Priceline.com Reports 3rd Quarter 2002 Results; Hotel Booked Offers Climb 37%; Cost-Reduction Initiatives Announced
NORWALK, Conn.--(BUSINESS WIRE)--Nov. 5, 2002--Priceline.com® (Nasdaq: PCLN) today reported a 3rd quarter 2002 loss of $24.3 million, or $0.11 per share, which includes non-cash charges of $24.2 million relating to impairment of the Company's investments in offshore licensees.
On a pro forma basis, the Company reported net income of $400,000 ($0.00 per share) on revenues of $240 million. The Company's pro forma EPS results were in line with guidance provided in July.
By comparison, in the 3rd quarter 2001 priceline.com had a GAAP net loss of $3.6 million, or $0.02 per share, on revenue of $302 million, and pro forma EPS of $0.03. For the nine months ended September 30, 2002, priceline.com had a GAAP net loss of $0.06 per share and pro forma EPS of $0.05, compared to a GAAP net loss of $0.07 per share and pro forma EPS of $0.06 for the first nine months of 2001.
Priceline.com reported pro forma EBITDA for the 3rd quarter 2002
of $4.5 million, compared to $8.4 million in the 3rd quarter 2001. Pro
forma net income and pro forma EBITDA are stated before restructuring,
special and severance charges, impairment of investments in offshore
licensees, stock-based compensation, option payroll tax and preferred
stock dividend. (The attached financial and statistical supplement
reconciles pro forma financial information with the Company's
financial results under GAAP). EBITDA is defined as earnings before
interest, taxes, depreciation and amortization.
Gross profit for the 3rd quarter 2002 was $37.7 million, compared to $50.4 million in the 3rd quarter 2001. Priceline.com ended the quarter with $152.5 million in cash and short-term investments. Quarter-over-quarter cash reductions resulted primarily from the repurchase of 5.4 million shares of priceline.com common stock in the quarter and changes in working capital associated with reduced sales of airline tickets. Priceline.com has no outstanding debt.
"The 3rd quarter 2002 was another strong quarter for priceline.com's hotel service," said priceline.com President and Co-CEO Jeffery H. Boyd. Priceline.com's hotel booked offers grew 37 percent year over year, with sales of more than 1 million room nights. Priceline.com's customer base grew to 15.4 million and repeat business for the quarter came in at a record 67.4 percent. (Repeat business is defined as the number of total unique purchase offers coming from repeat customers divided by the number of total unique purchase offers).
Priceline.com's 3rd quarter 2002 results reflect continued difficult conditions in the airline industry, which has been affected by heavy discounting of retail fares and weak results in September attributable, in part, to lower levels of travel around the anniversary of September 11th. "Amid increasing evidence that the growth of published discounting on the Internet is doing more harm (by reducing yields) than good (in the form of lower distribution costs), we continue to believe that our Name Your Own Price(SM) model provides the best non-dilutive model for airlines to move unsold inventory and increase load factors and revenues," said Mr. Boyd. "However, given the protracted nature of the airline industry's difficulties, we will continue to focus our resources on our hotel and vacation package businesses and on making discounted retail fares available to our customers through Lowestfare.com®."
In conjunction with that focus, priceline.com said it will reduce operating expenses through a repositioning of its non-travel businesses and a reduction in headcount and other expenses. Priceline.com's car service will continue to provide new- and used-car buying information and guaranteed quote requests through Autobytel and other marketing partners. Priceline.com's telecommunications service will continue to offer long distance calling plans, but will no longer sell Name Your Own price calling minutes. PricelineMortgage's current product lineup will continue to be offered on the Company's Web site.
"These steps are designed to reduce our operating expenses and allow for a greater focus of our resources on our key travel businesses," said Mr. Boyd. As part of this business re-focusing, priceline.com said it will reduce its workforce by approximately 65 positions.
Also today, priceline.com reported progress on its travel initiatives.
- Hotels. Priceline.com's hotel service benefited from the
launch in August of a revised Web path and a Best-Price
guarantee. Hotel supplier participation grew to over 8,500
hotels in the U.S., Europe, Asia, Canada, Mexico and the
Caribbean. With industry-leading pricing and the continued
growth in online hotel bookings, priceline.com is
well-positioned to benefit from more aggressive advertising
and promotion of this product.
- Retail Offerings. As disclosed at the end of the previous
quarter, priceline.com is in the process of offering customers
retail travel products through its own site and through
Lowestfare.com. (Priceline.com acquired the Lowestfare.com
domain name and trademarks earlier this year). The first phase
of retail air and hotel product offerings on Lowestfare.com is
expected to be up and running in the next few weeks.
- Progress also has been made on the integration of
Lowestfare.com retail offerings on priceline.com, so that
customers who aren't successful with their priceline.com
bids are presented with the opportunity to purchase a
retail product. A retail hotel room offering is currently
available on a test basis and a retail airline ticket
offering is scheduled for launch before year-end.
- Vacation Packages. Today, priceline.com and Lowestfare.com announced a marketing alliance with GOGO Worldwide Vacations. GOGO is one of the oldest and biggest leisure travel wholesalers to the travel agent market. GOGO offers the largest vacation package lineup in the industry - over 200 destinations on four continents, including popular spots like the Caribbean, Mexico, Europe, Central America, the South Pacific, the Bahamas, Las Vegas and Hawaii. Starting later this quarter, Lowestfare.com customers will be able to select from GOGO's lineup of money-saving packages. Integration of GOGO packages within priceline.com is scheduled for implementation early next year. Priceline.com also will continue to expand its own Name Your Own Price vacation package offerings.
"We believe that priceline.com already has the two most important ingredients in place to make our travel growth strategy a success," said priceline.com Chairman and Co-CEO Richard S. Braddock. "One is our industry leading travel brand and the other is our customer franchise, which provides a steady average stream of 4 million visitors who come to priceline.com each month looking to make travel purchases."
Looking forward, Mr. Braddock said, "Revenue in October was
approximately $72.5 million, a slight improvement from September, but
we expect seasonal decreases in revenue during November and December.
Also, the staff reductions announced today will result in 4th quarter
restructuring and other charges, ranging from $4 million to $5
million. We expect pro forma EPS in the 4th quarter will range from a
loss of $0.02 per share to break-even. Looking forward to 2003, we
expect to return to profitability by the second quarter of 2003 and we
expect 2003 full-year pro forma EPS to exceed 2002 pro forma EPS. We
will give more specific guidance when we announce full-year 2002
results."
About Priceline.com
Priceline.com offers products for sale in four categories: a travel service that offers leisure airline tickets, hotel rooms, rental cars, vacation packages and cruises; a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee; an automotive service that offers new cars; and a telecommunications service that offers long distance calling services. Priceline.com also owns the Internet domain names and trademarks of LowestFare.com, another Web-based travel site. Priceline.com licenses its business model to independent licensees, including pricelinemortgage and certain international licensees.
Information About Forward-Looking Statements
This press release may 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; 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, without limitation, "may," "will," "should," "could," "expects," "does not currently expect," "plans," "anticipates," "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 Company'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 products as the result of, among other things, terrorist attacks or hostilities; adverse changes in the Company's relationships with airlines and other product and service providers including, without limitation, the withdrawal of suppliers from the priceline.com system; the effects of increased competition; systems-related failures and/or security breaches; the Company's ability to protect its intellectual property rights; losses by the Company and its licensees; final adjustments made in closing the quarter; legal and regulatory risks and the ability to attract and retain qualified personnel. For a detailed discussion of these and other factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements, please refer to the Company's most recent Form 10-Q, Form 10-K and Form 8-K filings with the Securities and Exchange Commission. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Pro forma measures and EBITDA do not have standardized meanings and are therefore unlikely to be comparable to similar measures presented by other companies and are not meant to be a substitute for GAAP measures.
This presentation is unaudited and intended as a supplement to, and should be read in conjunction with priceline.com's audited financial statements and the notes thereto filed with the Securities and Exchange Commission on Form 10-K and quarterly financial statements filed with the Securities and Exchange Commission on Form 10-Q. Certain presentations within this presentation are not consistent with Generally Accepted Accounting Principles.
priceline.com Incorporated
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
September 30, December 31,
2002 2001
------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 66,857 $ 99,943
Restricted cash 18,174 15,396
Short-term investments 67,478 49,269
Accounts receivable, net of allowance
for doubtful accounts of $2,581 and
$4,170 at September 30, 2002 and
December 31, 2001, respectively 16,654 15,665
Prepaid expenses and other current assets 9,068 5,038
-------- --------
Total current assets 178,231 185,311
Property and equipment, net 25,279 32,266
Goodwill 10,517 23,646
Other assets 9,791 20,967
-------- --------
Total assets $ 223,818 $ 262,190
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 40,972 $ 45,941
Accrued expenses 25,861 36,240
Other current liabilities 3,495 5,115
-------- --------
Total current liabilities 70,328 87,296
Accrued expenses 1,001 2,838
-------- --------
Total liabilities 71,329 90,134
SERIES B MANDATORILY REDEEMABLE
PREFERRED STOCK 13,470 25,345
Stockholders' equity
Common stock 1,884 1,836
Treasury stock (338,410) (326,633)
Additional paid-in capital 2,033,938 2,015,849
Accumulated deficit (1,558,458) (1,544,341)
Accumulated other comprehensive income:
Cumulative currency translation
adjustment 65 -
--------- ---------
Total stockholders' equity 139,019 146,711
--------- ---------
Total liabilities and
stockholders' equity $ 223,818 $ 262,190
========= =========
priceline.com Incorporated
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts, unaudited)
Three Months Nine Months
Ended Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Travel revenues $ 238,121 $ 299,793 $ 800,902 $ 929,305
Other revenues 1,843 2,196 5,403 7,144
------- ------- ------- -------
Total revenues 239,964 301,989 806,305 936,449
Cost of travel revenues 201,949 250,952 677,432 780,427
Cost of other revenues 274 605 991 2,369
------- ------- ------- -------
Total costs of revenues 202,223 251,557 678,423 782,796
------- ------- ------- -------
Gross profit 37,741 50,432 127,882 153,653
------- ------- ------- -------
Operating expenses:
Sales and marketing 20,794 30,010 66,175 93,451
General and administrative 7,459 6,069 21,883 22,950
Payroll tax on employee
stock options - 297 120 687
Stock based compensation 250 1,015 750 9,312
Systems and business
development 10,138 10,160 31,191 31,164
Restructuring and special
charge (reversal) (92) - (1,116) 1,400
Severance charge (reversal) - - (55) 5,412
------- ------- ------- -------
Total operating expenses 38,549 47,551 118,948 164,376
------- ------- ------- -------
Operating (loss) income (808) 2,881 8,934 (10,723)
Other income/(loss):
Loss on sale of equity
investment - - - (946)
Interest income 656 2,062 2,226 5,654
Equity in net income of
pricelinemortgage 394 34 1,131 34
Impairments of investments
in licensees (24,229) - (24,229) -
Gain on property and
equipment 164 - 164 -
Other - - 1 -
------- ------- ------- -------
Total other (loss) income (23,015) 2,096 (20,707) 4,742
------- ------- ------- -------
Net (loss ) income (23,823) 4,977 (11,773) (5,981)
Preferred stock dividend (490) (8,563) (2,344) (8,563)
------- ------- ------- -------
Net loss applicable to
common stockholders $ (24,313) $ (3,586) $ (14,117) $ (14,544)
======= ======= ======= =======
Net loss applicable to common
stockholders per basic and
diluted common share $ (0.11) $ (0.02) $ (0.06) $ (0.07)
======= ======= ======= =======
Weighted average number of
basic and diluted common
shares outstanding 227,273 216,132 228,151 198,921
======= ======= ======= =======
priceline.com Incorporated
SUPPLEMENTAL PRO FORMA FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts, unaudited)
Three Months Ended
September 30, 2002
---------------------------------
Pro Forma
Reported Adjustments Pro Forma
-------- ----------- ---------
Travel revenues $ 238,121 $ 238,121
Other revenues 1,843 1,843
-------- -------- -------
Total revenues 239,964 239,964
Cost of travel revenues 201,949 201,949
Cost of other revenues 274 274
-------- -------- -------
Total costs of revenues 202,223 202,223
-------- -------- -------
Gross profit 37,741 37,741
-------- -------- -------
Operating expenses:
Sales and marketing 20,794 20,794
General and administrative 7,459 7,459
Payroll tax on employee stock options - -
Stock based compensation 250 (250)(a) -
Systems and business development 10,138 10,138
Restructuring charge (reversal) (92) 92 (b) -
-------- ------- -------
Total operating expenses 38,549 (158) 38,391
-------- ------- -------
Operating loss (808) 158 (650)
Other income/(loss):
Interest income 656 656
Equity in net income of
pricelinemortgage 394 394
Impairments of investments
in licensees (24,229) 24,229 (c) -
Gain on property and equipment 164 (164)(d) -
-------- ------- -------
Total other (loss) income (23,015) 24,065 1,050
-------- ------- -------
Net (loss) income (23,823) 24,223 400
Preferred stock dividend (490) 490 (e) -
-------- ------- -------
Net (loss) income applicable to
common stockholders $ (24,313) $ 24,713 $ 400
======== ======= =======
Net (loss) income applicable to
common stockholders per basic
common share $ (0.11) $ 0.11 $ 0.00
======== ======= =======
Weighted average number of basic
common shares outstanding 227,273 227,273
======== =======
Net (loss) income applicable to
common stockholders per diluted
common share $ (0.11) $ 0.11 $ 0.00
======== ======= =======
Weighted average number of diluted
common shares outstanding 227,273 231,507
======== =======
(a) Non-cash amortization of stock based compensation expense.
(b) Recovery of restructuring charges.
(c) Impairment of Priceline Europe goodwill and Hutchison-Priceline
investments.
(d) Gain on sale of property and equipment.
(e) Non-cash preferred stock dividend.
priceline.com Incorporated
----------------------------------------------------------------------
Offer and Customer Activity
Unique Offers: 1Q01 2Q01 3Q01 4Q01
-------------- ---------- ----------- ---------- -----------
New Customer Offers 891,490 1,025,041 927,338 854,082
Repeat Customer Offers 1,217,217 1,620,157 1,559,727 1,491,942
Total Unique Offers 2,108,707 2,645,198 2,487,065 2,346,024
Repeat customer offers/ 57.7% 61.2% 62.7% 63.6%
Total unique offers
Customers
--------------------
New Customers 891,490 1,025,041 927,338 854,082
Cumulative Customers 9,886,150 10,911,191 11,838,529 12,692,611
3Q02 vs.
Unique Offers: 1Q02 2Q02 3Q02 3Q01
-------------- --------- ---------- --------- ----------
New Customer Offers 874,792 964,464 825,026 -11%
Repeat Customer Offers 1,530,745 1,819,872 1,707,494 9%
Total Unique Offers 2,405,537 2,784,336 2,532,520 2%
Repeat customer offers/ 63.6% 65.4% 67.4%
Total unique offers
Customers
--------------------
New Customers 874,792 964,464 825,026 -11%
Cumulative Customers 13,567,403 14,531,867 15,356,893 30%
The information included above is for priceline.com only.
Statistics do not include priceline.com Europe Ltd.
priceline.com Incorporated
----------------------------------------------------------------------
Air
1Q01 2Q01 3Q01 4Q01
---------- ---------- ---------- ----------
Tickets Sold 1,075,555 1,435,936 1,183,981 840,191
Net Unique Offers 1,392,747 1,683,661 1,445,575 1,441,620
Offers Booked 709,576 963,167 779,319 584,505
Bind Rate 50.9% 57.2% 53.9% 40.5%
3Q02 vs.
1Q02 2Q02 3Q02 3Q01
---------- ---------- ---------- ------------
Tickets Sold 866,643 921,201 643,659 -46%
Net Unique Offers 1,391,478 1,533,442 1,195,664 -17%
Offers Booked 580,555 619,590 441,406 -43%
Bind Rate 41.7% 40.4% 36.9%
bind rate = offers booked/net unique offers
Air product was launched on April 6, 1998
The information included above is for priceline.com only.
Statistics do not include priceline.com Europe Ltd.
priceline.com Incorporated
----------------------------------------------------------------------
Hotels
1Q01 2Q01 3Q01 4Q01
--------- --------- --------- ---------
Room Nights Sold 432,884 680,604 879,922 789,638
Net Unique Offers 351,952 516,816 647,446 554,523
Offers Booked 188,278 311,121 394,807 384,463
Bind Rate 53.5% 60.2% 61.0% 69.3%
3Q02 vs.
1Q02 2Q02 3Q02 3Q01
--------- --------- -------- ---------
Room Nights Sold 909,107 1,089,586 1,144,988 30%
Net Unique Offers 629,145 812,285 931,323 44%
Offers Booked 417,306 499,065 539,899 37%
Bind Rate 66.3% 61.4% 58.0%
bind rate = offers booked/net unique offers
Hotel product was launched on October 28, 1998
The information included above is for priceline.com only.
Statistics do not include priceline.com Europe Ltd.
priceline.com Incorporated
----------------------------------------------------------------------
Rental Cars
1Q01 2Q01 3Q01 4Q01
--------- --------- --------- ---------
Days Sold 607,336 922,545 895,601 720,213
Net Unique Offers 229,581 325,235 313,389 261,069
Offers Booked 105,970 162,053 160,603 135,781
Bind Rate 46.2% 49.8% 51.2% 52.0%
3Q02 vs.
1Q02 2Q02 3Q02 3Q01
--------- --------- --------- ---------
Days Sold 738,021 793,616 741,167 -17%
Net Unique Offers 303,611 335,059 302,554 -3%
Offers Booked 139,776 148,483 143,593 -11%
Bind Rate 46.0% 44.3% 47.5%
bind rate = offers booked/net unique offers
Rental Car product was launched on February 3, 2000
The information included above is for priceline.com only.
Statistics do not include priceline.com Europe Ltd.
CONTACT:
priceline.com
Brian Ek, 203/299-8167
brian.ek@priceline.com
