SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 27, 2000
priceline.com Incorporated
(Exact name of registrant as specified in its charter)
Delaware 0-25581 06-1528493
(State or other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
800 Connecticut Avenue, Norwalk, Connecticut 06854
(Address of principal office) (zip code)
Registrant's telephone number, including area code
(203) 299-8000
Five High Ridge Park, Stamford, Connecticut 06905
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
Fourth Quarter Earnings
On January 27, 2000, priceline.com Incorporated, a Delaware
corporation ("priceline.com"), announced its fourth quarter final results,
including fourth quarter revenues of $169.2 million and net loss per share,
excluding certain items, of $0.06 per share. The information set forth
above is qualified in its entirety by reference to the press release issued
by priceline.com on January 27, 2000, a copy of which is attached hereto as
Exhibit 99.4 and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.4 Press Release issued by priceline.com on January 27, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
PRICELINE.COM INCORPORATED
By: /s/ Paul E. Francis
-------------------------------
Name: Paul E. Francis
Title: Chief Financial Officer
Date: January 31, 2000
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
99.4 Press Release issued by priceline.com on January 27, 2000.
Priceline.com Reports Record Fourth Quarter Financial Results
. . . 4TH QUARTER REVENUE OF $169.2 MILLION IS UP 791% OVER 4TH QUARTER 1998
. . . NET LOSS PER SHARE EXCLUDING CERTAIN ITEMS IS $0.06 IN 4TH QUARTER
1999, COMPARED TO $0.14 IN 4Q 1998 AND $0.08 IN 3Q 1999
. . . PRICELINE.COM ADDS ALMOST 1 MILLION NEW CUSTOMERS IN 4TH QUARTER,
BRINGING ITS TOTAL CUSTOMER BASE TO NEARLY 4 MILLION
. . . 4TH QUARTER GROSS MARGIN OF 14.2% IS HIGHEST EVER FOR PRICELINE.COM
. . . COMPANY ALSO REPORTS FULL-YEAR 1999 REVENUE OF NEARLY HALF A BILLION
DOLLARS
. . . COMPANY SETS 2000 REVENUE TARGET OF $1 BILLION
NORWALK, Conn., January 27, 2000 . . . Priceline.com (Nasdaq: PCLN),
the Internet pricing system that enables consumers to save money by naming
their own prices for travel, automotive and home finance products, today
reported record 4th quarter financial results and said that, based on early
1st quarter performance, it had established a target of $1 billion in
revenue in 2000. The Company also reported that it added nearly 1 million
new unique customers in the quarter and reduced its net loss per share
excluding certain items to $0.06, or 2 cents per share better than the
First Call consensus of analyst estimates and less than half the $0.14 per
share loss priceline.com reported in the 4th quarter of 1998.
Priceline.com reported revenue of $169.2 million for the fourth quarter
ended December 31, 1999, a 791% increase over revenue of $19.0 million for
the fourth quarter ended December 31, 1998. Gross margin for the 4th
quarter was 14.2%, the highest ever for priceline.com. Gross profit for
the fourth quarter of 1999 was $24.1 million, a 952% increase over gross
profit of $2.3 million for the fourth quarter ended December 31, 1998.
Gross profit and gross margin percentages for both periods exclude non-cash
supplier warrant charges.
Operating loss in the fourth quarter of 1999 was $12.7 million, compared to
an operating loss of $12.9 million in the fourth quarter of 1998. Net loss
in the fourth quarter of 1999 was $10.0 million, or $0.06 per share
compared to a net loss in the fourth quarter of 1998 of $12.7 million, or
$0.14 per share. Operating loss and net loss results for both periods
exclude certain items as described in the footnotes to the table below.
QUARTER ENDED QUARTER ENDED
DECEMBER 31, 1999(1) DECEMBER 31, 1998(2)
-------------------- --------------------
REVENUE $ 169.2 million $ 19.0 million
GROSS PROFIT $ 24.1 million $ 2.3 million
OPERATING LOSS $ (12.7) million $ (12.9) million
NET LOSS $ (10.0) million $ (12.7) million
(1) Excludes a non-cash charge of $910.4 million of net warrant costs
related to the issuance of warrants to certain of priceline's airline
partners (net of income from the receipt of a warrant to purchase
shares in the Priceline WebHouse Club), a non-cash charge of
$380,759 for supplier warrant charges, $264,744 in option payroll
taxes resulting from the exercise of non-qualified employee stock
options, and the write-off of $380,609 in deferred financing costs.
(2) Excludes the effect of a non-cash charge of $61.0 million for the
issuance of warrants to certain of priceline.com's airline partners
and a $2.2 million charge for the accretion of preferred stock.
Priceline.com also reported strong results for 1999, its first full year of
operation. Revenue for the full year 1999 was $482.4 million, with $59.4
million in gross profit and a net loss of $52.5 million or $0.39 per share.
That compares to 1998 results of $35.2 million in revenue, $1.7 million in
gross profit and a net loss of $44.4 million or $0.55 per share. Gross
profit and net loss results exclude non-cash net warrant costs, supplier
warrant charges, option payroll taxes, and the write-off of deferred
financing costs in 1999 and exclude non-cash net warrant costs, supplier
warrant charges, stock based compensation expense and accretion of
preferred stock in 1998. Including such items, reported net loss for the
fourth quarter and full-year 1999 were $921.5 million and $1.1 billion
respectively, and $75.9 million and $114.4 million for the fourth quarter
and full- year 1998 respectively.
"Priceline.com had a strong year and a particularly strong fourth quarter
as we continued to deliver on our commitment to steadily reduce our
operating losses and improve our operating margins on our way to
profitability," said Richard S. Braddock, priceline.com's chairman and CEO.
"This was a landmark quarter for priceline.com in terms of adding
customers, increasing sales and margins, bringing on board new industry
leading suppliers and partners and introducing new product initiatives."
Braddock continued, "Based on our performance so far this year, we are now
comfortable that our revenues will increase sequentially from the fourth
quarter of 1999 to the first quarter of 2000 at a rate of at least 30%.
More importantly, we have established a target of $1 billion of revenue for
the year 2000, which is more than double our revenue in 1999."
Business Highlights
During the 4th quarter, priceline.com added a record 982,000 unique
customers (including the 80,000 unique customers who joined the Priceline
WebHouse Club, a priceline.com licensee, in the 4th quarter). In total,
priceline.com had 3.8 million unique customers at the end of the fourth
quarter. Nearly half became customers in the last 6 months.
During the fourth quarter, priceline.com continued to build a broad,
horizontal e-commerce business and made substantial strides in solidifying
and expanding its offerings into new vertical markets, as well as
announcing several new Name-Your-Own-Price initiatives.
In November, priceline.com announced that American Airlines, United
Airlines and US Airways would join priceline.com's airline service. Today,
all 8 major full-service U.S. airlines participate in priceline.com, as
well as over 20 international carriers. Priceline.com believes that it now
accounts for over 3% of all of the leisure airline tickets sold in the U.S.
Priceline.com also announced during the fourth quarter a co-marketing
agreement with Travelocity.com and Preview Travel. As part of the alliance
with Travelocity.com and Preview Travel, all three Web sites will offer
customers the ability to either name their own price through priceline.com,
or purchase published-fare tickets through Travelocity.com and Preview
Travel. The three companies will share a total customer base estimated at
more than 20 million.
Priceline.com Auto Services, LLC, expanded in the fourth quarter to cover
26 states. The Company also launched a market trial with Ford Motor
Company in Florida where Ford customers can name their price for a new car
and get that car from a local Ford dealership. As a result of these
initiatives, priceline.com doubled the number of cars sold in the fourth
quarter, compared to third quarter 1999.
Vertical Market Expansion
Priceline.com announced plans in the fourth quarter to enter two new
vertical markets. The Company said it would offer a Name Your Own Price
service for rental cars in the first half of 2000, and that Budget Rent A
Car and National Car Rental would be the first two companies to participate
in the program.
Long-distance calling is another service priceline.com said it would offer
in 2000. The Company named Net2Phone as its first supplier for the new
service that will allow customers to name their own price for individual
calls or blocks of international and domestic calling time.
As part of that marketing agreement, Net2Phone will pay priceline.com $18
million over three years in fees for being featured as priceline.com's
premier service provider of long distance services. In addition to the
consumer market, priceline.com said that this service would be attractive
to small businesses that normally cannot negotiate deep discounts for their
domestic and international calls.
Also in the fourth quarter, priceline.com licensed its business model to
Priceline WebHouse Club, a company that offers retail goods, beginning
with groceries, on a Name Your Own Price basis. The service, which
launched in November, has attracted over 125,000 customers in the New York
area (or approximately 2% of all households) in its first 10 weeks of
operation. To date, the service has sold more than 4 million grocery
items. In return for the WebHouse Club license, priceline.com has received
warrants allowing it to take a majority equity stake in the WebHouse Club
under certain conditions. The financial results of Priceline WebHouse
Club will not be included in priceline.com's financial statements unless
those warrants are exercised.
International Expansion
During the fourth quarter, priceline.com continued discussions with
potential alliance partners to expand its services internationally.
Yesterday, priceline.com announced the first in a series of international
expansion initiatives. The Company announced an alliance with Hutchison-
Whampoa, one of Asia's largest companies with an extensive Internet
presence, to create a new company to introduce priceline.com's buyer-driven
business model to China and Hong Kong, Singapore, Taiwan, India, Indonesia,
Malaysia, the Philippines, India and Vietnam.
ABOUT PRICELINE.COM
Priceline.com is the patented Internet pricing system that enables
consumers to achieve significant savings by naming their own price for
goods and services. Priceline.com takes consumer offers and then presents
them to sellers who can fill as much of that guaranteed demand as they wish
at price points determined by buyers.
Priceline.com's "virtual" business model allows for rapid scaling using the
Internet. Because the Company electronically collects consumer demand, it
can fill this demand directly with sellers or by using proprietary
databases. Priceline.com does not maintain or warehouse inventories in any
of its product lines. Priceline.com is currently selling multiple services
to its sellers across three distinct product categories: a travel service
that offers leisure airline tickets, hotel rooms and rental cars, a
personal finance service that offers home mortgages, refinancing and home
equity loans, and an automotive service that offers new cars. Recently,
priceline.com announced that it would also offer new services for long-
distance telephone calling and credit cards.
# # #
For investor relations, contact:
Raya Papp at priceline.com 203-299-8160 ([email protected])
For press information, contact:
Brian Ek at priceline.com 203-299-8167 ([email protected])
Mike Darcy at priceline.com 203-299-8168 ([email protected])
This press release may contain forward-looking statements that are made
pursuant to the safe-harbor provisions of the Private Securities Litigation
Reform Act of 1995. Expressions of future goals and similar expressions
including, without limitation, "may," "will," "believes," "should,"
"could," "hope," "expects," "expected," "does not currently expect,"
"anticipates," "predicts," "potential," and "forecast," reflecting
something other than historical fact are intended to identify forward-
looking statements, but are not the exclusive means of identifying such
statements.
These forward-looking statements involve a number of risks and
uncertainties, including the timely development and market acceptance of
products and technologies and other factors described in the Company's
filings with the Securities and Exchange Commission. The actual results
may differ materially from any forward-looking statements due to such risks
and uncertainties. The Company undertakes no obligations to revise or
update any forward-looking statements in order to reflect events or
circumstances that may arise after the date of this release.
<TABLE>
<CAPTION>
PRICELINE.COM INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 18,993,127 $ 169,213,345 $ 35,236,860 $ 482,409,988
Cost of Revenues:
Product costs 16,701,948 145,104,504 33,495,745 423,056,185
Supplier warrant
costs 3,029,014 380,759 3,029,014 1,523,036
------------ ------------ ------------ -------------
Total cost of
revenues 19,730,962 145,485,263 36,524,759 424,579,221
Gross profit (loss) (737,835) 23,728,082 (1,287,899) 57,830,767
------------ ----------- ------------- ------------
Expenses:
Warrant costs,
net, including
$189,000,000
of warrant
income in the
three and
twelve months
ended December 31,
1999 57,978,678 910,442,774 57,978,678 998,831,785
Sales and marketing 8,462,960 23,238,316 24,388,061 79,576,556
General and
administrative,
including
$264,744 and
$1,811,610 of
option payroll
taxes in the
three and twelve
months ended
December 31,
1999, respectively 3,805,924 10,103,261 18,004,585 27,609,408
Systems and business
development 2,962,666 3,777,513 11,131,650 14,023,168
----------- ----------- ----------- -------------
Total expenses 73,210,228 947,561,864 111,502,974 1,120,040,917
----------- ----------- ----------- -------------
Operating loss (73,948,063) (923,833,782) (112,790,873) (1,062,210,150)
Other expense -- (380,609) -- (380,609)
Interest income, net 244,115 2,757,472 548,374 7,501,225
----------- ------------ ------------ -------------
Total other
income/expense,
net 244,115 2,376,863 548,374 7,120,616
Net loss (73,703,948) (921,456,919) (112,242,499) (1,055,089,534)
Accretion on
preferred stock (2,183,424) - (2,183,424) (8,353,973)
-------------- -------------- -------------- ----------------
Net loss applicable
to common
shareholders $ (75,887,372) $(921,456,919) $(114,425,923) $(1,063,443,507)
============== ============== ============== ================
Basic and diluted
loss per common
share $ (0.81) $ (5.91) $ (1.41) $ (7.90)
============== ============== ============== ================
Weighted average
common shares
outstanding 93,167,679 156,031,746 81,231,425 134,621,746
</TABLE>
<TABLE>
<CAPTION>
PRICELINE.COM INCORPORATED
CONDENSED BALANCE SHEETS
(UNAUDITED)
DECEMBER 31, DECEMBER 31,
ASSETS 1998 1999
------------ ------------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 53,593,026 $ 133,171,813
Short term investments - 38,771,417
Accounts receivable, net of allowance for
uncollectible accounts of $290,823
and $1,960,680 at December 31, 1998
and December 31, 1999, respectively 4,176,980 21,288,946
Related party receivable - 507,770
Prepaid expenses and other current assets 2,433,542 17,999,123
-------------- ----------------
Total current assets 60,203,548 211,739,069
PROPERTY AND EQUIPMENT - net 5,926,877 28,006,478
WARRANTS TO PURCHASE COMMON STOCK OF
WEBHOUSE CLUB, INC. - 189,000,000
OTHER ASSETS 442,060 13,140,742
--------------- -----------------
TOTAL ASSETS $ 66,572,485 $ 441,886,289
=============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 5,268,430 $ 24,302,434
Related party payable 32,447 -
Accrued expenses 4,258,641 13,695,269
Other current liabilities 722,030 1,252,956
--------------- ----------------
Total current liabilities 10,281,548 39,250,659
LONG-TERM DEBT - net 989,018 -
CAPITAL LEASE OBLIGATIONS 26,074 -
--------------- ----------------
Total liabilities 11,296,640 39,250,659
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock 311,262 -
Common stock 745,802 1,310,937
Additional paid-in capital 171,158,186 1,581,707,605
Accumulated deficit (116,939,405) (1,180,382,912)
---------------- -----------------
Total stockholders' equity 55,275,845 402,635,630
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 66,572,485 $ 441,886,289
=============== ================
</TABLE>
