Priceline Com Inc
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PRICELINE COM INC FORM 10-K (Annual Report) Filed 02/27/12 for the Period Ending 12/31/11 Address 800 CONNECTICUT AVE NORWALK, CT 06854 Telephone 203-299-8000 CIK 0001075531 Symbol PCLN SIC Code 7389 - Business Services, Not Elsewhere Classified Industry Business Services Sector Services Fiscal Year 12/31 http://www.edgar-online.com © Copyright 2012, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. Table of Contents 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, 2011 Commission File No.: 0-25581 priceline.com Incorporated (Exact name of Registrant as specified in its charter) Delaware (State or other Jurisdiction of Incorporation or 06-1528493 Organization) (I.R.S. Employer Identification No.) 800 Connecticut Avenue Norwalk, Connecticut 06854 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (203) 299-8000 _____________________________________________________________________________________________ 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 Global Select Market 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 No 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 No 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 No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No 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. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No The aggregate market value of common stock held by non-affiliates of priceline.com Incorporated as of June 30, 2011 was approximately $25.2 billion based upon the closing price reported for such date on the Nasdaq Global Select Market. For purposes of this disclosure, shares of common stock held by executive officers and directors of priceline.com Incorporated on June 30, 2011 have been excluded because such persons may be deemed to be affiliates of priceline.com Incorporated. This determination of affiliate status is not necessarily a conclusive determination for other purposes. The number of outstanding shares of priceline.com Incorporated’s common stock was 49,798,861 as of February 17, 2012. Table of Contents 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 Incorporated’s definitive proxy statement relating to the annual meeting of stockholders to be held on June 7, 2012, to be filed with the Securities and Exchange Commission within 120 days after the end of priceline.com Incorporated’s fiscal year ended December 31, 2011. priceline.com Incorporated Annual Report on Form 10-K for the Year Ended December 31, 2011 Index Page No. Special Note Regarding Forward Looking Statements 1 PART I 1 Item 1. Business 1 Item 1A. Risk Factors 10 Item 1B. Unresolved Staff Comments 23 Item 2. Properties 23 Item 3. Legal Proceedings 23 Item 4. Mine Safety Disclosures 29 PART II 29 Item 5. Market for Registrant ’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. Selected Financial Data 32 Item 7. Management ’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 56 Item 8. Financial Statements and Supplementary Data 57 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 57 Item 9A. Controls and Procedures 57 Item 9B. Other Information 58 PART III 59 Item 10. Directors, Executive Officers and Corporate Governance 59 Item 11. Executive Compensation 59 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 59 Item 13. Certain Relationships and Related Transactions, and Director Independence 59 Item 14. Principal Accountant Fees and Services 59 PART IV 60 Item 15. Exhibits and Financial Statement Schedules 60 Signatures 64 Consolidated Financial Statements 66 Table of Contents 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 forecast 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. Our actual results could differ materially from those described in the forward-looking statements for various reasons including the risks we face which are more fully described in Item 1A, "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 Securities and Exchange Commission (the "SEC" or the "Commission"), particularly our quarterly reports on Form 10-Q and current reports on Form 8-K. PART I Item 1. Business General Priceline.com Incorporated is a leading online travel company that offers our customers hotel room reservations at over 210,000 hotels worldwide through the Booking.com, priceline.com and Agoda brands. In the United States, we also offer our customers reservations for car rentals, airline tickets, vacation packages, destination services and cruises through the priceline.com brand. We offer car rental reservations worldwide through rentalcars.com (formerly known as TravelJigsaw), which we acquired in May 2010. We refer to Booking.com, priceline.com, Agoda and rentalcars.com collectively as the "Priceline Group," the "Company," "we," "our" or "us." We launched our business in the United States in 1998 under the priceline.com brand and have since expanded our operations to include the Booking.com, Agoda and rentalcars.com companies. Our principal goal is to serve our customers with worldwide leadership in online hotel and rental car reservations. Our business is driven primarily by international results. During the year ended December 31, 2011, our international business (the significant majority of which is generated by Booking.com) represented approximately 78% of our gross bookings (an operating and statistical metric referring to the total dollar value, generally inclusive of all taxes and fees, of all travel services purchased by our customers), and approximately 88% of our consolidated operating income. Given that the business of our international operations is primarily comprised of hotel reservation services, gross profit earned in connection with the reservation of hotel room nights represents a substantial majority of our gross profit. Our priceline.com brand in the U.S. offers merchant Name Your Own Price ® travel services (sometimes referred to as "opaque" travel services), which are recorded