statements do not include the potential impact of any mergers, acquisitions or other business combinations that may be completed in the future other than previously announced pending acquisitions. This presentation reflects estimates that USAi is comfortable releasing to analysts and the public as of the date hereof. USA Networks, Inc. ("USA") and Expedia, Inc. ("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 AND INFORMATION 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 will file a proxy statement and other relevant documents concerning USA's contribution of its Entertainment Group to a joint venture with Vivendi Universal 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 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. 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. 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 USA 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. 4
DEBT CAPACITY FROM OPERATIONS $ 1,200 (a) Cash and cash equivalents on balance sheet: Cash on balance sheet, net of debt outstanding (b) 600 Cash from partnership distribution 1,619 Series A Preferred (c) 750 ------------ TOTAL CASH EQUIVALENTS ON BALANCE SHEET $ 2,969 ------------ TOTAL LIQUIDITY $ 4,169 ============