Priceline.com Reports Profit for 2Q 2002

Priceline.com
(Nasdaq: PCLN) has reported 2nd quarter 2002 GAAP and pro forma
net income of $6.3 million, or $0.03 per diluted share on revenue of $304.5
million.

By comparison, in the 2nd quarter 2001, priceline.com had GAAP net income of
$2.8 million, or $0.01 per diluted share, on revenue of $364.8 million. Compared
to 1st quarter 2002, priceline.com`s revenue grew 16 percent, primarily as a
result of stronger sequential unit sales of its travel products.


Priceline.com reported pro forma EBITDA for the 2nd quarter 2002 of $9.9
million, compared to pro forma EBITDA of $13.9 million in the 2nd quarter 2001.
Pro forma net income and pro forma EBITDA are stated before restructuring,
special and severance charges, stock-based compensation and option payroll
taxes. Gross profit for the 2nd quarter 2002 was $48.1 million, compared to
$60.1 million in the 2nd quarter 2001. Priceline.com ended the quarter with more
than $180 million in cash and short-term investments. Priceline.com has no
outstanding debt.


“The steady growth of priceline.com`s consumer franchise and non-airline travel
businesses continued in the 2nd quarter,” said priceline.com President and
Co-Chief Executive Officer Jeffery H. Boyd
. “We added nearly a million new
customers in the quarter, bringing our customer base to 14.5 million.
Priceline.com`s repeat business for the quarter was a record 65.4 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.


Mr. Boyd continued, “While the travel industry, particularly the airline
business, continues to face significant challenges, priceline.com`s unit sales
of travel products increased 12 percent over the previous quarter primarily on
the strength of hotel room nights sold. For the first time in a quarter, our
hotel service sold over 1 million room nights, which represents a 60 percent
year-over-year increase and a 20 percent sequential increase. Priceline.com has
utilized its hotel and airline relationships to introduce a new Name Your Own
Price(SM) vacation service. Our vacation service has been well received by
customers, with solid bookings growth achieved since the May 2002 launch at a
high average transaction size and attractive margins.”

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Priceline.com also announced today that its Board of Directors authorized the
re-purchase of up to $40 million of priceline.com common stock. In conjunction
with priceline.com`s purchase, Cheung Kong (Holdings) Limited and Hutchison
Whampoa Limited - priceline.com`s two largest stockholders - informed
priceline.com that they may purchase up to an additional $40 million of
priceline.com common stock. The combined purchases by priceline.com, Cheung Kong
and Hutchison Whampoa - the pricing, timing, initiation and completion of which
are at the discretion of each company`s management - would have an aggregate
value of $80 million.


“At the current valuation, we believe that the best investment priceline.com can
make is in our own Company,” said priceline.com Chairman and Co-Chief Executive
Officer Richard S. Braddock. “Priceline.com is a growing, profitable business in
one of the Internet`s most desirable industry sectors. Priceline.com has no debt
and $180 million in cash and short-term investments. In past years,
priceline.com also has recorded significant net operating losses which will
continue to have a favorable cash tax impact on the business for many years.”


Also today, priceline.com announced the re-launch of Lowestfare.com
and outlined
plans for the future integration of priceline.com and Lowestfare.com offerings.
As part of that future integration, priceline.com and Lowestfare.com customers
will have access to an even wider range of Name Your Own Pricesm and
published-price travel products, including a broad selection of vacation package
inventory.


“Priceline.com and Lowestfare.com already have significant convertible consumer
traffic,” said Mr. Boyd. “We have been successful in improving Lowestfare.com`s
conversion rates since we acquired the URL in June. Priceline.com and
Lowestfare.com have strong recognition in the online travel space, thanks to
early investments in brand-building, and we believe that we can be successful
moving customers between opaque and published-fare products and closing the
sale.”


Looking forward, Mr. Braddock said, “Priceline.com will continue to evolve and
expand its businesses through a series of ongoing initiatives. Today, we
announced a strategic re-alignment of our senior management team to take full
advantage of these important initiatives. (See related release). We will
leverage new growth areas in online travel, such as hotels and vacation
packages. We will support our airline partners by implementing additional ways
to sell their products. We intend to continue to broaden our online reach by
working closely with major brands such as eBay, LowestFare.com and LastMinute
Travel. And we will support our brand through awareness- and sales-building
radio and TV advertising featuring our longtime spokesperson, William Shatner.
In fact, you can look for Mr. Shatner to re-take the TV screen this fall on
priceline.com`s behalf.”


Mr. Braddock continued, “Priceline.com is taking the initiatives to leverage the
strong brand recognition of priceline.com and Lowestfare.com and to continue to
build on our position as one of the Internet`s premier travel providers. We look
forward to providing additional information in the future as these initiatives
come closer to fruition. As for the 3rd quarter 2002, it is particularly
challenging to provide definitive revenue guidance given the continued
turbulence in the airline industry and the potential one-time impact of consumer
reluctance to travel in September around the anniversary of the terrorist
attacks. Priceline.com`s July revenue will be approximately $92 million to $93
million and we expect August revenue to come in at or slightly below July
revenue given historical seasonality. For September, it is simply not possible
to gauge the impact of the 9/11 anniversary or the short-term benefit from
priceline.com`s return to TV advertising. Despite this uncertainty, we expect
pro forma earnings per share to be between break-even and $0.02 per share.”

Related stories on ITN:

(27/06/2002) Priceline.com Updates 2nd Quarter 2002 Guidance

(10/06/2002) Priceline Increases online Presence by 810% in 1 Year

(02/05/2002) Priceline.com Reports Profit For 1Q 2002

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