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Form 8-K Priceline Group Inc. For: Aug 05

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August 5, 2015 7:08 AM EDT


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) August 5, 2015
 
The Priceline Group Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
1-36691
 
06-1528493
(State or other Jurisdiction of
Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
 
800 Connecticut Avenue, Norwalk, Connecticut
 
06854
(Address of principal office)
 
(zip code)
 
N/A 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12  under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4c  under the Exchange Act (17 CFR 240.13e-4(c))






Item 2.02.              Results of Operations and Financial Conditions
 
On August 5, 2015, The Priceline Group Inc. announced its financial results for the quarter ended June 30, 2015.  The press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference. Copies of The Priceline Group's unaudited consolidated balance sheet at June 30, 2015, unaudited consolidated statements of operations for the three and six months ended June 30, 2015 and unaudited consolidated statement of cash flows for the six months ended June 30, 2015, are included in the financial and statistical supplement attached to the press release.  The unaudited consolidated balance sheet at June 30, 2015, unaudited consolidated statements of operations for the three and six months ended June 30, 2015 and unaudited consolidated statement of cash flows for the six months ended June 30, 2015 shall be treated as "filed" for purposes of the Securities Exchange Act of 1934, as amended, but all other information in the press release shall be treated as "furnished."

Item 9.01.           Financial Statements and Exhibits
 
(d)    Exhibits

Exhibit    Description

99.1
Press release (which includes a financial and statistical supplement and related information) issued by The Priceline Group Inc. on August 5, 2015 relating to, among other things, its second quarter 2015 earnings. The unaudited consolidated balance sheet at June 30, 2015 and unaudited consolidated statement of operations for the three and six months ended June 30, 2015 and unaudited consolidated statement of cash flows for the six months ended June 30, 2015 shall be treated as "filed" for the purposes of the Securities and Exchange Act of 1934, as amended, and the remaining information shall be treated as "furnished."
 







SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
THE PRICELINE GROUP INC.
 
 
 
 
 
 
By:
/s/ Peter J. Millones
 
 
Name:
Peter J. Millones
 
 
Title:
Executive Vice President, General Counsel and Secretary
 
 
Date:  August 5, 2015





EXHIBIT INDEX
 
Exhibit No.    Description

99.1
Press release (which includes a financial and statistical supplement and related information) issued by The Priceline Group Inc. on August 5, 2015 relating to, among other things, its second quarter 2015 earnings.








Exhibit 99.1
The Priceline Group Reports Financial Results for 2nd Quarter 2015
NORWALK, CT – August 5, 2015. . . The Priceline Group Inc. (NASDAQ: PCLN) today reported its 2nd quarter 2015 financial results. Second quarter gross travel bookings for The Priceline Group (the "Group"), which refers to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by its customers, were $15.0 billion, an increase of 11% over a year ago (approximately 26% on a constant currency basis).
The Group's gross profit for the 2nd quarter was $2.1 billion, an 11% increase from the prior year (approximately 26% on a constant currency basis). International operations contributed gross profit in the 2nd quarter of $1.8 billion, an 8% increase versus a year ago (approximately 26% on a constant currency basis). The Group had GAAP net income applicable to common shareholders for the 2nd quarter of $517 million, or $9.94 per diluted share, which compares to $576 million or $10.89 per diluted share, in the same period a year ago.
Non-GAAP net income in the 2nd quarter was $653 million, a 2% decrease versus the prior year. Non-GAAP net income was $12.45 per diluted share, compared to $12.51 per diluted share a year ago. FactSet consensus for the 2nd quarter 2015 was $11.85 per diluted share. Adjusted EBITDA for the 2nd quarter 2015 was $805 million, a decrease of 1% versus a year ago. The section below entitled "Non-GAAP Financial Measures" provides definitions and information about the use of non-GAAP financial measures in this press release, and the attached financial and statistical supplement reconciles non-GAAP financial information with the Group's financial results under GAAP.
"The Priceline Group performed well in the quarter as the summer travel season got off to a strong start with a second consecutive quarter of accelerating growth in hotel room nights and rental car days booked," said Darren Huston, President and CEO of The Priceline Group. "Globally, our accommodation business booked 113 million room nights in the second quarter, up 26% over the same period last year. International gross bookings growth accelerated to 30% on a constant currency basis and the Group's total gross profit grew by about 26% on a constant currency basis."
Looking forward to the third quarter, Mr. Huston said, "We believe we are well set up to deliver the largest quarter in our company's history. Our teams are ready and are intensely focused on delivering the best selection, competitive pricing, and the best online and offline experience to our customers around the world."
The Priceline Group said it was targeting the following for 3rd quarter 2015:
•
Total gross travel bookings ranging from a decrease of 1% to an increase of approximately 6% year-over-year (an increase of approximately 13% - 20% on a constant currency basis).
•
Year-over-year increase in international gross travel bookings of approximately 0% - 7% (an increase of approximately 16% - 23% on a constant currency basis).
•
U.S. gross travel bookings are expected to be about the same as 3rd quarter 2014.
•
Year-over-year increase in revenue of approximately 1% - 8%.
•
Year-over-year increase in gross profit of approximately 3% - 10% (an increase of approximately 19% - 26% on a constant currency basis).
•
Adjusted EBITDA of approximately $1,425 million to $1,525 million.
•
Non-GAAP net income per diluted share between $22.95 and $24.45.
Non-GAAP guidance for the 3rd quarter 2015:

1 of 10


•
excludes non-cash amortization expense of intangibles,
•
excludes non-cash stock-based employee compensation expense,
•
excludes non-cash interest expense related to the amortization of debt discount and gains or losses on early debt extinguishment, if any, related to cash-settled convertible debt,
•
excludes the impact, if any, of significant charges or benefits associated with judgments, rulings and/or settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings,
•
excludes the impact, if any, of significant costs related to acquisitions,
•
excludes non-cash income tax expense and reflects the impact on income taxes of certain of the non-GAAP adjustments, and
•
includes the dilutive impact of unvested restricted stock units and performance share units because non-GAAP net income has been adjusted to exclude stock-based employee compensation.
The Priceline Group highlighted that its forecast assumes currency exchange rates of $1.09 per Euro and $1.56 per British Pound for the remainder of the quarter, which results in average exchange rates for the quarter that would be 18% weaker for the Euro and 7% weaker for the British Pound as compared to the prior year. Therefore, currency exchange rates are expected to significantly reduce the Company's growth rates expressed in U.S. dollars.
In addition to the adjustments above, adjusted EBITDA excludes depreciation and amortization expense, interest income, interest expense and income taxes and includes the impact of foreign currency transactions and other expenses.
When aggregated, the non-GAAP adjustments are expected to increase adjusted EBITDA over GAAP net income by approximately $382 million in the 3rd quarter 2015. In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $118 million in the 3rd quarter 2015. The Group estimates GAAP net income per diluted share between $20.84 and $22.34 for the 3rd quarter 2015.

Information About Forward-Looking Statements
This press release contains forward-looking statements. These forward-looking statements reflect the views of the Group's management regarding current expectations and projections about future events and are based on currently available information and current foreign currency exchange rates. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals and similar expressions including, "may," "will," "should," "could," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," or "continue," reflecting something other than historical fact are intended to identify forward-looking statements.
The following factors, among others, could cause the Group's actual results to differ materially from those described in the forward-looking statements:
-- adverse changes in general market conditions for leisure and other travel services;
-- the effects of increased competition;
-- fluctuations in foreign exchange rates and other risks associated with doing business in multiple currencies;
-- our ability to expand successfully in international markets;
-- our online advertising efficiency;
-- any change by a major search engine in how it presents travel search results or conducts its auction for search placement in a manner that is competitively disadvantageous to us;
-- adverse changes in the Group's relationships with travel service providers;
-- systems-related failures and/or security breaches;
-- the ability to attract and retain qualified personnel; and
-- tax, legal and regulatory risks.

2 of 10


For a detailed discussion of these and other factors that could cause the Group's actual results to differ materially from those described in the forward-looking statements, please refer to the Group's most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K filed with the Securities and Exchange Commission. Unless required by law, the Group undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Measures
The Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. Adjusted EBITDA represents GAAP net income excluding depreciation and amortization expense, interest income, interest expense and is adjusted to exclude stock-based employee compensation expense, gains and losses on early debt extinguishment, significant charges or benefits associated with judgments, rulings and/or settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings and significant acquisition costs.
Non-GAAP gross profit, adjusted EBITDA, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share are "non-GAAP financial measures," as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. The Group believes that non-GAAP gross profit, adjusted EBITDA, non-GAAP operating income, non-GAAP net income and non-GAAP net income per share that exclude certain non-cash or non-recurring income or expense items are useful for analysts and investors to evaluate the Group's on-going performance because they provide a useful comparison of the Group's projected cash earnings and performance with its historical results from prior periods and to those of its competitors (though competitors may calculate similar non-GAAP financial measures differently than those calculated by the Group). These non-GAAP metrics, in particular adjusted EBITDA, non-GAAP operating income, and non-GAAP net income are not intended to represent funds available for the Group's discretionary use and are not intended to represent or to be used as a substitute for operating income, net income or cash flows from operations data as measured under GAAP. The items excluded from these non-GAAP metrics, but included in the calculation of their closest GAAP equivalent, are significant components of consolidated statements of income and must be considered in performing a comprehensive assessment of overall financial performance.
Non-GAAP financial information for the three and six months ended June 30, 2015 and 2014 are adjusted for the following items:
•
Amortization expense of intangibles is excluded because it does not impact cash earnings.
•
Stock-based employee compensation expense is excluded because it does not impact cash earnings and is reflected in earnings per share through increased share count.
•
Interest expense related to the amortization of debt discount and gains or losses on early debt extinguishment related to convertible debt are excluded because they are non-cash in nature.
•
Significant charges or credits associated with judgments, rulings and/or settlements related to travel transaction tax (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.) proceedings, including the reversal of previously accrued travel transaction taxes (including estimated interest and penalties) of $16.4 million recorded in the 1st quarter of 2015 related to a favorable ruling in the State of Hawaii, are excluded because the amount and timing of these items are unpredictable, are not driven by core operating results and render comparisons with prior periods less meaningful. There were no such charges or credits in the six months ended June 30, 2014.
•
Income tax expense is adjusted for the tax impact of certain of the non-GAAP adjustments described above and to exclude tax expense recorded where no actual tax payments are owed because of available net operating loss carryforwards.
•
For calculating non-GAAP net income per share:
◦
net income is adjusted for the impact of the non-GAAP adjustments described above; and
◦
additional unvested restricted stock units and performance share units are included in the calculation of non-GAAP net income per share because non-GAAP net income has been adjusted to exclude stock-based employee compensation expense.

3 of 10


The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States. The attached financial and statistical supplement reconciles non-GAAP financial information with the Group's financial results under GAAP.
About The Priceline Group
The Priceline Group Inc. (NASDAQ: PCLN) is a leading provider of online travel and travel related reservation and search services, provided to consumers and local partners in over 200 countries through six primary brands: Booking.com, priceline.com, KAYAK, agoda.com, rentalcars.com and OpenTable.
For more information, visit pricelinegroup.com.

###
For Press Information: Leslie Cafferty (203) 299-8128 [email protected]
For Investor Relations: Matthew Tynan (203) 299-8487 [email protected]


4 of 10



The Priceline Group Inc.
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

 
 
June 30,
2015
 
December 31,
2014
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
1,888,949

 
$
3,148,651

Restricted cash
 
1,052

 
843

Short-term investments
 
1,299,127

 
1,142,182

Accounts receivable, net of allowance for doubtful accounts of $22,186 and $14,212, respectively
 
889,868

 
643,894

Prepaid expenses and other current assets
 
508,410

 
178,050

Deferred income taxes
 
106,065

 
153,754

Total current assets
 
4,693,471

 
5,267,374

Property and equipment, net
 
246,102

 
198,953

Intangible assets, net
 
2,246,629

 
2,334,761

Goodwill
 
3,366,396

 
3,326,474

Long-term investments
 
6,395,468

 
3,755,653

Other assets
 
79,280

 
57,348

Total assets
 
$
17,027,346

 
$
14,940,563

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
367,221

 
$
281,480

Accrued expenses and other current liabilities
 
903,641

 
600,758

Deferred merchant bookings
 
660,272

 
460,558

Convertible debt
 
—

 
37,195

Total current liabilities
 
1,931,134

 
1,379,991

Deferred income taxes
 
991,882

 
1,040,260

Other long-term liabilities
 
146,399

 
103,533

Long-term debt
 
5,399,966

 
3,849,756

Total liabilities
 
8,469,381

 
6,373,540

 
 
 
 
 
Convertible debt
 
—

 
329

 
 
 
 
 
Stockholders' equity:
 
 

 
 

Common stock, $0.008 par value; authorized 1,000,000,000 shares, 61,995,793 and 61,821,097 shares issued, respectively
 
482

 
480

Treasury stock, 10,863,246 and 9,888,024 shares, respectively
 
(3,900,011
)
 
(2,737,585
)
Additional paid-in capital
 
5,009,753

 
4,923,196

Accumulated earnings
 
7,490,864

 
6,640,505

Accumulated other comprehensive loss
 
(43,123
)
 
(259,902
)
Total stockholders' equity
 
8,557,965

 
8,566,694

Total liabilities and stockholders' equity
 
$
17,027,346

 
$
14,940,563





5 of 10


The Priceline Group Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Agency revenues
 
$
1,582,153

 
$
1,474,396

 
$
2,781,501

 
$
2,515,540

Merchant revenues
 
546,013

 
567,253

 
1,040,688

 
1,094,251

Advertising and other revenues
 
152,231

 
81,926

 
298,902

 
155,586

Total revenues
 
2,280,397

 
2,123,575

 
4,121,091

 
3,765,377

Cost of revenues
 
187,491

 
240,579

 
355,949

 
475,910

Gross profit
 
2,092,906

 
1,882,996

 
3,765,142

 
3,289,467

Operating expenses:
 
 

 
 

 
 

 
 

Advertising — Online
 
770,818

 
639,655

 
1,414,034

 
1,160,503

Advertising — Offline
 
66,303

 
58,026

 
129,885

 
111,500

Sales and marketing
 
94,523

 
75,053

 
176,467

 
139,364

Personnel, including stock-based compensation of $60,164, $35,168, $114,172 and $73,971, respectively
 
289,156

 
221,852

 
548,140

 
416,383

General and administrative
 
98,945

 
91,067

 
199,123

 
164,048

Information technology
 
27,156

 
24,042

 
52,517

 
47,266

Depreciation and amortization
 
67,674

 
40,287

 
132,676

 
78,663

Total operating expenses
 
1,414,575

 
1,149,982

 
2,652,842

 
2,117,727

Operating income
 
678,331

 
733,014

 
1,112,300

 
1,171,740

Other income (expense):
 
 

 
 

 
 

 
 

Interest income
 
13,037

 
1,634

 
24,633

 
2,675

Interest expense
 
(41,547
)
 
(17,106
)
 
(75,026
)
 
(34,851
)
Foreign currency transactions and other
 
(1,444
)
 
(1,777
)
 
(6,287
)
 
(7,746
)
Total other income (expense)
 
(29,954
)
 
(17,249
)
 
(56,680
)
 
(39,922
)
Earnings before income taxes
 
648,377

 
715,765

 
1,055,620

 
1,131,818

Income tax expense
 
131,345

 
139,314

 
205,261

 
224,149

Net income
 
$
517,032

 
$
576,451

 
$
850,359

 
$
907,669

Net income applicable to common stockholders per basic common share
 
$
10.02

 
$
11.00

 
$
16.43

 
$
17.36

Weighted-average number of basic common shares outstanding
 
51,589

 
52,397

 
51,748

 
52,275

Net income applicable to common stockholders per diluted common share
 
$
9.94

 
$
10.89

 
$
16.27

 
$
17.12

Weighted-average number of diluted common shares outstanding
 
52,038

 
52,955

 
52,253

 
53,004




6 of 10


The Priceline Group Inc.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
 
Six Months Ended
June 30,
 
 
2015
 
2014
OPERATING ACTIVITIES:
 
 

 
 

Net income
 
$
850,359

 
$
907,669

Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 

Depreciation
 
46,695

 
32,889

Amortization
 
85,981

 
45,774

Provision for uncollectible accounts, net
 
13,233

 
8,122

Deferred income taxes
 
(41,577
)
 
26,070

Stock-based compensation expense and other stock-based payments
 
115,269

 
75,151

Amortization of debt issuance costs
 
4,218

 
2,585

Amortization of debt discount
 
33,211

 
24,259

Loss on early extinguishment of debt
 
3

 
6,129

Changes in assets and liabilities:
 
 

 
 

Accounts receivable
 
(287,940
)
 
(312,959
)
Prepaid expenses and other current assets
 
(300,482
)
 
(263,963
)
Accounts payable, accrued expenses and other current liabilities
 
405,818

 
312,925

Other
 
(13,429
)
 
2,334

Net cash provided by operating activities
 
911,359

 
866,985

 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
Purchase of investments
 
(4,686,507
)
 
(4,305,033
)
Proceeds from sale of investments
 
2,231,926

 
6,078,411

Additions to property and equipment
 
(84,351
)
 
(61,986
)
Acquisitions and other investments, net of cash acquired
 
(45,937
)
 
(101,050
)
Proceeds from foreign currency contracts
 
453,818

 
9,029

Payments on foreign currency contracts
 
(448,640
)
 
(78,866
)
Change in restricted cash
 
(225
)
 
(5,194
)
Net cash (used in) provided by investing activities
 
(2,579,916
)
 
1,535,311

 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
Proceeds from the issuance of long-term debt
 
1,619,951

 
—

Payment of debt issuance costs
 
(13,272
)
 
—

Payments related to conversion of senior notes
 
(147,629
)
 
(117,830
)
Repurchase of common stock
 
(986,581
)
 
(97,326
)
Proceeds from exercise of stock options
 
12,825

 
9,686

Excess tax benefits on stock-based compensation
 
68,241

 
12,222

Net cash provided by (used in) financing activities
 
553,535

 
(193,248
)
Effect of exchange rate changes on cash and cash equivalents
 
(144,680
)
 
4,857

Net (decrease) increase in cash and cash equivalents
 
(1,259,702
)
 
2,213,905

Cash and cash equivalents, beginning of period
 
3,148,651

 
1,289,994

Cash and cash equivalents, end of period
 
$
1,888,949

 
$
3,503,899

SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
 
Cash paid during the period for income taxes
 
$
472,350

 
$
385,506

Cash paid during the period for interest
 
$
13,537

 
$
8,080

Non-cash investing activity for contingent consideration
 
$
9,170

 
$
24,377

Non-cash financing activity for acquisitions
 
$
—

 
$
5,584


7 of 10


The Priceline Group Inc.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)

RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
 
$
2,092,906

 
$
1,882,996

 
$
3,765,142

 
$
3,289,467

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
—

 
—

 
(16,404
)
 
—

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Gross profit
 
$
2,092,906

 
$
1,882,996

 
$
3,748,738

 
$
3,289,467

 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income
 
$
678,331

 
$
733,014

 
$
1,112,300

 
$
1,171,740

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
—

 
—

 
(16,404
)
 
—

(b)
Stock-based employee compensation
 
60,164

 
35,168

 
114,172

 
73,971

(c)
Amortization of intangible assets
 
42,653

 
22,950

 
85,981

 
45,773

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Operating income
 
$
781,148

 
$
791,132

 
$
1,296,049

 
$
1,291,484

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Operating income as a % of Non-GAAP Gross profit
 
37.3
%
 
42.0
%
 
34.6
%
 
39.3
%
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Net income applicable to common stockholders
 
$
517,032

 
$
576,451

 
$
850,359

 
$
907,669

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
—

 
—

 
(16,404
)
 
—

(b)
Stock-based employee compensation
 
60,164

 
35,168

 
114,172

 
73,971

(d)
Depreciation and amortization
 
67,674

 
40,287

 
132,676

 
78,663

(e)
Interest income
 
(13,037
)
 
(1,634
)
 
(24,633
)
 
(2,675
)
(e)
Interest expense
 
41,547

 
17,106

 
75,026

 
34,851

(f)
Loss on early extinguishment of convertible debt
 
—

 
2,733

 
3

 
6,129

(g)
Income tax expense
 
131,345

 
139,314

 
205,261

 
224,149

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
804,725

 
$
809,425

 
$
1,336,460

 
$
1,322,757

 
 
 


 


 


 



8 of 10


The Priceline Group Inc.
UNAUDITED RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL INFORMATION
(In thousands, except per share data)

RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Net income applicable to common stockholders
 
$
517,032

 
$
576,451

 
$
850,359

 
$
907,669

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
—

 
—

 
(16,404
)
 
—

(b)
Stock-based employee compensation
 
60,164

 
35,168

 
114,172

 
73,971

(c)
Amortization of intangible assets
 
42,653

 
22,950

 
85,981

 
45,773

(f)
Debt discount amortization related to convertible debt
 
15,575

 
11,189

 
31,350

 
22,947

(f)
Loss on early extinguishment of convertible debt
 
—

 
2,733

 
3

 
6,129

(h)
Adjustments for the tax impact of certain of the Non-GAAP adjustments and to exclude non-cash income taxes
 
17,558

 
18,609

 
16,048

 
27,088

 
Non-GAAP Net income applicable to common stockholders
 
$
652,982

 
$
667,100

 
$
1,081,509

 
$
1,083,577

 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED COMMON SHARE
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average number of diluted common shares outstanding
 
52,038

 
52,955

 
52,253

 
53,004

(i)
Adjustment for unvested restricted stock units and performance share units
 
430

 
371

 
375

 
328

 
Non-GAAP weighted-average number of diluted common shares outstanding
 
52,468

 
53,326

 
52,628

 
53,332

 
Net income applicable to common stockholders per diluted common share
 
 
 
 
 
 
 
 
 
GAAP
 
$
9.94

 
$
10.89

 
$
16.27

 
$
17.12

 
Non-GAAP
 
$
12.45

 
$
12.51

 
$
20.55

 
$
20.32

 
 
 (a)
Adjustment for travel transaction taxes (including estimated interest and penalties) related to a favorable ruling in the State of Hawaii is recorded in Cost of revenues.
 (b)
Stock-based employee compensation is recorded in Personnel expense.
 (c)
Amortization of intangible assets is recorded in Depreciation and amortization.
 (d)
Depreciation and amortization are excluded from Net income to calculate Adjusted EBITDA.
 (e)
Interest income and Interest expense are excluded from Net income to calculate Adjusted EBITDA.
 (f)
Non-cash interest expense related to the amortization of debt discount and loss on early extinguishment of convertible debt are recorded in Interest expense and Foreign currency transactions and other, respectively.
 (g)
Income tax expense is excluded from Net income to calculate Adjusted EBITDA.
 (h)
Adjustments for the tax impact of certain of the non-GAAP adjustments and to exclude non-cash income taxes.
(i)
Additional shares related to unvested restricted stock units and performance share units are included in the calculation of non-GAAP net income per share because non-GAAP net income has been adjusted to exclude employee stock-based compensation expense.
 
 
 
For a more detailed discussion of the adjustments described above, please see the section in our press release entitled "Non-GAAP Financial Measures" which provides a definition and information about the use of non-GAAP financial measures.

9 of 10


The Priceline Group Inc.
Statistical Data
In millions
(Unaudited)
Gross Bookings
 
2Q13
 
3Q13
 
4Q13
 
1Q14
 
2Q14
 
3Q14
 
4Q14
 
1Q15
 
2Q15
International
 
$
8,579

 
$
9,179

 
$
7,758

 
$
10,643

 
$
11,682

 
$
12,080

 
$
9,233

 
$
12,104

 
$
13,092

U.S.
 
1,538

 
1,586

 
1,379

 
1,637

 
1,856

 
1,743

 
1,426

 
1,672

 
1,868

Total
 
$
10,118

 
$
10,765

 
$
9,138

 
$
12,280

 
$
13,538

 
$
13,823

 
$
10,659

 
$
13,775

 
$
14,960

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
$
8,425

 
$
9,023

 
$
7,576

 
$
10,516

 
$
11,581

 
$
11,821

 
$
8,974

 
$
11,908

 
$
12,867

Merchant
 
1,692

 
1,742

 
1,562

 
1,764

 
1,957

 
2,002

 
1,685

 
1,867

 
2,094

Total
 
$
10,118

 
$
10,765

 
$
9,138

 
$
12,280

 
$
13,538

 
$
13,823

 
$
10,659

 
$
13,775

 
$
14,960

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year/Year Growth
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International
 
44.1
%
 
41.8
%
 
41.2
%
 
36.8
%
 
36.2
%
 
31.6
%
 
19.0
 %
 
13.7
 %
 
12.1
%
excluding F/X impact
 
44
%
 
41
%
 
42
%
 
38
%
 
35
%
 
32
%
 
27
 %
 
29
 %
 
30
%
U.S.
 
11.7
%
 
16.7
%
 
26.5
%
 
19.5
%
 
20.6
%
 
9.9
%
 
3.4
 %
 
2.1
 %
 
0.7
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
39.7
%
 
40.5
%
 
42.9
%
 
37.5
%
 
37.4
%
 
31.0
%
 
18.5
 %
 
13.2
 %
 
11.1
%
Merchant
 
30.3
%
 
23.7
%
 
21.8
%
 
17.2
%
 
15.7
%
 
15.0
%
 
7.9
 %
 
5.8
 %
 
7.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
38.0
%
 
37.5
%
 
38.8
%
 
34.2
%
 
33.8
%
 
28.4
%
 
16.7
 %
 
12.2
 %
 
10.5
%
excluding F/X impact
 
38
%
 
36
%
 
39
%
 
35
%
 
32
%
 
29
%
 
23
 %
 
26
 %
 
26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Units Sold
 
2Q13
 
3Q13
 
4Q13
 
1Q14
 
2Q14
 
3Q14
 
4Q14
 
1Q15
 
2Q15
Hotel Room-Nights
 
69.4

 
74.8

 
63.1

 
83.4

 
89.6

 
94.8

 
78.2

 
104.6

 
113.1

Year/Year Growth
 
38.2
%
 
35.6
%
 
36.5
%
 
32.0
%
 
29.2
%
 
26.7
%
 
24.0
 %
 
25.4
 %
 
26.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Car Days
 
12.5

 
12.0

 
9.5

 
12.3

 
14.3

 
14.2

 
11.0

 
14.6

 
17.2

Year/Year Growth
 
46.3
%
 
27.5
%
 
32.3
%
 
24.6
%
 
14.4
%
 
18.1
%
 
16.1
 %
 
18.0
 %
 
20.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airline Tickets
 
1.7

 
1.8

 
1.8

 
2.0

 
2.1

 
2.0

 
1.7

 
2.0

 
2.1

Year/Year Growth
 
1.8
%
 
8.6
%
 
28.1
%
 
22.6
%
 
22.3
%
 
8.0
%
 
(4.0
)%
 
(3.2
)%
 
0.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2Q13
 
3Q13
 
4Q13
 
1Q14
 
2Q14
 
3Q14
 
4Q14
 
1Q15
 
2Q15
Revenue
 
$
1,680.2

 
$
2,269.9

 
$
1,541.2

 
$
1,641.8

 
$
2,123.6

 
$
2,836.5

 
$
1,840.1

 
$
1,840.7

 
$
2,280.4

Year/Year Growth
 
26.6
%
 
33.0
%
 
29.4
%
 
26.1
%
 
26.4
%
 
25.0
%
 
19.4
 %
 
12.1
 %
 
7.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
$
1,383.9

 
$
1,989.1

 
$
1,333.3

 
$
1,406.5

 
$
1,883.0

 
$
2,620.0

 
$
1,674.7

 
$
1,672.2

 
$
2,092.9

Year/Year Growth
 
37.8
%
 
42.4
%
 
41.9
%
 
39.3
%
 
36.1
%
 
31.7
%
 
25.6
 %
 
18.9
 %
 
11.1
%

Amounts may not total due to rounding.

Gross bookings is an operating and statistical metric that captures the total dollar value, generally inclusive of taxes and fees, of all travel services booked by our customers. International gross bookings consist of the gross bookings of Booking.com, agoda.com and rentalcars.com, in each case regardless of where the consumer is resident, from where the consumer makes a reservation or where the travel service is provided.

10 of 10

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