Hospitality Net

Hospitality Net - Article
For more news visit: http://www.hospitalitynet.org

IAC Reports Fourth Quarter Results | IAC Travel grew U.S. revenue by 20%

17 February 2005

NEW YORK, IAC/InterActiveCorp (NASDAQ:IACI) reported fourth quarter results today. Revenue totaled $1.7 billion, up 9% on a comparable net basis. Operating Income Before Amortization was $324 million, up 11%, or 20% excluding a supplier liability adjustment in the prior year period (see page 3 for further detail). Adjusted Net Income was $250 million and Adjusted EPS was $0.33 (see page 14 for an explanation of comparable net revenue and definitions of non-GAAP measures).

On a GAAP basis, operating loss was $32 million, net loss was $46 million, and Diluted EPS was $(0.07), all adversely impacted by a $185 million impairment charge related to Teleservices goodwill and a $33 million impairment charge related to certain intangible assets of TV Travel Shop. These charges impacted Diluted EPS by $0.28 per share.

                                 SUMMARY RESULTS
                         $ in millions, except per share

                              Q4 2004 Q4 2003 Growth FY 2004 FY 2003 Growth
    Revenue on a comparable
     net basis (see p. 14
     for explanation)          $1,716  $1,573    9%   $6,193  $5,388   15%
    Revenue                    $1,716  $1,805   -5%   $6,193  $6,328   -2%
    Operating Income Before
     Amortization                $324    $292   11%   $1,024    $860   19%
    Operating  (Loss) Income     $(32)   $179   NM      $233    $400  -42%
    Adjusted Net Income          $250    $228   10%     $747    $620   20%
    Adjusted EPS                $0.33   $0.29   14%    $0.97   $0.81   21%
    Net (Loss) Income            $(46)   $153   NM      $152    $154   -2%
    GAAP Diluted EPS           $(0.07)  $0.20   NM     $0.20   $0.23  -11%


                             SEGMENT RESULTS

Segment results for the fourth quarter ended December 31 were as follows ($ in millions):

                                            Q4 2004      Q4 2003     Growth
  REVENUE
    IAC Travel (on a comparable net basis)   $496.5       $445.3       11%
    Electronic Retailing                      703.3        647.1        9%
    Ticketing                                 188.9        183.0        3%
    Personals                                  50.9         47.9        6%
    IAC Local and Media Services              160.1        147.5        9%
    Financial Services and Real Estate         57.5         31.4       83%
    Teleservices                               75.0         78.2       -4%
    Intersegment elimination                  (16.4)        (7.9)    -108%
    Total                                  $1,715.7     $1,572.6        9%

    As reported:
      IAC Travel                             $496.5       $677.4      -27%
      Total                                $1,715.7     $1,804.6       -5%

  OPERATING (LOSS) INCOME
    IAC Travel                                $80.9       $108.3       -25%
    Electronic Retailing                       74.9         52.4        43%
    Ticketing                                  31.6         29.2         8%
    Personals                                   5.4          1.5       269%
    IAC Local and Media Services               50.1         40.5        24%
    Financial Services and Real Estate         (2.7)       (11.6)       77%
    Teleservices                             (181.0)         6.6        NM
    Corporate and other                       (91.5)       (48.4)      -89%
    Total                                    $(32.2)      $178.6        NM

  OPERATING INCOME BEFORE AMORTIZATION
    IAC Travel                               $154.2       $150.2         3%
    Electronic Retailing                       88.5         66.0        34%
    Ticketing                                  38.3         34.6        11%
    Personals                                   7.2          8.3       -13%
    IAC Local and Media Services               56.7         54.8         3%
    Financial Services and Real Estate          6.2         (1.7)       NM
    Teleservices                                3.8          6.6       -42%
    Corporate and other                       (31.0)       (27.2)      -14%
    Total                                    $323.9       $291.5        11%

Q4 growth rates were adversely impacted by a $22.4 million supplier liability adjustment in Q4 2003 which positively impacted IACT revenue, operating income and Operating Income Before Amortization. Excluding that adjustment, IACT revenue (on a comparable net basis) and Operating Income Before Amortization would have grown by 17% and 21%, respectively, and IAC overall revenue (on a comparable net basis) and Operating Income Before Amortization would have grown by 11% and 20%, respectively. Operating income growth rates were further impacted by Q4 2004 impairment charges of $32.7 million at TV Travel Shop and $184.8 million at Teleservices. Excluding the supplier liability adjustment in the prior year period and both impairment charges in the current period, IAC overall operating income would have grown by 19%. Please see page 12 for further segment detail and reconciliations of Operating Income Before Amortization to the comparable GAAP measure.

DISCUSSION OF FOURTH QUARTER FINANCIAL AND OPERATING RESULTS IAC TRAVEL

IACT grew revenue by 11% on a comparable net basis to $496.5 million, driven primarily by the merchant hotel, air and packages businesses, all of which benefited from the inclusion of Hotwire as of November 5, 2003. Revenue in 2003 was favorably impacted by a $22.4 million net reduction to estimated supplier liabilities. Excluding this adjustment, revenue on a comparable net basis would have increased by 17%. IACT's international revenue grew 54%, or 44% on a local currency basis, to $104 million, driven by strong growth from the UK, German and Canada websites, as well as the acquisitions of Anyway.com and Expedia Corporate Travel-Europe. Merchant hotel room nights stayed, including rooms delivered as a component of packages, increased 9% to 7.4 million, driven primarily by continued growth in the international businesses and the inclusion of Hotwire. Revenue per room night increased 6%, driven primarily by increases in average daily room rates, partially offset by a decline in merchant hotel raw margins (defined as merchant hotel net revenue as a percent of merchant hotel gross bookings). IACT's U.S. merchant hotel business continues to operate in a more challenging environment than in the prior year period, due primarily to increased competition from third party distributors, increased promotion by hotel chains of their own direct sites and higher overall occupancy rates, resulting in decreased availability of favorably priced inventory compared with the prior year period. These trends are generally expected to continue. Overall revenue margins (defined as net revenue as a percent of gross bookings) declined by 60 basis points excluding the supplier liability adjustment in the prior year period, due primarily to lower air revenue per transaction and lower merchant hotel raw margins, partially offset by higher merchant hotel average daily rates. While air revenue per transaction was lower, air transaction volume increased over the prior year period, driven by domestic and international ticket sales and the inclusion of Hotwire. IACT grew Operating Income Before Amortization by 3% to $154.2 million, or by 21% excluding the supplier liability adjustment in the prior year period, resulting primarily from profitability at Expedia Europe, margin improvement at Interval and the inclusion of Hotwire. Selling and marketing expense increased 8%, driven by higher international investment, partially offset by a domestic decline. Operating income decreased 25% to $80.9 million, due mainly to a $32.7 million impairment charge related to the write down of certain intangible assets of TV Travel Shop in Q4 2004. Excluding that charge and the supplier liability adjustment in the prior year period, operating income would have grown 32%. ELECTRONIC RETAILING HSN U.S. grew revenue by 8% to $562.9 million, driven primarily by a 6% increase in average price point and a 150 basis point decline in overall return rates, resulting primarily from a higher sales mix of Home Fashions and a lower sales mix of Jewelry. HSN.com increased revenues by 25% over the prior year period. HSN U.S. grew Operating Income Before Amortization by 20% to $68.4 million and operating income by 26% to $55.1 million, resulting primarily from higher revenue and a 50 basis point increase in gross profit margins which was due mainly to the product mix shift. This was partially offset by increased customer service costs, including expenses relating to HSN's new Tennessee distribution facility, and increased contribution from the infomercial and catalog businesses, which have relatively lower operating margins. HSN International increased revenue by 12% to $140.4 million, or 2% on a local currency basis, driven primarily by Euvia and HSN's new Quiz TV venture in the UK, partially offset by decreased revenues at HSN Germany. Euvia's strong growth was driven by higher revenue per call and expanded call volumes from Austria and Switzerland, amid increased competition. HSN Germany continues to experience weakness, particularly in its Wellness category. HSN International grew Operating Income Before Amortization by 124% to $20.1 million and operating income by 129% to $19.8 million, resulting primarily from higher revenue and a restructuring benefit related to a former business in the UK. TICKETING Ticketing grew revenue by 3% to $188.9 million, driven mainly by increased international ticket volume. Average revenue per ticket was down slightly over the prior year period, resulting from a higher mix of international tickets, partially offset by an increase in domestic average revenue per ticket. International revenue increased 32%, or 22% on a local currency basis, on increased ticket volumes resulting primarily from acquisitions in Sweden and Finland and record ticket sales in the UK. Domestic revenue and ticket volume declined, mainly due to the weak concert environment and the NHL strike. Ticketing grew Operating Income before Amortization by 11% to $38.3 million and operating income by 8% to $31.6 million, primarily due to higher revenues and distribution efficiencies, partially offset by higher technology expenses. As the company continues to develop enhanced products to sell more tickets for its clients, technology expenses are expected to increase; ticket royalties are also expected to continue to increase. In addition, the NHL lockout is expected to adversely impact results in the near term. PERSONALS Personals grew revenue by 6% to $50.9 million, driven primarily by a 5% increase in paid subscribers. International paid subscribers grew 37%, excluding declines at uDate. Personals Operating Income Before Amortization declined 13% to $7.2 million, resulting primarily from higher customer acquisition costs and expenses associated with the elimination of certain non-core products. Operating income grew 269% to $5.4 million, reflecting decreased non-cash distribution and marketing expense and amortization of intangibles. IAC LOCAL AND MEDIA SERVICES IAC Local and Media Services grew revenue by 9% to $160.1 million, driven primarily by the inclusion of TripAdvisor and ServiceMagic as of April 27, 2004 and September 1, 2004, respectively, and by higher revenue at Citysearch, partially offset by lower revenue at EPI. Citysearch grew revenue by 49% over the prior year period, driven by both the addition of new Pay-For-Performance merchants and increased traffic. EPI revenue decreased by 6% driven by declines in EPI's local fundraising channels resulting primarily from increased competition, offset partially by growth in its consumer and merchant businesses, including EPI's online business. EPI is a highly seasonal business that sells the majority of its products in Q4. IAC Local and Media Services grew Operating Income Before Amortization by 3% to $56.7 million and operating income by 24% to $50.1 million, driven primarily by the inclusion of TripAdvisor and reduced losses at Citysearch, partially offset by a decline at EPI. FINANCIAL SERVICES AND REAL ESTATE Financial Services and Real Estate grew revenue by 83% to $57.5 million, driven primarily by acquisitions, including HomeLoanCenter (also called LendingTree Loans) and iNest, as of December 15, 2004 and October 28, 2004, respectively, and growth in existing business lines. Revenue from purchase mortgages, refinance mortgages, home equity, and real estate transactions grew organically by 91%, 17%, 13%, and 34%, respectively. The number of loan and real estate requests transmitted increased by 41%, resulting primarily from acquisitions and growth in the mortgage and real estate categories. While the total number of closings declined by 1% over the prior year, the dollar volume of closed transactions increased by 24% reflecting a higher mix of purchase mortgage and real estate transactions, which have higher per-transaction amounts than other products, such as refinance mortgages, home equity and auto loans. Financial Services and Real Estate Operating Income Before Amortization was $6.2 million versus a loss of $1.7 million in the prior year period and the operating loss narrowed to $2.7 million from $11.6 million in the prior year period, primarily driven by higher revenues, partially offset by higher marketing expense and overhead related to acquisitions. TELESERVICES Teleservices revenue declined by 4% to $75.0 million, primarily reflecting the loss of two key clients that are no longer outsourcing their customer care, partially offset by growth in existing client programs and new business. In consideration of continued competition and macroeconomic factors which have negatively impacted industry valuations, Teleservices recorded a $184.8 million impairment charge related to the write down of goodwill in Q4. Teleservices Operating Income Before Amortization decreased by 42% to $3.8 million, due primarily to lower revenue, pricing pressure resulting in lower contribution margins, and higher fixed costs as a result of certain employee related charges, partially offset by lower depreciation expense. Teleservices recorded an operating loss of $181.0 million versus operating income of $6.6 million in the prior year period, due primarily to the impairment charge related to goodwill and other factors referenced above. OTHER IAC recognized non-cash compensation expense of $38.3 million in Q4 2004 related to IAC's mergers with its formerly publicly traded subsidiaries, which were completed in 2003. The effective tax rate for continuing operations in Q4 2004 was higher than the federal statutory rate of 35% due principally to the impairment of goodwill that is not deductible for tax purposes, state and local taxes, the amortization of non-deductible intangible assets and the recognition of a valuation allowance on tax losses, partially offset by the benefit of utilization of foreign tax credits. The effective tax rate for adjusted net income was 29% in Q4 2004 compared to 28% in Q4 2003. The effective tax rate in Q4 2004 for adjusted net income was lower than the federal statutory rate of 35% due principally to the benefit of utilization of foreign tax credits, offset by state and local taxes. The effective tax rate for continuing operations and for adjusted net income in Q4 2003 was lower than the federal statutory rate due to the reversal of certain tax accruals and other tax benefits.

                       SEGMENT OPERATING METRICS

  IAC TRAVEL                                Q4 2004     Q4 2003     Growth
     Gross Bookings By Geography (mm):
         Domestic                            $2,350      $2,076       13%
         International                          621         374       66%
         Total                               $2,971      $2,450       21%

     Net Revenue By Geography (mm):     (a)
         Domestic                              $392        $378        4%
         International                          104          68       54%
         Total                                 $496        $445       11%

     Gross Bookings by Brand (mm):
         Expedia                             $2,409      $1,914       26%
         Hotels.com                             350         363       -4%
         Other                                  211         173       22%
         Total                               $2,971      $2,450       21%

     Gross Bookings by Agency / Merchant (mm):
         Agency                              $1,776      $1,441       23%
         Merchant                             1,195       1,009       18%
         Total                               $2,971      $2,450       21%

     Packages revenue (mm)                      $95         $82       15%
     Number of transactions (mm)        (b)     7.6         6.5       17%
     Merchant hotel room nights (mm)    (c)     7.4         6.8        9%

     INTERVAL:
         Members (000s)                       1,696       1,594        6%
         Confirmations (000s)                   181         175        3%
         Share of confirmations online        19.4%       17.0%

  HSN - U.S. (Households as of end of period)
     Units Shipped (mm)                        11.7        11.7        0%
     Gross Profit %                           36.6%       36.1%
     Return Rate                              15.8%       17.3%
     Average price point                     $51.99      $49.05        6%
     Product mix:
         Home Hard Goods                        35%         35%
         Home Fashions                          15%         12%
         Jewelry                                19%         23%
         Health / Beauty                        22%         22%
         Apparel / Accessories                   9%          9%
     HSN total homes (mm)                      85.7        81.2        6%
     HSN/ America's Store FTEs (mm)            74.1        71.5        4%
     HSN.com % of Sales                         17%         15%

  TICKETING
     Number of tickets sold (mm)               25.7        25.0        3%
     Gross value of tickets sold (mm)        $1,288      $1,255        3%

  PERSONALS
     Paid Subscribers (000s)                  982.8       939.4        5%

  FINANCIAL SERVICES & REAL ESTATE      (d)
     Loan/Real Estate Requests
      transmitted:
         Number (000s)                        633.7       448.5       41%
         Volume of Requests (bn)              $80.8       $37.0      118%
     Loan/Real Estate Transactions
      closed in Quarter:
         Number (000s)                         67.7        68.4       -1%
         Volume of
          Transactions Closed (bn)             $8.3        $6.7       24%
     Transmit Rate                      (e)    76.9%       65.3%
     Static Pool Close Rate             (f)    14.1%       13.1%
     Number of Lenders                  (g)     312         294        6%
     Number of Real Estate
      Brokerages                        (h)     767         695       10%


  Note:  rounding differences may exist.
  (a) Represents revenue as if Hotels.com revenue was presented on a net
       basis in 2003.

  (b) Transactions are reported as booked.

  (c) Merchant room nights are reported as stayed for Expedia and
      Hotels.com, and booked for Hotwire.

  (d) Data is for the LendingTree exchange (lending and real estate), plus
      recent acquisitions including HomeLoanCenter, iNest, GetSmart, and
      ServiceMagic as of the acquisition dates of 12/15/04, 10/28/04,
      12/10/03 and 9/1/04, respectively.

  (e) Represents the percentage of completed qualification forms ("QF")
      successfully transmitted to at least one lender or real estate service
      provider.

  (f) Static pool close rate represents the % of QFs that result in a closed
      loan and is calculated by matching closed transactions to the month in
      which the QF originated.

  (g) Represents unduplicated lenders for LendingTree, GetSmart (as of
      12/10/03) and ServiceMagic (as of 9/1/04).

  (h) Does not include ServiceMagic real estate agents.


                        GAAP FINANCIAL STATEMENTS

   IAC CONSOLIDATED STATEMENT OF OPERATIONS
   (unaudited; $ in thousands except per share amounts)

                                Three Months Ended     Twelve Months Ended
                                   December 31,            December 31,
                                 2004        2003        2004        2003

  Service revenue              $881,577  $1,016,733  $3,595,898  $3,896,148
  Product sales                 834,134     787,870   2,596,782   2,431,970
      Net revenue             1,715,711   1,804,603   6,192,680   6,328,118
  Cost of sales-service
   revenue                      331,764     516,805   1,331,173   2,068,286
  Cost of sales-product sales   464,682     442,121   1,492,779   1,400,753
      Gross profit              919,265     845,677   3,368,728   2,859,079

  Selling and marketing
   expense                      286,158     265,532   1,203,370     929,445
  General and administrative
   expense                      207,276     203,071     746,853     711,781
  Other operating expense        38,917      29,266     142,360     116,413
  Amortization of cable
   distribution fees             16,523      18,588      70,590      68,902
  Amortization of non-cash
   distribution and marketing
   expense                        3,702       6,747      18,030      51,432
  Amortization of non-cash
   compensation expense          59,571      21,991     241,726     128,185
  Amortization of intangibles   108,042      83,900     347,457     268,504
  Depreciation expense           49,350      38,080     179,514     172,453
  Restructuring                  (2,879)       (362)      1,542          21
  Merger costs                       (0)        295         -        11,760
  Goodwill impairment           184,780         -       184,780         -
      Operating (loss) income   (32,175)    178,569     232,506     400,183

  Other income (expense):
    Interest income              50,166      45,291     191,679     175,822
    Interest expense            (23,796)    (25,654)    (87,388)    (92,913)
    Equity in the income
     (losses) of VUE              4,895       2,393      16,188    (224,468)
    Equity in the income of
     unconsolidated
     subsidiaries and other       8,798      10,666      25,691       3,767
  Total other income
   (expense), net                40,063      32,696     146,170    (137,792)

  Earnings from continuing
   operations before income
   taxes and minority interest    7,888     211,265     378,676     262,391
    Income tax expense          (45,988)    (60,066)   (179,186)    (70,691)
    Minority interest in income
     of consolidated
     subsidiaries                (3,018)     (2,640)    (13,729)    (65,043)
  (Loss) earnings from
   continuing operations        (41,118)    148,559     185,761     126,657
    Income (loss) from
     discontinued operations,
     net of tax                  (1,485)      7,459     (20,900)     40,739
  (Loss) earnings before
   preferred dividends          (42,603)    156,018     164,861     167,396
  Preferred dividends            (3,263)     (3,263)    (13,053)    (13,055)
  Net (loss) earnings
   available to common
   shareholders                $(45,866)   $152,755    $151,808    $154,341

  Earnings (loss) per share
     Basic (loss) earnings
      per share from
      continuing operations      $(0.06)      $0.21       $0.25       $0.19
     Diluted (loss) earnings
      per share from
      continuing operations      $(0.06)      $0.19       $0.23       $0.17

     Basic (loss) earnings
      per share                  $(0.07)      $0.22       $0.22       $0.26
     Diluted (loss) earnings
      per share                  $(0.07)      $0.20       $0.20       $0.23


   IAC CONSOLIDATED BALANCE SHEET
   (unaudited; $ in thousands)

                                             December 31,      December 31,
                                                 2004              2003
                     ASSETS
   CURRENT ASSETS
   Cash and cash equivalents                  $1,157,462          $899,062
   Restricted cash and cash equivalents           41,377            31,356
   Marketable securities                       2,409,745         2,419,735
   Accounts and notes receivable, net            550,867           429,424
   Loans available for sale, net                 206,256               -
   Inventories, net                              240,977           215,995
   Deferred income tax                           110,039            65,071
   Other current assets                          168,029           154,333
   Total current assets                        4,884,752         4,214,976

   Computer and broadcast equipment              801,712           686,899
   Buildings and leasehold improvements          166,202           155,212
   Furniture and other equipment                 161,932           154,378
   Land                                           21,168            21,172
   Projects in progress                           71,283            30,962
                                               1,222,297         1,048,623
   Less: accumulated depreciation and
    amortization                                (707,780)         (575,446)
   Total property, plant and equipment           514,517           473,177

   Goodwill                                   11,433,746        11,273,635
   Intangible assets, net                      2,333,663         2,513,889
   Long-term investments                       1,609,335         1,426,502
   Preferred interest exchangeable for
    common stock                               1,428,530         1,428,530
   Cable distribution fees, net                   80,525           128,971
   Notes receivable and advances, net
    of current portion                               615            14,507
   Deferred charges and other                    112,842            93,928
   Non-current assets of discontinued
    operations                                       340               340
   TOTAL ASSETS                              $22,398,865       $21,568,455

             LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES
   Current maturities of long-term
    obligations and short-term
    borrowings                                  $565,273            $2,850
   Accounts payable, trade                       811,874           687,977
   Accounts payable, client accounts             176,921           142,002
   Cable distribution fees payable                39,703            39,142
   Deferred merchant bookings                    361,199           218,822
   Deferred revenue                              104,611           180,229
   Income tax payable                             77,528            96,817
   Other accrued liabilities                     499,300           494,280
   Current liabilities of discontinued
    operations                                     9,306            16,062
   Total current liabilities                   2,645,715         1,878,181

   Long-term obligations, net of
    current maturities                           796,715         1,120,097
   Other long-term liabilities                   151,580            67,981
   Deferred income taxes                       2,479,099         2,446,394
   Common stock exchangeable for
    preferred interest                         1,428,530         1,428,530
   Minority interest                             291,922           211,687

   SHAREHOLDERS' EQUITY
   Preferred stock                                   131               131
   Common stock                                    6,970             6,790
   Class B convertible common stock                  646               646
   Additional paid-in capital                 14,058,797        13,634,926
   Retained earnings                           2,428,760         2,276,952
   Accumulated other comprehensive
    income                                        81,051            36,896
   Treasury stock                             (1,966,053)       (1,535,758)
   Note receivable from key executive
    for common stock issuance                     (4,998)           (4,998)
   Total shareholders' equity                 14,605,304        14,415,585
   TOTAL LIABILITIES AND SHAREHOLDERS'
    EQUITY                                   $22,398,865       $21,568,455


   IAC STATEMENT OF CASH FLOWS
   (unaudited; $ in thousands)

                                            Twelve Months Ended December 31,
                                                 2004              2003
  Cash flows from operating activities:
  Earnings from continuing operations           $185,761          $126,657
  Adjustments to reconcile net
   income to net cash provided by
   operating activities:
     Depreciation and amortization               526,971           440,957
     Goodwill impairment                         184,780               -
     Amortization of non-cash
      distribution and marketing
      expense                                     18,030            51,432
     Amortization of non-cash
      compensation expense                       241,726           128,185
     Amortization of cable distribution
      fees                                        70,590            68,902
     Amortization of deferred financing
      costs                                          161             2,641
     Deferred income taxes                       (29,277)         (169,655)
     Loss on retirement of bonds                     -               8,639
     Equity in (income) loss of
      unconsolidated subsidiaries,
      including VUE                              (32,042)          220,823
     Non-cash interest income                    (41,703)          (43,250)
     Minority interest                            13,729            65,043
     Increase in cable distribution
      fees                                       (22,348)          (28,349)
  Changes in current assets and liabilities:
     Accounts receivable and notes               (70,427)          (73,303)
     Inventories                                 (23,079)           (6,083)
     Prepaids and other assets                    (2,071)          (20,309)
     Accounts payable and accrued
      liabilities                                151,764           409,493
     Deferred revenue                             26,023            75,697
     Deferred merchant bookings                   54,872            69,474
     Funds collected by Ticketmaster on
      behalf of clients, net                      15,335             1,683
     Other, net                                    4,433           (24,009)
  Net cash provided by operating activities    1,273,228         1,304,668
  Cash flows from investing activities:
     Acquisitions, net of cash acquired         (486,033)       (1,092,009)
     Capital expenditures                       (223,787)         (186,865)
      (Increase) decrease in long-term
       investments and notes receivable          (46,764)              735
     Purchase of marketable securities        (3,373,143)       (7,197,329)
     Proceeds from sale of marketable
      securities                               3,370,147         6,700,291
     Other, net                                    6,386             5,105
  Net cash used in investing activities         (753,194)       (1,770,072)
  Cash flows from financing activities:
     Borrowings                                   23,378               -
     Principal payments on long-term
      obligations                                 (4,339)          (28,033)
     Purchase of treasury stock, by IAC
      and subsidiaries                          (430,295)       (1,485,955)
     Repurchase of 1998 Senior Notes                 -            (101,379)
     Purchase of Vivendi warrants                    -            (407,398)
     Tax withholding payments on
      retired Expedia warrants                       -             (32,247)
     Proceeds from subsidiary stock,
      including stock options                        -              57,358
     Proceeds from issuance of common
      stock, including stock options             147,283         1,430,053
     Preferred dividends                         (13,053)          (13,055)
     Other, net                                   17,380            13,016
  Net cash used in financing activities         (259,646)         (567,640)
  Net Cash Used in Discontinued Operations       (17,528)          (85,632)
  Effect of exchange rates changes
   on cash and cash equivalents                   15,540            19,624
  Net Increase (Decrease) in Cash
   and Cash Equivalents                          258,400        (1,099,052)
  Cash and cash equivalents at
   beginning of period                           899,062         1,998,114
  Cash and Cash Equivalents at End of Period  $1,157,462          $899,062


                           DILUTIVE SECURITIES

IAC has various tranches of dilutive securities (warrants, convertible preferred, and options), including securities initially issued by its former public subsidiaries which have been converted to IAC securities. The table below details these securities as well as potential dilution at various stock prices (amounts in millions, except average strike/conversion price):

                            Avg.
                           Strike /   As of
                  Shares Conversion  2/10/05         Dilution at:
  Average Share
   Price                             $23.71  $25.00  $30.00  $35.00  $40.00

  Absolute Shares
   as of 2/10/05  698.6               698.6   698.6   698.6   698.6   698.6

  RSUs             13.0                13.0    13.0    13.0    13.0    13.0
  Options          76.7    $11.77      27.3    28.2    31.1    33.1    34.6
  Warrants         73.2    $24.79       9.2     9.9    14.0    19.3    25.5
  Convertible
   Preferred       19.4    $33.75       0.0     0.0     0.0    19.4    20.2
                         (initial)
  Total Treasury
   Method Dilution                     49.5    51.1    58.1    84.8    93.3
    % Dilution                          6.6%    6.8%    7.7%   10.8%   11.8%
  Total Treasury
   Method Diluted
   Shares Outstanding                 748.2   749.8   756.7   783.4   791.9

IAC has outstanding approximately 14.1 million shares of restricted stock and restricted stock units ("RSUs"), which generally vest over five years from date of grant, including 4.8 million issued in 2005, and including 1.1 million which will be settled in cash and therefore have no dilutive effect. LIQUIDITY AND CAPITAL RESOURCES As of December 31, 2004, IAC had $3.6 billion in cash and marketable securities. This includes $142.2 million in net funds collected on behalf of clients by Ticketmaster and $488.7 million in combined deferred merchant bookings and deferred revenue at IAC Travel. As of December 31, 2004, IAC had total debt of $1.4 billion, $565.3 million of which is included in current maturities. Total debt consists mainly of 7.00% Senior Notes due 2013, 6.75% Senior Notes due 2005, and short-term borrowings at LendingTree Loans, and does not include IAC's convertible preferred stock with a balance sheet carrying value based on the par value of $0.01 per share and a face value of $656 million. The convertible preferred is initially convertible at $33.75 (subject to downward adjustment if the price of IAC common stock is more than $35.10 at the time of conversion).


               RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

   IAC RECONCILIATION OF GAAP EPS TO ADJUSTED EPS - Q4 AND FULL YEAR
   (unaudited; in thousands except per share amounts)

                                     Three Months Ended  Twelve Months Ended
                                         December 31,        December 31,
                                       2004      2003      2004      2003

  Diluted (loss) earnings
   per share (a)                       ($0.07)    $0.20     $0.20     $0.23
  GAAP diluted weighted average
   shares outstanding                 694,493   786,761   742,423   643,331

  Net (loss) income                  $(45,866) $152,755  $151,808  $154,341
  Amortization of distribution and
   marketing expense                    3,702     6,747    18,030    51,432
  Amortization of compensation
   expense                             59,571    21,991   241,726   128,185
  Amortization of intangibles         108,042    83,900   347,457   268,504
  Goodwill impairment                 184,780       -     184,780       -
  Merger costs (b)                         (0)      295       -      11,760
  Discontinued Operations,
   net of tax (c)                       1,485    (7,459)   20,899   (40,739)
  Equity in the (income)
   losses of VUE (d)                   (4,895)   (2,393)  (16,188)  224,468
  Impact of pro forma adjustments,
   income taxes and minority
   interest (e)                       (59,664)  (30,907) (214,533) (191,011)
  Preferred dividends                   3,263     3,263    13,053    13,055
  Adjusted Net Income                $250,418  $228,192  $747,032  $619,995

  Adjusted EPS weighted average
   shares outstanding                 761,056   790,264   768,956   770,141

  Adjusted EPS                          $0.33     $0.29     $0.97     $0.81

  GAAP Basic weighted average shares
   outstanding                        694,493   706,817   695,979   600,063
    Options, warrants and restricted
     stock, treasury method               -      60,510    46,444    43,268
    Conversion of preferred shares to
     common (if applicable)               -      19,434       -         -
  GAAP Diluted weighted average
   shares outstanding                 694,493   786,761   742,423   643,331

    Pro forma adjustments                 -         -         -     104,431
    Options, warrants and RS, treasury
     method not included in diluted
     shares above                      38,670       -         -         -
    Convertible preferred; add'l
     restricted shares for adjusted
     EPS                               27,893     3,503    26,533    22,379
  Adjusted EPS shares
   outstanding (f)                    761,056   790,264   768,956   770,141


   IAC RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
   (unaudited; in millions)

                                          Twelve Months Ended December 31,
                                               2004              2003
  Net Cash Provided by Operating Activities  $1,273.2          $1,304.7
    Capital expenditures                       (223.8)           (186.9)
    Tax distributions from VUE                    4.6               1.4
    Preferred dividend paid                     (13.1)            (13.1)
  Free Cash Flow                             $1,041.0          $1,106.2

For the twelve months ended December 31, free cash flow decreased by $65.2 million due primarily to increases in cash taxes paid, lower contribution to working capital from deferred merchant bookings and deferred revenue at IAC Travel, and higher capital expenditures. In addition, free cash flow was negatively impacted by increases in loans held for sale at LendingTree Loans not included in the prior year period. Deferred merchant bookings and deferred revenue at IAC Travel contributed $81.8 million to the change in working capital during the period, versus $135.8 million in the prior year. Ticketmaster client cash contributed $15.3 million to the change in working capital in the current period, versus $1.7 million in the prior year. Please see pages 13 and 14 for footnotes and definitions of non-GAAP measures.

   IAC RECONCILIATION OF DETAILED SEGMENT RESULTS TO GAAP - Q4 AND FULL YEAR
   (unaudited; $ in millions; rounding differences may occur)

                                             Q4                  FY
                                       2004      2003      2004      2003
  Revenue
    IAC Travel                        $496.5    $677.4  $2,116.5  $2,610.1
    Electronic Retailing:
      HSN U.S.                         562.9     521.3   1,905.9   1,763.7
      HSN International                140.4     125.7     476.3     466.7
      Total Electronic Retailing       703.3     647.1   2,382.2   2,230.4
    Ticketing                          188.9     183.0     768.2     743.2
    Personals                           50.9      47.9     198.0     185.3
    IAC Local and Media Services       160.1     147.5     294.7     230.3
    Financial Services and Real Estate  57.5      31.4     189.8      55.8
    Teleservices                        75.0      78.2     293.9     294.3
    Intersegment elimination           (16.4)     (7.9)    (50.6)    (21.3)
  Total Revenue                     $1,715.7  $1,804.6  $6,192.7  $6,328.1

  Operating Income Before Amortization
    IAC Travel                        $154.2    $150.2    $627.3    $523.8
    Electronic Retailing:
      HSN U.S. (g)                      68.4      57.0     194.7     168.3
      HSN International                 20.1       9.0      39.2      32.6
      Total Electronic Retailing        88.5      66.0     233.9     200.9
    Ticketing                           38.3      34.6     164.3     144.5
    Personals                            7.2       8.3      27.6      31.0
    IAC Local and Media Services        56.7      54.8      26.5      26.2
    Financial Services and Real Estate   6.2      (1.7)     21.4       1.2
    Teleservices                         3.8       6.6      17.1      12.5
    Interactive Development             (2.2)     (0.8)     (6.2)     (3.8)
    Corporate Expense and other
     adjustments                       (28.8)    (26.4)    (87.8)    (75.5)
    Intersegment Elimination             0.0       0.0       0.4      (0.8)
  Total Operating Income Before
   Amortization                       $323.9    $291.5  $1,024.5    $860.1

  Amortization and merger costs (b)
    IAC Travel                         $73.3     $41.9    $198.3    $176.8
    Electronic Retailing:
      HSN U.S.                          13.2      13.2      52.9      50.8
      HSN International                  0.3       0.3       1.3       1.3
      Total Electronic Retailing        13.6      13.6      54.2      52.1
    Ticketing                            6.8       5.3      26.4      28.0
    Personals                            1.8       6.8       8.7      16.9
    IAC Local and Media Services         6.6      14.3      50.0      55.6
    Financial Services and Real Estate   8.8       9.9      29.0      17.7
    Teleservices                       184.8       -       184.8       -
    Interactive Development              3.4      (0.0)      3.9       2.1
    Corporate Expense and other
     adjustments                        57.1      21.1     236.6     110.5
  Total amortization and merger
   costs                              $356.1    $112.9    $792.0    $459.9

  Operating (Loss) Income
    IAC Travel                         $80.9    $108.3    $429.0    $347.0
    Electronic Retailing:
      HSN U.S. (g)                      55.1      43.8     141.7     117.5
      HSN International                 19.8       8.7      37.9      31.3
      Total Electronic Retailing        74.9      52.4     179.6     148.8
    Ticketing                           31.6      29.2     137.9     116.5
    Personals                            5.4       1.5      18.8      14.1
    IAC Local and Media Services        50.1      40.5     (23.6)    (29.4)
    Financial Services and Real Estate  (2.7)    (11.6)     (7.6)    (16.5)
    Teleservices                      (181.0)      6.6    (167.7)     12.5
    Interactive Development             (5.7)     (0.8)    (10.1)     (5.9)
    Corporate Expense and other
     adjustments                       (85.8)    (47.6)   (324.4)   (186.0)
    Intersegment Elimination             0.0       0.0       0.4      (0.8)
  Total operating (loss) income        (32.2)    178.6     232.5     400.2
    Total other income (expense), net   40.1      32.7     146.2    (137.8)
    Earnings from cont. operations
     before income taxes and min. int.   7.9     211.3     378.7     262.4
    Income tax expense                 (46.0)    (60.1)   (179.2)    (70.7)
    Minority interest                   (3.0)     (2.6)    (13.7)    (65.0)
    (Loss) earnings from continuing
     operations                        (41.1)    148.6     185.8     126.7
    Discontinued Operations, net of
     tax                                (1.5)      7.5     (20.9)     40.7
    (Loss) earnings before preferred
     dividends                         (42.6)    156.0     164.9     167.4
    Preferred dividends                 (3.3)     (3.3)    (13.1)    (13.1)
    Net (loss) income available to
     common shareholders              $(45.9)   $152.8    $151.8    $154.3

  Supplemental: Depreciation expense
    IAC Travel                         $10.8      $4.8     $41.5     $39.4
    Electronic Retailing:
      HSN U.S. (g)                      11.4      10.5      42.2      44.3
      HSN International                  3.2       3.3      12.1      11.4
      Total Electronic Retailing        14.7      13.7      54.4      55.8
    Ticketing                            9.7       8.1      33.4      30.3
    Personals                            4.8       2.1      14.8      10.7
    IAC Local and Media Services         2.6       1.8       8.2       5.7
    Financial Services and Real Estate   0.9       0.8       3.5       1.2
    Teleservices                         4.0       5.2      17.7      23.5
    Corporate expense and other
     adjustments                         1.9       1.6       6.0       5.8
  Total depreciation expense           $49.3     $38.1    $179.5    $172.5


                                FOOTNOTES
  (a) Diluted net income for GAAP EPS purposes was impacted by dilutive
      securities of subsidiaries of $6.2 million for the twelve months ended
      December 31, 2003.   The amount represents dilutive options and
      warrants held by minority interests of Expedia, Hotels.com and
      Ticketmaster in excess of basic shares held by minority interests,
      which were assumed by IAC in the buy-ins.

  (b) Merger costs incurred by Expedia, Hotels.com and Ticketmaster in 2003
      for investment banking, legal and accounting fees were related
      directly to the mergers and are treated as non-recurring for
      calculating Operating Income Before Amortization and Adjusted Net
      Income.  These costs were incurred solely in relation to the mergers,
      but may not be capitalized since Expedia, Hotels.com and Ticketmaster
      were considered the targets in the transaction for accounting
      purposes.  These costs do not directly benefit operations in any
      manner, would not normally be recorded by IAC if not for the fact it
      already consolidated these entities, and are all related to the same
      transaction, as IAC simultaneously announced its intention to commence
      its exchange offer for the companies in 2002.  The majority of costs
      are for advisory services provided by investment bankers, and the
      amounts incurred in 2003 were pursuant to the same fee letters entered
      into by each company in 2002.  Given these factors, IAC believes it is
      appropriate to consider these costs as one-time.  Operating Income
      Before Amortization by segment is presented before one-time items.

  (c) Discontinued operations in Q2 2003 included a $37 million tax benefit
      related to the shut-down of Styleclick.

  (d) In Q1 2003, IAC took a charge of $245 million pretax and $149 million
      after-tax, or $0.29 per diluted share, in connection with VUE's
      $4.5 billion impairment charge of which IAC recorded its 5.44%
      proportionate interest.

  (e) Pro forma adjustments represent the impact of the merger with
      Ticketmaster, which closed January 17, 2003, the merger with
      Hotels.com, which closed June 23, 2003, and the merger with Expedia,
      which closed August 8, 2003.  Also included is the impact of these
      transactions on shares outstanding.  There were no pro forma
      adjustments in 2004.

  (f) For Adjusted EPS purposes, the impact of RSUs is based on the weighted
      average amount of RSUs outstanding, as compared with shares
      outstanding for GAAP purposes, which includes RSUs on a treasury
      method basis.

  (g) As noted in previous filings, the majority of the USAB stations sold
      to Univision were 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 incurred incremental costs to obtain carriage lost in the
      disengagement markets and conduct marketing activities to inform
      viewers of new channel positioning for the HSN service.  Higher
      incremental costs were incurred in 2002, so disengagement costs were
      presented separately from HSN results when comparing 2003 results to
      2002.  Comparable costs are expected to be incurred in 2004 in
      relation to 2003, and HSN's results are presented including
      disengagement costs in each period.


                     DEFINITIONS OF NON-GAAP MEASURES

Operating Income Before Amortization is defined as operating income plus: (1) amortization of non-cash distribution, marketing and compensation expense, (2) amortization of intangibles and goodwill and intangibles impairment, if applicable, (3) pro forma adjustments for significant acquisitions and (4) certain one-time items. We believe this measure is useful to investors because it represents the consolidated operating results from IAC's segments, taking into account depreciation, which we believe is an ongoing cost of doing business, but excluding the effects of any other non-cash expenses. Operating Income Before Amortization has certain limitations in that it does not take into account the impact to IAC's statement of operations of certain expenses, including non-cash compensation, non-cash payments to partners, and acquisition-related accounting.

Adjusted Net Income generally captures all items on the statement of operations that have been, or ultimately will be, settled in cash and is defined as net income available to common shareholders plus: (1) amortization of non-cash distribution, marketing and compensation expense, (2) amortization of intangibles and goodwill impairment, if applicable, (3) pro forma adjustments for significant acquisitions, (4) equity income or loss from IAC's 5.44% interest in VUE, (5) one-time items, net of related tax, and minority interest and (6) discontinued operations, net of tax. We believe Adjusted Net Income is useful to investors because it represents IAC's consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other charges which are not allocated to the operating businesses such as interest expense, taxes and minority interest, but excluding the effects of any other non-cash expenses.

Adjusted EPS is defined as Adjusted Net Income divided by weighted fully diluted shares outstanding for Adjusted EPS purposes. We include dilution from options and warrants per the treasury stock method and include all shares relating to restricted stock/share units ("RSU") in shares outstanding for Adjusted EPS. This differs from the GAAP method for including RSUs, which treats them on a treasury method basis. Shares outstanding for Adjusted EPS purposes are therefore higher than shares outstanding for GAAP EPS purposes. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, IAC's consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other charges which are not allocated to the operating businesses such as interest expense, taxes and minority interest, but excluding the effects of any other non-cash expenses. Adjusted Net Income and Adjusted EPS have the same limitations as Operating Income Before Amortization, and in addition Adjusted Net Income and Adjusted EPS do not account for IAC's passive ownership in VUE. Therefore, we think it is important to evaluate these measures along with our consolidated statement of operations.

Free Cash Flow is defined as net cash provided by operating activities, including preferred dividends received from VUE, less capital expenditures, investments to fund HSN International unconsolidated operations and preferred dividends paid by IAC. In addition, Free Cash Flow includes tax distributions on the VUE common and preferred interests upon receipt of the distributions by IAC. We believe Free Cash Flow is useful to investors because it represents the cash that our operating businesses generate, before taking into account cash movements that are non-operational.

Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. For example, it does not take into account stock repurchases. Therefore, we think it is important to evaluate Free Cash Flow along with our consolidated statement of cash flows.

We endeavor to compensate for the limitations of the non-GAAP measures presented by also providing the comparable GAAP measures, GAAP financial statements, and descriptions of the reconciling items and adjustments, to derive the non-GAAP measures.

For IAC's Principles of Financial Reporting, a detailed explanation of why we believe these non-GAAP measures are useful to investors and management, please refer to IAC's website at http://www.iac.com/investors.htm.

Explanation of Comparable Net Revenue and Reported Revenue: As part of the integration of IACT's businesses, Hotels.com conformed its merchant hotel business practices with those of the other IACT businesses. As a result, beginning January 1, 2004, IAC commenced prospectively reporting revenue for Hotels.com on a net basis, consistent with Expedia's historical practice. Accordingly, we are including prior year results as though Hotels.com had reported revenue on a net basis for purposes of better comparability. There was no impact to operating income or Operating Income Before Amortization from the change in reporting.

Conference Call

IAC will audiocast its conference call with investors and analysts discussing the company's fourth quarter financial results and certain forward-looking information on Wednesday, February 16, 2005, at 11:00 a.m. Eastern Time (ET). The live audiocast is open to the public at http://www.iac.com/investors.htm.

Additional Information And Where To Find It

Safe Harbor Statement Under The Private Securities Litigation Reform Act Of 1995

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements relating to IAC's anticipated financial performance, business prospects, new developments and similar matters, and/or statements preceded by, followed by or that include the words "believes," "could," "expects," "anticipates," "estimates," "intends," "plans," or similar expressions. These forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those suggested by the forward-looking statements due to a variety of factors, including changes in business, political, and economic conditions due to the threat of future terrorist activity or otherwise, actions and initiatives by current and potential competitors, changes in the availability of favorably priced inventory, changes in occupancy rates, the effect of current and future legislation or regulation, the ability to make cost efficient expenditures in connection with expanding our reach, the ability to expand our reach into international markets, and certain other additional factors described in IAC's filings with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on IAC's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release.

IAC is not under any obligation and does not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this press release to reflect circumstances existing after the date of this press release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

About IAC/InterActiveCorp - IAC operates leading and diversified businesses in sectors being transformed by the internet, online and offline ... our mission is to harness the power of interactivity to make daily life easier and more productive for people all over the world. To view a full list of the companies of IAC please visit our website at http://iac.com/.

CONTACT
Andrea Riggs
Phone: +1 206-604-2965
Email: ariggs@expedia.com

ORGANIZATION
IAC/InterActiveCorp
www.interactivecorp.com
152 West 57th Street, 42nd Floor
USA - New York, NY 10019
Phone: (212)314-7300
Fax: (212)314-7379
Email: corpcomm@iac.com