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: ------------------------------------------------------------------------ Slide 1 USA Interactive Goal: 20% of all Interactive Commerce USA Interactive will be the new name of USA Networks, Inc. upon closing of the transaction in which the entertainment businesses of USA Networks, Inc. will be contributed to a joint venture with Vivendi Universal. Prepared 1/29/02 - Read important disclaimer Slide 2: USA Interactive Electronic Retailing: (logos) Home Shopping Network, America's Store, Home Shopping Espanol, Shop Channel, HSN.com, TVSN, Home Shopping Europe Information & Services: (logos) Ticketmaster, Match.com, Citysearch.com, HRN, USA ECS, Styleclick, Expedia, Inc. (Transaction pending), PRC Pro forma for pending Expedia transaction. Includes some companies majority or partially owned by USA. USA Interactive will be the new name of USA Networks, Inc. upon closing of the transaction in which the entertainment businesses of USA Networks, Inc. will be contributed to a joint venture with Vivendi Universal. Prepared 1/29/02 - Read important disclaimer Slide 3: Huge Opportunity $ in billions U.S. Interactive Commerce Gross Transaction Value ("GTV") GAGR = 24% Source: Shop.org / BCG (5/01); PhocusWright (10/01); Comscore Networks (1/02); Jupiter (10/01, 11/01, 4/00, 10/00); compiled estimates from various other Wall Street analysts and internal estimates. Includes B2C online commerce, online financial services and online classifieds. Prepared 1/29/02 - Read important disclaimer Slide 4: USA's Target $ in billions
2001 $87 2002E $110 2003E $137 2004E $169 2005E $207 2006E $253 Source: Shop.org / BCG (5/0)1; Comscore Networks (1/02); Jupiter (10/01, 11/01, 4/00, 10/00); compiled estimates from various other Wall Street analysts and internal estimates. Includes B2C online commerce, online financial services and online classifieds. USA budget / estimates based on USA Revised Budget as filed with the SEC on 1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for initiatives and new acquisitions based on USA internal estimates. Pro forma for pending Expedia transaction. Prepared 1/29/02 - Read important disclaimer Slide 5: Growing Interactive Transactions $ in billions USA Gross Interactive Transactions CAGR = 56%
Target 2001 $87 8% 2002E $110 13% 2003E $137 17% 2004E $169 20% 2005E $207 21% 2006E $253 22% USA budget / estimates based on USA Revised Budget as filed with the SEC on 1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for initiatives and new acquisitions based on USA internal estimates. Pro forma for pending Expedia transaction. Prepared 1/29/02 - Read important disclaimer Slide 6: How Will We Get There? Prepared 1/29/02 - Read important disclaimer Slide 7: Organic Growth + New Initiatives + Acquisitions Prepared 1/29/02 - Read important disclaimer Slide 8: Components of Our Growth (%) $ in billions USA Gross Interactive Transactions
2001 $6.2 2002E $14.3 2003E $23.3 2004E $33.9 2005E $44.2 2006E $56.3 USA budget / estimates based on USA Revised Budget as filed with the SEC on 1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for initiatives and new acquisitions based on USA internal estimates. Pro forma for pending Expedia transaction. Prepared 1/29/02 - Read important disclaimer Slide 9: Components of Our Growth ($) $ in billions USA Gross Interactive Transactions
2001 2002E 2003E 2004E 2005E 2006E New Acquisitions 5% 8% 10% 11% 11% Initiatives 1% 1% 1% 1% Organic Growth 7% 8% 8% 9% 10% 10% Total 7% 13% 17% 20% 21% 22% USA budget / estimates based on USA Revised Budget as filed with the SEC on 1/29/02 for 2002 and 2003 and internal estimates for 2004-2006; goals for initiatives and new acquisitions based on USA internal estimates. Pro forma for pending Expedia transaction. Prepared 1/29/02 - Read important disclaimer Slide 10: Organic Growth Prepared 1/29/02 - Read important disclaimer Slide 11: Exchanges (graphic) screen grab of Ticketmaster.com Orlando Magic tickets exchange page Prepared 1/29/02 - Read important disclaimer Slide 12: Online Personals: Huge Potential
2001 2002E 2003E 2004E 2005E 2006E New Acquisitions $5.70 $11.10 $17.50 $22.70 $28.80 Initiatives $0.70 $1.20 $1.70 $2.30 Organic Growth $6.20 $8.50 $11.50 $15.20 $19.80 $25.20 Total $6.20 $14.30 $23.30 $33.90 $44.20 $56.30 Sources: US Census Bureau 1998; MRE Cyberstats Fall 2000; NPD Group Research 12/00 Prepared 1/29/02 - Read important disclaimer Slide 13: Match: A True Gem $ in millions Revenue CAGR = 67%
Online Not Online Singles 18+ (U.S.) 44% 56% 87 mm Uses Online Never used Dating Online Dating Online Singles 18% (U.S.) 24% 76% 39 mm EBITDA CAGR = 109%
2000 $29 2001 $49 2002E $88 2003E $135 Source: USA Revised Budget as filed with the SEC 1/29/02. Prepared 1/29/02 - Read important disclaimer Slide 14: Travel: Quickly Migrating Online U.S. Online Travel as % of Total U.S. Travel
2000 $6 2001 $17 2002E $30 2003E $55 Total U.S. Travel Today ~ $500 billion Source: CIBC for total US travel market; PhocusWright, Shop.org and USA estimates for US online travel market. Prepared 1/29/02 - Read important disclaimer Slide 15: Packaging the Merchant Model (graphics) screen grabs of Expedia.com Pro forma for pending Expedia transactions. Prepared 1/29/02 - Read important disclaimer Slide 16: Expanding HSN Online $ in millions HSN.com Revenue 2000 = $42 increases 200% 2000-2001 increases 40% 2001-2002E % of HSN U.S. Sales
1999 1% 2002E 5% 2006E +15%? Source: USA Revised Budget as filed with the SEC on 1/29/02. Prepared 1/29/02 - Read important disclaimer Slide 17: HSN Circle of Commerce Center: Fun, Informative, Interactive TV, Internet, Off Air, DRTV, Catalog, Wireless, Contextual Commerce, Digital Tiers, iTV, B&M Prepared 1/29/02 - Read important disclaimer Slide 18: New Initiatives Prepared 1/29/02 - Read important disclaimer Slide 19 Membership Clubs Credit Cards Loyalty / Notification Programs 65mm Name Database Prepared 1/29/02 - Read important disclaimer Slide 20: Acquisitions Prepared 1/29/02 - Read important disclaimer Slide 21: Areas of Opportunity Interactive Commerce & Services pie chart: USA business from largest to smallest (Travel, PCs/Electronics, TV Elec. Retailing, Other Commerce, Mass Merchandise, Apparel, Home/Office, Event Tickets, Personals other business (Financial Services, Auctions, Books, Music & Video, Flowers & Cards, Jobs Classifieds, Automobile, Real Estate Classifieds Source: Shop.org, Jupiter, MSDW , Prudential, Furman Selz, Painewebber, SSB, SEC filings and Match.com and other internal estimates. Prepared 1/29/02 - Read important disclaimer Slide 22: Historical Price Performance USA CAGR = 35% (graphic) line chart depicting relative performance of USAI, Entertainment Index, and Nasdaq from Dec 96 to Dec 01 Source: Yahoo! Finance. Date range is from closing of HSN / Silver King merger to 12/31/01. Prepared 1/29/02 - Read important disclaimer Slide 23: Value Creation Increase to shareholder value: $13.3 billion Estimated annual ROI: 33% Companies included: HSN, Ticketmaster, HRN, Broadcasting, USA Entertainment Purchase Price = $7.2 Billion Estimates Current Market Value = $20.5 Billion Value of publicly traded subsidiaries based on current market values. Value of USA Broadcasting based on purchase price by Univision. Value of USA Entertainment based on estimated value of pending transaction. Value of other assets based on Wall Street analyst and USA internal estimates. Does not include pending Expedia transaction, which has not yet closed. Prepared 1/29/02 - Read important disclaimer Slide 24: Misses Santa.com - $5 mm Styleclick, FirstAuction, FirstJewelry.com - $115 mm MXG Online - $25 mm emachines - $8 mm Others < $23 mm Prepared 1/29/02 - Read important disclaimer Slide 25: Current Trading Multiple $ in billions except per share USA Share Price - $27.00 Fully Diluted Shares Outstanding - 415 Equity Value - $11.2 Less: Net Cash & Investments - (3.5) Enterprise Value - 7.7 Less: Value of Emerging Assets - (0.5) Adjusted Enterprise Value - $7.2 2002E 2003E AEV / Attributable Operating EBITDA 13.8x 10.5x Pro forma for pending Expedia and Vivendi transactions. Net cash and investments includes $750 million preferred interest in Vivendi Universal Entertainment ("VUE") and 5.4% common interest in VUE, and includes only attributable cash from publicly-traded subsidiaries. Attributable Operating EBITDA deducts minority interest, calculated on a fully diluted, treasury method basis, % of EBITDA from USA's publicly traded subsidiaries. Prepared 1/29/02 - Read important disclaimer Slide 26: USA Potential $ in billions except per share
2000 3% 2001 8% 2002E ~10% Pro forma for pending Expedia and Vivendi transactions. Attributable Operating EBITDA is defined as EBITDA from USA's Operating Businesses, less minority interest %, calculated on a fully diluted, treasury method basis, % of EBITDA from USA's publicly-traded subsidiaries. Assumes USA's 5.4% common interest in VUE increases in value 12% per year. Assumes 20% of EBITDA used to repay debt. Source: USA Revised Budget as filed with the SEC on 1/29/02 and internal estimates. Includes new initiatives and acquisitions. Prepared 1/29/02 - Read important disclaimer Slide 27: Fully Diluted Shares Outstanding Shares in millions
Assumed Multiple 12x 14x 16x 18x 20x 2006 Attributable Operating EBITDA $3.5 $3.5 $3.5 $3.5 $3.5 Implied Enterprise Value $41.60 $48.60 $55.50 $62.50 $69.40 Less: Net Debt -1.1 -1.1 -1.1 -1.1 -1.1 Plus: 5.4% Interest in VUE 1.6 1.6 1.6 1.6 1.6 Implied Equity Value $42.1 $49.1 $56.0 $62.9 $69.9 2005 Theoretical Share price $71 $81 $92 $103 $114 Pro forma for pending transactions. Assumes tax savings from options and warrants exercise, increase in options outstanding of 3 mm per year. Includes all warrants related to Expedia and Vivendi transactions. Assumes new acquisitions at average multiple of 13x forward year EBITDA, excluding synergies. Prepared 1/29/02 - Read important disclaimer Slide 28: Important This presentation contains forward looking statements relating to possible or assumed future results of USA. It reflects the current views of USA with respect to future events, and is subject to risks that could cause future results to materially differ. These risks are described in USA's Securities and Exchange Commission filings. Information contained herein about entities other than USA 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 prmpleteness. 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 USA 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 transactions. This presentation reflects estimates that USA is comfortable releasing to analysts and the public as of the date hereof. Prepared 1/29/02 - Read important disclaimer Slide 29: Important 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. Prepared 1/29/02 - Read important disclaimer Slide 30: Important 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 RELATING TO THE PROPOSED TRANSACTIONS. 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 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. Prepared 1/29/02 - Read important disclaimer
Assumed Multiple 12x 14x 16x 18x 20x 2005 Theoretical Share Price $70 $81 $92 $103 $114 Basic Shares Outstanding 390 390 390 390 390 Treasury Method Options 38 40 41 42 43 Dilution from Warrants and Preferred Conversion 88 97 104 110 114 Shares Issued in New Acquisitions 809 76 72 69 66 Pro Forma Fully Filuted Shares Outstanding 596 603 608 611 614