USAI sheets are clean

On balance, Diller's co. has plenty of cash

NEW YORK — Barry Diller’s USA Interactive Wednesday posted strong net cash earnings for the second quarter, along with a reassuringly cash-rich balance sheet.

Diller’s traded media vehicle USA Interactive (which controls the HSN shopping network along with online retail services including Expedia, Hotels.com and Ticketmaster) reinforced its reputation for providing the industry’s most transparent financial statements, reporting operating net cash income from operations up 57% for the second quarter to $96 million.

(Operating net cash income from operations is a new measure that replaces EBITDA and should more accurately reflect the true cash position of a company after depreciation and interest charges.)

Total sales were up to $1.12 billion, compared to $940 million for the same period last year.

USAI boasts a rich $4 billion in cash and securities (net of debt) on the balance sheet. Diller said this cash pile will be used for acquisitions, stock buy-backs and internal expansion.

“We will buy back our stock, hopefully an inch before this crazed market stabilizes,” Diller said.

Travel site Expedia, Hotels.com and dating service Match.com all turned in better-than-budgeted results, which will help offset higher than expected losses from Home Shopping Network’s international operations.

Company also warned of tight times at HSN domestically, as it shifts to selling higher margin goods.

Diller admitted HSN expanded too rapidly overseas and is now in the process of choosing a new strategic partner for its remaining German and Italian shopping channels. (Its operations in the U.K., France, Benelux and the Netherlands were shut down last month.)

Company says in June it surpassed Amazon.com to become the eighth largest group in terms of online reach, with 29.2 million unduplicated unique visitors.

Much of that growth comes from its popular dating site: In the second quarter alone, Match.com recorded nearly 3.3 million new registrations, up from 1.06 million new singles signups in the first quarter of 2002. Some 9.5% of those registrations converted to fully paid subscriptions.

Diller sold the USA entertainment assets to Viv U for a gain of $2.4 billion in May, which helped boost earnings per share to $4.87 for the quarter. USA Entertainment, which consists of USA Cable, Studios USA and USA Films, reported adjusted EBITDA of $39.9 million off total sales of $188.5 million.

Regarding his “latenight job” as CEO of Viv U Entertainment, Diller was unequivocal in describing USAI’s interest in buying Viv U’s music and film assets.

“Zero,” he said emphatically, adding he had neither the interest nor the aptitude to get into the music business.

Recently in Paris to brief the new Viv U management team, Diller said he felt confident that new CEO Jean Rene Fourtou will restore the company to financial stability. “He’s straight, direct and has a clear single goal.”

Diller also praised board member Edgar Bronfman Jr., calling him “the unreported hero” of the recent shakeup.

“He’s done a great service for all VU shareholders,” Diller told analysts and investors during the Wednesday conference call.

In keeping with the SEC’s new fiscal-discipline agenda, Diller also confirmed he will personally be signing off on USAI’s financial results.

Diller also spoke out against stock options, claiming that while USAI will be expensing options, in the future the company will replace such “overly democratic” incentives with “restricted stock,” which will require employees to have long-term vesting requirements and performance metrics.

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