8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 10, 2004

priceline.com Incorporated

(Exact name of registrant as specified in its charter)

Delaware	0-25581	06-1528493
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
800 Connecticut Avenue, Norwalk, Connecticut		06854
(Address of principal office)		(zip code)
N/A
(Former name or former address, if changed since last report)

Item 5.Other Events

On February 10, 2004, priceline.com Incorporated announced its financial results for the fiscal quarter and year ended December 31, 2003.  A copy of priceline.com’s consolidated balance sheets at December 31, 2003 and 2002 and consolidated statements of operations for the three and twelve months ended December 31, 2003 and 2002 is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 7.Financial Statements and Exhibits

(c) Exhibits

99.1Priceline.com consolidated balance sheets at December 31, 2003 and 2002 and consolidated statements of operations for the three and twelve months ended December 31, 2003 and 2002.

99.2Press release (which includes a financial and statistical supplement and related information) issued by priceline.com Incorporated on February 10, 2004 relating to its 4^th quarter ended December 31, 2003 earnings.

Item 12.Results of Operations and Financial Condition

On February 10, 2004, priceline.com Incorporated announced its financial results for the fiscal quarter ended December 31, 2003.  A copy of priceline.com’s press release announcing these financial results and certain other information is attached as Exhibit 99.2 to this Current Report on Form 8-K.

As set forth in more detail in the press release, for the 4^th quarter 2003, priceline.com’s revenues were $180.2 million, gross profit was $31.8 million and gross margin was 17.7%.  Priceline.com reported net income for the 4^th quarter 2003 of $2.2 million, or $0.06 per share.  For the twelve months ended December 31, 2003, priceline.com reported revenue of $863.7 million and net income applicable to common stockholders of $10.4 million, or $0.27 per share.  Priceline.com announced that for the 1^st quarter 2004, it was targeting revenues roughly equal to the 1^st quarter 2003 and net income per share of $0.06 to $0.10.  With respect to 1^st quarter 2004 operating expenses, priceline.com announced that it expected advertising expenses of approximately $13.0 to $15.0 million, sales and marketing expenses of approximately $6.5 to $7.0 million, personnel costs of approximately $7.0 to $7.5 million, general and administrative expenses of approximately $3.5 million, information technology expenses of approximately $2.5 to $3.0 million, and depreciation and amortization expenses of approximately $2.3 million.  In addition, the company noted that it expected advertising expense in the first half of 2004 to exceed advertising expense in the second half of 2004.

The information set forth above and the attached press release contains forward-looking statements relating to priceline.com’s performance during 2004. A more thorough discussion of certain factors which may affect priceline.com’s operating results is included in priceline.com’s recent filings with the Securities and Exchange Commission and will also be included in priceline.com’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 to be filed with the Securities and Exchange Commission in the first quarter of 2004.  The information set forth above is qualified in its entirety by reference to the press release (which includes a financial and statistical supplement), a copy of which is attached hereto as Exhibit 99.2 and incorporated herein by reference.

The information in this Item 12 shall not be treated as “filed” for purposes of the Securities Exchange Act of 1934, as amended.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PRICELINE.COM INCORPORATED
	By:	/s/ Jeffery H. Boyd
		Name:	Jeffery H. Boyd
		Title:	President and Chief Executive Officer
Date:  February 10, 2004

3

EXHIBIT INDEX

Exhibit No.	Description
99.1	Priceline.com consolidated balance sheets at December 31, 2003 and 2002 and consolidated statements of operations for the three and twelve months ended December 31, 2003 and 2002.
99.2	Press release (which includes a financial and statistical supplement and related information) issued by priceline.com Incorporated on February 10, 2004 relating to its 4th quarter ended December 31, 2003 earnings.

4

EX-99.1

Exhibit 99.1

priceline.com Incorporated

CONSOLIDATED BALANCE SHEETS

(In thousands, unaudited)

	December 31, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	93,732		$	67,182
Restricted cash	22,485			18,248
Short-term investments	151,736			64,154
Accounts receivable, net of allowance for doubtful accounts of $794 and $1,262 at December 31, 2003 and 2002, respectively	10,782			13,636
Prepaid expenses and other current assets	4,778			6,348
Total current assets	283,513			169,568
Property and equipment, net	16,524			21,413
Intangible assets, net	7,053			1,694
Goodwill	8,779			10,517
Other assets, principally equity investments in pricelinemortgage, and at December 31, 2003, Travelweb LLC	21,915			7,970
Total assets	$	337,784		$	211,162
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,061		$	35,375
Accrued expenses	21,031			27,889
Other current liabilities	3,522			2,063
Total current liabilities	49,614			65,327
Long-term accrued expenses	532			715
Other long-term liabilities	537
Long-term debt	124,524			—
Total liabilities	175,207			66,042
SERIES B MANDATORILY REDEEMABLE PREFERRED STOCK	13,470			13,470
Stockholders’ equity
Common stock	306			1,884
Treasury stock	(350,628		)	(338,410		)
Additional paid-in capital	2,055,607			2,033,944
Deferred compensation	(1,408		)	—
Accumulated deficit	(1,555,444		)	(1,565,869		)
Accumulated other comprehensive income	674			101
Total stockholders’ equity	149,107			131,650
Total liabilities and stockholders’ equity	$	337,784		$	211,162

priceline.com Incorporated

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2003			December 31, 2002			December 31, 2003			December 31, 2002
Merchant revenues	$	176,319		$	195,814		$	852,454		$	996,112
Agency revenues	3,178			131			7,554			720
Other revenues	670			1,356			3,653			6,774
Total revenues	180,167			197,301			863,661			1,003,606
Cost of merchant revenues	148,351			166,710			717,716			844,142
Cost of agency revenues	—			—			—			—
Cost of other revenues	—			107			—			1,098
Total costs of revenues	148,351			166,817			717,716			845,240
Gross profit	$	31,816		$	30,484		$	145,945		$	158,366
Operating expenses:
Advertising	10,092			10,011			42,248			44,664
Sales and marketing	4,908			5,310			26,803			32,699
Personnel	7,180			7,493			29,680			32,045
General and administrative, including option payroll taxes	3,256			3,187			12,031			13,298
Information technology	2,049			3,142			8,898			12,008
Depreciation and amortization	2,324			4,466			11,533			18,264
Stock based compensation	106			250			282			1,000
Special charge (reversal)	—			—			—			(200		)
Restructuring charge (reversal)	(49		)	4,654			(186		)	3,738
Severance charge (reversal)	—			—			—			(55		)
Impairment charge	—			—			—			24,229
Warrant costs	—			—			6,638			—
Total operating expenses	$	29,866		$	38,513		$	137,927		$	181,690
Operating income (loss)	$	1,950		$	(8,029	)	$	8,018		$	(23,324	)
Other income:
Interest income	1,004			647			2,474			2,911
Interest expense	(563		)	(30		)	(907		)	(68		)
Equity in income of investees, net	(163		)	—			2,331			1,131
Other	—			1			—			166
Total other income	$	278		$	618		$	3,898		$	4,140
Net income (loss)	2,228			(7,411		)	11,916			(19,184		)
Preferred stock dividend				—			(1,491		)	(2,344		)
Net income (loss) applicable to common stockholders	$	2,228		$	(7,411	)	$	10,425		$	(21,528	)
Net income (loss) applicable to common stockholders per basic common share	$	0.06		$	(0.20	)	$	0.28		$	(0.57	)
Weighted average number of basic common shares outstanding	38,019			37,452			37,804			37,881
Net income (loss) applicable to common stockholders per diluted common share	$	0.06		$	(0.20	)	$	0.27		$	(0.57	)
Weighted average number of diluted common shares outstanding	40,107			37,452			39,009			37,881

EX-99.2

Exhibit 99.2

Priceline.com Reports Financial Results

For 4^th Quarter And Full-Year 2003

4^th quarter net income of $2.2 million, or $0.06 per share

Quarterly gross travel bookings of $256.2 million, up 12.2% year-over-year

Quarterly hotel room night sales grow 37% year-over-year

     NORWALK, Conn., February 10, 2004 . . . Priceline.com® (Nasdaq: PCLN) today reported its financial results for the 4^th quarter and full-year 2003.  For the 4^th quarter, gross travel bookings, which refers to the total dollar value, inclusive of taxes and fees, of all travel products purchased by consumers, rose 12.2% year-over-year to $256.2 million, while revenues were $180.2 million, down 8.7% from the 4^th quarter 2002.  Gross profit for the 4^th quarter was $31.8 million, a 4.4% increase over the 4^th quarter 2002, and gross margin was 17.7%, an improvement over the 15.5% reported in the 4^th quarter 2002.  The Company reported net income for the quarter of $2.2 million, or $0.06 per share, compared to a net loss of $7.4 million or $0.20 per share a year ago.

For full-year 2003, priceline.com reported gross travel bookings of $1.1 billion, revenue of  $863.7 million and net income applicable to common stockholders of $10.4 million, or $0.27 per share, compared to a loss of $0.57 per share for 2002.  The Company ended 2003 with a balance of $268.0 million in cash and short-term investments.  During the 4^th quarter, the Company invested $12.2 million to buy-back 690,000 shares of its common stock, which represents approximately two percent of the Company’s outstanding common stock.

“Priceline.com’s 4^th quarter results were lifted by the successful launch of our new airline tickets service, which offers consumers the choice between disclosed itinerary fares and Name-Your-Own-Price® savings, as well as strong results from our hotel, rental car and new vacation products,” said Jeffery H. Boyd, priceline.com’s President and Chief Executive Officer.  “The growth in total gross travel bookings and gross profit reflects a successful transition of our airline ticket business and a positive bottom-line financial result, before any significant benefit from new airline ticket advertising.”

Mr. Boyd continued, “Priceline.com reported strong product metrics across its travel products.  For the 4^th quarter, total merchant and agency hotel room nights sold increased 37% over the 4^th quarter of 2002 and total merchant and agency rental car days increased 62%.  The decline of merchant and agency airline tickets sold slowed to 18% in the 4^th quarter 2003 and represents a significant improvement over the first nine months of 2003, when the airline tickets decline was over 40% compared to the first nine months of 2002.  That trend has continued with current quarter-to-date total ticket sales running above last year’s levels.  Air and hotel are benefiting from increasing package sales as a result of product improvements launched in the quarter.”

Revenues for the 4^th quarter were down year-over-year as the new air service increased the mix of retail ticket sales (which are reported for on a “net” basis as compared to Name- Your-Own-Price® sales, which are reported on a “gross” basis).  The Company noted that, commencing with the 4^th quarter, it would begin disclosing total merchant and agency airline, hotel and rental car unit sales, reflecting the growing importance of agency unit sales.

4^th Quarter Operating Highlights

•       Priceline.com completes testing of its new airline ticketing service that gives customers a choice between picking their flights and airlines from a broad assortment of fares, or Naming Your Own Price for deeper savings.

•       Priceline.com’s hotel service passes the 10,000 participating hotels milestone.  The service offers top-quality hotel properties in the U.S., Europe, Asia, Canada, Mexico and the Caribbean.

•       Priceline.com introduces an enhanced vacation packages service.  The service offers over 2,000 hotel properties and all-inclusive resorts.  The new vacation package service includes fixed pricing, more flight options and a last-minute weekender product offering flight time windows and a fast, easy booking process.

•       Priceline.com signs William Shatner and Leonard Nimoy to star in a new ad campaign for its airline tickets service.

•       Priceline.com adds a new look and feel to its Rentalcars.com site.  The new site offers cars at special retail rates and contains links to priceline.com’s Name Your Own Price® rental car service.  The 4^th quarter growth in the number of rental car days sold over the 4^th quarter 2002 was driven by an increase in both merchant and agency sales.

Looking forward, Mr. Boyd said, “We expect the first half of 2004 to benefit from continued positive results from our new airline ticket and vacation products.  We also believe that the new William Shatner/Leonard Nimoy advertising and continuation of our successful hotel ad campaign will contribute added momentum to the business.  Consequently, for the 1^st quarter 2004, we are targeting:

•       A 25% to 30% year-over-year increase in gross travel bookings,

•       A 10% to 15% year-over-year increase in airline ticket  unit bookings,

•       A 25% to 30% year-over-year increase in hotel room night unit bookings ,

•       A 50% to 60% year-over-year increase in rental car day unit bookings,

•       Revenues roughly equal to the same period last year,

•       A gross margin of 18% to 20%,

•       A 15% to 20% year-over-year increase in gross profit, and

•       Net income per share of $0.06 to $0.10.”

Mr. Boyd continued, “For the 2^nd quarter 2004, we are targeting a 25% to 30% year-over-year increase in gross travel bookings and net income per share of $0.22 to $0.30.  For the second half of 2004, we expect to generate meaningful year-over-year growth in gross travel bookings, gross profit dollars and net income.”

About priceline.com

Priceline.com is a travel service that offers leisure airline tickets, hotel rooms, rental cars, vacation packages and cruises.  In addition, priceline.com offers a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee.  Priceline.com operates the retail travel Web sites Lowestfare.com and Rentalcars.com.  Priceline.com is part-owner of Travelweb LLC.  Priceline.com licenses its business model to independent licensees, including pricelinemortgage and certain international licensees.

###

For press information:  Brian Ek  203-299-8167  (brian.ek@priceline.com)

Information About Forward-Looking Statements

This press release may contain forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals and similar expressions including, without limitation, “expect,” “believe,” “targeting,” “may,” “will,” “should,” “could,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “targets,” or “continue,” reflecting something other than historical fact are intended to identify forward-looking statements. The following factors, among others, could cause the Company’s actual results to differ materially from those described in the forward-looking statements: adverse changes in general market conditions for leisure and other travel products as the result of, among other things, terrorist attacks; adverse changes in the Company’s relationships with airlines and other product and service providers including, without limitation, the withdrawal of suppliers from the priceline.com system; the bankruptcy or insolvency of another major domestic airline; the effects of increased competition; systems-related failures and/or security breaches; the Company’s ability to protect its intellectual property rights; losses by the Company and its licensees; final adjustments made in closing the quarter; legal and regulatory risks and the ability to attract and retain qualified personnel. For a detailed discussion of these and other factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements, please refer to the Company’s most recent Form 10-Q, Form 10-K and Form 8-K filings with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

priceline.com Incorporated
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)

	December 31, 2003			December 31, 2002
ASSETS
Current assets:
Cash and cash equivalents	$	93,732		$	67,182
Restricted cash	22,485			18,248
Short-term investments	151,736			64,154
Accounts receivable, net of allowance for doubtful accounts of $794 and $1,262 at December 31, 2003 and 2002, respectively	10,782			13,636
Prepaid expenses and other current assets	4,778			6,348
Total current assets	283,513			169,568
Property and equipment, net	16,524			21,413
Intangible assets, net	7,053			1,694
Goodwill	8,779			10,517
Other assets, principally equity investments in pricelinemortgage, and at December 31, 2003, Travelweb LLC	21,915			7,970
Total assets	$	337,784		$	211,162
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	25,061		$	35,375
Accrued expenses	21,031			27,889
Other current liabilities	3,522			2,063
Total current liabilities	49,614			65,327
Long-term accrued expenses	532			715
Other long-term liabilities	537
Long-term debt	124,524			—
Total liabilities	175,207			66,042
SERIES B MANDATORILY REDEEMABLE PREFERRED STOCK	13,470			13,470
Stockholders’ equity
Common stock	306			1,884
Treasury stock	(350,628		)	(338,410		)
Additional paid-in capital	2,055,607			2,033,944
Deferred compensation	(1,408		)	—
Accumulated deficit	(1,555,444		)	(1,565,869		)
Accumulated other comprehensive income	674			101
Total stockholders’ equity	149,107			131,650
Total liabilities and stockholders’ equity	$	337,784		$	211,162

priceline.com Incorporated

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data, unaudited)

	Three Months Ended						Twelve Months Ended
	December 31, 2003			December 31, 2002			December 31, 2003			December 31, 2002
Merchant revenues	$	176,319		$	195,814		$	852,454		$	996,112
Agency revenues	3,178			131			7,554			720
Other revenues	670			1,356			3,653			6,774
Total revenues	180,167			197,301			863,661			1,003,606
Cost of merchant revenues	148,351			166,710			717,716			844,142
Cost of agency revenues	—			—			—			—
Cost of other revenues	—			107			—			1,098
Total costs of revenues	148,351			166,817			717,716			845,240
Gross profit	$	31,816		$	30,484		$	145,945		$	158,366
Operating expenses:
Advertising	10,092			10,011			42,248			44,664
Sales and marketing	4,908			5,310			26,803			32,699
Personnel	7,180			7,493			29,680			32,045
General and administrative, including option payroll taxes	3,256			3,187			12,031			13,298
Information technology	2,049			3,142			8,898			12,008
Depreciation and amortization	2,324			4,466			11,533			18,264
Stock based compensation	106			250			282			1,000
Special charge (reversal)	—			—			—			(200		)
Restructuring charge (reversal)	(49		)	4,654			(186		)	3,738
Severance charge (reversal)	—			—			—			(55		)
Impairment charge	—			—			—			24,229
Warrant costs	—			—			6,638			—
Total operating expenses	$	29,866		$	38,513		$	137,927		$	181,690
Operating income (loss)	$	1,950		$	(8,029	)	$	8,018		$	(23,324	)
Other income:
Interest income	1,004			647			2,474			2,911
Interest expense	(563		)	(30		)	(907		)	(68		)
Equity in income of investees, net	(163		)	—			2,331			1,131
Other	—			1			—			166
Total other income	$	278		$	618		$	3,898		$	4,140
Net income (loss)	2,228			(7,411		)	11,916			(19,184		)
Preferred stock dividend				—			(1,491		)	(2,344		)
Net income (loss) applicable to common stockholders	$	2,228		$	(7,411	)	$	10,425		$	(21,528	)
Net income (loss) applicable to common stockholders per basic common share	$	0.06		$	(0.20	)	$	0.28		$	(0.57	)
Weighted average number of basic common shares outstanding	38,019			37,452			37,804			37,881
Net income (loss) applicable to common stockholders per diluted common share	$	0.06		$	(0.20	)	$	0.27		$	(0.57	)
Weighted average number of diluted common shares outstanding	40,107			37,452			39,009			37,881

priceline.com Incorporated - 2003 FOURTH QUARTER FINANCIAL DATA SUPPLEMENT

priceline.com Financials
	Consolidated Statements of Operations
	Consolidated Balance Sheets
Statistical Data

This supplement is unaudited and intended as a supplement to, and should be read in conjunction with, the Company’s audited financial statements and the notes thereto filed with the SEC on Form 10-K and unaudited quarterly financial statements filed with the SEC on Form 10-Q.  Certain data have been reclassified in order to conform historical information in a manner consistent with current presentation and has not been audited in this form.  Certain presentations within this supplement are not consistent with Generally Accepted Accounting Principles.

priceline.com Incorporated

Consolidated Statements of Operations

In thousands, except per share data

(Unaudited)

Income Statement Analysis	1Q02			2Q02			3Q02			4Q02			1Q03			2Q03			3Q03			4Q03			4Q03 vs. 4Q02		12 months 2003			12 months 2002			12 mos. 2003 vs. 12 mos. 2002
Merchant revenues	$	259,667		$	302,670		$	237,961		$	195,814		$	198,608		$	236,943		$	240,584		$	176,319		-10	%	$	852,454		$	996,112		-14	%
Agency revenues	218			211			160			131			1,005			1,476			1,895			3,178			2326	%	7,554			720			949	%
Other revenues	2,000			1,575			1,843			1,356			874			1,147			962			670			-51	%	3,653			6,774			-46	%
Total revenues	261,885			304,456			239,964			197,301			200,487			239,566			243,441			180,167			-9	%	863,661			1,003,606			-14	%
Cost of merchant revenues	219,511			255,972			201,949			166,710			167,500			199,072			202,793			148,351			-11	%	717,716			844,142			-15	%
Cost of agency revenues	—			—			—			—			—			—			—			—			—		—			—			—
Cost of other revenues	381			336			274			107			—			—			—			—			-100	%	—			1,098			-100	%
Total costs of revenues	219,892			256,308			202,223			166,817			167,500			199,072			202,793			148,351			-11	%	717,716			845,240			-15	%
Gross profit	$	41,993		$	48,148		$	37,741		$	30,484		$	32,987		$	40,494		$	40,648		$	31,816		4	%	$	145,945		$	158,366		-8	%
Operating expenses:
Advertising	10,227			12,777			11,649			10,011			11,098			10,774			10,284			10,092			1	%	42,248			44,664			-5	%
Sales and marketing	9,259			10,463			7,667			5,310			6,864			7,789			7,242			4,908			-8	%	26,803			32,699			-18	%
Personnel	7,721			8,434			8,397			7,493			7,512			7,547			7,441			7,180			-4	%	29,680			32,045			-7	%
General and administrative	3,208			3,536			3,247			3,187			2,819			2,642			3,058			3,256			2	%	11,775			13,178			-11	%
Information technology	3,087			3,198			2,581			3,142			2,367			2,604			1,878			2,049			-35	%	8,898			12,008			-26	%
Depreciation and amortization	4,458			4,490			4,850			4,466			3,912			2,787			2,510			2,324			-48	%	11,533			18,264			-37	%
Option payroll taxes	104			16			—			—			—			102			154			—			—		256			120			113	%
Stock based compensation	250			250			250			250			—			70			106			106			-58	%	282			1,000			-72	%
Special charge/(reversal)	—			(200		)	—			—			—			—			—			—			—		—			(200		)	100	%
Restructuring charge/(reversal)	(824		)	—			(92		)	4,654			—			—			(137		)	(49		)	-101	%	(186		)	3,738			-105	%
Severance charge/(reversal)	—			(55		)	—			—			—			—			—			—			—		—			(55		)	100	%
Impairment charge	—			—			24,229			—			—			—			—			—			—		—			24,229			-100	%
Warrant costs	—			—			—			—			6,638			—			—			—			—		6,638			—			—
Total operating expenses	$	37,490		$	42,909		$	62,778		$	38,513		$	41,210		$	34,315		$	32,536		$	29,866		-22	%	$	137,927		$	181,690		-24	%
Operating income (loss)	$	4,503		$	5,239		$	(25,037	)	$	(8,029	)	$	(8,223	)	$	6,179		$	8,112		$	1,950		124	%	$	8,018		$	(23,324	)	134	%
Other income (expenses):
Interest income, net	782			788			656			617			492			405			229			441			-29	%	1,567			2,843			-45	%
Equity in income/(loss) of investees, net	492			245			394			—			—			1,105			1,389			(163		)	—		2,331			1,131			106	%
Other	(36		)	37			164			1			—			—			—			—			-100	%	—			166			-100	%
Total other income	$	1,238		$	1,070		$	1,214		$	618		$	492		$	1,510		$	1,618		$	278		-55	%	$	3,898		$	4,140		-6	%
Net income (loss)	$	5,741		$	6,309		$	(23,823	)	$	(7,411	)	$	(7,731	)	$	7,689		$	9,730		$	2,228		130	%	$	11,916		$	(19,184	)	162	%
Preferred stock dividend	(1,854		)	—			(490		)	—			(297		)	—			(1,194		)	—			—		(1,491		)	(2,344		)	36	%
Net income (loss) applicable to common stockholders	$	3,887		$	6,309		$	(24,313	)	$	(7,411	)	$	(8,028	)	$	7,689		$	8,536		$	2,228		130	%	$	10,425		$	(21,528	)	148	%
Net income (loss) applicable to common stockholders per basic common share	$	0.10		$	0.16		$	(0.64	)	$	(0.20	)	$	(0.21	)	$	0.20		$	0.22		$	0.06		130	%	$	0.28		$	(0.57	)	149	%
Net income (loss) applicable to common stockholders per diluted common share	$	0.10		$	0.16		$	(0.64	)	$	(0.20	)	$	(0.21	)	$	0.20		$	0.21		$	0.06		130	%	$	0.27		$	(0.57	)	147	%
(1) Weighted average common shares:
Basic	37,917			38,280			37,879			37,452			37,477			37,635			38,044			38,019			2	%	37,804			37,881			0	%
Diluted	39,995			39,917			37,879			37,452			37,477			39,284			39,812			40,107			7	%	39,009			37,881			3	%
Common shares outstanding, end of period	38,257			38,298			37,451			37,452			37,495			37,925			38,291			37,607			0	%	37,607			37,452			0	%
Gross margin	16.0		%	15.8		%	15.7		%	15.5		%	16.5		%	16.9		%	16.7		%	17.7		%			16.9		%	15.8		%

(1)  Reflects one-for-six reverse stock split.

1

priceline.com Incorporated

Consolidated Balance Sheets

In thousands

(Unaudited)

	3/31/2002			6/30/2002			9/30/2002			12/31/2002			3/31/2003			6/30/2003			9/30/2003			12/31/2003
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	92,051		$	98,140		$	66,857		$	67,182		$	52,560		$	69,292		$	115,302		$	93,732
Restricted cash	17,454			19,573			18,174			18,248			17,025			16,869			20,750			22,485
Short-term investments	68,327			62,458			67,478			64,154			70,194			62,992			148,027			151,736
Accounts receivable, net of allowance for doubtful accounts	20,218			21,977			16,654			13,636			16,106			23,565			18,809			10,782
Prepaid expenses and other current assets	10,544			8,640			9,068			6,348			6,243			8,158			6,737			4,778
Total current assets	208,594			210,788			178,231			169,568			162,128			180,876			309,625			283,513
PROPERTY AND EQUIPMENT, net	31,291			28,205			25,279			21,413			17,690			16,106			16,603			16,524
INTANGIBLE ASSETS, net	631			566			998			1,174			1,086			3,808			3,687			7,053
GOODWILL	22,535			22,535			10,517			10,517			10,517			10,517			9,534			8,779
OTHER ASSETS	19,100			20,040			8,793			8,490			16,837			17,699			22,829			21,915
TOTAL ASSETS	$	282,151		$	282,134		$	223,818		$	211,162		$	208,258		$	229,006		$	362,278		$	337,784
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	62,177		$	55,422		$	40,972		$	35,375		$	36,020		$	46,863		$	38,467		$	25,061
Accrued expenses	31,750			32,318			25,861			27,889			24,983			23,296			22,972			21,031
Other current liabilities	5,050			4,954			3,495			2,063			2,833			2,134			3,100			3,522
Total current liabilities	98,977			92,694			70,328			65,327			63,836			72,293			64,539			49,614
Long-term accrued expenses	2,365			1,483			1,001			715			422			276			545			532
Other long-term liabilities	—			—			—			—			—			—			—			537
Long-term debt	—			—			—			—			—			—			125,000			124,524
Total liabilities	101,342			94,177			71,329			66,042			64,258			72,569			190,084			175,207
SERIES B MANDATORILY REDEEMABLE  PREFERRED STOCK	13,470			13,470			13,470			13,470			13,470			13,470			13,470			13,470
STOCKHOLDERS’ EQUITY:
Common stock	1,880			1,882			1,884			1,884			1,886			303			306			306
Treasury stock	(326,633		)	(326,633		)	(338,410		)	(338,410		)	(338,410		)	(338,410		)	(338,410		)	(350,628		)
Additional paid-in capital	2,032,547			2,033,313			2,033,938			2,033,944			2,040,850			2,048,785			2,055,540			2,055,607
Deferred compensation	—			—			—			—			—			(1,619		)	(1,514		)	(1,408		)
Accumulated deficit	(1,540,455		)	(1,534,145		)	(1,558,458		)	(1,565,869		)	(1,573,897		)	(1,566,208		)	(1,557,672		)	(1,555,444		)
Accumulated other comprehensive income	—			70			65			101			101			116			474			674
Total stockholders’ equity	167,339			174,487			139,019			131,650			130,530			142,967			158,724			149,107
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	282,151		$	282,134		$	223,818		$	211,162		$	208,258		$	229,006		$	362,278		$	337,784

2

priceline.com Incorporated

Statistical Data

In thousands

Gross Bookings	1Q02		2Q02		3Q02		4Q02		1Q03			2Q03			3Q03			4Q03
Merchant	$	302,564	$	351,039	$	271,922	$	218,100	$	226,739		$	267,039		$	266,640		$	197,543
Agency	4,251		3,744		3,385		10,228		20,778			30,023			33,875			58,647
Total	$	306,814	$	354,783	$	275,307	$	228,328	$	247,517		$	297,061		$	300,515		$	256,191
Year/Year Growth									-19.3		%	-16.3		%	9.2		%	12.2		%

Units Sold	1Q02	2Q02	3Q02	4Q02	1Q03		2Q03		3Q03		4Q03
Airline Tickets	867	921	644	487	483		513		438		399
Year/Year Growth					-44.2	%	-44.4	%	-32.0	%	-18.1	%
Hotel Room-Nights	910	1,091	1,146	963	1,234		1,505		1,642		1,319
Year/Year Growth					35.6	%	38.0	%	43.2	%	36.9	%
Rental Car Days	759	817	764	570	663		867		1,215		922
Year/Year Growth					-12.6	%	6.1	%	59.1	%	61.8	%

	1Q02		2Q02		3Q02		4Q02		1Q03			2Q03			3Q03			4Q03
Revenue	$	261,885	$	304,456	$	239,964	$	197,301	$	200,487		$	239,566		$	243,441		$	180,167
Year/Year Growth									-23.4		%	-21.3		%	1.4		%	-8.7		%
Gross Profit	$	41,993	$	48,148	$	37,741	$	30,484	$	32,987		$	40,494		$	40,648		$	31,816
Year/Year Growth									-21.4		%	-15.9		%	7.7		%	4.4		%

Gross Bookings represent the total dollar value of travel booked, inclusive of taxes and fees, through the priceline.com, lowestfare.com and rentalcars.com sites.

The information included above is for U.S. operations only. 

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