Norwalk, Connecticut – (The Hosting News) – June 13, 2007 – Search engine for travel destination portal, Priceline.com Incorporated, has agreed to settle the securities class action litigation that was filed against the Company in 2000. Under the terms of the settlement agreement, the class will receive $80 million in return for a release, with prejudice, of all claims against the Company.
In addition., the individual defendants that are related to the purchase of the Company’s securities by class members during the class period, will be recipients of part of the settlement funds. The Company’s insurance carriers will fund $30 million of the settlement. The settlement is subject to approval by the Court after notice to the class. In connection with the settlement announced today, the Company expects to incur a net charge of approximately $55 million in the 1st quarter of 2007, representing the settlement amount and estimated legal expenses relating to the settlement.
The Company also provided an estimate of operating results for its recently completed 1st quarter. The Company said that it expects to report 1st quarter 2007 year-over-year gross travel bookings growth of approximately 34%, which was driven primarily by an approximately 91% year-over-year increase in gross travel bookings from its European operations. The consolidated year-over-year gross travel bookings growth compares to the Company’s prior guidance of between 25% and 30%. Gross travel bookings refer to the total dollar value, inclusive of all taxes and fees, of all travel services purchased by consumers. The Company said that pro forma net income per share was favorably impacted by the strong gross travel bookings performance in Europe, continued growth in domestic merchant gross travel bookings and good expense management. The Company now expects to report pro forma net income (which excludes, among other things, the impact of the litigation settlement expenses and the excise tax refund referred to below) of $0.43 per diluted share in the 1st quarter 2007. This compares to the Company’s prior range of pro forma net income guidance of between $0.22 and $0.28 per diluted share. The Company expects to report a GAAP net loss (which includes, among other things, the impact of the litigation settlement expenses and the excise tax refund referred to below) of $0.44 per diluted share in the 1st quarter 2007.
In addition, the company announced that it was increasing full-year 2007 pro forma financial guidance and is now targeting full-year 2007 pro forma net income of approximately $2.90 to $3.10 per diluted share. This compares to the Company’s prior range of full-year 2007 pro forma net income guidance of between $2.60 and $2.90 per diluted share. The revised full-year 2007 pro forma net income per share estimate is based upon an estimated pro forma fully diluted share count of 42.2 million shares. The estimate of pro forma fully diluted share count uses actual year-to-date stock price data as well as future stock prices based on the closing price of the Company’s stock as of May 3, 2007 to calculate the potential dilutive impact of stock options and convertible debt. Any material increases or decreases in priceline.com’s stock price will impact the number of fully diluted shares outstanding, which in turn would impact the company’s net income per diluted share results. The Company intends to provide more details on its 1st quarter 2007 financial results and full-year 2007 financial guidance when it announces its 1st quarter 2007 results on May 8th. The section below entitled “Non-GAAP Financial Measures” provides information about the use of pro forma financial measures used in this press release and a reconciliation of pro forma and GAAP results is attached to this press release.
The Company also announced that in March and April it had received definitive notice from the Internal Revenue Service that the Company’s previously disclosed refund request for excise taxes paid on merchant airline tickets had been approved for payment. As a result, the Company expects to record approximately $18.7 million of income in the 1st quarter 2007 related to the March notice and approximately $3 million of income in the 2nd quarter 2007 related to the April notice associated with the tax refund, including estimated accrued interest. The Company expects the refund to positively impact 1st and 2nd quarter 2007 GAAP results but intends to exclude the amounts from pro forma results because of its non-recurring nature.
The estimate of 1st quarter 2007 pro forma net income per diluted share:
- excludes cash expenses associated with the settlement of the 2000 securities litigation,
- excludes the cash benefit associated with the refund of excise taxes (and related accrued interest) paid on merchant airline tickets,
- excludes non-cash amortization expense of acquisition-related intangibles,
- excludes non-cash stock-based compensation expense,
- excludes option payroll tax expense,
- excludes non-cash income tax expense and reflects the impact on income taxes of the pro forma adjustments,
- excludes non-cash preferred stock dividends,
- includes the additional impact on minority interest expense of the pro forma adjustments described above,
- includes the anti-dilutive impact of the “Conversion Spread Hedges” (see below) on outstanding diluted common shares outstanding, and
- includes the dilutive impact of additional warrants and shares of unvested restricted stock and restricted stock units.
When aggregated, the foregoing adjustments are expected to increase pro forma net income over GAAP net income by approximately $34 million in the 1st quarter 2007.
Priceline.com is a travel service for value-conscious leisure travelers, including airline tickets, hotel rooms, rental cars, vacation packages and cruises.
To learn more about Priceline.com, please visit: www.priceline.com.