Published: 2022-05-04 00:00:00 ET

HTTP/1.1 200 OK HTTP/1.1 200 OK X-Crawlera-Slave: 38.153.10.219:8800 X-Crawlera-Version: 1.60.1 accept-ranges: bytes content-type: text/html last-modified: Wed, 04 May 2022 21:25:14 GMT server: AmazonS3 x-amz-id-2: +Xd5x8oRgtM7yWbqBIjSqOdXZ2XKSoYs+fDCIbC1rvd8MitKJQG69ZivJpfzQGerHorSkSbMXjf7K+VSthbyog== x-amz-meta-mode: 33188 x-amz-meta-s3cmd-attrs: uid:504/gname:fitrprnt/uname:fitrprnt/gid:504/mode:33184/mtime:1651699494/atime:1651699494/md5:ed4244a5e67023e19913b92ccba8aa60/ctime:1651699501 x-amz-replication-status: COMPLETED x-amz-request-id: 13SVH6S8BS43FGBS x-amz-version-id: kQGdrjxEk9qJrC65h1BUjdUXSdV.hezd x-content-type-options: nosniff x-frame-options: SAMEORIGIN x-xss-protection: 1; mode=block x-akamai-transformed: 9 - 0 pmb=mTOE,2 expires: Thu, 06 Apr 2023 09:32:55 GMT cache-control: max-age=0, no-cache, no-store pragma: no-cache date: Thu, 06 Apr 2023 09:32:55 GMT vary: Accept-Encoding akamai-x-true-ttl: -1 strict-transport-security: max-age=31536000 ; includeSubDomains ; preload set-cookie: ak_bmsc=329AABE847A48600F268B89141CEE8C6~000000000000000000000000000000~YAAQXA/QF1vMtzaHAQAAv3PpVRORcZjOx+S43j7A+yxiL8UeCqICEZfWoBNkr0HZgjeNrTeAlRi4Xec4hDv01EguDMsPMFVTS+OuwyFFI/1VIRsrW+l9y7vieEp0dBscRp6qQr6RI2TBkePfi5neOg1+4hjE5iiKwl5emvzybAk0VAsHLfGWWRCusv7O0EK+vZXuqg+N0CSXS8yJuCd/Jdblblb3JUI8e+qX5dvbb6H3n5hr6jUpChjuQjfY2kUZudPxPPzF99YhzaCDXD2ho0A8aKc0fpb22eI4D+4KlLbsU930awtPTfwolB/snFYTWO/LG8FDUnfzCPdZ9X8W+nx3sMVEOlkiPEU8jrIysT4ZV5FfOOQDssOGPQHW0LxaQjpP5hcFBg==; Domain=.sec.gov; Path=/; Expires=Thu, 06 Apr 2023 11:32:55 GMT; Max-Age=7200; HttpOnly set-cookie: bm_mi=D17EEC3C72BB4DFA6A0123A8752E84B1~YAAQXA/QF1zMtzaHAQAAv3PpVRNQ9ZtAGP8FZHODsr+CgoQKaDAPN3QvbXUhuvyheLJ9jXvHm/QmX87Uw7a/42p0zFjyO9htRzfMVbXPZVbapVgF49Yd9eI4gh6Ozwm3UccOn9LW58cqo0qCJglePZVYuPkrHWKaVSmAJLRPDacYEnx4rLIN6FY/AKu/usfGdHCBm2YePCCqfrUiyvBHaYD/on3UQbc7NXJLoD3GpuvKnlypZt7W+WGKvI0DHerpuG74E1+aCaqkzuMfyqrFyXeBRqLcamYBnKko4X7QYuYKdgKw1lJ42oGaI1zGzSH4yr/2F8orBiPN0D+DdBaPht0ndzzJTBin/nm3oJOJ+ddiSTyYFtIQbRZx/ZmVD653/YU3q025TKTOyw==~1; Domain=.sec.gov; Path=/; Expires=Thu, 06 Apr 2023 09:32:55 GMT; Max-Age=0; Secure Transfer-Encoding: chunked Proxy-Connection: close Connection: close

---

---

---

---

---

---

---

 

Management of Booking Holdings Inc. (the "Company") is responsible for the Unaudited Consolidated Financial Statements included in this document. The Unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include all normal and recurring adjustments that management of the Company considers necessary for a fair presentation of its financial position and operating results. The Company prepared the Unaudited Consolidated Financial Statements following the requirements of the Securities and Exchange Commission ("SEC") for interim reporting. As permitted under those rules, the Company condensed or omitted certain footnotes or other financial information that are normally required by U.S. GAAP for annual financial statements. These statements should be read in combination with the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2021.

 

The Unaudited Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation. The functional currency of the Company's subsidiaries is generally the respective local currency. For international operations, assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the accompanying Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations.

 

Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for any subsequent quarter or the full year.

Impact of COVID-19

In response to the outbreak of COVID-19 (the "COVID-19 pandemic"), as well as subsequent outbreaks driven by new variants of COVID-19, governments and businesses around the world have implemented a variety of restrictive measures to reduce the spread of COVID-19. These measures have had a significant adverse effect on many of the customers on whom the Company’s business relies, including hotels and other accommodation providers, airlines, and restaurants, as well as the Company's operations, employees, and consumers. The COVID-19 pandemic and the resulting implementation of restrictive measures resulted in a significant decline in travel activities and consumer demand for related services, in 2020 in particular. The Company’s financial results and prospects are almost entirely dependent on the sale of travel-related services. The spread of new variants of COVID-19 has caused uncertainty as to when restrictions will be lifted, if additional restrictions may be initiated or reimposed, if there will be permanent changes to travel behavior patterns, and the timing of distribution and administration of COVID-19 vaccines and other medical interventions globally. See Note 2 to the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 for further information.

Even though there have been some improvements in the economic and operating conditions for the Company's business since the outset of the COVID-19 pandemic, the Company cannot predict the long-term effects of the pandemic on its business or the travel and restaurant industries as a whole.

Reclassification

Certain amounts from prior periods have been reclassified to conform to the current period presentation.

Recent Accounting Pronouncements Adopted

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

On January 1, 2022, the Company adopted the new accounting standards update relating to convertible instruments and contracts in an entity’s own equity. Compared to legacy U.S. GAAP, the accounting standards update reduces the number of accounting models for convertible debt instruments, requires fewer embedded conversion features to be separately recognized from the host contract, and amends certain guidance to reduce form-over-substance-based accounting conclusions. Under the updated guidance, upon the initial recognition of convertible debt, the Company presents the entire amount attributable to the debt as a liability. The initial carrying amount of the convertible debt liability is reduced by any direct and

---

incremental issuance costs paid to third parties that are associated with the convertible debt issuance. No amount attributable to the debt is initially recognized within equity unless the instrument is issued at a substantial premium. In calculating diluted earnings per share, the accounting standards update also requires the use of the if-converted method for the Company’s convertible debt.

The Company adopted the accounting standards update on a modified retrospective basis applied to the 0.75% convertible senior notes due May 2025 (see Note 9) resulting in an increase of $30 million to "Retained earnings" as of January 1, 2022. The significant corresponding balance sheet changes as of that date were an increase of $86 million to "Long-term debt" and decreases of $96 million to "Additional paid-in capital" and $21 million to "Deferred income taxes". For the Company’s convertible debt, interest expense for the periods beginning after January 1, 2022 is reflected in the financial statements using interest rates that are closer to the coupon interest rate of the debt rather than the higher imputed interest expense that resulted from the separation of conversion features required by legacy U.S. GAAP. See Note 4 for additional information on net income per share calculations.

Disaggregation of Revenue

Geographic Information

The Company's revenue from its businesses outside of the U.S. consists of the results of Booking.com, agoda, and Rentalcars.com in their entirety and the results of the KAYAK and OpenTable businesses located outside of the U.S. This classification is independent of where the consumer resides, where the consumer is physically located while using the Company's services, or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the United States is part of the results of the Company's businesses outside of the U.S. The Company's geographic information is as follows (in millions):

												Outside of the U.S.
						United States						The Netherlands						Other						Total
Total revenues for the three months ended March 31,
2022						$	475					$	1,969					$	251					$	2,695
2021						$	197					$	811					$	133					$	1,141

Revenue by Type of Service

Approximately 86% of the Company's revenues for the three months ended March 31, 2022 and 2021 relate to online accommodation reservation services. Revenue from all other sources of online travel reservation services and advertising and other revenues each individually represent less than 10% of the Company's total revenue for each period.

Deferred Merchant Bookings and Deferred Revenue

Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to the travel service providers as well as the Company's estimated deferred revenue for its commission or margin and fees. At March 31, 2022 and December 31, 2021, deferred merchant bookings included deferred revenue for online travel reservation services of $421 million and $148 million, respectively. The amounts are subject to refunds for cancellations. The Company expects to complete its performance obligations generally within one year from the reservation date. During the three months ended March 31, 2022, the Company recognized revenues of $91 million from the deferred revenue balance as of December 31, 2021. The increase in the deferred revenue balance for the three months ended March 31, 2022 is principally driven by payments received from travelers, net of amounts estimated to be payable to travel service providers, for online travel reservations in the current period.

Incentive Programs

The Company provides various incentive programs such as referral bonuses, rebates, credits, and discounts. In addition, the Company offers loyalty programs, such as OpenTable's loyalty program, where participating consumers may be awarded loyalty points on current transactions that can be redeemed in the future. The estimated value of the incentives granted

---

 

The Company maintains equity incentive plans that include performance share units granted to officers and certain other employees, broad-based grants of restricted stock units, and stock options granted to certain employees.

During the three months ended March 31, 2021, the Company modified the performance-based awards granted in 2018 and 2019 to its executive officers, to fix the number of shares to be issued, subject to other vesting conditions. The modification, in aggregate, resulted in additional stock-based compensation expense of $40 million, which was recognized over the remaining requisite service periods for the performance-based awards.

Restricted stock units and performance share units granted by the Company during the three months ended March 31, 2022 had an aggregate grant-date fair value of $450 million. Restricted stock units and performance share units that vested during the three months ended March 31, 2022 had an aggregate fair value at vesting of $363 million. At March 31, 2022, there was $850 million of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 2.3 years, and $21 million of estimated total future stock-based compensation expense related to unvested stock options to be recognized over a weighted-average period of 0.9 years.

The following table summarizes the activity in restricted stock units for employees and non-employee directors during the three months ended March 31, 2022: 

Restricted Stock Units						Shares						Weighted-average Grant-date Fair Value
Unvested at December 31, 2021						281,924									$	1,914
Granted						161,384									$	2,102
Vested						(129,438)									$	1,805
Forfeited						(11,234)									$	2,022
Unvested at March 31, 2022						302,636									$	2,057

The following table summarizes the activity in performance share units for employees during the three months ended March 31, 2022:

Performance Share Units						Shares			Weighted-average Grant-date Fair Value
Unvested at December 31, 2021(1)						108,323						$	2,123
Granted(2),(3)						50,063						$	2,211
Vested						(42,888)						$	1,854
Performance shares adjustment (4)						31,598						$	2,392
Forfeited						(1,128)						$	2,274
Unvested at March 31, 2022						145,968						$	2,290

(1)    Excludes 12,251 performance share units awarded during the year ended December 31, 2021 for which the grant date under Accounting Standards Codification ("ASC") 718, Compensation - Stock Compensation, was not established as of December 31, 2021. Among other conditions, for the grant date to be established, a mutual understanding is required to be reached between the Company and the employee of the key terms and conditions of the award, including the performance targets. The performance targets for each of the annual performance periods under the award are set at the beginning of the respective year.

(2)     Excludes 9,692 performance share units awarded during the three months ended March 31, 2022 for which the grant date under ASC 718 has not been established as of March 31, 2022.

(3)     Includes 7,856 performance share units awarded during the year ended December 31, 2021 for which the grant date under ASC 718 was established.

(4)    Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications.

---

The following table summarizes the activity in stock options during the three months ended March 31, 2022: 

Employee Stock Options									Number of Shares						Weighted-average  Exercise Price									Aggregate  Intrinsic Value (in millions)									Weighted-average Remaining Contractual Term (in years)
Balance, December 31, 2021									135,851									$	1,407								$	135					8.3
Exercised									(2,386)									$	1,411
Forfeited									(3,085)									$	1,411
Balance, March 31, 2022									130,380									$	1,407								$	123					8.0
Exercisable at March 31, 2022									1,317									$	1,015								$	2					1.1

 

The Company computes basic net loss per share by dividing net loss applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period.

 

Common equivalent shares related to stock options, restricted stock units and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.

 

The Company's convertible senior notes have net share settlement features requiring the Company upon conversion to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock, at the Company's option. If the conversion prices for the convertible senior notes exceed the Company's average stock price for the period, the convertible senior notes generally have no impact on diluted net income/loss per share. For periods prior to January 1, 2022, the treasury stock method was used for convertible senior notes in the calculation of diluted net income per share. Following the adoption of the accounting standards update on January 1, 2022 (see Note 1), the if-converted method is used for all periods after that date.

As the Company had net losses for both the three months ended March 31, 2022 and 2021, no incremental shares related to stock-based awards and convertible senior notes are included in the weighted-average numbers of diluted common and common equivalent shares outstanding because the effect would be anti-dilutive.

For the three months ended March 31, 2022 and 2021, 269,653 and 403,620 potential common shares, respectively, related to stock options, restricted stock units, performance share units, and convertible senior notes as applicable, were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive for the respective period.

---

The following table summarizes, by major security type, the Company's investments at March 31, 2022 (in millions): 

						Cost						Gross Unrealized Gains /Upward Adjustments						Gross Unrealized Losses /Downward Adjustments						Carrying  Value
Short-term investments:
Debt securities						$	25					$	—					$	(1)					$	24
Long-term investments:
Equity securities of private companies						$	78					$	259					$	—					$	337
Equity securities with readily determinable fair values						1,165						1,153						(455)						1,863
Total						$	1,243					$	1,412					$	(455)					$	2,200

The following table summarizes, by major security type, the Company's investments at December 31, 2021 (in millions):

						Cost						Gross Unrealized Gains/Upward Adjustments						Gross Unrealized Losses/Downward Adjustments						Carrying  Value
Short-term investments:
Debt securities						$	25					$	—					$	—					$	25
Long-term investments:
Equity securities of private companies						$	66					$	259					$	—					$	325
Equity securities with readily determinable fair values						1,165						1,990						(305)						2,850
Total						$	1,231					$	2,249					$	(305)					$	3,175

Short-term investments in debt securities are included in "Other current assets" in the Consolidated Balance Sheets.

Equity securities with readily determinable fair values include the Company's investments in Meituan, Grab Holdings Limited ("Grab"), and DiDi Global Inc. ("DiDi") with fair values of $1.6 billion, $148 million, and $98 million, respectively, at March 31, 2022 and $2.3 billion, $301 million, and $195 million at December 31, 2021, respectively, which are included in "Long-term investments" in the Consolidated Balance Sheets. Net unrealized losses of $728 million, $153 million, and $97 million for the three months ended March 31, 2022 related to Meituan, Grab, and DiDi, respectively, and net unrealized gains of $29 million for the three months ended March 31, 2021 related to Meituan, are included in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations. In April 2022, DiDi announced that a shareholders' meeting will be held in May 2022 to consider the delisting of its American Depositary Shares ("ADSs") from the New York Stock Exchange and that it will not apply for listing of its shares on any other stock exchange before completion of the delisting. As of May 3, 2022, the market prices of DiDi's ADSs and Grab's shares decreased by 20% and 10%, respectively, as compared to their respective market prices on March 31, 2022.

Investments in equity securities without readily determinable fair values are measured at cost less impairment, if any. Such investments are also required to be measured at fair value as of the date of certain observable transactions for the identical or a similar investment of the same issuer. The Company’s investment in equity securities of private companies at March 31, 2022 and December 31, 2021, includes $51 million invested in Yanolja Co., Ltd. ("Yanolja"), which had a carrying value of $306 million as of those dates.

---

 

Financial assets and liabilities carried at fair value at March 31, 2022 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):

						Level 1						Level 2						Level 3						Total
Recurring fair value measurements
ASSETS:
Cash equivalents and restricted cash equivalents:
Money market fund investments						$	9,691					$	—					$	—					$	9,691
Time deposits and certificates of deposit						63						—						—						63
Short-term investments:
Debt securities						—						24						—						24
Long-term investments:
Equity securities						1,863						—						—						1,863
Derivatives:
Foreign currency exchange derivatives						—						11						—						11
Total assets at fair value						$	11,617					$	35					$	—					$	11,652
LIABILITIES:
Foreign currency exchange derivatives						$	—					$	19					$	—					$	19
Nonrecurring fair value measurements
Assets held for sale (1)						$	—					$	—					$	10					$	10
Total nonrecurring fair value measurements						$	—					$	—					$	10					$	10

(1)    See Note 15 for additional information related to assets held for sale.

Financial assets and liabilities carried at fair value at December 31, 2021 and nonrecurring fair value measurements are classified in the categories described in the table below (in millions):    

						Level 1						Level 2												Total
Recurring fair value measurements (1)
ASSETS:
Cash equivalents and restricted cash equivalents:
Money market fund investments						$	10,410					$	—											$	10,410
Time deposits and certificates of deposit						25						—												25
Short-term investments:
Debt securities						—						25												25
Long-term investments:
Equity securities						2,850						—												2,850
Derivatives:
Foreign currency exchange derivatives						—						5												5
Total assets at fair value						$	13,285					$	30											$	13,315
LIABILITIES:
Foreign currency exchange derivatives						$	—					$	11											$	11
Nonrecurring fair value measurements
Investments in equity securities of private companies (2)						$	—					$	325											$	325
Total nonrecurring fair value measurements						$	—					$	325											$	325

(1)    The Company did not have any Level 3 fair value measurements at December 31, 2021.

(2)    During the year ended December 31, 2021, the Company recorded upward adjustments to its investments in equity securities of private companies based on observable price changes in orderly transactions for identical or similar investments of the same issuer (see Note 5).

---

There are three levels of inputs to measure fair value. The definition of each input is described below:

 

Level 1:    Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and liabilities.

Level 2:    Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.

Level 3:    Unobservable inputs are used when little or no market data is available.

Investments

See Note 5 for additional information related to the Company's investments.

The valuation of the Company's investment in debt securities is considered a "Level 2" valuation because the Company has access to quoted prices for identical or comparable securities, but does not have visibility into the volume and frequency of trading for this investment. A market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.

    

Derivatives

The Company's derivative instruments are valued using pricing models. Pricing models take into account the contract terms as well as multiple inputs where applicable, such as interest rate yield curves, option volatility, and foreign currency exchange rates. The valuation of derivatives are considered "Level 2" fair value measurements. The Company's derivative instruments are typically short-term in nature. The Company reports the fair values of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively.

In the normal course of business, the Company is exposed to the impact of foreign currency fluctuations which it mitigates by following established risk management policies and procedures, including the use of derivatives. The Company enters into foreign currency forward contracts to hedge its exposure to the impact of movements in foreign currency exchange rates primarily on its transactional balances denominated in currencies other than the functional currency and does not use derivatives for trading or speculative purposes. As of March 31, 2022 and December 31, 2021, the Company did not designate any foreign currency exchange derivatives as hedges for accounting purposes.

The table below provides estimated fair values and notional amounts of foreign currency exchange derivatives outstanding at March 31, 2022 and December 31, 2021 (in millions). The notional amount of a foreign currency forward contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheets.

			March 31, 2022						December 31, 2021
Estimated fair value of derivative assets			$	11					$	5
Estimated fair value of derivative liabilities			$	19					$	11
Notional amount:
Foreign currency purchases			$	1,360					$	840
Foreign currency sales			$	2,019					$	1,857

The Company recorded losses of $16 million and $9 million in "Other income (expense), net" in the Unaudited Consolidated Statements of Operations related to foreign currency exchange derivatives for the three months ended March 31, 2022 and 2021, respectively.

Other Financial Assets and Liabilities

At March 31, 2022 and December 31, 2021, the Company's cash consisted of bank deposits. Cash equivalents principally include money market fund investments, time deposits, and certificates of deposit and their carrying value generally approximates the fair value as they are readily convertible to known amounts of cash. Other financial assets and liabilities,

---

 

Accounts receivable in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021 includes receivables from customers of $1.1 billion and receivables from payment processors and networks of $545 million and $343 million, respectively. The remaining balance principally relates to receivables from marketing affiliates. The Company’s receivables are short-term in nature. In addition, the Company had prepayments to certain customers of $51 million and $67 million included in "Prepaid expenses, net" and $20 million and $18 million included in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, respectively. The amounts mentioned above are stated on gross basis, before deducting the allowance for expected credit losses.

Significant judgments and assumptions are required to estimate the allowance for expected credit losses and such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates, including the impact of the COVID-19 pandemic, and the Company’s ability to collect the receivable or recover the prepayment.

The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions):

			Three Months Ended March 31,
			2022						2021
Balance, beginning of year			$	101					$	166
Provision charged to expense			30						(12)
Write-offs and adjustments			(28)						(57)
Foreign currency translation adjustments			(1)						(3)
Balance, end of period			$	102					$	94

In addition to the allowance for expected credit losses on receivables, the Company recorded an allowance for expected credit losses on prepayments to certain customers, which are included in "Prepaid expenses, net" and "Other assets, net" in the Consolidated Balance Sheets. The following table summarizes the activity of the allowance for expected credit losses on prepayments to customers (in millions):

			Three Months Ended March 31,
			2022						2021
Balance, beginning of year			$	47					$	55
Provision charged to expense			(3)						2
Write-offs and adjustments			(1)						(1)
Balance, end of period			$	43					$	56

---

The Company's intangible assets at March 31, 2022 and December 31, 2021 consist of the following (in millions): 

			March 31, 2022																		December 31, 2021
			Gross  Carrying  Amount						Accumulated Amortization						Net  Carrying  Amount						Gross  Carrying  Amount						Accumulated Amortization						Net  Carrying  Amount						Amortization Period
Supply and distribution agreements			$	1,398					$	(608)					$	790					$	1,407					$	(591)					$	816					3 - 20 years
Technology			296						(160)						136						297						(151)						146						2 - 7 years
Internet domain names			40						(36)						4						41						(36)						5						5 - 20 years
Trade names			1,812						(745)						1,067						1,814						(724)						1,090						4 - 20 years
Other intangible assets			2						(2)						—						2						(2)						—						Up to 15 years
Total intangible assets			$	3,548					$	(1,551)					$	1,997					$	3,561					$	(1,504)					$	2,057

 

Intangible assets are amortized on a straight-line basis. Amortization expense was $56 million and $41 million for the three months ended March 31, 2022 and 2021, respectively.

A substantial portion of the Company's intangible assets and goodwill relates to the acquisitions of OpenTable, KAYAK, and Getaroom. The purchase price allocation for the acquisition of Getaroom has not been completed at March 31, 2022 (see Note 14).

Revolving Credit Facility

In August 2019, the Company entered into a $2.0 billion five-year unsecured revolving credit facility with a group of lenders. The revolving credit facility provides for the issuance of up to $80 million of letters of credit as well as borrowings of up to $100 million on same-day notice, referred to as swingline loans. Other than swingline loans, which are available only in U.S. Dollars, borrowings and letters of credit under the revolving credit facility may be made in U.S. Dollars, Euros, British Pounds Sterling, and any other foreign currency agreed to by the lenders. The proceeds of loans made under the facility can be used for working capital and general corporate purposes, including acquisitions, share repurchases, and debt repayments. At March 31, 2022 and December 31, 2021, there were no borrowings outstanding and $5 million and $4 million, respectively, of letters of credit issued under this revolving credit facility.

The revolving credit facility contains a maximum leverage ratio covenant, compliance with which is a condition to the Company's ability to borrow thereunder. The 2020 amendment to the credit facility increased the permitted maximum leverage ratio through and including the three months ending March 31, 2023. Under the amendment, the Company may not declare or make any cash distribution or repurchase any of its shares (with certain exceptions including in connection with tax withholding related to shares issued to employees) unless (i) prior to the delivery of financial statements for the three months ending June 30, 2022, it has at least $6.0 billion of liquidity on a pro forma basis, based on unrestricted cash, cash equivalents, short-term investments, and unused capacity under the revolving credit facility and (ii) after the delivery of financial statements for the three months ending June 30, 2022, it is in compliance on a pro forma basis with the maximum leverage ratio covenant then in effect. Such restriction ends upon delivery of financial statements required for the three months ending June 30, 2023, or the Company has the ability to terminate this restriction earlier if it demonstrates compliance with the original maximum leverage ratio covenant in the revolving credit facility.

---

Outstanding Debt

 

Outstanding debt at March 31, 2022 consists of the following (in millions): 

March 31, 2022						Outstanding  Principal  Amount						Unamortized Debt Discount and Debt Issuance Cost						Carrying  Value
Current liabilities:
2.15% (€750 Million) Senior Notes due November 2022						$	834					$	—					$	834
2.75% Senior Notes due March 2023						500						(1)						499
Total current liabilities						$	1,334					$	(1)					$	1,333
Long-term debt:
2.375% (€1 Billion) Senior Notes due September 2024						$	1,113					$	(5)					$	1,108
3.65% Senior Notes due March 2025						500						(1)						499
0.1% (€950 Million) Senior Notes due March 2025						1,057						(4)						1,053
0.75% Convertible Senior Notes due May 2025						863						(12)						851
3.6% Senior Notes due June 2026						1,000						(4)						996
1.8% (€1 Billion) Senior Notes due March 2027						1,113						(3)						1,110
3.55% Senior Notes due March 2028						500						(2)						498
0.5% (€750 Million) Senior Notes due March 2028						834						(5)						829
4.625% Senior Notes due April 2030						1,500						(9)						1,491
Total long-term debt						$	8,480					$	(45)					$	8,435

 

Outstanding debt at December 31, 2021 consists of the following (in millions): 

December 31, 2021						Outstanding  Principal  Amount						Unamortized Debt Discount and Debt Issuance Cost						Carrying  Value
Current Liabilities:
0.8% (€1 Billion) Senior Notes due March 2022						$	1,137					$	—					$	1,137
2.15% (€750 Million) Senior Notes due November 2022						853						(1)						852
Total current liabilities						$	1,990					$	(1)					$	1,989
Long-term debt:
2.75% Senior Notes due March 2023						$	500					$	(1)					$	499
2.375% (€1 Billion) Senior Notes due September 2024						1,137						(5)						1,132
3.65% Senior Notes due March 2025						500						(1)						499
0.1% (€950 Million) Senior Notes due March 2025						1,080						(4)						1,076
0.75% Convertible Senior Notes due May 2025						863						(99)						764
3.6% Senior Notes due June 2026						1,000						(4)						996
1.8% (€1 Billion) Senior Notes due March 2027						1,137						(3)						1,134
3.55% Senior Notes due March 2028						500						(2)						498
0.5% (€750 Million) Senior Notes due March 2028						853						(5)						848
4.625% Senior Notes due April 2030						1,500						(9)						1,491
Total long-term debt						$	9,070					$	(133)					$	8,937

 

Fair Value of Debt

At March 31, 2022 and December 31, 2021, the estimated fair value of the outstanding debt was approximately $10.4 billion and $12.1 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6). Fair value was estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. The estimated fair value of the Company's debt in excess of the outstanding principal amount at March 31, 2022 and December 31, 2021 primarily relates to the conversion premium on the convertible senior notes due in May 2025 and the outstanding senior notes due in April 2030.

---

Convertible Senior Notes

In April 2020, the Company issued $863 million aggregate principal amount of convertible senior notes due in May 2025 with an interest rate of 0.75% (the "May 2025 Notes"). The Company paid $19 million in debt issuance costs during the year ended December 31, 2020 related to this offering. The May 2025 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of $1,886.44 per share. The May 2025 Notes are convertible, at the option of the holder, prior to November 1, 2024, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 130% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the May 2025 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the May 2025 Notes in an aggregate value ranging from $0 to $235 million depending upon the date of the transaction and the then current stock price of the Company. Starting on November 1, 2024, holders will have the right to convert all or any portion of the May 2025 Notes, regardless of the Company's stock price. The May 2025 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the May 2025 Notes for cash in certain circumstances. Interest on the May 2025 Notes is payable on May 1 and November 1 of each year. If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount. Based on the closing price of the Company's common stock for the prescribed measurement periods for the three months ended March 31, 2022 and December 31, 2021, the contingent conversion thresholds on the May 2025 Notes were not exceeded and therefore the notes were not convertible. At March 31, 2022 and December 31, 2021, the estimated fair value of the May 2025 Notes was $1.3 billion and was considered a "Level 2" fair value measurement (see Note 6).

On January 1, 2022, the Company adopted the new accounting standards update relating to convertible instruments (see Note 1). The following table summarizes the interest expenses and weighted-average effective interest rates related to the convertible senior notes (in millions, except for interest rates). The remaining period for amortization of debt issuance costs and debt discount, as applicable, is the period until the stated maturity date for the respective debt. The adoption of the new accounting standards update resulted in a decrease of $6 million in "Interest expense" and "Loss before income taxes" in the Unaudited Consolidated Statement of Operations for the three months ended March 31, 2022.

												For the Three Months Ended March 31,
																		2022						2021
Coupon interest expense																		$	2					$	4
Amortization of debt discount and debt issuance costs																		1						14
Total interest expense																		$	3					$	18
Weighted-average effective interest rate																		1.2		%				3.9		%

Other Senior Notes

In March 2022, the Company repaid $1.1 billion on the maturity of senior notes with an interest rate of 0.8% and principal amount of 1.0 billion Euros.

In March 2021, the Company issued Senior Notes due March 2025 with an interest rate of 0.1% for an aggregate principal amount of 950 million Euros and Senior Notes due March 2028 with an interest rate of 0.5% for an aggregate principal amount of 750 million Euros. The proceeds from the issuance of these senior notes were used to redeem the Senior Notes due April 2025 and the Senior Notes due April 2027.

Other senior notes had a total carrying value of $8.9 billion and $10.2 billion at March 31, 2022 and December 31, 2021, respectively. Debt discount and debt issuance costs are amortized using the effective interest rate method over the period from the origination date through the stated maturity date. 

---

The following table summarizes the interest expenses related to other senior notes (in millions):

												For the Three Months Ended March 31,
																		2022						2021
Coupon interest expense																		$	58					$	78
Amortization of debt discount and debt issuance costs																		3						2
Total interest expense																		$	61					$	80

 

At March 31, 2022 and December 31, 2021, the Company had a total remaining authorization of $9.5 billion and $10.4 billion, respectively, to repurchase its common stock under a program authorized by the Company's Board of Directors in 2019 to repurchase up to $15.0 billion of the Company's common stock. The Company expects to complete repurchases under the remaining authorization within the next three years assuming the travel recovery continues and the Company is able to meet the minimum liquidity required by the credit facility amendment. See Note 9 for a description of the impact of the 2020 credit facility amendment on the Company's ability to repurchase shares. Additionally, the Board of Directors has given the Company the general authorization to repurchase shares of its common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation.

The following table summarizes the Company's stock repurchase activities during the three months ended March 31, 2022 and 2021 (in millions, except for shares, which are reflected in thousands):

												Three Months Ended March 31,
																		2022												2021
																														Shares						Amount						Shares						Amount
Authorized stock repurchase programs																														414						$	948					—						$	—
General authorization for shares withheld on stock award vesting																														73						152						64						146
Total																														487						$	1,100					64						$	146

Stock repurchases of $30 million in March 2022 were settled in April 2022. In addition, in April 2022, the Company repurchased approximately $325 million of its common stock.

For the three months ended March 31, 2022 and 2021, the Company remitted employee withholding taxes of $131 million and $137 million, respectively, to the tax authorities, which is different from the aggregate cost of the shares withheld for taxes for each period due to the timing in remitting the taxes. The cash remitted to the tax authorities is included in financing activities in the Unaudited Consolidated Statements of Cash Flows.

 

Income tax expense consists of U.S. and international income taxes, determined using an estimate of the Company's annual effective tax rate, which is based upon the applicable tax rates and tax laws of the countries in which the income is generated. A deferred tax liability is recognized for all taxable temporary differences, and a deferred tax asset is recognized for all deductible temporary differences and operating loss and tax credit carryforwards. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes and other relevant factors.

The Company's effective tax rate for the three months ended March 31, 2022 was 17.6%, compared to 80.2% for the three months ended March 31, 2021. The Company's 2022 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to higher international tax rates, valuation allowance related to certain unrealized losses on equity securities, and certain non-deductible expenses, partially offset by the benefit of the Netherlands Innovation Box Tax (discussed below).

---

The Company's 2021 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to higher international tax rates and certain non-deductible expenses, partially offset by the benefit of the Netherlands Innovation Box Tax.

The Company’s effective tax rate for the three months ended March 31, 2022 was lower than the three months ended March 31, 2021, primarily due to lower discrete U.S. tax expense related to unrealized gains on equity securities, lower international tax rates and certain lower non-deductible expenses, partially offset by a decrease in the benefit of the Netherlands Innovation Box Tax.

During the three months ended March 31, 2022 and 2021, a majority of the Company's income was reported in the Netherlands, where Booking.com is based. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate. Effective January 1, 2022, the Netherlands corporate income tax rate increased from 25% to 25.8%. A portion of Booking.com's earnings during the three months ended March 31, 2022 and 2021 qualified for Innovation Box Tax treatment, which had a beneficial impact on the Company's effective tax rates for these periods.

---

 

The tables below present the changes in the balances of accumulated other comprehensive loss ("AOCI") by component for the three months ended March 31, 2022 and 2021 (in millions): 

						Foreign currency translation adjustments																														Unrealized losses on cash flow hedges(1)																		Net unrealized gains (losses) on available-for-sale securities																														Total AOCI, net of tax
						Foreign currency translation												Net investment hedges (2)												Total, net of tax						Before tax						Tax						Total, net of tax						Before tax						Tax						Total, net of tax
						Before tax						Tax (3)						Before tax						Tax
Three Months Ended March 31, 2022
Balance, December 31, 2021						$	(276)					$	67					$	91					$	(28)					$	(146)					$	—					$	—					$	—					$	3					$	(1)					$	2																	$	(144)
Other comprehensive (loss) income ("OCI") before reclassifications						(135)						7						117						(27)						(38)						—						—						—						(1)						—						(1)																		(39)
OCI for the period						(135)						7						117						(27)						(38)						—						—						—						(1)						—						(1)																		(39)
Balance, March 31, 2022						$	(411)					$	74					$	208					$	(55)					$	(184)					$	—					$	—					$	—					$	2					$	(1)					$	1																	$	(183)

						Foreign currency translation adjustments																														Unrealized losses on cash flow hedges(1)																		Net unrealized gains (losses) on available-for-sale securities																														Total AOCI, net of tax
						Foreign currency translation												Net investment hedges (2)												Total, net of tax						Before tax						Tax						Total, net of tax						Before tax						Tax						Total, net of tax
						Before tax						Tax (3)						Before tax						Tax
Three Months Ended March 31, 2021
Balance, December 31, 2020						$	11					$	47					$	(184)					$	37					$	(89)					$	—					$	—					$	—					$	3					$	(32)					$	(29)																	$	(118)
Other comprehensive (loss) income ("OCI") before reclassifications						(117)						4						109						(26)						(30)						(15)						4						(11)						(1)						—						(1)																		(42)
OCI for the period						(117)						4						109						(26)						(30)						(15)						4						(11)						(1)						—						(1)																		(42)
Balance, March 31, 2021						$	(106)					$	51					$	(75)					$	11					$	(119)					$	(15)					$	4					$	(11)					$	2					$	(32)					$	(30)																	$	(160)

(1)    Relates to the reverse treasury lock agreements with an aggregate notional amount of $1.8 billion entered in March 2021 to hedge the risk of changes in the cash flows related to the planned redemption, in April 2021, of the Senior Notes due April 2025 and the Senior Notes due April 2027. The agreements were designated as cash flow hedges and settled in April 2021.

(2)    Net investment hedges balance at March 31, 2022 and earlier dates presented above, includes accumulated net losses from fair value adjustments of $35 million ($53 million before tax) associated with previously settled derivatives that were designated as net investment hedges. The remaining balances relate to foreign currency transaction gains (losses) and related tax benefits (expenses) associated with the Company's Euro-denominated debt that is designated as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries (see Note 9).

(3)    The tax benefits relate to foreign currency translation adjustments to the Company's one-time deemed repatriation tax liability recorded at December 31, 2017 and foreign earnings for periods after December 31, 2017 that are subject to U.S. federal and state income tax, resulting from the enactment of the U.S. Tax Cuts and Jobs Act (the "Tax Act").

Competition and Consumer Protection Reviews

At times, online platforms, including online travel platforms, have been the subject of investigations or inquiries by various national competition authorities ("NCAs") or other governmental authorities regarding competition law matters, consumer protection issues or other areas of concern. The Company is and has been involved in many such investigations. For example, the Company has been and continues to be involved in investigations related to whether Booking.com's contractual parity arrangements with accommodation providers, sometimes also referred to as "most favored nation" or "MFN" provisions, are anti-competitive because they require accommodation providers to provide Booking.com with room rates, conditions or availability that are at least as favorable as those offered to other online travel companies ("OTCs") or through the accommodation provider's website. To resolve and close certain of the investigations, the Company has from time to time made commitments to the investigating authorities regarding future business practices or activities, such as agreeing to narrow the

---

scope of its parity clauses, in order to resolve parity-related investigations. These investigations have resulted in fines and the Company could incur additional fines in the future. In addition, in September 2017, the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland and the investigation is ongoing. If there is an adverse outcome and Booking.com is unsuccessful in any appeal, Booking.com could be required to reduce its commissions in Switzerland. Some authorities are reviewing the online hotel booking sector more generally through market inquiries and the Company cannot predict the outcome of such inquiries or any resulting impact on its business, results of operations, cash flows or financial condition.

The Company is and has been involved in investigations or inquiries by NCAs or other governmental authorities involving consumer protection matters, including in the United Kingdom and the European Union. The Company has previously made certain voluntary commitments to competition authorities to resolve investigations or inquiries that have included showing prices inclusive of all mandatory taxes and charges, providing information about the effect of money earned on search result rankings on or before the search results page and making certain adjustments to how discounts and statements concerning popularity or availability are shown to consumers. In the future, it is possible new jurisdictions could engage the Company in discussions to implement similar changes to its business in those countries. The Company is unable to predict what, if any, effect any future similar commitments will have on its business, industry practices or online commerce more generally. To the extent that any other investigations or inquiries result in additional commitments, fines, damages or other remedies, the Company's business, financial condition and results of operations could be harmed.

The Company is unable to predict how any current or future investigations or litigation may be resolved or the long-term impact of any such resolution on its business. For example, competition and consumer-law-related investigations, legislation or issues could result in private litigation and the Company is currently involved in such litigation. More immediate results could include, among other things, the imposition of fines, payment of damages, commitments to change certain business practices or reputational damage, any of which could harm the Company's business, results of operations, brands, or competitive position.

Tax Matters

French tax authorities conducted audits of Booking.com for the years 2003 through 2012, 2013 through 2015, and 2016 through 2018. In December 2015, the French tax authorities issued Booking.com assessments for unpaid income and value added taxes ("VAT") related to tax years 2006 through 2012 for approximately 356 million Euros ($396 million), the majority of which represents penalties and interest. The assessments assert that Booking.com had a permanent establishment in France. In December 2019, the French tax authorities issued an additional assessment of 70 million Euros ($78 million), including interest and penalties, for the 2013 tax year asserting that Booking.com had taxable income attributable to a permanent establishment in France. The French tax authorities also have issued assessments totaling 39 million Euros ($44 million), including interest and penalties, for certain tax years between 2011 and 2015 on Booking.com's French subsidiary asserting that the subsidiary did not receive sufficient compensation for the services it rendered to Booking.com in the Netherlands. On February 8, 2022, the French Tax Court issued a decision in favor of Booking.com’s French subsidiary regarding the assessments of 3 million Euros ($4 million) for the tax years 2011 and 2012. In December 2021, the French tax authorities issued assessments on Booking.com’s French subsidiary totaling 78 million Euros ($86 million), including interest and penalties, for the tax years 2016 through 2018 asserting that the subsidiary did not receive sufficient compensation for the services it rendered to Booking.com. As a result of a formal demand from the French tax authorities for payment of the amounts assessed against Booking.com for the years 2006 through 2012, in January 2019, the Company paid the assessments of approximately 356 million Euros ($396 million) in order to preserve its right to contest those assessments in court. The payment, which is included in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, does not constitute an admission that the Company owes the taxes and will be refunded (with interest) to the Company to the extent the Company prevails. In December 2019 and October 2020, the Company initiated court proceedings with respect to certain of the assessments. Although the Company believes that Booking.com has been, and continues to be, in compliance with French tax law, and the Company is contesting the assessments, during the three months ended September 30, 2020, the Company contacted the French tax authorities regarding the potential to achieve resolution of the matter through a settlement. After assessing several potential outcomes and potential settlement amounts and terms, an expense for unrecognized tax benefit in the amount of 50 million Euros ($59 million) was recorded during the year ended December 31, 2020, of which the majority was included as a partial reduction to the tax payment recorded in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021. In December 2020, the French Administrative Court (Conseil d’Etat) delivered a decision in the "ValueClick" case that could have an impact on the outcome in the Company's case. After considering the potential adverse impact of the new decision on the potential outcomes for the Booking.com assessments, the Company currently estimates that the reasonably possible loss related to VAT is approximately 20 million Euros ($22 million).

---

In December 2018 and December 2019, the Italian tax authorities issued assessments on Booking.com's Italian subsidiary for approximately 48 million Euros ($53 million) for the 2013 tax year and 58 million Euros ($64 million) for the 2014 tax year asserting that its transfer pricing policies were inadequate. The Company believes Booking.com has been and continues to be in compliance with Italian tax law. In September 2020, the Italian tax authorities approved the opening of a Mutual Agreement Procedure ("MAP") between Italy and the Netherlands for the 2013 tax year and Booking.com has submitted a request that the 2014 tax year be added to the MAP. Based on the possibility of the 2013 and 2014 Italian assessments being settled through the MAP process, and, after considering potential resolution amounts, a net expense for unrecognized tax benefit of 4 million Euros ($5 million) was recorded during the three months ended September 30, 2020. In March 2021, the Italian authorities issued assessments on Booking.com’s Italian subsidiary for approximately 31 million Euros ($35 million) for the 2015 tax year, again asserting that its transfer pricing policies were inadequate. Based on the Company’s expectation that the Italian assessments for 2013, 2014, 2015 and any transfer pricing assessments received for subsequent open years will be settled through the MAP process, and after considering potential resolution amounts, an additional net expense for unrecognized tax benefit of 13 million Euros ($16 million) was recorded during the three months ended March 31, 2021. In August 2021, the Italian tax authorities issued a transfer pricing assessment on Booking.com’s Italian subsidiary for approximately 114 million Euros ($127 million) for the periods 2016-2018. The Company has requested that the 2016-2018 assessments be added to the MAP. Because the unrecognized tax benefit recorded during the three months ended March 31, 2021 already reflected consideration of potential resolution amounts for Italian transfer pricing assessments for all open tax years, including 2016-2018, no additional unrecognized tax benefit has been recorded for the 2016-2018 assessments. In December 2019, the Company paid 10 million Euros ($11 million) as a partial prepayment of the 2013 assessment to avoid any collection enforcement from the Italian tax authorities pending the appeal phase of the case. The payment, which is included in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021, does not constitute an admission that the Company owes the taxes and will be refunded (with interest) to the Company to the extent that the Company prevails. A total of 5 million Euros ($6 million) of the net expense for unrecognized tax benefit recorded during the year ended December 31, 2021 and 2020 has been included as a partial reduction to the tax payment recorded in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021. Similarly, in February 2022 the Company made deposits totaling 23 million Euros ($26 million) for the 2014 and 2015 assessments. The Company expects to be required to make prepayment deposits or provide bank guarantees of approximately 41 million Euros ($45 million), with respect to the 2016-2018 assessments to avoid any collection enforcement from the Italian tax authorities pending the MAP proceedings.

In June 2021, the investigative arm of the Italian tax authorities issued a Tax Audit Report for the 2013 through 2019 Italian VAT audit. While the Tax Audit Report does not constitute a formal tax assessment, it recommends that an assessment of 154 million Euros ($171 million), plus interest and penalties, should be made on Booking.com BV for VAT related to commissions charged to certain Italian accommodation providers. The Company believes that Booking.com has been, and continues to be, in compliance with Italian and EU VAT laws and the Company has not recorded any liability in connection with the Tax Audit Report. It is unclear what further actions, if any, the Italian authorities will take with respect to the VAT audit for the periods 2013 through 2019. Such actions could include closing the investigation, assessing Booking.com additional taxes and/or imposing interest, fines, penalties or criminal proceedings.

In 2018 and 2019, Turkish tax authorities asserted that Booking.com has a permanent establishment in Turkey and have issued tax assessments for the years 2012 through 2018 for approximately 824 million Turkish Lira ($56 million), which includes interest and penalties through March 31, 2022. The Company believes that Booking.com has been, and continues to be, in compliance with Turkish tax law, and the Company is contesting these assessments in court. The Company has not recorded a liability in connection with these assessments. In December 2021, the Company paid approximately 118 million Turkish Lira ($8 million) of the assessments in order to preserve its right to contest a portion of the assessments in court. The payment, which is included in "Other assets, net" in the Consolidated Balance Sheets at March 31, 2022 and December 31, 2021 does not constitute an admission that the Company owes the taxes and will be refunded to the Company to the extent the Company prevails.

From time to time, the Company is involved in other tax-related audits, investigations, or litigation, which relate to income taxes, value-added taxes, travel transaction taxes (e.g., hotel occupancy taxes), sales taxes, employment taxes, or other taxes. Any taxes or other assessments in excess of the Company's current tax provisions, whether in connection with the foregoing or otherwise (including the resolution of any tax proceedings), could have a materially adverse impact on the Company's results of operations, cash flows, and financial condition.

Other Matters

Beginning in 2014, Booking.com received several letters from the Netherlands Pension Fund for the Travel Industry (Reiswerk) ("BPF") claiming that Booking.com is required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999, which has a higher contribution rate than the pension scheme in which Booking.com is currently

---

participating. BPF instituted legal proceedings against Booking.com and in 2016 the District Court of Amsterdam rejected all of BPF’s claims. BPF appealed the decision to the Court of Appeal, and, in May 2019, the Court of Appeal also rejected all of BPF’s claims, in each case by ruling that Booking.com does not meet the definition of a travel intermediary for purposes of the mandatory pension scheme. BPF then appealed to the Netherlands Supreme Court. In April 2021, the Supreme Court overturned the previous decision of the Court of Appeal and held that Booking.com meets the definition of a travel intermediary for the purposes of the mandatory pension scheme. The Supreme Court ruled only on the qualification of Booking.com as a travel intermediary for the purposes of the mandatory pension scheme and did not rule on the various other defenses brought forward by the Company against BPF's claims. The Supreme Court referred the matter to another Court of Appeal that will have to assess the other defenses brought forward by the Company if BPF were to proceed with the litigation. The Company intends to pursue a number of defenses in any subsequent proceedings and may ultimately prevail in whole or in part. While the Company continues to believe that Booking.com is in compliance with its pension obligations and that the Court of Appeal could ultimately rule in favor of Booking.com, given the Supreme Court’s decision, the Company believes it is probable that it has incurred a loss related to this matter. The Company is not able to reasonably estimate a loss or a range of loss because there are significant factual and legal questions yet to be determined in any subsequent proceedings. As a result, as of March 31, 2022, the Company has not recorded a liability in connection with a potential adverse ultimate outcome to this litigation. However, if Booking.com were to ultimately lose and all of BPF’s claims were to be accepted (including with retroactive effect to 1999), the Company estimates that as of March 31, 2022, the maximum loss, not including any potential interest or penalties, would be approximately 301 million Euros ($335 million). Such estimated potential loss increases as Booking.com continues not to contribute to the BPF and depends on Booking.com's applicable employee compensation after March 31, 2022.

The Company accrues for certain legal contingencies where it is probable that a loss has been incurred and the amount can be reasonably estimated. Such accrued amounts are not material to the Company's balance sheets and provisions recorded have not been material to the Company's results of operations or cash flows.

From time to time, the Company notifies the Dutch data protection authority in accordance with its obligations under the E.U. General Data Protection Regulation of certain incidental and accidental personal data security incidents. Although the Company believes it has fulfilled its data protection regulatory obligations, should the Dutch data protection authority decide these incidents were the result of inadequate technical and organizational security measures, it could decide to impose a fine. The Company has been, is currently, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources, divert management's attention from the Company's business objectives and adversely affect the Company's business, results of operations, financial condition, and cash flows.

Building Construction

As of March 31, 2022, the Company had a remaining obligation of 8 million Euros ($9 million) related to the turnkey agreement for the construction of Booking.com's future headquarters in the Netherlands, which will be paid through 2022, when the Company anticipates construction will be complete. In addition to the turnkey agreement, the Company has a remaining obligation at March 31, 2022 to pay 68 million Euros ($75 million) over the remaining initial term of the acquired land lease, which expires in 2065. The Company has made and will continue to make additional capital expenditures to fit out and furnish the office space. At March 31, 2022, the Company had 15 million Euros ($17 million) of outstanding commitments to vendors to fit out and furnish the office space.

Other Contractual Obligations

In November 2021, the Company entered into an agreement to acquire global flight booking provider Etraveli Group for approximately 1.6 billion Euros ($1.8 billion). Completion of the acquisition is subject to certain closing conditions, including regulatory approvals.

In December 2021, the Company acquired all of the outstanding stock of Getaroom, a business-to-business ("B2B") distributor of hotel rooms, in a cash transaction for $1.3 billion ($1.2 billion, net of cash acquired).

---

The accounting for the Getaroom acquisition is based on provisional amounts as the allocation of the consideration transferred was not complete for accounting purposes as of March 31, 2022. The following table summarizes the preliminary allocation of the consideration transferred. The amounts allocated to goodwill, intangibles and certain assets and liabilities, and the estimated useful lives of certain assets (and the related amortization expense) are subject to change as the Company continues to identify and measure the assets acquired, liabilities assumed and consideration transferred and evaluate the preliminary valuation and underlying inputs and assumptions.

			(in millions)
Current assets(1)			$	174
Identifiable intangible assets(2)			423
Goodwill(3)			1,020
Other noncurrent assets			10
Current liabilities			(198)
Deferred income taxes			(92)
Other noncurrent liabilities(4)			(41)
Total consideration			$	1,296

(1)    Includes cash and restricted cash acquired of $116 million.

(2)    Acquired definite-lived intangible assets consist of supply and distribution agreements with an estimated value of $299 million and weighted-average useful life of 10 years and technology assets with an estimated value of $124 million and weighted-average useful life of 4 years.

(3)    Goodwill, which is not tax deductible, reflects the synergies expected from combining the technology and expertise of Getaroom and Priceline.

(4)    Includes liabilities of $38 million principally related to travel transaction taxes.

In response to the reduction in the Company's business volumes as a result of the impact of the COVID-19 pandemic (see Note 1), during the year ended December 31, 2020, the Company took actions at all its brands to reduce the size of its workforce to optimize efficiency and reduce costs. During the three months ended March 31, 2021, the Company recorded restructuring expenses of $8 million.

In February 2022, the Company entered into an agreement to transfer certain customer service operations of Booking.com to Majorel Group Luxembourg S.A. ("Majorel"). The transaction is subject to customary closing conditions. The assets expected to be transferred to Majorel, with the related liabilities, are classified as held for sale as of March 31, 2022 and are stated at the lower of their carrying value and fair value less costs to sell resulting in a loss of $36 million which was recorded in "Restructuring, disposal and other exit costs" in the Unaudited Consolidated Statement of Operations for the three months ended March 31, 2022. "Other current assets" and "Accrued expenses and other current liabilities" in the Company's Unaudited Consolidated Balance Sheet as of March 31, 2022 includes held-for-sale assets of $10 million and related liabilities of $47 million, respectively. The carrying value of the assets and liabilities in the disposal group, before the allocation of the loss on classification as held for sale, includes lease assets and related lease liabilities of $23 million and accrued expenses of $15 million.

The components of other income (expense), net were as follows (in millions):

												Three Months Ended March 31,
																		2022						2021
Net (losses) gains on equity securities (1)																		$	(987)					$	36
Foreign currency transaction gains (2)																		30						88
Other																		2						7
Other income (expense), net																		$	(955)					$	131

(1)    See Note 5 for additional information related to the net (losses) gains on equity securities.

---

Unaudited Consolidated Statements of Cash Flows: Additional Information

Restricted cash and cash equivalents at March 31, 2022 and December 31, 2021 principally relates to the minimum cash requirement for the Company's travel-related insurance business. The following table reconciles cash and cash equivalents and restricted cash and cash equivalents reported in the Consolidated Balance Sheets to the total amounts shown in the Unaudited Consolidated Statements of Cash Flows (in millions):

						March 31, 2022						December 31, 2021
						(Unaudited)
As included in the Consolidated Balance Sheets:
Cash and cash equivalents						$	10,549					$	11,127
Restricted cash and cash equivalents (1)						25						25
Cash included in assets held for sale (1) (2)						4						—
Total cash and cash equivalents and restricted cash and cash equivalents as shown in the Unaudited Consolidated Statements of Cash Flows						$	10,578					$	11,152

(1)    Included in "Other current assets" in the Consolidated Balance Sheets.

(2)    See Note 15 for additional information related to assets held for sale.

During the three months ended March 31, 2022 and 2021, the Company prepaid Netherlands income taxes of 54 million Euros ($60 million) and 149 million Euros ($175 million), respectively.

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---

---