10-Q/APeriod: Q1 FY2007

Booking Holdings Inc. Quarterly Report (Amendment) for Q1 Ended Mar 31, 2007

Filed March 10, 2008For Securities:BKNG

Summary

This amended 10-Q filing for priceline.com Incorporated (now Booking Holdings Inc.) for the quarter ended March 31, 2007, primarily serves to restate its financial statements due to a reclassification of minority interest from a liability to mezzanine equity. The operational and financial results remain unchanged by this amendment. For the reported quarter, the company experienced a net loss of $16.3 million, or $0.44 per diluted share, compared to a net loss of $0.96 million, or $0.02 per diluted share, in the prior year period. This increased loss was largely driven by a significant litigation settlement charge of $54.9 million in the current period, which offset revenue growth. Total revenues saw a substantial increase of 24.5% to $301.4 million, driven by strong performance in merchant revenues. However, operating expenses also rose significantly, particularly due to the aforementioned litigation settlement. Despite the net loss, the company reported a healthy increase in cash and cash equivalents, indicating positive operating cash flow from core activities before the impact of significant one-time items. Investors should note the ongoing litigation risks and the substantial convertible debt, which could impact future dilution.

Key Highlights

  • 1Total revenues grew 24.5% year-over-year to $301.4 million, driven by a 17.2% increase in merchant revenues.
  • 2The company reported a net loss of $16.3 million ($0.44 per diluted share) for the quarter, a significant increase from the $0.96 million ($0.02 per diluted share) net loss in the prior year period.
  • 3A substantial litigation settlement charge of $54.9 million was recorded in the first quarter of 2007, significantly impacting profitability.
  • 4Cash and cash equivalents increased by $31.4 million to $455.0 million, indicating positive operating cash generation before the impact of large non-recurring charges.
  • 5The company received IRS approval for airline excise tax refund claims totaling $15.9 million plus interest, which was recognized as revenue and interest income.
  • 6Convertible debt of approximately $569 million remains a significant item on the balance sheet, with certain tranches now classified as current liabilities due to conversion thresholds being met.
  • 7Minority interest was reclassified from liabilities to mezzanine equity in this amended filing, with no impact on total assets or total liabilities and equity.

Frequently Asked Questions

This amended filing was made to correct a classification error in the consolidated balance sheet. Specifically, minority interest was reclassified from a liability to the mezzanine section (between liabilities and stockholders' equity). This change did not affect the company's assets, total liabilities and equity, statement of operations, or cash flow statement.

For the first quarter of 2007, priceline.com reported a net loss of $16.3 million ($0.44 per diluted share), a significant increase from the $0.96 million ($0.02 per diluted share) net loss in the same period of 2006. This widened loss was primarily due to a substantial $54.9 million charge related to a litigation settlement.

Yes, the company generated $18.8 million in net cash provided by operating activities for the three months ended March 31, 2007. This positive operating cash flow, combined with proceeds from financing activities like stock option exercises, led to an overall increase in cash and cash equivalents of $31.4 million during the quarter, reaching $455.0 million.

The company received IRS approval for refund claims totaling $15.9 million, plus interest, related to federal excise taxes previously paid on fees earned from facilitating airline ticket purchases. This refund was recognized as revenue and interest income in the first quarter of 2007, providing a positive financial boost.