Priceline.com Reports 3rd Quarter 2005 Financial Results; Priceline.com gross profit grows by 56.5%; pro forma net income is $19.3 million, or $0.47 per diluted share

Priceline.com Incorporated (Nasdaq: PCLN) today reportedits financial results for the 3rd quarter 2005. Gross travel bookingsfor the quarter were $611.1 million, a 40.4% increase over the sameperiod a year ago. Gross travel bookings refer to the total dollarvalue, inclusive of all taxes and fees, of all travel servicespurchased by consumers. Revenues in the 3rd quarter were $258.8million, compared to $235.9 million a year ago, a 9.7% increase. Thirdquarter 2005 results include the operating results of the recentacquisitions of Active Hotels and Bookings, B.V.

Priceline.com's GAAP gross profit for the 3rd quarter 2005 was$80.0 million, up 56.5% over the same period in the previous year.Gross profit increased more significantly than revenue due primarilyto the continued growth of priceline.com's published-price travelservices. GAAP net income for the 3rd quarter 2005 was $170.6 million,or $3.71 per diluted share, compared to $9.3 million, or $0.23 perdiluted share a year ago. GAAP net income for the 3rd quarter 2005includes a $160 million net non-cash tax benefit from reversing aportion of priceline.com's deferred tax asset valuation allowance,partly offset by recording a non-cash U.S. income tax provision.

Pro forma gross profit for the 3rd quarter 2005 was $80.9 million,a 56.5% increase over the same period a year ago. Pro forma net incomefor the 3rd quarter 2005 was $19.3 million, or $0.47 per dilutedshare, compared to $11.3 million, or $0.28 per diluted share a yearago. The First Call average analyst estimate for the 3rd quarter 2005was $0.37 per diluted share. The section below entitled "Non-GAAPFinancial Measures" provides a definition and information about theuse of pro forma financial information used in this press release andthe attached financial and statistical supplement reconciles pro formafinancial information with priceline.com's financial results underGAAP.

The non-cash tax benefit was recorded pursuant to the provisionsof Statement of Financial Accounting Standards No. 109, that require acompany to release a portion of its deferred tax asset valuationallowance when it achieves a pattern of profitability in recent yearsand the likelihood of achieving future sustained profitabilitysuggests that it is more likely than not that it will realize all orsome portion of its net operating loss carryforward. Whilepriceline.com does not expect to pay cash taxes on its U.S. federaltaxable income for the foreseeable future, as a result of thereversal, priceline.com began to record, in the 3rd quarter 2005, amostly non-cash provision for U.S. income tax expense in itsconsolidated financial statements. Priceline.com makes cash taxpayments for U.S. alternative minimum taxes and for certaininternational taxes.

Priceline.com also said today that its Board of Directorsauthorized the company to repurchase up to $50 million worth ofpriceline.com common stock. Since 2002, priceline.com has repurchasedapproximately $24 million of its common stock. The pricing, timing,initiation and completion of the repurchases, if any, will be at thediscretion of the company's management.

Priceline.com said it experienced a strong 3rd quarter."Priceline.com had solid results domestically in the 3rd quarter andour European operations are experiencing high growth rates in trafficand bookings, particularly in Continental Europe, where online growthtrends are generally strong," said priceline.com President and ChiefExecutive Officer Jeffery H. Boyd. "Priceline Europe recorded grossbookings of $165 million in the 3rd quarter, which represents anorganic growth rate of 75.5% compared to the same quarter in the prioryear (which assumes ownership of Active Hotels and Bookings, BV duringthe entire period). With a combined base of more than 18,000properties, we believe that Priceline Europe, with its combination ofActive Hotels and Bookings, BV, is one of the largest andfastest-growing online hotel reservation services in Europe."

Mr. Boyd continued, "In addition, priceline.com benefited duringthe quarter from continued business and service diversification. Allof our core travel services now give priceline.com customerspublished-price and opaque purchase options, which significantlybroadens our target market. With this service line-up, priceline.comcan now build distribution in new channels, including content-drivensearch and affiliate channels and branded affiliate channels. Duringthe quarter, priceline.com launched a new white-label booking engine,called FlexRez(sm), which allows affiliates to sell hotel rooms andother travel services using their own brand identity and Webpresence."

Forward Guidance

Looking forward, Mr. Boyd said, "During the 4th quarter 2005, weintend to continue to invest in building distribution and serviceimprovements in the U.S., and in building supply and distribution inEurope. With the solid 3rd quarter results announced today and thebusiness strength underlying those results, our full-year 2005 resultsare on track to exceed First Call average analyst estimates for thefull year."

Priceline.com issued the following guidance for 4th quarter andfull-year 2005:

-- Year-over-year increases in gross travel bookings of approximately 25%;

-- Year-over-year increase in revenue of approximately 5%;

-- Year-over-year increase in pro forma gross profit of approximately 25%; and

-- Pro forma net income of between $0.24 to $0.28 per diluted share.

For the full-year 2005, priceline.com said it expects pro formanet income to be in the range of $1.33 to $1.37 per diluted share.

A reconciliation of pro forma financial results to GAAP results isincluded in the attached financial and statistical supplement. Proforma gross profit guidance for the 4th quarter 2005 excludes non-cashamortization expense of acquisition-related intangibles associatedwith the acquisitions of Travelweb LLC, and Bookings, BV.

Pro forma net income per diluted share guidance for the 4thquarter and full-year 2005 exclude non-cash amortization expense ofacquisition-related intangibles (primarily associated with theacquisitions of Travelweb, Active Hotels and Bookings, BV),stock-based compensation expense, option payroll tax expense, non-cashincome tax expense and benefits (including non-cash U.S. income taxexpense and the 3rd quarter release of priceline.com's deferred taxvaluation allowance), a 3rd quarter 2005 non-cash restructuring chargeassociated with the abandonment of real estate, and, as applicable,the payment of non-cash preferred stock dividends, which, whenaggregated, are expected to total approximately $7 million and $135million, respectively. Pro forma net income is also adjusted for theimpact on minority interests of the pro forma adjustments describedabove. In addition, pro forma net income per diluted share guidancefor the 4th quarter 2005 and full-year 2005 excludes the anticipatedimpact of EITF 04-08 ("Effect of Contingently Convertible Debt onDiluted Earnings per Share"), which was effective as of December 15,2004 and which revises the method for calculating diluted sharesoutstanding for purposes of computing GAAP net income per dilutedshare.

About priceline.com

Priceline.com is a travel service that offers leisure airlinetickets, hotel rooms, rental cars, vacation packages and cruises.Priceline.com recently expanded its services so customers now have achoice: they can pick from a broad selection of published flights,hotels, rental cars and packages at published prices or, for deepersavings, they can use priceline.com's Name Your Own Price(R) servicefor their travel needs. Priceline.com also has a personal financeservice that offers home mortgages, refinancing and home equity loansthrough an independent licensee.

Priceline.com operates one of Europe's fastest growing hotelreservation services through Activehotels.com, Activereservations.com,Bookings.net and priceline.co.uk. The company also operates thefollowing travel sites: Travelweb.com, Lowestfare.com, RentalCars.comand BreezeNet.com. Priceline.com licenses its business model toindependent licensees, including priceline mortgage and certaininternational licensees.

Information About Forward-Looking Statements

This press release may contain forward-looking statements. Theseforward-looking statements are not guarantees of future performanceand are subject to certain risks, uncertainties and assumptions thatare difficult to predict; therefore, actual results may differmaterially from those expressed, implied or forecasted in any suchforward-looking statements. Expressions of future goals and similarexpressions including, without limitation, "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 historicalfact are intended to identify forward-looking statements. Thefollowing factors, among others, could cause the Company's actualresults to differ materially from those described in theforward-looking statements:

-- adverse changes in general market conditions for leisure and other travel services as the result of, among other things, terrorist attacks, natural disasters, or the outbreak of an epidemic or pandemic disease;

-- adverse changes in the Company's relationships with airlines and other product and service providers which could include, without limitation, the withdrawal of suppliers from the priceline.com system (either priceline.com's retail or "opaque" services, or both):

-- the loss or reduction of global distribution fees;

-- the bankruptcy or insolvency of another major domestic airline;

-- the effects of increased competition;

-- 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 acquisitions, such as Active Hotels and Bookings B.V., 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 3rd 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 couldcause the Company's actual results to differ materially from thosedescribed in the forward-looking statements, please refer to theCompany's most recent Form 10-Q, Form 10-K and Form 8-K filings withthe Securities and Exchange Commission. Unless required by law, theCompany undertakes no obligation to update publicly anyforward-looking statements, whether as a result of new information,future events or otherwise.

Non-GAAP Financial Measures

Pro forma gross profit, pro forma net income and pro forma netincome per share are "non-GAAP financial measures," as such term isdefined by the Securities and Exchange Commission, and may differ fromnon-GAAP financial measures used by other companies. Priceline.combelieves that pro forma gross profit, pro forma net income and proforma net income per share that exclude certain non-cash ornon-recurring revenues or expenses are useful for investors toevaluate priceline.com's future on-going performance because theyenable a more meaningful comparison of priceline.com's projected cashearnings and performance with its historical results from priorperiods.

Pro forma gross profit excludes non-cash amortization expense ofacquisition-related intangibles. Pro forma net income excludesnon-cash amortization expense of acquisition-related intangibles,stock-based compensation expense, option payroll tax expense, anon-cash restructuring charge associated with the abandonment of realestate, non-cash income tax expense/ benefit (including non-cash U.S.income tax expense and the 3rd quarter release of priceline.com'sdeferred tax valuation allowance) and, when applicable, the payment ofnon-cash preferred stock dividends. Pro forma net income is alsoadjusted for the impact on minority interests of the pro formaadjustments described above. In addition, pro forma net income pershare excludes the accounting impact of EITF 04-08 ("Effect ofContingently Convertible Debt on Diluted Earnings per Share"), whichwas effective as of December 15, 2004 and revises the method forcalculating diluted shares outstanding for purposes of computing GAAPnet income per share.

Stock based compensation expense and the non-cash expenseassociated with the payment of preferred stock dividends are excludedfrom pro forma net income and pro forma net income per share becausethey do not impact cash earnings and are reflected in earnings pershare through increased share counts. Option payroll tax expense oftenshows volatility unrelated to operating results since the expense isdriven primarily by option exercise activity and the market price ofpriceline.com's common stock. Restructuring charge (reversal) canimpact comparability of earnings with historical results from priorperiods. Finally, the accounting impact of EITF 04-08 ("Effect ofContingently Convertible Debt on Diluted Earnings per Share"), whichrequires that priceline.com use the "if-converted" method ofaccounting for convertible debt instruments when calculating earningsper share, has been excluded because the common stock that underliepriceline.com's 1% Convertible Senior Notes and priceline.com's 2.25%Convertible Senior Notes are generally not issuable unless our commonstock trades at prices of $44.00 per share and $45.54 per share,respectively.

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

priceline.com Incorporated
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except per share data)

September December
30, 31,
ASSETS 2005 2004
----------- -----------
Current assets:
Cash and cash equivalents $ 100,089 $ 101,270
Restricted cash 22,613 23,572
Short-term investments 52,881 122,812
Accounts receivable, net of allowance for
doubtful accounts of $1,435 and $1,390,
respectively 36,200 18,314
Prepaid expenses and other current assets 19,058 6,578
----------- -----------
Total current assets 230,841 272,546

Property and equipment, net 17,706 15,827
Intangible assets, net 158,905 98,908
Goodwill 202,469 138,859
Deferred taxes 148,357 -
Other assets 17,553 15,942
----------- -----------
Total assets $ 775,831 $ 542,082
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable $ 48,922 $ 40,612
Accrued expenses 25,096 23,649
Deferred merchant bookings 6,065 5,641
Other current liabilities 8,008 4,475
----------- -----------
Total current liabilities 88,091 74,377

Deferred taxes 44,585 25,668
Other long-term liabilities 3,091 692
Minority interest 23,916 4,314
Long-term debt 223,562 224,418
----------- -----------
Total liabilities 383,245 329,469
----------- -----------

SERIES B MANDATORILY REDEEMABLE PREFERRED
STOCK, $0.01 par value, 80,000 authorized
shares; $1,000 liquidation value per share;
80,000 shares issued 13,470 and 13,470
shares outstanding, respectively 13,470 13,470

Stockholders' equity:
Common stock, $0.008 par value, authorized
1,000,000,000 shares, 41,934,686 and
41,356,576 shares issued, respectively 321 317
Treasury stock, 2,496,326 shares (350,628) (350,628)
Additional paid-in capital 2,077,099 2,064,224
Deferred compensation (6,917) (1,264)
Accumulated deficit (1,338,362) (1,525,447)
Accumulated other comprehensive
income (loss) (2,397) 11,941
----------- -----------
Total stockholders' equity 379,116 199,143
----------- -----------

Total liabilities and stockholders' equity $ 775,831 $ 542,082
=========== ===========

priceline.com Incorporated
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)

Three Months Nine Months
Ended Ended
September 30, September 30,
---------------------------------------
2005 2004 2005 2004
--------- --------- --------- ---------

Merchant revenues $222,142 $226,453 $686,174 $693,324
Agency revenues 35,497 8,671 69,280 23,866
Other revenues 1,158 758 3,293 2,212
--------- --------- --------- ---------
Total revenues 258,797 235,882 758,747 719,402

Cost of merchant revenues 178,272 184,627 555,280 570,994
Cost of agency revenues 523 151 523 151
Cost of other revenues - - - -
--------- --------- --------- ---------
Total costs of revenues 178,795 184,778 555,803 571,145
--------- --------- --------- ---------

Gross profit 80,002 51,104 202,944 148,257
--------- --------- --------- ---------

Operating expenses:
Advertising - Offline 7,320 7,178 26,482 27,459
Advertising - Online 19,865 7,471 42,001 18,961
Sales and marketing 9,645 8,711 27,967 24,513
Personnel, including stock
based compensation of $1,270
and $126 for the three months
ended September 30, 2005 and
2004 and $2,974 and $344 for
the nine months ended
September 30, 2005 and 2004,
respectively 13,820 8,162 34,804 24,398
General and administrative,
including option payroll taxes
of $10 and $6 for the three
months ended September 30,
2005 and 2004 and $66 and $344
for the nine months ended
September 30, 2005 and 2004,
respectively 4,814 4,301 14,502 12,264
Information technology 2,508 2,272 8,023 7,241
Depreciation and amortization 7,138 3,359 17,651 8,144
Restructuring charge
(reversal), net 2,000 - 1,664 (12)
--------- --------- --------- ---------

Total operating expenses $ 67,110 $ 41,454 $173,094 $122,968
--------- --------- --------- ---------

Operating income 12,892 9,650 29,850 25,289

Other income:
Interest income 1,102 1,655 4,271 3,794
Interest expense (1,245) (1,299) (3,777) (2,431)
Other (77) (2) (558) 4
--------- --------- --------- ---------
Total other income
(expense) (220) 354 (64) 1,367
--------- --------- --------- ---------
Earnings before income taxes,
equity in income (loss) of
investees and minority
interests 12,672 10,004 29,786 26,656
Income tax (expense)
benefit - note (1) 158,573 (67) 158,527 (67)
Equity in income (loss) of
investee and minority
interests 325 67 626 (81)
--------- --------- --------- ---------
Net income - note (1) 171,570 10,004 188,939 26,508
Preferred stock dividend (976) (740) (1,854) (1,512)
--------- --------- --------- ---------
Net income applicable to
common stockholders
- note (1) $170,594 $ 9,264 $187,085 $ 24,996
========= ========= ========= =========

Net income applicable to common
stockholders per basic common
share - note (1) $ 4.36 $ 0.24 $ 4.79 $ 0.66
========= ========= ========= =========
Weighted average number of
basic common shares
outstanding 39,156 38,684 39,038 38,111
========= ========= ========= =========
Net income applicable to common
stockholders per diluted
common share - note (1) $ 3.71 $ 0.23 $ 4.12 $ 0.63
========= ========= ========= =========
Weighted average number of
diluted common shares
outstanding 46,485 42,648 46,441 42,153
========= ========= ========= =========

note 1: Income tax (expense) benefit for the 3rd quarter 2005
includes a $160 million net non-cash tax benefit from a $170 million
reversal of a portion of the Company's deferred tax asset valuation
allowance, partly offset by recording at $10 million non-cash US
income tax provision.


priceline.com Incorporated
RECONCILIATION OF GAAP FINANCIAL INFORMATION TO PRO FORMA
FINANCIAL INFORMATION
(unaudited)
(In thousands, except per share data)

Three Months Ended
September 30 2005
-------------------------------------
GAAP Adjustments Pro Forma
---------- ----------- ----------
Merchant revenues $ 222,142 $ 222,142
Agency revenues 35,497 35,497
Other revenues 1,158 1,158
---------- ----------
Total revenues 258,797 258,797

Cost of merchant revenues 178,272 (340) (a) 177,932
Cost of agency revenues 523 (523) (b) -
Cost of other revenues - -
---------- ----------- ----------
Total costs of revenues 178,795 (863) 177,932
---------- ----------- ----------

Gross profit 80,002 863 80,865
---------- ----------- ----------
Operating expenses:
Advertising - Offline 7,320 7,320
Advertising - Online 19,865 19,865
Sales and marketing 9,645 9,645
Personnel, including stock
based compensation of $1,270 13,820 (1,270) (c) 12,550
General and administrative,
including option payroll
taxes of $10 4,814 (10) (d) 4,804
Information technology 2,508 2,508
Depreciation and amortization 7,138 (4,995) (e) 2,143
Restructuring charge
(reversal) 2,000 (2,000) (f) -
---------- ----------- ----------

Total operating expenses $ 67,110 $ (8,275) $ 58,835
---------- ----------- ----------

Operating income 12,892 9,138 22,030

Other income:
Interest income 1,102 1,102
Interest expense (1,245) (1,245)
Other (77) (77)
---------- ----------- ----------
Total other income (expense) (220) - (220)
---------- ----------- ----------
Earnings before income taxes,
equity in income of investees
and minority interests 12,672 9,138 21,810
Income tax (expense) benefit 158,573 (160,930) (g) (2,357)
Equity in income of investee
and minority interests 325 (435) (h) (110)
---------- ----------- ----------
Net income 171,570 (152,227) 19,343
Preferred stock dividend (976) 976 (i) -
---------- ----------- ----------
Net income applicable to common
stockholders $ 170,594 $ (151,251) $ 19,343
========== =========== ==========
Net income applicable to common
stockholders per basic common
share $ 4.36 $ 0.49
========== ==========
Weighted average number of
basic common shares
outstanding 39,156 39,156
========== ==========
Net income applicable to common
stockholders per diluted
common share $ 3.71 $ 0.47
========== ==========
Weighted average number of
diluted common shares
outstanding 46,485 (5,453) (j) 41,032
========== =========== ==========

(a) Cost of merchant revenue adjustment for Travelweb acquired
intangibles.

(b) Cost of agency revenue adjustment for Bookings BV acquired
intangibles.

(c) Adjustment for stock-based compensation.

(d) Adjustment for option payroll taxes.

(e) Adjustment for amortization of acquisition-related intangibles,
primarily related to Bookings BV, Active Hotels and Travelweb.

(f) Adjustment for restructuring charge associated with abandoned real
estate.

(g) Adjustment for $160 million net non-cash tax benefit from a $170
million reversal of a portion of the Company's deferred tax asset
valuation allowance, partly offset by recording a $10 million
non-cash US income tax provision. In addition, adjustment for
acquisition-related income tax benefit.

(h) Impact on minority interest of pro forma adjustments.

(i) Adjustment for preferred stock dividend.

(j) Adjustment for the impact of EITF 04-08. Also, adjustment to
include shares of restricted stock that were not considered in
GAAP calculation of weighted average number of diluted common
shares outstanding.


priceline.com Incorporated
RECONCILIATION OF GAAP FINANCIAL INFORMATION TO PRO FORMA
FINANCIAL INFORMATION
(unaudited)
(In thousands, except per share data)

Nine Months Ended
September 30, 2005
-------------------------------------
2005 Adjustments Pro Forma
---------- ----------- ----------

Merchant revenues $ 686,174 $ 686,174
Agency revenues 69,280 69,280
Other revenues 3,293 3,293
---------- ----------
Total revenues 758,747 758,747

Cost of merchant revenues 555,280 (1,041) (a) 554,239
Cost of agency revenues 523 (523) (b) -
Cost of other revenues - -
---------- ----------- ----------
Total costs of revenues 555,803 (1,564) 554,239
---------- ----------- ----------

Gross profit 202,944 1,564 204,508
---------- ----------- ----------
Operating expenses:
Advertising - Offline 26,482 26,482
Advertising - Online 42,001 42,001
Sales and marketing 27,967 27,967
Personnel, including stock
based compensation of
$2,974 34,804 (2,974) (c) 31,830
General and administrative,
including option payroll
taxes of $66 14,502 (66) (d) 14,436
Information technology 8,023 8,023
Depreciation and
amortization 17,651 (11,181) (e) 6,470
Restructuring charge
(reversal), net 1,664 (1,664) (f) -
---------- ----------- ----------

Total operating expenses $ 173,094 $ (15,885) $ 157,209
---------- ----------- ----------

Operating income 29,850 17,449 47,299

Other income:
Interest income 4,271 4,271
Interest expense (3,777) (3,777)
Other (558) (558)
---------- ----------- ----------
Total other income (expense) (64) - (64)
---------- ----------- ----------

Earnings before income taxes,
equity in income of investees
and minority interests 29,786 17,449 47,235
Income tax (expense) benefit 158,527 (161,339) (g) (2,812)
Equity in income of investee
and minority interests 626 (515) (h) 111
---------- ----------- ----------
Net income 188,939 (144,405) 44,534
Preferred stock dividend (1,854) 1,854 (i) -
---------- ----------- ----------
Net income applicable to
common stockholders $ 187,085 $(142,551) $ 44,534
========== =========== ==========
Net income applicable to
common stockholders per basic
common share $ 4.79 $ 1.14
========== ==========
Weighted average number of
basic common shares
outstanding 39,038 39,038
========== ==========
Net income applicable to common
stockholders per diluted
common share $ 4.12 $ 1.09
========== ==========
Weighted average number of
diluted common shares
outstanding 46,441 (5,461) (j) 40,980
========== =========== ==========

(a) Cost of merchant revenue adjustment for Travelweb acquired
intangibles.

(b) Cost of agency revenue adjustment for Bookings BV acquired
intangibles.

(c) Adjustment for stock-based compensation.

(d) Adjustment for option payroll taxes.

(e) Adjustment for amortization of acquisition-related intangibles,
primarily related to Bookings BV, Active Hotels and Travelweb.

(f) Adjustment for restructuring expense activity.

(g) Adjustment for $160 million net non-cash tax benefit from a $170
million reversal of a portion of the Company's deferred tax asset
valuation allowance, partly offset by recording a $10 million
non-cash US income tax provision. In addition, acquisition-related
income tax benefit.

(h) Impact on minority interest of pro forma adjustments.

(i) Adjustment for preferred stock dividend.

(j) Adjustment for the impact of EITF 04-08. Also, adjustment to
include shares of restricted stock that were not considered in
GAAP calculation of weighted average number of diluted common
shares outstanding.


priceline.com Incorporated
Consolidated Statements of Operations
In thousands, except per share data
(Unaudited)

Income Statement Analysis 1Q04 2Q04 3Q04 4Q04
------------------------- --------- --------- --------- ---------
Merchant revenues $217,011 $249,860 $226,453 $179,669
Agency revenues 6,448 8,747 8,671 14,734
Other revenues 672 782 758 565
--------- --------- --------- ---------
Total revenues 224,131 259,389 235,882 194,968

Cost of merchant revenues 180,757 205,610 184,627 143,827
Cost of agency revenues - - 151 1,244
Cost of other revenues - - - -
--------- --------- --------- ---------
Total costs of revenues 180,757 205,610 184,778 145,071
--------- --------- --------- ---------
Gross profit 43,374 53,779 51,104 49,897
--------- --------- --------- ---------
Operating expenses:
Advertising - offline 10,664 9,617 7,178 6,018
Advertising - online 4,741 6,749 7,471 8,518
Sales and marketing 6,706 9,096 8,711 7,577
Personnel 8,341 7,895 8,162 11,176
General and administrative 3,509 4,454 4,301 4,188
Information technology 2,514 2,455 2,272 1,929
Depreciation and
amortization 2,220 2,565 3,359 5,358
Restructuring charge
(reversal) - (12) - -
--------- --------- --------- ---------
Total operating expenses $ 38,695 $ 42,819 $ 41,454 $ 44,764
--------- --------- --------- ---------

Operating income 4,679 10,960 9,650 5,133

Other income (expense):
Interest income 1,110 1,029 1,655 1,316
Interest expense (566) (566) (1,299) (1,291)
Other 6 - (2) 10
--------- --------- --------- ---------

Total other income (expense) 550 463 354 35
--------- --------- --------- ---------

Earnings before income taxes,
equity in income (loss) of
investees and minority
interests 5,229 11,423 10,004 5,168
Income tax benefit (expense) - - (67) 260
Equity in income (loss) of
investee and minority
interests (126) (22) 67 (430)
--------- --------- --------- ---------
Net income 5,103 11,401 10,004 4,998

Preferred stock dividend (772) - (740) -
--------- --------- --------- ---------
Net income applicable to
common stockholders $ 4,331 $ 11,401 $ 9,264 $ 4,998
========= ========= ========= =========

Net income applicable to common
stockholders per basic common
share $ 0.12 $ 0.30 $ 0.24 $ 0.13
========= ========= ========= =========

Net income applicable to common
stockholders per diluted
common share $ 0.11 $ 0.28 $ 0.23 $ 0.12
========= ========= ========= =========

(1) Weighted average common
shares:
Basic 37,588 38,076 38,684 38,775
Diluted 38,905 43,144 42,648 40,449
Common shares outstanding,
end of period 37,696 38,748 38,801 38,860


3Q05
vs.
Income Statement Analysis 1Q05 2Q05 3Q05 3Q04
------------------------- --------- --------- --------- ---------

Merchant revenues $217,528 $246,504 $222,142 -2%
Agency revenues 14,925 18,858 35,497 309%
Other revenues 939 1,195 1,158 53%
--------- --------- ---------
Total revenues 233,392 266,557 258,797 10%

Cost of merchant revenues 175,685 201,323 178,272 -3%
Cost of agency revenues - - 523 246%
Cost of other revenues - - - NM
--------- --------- ---------
Total costs of revenues 175,685 201,323 178,795 -3%
--------- --------- ---------

Gross profit 57,707 65,234 80,002 57%
--------- --------- ---------
Operating expenses:
Advertising - offline 11,072 8,089 7,320 2%
Advertising - online 9,932 12,205 19,865 166%
Sales and marketing 8,208 10,113 9,645 11%
Personnel 11,222 9,761 13,820 69%
General and administrative 4,237 5,453 4,814 12%
Information technology 2,739 2,776 2,508 10%
Depreciation and amortization 5,466 5,047 7,138 113%
Restructuring charge
(reversal) (336) - 2,000 NM
--------- --------- ---------

Total operating expenses $ 52,540 $ 53,444 $ 67,110 62%
--------- --------- ---------

Operating income 5,167 11,790 12,892 34%

Other income (expense):
Interest income 1,456 1,712 1,102 -33%
Interest expense (1,293) (1,239) (1,245) -4%
Other (618) 137 (77) NM
--------- --------- ---------

Total other income (expense) (455) 610 (220) NM
--------- --------- ---------
Earnings before income taxes,
equity in income (loss) of
investees and minority
interests 4,712 12,400 12,672 27%
Income tax benefit (expense) 290 (336) 158,573 NM
Equity in income (loss) of
investee and minority
interests (10) 312 325 385%
--------- --------- ---------
Net income 4,992 12,376 171,570 1615%

Preferred stock dividend (878) - (976) 32%
--------- --------- ---------
Net income applicable to
common stockholders $ 4,114 $ 12,376 $170,594 1741%
========= ========= =========
Net income applicable to
common stockholders per basic
common share $ 0.11 $ 0.32 $ 4.36 1717%
========= ========= =========
Net income applicable to common
stockholders per diluted
common share $ 0.10 $ 0.29 $ 3.71 1513%
========= ========= =========
(1) Weighted average common
shares:
Basic 38,863 39,022 39,156 1%
Diluted 39,764 46,516 46,485 9%
Common shares outstanding,
end of period 39,241 39,343 39,438 2%

priceline.com Incorporated
Consolidated Balance Sheets
In thousands
(Unaudited)


ASSETS 3/31/2004 6/30/2004 9/30/2004 12/31/2004
----------- ----------- ---------- ----------

CURRENT ASSETS:
Cash and cash
equivalents $ 176,092 $ 156,306 $ 77,281 $ 101,270
Restricted cash 22,384 23,502 25,968 23,572
Short-term investments 79,576 206,360 144,381 122,812
Accounts receivable,
net of allowance for
doubtful accounts 19,052 23,733 24,146 18,314
Prepaid expenses and
other current assets 3,435 6,156 7,223 6,578
----------- ----------- ---------- ----------
Total current assets 300,539 416,057 278,999 272,546

PROPERTY AND EQUIPMENT,
net 15,692 15,474 15,899 15,827
INTANGIBLE ASSETS, net 6,814 13,570 96,651 98,908
GOODWILL 8,779 32,837 130,118 138,859
DEFERRED TAXES - - - -
OTHER ASSETS 21,385 16,674 16,186 15,942
----------- ----------- ---------- ----------

TOTAL ASSETS $ 353,209 $ 494,612 $ 537,853 $ 542,082
=========== =========== ========== ==========

LIABILITIES AND
STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 38,023 $ 49,380 $ 50,640 $ 40,612
Accrued expenses 18,118 22,414 25,096 23,649
Deferred merchant
bookings - 8,867 7,398 5,641
Other current
liabilities 3,127 3,340 3,512 4,475
----------- ----------- ---------- ----------
Total current
liabilities 59,268 84,001 86,646 74,377

Deferred taxes - - 25,310 25,668
Other long-term
liabilities 435 2,029 632 692
Minority interest - 691 4,471 4,314
Long-term debt 124,996 223,348 224,572 224,418
----------- ----------- ---------- ----------
Total liabilities 184,699 310,069 341,631 329,469
----------- ----------- ---------- ----------

SERIES B MANDATORILY
REDEEMABLE PREFERRED
STOCK 13,470 13,470 13,470 13,470
----------- ----------- ---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 307 315 316 317
Treasury stock (350,628) (350,628) (350,628) (350,628)
Additional paid-in
capital 2,056,942 2,062,613 2,063,451 2,064,224
Deferred compensation (1,302) (1,516) (1,390) (1,264)
Accumulated deficit (1,551,113) (1,539,712)(1,530,448)(1,525,447)
Accumulated other
comprehensive income 834 1 1,451 11,941
----------- ----------- ---------- ----------
Total stockholders'
equity 155,040 171,073 182,752 199,143
----------- ----------- ---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 353,209 $ 494,612 $ 537,853 $ 542,082
=========== =========== ========== ==========


ASSETS 3/31/2005 6/30/2005 9/30/2005
----------- ---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 100,071 $ 118,270 $ 100,089
Restricted cash 23,855 22,041 22,613
Short-term investments 141,967 137,598 52,881
Accounts receivable, net of
allowance for doubtful accounts 25,915 31,811 36,200
Prepaid expenses and other
current assets 6,419 8,075 19,058
----------- ---------- ----------

Total current assets 298,227 317,795 230,841

PROPERTY AND EQUIPMENT, net 17,672 17,627 17,706
INTANGIBLE ASSETS, net 94,195 86,737 158,905
GOODWILL 132,540 127,665 202,469
DEFERRED TAXES - - 148,357
OTHER ASSETS 17,164 17,431 17,553
----------- ---------- ----------

TOTAL ASSETS $ 559,798 $ 567,255 $ 775,831
=========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accounts payable $ 58,900 $ 57,175 $ 48,922
Accrued expenses 19,620 20,607 25,096
Deferred merchant bookings 7,950 8,267 6,065
Other current liabilities 4,047 7,135 8,008
----------- ---------- ----------
Total current liabilities 90,517 93,184 88,091

Deferred taxes 22,624 21,857 44,585
Other long-term liabilities 1,573 844 3,091
Minority interest 4,459 4,476 23,916
Long-term debt 223,576 224,247 223,562
----------- ---------- ----------
Total liabilities 342,749 344,608 383,245
----------- ---------- ----------
SERIES B MANDATORILY REDEEMABLE
PREFERRED STOCK 13,470 13,470 13,470
----------- ---------- ----------
STOCKHOLDERS' EQUITY:
Common stock 319 320 321
Treasury stock (350,628) (350,628) (350,628)
Additional paid-in capital 2,071,625 2,073,832 2,077,099
Deferred compensation (6,146) (5,990) (6,917)
Accumulated deficit (1,521,333)(1,508,957)(1,338,362)
Accumulated other comprehensive
income 9,742 600 (2,397)
----------- ---------- ----------
Total stockholders' equity 203,579 209,177 379,116
----------- ---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 559,798 $ 567,255 $ 775,831
=========== ========== ==========

priceline.com Incorporated
Statistical Data
In thousands

Gross Bookings 1Q04 2Q04 3Q04 4Q04
-------------- ----------- ----------- ---------- ----------

Agency $ 116,611 $ 176,248 $ 156,946 $ 197,634
Merchant 246,339 297,094 278,339 218,541
----------- ----------- ---------- ----------
Total $ 362,950 $ 473,342 $ 435,285 $ 416,175

Domestic $ 360,179 $ 470,375 $ 424,815 $ 367,199
International 2,771 2,967 10,470 48,976
----------- ----------- ---------- ----------
Total $ 362,950 $ 473,342 $ 435,285 $ 416,175

Year/Year Growth 45.3% 58.0% 43.7% 61.1%


Units Sold 1Q04 2Q04 3Q04 4Q04
---------- ----------- ----------- ---------- ----------

Airline Tickets 622 822 725 644
Year/Year Growth 28.7% 60.3% 65.5% 61.5%

Hotel Room- Nights 1,682 1,995 2,087 2,007
Year/Year Growth 35.9% 31.6% 26.2% 51.1%

Rental Car Days 1,214 1,409 1,364 1,065
Year/Year Growth 83.1% 62.4% 12.1% 15.4%


1Q04 2Q04 3Q04 4Q04
----------- ----------- ---------- ----------

Revenue $ 224,131 $ 259,389 $ 235,882 $ 194,968
Year/Year Growth 11.8% 8.3% -3.1% 8.2%

Gross Profit $ 43,374 $ 53,779 $ 51,104 $ 49,897
Year/Year Growth 31.5% 32.8% 25.7% 56.8%


Gross Bookings represent the total Dollar value of travel booked,
inclusive of taxes and fees.

The gross bookings and units sold information reflects results
from Active Hotels and Bookings since acquisition.


Gross Bookings 1Q05 2Q05 3Q05
-------------- ----------- ---------- ----------

Agency $ 241,935 $ 266,447 $ 343,214
Merchant 267,815 303,017 267,840
----------- ---------- ----------
Total $ 509,750 $ 569,464 $ 611,054

Domestic $ 437,848 $ 491,949 $ 446,232
International 71,902 77,515 164,822
----------- ---------- ----------
Total $ 509,750 $ 569,464 $ 611,054

Year/Year Growth 40.4% 20.3% 40.4%


Units Sold 1Q05 2Q05 3Q05
----------- ----------- ---------- ----------

Airline Tickets 747 789 680
Year/Year Growth 20.0% -4.1% -6.2%

Hotel Room- Nights 2,556 2,736 3,499
Year/Year Growth 52.0% 37.1% 67.7%

Rental Car Days 1,278 1,535 1,692
Year/Year Growth 5.3% 8.9% 24.0%


1Q05 2Q05 3Q05
----------- ---------- ----------
Revenue $ 233,392 $ 266,557 $ 258,797
Year/Year Growth 4.1% 2.8% 9.7%

Gross Profit $ 57,707 $ 65,234 $ 80,002
Year/Year Growth 33.0% 21.3% 56.5%

Gross Bookings represent the total dollar value of travel booked,
inclusive of taxes and fees.

The gross bookings and units sold information reflects results
from Active Hotels and Bookings since acquisition.