PRICELINE.COM (PCLN)

Priceline.com Incorporated (Nasdaq: PCLN) today reported its financial results for the 2^nd quarter 2007. Gross travel bookings for the 2^nd quarter, which refers to the total dollar value, inclusive of all taxes and fees, of all travel services purchased by consumers, rose 33% year-over-year to $1.2 billion.

Priceline.com had GAAP revenues in the 2^nd quarter of $355.9 million, a 15.7% increase over a year ago. Priceline.com's GAAP gross profit for the 2^nd quarter was $157.2 million, up 48.6% from the prior year. Priceline.com had GAAP net income for the 2^nd quarter 2007 of $34.6 million or $0.79 per diluted share, which compares to a $12.5 million or $0.28 per diluted share in the same period a year ago.

Priceline.com reported pro forma revenues in the 2^nd quarter of $353.6 million, a 14.9% increase over a year ago. Pro forma gross profit for the 2^nd quarter 2007 was $154.9 million, an increase of 45.9% over the same period in the prior year. Pro forma net income for the quarter was $47.3 million or $1.11 per diluted share, which compares to $23.0 million, or $0.55 per diluted share in the same period a year ago. First Call analyst consensus for the 2^nd quarter 2007 was $0.89 per diluted share. The section below entitled ?Non-GAAP Financial Measures? provides a definition and information about the use of pro forma financial measures in this press release and the attached financial and statistical supplement reconciles pro forma financial information with priceline.com's financial results under GAAP.

?Priceline.com's earnings performance in the second quarter exceeded our previous expectations for both the international and domestic businesses,? said priceline.com President and Chief Executive Officer Jeffery H. Boyd. ?Internationally, Booking.com's results were driven by 93% growth in gross bookings, which continues to outperform market growth rates. Domestic gross bookings fell within the range of our guidance, but earnings growth exceeded our expectations due to strong organic growth in merchant hotel and rental cars and more efficient marketing.?

?Based on the strength we have seen in our international and domestic businesses as the summer unfolds, we are increasing our guidance for the balance of the year,? Mr. Boyd said. ?In particular, we believe the scale we have achieved in worldwide hotel sales and our low-cost leadership has provided us with opportunities to grow organically and geographically which are reflected in our recent reported results. We intend to continue our vigorous pursuit of those opportunities going forward.?

Forward Guidance

Priceline.com said it was targeting the following for 3^rd quarter 2007:

• Year-over-year increases in overall gross travel bookings of approximately 43% to 46%.
• Year-over-year increases in gross travel bookings from Booking.com of approximately 85% to 90%.
• Year-over-year increase in pro forma revenue of approximately 20% to 25%.
• Year-over-year increase in pro forma gross profit of approximately 50% to 54%.
• Pro forma net income of between $1.21 and $1.31 per diluted share.

In view of the company's stronger than expected performance in the 2^nd quarter 2007, priceline.com revised its full year guidance as follows:

• Consolidated gross travel bookings of $4.50 to $4.65 billion
• International gross travel bookings of $2.45 to $2.55 billion
• Pro forma net income of between $3.50 and $3.65 per diluted share

Pro forma guidance for the 3^rd quarter and full year 2007:

• 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 shares of unvested restricted stock and restricted stock units because pro forma net income has been adjusted to exclude preferred stock dividend and stock-based compensation.

When aggregated, the foregoing adjustments are expected to increase pro forma net income over GAAP net income by approximately $13 million for the 3rd quarter 2007 and $70 million for full-year 2007. On a per share basis, the Company estimates GAAP net income of approximately $0.90 to $1.00 per diluted share for the 3rd quarter 2007 and GAAP net income of approximately $1.82 to $1.97 per diluted share for the full-year 2007.

The Financial Accounting Standards Board (?FASB?) is expected to propose a FASB Staff Position (?FSP?) that would significantly impact the accounting for convertible debt. The proposal would require cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component would be the estimated fair value, as of the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value would be recorded as a debt discount and amortized to interest expense over the life of the bond. Although the FSP would have no impact on priceline.com's actual past or future cash flows, it would require priceline.com to record a significant amount of non-cash interest expense as the debt discount is amortized. As a result, there would be a material adverse impact on priceline's reported GAAP results of operations and earnings per share. The expected proposal, if approved, is likely to become effective January 1, 2008 for priceline and require retrospective application.

About Priceline.com® Incorporated

Priceline.com Incorporated (Nasdaq: PCLN) operates priceline.com, a leading U.S. online travel service for value-conscious leisure travelers, and Booking.com, a leading international online hotel reservation service.

In the U.S., priceline.com gives customers more ways to save on their airline tickets, hotel rooms, rental cars, vacation packages and cruises than any other Internet travel service. In addition to getting the best published prices, leisure travelers can narrow their searches using priceline.com's TripFilter? advanced search technology, create packages to save even more money, and take advantage of priceline.com's famous Name Your Own Price® service, which can deliver the lowest prices available.

Booking.com operates one of Europe's fastest growing hotel reservation services through a network of affiliated Web sites. Booking.com operates in 53 countries in 15 languages and offers its customers access to approximately 35,000 participating hotels worldwide.

Priceline.com also operates the following travel websites: Travelweb.com, Lowestfare.com, RentalCars.com and BreezeNet.com. Priceline.com also has a personal finance service that offers home mortgages, refinancing and home equity loans through an independent licensee. Priceline.com licenses its business model to independent licensees, including priceline mortgage and certain international licensees.

For more information about priceline.com:

To book flights http://www.priceline.com/flights/

To book hotels http://www.priceline.com/hotels/

To book rental cars http://www.priceline.com/rentalcars/

To book a vacation package http://www.priceline.com/vacationpackages/

To book a cruise http://www.pricelinecruiseoutlet.com

To see our PriceBreakers deals: http://www.priceline.com/pricebreakers

To check our travel guides: http://travela.priceline.com/travelguides/

To watch our TV ads: http://www.priceline.com/promo/shatner_pcln_negotiator.asp

Other priceline.com affiliated sites include:

General travel information and trip planning http://www.mytravelguide.com

Travel reservations http://www.lowestfare.com

http://www.travelweb.com

Rental cars http://www.RentalCars.com

http://www.BreezeNet.com

European hotels http://www.booking.com

http://www.priceline.co.uk

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, ?goal,? "believe(s)," "intend,? "expect(s)," "will," "may," "should," "could," "plan(s)," "anticipate(s)," "estimate(s)," "predict(s)," "potential," "target(s)," 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 services as a result of, among other things, terrorist attacks, natural disasters or advese weather, the bankruptcy or insolvency of a major airline, decreased consumer spending, general economic downturn or the outbreak of an epidemic or pandemic disease;

-- adverse changes in the Company's relationships with airlines and other product and service providers and vendors which could include, without limitation, the withdrawal of suppliers from the priceline.com system (either priceline.com's ?retail? or ?opaque? services, or both) and/or the loss or reduction of global distribution fees;

-- the effects of increased competition;

-- fluctuations in foreign exchange rates;

-- our ability to expand successfully in international markets;

-- systems-related failures and/or security breaches, including without limitation, any security breach that results in the theft, transfer or unauthorized disclosure of customer information, or the failure to comply with various state laws applicable to the company's obligations in the event of such a breach;

-- difficulties integrating recent or future acquisitions, including ensuring the effectiveness of the design and operation of internal controls and disclosure controls of acquired businesses;

-- a change by a major search engine to its search engine algorithms that negatively affects the search engine ranking of the company or its 3^rd party distribution partners;

-- 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.

Non-GAAP Financial Measures

Pro forma revenue, Pro forma gross profit, pro forma net income and pro forma net income per share are "non-GAAP financial measures," as such term is defined by the Securities and Exchange Commission, and may differ from non-GAAP financial measures used by other companies. Priceline.com believes that pro forma revenue, pro forma gross profit, pro forma net income and pro forma net income per share that exclude certain non-cash or non-recurring income or expense items are useful for investors to evaluate priceline.com's future on-going performance because they enable a more meaningful comparison of priceline.com's projected cash earnings and performance with its historical results from prior periods. Pro forma financial information is adjusted for the following items:

• Cash expenses associated with the settlement of the 2000 securities litigation are excluded because of the non-recurring nature of the settlement.
• Cash benefit associated with the refund of excise taxes paid (and related accrued interest) on merchant airline tickets is excluded because of its non-recurring nature.
• Amortization expense of acquisition-related intangibles is excluded from pro forma gross profit and pro forma net income because it does not impact cash earnings.
• Stock-based compensation expense and the non-cash expense associated with the payment of preferred stock dividends are excluded from pro forma net income because they do not impact cash earnings and are reflected in earnings per share through increased share counts.
• Option payroll tax expense is excluded because the expense is driven primarily by stock option exercise activity and the market price of priceline.com's common stock and often shows volatility unrelated to operating results.
• The restructuring charge, net is excluded because it can impact comparability of earnings with historical results from prior periods.
• Income tax expense is adjusted for the tax impact of certain of the pro forma adjustments described above and to exclude tax expense recorded where no actual tax payments are owed because of available net operating loss carryforwards.
• Minority interest is adjusted for the impact of certain of the pro forma adjustments described above.
• Finally, for calculating pro forma net income per share:

    -- net income is adjusted for the impact of the pro forma
       adjustments described above
    -- fully diluted share count is adjusted to include the
       anti-dilutive impact of the Conversion Spread Hedges that
       increase the effective conversion price of the 2011 Notes and
       2013 Notes from their stated $40.38 conversion price to an
       effective conversion price of $50.47 per share. Under GAAP,
       the anti-dilutive impact of the Conversion Spread Hedges is not
       reflected on the outstanding diluted share count until the end
       of the hedge when shares are delivered.
    -- fully diluted share count in 2006 is adjusted to exclude the
       impact of EITF 04-08 ("Effect of Contingently Convertible Debt
       on Diluted Earnings per Share"), because the common stock that
       underlie priceline.com's 1% Convertible Senior Notes and
       priceline.com's 2.25% Convertible Senior Notes were not
       issuable because our common stock did not trade above the
       respective contingent conversion prices.
    -- All common stock warrants and shares of restricted common stock
       are included in the calculation of pro forma net income per
       share because pro forma net income has been adjusted to exclude
       our preferred stock dividend and stock-based compensation
       expense.

The presentation of this financial information should not be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles in the United States. The attached financial and statistical supplement reconciles pro forma financial information with priceline.com's financial results under GAAP.

priceline.com Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Merchant revenues, including $2,318 and $18,196 excise tax refund for the three and six months ended June 30, 2007, respectively
		$	254,909			$	250,524			$	500,921			$	460,962
Agency revenues			98,344				55,892				152,855				86,273
Other revenues			2,627				1,235				3,493				2,329
Total revenues			355,880				307,651				657,269				549,564
Cost of merchant revenues			198,669				201,847				380,341				371,530
Cost of agency revenues			-				-				-				-
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