Priceline 2014 Annual Report Download - page 59

Download and view the complete annual report

Please find page 59 of the 2014 Priceline annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

Information Technology
Information technology expenses consist primarily of: (1) software license and system maintenance fees; (2) data communications and
other expenses associated with operating our services; (3) outsourced data center costs; and (4) payments to outside consultants. Information
technology expense increased during the year ended December 31, 2014 , compared to the year ended December 31, 2013 , due primarily to
growth in our worldwide operations. The inclusion of OpenTable and KAYAK in our consolidated results since their acquisitions on July 24,
2014 and May 21, 2013, respectively, contributed to the increase in information technology expenses for the year ended December 31, 2014
compared to the year ended December 31, 2013 .
Depreciation and Amortization
Depreciation and amortization expenses consist of: (1) amortization of intangible assets with determinable lives; (2) depreciation on
computer equipment; (3) depreciation of internally developed and purchased software; and (4) depreciation of leasehold improvements, furniture
and fixtures and office equipment. For the year ended December 31, 2014
, depreciation and amortization expense increased from the year ended
December 31, 2013
due primarily to increased intangible amortization from the OpenTable and KAYAK acquisitions and increased depreciation
expense due to capital expenditures for additional data center capacity and office build outs to support growth and geographic expansion,
principally related to our Booking.com business.
Other Income (Expense)
For the year ended December 31, 2014 , interest income on cash and marketable securities increased compared to the year ended
December 31, 2013
, primarily due to an increase in the average invested balance and higher yields. Interest expense increased for the year ended
December 31, 2014 , compared to the year ended December 31, 2013 , primarily due to interest expense attributable to our Senior Notes issued
in August 2014 and September 2014 and interest expense attributable to our Senior Convertible Notes issued in May 2013, partially offset by
early conversions of our 1.25% Convertible Senior Notes due March 2015.
Derivative contracts that hedge our exposure to the impact of currency fluctuations on the translation of our international operating
results into U.S. Dollars upon consolidation resulted in foreign exchange gains of $13.7 million for the year ended December 31, 2014
compared
with foreign exchange gains of $0.3 million for the year ended December 31, 2013 , which are recorded in "Foreign currency transactions and
other" on the Consolidated Statements of Operations.
55
Year Ended December 31,
(in thousands)
2014
2013
Change
Information Technology
$
97,498
$
71,890
35.6
%
% of Total Gross Profit
1.3
%
1.3
%
Year Ended December 31,
(in thousands)
2014
2013
Change
Depreciation and Amortization
$
207,820
$
117,975
76.2
%
% of Total Gross Profit
2.7
%
2.1
%
Year Ended December 31,
(in thousands)
2014
2013
Change
Interest Income
$
13,933
$
4,167
234.4
%
Interest Expense
(88,353
)
(83,289
)
6.1
%
Foreign Currency Transactions and Other
(9,444
)
(36,755
)
(74.3
)%
Total
$
(83,864
)
$
(115,877
)
(27.6
)%