Priceline 2011 Annual Report Download - page 100

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Stephens, Inc. and Salomon Smith Barney, Inc. as defendants (01 Civ. 2261, 01 Civ. 2576, 01 Civ. 3590 and 01 Civ. 4956).
Shives et al. v. Bank of America Securities LLC et al., 01 Civ. 4956, also names other defendants and states claims unrelated to
the Company. The complaints allege, among other things, that the Company and the individual defendants violated the federal
securities laws by issuing and selling priceline.com common stock in the Company's March 1999 initial public offering without
disclosing to investors that some of the underwriters in the offering, including the lead underwriters, had allegedly solicited and
received excessive and undisclosed commissions from certain investors. After extensive negotiations, the parties reached a
comprehensive settlement on or about March 30, 2009. On April 2, 2009, plaintiffs filed a Notice of Motion for Preliminary
Approval of Settlement. On June 9, 2009, the court granted the motion and scheduled the hearing for final approval for
September 10, 2009. The settlement, previously approved by a special committee of the Company's Board of Directors,
compromised the claims against the Company for approximately $0.3 million. The court issued an order granting final
approval of the settlement on October 5, 2009. Notices of appeal of the Court's order have been filed with the Second Circuit.
All of the appeals have now been resolved.
OFT Inquiry
In September 2010, the United Kingdom's Office of Fair Trading (the "OFT"), the competition authority in the
U.K., announced it was conducting a formal early stage investigation into suspected breaches of competition law in the hotel
online booking sector and had written to a number of parties in the industry to request information. Specifically, the
investigation focuses 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 Booking.com, received a Notice of
Inquiry from the OFT; the Company and Booking.com are cooperating with the OFT's investigation. The Company is unable
at this time to predict the outcome of the OFT's investigation and the impact, if any, on the Company's business, financial
condition and results of operations.
The Company intends to defend vigorously against the claims in all of the proceedings described in this Note 16. The
Company has accrued for certain legal contingencies where it is probable that a loss has been incurred and the amount can be
reasonably estimated. Except as disclosed, such amounts accrued are not material to the Company's Consolidated Balance
Sheets and provisions recorded have not been material to its consolidated results of operations. The Company is unable to
estimate the potential maximum range of loss.
From time to time, the Company has been, and expect to continue to be, subject to legal proceedings and claims in the
ordinary course of business, including claims of alleged infringement of third party intellectual property rights. Such claims,
even if not meritorious, could result in the expenditure of significant financial and managerial resources, divert management's
attention from the Company's business objectives and could adversely affect the Company's business, results of operations,
financial condition and cash flows.
Employment Contracts
The Company has employment agreements with certain members of senior management that provide for cash
severance payments of up to approximately $26 million, accelerated vesting of equity instruments, including without limitation,
restricted stock, restricted stock units and performance share units upon, among other things, death or termination without
"cause" or "good reason," as those terms are defined in the agreements, and a gross-up for the payment of "golden parachute"
excise taxes. In addition, certain of the agreements provide for the extension of health and insurance benefits after termination
for periods up to three years.
Operating Leases
The Company leases certain facilities and equipment through operating leases. Rental expense for leased office space
was approximately $17.7 million, $10.4 million and $7.8 million for the years ended December 31, 2011, 2010 and 2009,
respectively. The Company’s executive, administrative and U.S. operating offices and network operations center are located in
approximately 70,000 square feet of leased office space located in Norwalk, Connecticut. The Company also leases
approximately 49,000 square feet of office space in Grand Rapids, Michigan. Booking.com Limited leases approximately
48,000 square feet of office space in Cambridge, England. Booking.com B.V. leases approximately 458,000 square feet of
office space in Amsterdam, Netherlands and in 39 other countries in support of its international operations. Agoda leases
approximately 74,000 square feet of office space in Bangkok, Thailand and in 18 other countries in support of its international
operations. Rentalcars.com leases approximately 29,000 square feet of office space in Manchester, England. Minimum
payments for operating leases for office space, data centers and equipment having initial or remaining non-cancelable terms in
excess of one year have been translated into U.S. Dollars at the December 31, 2011 spot exchange rates, as applicable, and are