Reports 4Q & Full-Year 2002 Results

11th Feb 2003
today reported a 4th quarter 2002 GAAP net loss of $7.4 million, or $0.03 per
share, after giving effect to previously announced restructuring and other

On a pro forma basis, the Company reported a net loss of $2.5 million, or $0.01
per share, on revenues of $197.3 million for the 4th quarter, which was
consistent with Company guidance provided in November. By comparison, in the 4th
quarter 2001, had a GAAP net loss of $1.3 million, or $0.01 per
share, on revenue of $235.3 million, and pro forma net income of $3.4 million,
or $0.01 per diluted share. reported pro forma EBITDA for the 4th quarter 2002 of $1.2 million
compared with $6.2 million for the 4th quarter of 2001. Pro forma financial
information is stated before restructuring, special and severance charges,
stock-based compensation and option payroll tax, impairment of certain
investments and preferred stock dividends. (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. ended 2002 with
$149.6 million in cash and short-term investments. has no debt. reported growth in its key customer metrics. The Company`s
customer base grew to 16.1 million, with repeat business for the quarter
registering 66.3 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).

For full-year 2002, had revenue of $1 billion, compared with $1.2
billion during 2001. On a GAAP basis, had a full-year 2002 net
loss of $21.5 million, or $0.09 per share, which included a $24.2 million
non-cash charge for the impairment of certain Company investments. During 2001,
priceline had a GAAP net loss of $15.9 million, or $0.08 per share. On a pro
forma basis, had full-year 2002 net income of $9.5 million, or
$0.04 per diluted share. This compares to pro forma net income of $15.1 million
or $0.07 per diluted share during 2001. Full-year 2002 pro forma EBITDA was
$24.5 million, compared to $24.4 million during 2001.


“`s 4th quarter results came in consistent with our November
guidance despite continued deterioration in travel market conditions which we
believe are generally tied to the potential for war in the Middle East, a
weakened airline industry and economic uncertainty,” said
President and Chief Executive Officer Jeffery H. Boyd. “Continued weakness in
opaque airline ticket sales was partially offset by another strong quarter for
our hotel business, which sold almost 1 million hotel room nights. In total,
hotel room nights sold were up 47 percent in 2002 compared to the previous year.
On a quarterly basis, hotel room nights sold grew 22 percent compared to 4th
quarter 2001.”

Mr. Boyd continued, “In 2002, made good progress in building its
hotel, packages and retail travel businesses, thereby reducing its reliance on
opaque airline ticket sales. In the fourth quarter of 2002, 63% of all booked
customer offers were derived from services other than the Company`s opaque
airline product, up from 47% in the fourth quarter of 2001. We significantly
increased our investment in the hotel business with a major TV campaign launched
in January featuring the quality of our hotel inventory and our delivery of up
to 40 percent savings compared to leading online sites. The early results are
encouraging with quarter-to-date room night sales up over 30% compared to the
same period last year.”

Today, also reported specific progress on travel initiatives that
included expansion of its hotel service and the integration of Name Your Own
Price(sm) and retail travel services
“We believe that our hotel service is clearly a best-of-breed product that
delivers high quality at lower prices than the other leading online hotel
booking services,” said Mr. Boyd. “We will market and advertise this message
aggressively to consumers throughout 2003. and have
also taken and will continue to take the steps necessary to furnish customers
with one-stop solutions that save them time and money on their travel purchases.
We expect airline industry conditions will continue to put pressure on our
opaque airline ticket sales. However, we believe that total travel bookings and
revenue in our other businesses - hotels, packages, rental cars and retail
offerings - will continue to grow. We expect to reach an inflection point
sometime in the second half of this year, at which point the year-over-year
decreases in our opaque airline ticket sales will be overtaken by the size and
corresponding growth rates of our collective other businesses. We believe that
progress in these businesses position for improved operating
results and long-term growth.”

Looking forward, Mr. Boyd said, “Total revenue for the month of January was
approximately $62 million, reflecting continued weakness in opaque airline
ticket sales, offset partially by continued strong hotel performance. Excluding
the effects of a potential war in the Middle East or terrorist events that might
negatively impact the travel industry, we expect revenue in February and March
will exceed that of January, and we expect pro forma results in the 1st quarter
2003 will range from break-even to a loss of $0.02 per share. Incorporated into
that guidance is the Company`s decision to continue to invest in advertising for
our hotel service during the quarter. On the same assumptions, we continue to
expect that will return to profitability by the 2nd quarter of
this year and we expect to have 2003 full-year pro forma EPS that will exceed
that of 2002.”



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