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Form 8-K Priceline Group Inc. For: Nov 06

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November 9, 2015 7:17 AM EST


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) November 9, 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 November 9, 2015, The Priceline Group Inc. announced its financial results for the quarter ended September 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 September 30, 2015, unaudited consolidated statements of operations for the three and nine months ended September 30, 2015 and unaudited consolidated statement of cash flows for the nine months ended September 30, 2015, are included in the financial and statistical supplement attached to the press release.  The unaudited consolidated balance sheet at September 30, 2015, unaudited consolidated statements of operations for the three and nine months ended September 30, 2015 and unaudited consolidated statement of cash flows for the nine months ended September 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 November 9, 2015 relating to, among other things, its third quarter 2015 earnings. The unaudited consolidated balance sheet at September 30, 2015 and unaudited consolidated statement of operations for the three and nine months ended September 30, 2015 and unaudited consolidated statement of cash flows for the nine months ended September 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:  November 9, 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 November 9, 2015 relating to, among other things, its third quarter 2015 earnings.








Exhibit 99.1
The Priceline Group Reports Financial Results for 3rd Quarter 2015
NORWALK, CT – November 9, 2015. . . The Priceline Group Inc. (NASDAQ: PCLN) today reported its 3rd quarter 2015 financial results. Third 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 $14.8 billion, an increase of 7% over a year ago (approximately 22% on a constant currency basis).
The Group's gross profit for the 3rd quarter was $2.9 billion, a 12% increase from the prior year (approximately 29% on a constant currency basis). International operations contributed gross profit in the 3rd quarter of $2.6 billion, an 11% increase versus a year ago (approximately 29% on a constant currency basis). The Group had GAAP net income applicable to common shareholders for the 3rd quarter of $1.2 billion, or $23.41 per diluted share, which compares to $1.1 billion or $20.03 per diluted share, in the same period a year ago.
Non-GAAP net income in the 3rd quarter was $1.3 billion, a 10% increase versus the prior year. Non-GAAP net income was $25.35 per diluted share, compared to $22.16 per diluted share a year ago. FactSet consensus for the 3rd quarter 2015 was $24.21 per diluted share. Adjusted EBITDA for the 3rd quarter 2015 was $1.6 billion, an increase of 12% 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 delivered strong growth and operating results during its high travel season,” said Darren Huston, President and CEO of The Priceline Group. “Globally, our accommodation business booked a record 116 million room nights in the 3rd quarter, up 22% over the same period last year.  Gross profit grew 29% on a constant currency basis.  Booking.com showed continued positive momentum with over 820,000 properties on its platform, up 38% over last year.  This represents over 21 million potentially bookable rooms, the largest, and most diverse, selection of directly bookable accommodations in the world.”
Looking forward, Mr. Huston said, “The Group’s mission is to help people experience the world.  We continue to be the most valuable platform in the world exclusively dedicated to this pursuit.  We will continue to focus on making the right investments across our six brands - in people, systems, and demand - to continue to profitably grow our business.”
The Priceline Group said it was targeting the following for 4th quarter 2015:
•
Year-over-year increase in total gross travel bookings of approximately 1% - 8% (an increase of approximately 13% - 20% on a constant currency basis).
•
Year-over-year increase in international gross travel bookings of approximately 3% - 10% (an increase of approximately 17% - 24% on a constant currency basis).
•
U.S. gross travel bookings are expected to decrease by 5% - 10% as compared to 4th 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 14% - 21% on a constant currency basis).
•
Adjusted EBITDA of approximately $710 million to $760 million.
•
Non-GAAP net income per diluted share between $11.10 and $11.90.

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Non-GAAP guidance for the 4th quarter 2015:
•
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 $1.07 per Euro and $1.51 per British Pound for the remainder of the quarter, which results in average exchange rates for the quarter that would be 13% weaker for the Euro and 4% 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 $265 million in the 4th quarter 2015. In addition, the non-GAAP adjustments are expected to increase non-GAAP net income over GAAP net income by approximately $104 million in the 4th quarter 2015. The Group estimates GAAP net income per diluted share between $9.10 and $9.90 for the 4th 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

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-- tax, legal and regulatory risks.
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 nine months ended September 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 net reversal of previously accrued travel transaction taxes (including estimated interest and penalties) of $13.7 million and $30.1 million, in the three and nine months ended September 30, 2015, respectively, principally 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 either the three or nine months ended September 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

3 of 10


calculation of non-GAAP net income per share because non-GAAP net income has been adjusted to exclude stock-based employee compensation expense.
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 (NASDAQ: PCLN) is the world leader in online travel and related services, provided to customers and partners in over 200 countries through six primary brands - Booking.com, priceline.com , KAYAK, agoda.com, rentalcars.com, and OpenTable. The Priceline Group’s mission is to help people experience the world.  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]


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

 
 
September 30,
2015
 
December 31,
2014
ASSETS
 
 

 
 

Current assets:
 
 

 
 

Cash and cash equivalents
 
$
1,841,658

 
$
3,148,651

Restricted cash
 
827

 
843

Short-term investments
 
1,211,184

 
1,142,182

Accounts receivable, net of allowance for doubtful accounts of $17,149 and $14,212, respectively
 
890,532

 
643,894

Prepaid expenses and other current assets
 
264,256

 
178,050

Deferred income taxes
 
90,500

 
153,754

Total current assets
 
4,298,957

 
5,267,374

Property and equipment, net
 
257,135

 
198,953

Intangible assets, net
 
2,203,270

 
2,334,761

Goodwill
 
3,386,519

 
3,326,474

Long-term investments
 
6,327,630

 
3,755,653

Other assets
 
141,259

 
57,348

Total assets
 
$
16,614,770

 
$
14,940,563

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 

 
 

Current liabilities:
 
 

 
 

Accounts payable
 
$
388,528

 
$
281,480

Accrued expenses and other current liabilities
 
780,784

 
600,758

Deferred merchant bookings
 
413,495

 
460,558

Convertible debt
 
—

 
37,195

Total current liabilities
 
1,582,807

 
1,379,991

Deferred income taxes
 
952,388

 
1,040,260

Other long-term liabilities
 
131,474

 
103,533

Long-term debt
 
5,421,328

 
3,849,756

Total liabilities
 
8,087,997

 
6,373,540

 
 
 
 
 
Convertible debt
 
—

 
329

 
 
 
 
 
Stockholders' equity:
 
 

 
 

Common stock, $0.008 par value; authorized 1,000,000,000 shares, 62,026,743 and 61,821,097 shares issued, respectively
 
482

 
480

Treasury stock, 11,847,933 and 9,888,024 shares, respectively
 
(5,073,400
)
 
(2,737,585
)
Additional paid-in capital
 
5,097,560

 
4,923,196

Accumulated earnings
 
8,687,596

 
6,640,505

Accumulated other comprehensive loss
 
(185,465
)
 
(259,902
)
Total stockholders' equity
 
8,526,773

 
8,566,694

Total liabilities and stockholders' equity
 
$
16,614,770

 
$
14,940,563





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

 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
Agency revenues
 
$
2,345,673

 
$
2,099,629

 
$
5,127,174

 
$
4,615,169

Merchant revenues
 
596,503

 
613,535

 
1,637,191

 
1,707,786

Advertising and other revenues
 
160,725

 
123,333

 
459,627

 
278,919

Total revenues
 
3,102,901

 
2,836,497

 
7,223,992

 
6,601,874

Cost of revenues
 
155,619

 
216,519

 
511,568

 
692,429

Gross profit
 
2,947,282

 
2,619,978

 
6,712,424

 
5,909,445

Operating expenses:
 
 

 
 

 
 

 
 

Advertising — Online
 
801,147

 
699,814

 
2,215,181

 
1,860,317

Advertising — Offline
 
51,440

 
71,593

 
181,325

 
183,093

Sales and marketing
 
93,069

 
86,092

 
269,536

 
225,456

Personnel, including stock-based compensation of $58,274, $46,136, $172,446 and $120,108, respectively
 
305,329

 
259,471

 
853,469

 
675,854

General and administrative
 
109,706

 
97,902

 
308,829

 
261,950

Information technology
 
28,830

 
24,802

 
81,347

 
72,068

Depreciation and amortization
 
69,054

 
57,599

 
201,730

 
136,262

Total operating expenses
 
1,458,575

 
1,297,273

 
4,111,417

 
3,415,000

Operating income
 
1,488,707

 
1,322,705

 
2,601,007

 
2,494,445

Other income (expense):
 
 

 
 

 
 

 
 

Interest income
 
14,682

 
2,490

 
39,315

 
5,165

Interest expense
 
(41,436
)
 
(22,953
)
 
(116,462
)
 
(57,804
)
Foreign currency transactions and other
 
(5,783
)
 
3,347

 
(12,070
)
 
(4,399
)
Total other income (expense)
 
(32,537
)
 
(17,116
)
 
(89,217
)
 
(57,038
)
Earnings before income taxes
 
1,456,170

 
1,305,589

 
2,511,790

 
2,437,407

Income tax expense
 
259,438

 
243,336

 
464,699

 
467,485

Net income
 
$
1,196,732

 
$
1,062,253

 
$
2,047,091

 
$
1,969,922

Net income applicable to common stockholders per basic common share
 
$
23.67

 
$
20.27

 
$
39.87

 
$
37.65

Weighted-average number of basic common shares outstanding
 
50,550

 
52,405

 
51,344

 
52,319

Net income applicable to common stockholders per diluted common share
 
$
23.41

 
$
20.03

 
$
39.40

 
$
37.13

Weighted-average number of diluted common shares outstanding
 
51,130

 
53,024

 
51,952

 
53,048




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

 
 

Net income
 
$
2,047,091

 
$
1,969,922

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

 
 

Depreciation
 
73,520

 
54,704

Amortization
 
128,210

 
81,558

Provision for uncollectible accounts, net
 
17,242

 
14,150

Deferred income taxes
 
(63,675
)
 
46,451

Stock-based compensation expense and other stock-based payments
 
174,068

 
122,120

Amortization of debt issuance costs
 
5,913

 
3,818

Amortization of debt discount
 
49,868

 
39,079

Loss on early extinguishment of debt
 
3

 
6,254

Changes in assets and liabilities:
 
 

 
 

Accounts receivable
 
(289,604
)
 
(353,357
)
Prepaid expenses and other current assets
 
(86,808
)
 
(35,341
)
Accounts payable, accrued expenses and other current liabilities
 
191,881

 
209,557

Other
 
(26,550
)
 
202

Net cash provided by operating activities
 
2,221,159

 
2,159,117

 
 
 
 
 
INVESTING ACTIVITIES:
 
 
 
 
Purchase of investments
 
(5,597,897
)
 
(7,327,635
)
Proceeds from sale of investments
 
3,180,981

 
9,703,032

Additions to property and equipment
 
(126,637
)
 
(90,725
)
Acquisitions and other investments, net of cash acquired
 
(135,664
)
 
(2,496,084
)
Proceeds from foreign currency contracts
 
453,818

 
14,354

Payments on foreign currency contracts
 
(448,640
)
 
(94,661
)
Change in restricted cash
 
—

 
9,309

Net cash used in investing activities
 
(2,674,039
)
 
(282,410
)
 
 
 
 
 
FINANCING ACTIVITIES:
 
 
 
 
Proceeds from revolving credit facility
 
—

 
995,000

Payments related to revolving credit facility
 
—

 
(995,000
)
Proceeds from the issuance of long-term debt
 
1,619,951

 
2,282,217

Payment of debt issuance costs
 
(13,507
)
 
(16,241
)
Payments related to conversion of senior notes
 
(147,629
)
 
(121,925
)
Repurchase of common stock
 
(2,267,384
)
 
(245,456
)
Payments of contingent consideration
 
(10,700
)
 
—

Proceeds from exercise of stock options
 
19,139

 
12,434

Excess tax benefits on stock-based awards
 
90,935

 
14,139

Net cash (used in) provided by financing activities
 
(709,195
)
 
1,925,168

Effect of exchange rate changes on cash and cash equivalents
 
(144,918
)
 
(48,145
)
Net (decrease) increase in cash and cash equivalents
 
(1,306,993
)
 
3,753,730

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

 
1,289,994

Cash and cash equivalents, end of period
 
$
1,841,658

 
$
5,043,724

SUPPLEMENTAL CASH FLOW INFORMATION:
 
 
 
 
Cash paid during the period for income taxes
 
$
499,421

 
$
412,185

Cash paid during the period for interest
 
$
50,400

 
$
14,531

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

 
$
13,310

Non-cash financing activity for acquisitions
 
$
—

 
$
13,752


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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
September 30,
 
Nine Months Ended
September 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Gross profit
 
$
2,947,282

 
$
2,619,978

 
$
6,712,424

 
$
5,909,445

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
(13,655
)
 
—

 
(30,059
)
 
—

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Gross profit
 
$
2,933,627

 
$
2,619,978

 
$
6,682,365

 
$
5,909,445

 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Operating income
 
$
1,488,707

 
$
1,322,705

 
$
2,601,007

 
$
2,494,445

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
(13,655
)
 
—

 
(30,059
)
 
—

(b)
Stock-based employee compensation
 
58,274

 
46,136

 
172,446

 
120,108

(c)
Amortization of intangible assets
 
42,229

 
35,784

 
128,210

 
81,558

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Operating income
 
$
1,575,555

 
$
1,404,625

 
$
2,871,604

 
$
2,696,111

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Operating income as a % of Non-GAAP Gross profit
 
53.7%
 
53.6%
 
43.0%
 
45.6%
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Net income applicable to common stockholders
 
$
1,196,732

 
$
1,062,253

 
$
2,047,091

 
$
1,969,922

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
(13,655
)
 
—

 
(30,059
)
 
—

(b)
Stock-based employee compensation
 
58,274

 
46,136

 
172,446

 
120,108

(d)
Depreciation and amortization
 
69,054

 
57,599

 
201,730

 
136,262

(e)
Interest income
 
(14,682
)
 
(2,490
)
 
(39,315
)
 
(5,165
)
(e)
Interest expense
 
41,436

 
22,953

 
116,462

 
57,804

(f)
Loss on early extinguishment of convertible debt
 
—

 
124

 
3

 
6,254

(g)
Income tax expense
 
259,438

 
243,336

 
464,699

 
467,485

 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
 
$
1,596,597

 
$
1,429,911

 
$
2,933,057

 
$
2,752,670

 
 
 


 


 


 



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
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP Net income applicable to common stockholders
 
$
1,196,732

 
$
1,062,253

 
$
2,047,091

 
$
1,969,922

 
 
 
 
 
 
 
 
 
 
(a)
Adjustment to exclude favorable impact of travel transaction tax judgments, rulings and settlements
 
(13,655
)
 
—

 
(30,059
)
 
—

(b)
Stock-based employee compensation
 
58,274

 
46,136

 
172,446

 
120,108

(c)
Amortization of intangible assets
 
42,229

 
35,784

 
128,210

 
81,558

(f)
Debt discount amortization related to convertible debt
 
15,703

 
14,133

 
47,053

 
37,080

(f)
Loss on early extinguishment of convertible debt
 
—

 
124

 
3

 
6,254

(h)
Adjustments for the tax impact of certain of the Non-GAAP adjustments and to exclude non-cash income taxes
 
4,959

 
24,016

 
21,007

 
51,103

 
Non-GAAP Net income applicable to common stockholders
 
$
1,304,242

 
$
1,182,446

 
$
2,385,751

 
$
2,266,025

 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME PER DILUTED COMMON SHARE
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
GAAP weighted-average number of diluted common shares outstanding
 
51,130

 
53,024

 
51,952

 
53,048

(i)
Adjustment for unvested restricted stock units and performance share units
 
319

 
338

 
278

 
293

 
Non-GAAP weighted-average number of diluted common shares outstanding
 
51,449

 
53,362

 
52,230

 
53,341

 
Net income applicable to common stockholders per diluted common share
 
 
 
 
 
 
 
 
 
GAAP
 
$
23.41

 
$
20.03

 
$
39.40

 
$
37.13

 
Non-GAAP
 
$
25.35

 
$
22.16

 
$
45.68

 
$
42.48

 
 
 (a)
Adjustment for travel transaction taxes (including estimated interest and penalties) principally 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
 
3Q13
 
4Q13
 
1Q14
 
2Q14
 
3Q14
 
4Q14
 
1Q15
 
2Q15
 
3Q15
International
 
$
9,179

 
$
7,758

 
$
10,643

 
$
11,682

 
$
12,080

 
$
9,233

 
$
12,104

 
$
13,092

 
$
13,078

U.S.
 
1,586

 
1,379

 
1,637

 
1,856

 
1,743

 
1,426

 
1,672

 
1,868

 
1,700

Total
 
$
10,765

 
$
9,138

 
$
12,280

 
$
13,538

 
$
13,823

 
$
10,659

 
$
13,775

 
$
14,960

 
$
14,778

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
$
9,023

 
$
7,576

 
$
10,516

 
$
11,581

 
$
11,821

 
$
8,974

 
$
11,908

 
$
12,867

 
$
12,850

Merchant
 
1,742

 
1,562

 
1,764

 
1,957

 
2,002

 
1,685

 
1,867

 
2,094

 
1,928

Total
 
$
10,765

 
$
9,138

 
$
12,280

 
$
13,538

 
$
13,823

 
$
10,659

 
$
13,775

 
$
14,960

 
$
14,778

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year/Year Growth
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International
 
41.8
%
 
41.2
%
 
36.8
%
 
36.2
%
 
31.6
%
 
19.0
 %
 
13.7
 %
 
12.1
%
 
8.3
 %
excluding F/X impact
 
41
%
 
42
%
 
38
%
 
35
%
 
32
%
 
27
 %
 
29
 %
 
30
%
 
25
 %
U.S.
 
16.7
%
 
26.5
%
 
19.5
%
 
20.6
%
 
9.9
%
 
3.4
 %
 
2.1
 %
 
0.7
%
 
(2.5
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency
 
40.5
%
 
42.9
%
 
37.5
%
 
37.4
%
 
31.0
%
 
18.5
 %
 
13.2
 %
 
11.1
%
 
8.7
 %
Merchant
 
23.7
%
 
21.8
%
 
17.2
%
 
15.7
%
 
15.0
%
 
7.9
 %
 
5.8
 %
 
7.0
%
 
(3.7
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total
 
37.5
%
 
38.8
%
 
34.2
%
 
33.8
%
 
28.4
%
 
16.7
 %
 
12.2
 %
 
10.5
%
 
6.9
 %
excluding F/X impact
 
36
%
 
39
%
 
35
%
 
32
%
 
29
%
 
23
 %
 
26
 %
 
26
%
 
22
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Units Sold
 
3Q13
 
4Q13
 
1Q14
 
2Q14
 
3Q14
 
4Q14
 
1Q15
 
2Q15
 
3Q15
Hotel Room-Nights
 
74.8

 
63.1

 
83.4

 
89.6

 
94.8

 
78.2

 
104.6

 
113.1

 
115.6

Year/Year Growth
 
35.6
%
 
36.5
%
 
32.0
%
 
29.2
%
 
26.7
%
 
24.0
 %
 
25.4
 %
 
26.2
%
 
22.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental Car Days
 
12.0

 
9.5

 
12.3

 
14.3

 
14.2

 
11.0

 
14.6

 
17.2

 
16.0

Year/Year Growth
 
27.5
%
 
32.3
%
 
24.6
%
 
14.4
%
 
18.1
%
 
16.1
 %
 
18.0
 %
 
20.1
%
 
13.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airline Tickets
 
1.8

 
1.8

 
2.0

 
2.1

 
2.0

 
1.7

 
2.0

 
2.1

 
2.0

Year/Year Growth
 
8.6
%
 
28.1
%
 
22.6
%
 
22.3
%
 
8.0
%
 
(4.0
)%
 
(3.2
)%
 
0.3
%
 
(1.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3Q13
 
4Q13
 
1Q14
 
2Q14
 
3Q14
 
4Q14
 
1Q15
 
2Q15
 
3Q15
Revenue
 
$
2,269.9

 
$
1,541.2

 
$
1,641.8

 
$
2,123.6

 
$
2,836.5

 
$
1,840.1

 
$
1,840.7

 
$
2,280.4

 
$
3,102.9

Year/Year Growth
 
33.0
%
 
29.4
%
 
26.1
%
 
26.4
%
 
25.0
%
 
19.4
 %
 
12.1
 %
 
7.4
%
 
9.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit
 
$
1,989.1

 
$
1,333.3

 
$
1,406.5

 
$
1,883.0

 
$
2,620.0

 
$
1,674.7

 
$
1,672.2

 
$
2,092.9

 
$
2,947.3

Year/Year Growth
 
42.4
%
 
41.9
%
 
39.3
%
 
36.1
%
 
31.7
%
 
25.6
 %
 
18.9
 %
 
11.1
%
 
12.5
 %

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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