IAC Reports Q4 Results

                            IAC Reports Q4 Results

PR Newswire

NEW YORK, Feb. 6, 2013

NEW YORK, Feb. 6, 2013 /PRNewswire/ --IAC (Nasdaq: IACI) released fourth
quarter 2012 results today.

SUMMARY RESULTS
$ in millions (except per share amounts)
                          Q4 2012   Q4 2011 Growth     FY 2012 FY 2011 Growth
 Revenue                  $     $    28%        $     $     36%
                           765.3  596.9             2,800.9 2,059.4
 Operating Income Before  123.4     90.9    36%        445.0   308.4   44%
 Amortization
 Adjusted Net Income      66.2      67.4    -2%        263.1   220.5   19%
 Adjusted EPS             0.70      0.70    0%         2.77    2.26    23%
 Operating Income         85.3      55.5    54%        323.6   197.8   64%
 Net Income              40.7      48.8    -16%       159.3   174.2   -9%
 GAAP Diluted EPS        0.43      0.53    -18%       1.71    1.85    -7%
 See reconciliations of GAAP to non-GAAP
 measures beginning on page 10.

  oRevenue and Operating Income Before Amortization reflect strong double
    digit growth for the 12^th consecutive quarter. Excluding restructuring
    costs, Operating Income Before Amortization grew 48% to $134.9 million.
  oFree Cash Flow for the twelve months ended December 31, 2012 was $306.4
    million, while cash flow from operating activities attributable to
    continuing operations was $354.5 million.
  oIAC repurchased 6.4 million shares of common stock between October 20,
    2012 and February 1, 2013 at an average price of $45.69 per share, or
    $292.9 million in aggregate.
  oIAC declared a quarterly cash dividend of $0.24 per share, to be paid on
    March 1, 2013 to stockholders of record as of the close of business on
    February 15, 2013.
  oIn December 2012, IAC issued $500 million of 4.75% Senior Notes due 2022
    and closed a $300 million 5-year Revolving Credit Facility.



DISCUSSION OF FINANCIAL AND OPERATING RESULTS

                                     Q4 2012       Q4 2011       Growth
Revenue                              $ in millions
       Search & Applications        $   403.6  $   309.5  30%
       Match                         182.6         157.7         16%
       Local                         76.7          72.0          7%
       Media                         57.8          18.4          215%
       Other                         44.7          39.6          13%
       Intercompany Elimination      (0.1)         (0.1)         32%
                                     $   765.3  $   596.9  28%
Operating Income Before Amortization
       Search & Applications        $    96.4 $    59.2 63%
       Match                         65.8          48.7          35%
       Local                         1.3           4.4           -70%
       Media                         (19.4)        (5.5)         -250%
       Other                         (0.7)         0.5           NM
       Corporate                     (20.1)        (16.5)        -22%
                                     $   123.4  $    90.9 36%
Operating Income (Loss)
       Search & Applications        $    89.1 $    59.2 50%
       Match                         62.4          36.4          71%
       Local                         (1.1)         3.0           NM
       Media                         (24.6)        (5.7)         -330%
       Other                         (1.1)         -             NM
       Corporate                     (39.4)        (37.5)        -5%
                                     $    85.3 $    55.5 54%



Search & Applications
Revenue reflects strong growth from both Websites and Applications. Websites
revenue growth reflects a $30.1 million contribution from The About Group,
consolidated with effect from October 1, 2012, and strong query gains driven
primarily by increased marketing and site optimization. Revenue growth from
Applications was driven by increased contribution from existing partners as
well as existing and new products. Profits were favorably impacted by higher
revenue and lower cost of acquisition as a percentage of revenue, as well as
by the contribution from The About Group, which had Operating Income Before
Amortization of $13.3 million. Operating income in the current year period
reflects an increase of $7.3 million in amortization of intangibles primarily
related to The About Group.

Match
Revenue increased due to Meetic, which had revenue of $54.5 million versus the
prior year period of $35.0 million, and growth from Core. Meetic revenue in
the prior year period was negatively impacted by the write-off of $23.0
million of deferred revenue in connection with its acquisition. Core revenue
increased 5% to $110.7 million driven by an increase in subscribers.
Operating Income Before Amortization, excluding Meetic's results, increased
15% to $54.7 million due to higher revenue, lower customer acquisition costs
as a percentage of revenue and lower operating expenses. Meetic profits in
the current year period reflect the planned increase in marketing expense; the
prior year period was negatively impacted by the write-off of deferred revenue
described above. Operating income in the current year period reflects a
decrease of $8.5 million in amortization of intangibles primarily related to
Meetic.

Local
Revenue increased reflecting growth from CityGrid Media, which benefited from
the contribution of Felix, acquired August 2012, and higher reseller revenue,
partially offset by a decline from direct sales revenue. HomeAdvisor revenue
was flat versus the prior year period as the increase in international
revenue, which benefited from an increase in accepted service requests, was
offset by a decline in domestic revenue. The decline in domestic revenue was
due to the rebranding of the business and marketing optimization efforts,
which reduced service requests but increased accepts per service request.
Local profits were negatively impacted by an increase in general and
administrative expense primarily related to restructuring costs at CityGrid
Media and the inclusion of Felix. Operating loss in the current year period
reflects an increase of $1.0 million in amortization of intangibles.

Media
Revenue increased due to the contribution of News_Beast, which has been
consolidated following our acquisition of a controlling interest in May 2012,
and strong growth from Electus and Vimeo. Higher losses primarily reflect the
inclusion of News_Beast in our consolidated results, which includes $7.0
million in restructuring costs in the current year period related to the
transition to a digital only publication. Operating loss in the current year
period reflects an increase of $5.0 million in amortization of intangibles
primarily related to News_Beast.

Other
Revenue increased reflecting strong growth from Shoebuy in its seasonally
strongest quarter. Profits were negatively impacted due primarily to Hatch
Labs, which was shut down in December 2012.

Corporate
Corporate expenses increased primarily due to higher compensation expense and
insurance deductibles related to Super Storm Sandy losses.

OTHER ITEMS
Profits in Q4 2012 includes restructuring charges of $11.5 million comprised
of $7.0 million in Media, $2.0 million in Search & Applications, $1.8 million
in Local and $0.7 million in Other.

Equity in losses of unconsolidated affiliates in Q4 2011 includes $9.6 million
in losses related to News_Beast. Other (expense) income in Q4 2012 includes
an $8.7 million write-down of an investment.

The effective tax rates for continuing operations and Adjusted Net Income in
Q4 2012 were 45% and 41%, respectively. The effective tax rates were higher
than the statutory rate of 35% due principally to an increase in reserves for
and interest on tax contingencies, a valuation allowance on the deferred tax
asset created by the write-down of an investment and state taxes, partially
offset by foreign income taxed at lower rates. The effective tax rates for
continuing operations and Adjusted Net Income in Q4 2011 were 5% and 16%,
respectively. The effective tax rates were lower than the statutory rate of
35% due principally to the reduction in reserves due to the favorable outcome
of state and foreign audits. 



LIQUIDITY AND CAPITAL RESOURCES

During Q4 2012, IAC repurchased 6.4 million common shares at an average price
of $45.69 per share, or $292.9 million in aggregate. As of December 31, 2012,
IAC had 84.3 million common and class B common shares outstanding. IAC may
purchase shares over an indefinite period of time on the open market and in
privately negotiated transactions, depending on those factors IAC management
deems relevant at any particular time, including, without limitation, market
conditions, share price and future outlook. As of February 1, 2013, the
Company had 3.1 million shares remaining in its stock repurchase
authorization.

IAC's Board of Directors declared a quarterly cash dividend of $0.24 per share
of common and class B common stock outstanding with record and payment dates
of February 15, 2013 and March 1, 2013, respectively.

As of December 31, 2012, IAC had $770.6 million in cash and cash equivalents
and marketable securities, as well as $595.8 million, in debt of which $15.8
million was short-term and paid on January 15, 2013. The Company has $300.0
million in unused borrowing capacity under its revolving credit facility.



OPERATING METRICS

                                       Q4 2012        Q4 2011        Growth
SEARCH & APPLICATIONS(in millions)
Revenue
  Websites ^(a)                        $    197.0 $    140.9 40%
  Applications ^(b)                    206.6          168.6          23%
  Total Revenue                        $    403.6 $    309.5 30%
Queries
  Websites ^(c)                       2,635          2,175          21%
  Applications ^(d)                    5,475          4,698          17%
  Total Queries                        8,110          6,872          18%
MATCH(in thousands)
Paid Subscribers
  Core ^(e)                            1,803          1,664          8%
  Developing ^(f)                      240            270            -11%
  Meetic ^(g)                          769            762            1%
  Total Paid Subscribers               2,811          2,696          4%
HOMEADVISOR(in thousands)
  Domestic Service Requests ^(h)       1,274          1,437          -11%
  Domestic Accepts ^(i)                1,687          1,836          -8%
  International Service Requests ^(h)  243            194            26%
  International Accepts ^(i)           311            234            33%



(a) Websites revenue includes Ask.com, The About Group, Pronto and
    Dictionary.com, excluding downloadable applications related revenue.
(b) Applications revenue includes B2C and B2B, as well as downloadable
    applications related revenue from Ask.com and Dictionary.com.
(c) Websites queries include Ask.com, but exclude Ask.com's downloadable
    applications, The About Group, Pronto and Dictionary.com.
(d) Applications queries include B2C and B2B, as well as downloadable
    applications queries from Ask.com.
(e) Core consists of Match.com in the United States, Chemistry and People
    Media.
(f) Developing includes OkCupid, DateHookup and Match's international
    operations, excluding Meetic S.A.
(g) Meetic consists of the publicly traded personals company Meetic S.A.,
    which operates principally in Europe.
(h) Fully completed and submitted customer service requests on HomeAdvisor.
    The number of times service requests are accepted by service
(i) professionals. A service request can be transmitted to and accepted by
    more than one service professional.



DILUTIVE SECURITIES

IAC has various tranches of dilutive securities. The table below details
these securities as well as potential dilution at various stock prices (shares
in millions, rounding differences may occur).

                              Avg.
                              Exercise  As of
                      Shares  Price     2/1/13 Dilution at:
Share Price                             $41.56 $ 45.00 $ 50.00 $ 55.00 $ 60.00
Absolute Shares as of 84.3              84.3   84.3    84.3    84.3    84.3
2/1/13
RSUs and Other        2.9               2.9    2.7     2.5     2.4     2.2
Options               9.9     $33.01    2.5    2.8     3.4     4.0     4.5
Total Dilution                          5.4    5.6     6.0     6.4     6.7
   % Dilution                           6.0%   6.2%    6.6%    7.0%    7.3%
Total Diluted Shares                    89.7   89.8    90.2    90.6    90.9
Outstanding



CONFERENCE CALL

IAC will audiocast its conference call with investors and analysts discussing
the Company's Q4 financial results on Wednesday, February 6, 2013, at 4:30
p.m. Eastern Time (ET). This call will include the disclosure of certain
information, including forward-looking information, which may be material to
an investor's understanding of IAC's business. The live audiocast is open to
the public at www.iac.com/investors.htm.



GAAP FINANCIAL STATEMENTS

IAC CONSOLIDATED
STATEMENT OF
OPERATIONS
($ in thousands except
per share amounts)
                        Three Months Ended         Twelve Months Ended
                        December 31,               December 31,
                        2012         2011          2012          2011
Revenue                 $       $        $        $     
                          765,251    596,943   2,800,933    2,059,444
Costs and expenses:
Cost of revenue
(exclusive of           270,277      218,412       992,470       761,244
depreciation shown
separately below)
Selling and marketing   229,090      187,410       898,761       614,174
expense
General and             117,118      87,256        396,013       328,728
administrative expense
Product development     30,768       22,202        101,869       78,760
expense
Depreciation            14,991       13,346        52,481        56,719
Amortization of         17,713       12,862        35,771        22,057
intangibles
Total costs and         679,957      541,488       2,477,365     1,861,682
expenses
Operating income       85,294       55,455        323,568       197,762
Equity in earnings
(losses) of             2,863        (10,623)      (25,345)      (36,300)
unconsolidated
affiliates
Other (expense)         (7,894)      (637)         (9,161)       10,060
income, net
Earnings from
continuing operations   80,263       44,195        289,062       171,522
before income taxes
Income tax (provision)  (35,855)     (2,397)       (119,215)     4,047
benefit
Earnings from           44,408       41,798        169,847       175,569
continuing operations
(Loss) earnings from
discontinued            (2,470)      4,366         (9,051)       (3,992)
operations, net of tax
Net earnings           41,938       46,164        160,796       171,577
Net (earnings) loss
attributable to         (1,199)      2,602         (1,530)       2,656
noncontrolling
interests
Net earnings            $       $        $       $      
attributable to IAC        40,739    48,766   159,266      174,233
shareholders
Per share information
attributable to IAC
shareholders:
Basic earnings per   $       $        $       $      
share from continuing                        1.95      2.05
operations              0.49         0.53
Diluted earnings     $       $        $       $      
per share from                               1.81      1.89
continuing operations   0.46         0.48
Basic earnings per   $       $        $       $      
share                                        1.85      2.01
                        0.46         0.58
Diluted earnings     $       $        $       $      
per share                                    1.71      1.85
                        0.43         0.53
Dividends declared per  $       $        $       $      
common share                                 0.72      0.12
                        0.24         0.12
Non-cash compensation
expense by function:
                        $       $        $       $      
Cost of revenue                               6,219      5,359
                        1,444        1,677
Selling and marketing   1,248        1,331         4,760         4,807
expense
General and             16,262       17,450        68,640        70,894
administrative expense
Product development     1,413        2,077         6,006         7,528
expense
Total non-cash          $       $        $       $      
compensation expense       20,367    22,535    85,625      88,588



IAC CONSOLIDATED BALANCE SHEET
($ in thousands)
                                  December 31,           December 31,
                                  2012                   2011
ASSETS
Cash and cash equivalents       $               $       
                                  749,977                704,153
Marketable securities           20,604                 165,695
Accounts receivable, net        229,830                177,030
Other current assets            156,339                112,255
Total current assets            1,156,750              1,159,133
Property and equipment, net     270,512                259,588
Goodwill                        1,616,154              1,358,524
Intangible assets, net          482,904                378,107
Long-term investments           161,278                173,752
Other non-current assets        118,230                80,761
TOTAL ASSETS                    $      3,805,828 $     
                                                         3,409,865
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Current maturities of long-term  $              $          
debt                             15,844                   -
Accounts payable, trade         98,314                 64,398
Deferred revenue                155,499                126,297
Accrued expenses and other       355,232                343,490
current liabilities
Total current liabilities       624,889                534,185
Long-term debt, net of current   580,000                95,844
maturities
Income taxes payable            479,945                450,533
Deferred income taxes           323,403                302,213
Other long-term liabilities     31,830                 16,601
Redeemable noncontrolling        58,126                 50,349
interests
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock                    251                    234
Class B convertible common       16                     16
stock
Additional paid-in capital      11,607,367             11,280,173
Accumulated deficit             (318,519)              (477,785)
Accumulated other comprehensive  (32,169)               (12,443)
loss
Treasury stock                  (9,601,218)            (8,885,146)
Total IAC shareholders' equity  1,655,728              1,905,049
Noncontrolling interests        51,907                 55,091
Total shareholders' equity      1,707,635              1,960,140
TOTAL LIABILITIES AND            $      3,805,828 $     
SHAREHOLDERS' EQUITY                                    3,409,865



IAC CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
                                              Twelve Months Ended December 31,
                                              2012             2011
Cash flows from operating activities
attributable to continuing operations:
Net earnings                                  $         $       
                                              160,796          171,577
Less: loss from discontinued operations, net  (9,051)          (3,992)
of tax
Earnings from continuing operations           169,847          175,569
Adjustments to reconcile earnings from
continuing operations to net cash provided
by

operating activities attributable to
continuing operations:
Non-cash compensation expense                 85,625           88,588
Depreciation                                  52,481           56,719
Amortization of intangibles                   35,771           22,057
Impairment of a long-term investment          8,685            -
Deferred income taxes                         37,076           (35,483)
Equity in losses of unconsolidated            25,345           36,300
affiliates
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable                           (30,991)         (58,314)
Other current assets                          (22,991)         1,287
Accounts payable and other current            (14,384)         57,228
liabilities
Income taxes payable                          (10,091)         (29,215)
Deferred revenue                              1,864            48,950
Other, net                                    16,290           8,700
Net cash provided by operating activities     354,527          372,386
attributable to continuing operations
Cash flows from investing activities
attributable to continuing operations:
Acquisitions, net of cash acquired            (411,035)        (278,469)
Capital expenditures                          (51,201)         (39,954)
Proceeds from maturities and sales of         195,501          584,935
marketable debt securities
Purchases of marketable debt securities       (53,952)         (203,970)
Proceeds from sales of long-term investments  14,194           15,214
Purchases of long-term investments            (36,094)         (90,245)
Other, net                                    (9,501)          (12,697)
Net cash used in investing activities         (352,088)        (25,186)
attributable to continuing operations
Cash flows from financing activities
attributable to continuing operations:
Proceeds from issuance of long-term debt      500,000          -
Purchase of treasury stock                   (691,830)        (507,765)
Issuance of common stock, net of withholding  262,841          132,785
taxes
Dividends                                     (68,163)         (10,668)
Excess tax benefits from stock-based awards   57,101           22,166
Other, net                                    (15,648)         (8,751)
Net cash provided by (used in) financing
activities attributable to continuing         44,301           (372,233)
operations
Total cash provided by (used in) continuing   46,740           (25,033)
operations
Total cash used in discontinued operations    (3,472)          (8,417)
Effect of exchange rate changes on cash and   2,556            (4,496)
cash equivalents
Net increase (decrease) in cash and cash      45,824           (37,946)
equivalents
Cash and cash equivalents at beginning of     704,153          742,099
period
Cash and cash equivalents at end of period    $         $       
                                              749,977          704,153



RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

IAC RECONCILIATION OF OPERATING CASH FLOW FROM CONTINUING OPERATIONS TO FREE
CASH FLOW
($ in millions; rounding differences
may occur)
                                       Twelve Months Ended December 31,
                                       2012                2011
Net cash provided by operating         $          $         
activities attributable to continuing  354.5               372.4
operations
Capital expenditures                   (51.2)              (40.0)
Tax payments related to sales of a     3.1                 -
business and an investment
Free Cash Flow                        $          $         
                                       306.4               332.4



For the twelve months ended December 31, 2012, consolidated Free Cash Flow
decreased by $26.0 million from the prior year period due principally to the
payment of bonuses for 2012 in Q4 2012 and the payment of bonuses for 2011 in
Q1 2012, and increases in income taxes paid and capital expenditures,
partially offset by an increase in Operating Income Before Amortization.

IAC RECONCILIATION OF
GAAP EPS TO ADJUSTED EPS
(in thousands except per
share amounts)
                          Three Months Ended December  Twelve Months Ended
                          31,                          December 31,
                          2012          2011           2012        2011
Net earnings              $       $        $      $     
attributable to IAC         40,739      48,766       159,266   174,233
shareholders
Non-cash compensation     20,367        22,535         85,625      88,588
expense
Amortization of           17,713        12,862         35,771      22,057
intangibles
Meetic re-measurement     -             -              -           11,728
loss
News_Beast                (3,000)       -              18,629      -
re-measurement loss
Gain on sale of VUE
interests and related     1,019         1,552          3,598       6,562
effects
Discontinued operations,  2,470         (4,366)        9,051       3,992
net of tax
Impact of income taxes
and noncontrolling        (13,079)      (13,981)       (48,846)    (86,648)
interests
Adjusted Net Income       $       $        $      $     
                            66,229      67,368       263,094   220,512
GAAP Basic weighted
average shares            87,678        83,364         86,247      86,755
outstanding
Options, warrants and     6,293         9,289          6,842       7,566
RSUs, treasury method
GAAP Diluted weighted
average shares            93,971        92,653         93,089      94,321
outstanding
Impact of RSUs            296           3,376          1,897       3,432
Adjusted EPS shares       94,267        96,029         94,986      97,753
outstanding
Diluted earnings per      $       $        $      $     
share                         0.43      0.53              
                                                       1.71        1.85
                          $       $        $      $     
Adjusted EPS                  0.70      0.70              
                                                       2.77        2.26



For Adjusted EPS purposes, the impact of RSUs on shares outstanding is based
on the weighted average number of RSUs outstanding, including
performance-based RSUs outstanding that the Company believes are probable of
vesting. For GAAP diluted EPS purposes, RSUs, including performance-based
RSUs (for which the performance criteria have been met), are included on a
treasury method basis.

IAC RECONCILIATION OF SEGMENT NON-GAAP MEASURE TO GAAP MEASURE
($ in millions;
rounding
differences may
occur)
                    For the three months ended December 31, 2012
                    Operating       Non-cash        Amortization   Operating
                    Income Before   compensation    of intangibles income
                    Amortization    expense                        (loss)
Search &            $        $        $        $     
Applications            96.4         -                 
                                                    (7.3)         89.1
Match (a)           65.8            (0.8)           (2.6)          62.4
Local               1.3             -               (2.4)          (1.1)
Media               (19.4)          (0.2)           (5.0)          (24.6)
Other               (0.7)           (0.1)           (0.4)          (1.1)
Corporate           (20.1)          (19.3)          -              (39.4)
                    $        $        $        $     
Total                  123.4       (20.4)                   
                                                    (17.7)        85.3
(a) Includes the
results of Meetic
                    $        $        $        $     
Meetic                  11.1       (0.8)                 
                                                    (1.7)          8.6
Supplemental:
Depreciation
Search &            $       
Applications             5.0
Match               4.6
Local               2.4
Media               0.5
Other               0.3
Corporate           2.3
Total depreciation $       
                        15.0
                    For the three months ended December 31, 2011
                    Operating       Non-cash        Amortization   Operating
                    Income Before   compensation    of intangibles income
                    Amortization    expense                       (loss)
Search &            $        $        $        $     
Applications            59.2         -              
                                                    -             59.2
Match (b)           48.7            (1.2)           (11.1)         36.4
Local               4.4             -               (1.4)          3.0
Media               (5.5)           (0.2)           -              (5.7)
Other               0.5             (0.1)           (0.4)          -
Corporate           (16.5)          (21.0)          -              (37.5)
                    $        $        $        $     
Total                   90.9      (22.5)                  
                                                    (12.9)        55.5
(b) Includes the
results of Meetic
                    $        $        $        $     
Meetic                   1.1      (1.2)                
                                                    (7.8)         (7.9)
Supplemental:
Depreciation
Search &            $       
Applications             4.1
Match               3.7
Local               3.1
Media               0.2
Other               0.2
Corporate           2.1
Total depreciation $       
                        13.3
IAC RECONCILIATION OF SEGMENT NON-GAAP MEASURE TO GAAP MEASURE
($ in millions;
rounding
differences may
occur)
                    For the twelve months ended December 31, 2012
                    Operating       Non-cash        Amortization   Operating
                    Income Before   compensation    of intangibles income
                    Amortization    expense                       (loss)
Search &            $        $        $        $     
Applications           313.1          -                
                                                    (7.5)         305.6
Match (c)           225.8           (2.8)           (17.5)         205.5
Local               24.9            -               (3.2)          21.7
Media               (44.8)          (0.8)           (6.2)          (51.8)
Other               (6.1)           (0.1)           (1.5)          (7.7)
Corporate           (68.0)          (81.9)          -              (149.8)
                    $        $        $        $     
Total                  445.0       (85.6)                  
                                                    (35.8)        323.6
(c) Includes the
results of Meetic
                    $        $        $        $     
Meetic                  37.8       (2.8)                  
                                                    (15.7)        19.3
Supplemental:
Depreciation
Search &            $       
Applications            15.0
Match              16.3
Local               10.1
Media               1.4
Other               1.1
Corporate           8.5
Total depreciation $       
                        52.5
                    For the twelve months ended December 31, 2011
                    Operating       Non-cash        Amortization   Operating
                    Income Before   compensation    of intangibles income
                    Amortization    expense                       (loss)
Search &            $        $        $        $     
Applications           205.0         0.2                
                                                    (1.2)         204.0
Match (d)           156.3           (1.6)           (17.1)         137.6
Local               28.3            -               (2.8)          25.5
Media               (15.8)          (0.4)           -              (16.3)
Other               (2.5)           (0.3)           (1.1)          (3.9)
Corporate           (62.8)          (86.4)          -              (149.2)
                    $        $        $        $     
Total                  308.4       (88.6)                  
                                                    (22.1)        197.8
(d) Includes the
results of Meetic
from September 1,
2011
                    $        $        $        $     
Meetic                  (1.9)      (1.6)                
                                                    (9.8)         (13.4)
Supplemental:
Depreciation
Search &            $       
Applications            25.5
Match               10.8
Local               10.4
Media               0.7
Other               0.9
Corporate           8.5
Total depreciation $       
                        56.7



RECONCILIATION OF THE ABOUT GROUP NON-GAAP MEASURE TO GAAP MEASURE
($ in millions; rounding
differences may occur)
               Operating                   Amortization
                             Non-cash      of            Goodwill    Operating
               Income Before compensation                impairment  income
                             expense       intangibles               (loss)
               Amortization
Three months   $       $       $       $      $    
ended December   9.8         -        (4.6)         -     
31, 2011                                                             5.2
Three months   $       $       $       $      $    
ended March      8.4         -        (1.4)         -     
31, 2012                                                             7.0
Three months   $       $       $       $      $    
ended June 30,   9.0         -        (1.1)      (194.7)    
2012                                                                 (186.8)
Three months                                                         $    
ended          $       $       $       $         
September 30,   10.0          -        (1.1)         -  8.9
2012
Three months   $       $       $       $      $    
ended December  13.3          -        (7.2)         -     
31, 2012                                                             6.1
Twelve months  $       $       $       $      $    
ended December  40.7         (0.1)      (10.8)       (194.7)    
31, 2012                                                             (164.8)
Supplemental:
Revenue
Three months   $      
ended December  26.1
31, 2011
Three months   $      
ended March     23.9
31, 2012
Three months   $      
ended June 30,  25.4
2012
Three months
ended          $      
September 30,   25.6
2012
Three months   $      
ended December  30.1
31, 2012
Twelve months  $      
ended December 105.1
31, 2012



IAC'S PRINCIPLES OF FINANCIAL REPORTING

IAC reports Operating Income Before Amortization, Adjusted Net Income,
Adjusted EPS and Free Cash Flow, all of which are supplemental measures to
GAAP. These measures are among the primary metrics by which we evaluate the
performance of our businesses, on which our internal budgets are based and by
which management is compensated. We believe that investors should have access
to, and we are obligated to provide, the same set of tools that we use in
analyzing our results. These non-GAAP measures should be considered in
addition to results prepared in accordance with GAAP, but should not be
considered a substitute for or superior to GAAP results. IAC endeavors to
compensate for the limitations of the non-GAAP measures presented by providing
the comparable GAAP measures with equal or greater prominence and descriptions
of the reconciling items, including quantifying such items, to derive the
non-GAAP measures. We encourage investors to examine the reconciling
adjustments between the GAAP and non-GAAP measures contained in this release
and which we discuss below. Interim results are not necessarily indicative of
the results that may be expected for a full year.

Definitions of Non-GAAP Measures

Operating Income Before Amortization is defined as operating income excluding,
if applicable: (1) non-cash compensation expense, (2) amortization and
impairment of intangibles, (3) goodwill impairment, and (4) 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 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 earnings attributable to IAC shareholders excluding, net of tax
effects and noncontrolling interests, if applicable: (1) non-cash compensation
expense, (2) amortization and impairment of intangibles, (3) goodwill
impairment, (4) income or loss effects related to IAC's former passive
ownership in VUE, (5) the reversal of a deferred tax liability associated with
our 27% investment in Meetic, (6) the re-measurement losses recorded upon
acquiring control of Meetic and News_Beast, (7) one-time items, and (8)
discontinued operations. 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, income taxes and noncontrolling interests, but
excluding the effects of any other non-cash expenses.

Adjusted EPS is defined as Adjusted Net Income divided by fully diluted
weighted average shares outstanding for Adjusted EPS purposes. We include
dilution from options and warrants in accordance with the treasury stock
method and include all restricted stock units ("RSUs") in shares outstanding
for Adjusted EPS, with performance-based RSUs included based on the number of
shares that the Company believes are probable of vesting. This differs from
the GAAP method for including RSUs, which treats them on a treasury method
basis and with respect to performance-based RSUs only to the extent the
performance criteria are met (assuming the end of the reporting period is the
end of the contingency period). 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, income taxes and noncontrolling interests, 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 former 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, less
capital expenditures. In addition, Free Cash Flow excludes, if applicable,
tax payments and refunds related to the sales of certain businesses and
investments, including IAC's interests in VUE, an internal restructuring and
dividends received that represent a return of capital due to the exclusion of
the proceeds from these sales and dividends from cash provided by operating
activities. 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. 



IAC'S PRINCIPLES OF FINANCIAL REPORTING - continued

One-Time Items

Operating Income Before Amortization and Adjusted Net Income are presented
before one-time items, if applicable. These items are truly one-time in
nature and non-recurring, infrequent or unusual, and have not occurred in the
past two years or are not expected to recur in the next two years, in
accordance with SEC rules. GAAP results include one-time items. For the
periods presented in this release, there are no adjustments for one-time
items.

Non-Cash Expenses That Are Excluded From Our Non-GAAP Measures

Non-cash compensation expense consists principally of expense associated with
the grants, including unvested grants assumed in acquisitions, of stock
options, restricted stock units and performance-based RSUs. These expenses
are not paid in cash, and we include the related shares in our fully diluted
shares outstanding which, for stock options and restricted stock units, are
included on a treasury method basis, and for performance-based RSUs are
included on a treasury method basis once the performance conditions are met.
We view the true cost of our restricted stock units and performance-based
RSUs as the dilution to our share base, and as such units are included in our
shares outstanding for Adjusted EPS purposes as described above under the
definition of Adjusted EPS. Upon the exercise of certain stock options and
vesting of restricted stock units and performance-based RSUs, the awards are
settled, at the Company's discretion, on a net basis, with the Company
remitting the required tax withholding amount from its current funds.

Amortization of intangibles (including impairment of intangibles, if
applicable) and goodwill impairment (if applicable) are non-cash expenses
relating primarily to acquisitions. At the time of an acquisition, the
identifiable definite-lived intangible assets of the acquired company, such as
content, technology, customer lists, advertisers and supplier relationships,
are valued and amortized over their estimated lives. Value is also assigned
to acquired indefinite-lived intangible assets, which comprise trade names and
trademarks, and goodwill that are not subject to amortization. An impairment
is recorded when the carrying value of an intangible asset or goodwill exceeds
its fair value. While it is likely that we will have significant intangible
amortization expense as we continue to acquire companies, we believe that
intangible assets represent costs incurred by the acquired company to build
value prior to acquisition and the related amortization and impairment charges
of intangible assets or goodwill, if applicable are not ongoing costs of doing
business.

Income or loss effects related to IAC's former passive ownership in VUE are
excluded from Adjusted Net Income and Adjusted EPS because IAC had no
operating control over VUE, which was sold for a gain in 2005, had no way to
forecast this business, and did not consider the results of VUE in evaluating
the performance of IAC's businesses.

Free Cash Flow

We look at Free Cash Flow as a measure of the strength and performance of our
businesses, not for valuation purposes. In our view, applying "multiples" to
Free Cash Flow is inappropriate because it is subject to timing, seasonality
and one-time events. We manage our business for cash and we think it is of
utmost importance to maximize cash – but our primary valuation metrics are
Operating Income Before Amortization and Adjusted EPS.

OTHER INFORMATION

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995

This press release and our conference call to be held at 4:30 p.m. Eastern
Time today may contain "forward ‑looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. The use of words such as
"anticipates," "estimates," "expects," "intends," "plans" and "believes,"
among others, generally identify forward-looking statements. These
forward-looking statements include, among others, statements relating to:
IAC's future financial performance, IAC's business prospects and strategy,
anticipated trends and prospects in the industries in which IAC's businesses
operate and other similar matters. These forward‑looking statements are based
on management's current expectations and assumptions about future events,
which are inherently subject to uncertainties, risks and changes in
circumstances that are difficult to predict. Actual results could differ
materially from those contained in these forward‑looking statements for a
variety of reasons, including, among others: changes in senior management at
IAC and/or its businesses, changes in our relationship with, or policies
implemented by, Google, adverse changes in economic conditions, either
generally or in any of the markets in which IAC's businesses operate, adverse
trends in the online advertising industry or the advertising industry
generally, our ability to convert visitors to our various websites into users
and customers, our ability to offer new or alternative products and services
in a cost-effective manner and consumer acceptance of these products and
services, operational and financial risks relating to acquisitions, changes in
industry standards and technology, our ability to expand successfully into
international markets and regulatory changes. Certain of these and other risks
and uncertainties are discussed in IAC's filings with the Securities and
Exchange Commission ("SEC"). Other unknown or unpredictable factors that
could also adversely affect IAC's business, financial condition and results of
operations may arise from time to time. In light of these risks and
uncertainties, these forward‑looking statements may not prove to be accurate.
Accordingly, you should not place undue reliance on these forward‑looking
statements, which only reflect the views of IAC management as of the date of
this press release. IAC does not undertake to update these forward-looking
statements.

About IAC

IAC (NASDAQ: IACI) is a leading media and Internet company comprised of more
than 150 brands and products, including Ask.com, About.com, Match.com,
HomeAdvisor.com and Vimeo.com. Focused in the areas of Search, Match, Local
and Media, IAC's family of websites is one of the largest in the world, with
more than a billion monthly visits across more than 30 countries. The company
is headquartered in New York City with offices in various locations throughout
the U.S. and internationally. To view a full list of the companies of IAC,
please visit our website at www.iac.com.

SOURCE IAC

Website: http://www.iac.com
Contact: IAC Investor Relations: Nick Stoumpas or Bridget Murphy,
+1-212-314-7400; IAC Corporate Communications: Justine Sacco, +1-212-314-7326;
IAC, 555 West 18th Street, New York, NY 10011, +1-212-314-7300, Fax
+1-212-314-7309, http://iac.com
 
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