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IAC Reports Q3 Results

Wednesday, October 31, 2007 - 01:30

NEW YORK, Oct. 31 /PRNewswire-FirstCall/ -- IAC (NASDAQ: IACI) released third quarter 2007 results today, reporting $1.5 billion in revenue, a 7% rate of growth over the prior year, and $173 million in Operating Income Before Amortization, versus $170 million last year. Adjusted EPS was $0.37, compared to $0.35 in the year ago period.

Free cash flow generated during the first nine months of 2007 was $293 million, with $600 million in net cash provided by operating activities. Operating income was $104 million, versus $108 million in the year ago period. GAAP Diluted EPS of $0.24 for the quarter was in line with the prior year period.

IAC repurchased 8 million shares of common stock at an average price of $27.54 between July 31, 2007 and October 26, 2007. Year-to-date, IAC has repurchased 15.6 million shares of common stock for approximately $0.5 billion. IAC has 50.8 million shares remaining in its stock repurchase authorization.

Third quarter revenue was driven by increased year-over-year contributions from the Retailing, Media & Advertising, and Membership & Subscriptions sectors. Retailing revenue grew slightly; however, HSN revenue grew 5%, excluding America's Store. Transactions sector revenue reflects strong growth at Ticketmaster, offset by a decline at LendingTree, which continues to operate in a difficult home loan market. Syndicated search and Fun Web Products drove strong revenue growth in Media & Advertising. Increased transaction volume and membership at Interval and higher revenue per subscriber at Match benefited Membership & Subscriptions revenue. Operating Income Before Amortization increased primarily due to growth at Ticketmaster, and strong growth at IAC Search & Media, Interval and Match, offset by declines at Retailing and LendingTree.

Commenting on results, IAC Chairman and CEO Barry Diller said, "With the exception of LendingTree, this was a satisfactory quarter for IAC. Trends at our businesses are good, and particularly so at HSN, where I believe that Mindy Grossman and her team have now become acclimated and are beginning to demonstrate the great retailing smarts that we knew they were capable of."

                                  SUMMARY RESULTS
                     $ in millions (except per share amounts)

                                           Q3 2007      Q3 2006     Growth
   Revenue                                $1,515.8     $1,411.7      7.4%

   Operating Income Before Amortization     $173.5       $170.2      1.9%
   Adjusted Net Income                      $112.2       $110.1      1.8%
   Adjusted EPS                              $0.37        $0.35      5.5%

   Operating Income                         $104.1       $108.0     -3.5%
   Net Income                                $71.8        $74.9     -4.2%
   GAAP Diluted EPS                          $0.24        $0.24     -1.0%

  See reconciliation of GAAP to non-GAAP measures beginning on page 13.


                              SECTOR RESULTS

Sector results for the quarter were as follows ($ in millions; rounding differences may occur):

                                              Q3 2007      Q3 2006    Growth
  REVENUE
    Retailing                                  $700.4       $686.2        2%
    Transactions                                402.6        405.9       -1%
    Media & Advertising                         189.8        135.5       40%
    Membership & Subscriptions                  220.8        185.1       19%
    Emerging Businesses                           7.8          0.6     1133%
    Other                                        (5.6)        (1.6)    -245%
    Total                                    $1,515.8     $1,411.7        7%


  OPERATING INCOME BEFORE AMORTIZATION
    Retailing                                   $47.2        $57.3      -18%
    Transactions                                 60.3         75.6      -20%
    Media & Advertising                          27.6         15.9       74%
    Membership & Subscriptions                   64.4         44.5       45%
    Emerging Businesses                          (5.1)        (4.5)     -15%
    Corporate and other                         (20.9)       (18.6)     -13%
    Total                                      $173.5       $170.2        2%


  OPERATING INCOME (LOSS)
    Retailing                                   $37.4        $50.3      -26%
    Transactions                                 48.2         62.7      -23%
    Media & Advertising                          15.4         (2.1)       NM
    Membership & Subscriptions                   55.6         36.6       52%
    Emerging Businesses                          (8.1)        (4.7)     -73%
    Corporate and other                         (44.4)       (34.9)     -27%
    Total                                      $104.1       $108.0       -4%

Please see discussion of financial and operating results beginning on page 3 and reconciliations to the comparable GAAP measures and further segment detail beginning on page 13.

              DISCUSSION OF FINANCIAL AND OPERATING RESULTS

  RETAILING

                                            Q3 2007      Q3 2006     Growth
                                                      $ in millions
  Revenue                                    $700.4       $686.2         2%
  Operating Income Before Amortization        $47.2        $57.3       -18%
  Operating Income                            $37.4        $50.3       -26%

Revenue growth reflects strong gains at Shoebuy and slight growth at catalogs and HSN. Excluding the results of America's Store, which ceased operations on April 3, 2007, HSN grew revenue 5%. Online sales continued to grow at a double digit rate in the third quarter.

Retailing results reflect a higher overall average price point as a result of a product mix shift, partially offset by lower units shipped. During the quarter, HSN improved sales efficiency across the majority of its product categories. The number and average spend of frequent customers grew and the number of total active customers remained relatively flat. Excluding America's Store, revenue at HSN reflects a higher average price point and a slight increase in units shipped, partially offset by an increase in return rate. Catalogs revenue growth reflects a higher average price point, partially offset by slightly lower units shipped resulting principally from a planned decrease in circulation at certain catalogs.

Operating Income Before Amortization declined due to lower overall gross margins and increased operating expenses. Gross margins were adversely impacted by higher inventory reserves and increased shipping and handling costs. Operating income for the current period reflects amortization of non- cash marketing of $7.0 million and decreases in amortization of intangibles and non-cash compensation of $3.0 million and $1.2 million, respectively.

  TRANSACTIONS

                                            Q3 2007      Q3 2006     Growth
  Revenue                                            $ in millions
      Ticketmaster                           $301.3       $265.5        13%
      LendingTree                              63.0        106.0       -41%
      Real Estate                              13.8         15.9       -13%
      ServiceMagic                             24.6         18.5        33%
      Intra-sector elimination                 (0.1)         -           NM
                                             $402.6       $405.9        -1%
  Operating Income Before Amortization
      Ticketmaster                            $61.9        $57.0         9%
      LendingTree                              (3.2)        18.8         NM
      Real Estate                              (3.9)        (6.3)       38%
      ServiceMagic                              5.4          6.0       -10%
                                              $60.3        $75.6       -20%
  Operating Income (Loss)
      Ticketmaster                            $54.0        $50.5         7%
      LendingTree                              (5.6)        15.2         NM
      Real Estate                              (4.8)        (8.0)       40%
      ServiceMagic                              4.6          5.1        -9%
                                              $48.2        $62.7       -23%

Transactions revenue benefited from strong growth at Ticketmaster and ServiceMagic, offset by a decline at LendingTree. Profit declined due to losses at LendingTree and a profit decline at ServiceMagic.

Ticketmaster

Revenue growth was driven by an 11% increase in worldwide ticket sales and 2% higher average revenue per ticket. Domestic revenue increased 5% primarily due to higher average revenue per ticket and increased ticket volume. International revenue grew 36%, or 28% excluding the effects of foreign exchange, due primarily to increased revenue in the United Kingdom and Australia. Profit growth was adversely impacted by higher operating expenses associated with technology improvements and the continued build out of worldwide infrastructure and higher overall royalty rates. Operating income was negatively impacted by an increase in amortization of non-cash compensation of $1.9 million.

LendingTree

Revenue declined primarily due to fewer loans sold into the secondary market, lower revenue per loan sold, and fewer loans closed at the exchange. Revenue from all home loan products declined with home equity declining the fastest, driven by the overall mortgage market deterioration as well as the decline in real estate values. Profits were impacted by an $8.2 million provision for loan losses in the quarter, compared to $2.1 million in Q2 2007 and $0.7 million in Q3 2006. The Q3 2007 provision reflects the increased losses the company is experiencing with respect to loans sold. Profits were also impacted by higher costs per loan sold resulting from lower close rates and stricter underwriting criteria, partially offset by lower marketing expenses. Profits benefited by $13.3 million due to the net impact of a favorable legal settlement and an increase in certain legal reserves, offset by $6.6 million in restructuring costs.

Real Estate

Results reflect fewer closings at the builder and broker networks, partially offset by increased closings at the company owned brokerage. Losses decreased due to lower administrative costs resulting in part from the restructuring of the business in the second quarter and lower marketing expenses.

ServiceMagic

ServiceMagic revenue benefited from a 19% increase in customer service requests and a 10% increase in the number of service providers in the network. Profit declines reflect increased operating expenses associated with the expansion of the sales force, increased marketing expenses and the opening of a new call center in Kansas City.

  MEDIA & ADVERTISING

                                            Q3 2007      Q3 2006     Growth
                                                     $ in millions
  Revenue                                    $189.8       $135.5        40%
  Operating Income Before Amortization        $27.6        $15.9        74%
  Operating Income (Loss)                     $15.4        $(2.1)        NM

Media & Advertising results include IAC Search & Media, Citysearch and Evite. IAC Search & Media consists of proprietary properties such as Ask.com and Fun Web Products, and network properties which include syndicated advertising, search results, and toolbars. Both proprietary and network revenue grew during the quarter.

Media & Advertising revenue growth was driven by an increase in queries from syndicated search and increased queries and revenue per query at Fun Web Products. Within IAC Search & Media, network revenue growth outpaced that of proprietary revenue, primarily due to a wider adoption of syndicated search and sponsored listings products. Proprietary revenue grew on the strength of Fun Web Products, while Ask.com revenue grew, due to an increase in revenue per query and queries.

Media & Advertising Operating Income Before Amortization benefited from a reduction in the current year expense of $5.8 million resulting from the capitalization and amortization of costs related to the distribution of toolbars which began on April 1, 2007. These costs had previously been expensed as incurred.

Media & Advertising operating income for the current period also reflects a decrease in amortization of non-cash marketing of $8.6 million, partially offset by an increase in amortization of intangibles of $2.8 million.

  MEMBERSHIP & SUBSCRIPTIONS

                                            Q3 2007      Q3 2006     Growth
  Revenue                                            $ in millions
      Interval                                $98.5        $72.9        35%
      Match                                    89.1         80.2        11%
      Entertainment                            33.3         32.0         4%
      Intra-sector elimination                  -           (0.1)        NM
                                             $220.8       $185.1        19%
  Operating Income Before Amortization
      Interval                                $36.2        $29.1        24%
      Match                                    29.5         19.3        53%
      Entertainment                            (1.4)        (3.9)       65%
                                              $64.4        $44.5        45%
  Operating Income (Loss)
      Interval                                $28.4        $22.8        24%
      Match                                    29.3         19.0        54%
      Entertainment                            (2.1)        (5.2)       61%
                                              $55.6        $36.6        52%

Membership & Subscriptions revenue benefited from the inclusion of ResortQuest Hawaii (acquired May 31, 2007) and increased transaction volume and membership at Interval, as well as increased average revenue per subscriber at Match.

Interval

Revenue and profit growth were driven by strong transaction revenue, due to 7% growth in transaction volume and higher average fees, and a 6% increase in members reflecting strong new member growth and renewal rates. ResortQuest Hawaii contributed $18.9 million to Interval's overall revenue in the quarter. Profits grew at a slower rate than revenue due to the inclusion of ResortQuest Hawaii.

Match

Revenue growth was driven by an 11% increase in revenue per subscriber, primarily in North America. International subscribers grew 10% although worldwide subscribers declined 1%. Profits grew faster than revenue due to lower operating costs and a lower cost of acquisition as a percentage of revenue.

Entertainment

Revenue growth reflects increases in paid advertising and continued strength in custom discount and promotion products marketed to corporate clients, partially offset by lower online sales of the core coupon book. Profits benefited from lower marketing expenses.

OTHER ITEMS

Q3 other income (expense) benefited from a $5.9 million gain in Q3 2007 reflecting an increase in the fair value of the derivative asset received by the Company in connection with the sale of HSE24. Additionally, Q3 other income (expense) benefited from a $2.7 million gain in Q3 2007 as compared to a $2.7 million loss in Q3 2006, reflecting changes in the fair value of the derivatives that were created in the Expedia spin-off. The derivatives relate to IAC's obligation to deliver both IAC and Expedia shares upon the conversion of the Ask Convertible Notes and the exercise of certain IAC warrants.

The effective tax rates for continuing operations and adjusted net income in Q3 2007 were 40% and 38%, respectively. These effective tax rates were higher than the statutory rate of 35% due principally to state taxes. In addition, continuing operations was unfavorably impacted by interest on tax contingencies. The effective tax rates for continuing operations and adjusted net income in Q3 2006 were 44% and 41%, respectively. These effective tax rates were higher than the statutory rate of 35% due principally to state taxes. In addition, continuing operations was unfavorably impacted by interest on tax contingencies, partially offset by net adjustments related to the reconciliation of provision accruals to tax returns.

LIQUIDITY AND CAPITAL RESOURCES

During Q3, IAC repurchased 8 million shares at an average price of $27.54. IAC may purchase shares over an indefinite period of time, depending on those factors IAC management deems relevant at any particular time, including, without limitation, market conditions, share price, and future outlook.

As of September 30, 2007, IAC had approximately $1.8 billion in cash, restricted cash and marketable securities, $1.0 billion in debt and, excluding $144.0 million in LendingTree Loans debt that is non-recourse to IAC, $955.9 million in pro forma net cash and marketable securities.

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).

                            Avg.
                          Strike /    As of
                 Shares  Conversion  10/26/07        Dilution at:

  Share Price                         $27.07  $30.00  $35.00  $40.00  $45.00

  Absolute Shares
   as of 10/26/07  283.4               283.4   283.4   283.4   283.4   283.4

  RSUs and Other    10.2                10.3    10.2    10.1    10.0     9.9
  Options           12.3   $28.76        1.5     1.7     2.0     2.3     2.5
  Warrants          34.6   $27.88        4.9     5.5     7.9    10.4    13.1
  Convertible
   Notes             0.5   $14.82        0.5     0.5     0.5     0.5     0.5


  Total Dilution                        17.1    17.9    20.4    23.1    25.9
  % Dilution                            5.7%    5.9%    6.7%    7.5%    8.4%
  Total Diluted Shares
   Outstanding                         300.5   301.3   303.9   306.5   309.4


                             CONFERENCE CALL

IAC will audiocast its conference call with investors and analysts discussing the Company's Q3 financial results on Wednesday, October 31, 2007, at 11:00 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 http://www.iac.com/investors.htm.

                            OPERATING METRICS

                                             Q3 2007      Q3 2006     Growth
  RETAILING

  Retailing                          (a)
      Units shipped (mm)                        12.9         13.2       -2%
      Gross profit %                           37.4%        38.2%
      Return rate                              18.9%        18.0%
      Average price point                     $61.01       $58.07        5%
      Internet %                     (b)         32%          27%
      HSN total homes -
       end of period (mm)                       89.8         88.6        1%
      Catalogs mailed (mm)                      85.2         93.5       -9%


  TRANSACTIONS

  Ticketmaster
      Number of tickets sold (mm)               34.4         30.9       11%
      Gross value of tickets sold (mm)        $1,899       $1,609       18%

  LendingTree
      Transmitted QFs (000s)         (c)       726.8      1,020.6      -29%
      Closings - units (000s)        (d)        46.9         68.7      -32%
      Closings - dollars ($mm)       (d)      $5,697       $8,031      -29%

  Real Estate
      Closings - units (000s)                    2.8          3.4      -17%
      Closings - dollars ($mm)                  $730         $868      -16%

  MEDIA & ADVERTISING

  IAC Search & Media Revenue by traffic source
      Proprietary                              50.1%        59.3%
      Network                                  49.9%        40.7%


  MEMBERSHIP & SUBSCRIPTIONS

  Interval
      Members (000s)                           1,949        1,843        6%
      Confirmations (000s)                       227          213        7%
      Share of confirmations online              27%          25%

  Match
      Paid Subscribers (000s)                1,308.8      1,319.7       -1%


  (a) Retailing includes HSN, Catalogs and Shoebuy for all periods
      presented.
  (b) Internet demand as a percent of total Retailing demand excluding
      Liquidations and Services.
  (c) Customer "Qualification Forms" (QFs) transmitted to at least one
      exchange lender (including LendingTree Loans) plus QFs transmitted to
      at least one GetSmart lender.
  (d) Loan closings consist of loans closed by exchange lenders and directly
      by LendingTree Loans.


                        GAAP FINANCIAL STATEMENTS

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

                              Three Months Ended        Nine Months Ended
                                 September 30,             September 30,
                               2007         2006         2007         2006

  Product sales             $736,036     $717,797   $2,163,343   $2,128,998
  Service revenue            779,797      693,872    2,357,565    2,067,701
    Net revenue            1,515,833    1,411,669    4,520,908    4,196,699
  Cost of sales-product
   sales (exclusive of
   depreciation shown
   separately below)         444,444      429,083    1,322,493    1,276,493
  Cost of sales-service
   revenue (exclusive of
   depreciation shown
   separately below)         357,145      278,050    1,035,647      825,933
    Gross profit             714,244      704,536    2,162,768    2,094,273

  Selling and marketing
   expense                   303,136      294,059      980,805      924,592
  General and administrative
   expense                   208,667      190,720      617,611      553,372
  Other operating expense     14,820       29,578       73,203       84,421
  Amortization of
   non-cash marketing         13,064       14,629       37,522       32,625
  Amortization of
   intangibles                31,075       29,531       91,685      126,518
  Depreciation                39,345       38,058      115,851      114,397
    Operating income         104,137      107,961      246,091      258,348

  Other income (expense):
    Interest income           15,672       16,099       53,539       53,436
    Interest expense         (15,446)     (14,759)     (46,061)     (45,590)
    Equity in income of
     unconsolidated
     affiliates                5,081        8,322       19,564       25,594
    Other income              10,769        3,518       18,351        5,979
  Total other income, net     16,076       13,180       45,393       39,419

  Earnings from continuing
   operations before
   income taxes and
   minority interest         120,213      121,141      291,484      297,767
  Income tax provision       (48,160)     (53,314)    (110,300)    (128,042)
  Minority interest in
   losses of consolidated
   subsidiaries                2,906           30        3,146          701
  Earnings from continuing
   operations                 74,959       67,857      184,330      170,426
  (Loss) gain on sale of
   discontinued operations,
   net of tax                 (1,557)           -       33,524            -
  (Loss) income from
   discontinued operations,
   net of tax                 (1,638)       7,088       11,973        5,510
  Net earnings available
   to common shareholders    $71,764      $74,945     $229,827     $175,936


  Earnings per share from
   continuing operations:
    Basic earnings per share   $0.26        $0.23        $0.64        $0.55
    Diluted earnings
     per share                 $0.25        $0.22        $0.61        $0.53

  Net earnings per share
   available to common
   shareholders:
    Basic earnings per share   $0.25        $0.25        $0.80        $0.57
    Diluted earnings
     per share                 $0.24        $0.24        $0.76        $0.54


  IAC CONSOLIDATED BALANCE SHEETS
  ($ in thousands)

                                            September 30,      December 31,
                                                 2007              2006
                 ASSETS                      (unaudited)        (audited)
   CURRENT ASSETS
   Cash and cash equivalents                  $1,378,593        $1,428,140
   Restricted cash and cash equivalents           23,990            27,855
   Marketable securities                         409,698           897,742
   Accounts receivable, net                      515,830           487,149
   Loans held for sale, net                      151,964           345,896
   Inventories                                   402,095           325,976
   Deferred income taxes                          34,120            32,435
   Prepaid and other current assets              207,804           412,191
      Total current assets                     3,124,094         3,957,384

   Property, plant and equipment, net            646,412           594,536
   Goodwill                                    6,966,281         6,849,976
   Intangible assets, net                      1,443,550         1,463,972
   Long-term investments                         488,029           168,791
   Other non-current assets                      192,919           154,115
   TOTAL ASSETS                              $12,861,285       $13,188,774

           LIABILITIES AND SHAREHOLDERS' EQUITY
   CURRENT LIABILITIES
   Current maturities of long-term
    obligations and short-term borrowings       $176,961          $357,679
   Accounts payable, trade                       256,782           254,508
   Accounts payable, client accounts             441,581           304,800
   Deferred revenue                              162,863           147,120
   Income taxes payable                           12,563           518,806
   Accrued expenses and other current
    liabilities                                  604,141           678,268
      Total current liabilities                1,654,891         2,261,181

   Long-term obligations, net of
    current maturities                           823,391           856,408
   Income taxes payable                          233,001               -
   Other long-term liabilities                   116,787           147,317
   Deferred income taxes                         969,027         1,129,994
   Minority interest                              32,757            24,881

   SHAREHOLDERS' EQUITY
   Preferred stock                                   -                 -
   Common stock                                      414               410
   Class B convertible common stock                   32                32
   Additional paid-in capital                 14,742,545        14,636,478
   Retained earnings                             971,235           320,711
   Accumulated other comprehensive income         85,944            76,505
   Treasury stock                             (6,768,739)       (6,260,145)
   Note receivable from key executive
    for common stock issuance                        -              (4,998)
      Total shareholders' equity               9,031,431         8,768,993
   TOTAL LIABILITIES AND SHAREHOLDERS'
    EQUITY                                   $12,861,285       $13,188,774


  IAC CONSOLIDATED STATEMENTS OF CASH FLOWS
  (unaudited; $ in thousands)

                                             Nine Months Ended September 30,
                                                 2007              2006
  Cash flows from operating activities
   attributable to continuing operations:
  Net earnings available to common
   shareholders                                 $229,827          $175,936
  Less: income from discontinued
   operations, net of tax                        (45,497)           (5,510)
  Earnings from continuing operations            184,330           170,426
  Adjustments to reconcile earnings
   from continuing operations to net
   cash provided by operating
   activities attributable to
   continuing operations:
    Depreciation and amortization of
     intangibles                                 207,536           240,915
    Non-cash compensation expense                 76,299            70,772
    Amortization of cable distribution fees        3,659            23,191
    Amortization of non-cash marketing            37,522            32,625
    Deferred income taxes                            838            63,238
    Gain on sales of loans held for sale        (126,248)         (170,174)
    Equity in income of unconsolidated
     affiliates, net of dividends                (12,227)          (25,594)
    Minority interest in losses of
     consolidated subsidiaries                    (3,146)             (701)
    Increase in cable distribution fees              -             (16,875)
  Changes in current assets and liabilities:
    Accounts receivable                           (9,125)           10,098
    Origination of loans held for sale        (5,046,315)       (5,956,766)
    Proceeds from sales of loans held for
     sale                                      5,361,964         6,166,840
    Inventories                                  (86,542)          (79,757)
    Prepaid and other current assets             (31,835)          (12,818)
    Accounts payable, income taxes
     payable and other current
     liabilities                                 (60,380)          (92,639)
    Deferred revenue                              15,670            25,410
    Funds collected by Ticketmaster on
     behalf of clients, net                       57,180            64,947
    Other, net                                    30,830            30,932
  Net cash provided by operating
   activities attributable to
   continuing operations                         600,010           544,070
  Cash flows from investing activities
   attributable to continuing operations:
    Acquisitions, net of cash acquired          (185,525)          (80,148)
    Capital expenditures                        (159,496)         (163,851)
    Purchases of marketable securities          (720,994)         (529,643)
    Proceeds from sales and maturities of
     marketable securities                     1,220,987         1,220,121
    Proceeds from sales of long-term
     investments                                 109,923             6,560
    Increase in long-term investments           (229,887)           (2,443)
    Other, net                                    17,318            (6,270)
  Net cash provided by investing
   activities attributable to
   continuing operations                          52,326           444,326
  Cash flows from financing activities
   attributable to continuing operations:
    Borrowings under warehouse lines of credit 4,902,649         5,853,469
    Repayments of warehouse lines of credit   (5,097,131)       (5,892,278)
    Principal payments on long-term
     obligations                                 (20,576)          (11,706)
    Purchase of treasury stock                  (542,946)         (927,059)
    Issuance of common stock, net of
     withholding taxes                            21,944            49,785
    Excess tax benefits from stock-based awards   12,532            14,144
    Collection of note receivable from
     key executive for common stock issuance       4,998               -
    Other, net                                    (2,856)           22,035
  Net cash used in financing activities
   attributable to continuing activities        (721,386)         (891,610)
  Total cash (used in) provided by
   continuing operations                         (69,050)           96,786
  Net cash used in operating activities
   attributable to discontinued operations        (8,308)          (31,636)
  Net cash used in investing activities
   attributable to discontinued operations          (967)           (6,361)
  Net cash used in financing activities
   attributable to discontinued operations          (694)             (339)
  Total cash used in discontinued operations      (9,969)          (38,336)
  Effect of exchange rate changes on
   cash and cash equivalents                      29,472            23,327
  Net (decrease) increase in cash and
   cash equivalents                              (49,547)           81,777
  Cash and cash equivalents at
   beginning of period                         1,428,140           987,080
  Cash and cash equivalents at end of
   period                                     $1,378,593        $1,068,857


  RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES

  IAC RECONCILIATION OF OPERATING CASH FLOW FROM CONTINUING OPERATIONS TO
  FREE CASH FLOW
  (unaudited; $ in millions; rounding differences may occur)

                                             Nine Months Ended September 30,
                                                  2007              2006
  Net cash provided by operating
   activities attributable to
   continuing operations                          $600.0            $544.1
    Decrease in warehouse lines of credit         (194.5)            (38.8)
    Capital expenditures                          (159.5)           (163.9)
    Tax (refunds) payments related to the
     sale of VUE interests                         (28.5)             11.1
    Tax payments related to the sale of PRC         43.6               -
    Tax payments related to the sale of HSE24       31.6               -
  Free Cash Flow                                  $292.7            $352.5

For the nine months ended September 30, 2007, consolidated Free Cash Flow decreased by $59.8 million from the prior year period due principally to lower net cash from changes in loans held for sale and warehouse lines of credit, higher cash taxes paid and a decreased contribution from Ticketmaster client cash. Ticketmaster client cash contributed $57.2 million in the current period, versus $64.9 million in the prior year period. Free Cash Flow includes the change in warehouse lines of credit because the change in loans held for sale is already included in cash provided by operating activities. Free Cash Flow excludes tax payments related to the sale of the Company's interests in VUE, PRC and HSE24 because the proceeds from these sales were not included in cash provided by operating activities.

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

                                      Three Months Ended  Nine Months Ended
                                         September 30,       September 30,
                                         2007      2006      2007      2006

  Diluted earnings per share            $0.24     $0.24     $0.76     $0.54
  GAAP diluted weighted average
   shares outstanding                 298,414   309,214   302,044   324,747
  Net earnings available to common
   shareholders                       $71,764   $74,945  $229,827  $175,936
  Non-cash compensation expense        25,215    18,092    76,299    70,772
  Amortization of non-cash marketing   13,064    14,629    37,522    32,625
  Amortization of intangibles          31,075    29,531    91,685   126,518
  Net other (income) expense related
   to the fair value adjustment of
   derivatives                         (2,666)    2,741    (4,383)    2,977
  Other income related to fair value
   adjustment of the derivative
   created in the sale of HSE24        (5,859)      -      (7,771)      -
  Gain on sale of VUE interests and
   related effects                      2,072     3,886     6,155     8,591
  Loss (gain) on sale of
   discontinued operations, net of
   tax                                  1,557       -     (33,524)      -
  Discontinued operations, net of
   tax                                  1,638    (7,088)  (11,973)   (5,510)
  Impact of income taxes and
   minority interest                  (25,791)  (26,840)  (77,083)  (92,758)
  Interest on convertible notes, net
   of tax                                  92       241       311       851
  Adjusted Net Income                $112,161  $110,137  $307,065  $320,002

  Adjusted EPS weighted average
   shares outstanding                 305,158   316,067   308,402   331,304

  Adjusted EPS                          $0.37     $0.35     $1.00     $0.97

  GAAP Basic weighted average shares
   outstanding                        284,961   296,091   286,507   309,070
    Options, warrants and restricted
     stock, treasury method            12,984    11,823    15,013    14,019
    Conversion of convertible
     preferred and convertible notes
     (if applicable)                      469     1,300       524     1,658
  GAAP Diluted weighted average
   shares outstanding                 298,414   309,214   302,044   324,747
    Impact of restricted shares and
     convertible preferred and notes
     (if applicable), net               6,744     6,853     6,358     6,557
  Adjusted EPS shares outstanding     305,158   316,067   308,402   331,304

For Adjusted EPS purposes, the impact of RSUs on shares outstanding is based on the weighted average number of RSUs outstanding as compared with shares outstanding for GAAP purposes, which includes RSUs on a treasury method basis. The weighted average number of RSUs outstanding for Adjusted EPS purposes includes the weighted average number of performance-based RSUs that the Company believes are probable of vesting. There are no performance-based RSUs included for GAAP purposes.

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

                       For the three months ended September 30, 2007

              Operating
               Income        Non-cash   Amortization               Operating
               Before      compensation  of non-cash  Amortization   income
            Amortization    expense (A)   marketing  of intangibles  (loss)

  Retailing       $47.2        $(0.1)         $(7.0)     $(2.7)      $37.4
  Transactions:
    Ticketmaster   61.9         (1.9)             -       (6.1)       54.0
    LendingTree    (3.2)         0.4              -       (2.9)       (5.6)
    Real Estate    (3.9)         0.2              -       (1.1)       (4.8)
    ServiceMagic    5.4         (0.2)             -       (0.6)        4.6
  Total
   Transactions    60.3         (1.4)             -      (10.7)       48.2
  Media &
   Advertising     27.6            -           (6.1)      (6.2)       15.4
  Membership &
   Subscriptions:
    Interval       36.2            -              -       (7.9)       28.4
    Match          29.5            -              -       (0.2)       29.3
    Entertainment  (1.4)           -              -       (0.7)       (2.1)
  Total Membership &
   Subscriptions   64.4            -              -       (8.8)       55.6
  Emerging
   Businesses      (5.1)        (0.2)             -       (2.7)       (8.1)
  Corporate and
   other          (20.9)       (23.5)             -          -       (44.4)
  Total          $173.5       $(25.2)        $(13.1)    $(31.1)     $104.1
  Other income,
   net                                                                16.1
  Earnings from
   continuing
   operations
   before income
   taxes and
   minority
   interest                                                          120.2
  Income tax
   provision                                                         (48.2)
  Minority
   interest in
   losses of
   consolidated
   subsidiaries                                                        2.9
  Earnings from
   continuing
   operations                                                         75.0
  Loss on sale
   of discontinued
   operations,
   net of tax                                                         (1.6)
  Loss from
   discontinued
   operations,
   net of tax                                                         (1.6)
  Net earnings
   available to
   common
   shareholders                                                      $71.8


  (A) Non-cash compensation expense includes $1.9 million, $2.0 million and
      $21.3 million which are included in cost of sales, selling and
      marketing expense and general and administrative expense,
      respectively, in the accompanying consolidated statement of
      operations.


   Supplemental: Depreciation
   Retailing                    $8.8
   Transactions:
     Ticketmaster               10.4
     LendingTree                 2.1
     Real Estate                 0.3
     ServiceMagic                0.7
   Total Transactions           13.5
   Media & Advertising           7.6
   Membership &
    Subscriptions:
     Interval                    2.2
     Match                       2.0
     Entertainment               1.3
   Total Membership&
    Subscriptions                5.5
   Emerging Businesses           0.5
   Corporate and other           3.4
   Total Depreciation          $39.3


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

                       For the nine months ended September 30, 2007

              Operating
               Income        Non-cash   Amortization               Operating
               Before      compensation  of non-cash  Amortization   income
            Amortization    expense (A)   marketing  of intangibles  (loss)

  Retailing       $125.5      $(0.8)       $(7.4)       $(10.6)     $106.6
  Transactions:
    Ticketmaster   192.6       (1.9)           -         (19.6)      171.2
    LendingTree      1.6        0.2            -          (8.6)       (6.8)
    Real Estate    (16.0)       0.1            -          (5.7)      (21.5)
    ServiceMagic    18.7       (0.5)           -          (2.2)       16.1
  Total
   Transactions    197.0       (2.0)           -         (36.1)      159.0
  Media &
   Advertising      56.5          -        (22.8)        (18.5)       15.2
  Membership &
   Subscriptions:
    Interval       113.5          -            -         (20.5)       93.0
    Match           57.5          -         (7.2)         (0.7)       49.6
    Entertainment  (27.9)         -            -          (2.1)      (30.0)
  Total Membership &
   Subscriptions   143.1          -         (7.2)        (23.2)      112.7
  Emerging
   Businesses       (4.9)      (0.5)           -          (3.4)       (8.7)
  Corporate and
   other           (65.6)     (73.0)           -             -      (138.6)
  Total           $451.6     $(76.3)      $(37.5)       $(91.7)     $246.1
  Other income,
   net                                                                45.4
  Earnings from
   continuing
   operations
   before income
   taxes and
   minority
   interest                                                          291.5
  Income tax
   provision                                                        (110.3)
  Minority
   interest in
   losses of
   consolidated
   subsidiaries                                                        3.1
  Earnings from
   continuing
   operations                                                        184.3
  Gain on sale
   of discontinued
   operations,
   net of tax                                                         33.5
  Income from
   discontinued
   operations,
   net of tax                                                         12.0
  Net earnings
   available to
   common
   shareholders                                                     $229.8


  (A) Non-cash compensation expense includes $5.8 million, $6.3 million,
      $64.1 million and $0.2 million which are included in cost of sales,
      selling and marketing expense, general and administrative expense and
      other operating expense, respectively, in the accompanying
      consolidated statement of operations.


   Supplemental: Depreciation
   Retailing                  $26.0
   Transactions:
     Ticketmaster              30.5
     LendingTree                7.0
     Real Estate                0.9
     ServiceMagic               1.8
   Total Transactions          40.1
   Media & Advertising         22.9
   Membership &
    Subscriptions:
     Interval                   6.1
     Match                      5.5
     Entertainment              4.0
   Total Membership &
    Subscriptions              15.6
   Emerging Businesses          1.3
   Corporate and other          9.8
   Total Depreciation        $115.9


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

                       For the three months ended September 30, 2006

               Operating
                Income       Non-cash   Amortization               Operating
                Before     compensation  of non-cash  Amortization   income
             Amortization   expense (A)   marketing  of intangibles  (loss)

  Retailing        $57.3      $(1.3)         $-         $(5.7)       $50.3
  Transactions:
    Ticketmaster    57.0          -           -          (6.6)        50.5
    LendingTree     18.8       (0.1)          -          (3.5)        15.2
    Real Estate     (6.3)      (0.1)          -          (1.7)        (8.0)
    ServiceMagic     6.0       (0.2)          -          (0.8)         5.1
  Total
   Transactions     75.6       (0.4)          -         (12.5)        62.7
  Media &
   Advertising      15.9          -       (14.6)         (3.4)        (2.1)
  Membership &
   Subscriptions:
    Interval        29.1          -           -          (6.3)        22.8
    Match           19.3          -           -          (0.3)        19.0
    Entertainment   (3.9)         -           -          (1.3)        (5.2)
  Total Membership &
   Subscriptions    44.5          -           -          (7.8)        36.6
  Emerging
   Businesses       (4.5)         -           -          (0.1)        (4.7)
  Corporate and
   other           (18.6)     (16.4)          -             -        (34.9)
  Total           $170.2     $(18.1)     $(14.6)       $(29.5)      $108.0
  Other income, net                                                   13.2
  Earnings from
   continuing
   operations
   before income
   taxes and
   minority
   interest                                                          121.1
  Income tax
   provision                                                         (53.3)
  Minority interest
   in losses of
   consolidated
   subsidiaries                                                          -
  Earnings from
   continuing
   operations                                                         67.9
  Income from
   discontinued
   operations,
   net of tax                                                          7.1
  Net earnings
   available to
   common
   shareholders                                                      $74.9


  (A) Non-cash compensation expense includes $1.3 million, $1.4 million and
      $15.4 million which are included in cost of sales, selling and
      marketing expense and general and administrative expense,
      respectively, in the accompanying consolidated statement of
      operations.


   Supplemental: Depreciation
   Retailing                   $8.9
   Transactions:
     Ticketmaster               9.5
     LendingTree                2.3
     Real Estate                0.7
     ServiceMagic               0.5
   Total Transactions          13.0
   Media & Advertising          6.9
   Membership &
    Subscriptions:
     Interval                   1.9
     Match                      2.3
     Entertainment              1.5
   Total Membership &
    Subscriptions               5.8
   Emerging Businesses          0.5
   Corporate and other          3.0
   Total Depreciation         $38.1


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

                     For the nine months ended September 30, 2006

               Operating
                Income       Non-cash   Amortization               Operating
                Before     compensation  of non-cash  Amortization   income
             Amortization   expense (A)   marketing  of intangibles  (loss)

  Retailing       $176.8       $(3.5)        $-        $(30.5)      $142.9
  Transactions:
    Ticketmaster   198.8           -          -         (20.5)       178.3
    LendingTree     46.5         1.0          -         (13.5)        34.0
    Real Estate    (15.9)        0.5          -          (6.2)       (21.6)
    ServiceMagic    13.6        (0.5)         -          (2.4)        10.8
  Total
   Transactions    242.9         1.1          -         (42.6)       201.5
  Media &
   Advertising      38.2           -      (29.6)        (28.5)       (19.9)
  Membership &
   Subscriptions:
    Interval        94.4           -          -         (18.9)        75.5
    Match           42.5           -       (3.0)         (1.9)        37.6
    Entertainment  (34.3)          -          -          (3.9)       (38.1)
  Total Membership &
   Subscriptions   102.7           -       (3.0)        (24.6)        75.0
  Emerging
   Businesses      (12.6)       (0.1)         -          (0.3)       (13.1)
  Corporate and
   other           (59.8)      (68.3)         -             -       (128.1)
  Total           $488.3      $(70.8)    $(32.6)      $(126.5)       258.3
  Other income,
   net                                                                39.4
  Earnings from
   continuing
   operations
   before income
   taxes and
   minority
   interest                                                          297.8
  Income tax
   provision                                                        (128.0)
  Minority interest
   in losses of
   consolidated
   subsidiaries                                                        0.7
  Earnings from
   continuing
   operations                                                        170.4
  Income from
   discontinued
   operations,
   net of tax                                                          5.5
  Net earnings
   available to
   common
   shareholders                                                     $175.9


    (A) Non-cash compensation expense includes $5.4 million, $5.9 million,
        $59.4 million and $0.1 million which are included in cost of sales,
        selling and marketing expense, general and administrative expense
        and other operating expense, respectively, in the accompanying
        consolidated statement of operations.


   Supplemental: Depreciation
   Retailing                   $29.0
   Transactions:
     Ticketmaster               28.6
     LendingTree                 7.3
     Real Estate                 1.9
     ServiceMagic                1.2
   Total Transactions           39.1
   Media & Advertising          20.3
   Membership &
    Subscriptions:
     Interval                    5.9
     Match                       5.8
     Entertainment               4.3
   Total Membership &
    Subscriptions               16.0
   Emerging Businesses           1.4
   Corporate and other           8.6
   Total Depreciation         $114.4


                 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.

Definitions of Non-GAAP Measures

Operating Income Before Amortization is defined as operating income excluding, if applicable: (1) non-cash compensation expense and amortization of non-cash marketing, (2) amortization of intangibles and goodwill impairment, (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 statement of operations of certain expenses, including non-cash compensation, non-cash marketing, 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 income available to common shareholders excluding, net of tax effects and minority interest, if applicable: (1) non-cash compensation expense and amortization of non-cash marketing, (2) amortization of intangibles and goodwill impairment, (3) pro forma adjustments for significant acquisitions, (4) equity income or loss from IAC's 5.44% interest in VUE and gain on the sale of IAC's interest in VUE, (5) non-cash income or expense reflecting changes in the fair value of the derivatives created in the Expedia spin-off as a result of both IAC and Expedia shares being issuable upon the conversion of the Ask Convertible Notes and the exercise of certain IAC warrants, (6) income or expense reflecting changes in the fair value of the derivative asset associated with the sale of HSE24, (7) one-time items, and (8) discontinued operations. We believe Adjusted Net Income is useful to investors because it represents IAC's consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other charges which are not allocated to the operating businesses such as interest expense, taxes and minority interest, 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 per the treasury stock method and include all restricted shares and 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). In addition, convertible instruments are assumed to be converted in determining shares outstanding for Adjusted EPS, if the effect is dilutive. 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 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 and preferred dividends paid by IAC. For purposes of Free Cash Flow, we also include changes in warehouse lines of credit due to the close connection that exists with changes in loans held for sale which are included in cash provided by operating activities. In addition, Free Cash Flow excludes tax payments related to the sale of IAC's interests in VUE, PRC and HSE24 due to the exclusion of the proceeds from these sales 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.

Pro Forma Results

We will only present Operating Income Before Amortization, Adjusted Net Income and Adjusted EPS on a pro forma basis if we view a particular transaction as significant in size or transformational in nature. For the periods presented in this release, there are no transactions that we have included on a pro forma basis.

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 any 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 restricted stock, restricted stock units and stock options. These expenses are not paid in cash, and we include the related shares in our fully diluted shares outstanding which, for restricted stock units and stock options, are included on a treasury method basis. We view the true cost of our restricted stock units as the dilution to our share base, and as such units are included in our shares outstanding for Adjusted EPS purposes as described above under the definition of Adjusted EPS. Upon vesting of restricted stock and restricted stock units and the exercise of certain stock options, 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 non-cash marketing consists of non-cash advertising secured from Universal Television as part of the transaction pursuant to which VUE was created, and the subsequent transaction by which IAC sold its partnership interests in VUE (collectively referred to as "NBC Universal Advertising"). The NBC Universal Advertising is available for television advertising on various NBC Universal network and cable channels without any cash cost.

The NBC Universal Advertising is excluded from Operating Income Before Amortization and Adjusted Net Income because it is non-cash and generally is incremental to the advertising the Company otherwise secures as a result of its ordinary cost/benefit marketing planning process. Accordingly, the Company's aggregate level of advertising, and the increased concentration of that advertising on NBC Universal network and cable channels, does not reflect what our advertising effort would otherwise be without these credits, which will expire on September 30, 2008 if not exhausted before then. As a result, management believes that treating the NBC Universal Advertising as an expense does not appropriately reflect its true cost/benefit relationship, nor does it best reflect the Company's long-term level of advertising expenditures. Nonetheless, while the benefits directly attributable to television advertising are always difficult to determine, and especially so with respect to the NBC Universal Advertising due to its incrementality and heavy concentration, it is likely that the Company does derive benefits from it, though management believes such benefits are generally less than those received through its regular advertising for the reasons stated above. Operating Income Before Amortization and Adjusted Net Income therefore have the limitation of including those benefits while excluding the associated expense.

Amortization of intangibles is a non-cash expense relating primarily to acquisitions. At the time of an acquisition, the intangible assets of the acquired company, such as supplier contracts and customer relationships, are valued and amortized over their estimated lives. While it is likely that we will have significant intangible amortization expense as we continue to acquire companies, we believe that since intangibles represent costs incurred by the acquired company to build value prior to acquisition, they were part of transaction costs.

Equity income or loss from IAC's 5.44% common interest in VUE was excluded from Adjusted Net Income and Adjusted EPS because IAC had no operating control over VUE, had no way to forecast this business, and did not consider the results of VUE in evaluating the performance of IAC's businesses. The gain from the sale in June 2005 of IAC's interests in VUE and related effects are excluded from Adjusted Net Income and Adjusted EPS for similar reasons.

Non-cash income or expense reflecting changes in the fair value of the derivatives created in the Expedia spin-off is excluded from Adjusted Net Income and Adjusted EPS because the obligations underlying these derivatives, which relate to the Ask Convertible Notes and certain IAC warrants, are expected to ultimately be settled in shares of IAC common stock and Expedia common stock, and not in cash.

Income or expense reflecting changes in the fair value of the derivative asset created in the sale of HSE24 is excluded from Adjusted Net Income and Adjusted EPS because the variations in the value of the derivative are non- operational in nature.

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. In addition, because Free Cash Flow is subject to timing, seasonality and one- time events, we believe it is not appropriate to annualize quarterly Free Cash Flow results.

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 11:00 a.m. Eastern Time today may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The use of words such as "anticipates," "estimates," "expects," "intends," "plans" and "believes," among others, generally identify forward-looking statements. These forward- looking statements include, among others, statements relating to: IAC's future financial performance, IAC's business prospects and strategy, anticipated trends and prospects in the various 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 economic conditions generally or in any of the markets or industries in which IAC's businesses operate, changes in senior management at IAC and/or its businesses, the rate of online migration in the various markets and industries in which IAC's businesses operate, technological changes, regulatory changes, changes in the interest rate environment or overall credit markets, a continuing or accelerating slowdown in the domestic housing market, increased credit losses relating to certain underperforming loans sold into the secondary market, effectiveness of hedging activities, changes affecting distribution channels, failure to comply with existing laws, our ability to offer new or alternative products and services in a cost effective manner and consumer acceptance of these products and services, changes in product delivery costs, changes in the advertising market and the ability of IAC to expand successfully in international markets. 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 is an interactive conglomerate operating more than 60 diversified brands in sectors being transformed by the internet, online and offline... our mission is to harness the power of interactivity to make daily life easier and more productive for people all over the world. To learn more about IAC please visit http://iac.com/

  Contact Us

  IAC Investor Relations
  Eoin Ryan
  (212) 314-7400

  IAC Corporate Communications
  Andrea Riggs / Stacy Simpson
  (212) 314-7280 / 7470

SOURCE: IAC

CONTACT: IAC Investor Relations, Eoin Ryan, +1-212-314-7400, or IAC
Corporate Communications, Andrea Riggs, +1-212-314-7280, Stacy Simpson,
+1-212-314-7470

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

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