10-Q/A 1 a2084937z10-qa.htm 10-Q/A
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As filed with the Securities and Exchange Commission on July 24, 2002

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q/A
(Amendment No. 1)

(Mark One)

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

For the Quarterly Period Ended March 31, 2002

or

o 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
incorporation or organization)		   (I.R.S. Employer Identification No.)

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 ý        No o

        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.


EXPLANATORY NOTE

        The Registrant hereby amends and restates in its entirety Item 1, Consolidated Financial Statements, as described. On May 7, 2002, USA Interactive (formerly, USA Networks, Inc.) completed its previously announced transaction with Vivendi Universal, S.A. to create a joint venture called Vivendi Universal Entertainment. In conjunction with the transaction, USA Interactive contributed the USA Entertainment Group to Vivendi Universal Entertainment. The USA Entertainment Group consists of USA Cable, including USA Network and SciFi 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. The consolidated financial statements included in this Amendment to the Quarterly Report on Form 10-Q/A have been reclassified to present the results of operations and financial position of USA Entertainment as discontinued operations.

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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     509,207     361,764  
   
 
 
  Net revenue     971,649     820,662  
Operating costs and expenses:              
  Cost of sales-product sales     301,742     303,657  
  Cost of sales-service revenue     315,806     246,425  
  Selling and marketing     145,846     109,619  
  General and administrative     78,311     72,009  
  Other operating costs     19,068     19,192  
  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     59,321     103,660  
   
 
 
  Total operating costs and expenses     943,866     874,190  
   
 
 
  Operating profit (loss)     27,783     (53,528 )
Other income (expense):              
  Interest income     6,765     7,378  
  Interest expense     (11,433 )   (11,559 )
  Loss in unconsolidated subsidiaries and other     (12,132 )   (6,529 )
   
 
 
      (16,800 )   (10,710 )
   
 
 
Earnings (loss) from continuing operations before income taxes and minority interest     10,983     (64,238 )
Income tax expense     (15,950 )   (4,565 )
Minority interest expense     8,937     25,180  
   
 
 
Earnings (loss) from continuing operations before cumulative effect of accounting change     3,970     (43,623 )
Discontinued operations, net of tax     21,930     26,240  
   
 
 
Earnings 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 )
   
 
 
Earnings (loss) per share from continuing operations available to common shareholders:              
Basic earnings (loss) per common share   $ .01   $ (.12 )
Diluted earnings (loss) per common share     —   $ (.12 )
Earnings (loss) per share before cumulative effect of accounting change:              
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 loss per common share   $ (.73 ) $ (.07 )

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

3


USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
   March 31,
2002
   December 31,
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 $17,902 and $16,252, respectively     274,493     276,716  
Receivable from sale of USAB     —     589,625  
Inventories, net     189,888     197,354  
Deferred tax assets     38,120     39,946  
Other current assets, net     128,414     84,727  
Net current assets of discontinued operations     134,739     38,343  
   
 
 
  Total current assets     2,713,488     2,385,659  
PROPERTY, PLANT AND EQUIPMENT              
Computer and broadcast equipment     378,236     349,145  
Buildings and leasehold improvements     123,677     125,491  
Furniture and other equipment     95,099     91,292  
Land     15,675     15,665  
Projects in progress     33,396     45,754  
   
 
 
      646,083     627,347  
  Less accumulated depreciation and amortization     (238,370 )   (228,360 )
   
 
 
      407,713     398,987  
OTHER ASSETS              
Goodwill     3,587,131     3,075,831  
Intangible assets, net     710,436     218,651  
Cable distribution fees, net     202,727     158,880  
Long-term investments     83,899     64,731  
Notes and accounts receivable, net of current portion ($86,091 and $99,819, respectively, from related parties)     91,867     108,095  
Advance to Universal     19,687     39,265  
Deferred income taxes     93,192     —  
Deferred charges and other, net     80,218     89,751  
   
 
 
    $ 7,990,358   $ 6,539,850  
   
 
 

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

4


USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
   March 31,
2002
   December 31,
2001
  
 
   (In thousands,
except share data)

  
  LIABILITIES AND STOCKHOLDERS' EQUITY  
CURRENT LIABILITIES              
Current maturities of long-term obligations   $ 35,512   $ 33,519  
Accounts payable, trade     230,319     309,609  
Accounts payable, client accounts     200,714     102,011  
Cable distribution fees payable     76,553     32,795  
Deferred revenue     274,832     75,256  
Income tax payable     168,586     188,806  
Other accrued liabilities     379,196     262,727  
   
 
 
    Total current liabilities     1,365,712     1,004,723  
Long-Term Obligations (net of current maturities)     544,501     544,372  
Other Long-Term Liabilities     23,550     26,350  
Deferred Income Taxes     —     210,184  
Minority Interest     629,903     706,688  
Net Long-term Liabilities of Discontinued Operations     152,447     102,032  
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  
   
 
 
    $ 7,990,358   $ 6,539,850  
   
 
 

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

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USA INTERACTIVE AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

 
   Total
   Preferred
Stock
   Common
Stock
   Class B
Convertible
Common
Stock
   Addit.
Paid-in
Capital
   Retained
Earnings/
Accum.
Deficit
   Accum.
Other
Comp.
Income
   Treasury
Stock
   Note
Receivable
From Key
Executive
for
Common
Stock
Issuance
  
 
    
    
    
    
   (In thousands)

    
    
    
  
Balance at December 31, 2001   $ 3,945,501   $ —   $ 3,147   $ 630   $ 3,918,401   $ 181,267   $ (11,605 ) $ (141,341 ) $ (4,998 )
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 )   —     —     —     —     (4,334 )   —  
   
 
 
 
 
 
 
 
 
 
Balance at March 31, 2002   $ 5,274,245   $ 131   $ 3,419   $ 630   $ 5,541,376   $ (105,387 ) $ (15,251 ) $ (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.

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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) from continuing operations before cumulative effect of accounting change   $ 3,970   $ (43,623 )
  Adjustments to reconcile net loss to net cash provided by operating activities:              
    Depreciation and amortization     59,321     103,660  
    Amortization of cable distribution fees     13,000     8,756  
    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     (8,937 )   (25,180 )
  Changes in current assets and liabilities:              
    Accounts receivable     30,780     156  
    Inventories     7,619     17,775  
    Accounts payable     (11,782 )   (23,977 )
    Accrued liabilities and deferred revenue     (95,039 )   28,286  
    Increase in cable distribution fees     (12,884 )   (732 )
    Other, net     (5,948 )   (8,307 )
   
 
 
Net Cash Provided By Operating Activities     13,586     69,718  
Cash flows from investing activities:              
  Acquisitions, net of cash acquired     242,306     (79,905 )
  Capital expenditures     (28,031 )   (21,678 )
  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     (10,119 )   (4,589 )
   
 
 
Net Cash Provided By (Used In) Investing Activities     757,759     (74,752 )
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     (243 )   (6,829 )
   
 
 
Net Cash Provided By (Used In) Financing Activities     (21,737 )   43,101  
  Discontinued operations     (18,451 )   29,837  
  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.

7


USA INTERACTIVE AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1—ORGANIZATION

        USA Interactive ("USA" or the "Company") (Nasdaq: USAI) is 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 (formerly Hotel Reservations Network (Nasdaq: ROOM); Electronic Commerce Solutions; Styleclick (OTC: IBUY); Precision Response Corporation; and Expedia, Inc. (as of February 4, 2002) (Nasdaq: EXPE). 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 and the results of operations and statement of position of USA Entertainment is now presented as a discontinued operation. See Note 10 for further discussion of the VUE transaction.

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

        Prior to the VUE transaction, a number of USA's businesses were held by two non-wholly owned subsidiaries, Home Shopping Network, Inc. ("Holdco") and USANi LLC. USA maintained 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") and Vivendi, through Universal Studios, Inc ("Universal") and other subsidiaries. In connection with the VUE transaction, all shares of USANi LLC held by Liberty and Vivendi were exchanged for USA shares or cancelled. USA had the contractual right to require the exchange of the Holdco shares held by Liberty for shares of USA, which exchange occurred on June 27, 2002. Following such exchange and after giving effect to the VUE transaction, Holdco and USANi LLC are wholly owned, thereby simplifying USA's corporate and capital 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

8


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.

        Significant estimates underlying the accompanying consolidated financial statements include the inventory carrying adjustment, program rights and film cost amortization (Discontinued operations), sales return and other revenue allowances, allowance for doubtful accounts, recoverability of intangibles and other long-lived assets, estimates of film revenue ultimates (Discontinued operations) 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 $52.8 million.

        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.

9


Accounting by Producers or Distributors of Films (Discontinued Operations)

        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 expense of $9.2 million related to the entertainment assets that were transferred to Vivendi. 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, as amended (the "2001 Form 10-K/A") 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."

10

        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 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

11


been had the transactions actually occurred on the aforementioned dates. Note that the amounts exclude USAB and USA Entertainment, which are presented as discontinued operations (see note 10).

 
   Three Months Ended
March 31,
  
 
   2002
   2001
  
 
   (in thousands, except per share data)

  
Net revenues   $ 1,007,993   $ 877,884  
Earnings (loss) before cumulative effect of accounting change     7,234     (59,835 )
Earnings (loss) before cumulative effect of accounting change available to common shareholders     3,970     (59,835 )
Basic and diluted loss available to common shareholders before cumulative effect of accounting change per common share     —     (0.15 )

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.

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

        The Company operated principally in the following industry segments: 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 (Nasdaq: EXPE); Electronic Commerce Solutions; Styleclick (OTC: IBUY); and Precision Response Corporation.

        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

12


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.

 
   Three Months Ended
March 31,
  
 
   2002
   2001
  
 
   (in thousands)

  
Operating profit (loss)   $ 27,783   $ (53,528 )
  Depreciation and amortization     59,321     103,660  
  Amortization of cable distribution fees     13,000     8,756  
  Amortization of non-cash distribution and marketing     6,964     8,017  
  Amortization of non cash compensation expense     3,808     2,855  
  Disengagement expenses     11,538     —  
   
 
 
  Adjusted EBITDA   $ 122,414   $ 69,670  
   
 
 
Revenues:              
  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  
  Intersegment Elimination     (2,989 )   —  
   
 
 
    Total   $ 971,649   $ 820,662  
   
 
 

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Operating profit (loss):              
  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 )
  Corporate & other     (11,097 )   (12,573 )
  Intersegment elimination     4,059     —  
   
 
 
    Total   $ 27,783   $ (53,528 )
   
 
 
Adjusted EBITDA              
  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 )
  Corporate & other     (8,701 )   (7,937 )
   
 
 
    Total   $ 122,414   $ 69,760  
   
 
 
(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.

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

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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  
Non-current assets     168,993     41,344  
Current liabilities     47,469     32,267  
Non-current 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 $3.6 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 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 $21.3 million and

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$19.6 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 earnings (loss) and basic and diluted net earnings (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) from continuing operations before cumulative effect of accounting change   $ 3,970   $ (43,623 )
Discontinued operations, net of tax     21,930     26,240  
   
 
 
Earnings (loss) before cumulative effect of accounting change     25,900     (17,383 )
Cumulative effect of accounting change (a)     (310,587 )   (9,187 )
   
 
 
Reported net loss     (284,687 )   (26,570 )
Preferred dividend     (1,967 )   —  
   
 
 
Loss available to common shareholders     (286,654 )   (26,570 )
Add back goodwill amortization     —     43,201  
   
 
 
Adjusted net (loss) earnings   $ (286,654 ) $ 16,631  
   
 
 
Earnings (loss) per share:              
Reported earnings (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) earnings 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.

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        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):

 
   Balance at
January 1, 2002
   FX
Translation
   Adoption
of
FAS 142
   Balance at
March 31, 2002
HSN-US     1,174,652     —     —     1,174,652
Ticketing operations     722,786     568     —     723,354
Hotels.com     362,585     —     —     362,585
Expedia     —     —     —     954,181
Precision Response     696,809     —     (384,455 )   312,354
Citysearch and related     58,994     —     (58,994 )   —
Match.com     45,738     —     —     45,738
ECS     —     —     —     —
Styleclick     —     —     —     —
HSN-International     14,267     —     —     14,267
   
 
 
 
    $ 3,075,831   $ 568   $ (443,449 ) $ 3,587,131
   
 
 
 

NOTE 8—SAVOY SUMMARIZED FINANCIAL INFORMATION (Discontinued Operation)

        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

Summary Consolidated Balance Sheets

 
   March 31,
2002
   December 31,
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

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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 63/4% Senior Notes due 2005 (the "Old Notes"). In May 1999, the Old Notes were exchanged in full for $500.0 million of new 63/4% 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.

        As of and for the Three Months Ended March 31, 2002

 
   USA
   Holdco
   USANi
LLC
   Wholly
Owned
Subsidiary
Guarantors
   Non-Guarantor
Subsidiaries
   Eliminations
   USA
Consolidated
  
Current assets   $ —   $ —   $ 1,096,724   $ 285,399   $ 1,236,564   $ (39,938 ) $ 2,578,749  
Property and equipment, net     —     —     23,991     159,587     224,135     —     407,713  
Goodwill and other intangible assets, net     1,430,535     —     2,131     1,056,957     1,807,944     —     4,297,567  
Investment in subsidiaries     3,945,321     1,068,812     5,806,100     —     —     (10,820,233 )   —  
Other assets     174,189     —     65,848     (999,305 )   1,360,664     (29,806 )   571,590  
Net current assets of discontinued operations     —     —     —     142,613     (34,623 )   26,749     134,739  
   
 
 
 
 
 
 
 
Total assets   $ 5,550,045   $ 1,068,812   $ 6,994,794   $ 645,251   $ 4,594,684   $ (10,863,228 ) $ 7,990,358  
   
 
 
 
 
 
 
 
Current liabilities   $ 97,596   $ —   $ 77,139   $ 387,523   $ 858,049   $ (54,595 ) $ 1,365,712  
Long-term debt, less current portion     —     —     498,590     —     45,911     —     544,501  
Other liabilities     182,371     —     388,182     7,776     452,120     (1,006,899 )   23,550  
Minority interest     (4,167 )   —     (414,946 )   156,510     339,449     553,057     629,903  
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  
Net non-current liabilities on discontinued operations     —     —     —     (5,546,917 )   (11,414 )   5,710,778     152,447  
   
 
 
 
 
 
 
 
Total liabilities and shareholders' equity   $ 5,550,045   $ 1,068,812   $ 6,994,794   $ 645,251   $ 4,594,684   $ (10,863,228 ) $ 7,990,358  
   
 
 
 
 
 
 
 

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Revenue   $ —   $ —   $ —   $ 388,845   $ 587,018   $ (4,214 ) $ 971,649  
Operating expenses     894     —     (8,245 )   (377,947 )   (566,472 )   7,904     (943,866 )
Interest expense, net     4,085     —     (8,569 )   (273 )   289     (200 )   (4,668 )
Miscellaneous     (1,009 )   26,823     98,506     417     (10,827 )   (126,042 )   (12,132 )
Provision for income taxes     —     —     —     (893 )   (15,057 )   —     (15,950 )
Minority interest     —     —     —     (48,694 )   (2,284 )   59,915     8,937  
   
 
 
 
 
 
 
 
Net income (loss) from continuing operations     3,970     26,823     81,692     (38,545 )   (7,333 )   (62,637 )   3,970  
Net income (loss) from discontinued operations     21,930     —     —     28,546     (6,616 )   (21,930 )   21,930  
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   $ (9,999 ) $ (324,536 ) $ 226,020   $ (284,687 )
   
 
 
 
 
 
 
 
Cash flows from operations   $ 457,217   $ —   $ (605,653 ) $ (21,748 ) $ 183,770   $ —   $ 13,586  
Cash flows used in investing activities     (33,841 )   —     591,191     (11,992 )   165,401     47,000     757,759  
Cash flows from financing activities     (423,376 )   —     316,103     33,044     99,492     (47,000 )   (21,737 )
Cash flows used by discontinued operations     —     —     —     (7,135 )   (11,316 )   —     (18,451 )
Effect of exchange rate     —     —     —     14     20     —     34  
Cash at the beginning of the period     (1,544 )   —     773,907     3,348     202,666     —     978,377  
   
 
 
 
 
 
 
 
Cash at the end of the period   $ (1,544 ) $ —   $ 1,075,548   $ (4,469 ) $ 640,033   $ —   $ 1,709,568  
   
 
 
 
 
 
 
 

        For the Three Months Ended March 31, 2001

 
   USA
   Holdco
   USANi
LLC
   Wholly
Owned
Subsidiary
Guarantors
   Non-Guarantor
Subsidiaries
   Eliminations
   USA
Consolidated
  
Revenue   $ —   $ —   $ —   $ 388,841   $ 431,821   $ —   $ 820,662  
Operating expenses     (2,519 )   —     (9,765 )   (373,350 )   (488,556 )   —     (874,190 )
Interest expense, net     (6,930 )   —     3,228     (197 )   (282 )   —     (4,181 )
Miscellaneous     (34,174 )   26,465     112,624     1,493     (8,021 )   (104,916 )   (6,529 )
Provision for income taxes     —     —     —     2,120     (6,685 )   —     (4,565 )
Minority interest     —     —     —     (65,239 )   19,048     71,371     25,180  
   
 
 
 
 
 
 
 
Net (loss) income from continuing operations     (43,623 )   26,465     106,087     (46,332 )   (52,675 )   (33,545 )   (43,623 )
Net income (loss) from discontinued operations     26,240     —     —     29,021     (2,781 )   (26,240 )   26,240  
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   $ (14,873 ) $ (67,081 ) $ (50,598 ) $ (26,570 )
   
 
 
 
 
 
 
 
Cash flows from operations   $ (5,031 ) $ —   $ 2,081   $ 21,036   $ 51,632   $ —   $ 69,718  
Cash flows used in investing activities     16,399     —     (377 )   (12,986 )   (77,788 )   —     (74,752 )
Cash flows from financing activities     (11,368 )   —     (18,731 )   (6,422 )   79,622     —     43,101  
Cash flows used by discontinued operations     —     —     —     37,955     (8,118 )   —     29,837  
Effect of exchange rate     —     —     (139 )   195     (3,078 )   —     (3,022 )
Cash at the beginning of the period     —     —     51,911     (2,427 )   194,739     —     244,223  
   
 
 
 
 
 
 
 
Cash at the end of the period   $ —   $ —   $ 34,745   $ 37,351   $ 237,009   $ —   $ 309,105  
   
 
 
 
 
 
 
 

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NOTE 10—DISCONTINUED OPERATIONS

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 VUE 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 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.

        The USA Entertainment Group is presented as a discontinued operation for all periods presented. The revenues the USA Entertainment Group were $405.0 million and $492.1 million in the three months ended March 31, 2002 and 2001, respectively. The net income, net of the effect of minority interest, for the USA Entertainment Group was $21.9 million (net of tax expense of $16.2 million) and $26.2 million (net of tax expense of $21.9 million) in the three months ended 2002 and 2001, respectively. During the three months ended March 31, 2001, USA Entertainment Group recorded expense of $9.2 million related to the cumulative effect of adoption of Statement of Position 00-2 "Accounting By Producers or Distributors of Films."

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SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 on Form 10-Q/A to its Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

July 24, 2002

    USA INTERACTIVE

 
 
By:
/s/  WILLIAM J. SEVERANCE      
Name: William J. Severance
Title: Vice President and Controller
(Chief Accounting Officer)

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USA INTERACTIVE AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
USA INTERACTIVE AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
USA INTERACTIVE AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited)
USA INTERACTIVE AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
USA INTERACTIVE AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
USA INTERACTIVE AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
SIGNATURES