Priceline 2011 Annual Report Download - page 47

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over a multi-year period. The amount of qualifying earnings expressed as a percentage of the total pretax earnings in the
Netherlands will vary depending upon the level of total pretax earnings that is achieved in any given year.
In order to be eligible for Innovation Box Tax treatment, Booking.com must, among other things, apply for and obtain
a research and development ("R&D") certificate from a Dutch governmental agency every six months confirming that the
activities that Booking.com intends to be engaged in over the subsequent six month period are "innovative." Should
Booking.com fail to secure such a certificate in any such period - for example, because the governmental agency does not view
Booking.com's new or anticipated activities as "innovative" - or should this agency determine that the activities contemplated
to be performed in a prior period were not performed as contemplated or did not comply with the agency's requirements,
Booking.com may lose its certificate and, as a result, the Innovation Box Tax benefit may be reduced or eliminated.
Booking.com intends to reapply for continued Innovation Box Tax treatment for future 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 a reduction or elimination of the tax benefit.
The Innovation Box Tax did not have a material impact on the our 2010 results. The impact of the Innovation Box Tax
for 2011 reduced our consolidated effective income tax rate by approximately four percentage points. We currently estimate
that our consolidated effective tax rate for 2012 will be lower by approximately four to six percentage points compared to what
it would be if we did not have the benefit of the Innovation Box Tax.
Until our domestic net operating loss carryforwards are utilized or expire, we do not expect to make tax payments on
our U.S. income, 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 our international operations will grow their pretax income at higher rates than the
U.S. over the long term and, therefore, it is our expectation that our cash tax payments will increase as our international
businesses generate an increasing share of our pre-tax income.
The Internal Revenue Service initiated an audit of our income taxes for the first time in the third quarter of 2011. To
date, we have been audited in several taxing jurisdictions with no significant adjustments as a result. If future audits find that
additional taxes are due, we may be subject to incremental tax liabilities, possibly including interest and penalties, which could
have a material adverse effect on our financial condition and results of operations.
Redeemable Noncontrolling Interests
Net income attributable to noncontrolling interests
Year Ended
December 31,
($000)
2011
$ 2,760 2010 $ 601
Change
359.2%
The net income attributable to redeemable noncontrolling interest for the year ended December 31, 2011 compared to
the same period in 2010 increased primarily due to the improved year-over-year operating performance for rentalcars.com.
Results of Operations
Year Ended December 31, 2010 compared to Year Ended December 31, 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):