EX-99.1 2 a09-31115_2ex99d1.htm EX-99.1

Exhibit 99.1

 

Priceline.com Reports Financial Results for 3rd Quarter 2009

 

NORWALK, Conn., November 9, 2009 . . . Priceline.com Incorporated (Nasdaq: PCLN) today reported its financial results for the 3rd quarter 2009. Gross travel bookings for the 3rd quarter, which refers to the total dollar value, inclusive of all taxes and fees, of all travel services purchased by consumers, were $2.7 billion, an increase of 32.8% over a year ago.

 

Priceline.com had revenues in the 3rd quarter of $730.7 million, a 30.1% increase over a year ago. The Company’s international operations contributed revenues in the 3rd quarter of $316.9 million, a 41.7% increase versus a year ago (approximately 50% on a local currency basis).  Priceline.com’s gross profit for the 3rd quarter was $434.0 million, a 37.3% increase from the prior year.  The Company’s international operations contributed gross profit in the 3rd quarter of $316.0 million, a 42.0% increase versus a year ago (approximately 50% growth on a local currency basis).  The Company’s operating income in 3rd quarter 2009 was $200.8 million, a 56.9% increase from the prior year.  Priceline.com had GAAP net income for the 3rd quarter of $319.0 million or $6.42 per diluted share, which compares to $84.5 million or $1.74 per diluted share in the same period a year ago. GAAP net income for the 3rd quarter 2009 was positively affected by a $181.9 million non-cash tax benefit from reversing a portion of the valuation allowance related to the Company’s net operating loss carry forwards.  The valuation allowance was reversed to reflect the amount of deferred tax asset that is estimated to be more likely than not to be realized after taking into consideration current operating results and future estimated domestic taxable income.

 

Pro forma EBITDA for the 3rd quarter 2009 was $224.6 million, an increase of 47.3% over a year ago.  Pro forma net income in the 3rd quarter was $173.3 million or $3.45 per diluted share, compared to $2.39 per share a year ago.  First Call analyst consensus for the 3rd quarter 2009 was $2.90 per diluted share.  The section below entitled “Non-GAAP Financial Measures” provides a definition and information about the use of pro forma financial measures in this press release and the attached financial and statistical supplement reconciles pro forma financial information with priceline.com’s financial results under GAAP.

 

“Despite a difficult economic environment, the summer travel season turned out to be an exceptionally strong one for priceline.com, as 3rd quarter growth rates accelerated sequentially for our international and domestic businesses,” said priceline.com President and Chief Executive Officer Jeffery H. Boyd.  “On a global basis, priceline.com continued to increase its market share as hotel room night reservations grew by 56% in the 3rd quarter, propelled by strong performance in the U.S., Europe and Asia.  Internationally, our hotel business experienced gross travel bookings growth of 38%, or approximately 49% on a local currency basis, as we reaped the benefits of outstanding hotel supply, geographic expansion in high-opportunity markets and continued shift by consumers to on-line booking of hotel reservations.   Our U.S. business grew gross travel bookings by 25% as consumers continue to respond positively to our money-saving travel services.  Airline ticket sales were up 30.2%, despite the fact that competitors’ matching fee eliminations were in place for the entire quarter.  Rental car days booked increased 11.6%.”

 

(more)

 



 

“The online travel industry achieved improved year-over-year growth in the third quarter as we comped against weakening demand in the prior-year period and received a boost from industry-wide fee reductions and supplier discounting and promotions.” Mr. Boyd continued, “Priceline.com intends to continue to focus on building out our global brands and hotel platform, adding additional supply, integration initiatives and innovation to support the long-term growth of the business.”

 

Priceline.com said it was targeting the following for 4th quarter 2009:

 

·                  Year-over-year increase in total gross travel bookings of approximately 30% - 40%.

 

·                  Year-over-year increase in international gross travel bookings of approximately 50% - 60% (an increase of approximately 37% - 46% on a local currency basis).

 

·                  Year-over-year increase in domestic gross travel bookings of approximately 15%.

 

·                  Year-over-year increase in revenue of approximately 24% to 28%.

 

·                  Year-over-year increase in gross profit of approximately 40% to 45%.

 

·                  Pro forma EBITDA of approximately $98 million to $108 million.

 

·                  Pro forma net income of between $1.52 and $1.62 per diluted share.

 

Pro forma guidance for the 4th quarter 2009:

 

·                  excludes non-cash amortization expense of acquisition-related intangibles,

 

·                  excludes non-cash stock-based compensation expense,

 

·                  excludes non-cash interest expense and gains or losses on debt extinguishment, if any, recorded pursuant to the provisions of FSP APB 14-1,

 

·                  excludes non-cash income tax expense and reflects the impact on income taxes of certain of the pro forma adjustments,

 

·                  excludes the impact, if any, of charges associated with judgments, rulings and/or settlements related to hotel occupancy tax proceedings,

 

·                  includes the anti-dilutive impact of the “Conversion Spread Hedges” (see “Non-GAAP Financial Measures” below) on diluted common shares outstanding  related to outstanding convertible notes, and

 

·                  includes the dilutive impact of additional shares of unvested restricted stock, restricted stock units and performance share units because pro forma net income has been adjusted to exclude stock-based compensation.

 

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In addition, pro forma EBITDA excludes depreciation and amortization expense and includes the impact of foreign currency transactions and other expenses.

 

When aggregated, the foregoing adjustments are expected to increase pro forma EBITDA over GAAP operating income by approximately $20 million in 4th quarter 2009.

 

In addition, the foregoing adjustments are expected to increase pro forma net income over GAAP net income by approximately $24 million in the 4th quarter 2009. On a per share basis, the Company estimates GAAP net income of approximately $1.06 to $1.16 per diluted share for the 4th quarter 2009.

 

Effective January 1, 2009, we adopted FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” (“FSP APB 14-1”). FSP APB 14-1 requires cash settled convertible debt, such as our convertible senior notes, to be separated into debt and equity components at issuance and a value to be assigned to each.

 

The value assigned to the debt component is the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, is recorded as a debt discount and amortized to interest expense over the life of the bond. Although FSP APB 14-1 has no impact on our actual past or future cash flows, it requires us to adjust our previously issued financial statements and to record a significant amount of non-cash interest expense as the debt discount is amortized and may result in gains or losses on extinguishment that would not have occurred under previous GAAP.

 

The adoption of FSP APB 14-1 increased non-cash interest expense for the years ended December 31, 2008, 2007 and 2006 by approximately $26.1 million ($15.5 million net of tax), $28.2 million ($16.6 million net of tax), and $5.4 million ($3.2 million net of tax), respectively, and is estimated to increase fiscal year 2009 non-cash interest expense by approximately $17.8 million ($10.7 million net of tax), excluding the impact of future debt conversions, if any. The adoption of FSP APB 14-1 increased non-cash interest expense in the three months ended September 30, 2009 and 2008 by $4.3 million ($2.6 million net of tax) and $6.0 million ($3.6 million net of tax), respectively.

 

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Information About Forward-Looking Statements

 

This press release contains forward-looking statements. These forward-looking statements reflect the views of the Company’s management regarding current expectations and projections about future events and are based on currently available information and current foreign currency exchange rates. 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, “may,” “will,” “should,” “could,” “expects,” “does not currently expect,” “plans,” “anticipates,” “intends,” “believes,” “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 services as a result of, among other things, decreased consumer spending, general economic downturn, terrorist attacks, natural disasters or adverse weather, the bankruptcy or insolvency of a major airline, or the outbreak of an epidemic or pandemic disease, such as the recent swine flu outbreak;

 

· adverse changes in the Company’s relationships with airlines and other product and service providers and vendors which could include, without limitation, the withdrawal of suppliers from the priceline.com system (either priceline.com’s “retail” or “opaque” services, or both) and/or the loss or reduction of global distribution fees;

 

· fluctuations in foreign exchange rates and other risks associated with doing business in multiple currencies;

 

· the effects of increased competition, including the potential impact of increased pricing competition initiated by other on-line travel agents toward the end of 1st quarter 2009 in the form of reduced booking fees and/or the launch by competitors of an “opaque” travel offering;

 

· an adverse outcome in one or more of the hotel occupancy and other tax proceedings in which the Company is involved;

 

· a change by a major search engine to its search engine algorithms that negatively affects the search engine ranking of the company or its 3rd party distribution partners;

 

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· our ability to expand successfully in international markets;

 

· the ability to attract and retain qualified personnel;

 

· difficulties integrating recent or future acquisitions, such as the 4th quarter 2007 acquisition of Agoda, including ensuring the effectiveness of the design and operation of internal controls and disclosure controls of acquired businesses;

 

· the occurrence of an external or internal security breach of our systems or other Internet based systems involving personal customer information, credit card information or other sensitive data;

 

· systems-related failures and/or security breaches, including without limitation, “denial-of-service” type attacks on our system, any security breach that results in the theft, transfer or unauthorized disclosure of customer information, or the failure to comply with various state laws applicable to the company’s obligations in the event of such a breach; and

 

· legal and regulatory risks.

 

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.

 

Non-GAAP Financial Measures

 

Pro forma EBITDA represents GAAP operating income excluding depreciation and amortization expense, plus foreign currency transactions and other expense and the pro forma adjustments relating to stock-based compensation expense and payroll taxes related to stock-based compensation described below.

 

Pro forma EBITDA, pro forma net income and pro forma net income per share are “non-GAAP financial measures,” as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. Priceline.com believes that pro forma EBITDA, pro forma net income and pro forma net income per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate priceline.com’s future on-going performance because they enable a more meaningful comparison of priceline.com’s projected cash earnings and performance with its historical results from prior periods. These pro forma metrics, in particular pro forma EBITDA and pro forma net income, are not intended to represent funds available for priceline.com’s discretionary use and

 

5



 

are not intended to represent or to be used as a substitute for operating income, net income or cash flows from operations data as measured under GAAP. The items excluded from these pro forma metrics, but included in the calculation of their closest GAAP equivalent, are significant components of consolidated statements of income and must be considered in performing a comprehensive assessment of overall financial performance.

 

Pro forma financial information is adjusted for the following items:

 

·                  Amortization expense of acquisition-related intangibles is excluded because it does not impact cash earnings.

 

·                  The charge related to the judgment in the Texas hotel occupancy tax litigation is excluded because it impacts comparability with historical operating results from prior periods.

 

·                  Stock-based compensation expense is excluded because it does not impact cash earnings and is reflected in earnings per share through increased share count.

 

·                  Payroll tax expense related to stock-based compensation is excluded for 2008 because the expense is driven primarily by stock option exercise and share award vesting activity and the market price of priceline.com’s common stock and often shows volatility unrelated to operating results.  As of January 1, 2009, we no longer exclude payroll tax expense related to stock-based compensation due to its relative insignificance to our consolidated financial statements.

 

·                  Interest expense related to the amortization of debt discount and gains or losses on debt extinguishment recorded in 2009, and in 2008 on a retrospective basis, pursuant to the provisions of FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” are excluded because they are non-cash in nature. Pursuant to the provisions of FSP APB 14-1, certain debt issuance costs were reclassified to equity and are therefore no longer amortized in GAAP or pro forma earnings (as of January 1, 2009).

 

·                  Income tax expense is adjusted for the tax impact of certain of the pro forma adjustments described above and to exclude tax expense recorded where no actual tax payments are owed because of available net operating loss carry forwards.  Income tax expense is also adjusted to exclude the $181.9 million non-cash tax benefit from reversing a portion of the deferred tax asset valuation allowance in 3rd quarter 2009.

 

·                  Net income attributable to non-controlling interests is adjusted for the impact of certain of the pro forma adjustments described above.

 

·                  For calculating pro forma net income per share:

 

·                  net income is adjusted for the impact of the pro forma adjustments described above.

 

6



 

·                  fully diluted share count is adjusted to include the anti-dilutive impact of “Conversion Spread Hedges” related to priceline.com’s convertible securities that increase the effective conversion price of the currently outstanding 0.50% convertible notes due 2011 and 0.75% convertible notes due 2013 from their stated $40.38 conversion price to an effective conversion price of $50.47 per share.

 

Under GAAP, the anti-dilutive impact of the Conversion Spread Hedges is not reflected on the outstanding diluted share count until the end of the hedge in 2011 and 2013 if and when shares are delivered.

 

·                  all unvested shares of restricted common stock, restricted stock units and performance share units are included in the calculation of pro forma net income per share because pro forma net income has been adjusted to exclude stock-based compensation expense.

 

The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States. The attached financial and statistical supplement reconciles pro forma financial information with priceline.com’s financial results under GAAP.

 

About Priceline.com® Incorporated

Priceline.com Incorporated (Nasdaq: PCLN) www.priceline.com provides online travel services in 29 languages in 78 countries in Europe, North America, Asia, the Middle East and Africa. Included in the priceline.com family of companies is Booking.com, a leading international online hotel reservation service, priceline.com, a leading U.S. online travel service for value-conscious leisure travelers, and Agoda.com, an Asian online hotel reservation service.  Priceline.com believes that Booking.com is Europe’s largest and fastest growing hotel reservation service, with a network of affiliated Web sites. Booking.com operates in over 70 countries in 24 languages and offers its customers access to over 73,000 participating hotels worldwide.

 

In the U.S., priceline.com gives customers more ways to save on their airline tickets, hotel rooms, rental cars, vacation packages and cruises than any other Internet travel service. In addition to getting great published prices, leisure travelers can narrow their searches using priceline.com’s TripFilter advanced search technology, customize their search activity through priceline.com’s Inside Track features, create packages to save even more money, and take advantage of priceline.com’s famous Name Your Own Price® service, which can deliver the lowest prices available.  Priceline.com operates the following travel websites: Travelweb.com, Lowestfare.com, RentalCars.com and BreezeNet.com. Priceline.com also licenses its business model to independent licensees.

 

###

 

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Press Contact:

 

Brian Ek 203-299-8167  brian.ek@priceline.com

 

Investor Relations Contact:

 

Matthew Tynan 203-299-8487 matt.tynan@priceline.com

 



 

priceline.com Incorporated

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

 

 

December 31,

 

 

 

September 30,

 

2008

 

 

 

2009

 

As Adjusted

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

362,473

 

$

364,550

 

Restricted cash

 

1,321

 

2,528

 

Short-term investments

 

356,793

 

98,888

 

Accounts receivable, net of allowance for doubtful accounts of $7,792 and $8,429, respectively

 

169,864

 

92,328

 

Prepaid expenses and other current assets

 

19,236

 

23,463

 

Deferred income taxes

 

40,671

 

12,142

 

Total current assets

 

950,358

 

593,899

 

 

 

 

 

 

 

Property and equipment, net

 

29,339

 

29,404

 

Intangible assets, net

 

179,794

 

193,231

 

Goodwill

 

349,981

 

326,863

 

Deferred income taxes

 

282,606

 

153,955

 

Other assets

 

4,958

 

15,069

 

 

 

 

 

 

 

Total assets

 

$

1,797,036

 

$

1,312,421

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

62,995

 

$

46,290

 

Accrued expenses and other current liabilities

 

143,463

 

77,713

 

Deferred merchant bookings

 

50,405

 

29,664

 

Convertible debt

 

220,725

 

317,910

 

Total current liabilities

 

477,588

 

471,577

 

 

 

 

 

 

 

Deferred taxes

 

45,733

 

48,933

 

Other long-term liabilities

 

21,777

 

18,010

 

Total liabilities

 

545,098

 

538,520

 

 

 

 

 

 

 

Convertible debt

 

50,213

 

75,075

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock, $0.008 par value, authorized 1,000,000,000 shares, 50,656,947, and 47,664,766 shares issued, respectively

 

391

 

367

 

Treasury stock, 6,848,605 and 6,685,048 shares, respectively

 

(507,724

)

(493,555

)

Additional paid-in capital

 

2,237,372

 

2,176,556

 

Accumulated deficit

 

(533,128

)

(944,145

)

Accumulated other comprehensive income

 

4,814

 

(40,397

)

Total stockholders’ equity

 

1,201,725

 

698,826

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,797,036

 

$

1,312,421

 

 



 

priceline.com Incorporated

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

September 30,

 

September 30,

 

 

 

 

 

2008

 

 

 

2008

 

 

 

2009

 

As Adjusted

 

2009

 

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

Merchant revenues

 

$

400,314

 

$

323,957

 

$

1,130,169

 

$

949,345

 

Agency revenues

 

323,188

 

232,638

 

647,899

 

515,819

 

Other revenues

 

7,158

 

5,014

 

18,391

 

13,600

 

Total revenues

 

730,660

 

561,609

 

1,796,459

 

1,478,764

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues

 

296,654

 

245,531

 

848,885

 

727,858

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

434,006

 

316,078

 

947,574

 

750,906

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Advertising - Offline

 

8,474

 

8,293

 

30,293

 

30,252

 

Advertising - Online

 

115,103

 

84,291

 

273,327

 

214,952

 

Sales and marketing

 

24,473

 

21,452

 

63,583

 

57,715

 

Personnel, including stock-based compensation of $10,870, $10,055, $32,727, and $29,070, respectively

 

50,959

 

45,259

 

135,333

 

121,787

 

General and administrative

 

19,367

 

13,524

 

48,881

 

39,519

 

Information technology

 

4,777

 

4,402

 

14,002

 

13,688

 

Depreciation and amortization

 

10,098

 

10,935

 

29,182

 

32,352

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

233,251

 

188,156

 

594,601

 

510,265

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

200,755

 

127,922

 

352,973

 

240,641

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

471

 

3,061

 

1,695

 

10,138

 

Interest expense

 

(5,911

)

(7,739

)

(19,221

)

(27,321

)

Foreign currency transactions and other

 

(1,220

)

3,587

 

(1,283

)

(1,508

)

Total other income (expense)

 

(6,660

)

(1,091

)

(18,809

)

(18,691

)

 

 

 

 

 

 

 

 

 

 

Earnings before income taxes and equity in income (loss) of investees

 

194,095

 

126,831

 

334,164

 

221,950

 

Income tax benefit (expense)

 

124,887

 

(40,445

)

76,851

 

(70,209

)

Equity in income (loss) of investees

 

 

(97

)

2

 

(263

)

Net income

 

318,982

 

86,289

 

411,017

 

151,478

 

Less: net income attributable to noncontrolling interests

 

 

1,803

 

 

3,378

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common stockholders of priceline.com Incorporated

 

$

318,982

 

$

84,486

 

$

411,017

 

$

148,100

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common stockholders per basic common share

 

$

7.49

 

$

2.13

 

$

9.84

 

$

3.81

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of basic common shares outstanding

 

42,569

 

39,715

 

41,750

 

38,905

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common stockholders per diluted common share

 

$

6.42

 

$

1.74

 

$

8.42

 

$

3.00

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of diluted common shares outstanding

 

49,670

 

48,656

 

48,805

 

49,344

 

 



 

priceline.com Incorporated

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

 

 

2008

 

 

 

2009

 

As Adjusted

 

OPERATING ACTIVITIES:

 

 

 

 

 

Net income

 

$

411,017

 

$

151,478

 

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation

 

10,605

 

10,799

 

Amortization

 

18,577

 

21,825

 

Provision for uncollectible accounts, net

 

3,379

 

5,351

 

Reversal of valuation allowance on deferred tax asset

 

(181,874

)

 

Other deferred income taxes

 

27,835

 

14,097

 

Stock-based compensation expense

 

32,727

 

29,070

 

Amortization of debt issuance costs

 

1,620

 

1,819

 

Amortization of debt discount

 

14,752

 

21,040

 

Gain on extinguishment of debt

 

(2,735

)

(46

)

Equity in (income) loss of investees

 

(2

)

263

 

Loss on impairment of investment

 

 

843

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(73,932

)

(80,960

)

Prepaid expenses and other current assets

 

8,921

 

(2,662

)

Accounts payable, accrued expenses and other current liabilities

 

89,827

 

58,518

 

Other

 

2,683

 

3,765

 

Net cash provided by operating activities

 

363,400

 

235,200

 

INVESTING ACTIVITIES:

 

 

 

 

 

Purchase of investments

 

(534,274

)

(115,005

)

Maturity of investments

 

294,618

 

185,226

 

Additions to property and equipment

 

(9,902

)

(12,885

)

Acquisitions and other equity investments, net of cash acquired

 

 

(593

)

Proceeds from redemption of equity investment in pricelinemortgage.com

 

8,921

 

 

Change in restricted cash

 

1,234

 

(1,500

)

Purchase of shares held by noncontrolling interests

 

 

(153,564

)

Net cash used in investing activities

 

(239,403

)

(98,321

)

FINANCING ACTIVITIES:

 

 

 

 

 

Payments related to conversion of senior notes

 

(122,047

)

(102,409

)

Repurchase of common stock

 

(14,169

)

(4,336

)

Proceeds from exercise of stock options

 

9,404

 

4,475

 

Excess tax benefit on stock-based compensation

 

1,580

 

6,541

 

Net cash used in financing activities

 

(125,232

)

(95,729

)

Effect of exchange rate changes on cash and cash equivalents

 

(842

)

(13,123

)

Net increase / (decrease) in cash and cash equivalents

 

(2,077

)

28,027

 

Cash and cash equivalents, beginning of period

 

364,550

 

385,359

 

Cash and cash equivalents, end of period

 

$

362,473

 

$

413,386

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid during the period for income taxes

 

$

60,155

 

$

46,280

 

Cash paid during the period for interest

 

$

4,242

 

$

6,325

 

 



 

priceline.com Incorporated

UNAUDITED RECONCILIATION OF GAAP TO PRO FORMA FINANCIAL INFORMATION

(In thousands, except per share data)

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

2008

 

 

 

2008

 

 

 

 

 

2009

 

As Adjusted

 

2009

 

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF GAAP OPERATING INCOME TO PRO FORMA EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating income

 

$

200,755

 

$

127,922

 

$

352,973

 

$

240,641

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Amortization of acquired intangible assets in Cost of revenues

 

 

 

 

272

 

(b)

 

Stock-based compensation

 

10,870

 

10,055

 

32,727

 

29,070

 

(c)

 

Charge related to hotel occupancy tax litigation judgement in General and administrative expense

 

3,680

 

 

3,680

 

 

(d)

 

Stock-based compensation payroll taxes

 

 

36

 

 

709

 

(j)

 

Depreciation and amortization

 

10,098

 

10,935

 

29,182

 

32,352

 

(k)

 

Foreign currency transactions and other

 

(1,220

)

3,587

 

(1,283

)

(1,507

)

(g)

 

(Gain) loss on extinguishment of debt

 

394

 

(87

)

(2,735

)

(45

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Forma EBITDA

 

$

224,577

 

$

152,448

 

$

414,544

 

$

301,492

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

2008

 

 

 

2008

 

 

 

 

 

2009

 

As Adjusted

 

2009

 

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF GAAP TO PRO FORMA NET INCOME APPLICABLE TO COMMON STOCKHOLDERS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net income applicable to common stockholders of priceline.com Incorporated

 

$

318,982

 

$

84,486

 

$

411,017

 

$

148,100

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)

 

Amortization of acquired intangible assets in Cost of revenues

 

 

 

 

272

 

(a)

 

Amortization of acquired intangible assets in Depreciation and amortization

 

6,427

 

7,352

 

18,542

 

21,553

 

(b)

 

Stock-based compensation

 

10,870

 

10,055

 

32,727

 

29,070

 

(c)

 

Charge related to hotel occupancy tax litigation judgement in General and administrative expense

 

3,680

 

 

3,680

 

 

(d)

 

Stock-based compensation payroll taxes

 

 

36

 

 

709

 

(e)

 

Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes (including the non-cash benefit of $181.9 million in 3rd quarter 2009 from the reversal of a portion of the valuation allowance on the Company’s deferred tax asset)

 

(171,529

)

9,213

 

(154,382

)

13,098

 

(f)

 

Impact on noncontrolling interests of other pro forma adjustments

 

 

(243

)

 

(818

)

(g)

 

Amortization related to FSP APB 14-1

 

4,516

 

5,976

 

14,752

 

20,534

 

(g)

 

(Gain) loss on extinguishment of debt

 

394

 

(87

)

(2,735

)

(45

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Forma Net income applicable to common stockholders of priceline.com Incorporated

 

$

173,340

 

$

116,788

 

$

323,601

 

$

232,473

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

 

 

 

 

 

2008

 

 

 

2008

 

 

 

 

 

2009

 

As Adjusted

 

2009

 

As Adjusted

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF GAAP TO PRO FORMA NET INCOME APPLICABLE TO COMMON STOCKHOLDERS PER DILUTED COMMON SHARE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP weighted average number of diluted common shares outstanding

 

49,670

 

48,656

 

48,805

 

49,344

 

 

 

 

 

 

 

 

 

 

 

 

 

(h)

 

Adjustment for Conversion Spread Hedges

 

(449

)

(884

)

(642

)

(767

)

(i)

 

Adjustment for restricted stock, restricted stock units and performance units

 

1,019

 

1,091

 

1,006

 

1,002

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Forma Weighted average number of diluted common shares outstanding

 

50,240

 

48,863

 

49,169

 

49,579

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income applicable to common stockholders per diluted common share GAAP

 

$

6.42

 

$

1.74

 

$

8.42

 

$

3.00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pro Forma

 

$

3.45

 

$

2.39

 

$

6.58

 

$

4.69

 

 


(a)

Amortization of acquired intangible assets is recorded in Cost of revenues and Depreciation and amortization.

(b)

Stock-based compensation is recorded in Personnel expense.

(c)

Charge related to Texas hotel occupancy tax litigation judgement is recorded in General and administrative expense.

(d)

Stock-based compensation payroll taxes are recorded in General and administrative expense. As of January 1, 2009, we no longer exclude payroll tax expense related to stock-based compensation due to its relative insignificance to our consolidated financial statements.

(e)

Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes (including the non-cash benefit of $181.9 million in 3rd quarter 2009 from the reversal of a portion of the valuation allowance on the Company’s deferred tax asset).

(f)

Impact on noncontrolling interests of other pro forma adjustments are recorded in Net income attributable to noncontrolling interests.

(g)

Non-cash interest expense related to the amortization of debt discount and (gain) loss on debt extinguishment, pursuant to the provisions of FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash upon Conversion (Including Partial Cash Settlement)” are recorded in Interest expense and Foreign currency transactions and other, respectively.

(h)

Reflects the impact of the Conversion Spread Hedges that increase the effective conversion price of the currently outstanding Convertible Senior Notes due September 30, 2011 and the Convertible Senior Notes due September 30, 2013 from their stated $40.38 conversion price to an effective conversion price of $50.47 per share.  Under GAAP, the anti-dilutive impact of the Conversion Spread Hedges is not reflected on the outstanding diluted share count until the end of the hedge when shares are delivered.

(i)

All shares of restricted common stock, restricted stock units and performance share units are included in the calculation of pro forma net income per share because pro forma net income has been adjusted to exclude stock-based compensation expense.

(j)

Depreciation and amortization are excluded from Operating income to calculate EBITDA.

(k)

Foreign currency transactions and other are added to Operating income to calculate EBITDA.

 



 

priceline.com Incorporated

Statistical Data

In thousands

(Unaudited)

 

Gross Bookings

 

2Q07

 

3Q07

 

4Q07

 

1Q08

 

2Q08

 

3Q08

 

4Q08

 

1Q09

 

2Q09

 

3Q09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$

547,787

 

$

602,205

 

$

525,571

 

$

720,968

 

$

872,284

 

$

799,578

 

$

688,923

 

$

851,157

 

$

964,464

 

$

998,715

 

International**

 

687,124

 

788,478

 

679,760

 

1,037,644

 

1,237,681

 

1,250,850

 

792,190

 

1,092,427

 

1,414,714

 

1,724,131

 

Total

 

$

1,234,911

 

$

1,390,683

 

$

1,205,331

 

$

1,758,612

 

$

2,109,965

 

$

2,050,427

 

$

1,481,113

 

$

1,943,584

 

$

2,379,178

 

$

2,722,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

$

919,260

 

$

1,042,619

 

$

912,698

 

$

1,370,119

 

$

1,656,775

 

$

1,603,693

 

$

1,108,024

 

$

1,469,956

 

$

1,824,618

 

$

2,130,571

 

Merchant**

 

315,651

 

348,064

 

292,633

 

388,493

 

453,190

 

446,734

 

373,089

 

473,628

 

554,560

 

592,275

 

Total

 

$

1,234,911

 

$

1,390,683

 

$

1,205,331

 

$

1,758,612

 

$

2,109,965

 

$

2,050,427

 

$

1,481,113

 

$

1,943,584

 

$

2,379,178

 

$

2,722,846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year/Year Growth

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

-4.0

%

19.3

%

24.2

%

50.6

%

59.2

%

32.8

%

31.1

%

18.1

%

10.6

%

24.9

%

International

 

92.7

%

97.9

%

113.0

%

99.7

%

80.1

%

58.6

%

16.5

%

5.3

%

14.3

%

37.8

%

excluding F/X impact

 

79.6

%

83.4

%

89.9

%

75.0

%

55.8

%

44.7

%

27.6

%

23.5

%

32.4

%

48.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

50.9

%

73.7

%

85.9

%

92.8

%

80.2

%

53.8

%

21.4

%

7.3

%

10.1

%

32.9

%

Merchant

 

-0.8

%

15.0

%

16.4

%

34.9

%

43.6

%

28.3

%

27.5

%

21.9

%

22.4

%

32.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

33.2

%

54.0

%

62.4

%

76.1

%

70.9

%

47.4

%

22.9

%

10.5

%

12.8

%

32.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units Sold

 

2Q07

 

3Q07

 

4Q07

 

1Q08

 

2Q08

 

3Q08

 

4Q08

 

1Q09

 

2Q09

 

3Q09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hotel Room-Nights

 

7,242

 

7,964

 

6,616

 

9,375

 

10,879

 

11,434

 

9,126

 

12,785

 

15,665

 

17,869

 

Year/Year Growth

 

45.0

%

52.0

%

55.1

%

57.4

%

50.2

%

43.6

%

38.0

%

36.4

%

44.0

%

56.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental Car Days

 

2,278

 

2,338

 

2,002

 

2,612

 

2,815

 

2,333

 

2,224

 

3,014

 

3,237

 

2,604

 

Year/Year Growth

 

13.9

%

14.4

%

11.9

%

30.4

%

23.6

%

-0.2

%

11.1

%

15.4

%

15.0

%

11.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airline Tickets

 

687

 

819

 

790

 

1,169

 

1,362

 

1,186

 

1,135

 

1,496

 

1,551

 

1,544

 

Year/Year Growth

 

-16.3

%

23.0

%

34.4

%

83.0

%

98.2

%

44.8

%

43.7

%

28.0

%

13.9

%

30.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2Q07

 

3Q07

 

4Q07

 

1Q08

 

2Q08

 

3Q08

 

4Q08

 

1Q09

 

2Q09

 

3Q09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

355,880

 

$

417,287

 

$

334,853

 

$

403,180

 

$

513,976

 

$

561,609

 

$

406,041

 

$

462,058

 

$

603,741

 

$

730,660

 

Year/Year Growth

 

15.7

%

33.1

%

28.8

%

33.8

%

44.4

%

34.6

%

21.3

%

14.6

%

17.5

%

30.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

$

157,211

 

$

202,331

 

$

160,152

 

$

181,103

 

$

253,725

 

$

316,078

 

$

205,065

 

$

208,330

 

$

305,238

 

$

434,006

 

Year/Year Growth

 

48.6

%

63.8

%

60.9

%

51.3

%

61.4

%

56.2

%

28.0

%

15.0

%

20.3

%

37.3

%

 


Gross Bookings represent the total dollar value of travel booked, inclusive of taxes and fees.

** Includes $37.5 million, $32.4 million, $24.2 million, $24.6 million and $13.4 million of Agoda gross bookings in 4Q08, 3Q08, 2Q08, 1Q08 and 4Q07, respectively since acquisition on November 6, 2007.