UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 29, 2002
USA INTERACTIVE
(Exact name of Registrant as specified in charter)
Delaware 0-20570 59-2712887
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
152 West 57th Street, New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 314-7300
ITEM 9. REGULATION FD DISCLOSURE
USA Interactive ("USA" or the "Company") furnishes pursuant to Regulation
FD the following information in connection with a report issued by the Center
for Financial Research and Analysis that USA learned of today.
1. NEGATIVE OPERATING CASH FLOW
USA's negative cash flow from operations was the result of tax payment of
$156.9 million for gains on the sale of the USAB stations. This payment
was disclosed on page 29 of USA's 10Q for the period ending March 31,
2002. Not including this one time event, USA's operating cash flow in the
March 2002 quarter would be POSITIVE $152.7 MILLION versus a positive cash
flow of $127.2 million in the prior year period, AN INCREASE OF 20%. On
the same basis, our cash flow surplus in the March 2002 quarter was $131.6
versus CFRA's inaccurate presentation of a $30.1 million deficit. We find
CFRA's not taking into account this prominently disclosed one time tax
payment in CFRA's analysis astounding.
2. NEGATIVE REVENUE GROWTH IN USA ENTERTAINMENT BUSINESS CONTRIBUTED TO
JOINT VENTURE WITH VIVENDI
USA was amongst the first to disclose and have always been upfront with
investors in regards to the weakness in the advertising market, which is
principally responsible for the year over year decrease in revenue for the
USA Entertainment businesses. Our exposure to the advertising market has
been virtually eliminated as a result of the contribution of our
Entertainment assets into the VUE joint venture, which has closed. We find
it inexplicable that CFRA has highlighted this as an issue of concern for
USA investors, when we have divested the assets that are the basis for the
concern.
3. WEAKER THAN REPORTED REVENUE GROWTH
CFRA seems to suggest in the report that USA used the purchase method of
accounting in order to artificially boost revenue growth for the quarter
ended March 2002. The fact is that the purchase method of accounting is
the only accounting method allowed under GAAP to account for acquisitions.
We are also amazed that CFRA's pro forma presentation of USA's financials
are pro forma for the Expedia acquisition but are not pro forma for the
contribution of USA's Entertainment assets into the VUE joint venture.
Clearly, CFRA's choice was motivated by the desire to ARTIFICIALLY show
lower growth for USA. If one properly pro formas both the Expedia and VUE
transactions, USA's revenue growth for the March 2002 quarter would be
14.7% versus CFRA's analysis of 2.8% and actual growth of 4.6%. A proper
pro forma analysis would show higher revenue growth than actuals, not
lower as CFRA has suggested.
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4. POSSIBLE FUTURE EARNINGS BOOST: UNUSUAL ACCOUNTING FOR SIGNIFICANT
ACQUISITION-RELATED RESERVES
USA has taken ABSOLUTELY NO reserves from the Expedia acquisition. CFRA's
suggestion that we MAY have done so without speaking to us is libelous.
5. EARNINGS BOOST: DECREASED AMORTIZATION DUE TO LONGER AMORTIZATION
PERIODS FOR INTANGIBLES OTHER THAN GOODWILL
The suggestion that USA has sought an earnings boost through longer
amortization periods is baseless and irresponsible. USA has not changed
its policy relating to amortization of Intangibles. The reason for the
longer amortization periods for Intangibles in the March 2002 quarter is
simply the inclusion of Expedia assets, which have a longer useful life.
The bottom end of the range for the amortization period increased in the
March 2002 quarter due to the full amortization of a domain name we had
amortized over one year in 2001.
We disclosed on page 13 of the March 2002 10-Q that $246 million out of a
total of $395.3 million, or 62% of other intangible assets on our books
were related to the Expedia acquisition. Why would CFRA not present the
inclusion of Expedia as a possibility for the change in the amortization
period for those intangibles, as opposed to only suggesting that we might
get an earnings boost from a change in accounting policy?
6. APPARENT DROP IN ACCRUED LIABILITIES AND DEFERRED REVENUE
Per CFRA's analysis the Statement of Cash Flow for the March 2002 quarter
discloses a use of cash of $105.9 million related to accrued liabilities,
including taxes, and deferred revenue. However, this use of cash is due to
the aforementioned payment of $156.9 million of taxes related to the USAB
sale. Not including this one time event, we would show an increase of
$51.0 million related to accrued liabilities and deferred revenue.
In response to CFRA's concern stated in its report, the Company has not
adopted a more aggressive revenue recognition policy nor has the Company
"boosted" earnings by decreasing reserves. The Company and its management
take their responsibility for fair financial reporting extremely
seriously, and have taken steps to disclose information even if accounting
or SEC rules do not require such disclosure. The Company has certainly not
liquidated reserves nor manipulated its results in any way, shape or form.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
USA INTERACTIVE
By: /S/ Julius Genachowski
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Name: Julius Genachowski
Title: Executive Vice President and
General Counsel
Date: May 29, 2002
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