Priceline 2014 Annual Report Download - page 89

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The Priceline Group Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
("The Priceline Group" or the "Company") is a leading provider of online travel and travel related reservation and search services. Through the
Company's online travel agent ("OTA") services, the Company connects consumers wishing to make travel reservations with providers of travel
services around the world. The Company offers consumers accommodation reservations (including hotels, bed and breakfasts, hostels,
apartments, vacation rentals and other properties) through its Booking.com, priceline.com and agoda.com brands. The Company's priceline.com
brand also offers consumers reservations for rental cars, airline tickets, vacation packages and cruises. The Company offers rental car
reservations worldwide through rentalcars.com. The Company also allows consumers to easily compare airline ticket, hotel reservation and
rental car reservation information from hundreds of travel websites at once through KAYAK. The Company acquired OpenTable, a leading
provider of online restaurant reservations in July 2014.
Basis of Presentation — The Company's Consolidated Financial Statements include the accounts of the Company and its wholly-
owned
subsidiaries, including KAYAK Software Corporation ("KAYAK") since its acquisition in May 2013 and OpenTable, Inc. ("OpenTable") since
its acquisition in July 2014. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates — The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and
footnotes thereto. Actual results may differ significantly from those estimates. The estimates underlying the Company's Consolidated Financial
Statements relate to, among other things, the accrual for travel transaction taxes, stock-
based compensation, the allowance for doubtful accounts,
the valuation of goodwill, long-lived assets and intangibles, income taxes, the accrual for loyalty programs and the valuation of redeemable
noncontrolling interests.
Fair Value of Financial Instruments — The Company's financial instruments, including cash, restricted cash, accounts receivable,
accounts payable, accrued expenses and deferred merchant bookings, are carried at cost which approximates their fair value because of the short-
term nature of these financial instruments. See Notes 4 , 5 , 11 and 13 for information on fair value for investments, derivatives, the Company's
outstanding Senior Notes and redeemable noncontrolling interests.
Cash and Cash Equivalents — Cash and cash equivalents consists primarily of cash and highly liquid investment grade securities with
an original maturity of three months or less.
Restricted Cash — Restricted cash at December 31, 2014 and 2013 collateralizes office leases and supplier obligations.
Investments — The Company has classified its investments as available-for-
sale securities. These securities are carried at estimated fair
value with the aggregate unrealized gains and losses related to these investments, net of taxes, reflected as a part of "Accumulated other
comprehensive income (loss)" within stockholders' equity.
The fair value of the investments is based on the specific quoted market price of the securities or comparable securities at the balance
sheet dates. Investments in debt securities are considered to be impaired when a decline in fair value is judged to be other than temporary
because the Company either intends to sell or it is more-likely-than not that it will have to sell the impaired security before recovery. Once a
decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is
established. If the Company does not intend to sell the debt security, but it is probable that the Company will not collect all amounts due, then
only the impairment due to the credit risk would be recognized in earnings and the remaining amount of the impairment would be recognized in
"Accumulated other comprehensive income (loss)" within stockholders' equity. Marketable securities are presented as current assets on the
Company's Consolidated Balance Sheets if they are available to meet the short-term working capital needs of the Company. See Notes 4 and 5
for further detail of investments.
84
1.
BUSINESS DESCRIPTION
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES