Priceline 2011 Annual Report Download - page 89

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rates at debt origination to be 5.89% for the 2015 Notes and 8.0% for the 2013 Notes. The yield to maturity was estimated at
an at-market coupon priced at par.
Debt discount after tax of $69.1 million ($115.2 million before tax) partially offset by financing costs associated with
the equity component of convertible debt of $1.6 million after tax were recorded in additional paid-in capital related to the 2015
Notes at December 31, 2010. The Company reclassified $77.4 million before tax out of additional paid-in-capital to the
mezzanine section in the Company's Consolidated Balance Sheet at December 31, 2011 because the 2015 Notes were
convertible at the option of the holders.
For the years ended December 31, 2011, 2010 and 2009, the Company recognized interest expense of $30.6 million,
$27.6 million and $22.1 million, respectively, related to convertible notes, comprised of $7.2 million, $5.8 million and $2.9
million, respectively, for the contractual coupon interest, $21.4 million, $20.1 million and $18.2 million, respectively, related to
the amortization of debt discount and $2.0 million, $1.7 million and $1.0 million, respectively, related to the amortization of
debt issuance costs. In addition, unamortized debt issuance costs written off to interest expense related to debt conversions in
2010 and 2009 was $1.4 million, and $1.2 million, respectively, while costs associated with 2011 debt conversions were
insignificant. The remaining period for amortization of debt discount and debt issuance costs is the stated maturity dates for the
respective debt. The effective interest rates for the years ended December 31, 2011, 2010, and 2009 are 6.3%, 6.7% and 8.5%,
respectively.
In addition, if the Company’s convertible debt is redeemed or converted prior to maturity, a gain or loss on
extinguishment will be recognized. The gain or loss is the difference between the fair value of the debt component immediately
prior to extinguishment and its carrying value. To estimate the fair value at each conversion date, the Company used an
applicable LIBOR rate plus an applicable credit default spread based upon the Company’s credit rating at the respective
conversion dates. In the years ended December 31, 2010 and 2009, the Company recognized a loss of $11.3 million ($6.8
million after tax) and a loss of $1.0 million ($0.6 million after tax), respectively, in "Foreign currency transactions and other" in
the Consolidated Statements of Operations. The loss recognized for the year ended December 31, 2011 for debt conversions
was insignificant.
12. TREASURY STOCK
In the first quarter of 2010, the Company’s Board of Directors authorized an additional repurchase of up to $500
million of the Company’s common stock from time to time in the open market or in privately negotiated transactions, including
the approval to purchase up to $100 million from the proceeds from the issuance of the 2015 Notes. During the year ended
December 31, 2010, the Company repurchased 461,437 shares of its common stock at an aggregate cost of approximately
$106.1 million.
The Board of Directors has also given the Company the general authorization to repurchase shares of its common
stock to satisfy employee withholding tax obligations related to stock-based compensation. In the years ended December 31,
2011, 2010 and 2009, the Company repurchased 358,517, 94,572, and 180,071 shares at an aggregate cost of approximately
$163.2 million, $23.4 million and $17.4 million, respectively, to satisfy employee withholding taxes related to stock-based
compensation.
The Company may make additional repurchases of shares under its stock repurchase program, depending on
prevailing market conditions, alternate uses of capital and other factors. Whether and when to initiate and/or complete any
purchase of common stock and the amount of common stock purchased will be determined in the Company’s complete
discretion. The Company has a remaining authorization of $459.2 million to repurchase common stock. As of December 31,
2011, there were approximately 7.8 million shares of the Company’s common stock held in treasury.
13. NONCONTROLLING INTERESTS
On May 18, 2010, the Company, through its wholly-owned subsidiary, 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
of $1.9 million were expensed during the three months ended June 30, 2010.
Certain key members of rentalcars.com’s management team retained a noncontrolling ownership interest in
rentalcars.com. In addition, certain key members of the management team of Booking.com purchased a 3% ownership interest
in rentalcars.com from PIL in June 2010 (together with rentalcars.com management’s investment, the "Redeemable Shares").
The holders of the Redeemable Shares will have the right to put their shares to PIL and PIL will have the right to call the