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) November 8, 2010

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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425

oSoliciting material pursuant to Rule 14a-12  under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4c under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.Results of Operations and Financial Conditions

On November 8, 2010, priceline.com Incorporated (“priceline.com” or the “company”) announced its financial results for the 3rd quarter ended September 30, 2010.  A copy of priceline.com’s consolidated balance sheet at September 30, 2010, consolidated statement of operations for the three and nine months ended September 30, 2010 and consolidated statement of cash flows for the nine months ended September 30, 2010 are included in the financial and statistical supplement attached to the press release attached as Exhibit 99.1 to this Current Report on Form 8-K.  The consolidated balance sheet at September 30, 2010, consolidated statement of operations for the three and nine months ended September 30, 2010 and consolidated statement of cash flows for the nine months ended September 30, 2010 shall be treated as “filed” for the purposes of the Securities and Exchange Act of 1934, as amended.

Item 5.02Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

On November 8, 2010, priceline.com Incorporated announced that Robert J. Mylod Jr., age 44, Vice Chairman and Head of Worldwide Strategy and Planning, will retire on March 31, 2011.  Mr. Mylod joined priceline.com in 1998 and served as the Company’s Chief Financial Officer from November 2000 to January 2009.  He was appointed Vice Chairman and Head of Worldwide Strategy and Planning in January 2009.

A copy of priceline.com’s press release announcing Mr. Mylod’s retirement is attached as Exhibit 99.2 to this Current Report on Form 8-K.

Item 7.01.Regulation FD Disclosure

On November 8, 2010, priceline.com announced its financial results for the 3rd quarter ended September 30, 2010.  A copy of priceline.com’s press release announcing these results is attached as Exhibit 99.1 to this Current Report on Form 8-K.

The company noted that average daily rates for hotel room night reservations had increased year-over-year during the 3rd quarter 2010 by about 4% for the company’s international business and by over 5% for its domestic business.

The company stated that the combined gross travel bookings of Agoda plus Booking.com’s business for Asia Pacific destinations was approximately $780 million for the 12 months ended September 30, 2010 and the year-over-year growth rate during the 3rd quarter 2010 was “just shy” of 150%.  The company also stated that Booking.com had gross travel bookings for South American destinations of $96 million for the 12 months ended September 30, 2010 and the year-over-year growth rate during the 3rd quarter 2010 was in excess of 300%.  The company’s brands are building point-of-sale businesses which are of a comparable size and growing at impressive rates as well. The company also noted that Booking.com’s “point-of-sale” business in South America generated $265 million in gross travel bookings for the 12 months ended September 30, 2010 and the year-over-year growth rate during the 3rd quarter 2010 was approximately 133%. The company stated that Agoda gross bookings grew year-over-year in excess of 100%.

The company also explained that it had spent approximately $122 million in cash during the 3rd quarter 2010 in connection with conversions of its outstanding convertible debt (approximately $50 million of which was used to repay the principal amount of outstanding debt

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and approximately $72 million of which was paid to satisfy the conversion value in excess of the principal amount).

With respect to 4th quarter 2010 guidance, the company announced that it expected consolidated advertising expenses of approximately $141 to $146 million in the 4th quarter 2010 and expected approximately $6 million of that amount to be spent “off-line.”  Priceline.com estimated that sales and marketing expenses in the 4th quarter 2010 would be between $29 and $32 million. Priceline.com stated that it estimated that personnel costs, excluding stock-based compensation expense, would be approximately $60.5 to $63.5 million in the 4th quarter 2010. With respect to 4th quarter 2010, priceline.com stated that it estimated that general and administrative expenses would be approximately $21 to $24 million, information technology expenses would be approximately $7 million, and depreciation and amortization expenses, excluding acquisition related amortization, would be approximately $5 million.  Priceline.com said it expected below-the-line net expenses of approximately $6.5 million in the 4th quarter 2010 primarily associated with net interest expense, foreign exchange hedging losses and the charge for non-GAAP net income allocated to non-controlling interests.  Priceline.com estimated that it would have cash income tax expense of approximately $43.5 million in the 4th quarter 2010 comprised of international income taxes and alternative minimum tax and state income taxes in the United States.

The company noted that its forecast for the 4th quarter 2010 assumed, among other things, that the Euro/U.S. Dollar exchange rate would be 1.40 U.S. dollars per Euro for the remainder of the 4th quarter and that the British Pound/U.S. Dollar exchange rate would be 1.62 U.S. Dollars per British Pound for the remainder of the 4th quarter.  The company’s 4th quarter financial guidance also assumed that the rate of year-over-year increase for international and domestic average daily rates for hotel room night reservations would improve further in the 4th quarter 2010 compared to the year-over-year growth rates in the 3rd quarter 2010.  The company noted that its non-GAAP financial guidance was based upon a diluted share count of approximately 51.4 million shares (which includes a calculation of the assumed economic dilutive impact of the company’s outstanding convertible notes and share-based awards, net of the favorable economic impact of the hedges associated with some of the company’s outstanding convertible notes), which is based on the company’s November 5, 2010 closing stock price of $388.87 per share.  The company noted that it expected TravelJigsaw to be “very slightly” accretive to non-GAAP financial results in the 4th quarter 2010.

The company explained that its year-over-year “comps” would be increasingly more challenging in future quarters and noted that the company had seen a year-over-year deceleration in unit growth rates quarter-to-date in the 4th quarter 2010.  The company noted that, as a result of the more challenging “comps” and the “sheer” size of the company’s business, it expected to see a pattern of sequential decelerating quarterly year-over-year unit growth rates in future quarters.

The company noted that its guidance assumes that macro-economic conditions in general and conditions in the consumer travel market in particular, remain relatively unchanged.

This Form 8-K contains 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, “goal,” “believe(s),” “intend,” “expect(s),” “will,” “may,” “should,” “could,” “plan(s),” “anticipate(s),” “estimate(s),” “predict(s),” “potential,” “target(s),” or “continue,” reflecting something other than historical fact are intended to identify forward-looking statements.  For a detailed discussion of the 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 

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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.

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Item 9.01Financial Statements and Exhibits.

(d)Exhibits.

Exhibit No.	Description
99.1	Press Release (which includes a financial and statistical supplement and related information) issued by priceline.com Incorporated on November 8, 2010 relating to, among other things, its 3rd quarter ended September 30, 2010 earnings. The consolidated balance sheet at September 30, 2010 and consolidated statement of operations for the three and nine months ended September 30, 2010 and consolidated statement of cash flows for the nine months ended September 30, 2010, shall be treated as “filed” for the purposes of the Securities and Exchange Act of 1934, as amended, and the remaining information shall be treated as “furnished.”
99.2	Press Release announcing the retirement of Robert J. Mylod Jr., Vice Chairman and Head of Worldwide Strategy and Planning, effective March 31, 2011

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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/ Daniel J. Finnegan
		Name:	Daniel J. Finnegan
		Title:	Chief Financial Officer
Date:  November 9, 2010

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release (which includes a financial and statistical supplement and related information) issued by priceline.com Incorporated on November 8, 2010 relating to, among other things, its 3rd quarter ended September 30, 2010 earnings. The consolidated balance sheet at September 30, 2010 and consolidated statement of operations for the three and nine months ended September 30, 2010 and consolidated statement of cash flows for the nine months ended September 30, 2010, shall be treated as “filed” for the purposes of the Securities and Exchange Act of 1934, as amended, and the remaining information shall be treated as “furnished.”
99.2	Press Release announcing the retirement of Robert J. Mylod Jr., Vice Chairman and Head of Worldwide Strategy and Planning, effective March 31, 2011

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EX-99.1

Exhibit 99.1

Priceline.com Reports Financial Results for 3rd Quarter 2010

NORWALK, Conn., November 8, 2010 . . . Priceline.com Incorporated (Nasdaq: PCLN) today reported 3rd quarter 2010 financial results for the Priceline Group of Companies. Third quarter gross travel bookings for the Group, which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by consumers, were $4.0 billion, an increase of 47.1% over a year ago.

The Group had revenues in the 3rd quarter of $1.0 billion, a 37.1% increase over a year ago. International operations contributed revenues in the 3rd quarter of $531.0 million, a 67.6% increase versus a year ago (approximately 80% on a local currency basis). The Group’s gross profit for the 3rd quarter was $666.2 million, a 53.5% increase from the prior year.  International operations contributed gross profit in the 3rd quarter of $529.8 million, a 67.6% increase versus a year ago (approximately 80% growth on a local currency basis). The Group’s operating income in the 3rd quarter 2010 was $336.8 million, a 67.8% increase from the prior year. The Group had GAAP net income for the 3rd quarter of $223.0 million or $4.41 per diluted share, which compares to $319.0 million or $6.42 per diluted share in the same period a year ago.  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 Group’s net operating loss carry forwards.

Non-GAAP net income in the 3rd quarter was $272.3 million, a 57.1% increase versus the similar period in the prior year.  Non-GAAP net income per diluted share was $5.33, compared to $3.45 per diluted share a year ago.  First Call analyst consensus for the 3rd quarter 2010 was $4.97 per diluted share. Non-GAAP EBITDA for the 3rd quarter was $362.5 million, an increase of 61.4% over the prior year.  The section below entitled “Non-GAAP Financial Measures” provides a definition and information about the use of non-GAAP financial measures in this press release and the attached financial and statistical supplement reconciles non-GAAP financial information with the Group’s financial results under GAAP.

“We are pleased by the Group’s strong performance in the 3rd quarter” said Jeffery H. Boyd, President and CEO.  “Increased gross travel bookings were driven primarily by our worldwide hotel business, which had a 54% increase in room nights booked.  Transaction growth in core Western European and North American markets, ADR improvement and an increasing contribution from high growth new markets led to a sequential increase in the Group’s gross travel bookings growth.”

Mr. Boyd continued, “Rental car unit sales also contributed to bookings growth with 97% growth in days booked, driven by the strong performance of TravelJigsaw, our recently acquired international rental car business, and a 23% increase in domestic unit sales.  Airline ticket sales were down 5% in the quarter as demand was impacted by reduced capacity and higher airfares.”

Looking forward, Mr. Boyd said, “We believe the Group is benefiting from cyclical improvements in the travel economy, including an easing of immediate fears relating to Eurozone sovereign debt, an increasing contribution from fast-growing new markets, particularly non-core Europe and Asia/Pacific, and continued innovation and execution by our teams around the world to build hotel supply, content, distribution and improve the customer experience.  We believe the scale of our international hotel business and the talent and commitment of our people position the Group well to continue building share and navigate changes in our markets in the future.”

Priceline.com said the Group was targeting the following for 4th quarter 2010:

·Year-over-year increase in total gross travel bookings of approximately 36% - 41%.

·Year-over-year increase in international gross travel bookings of approximately 54% - 59% (an increase of approximately 58% - 63% on a local currency basis).

·Year-over-year increase in domestic gross travel bookings of approximately 5% - 10%.

·Year-over-year increase in revenue of approximately 31% - 36%.

·Year-over-year increase in gross profit of approximately 49% - 54%.

·Non-GAAP EBITDA of approximately $200 million to $210 million.

·Non-GAAP net income of between $2.91 and $3.06 per diluted share.

Non-GAAP guidance for the 4th quarter 2010:

·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 early debt extinguishment, if any, related to cash settled convertible debt,

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

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

·includes the additional impact of the non-GAAP adjustments described above on net income attributable to noncontrolling interests,

·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 non-GAAP net income has been adjusted to exclude stock-based compensation.

In addition, non-GAAP EBITDA excludes depreciation and amortization expense, interest income, interest expense, equity in income and loss of investees, net income attributable to noncontrolling interests, income taxes and includes the impact of foreign currency transactions and other expenses.

When aggregated, the foregoing adjustments are expected to increase non-GAAP EBITDA over GAAP net income by approximately $84 million in the 4th quarter 2010.  In addition, the foregoing adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $33 million in the 4th quarter 2010. On a per share basis, the Group estimates GAAP net income of approximately $2.29 to $2.44 per diluted share for the 4th quarter 2010.

Information About Forward-Looking Statements

This press release contains forward-looking statements. These forward-looking statements reflect the views of the Group’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 Group’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 Group’s relationships with airlines and other product and service providers and vendors which could include, without limitation, the withdrawal of suppliers from the Group’s systems (either “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 in the form of reduced booking fees and/or the launch by competitors of an “opaque” travel offering and the potential impact of “metasearch” initiatives by Google and other search engines upon which we rely for a significant amount of traffic;

·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;

·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 2nd quarter 2010 acquisition of TravelJigsaw, 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 Group’s actual results to differ materially from those described in the forward-looking statements, please refer to the Group’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 Group 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

Non-GAAP EBITDA represents GAAP net income excluding depreciation and amortization expense, interest income, interest expense, equity in income and loss of investees, net income and loss attributable to noncontrolling interests, income taxes and the non-GAAP adjustments relating to stock-based compensation expense, gains and losses on early debt extinguishment and charges or benefits related to judgments, rulings, or settlements of hotel occupancy tax proceedings. Additionally, favorable adjustments related to franchise tax and sales and use tax recorded in GAAP net income have been excluded from non-GAAP EBITDA and non-GAAP net income.

Non-GAAP EBITDA, non-GAAP net income and non-GAAP 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. The Group believes that non-GAAP EBITDA, non-GAAP net income and non-GAAP net income per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate the Group’s future on-going performance because they enable a more meaningful comparison of the Group’s projected cash earnings and performance with its historical results from prior periods. These non-GAAP metrics, in particular non-GAAP EBITDA and non-GAAP net income, are not intended to represent funds available for priceline.com’s discretionary use and 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 non-GAAP 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.

Non-GAAP financial information is adjusted for the following items:

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

·Charges or benefits related to judgments, rulings, or settlements of hotel occupancy tax proceedings and favorable adjustments related to certain franchise and sales tax issues for our headquarters location are excluded because the amount and timing of these items are unpredictable, not driven by core operating results and render comparisons with prior periods less meaningful.

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

·Interest expense related to the amortization of debt discount and gains or losses on early debt extinguishment related to convertible debt are excluded because they are non-cash in nature.

·Income tax expense is adjusted for the tax impact of certain of the non-GAAP 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 for the 3rd quarter 2009 was adjusted to exclude a $181.9 million non-cash tax benefit from reversing a portion of the valuation allowance related to the Group’s net operating loss carry forwards.

·Net income and loss attributable to non-controlling interest is adjusted for the impact of certain of the non-GAAP adjustments described above

·For calculating non-GAAP net income per share:

·net income is adjusted for the impact of the non-GAAP adjustments described above.

·fully diluted share count is adjusted to include the anti-dilutive impact of “Conversion Spread Hedges” which increases 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 non-GAAP net income per share because non-GAAP 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 non-GAAP financial information with priceline.com’s financial results under GAAP.

About The Priceline Group of Companies

The Priceline Group of Companies (Nasdaq: PCLN) is a leader in global online hotel reservations, with approximately 61 million room nights booked in 2009.  The Group is composed of four primary brands — Booking.com, priceline.com, Agoda.com and TravelJigsaw.

The Priceline Group provides online travel services in 38 languages in 100 countries in Europe, North America, Asia, the Middle East and Africa.

Based in Amsterdam, Booking.com is a leading international online hotel reservation service operating in 92 countries in 38 languages.  Booking.com offers its customers access to over 105,000 participating hotels worldwide.

In the U.S., priceline.com gives leisure travelers multiple ways to save on their airline tickets, hotel rooms, rental cars, vacation packages and cruises. In addition to getting compelling published prices, travelers can take advantage of priceline.com’s famous Name Your Own Price® service, which can deliver the lowest prices available. Priceline.com also operates the following travel websites: Travelweb.com, Lowestfare.com, RentalCars.com and BreezeNet.com.

Singapore-based Agoda.com is an Asian online hotel reservation service that offers hotel rooms around the world and is available in 32 languages.  With headquarters in Manchester, UK, TravelJigsaw is a multinational car hire service, offering its reservation services in more than 4,000 locations in 80 countries.  Customer support is provided in 20 languages.

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

For Investor Relations: Matthew Tynan (203) 299-8487 matt.tynan@priceline.com

priceline.com Incorporated

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	September 30,			December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	533,121		$	202,141
Restricted cash	1,155			1,319
Short-term investments	941,948			598,014
Accounts receivable, net of allowance for doubtful accounts of $5,758 and $5,023, respectively	248,946			118,659
Prepaid expenses and other current assets	41,631			36,828
Deferred income taxes	73,257			65,980
Total current assets	1,840,058			1,022,941
Property and equipment, net	35,905			30,489
Intangible assets, net	243,243			172,080
Goodwill	453,618			350,630
Deferred taxes	158,888			253,700
Other assets	14,833			4,384
Total assets	$	2,746,545		$	1,834,224
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	112,753		$	60,568
Accrued expenses and other current liabilities	195,936			119,521
Deferred merchant bookings	117,800			60,758
Income taxes payable	79,666			8,040
Convertible debt	174			159,878
Total current liabilities	506,329			408,765
Deferred income taxes	59,402			43,793
Other long-term liabilities	28,481			24,052
Convertible debt	471,071			—
Total liabilities	1,065,283			476,610
Convertible debt	41			35,985
Redeemable noncontrolling interests	44,222			—
Stockholders’ equity:
Common stock, $0.008 par value, authorized 1,000,000,000 shares, 56,498,183, and 52,446,173 shares issued, respectively	438			405
Treasury stock,7,410,558 and 6,865,119 shares, respectively	(636,623		)	(510,970		)
Additional paid-in capital	2,355,093			2,289,867
Accumulated deficit	(62,861		)	(454,673		)
Accumulated other comprehensive loss	(19,048		)	(3,000		)
Total stockholders’ equity	1,636,999			1,321,629
Total liabilities and stockholders’ equity	$	2,746,545		$	1,834,224

priceline.com Incorporated

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September, 30,						September, 30,
	2010			2009			2010			2009
Merchant revenues	$	494,473		$	400,314		$	1,309,407		$	1,130,169
Agency revenues	504,010			323,188			1,034,765			647,899
Other revenues	3,274			7,158			9,419			18,391
Total revenues	1,001,757			730,660			2,353,591			1,796,459
Cost of revenues	335,569			296,654			923,032			848,885
Gross profit	666,188			434,006			1,430,559			947,574
Operating expenses:
Advertising - Offline	7,773			8,474			29,684			30,293
Advertising - Online	172,727			115,103			418,354			273,327
Sales and marketing	33,060			24,473			85,663			63,583
Personnel, including stock-based compensation of $21,176, $10,870, $48,550 and $32,727 for the three and nine months ended September 30, 2010 and 2009, respectively	82,007			50,959			194,635			135,333
General and administrative	15,730			19,367			56,224			48,881
Information technology	5,347			4,777			14,850			14,002
Depreciation and amortization	12,775			10,098			33,312			29,182
Total operating expenses	329,419			233,251			832,722			594,601
Operating income	336,769			200,755			597,837			352,973
Other income (expense):
Interest income	918			471			2,713			1,695
Interest expense	(8,293		)	(5,911		)	(22,366		)	(19,221		)
Foreign currency transactions and other	(10,715		)	(1,220		)	(12,806		)	(1,283		)
Total other income (expense)	(18,090		)	(6,660		)	(32,459		)	(18,809		)
Earnings before income taxes and equity in income of investees	318,679			194,095			565,378			334,164
Income tax (expense) benefit	(94,119		)	124,887			(172,347		)	76,851
Equity in income of investees	—			—			—			2
Net income	224,560			318,982			393,031			411,017
Less: net income attributable to noncontrolling interests	1,580			—			1,219			—
Net income applicable to common stockholders	$	222,980		$	318,982		$	391,812		$	411,017
Net income applicable to common stockholders per basic common share	$	4.59		$	7.49		$	8.24		$	9.84
Weighted average number of basic common shares outstanding	48,570			42,569			47,565			41,750
Net income applicable to common stockholders per diluted common share	$	4.41		$	6.42		$	7.70		$	8.42
Weighted average number of diluted common shares outstanding	50,559			49,670			50,917			48,805

priceline.com Incorporated

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended
	September 30,
	2010			2009
OPERATING ACTIVITIES:
Net income	$	393,031		$	411,017
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	12,068			10,605
Amortization	24,193			18,577
Provision for uncollectible accounts, net	5,737			3,379
Reversal of valuation allowance on deferred tax asset	—			(181,874		)
Other deferred income taxes excluding valuation allowance reversal	33,650			27,835
Stock-based compensation expense	48,628			32,727
Amortization of debt issuance costs	2,785			1,620
Amortization of debt discount	14,948			14,752
Loss (gain) on early extinguishment of debt	11,334			(2,735		)
Equity in income of investees	—			(2		)
Changes in assets and liabilities:
Accounts receivable	(112,755		)	(73,932		)
Prepaid expenses and other current assets	(8,034		)	8,921
Accounts payable, accrued expenses and other current liabilities	169,898			89,827
Other	1,897			2,683
Net cash provided by operating activities	597,380			363,400
INVESTING ACTIVITIES:
Purchase of investments	(1,030,011		)	(534,274		)
Proceeds from sale of investments	665,925			294,618
Additions to property and equipment	(14,471		)	(9,902		)
Acquisitions and other equity investments, net of cash acquired	(110,972		)	—
Proceeds from foreign currency contracts	44,564			—
Payments on foreign currency contracts	(4,283		)	—
Proceeds from redemption of equity investment in pricelinemortgage.com	—			8,921
Change in restricted cash	156			1,234
Net cash used in investing activities	(449,092		)	(239,403		)
FINANCING ACTIVITIES:
Proceeds from the issuance of convertible senior notes	575,000			—
Payment of debt issuance costs	(13,334		)	—
Payments related to conversion of convertible senior notes	(295,398		)	(122,047		)
Repurchase of common stock	(125,653		)	(14,169		)
Proceeds from the sale of subsidiary shares to noncontrolling interests	4,311			—
Proceeds from exercise of stock options	24,623			9,404
Excess tax benefit on stock-based compensation	4,975			1,580
Net cash provided by (used in) financing activities	174,524			(125,232		)
Effect of exchange rate changes on cash and cash equivalents	8,168			(842		)
Net increase (decrease) in cash and cash equivalents	330,980			(2,077		)
Cash and cash equivalents, beginning of period	202,141			364,550
Cash and cash equivalents, end of period	$	533,121		$	362,473
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	61,568		$	60,155
Cash paid during the period for interest	$	4,639		$	4,242
Non-cash fair value adjustment for redeemable noncontrolling interests	$	4,118		$	—

priceline.com Incorporated

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
	GAAP Net income applicable to common stockholders	$	222,980		$	318,982		$	391,812		$	411,017
(a)	Amortization of acquired intangible assets in Merchant revenues	2,020			—			2,949			—
(b)	Stock-based compensation	21,176			10,870			48,550			32,727
(c)	Favorable adjustments related to franchise tax and sales and use tax for headquarters location are recorded in General and administrative expense	(2,720		)	—			(2,720		)	—
(d)	Charge related to hotel occupancy tax litigation judgment in General and administrative expense	—			3,680			—			3,680
(e)	Depreciation and amortization	12,775			10,098			33,312			29,182
(f)	Interest income	(918		)	(471		)	(2,713		)	(1,695		)
(f)	Interest expense	8,293			5,911			22,366			19,221
(g)	Loss (gain) on early extinguishment of debt	3,226			394			11,334			(2,735		)
(h)	Adjustments for the tax impact of certain of the pro forma adjustments and to exclude non-cash income taxes	94,119			(124,887		)	172,347			(76,851		)
(i)	Equity in income of investees	—			—			—			(2		)
(j)	Net income attributable to noncontrolling interests	1,580			—			1,219			—
	Non-GAAP EBITDA	$	362,531		$	224,577		$	678,456		$	414,544

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
	GAAP Net income applicable to common stockholders	$	222,980		$	318,982		$	391,812		$	411,017
(a)	Amortization of acquired intangible assets in Merchant revenues	2,020			—			2,949			—
(b)	Stock-based compensation	21,176			10,870			48,550			32,727
(c)	Favorable adjustments related to franchise tax and sales and use tax for headquarters location are recorded in General and administrative expense	(2,720		)	—			(2,720		)	—
(d)	Charge related to hotel occupancy tax litigation judgment in General and administrative expense	—			3,680			—			3,680
(g)	Debt discount amortization related to convertible debt	5,482			4,516			14,948			14,752
(g)	Loss (gain) on early extinguishment of debt	3,226			394			11,334			(2,735		)
(h)	Adjustments for the tax impact of certain of the non-GAAP 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)	12,281			(171,529		)	30,728			(154,382		)
(a)	Amortization of acquired intangible assets in Depreciation and amortization	8,558			6,427			21,200			18,542
(j)	Impact on noncontrolling interests of certain other pro forma adjustments	(745		)	—			(1,154		)	—
	Non-GAAP Net income applicable to common stockholders	$	272,258		$	173,340		$	517,647		$	323,601

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED COMMON SHARE

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
	GAAP weighted average number of diluted common shares outstanding	50,559			49,670			50,917			48,805
(k)	Adjustment for Conversion Spread Hedges	(25		)	(449		)	(87		)	(642		)
(l)	Adjustment for restricted stock, restricted stock units and performance units	525			1,019			501			1,006
	Non-GAAP weighted average number of diluted common shares outstanding	51,059			50,240			51,331			49,169
	Net income applicable to common stockholders per diluted common share GAAP	$	4.41		$	6.42		$	7.70		$	8.42
	Non-GAAP	$	5.33		$	3.45		$	10.08		$	6.58

(a)	Amortization of acquired intangible assets is recorded in Merchant revenues and Depreciation and amortization.
(b)	Stock-based compensation is recorded in Personnel expense.
(c)	Favorable adjustments related to franchise tax and sales and use tax for headquarters location are recorded in General and administrative expense.
(d)	Charge related to Texas hotel occupancy tax litigation judgment is recorded in General and administrative expense.
(e)	Depreciation and amortization are excluded from Net income to calculate EBITDA.
(f)	Interest income and Interest expense are excluded from Net income to calculate EBITDA.
(g)	Non-cash interest expense related to the amortization of debt discount and loss (gain) on early debt extinguishment are recorded in Interest expense and Foreign currency transactions and other, respectively.
(h)	Adjustments for the tax impact of certain of the non-GAAP 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).
(i)	Equity in income of investees is excluded from Net income to calculate EBITDA.
(j)	Impact of other non-GAAP adjustments on Net income attributable to noncontrolling interests.
(k)	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.
(l)	All shares of restricted common stock, restricted stock units and performance share units are included in the calculation of non-GAAP net income per share because non-GAAP net income has been adjusted to exclude stock-based compensation expense.

priceline.com Incorporated

Statistical Data

In millions

(Unaudited)

	2Q08			3Q08			4Q08			1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10
Gross Bookings
Domestic	$	872		$	800		$	689		$	851		$	964		$	999		$	831		$	989		$	1,154		$	1,121
International**	1,238			1,251			792			1,092			1,415			1,724			1,433			1,975			2,256			2,885
Total	$	2,110		$	2,050		$	1,481		$	1,944		$	2,379		$	2,723		$	2,264		$	2,965		$	3,410		$	4,006
Agency	$	1,657		$	1,604		$	1,108		$	1,470		$	1,825		$	2,131		$	1,766		$	2,374		$	2,683		$	3,168
Merchant**	453			447			373			474			555			592			498			591			727			838
Total	$	2,110		$	2,050		$	1,481		$	1,944		$	2,379		$	2,723		$	2,264		$	2,965		$	3,410		$	4,006
Year/Year Growth
Domestic	59.2		%	32.8		%	31.1		%	18.1		%	10.6		%	24.9		%	20.6		%	16.2		%	19.6		%	12.2		%
International	80.1		%	58.6		%	16.5		%	5.3		%	14.3		%	37.8		%	81.0		%	80.8		%	59.5		%	67.3		%
excluding F/X impact	55.8		%	44.7		%	27.6		%	23.5		%	32.4		%	48.5		%	69.5		%	72.8		%	67.1		%	78.0		%
Agency	80.2		%	53.8		%	21.4		%	7.3		%	10.1		%	32.9		%	59.4		%	61.5		%	47.0		%	48.7		%
Merchant	43.6		%	28.3		%	27.5		%	21.9		%	22.4		%	32.6		%	33.5		%	24.8		%	31.1		%	41.4		%
Total	70.9		%	47.4		%	22.9		%	10.5		%	12.8		%	32.8		%	52.9		%	52.5		%	43.3		%	47.1		%
	2Q08			3Q08			4Q08			1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10
Units Sold
Hotel Room-Nights	10.9			11.4			9.1			12.8			15.7			17.9			14.6			20.0			23.2			27.5
Year/Year Growth	50.2		%	43.6		%	38.0		%	36.4		%	44.0		%	56.3		%	59.9		%	56.8		%	48.2		%	54.1		%
Rental Car Days	2.8			2.3			2.2			3.0			3.2			2.6			2.4			3.0			4.3			5.1
Year/Year Growth	23.6		%	-0.2		%	11.1		%	15.4		%	15.0		%	11.6		%	6.6		%	-0.9		%	32.0		%	97.3		%
Airline Tickets	1.4			1.2			1.1			1.5			1.6			1.5			1.3			1.5			1.6			1.5
Year/Year Growth	98.2		%	44.8		%	43.7		%	28.0		%	13.9		%	30.2		%	16.2		%	2.8		%	4.1		%	-4.6		%
	2Q08			3Q08			4Q08			1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10
Revenue	$	514.0		$	561.6		$	406.0		$	462.1		$	603.7		$	730.7		$	541.8		$	584.4		$	767.4		$	1,001.8
Year/Year Growth	44.4		%	34.6		%	21.3		%	14.6		%	17.5		%	30.1		%	33.4		%	26.5		%	27.1		%	37.1		%
Gross Profit	$	253.7		$	316.1		$	205.1		$	208.3		$	305.2		$	434.0		$	313.2		$	319.1		$	445.3		$	666.2
Year/Year Growth	61.4		%	56.2		%	28.0		%	15.0		%	20.3		%	37.3		%	52.7		%	53.2		%	45.9		%	53.5		%

Gross bookings is an operating and statistical metric that captures the total dollar value, generally inclusive of taxes and fees, of all travel services booked by customers.

** Includes $85.8 million and $43.9 million of Travel Jigsaw gross bookings in 3Q10 and 2Q10 since acquisition on May 18, 2010, respectively.  Includes $37.5 million, $32.4 million and $24.2 million of Agoda gross bookings in 4Q08, 3Q08 and 2Q08, respectively.

EX-99.2

Exhibit 99.2

Priceline.com Announces Executive Changes

NORWALK, Conn., November 8, 2010 . . . Priceline.com (Nasdaq: PCLN) today announced executive changes within the Priceline Group of Companies.  Robert J. Mylod Jr., 44, Priceline’s Vice Chairman and Head of Worldwide Strategy and Planning, will retire on March 31, 2011.  For the next year following his retirement, he will continue to assist Priceline’s President and CEO Jeffery H. Boyd on special projects on a part-time basis.

Effective immediately, Glenn D. Fogel, 48, Priceline’s Executive Vice President, Corporate Development, will assume the additional role of Head of Worldwide Strategy and Planning, reporting to Mr. Boyd.

Mr. Mylod joined priceline.com in 1998 and served as the Company’s Chief Financial Officer from November 2000 to January 2009.  He was appointed Vice Chairman and Head of Worldwide Strategy and Planning in January 2009.

“On behalf of the Group, I want to thank Bob Mylod for his many years of exemplary service to Priceline,” said Mr. Boyd.  “Bob has played a critical role in developing the Company’s business and financial strategy from the original turnaround through the build-out of the Group’s retail and international businesses.  I am glad that Bob will be available to work on special projects next year and we all wish him well in his future endeavors.”

Mr. Fogel joined priceline.com in February 2000.  As Executive Vice President, Corporate Development, he is responsible for the Company’s worldwide mergers, acquisitions and strategic alliances.  He is a member of the board of directors of the Priceline Group’s international subsidiaries, Booking.com, Agoda.com and TravelJigsaw.  Prior to joining priceline.com, he worked at Morgan Stanley.

“For several years, Glenn has had the lead role in assessing and executing acquisition opportunities for the Company,” said Mr. Boyd.  “His work led to the addition of Active Hotels, Booking.com, Agoda.com and TravelJigsaw.com, all of which have contributed significantly to the Priceline Group’s growth and success.  Glenn’s deep understanding of the global online travel environment and Priceline’s strategic business needs will be very valuable to the Group going forward.  I look forward to working with Glenn in his new, expanded role.”

The Priceline Group also announced today the promotion of Robert Rosenstein, 43, to Chief Executive Officer of Agoda Company Pte. Ltd.  Agoda is priceline.com’s Asia-based online hotel reservation service.  The promotion will be effective November 15, 2010.

Mr. Rosenstein is Agoda’s President and Chief Operating Officer and a co-founder of Agoda.  He will succeed co-founder Michael Kenny, 43, who is leaving to pursue other personal interests. Mr. Kenny has served as Agoda’s Chief Executive Officer since its founding. Agoda was acquired by priceline.com in November 2007.

“Agoda is one of Asia’s fastest growing online hotel reservation services,” said Mr. Boyd. “Michael Kenny has been instrumental in overseeing the growth of this business and ensuring a smooth integration into the Priceline network of companies.  We wish Mike well in his future endeavors.”

As a co-founder of Agoda, Mr. Rosenstein has been part of the Agoda management team since its inception.  As Agoda’s President and Chief Operating Officer, he has overseen the principal

operations of the company for more than five years. Before joining Agoda, he was an active investor in Internet start-ups and has held various positions in e-commerce and online media enterprises.

“Rob Rosenstein is an Agoda veteran with a deep knowledge of the markets in which Agoda operates,” said Mr. Boyd. “Rob has assembled an excellent management team and Agoda has achieved significant success in building a leading Asian online hotel reservations brand.  As we continue to build out the Agoda brand in Asia and worldwide, I look forward to working with Rob in his new role.”

About The Priceline Group of Companies

The Priceline Group of Companies (Nasdaq: PCLN) is a leader in global online hotel reservations, with approximately 61 million room nights booked in 2009.  The Group is composed of four primary brands — Booking.com, priceline.com, Agoda.com and TravelJigsaw. The Priceline Group provides online travel services in 38 languages in 100 countries in Europe, North America, Asia, the Middle East and Africa.

Based in Amsterdam, Booking.com is a leading international online hotel reservation service operating in 92 countries in 38 languages.  Booking.com offers its customers access to over 105,000 participating hotels worldwide.

In the U.S., priceline.com gives leisure travelers multiple ways to save on their airline tickets, hotel rooms, rental cars, vacation packages and cruises. In addition to getting compelling published prices, travelers can take advantage of priceline.com’s famous Name Your Own Price® service, which can deliver the lowest prices available. Priceline.com also operates the following travel websites: Travelweb.com, Lowestfare.com, RentalCars.com and BreezeNet.com.

Singapore-based Agoda.com is an Asian online hotel reservation service that offers hotel rooms around the world and is available in 32 languages.  With headquarters in Manchester, UK, TravelJigsaw is a multinational car hire service, offering its reservation services in more than 4,000 locations in 80 countries.  Customer support is provided in 20 languages.

###

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

For Investor Relations: Matthew Tynan (203) 299-8487 matt.tynan@priceline.com