As Filed with the Securities and Exchange Commission on April 2, 2001
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 2001 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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, 2000 USA NETWORKS, INC. (Exact name of registrant as specified in its charter) ------------------------------ COMMISSION FILE NO. 0-20570 DELAWARE 59-2712887 (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization) 152 WEST 57TH STREET, NEW YORK, NEW YORK, 10019 (Address of Registrant's principal executive offices) (212) 314-7300 (Registrant's telephone number, including area code): 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 ------------------------ Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / 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 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. /X/ As of January 31, 2001, the following shares of the Registrant's capital stock were outstanding: Common Stock................................................ 305,538,308 Class B Common Stock........................................ 63,033,452 ----------- Total....................................................... 368,571,760 Common Stock issuable upon exchange of outstanding exchangeable subsidiary equity............................ 361,152,846 ----------- Total outstanding Common Stock, assuming full exchange of Class B Common Stock and exchangeable subsidiary equity... 729,724,606 =========== The aggregate market value of the voting stock held by non-affiliates of the Registrant as of January 31, 2001 was $4,475,484,857. 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 January 31, 2001, of all equity securities of subsidiaries of the Registrant exchangeable for Common Stock of the Registrant, the Registrant would have outstanding 729,724,606 shares of Common Stock with an aggregate market value of $14,817,923,976. All share numbers set forth above give effect to the two-for-one stock split which became effective on February 24, 2000 for holders of record as of the close of business on February 10, 2000. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Registrant's proxy statement for its 2001 Annual Meeting of Stockholders are incorporated by reference into Part III herein. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INDEX PAGE -------- PART I Item 1. Business.................................................... 2 Item 2. Properties.................................................. 42 Item 3. Legal Proceedings........................................... 46 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................................... 53 Item 6. Selected Financial Data..................................... 54 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 56 Item 7A. Quantitative and Qualitative Disclosures about Market Risk........................................................ 69 Item 8. Consolidated Financial Statements and Supplementary Data.... 71 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures................................... 112 PART III Item 10. Directors and Executive Officers of the Registrant.......... 112 Item 11. Executive Compensation...................................... 112 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 112 Item 13. Certain Relationships and Related Party Transactions........ 112 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K......................................................... 113 PART I ITEM 1. BUSINESS GENERAL USA Networks, Inc. ("USAi" or the "Company"), through its subsidiaries, is a media and electronic commerce company focused on the new convergence of entertainment, information and direct selling. USAi's principal operating assets include USA Network, Sci Fi Channel, Studios USA, USA Films, Home Shopping Network, Ticketmaster, Citysearch, Match.com, Hotel Reservations Network, Precision Response Corporation, USA Electronic Commerce Solutions and Styleclick, Inc. In the second quarter of 2000, USAi organized its business into three units, USA Entertainment, USA Electronic Retailing and USA Information and Services, as follows: USA ENTERTAINMENT - CABLE AND STUDIOS. USA Cable operates cable networks, including USA Network, Sci Fi Channel, and two emerging networks, Trio and NewsWorld International. Studios USA produces and distributes television programming. - FILMED ENTERTAINMENT, consisting primarily of USA Films, which is in the film distribution and production businesses. USA ELECTRONIC RETAILING - ELECTRONIC RETAILING, consisting primarily of HSN and America's Store, HSN International and HSN Interactive, including HSN.com. USA INFORMATION AND SERVICES - TICKETING OPERATIONS, consisting primarily of Ticketmaster and Ticketmaster.com, which provide offline and online automated ticketing services. - HOTEL RESERVATIONS, which includes Hotel Reservations Network, a leading consolidator of hotel rooms for resale in the consumer market. - TELESERVICES, consisting of Precision Response Corporation, a leader in outsourced customer care for both large corporations and high-growth internet-focused companies. - CITYSEARCH, which operates an online network that provides locally oriented services and information to users. - MATCH.COM, consisting of an online personals business. - USA ELECTRONIC COMMERCE SOLUTIONS, which primarily represents the Company's electronic commerce solutions business. - STYLECLICK, a facilitator of e-commerce websites and Internet enabled applications which includes the Company's online retailing networks. All share numbers referenced herein reflect the two-for-one stock split of USAi's common stock and Class B common stock, unless otherwise specified. The Board of Directors declared a two-for-one stock split of USAi's common stock and Class B common stock, payable in the form of a dividend to stockholders of record as of the close of business on February 10, 2000. The 100% stock dividend was paid on February 24, 2000. 2 CORPORATE HISTORY USAi was incorporated in July 1986 in Delaware under the name Silver King Broadcasting Company, Inc. as a subsidiary of Home Shopping Network, Inc. ("Holdco"). On December 28, 1992, Holdco distributed the capital stock of USAi to its stockholders. SAVOY AND HOME SHOPPING MERGERS In December 1996, USAi completed mergers with Savoy Pictures Entertainment, Inc. ("Savoy") and Holdco, and Savoy and Holdco became subsidiaries of USAi. At the same time as the mergers, USAi changed its name from Silver King Broadcasting Company, Inc. to HSN, Inc. TICKETMASTER TRANSACTION On July 17, 1997, USAi acquired a controlling interest in Ticketmaster Group, Inc. ("Ticketmaster Group") from Mr. Paul G. Allen, who upon completion of the transaction became a director of USAi, in exchange for shares of USAi's common stock. On June 24, 1998, USAi acquired the remaining Ticketmaster Group common equity in a tax-free stock-for-stock merger. UNIVERSAL TRANSACTION On February 12, 1998, USAi completed the Universal transaction, in which USAi acquired USA Networks, a New York partnership (which consisted of USA Network and Sci Fi Channel cable television networks), and the domestic television production and distribution business ("Studios USA") of Universal Studios, Inc. ("Universal") from Universal. USAi paid Universal approximately $1.6 billion in cash ($300 million of which was deferred with interest) and an effective 45.8% interest in USAi through shares of USAi common stock, USAi Class B common stock and shares of USANi LLC, a Delaware limited liability company ("USANi LLC"). The USANi LLC shares are exchangeable for shares of USAi's common stock and Class B common stock on a one-for-one basis. Universal is controlled by Vivendi Universal, S.A., a French corporation ("Vivendi"), as a result of the combination of Vivendi S.A., The Seagram Company Ltd. ("Seagram") and Canal Plus completed in December 2000. Due to Federal Communication Commission ("FCC") restrictions on foreign ownership of entities that control domestic television broadcast licenses, Universal, which is controlled by Vivendi, is limited in the number of shares of USAi's stock that it may own. USAi formed USANi LLC primarily to hold