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IAC Reports Q1 2004 Results

Monday, May 3, 2004 - 01:00

IAC/InterActiveCorp (NASDAQ: IACI) reported Q1 2004 results today. Revenue grew to $1.5 billion, up 23% over the prior year on a comparable net basis and up 6% as reported. Operating income decreased 57% as a result of non-cash compensation and amortization of intangibles recorded primarily as a result of the buy-ins of IAC's formerly public subsidiaries, as well as higher selling and marketing expenses. GAAP net income was $38 million versus a loss of $110 million in the prior year and GAAP diluted EPS was $0.05 versus $(0.23) in the prior year. (Q1 2003 was impacted by a $245 million charge related to IAC's equity interest in VUE.) Please see the next page for explanation of comparable net revenue and reported revenue.

Operating Income Before Amortization grew by 14% to $198 million. Adjusted Net Income grew 23% to $141 million and Adjusted EPS was $0.18 versus $0.16 in the prior year.

IAC's operating businesses delivered strong results for the quarter. HSN U.S. recorded solid topline growth and margin expansion, with revenues, operating income and Operating Income Before Amortization up 13%, 53% and 36%, respectively. Ticketing had a good quarter, with operating income and Operating Income Before Amortization up 19% and 13%, respectively. IAC Travel ("IACT") increased revenues on a comparable net basis by 41% to $494 million, operating income by 21% to $85 million and Operating Income Before Amortization by 23% to $128 million, driven by growth in its merchant hotel, packages and international businesses.

                               Q1 SUMMARY RESULTS
                        $ in millions, except per share

                                            Q1 2004      Q1 2003     Growth

    Revenue (on a comparable net basis)      $1,471       $1,193        23%
    Revenue                                  $1,471       $1,387         6%
    Operating income                            $43          $99       -57%
    Operating Income Before Amortization       $198         $174        14%
    Net Income                                  $38        $(110)       NM
    GAAP Diluted EPS                          $0.05       $(0.23)       NM
    Adjusted Net Income                        $141         $115        23%
    Adjusted EPS                              $0.18        $0.16        11%


  Table of Contents:

   Segment Results                                            Page 3
   Discussion of Financial and Operating Results              Pages 4 - 6
   Outlook                                                    Page 6
   Segment Operating Metrics                                  Pages 7
   Operating Highlights                                       Page 8
   GAAP Financial Statements                                  Pages 9 - 11
   Dilutive Securities and Liquidity and Capital Resources    Page 12
   Reconciliations of GAAP to Non-GAAP Measures               Pages 13 - 14
   Footnotes and Definitions                                  Pages 15 - 16

For definitions of non-GAAP items, please see page 16 of this release. For IAC's Principles of Financial Reporting, a detailed explanation of why we feel these non-GAAP items are useful to investors and management, please refer to IAC's Q3 2003 earnings release. This document, as well as other investor relations materials, are available for download on our website at www.iac.com/investor_relations.

As part of the integration of IACT's businesses, Hotels.com conformed its merchant hotel business practices with those of the other IACT businesses. As a result, beginning January 1, 2004, IAC commenced prospectively reporting revenue for Hotels.com on a net basis, consistent with Expedia's historic practice. Accordingly, we are including prior year results as though they had also been reported on a net basis for purposes of better comparability. There was no impact to operating income or Operating Income Before Amortization from the change in reporting.

SEGMENT RESULTS

Segment results for the first quarter ended March 31 were as follows ($ in millions):

                                            Q1 2004      Q1 2003     Growth
    REVENUE
     IAC Travel (on a comparable
      net basis)                             $494.0       $351.1       41%
     Electronic Retailing                     588.0        530.2       11%
     Ticketing                                202.3        195.1        4%
     Personals                                 48.8         40.9       19%
     IAC Local and Media Services              32.1          8.4      282%
     Financial Services and Real Estate        39.7           --       NM
     Teleservices                              71.8         70.8        1%
     Other                                     (6.0)        (3.7)     -60%
     Total                                 $1,470.7     $1,192.7       23%

     As reported:
       IAC Travel                             494.0       $545.1       -9%
       Total                               $1,470.7     $1,386.7        6%

    OPERATING INCOME
     IAC Travel                               $84.7        $69.9       21%
     Electronic Retailing                      32.8         33.1       -1%
     Ticketing                                 40.7         34.3       19%
     Personals                                  2.8          0.6      369%
     IAC Local and Media Services             (27.8)       (19.4)     -43%
     Financial Services and Real Estate        (3.6)          --       NM
     Teleservices                               3.2          1.9       67%
     Corporate and other                      (90.2)       (21.5)    -321%
     Total                                    $42.6        $99.0      -57%

    OPERATING INCOME BEFORE AMORTIZATION
     IAC Travel                              $127.6       $103.7       23%
     Electronic Retailing                      46.3         45.6        2%
     Ticketing                                 46.8         41.4       13%
     Personals                                  6.3          2.7      135%
     IAC Local and Media Services             (13.6)        (6.8)    -100%
     Financial Services and Real Estate         3.1           --       NM
     Teleservices                               3.2          1.9       67%
     Corporate and other                      (22.2)       (14.6)     -51%
     Total                                   $197.6       $173.9       14%

Please see page 14 for further segment detail and reconciliations of Operating Income Before Amortization to the comparable GAAP measure.

              DISCUSSION OF FINANCIAL AND OPERATING RESULTS

  IAC TRAVEL

IAC Travel growth continued to benefit from positive online and overall travel trends. The international, packages and merchant hotel businesses, as well as the inclusion of Hotwire in this year's results, led the growth in the quarter. IACT revenue was up 41% on a comparable net basis, while bookings were up 51%. International bookings increased by 108%, and international revenue was up 79%, or 61% on a local currency basis. The international business was driven by particularly strong growth in the UK and Germany. Improved package offerings, consumer acceptance of the product and Hotels.com's new packages product helped drive packages revenue growth of 73%. In addition, the Q1 2004 comparison benefited from the adverse impact of the war in Iraq last year, partially offset by the termination of the Travelocity affiliate relationship in September 2003, which represented 8% of IACT reported revenue and 3% of revenue on a net basis in the prior year.

The merchant hotel business continued its strong growth, with total merchant hotel revenue up 39% and total merchant room nights stayed up 36% to 7.0 million. Industry-wide increases in average daily room rates helped increase revenue per room night during the quarter. International hotel merchant revenue doubled year over year. Hotels.com experienced the highest day of bookings in its history during the quarter, and has made significant progress towards replacing the volume lost from the termination of the Travelocity deal. Interval also contributed solidly to this quarter's results, with higher membership and exchange revenue and continued cost efficiencies and online migration.

The IACT companies are also beginning to drive revenue to each other, increasing the market position of all of our brands. For example, Expedia packages booked on Hotels.com climbed 114% from Q4. Expedia Corporate Travel ("ECT") launched new online features and services including personalized seat searches, automatic flight upgrades, unused ticket notifications and company- defined destinations within hotel searches. ECT also announced CSX Corporation as its 13th Fortune 500 customer.

Operating income and Operating Income Before Amortization margins were lower than the prior year, as selling and marketing expenses increased due to higher costs of traffic acquisition online, higher CPM's offline and a greater investment in our international businesses, which have higher selling and marketing expenses relative to revenue due to their earlier stages of development. We expect higher margins for the remainder of 2004 as compared to Q1.

ELECTRONIC RETAILING

Electronic Retailing was led by strong performance at HSN U.S., which increased revenue by 13% to $467.8 million from $415.0 million, operating income by 53% to $28.4 million from $18.5 million and Operating Income Before Amortization by 36% to $41.6 million from $30.6 million. The revenue increase was driven primarily by an increase in price point as a result of successful computer and electronics sales as well as higher price points in other categories. HSN.com, which grew 25% over the prior year, and the Improvements Catalog, which grew 15%, also contributed. In addition, America's Store continues to benefit from increased sales related to distribution that was added last year.

HSN continues to strengthen its customer service and has significantly improved its call handling times. In April, HSN purchased a new distribution facility in Tennessee, which will replace its current facility in Salem, Virginia. The new facility is needed for additional capacity and is expected to result in greater efficiencies over time. HSN will incur approximately $5 million in incremental costs over the course of 2004 during this transition period.

HSN International revenue increased 4%, operating income decreased 70% and Operating Income Before Amortization decreased 68%. Q1 2003 results were favorably impacted by an override commission payment at Euvia. We do not expect international results to improve significantly over the next few quarters, due to increased competition at both Euvia and HSN Germany, and weakness in the Wellness category at HSN Germany.

TICKETING

Ticketmaster had a strong quarter, both in the U.S. and internationally. Operating Income Before Amortization was $46.8 million, up 13% year over year, while operating income was $40.7 million, up 19%. Top concert ticket onsales in the U.S. included Prince, Madonna and Rod Stewart. International results were led by the U.K., which benefited from a large number of concerts and festival-related shows.

Revenue growth was driven mainly by increased revenue per ticket as a result of favorable currency exchange rates on international sales, contractual increases to convenience charges and a changing mix of ticket sales through our various distribution channels. These increases were partially offset by relatively fewer concert tickets sold in Q1 2004 compared to Q1 2003. Ticketing margins expanded due to higher revenue and slightly lower variable costs, but we anticipate lower margins in subsequent quarters as compared to Q1 due to normal seasonality and product mix.

PERSONALS

Revenue growth in Personals was driven mainly by growth in paid subscribers, which increased 32% to approximately 1 million, offset partially by 9% lower revenue per subscriber. Excluding the results of uDate, which was acquired on April 4, 2003, paid subscribers grew 23%. The international business contributed 25% of paid subscribers in Q1, versus 15% in the prior period. Repeat subscribers grew nearly 100% over the prior year, a strong testament to the significant role the business plays in making personal connections in the lives of consumers. Personals margins increased primarily due to lower domestic marketing spend, margin improvement from international operations and the inclusion of uDate results.

IAC LOCAL AND MEDIA SERVICES

Results in IAC Local and Media Services were largely impacted by the inclusion in this year's results of EPI, which was acquired on March 25, 2003. Excluding the results of EPI, Q1 revenue for IAC Local and Media Services would have been $5.8 million, operating income would have been a loss of $(17.1) million and Operating Income Before Amortization would have been a loss of $(5.0) million. Citysearch continued to grow its pay-for-performance ("PFP") business and increased its PFP revenues by 37 % sequentially.

During Q3 2003, EPI sold its Australian operation, which contributed $6.2 million in operating income to IAC in 2003, primarily in Q2. As a result, we expect similar losses in Q2 as compared to Q1 due to the seasonality of EPI's business.

FINANCIAL SERVICES & REAL ESTATE

Revenue at LendingTree was up 2% over the prior year, despite a 45% drop in industry-wide consumer demand for mortgage refinancings, which reached record levels in Q1 2003. Results were driven by purchase mortgage activity, which more than doubled as a result of strong close rates and a targeted marketing campaign, as well as the real estate and home equity products and incremental revenue from acquisitions. In addition, LendingTree continues to increase its marketing spend through both online and offline channels in order to grow and diversify into a broader consumer finance and real estate business. Results for the prior year were not included in IAC's Q1 2003 results as the acquisition was closed on August 8, 2003.

TELESERVICES

PRC benefited from continued decreases in fixed costs and depreciation expense in Q1 versus the prior year. Key operating and strategic initiatives and lower capital spending throughout the organization drove these cost efficiencies. PRC's international call center business continues to expand and is expected to become an increasingly important component of the business. The industry and PRC continue to face significant pricing pressure and competition for reduced call volumes. Consistent with anticipated industry and client seasonal trends, PRC expects modest growth for the full year.

OTHER

In Q1 2004, IAC recognized non-cash compensation expense of $45.0 million in connection with IAC's mergers with its formerly publicly traded subsidiaries, which were completed in 2003.

In the prior year, IAC recorded a charge related to its equity interest in VUE of $245 million pre-tax and $149 million after-tax, or $0.29 per diluted share.

In Q1 2004, the tax rate for continuing operations was 39% and the tax rate for adjusted net income was 38%. The 2004 tax rate is higher than the federal statutory tax rate of 35% due principally to state and local income taxes and the amortization of intangibles that are non-deductible for tax purposes.

OUTLOOK

IAC reaffirms its outlook for full year 2004 Operating Income Before Amortization in the range of $1 - $1.2 billion, with operating income in the range of $415 - $615 million.

                        SEGMENT OPERATING METRICS


  IAC TRAVEL                                Q1 2004     Q1 2003     Growth
     Gross Bookings By Geography (mm):
        Domestic                             $2,859      $2,001       43%
        International                           630         302      108%
        Total                                $3,489      $2,303       51%

     Net Revenue By Geography (mm):   (a)
        Domestic                               $413        $306       35%
        International                            81          45       79%
        Total                                  $494        $351       41%

     Gross Bookings by Brand (mm):
        Expedia                              $2,672      $1,802       48%
        Hotels.com                              494         344       44%
        Other                                   323         157      105%
        Total                                $3,489      $2,303       51%

     Gross Bookings by Agency / Merchant (mm):
        Agency                               $1,895      $1,318       44%
        Merchant                              1,594         985       62%
        Total                                $3,489      $2,303       51%

     Packages revenue (mm)                     $104         $60       73%
     Number of transactions (mm)                8.2         5.7       44%
     Merchant hotel room nights (mm)  (b)       7.0         5.1       36%

     INTERVAL:
        Members (000s)                        1,622       1,522        7%
        Confirmations (000s)                    266         225       18%
        Share of confirmations online         17.2%       13.2%

  HSN - U.S. (Households as of end of period)
     Units Shipped (mm)                        10.1        10.3       -2%
     Gross Profit %                           36.4%       36.5%
     Return Rate                              16.8%       18.0%
     Average price point                     $51.02      $44.16       16%
     Product mix:
        Home Hard Goods                         27%         25%
        Home Fashions                           14%         14%
        Jewelry                                 17%         23%
        Health / Beauty                         31%         25%
        Apparel / Accessories                   11%         13%
     HSN total homes (mm)                      83.1        79.5        5%
     HSN FTEs (mm)                             72.8        69.8        4%
     HSN.com % of Sales                         15%         14%

  TICKETING
     Number of tickets sold (mm)               26.7        27.1       -1%
     Gross value of tickets sold (mm)        $1,326      $1,265        5%

  PERSONALS
     Paid Subscribers (000s)                1,011.7       766.6       32%

  FINANCIAL SERVICES & REAL ESTATE
     Loan/Real Estate Requests transmitted:
        Number (000s)                         619.0       696.1      -11%
        Volume of Requests (bn)               $59.7       $72.6      -18%
     Loan/Real Estate Transactions
      closed in Quarter:
        Number                                 64.9        74.2      -13%
        Volume of Transactions Closed (bn)     $6.7        $8.6      -22%
     Transmit Rate                            75.8%       64.7%
     Static Pool Close Rate           (c)     14.6%       12.7%
     Number of Lenders                          233         206       13%
     Number of Realty Agencies                  742         665       12%


  Note:  rounding differences may exist.

  (a) Represents revenue as if Hotels.com revenue was presented on a net
      basis in 2003.

  (b) Merchant room nights are reported as stayed for Expedia and
      Hotels.com, and booked for Hotwire.

  (c) The static pool close rate includes loans and real estate
      transactions.  The static pool close rate for loans incorporates the
      average time lag between the submission of a loan request (a "QF") and
      the closure of a loan.  It represents the closure rate of approved QFs
      from a static pool of requests submitted in the most recent quarter
      with a complete closure cycle.  A static pool is considered to have a
      complete closure cycle after 120 days from the month in which a
      mortgage QF was submitted, 90 days after a home equity QF was
      submitted, 60 days after an auto or personal QF was submitted, and
      less than 30 days after a credit card QF was submitted.  The static
      pool closing cycle for a real estate referral is 180 days from the
      month in which a real estate referral was submitted.


                           OPERATING HIGHLIGHTS

  *  Expedia and Hotels.com announced merchant hotel agreements with
     Marriott, Joie de Vivre Hospitality, Noble House Hotels and Resorts,
     and Prime Hospitality Corp., giving customers access to even more high-
     quality, distinctive properties on Expedia and Hotels.com.

  *  Expedia launched direct connections from the Expedia Web site to the
     central reservations systems of Hyatt, Outrigger and LaQuinta, making
     it easier and more cost-effective for hotel property owners to process
     reservations provided to the millions of travelers shopping monthly on
     Expedia.com.

  *  Expedia and Hotels.com ranked #1 and #2 in overall online customer
     experience in an extensive survey of agency and supplier lodging sites
     conducted by Vividence, a leading customer experience market research
     firm.

  *  ECT became the first and only of the new entrants in the corporate
     travel space to announce an online adoption guarantee. Companies are
     guaranteed that their travelers will book 50% of all transactions
     online within 50 days of implementing the service, or ECT will refund
     all qualifying transaction fees.

  *  Expedia recently launched a dynamic packaging site for the Eurostar
     train from London to Paris/Brussels allowing customers to bundle the
     train with hotel, car and destination services, and the new site is
     showing early signs of great promise.

  *  HSN.com's dressing room program, "My Virtual Model," was enhanced with
     new features such as "My Closet" for users to store potential outfits
     and an "Outfit Wizard" that provides customers with a "personal
     stylist" to help create a coordinating outfit.

  *  Ticketmaster's auction product continued to gain momentum as we
     launched 10 new auctions for sports and entertainment clients including
     Aretha Franklin, NASCAR, Ringling Brothers, the Orlando Magic, the
     Atlanta Hawks and the Tampa Bay Lightning.

  *  Ticketmaster and Clear Channel Entertainment launched Get In First. The
     new online promotion is being featured at Clear Channel Entertainment
     amphitheaters in 22 cities nationwide and gives fans priority entry
     when purchasing their tickets using Ticketmaster's ticketFast®
     technology.

  *  Match.com was named the world's most popular dating site by industry-
     leading independent measurement firm comScore Media Metrix.  In January
     2004, Match.com personals sites, which include uDate.com, had
     29.6 million unique visitors - nearly three times as many as its
     nearest rival.

  *  LendingTree re-launched its RealEstate.com website, with an unmatched
     suite of services and enhanced functionality, including listings on
     more than 400,000 homes, valuable rebates, home loan products and home
     valuation services.  The company's goal is to have one million home
     listings available in 2004.

  *  Since January 1, IAC acquired Zero Degrees, an online business
     networking firm; Activity World, a destination services firm based in
     Hawaii; TripAdvisor, an online travel search company; and Egencia, an
     online corporate travel agency based in Europe.  All of these
     transactions have closed.


                        GAAP FINANCIAL STATEMENTS

   IAC CONSOLIDATED STATEMENT OF OPERATIONS
   (unaudited; $ in thousands except per share amounts)

                                               Three Months Ended March 31,
                                                   2004              2003

  Service revenue                               $856,492          $855,335
  Product sales                                  614,245           531,399
     Net revenue                               1,470,737         1,386,734
  Cost of sales-service revenue                  329,478           467,510
  Cost of sales-product sales                    366,940           319,372
     Gross profit                                774,319           599,852
  Selling and marketing                          309,420           189,353
  General and administrative                     174,384           153,255
  Other                                           32,637            25,807
  Cable distribution fees                         17,764            15,326
  Amortization of non-cash distribution
   and marketing expense                           6,339            10,489
  Amortization of non-cash
   compensation expense                           68,968            10,211
  Amortization of intangibles                     79,717            52,156
  Depreciation                                    42,511            42,162
  Merger costs                                        --             2,096
  Operating income                                42,579            98,997
  Other income (expense):
     Interest income                              45,409            39,830
     Interest expense                            (20,755)          (24,278)
     Equity in losses of VUE                        (352)         (243,276)
     Equity in income (losses) in
      unconsolidated subsidiaries and
      other expenses                               7,528            (1,879)
  Total other income (expense), net               31,830          (229,603)

  Earnings (loss) from continuing
   operations before income taxes and
   minority interest                              74,409          (130,606)
     Income tax (expense) benefit                (29,223)           54,174
     Minority interest                            (1,396)          (25,727)
  Earnings (loss) from continuing operations      43,790          (102,159)
     Discontinued operations, net of tax          (2,263)           (4,637)
  Earnings (loss) before preferred dividend       41,527          (106,796)
     Preferred dividend                           (3,264)           (3,264)
  Net income (loss)                              $38,263         $(110,060)

  Income (loss) per share:
     Basic earnings (loss) per share
      from continuing operations                   $0.06            $(0.22)
     Diluted earnings (loss) per share
      from continuing operations                   $0.05            $(0.22)

     Basic earnings (loss) per share               $0.05            $(0.23)
     Diluted earnings (loss) per share             $0.05            $(0.23)



   IAC CONSOLIDATED BALANCE SHEET
   (unaudited; $ in thousands)

                                               March 31,       December 31,
                                                  2004              2003
                               ASSETS
  CURRENT ASSETS
  Cash and cash equivalents                   $1,491,169          $899,062
  Restricted cash equivalents                     26,128            31,356
  Marketable securities                        2,431,917         2,419,735
  Accounts and notes receivable, net             458,282           429,424
  Inventories, net                               216,746           215,995
  Deferred tax assets, net                        62,357            65,071
  Other current assets                           246,437           154,333
  Total current assets                         4,933,036         4,214,976

  Property, Plant and Equipment
     Computer and broadcast equipment            713,357           686,899
     Buildings and leasehold improvements        152,912           155,212
     Furniture and other equipment               151,171           154,378
     Land                                         21,155            21,172
     Projects in progress                         29,338            30,962
                                               1,067,933         1,048,623
     Less accumulated depreciation and
      amortization                              (608,919)         (575,446)
     Total property, plant and
      equipment, net                             459,014           473,177

  Goodwill                                    11,262,861        11,291,768
  Intangible assets, net                       2,472,654         2,513,889
  Long-term investments                        1,447,711         1,426,502
  Preferred interest exchangeable for
   common stock                                1,428,530         1,428,530
  Cable distribution fees, net                   124,659           128,971
  Notes receivable and advances, net of
   current portion                                15,648            14,507
  Deferred charges and other, net                 98,884            93,928
  Non-current assets of
   discontinued operations                           339               340
  TOTAL ASSETS                               $22,243,336       $21,586,588

                   LIABILITIES AND SHAREHOLDERS' EQUITY

  CURRENT LIABILITIES
  Current maturities of long-term
   obligations                                    $2,970            $2,850
  Accounts payable, trade                        749,426           687,977
  Accounts payable, client accounts              243,938           142,002
  Cable distribution fees payable                 41,964            39,142
  Deferred merchant bookings                     619,015           218,822
  Deferred revenue                               107,327           180,229
  Income tax payable                              97,780            96,817
  Other accrued liabilities                      431,185           494,280
  Current liabilities of discontinued
   operations                                     13,362            16,062
  Total current liabilities                    2,306,967         1,878,181

  Long term obligations, net of current
   maturities                                  1,134,322         1,120,097
  Other long-term liabilities                     81,098            67,981
  Deferred income taxes                        2,599,557         2,565,415
  Common stock exchangeable for preferred
   interest                                    1,428,530         1,428,530
  Minority interest                              108,409           110,799

  SHAREHOLDERS' EQUITY
  Preferred stock                                    131               131
  Common stock                                     6,352             6,305
  Class B convertible common stock                   646               646
  Additional paid-in capital and unearned
   compensation                               13,759,762        13,634,926
  Retained earnings                            2,315,215         2,276,952
  Accumulated other comprehensive income          43,500            36,896
  Treasury stock                              (1,536,155)       (1,535,273)
  Note receivable from key executive for
   common stock issuance                          (4,998)           (4,998)
  Total shareholders' equity                  14,584,453        14,415,585
  TOTAL LIABILITIES AND SHAREHOLDERS'
   EQUITY                                    $22,243,336       $21,586,588


   IAC STATEMENT OF CASH FLOWS
  (unaudited; $ in thousands)

                                                Three Months Ended March 31,
                                                    2004              2003
  Cash flows from operating activities:
    Earnings (loss) from continuing operations   $43,790         $(102,159)
    Adjustments to reconcile income
     (loss) from continuing
     operations to net cash provided
     by operating activities:
       Depreciation and amortization             122,228            94,318
       Amortization of non-cash
        distribution and marketing                 6,339            10,489
       Amortization of non-cash
        compensation expense                      68,968            10,211
       Amortization of cable distribution fees    17,764            15,326
       Amortization of deferred
        financing costs                              161               541
       Deferred income taxes                     (26,819)          (52,202)
       Loss on retirement of bonds                    --             1,446
       Equity in losses of
        unconsolidated subsidiaries,
        including VUE                             (2,460)          243,419
       Non-cash interest income                   (9,952)           (8,673)
       Minority interest                           1,396            25,727
       Increase in cable distribution fees       (12,106)           (9,367)
    Changes in current assets and liabilities:
       Accounts receivable                       (32,515)          (17,515)
       Inventories                                (6,275)           17,708
       Prepaid and other assets                  (58,598)          (19,429)
       Accounts payable and accrued
        liabilities                               60,732            73,318
       Deferred revenue                          (64,390)           57,329
       Deferred  merchant bookings               400,194           120,854
       Funds collected by
        Ticketmaster on behalf
         of clients, net                          81,972            22,571
       Other, net                                  3,622            (8,257)
  Net Cash Provided By Operating Activities      594,051           475,655
  Cash flows from investing activities:
    Acquisitions and deal costs, net
     of cash acquired                             (4,729)         (366,887)
    Capital expenditures                         (34,390)          (33,738)
    Purchase of marketable securities         (1,344,834)       (1,883,334)
    Proceeds of marketable securities          1,334,757         1,066,088
    Increase in long-term investments
     and notes receivable                           (805)              (93)
    Other, net                                     9,221             2,116
  Net Cash Used in Investing Activities          (40,780)       (1,215,848)
  Cash flows from financing activities:
    Principal payments on long-term
     obligations                                    (532)          (10,087)
    Purchase of treasury stock by IAC
     and subsidiaries                               (882)          (24,854)
    (Repurchase) issuance of bonds                    --           (98,776)
    Proceeds from sale of subsidiary
     stock, including stock options                   --            14,032
    Proceeds from issuance of common
     stock and LLC shares                         40,834            26,893
    Preferred dividend                            (3,264)           (3,264)
    Other, net                                    10,472            (8,193)
  Net Cash Provided By (Used In)
   Financing Activities                           46,628          (104,249)
  Net Cash Used In Discontinued Operations        (5,292)          (79,010)
    Effect of exchange rate changes
     on cash and cash equivalents                 (2,500)            1,811
  Net Increase (Decrease) In Cash and
   Cash Equivalents                              592,107          (921,641)
  Cash and cash equivalents at
   beginning of period                           899,062         1,998,114
  Cash And Cash Equivalents at
   End of Period                              $1,491,169        $1,076,473


                           DILUTIVE SECURITIES

IAC has various tranches of dilutive securities (warrants, convertible preferred, and options), including securities initially issued by its former public subsidiaries which have been converted to IAC securities. The table below details these securities as well as potential dilution at various stock prices (amounts in millions, except average strike/conversion price):

                              Avg.                    Dilution at:
                             Strike/
                             Conver-  As of
                      Shares  sion   4/26/04
  Average Share Price                 $33.37  $35.00  $40.00  $45.00  $50.00
  Absolute Shares as
   of 4/26/04           701.0          701.0   701.0   701.0   701.0   701.0
  RSUs                    8.7            8.7     8.7     8.7     8.7     8.7
  Options                91.0  $11.45   37.3    38.2    40.3    42.0    43.3
  Warrants               77.0  $25.78   16.8    18.7    25.3    30.4    34.5
  Convertible Preferred  19.4  $33.75    0.0    19.4    20.2    20.8    21.3

  Total Treasury Method
   Dilution                             62.9    85.0    94.5   101.9   107.9
   % Dilution                           8.2%    10.8%  11.9%   12.7%   13.3%
  Total Treasury Method
  Diluted Shares Outstanding           763.9   786.0   795.5   802.9   808.9

IAC has outstanding approximately 8.7 million shares of restricted stock and restricted stock units ("RSUs") which vest principally over a period of one to five years, including 4.5 million issued in 2004. Ultimately we expect our RSU program to result in total dilution to GAAP and Adjusted Net Income shares of approximately 2% to 3% over the next 5 years.

IAC currently has 38.7 million shares remaining in its stock repurchase authorization. IAC may purchase shares over an indefinite time, on the open market or through private transactions, depending on market conditions, share price and other factors.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2004, IAC had $3.9 billion in cash and marketable securities. This includes $196 million in net funds collected on behalf of clients by Ticketmaster and $737 million in combined deferred merchant bookings and deferred revenue at IAC Travel.

As of March 31, 2004, IAC had long-term debt of $1.1 billion, consisting mainly of 6.75% Senior Notes due 2005 and 7.00% Senior Notes due 2013. This does not include IAC's convertible preferred stock with a balance sheet carrying value based on the par value of $0.01 per share and a face value of $656 million. The convertible preferred is initially convertible at $33.75 (subject to downward adjustment if the price of IAC common stock is more than $35.10 at the time of conversion).

               RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

   IAC RECONCILIATION OF GAAP EPS TO ADJUSTED EPS - Q1
   (unaudited; in thousands except per share amounts)

                                             Three Months Ended March 31,
                                                2004              2003

  Diluted earnings per share (a)               $0.05            $(0.23)
  GAAP diluted weighted average
   shares outstanding                        752,167           487,244

  Net income                                 $38,263         $(110,060)
  Amortization of non-cash
   distribution and marketing                  6,339            10,489
  Amortization of non-cash compensation       68,968            10,211
  Amortization of intangibles                 79,717            52,156
  Merger costs (b)                                --             2,096
  Discontinued operations, net of tax (c)      2,263             4,637
  Equity (income) loss from 5.44%
   common interest in VUE (d)                    352           243,276
  Impact of pro forma adjustments, income
   taxes and minority interest (e)           (57,721)          (98,205)
  Add back of preferred dividend               3,264                --

  Adjusted Net Income                       $141,445          $114,600

  Adjusted EPS weighted average shares
   outstanding                               777,528           699,167

  Adjusted EPS                                 $0.18             $0.16

  GAAP Basic weighted average shares
   outstanding                               697,499           487,244
     Options, warrants and restricted
      stock, treasury method                  54,668                --
     Conversion of preferred
      shares to common (if applicable)            --                --
  GAAP Diluted weighted average shares
   outstanding                               752,167           487,244
     Pro forma adjustments                        --           187,458
     Options, warrants and RS, treasury
      method not included in diluted
      shares above                                --            22,470
     Expedia convertible preferred;
      add'l restricted shares for
      adjusted EPS                            25,361             1,995
     Adjusted EPS shares outstanding (f)     777,528           699,167


   IAC RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
   (unaudited in millions)
                                            Three Months Ended March 31,
                                               2004               2003
  Net Cash Provided by Operating
   Activities                                 $594.1             $475.7
      Capital expenditures                     (34.4)             (33.7)
      Preferred dividend paid                   (3.3)              (3.3)
  Free Cash Flow                              $556.4             $438.7

$333 million of working capital was attributable to increased deferred merchant bookings and deferred revenue at IAC Travel, versus $179 million in the prior year. Ticketmaster client cash contributed $82 million to the change in working capital in the current period as a result of unexpected timing of certain payments which the company does not expect to recur.

   IAC RECONCILIATION OF OPERATING INCOME TO OPERATING INCOME BEFORE
   AMORTIZATION - 2004 OUTLOOK
   (unaudited; in millions)

                                                   2004 Outlook

  Operating Income Before Amortization               $1,200
  Less:  Amortization                                  (585)
  Operating income                                     $615

We currently expect Operating Income Before Amortization in the range of $1.0 billion to $1.2 billion for the full year 2004. The above reconciliation is for purposes of reconciliation only and represents the high end of the range of our current outlook.

Please see pages 15 and 16 for footnotes and definitions of non-GAAP measures.

   IAC RECONCILIATION OF DETAILED SEGMENT RESULTS TO GAAP - Q1
   (unaudited; $ in millions; rounding differences may occur)

                                                 Q1 2004           Q1 2003
  Revenue
     IAC Travel                                   $494.0            $545.1
    Electronic Retailing:
      HSN U.S.                                     467.8             415.0
      HSN International                            120.2             115.2
      Total Electronic Retailing                   588.0             530.2
    Ticketing                                      202.3             195.1
    Personals                                       48.8              40.9
    IAC Local and Media Services                    32.1               8.4
    Financial Services and Real Estate              39.7                -
    Teleservices                                    71.8              70.8
    Intersegment Elimination                        (6.0)             (3.7)
   Total Revenue                                $1,470.7          $1,386.7

  Operating Income Before Amortization
    IAC Travel                                    $127.6            $103.7
    Electronic Retailing:
      HSN U.S. (g)                                  41.6              30.6
      HSN International                              4.7              15.0
      Total Electronic Retailing                    46.3              45.6
    Ticketing                                       46.8              41.4
    Personals                                        6.3               2.7
    IAC Local and Media Services                   (13.6)             (6.8)
    Financial Services and Real Estate               3.1                --
    Teleservices                                     3.2               1.9
    Interactive Development                         (1.0)             (1.1)
    Corporate expense and other adjustments        (21.7)            (13.3)
    Intersegment Elimination                         0.4              (0.3)
  Total Operating Income Before Amortization      $197.6            $173.9

  Amortization and merger costs (b)
    IAC Travel                                     $42.9             $33.8
    Electronic Retailing:
      HSN U.S.                                      13.2              12.2
      HSN International                              0.3               0.4
      Total Electronic Retailing                    13.6              12.5
    Ticketing                                        6.2               7.1
    Personals                                        3.5               2.1
    IAC Local and Media Services                    14.2              12.6
    Financial Services and Real Estate               6.6                --
    Teleservices                                      --                --
    Interactive Development                           --               1.1
    Corporate expense and other adjustments         68.1               5.7
  Total amortization and merger costs             $155.0             $75.0

  Operating income
    IAC Travel                                     $84.7             $69.9
    Electronic Retailing:
      HSN U.S. (g)                                  28.4              18.5
      HSN International                              4.4              14.6
      Total Electronic Retailing                    32.8              33.1
    Ticketing                                       40.7              34.3
    Personals                                        2.8               0.6
    IAC Local and Media Services                   (27.8)            (19.4)
    Financial Services and Real Estate              (3.6)               -
    Teleservices                                     3.2               1.9
    Interactive Development                         (1.0)             (2.1)
    Corporate expense and other adjustments        (89.7)            (19.0)
    Intersegment Elimination                         0.4              (0.3)
  Total operating income                           $42.6             $99.0

  Other income, net                                 31.8            (229.6)
  Earnings (loss) from cont. operations
   before income taxes and min. int.                74.4            (130.6)
  Income tax benefit (expense)                     (29.2)             54.2
  Minority interest                                 (1.4)            (25.7)
  Earnings (loss) from continuing operations        43.8            (102.2)
  Discontinued operations                           (2.3)             (4.6)
  Earnings (loss) before preferred dividend         41.5            (106.8)
  Preferred dividend                                (3.3)             (3.3)
  Net income (loss) available to common
   shareholders                                    $38.3           $(110.1)

   FOOTNOTES

  (a) Diluted net income for GAAP EPS purposes is impacted by dilutive
      securities of subsidiaries of $2.0 million for the three months ended
      March 31, 2003.   The amount represents dilutive options and warrants
      held by minority interests of Expedia, Hotels.com and Ticketmaster in
      excess of basic shares held by minority interests, which were assumed
      by IAC in the buy-ins.

  (b) Merger costs incurred by Expedia, Hotels.com and Ticketmaster in 2003
      for investment banking, legal and accounting fees were related
      directly to the mergers and are treated as non-recurring for
      calculating Operating Income Before Amortization and Adjusted Net
      Income.  These costs were incurred solely in relation to the mergers,
      but may not be capitalized since Expedia, Hotels.com and Ticketmaster
      were considered the targets in the transaction for accounting
      purposes.  These costs do not directly benefit operations in any
      manner, would not normally be recorded by IAC if not for the fact it
      already consolidated these entities, and are all related to the same
      transaction, as IAC simultaneously announced its intention to commence
      its exchange offer for the companies in 2002.  The majority of costs
      are for advisory services provided by investment bankers, and the
      amounts incurred in 2003 were pursuant to the same fee letters entered
      into by each company in 2002.  Given these factors, IAC believes it is
      appropriate to consider these costs as one-time.  Operating Income
      before Amortization by segment is presented before one-time items.

  (c) Discontinued operations consists of the results of Avaltus and
      ECS/Styleclick, which were discontinued in 2003.

  (d) During Q1 2003, IAC received the audited financial statements of VUE
      for the year ended December 31, 2002, which disclosed that VUE
      recorded an impairment charge for goodwill and intangible assets and
      other long-lived assets of $4.5 billion in the period May 7, 2002 to
      December 31, 2002 based upon VUE management's review of the estimated
      fair value of VUE as of December 31, 2002.  Because of delays in VUE's
      financial reporting, IAC records its 5.44% proportionate share of the
      results of VUE on a one-quarter lag.  The Q1 2003 charge taken by IAC
      was approximately $245 million pretax and $149 million after-tax, or
      $0.29 per diluted share.  IAC holds preferred and common interests in
      VUE. IAC believes the action taken by Vivendi Universal does not
      affect the value of IAC's preferred interests in VUE, which are senior
      to the common interests in VUE, and the terminal value of which,
      pursuant to the VUE agreements, do not vary based on the value of
      VUE's businesses. IAC's 5.44% common interest is generally subject to
      a call right of Universal Studios beginning in 2007, and a put right
      of IAC beginning in 2010, in both cases based generally on private
      market values at the time.

  (e) Pro forma adjustments represent the impact of the merger with
      Ticketmaster, which closed January 17, 2003, the merger with
      Hotels.com, which closed June 23, 2003, and the merger with Expedia,
      which closed August 8, 2003.  Also included is the impact of these
      transactions on shares outstanding.

  (f) For Adjusted EPS purposes, the impact of RSUs is based on the weighted
      average amount of RSUs outstanding, as compared with shares
      outstanding for GAAP purposes, which includes RSUs on a treasury
      method basis.

  (g) As noted in previous filings, the majority of the USAB stations sold
      to Univision are located in the largest markets in the country and
      aired HSN on a 24-hour basis.   As of January 2002, HSN switched its
      distribution in these markets directly to cable carriage.  As a
      result, HSN incurred incremental costs to obtain carriage lost in the
      disengagement markets and conduct marketing activities to inform
      viewers of new channel positioning for the HSN service.  Higher
      incremental costs were incurred in 2002, so disengagement costs were
      presented separately from HSN results when comparing 2003 results to
      2002.  Comparable costs are expected to be incurred in 2004 in
      relation to 2003, and HSN's results are presented including
      disengagement costs in each period.


                     DEFINITIONS OF NON-GAAP MEASURES

Operating Income Before Amortization is defined as operating income plus: (1) amortization of non-cash distribution, marketing and compensation expense, (2) amortization of intangibles and goodwill impairment, if applicable, (3) pro forma adjustments for significant acquisitions 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 income statement of certain expenses, including non-cash compensation associated with IAC's employees, non-cash payments to partners, and acquisition-related accounting.

Adjusted Net Income generally captures all income statement items that have been, or ultimately will be, settled in cash and is defined as net income available to common shareholders plus: (1) amortization of non-cash distribution, marketing and compensation expense, (2) amortization of intangibles and goodwill impairment, if applicable, (3) pro forma adjustments for significant acquisitions, (4) equity income or loss from IAC's 5.44% interest in VUE, and (5) one-time items, net of related tax and minority interest. 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, taxes and minority interest, but excluding the effects of any other non-cash expenses.

Adjusted EPS is defined as Adjusted Net Income divided by weighted fully diluted shares outstanding for Adjusted EPS purposes. We include dilution from options and warrants per the treasury stock method and include all shares relating to restricted stock/share units ("RSU") in shares outstanding for Adjusted EPS. This differs from the GAAP method for including RSUs, which treats them on a treasury method basis. 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, taxes and minority interest, 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 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, investments to fund HSN International unconsolidated operations and preferred dividends paid. Free Cash Flow includes cash dividends received and tax related payments with respect to the VUE securities. 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 treasury stock repurchases. Therefore, we think it is important to evaluate Free Cash Flow along with our consolidated statement of cash flows.

We endeavor to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measures with equal or greater prominence, GAAP financial statements, and descriptions of the reconciling items and adjustments, to derive the non-GAAP measures.

Conference Call

IAC will audiocast its conference call with investors and analysts discussing the company's first quarter financial results and certain forward- looking information on Monday, May 3, 2004, at 11:00 a.m. Eastern Time (ET). The live audiocast is open to the public at www.iac.com/investor_relations.

Additional Information And Where To Find It

Safe Harbor Statement Under The Private Securities Litigation Reform Act Of 1995

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements relating to IAC's anticipated financial performance, business prospects, new developments and similar matters, and/or statements preceded by, followed by or that include the words "believes," "could," "expects," "anticipates," "estimates," "intends," "plans," "projects," "seeks," or similar expressions. These forward-looking statements are based on management's current expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results may differ materially from those suggested by the forward-looking statements due to a variety of factors, including changes in business, political, and economic conditions due to the threat of future terrorist activity, actions and initiatives by current and potential competitors, the effect of current and future legislation or regulation, the ability to expand our reach into international markets, and certain other additional factors described in IAC's filings with the Securities and Exchange Commission. Other unknown or unpredictable factors also could have material adverse effects on IAC's future results, performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release.

IAC is not under any obligation and does not intend to make publicly available any update or other revisions to any of the forward-looking statements contained in this press release to reflect circumstances existing after the date of this press release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

About IAC/InterActiveCorp

IAC/InterActiveCorp (NASDAQ: IACI) is the world's leading multi-brand interactive commerce company. IAC consists of IAC Travel, which includes Expedia, Inc., Hotels.com, Hotwire, Interval International, and TV Travel Shop; HSN; Ticketmaster, which oversees ReserveAmerica; Match.com; Lending Tree; Precision Response Corporation; IAC Interactive Development which includes ZeroDegrees; and IAC Local and Media Services, which includes Citysearch, Evite, Entertainment Publications, Inc. and TripAdvisor, Inc.

(Logo: http://www.newscom.com/cgi-bin/prnh/20031105/NYW076LOGO )

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SOURCE: IAC/InterActiveCorp

CONTACT: Investor Relations, Roger Clark or Lauren Rosenfield,
+1-212-314-7400, or Corporate Communications, Deborah Roth, +1-212-314-7254,
all of IAC

Web site: http://www.iac.com/

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