FORM 10−K PRICELINE COM INC − PCLN Filed: March 01, 2007 (Period: December 31, 2006)
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FORM 10−K PRICELINE COM INC − PCLN Filed: March 01, 2007 (period: December 31, 2006) Annual report which provides a comprehensive overview of the company for the past year Table of Contents PART I Item 1. Business 1 PART I Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Submission of Matters to a Vote of Security Holders PART II Item 5. Market for Registrant s Common Equity, Related Stockholder Matters and Issuer Purchases of E Item 6. Selected Financial Data Item 7. Management s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information PART III Item 10. Directors; Executive Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matt Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services PART IV Item 15. Exhibits, Financial Statement Schedules. Signatures INDEX TO EXHIBITS EX−12.1 (EX−12.1) EX−21 (EX−21) EX−23.1 (EX−23.1) EX−31.1 (EX−31.1) EX−31.2 (EX−31.2) EX−32.1 (EX−32.1) EX−32.2 (EX−32.2) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10−K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2006 Commission File No.: 0−25581 priceline.com Incorporated (Exact name of Registrant as specified in its charter) Delaware 06−1528493 (State or other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.) 800 Connecticut Avenue Norwalk, Connecticut 06854 (Address of Principal Executive Offices) (Zip Code) (203) 299−8000 Registrant’s telephone number, including area code: Securities Registered Pursuant to Section 12(b) of the Act: Title of Each Class: Name of Each Exchange on which Registered: Common Stock, par value $0.008 per share The NASDAQ Stock Market LLC Securities Registered Pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well−known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S−K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10−K or any amendment to this Form 10−K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non−accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b−2 of the Exchange Act (Check one): Large accelerated filer x Accelerated filer o Non−accelerated filer o Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b−2 of the Act). Yes o No x Source: PRICELINE COM INC, 10−K, March 01, 2007 The aggregate market value of common stock held by non−affiliates of priceline.com as of June 30, 2006 was approximately $797 million based upon the closing price reported for such date on the Nasdaq National Market. For purposes of this disclosure, shares of common stock held by executive officers and directors of priceline.com on June 30, 2006 have been excluded because such persons may be deemed to be affiliates of priceline.com. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of priceline.com’s common stock was 37,585,373 as of February 15, 2007. Source: PRICELINE COM INC, 10−K, March 01, 2007 DOCUMENTS INCORPORATED BY REFERENCE The information required by Part III of this Annual Report on Form 10−K, to the extent not set forth in this Form 10−K, is incorporated herein by reference from priceline.com’s definitive proxy statement relating to the annual meeting of stockholders to be held on June 6, 2007, to be filed with the Securities and Exchange Commission within 120 days after the end of priceline.com’s fiscal year ended December 31, 2006. priceline.com Incorporated Annual Report on Form 10−K for the Year Ended December 31, 2006 Index Page No. Special Note Regarding Forward Looking Statements 1 PART I Item 1. Business 1 Item 1A. Risk Factors 15 Item 1B. Unresolved Staff Comments 32 Item 2. Properties 32 Item 3. Legal Proceedings 32 Item 4. Submission of Matters to a Vote of Security Holders 44 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 45 Item 6. Selected Financial Data 48 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 49 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 76 Item 8. Financial Statements and Supplementary Data 77 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 77 Item 9A. Controls and Procedures 77 Item 9B. Other Information 78 PART III Item 10. Directors; Executive Officers and Corporate Governance 79 Item 11. Executive Compensation 79 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 79 Item 13. Certain Relationships and Related Transactions, and Director Independence 79 Item 14. Principal Accounting Fees and Services 79 PART IV Item 15. Exhibits, Financial Statement Schedules 80 Signatures 84 Consolidated Financial Statements 86 Source: PRICELINE COM INC, 10−K, March 01, 2007 Special Note Regarding Forward−Looking Statements This Annual Report on Form 10−K and the documents incorporated herein by reference contain forward−looking statements. These forward−looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including the Risk Factors identified in Item 1A of this Annual Report; therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward−looking statements. Expressions of future goals, expectations and similar expressions including, without limitation, “may,” “will,” “should,” “could,” “expects,” “does not currently expect,” “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 our 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 as the result of, among other things, terrorist attacks, natural disasters, or the outbreak of an epidemic or pandemic disease; adverse changes in our relationships with airlines and other product and service providers which could include, without limitation, the withdrawal of suppliers from the priceline.com system (either priceline.com’s retail or “opaque” services, or both); the loss or reduction of global distribution fees; the bankruptcy or insolvency of another major domestic airline; the effects of increased competition; systems−related failures and/or security breaches, including without limitation, any security breach that results in the theft, transfer or unauthorized disclosure of customer information, or the failure to comply with various state laws applicable to the company’s obligations in the event of such a breach; difficulties integrating recent acquisitions, such as Booking.com Limited (formerly known as Active Hotels Ltd.) and Booking.com B.V. (formerly known as Bookings B.V.), including, ensuring the effectiveness of the design and operation of internal controls and disclosure controls of acquired businesses; a change by a major search engine to its search engine algorithms that negatively affects the search engine ranking of the company or its third party distribution partners; legal and regulatory risks; and the ability to attract and retain qualified personnel. These factors and others are described in more detail below under the heading “Risk Factors.” Unless required by law, we undertake no obligation to update publicly any forward−looking statements, whether as a result of new information, future events or otherwise. However, readers should carefully review the reports and documents we file or furnish from time to time with the SEC, particularly our quarterly reports on Form 10−Q and current reports on Form 8−K. PART I Item 1. Business General We are a leading online travel company that offers our customers a broad range of travel services, including airline tickets, hotel rooms, car rentals, vacation packages, cruises and destination services. We offer our customers