The Priceline Group
May 5, 2011

Priceline.com Reports Financial Results for 1st Quarter 2011

NORWALK, Conn., May 5, 2011 /PRNewswire via COMTEX/ --Priceline.com Incorporated (Nasdaq: PCLN) today reported 1st quarter 2011 financial results for the Priceline Group of Companies. First 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 $4.7 billion, an increase of 57.3% over a year ago.

The Group had revenues in the 1st quarter of $809.3 million, a 38.5% increase over a year ago. The Group's international operations contributed revenues in the 1st quarter of $389.1 million, an 80% increase versus a year ago (approximately 79% on a local currency basis). The Group's gross profit for the 1st quarter was $505.8 million, a 58.5% increase from the prior year. International operations contributed gross profit in the 1st quarter of $388.2 million, an 81% increase versus a year ago (approximately 79% growth on a local currency basis). The Group's operating income in the 1st quarter was $154.1 million, a 75.2% increase from the prior year. The Group had GAAP net income applicable to common shareholders for the 1st quarter of $104.8 million, or $2.05 per diluted share, which compares to $53.9 million or $1.06 per diluted share, in the same period a year ago.

Non-GAAP net income in the 1st quarter was $137.0 million, a 57.1% increase versus the prior year. Non-GAAP net income was $2.66 per diluted share, compared to $1.70 per diluted share a year ago. First Call analyst consensus for the 1st quarter 2011 was $2.44 per diluted share. Non-GAAP EBITDA for the 1st quarter 2011 was $173.5 million, an increase of 55.3% over a year ago. 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.

"In the 1st quarter, the Group benefitted from strong growth in our global hotel business, particularly at Booking.com and Agoda," said Jeffery H. Boyd, Priceline President and Chief Executive Officer. "Room nights booked grew by 55.8% and our international gross bookings grew by 79% compared to prior year first quarter. The Group's hotel business continues to benefit from improving ADRs, a continuing shift from offline to online bookings, increased penetration of core European and North American markets and outstanding growth in new markets throughout the Asia-Pacific region and South America."

Mr. Boyd continued, "The Group's global rental car operations grew rental car days booked by 64.7% in the 1st quarter 2011 as compared to the prior year. A significant portion of this growth can be attributed to the Group's acquisition of TravelJigsaw and its international car hire operations, which continues to grow at impressive rates. Priceline.com's airline ticketing business returned to positive growth in the 1st quarter, with a 2.1% gain in ticket sales and improving growth in opaque ticket sales."

Looking forward, Mr. Boyd said, "Globally, we intend to retain our focus on extending our reach in established and new geographic markets and providing an outstanding consumer experience to build the strength of our brands."

The Priceline Group said it was targeting the following for 2nd quarter 2011:

Non-GAAP guidance for the 2nd quarter 2011:

In addition, non-GAAP EBITDA excludes depreciation and amortization expense, interest income, interest expense, net income and loss 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 $109 million in the 2nd quarter 2011. In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $37 million in the 2nd quarter 2011. On a per share basis, the Group estimates GAAP net income of approximately $4.03 to $4.23 per diluted share for the 2nd 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," "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 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, 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.

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:

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 170,000 participating hotels worldwide. The Group is composed of four primary brands - Booking.com, priceline.com, Agoda.com and TravelJigsaw - and several ancillary brands. The Priceline Group provides online travel services in Europe, North America, South America, the Asia-Pacific region, the Middle East and Africa.

Booking.com is a leading international online hotel reservation service operating in 101 countries in 41 languages. Booking.com offers its customers access to over 135,000 participating hotels worldwide. 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. Agoda.com is an Asia-based online hotel reservation service that offers hotel rooms around the world and is available in 32 languages. 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 27 languages.

priceline.com Incorporated

 

UNAUDITED CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share and per share data)

 





 





 


March 31,


December 31,

 

ASSETS


2011


2010

 





 

Current assets:





 

Cash and cash equivalents


$ 551,074


$ 358,967

 

Restricted cash


1,064


1,050

 

Short-term investments


1,194,512


1,303,251

 

Accounts receivable, net of allowance for doubtful accounts of





 

$5,893 and $6,353, respectively


221,978


162,426

 

Prepaid expenses and other current assets


56,682


61,211

 

Deferred income taxes


80,360


70,559

 

Total current assets


2,105,670


1,957,464

 





 

Property and equipment, net


44,386


39,739

 

Intangible assets, net


234,063


232,030

 

Goodwill


525,801


510,894

 

Deferred taxes


137,969


151,408

 

Other assets


17,462


14,418

 





 

Total assets


$ 3,065,351


$ 2,905,953

 





 

LIABILITIES AND STOCKHOLDERS' EQUITY





 





 

Current liabilities:





 

Accounts payable


$ 115,512


$ 90,311

 

Accrued expenses and other current liabilities


322,735


243,767

 

Deferred merchant bookings


166,805


136,915

 

Convertible debt


481,644


175

 

Total current liabilities


1,086,696


471,168

 





 

Deferred income taxes


55,938


56,440

 

Other long-term liabilities


47,209


42,990

 

Convertible debt


-


476,230

 

Total liabilities


1,189,843


1,046,828

 





 

Redeemable noncontrolling interests


57,538


45,751

 

Convertible debt


93,569


38

 





 

Stockholders' equity:





 

Common stock, $0.008 par value, authorized 1,000,000,000 shares,





 

57,414,428, and 56,567,236 shares issued, respectively


445


438

 

Treasury stock 7,768,032 and 7,421,128 shares, respectively


(797,677)


(640,415)

 

Additional paid-in capital


2,347,728


2,417,092

 

Accumulated earnings


163,545


69,110

 

Accumulated other comprehensive income (loss)


10,360


(32,889)

 

Total stockholders' equity


1,724,401


1,813,336

 





 

Total liabilities and stockholders' equity


$ 3,065,351


$ 2,905,953

 
         

priceline.com Incorporated

 

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(In thousands, except per share data)

 

 

Three Months Ended

 

March 31,

 




 

2011


2010

 




 

Merchant revenues

$ 454,804


$ 368,265

 

Agency revenues

351,422


213,242

 

Other revenues

3,094


2,887

 

Total revenues

809,320


584,394

 




 

Cost of revenues

303,512


265,278

 




 

Gross profit

505,808


319,116

 




 

Operating expenses:




 

Advertising - Offline

11,614


11,788

 

Advertising - Online

185,108


113,109

 

Sales and marketing

34,778


24,113

 

Personnel, including stock-based compensation of $13,993, and $11,909




 

for the three months ended March 31, 2011 and 2010, respectively

75,221


49,777

 

General and administrative

25,879


18,033

 

Information technology

6,670


4,608

 

Depreciation and amortization

12,479


9,779

 




 

Total operating expenses

351,749


231,207

 




 

Operating income

154,059


87,909

 




 

Other income (expense):




 

Interest income

1,421


855

 

Interest expense

(7,715)


(4,806)

 

Foreign currency transactions and other

(7,073)


(3,130)

 

Total other income (expense)

(13,367)


(7,081)

 




 

Earnings before income taxes

140,692


80,828

 

Income tax expense

(36,679)


(26,953)

 

Net income

104,013


53,875

 

Less: net loss attributable to noncontrolling interests

777


-

 




 

Net income applicable to common stockholders of priceline.com Incorporated

$ 104,790


$ 53,875

 




 

Net income applicable to common stockholders per basic common share

$ 2.12


$ 1.16

 




 

Weighted average number of basic common shares outstanding

49,319


46,309

 




 

Net income applicable to common stockholders per diluted common share

$ 2.05


$ 1.06

 




 

Weighted average number of diluted common shares outstanding

51,159


50,862

 
       

priceline.com Incorporated

 

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In thousands)

 




 






 



Three Months Ended

 



March 31,

 






 

OPERATING ACTIVITIES:

2011


2010

 

Net income

$ 104,013


$ 53,875

 

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




 

Depreciation

4,166


3,969

 

Amortization

8,313


5,810

 

Provision for uncollectible accounts, net

2,812


1,784

 

Other deferred income taxes

8,260


11,426

 

Stock-based compensation and other stock-based payments

14,110


11,909

 

Amortization of debt issuance costs

553


907

 

Amortization of debt discount

5,239


3,274

 

Loss on early extinguishment of debt

-


5,251

 

Changes in assets and liabilities:




 

Accounts receivable

(56,487)


(20,223)

 

Prepaid expenses and other current assets

3,307


1,893

 

Accounts payable, accrued expenses and other current liabilities

177,763


23,711

 

Other

4,170


1,111

 

Net cash provided by operating activities

276,219


104,697

 






 

INVESTING ACTIVITIES:




 

Purchase of investments

(472,872)


(526,493)

 

Proceeds from sale of investments

618,427


212,674

 

Additions to property and equipment

(8,279)


(4,831)

 

Acquisitions and other equity investments, net of cash acquired

(66,204)


(2,500)

 

Proceeds from settlement of foreign currency contracts

-


9,707

 

Payments on foreign currency contracts

(16,005)


-

 

Change in restricted cash

(16)


(31)

 

Net cash provided by (used in) investing activities

55,051


(311,474)

 






 

FINANCING ACTIVITIES:




 

Proceeds from the issuance of convertible debt

-


575,000

 

Payment of debt issuance costs

-


(12,938)

 

Payments related to conversion of convertible debt

-


(98,388)

 

Repurchase of common stock

(157,262)


(118,932)

 

Proceeds from exercise of stock options

544


12,597

 

Excess tax benefit on stock-based compensation

9,520


1,656

 

Net cash (used in) provided by financing activities

(147,198)


358,995

 






 

Effect of exchange rate changes on cash and cash equivalents

8,035


(5,584)

 

Net increase in cash and cash equivalents

192,107


146,634

 

Cash and cash equivalents, beginning of period

358,967


202,141

 

Cash and cash equivalents, end of period

$ 551,074


$ 348,775

 






 

SUPPLEMENTAL CASH FLOW INFORMATION:




 

Cash paid during the period for income taxes

$ 28,956


$ 15,933

 

Cash paid during the period for interest

$ 3,601


$ 751

 

Non-cash fair value adjustment for redeemable noncontrolling interests

$ 10,355


$ -

 
           

priceline.com Incorporated

 

UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION

 

(In thousands, except per share data)

 





 





 


Three Months Ended
March 31,

 

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA

2011


2010

 





 

GAAP Net income applicable to common stockholders

$ 104,790


$ 53,875

 





 

(a)

Stock-based compensation

13,993


11,909

 

(b)

Depreciation and amortization

12,479


9,779

 

( c)

Interest income

(1,421)


(855)

 

( c)

Interest expense

7,715


4,806

 

(d)

Loss on early extinguishment of debt

-


5,251

 

(e)

Income tax expense

36,679


26,953

 

(f)

Net loss attributable to noncontrolling interests

(777)


-

 





 

Non-GAAP EBITDA

$ 173,458


$ 111,718

 





 


Three Months Ended
March 31,

 

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME

2011


2010

 





 

GAAP Net income applicable to common stockholders

$ 104,790


$ 53,875

 





 

(a)

Stock-based compensation

13,993


11,909

 

(d)

Debt discount amortization related to convertible debt

5,239


3,274

 

(d)

Loss on early extinguishment of debt

-


5,251

 

(g)


Adjustments for the tax impact of certain of the non-GAAP
adjustments and to exclude non-cash income taxes

5,447


7,130

 

(h)

Amortization of acquired intangible assets in Depreciation and
amortization

8,227


5,797

 

(i)

Impact on noncontrolling interests of certain other non-GAAP
adjustments

(664)


-

 





 

Non-GAAP Net income applicable to common stockholders

$ 137,032


$ 87,236

 





 


Three Months Ended
March 31,

 

RECONCILIATION OF GAAP TO NON-GAAP NET INCOME




 

PER DILUTED COMMON SHARE

2011


2010

 





 

GAAP weighted average number of diluted common shares
outstanding

51,159


50,862

 





 

(j)

Adjustment for Conversion Spread Hedges

-


(159)

 

(k)

Adjustment for restricted stock, restricted stock units and
performance units

363


690

 





 

Non-GAAP weighted average number of diluted common shares
outstanding

51,522


51,393

 





 

Net income applicable to common stockholders per diluted
common share




 

GAAP

$ 2.05


$ 1.06

 





 

Non-GAAP

$ 2.66


$ 1.70

 





 





 





 

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

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

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

(d) 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.

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

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

(g) Adjustments for the tax impact of certain of the non-GAAP adjustments and to exclude non-cash income taxes.

(h) Amortization of acquired intangible assets is recorded in Depreciation and amortization.

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

(j) 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.

(k) 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




4Q08


1Q09


2Q09


3Q09


4Q09


1Q10


2Q10


3Q10


4Q10


1Q11

 
























 

Domestic




$689


$851


$964


$999


$831


$989


$1,154


$1,121


$902


$1,129

 

International**




792


1,092


1,415


1,724


1,433


1,975


2,256


2,885


2,363


3,536

 

Total




$1,481


$1,944


$2,379


$2,723


$2,264


$2,965


$3,410


$4,006


$3,265


$4,665

 
























 

Agency




$1,108


$1,470


$1,825


$2,131


$1,766


$2,374


$2,683


$3,168


$2,557


$3,781

 

Merchant**




373


474


555


592


498


591


727


838


708


884

 

Total




$1,481


$1,944


$2,379


$2,723


$2,264


$2,965


$3,410


$4,006


$3,265


$4,665

 
























 

Year/Year Growth























 

Domestic




31.1%


18.1%


10.6%


24.9%


20.6%


16.2%


19.6%


12.2%


8.5%


14.1%

 

International




16.5%


5.3%


14.3%


37.8%


81.0%


80.8%


59.5%


67.3%


64.9%


79.0%

 

excluding F/X impact




27.6%


23.5%


32.4%


48.5%


69.5%


72.8%


67.1%


78.0%


70.7%


78.1%

 
























 
























 

Agency




21.4%


7.3%


10.1%


32.9%


59.4%


61.5%


47.0%


48.7%


44.8%


59.3%

 

Merchant




27.5%


21.9%


22.4%


32.6%


33.5%


24.8%


31.1%


41.4%


42.1%


49.5%

 
























 

Total




22.9%


10.5%


12.8%


32.8%


52.9%


52.5%


43.3%


47.1%


44.2%


57.3%

 
























 
























 

Units Sold




4Q08


1Q09


2Q09


3Q09


4Q09


1Q10


2Q10


3Q10


4Q10


1Q11

 
























 

Hotel Room-Nights




9.1


12.8


15.7


17.9


14.6


20.0


23.2


27.5


22.0


31.2

 

Year/Year Growth




38.0%


36.4%


44.0%


56.3%


59.9%


56.8%


48.2%


54.1%


50.6%


55.8%

 
























 

Rental Car Days




2.2


3.0


3.2


2.6


2.4


3.0


4.3


5.1


3.9


4.9

 

Year/Year Growth




11.1%


15.4%


15.0%


11.6%


6.6%


-0.9%


32.0%


97.3%


65.4%


64.7%

 
























 

Airline Tickets




1.1


1.5


1.6


1.5


1.3


1.5


1.6


1.5


1.3


1.6

 

Year/Year Growth




43.7%


28.0%


13.9%


30.2%


16.2%


2.8%


4.1%


-4.6%


-2.3%


2.1%

 
























 
























 





4Q08


1Q09


2Q09


3Q09


4Q09


1Q10


2Q10


3Q10


4Q10


1Q11

 
























 

Revenue




$406.0


$462.1


$603.7


$730.7


$541.8


$584.4


$767.4


$1,001.8


$731.3


$809.3

 

Year/Year Growth




21.3%


14.6%


17.5%


30.1%


33.4%


26.5%


27.1%


37.1%


35.0%


38.5%

 
























 

Gross Profit




$205.1


$208.3


$305.2


$434.0


$313.2


$319.1


$445.3


$666.2


$478.4


$505.8

 

Year/Year Growth




28.0%


15.0%


20.3%


37.3%


52.7%


53.2%


45.9%


53.5%


52.8%


58.5%

 
























 
























 

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 $95.7 million, $55.0 million, $85.8 million and $43.9 million of Travel Jigsaw gross bookings in 1Q11, 4Q10, 3Q10 and 2Q10 since acquisition on May 18, 2010, respectively.

 
                                               

SOURCE Priceline.com Incorporated