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Iac/Interactivecorp IAC/INTERACTIVECORP FORM 10-K (Annual Report) Filed 03/16/05 for the Period Ending 12/31/04 Address 152 WEST 57TH ST 42ND FLOOR NEW YORK, NY 10019 Telephone 2123147300 CIK 0000891103 Symbol IACI SIC Code 5990 - Retail Stores, Not Elsewhere Classified Industry Retail (Catalog & Mail Order) Sector Services Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2008, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. QuickLinks -- Click here to rapidly navigate through this document As filed with the Securities and Exchange Commission on March 16, 2005 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 2004 IAC/INTERACTIVECORP (Exact name of registrant as specified in its charter) Commission File No. 0-20570 Delaware 59 -2712887 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 152 West 57th Street, New York, New York 10019 (Address of Registrant's principal executive offices) (Zip Code) (212) 314-7300 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value Warrants to Acquire One Share of Common Stock Warrants to Acquire 1.93875 Shares of Common Stock 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 No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No As of February 10, 2005, the following shares of the Registrant's Common Stock were outstanding: Common Stock, including 266,143 shares of restricted stock 634,246,558 Class B Common Stock 64,629,996 Total 698,876,554 The aggregate market value of the voting common equity held by non-affiliates of the Registrant as of February 10, 2005 was $11,888,050,303. For the purpose of the foregoing calculation only, all directors and executive officers of the Registrant are assumed to be affiliates of the Registrant. Documents Incorporated By Reference: Portions of the Registrant's proxy statement for its 2005 Annual Meeting of Stockholders are incorporated by reference into Part III herein. TABLE OF CONTENTS Page Number PART I Item 1. Business 1 Item 2. Properties 27 Item 3. Legal Proceedings 27 Item 4. Submission of Matters to a Vote of Security Holders 37 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 38 Item 6. Selected Financial Data 40 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 42 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 81 Item 8. Consolidated Financial Statements and Supplementary Data 84 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 164 Item 9A. Controls and Procedures 164 Item 9B. Other Information 165 PART III Item 10. Directors and Executive Officers of the Registrant 166 Item 11. Executive Compensation 166 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 166 Item 13. Certain Relationships and Related Transactions 166 Item 14. Principal Accounting Fees and Services 166 PART IV Item 15. Exhibits and Financial Statement Schedules 167 PART I Item 1. Business OVERVIEW IAC Brands and Businesses IAC/InterActiveCorp 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. IAC currently operates a diversified portfolio of specialized and global brands in the travel, retailing, ticketing, personals, media, financial services, real estate and teleservices industries. IAC enables billions of dollars of consumer-direct transactions for products and services via the internet and telephone. IAC/InterActiveCorp is referred to herein as either IAC or the Company. IAC consists of the following segments: • IAC Travel, which includes Expedia, Hotels.com, Hotwire and Interval International; • Electronic Retailing, which includes HSN U.S. and HSN International; • Ticketing, which includes Ticketmaster; • Personals, which includes Match.com; • IAC Local and Media Services, which includes Citysearch, Evite, Entertainment Publications, TripAdvisor (since April 2004) and ServiceMagic (since September 2004); • Financial Services and Real Estate, which includes LendingTree and its affiliated brands and businesses; and • Teleservices, which includes Precision Response Corporation. For information regarding the results of operations of these segments, as well as their respective contributions to IAC's consolidated results of operations, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 42 and the Consolidated Financial Statements and related notes beginning on page 84. On December 21, 2004, IAC announced its plan to separate into two independent public companies in order to better achieve certain strategic objectives of its various businesses. In this report, we refer to this transaction as the "Spin-Off" and to the new company that will hold the travel and travel-related businesses of IAC as "New Expedia." For additional information, see "—Spin-Off." History Since its inception, the Company has transformed itself from a hybrid media/electronic retailing company into an interactive commerce company. The Company was incorporated in July 1986 in Delaware under the name Silver King Broadcasting Company, Inc., or Silver King, as a subsidiary of Home Shopping Network, Inc., or Home Shopping Network. On December 28, 1992, Home Shopping Network distributed the capital stock of Silver King to its stockholders. In December 1996, the Company completed mergers with Savoy Pictures Entertainment, Inc., or Savoy, and Home Shopping Network, with Savoy and Home Shopping Network becoming subsidiaries of Silver King. In connection 1 with these mergers, the Company changed its name from Silver King Broadcasting Company, Inc. to HSN, Inc. The Company acquired a controlling interest in Ticketmaster Group, Inc. in 1997 (and the remaining interest in 1998). In 1998, upon the purchase of USA Networks and Studios USA from Universal Studios, Inc., or Universal, the Company became USA Networks, Inc. From 1999 through 2001, the Company invested in Hotel Reservations Network (later renamed Hotels.com), Match.com and other smaller e-commerce companies. In 2001, the Company sold USA Broadcasting to Univision Communications, Inc. In February 2002, the Company acquired a controlling stake in Expedia. In May 2002, after contributing its entertainment assets to a joint venture controlled by Vivendi Universal, S.A., or Vivendi, the Company was renamed USA Interactive. In September 2002, the Company acquired Interval International. In 2003, the Company acquired the minority interests in its formerly public subsidiaries, Expedia, Hotels.com, and Ticketmaster, and acquired a number of other companies, including Entertainment Publications, Inc., LendingTree and Hotwire. The Company was renamed InterActiveCorp in June 2003 and IAC/InterActiveCorp in July 2004. SPIN-OFF On December 21, 2004, IAC announced its plans relating to the Spin-Off. Following the completion of the Spin-Off: • New Expedia will consist of the travel and travel -related businesses and investments that IAC currently operates and/or manages through IAC Travel (other than Interval International, which IAC will retain) and TripAdvisor, which during 2004 was operated and managed through IAC Local and Media Services; and • IAC will continue to operate and/or manage its remaining businesses and investments, which currently comprise its Electronic Retailing, Ticketing, Personals, Local and Media Services (other than TripAdvisor), Financial Services and Real Estate and Teleservices segments, as well as Interval International. SELECTED TRANSACTIONS For a more detailed discussion concerning certain of the transactions described below, see Notes 3 and 4 to the Notes to the Consolidated Financial Statements. IAC Travel Expedia • On February 4, 2002, the Company acquired a controlling interest in Expedia. On August 8, 2003, IAC completed its acquisition of all of the outstanding capital stock of Expedia that it did not already own. Following the completion of the Spin-Off, Expedia will be part of New Expedia. 2 Hotels.com • On May 10, 1999, the Company acquired substantially all of the assets and assumed substantially all of the liabilities of two entities that operated Hotel Reservations Network, since renamed Hotels.com. On March 1, 2000, Hotels.com completed an initial public offering. On June 23, 2003, IAC completed its acquisition of all of the outstanding capital stock of Hotels.com that it did not already own. Following the completion of the Spin-Off, Hotels.com will be part of New Expedia. Hotwire • On November 5, 2003, IAC completed its acquisition of Hotwire. Following the completion of the Spin-Off, Hotwire will be part of New Expedia. Interval International • On September 24, 2002, the Company completed its acquisition of Interval International. Following the completion of the Spin- Off, Interval International will remain part of IAC. Ticketing • On July 17, 1997, the Company acquired a controlling interest in Ticketmaster Group, Inc., or the Ticketmaster Group.
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