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 23, 2011

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:

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

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

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

o Pre-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 February 23, 2011, priceline.com Incorporated (“priceline.com” or the “company”) announced its financial results for the 4th quarter and full-year ended December 31, 2010.  A copy of priceline.com’s consolidated balance sheet at December 31, 2010, consolidated statement of operations for the three and twelve months ended December 31, 2010 and consolidated statement of cash flows for the twelve months ended December 31, 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 December 31, 2010, consolidated statement of operations for the three and twelve months e nded December 31, 2010 and consolidated statement of cash flows for the twelve months ended December 31, 2010 shall be treated as “filed” for purposes of the Securities Exchange Act of 1934, as amended.

Item 7.01.              Regulation FD Disclosure

On February 23, 2011, priceline.com announced its financial results for the 4th quarter and year-ended December 31, 2010.  A copy of priceline.com’s press release announcing these financial 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 4th quarter 2010 approximately 3% internationally and by over 5% domestically.

With respect to 1st quarter 2011 guidance, the company announced that it expected consolidated advertising expenses of approximately $185 to $190 million in the 1st quarter 2011 and expected approximately $12 million of that amount to be spent “off-line.”  Priceline.com estimated that sales and marketing expenses in the 1st quarter 2011 would be between $32 and $36 million.  Priceline.com stated that it estimated that personnel costs, excluding stock-based compensation expense, would be approxim ately $65 to $69 million in the 1st quarter 2011.  With respect to 1st quarter 2011, priceline.com stated it estimated that general and administrative expenses would be approximately $23 to $26 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 expenses of approximately $5.5 million in the 1st quarter 2011 associated with foreign exchange hedging expense, net interest expense and the expense associated with Non-GAAP net income allocated to no n-controlling interests.  Priceline.com estimated that it would have cash income tax expense of approximately $26 million in the 1st quarter 2011 comprised of international income taxes and alternative minimum and state income taxes in the United States.

The company explained that its guidance assumed that the company would experience “deleverage” during the 1st quarter 2011 caused by, among other things, expenses associated with foreign exchange transactions and hedges and by on-line advertising expense and personnel expense (excluding stock based compensation) growing during the quarter at a faster rate than gross profit.  The company noted that this variance was principally caused by the timing difference between the recognition of revenue and certain expenses, including on-line advertising expense and operating expenses.

The company explained that effective January 1, 2010, the Netherlands modified its corporate income tax law related to income generated from qualifying “innovative” activities (the “Innovation Box Tax”) and that earnings that qualify for the Innovation Box Tax will effectively be taxed at the rate of 5% rather than the Dutch statutory rate of 25.5% (25% as of 2011).    The company noted that Booking.com obtained a ruling from the Dutch tax authorities in February

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2011 confirming that a portion of its earnings (“qualifying earnings”) is eligible for Innovation Box Tax treatment and that the ruling from the Dutch tax authorities is valid from January 1, 2010 through December 31, 2013 (the “Initial Period”).  The company explained that, in this ruling, the Dutch tax authorities require that the Innovation Box Tax benefit be phased in over a multi-year period.  The company explained that, in 2011, it expected the impact of the Innovation Box Tax to reduce the company’s consolidated income tax rate by approximately one to two percentage points, which was reflected in the company’s financial guidance for the 1st quarter 2011.  The amount of qualifying earnings expressed as a percentage of the to tal pretax earnings in the Netherlands will vary depending upon the level of total pretax earnings that is achieved in any given year.  The company estimated that by 2013, “all things being equal,” the Innovation Box Tax benefit could reduce the company’s consolidated cash income tax rate by up to approximately 5%, depending on the level of earnings.

The company noted that its forecast for the remainder of the 1st quarter 2011 assumed, among other things, that the Euro/U.S. Dollar exchange rate would be 1.36 U.S. dollars per Euro, that the British Pound/U.S. Dollar exchange rate would be 1.61 U.S. Dollars per British Pound and assumed that the year-over-year rate of increase in hotel average daily rates would be similar to the year-over-year increases experienced in the 4th quarter 2010.  The company noted that its Non-GAAP financial guidance was based upon a Non-GAAP diluted share count of approximately 51.5 million shares (which includes a calculation of the assumed economic dilut ive impact of the company’s outstanding convertible notes and share-based awards, net of the favorable economic impact of the hedges associated with the company’s outstanding convertible notes), which is based on the company’s February 22, 2011 closing stock price of $433.78 per share.

The company emphasized that it was highly likely that its year-over-year unit growth rates would sequentially decelerate in future quarters due to the “sheer size of the business” and progressively more difficult “comps” as economic conditions continue to gradually improve.

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 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 9.01.              Financial Statements and Exhibits

(d) Exhibits

99.1 Press release (which includes a financial and statistical supplement and related information) issued by priceline.com Incorporated on February 23, 2011 relating to, among other things, its 4th quarter and year-ended December 31, 2010 earnings. The consolidated balance sheet at December 31, 2010 and consolidated statement of operations for the three and twelve months ended December 31, 2010 and consolidated statement of cash flows for the twelve months ended December 31, 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.”

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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/ Peter J. Millones
		Name:	Peter J. Millones
		Title:	Executive Vice President, General Counsel
			and Corporate Secretary
Date:  February 25, 2011

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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 February 23, 2011 relating to, among other things, its 4th quarter and year-ended December 31, 2010 earnings. The consolidated balance sheet at December 31, 2010 and consolidated statement of operations for the three and twelve months ended December 31, 2010 and consolidated statement of cash flows for the twelve months ended December 31, 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.”

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EX-99.1

Exhibit 99.1

Priceline.com Reports Financial Results for 4th Quarter and Full-Year 2010

NORWALK, Conn., February 23, 2011 . . . Priceline.com Incorporated (Nasdaq: PCLN) today reported 4th quarter and full-year 2010 financial results for the Priceline Group of Companies. Fourth 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 $3.26 billion, an increase of 44.2% over a year ago.

The Group had revenues in the 4th quarter of $731 million, a 35.0% increase over a year ago. The Group’s international operations contributed revenues in the 4th quarter of $374.9 million, a 68.2% increase versus a year ago (approximately 75% on a local currency basis). The Group’s gross profit for the 4th quarter was $478.4 million, a 52.8% increase from the prior year. International operations contributed gross profit in the 4th quarter of $374.0 million, a 68.4% increase versus a year ago (approximately 75% growth on a local currency basis). The Group’s operating income in the 4th quarter was $189.0 million, a 60.3% increase from the prior year. The Group had GAAP net income applicable to common shareholders for the 4th quarter of $135.7 million, or $2.66 per diluted share, which compares to $78.4 million or $1.55 per diluted share, in the same period a year ago.

Non-GAAP net income in the 4th quarter was $175.0 million, a 72.2% increase versus the prior year.  Non-GAAP net income was $3.40 per diluted share, compared to $1.99 per diluted share a year ago. First Call analyst consensus for the 4th quarter 2010 was $3.10 per diluted share.  Non-GAAP EBITDA for the 4th quarter 2010 was $222.9 million, an increase of 67.4% over a year ago. The section below entitled “Non-GAAP Financial Measures” provides a definition and information about the u se 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.

For full-year 2010, the Group had revenues of $3.08 billion, a 31.9% increase over 2009. International operations contributed full-year revenues of $1.4 billion, a 69.5% increase versus a year ago (approximately 77% on a local currency basis).  Gross profit for the Group in 2010 was $1.9 billion, a 51.4% increase from the prior year. International operations contributed full-year gross profit of $1.4 billion, a 69.7% increase versus the prior year (approximately 77% growth on a local currency basis). The Group’s 2010 operating income was $786.8 million, a 67.1% increase from the prior year.  The Group had GAAP net income for full-year 2010 of $527.5 million, or $10.35 per diluted share, which compares to $489.5 million or $9.88 per diluted share in 2009.  Net income for the full-year 2009 was positively affected by a $183.3 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 EBITDA for 2010 was $901.4 million, an increase of 64.6% over a year ago. Non-GAAP net income for 2010 was $692.7 million or $13.49 per diluted share, compared to $8.52 per diluted share a year ago. First Call analyst consensus for full-year 2010 was $13.22 per diluted share.

“The Group’s worldwide hotel business performed well for the 4th quarter and full year 2010,” said Jeffery H. Boyd, Priceline President and Chief Executive Officer. “High gross travel

bookings growth rates were the result of continued penetration of new markets, like Asia-Pacific and South America, where economic growth and rapid online adoption are tailwinds for the business, and solid growth in core markets in Western Europe and North America.  The Group’s air and rental car businesses also performed well under challenging market conditions and TravelJigsaw has made good progress with platform and website enhancements to grow our international rental car business.”

“Going forward, Booking.com, priceline.com, Agoda.com and TravelJigsaw intend to continue building their brands, extending the reach of the Group’s global hotel network and working together to achieve benefits of integration where appropriate,” said Mr. Boyd.

Priceline.com said it was targeting the following for 1st quarter 2011:

·Year-over-year increase in total gross travel bookings of approximately 45% - 50%.

·Year-over-year increase in international gross travel bookings of approximately 64% - 69% (an increase of approximately 66% - 71% on a local currency basis).

·Year-over-year increase in domestic gross travel bookings of approximately 7% to 12%.

·Year-over-year increase in revenue of approximately 29% to 34%.

·Year-over-year increase in gross profit of approximately 47% to 52%.

·Non-GAAP EBITDA of approximately $147 million to $157 million.

·Non-GAAP net income of between $2.34 and $2.44 per diluted share.

The Company noted that its first quarter guidance reflected sequentially higher levels of top-line growth, and accordingly, higher variable expenses, which should benefit earnings in the second and third quarters when a high proportion of the related stays occur and commission revenue is recognized.

Non-GAAP guidance for the 1st quarter 2011:

·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 non-GAAP adjustments are expected to increase non-GAAP EBITDA over GAAP net income by approximately $68 million in the 1st quarter 2011.  In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $35 million in the 1st quarter 2011. On a per share basis, the Group estimates GAAP net income of approximately $1.66 to $1.76 per diluted share for the 1st quarter 2011.

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,
48; “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 priceline.com 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 is adjusted for 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 to franchise tax and sales and use tax and the favorable litigation settlement relating to credit card processing costs 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 and to those of its competitors. 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.

·Cash benefit associated with the favorable settlement of litigation related to credit card processing costs is excluded because the amount and timing of this item is 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 full year 2009 was adjusted to exclude a $183.3 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 over 150,000 participating hotels worldwide and 92.8 million room nights booked in 2010.  The Group is composed of four primary brands — Booking.com, priceline.com, Agoda.com and TravelJigsaw. The Priceline Group provides online travel services in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa.

Based in Amsterdam, Booking.com is a leading international online hotel reservation service operating in 99 countries in 41 languages.  Booking.com offers its customers access to over 120,000 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 115 countries.  Customer support is provided in 20 languages.

priceline.com Incorporated

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	December 31,			December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	358,967		$	202,141
Restricted cash	1,050			1,319
Short-term investments	1,303,251			598,014
Accounts receivable, net of allowance for doubtful accounts of $6,353 and $5,023, respectively	162,426			118,659
Prepaid expenses and other current assets	61,211			36,828
Deferred income taxes	70,559			65,980
Total current assets	1,957,464			1,022,941
Property and equipment, net	39,739			30,489
Intangible assets, net	232,030			172,080
Goodwill	510,894			350,630
Deferred taxes	151,408			253,700
Other assets	14,418			4,384
Total assets	$	2,905,953		$	1,834,224
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	90,311		$	60,568
Accrued expenses and other current liabilities	243,767			127,561
Deferred merchant bookings	136,915			60,758
Convertible debt	175			159,878
Total current liabilities	471,168			408,765
Deferred income taxes	56,440			43,793
Other long-term liabilities	42,990			24,052
Convertible debt	476,230			—
Total liabilities	1,046,828			476,610
Redeemable noncontrolling interests	45,751			—
Convertible debt	38			35,985
Stockholders’ equity:
Common stock, $0.008 par value, authorized 1,000,000,000 shares, 56,567,236, and 52,446,173 shares issued, respectively	438			405
Treasury stock 7,421,128 and 6,865,119 shares, respectively	(640,415		)	(510,970		)
Additional paid-in capital	2,417,092			2,289,867
Accumulated earnings (deficit)	69,110			(454,673		)
Accumulated other comprehensive loss	(32,889		)	(3,000		)
Total stockholders’ equity	1,813,336			1,321,629
Total liabilities and stockholders’ equity	$	2,905,953		$	1,834,224

priceline.com Incorporated

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
Merchant revenues	$	382,234		$	317,407		$	1,691,640		$	1,447,576
Agency revenues	345,838			220,496			1,380,603			868,395
Other revenues	3,244			3,850			12,662			22,241
Total revenues	731,316			541,753			3,084,905			2,338,212
Cost of revenues	252,903			228,564			1,175,934			1,077,449
Gross profit	478,413			313,189			1,908,971			1,260,763
Operating expenses:
Advertising - Offline	6,030			5,978			35,714			36,270
Advertising - Online	133,786			92,054			552,140			365,381
Sales and marketing	30,641			17,655			116,303			81,238
Personnel, including stock-based compensation of $19,650, $7,944, $68,200 and $40,671 for the three and twelve months ended December 31, 2010 and 2009, respectively	75,437			44,819			270,071			180,152
General and administrative	24,961			19,673			81,185			68,555
Information technology	6,148			5,137			20,998			19,139
Depreciation and amortization	12,451			10,011			45,763			39,193
Total operating expenses	289,454			195,327			1,122,174			789,928
Operating income	188,959			117,862			786,797			470,835
Other income (expense):
Interest income	1,144			528			3,857			2,223
Interest expense	(7,578		)	(4,863		)	(29,944		)	(24,084		)
Foreign currency transactions and other	(1,620		)	(5,389		)	(14,427		)	(6,672		)
Total other income (expense)	(8,054		)	(9,724		)	(40,514		)	(28,533		)
Earnings before income taxes and equity in income of investees	180,905			108,138			746,283			442,302
Income tax (expense) benefit	(45,794		)	(29,683		)	(218,141		)	47,168
Equity in income of investees	—			—			—			2
Net income	135,111			78,455			528,142			489,472
Less: net (loss) income attributable to noncontrolling interests	(618		)	—			601			—
Net income applicable to common stockholders	$	135,729		$	78,455		$	527,541		$	489,472
Net income applicable to common stockholders per basic common share	$	2.76		$	1.77		$	11.00		$	11.54
Weighted average number of basic common shares outstanding	49,111			44,350			47,955			42,406
Net income applicable to common stockholders per diluted common share	$	2.66		$	1.55		$	10.35		$	9.88
Weighted average number of diluted common shares outstanding	51,035			50,570			50,988			49,522

priceline.com Incorporated

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Twelve Months Ended
	December 31,
	2010			2009			2008
OPERATING ACTIVITIES:
Net income	$	528,142		$	489,472		$	185,624
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	16,209			14,491			14,388
Amortization	34,255			24,702			28,680
Provision for uncollectible accounts, net	7,102			3,227			13,113
Reversal of valuation allowance on deferred tax asset	—			(183,272		)	—
Other deferred income taxes	37,540			30,990			19,899
Stock-based compensation and other stock-based payments	68,396			40,671			40,522
Amortization of debt issuance costs	3,332			2,465			2,525
Amortization of debt discount	20,110			18,203			26,669
Loss (gain) on early extinguishment of debt	11,334			1,048			(6,014		)
Equity in (income) loss of investees	—			(2		)	310
Loss on impairment of investment	—			—			843
Changes in assets and liabilities:
Accounts receivable	(29,275		)	(22,767		)	(42,888		)
Prepaid expenses and other current assets	(22,373		)	(979		)	(5,153		)
Accounts payable, accrued expenses and other current liabilities	84,750			86,792			32,245
Other	17,775			4,624			4,790
Net cash provided by operating activities	777,297			509,665			315,553
INVESTING ACTIVITIES:
Purchase of investments	(1,813,032		)	(922,163		)	(196,308		)
Proceeds from sale of investments	1,071,669			432,184			218,555
Purchase of shares held by noncontrolling interests	—			—			(154,034		)
Additions to property and equipment	(22,593		)	(15,106		)	(18,322		)
Acquisitions and other equity investments, net of cash acquired	(112,405		)	(1,500		)	(599		)
Proceeds from redemption of equity investment in pricelinemortgage.com	—			8,921			—
Proceeds from foreign currency contracts	44,564			(5,025		)	—
Payments on foreign currency contracts	(9,561		)	—			—
Change in restricted cash	260			1,229			(1,197		)
Net cash used in investing activities	(841,098		)	(501,460		)	(151,905		)
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	(295,401		)	(197,122		)	(176,943		)
Repurchase of common stock	(129,445		)	(17,415		)	(4,449		)
Proceeds from the sale of subsidiary shares to noncontrolling interests	4,311			—			—
Proceeds from exercise of stock options	25,751			43,428			5,507
Proceeds from the termination of conversion spread hedges	42,984			—			—
Net cash provided by (used in) financing activities Excess tax benefit on stock-based compensation	3,091			2,149			7,037
Effect of exchange rate changes on cash and cash equivalents	212,957			(168,960		)	(168,848		)
Net increase (decrease) in cash and cash equivalents	7,670			(1,654		)	(15,609		)
Cash and cash equivalents, beginning of period	156,826			(162,409		)	(20,809		)
Cash and cash equivalents, end of period	202,141			364,550			385,359
	$	358,967		$	202,141		$	364,550
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for income taxes	$	169,320		$	95,512		$	66,948
Cash paid during the period for interest	$	4,901		$	4,448		$	6,353
Non-cash fair value adjustment for redeemable noncontrolling interests	$	7,876		$	—		$	—

priceline.com Incorporated

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

(In thousands, except per share data)

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2010			2009			2010			2009
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA
	GAAP Net income applicable to common stockholders	$	135,729		$	78,455		$	527,541		$	489,472
(a)	Amortization of acquired intangible assets in Merchant revenues	1,753			—			4,702			—
(b)	Favorable litigation settlement related to credit card processing costs	—			(1,049		)	—			(1,049		)
(c)	Stock-based compensation	19,650			7,944			68,200			40,671
(d)	Favorable adjustments related to franchise tax and sales and use tax for headquarters location	—			—			(2,720		)	—
(e)	Charges related to hotel margin tax rulings and judgements	1,732			—			1,732			3,680
(f)	Depreciation and amortization	12,451			10,011			45,763			39,193
(g)	Interest income	(1,144		)	(528		)	(3,857		)	(2,223		)
(g)	Interest expense	7,578			4,863			29,944			24,084
(h)	Loss on early extinguishment of debt	—			3,784			11,334			1,048
(i)	Income tax expense (benefit)	45,794			29,683			218,141			(47,168		)
(k)	Equity in income of investees	—			—			—			(2		)
(l)	Net (loss) income attributable to noncontrolling interests	(618		)	—			601			—
	Non-GAAP EBITDA	$	222,925		$	133,163		$	901,381		$	547,706

		Three Months Ended December 31,						Twelve Months Ended December 31,
		2010			2009			2010			2009
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
	GAAP Net income applicable to common stockholders	$	135,729		$	78,455		$	527,541		$	489,472
(a)	Amortization of acquired intangible assets in Merchant revenues	1,753			—			4,702			—
(b)	Favorable litigation settlement related to credit card processing costs	—			(1,049		)	—			(1,049		)
(c)	Stock-based compensation	19,650			7,944			68,200			40,671
(d)	Favorable adjustments related to franchise tax and sales and use tax for headquarters location	—			—			(2,720		)	—
(e)	Charges related to hotel margin tax, rulings and judgements	1,732			—			1,732			3,680
(h)	Debt discount amortization related to convertible debt	5,161			3,451			20,110			18,203
(h)	Loss (gain) on early extinguishment of debt	—			3,784			11,334			1,048
(j)	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 $183.3 million, primarily in 3rd quarter 2009, from the reversal of a portion of the valuation allowance on the Company’s deferred tax asset)	3,633			2,949			34,361			(151,433		)
(a)	Amortization of acquired intangible assets in Depreciation and amortization	8,271			6,115			29,472			24,657
(m)	Impact on noncontrolling interests of certain other pro forma adjustments	(919		)	—			(2,073		)	—
	Non-GAAP Net income applicable to common stockholders	$	175,010		$	101,649		$	692,659		$	425,249

		Three Months Ended December 31,					Twelve Months Ended December 31,
		2010		2009			2010			2009
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED COMMON SHARE
	GAAP weighted average number of diluted common shares outstanding	51,035		50,570			50,988			49,522
(n)	Adjustment for Conversion Spread Hedges	—		(284		)	(56		)	(505		)
(o)	Adjustment for restricted stock, restricted stock units and performance units	396		787			397			886
	Non-GAAP weighted average number of diluted common shares outstanding	51,431		51,073			51,329			49,903
	Net income applicable to common stockholders per diluted common share GAAP	$	2.66	$	1.55		$	10.35		$	9.88
	Non-GAAP	$	3.40	$	1.99		$	13.49		$	8.52

(a)Amortization of acquired intangible assets is recorded in Merchant revenues and Depreciation and amortization.

(b)Cash benefit associated with the favorable resolution of litigation related to credit card processing costs is excluded because of the nonrecurring nature of the settlement.

(c)Stock-based compensation is recorded in Personnel expense.

(d)Favorable adjustments related to franchise tax and sales and use tax for headquarters location are recorded in General and administrative expense.

(e)Charges related to South Carolina hotel margin tax ruling in fourth quarter 2010 and Texas hotel margin tax litigation judgment in 3rd quarter 2009 are recorded in General and administrative expense.

(f)Depreciation and amortization are excluded from Net income to calculate non-GAAP EBITDA.

(g)Interest income and Interest expense are excluded from Net income to calculate non-GAAP EBITDA.

(h)Non-cash interest expense related to the amortization of debt discount and loss on early debt extinguishment are recorded in Interest expense and Foreign currency transactions and other, respectively.

(i)Income tax expense (benefit) is excluded from Net income to calculate non-GAAP EBITDA.

(j)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 $183.3 million in 2009 from the reversal of a portion of the valuation allowance on the Company’s deferred tax asset).

(k)Equity in income of investees is excluded from Net income to calculate non-GAAP EBITDA.

(l)Net (loss) income attributable to noncontrolling interests is excluded from Net income to calculate non-GAAP EBITDA.

(m)Impact of other non-GAAP adjustments on Net income attributable to noncontrolling interests.

(n)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.

(o)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)

Gross Bookings	3Q08			4Q08			1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10			4Q10
Domestic	$	800		$	689		$	851		$	964		$	999		$	831		$	989		$	1,154		$	1,121		$	902
International**	1,251			792			1,092			1,415			1,724			1,433			1,975			2,256			2,885			2,363
Total	$	2,050		$	1,481		$	1,944		$	2,379		$	2,723		$	2,264		$	2,965		$	3,410		$	4,006		$	3,265
Agency	$	1,604		$	1,108		$	1,470		$	1,825		$	2,131		$	1,766		$	2,374		$	2,683		$	3,168		$	2,557
Merchant**	447			373			474			555			592			498			591			727			838			708
Total	$	2,050		$	1,481		$	1,944		$	2,379		$	2,723		$	2,264		$	2,965		$	3,410		$	4,006		$	3,265
Year/Year Growth
Domestic	32.8		%	31.1		%	18.1		%	10.6		%	24.9		%	20.6		%	16.2		%	19.6		%	12.2		%	8.5		%
International	58.6		%	16.5		%	5.3		%	14.3		%	37.8		%	81.0		%	80.8		%	59.5		%	67.3		%	64.9		%
excluding F/X impact	44.7		%	27.6		%	23.5		%	32.4		%	48.5		%	69.5		%	72.8		%	67.1		%	78.0		%	70.7		%
Agency	53.8		%	21.4		%	7.3		%	10.1		%	32.9		%	59.4		%	61.5		%	47.0		%	48.7		%	44.8		%
Merchant	28.3		%	27.5		%	21.9		%	22.4		%	32.6		%	33.5		%	24.8		%	31.1		%	41.4		%	42.1		%
Total	47.4		%	22.9		%	10.5		%	12.8		%	32.8		%	52.9		%	52.5		%	43.3		%	47.1		%	44.2		%
Units Sold	3Q08			4Q08			1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10			4Q10
Hotel Room-Nights	11.4			9.1			12.8			15.7			17.9			14.6			20.0			23.2			27.5			22.0
Year/Year Growth	43.6		%	38.0		%	36.4		%	44.0		%	56.3		%	59.9		%	56.8		%	48.2		%	54.1		%	50.6		%
Rental Car Days	2.3			2.2			3.0			3.2			2.6			2.4			3.0			4.3			5.1			3.9
Year/Year Growth	-0.2		%	11.1		%	15.4		%	15.0		%	11.6		%	6.6		%	-0.9		%	32.0		%	97.3		%	65.4		%
Airline Tickets	1.2			1.1			1.5			1.6			1.5			1.3			1.5			1.6			1.5			1.3
Year/Year Growth	44.8		%	43.7		%	28.0		%	13.9		%	30.2		%	16.2		%	2.8		%	4.1		%	-4.6		%	-2.3		%
	3Q08			4Q08			1Q09			2Q09			3Q09			4Q09			1Q10			2Q10			3Q10			4Q10
Revenue	$	561.6		$	406.0		$	462.1		$	603.7		$	730.7		$	541.8		$	584.4		$	767.4		$	1,001.8		$	731.3
Year/Year Growth	34.6		%	21.3		%	14.6		%	17.5		%	30.1		%	33.4		%	26.5		%	27.1		%	37.1		%	35.0		%
Gross Profit	$	316.1		$	205.1		$	208.3		$	305.2		$	434.0		$	313.2		$	319.1		$	445.3		$	666.2		$	478.4
Year/Year Growth	56.2		%	28.0		%	15.0		%	20.3		%	37.3		%	52.7		%	53.2		%	45.9		%	53.5		%	52.8		%

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 $55.0 million, $85.8 million and $43.9 million of Travel Jigsaw gross bookings in 4Q10, 3Q10 and 2Q10 since acquisition on May 18, 2010, respectively.  Includes $37.5 million and $32.4 million of Agoda gross bookings in 4Q08 and 3Q08, respectively.

Exhibit 99.1