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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 15, 2002
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 10-Q

(MARK ONE)

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NO. 0-20570
------------------------
USA INTERACTIVE

(Exact name of registrant as specified in its charter)

DELAWARE 59-2712887
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)

152 WEST 57TH STREET, NEW YORK, NEW YORK 10019
(Address of Registrant's principal executive offices)

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

USA NETWORKS, INC.
(Former name, former address and former fiscal year, if changed since last
report)
--------------------------

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/ No / /

As of May 10, 2002, the following shares of the Registrant's capital stock
were outstanding:

Common Stock................................................ 350,252,365
Class B Common Stock........................................ 63,033,452
-----------
Total....................................................... 413,285,817
Common Stock issuable upon exchange of outstanding
exchangeable subsidiary equity............................ 33,216,607
-----------
Total outstanding Common Stock, assuming full exchange of
Class B Common Stock and exchangeable subsidiary equity... 446,502,424
===========

The aggregate market value of the voting stock held by non-affiliates of the
Registrant as of May 10, 2002 was $8,470,236,757. For the purpose of the
foregoing calculation only, all directors and executive officers of the
Registrant are assumed to be affiliates of the Registrant.

Assuming the exchange, as of May 10, 2002, of all equity securities of
subsidiaries of the Registrant exchangeable for Common Stock of the Registrant,
the Registrant would have outstanding 446,502,424 shares of Common Stock with an
aggregate market value of $12,702,993,959.

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PART I--FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
-----------------------
2002 2001
---------- ----------
(IN THOUSANDS,
EXCEPT PER SHARE DATA)

Product sales............................................... $ 462,442 $ 458,898
Service revenue............................................. 910,126 853,905
---------- ----------
Net revenue............................................... 1,372,568 1,312,803
Operating costs and expenses:
Cost of sales-product sales............................... 301,742 306,163
Cost of sales-service revenue............................. 348,890 292,349
Program costs............................................. 171,820 201,337
Selling and marketing..................................... 196,583 150,735
General and administrative................................ 102,927 103,676
Other operating costs..................................... 27,535 28,107
Amortization of non-cash distribution and marketing
expense................................................. 6,964 8,017
Amortization of non-cash compensation expense............. 3,808 2,855
Amortization of cable distribution fees................... 13,000 8,756
Depreciation and amortization............................. 62,853 137,599
---------- ----------
Total operating costs and expenses........................ 1,236,122 1,239,594
---------- ----------
Operating profit.......................................... 136,446 73,209
Other income (expense):
Interest income........................................... 7,507 8,110
Interest expense.......................................... (19,265) (19,526)
Miscellaneous............................................. (12,132) (6,525)
---------- ----------
(23,890) (17,941)
---------- ----------
Earnings before income taxes, minority interest and
cumulative effect of accounting change.................... 112,556 55,268
Income tax expense.......................................... (32,180) (26,462)
Minority interest expense................................... (54,476) (46,189)
---------- ----------
Earnings (loss) before cumulative effect of accounting
change.................................................... 25,900 (17,383)
Cumulative effect of accounting change, net of tax.......... (310,587) (9,187)
---------- ----------
NET LOSS.................................................... (284,687) $ (26,570)
Preferred dividend.......................................... (1,967) --
---------- ----------
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS................... $ (286,654) $ (26,570)
========== ==========

INCOME (LOSS) PER SHARE BEFORE CUMULATIVE EFFECT OF
ACCOUNTING CHANGE AVAILABLE TO COMMON SHAREHOLDERS:
Basic earnings (loss) per common share...................... $ .06 $ (.05)
Diluted earnings (loss) per common share.................... $ .05 $ (.05)
NET LOSS PER SHARE AVAILABLE TO COMMON SHAREHOLDERS:
Basic and diluted earnings (loss) per common share.......... $ (.73) $ (.07)

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

MARCH 31, DECEMBER 31,
2002 2001
------------ -------------
(IN THOUSANDS, EXCEPT SHARE
DATA)

ASSETS
CURRENT ASSETS
Cash and cash equivalents................................... $ 1,709,568 $ 978,377
Restricted cash equivalents................................. 12,052 9,107
Marketable securities....................................... 226,214 171,464
Accounts and notes receivable, net of allowance of $63,037
and $57,456, respectively................................. 668,121 672,935
Receivable from sale of USAB................................ -- 589,625
Inventories, net............................................ 401,550 408,306
Deferred tax assets......................................... 64,559 59,635
Other current assets, net................................... 134,599 86,783
----------- -----------
Total current assets...................................... 3,216,663 2,976,232

PROPERTY, PLANT AND EQUIPMENT
Computer and broadcast equipment............................ 398,334 368,475
Buildings and leasehold improvements........................ 144,474 146,162
Furniture and other equipment............................... 129,433 126,240
Land........................................................ 15,675 15,665
Projects in progress........................................ 33,452 45,781
----------- -----------
721,368 702,323
Less accumulated depreciation and amortization............ (281,659) (268,208)
----------- -----------
439,709 434,115

OTHER ASSETS
Goodwill.................................................... 7,529,536 7,018,236
Intangible assets, net...................................... 710,436 218,047
Cable distribution fees, net................................ 202,727 158,880
Long-term investments....................................... 85,059 65,891
Notes and accounts receivable, net of current portion
($86,091 and $99,819, respectively, from related
parties).................................................. 140,176 138,644
Advance to Universal........................................ 19,687 39,265
Inventories, net............................................ 565,907 535,555
Deferred charges and other, net............................. 115,337 118,187
----------- -----------
$13,025,237 $11,703,052
----------- -----------

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

MARCH 31, DECEMBER 31,
2002 2001
------------ -------------
(IN THOUSANDS, EXCEPT SHARE
DATA)

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations................. $ 36,091 $ 34,016
Accounts payable, trade..................................... 236,412 329,043
Accounts payable, client accounts........................... 200,714 102,011
Obligations for program rights and film costs............... 227,120 272,601
Cable distribution fees payable............................. 76,553 32,795
Deferred revenue............................................ 329,465 131,627
Income tax payable.......................................... 191,243 221,502
Other accrued liabilities................................... 571,289 471,701
----------- -----------
Total current liabilities................................. 1,868,887 1,595,296
LONG-TERM OBLIGATIONS (net of current maturities)........... 544,535 544,667

OBLIGATIONS FOR PROGRAM RIGHTS AND FILM COSTS, net of
current................................................... 297,841 285,378

OTHER LONG-TERM LIABILITIES................................. 48,410 51,354

DEFERRED INCOME TAXES....................................... 36,322 312,487

MINORITY INTEREST........................................... 4,954,997 4,968,369
STOCKHOLDERS' EQUITY
Preferred stock-$.01 par value; authorized 100,000,000
shares; 13,120,682 and 0 shares issued and outstanding,
respectively.............................................. 131 --
Common stock-$.01 par value; authorized 1,600,000,000
shares; issued and outstanding, 341,974,314 and
314,704,017 shares, respectively.......................... 3,419 3,147
Class B convertible common stock-$.01 par value; authorized,
400,000,000 shares; issued and outstanding, 63,033,452
shares.................................................... 630 630
Additional paid-in capital.................................. 5,541,376 3,918,401
(Accumulated deficit)/retained earnings..................... (105,387) 181,267
Accumulated other comprehensive loss........................ (15,251) (11,605)
Treasury stock.............................................. (145,675) (141,341)
Note receivable from key executive for common stock
issuance.................................................. (4,998) (4,998)
----------- -----------
Total stockholders' equity................................ 5,274,245 3,945,501
----------- -----------
$13,025,237 $11,703,052
=========== ===========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(UNAUDITED)

CLASS B RETAINED ACCUM.
CONVERTIBLE ADDIT. EARNINGS / OTHER
PREFERRED COMMON COMMON PAID-IN ACCUM. COMP.
TOTAL STOCK STOCK STOCK CAPITAL DEFICIT INCOME
---------- --------- -------- ----------- ---------- ---------- --------
(IN THOUSANDS)

BALANCE AT DECEMBER 31, 2001............ $3,945,501 $ -- $3,147 $630 $3,918,401 $ 181,267 $(11,605)
Comprehensive loss:
Net loss for the three months ended
March 31, 2002...................... (284,687) -- -- -- -- (284,687) --
Decrease in unrealized gains in
available for sale securities....... (316) -- -- -- -- -- (316)
Foreign currency translation.......... (3,330) -- -- -- -- -- (3,330)
----------
Comprehensive loss...................... (288,333)
Issuance of securities in connection
with the Expedia transaction.......... 1,498,007 131 206 -- 1,497,670 -- --
Issuance of common stock upon exercise
of stock options...................... 96,739 -- 63 -- 96,676 -- --
Income tax benefit related to stock
options exercised..................... 19,063 -- -- -- 19,063 -- --
Issuance of stock in connection with
other transactions.................... 9,571 -- 5 -- 9,566 -- --
Dividend on preferred stock............. (1,967) -- -- -- -- (1,967) --
Purchase of treasury stock.............. (4,336) -- (2) -- -- -- --
---------- ---- ------ ---- ---------- --------- --------
BALANCE AT MARCH 31, 2002............... $5,274,245 $131 $3,419 $630 $5,541,376 $(105,387) $(15,251)
========== ==== ====== ==== ========== ========= ========

NOTE
RECEIVABLE
FROM KEY
EXECUTIVE
FOR
COMMON
TREASURY STOCK
STOCK ISSUANCE
--------- ----------
(IN THOUSANDS)

BALANCE AT DECEMBER 31, 2001............ $(141,341) $(4,998)
Comprehensive loss:
Net loss for the three months ended
March 31, 2002...................... -- --
Decrease in unrealized gains in
available for sale securities....... -- --
Foreign currency translation.......... -- --

Comprehensive loss......................
Issuance of securities in connection
with the Expedia transaction.......... -- --
Issuance of common stock upon exercise
of stock options...................... -- --
Income tax benefit related to stock
options exercised..................... -- --
Issuance of stock in connection with
other transactions.................... -- --
Dividend on preferred stock............. -- --
Purchase of treasury stock.............. (4,334) --
--------- -------
BALANCE AT MARCH 31, 2002............... $(145,675) $(4,998)
========= =======

Accumulated other comprehensive income is comprised of unrealized (losses)
gains on available for sale securities of $(277) and $39 at March 31, 2002 and
December 31, 2001, respectively and foreign currency translation adjustments of
$(14,974) and $(11,644) at March 31, 2002 and December 31, 2001, respectively.

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
---------------------
2002 2001
---------- --------
(IN THOUSANDS)

Cash flows from operating activities:
Earnings (loss) before cumulative effect of accounting
change.................................................. $ 25,900 $(17,383)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization........................... 62,853 137,599
Amortization of cable distribution fees................. 13,000 8,756
Amortization of program rights and film costs........... 156,348 192,583
Amortization of deferred financing costs................ 343 465
Amortization of non-cash distribution and marketing..... 6,964 8,017
Amortization of non-cash compensation expense........... 3,808 2,855
Deferred income taxes................................... 9,133 (1,077)
Equity in losses of unconsolidated affiliates........... 13,473 4,258
Non-cash interest income................................ (235) (1,614)
Minority interest expense............................... 54,476 46,191
Changes in current assets and liabilities:
Accounts receivable..................................... 38,568 (52,398)
Inventories............................................. 7,619 17,775
Accounts payable........................................ (19,992) (41,980)
Accrued liabilities and deferred revenue................ (105,873) 80,909
Payment for program rights and film costs............... (219,791) (242,170)
Increase in cable distribution fees..................... (12,884) (732)
Other, net.............................................. (37,897) (14,866)
---------- --------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES......... (4,187) 127,188
Cash flows from investing activities:
Acquisitions, net of cash acquired........................ 242,314 (82,253)
Capital expenditures...................................... (28,340) (28,850)
Recoupment of advance to Universal........................ 19,735 16,474
Increase in long-term investments and notes receivable.... (603) (30,619)
(Purchase) redemption of marketable securities............ (55,154) 45,565
Proceeds from sale of broadcast stations.................. 589,625 --
Other, net................................................ (10,146) (4,588)
---------- --------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES......... 757,431 (84,271)
Cash flows from financing activities:
Borrowings................................................ 2,829 40,905
Principal payments on long-term obligations............... (1,854) (3,368)
Purchase of treasury stock................................ (2,895) (646)
Payment of mandatory tax distribution to LLC partners..... (153,479) (17,369)
Proceeds from sale of subsidiary stock.................... 33,566 913
Proceeds from issuance of common stock and LLC shares..... 100,339 29,495
Other, net................................................ (593) (24,943)
---------- --------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES......... (22,087) 24,987
Effect of exchange rate changes on cash and cash
equivalents............................................. 34 (3,022)
---------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 731,191 64,882
Cash and cash equivalents at beginning of period............ 978,377 244,223
---------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $1,709,568 $309,105
========== ========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1--ORGANIZATION

As of March 31, 2002, USA Interactive ("USA" or the "Company") (Nasdaq:
USAI) (formerly USA Networks, Inc.) was organized into two groups, the USA
Interactive Group and the USA Entertainment Group. The USA Interactive Group
consists of Home Shopping Network (including HSN International and HSN.com);
Ticketmaster (Nasdaq: TMCS), which operates Ticketmaster, Ticketmaster.com,
Citysearch and Match.com; Hotels.com (Nasdaq: ROOM) (formerly Hotel Reservations
Network, Inc.); Expedia, Inc. (as of February 4, 2002) (Nasdaq: EXPE);
Electronic Commerce Solutions; Styleclick (OTC: IBUY); and Precision Response
Corporation; and The USA Entertainment Group consists of USA Cable, including
USA Network and Sci Fi Channel and Emerging Networks TRIO, Newsworld
International and Crime; Studios USA, which produces and distributes television
programming; and USA Films, which produces and distributes films. USA
Entertainment was contributed to a joint venture with Vivendi Universal, S.A.
("Vivendi") on May 7, 2002. See Note 10 for further discussion of the VUE
transaction.

On February 4, 2002, USA completed its acquisition of a controlling interest
in Expedia through a merger of one of its subsidiaries with and into Expedia.
See Note 3 for further discussion.

A number of USA's businesses are currently held by two non-wholly owned
subsidiaries, Home Shopping Network, Inc. ("Holdco") and USANi LLC. USA
maintains control and management of Holdco and USANi LLC, and manages the
businesses held by USANi LLC, in substantially the same manner as they would be
if USA held them directly through wholly owned subsidiaries. The other principal
owners of these subsidiaries were Liberty Media Corporation ("Liberty"), through
its subsidiaries, and Vivendi, through Universal Studios, Inc. ("Universal") and
other subsidiaries, until May 7, 2002, when USA acquired all of Liberty's and
Vivendi's direct interest in USANi LLC in the Company's transaction with
Vivendi. USA has the contractual right to require the exchange of the Holdco
shares held by Liberty for shares of USA. Following such exchange, Holdco and
USANi LLC will become wholly owned, thereby simplifying USA's corporate
structure.

BASIS OF PRESENTATION

The interim Condensed Consolidated Financial Statements and Notes thereto of
the Company are unaudited and should be read in conjunction with the audited
Consolidated Financial Statements and Notes thereto for the twelve months ended
December 31, 2001.

In the opinion of the Company, all adjustments necessary for a fair
presentation of such Condensed Consolidated Financial Statements have been
included. Such adjustments consist of normal recurring items. Interim results
are not necessarily indicative of results for a full year. The interim Condensed
Consolidated Financial Statements and Notes thereto are presented as permitted
by the Securities and Exchange Commission and do not contain certain information
included in the Company's audited Consolidated Financial Statements and Notes
thereto.

ACCOUNTING ESTIMATES

Management of the Company is required to make certain estimates and
assumptions during the preparation of consolidated financial statements in
accordance with generally accepted accounting principles. These estimates and
assumptions impact the reported amount of assets and liabilities and disclosures
of contingent assets and liabilities as of the date of the consolidated
financial statements. They also impact the reported amount of net earnings
during any period. Actual results could differ from those estimates.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--ORGANIZATION (CONTINUED)
Significant estimates underlying the accompanying consolidated financial
statements include the inventory carrying adjustment, program rights and film
cost amortization, sales return and other revenue allowances, allowance for
doubtful accounts, recoverability of intangibles and other long-lived assets,
estimates of film revenue ultimates and various other operating allowances and
accruals.

NEW ACCOUNTING PRONOUNCEMENTS

ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

Effective January 1, 2002, USA adopted Statement of Financial Accounting
Standards No. 142, "Accounting for Goodwill and Other Intangible Assets." The
new rules eliminate amortization of goodwill and other intangible assets with
indefinite lives and establish new measurement criterion for these assets. As
previously discussed, USA recorded a pre-tax write-off before minority interest
of $499 million related to the Citysearch and Precision Response ("PRC")
businesses. Although Citysearch and PRC are expected to generate positive cash
flows in the future, due to cash flow discounting techniques to estimate fair
value as required by the new rules, the future estimated discounted cash flows
do not support current carrying values. The Citysearch write-off was
$115 million, and the PRC write-off was $384 million. Goodwill amortization
recorded in the three months ended March 31, 2001 was $83.4 million, including
$30.6 million related to USA Entertainment.

Adoption of the new standard resulted in a one-time, non-cash after-tax
expense of $310.6 million. The expense is reflected as a cumulative effect of an
accounting change in the accompanying consolidated statement of operations. See
Note 7 for additional information.

IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
or Disposal of Long-Lived Assets. This statement supersedes SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and for Assets to Be Disposed
Of, and the accounting and reporting provisions of APB Opinion No. 30, Reporting
the Results of Operations--Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in that opinion). SFAS No. 144 established a single accounting model, based on
the framework established in SFAS No. 121 for long-lived assets to be disposed
of for sale. It retains the fundamental provisions of SFAS No. 121 for (a)
recognition and measurement of the impairment of long-lived assets to be held
and used and (b) measurement of long-lived assets to be disposed of by sale SFAS
No. 144 is effective for fiscal years beginning after December 15, 2001, with
earlier applications encouraged. As a result of its adoption of SFAS 144, the
Company has not presented the operating results of the USA Entertainment Group
as discontinued operations as of and for the three months ended March 31, 2002.

ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--ORGANIZATION (CONTINUED)
and then expensing them over the related revenue streams. In addition, SOP 00-2
requires development costs for abandoned projects and certain indirect overhead
costs to be charged directly to expense, instead of those costs being
capitalized to film costs, which was required under the previous accounting
rules. SOP 00-2 also requires all film costs to be classified in the balance
sheet as non-current assets. Provisions of SOP 00-2 in other areas, such as
revenue recognition, generally are consistent with the Company's existing
accounting policies.

SOP 00-2 was adopted as of January 1, 2001, and the Company recorded a
one-time, non-cash after-tax expense of $9.2 million. The expense is reflected
as a cumulative effect of an accounting change in the accompanying consolidated
statement of operations.

RECLASSIFICATIONS

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform to the 2002 presentation.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 (the "2001 Form 10-K") for a summary of all significant
accounting policies.

NOTE 3--BUSINESS ACQUISITIONS

EXPEDIA TRANSACTION

On February 4, 2002, USA completed its acquisition of a controlling interest
in Expedia through a merger of one of its subsidiaries with and into Expedia.
Immediately following the merger, USA owned all of the outstanding shares of
Expedia Class B common stock, representing approximately 64.2% of Expedia's then
outstanding shares, and 94.9% of the voting interest in Expedia. On
February 20, 2002, USA acquired 936,815 shares of Expedia common stock,
increasing USA's ownership to 64.6% of Expedia's the then outstanding shares,
with USA's voting percentage remaining at 94.9%. In the merger, USA issued to
former holders of Expedia common stock who elected to receive USA securities an
aggregate of 20.6 million shares of USA common stock, 13.1 million shares of $50
face value 1.99% cumulative convertible preferred stock of USA and warrants to
acquire 14.6 million shares of USA common stock at an exercise price of $35.10.
Expedia will continue to be traded on Nasdaq under the symbol "EXPE," the USA
cumulative preferred stock trades on OTC under the symbol "USAIP" and the USA
warrants trade on Nasdaq under the symbol "USAIW."

Pursuant to the terms of the USA/Expedia transaction documents, Microsoft
Corporation, which beneficially owned 33,722,710 shares of Expedia common stock,
elected to exchange all of its Expedia common stock for USA securities in the
merger. Expedia shareholders who did not receive USA securities in the
transaction retained their Expedia shares and received for each Expedia share
held 0.1920 of a new Expedia warrant.

The aggregate purchase price, including transaction costs, was
$1.5 billion.

The Expedia transaction has been accounted for under the purchase method of
accounting by USA. The purchase price has been preliminarily allocated to the
assets acquired and liabilities assumed

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 3--BUSINESS ACQUISITIONS (CONTINUED)
based on their respective fair values at the date of purchase. In order to
complete its assessment, USA is in the process of obtaining an independent
valuation of the assets and liabilities acquired, including the identification
of intangible assets other than goodwill. Although it has not completed its
assessment, USA has preliminarily identified $567.3 million of intangible assets
other than goodwill. USA will complete its assessment of intangibles acquired by
the second quarter of 2002. The unallocated excess of acquisition costs over net
assets acquired of $804.7 million was allocated to goodwill. Intangible assets
without indefinite lives will be amortized over a period of 3 to 10 years, and
include technology, distribution agreements, customer lists and supplier
relationships. Assets and liabilities of Expedia as of the acquisition date,
including the preliminary application of purchase accounting by USA, consist of
the following:

(IN THOUSANDS)
--------------

Current assets.............................................. $ 320,224
Non-current assets.......................................... 34,528
Goodwill and indefinite lived intangible assets............. 1,201,504
Intangible assets........................................... 252,400
Current liabilities......................................... 206,497
Non-current liabilities..................................... 87,072

The following unaudited pro forma condensed consolidated financial
information for the three months ended March 31, 2002 and 2001, is presented to
show the results of the Company, as if the Expedia Transaction and the merger of
Ticketmaster and Ticketmaster Online Citysearch, which did not impact revenues
or operating profit, but rather minority interest and income taxes, had occurred
at the beginning of the periods presented. The pro forma results include certain
adjustments, including increased amortization related to intangible assets, and
are not necessarily indicative of what the results would have been had the
transactions actually occurred on the aforementioned dates.

THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2001
----------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)

Net revenues......................................... $1,408,912 $1,370,025
Earnings (loss) before cumulative effect of
accounting change.................................. 24,691 (33,595)
Basic and diluted loss before cumulative effect of
accounting change per common share................. 0.05 (0.09)

NOTE 4--STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2002:

For the three months ended March 31, 2002, interest accrued on the
$200.0 million advance to Universal amounted to $0.3 million.

For the three months ended March 31, 2002, the Company incurred non-cash
distribution and marketing expense of $7.0 million.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 4--STATEMENTS OF CASH FLOWS (CONTINUED)
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2001:

For the three months ended March 31, 2001, interest accrued on the
$200.0 million advance to Universal amounted to $1.6 million.

For the three months ended March 31, 2001, the Company incurred non-cash
distribution and marketing expense of $8.0 million.

NOTE 5--INDUSTRY SEGMENTS

As of March 31, 2002, USA was organized into two groups, the Interactive
Group and the Entertainment Group. The USA Interactive Group consists of Home
Shopping Network (including HSN International and HSN.com); Ticketmaster
(Nasdaq: TMCS), which operates Ticketmaster, Ticketmaster.com, Citysearch and
Match.com; Hotels.com (Nasdaq: ROOM); Electronic Commerce Solutions; Styleclick
(OTC: IBUY); and Precision Response Corporation. The USA Entertainment Group
consists of USA Cable, including USA Network and Sci Fi Channel and Emerging
Networks TRIO, Newsworld International and Crime; Studios USA, which produces
and distributes television programming; and USA Films, which produces and
distributes films.

Adjusted earnings before interest, income taxes, depreciation and
amortization ("Adjusted EBITDA") is defined as operating profit plus
(1) depreciation and amortization, (2) amortization of cable distribution fees
of $13.0 million and $8.8 million in the three months ended March 31, 2002 and
2001, respectively (3) amortization of non-cash distribution and marketing
expense and (4) disengagement expenses of $11.5 million in 2002. Adjusted EBITDA
is presented here as a tool and as a valuation methodology used by management in
evaluating the business. Adjusted EBITDA does not purport to represent cash
provided by operating activities. Adjusted EBITDA should not be considered in
isolation or as a substitute for measures of performance prepared in accordance
with generally accepted accounting principles. Adjusted EBITDA may not be
comparable to calculations of similarly titled measures presented by other
companies.

The following is a reconciliation of Operating Profit to Adjusted EBITDA for
the three months ended March 31, 2002 and 2001.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 5--INDUSTRY SEGMENTS (CONTINUED)

THREE MONTHS ENDED
MARCH 31,
-----------------------
2002 2001
---------- ----------
(IN THOUSANDS)

REVENUES:
Cable and studios........................................... $ 367,259 $ 434,972
HSN--U.S.(a)................................................ 395,326 385,372
Ticketing................................................... 153,379 150,109
Hotels.com.................................................. 165,712 105,286
Expedia..................................................... 80,519 --
Precision Response.......................................... 70,089 80,692
Match.com................................................... 25,265 8,544
Citysearch and related...................................... 7,275 12,384
Electronic Commerce Solutions/Styleclick.................... 12,084 8,572
HSN--International and other(b)............................. 64,989 69,703
USA Films................................................... 30,743 51,006
Trio, NWI, Crime, other emerging media...................... 6,976 6,163
Intersegment Elimination.................................... (7,048) --
---------- ----------
TOTAL................................................... $1,372,568 $1,312,803
========== ==========
OPERATING PROFIT (LOSS):
Cable and studios......................................... $ 123,210 $ 134,602
HSN--U.S.(a)(c)........................................... 21,691 23,001
Ticketing................................................. 19,344 10,585
Hotels.com................................................ 18,768 595
Expedia................................................... 12,874 --
Precision Response........................................ (3,203) (5,637)
Match.com................................................. 5,625 (4,685)
Citysearch and related.................................... (24,429) (42,603)
Electronic Commerce Solutions/Styleclick.................. (9,306) (19,638)
HSN--International and other.............................. (6,543) (2,573)
USA Films................................................. (6,259) (3,511)
Trio, NWI, Crime, other emerging media.................... (3,637) (4,354)
Corporate & other......................................... (11,689) (12,573)
---------- ----------
TOTAL................................................... $ 136,446 $ 73,209
========== ==========

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 5--INDUSTRY SEGMENTS (CONTINUED)

THREE MONTHS ENDED
MARCH 31,
-----------------------
2002 2001
---------- ----------
(IN THOUSANDS)

ADJUSTED EBITDA
Cable and studios......................................... $ 126,324 $ 163,406
HSN--U.S.(a)(c)........................................... 57,717 51,735
Ticketing................................................. 33,685 30,233
Hotels.com................................................ 25,794 15,822
Expedia................................................... 25,371 --
Precision Response........................................ 5,732 10,017
Match.com................................................. 6,872 264
Citysearch and related.................................... (10,740) (11,751)
Electronic Commerce Solutions/Styleclick.................. (8,465) (16,918)
HSN--International and other.............................. (4,851) (1,705)
USA Films................................................. (6,069) (1,033)
Trio, NWI, Crime, other emerging media.................... (3,409) (1,697)
Intersegment Elimination.................................. (4,059) --
Corporate & other......................................... (9,293) (7,937)
---------- ----------
TOTAL................................................... $ 234,609 $ 230,436
========== ==========

- ------------------------------

(a) Includes estimated revenue in 2001 generated by homes lost by HSN following
the sale of USA Broadcasting to Univision of $36.2 million. Includes coupons
redeemed by customers impacted by disengagement in 2002 of $0.9 million,
which is reflected as an offset to revenue.

(b) Includes impact of foreign exchange fluctuations, which reduced revenues by
$16.5 million and $13.7 million in 2002 and 2001, respectively, if the
results are translated from Euros to U.S. dollars at a constant exchange
rate, using 1999 as the base year.

(c) Includes $11.5 million of costs incurred in 2002 related to the
disengagement of HSN from USA Broadcasting stations. Amounts relate to
$0.9 million of coupons redeemed by customers and $10.6 million of payments
to cable operators and related marketing expenses in the disengaged markets.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 6--EQUITY INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

At March 31, 2002, USA beneficially owned 46.7% of the outstanding common
stock of Hot Networks AG, a German stock corporation, the subsidiaries of which
operate electronic retailing operations in Europe. This investment is accounted
for using the equity method. On May 3, 2002, USA stated that it would no longer
fund HOT Networks, which entity USA does not control. The other shareholders
have also terminated their funding of the venture. As of April 30, 2002, USA has
a long-term receivable of $100.5 million from HOT Networks. The Company is
evaluating the recoverability of this receivable, but has not completed its
evaluation at this time. Home Shopping Network and the other shareholders of HOT
Networks are actively discussing alternative arrangements with respect to their
relationship, which may include the acquisition of additional equity by USA.
Based on these discussions, the Company may determine that the carrying value of
the receivable is not recoverable. Summary financial information for Hot
Networks AG is presented below.

AS OF AND FOR THE
THREE MONTHS ENDED
MARCH 31,
-------------------------
2002 2001
-------- --------
(IN THOUSANDS)

Current assets..................................... $ 25,808 $ 5,932
Noncurrent assets.................................. 168,993 41,344
Current liabilities................................ 47,469 32,267
Noncurrent liabilities............................. 234,815 22,871
Net sales.......................................... 5,069 5,931
Gross profit....................................... 277 1,236
Net loss........................................... (27,094) (19,250)

Through April 30, 2002, the Company has contributed approximately
$137.5 million, including $12.2 million in April 2002, and recorded equity
losses in unconsolidated subsidiaries of $39.9 million, including $12.2 million
in the three months ended March 31, 2002.

Note that USA consolidates the operations of HOT Germany, a separate entity
that USA controls pursuant to a pooling agreement with Georg Kofler. Home
Shopping Network, a subsidiary of USA, Georg Kofler and the other shareholders
of HOT Germany are actively discussing alternative arrangements with respect to
their relationship, which may include the acquisition of additional equity by
USA. Home Shopping Network has guaranteed certain bank loans to Mr. Kofler by
agreeing to purchase, at a price not to exceed $50 million, Mr. Kofler's shares
in HOT Germany that have been pledged to the banks providing the loans in the
event of a default by Mr. Kofler. The Company is evaluating these provisions at
this time.

NOTE 7--GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill and other intangible assets is comprised of goodwill of
$7.5 billion, intangible assets with indefinite lives of $315.1 million related
primarily to tradenames acquired in the Expedia transaction, and other
intangible assets of $395.3 million. The other intangible assets relate
primarily to purchased technology, distribution agreements, customer lists and
supplier relationships, and include $246.0 million related to the Expedia
transaction. The amounts for Expedia are preliminary at this time, as the
Company has not completed its purchase price allocation. The intangible assets
that do not

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 7--GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
have indefinite lives are being amortized over periods ranging from 3 to
10 years. Amortization expense for the three months ended March 31, 2002 and
2001 was approximately $21.4 million and $19.7 million respectively.
Amortization expense based on March 31, 2002 balances for the next five years is
estimated to be as follows (in thousands):

Nine months ended December 31, 2002......................... $ 80,770
Year ended December 31, 2003................................ 103,393
Year ended December 31, 2004................................ 89,466
Year ended December 31, 2005................................ 53,484
Year ended December 31, 2006................................ 50,823
Year ended December 31, 2007 and thereafter................. 17,393
--------
$395,329
========

Reported net loss and basic and diluted net loss per share adjusted to
exclude amortization expense related to goodwill and other intangible assets
with indefinite lives is as follows (in thousands, except per share data):

THREE MONTHS ENDED
MARCH 31,
--------------------
2002 2001
--------- --------

Reported earnings (loss) before cumulative effect of
accounting change......................................... $ 25,900 $(17,382)
Cumulative effect of accounting change (a).................. (310,587) (9,187)
--------- --------
Reported net loss........................................... (284,687) (26,569)
Preferred dividend.......................................... (1,967) --
--------- --------
Income (loss) available to common shareholders.............. (286,654) (26,569)
Add back goodwill amortization.............................. -- 43,201
--------- --------
Adjusted net loss........................................... $(286,654) $ 16,632
========= ========
Loss per share:
Reported loss available to common shareholders before
cumulative effect of accounting change.................... 0.06 (0.05)
Cumulative effect of accounting change...................... (0.79) (0.02)
--------- --------
Reported basic and diluted net loss per share............... (0.73) (0.07)
Add back: goodwill amortization........................... \ -- 0.11
--------- --------
Adjusted basic and diluted net loss per share............... (0.73) 0.04
========= ========

- ------------------------

(a) Cumulative effect of accounting change in 2002 relates to the adoption
of FAS 142, while the effect in 2001 relates to the adoption of SOP 00-2,
Accounting by Producers or Distributors of Films.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 7--GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
The following table presents the balance of goodwill by segment, including
the changes in carrying amount of goodwill for the three months ended March 31,
2002 (in thousands):

ADOPTION
BALANCE AT FX OF BALANCE AT
JANUARY 1, 2002 TRANSLATION FAS 142 MARCH 31, 2002
--------------- ----------- --------- --------------

Cable and studios........................... $3,694,189 $ -- $ -- $3,694,189
Emerging networks........................... 87,540 -- -- 87,540
Filmed entertainment........................ 160,676 -- -- 160,676
HSN-US...................................... 1,174,652 -- -- 1,174,652
Ticketing operations........................ 722,786 568 -- 723,354
Hotels.com.................................. 362,585 -- -- 362,585
Expedia..................................... 0 -- -- 954,181
Precision Response.......................... 696,809 -- (384,455) 312,354
Citysearch and related...................... 58,994 -- (58,994) --
Match.com................................... 45,738 -- -- 45,738
ECS......................................... 0 -- -- --
Styleclick.................................. 0 -- -- --
HSN-International........................... 14,267 -- -- 14,267
---------- ---- --------- ----------
$7,018,236 $568 $(443,449) $7,529,536
========== ==== ========= ==========

NOTE 8--SAVOY SUMMARIZED FINANCIAL INFORMATION

The Company has not prepared separate financial statements and other
disclosures concerning Savoy because management has determined that such
information is not material to holders of the Savoy Debentures, all of which
have been assumed by the Company as a joint and several obligor. The information
presented is reflected at Savoy's historical cost basis.

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(IN THOUSANDS)

Net sales................................................. $823 $2,657
Operating expenses........................................ 42 2,527
Operating income.......................................... 781 130
Net income................................................ 639 1,326

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 8--SAVOY SUMMARIZED FINANCIAL INFORMATION (CONTINUED)
SUMMARY CONSOLIDATED BALANCE SHEETS

MARCH 31, DECEMBER 31,
2002 2001
--------- ------------
(IN THOUSANDS)

Current assets........................................ $10,707 $10,709
Non-current assets.................................... 54,655 53,563
Current liabilities................................... 4,851 4,861
Non-current liabilities............................... 44,791 44,530

NOTE 9-- NOTES OFFERING AND GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION

On November 23, 1998, the Company and USANi LLC as co-issuers completed an
offering of $500.0 million 6 3/4% Senior Notes due 2005 (the "Old Notes"). In
May 1999, the Old Notes were exchanged in full for $500.0 million of new 6 3/4%
Senior Notes due 2005 (the "Notes") that have terms that are substantially
identical to the Old Notes. Interest is payable on the Notes on May 15 and
November 15 of each year, commencing May 15, 1999. The Notes are jointly,
severally, fully and unconditionally guaranteed by certain subsidiaries of the
Company, including Home Shopping Network, Inc. ("Holdco"), a non-wholly owned,
direct subsidiary of the Company, and all of the subsidiaries of USANi LLC
(other than subsidiaries that are, individually and in the aggregate,
inconsequential to USANi LLC on a consolidated basis) (collectively, the
"Subsidiary Guarantors"). All of the Subsidiary Guarantors (other than Holdco)
(the "Wholly Owned Subsidiary Guarantors") are wholly owned, directly or
indirectly, by the Company or USANi LLC, as the case may be.

The following tables present condensed consolidating financial information
for the three months ended March 31, 2001 and 2000 for: (1) the Company on a
stand-alone basis, (2) Holdco on a stand-alone basis, (3) USANi LLC on a
stand-alone basis, (4) the combined Wholly Owned Subsidiary Guarantors
(including Wholly Owned Subsidiary Guarantors that are wholly owned subsidiaries
of USANi LLC), (5) the combined non-guarantor subsidiaries of the Company
(including the non-guarantor subsidiaries of USANi LLC (collectively, the
"Non-Guarantor Subsidiaries")), and (6) the Company on a consolidated basis.

Separate financial statements for each of the Wholly Owned Subsidiary
Guarantors are not presented and such Wholly Owned Subsidiary Guarantors are not
filing separate reports under the Securities Exchange Act of 1934 because the
Company's management has determined that the information contained in such
documents would not be material to investors.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 9-- NOTES OFFERING AND GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
As of and for the Three Months Ended March 31, 2002

WHOLLY
OWNED
USANI SUBSIDIARY NON-GUARANTOR USA
USA HOLDCO LLC GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ---------- ---------- ---------- ------------- ------------ ------------

Current assets.................. $ -- $ -- $1,049,790 $ 884,173 $1,263,338 $ 19,362 $ 3,216,663
Property and equipment, net..... -- -- 23,991 190,095 225,623 -- 439,709
Goodwill and other intangible
assets, net................... 1,430,535 -- 2,131 4,838,686 1,968,620 -- 8,239,972
Investment in subsidiaries...... 3,762,950 1,068,812 7,074,552 102,031 -- (12,008,345) --
Other assets.................... 178,356 -- 36,332 978,884 1,376,426 (1,441,105) 1,128,893
Net non-current assets on
discontinued operations....... -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ------------ -----------
Total assets.................... $5,371,841 $1,068,812 $8,186,796 $6,993,869 $4,834,007 $(13,430,088) $13,025,237
========== ========== ========== ========== ========== ============ ===========
Current liabilities............. $ 97,596 $ -- $ 30,205 $ 750,157 $ 919,447 $ 71,482 $ 1,868,887
Long-term debt, less current
portion....................... -- -- 498,590 34 45,911 -- 544,535
Other liabilities............... -- -- 1,627,118 435,347 618,631 (2,298,523) 382,573
Minority interest............... -- -- (414,946) 167,972 339,449 4,862,522 4,954,997
Interdivisional equity.......... -- -- -- 5,640,359 2,910,569 (8,550,928) --
Stockholders' equity............ 5,274,245 1,068,812 6,445,829 -- -- (7,514,641) 5,274,245
---------- ---------- ---------- ---------- ---------- ------------ -----------
Total liabilities and
shareholders' equity.......... $5,371,841 $1,068,812 $8,186,796 $6,993,869 $4,834,007 $(13,430,088) $13,025,237
========== ========== ========== ========== ========== ============ ===========
Revenue......................... $ -- $ -- $ -- $ 772,419 $ 618,272 $ (18,123) $ 1,372,568
Operating expenses.............. 894 -- (8,245) (641,544) (604,945) 17,718 (1,236,122)
Interest expense, net........... 4,085 -- (8,569) (8,506) 827 405 (11,758)
Miscellaneous................... 20,921 26,823 98,506 417 (10,827) (147,972) (12,132)
Provision for income taxes...... -- -- -- (16,989) (15,191) -- (32,180)
Minority interest............... -- -- -- (48,694) (2,284) (3,498) (54,476)
---------- ---------- ---------- ---------- ---------- ------------ -----------
Net income (loss) from
continuing operations......... 25,900 26,823 81,692 57,103 (14,148) (151,470) 25,900
Net loss from cumulative effect
of accounting change.......... (310,587) -- -- -- (310,587) 310,587 (310,587)
---------- ---------- ---------- ---------- ---------- ------------ -----------
Net earnings (loss)............. $ (284,687) $ 26,823 $ 81,692 $ 57,103 $ (324,735) $ 159,117 $ (284,687)
========== ========== ========== ========== ========== ============ ===========
Cash flows from operations...... $ 457,217 $ -- $ (605,653) $ (26,311) $ 170,560 $ -- $ (4,187)
Cash flows used in investing
activities.................... (33,841) -- 591,191 (12,255) 165,336 47,000 757,431
Cash flows from financing
activities.................... (423,376) -- 316,103 24,939 107,247 (47,000) (22,087)
Effect of exchange rate......... -- -- -- 14 20 -- 34
Cash at the beginning of the
period........................ (1,544) -- 789,464 (12,416) 202,873 -- 978,377
---------- ---------- ---------- ---------- ---------- ------------ -----------
Cash at the end of the period... $ (1,544) $ -- $1,091,105 $ (26,029) $ 646,036 $ -- $ 1,709,568
========== ========== ========== ========== ========== ============ ===========

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 9-- NOTES OFFERING AND GUARANTOR AND NON-GUARANTOR FINANCIAL INFORMATION
(CONTINUED)
For the Three Months Ended March 31, 2001

WHOLLY
OWNED
USANI SUBSIDIARY NON-GUARANTOR USA
USA HOLDCO LLC GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
-------- -------- -------- ---------- ------------- ------------ ------------

Revenue....................... $ -- $ -- $ -- $829,780 $483,164 $ (141) $1,312,803
Operating expenses............ (2,519) -- (9,765) (684,039) (543,412) 141 (1,239,594)
Interest expense, net......... (6,930) -- 3,228 (8,164) 450 -- (11,416)
Miscellaneous................. (7,934) 26,465 112,624 1,496 (8,021) (131,155) (6,525)
Provision for income taxes.... -- -- -- (19,777) (6,685) -- (26,462)
Minority interest............. -- -- -- (65,239) 19,050 -- (46,189)
-------- ------- -------- -------- -------- --------- ----------
Net (loss) income from
continuing operations....... (17,383) 26,465 106,087 54,057 (55,454) (131,155) (17,383)
Net (loss) income from
cumulative effect of
accounting change........... (9,187) -- -- 2,438 (11,625) 9,187 (9,187)
-------- ------- -------- -------- -------- --------- ----------
Net earnings (loss)........... $(26,570) $26,465 $106,087 $ 56,495 $(67,079) $(121,968) $ (26,570)
======== ======= ======== ======== ======== ========= ==========
Cash flows from operations.... $ (5,031) $ -- $ 2,081 $ 90,048 $ 40,090 $ -- $ 127,188
Cash flows used in investing
activities.................. 16,399 -- (377) (22,595) (77,698) -- (84,271)
Cash flows from financing
activities.................. (11,368) -- 24,720 (76,105) 87,740 -- 24,987
Effect of exchange rate....... -- -- (139) 195 (3,078) -- (3,022)
Cash at the beginning of the
period...................... -- -- 78,079 (28,949) 195,093 -- 244,223
-------- ------- -------- -------- -------- --------- ----------
Cash at the end of the
period...................... $ -- $ -- $104,364 $(37,406) $242,147 $ -- $ 309,105
======== ======= ======== ======== ======== ========= ==========

NOTE 10--SUBSEQUENT EVENTS

CONTRIBUTION OF THE USA ENTERTAINMENT GROUP TO VUE

On May 7, 2002, USA completed its previously announced transaction with
Vivendi to create a joint venture called Vivendi Universal Entertainment ("VUE")
(the "VUE Transaction"). VUE is controlled by Vivendi and its subsidiaries, with
the common interests owned 93.06% by Vivendi, 5.44% by USA and 1.5% by
Mr. Diller, Chairman and CEO of USA.

USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 10--SUBSEQUENT EVENTS (CONTINUED)
common stock), at its election; (iv) a 5.44% common interest in VUE, generally
callable by Universal after five years and puttable by USA after eight years,
which may be settled in either Vivendi stock or cash, at Universal's election,
and (v) a cancellation of Universal's USANi LLC interests that were exchangeable
into USA common shares including USANi LLC interests obtained from Liberty in
connection with a related transaction. In connection with the transaction, USA
has retired approximately 321 million shares previously owned by Vivendi,
thereby reducing USA's fully diluted shares to 477 million shares.

Related to the transaction, Liberty exchanged 7,079,726 shares of USANi LLC
for shares of USA common stock, and subsequently transferred to Universal
25,000,000 shares of USA common stock, its remaining 38,694,982 shares of USANi
LLC, as well as the assets and liabilities of Liberty Programming France (which
consist primarily of 4,921,250 shares of multiThematiques S.A., a French
entity), in exchange for 37,386,436 Vivendi ordinary shares.

USA contributed to VUE USA Cable, which includes USA Network, SCI FI
Channel, TRIO and Newsworld International; Studios USA, which produces and
distributes television programming; USA Films, which produces and distributes
films. Vivendi contributed the film, television and theme park businesses of its
subsidiary, Universal Studios, Inc. In addition, USA issued to Universal
ten-year warrants to acquire shares of USA common stock as follows: 24,187,094
shares at $27.50 per share; 24,187,094 shares at $32.50 per share; and
12,093,547 shares at $37.50 per share. Barry Diller, USA's chairman and chief
executive officer, will receive a common interest in VUE with a 1.5% profit
sharing percentage, with a minimum value of $275.0 million, in return for his
agreeing to specified non-competition provisions and agreeing to serve as
chairman and chief executive officer of VUE. USA and Mr. Diller have agreed that
they will not compete with Vivendi's television and filmed entertainment
businesses (including VUE) for a minimum of 18 months. The transaction has been
accounted for as an asset sale. The after-tax gain associated with this
transaction is preliminarily estimated at $3.5 billion.

ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION

GENERAL

As of March 31, 2002 USA Interactive ("USA" or the "Company") (Nasdaq: USAI)
(formerly USA Networks, Inc.) was organized into two groups, the USA Interactive
Group and the USA Entertainment Group. The USA Interactive Group consists of
Home Shopping Network (including HSN International and HSN.com); Ticketmaster
(Nasdaq: TMCS), which operates Ticketmaster, Ticketmaster.com, Citysearch and
Match.com; Hotels.com (Nasdaq: ROOM); Expedia, Inc. (as of February 4, 2002)
(Nasdaq: EXPE); Electronic Commerce Solutions; Styleclick (OTC: IBUY); and
Precision Response Corporation; and The USA Entertainment Group consists of USA
Cable, including USA Network and Sci Fi Channel and Emerging Networks TRIO,
Newsworld International and Crime; Studios USA, which produces and distributes
television programming; and USA Films, which produces and distributes films.
Note that USA Entertainment was contributed to a joint venture with Vivendi
Universal, S.A. ("Vivendi") on May 7, 2002. See below for further discussion.

On February 4, 2002, USA completed its acquisition of a controlling interest
in Expedia through a merger of one of its subsidiaries with and into Expedia.
Immediately following the merger, USA owned all of the outstanding shares of
Expedia Class B common stock, representing approximately 64.2% of Expedia's then
outstanding shares, and 94.9% of the voting interest in Expedia. On
February 20, 2002, USA acquired 936,815 shares of Expedia common stock,
increasing USA's ownership to 64.6% of Expedia's the then outstanding shares,
with USA's voting percentage remaining at 94.9%. In the merger, USA issued to
former holders of Expedia common stock who elected to receive USA securities an
aggregate of 20.6 million shares of USA common stock, 13.1 million shares of $50
face value 1.99% cumulative convertible preferred stock of USA and warrants to
acquire 14.6 million shares of USA common stock at an exercise price of $35.10.
Expedia continues to trade on Nasdaq under the symbol "EXPE," the USA cumulative
preferred stock trades on OTC under the symbol "USAIP" and the USA warrants
trade on Nasdaq under the symbol "USAIW."

A number of USA's businesses are currently held by two non-wholly owned
subsidiaries, Home Shopping Network, Inc. ("Holdco") and USANi LLC. USA
maintains control and management of Holdco and USANi LLC, and manages the
businesses held by USANi LLC, in substantially the same manner as they would be
if USA held them directly through wholly owned subsidiaries. The other principal
owners of these subsidiaries were Liberty Media Corporation ("Liberty"), through
its subsidiaries and Vivendi, through Universal Studios, Inc. ("Universal") and
other subsidiaries, until May 7, 2002, when USA acquired all of Liberty's and
Vivendi's direct interest in USANi LLC in the VUE Transaction (defined below).
USA has the contractual right to require the exchange of the Holdco shares held
by Liberty for shares of USA. Following such exchange and after giving effect to
the Vivendi Transaction, Holdco and USANi LLC will become wholly owned, thereby
simplifying USA's corporate structure.

SUBSEQUENT EVENTS

CONTRIBUTION OF THE USA ENTERTAINMENT GROUP TO VUE

On May 7, 2002, USA completed its previously announced transaction with
Vivendi to create a joint venture called Vivendi Universal Entertainment ("VUE")
(the "VUE Transaction"). VUE is

controlled by Vivendi and its subsidiaries, with the common interests owned
93.06% by Vivendi, 5.44% by USA and 1.5% by Mr. Diller, Chairman and CEO of USA.

In connection with the Vivendi Transaction, USA and its subsidiaries
received the following at the closing: (i) approximately $1.62 billion in cash,
debt-financed by VUE, subject to tax-deferred treatment for a 15-year period,
(ii) a $750 million face value Class A preferred interest in VUE, with a 5%
annual paid-in-kind dividend and a 20-year term, to be settled in cash at its
then face value at maturity; (iii) a $1.75 billion face value Class B preferred
interest in VUE, with a 1.4% annual paid-in-kind dividend, a 3.6% annual cash
dividend, callable and puttable after 20 years, to be settled by Universal at
its then face value with a maximum of approximately 56.6 million USA common
shares, provided that Universal may substitute cash in lieu of shares of USA
common stock (but not USA Class B common stock), at its election; (iv) a 5.44%
common interest in VUE, generally callable by Universal after five years and
puttable by USA after eight years, which may be settled in either Vivendi stock
or cash, at Universal's election, and (v) a cancellation of Universal's USANi
LLC interests that were exchangeable into USA common shares including USANi LLC
interests obtained from Liberty in connection with a related transaction. In
connection with the transaction, USA has retired approximately 321 million
shares previously owned by Vivendi, thereby reducing USA's fully diluted
treasury method shares to 477 million shares.

USA contributed to VUE USA Cable, which includes USA Network, SCI FI
Channel, TRIO and Newsworld International; Studios USA, which produces and
distributes television programming; and USA Films, which produces and
distributes films. Vivendi contributed the film, television and theme park
businesses of its subsidiary, Universal Studios, Inc. In addition, USA issued to
Universal ten-year warrants to acquire shares of USA common stock as follows:
24,187,094 shares at $27.50 per share; 24,187,094 shares at $32.50 per share;
and 12,093,547 shares at $37.50 per share. Barry Diller, USA's chairman and
chief executive officer, will received a common interest in VUE with a 1.5%
profit sharing percentage, with a minimum value of $275.0 million, in return for
his agreeing to specified non-competition provisions and agreeing to serve as
chairman and chief executive officer of VUE. USA and Mr. Diller have agreed that
they will not compete with Vivendi's television and filmed entertainment
businesses (including VUE) for a minimum of 18 months. The transaction has been
accounted for as an asset sale. The after-tax gain associated with this
transaction is preliminarily estimated at $3.5 billion. See additional pro forma
financial information for USA Interactive contained herein.

ADOPTION OF NEW ACCOUNTING RULES FOR GOODWILL

Effective January 1, 2002, USA adopted Statement of Financial Accounting
Standards No. 142, "Accounting for Goodwill and Other Intangible Assets." The
new rules eliminate amortization of goodwill and other intangible assets with
indefinite lives and establish new measurement criterion for these assets. As
disclosed in previous filings, USA recorded a pre-tax write-off of $499 million
related to the Citysearch and Precision Response ("PRC") businesses. Although
Citysearch and PRC are expected to generate positive cash flows in the future,
due to cash flow discounting techniques to estimate fair value as required by
the new rules, the future estimated discounted cash flows do not support current
carrying values. The Citysearch write-off was $115 million, and the PRC
write-off was $384 million. Goodwill amortization recorded in the three months
ended March 31, 2001 was $83.4 million, including $30.6 million related to USA
Entertainment.

ADJUSTED EBITDA

Adjusted earnings before interest, income taxes, depreciation and
amortization ("Adjusted EBITDA") is defined as operating profit plus
(1) depreciation and amortization, (2) amortization of cable distribution fees
(3) amortization of non-cash distribution and marketing expense and
(4) disengagement expenses. Adjusted EBITDA is presented here as a management
tool and as a valuation methodology. Adjusted EBITDA does not purport to
represent cash provided by operating activities. Adjusted EBITDA should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with generally accepted accounting principles. Adjusted EBITDA may
not be comparable to calculations of similarly titled measures presented by
other companies.

The following is a reconciliation of Operating Profit to Adjusted EBITDA for
2002 and 2001.

THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------

Operating profit........................................ $136,446 $ 73,209
Depreciation and amortization........................... 62,853 137,599
Amortization of cable distribution fees................. 13,000 8,756
Amortization of non-cash distribution and marketing
expense............................................... 6,964 8,017
Amortization of non-cash compensation expense........... 3,808 2,855
Disengagement expenses.................................. 11,538 --
-------- --------
Adjusted EBITDA......................................... $234,609 $230,436
======== ========

THIS REPORT INCLUDES FORWARD-LOOKING STATEMENTS RELATING TO SUCH MATTERS AS
ANTICIPATED FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, NEW DEVELOPMENTS, NEW
MERCHANDISING STRATEGIES AND SIMILAR MATTERS. A VARIETY OF FACTORS COULD CAUSE
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE TO DIFFER MATERIALLY FROM THE
ANTICIPATED RESULTS OR OTHER EXPECTATIONS EXPRESSED IN THE COMPANY'S
FORWARD-LOOKING STATEMENTS. THE RISKS AND UNCERTAINTIES THAT MAY AFFECT THE
OPERATIONS, PERFORMANCE, DEVELOPMENT AND RESULTS OF THE COMPANY'S BUSINESS
INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: MATERIAL ADVERSE CHANGES IN
ECONOMIC CONDITIONS GENERALLY OR IN THE MARKETS SERVED BY THE COMPANY; FUTURE
REGULATORY AND LEGISLATIVE ACTIONS AND CONDITIONS IN THE COMPANY'S OPERATING
AREAS; COMPETITION FROM OTHERS; SUCCESSFUL INTEGRATION OF THE COMPANY'S
DIVISIONS' MANAGEMENT STRUCTURES; PRODUCT DEMAND AND MARKET ACCEPTANCE; THE
ABILITY TO PROTECT PROPRIETARY INFORMATION AND TECHNOLOGY OR TO OBTAIN NECESSARY
LICENSES ON COMMERCIALLY REASONABLE TERMS; THE ABILITY TO EXPAND INTO AND
SUCCESSFULLY OPERATE IN FOREIGN MARKET; AND OBTAINING AND RETAINING KEY
EXECUTIVES AND EMPLOYEES.

THREE MONTHS ENDED MARCH 31, 2002 VS. THREE MONTHS ENDED MARCH 31, 2001

In February 2002, the Company acquired a controlling interest in Expedia.
The acquisition of Expedia resulted in increases in net revenues, operating
costs and expenses, other income (expense), minority interest and income taxes.
The following historical information is supplemented, where appropriate, with
pro forma information. The unaudited pro forma information presented below is
for illustrative purposes only and is not necessarily indicative of the results
of operations that would have actually been reported had the Expedia transaction
occurred as of January 1, 2001, nor is it necessarily indicative of future
results of operations.

INTERACTIVE

HSN--U.S.

OPERATING RESULTS

Net revenues in 2002 increased by $9.9 million, or 2.6%, to $395.3 million
from $385.4 million in 2001. The Company focused on higher margin products in
2002, resulting in an increased margin of 35.5% compared to 33.5% in 2001, at
lower revenue levels. As previously disclosed, 2002 revenue was impacted by the
disengagement of former USAB broadcast stations that aired Home Shopping
programming that occurred in late 2001 and early 2002 (see below for further
discussion). On a pro forma basis, based on the estimated impact of
disengagement on the 2001 results, net revenues in 2002 increased by
$47.0 million, or 13.4%, to $396.2 million from $349.2 million. For 2002, total
units shipped domestically increased to 9.6 million units compared to
8.6 million units in 2001, while the on-air return rate decreased slightly to
19.0% from 19.6% in 2001. The average price point in 2002 was $45.41, compared
to $50.06 in 2001, as a result of a shift from computers in 2002 to higher
margin products as discussed above. Cost related to revenues and other costs and
expenses for 2002 increased slightly by $4.0 million, or 1.2%, to
$337.6 million from $333.6 million in 2001 due to higher sales volume. Adjusted
EBITDA in 2002 increased $6.0 million, to $57.7 million from $51.7 million in
2001. Adjusted EBITDA excludes amortization of cable distribution fees of
$13.0 million in 2002 and $8.8 million in 2001 and disengagement costs of
$11.5 million in 2002.

DISENGAGEMENT

As noted in the Company's previous filings, the majority of the USAB
stations sold to Univision are located in the largest markets in the country and
aired HSN on a 24-hour basis. As of January 2002, HSN switched its distribution
in these markets directly to cable carriage. As a result, HSN lost approximately
12 million homes and accordingly, HSN's operating results were negatively
affected. Fortunately, sales from broadcast only homes are much lower than sales
from cable homes. As a result, HSN's losses attributable to disengagement are
expected to be limited. HSN estimates that lost sales and Adjusted EBITDA,
translated on a pro forma basis for the first quarter of 2001, were
$36.2 million and $6.0 million respectively. In addition, in order to
effectively transfer HSN's distribution to cable (which has been accomplished),
USA incurred charges of approximately $11.5 million in the form of payments to
cable operators and related marketing expenses, including $0.9 million of coupon
redemptions related to customers impacted by disengagement. USA expects that
total disengagement expenses will be approximately $100 million ($35.9 million
to be incurred in 2002). In effect these payments will reduce USA's pre-tax
proceeds from the Univision transaction to $1 billion. These disengagement costs
are excluded from Adjusted EBITDA. The total proceeds of $1.1 billion from the
Univision transaction have been collected. The Company has supplemented its
discussion of HSN's results by including a comparison of 2002 to 2001, adjusted
for the estimated impact of disengagement on revenues and Adjusted EBITDA.

TICKETING OPERATIONS

Net revenues in 2002 increased by $3.3 million, or 2.2%, to $153.4 million
from $150.1 million in 2001 due to a 1.5% increase in the number of tickets sold
and a slight increase in the average per ticket convenience, order processing
and delivery revenue of $5.97 in 2002 compared to $5.96 in 2001, and, to a
lesser extent, the impact of the acquisition of ReserveAmerica in
February 2001. The gross transaction value of tickets sold in 2002 was
$1.0 billion compared to $937 million in 2001. The percentage of tickets sold
online in 2002 was approximately 37.8% as compared to 29.5% in 2001, which
contributed to lower operating costs as a percentage of revenue and higher
Adjusted EBITDA of $33.7 million in 2002, compared to $30.2 million in 2001, a
11.4% increase. Cost related to revenues and other costs and expenses in 2002
remained flat at $119.7 million in 2002 resulting primarily from

the shift of revenue on-line. Adjusted EBITDA in 2002 excludes non-cash
distribution and marketing expense of $0.2 million related to barter
arrangements for distribution secured from third parties, for which USA Cable
provides advertising.

HOTELS.COM

Net revenues in 2002 increased by $60.4 million, or 57.4%, to
$165.7 million from $105.3 million in 2001, resulting from a 76% increase in
room nights sold (to 1.4 million from 0.8 million), a significant expansion of
affiliate marketing programs to over 25,755 web-based and call center marketing
affiliates in 2002 from 18,649 in 2001, an increase in the number of hotels in
existing cities as well as expansion into 83 new cities, including 37 new
international cities, and the acquisition of TravelNow in February 2001. Note
that on March 25, 2002, Hotels.com launched its new brand, hotels.com, which
produced 7 to 10% of its daily bookings since its launch. Cost related to
revenues and other costs and expenses in 2002 increased by $50.4 million, or
56.3%, to $139.9 million from $89.5 million in 2001 due primarily due to
increased sales, including an increased percentage of revenue attributable to
affiliates that earn commissions (sales from affiliate websites accounted for
approximately 64.3% of the total revenues, as compared to approximately 63.5% in
the comparable period), increased staffing levels and systems to support
increased operations, and higher marketing costs, including costs associated
with the launch of hotels.com. Gross profit margin in 2002 increased to 31.5%
from 30.0% due to the acquisition of TravelNow, which has higher gross margins
than Hotels.com's historical business. Adjusted EBITDA in 2002 increased by
$10.0 million, or 63.3%, to $25.8 million from $15.8 million in 2001. Adjusted
EBITDA for 2002 and 2001 excludes non-cash distribution and marketing expense of
$5.2 million and $3.9 million, respectively, related to the amortization of
stock-based warrants issued to affiliates in consideration of exclusive
affiliate distribution and marketing agreements. Hotels.com expects that the
amount of non-cash distribution and marketing expense could grow, as certain of
the warrants are performance based, the value of which is determined at the time
the performance criteria are met. As Hotels.com's stock price rises, the value
of the warrants also increases. In addition, Adjusted EBITDA in 2002 excludes
non-cash distribution and marketing expense of $0.9 million related to cross
promotion advertising provided by USA Cable.

EXPEDIA

USA completed its acquisition of a controlling interesting Expedia on
February 4, 2002. Net revenues and Adjusted EBITDA for the period February 4 to
March 31, 2002 were $80.5 million and $25.4 million, respectively. Adjusted
EBITDA excludes non-cash distribution and marketing expense of $1.5 million in
2002 related to cross promotion advertising provided by USA Cable and non-cash
compensation of $2.5 million in 2002. On a pro forma basis, Expedia's revenue
increased by $58.8 million, or 102.7%, to $116.0 million from $57.2 million in
2001, resulting from a 64% increase in total gross bookings (to $1.1 billion
from $0.7 billion), a favorable trend in Expedia.com conversion rates, as it
averaged 5.8% in 2002 as compared to 5.7% in 2001, and a significant increase in
cumulative purchasing customers 7.6 million at the end of Q1 2002 compared to
3.6 million in at the end of Q1 2001. Cost related to revenues and other costs
and expenses in 2002 increased by $28.8 million, or 54.6%, to $81.5 million from
$52.7 million in 2001 due primarily due to increased sales. Note that expenses
increased at a much lower rate than revenues as Expedia is realizing
efficiencies of scale due to increased transaction volume at low incremental
costs. Adjusted EBITDA in 2002 increased by $30.0 million to $34.5 million from
$4.5 million in 2001. Adjusted EBITDA excludes non-cash distribution and
marketing expense of $1.5 million in 2002 related to cross promotion advertising
provided by USA Cable and non-cash compensation of $2.5 million and
$6.5 million in 2002 and 2001, respectively.

PRECISION RESPONSE

Net revenues in 2002 decreased by $10.6 million, or 13.1%, to $70.1 million
from $80.7 million in 2001 primarily from the reduction in client services due
to the economy related slowdown in the outsourcing of customer care programs,
particularly in the telecom and financial services industries. On a sequential
basis, PRC was able to increase revenues 1% from the fourth quarter of 2001.
Revenue in 2002 includes $2.9 million for services provided to other USA
segments. Cost related to revenues and other costs and expenses in 2002
decreased by $6.3 million, or 8.9%, to $64.4 million from $70.7 million in 2001,
due primarily to the decrease in revenue. Adjusted EBITDA in 2002 decreased by
$4.3 million to $5.7 million from $10.0 million in 2001.

MATCH.COM

Net revenues in 2002 increased by $16.7 million, or 195.7%, to
$25.3 million compared to $8.5 million in 2001 due to increased subscription
revenue, as the personals operations had a 178% increase in the number of paid
subscribers. Cost related to revenues and other costs and expenses in 2002
increased by $10.1 million to $18.4 million in 2002 from $8.3 million primarily
from a new broadcast media campaign and higher operating costs to support the
increased sales volumes and increased fees paid to distribution partners.
Adjusted EBITDA in 2002 increased by $6.6 million to $6.9 million from
$0.3 million in 2001. Adjusted EBITDA in 2002 excludes $2.7 million of non-cash
distribution and marketing expense related to advertising provided by USA
Cable--$1.7 million for cross promotion advertising and $1.0 million related to
barter arrangements for distribution arrangements secured from unaffiliated
third parties.

HSN--INTERNATIONAL AND OTHER

HSN--International consists primarily of HSN--Germany and Home Shopping
Espanol, which operates Spanish language electronic retailing operations serving
customers primarily in the United States and Mexico. HSN--Germany had decreased
sales of $5.6 million in 2002 as compared to 2001, related in part to a decline
in the Euro, resulting in $2.8 million of lower sales upon translation from Euro
to dollars, and lower sales due to the lingering effects of the conversion to a
new order management system. Home Shopping Espanol had slightly increased
revenues of $1.6 million, to $5.3 million in 2002 compared to $3.7 million in
2001, resulting from increased sales in existing markets and expansion into
Mexico. Overall, international costs decreased $1.6 million due primarily due to
lower sales volume, although gross margins declined to 29.1% from 36.2% in 2001
due to high return rates and high fulfillment costs. Adjusted EBITDA for
electronic retailing in Germany decreased $3.7 million in 2002, to $1.0 million
from $4.7 million in 2001, due to lower margins and higher operating expense.
Adjusted EBITDA loss for Espanol and International administration, narrowed to
$4.8 million in 2002 from $5.2 million, due to a reduction in the number of
hours of programming produced for live airing.

CITYSEARCH AND RELATED

Net revenues in 2002 decreased by $5.1 million to $7.3 million compared to
$12.4 million in 2001 due primarily to decreased advertising revenue related to
the city guides business. Cost related to revenues and other costs and expenses
(including Ticketmaster corporate expenses) in 2002 decreased by $6.1 million to
$18.0 million from $24.1 million in 2001. The decrease in revenues and costs
reflect Citysearch's initiatives to reduce operating costs and focus on higher
margin products. In January 2002, Citysearch announced a further restructuring
of its operations in pursuit of its strategy to achieve breakeven financial
performance in 2003 (excluding Ticketmaster corporate expenses). Adjusted EBITDA
loss in 2002 narrowed by $1.0 million to $10.7 million from $11.8 million in
2001. Adjusted EBITDA in 2002 excludes $0.5 million of non-cash distribution and
marketing expense related to

advertising provided by USA Cable, related to barter arrangements for
distribution arrangements secured from unaffiliated third parties.

ELECTRONIC COMMERCE SOLUTIONS/ STYLECLICK

Net revenues in 2002 increased by $3.5 million to $12.1 million compared to
$8.6 million in 2001 due primarily to increases in revenue of ECS of
$7.3 million offset partially by lower Styleclick revenue of $3.8 million caused
by the shut-down of the First Jewelry and FirstAuction.com websites. Cost
related to revenues and other costs and expenses in 2002 decreased by
$4.9 million, due primarily to initiatives to reduce operating costs of
Styleclick. Adjusted EBITDA loss in 2002 narrowed by $8.4 million to
$8.5 million in 2002 from $16.9 million in 2001. As previously disclosed, in
2001, Styleclick began to focus on e-commerce services and technology while
eliminating its online retail business. During this transition, Styleclick
continued to incur significant net losses from operations that raise substantial
doubt about Styleclick's ability to continue as a going concern. Styleclick is
considering its options with respect to the situation.

ENTERTAINMENT

CABLE AND STUDIOS

Net revenues in 2002 decreased by $67.7 million to $367.3 million from
$435.0 million in 2001 due to the continued softness in the US advertising
market and lower syndication revenue. Note that the cable networks provided
$3.5 million of advertising to USA affiliates in 2002. In addition, the networks
recognized $8.7 million of barter revenue pursuant to agreements with
unaffiliated third parties. Cost related to revenues and other costs and
expenses in 2002 decreased by $30.7 million, or 11.3%, to $240.9 million from
$271.6 million in 2001 due to lower revenue and efficient use of programming by
Cable and increased usage of internally developed product by Cable, resulting in
reduced program amortization. Adjusted EBITDA in 2002 decreased by
$37.1 million, or 22.7%, to $126.3 million from $163.4 million in 2001.

EMERGING NETWORKS

Net revenues in 2002 increased by $0.8 million to $7.0 million from
$6.2 million in 2001. Cost related to revenue increased by $2.5 million to
$10.4 million from $7.9 million in 2002 as compared to 2001 due primarily to
higher programming costs of Trio. Adjusted EBITDA loss in 2002 increased by
$1.7 million, to a loss of $3.4 million.

FILMED ENTERTAINMENT

Net revenues in 2002 decreased by $20.3 million, or 39.7%, to $30.7 million
compared to $51.0 million in 2001 due primarily to decreased theatrical, video
and DVD revenues generated on TRAFFIC, which was released in 2001. Cost related
to revenues and other costs and expenses in 2002 decreased by $15.2 million, due
to lower film amortization costs related to TRAFFIC. Adjusted EBITDA loss in
2002 widened by $5.0 million to a loss of $6.1 million.

DEPRECIATION AND AMORTIZATION, NON-CASH COMPENSATION AND OTHER INCOME (EXPENSE)

Depreciation and amortization decreased $74.7 million to $62.9 million from
$137.6 million, due primarily to the impact of the adoption of FAS 141/ 142 in
the first quarter or 2002, resulting in no goodwill amortization in 2002.
Goodwill amortized in the first quarter of 2001 was $83.4 million. Amortization
of non-cash compensation expense increased $0.9 million due to equity grants
made after the first quarter of 2001 and the impact of Expedia, which has
non-cash compensation related to options converted at the time Expedia was
spun-off from Microsoft. Amortization of non-cash distribution and marketing
expense decreased $1.1 million to $7.0 million, and primarily related to the

amortization of warrant costs by Hotels.com. Amortization of cable distribution
fees increased $4.2 million, to $13.0 million in 2002, due to increased up-front
payments made to cable operators.

For the three months ended March 31, 2002, net interest expense was
$11.8 million compared to $11.4 million in 2001 primarily due to lower interest
earned due to lower rates.

In the three months ended March 31, 2002 and 2001, the Company realized
pre-tax losses of $13.5 million and $4.3 million, respectively, on equity losses
in unconsolidated subsidiaries resulting primarily from HOT Networks, which
operates electronic retailing operations in Europe. On May 3, 2002, USA stated
that it would no longer fund HOT Networks. The other shareholders have also
terminated their funding of the venture. As of April 30, 2002, USA has a
long-term receivable of $100.5 million from HOT Networks. The Company is
evaluating the recoverability of this receivable, but has not completed its
evaluation at this time. Home Shopping Network and the other shareholders of HOT
Networks are actively discussing alternative arrangements with respect to their
relationship, which may include the acquisition of additional equity by USA.
Based on these discussions, the Company may determine that the carrying value of
the receivable is not recoverable.

INCOME TAXES

USA's effective tax rate of 55.41% for the three months ended March 31, 2002
was higher than the statutory rate due to the impact on taxable income of
consolidated book losses not consolidated into taxable income and state income
taxes.

MINORITY INTEREST

Minority interest primarily represents Universal's and Liberty's ownership
interest in USANi LLC, Liberty's ownership interest in Holdco, the public's
ownership in TMCS until January 31, 2001, the public's ownership in Ticketmaster
from January 31, 2001, the public's ownership interest in Hotels.com since
February 25, 2000,the public's ownership interest in Styleclick since July 27,
2000, the partners ownership interest in HSN--Germany since its consolidation as
of January 1, 2000 and the public's ownership in Expedia since February 4, 2002.

Upon completion of the Vivendi Transaction, Holdco and USA owned 100% of the
member's interest in USANi LLC. USA has the contractual right to require the
exchange of the Holdco shares held by Liberty for shares of USA. Following such
exchange, Holdco and USANi LLC will become wholly owned, thereby simplifying
USA's corporate structure. These transactions will reduce the amount of minority
interest recorded by USA.

PRO FORMA FINANCIAL INFORMATION FOR USA INTERACTIVE

The Company has recently completed several significant transactions,
including USA's acquisition of a controlling interest in Expedia (which closed
February 4, 2002) and the contribution of the USA Entertainment Group to VUE
(which closed May 7, 2002). We have presented below separate pro forma
information for USA Interactive, reflecting the impact of the Expedia and VUE
transactions as if they had occurred at the beginning of the periods presented.
The pro forma combined condensed statements of operations reflects USA's
unaudited statements of operations, adjusted for the pro forma effects of the
contribution of the USA Entertainment Group to VUE and the acquisition of
Expedia, as if such transactions had occurred at the beginning of the periods
presented. The pro forma information also includes the estimated impact of
disengagement of Home Shopping programming from the USAB stations for 2001.

THE PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS ARE NOT
NECESSARILY INDICATIVE OF THE RESULTS OF OPERATIONS WHICH ACTUALLY WOULD HAVE
BEEN REPORTED HAD THESE TRANSACTIONS OCCURRED AS OF THE BEGINNING OF JANUARY 1,
2000, NOR ARE THEY NECESSARILY INDICATIVE OF USA INTERACTIVE'S FUTURE RESULTS OF
OPERATIONS.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENTS OF OPERATIONS--USA INTERACTIVE

THREE MONTHS ENDED MARCH 31,
----------------------------
2002 2001
---------- ---------

Net Revenues
HSN -- U.S.(a)........................................... $ 395,326 $385,372
Ticketing................................................ 153,379 150,109
Hotels.com............................................... 165,712 105,286
Expedia(b)............................................... 116,006 57,222
Precision Response....................................... 70,089 80,692
Match.com................................................ 25,265 8,544
HSN -- International and other(c)........................ 64,989 69,703
Citysearch............................................... 7,275 12,384
ECS/ Styleclick.......................................... 12,084 8,572
Intersegment elimination................................... (2,989) --
--------- --------
Total net revenues....................................... 1,007,136 877,884
========= ========
Operating costs and expenses:
Cost related to revenues................................. 628,134 568,167
Other costs and expenses................................. 248,267 235,418
Disengagement costs(d)................................... 10,681
Amortization of non cash distribution and marketing
expense(e)............................................. 11,023 8,017
Amortization of non cash compensation expense(f)......... 4,738 9,332
Amortization of cable distribution fees.................. 13,000 8,756
Depreciation and amortization(g)......................... 66,986 64,853
Total operating costs and expenses....................... 982,829 894,543
--------- --------
Operating profit/(loss).................................... $ 24,307 $(16,659)
--------- --------
Adjusted EBITDA............................................ $ 131,592 $ 74,299
========= ========

ADJUSTED EBITDA--INTERACTIVE PRO FORMA

The following is a reconciliation of pro forma operating profit (loss) to
Adjusted EBITDA for the three months ended March 31, 2002 and 2001.

THREE MONTHS ENDED
MARCH 31,
---------------------
2002 2001
--------- ---------

Operating profit/(loss)................................... $ 24,307 $(16,659)
Depreciation and amortization............................. 66,986 64,853
Amortization of cable distribution fees................... 13,000 8,756
Amortization of non-cash distribution and marketing
expense................................................. 11,023 8,017
Amortization of non-cash compensation expense............. 4,738 9,332
Disengagement expenses.................................... 11,538 --
-------- --------
Adjusted EBITDA........................................... $131,592 $ 74,299
======== ========

- ------------------------

(a) 2001 includes estimated revenue generated by homes lost by HSN following
the sale of USA Broadcasting to Univision estimated to be $36.2 million.
2002 includes coupons redeemed by customers impacted by disengagement of
$0.9 million, which is reflected as an offset to revenue.

(b) Expedia 2001 results derived from public filings, and represent results
for the three months ended March 31, 2001, adjusted for acquisitions made
by Expedia during the year.

(c) Includes impact of foreign exchange fluctuations, which reduced revenues
by $16.5 million and $13.7 million in 2002 and 2001, respectively, if the
results are translated from Euros to U.S. dollars at a constant exchange
rate, using 1999 as the base year.

(d) Represents costs incurred related to the disengagement of HSN from USA
Broadcasting stations. Amounts primarily related to payments to cable
operators and related marketing expenses in the disengaged markets.

(e) Amortization of warrants and stock issued in exchange for distribution
and marketing services.

(f) Expense related to the Company's bonus stock purchase program,
restricted stock awards and certain stock option grants, as well as
Expedia stock options that were converted upon the spin-off of Expedia
from Microsoft.

(g) 2001 is presented as if the new rules on goodwill amortization were in
effect during the period. Accordingly, the amounts presented for 2001
have been adjusted to exclude the effect of $58.4 million of historical
goodwill amortization.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities was $4.2 million for the three months
ended March 31, 2002 compared to $127.2 million of proceeds for the three months
ended March 31, 2001. The principle uses of operating proceeds were the payment
of taxes on the USAB sale of $156.9 million and payment for program rights and
film costs of $219.8 million. During the three months ended March 31, 2002
available cash and borrowings were also used to pay for acquisitions of
$36.6 million, to make capital expenditures of $28.3 million and to make
mandatory tax distribution payments to the LLC partners of $153.5 million. Cash
acquired in the Expedia transaction was $278.9 million.

As of March 31, 2002, the Company has $1.7 billion of cash on hand and
$226.2 million of marketable securities. After the closing of the Vivendi
Transaction, USA has $3.3 billion of cash on hand.

In January 2002, the Company received the final proceeds of $589.6 million
from the sale of the capital stock of certain USA Broadcasting ("USAB")
subsidiaries that own 13 full-power television stations and minority interests
in four additional full-power stations. The Company completed the sale in August
2001.

On February 12, 1998, USA and USANi LLC, as borrower, entered into a credit
agreement that provided for a $1.6 billion credit facility. Of that amount,
$1.0 billion was permanently repaid in prior years. The remaining
$600.0 million related to a revolving credit facility that was terminated by USA
as a result of the Vivendi Transaction. As of March 31, 2002, there was
$593.0 million available for borrowing after taking into account outstanding
letters of credit.

On February 28, 2002, the Company made a mandatory tax distribution payment
to Universal and Liberty in the amount of $153.5 million. On February 28, 2001,
the Company made a mandatory tax distribution payment to Universal and Liberty
in the amount of $17.4 million.

In connection with the 2000 acquisition of Universal's domestic film
distribution and development business previously operated by PFE and PFE's
domestic video and specialty video businesses transaction, USA advanced
$200.0 million to Universal in 2000 pursuant to an eight year, full recourse,
interest-bearing note in connection with a distribution agreement, under which
USA will distribute, in the United States and Canada, certain Polygram Filmed
Entertainment, Inc. theatrical films that were not acquired in the transaction.
The advance is repaid as revenues are received under the distribution agreement.
Through March 31, 2002, approximately $199.8 million has been offset against the
advance, including $19.7 million in 2002. Interest accrued on the loan through
March 31, 2002 is approximately $19.5 million, including $0.3 million in 2002.
Upon the close of the Vivendi Transaction, the balance was repaid in full.

In July 2000, USA announced that its Board of Directors authorized the
extension of the Company's stock repurchase program providing for the repurchase
of up to 20 million shares of USA's common stock over an indefinite period of
time, on the open market or in negotiated transactions. The amount and timing of
purchases, if any, will depend on market conditions and other factors, including
USA's overall capital structure. Funds for these purchases will come from cash
on hand or borrowings under the Company's credit facility. During the three
months ended March 31, 2002 and 2001, the Company made no purchases of its
common stock through this program.

In connection with the Vivendi Transaction, USA and its subsidiaries
received the following at closing: (i) approximately $1.62 billion in cash,
debt-financed by VUE, subject to tax-deferred treatment for a 15-year period,
(ii) a $750 million face value Class A preferred interest in VUE, with a 5%
annual paid-in-kind dividend and a 20-year term, to be settled in cash at its
then face value at maturity; (iii) a $1.75 billion face value Class B preferred
interest in VUE, with a 1.4% annual paid-in-kind dividend, a 3.6% annual cash
dividend, callable and puttable after 20 years, to be settled by Universal at
its then face value with a maximum of approximately 56.6 million USA common
shares, provided that Universal may substitute cash in lieu of shares of USA
common stock (but not USA Class B common stock), at its election; (iv) a 5.44%
common interest in VUE, generally callable by Universal after five years and
puttable by USA after eight years, which may be settled in either Vivendi stock
or cash, at Universal's election, and (v) a cancellation of Universal's USANi
LLC interests that were exchangeable into USA common shares including USANi LLC
interests obtained from Liberty in connection with the transaction.

On May 2, 2002, USA announced a redemption of the Savoy Debentures. The
total amount for the redemption is $38.3 million.

Through April 30, 2002, the Company has contributed approximately
$137.5 million to HOT Networks, including $12.2 million in April 2002, and
recorded equity losses in unconsolidated subsidiaries of $39.9 million,
including $12.2 million in the three months ended March 31, 2002. On

May 3, 2002, USA stated that it would no longer fund HOT Networks. The other
shareholders have also terminated their funding of this venture. As of
April 30, 2002, USA has a long-term receivable of $100.5 million from HOT
Networks. The Company is evaluating the recoverability of this receivable, but
has not completed its evaluation at this time. Home Shopping Network and the
other shareholders of HOT Networks are actively discussing alternative
arrangements with respect to their relationship, which may include the
acquisition of additional equity by USA. Based on these discussions, the Company
may determine that carrying value of the receivable is not recoverable.

Note that USA consolidates the operations of HOT Germany. Home Shopping
Network, a subsidiary of USA, Georg Kofler and the other shareholders of HOT
Germany are actively discussing alternative arrangements with respect to their
relationship, which may include the acquisition of additional equity by USA.
Home Shopping Network has guaranteed certain bank loans to Mr. Kofler by
agreeing to purchase, at a price not to exceed $50 million, Mr. Kofler's shares
in HOT Germany that have been pledged to the banks providing the loans in the
event of a default by Mr. Kofler. The Company is evaluating these provisions at
this time.

USA anticipates that it will need to invest working capital towards the
development and expansion of its overall operations. The Company anticipates
that it will make a significant number of acquisitions, which could result in
the incurrence of debt. Furthermore, future capital expenditures may be higher
than current amounts over the next several years.

In management's opinion, available cash, internally generated funds and
available borrowings will provide sufficient capital resources to meet USA's
foreseeable needs.

In 2001, USA did not pay any cash dividends. In relation to the Expedia
transaction, the Company issued approximately 13.1 million of preferred shares
bearing interest at 1.99% per annum, payable quarterly in cash or stock at USA's
option. If USA elects to pay cash, the amount is approximately $13.1 million on
an annual basis. The first dividend was due for the period ending February 15,
2002 and USA paid approximately $0.4 million. The next dividend is due May 15,
2002, and USA expects to pay approximately $3.3 million. USA's wholly-owned
subsidiaries have no material restrictions on their ability to transfer amounts
to fund USA's operations.

SEASONALITY

USA's businesses are subject to the effects of seasonality. Cable and
Studios revenues are influenced by advertiser demand and the seasonal nature of
programming, and generally peak in the spring and fall.

USA believes seasonality impacts its HSN-U.S. and HSN-International and
other segments but not to the same extent it impacts the retail industry in
general.

Ticketing Operations revenues are occasionally impacted by fluctuation in
the availability of events for sale to the public.

Hotels.com and Expedia revenues are influenced by the seasonal nature of
holiday travel in the markets it serves, and has historically peaked in the
fall. As the business expands into new markets, the impact of seasonality is
expected to lessen.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

INTEREST RATE RISK

The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's short-term investment portfolio and issuance
of debt. The Company does not use derivative financial instruments in its
investment portfolio. The Company has a prescribed methodology whereby it
invests its excess cash in debt instruments of government agencies and high
quality corporate issuers.

The portfolio is reviewed on a periodic basis and adjusted in the event that the
credit rating of a security held in the portfolio has deteriorated.

At March 31, 2002, the Company's outstanding debt approximated
$580.6 million, substantially all of which is fixed rate obligations. If market
rates decline, the Company runs the risk that the related required payments on
the fixed rate debt will exceed those based on the current market rate.

FOREIGN CURRENCY EXCHANGE RISK

The Company conducts business in certain foreign markets, primarily in the
European Union. The Company has exposure to exchange rate fluctuations of the
U.S. dollar to the Euro. However, the Company intends to reinvest profits from
international operations in order to grow the businesses.

As the Company increases its operations in international markets it becomes
increasingly exposed to potentially volatile movements in currency exchange
rates. The economic impact of currency exchange rate movements on the Company
are often linked to variability in real growth, inflation, interest rates,
governmental actions and other factors. These changes, if material, could cause
the Company to adjust its financing and operating strategies.

As currency exchange rates change, translation of the income statements of
the Company's international businesses into U.S. dollars affects year-over-year
comparability of operating results. The Company does not hedge translation risks
because cash flows from international operations are generally reinvested
locally. Further, the Company does not enter into hedges to minimize volatility
of reported earnings because the Company does not believe it is justified by the
attendant cost.

Foreign exchange gains and losses were not material to the Company's
earnings for the three months ended March 31, 2002 or 2001.

EQUITY PRICE RISK

The Company has a minimal investment in equity securities of publicly-traded
companies. This investment, as of March 31, 2002, was considered
available-for-sale, with the unrealized gain deferred as a component of
stockholders' equity. It is not customary for the Company to make significant
investments in equity securities as part of its investment strategy.

PART II--OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the lawsuit GLENN R. MATECUN, AND ALL OTHERS SIMILARLY SITUATED V.
TICKETMASTER L.L.C. AND TIME, INC., under the heading of Class Action Litigation
Related to Magazines Sales, previously reported in the 2001 Form 10-K, on or
about May 9, 2002, plaintiff filed a Second Amended Complaint, purporting to add
two additional individuals as named plaintiffs.

The Company has described the Home Shopping Network Consumer Class Action
litigation in the 2001 Form 10-K, which litigation related to an action in
Illinois. In May of 2002, Home Shopping Network, Inc. and Home Shopping Club LP
(the "HSN Defendants") were named as defendants in a consumer class action
lawsuit entitled SUSAN DICICCO, ON BEHALF OF HERSELF AND ALL OTHERS SIMILARLY
SITUATED V. HOME SHOPPING NETWORK, INC. D/B/A THE HOME SHOPPING NETWORK AND HOME
SHOPPING CLUB, L.P. D/B/A THE HOME SHOPPING NETWORK, filed in the Civil Division
of the Circuit Court of Pinellas County, Florida, Case No. 02-3625-CI-19. The
Florida action is substantially similar to the Illinois action and is
purportedly brought on behalf of consumers who were alleged to have purchased a
Proteva personal computer from the HSN Defendants and experienced one of the
three following conditions (a) the computer was or became defective upon
purchase or sooner thereafter, (b) the HSN Defendants refused or failed to honor
the rebate offer which was offered as part of the sale, or (c) the HSN
Defendants refused or failed to provide customer and warranty service as
purportedly advertised. In the complaint, the plaintiff asserts causes of action
for deceptive trade practices in violation of the Florida Deceptive and Unfair
Trade Practices Act, breach of contract, breach of express and implied
warranties and unjust enrichment and seek damages, disgorgement of profits,
costs and expenses (including reasonable attorneys' and experts' fees) and such
other relief as the Court may deem proper. The HSN Defendants have not been
served with the complaint, and when served, intend to vigorously defend the
action.

In the ordinary course of business, the Company and its subsidiaries are
parties to litigation involving property, personal injury, contract and other
claims. The amounts that may be recovered in these matters may be subject to
insurance coverage. Although amounts recovered in litigation are not expected to
be material to the financial position or operations of the Company, this
litigation, regardless of outcome or merit, could result in substantial costs
and diversion of management and technical resources, any of which could
materially harm our business.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

EXHIBIT
NUMBER DESCRIPTION
- --------------------- ------------------------------------------------------------

3.1 Restated Certificate of Incorporation of USA, filed as
Exhibit 3.1 to USA's Quarterly Report on Form 10-Q for the
fiscal quarter ended June 30, 2000, is incorporated herein
by reference.

3.2 Amendment to Restated Certificate of Incorporation of USA,
filed as Exhibit A to USA's Definitive Information
Statement, filed on November 19, 2001, is incorporated
herein by reference.

3.3 Certificate of Ownership and Merger Merging Taiwan Travel,
Inc. into USA Networks, Inc.

3.4 Amended and Restated By-Laws of USA, filed as Exhibit 3.4 to
USA's Form 10-K for the fiscal year ended December 31, 2001,
is incorporated herein by reference.

(b) Reports on Form 8-K filed during the quarter ended March 31, 2002.

On January 8, 2002, USA furnished a report on Form 8-K reporting under Item
9, Regulation FD Disclosure, attaching investor presentation materials.

On January 29, 2002, USA furnished a report on Form 8-K reporting under Item
9, Regulation FD Disclosure, attaching its interactive commerce goals.

On January 29, 2002, USA filed a report on Form 8-K reporting under Item 5,
Other Events and Regulation FD Disclosure, attaching a press release announcing
its results for the quarter ended

December 31, 2001, and under Item 9, Regulation FD Disclosure, attaching
forward-looking financial information and supplemental information.

On January 30, 2002, USA furnished a report on Form 8-K reporting under Item
9, Regulation FD Disclosure, attaching presentation materials.

On February 12, 2002, USA filed a report on Form 8-K reporting under Item 2,
Acquisition or Disposition of Assets, attaching two press releases announcing
the completion of its acquisition of a controlling interest in Expedia, Inc. and
the final exchange ratios for that transaction.

On February 26, 2002, USA furnished a report on Form 8-K reporting under
Item 9, Regulation FD Disclosure, attaching investor presentation materials.

On March 1, 2002, USA filed a report on Form 8-K reporting under Item 5,
Other Events and Regulation FD Disclosure, attaching audited financial
information for USA for the year ended December 31, 2001 and for certain of its
subsidiaries, USANi LLC and Home Shopping Network, Inc., and attaching
Management's Discussion and Analysis for USA.

On March 4, 2002, USA furnished a report on Form 8-K reporting under Item 9,
Regulation FD Disclosure, attaching investor presentation materials.

On March 15, 2002, USA filed a report on Form 8-K/A reporting under Item 5,
Other Events and Regulation FD Disclosure, amending the Form 8-K filed on
March 1, 2002.

On March 27, 2002, USA filed a report on Form 8-K/A reporting under Item 5,
Other Events and Regulation FD Disclosure, providing supplemental information to
the Form 8-Ks filed on October 24, 2001 and December 17, 2001.

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.

May 15, 2002

USA INTERACTIVE

By: /s/ BARRY DILLER
-----------------------------------------
Barry Diller
CHAIRMAN AND CHIEF EXECUTIVE OFFICER

NAME TITLE DATE
---- ----- ----

/s/ BARRY DILLER
------------------------------------------- Chairman of the Board and May 15, 2002
Barry Diller Chief Executive Officer

Executive Vice President
/s/ DARA KHOSROWSHAHI and Chief Financial
------------------------------------------- Officer (Principal May 15, 2002
Dara Khosrowshahi Financial Officer)

/s/ WILLIAM J. SEVERANCE Vice President and
------------------------------------------- Controller (Chief May 15, 2002
William J. Severance Accounting Officer)

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(IN THOUSANDS)

NET REVENUES
Product sales............................................... $462,442 $458,898
Service revenue............................................. 384,192 445,884
-------- --------
Net revenues.............................................. 846,634 904,782
Operating costs and expenses:
Cost of sales--product sales.............................. 301,742 306,163
Cost of sales--service revenue............................ 11,169 3,575
Program costs............................................. 171,820 201,337
Selling and marketing..................................... 110,286 95,716
General and administrative................................ 64,659 80,954
Other operating costs..................................... 27,535 34,465
Disengagement............................................. 10,681 --
Amortization of cable distribution fees................... 13,000 8,756
Amortization of non-cash compensation..................... 1,024 2,512
Depreciation and amortization............................. 18,339 56,387
-------- --------
Total operating costs and expenses........................ 730,255 789,865
-------- --------
Operating profit............................................ 116,379 114,917
Other income (expense):
Interest income............................................. 1,009 12,910
Interest expense............................................ (18,028) (17,788)
Miscellaneous............................................... (13,307) (7,075)
-------- --------
(30,326) (11,953)
-------- --------
Earnings before cumulative effect of accounting change,
income taxes and minority interest........................ 86,053 102,964
Minority interest benefit (expense)......................... (44,752) (57,496)
Income tax expense.......................................... (14,478) (20,904)
-------- --------
Earnings before cumulative effect of accounting change...... 26,823 24,564
Cumulative effect of accounting change...................... -- 1,901
-------- --------
NET EARNINGS................................................ $ 26,823 $ 26,465
======== ========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

MARCH 31, DECEMBER 31,
2002 2001
---------- ------------
(IN THOUSANDS)

ASSETS

CURRENT ASSETS
Cash and cash equivalents................................... $1,070,553 $ 779,592
Accounts and notes receivable, net of allowance of $33,137
and $30,586, respectively................................. 480,328 533,869
Inventories, net............................................ 397,799 404,155
Deferred income taxes....................................... 19,701 11,084
Other current assets, net................................... 33,012 26,120
---------- ----------
Total current assets...................................... 2,001,393 1,754,820
PROPERTY, PLANT AND EQUIPMENT
Computer and broadcast equipment............................ 140,296 132,712
Buildings and leasehold improvements........................ 79,478 79,043
Furniture and other equipment............................... 97,694 96,941
Land........................................................ 10,386 10,386
Projects in progress........................................ 30,882 40,032
---------- ----------
358,736 359,114
Less accumulated depreciation and amortization............ (131,060) (120,468)
---------- ----------
227,676 238,646

OTHER ASSETS
Intangible assets, net...................................... 4,888,856 4,888,545
Cable distribution fees, net................................ 202,727 158,880
Long-term investments....................................... 34,822 39,485
Notes and accounts receivable, net ($86,091 and $99,819,
respectively, from related parties)....................... 134,400 130,368
Inventories, net............................................ 513,958 484,679
Advances to USA and subsidiaries............................ (531,926) 70,477
Deferred charges and other, net............................. 64,329 58,475
---------- ----------
$7,536,235 $7,824,375
========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Current maturities of long-term obligations................. $ 34,096 $ 32,911
Accounts payable, trade..................................... 148,044 233,063
Obligations for program rights and film costs............... 227,120 272,601
Cable distribution fees..................................... 76,553 32,795
Deferred revenue............................................ 59,618 58,949
Other accrued liabilities................................... 398,437 416,212
---------- ----------
Total current liabilities................................. 943,868 1,046,531
LONG-TERM OBLIGATIONS (NET OF CURRENT MATURITIES)........... 499,507 499,513
OBLIGATIONS FOR PROGRAM RIGHTS AND FILM COSTS, NET OF
CURRENT................................................... 297,841 285,378
OTHER LONG-TERM LIABILITIES................................. 40,655 40,247
DEFERRED INCOME TAXES....................................... 90,117 69,397
MINORITY INTEREST........................................... 4,595,435 4,563,804
COMMITMENTS AND CONTINGENCIES............................... -- --
Stockholders' Equity
Common Stock................................................ 1,221,408 1,221,408
Additional paid-in capital.................................. 70,312 70,312
Retained earnings........................................... (213,587) 33,398
Accumulated other comprehensive income...................... (9,321) (5,613)
---------- ----------
Total stockholder's equity................................ 1,068,812 1,319,505
---------- ----------
$7,536,235 $7,824,375
========== ==========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(UNAUDITED)

ADDITIONAL RETAINED FOREIGN CURRENCY
COMMON PAID-IN EARNINGS TRANSLATION
TOTAL STOCK CAPITAL (DEFICIT) ADJUSTMENT
---------- ---------- ---------- --------- ----------------
(IN THOUSANDS)

BALANCE AT DECEMBER 31, 2001............ $1,319,505 $1,221,408 $70,312 $ 33,398 $(5,613)
COMPREHENSIVE INCOME:
Net earnings for the three months ended
March 31, 2002........................ 26,823 -- -- 26,823 --
Foreign currency translation
adjustment............................ (3,708) -- -- -- (3,708)
----------
Comprehensive income.................... 23,115
Mandatory tax distribution to LLC
partners.............................. (273,808) -- -- (273,808) --
---------- ---------- ------- --------- -------
BALANCE AT MARCH 31, 2002............... $1,068,812 $1,221,408 $70,312 $(213,587) $(9,321)
========== ========== ======= ========= =======

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
----------------------
2002 2001
---------- ---------
(IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings before cumulative effect of accounting
change.................................................. $ 26,823 $ 24,564
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization............................. 18,339 56,387
Amortization of cable distribution fees................... 13,000 8,756
Amortization of program rights and film costs............. 151,717 175,966
Non-cash compensation..................................... 1,024 2,512
Amortization of deferred financing costs.................. 343 465
Equity in losses of unconsolidated affiliates............. 13,459 4,773
Minority interest (benefit) expense....................... 44,752 57,496
CHANGES IN CURRENT ASSETS AND LIABILITIES:
Accounts receivable....................................... 38,826 (3,805)
Inventories............................................... 7,524 18,463
Accounts payable.......................................... (88,831) (65,919)
Accrued liabilities and deferred revenue.................. (16,150) 11,486
Payment for program rights and film costs................. (214,088) (215,251)
Increase in cable distribution fees....................... (12,884) (732)
Other, net................................................ (35,213) (4,410)
---------- ---------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES......... (51,359) 70,751
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired.......................... -- (2,348)
Capital expenditures........................................ (12,887) (19,025)
Increase in long-term investments and notes receivable...... (603) (30,619)
Other, net.................................................. 2,192 (3,957)
---------- ---------
NET CASH USED IN INVESTING ACTIVITIES....................... (11,298) (55,949)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings.................................................. 2,857 40,244
Payment of mandatory tax distribution to LLC partners....... (273,808) (30,737)
Principal payments on long-term obligations................. (1,547) (2,433)
Repurchase of LLC shares.................................... -- (646)
Advances from (to) USA and subsidiaries..................... 529,883 (30,943)
Proceeds from issuance of LLC shares........................ 96,005 29,495
Other....................................................... 323 (5,829)
---------- ---------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......... 353,713 (849)
Effect of exchange rate changes on cash and cash
equivalents............................................... (95) (1,680)
---------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 290,961 12,273
Cash and cash equivalents at beginning of period............ 779,592 71,816
---------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $1,070,553 $ 84,089
========== =========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION

Home Shopping Network, Inc. (the "Company" or "Home Shopping"), is a holding
company, whose subsidiary USANi LLC is engaged in diversified media and
electronic commerce businesses. In December 1996, the Company consummated a
merger with USA Interactive ("USA"), formerly known as USA Networks Inc. and
HSN, Inc., and became a subsidiary of USA (the "Home Shopping Merger").

As of March 31, 2002 the Company was organized into two groups, the
Interactive Group and the Entertainment Group. The Interactive Group consists of
Home Shopping Network (including HSN International and HSN.com; Electronic
Commerce Solutions; and Styleclick (OTC: IBUY). The Entertainment Group consists
of USA Cable, including USA Network and Sci Fi Channel and Emerging networks
TRIO, Newsworld International, and Crime; and Studios USA, which produces and
distributes television programming. USA Entertainment was contributed to a joint
venture with Vivendi Universal, S.A. ("Vivendi") on May 7, 2002. See Note 7 for
further discussion of the VUE transaction.

BASIS OF PRESENTATION

ACCOUNTING ESTIMATES

Significant estimates underlying the accompanying consolidated financial
statements include the inventory carrying adjustment, program rights and film
cost amortization, sales return and other revenue allowances, allowance for
doubtful accounts, recoverability of intangibles and other long-lived assets,
estimates of film revenue ultimates and various other operating allowances and
accruals.

NEW ACCOUNTING PRONOUNCEMENTS

ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

Company. Goodwill amortization recorded in the three months ended March 31, 2001
was $36.7 million, including $28.3 million related to USA Entertainment.

2001 earnings, adjusted for the add back of goodwill amortization, were
$42.5 million.

ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS

The Company adopted SOP 00-2, ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF
FILMS ("SOP 00-2") during the three months ended March 31, 2001. SOP 00-2
established new film accounting standards, including changes in revenue
recognition and accounting for advertising, development and overhead costs.
Specifically, SOP 00-2 requires advertising costs for theatrical and television
product to be expensed as incurred. This compares to the Company's previous
policy of first capitalizing these costs and then expensing them over the
related revenue streams. In addition, SOP 00-2 requires development costs for
abandoned projects and certain indirect overhead costs to be charged directly to
expense, instead of those costs being capitalized to film costs, which was
required under the previous accounting rules. SOP 00-2 also requires all film
costs to be classified in the balance sheet as non-current assets. Provisions of
SOP 00-2 in other areas, such as revenue recognition, generally are consistent
with the Company's existing accounting policies.

SOP 00-2 was adopted as of January 1, 2001, and the Company recorded a
one-time, non-cash after-tax benefit of $1.9 million. The expense is reflected
as a cumulative effect of an accounting change in the accompanying consolidated
statement of operations.

RECLASSIFICATIONS

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform to the 2002 presentation.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 (the "2001 Form 10-K") for a summary of all significant
accounting policies.

NOTE 3--STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISLCOSURE OF NON-CASH TRANSACTIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2002:

For the three months ended March 31, 2002, the Company incurred non-cash
compensation expense of $1.0 million.

For the three months ended March 31, 2002, the Company realized pre-tax
losses of $13.5 million on equity losses in unconsolidated subsidiaries,
resulting primarily from HOT Networks, which operates electronic retailing
operations in Europe.

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2001:

For the three months ended March 31, 2001, the Company incurred non-cash
compensation expense of $2.5 million.

For the three months ended March 31, 2001, the Company realized pre-tax
losses of $4.8 million on equity losses in unconsolidated subsidiaries,
resulting primarily from HOT Networks, which operates electronic retailing
operations in Europe.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 4--INDUSTRY SEGMENTS

The Company operates principally in five industry segments: Cable and
studios, HSN-US, ECS/ Styleclick, Emerging networks and HSN-International and
other.

ADJUSTED EBITDA

Adjusted earnings before interest, income taxes, depreciation and
amortization ("Adjusted EBITDA") is defined as operating profit plus
(1) depreciation and amortization, (2) amortization of cable distribution fees
(3) amortization of non-cash distribution and marketing expense and
(4) disengagement expenses. Adjusted EBITDA is presented here as a management
tool and as a valuation methodology. Adjusted EBITDA does not purport to
represent cash provided by operating activities. Adjusted EBITDA should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with generally accepted accounting principles. Adjusted EBITDA may
not be comparable to calculations of similarly titled measures presented by
other companies.

The following is a reconciliation of Operating Income to Adjusted EBITDA for
2002 and 2001.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(IN THOUSANDS)

Operating profit............................................ $116,379 $114,917
Depreciation and amortization............................... 18,339 56,387
Amortization of cable distribution fees..................... 13,000 8,756
Amortization of non cash compensation expense............... 1,024 2,512
Disengagement expenses...................................... 11,538 --
-------- --------
Adjusted EBITDA............................................. $160,280 $182,572
======== ========
REVENUE
Cable and studios........................................... $367,259 $434,972
HSN-U.S.(a)................................................. 395,326 385,372
Electronic commerce solutions / Styleclick.................. 12,084 8,572
Trio, NWI, Crime, other emerging media...................... 6,976 6,163
HSN-International and other (b)............................. 64,989 69,703
-------- --------
$846,634 $904,782
======== ========
OPERATING PROFIT (LOSS)
Cable and studios........................................... $123,210 $134,603
HSN-U.S. (a)(c)............................................. 21,691 16,646
Electronic commerce solutions / Styleclick.................. (9,306) (19,638)
Trio, NWI, Crime, other emerging media...................... (3,637) (4,356)
HSN-International and other (b)............................. (6,543) (2,573)
Corporate and other......................................... (9,036) (9,765)
-------- --------
$116,379 $114,917
======== ========
ADJUSTED EBITDA
Cable and studios........................................... $126,324 $163,406
HSN-U.S.(a)................................................. 57,717 45,380
Electronic Commerce Solutions/Styleclick.................... (8,465) (16,918)
Trio, NWI, Crime, other emerging media...................... (3,409) (1,697)
HSN-International and other(b).............................. (4,851) (1,705)
Corporate & other........................................... (7,036) (5,894)
-------- --------
TOTAL....................................................... $160,280 $182,572
======== ========

- ------------------------

(c) Includes $11.5 million of costs incurred in 2002 related to the
disengagement of HSN from USA Broadcasting stations. Amounts primarily
related to payments to cable operators and related marketing expenses in the
disengaged markets.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 5--EQUITY INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

At March 31, 2002, USA beneficially owned 46.7% of the outstanding common
stock of Hot Networks AG, a German stock corporation, the subsidiaries of which
operate electronic retailing operations in Europe. This investment is accounted
for using the equity method. On May 3, 2002, USA stated that it would no longer
fund HOT Networks, which entity USA does not control. The other shareholders
have also terminated their funding of the venture As of April 30, 2002, USA has
a long-term receivable of $100.5 million from HOT Networks. The Company is
evaluating the recoverability of this receivable, but has not completed its
evaluation at this time. Home Shopping Network and the other shareholders of HOT
Networks are actively discussing alternative arrangements with respect to their
relationship, which may include the acquisition of additional equity by USA.
Based on these discussions, the Company may determine that carrying value of the
receivable is not recoverable. Summary financial information for Hot Networks AG
is presented below.

AS OF AND FOR THE
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(IN THOUSANDS)

Current assets.......................................... $ 25,808 $ 5,932
Noncurrent assets....................................... 168,993 41,344
Current liabilities..................................... 47,469 32,267
Noncurrent liabilities.................................. 234,815 22,871
Net sales............................................... 5,069 5,931
Gross profit............................................ 277 1,236
Net loss................................................ (27,094) (19,250)

NOTE 6--GUARANTEE OF NOTES

USA issued $500.0 million 6 3/4% Senior Notes due 2005 (the "Notes"). USANi
LLC is a co-issuer and co-obligor of the Notes. The Notes are jointly,
severally, fully and unconditionally guaranteed by certain subsidiaries of USA,
including the Company and all of the subsidiaries of USANi LLC (other than
subsidiaries that are, individually and in the aggregate, inconsequential to
USANi LLC on a consolidated basis) (collectively, the "Subsidiary Guarantors").
All of the Subsidiary Guarantors (other than the Company) (the "Wholly Owned
Subsidiary Guarantors") are wholly owned, directly or indirectly, by the Company
or USANi LLC, as the case may be.

HOME SHOPPING NETWORK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 7--SUBSEQUENT EVENTS

CONTRIBUTION OF THE USA ENTERTAINMENT GROUP TO VUE

USANI LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(IN THOUSANDS)

NET REVENUES
Product sales............................................. $462,442 $458,898
Service revenue........................................... 384,192 445,884
-------- --------
Net revenues.............................................. 846,634 904,782
Operating costs and expenses:
Cost of sales--product sales.............................. 301,742 306,163
Cost of sales--service revenue............................ 11,169 3,575
Program costs............................................. 171,820 201,337
Selling and marketing..................................... 120,967 95,716
General and administrative................................ 64,659 80,954
Other operating costs..................................... 27,535 34,465
Amortization of cable distribution fees................... 13,000 8,756
Amortization of non-cash compensation..................... 1,024 2,512
Depreciation and amortization............................. 18,339 56,387
-------- --------
Total operating costs and expenses........................ 730,255 789,865
-------- --------
Operating profit............................................ 116,379 114,917
Other income (expense):
Interest income........................................... 1,009 12,910
Interest expense.......................................... (18,028) (17,788)
Miscellaneous............................................. (13,307) (7,075)
-------- --------
(30,326) (11,953)
-------- --------
Earnings before cumulative effect of accounting change,
income taxes and minority interest........................ 86,053 102,964
Minority interest benefit (expense)......................... 440 2,240
Income tax expense.......................................... (4,801) (5,587)
-------- --------
Earnings before cumulative effect of accounting change...... 81,692 99,617
Cumulative effect of accounting change...................... -- 6,470
-------- --------
NET EARNINGS................................................ $ 81,692 $106,087
======== ========

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

USANI LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

MARCH 31, DECEMBER 31,
2002 2001
---------- ------------
(IN THOUSANDS)

ASSETS

CURRENT ASSETS
Cash and cash equivalents................................... $1,070,553 $ 779,592
Accounts and notes receivable, net of allowance of $33,137
and $61,969, respectively................................. 480,328 533,869
Inventories, net............................................ 397,799 404,155
Investments held for sale................................... -- --
Other current assets, net................................... 33,012 26,120
---------- ----------
Total current assets...................................... 1,981,692 1,743,736
PROPERTY, PLANT AND EQUIPMENT
Computer and broadcast equipment............................ 140,296 132,712
Buildings and leasehold improvements........................ 79,478 79,043
Furniture and other equipment............................... 97,694 96,941
Land........................................................ 10,386 10,386
Projects in progress........................................ 30,882 40,032
---------- ----------
358,736 359,114
Less accumulated depreciation and amortization............ (131,060) (120,468)
---------- ----------
227,676 238,646
OTHER ASSETS
Intangible assets, net...................................... 4,970,570 4,970,259
Cable distribution fees, net................................ 202,727 158,880
Long-term investments....................................... 34,822 39,485
Notes and accounts receivable, net ($86,091 and $99,819,
respectively, from related parties)....................... 134,400 130,368
Inventories, net............................................ 513,958 484,679
Advances to USAI and subsidiaries........................... 80,882 581,367
Deferred charges and other, net............................. 64,329 58,475
---------- ----------
$8,211,056 $8,405,895
========== ==========

LIABILITIES AND MEMBERS' EQUITY

CURRENT LIABILITIES
Current maturities of long-term obligations................. $ 34,096 $ 32,911
Accounts payable, trade..................................... 148,044 233,063
Obligations for program rights and film costs............... 227,120 272,601
Cable distribution fees payable............................. 76,553 32,795
Deferred revenue............................................ 59,618 58,949
Other accrued liabilities................................... 381,265 409,286
---------- ----------
Total current liabilities................................... 926,696 1,039,605
LONG-TERM OBLIGATIONS (NET OF CURRENT MATURITIES)........... 499,507 499,513
OBLIGATIONS FOR PROGRAM RIGHTS AND FILM COSTS, net of
current................................................... 297,841 285,378
OTHER LONG-TERM LIABILITIES................................. 28,432 28,783
MINORITY INTEREST........................................... 12,751 12,939
COMMITMENTS AND CONTINGENCIES............................... -- --
MEMBERS' EQUITY
Class A (268,631,580 and 261,947,704 shares,
respectively)............................................. 2,192,794 2,090,818
Class B (282,161,532 shares)................................ 2,978,635 2,978,635
Class C (45,774,708 shares)................................. 466,252 466,252
Retained earnings........................................... 817,469 1,009,585
Accumulated other comprehensive loss........................ (9,321) (5,613)
---------- ----------
Total members' equity..................................... 6,445,829 6,539,677
---------- ----------
$8,211,056 $8,405,895
========== ==========

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.

USANI LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
(UNAUDITED)

FOREIGN CURRENCY
CLASS A CLASS B CLASS C RETAINED TRANSLATION
TOTAL LLC SHARES LLC SHARES LLC SHARES EARNINGS ADJUSTMENT
---------- ---------- ---------- ---------- ---------- ----------------
(IN THOUSANDS)

BALANCE AT DECEMBER 31,
2001...................... $6,539,677 $2,090,818 $2,978,635 $466,252 $1,009,585 $(5,613)
COMPREHENSIVE INCOME:
Net earnings for the three
months ended March 31,
2002.................... 81,692 -- -- -- 81,692 --
Foreign currency
translation
adjustment.............. (3,708) (3,708)
----------
Comprehensive income...... 77,984
----------
Issuance of LLC shares.... 106,311 106,311 -- -- -- --
Repurchase of LLC shares.. (4,335) (4,335) -- -- -- --
Mandatory tax distribution
to LLC partners......... (273,808) -- -- -- (273,808) --
---------- ---------- ---------- -------- ---------- -------
BALANCE AT MARCH 31, 2002... $6,445,829 $2,192,794 $2,978,635 $466,252 $ 817,469 $(9,321)
========== ========== ========== ======== ========== =======

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

USANI LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

THREE MONTHS ENDED
MARCH 31,
---------------------
2002 2001
---------- --------
(IN THOUSANDS)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings before cumulative effect of accounting
change.................................................. $ 81,692 $ 99,617
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization............................. 18,339 56,387
Amortization of cable distribution fees................... 13,000 8,756
Amortization of program rights and film costs............. 151,717 175,966
Non-cash compensation..................................... 1,024 2,512
Amortization of deferred financing costs.................. 343 465
Equity in losses of unconsolidated affiliates............. 13,459 4,773
Minority interest (benefit) expense....................... (440) (2,240)
CHANGES IN CURRENT ASSETS AND LIABILITIES:
Accounts receivable....................................... 38,826 (3,805)
Inventories............................................... 7,524 18,463
Accounts payable.......................................... (88,831) (65,919)
Accrued liabilities and deferred revenue.................. (25,827) (3,831)
Payment for program rights and film costs................. (214,088) (215,251)
Increase in cable distribution fees....................... (12,884) (732)
Other, net................................................ (35,213) (4,410)
---------- --------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES......... (51,359) 70,751
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions, net of cash acquired........................ -- (2,348)
Capital expenditures...................................... (12,887) (19,025)
Increase in long-term investments and notes receivable.... (603) (30,619)
Other, net................................................ 2,192 (3,957)
---------- --------
NET CASH USED IN INVESTING ACTIVITIES....................... (11,298) (55,949)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings................................................ 2,857 40,244
Payment of mandatory tax distribution to LLC partners..... (273,808) (30,737)
Principal payments on long-term obligations............... (1,547) (2,433)
Repurchase of LLC shares.................................. -- (646)
Advances from (to) USA and subsidiaries................... 529,883 (30,943)
Proceeds from issuance of LLC shares...................... 96,005 29,495
Other, net................................................ 323 (5,829)
---------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......... 353,713 (849)
Effect of exchange rate changes on cash and cash
equivalents............................................. (95) (1,680)
---------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS................... 290,961 12,273
Cash and cash equivalents at beginning of period.......... 779,592 71,816
---------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $1,070,553 $ 84,089
========== ========

The accompanying Notes to Consolidated Financial Statements
are an integral part of these statements.

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION

USANi LLC (the "Company" or "LLC"), a Delaware limited liability company,
was formed on February 12, 1998 and is a subsidiary of Home Shopping
Network, Inc. ("Home Shopping" or "Holdco"), which is a subsidiary of USA
Interactive (formerly, USA Networks, Inc.) ("USA"). At its formation, USA and
Home Shopping contributed substantially all of the operating assets and
liabilities of Home Shopping to the Company in exchange for Class A LLC Shares
of the Company. On February 12, 1998, the Company acquired USA Networks (renamed
USA Cable), a New York general partnership consisting of USA Network and Sci Fi
Channel, as well as the domestic television production and distribution
businesses of Universal Studios (the "Universal Transaction"). As of March 31,
2002 LLC was organized into two groups, the Interactive Group and the
Entertainment Group. The Interactive Group consists of Home Shopping Network
(including HSN International and HSN.com); Electronic Commerce Solutions; and
Styleclick (OTC: IBUY). The Entertainment Group consists of USA Cable, including
USA Network and Sci Fi Channel and Emerging networks TRIO, Newsworld
International, and Crime; and Studios USA, which produces and distributes
television programming. USA Entertainment was contributed to a joint venture
with Vivendi Universal, S.A. ("Vivendi") on May 7, 2002. See Note 7 for further
discussion of the VUE transaction.

BASIS OF PRESENTATION

ACCOUNTING ESTIMATES

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
NEW ACCOUNTING PRONOUNCEMENTS

ACCOUNTING FOR GOODWILL AND OTHER INTANGIBLE ASSETS

2001 earnings, adjusted for the add back of goodwill, were $142.8 million.

ACCOUNTING BY PRODUCERS OR DISTRIBUTORS OF FILMS

SOP 00-2 was adopted as of January 1, 2001, and the Company recorded a
one-time, non-cash after-tax benefit of $6.5 million. The expense is reflected
as a cumulative effect of an accounting change in the accompanying consolidated
statement of operations.

RECLASSIFICATIONS

Certain amounts in the prior years' consolidated financial statements have
been reclassified to conform to the 2002 presentation.

NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

See the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 (the "2001 Form 10-K") for a summary of all significant
accounting policies.

NOTE 3--STATEMENTS OF CASH FLOWS

SUPPLEMENTAL DISLCOSURE OF NON-CASH TRANSACTIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2002:

For the three months ended March 31, 2002, the Company incurred non-cash
compensation expense of $1.0 million.

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 3--STATEMENTS OF CASH FLOWS (CONTINUED)
For the three months ended March 31, 2002, the Company realized pre-tax
losses of $13.5 million on equity losses in unconsolidated subsidiaries,
resulting primarily from HOT Networks, which operates electronic retailing
operations in Europe.

SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS FOR THE THREE MONTHS ENDED
MARCH 31, 2001:

For the three months ended March 31, 2001, the Company incurred non-cash
compensation expense of $2.5 million.

NOTE 4--INDUSTRY SEGMENTS

The Company operates principally in five industry segments: Cable and
studios, HSN-US, ECS/ Styleclick, Emerging networks and HSN-International and
other.

ADJUSTED EBITDA

Adjusted earnings before interest, income taxes, depreciation and
amortization ("Adjusted EBITDA") is defined as operating profit plus
(1) depreciation and amortization, (2) amortization of cable distribution fees
(3) amortization of non-cash distribution and marketing expense and
(4) disengagement expenses. Adjusted EBITDA is presented here as a management
tool and as a valuation methodology. Adjusted EBITDA does not purport to
represent cash provided by operating activities. Adjusted EBITDA should not be
considered in isolation or as a substitute for measures of performance prepared
in accordance with generally accepted accounting principles. Adjusted EBITDA may
not be comparable to calculations of similarly titled measures presented by
other companies.

The following is a reconciliation of Operating Income to Adjusted EBITDA for
2002 and 2001.

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 4--INDUSTRY SEGMENTS (CONTINUED)

THREE MONTHS ENDED
MARCH 31,
-----------------------
2002 2001
-------- --------
(IN THOUSANDS)

REVENUE
Cable and studios........................................... $367,259 $434,972
HSN--U.S. (a)............................................... 395,326 385,372
Electronic commerce solutions/Styleclick.................... 12,084 8,572
Trio, NWI, Crime, other emerging media...................... 6,976 6,163
HSN--International and other(b)............................. 64,989 69,703
-------- --------
$846,634 $904,782
======== ========

OPERATING PROFIT (LOSS)
Cable and studios........................................... $123,210 $134,603
HSN--U.S.(a)(c)............................................. 21,691 16,646
Electronic commerce solutions/Styleclick.................... (9,306) (19,638)
Trio, NWI, Crime, other emerging media...................... (3,637) (4,356)
HSN--International and other(b)............................. (6,543) (2,573)
Corporate and other......................................... (9,036) (9,765)
-------- --------
$116,379 $114,917
======== ========

ADJUSTED EBITDA
Cable and studios........................................... $126,324 $163,406
HSN--U.S.(a)................................................ 57,717 45,380
Electronic Commerce Solutions/Styleclick.................... (8,465) (16,918)
Trio, NWI, Crime, other emerging media...................... (3,409) (1,697)
HSN--International and other (b)............................ (4,851) (1,705)
Corporate & other........................................... (7,036) (5,894)
-------- --------
TOTAL....................................................... $160,280 $182,572
======== ========

- ------------------------

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 4--INDUSTRY SEGMENTS (CONTINUED)
(b) Includes impact of foreign exchange fluctuations, which reduced revenues by
$16.5 million and $13.7 million in 2002 and 2001, respectively, if the
results are translated from Euros to U.S. dollars at a constant exchange
rate, using 1999 as the base year.

NOTE 5--EQUITY INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES

At March 31, 2002, USA beneficially owned 46.7% of the outstanding common
stock of Hot Networks AG, a German stock corporation, the subsidiaries of which
operate electronic retailing operations in Europe. This investment is accounted
for using the equity method. On May 3, 2002, USA stated that it would no longer
fund HOT Networks, which entity USA does not control. The other shareholders
have also terminated their funding of the venture. As of April 30, 2002, USA has
a long-term receivable of $100.5 million from HOT Networks. The Company is
evaluating the recoverability of this receivable, but has not completed its
evaluation at this time. Home Shopping Network and the other shareholders of HOT
Networks are actively discussing alternative arrangements with respect to their
relationship, which may include the acquisition of additional equity by USA.
Based on these discussions, the Company may determine that carrying value of the
receivable is not recoverable. Summary financial information for Hot Networks AG
is presented below.

AS OF AND FOR THE
THREE MONTHS ENDED
MARCH 31,
-------------------
2002 2001
-------- --------
(IN THOUSANDS)

Note that USA consolidates the operations of HOT Germany, a separate entity
that USA controls pursuant to a pooling agreement with Georg Kofler. Home
Shopping Network, a subsidiary of USA, Georg Kofler and the other shareholders
of HOT Germany are actively discussing alternative arrangements with respect to
their relationship which may include the acquisition of additional equity by
USA. Home Shopping Network has guaranteed certain bank loans to Mr. Kofler by
agreeing to purchase, at a price not to exceed $50 million, Mr. Kofler's shares
in HOT Germany that have been pledged to the banks providing the loans in the
event of a default by Mr. Kofler. The Company is evaluating these provisions at
this time.

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 6--GUARANTEE OF NOTES

On November 23, 1998, USA and the Company completed an offering of
$500.0 million 6 3/4% Senior Notes due 2005 (the "Old Notes"). In May 1999, the
Old Notes were exchanged in full for $500.0 million of new 6 3/4% Senior Notes
due 2005 (the "Notes") that have terms that are substantially identical to the
Old Notes. Interest is payable on the Notes on May 15 and November 15 of each
year, commencing May 15, 1999. The Notes are jointly, severally, fully and
unconditionally guaranteed by certain subsidiaries of USA, including Holdco, a
non-wholly owned, direct subsidiary of USA, and all of the subsidiaries of the
Company (other than subsidiaries that are, individually and in the aggregate,
inconsequential to the Company on a consolidated basis) (collectively, the
"Subsidiary Guarantors"). All of the Subsidiary Guarantors (other than Holdco)
(the "Wholly Owned Subsidiary Guarantors") are wholly owned, directly or
indirectly, by USA or the Company, as the case may be.

Separate financial statements for each of the Wholly Owned Subsidiary
Guarantors are not presented and such Wholly Owned Subsidiary Guarantors are not
filing separate reports under the Securities Exchange Act of 1934 because USA's
and the Company's management has determined that the information contained in
such documents would not be material to investors. USANi LLC and its
subsidiaries have no material restrictions on their ability to transfer amounts
to fund USA's operations.

As of and for the Year Ended March 31, 2002:

WHOLLY OWNED USANI
USANI SUBSIDIARY NON-GUARANTOR LLC
LLC GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ------------ ------------- ------------ ------------

Current assets.................... $1,096,724 $ 854,596 $ 30,372 $ -- $1,981,692
Property and equipment net........ 1,902 197,855 27,919 -- 227,676
Goodwill and other intangible
assets, net..................... 2,131 4,880,899 87,540 -- 4,970,570
Investment in subsidiaries........ 5,727,538 102,031 -- (5,829,569) --
Other assets...................... 1,687,720 195,327 13,129 (865,058) 1,031,118
---------- ---------- ---------- ----------- ----------
TOTAL ASSETS...................... $8,516,015 $6,230,708 $ 158,960 $(6,694,627) $8,211,056
========== ========== ========== =========== ==========
Current liabilities............... $ 38,041 $ 859,397 $ 29,258 $ -- $ 926,696
Long-term debt, less current
portion......................... 498,590 917 -- -- 499,507
Other liabilities................. 1,533,555 (1,346,055) 138,773 -- 326,273
Minority interest................. -- 10,216 -- 2,535 12,751
Interdivisional equity............ 6,706,233 (9,071) (6,697,162) --
Stockholders' equity.............. 6,445,829 -- -- -- 6,445,829
---------- ---------- ---------- ----------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY............ $8,516,015 $6,230,708 $ 158,960 $(6,694,627) $8,211,056
========== ========== ========== =========== ==========
Revenue........................... $ -- $ 827,619 $ 19,015 $ -- $ 846,634
Operating expenses................ (8,245) (690,481) (31,529) -- (730,255)
Interest expense, net............. (8,569) (8,450) -- -- (17,019)
Gain on sale of securities........ -- -- -- -- --
Other income (expense), net....... 98,506 (11,585) -- (100,228) (13,307)
Provision for income taxes........ -- (3,934) (867) -- (4,801)
Minority interest................. -- 440 -- -- 440
Net income (loss)................. 81,692 113,609 (13,381) (100,228) 81,692

USANI LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(UNAUDITED)

NOTE 6--GUARANTEE OF NOTES (CONTINUED)

WHOLLY OWNED USANI
USANI SUBSIDIARY NON-GUARANTOR LLC
LLC GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ------------ ------------- ------------ ------------

Net income (loss) from cumulative
effect on accounting change..... -- -- -- -- --
---------- ---------- ---------- ----------- ----------
NET EARNINGS (LOSS)............... 81,692 113,609 (13,381) (100,228) 81,692
========== ========== ========== =========== ==========
Cash flows from operations........ $ (16,028) $ 2,095 $ (37,426) $ -- $ (51,359)
Cash flows used in investing
activities...................... 1,566 (11,690) (1,174) -- (11,298)
Cash flows from financing
activities...................... 316,103 (4,215) 41,825 -- 353,713
Effect of exchange rate........... -- (95) -- -- (95)
Cash at the beginning of the
period.......................... 789,464 (5,443) (4,429) -- 779,592
---------- ---------- ---------- ----------- ----------
CASH AT THE END OF THE PERIOD..... $1,091,105 $ (19,348) $ (1,204) $ -- $1,070,553
========== ========== ========== =========== ==========

As of and for the Year Ended March 31, 2001:

WHOLLY OWNED USANI
USANI SUBSIDIARY NON-GUARANTOR LLC
LLC GUARANTORS SUBSIDIARIES ELIMINATIONS CONSOLIDATED
---------- ------------ ------------- ------------ ------------

Revenue........................... $ -- $ 890,458 $ 14,324 $ -- $ 904,782
Operating expenses................ (9,765) (742,227) (37,873) (789,865)
Interest expense, net............. 3,228 (8,317) 211 (4,878)
Gain on sale of securities........ --
Other income (expense), net....... 106,154 (5,103) (1,972) (106,154) (7,075)
Provision for income taxes........ -- (3,387) (2,200) (5,587)
Minority interest................. (1,511) -- 3,751 2,240
---------- ---------- ---------- ----------- ----------
Net income (loss)................. 99,617 129,913 (27,510) (102,403) 99,617
Net income (loss) from cumulative
effect on accounting change..... 6,470 6,470 -- (6,470) 6,470
---------- ---------- ---------- ----------- ----------
NET EARNINGS (LOSS)............... $ 106,087 $ 136,383 $ (27,510) $ (108,873) $ 106,087
========== ========== ========== =========== ==========
Cash flows from operations........ $ 2,655 $ 87,318 $ (19,222) $ -- $ 70,751
Cash flows used in investing
activities...................... (377) (54,604) (968) -- (55,949)
Cash flows from financing
activities...................... 24,146 (40,154) 15,159 -- (849)
Effect of exchange rate........... (139) (1,541) -- -- (1,680)
Cash at the beginning of the
period.......................... 78,079 (22,574) 16,311 -- 71,816
---------- ---------- ---------- ----------- ----------
CASH AT THE END OF THE PERIOD..... $ 104,364 $ (31,555) $ 11,280 $ -- $ 84,089
========== ========== ========== =========== ==========

USANI LLC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)

NOTE 7--SUBSEQUENT EVENTS

CONTRIBUTION OF THE USA ENTERTAINMENT GROUP TO VUE



                                                                     Exhibit 3.3

                                                               STATE OF DELAWARE
                                                              SECRETARY OF STATE
                                                        DIVISION OF CORPORATIONS
                                                       FILED 05:00 PM 05/07/2002
                                                              020291 706 2097382


                       CERTIFICATE OF OWNERSHIP AND MERGER

                                     MERGING

                               TAIWAN TRAVEL, INC.

                                      INTO

                               USA NETWORKS, INC.

                         (Pursuant to Section 253 of the
                      General Corporation Law of Delaware)


      USA Networks, Inc. a corporation organized and existing under the
laws of Delaware (the "Corporation"), does hereby certify:

            FIRST: That the Corporation owns all of the outstanding shares of
      the only class of stock of Taiwan Travel, Inc., a Delaware corporation
      ("Merger Sub").

            SECOND: That the Corporation, by the following resolutions of its
      Board of Directors, dated as of April 24, 2002 and unanimously adopted by
      the Board of Directors of the Corporation, determined to merge said Merger
      Sub into itself (the "Merger").

                  RESOLVED, that Merger Sub be merged into the Corporation and
            that, upon the effectiveness of such merger, the Corporation shall
            assume all of the liabilities and obligations of Merger Sub.

                  RESOLVED, that said merger shall become effective upon the
            filing of a Certificate of Ownership and Merger with the Secretary
            of State of the State of Delaware or, if later, at such time as
            specified in the Certificate of Ownership and Merger.

                  RESOLVED, that, upon effectiveness of said merger, Article I
            of the Restated Certificate of Incorporation of the Corporation, as
            heretofore amended, shall be amended to read as follows:

                                   "ARTICLE I

                The name of the corporation is USA Interactive."

                  RESOLVED, that the proper officers of the Corporation be, and
            they hereby are, directed to make and execute a Certificate of
            Ownership and Merger setting forth a copy of the resolutions to so
            merger and to change the name of the Corporation, and the date of
            adoption thereof, and to cause the same to be filed with the
            Secretary of State of the State of Delaware and to do all acts and
            things whatsoever, whether within or without the State of Delaware,
            that may be necessary or property to effect said merger and change
            of name.



            THIRD: The merger shall be effective upon the filing of this
      Certificate of Ownership and Merger with the Secretary of State of
      Delaware.


      IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by a duly authorized officer on this 7 day of May, 2002.


                                          USA NETWORKS, INC.


                                          By: /s/ Julius Genachowski
                                             -----------------------------------
                                             Name: Julius Genachowski
                                             Title: Executive Vice President