IAC Reports Q1 Results

                            IAC Reports Q1 Results

PR Newswire

NEW YORK, April 30, 2013

NEW YORK, April 30, 2013 /PRNewswire/ -- IAC (Nasdaq: IACI) released first
quarter 2013 results today.

SUMMARY RESULTS
$ in millions (except per share amounts)
                                         Q1 2013     Q1 2012     Growth
 Revenue                                 $  742.2  $  640.6  16%
 Operating Income Before Amortization    112.8       91.3        24%
 Adjusted Net Income                     72.7        48.1        51%
 Adjusted EPS                            0.83        0.51        64%
 Operating Income                        84.6        62.8        35%
 Net Income                             53.6        34.5        56%
 GAAP Diluted EPS                       0.61        0.38        63%
 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 13^th consecutive quarter.
  oFree Cash Flow for the three months ended March 31, 2013 was $58.7
    million, while cash flow from operating activities attributable to
    continuing operations was $92.4 million.
  oIAC repurchased 1.4 million shares of common stock between February 1,
    2013 and April 26, 2013 at an average price of $42.96 per share, or $60.1
    million in aggregate. On April 30, 2013, the Board of Directors
    authorized the Company to repurchase an additional 10 million shares of
    common stock.
  oIAC declared a quarterly cash dividend of $0.24 per share, to be paid on
    June 1, 2013 to stockholders of record as of the close of business on May
    15, 2013.

DISCUSSION OF FINANCIAL AND OPERATING RESULTS
                                     Q1 2013          Q1 2012          Growth
Revenue                              $ in millions
       Search & Applications        $     397.2  $     343.2  16%
       Match                         188.9            174.3            8%
       Local                         74.9             77.1             -3%
       Media                         45.3             15.9             185%
       Other                         36.0             30.2             19%
       Intercompany Elimination      (0.1)            (0.1)            -1%
                                     $     742.2  $     640.6  16%
Operating Income Before Amortization
       Search & Applications        $      93.6 $      73.5 27%
       Match                         46.3             37.3             24%
       Local                         (1.0)            4.0              NM
       Media                         (8.4)            (6.4)            -31%
       Other                         (2.5)            (1.4)            -79%
       Corporate                     (15.3)           (15.7)           2%
                                     $     112.8  $      91.3 24%
Operating Income (Loss)
       Search & Applications        $      87.0 $      73.5 18%
       Match                         41.0             29.9             37%
       Local                         (3.4)            3.8              NM
       Media                         (8.8)            (6.7)            -32%
       Other                         (3.2)            (1.7)            -88%
       Corporate                     (27.9)           (36.0)           22%
                                     $      84.6 $      62.8 35%



Search & Applications
Revenue growth was strong in both Websites and Applications. The increase in
Websites revenue includes a $31.3 million contribution from The About Group,
consolidated October 2012. The increase in Applications revenue was driven by
the contribution from existing B2B partners and new B2C 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 $15.1 million. Operating
income in the current year period reflects an increase of $6.7 million in
amortization of intangibles primarily related to The About Group.

Match
Core, Meetic and Developing revenue increased to $113.8 million, $55.0 million
and $20.1 million, respectively, driven by increases in subscribers. Profits
increased due to higher revenue, lower customer acquisition costs as a
percentage of revenue and operating expense leverage. Revenue and profits in
the prior year period were negatively impacted by the write-off of $5.2
million of deferred revenue in connection with the Meetic acquisition.

Other Segments
Local revenue decreased modestly year-over-year, impacted by the domain name
change at HomeAdvisor. Media revenue increased due to strong growth from
Electus and Vimeo as well as the contribution from News_Beast, consolidated
May 2012. Other revenue increased primarily due to the contribution from
Tutor.com, acquired December 2012. Local Operating Income Before Amortization
loss was negatively impacted by lower revenue at HomeAdvisor and increased
selling and marketing expense as a percentage of revenue. Local operating
loss also reflects an increase of $2.2 million in amortization of intangibles.
The increased Media and Other losses primarily reflect the inclusion of
News_Beast and Tutor.com, respectively.

Corporate operating loss declined due to a reduction in non-cash compensation
expense of $7.7 million as the result of certain awards that became fully
vested in the fourth quarter of 2012.

OTHER ITEMS
Interest expense in the current year period is primarily related to the 4.75%
Senior Notes due 2022, which were issued in December 2012.

Equity in losses of unconsolidated affiliates in Q1 2012 primarily reflects
losses related to our investment in News_Beast, which was accounted for as an
equity method investment from February 1, 2011 through May 31, 2012.

The effective tax rate for both continuing operations and Adjusted Net Income
in Q1 2013 was 33%. The effective rate was lower than the statutory rate of
35% due principally to foreign income taxed at lower rates. The effective tax
rates for continuing operations and Adjusted Net Income in Q1 2012 were 47%
and 42%, respectively. The effective rates were higher than the statutory
rate of 35% due principally to an increase in reserves for and interest on
income tax contingencies and state taxes, partially offset by foreign income
taxed at lower rates. 

LIQUIDITY AND CAPITAL RESOURCES

During Q1 2013, IAC repurchased 1.4 million common shares at an average price
of $42.96 per share, or $60.1 million in aggregate. As of March 31, 2013,
IAC had 83.7 million common and class B common shares outstanding. As of
April 26, 2013, the Company had 1.7 million shares remaining in its stock
repurchase authorization, and an additional 10 million shares of common stock
was added to the authorization by the Board of Directors on April 30, 2013.
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.

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 May 15, 2013 and June 1, 2013, respectively.

As of March 31, 2013, IAC had $679.6 million in cash and cash equivalents and
marketable securities, as well as $580.0 million in long term debt. The
Company has $300.0 million in unused borrowing capacity under its revolving
credit facility.



OPERATING METRICS
                                     Q1 2013      Q1 2012     Growth
SEARCH & APPLICATIONS (in millions)
Revenue
Websites ^(a)                        $   189.6 $   159.3 19%
Applications ^(b)                    207.5        183.9       13%
Total Revenue                        $   397.2 $   343.2 16%
Queries
Websites ^(c)                       2,955        2,565       15%
Applications ^(d)                    5,906        4,989       18%
Total Queries                        8,861        7,553       17%
MATCH (in thousands)
Paid Subscribers
Core ^(e)                            1,940        1,797       8%
Meetic ^(f)                          812          757         7%
Developing ^(g)                      388          267         45%
Total Paid Subscribers               3,140        2,821       11%
HOMEADVISOR (in thousands)
Domestic Service Requests ^(h)       1,209        1,618       -25%
Domestic Accepts ^(i)                1,631        2,031       -20%
International Service Requests ^(h)  232          186         24%
International Accepts ^(i)           314          247         27%

(a) Websites revenue includes Ask.com, The About Group 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 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) Meetic consists of the publicly traded personals company Meetic S.A.,
    excluding Twoo.
(g) Developing includes OkCupid, DateHookup, Twoo and Match's international
    operations, excluding Meetic S.A.
(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     4/26/13 Dilution at:
Share Price                            $46.10  $ 50.00 $ 55.00 $ 60.00 $ 65.00
Absolute Shares as   83.7              83.7    83.7    83.7    83.7    83.7
of 4/26/13
RSUs and Other       2.1               2.1     1.9     1.8     1.7     1.6
Options              9.6     $34.22    2.6     3.1     3.6     4.1     4.5
Total Dilution                         4.7     5.0     5.4     5.8     6.1
% Dilution                             5.3%    5.6%    6.1%    6.5%    6.8%
Total Diluted Shares                   88.4    88.7    89.2    89.5    89.9
Outstanding



CONFERENCE CALL

IAC will audiocast its conference call with investors and analysts discussing
the Company's Q1 financial results on Wednesday, May 1, 2013, at 8:30 a.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 March 31,
                                      2013                 2012
Revenue                               $      742,249 $     
                                                           640,600
Costs and expenses:
Cost of revenue (exclusive of         255,082              223,571
depreciation shown separately below)
Selling and marketing expense         242,914              219,838
General and administrative expense    98,026               91,788
Product development expense           33,582               23,482
Depreciation                          14,016               12,115
Amortization of intangibles         14,078               7,041
Total costs and expenses              657,698              577,835
Operating income                     84,551               62,765
Equity in losses of unconsolidated    (91)                 (5,901)
affiliates
Interest expense                      (7,663)              (1,347)
Other income, net                     1,658                2,756
Earnings from continuing operations   78,455               58,273
before income taxes
Income tax provision                  (25,746)             (27,120)
Earnings from continuing operations  52,709               31,153
(Loss) earnings from discontinued     (944)                3,684
operations, net of tax
Net earnings                         51,765               34,837
Net loss (earnings) attributable to   1,872                (359)
noncontrolling interests
Net earnings attributable to IAC      $              $      
shareholders                          53,637              34,478
Per share information attributable
to IAC shareholders:
Basic earnings per share from      $           $         
continuing operations                 0.65                 0.37
Diluted earnings per share from    $           $         
continuing operations                 0.62                 0.34
Basic earnings per share           $           $         
                                      0.64                 0.42
Diluted earnings per share         $           $         
                                      0.61                 0.38
Dividends declared per common share   $           $         
                                      0.24                 0.12
Non-cash compensation expense by
function:
Cost of revenue                       $           $        
                                      620                 1,724
Selling and marketing expense         386                  1,122
General and administrative expense    10,780               17,117
Product development expense           877                  1,503
Total non-cash compensation expense   $              $      
                                      12,663              21,466



IAC CONSOLIDATED BALANCE SHEET
($ in thousands)
                                   March 31,             December 31,
                                   2013                  2012
ASSETS
Cash and cash equivalents        $      673,757  $      749,977
Marketable securities            5,814                 20,604
Accounts receivable, net         235,181               229,830
Other current assets             140,930               156,339
Total current assets             1,055,682             1,156,750
Property and equipment, net      293,282               270,512
Goodwill                         1,674,220             1,616,154
Intangible assets, net           478,784               482,904
Long-term investments            157,750               161,278
Other non-current assets         120,528               118,230
TOTAL ASSETS                     $     3,780,246   $     3,805,828
LIABILITIES AND SHAREHOLDERS'
EQUITY
LIABILITIES
Current maturities of long-term   $           $       15,844
debt                               -
Accounts payable, trade          78,168                98,314
Deferred revenue                 169,480               155,499
Accrued expenses and other        343,791               355,232
current liabilities
Total current liabilities        591,439               624,889
Long-term debt, net of current    580,000               580,000
maturities
Income taxes payable             481,908               479,945
Deferred income taxes            314,750               323,403
Other long-term liabilities      66,405                31,830
Redeemable noncontrolling         59,254                58,126
interests
Commitments and contingencies
SHAREHOLDERS' EQUITY
Common stock                     251                   251
Class B convertible common        16                    16
stock
Additional paid-in capital       11,606,585            11,607,367
Accumulated deficit              (264,882)             (318,519)
Accumulated other comprehensive   (44,096)              (32,169)
loss
Treasury stock                   (9,661,355)           (9,601,218)
Total IAC shareholders' equity   1,636,519             1,655,728
Noncontrolling interests         49,971                51,907
Total shareholders' equity       1,686,490             1,707,635
TOTAL LIABILITIES AND             $     3,780,246   $     3,805,828
SHAREHOLDERS' EQUITY



IAC CONSOLIDATED STATEMENT OF CASH FLOWS
($ in thousands)
                                                  Three Months Ended March 31,
                                                  2013           2012
Cash flows from operating activities
attributable to continuing operations:
Net earnings                                      $        $      
                                                  51,765        34,837
Less: (loss) earnings from discontinued           (944)          3,684
operations, net of tax
Earnings from continuing operations               52,709         31,153
Adjustments to reconcile earnings from
continuing operations to net cash provided by
operating activities attributable to continuing
operations:
Non-cash compensation expense                     12,663         21,466
Depreciation                                      14,016         12,115
Amortization of intangibles                       14,078         7,041
Deferred income taxes                             (11,010)       3,129
Equity in losses of unconsolidated affiliates     91             5,901
Acquisition-related contingent consideration      1,458          -
fair value adjustment
Changes in assets and liabilities, net of
effects of acquisitions:
Accounts receivable                               (4,635)        (10,537)
Other current assets                              (8,001)        (8,950)
Accounts payable and other current liabilities    (12,929)       (34,991)
Income taxes payable                              22,666         10,843
Deferred revenue                                  7,827          19,622
Other, net                                        3,429          2,258
Net cash provided by operating activities         92,362         59,050
attributable to continuing operations
Cash flows from investing activities
attributable to continuing operations:
Acquisitions, net of cash acquired                (29,194)       (10,267)
Capital expenditures                              (33,638)       (9,633)
Proceeds from maturities and sales of marketable  12,500         18,343
debt securities
Purchases of marketable debt securities           -              (10,012)
Proceeds from sales of long-term investments      214            8,058
Purchases of long-term investments                (975)          (470)
Other, net                                        (1,051)        (8,253)
Net cash used in investing activities             (52,144)       (12,234)
attributable to continuing operations
Cash flows from financing activities
attributable to continuing operations:
Purchase of treasury stock                       (88,605)       (222,863)
Issuance of common stock, net of withholding      552            99,212
taxes
Dividends                                         (21,429)       (10,573)
Excess tax benefits from stock-based awards       12,530         6,477
Principal payments on long-term debt              (15,844)       -
Other, net                                        (1,101)        22
Net cash used in financing activities             (113,897)      (127,725)
attributable to continuing operations
Total cash used in continuing operations          (73,679)       (80,909)
Total cash provided by (used in) discontinued     2,425          (368)
operations
Effect of exchange rate changes on cash and cash  (4,966)        1,220
equivalents
Net decrease in cash and cash equivalents         (76,220)       (80,057)
Cash and cash equivalents at beginning of period  749,977        704,153
Cash and cash equivalents at end of period        $         $     
                                                  673,757       624,096

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)
                                         Three Months Ended March 31,
                                         2013                2012
Net cash provided by operating           $          $        
activities attributable to continuing    92.4                 59.1
operations
Capital expenditures                     (33.6)              (9.6)
Free Cash Flow                          $          $        
                                         58.7                 49.4

For the three months ended March 31, 2013, consolidated Free Cash Flow
increased $9.3 million primarily due to higher Operating Income Before
Amortization and the timing of bonus payments, partially offset by higher
capital expenditures.

IAC RECONCILIATION OF GAAP EPS TO
ADJUSTED EPS
(in thousands except per share amounts)
                                           Three Months Ended March 31,
                                           2013              2012
Net earnings attributable to IAC           $           $      
shareholders                               53,637           34,478
Non-cash compensation expense              12,663            21,466
Amortization of intangibles               14,078            7,041
Acquisition-related contingent             1,458             -
consideration fair value adjustment
Gain on sale of VUE interests and related  1,004             547
effects
Discontinued operations, net of tax        944               (3,684)
Impact of income taxes and noncontrolling  (11,046)          (11,739)
interests
Adjusted Net Income                        $           $      
                                           72,738           48,109
GAAP Basic weighted average shares         84,218            82,801
outstanding
Options, warrants and RSUs, treasury       3,162             8,917
method
GAAP Diluted weighted average shares       87,380            91,718
outstanding
Impact of RSUs                             287               3,289
Adjusted EPS shares outstanding            87,667            95,007
Diluted earnings per share                 $         $        
                                            0.61             0.38
Adjusted EPS                               $         $        
                                            0.83             0.51

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 March 31, 2013
              Operating                              Acquisition-related
              Income       Non-cash     Amortization                     Operating
                                        of           contingent          income
              Before       compensation
                                        intangibles  consideration fair  (loss)
              Amortization expense
                                                     value adjustment
Search &      $       $       $       $          $    
Applications                            -                
(a)          93.6          -         (6.7)                             87.0
Match        46.3         0.2          (4.0)        (1.5)               41.0
Local         (1.0)        -            (2.4)        -                   (3.4)
Media         (8.4)        (0.2)        (0.2)        -                   (8.8)
Other         (2.5)        -            (0.7)        -                   (3.2)
Corporate     (15.3)       (12.6)       -            -                   (27.9)
              $       $       $       $          $    
Total                                     (1.5)                 
              112.8        (12.7)       (14.1)                            84.6
(a) Includes
the results
of The About
Group
The About     $       $       $       $          $    
Group                                   -                 
              15.1          -          (6.5)                              8.6
Supplemental:
Depreciation
Search &      $     
Applications       
              3.9
Match         4.7
Local         2.3
Media         0.5
Other         0.3
Corporate     2.3
Total         $     
depreciation     
              14.0



              For the three months ended March 31, 2012
              Operating Income Non-cash                            Operating
                                                   Amortization of income
              Before           compensation
                                                   intangibles     (loss)
              Amortization     expense
Search &      $         $          $        $     
Applications     73.5          -                 -       
                                                                   73.5
Match         37.3             (0.9)               (6.5)           29.9
Local         4.0              -                   (0.2)           3.8
Media         (6.4)            (0.3)               -               (6.7)
Other         (1.4)            -                   (0.4)           (1.7)
Corporate     (15.7)           (20.3)              -               (36.0)
              $         $          $        $     
Total            91.3       (21.5)                 (7.0)        
                                                                   62.8
Supplemental:
Depreciation
Search &      $       
Applications      3.3
Match         3.5
Local         2.8
Media         0.2
Other         0.2
Corporate     2.1
Total         $       
depreciation    12.1



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, (4) acquisition-related
contingent consideration fair value adjustments and (5) 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) acquisition-related contingent consideration fair value
adjustments, (5) income or loss effects related to IAC's former passive
ownership in VUE, (6) the reversal of a deferred tax liability associated with
our 27% investment in Meetic, (7) the re-measurement losses recorded upon
acquiring control of Meetic and News_Beast, (8) one-time items and (9)
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 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, advertiser 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.

Acquisition-related contingent consideration fair value adjustments are
accounting adjustments to report contingent consideration liabilities at fair
value. These adjustments can be highly variable and are excluded from our
assessment of performance because they are considered non-operational in
nature and, therefore, are not indicative of current or future performance or
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 8:30 a.m. Eastern
Time on May 1, 2013 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, applications,
online dating, 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 / Bridget Murphy, (212)
314-7400, or IAC Corporate Communications, Justine Sacco, (212) 314-7326, IAC,
555 West 18th Street, New York, NY 10011, (212) 314-7300, Fax (212) 314-7309,
http://iac.com
 
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