Priceline 2011 Annual Report Download

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DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth in this Form 10-K,
is incorporated herein by reference from priceline.com Incorporated’s definitive proxy statement relating to the annual meeting
of stockholders to be held on June 7, 2012, to be filed with the Securities and Exchange Commission within 120 days after the
end of priceline.com Incorporated’s fiscal year ended December 31, 2011.
priceline.com Incorporated Annual Report on Form 10-K for the Year Ended December 31, 2011 Index
Page No.
Special Note Regarding Forward Looking Statements
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Signatures
Consolidated Financial Statements
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
Exhibits and Financial Statement Schedules
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Table of contents

  • Page 1
    ... June 7, 2012, to be filed with the Securities and Exchange Commission within 120 days after the end of priceline.com Incorporated's fiscal year ended December 31, 2011. priceline.com Incorporated Annual Report on Form 10-K for the Year Ended December 31, 2011 Index Page No. Special Note Regarding...

  • Page 2
    ... online travel company that offers our customers hotel room reservations at over 210,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, we also offer our customers reservations for car rentals, airline tickets, vacation packages, destination services...

  • Page 3
    ... We offer customers the ability to make hotel reservations on a worldwide basis primarily under the Booking.com, priceline.com and Agoda brands. In the United States, we also offer customers the ability to purchase other travel services, including airline tickets, rental car days, vacations packages...

  • Page 4
    ... customers who are less price sensitive and require the certainty of knowing the full details of their travel itinerary prior to purchasing. Become a Leading Worldwide Online Rental Car Reservation Service. In May 2010, we acquired the rentalcars.com business, a United Kingdom-based international...

  • Page 5
    ... model, as well as through an agency model for hotel room night reservations sourced through the Booking.com extranet. Name Your Own Price® Rental Cars. Our Name Your Own Price® rental car service is currently available in substantially all major United States airport markets. The top five brand...

  • Page 6
    ... cruise lines, and to purchase cruises online or through a call center by selecting from our published offerings and prices. We receive commissions from WTH on successful cruise bookings. Travel Insurance. We offer our air, hotel and vacation package customers in the United States an optional travel...

  • Page 7
    ... company, Google recently launched a new flight search tool that enables users to find fares, schedules and availability directly on Google and excludes online travel agent ("OTA") participation within the search results. Google has also invested in HomeAway, a publicly traded vacation home rental...

  • Page 8
    ... allows customers to book rooms at a discount. As with our Name Your Own Price® hotel booking service, for these services, the name of the hotel is not disclosed until after purchase. We believe these new offerings, in particular Expedia Unpublished Rates, have adversely impacted the market share...

  • Page 9
    ...." We are subject to federal, state and international laws that require protection of user privacy and user data. In our processing of travel transactions, we receive and store a large volume of personally identifiable data in the United States, Europe and Asia. This data is increasingly subject to...

  • Page 10
    ... early in the year, as customers plan and reserve their spring and summer vacations in Europe and North America. However, we do not recognize associated revenue until future quarters when the travel occurs. From a cost perspective, we expense the substantial majority of our advertising activities...

  • Page 11
    ...of all taxes and fees, of all travel services purchased by our customers) and hotel room night and rental car reservations. This growth rate has contributed significantly to our growth in consolidated revenue, gross profit and earnings per share. Over time, Booking.com, Agoda and rentalcars.com will...

  • Page 12
    ..., hotel.de, Hotel Reservation Service, AutoEurope, Car Trawler, Ctrip, MakeMyTrip, Rakuten, Jalan and Wotif; travel suppliers such as hotel companies, airlines and rental car companies, many of which have their own branded websites to which they drive business, including without limitation Room Key...

  • Page 13
    ..., have launched Room Key, a hotel search engine that competes directly with our hotel room night reservation services. The hotel companies that own Room Key have a stated goal of driving demand directly to their brand web sites, thus reducing the share received by online travel agencies. They may...

  • Page 14
    ... result in a purchase on our website, and such traffic is more likely to be obtained through paid online advertising channels than through free direct channels. The launch of Room Key discussed above is demonstrative of the effort of many hotel, airline and rental car suppliers, including suppliers...

  • Page 15
    ... car suppliers have begun offering discounted prepaid reservations on their own sites and through certain online travel agents. If such rates are sufficiently discounted or are associated with more flexible cancellation policies than those applicable to our Name Your Own Price® rental car service...

  • Page 16
    ... in the number of hotel room nights booked through our hotel reservation services. However, given the sheer size of our hotel reservation business, we believe it is highly likely that our year-over-year room night reservation growth rates will generally decelerate on a quarterly sequential basis...

  • Page 17
    ...is a text file that is stored on a user's web browser by a website. Cookies are common tools used by thousands of websites, such as Booking.com, which is based in the Netherlands, and priceline.com, to, among other things, store or gather information (i.e., remember log-on details so a user does not...

  • Page 18
    ... Internet or online service companies; announcements by us or our competitors of price reductions, promotions, significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments; loss of a major supplier participant, such as a hotel chain or airline; changes in the...

  • Page 19
    ...amount of Booking.com, Agoda and rentalcars.com's business is directed to our own websites through participation in pay-per-click advertising campaigns on Internet search engines whose pricing and operating dynamics can experience rapid change commercially, technically and competitively. In addition...

  • Page 20
    .... We are also subject to non-income based taxes, such as value-added, payroll, sales, use, net worth, property and goods and services taxes, in both the United States and various foreign jurisdictions. From time to time, we are under audit by tax authorities with respect to these non-income based...

  • Page 21
    ... mobile platforms and may gain acceptance on social and flash-sale platforms. If we are unable to develop product offerings and effective distribution on these platforms, we could lose market share to existing competitors or new entrants. We rely on the value of the Booking.com, priceline.com, Agoda...

  • Page 22
    ... upon whether there are agreements or concerted practices between hotels and online travel companies and/or hotel room reservation "wholesalers" relating to the fixed or minimum resale prices of hotel room reservations. In September 2010, Booking.com B.V. and priceline.com Incorporated, on behalf of...

  • Page 23
    ... may be unable or unwilling to honor tickets sold for their flights. Our policy in such event is to direct customers seeking a refund or exchange to the airline, and not to provide a remedy ourselves. Because we are the merchant-of-record on sales of Name Your Own Price® airline tickets to our...

  • Page 24
    ... defendant online travel companies are currently involved in approximately fifty lawsuits, including certified and putative class actions, brought by or against U.S. states, cities and counties over issues involving the payment of hotel occupancy and other taxes (i.e., state and local sales tax) and...

  • Page 25
    ... tax obligation from our customers, which would have the effect of increasing the cost of hotel room reservations to our customers and, consequently, could make our hotel service less competitive (i.e., versus the websites of other online travel companies or hotel company websites) and reduce hotel...

  • Page 26
    .... In City of San Diego, California v. Hotels.com, L.P., et al., JCCP 4472 (Los Angeles Superior Court, filed February 9, 2006), on September 6, 2011, the court granted the online travel companies' petition to (i) vacate the hearing officer's prior ruling that the online travel company defendants are...

  • Page 27
    ...of Florida, filed January 2009)(agreement signed August 2010) and the Tourist Development Tax claims asserted by the County in Priceline.com, Inc. v. Miami-Dade County, Florida, et al., were dismissed in 2011 pursuant to the August 2010 agreement reached in the County of Monroe case. As part of each...

  • Page 28
    ..., Second District; appeal filed January 2011) Priceline.com, Inc. v. Indiana Department of State Revenue (Indiana Tax Court; filed March 2009) Priceline.com, Inc., et al. v. City of San Francisco, California, et al. (Superior Court of California, County of San Francisco; filed June 2009); (Superior...

  • Page 29
    ... upon whether there are agreements or concerted practices between hotels and online travel companies and/or hotel room reservation "wholesalers" relating to the fixed or minimum resale prices of hotel room reservations. In September 2010, Booking.com B.V. and priceline.com Incorporated, on behalf of...

  • Page 30
    ...following table sets forth, for the periods indicated, the high and low sales prices per share of the common stock as reported on the NASDAQ Global Select Market: 2011 First Quarter Second Quarter Third Quarter Fourth Quarter $ High 509.00 561.88 554.00 553.33 $ Low 402.25 451.75 441.55 411.26 2010...

  • Page 31
    ... Point Priceline.com Incorporated NASDAQ Composite Index S&P 500 Index RDG Internet Composite 2006 2007 2008 2009 2010 2011 100....21 67.19 120.51 145.40 149.87 Sales of Unregistered Securities In 2011, we issued 4,869 shares of our common stock to holders of our 0.75% Convertible Senior Notes ...

  • Page 32
    ... Purchased as Part of Publicly Announced Plans or Programs (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs Period (a) Total Number of Shares (or Units) Purchased (b) Average Price Paid per Share (or Unit) October 1, 2011...

  • Page 33
    ... repurchased all of the remaining outstanding shares underlying noncontrolling interests in Priceline.com International Limited. Redeemable noncontrolling interests beginning in 2010 relates to the Company's purchase of rentalcars.com in May 2010. In April 2011, in connection with the exercise of...

  • Page 34
    ... online travel company that offers our customers hotel room reservations at over 210,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, we also offer our customers reservations for car rentals, airline tickets, vacation packages, destination services...

  • Page 35
    ... launched Room Key, a hotel search engine that competes directly with our hotel room night reservations services around the world. The hotel companies that own Room Key have a stated goal of driving demand directly to their brand web sites, thus reducing the share received by online travel agencies...

  • Page 36
    ... allows customers to book rooms at a discount. As with our Name Your Own Price® hotel booking service, for these services, the name of the hotel is not disclosed until after purchase. We believe these new offerings, in particular Expedia Unpublished Rates, have adversely impacted the market share...

  • Page 37
    ... profitability, primarily from our hotel business, to continue to promote the Booking.com, Agoda and rentalcars.com brands internationally and the priceline.com brand in the United States, and, over time, to offer other travel services and further expand into other international markets. Factors...

  • Page 38
    ... taxes (i.e., state and local sales tax) and our "merchant" hotel business. We are also involved in one consumer lawsuit relating to, among other things, the payment of hotel occupancy taxes and service fees. In addition, over sixty municipalities or counties, and at least six states, have initiated...

  • Page 39
    ... value for Booking.com, as well as our other reporting units, is substantially in excess of their respective carrying values. Since the annual impairment test in September 2011, there have been no events or changes in circumstances to indicate a potential impairment. • Valuation of Long-Lived...

  • Page 40
    ... of hotel room nights, rental car days and airline tickets capture the volume of units purchased by our customers. 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 our customers, and...

  • Page 41
    ... in the sale of Booking.com hotel room night reservations. Our U.S. priceline.com business experienced growth in reservations of agency price-disclosed hotel room nights, airline tickets and rental car days. Merchant gross bookings increased 41.3% for the year ended December 31, 2011, compared to...

  • Page 42
    ... of record and therefore charge the customer's credit card for the travel services provided. Merchant revenues include (1) transaction revenues representing the selling price of Name Your Own Price® hotel room reservations, rental cars and airline tickets and price-disclosed vacation packages...

  • Page 43
    ...2011, online advertising expenses increased over the same period in 2010, primarily to support increased hotel room night reservations for Booking.com and Agoda, increased rental car day reservations for rentalcars.com and increased hotel room night reservations for priceline.com. Online advertising...

  • Page 44
    ...the priceline.com brand is obtaining an increasing share of its traffic through online advertising, a trend which we also expect to continue. We recognize advertising expense as incurred at the time of booking, but recognize the gross profit for price-disclosed hotel room and rental car reservations...

  • Page 45
    ... domestic and international data centers; (2) system maintenance and software license fees; (3) data communications and other expenses associated with operating our Internet sites; and (4) payments to outside consultants. For the year ended December 31, 2011, the increase in information technology...

  • Page 46
    ... processing fees, amounting to $2.2 million, as an offset to revenue earned from the third party that processes the payments for merchant hotel transactions. Income Taxes Year Ended December 31, ($000) 2011 2010 308,663 $ 218,141 Income Tax Expense $ Change 41.5% Our effective tax rate for...

  • Page 47
    ..., 2009 Operating and Statistical Metrics Gross bookings resulting from hotel room night reservations, rental car days and airline tickets sold through our domestic and international operations for the years ended December 31, 2010 and 2009 were as follows (numbers may not total due to rounding): 46

  • Page 48
    ... fares, and increases in price-disclosed and Name Your Own Price® rental car days. Gross bookings resulting from hotel room night reservations, rental car days and airline tickets sold through our agency and merchant models for the years ended December 31, 2010 and 2009 were as follows (numbers...

  • Page 49
    ... of record and therefore charge the customer's credit card for the travel services provided. Merchant revenues include (1) transaction revenues representing the selling price of Name Your Own Price® hotel room reservations, rental cars and airline tickets and price-disclosed vacation packages...

  • Page 50
    ...® hotel room reservations, net of applicable taxes, (2) the cost of Name Your Own Price® rental cars, net of applicable taxes; and (3) the cost of Name Your Own Price® airline tickets, net of the federal air transportation tax, segment fees and passenger facility charges imposed in connection...

  • Page 51
    ... increased over the same period in 2009, primarily to support increased gross bookings for Booking.com, Agoda and priceline.com, as well as the inclusion of online advertising expense for TravelJigsaw since its acquisition in May 2010. Sales and Marketing Year Ended December 31, ($000) 2010 2009 116...

  • Page 52
    ... license fees; (2) outsourced data center costs relating to our domestic and international data centers; (3) data communications and other expenses associated with operating our Internet sites; and (4) payments to outside consultants. For the year ended December 31, 2010, information technology...

  • Page 53
    ... to make tax payments on our U.S. income for the foreseeable future, except for U.S. federal alternative minimum tax and state income taxes. However, we expect to pay foreign taxes on our foreign income. We expect that Booking.com, Agoda and TravelJigsaw will grow their pretax income at higher rates...

  • Page 54
    ... our merchant transactions during the last few weeks of every quarter. Net cash provided by operating activities for the year ended December 31, 2011, was $1.3 billion, resulting from net income of $1.1 billion and net favorable changes in working capital of $84.8 million, and a favorable impact of...

  • Page 55
    ... the year ended December 31, 2010. Investing activities for the year ended December 31, 2010 were affected by $741.4 million net purchases of marketable securities and a payment of $112.4 million for acquisitions and other equity investments, net of cash acquired, partially offset by $35.0 million...

  • Page 56
    ... additional tax obligations from our customers, which would have the effect of increasing the cost of hotel room reservations to our customers and, consequently, could make our hotels services less competitive (i.e., versus the websites of other online travel companies or hotel company websites) and...

  • Page 57
    .... Booking.com, Agoda and rentalcars.com are subject to risks typical of international business, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. From time to...

  • Page 58
    ... the Company and the report of our independent registered public accounting firm are filed as part of this Annual Report on Form 10-K (See Item 15). Consolidated Balance Sheets as of December 31, 2011 and 2010; Consolidated Statements of Operations, Consolidated Statements of Changes in Stockholders...

  • Page 59
    ... INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of priceline.com Incorporated Norwalk, Connecticut We have audited the internal control over financial reporting of priceline.com Incorporated and subsidiaries (the "Company") as of December 31, 2011, based on...

  • Page 60
    ...to our 2012 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2011, and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services Information required by Part III, Item...

  • Page 61
    ...or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form and the Company's other public filings, which are available without charge through the SEC's website at http://www.sec.gov. Exhibit Number 3.1(a) 3.2(b) 3.3(w) 3.4 4.1 4.2(a) 4.3(y) 10...

  • Page 62
    ... on an unconsolidated basis. Form of 2007 Performance Share Unit Agreement for awards under the 1999 Omnibus Plan, as amended, based on the performance of Agoda Company Ltd., Agoda Company Pte. Ltd. and Agoda Services Co. Ltd. priceline.com Incorporated 1999 Omnibus Plan (As Amended and Restated...

  • Page 63
    ..., dated September 12, 2011, by and between the Registrant and Darren Huston. Credit Agreement, dated as of October 28, 2011, among the Registrant, the lenders from time to time party thereto, RBS Citizens, N.A., as Documentation Agent, Bank of America, N.A. and Wells Fargo Bank, National Association...

  • Page 64
    ... priceline.com's initial public offering. (b) with priceline.com's registration of 1.00% Convertible Senior Notes due 2010 and Shares of Common Stock ...filed with the Commission pursuant to Rule The omitted confidential material has been filed separately with the Commission. Indicates a management...

  • Page 65
    ...registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PRICELINE.COM INCORPORATED By: /s/ Jeffery H. Boyd Name: Jeffery H. Boyd Title: Chief Executive Officer Date: February 27, 2012 Power of Attorney KNOW ALL PERSONS BY THESE PRESENTS, that...

  • Page 66
    ... and Director President, Chief Executive Officer and Director (Principal Executive Officer) Chief Financial Officer and Chief Accounting Officer (Principal Financial Officer and Principal Accounting Officer) Director February 27, 2012 February 27, 2012 February 27, 2012 /s/ Howard W. Barker, Jr...

  • Page 67
    ... FINANCIAL STATEMENTS Page No. Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 2011 and 2010 Consolidated Statements of Operations for the years ended December 31, 2011, 2010 and 2009 Consolidated Statements of Changes in Stockholders' Equity...

  • Page 68
    ... 2011, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2011...

  • Page 69
    priceline.com Incorporated CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) December 31, 2011 2010 ASSETS Current assets: Cash and cash equivalents Restricted cash Short-term investments Accounts receivable, net of allowance for doubtful accounts of $6,103 and $6,353, ...

  • Page 70
    ... 489,472 - 489,472 11.54 42,406 9.88 49,522 Merchant revenues Agency revenues Other revenues Total revenues Cost of revenues Gross profit Operating expenses: Advertising - Online Advertising - Offline Sales and marketing Personnel, including stock-based compensation of $65,724, $68,200, and $40,671...

  • Page 71
    priceline.com Incorporated CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 2011, 2010 and 2009 (In thousands) Common Stock Shares Balance, December 31, 2008 Net income applicable to common stockholders Unrealized gain on marketable securities, net of tax ...

  • Page 72
    ... accounts, net Reversal of valuation allowances on deferred tax assets Other deferred income taxes Stock-based compensation and other stock based payments Amortization of debt issuance costs Amortization of debt discount Loss on early extinguishment of debt Equity in income of investees Changes...

  • Page 73
    ... online travel company that offers its customers hotel room reservations at over 210,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, the Company also offers its customers reservations for car rentals, airline tickets, vacation packages, destination...

  • Page 74
    ...conclusion of the customer's stay at the hotel or return of the rental car. The Company records the difference between the customer selling price and the supplier cost of its merchant price-disclosed reservation services on a net basis in merchant revenue. Agency Revenues Agency revenues are derived...

  • Page 75
    ... Taxes and State and Local Taxes The Company provides an internet travel service to facilitate online travel purchases between consumers and travel suppliers, including airline ticket, hotel and rental car reservations, and sometimes as part of a vacation package reservation. For merchant model...

  • Page 76
    ... details on income taxes. Segment Reporting - The Company operates and manages its business as a single reportable unit. Operating segments that have similar economic characteristics are aggregated. For geographic related information, see Note 18 to the Company's Consolidated Financial Statements...

  • Page 77
    ... September 30, 2011, the Company performed its annual quantitative goodwill impairment testing, and concluded that the estimated fair value for each reporting unit substantially exceeds its respective carrying value. This new accounting guidance will not have a significant impact on the Company. In...

  • Page 78
    ... fair value measurement. This accounting update is effective for public companies for interim or annual periods beginning after December 15, 2011, with early adoption permitted. We expect to make the additional disclosures required in 2012. 3. STOCK-BASED COMPENSATION AND OTHER STOCK-BASED PAYMENTS...

  • Page 79
    ...the market price requirement. Subject to certain exceptions related to a change in control and terminations other than for "cause," or on account of death or disability, the executives must also continue their service through March 3, 2012 in order to receive any shares of the Company's common stock...

  • Page 80
    ... for performance share units is recorded based on the estimated probable outcome if the Company, and with respect to certain grants, its subsidiaries, priceline.com International and Agoda, achieve certain financial goals at the end of the performance period. The actual number of shares to be...

  • Page 81
    ... at fair value as of December 31, 2011 are classified in the table below in the categories described below (in thousands): Level 1 ASSETS: Short-term investments: Foreign government securities U.S. government securities U.S. agency securities U.S. corporate notes Foreign exchange derivatives Total...

  • Page 82
    ... to the volume and frequency of trading for all investments. Fair values for U.S. agency securities and corporate notes are considered "Level 2" valuations because they are obtained from pricing sources for these or comparable instruments. For the Company's investments, a market approach is used for...

  • Page 83
    ... ACCOUNTS RECEIVABLE RESERVES The Company records a provision for uncollectible agency commissions, principally receivables from hotels related to agency reservations. The Company also accrues for costs associated with purchases made on its websites by individuals using fraudulent credit cards and...

  • Page 84
    ... notes will generally have a dilutive impact on net income per share if the Company's average stock price for the period exceeds the conversion price for the convertible notes. The Company has Conversion Spread Hedges outstanding at December 31, 2011, which were designed to reduce potential...

  • Page 85
    ... relate to our Booking.com business. In addition, purchased intangibles increased by $94.5 million as a result of the acquisition of TravelJigsaw Holdings Limited (now known as rentalcars.com) in May 2010 (refer to Note 13). A rollforward of goodwill for the years ended December 31, 2011 and 2010...

  • Page 86
    ...) and contingent purchase price consideration recorded in December 2010 related to the acquisition of priceline.com Mauritius Company Limited (formerly known as Agoda) in 2007 increased goodwill by $60.1 million (refer to Note 16). As of September 30, 2011, the Company performed its annual goodwill...

  • Page 87
    ... December 31, 2011 and 2010, the estimated market value of the outstanding senior notes was approximately $0.9 billion for both periods. Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the...

  • Page 88
    ... $303.06 per share. The 2015 Notes are convertible, at the option of the holder, prior to March 15, 2015 upon the occurrence of specified events, including, but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period...

  • Page 89
    ... priceline.com International Limited ("PIL"), paid $108.5 million, net of cash acquired, to purchase a controlling interest of the outstanding equity of TravelJigsaw Holdings Limited (now known as rentalcars.com), a Manchester, UK-based international rental car reservation service. Transaction costs...

  • Page 90
    ... $ _____ (1) The fair value was determined based on the price paid at acquisition. (2) The Company retained a controlling interest after the sale of the subsidiary shares in June 2010. (3) The estimated fair value was based upon standard valuation techniques using discounted cash flow analysis and...

  • Page 91
    ... gain on investment securities (2) Accumulated other comprehensive loss _____ (1) Includes net gains from fair value adjustments at December 31, 2011 and 2010 associated with net investment hedges of $46.2 million after tax ($79.1 million before tax) and $15.8 million after tax ($27.1 million...

  • Page 92
    ...(in thousands): 2011 Deferred tax assets/(liabilities): Net operating loss carryforward - U.S. IRC 382 Disallowance Net operating loss carryforward - Foreign Fixed assets Investments Accrued expenses Stock-based compensation and other stock based payments Other Subtotal Discount on convertible notes...

  • Page 93
    ... periods. There can be no assurance that Booking.com's application will be accepted, or that the amount of qualifying earnings or applicable tax rates will not be reduced at that time. In addition, there can be no assurance that the tax law will not change in 2012 and/or future years resulting in...

  • Page 94
    .... The Internal Revenue Service initiated an audit of our 2009 and 2010 federal income tax returns in the third quarter of 2011. 16. COMMITMENTS AND CONTINGENCIES Litigation Related to Hotel Occupancy and Other Taxes The Company and certain third-party defendant online travel companies are currently...

  • Page 95
    ... tax obligation from its customers, which would have the effect of increasing the cost of hotel room reservations to its customers and, consequently, could make the Company's hotel service less competitive (i.e., versus the websites of other online travel companies or hotel company websites...

  • Page 96
    .... In City of San Diego, California v. Hotels.com, L.P., et al., JCCP 4472 (Los Angeles Superior Court, filed February 9, 2006), on September 6, 2011, the court granted the online travel companies' petition to (i) vacate the hearing officer's prior ruling that the online travel company defendants are...

  • Page 97
    ...of Florida, filed January 2009)(agreement signed August 2010) and the Tourist Development Tax claims asserted by the County in Priceline.com, Inc. v. Miami-Dade County, Florida, et al., were dismissed in 2011 pursuant to the August 2010 agreement reached in the County of Monroe case. As part of each...

  • Page 98
    ... Montgomery County, Maryland v. Priceline.com, Inc., et al. (United States District Court for the District of Maryland; filed December 2010) District of Columbia v. Expedia, Inc., et al. (Superior Court for the District of Columbia; filed March 2011) County of Volusia, et al. v. Expedia, Inc., et al...

  • Page 99
    ...Travelocity.com LLC, et al. (Hawaii Tax Appeal Court; filed March 2011) The Company intends to prosecute vigorously its claims in these actions. Consumer Class Actions On June 21, 2011 in Chiste, et al. v. priceline.com Inc., et al. (United States District Court for the Southern District of New...

  • Page 100
    ... upon whether there are agreements or concerted practices between hotels and online travel companies and/or hotel room reservation "wholesalers" relating to the fixed or minimum resale prices of hotel room reservations. In September 2010, Booking.com B.V. and priceline.com Incorporated, on behalf of...

  • Page 101
    ... of the Company, acquired 100% of the total share capital of priceline.com Mauritius Company Limited (formerly known as the Agoda Company, Ltd.) ("Agoda") and AGIP LLC. The purchase price for the acquisition, including acquisition costs, consisted of an initial purchase price paid by the Company in...

  • Page 102
    United States 2011 Revenues Intangible assets, net Goodwill Other long-lived assets 2010 Revenues Intangible assets, net Goodwill Other long-lived assets 2009 Revenues Intangible assets, net Goodwill Other long-lived assets $ 1,761,065 1,776 37,306 148,150 The Netherlands $ 1,638,851 78,850 142,576...

  • Page 103
    ...478,413 135,111 135,729 $ 1.16 $ 2.41 $ 4.59 $ 2.76 $ 1.06 $ 2.26 $ 4.41 $ 2.66 _____ (1) As the Company's retail hotel business, which recognizes revenue at the completion of the stay, continues to expand, our quarterly results become increasingly impacted by seasonal factors. 102

  • Page 104
    ...or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form and the Company's other public filings, which are available without charge through the SEC's website at http://www.sec.gov. Exhibit Number 3.1(a) 3.2(b) 3.3(w) 3.4 4.1 4.2(a) 4.3(y) 10...

  • Page 105
    ...between priceline.com Incorporated and Kees Koolen. Purchase Agreement, dated as of March 4, 2010, between the Registrant and J.P. Morgan Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the initial purchasers named therein. Form of Performance Share Unit...

  • Page 106
    ..., dated September 12, 2011, by and between the Registrant and Darren Huston. Credit Agreement, dated as of October 28, 2011, among the Registrant, the lenders from time to time party thereto, RBS Citizens, N.A., as Documentation Agent, Bank of America, N.A. and Wells Fargo Bank, National Association...

  • Page 107
    ... priceline.com's initial public offering. (b) with priceline.com's registration of 1.00% Convertible Senior Notes due 2010 and Shares of Common Stock ...filed with the Commission pursuant to Rule The omitted confidential material has been filed separately with the Commission. Indicates a management...

  • Page 108
    ...: 1. I have reviewed the Annual Report on Form 10-K of priceline.com Incorporated (the "Registrant") for the year ended December 31, 2011; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the...

  • Page 109
    ...: 1. I have reviewed the Annual Report on Form 10-K of priceline.com Incorporated (the "Registrant") for the year ended December 31, 2011; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the...

  • Page 110
    ... 63 of title 18, United States Code), the undersigned officer of priceline.com Incorporated, a Delaware corporation (the "Company"), hereby certifies that, to his knowledge: The Annual Report on Form 10-K for the 12 months ended December 31, 2011 (the "Report") of the Company fully complies with the...

  • Page 111
    ... 63 of title 18, United States Code), the undersigned officer of priceline.com Incorporated, a Delaware corporation (the "Company"), hereby certifies that, to his knowledge: The Annual Report on Form 10-K for the 12 months ended December 31, 2011 (the "Report") of the Company fully complies with the...