Exhibit 10.82


 


Priceline
Mortgage

Company, L.L.C.


 


Financial Statements for
the Years


Ended December 31, 2003
and 2002


and Independent Auditors’
Report


 

















 


PRICELINE
MORTGAGE COMPANY, L.L.C.


 


TABLE OF CONTENTS


 


	
  INDEPENDENT AUDITORS’ REPORT

  	
   

  
	
   

  	
   

  
	
  FINANCIAL
  STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002:

  	
   

  
	
   

  	
   

  
	
  Balance Sheets

  	
   

  
	
   

  	
   

  
	
  Statements of Income

  	
   

  
	
   

  	
   

  
	
  Statements of Changes in Members’ Equity

  	
   

  
	
   

  	
   

  
	
  Statements of Cash Flows

  	
   

  
	
   

  	
   

  
	
  Notes to Financial Statements

  	
   

  



 

















 


INDEPENDENT
AUDITORS’ REPORT


 


To the Members 

Priceline Mortgage Company, L.L.C.

Jacksonville, Florida


 


We have audited the accompanying balance sheets of
Priceline Mortgage Company, L.L.C. (the ”Company”) (formerly National
Mortgage Center, L.L.C.) as of December 31, 2003 and 2002 and the related
statements of income, changes in members’ equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits.


 


We conducted our audits in accordance with auditing
standards generally accepted in the United States of America. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.


 


In our opinion, such financial statements present
fairly, in all material respects, the financial position of Priceline Mortgage
Company, L.L.C. at December 31, 2003 and 2002 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.


 


	
  /s/ DELOITTE
  & TOUCHE LLP

  
	
  Jacksonville,
  Florida

  
	
  February 25, 2004

  



 


 

















 


PRICELINE MORTGAGE COMPANY,
L.L.C.


 


BALANCE SHEETS


DECEMBER 31, 2003 AND 2002


 


	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
  ASSETS

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ASSETS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cash and cash equivalents

  	
   

  	
  $

  	
  4,038,766

  	
   

  	
  $

  	
  7,092,422

  	
   

  
	
  Loans held for sale

  	
   

  	
  13,500,167

  	
   

  	
  2,323,586

  	
   

  
	
  Due from affiliates, net

  	
   

  	
  —

  	
   

  	
  1,537,495

  	
   

  
	
  Prepaid expenses and other assets

  	
   

  	
  97,942

  	
   

  	
  60,799

  	
   

  
	
  Premises and equipment, net

  	
   

  	
  844,109

  	
   

  	
  1,210,885

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL ASSETS

  	
   

  	
  $

  	
  18,480,984

  	
   

  	
  $

  	
  12,225,187

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES AND MEMBERS’ EQUITY

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  LIABILITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts payable and accrued expenses

  	
   

  	
  $

  	
  1,407,293

  	
   

  	
  $

  	
  3,492,631

  	
   

  
	
  Due to affiliates, net

  	
   

  	
  78,722

  	
   

  	
  —

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total liabilities

  	
   

  	
  1,486,015

  	
   

  	
  3,492,631

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COMMITMENTS AND CONTINGENCIES (see Note 4)

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  MEMBERS’ EQUITY

  	
   

  	
  16,994,969

  	
   

  	
  8,732,556

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TOTAL LIABILITIES AND MEMBERS’ EQUITY

  	
   

  	
  $

  	
  18,480,984

  	
   

  	
  $

  	
  12,225,187

  	
   

  



 


See notes to financial statements.


 


2

















 


PRICELINE MORTGAGE COMPANY, L.L.C.


 


STATEMENTS OF INCOME


YEARS ENDED DECEMBER 31, 2003 AND 2002


 


	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INTEREST INCOME:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest income

  	
   

  	
  $

  	
  796,054

  	
   

  	
  $

  	
  482,635

  	
   

  
	
  Interest expense

  	
   

  	
  (2,783

  	
  )

  	
  (4,044

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net interest income

  	
   

  	
  793,271

  	
   

  	
  478,591

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-INTEREST INCOME:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gain on sale of loans, net of commitment fees

  	
   

  	
  13,523,357

  	
   

  	
  9,882,002

  	
   

  
	
  Loan production revenue, net

  	
   

  	
  10,301,923

  	
   

  	
  9,475,171

  	
   

  
	
  Other

  	
   

  	
  118,906

  	
   

  	
  249,794

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total non-interest income

  	
   

  	
  23,944,186

  	
   

  	
  19,606,967

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NON-INTEREST EXPENSES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Salaries, commissions and other employee benefits

  	
   

  	
  10,326,230

  	
   

  	
  8,465,906

  	
   

  
	
  Occupancy and equipment

  	
   

  	
  1,174,278

  	
   

  	
  1,251,970

  	
   

  
	
  General and administrative

  	
   

  	
  4,974,536

  	
   

  	
  5,895,796

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total non-interest expenses

  	
   

  	
  16,475,044

  	
   

  	
  15,613,672

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET INCOME

  	
   

  	
  $

  	
  8,262,413

  	
   

  	
  $

  	
  4,471,886

  	
   

  



 


See notes to financial statements.


 


3

















 


PRICELINE MORTGAGE COMPANY, L.L.C.


 


STATEMENTS OF CHANGES IN MEMBERS’ EQUITY

YEARS ENDED DECEMBER 31, 2003 AND 2002


 


	
   

  	
   

  	
  Capital

  	
   

  	
  Accumulated

  Earnings

  (Deficit)

  	
   

  	
  Total

  Members’

  Equity

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE—December 31, 2001

  	
   

  	
  $

  	
  7,934,472

  	
   

  	
  $

  	
  (3,673,802

  	
  )

  	
  $

  	
  4,260,670

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net income

  	
   

  	
   

  	
   

  	
  4,471,886

  	
   

  	
  4,471,886

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE—December 31, 2002

  	
   

  	
  7,934,472

  	
   

  	
  798,084

  	
   

  	
  8,732,556

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net income

  	
   

  	
   

  	
   

  	
  8,262,413

  	
   

  	
  8,262,413

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BALANCE—December 31, 2003

  	
   

  	
  $

  	
  7,934,472

  	
   

  	
  $

  	
  9,060,497

  	
   

  	
  $

  	
  16,994,969

  	
   

  



 


See notes to financial statements.


 


4

















 


PRICELINE MORTGAGE COMPANY, L.L.C.


 


STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2003 AND 2002


 


	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPERATING ACTIVITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net income

  	
   

  	
  $

  	
  8,262,413

  	
   

  	
  $

  	
  4,471,886

  	
   

  
	
  Adjustments to reconcile net income to net

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  cash (used in) provided by operating activities:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Depreciation expense

  	
   

  	
  408,935

  	
   

  	
  419,243

  	
   

  
	
  Loss on disposal of fixed assets

  	
   

  	
  —

  	
   

  	
  920

  	
   

  
	
  Change in operating assets and liabilities:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Increase) decrease in loans held for sale

  	
   

  	
  (11,176,581

  	
  )

  	
  93,921

  	
   

  
	
  Decrease (increase) in due to affiliates, net

  	
   

  	
  1,616,217

  	
   

  	
  (1,831,291

  	
  )

  
	
  (Increase) decrease in prepaid expenses and other assets

  	
   

  	
  (37,143

  	
  )

  	
  806,731

  	
   

  
	
  (Decrease) increase in accounts payable and accrued expenses

  	
   

  	
  (2,085,338

  	
  )

  	
  2,477,684

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Net cash (used in) provided by operating activities

  	
   

  	
  (3,011,497

  	
  )

  	
  6,439,094

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INVESTING ACTIVITIES:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Purchase of premises and equipment

  	
   

  	
  (42,159

  	
  )

  	
  (839,373

  	
  )

  
	
  Net cash used in investing activities

  	
   

  	
  (42,159

  	
  )

  	
  (839,373

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

  	
   

  	
  (3,053,656

  	
  )

  	
  5,599,721

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  CASH AND CASH EQUIVALENTS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Beginning of year

  	
   

  	
  7,092,422

  	
   

  	
  1,492,701

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  End of year

  	
   

  	
  $

  	
  4,038,766

  	
   

  	
  $

  	
  7,092,422

  	
   

  



 


 


See notes to financial statements.


 


5

















 


PRICELINE
MORTGAGE COMPANY, L.L.C.


 


NOTES
TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2003 AND 2002


 


1.                      ORGANIZATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES


 


Organization—Priceline Mortgage Company, L.L.C.,
formerly known as National Mortgage Center, L.L.C., (the “Company”), engages in
the origination of real estate mortgage loans using the internet. The Company
is 51% owned by EverBank (formerly First Alliance Bank, FSB) and 49% owned by a
wholly owned subsidiary of Priceline.com and is doing business as
pricelinemortgage.com.


 


Basis of
Presentation—The financial statements
are presented in accordance with accounting principles generally accepted in
the United States of America, which require management to make estimates that
affect the reported amounts and disclosures of contingencies in the financial
statements. Estimates, by their nature, are based on judgment and available
information. Therefore, actual results could differ from those estimates and
could have a material impact on the financial statements, and it is possible
that such change could occur in the near term.


 


Cash and Cash
Equivalents—Cash
represents amounts held on deposit with various banks.


 


Loans Held for Sale—Loans held for sale are residential
mortgage loans originated by the Company which management intends to sell at
some point in the future. Loans held for sale are reported at the lower of cost
or estimated market value determined on an aggregate basis.


 


Commitments to
Originate Mortgage Loans—The Company enters into commitments to originate
loans whereby the interest rate on the loan is determined prior to funding
(rate lock commitments). Rate lock commitments on loans that are intended to be
sold are considered to be derivatives and are therefore recorded at fair value
with changes in fair value recorded in earnings. The fair value of rate lock
commitments at December 31, 2003 and 2002 recorded in loans held for sale was
$43,114 and $207,065, respectively. The change in fair value recorded in gain
on sale for the years ended December 31, 2003 and 2002 was $(163,951) and
$(178,138), respectively.  Rate lock
commitments expose the Company to interest rate risk.


 


Premises and
Equipment—Premises
and equipment consist of leasehold improvements, furniture, and equipment.
Premises and equipment are recorded at cost, less accumulated depreciation.
Depreciation is computed using the straight-line method over the estimated useful
lives of the assets ranging from 3 to 10 years. Leasehold improvements are
amortized using the straight-line method over the shorter of their estimated
useful life or the period the Company expects to occupy the related leased
space.


 


Revenue Recognition—Loan production income represents income earned
from the origination of mortgage loans. Gains and losses on the sale of
loans are recorded upon the sale of these assets by the Company.


 


6

















 


Interest income on mortgage loans is accrued as earned
and is computed using the effective interest method. Loans are placed on
non-accrual status when any portion of the principal or interest is 90 days
past due.


 


Income Taxes—For federal and state income tax
purposes the Company is considered a partnership with income taxable to the
ultimate owners of the Company. Thus, the Company does not provide for federal
and state income taxes.


 


Reclassification—Certain reclassifications have been made to prior year amounts to conform
to the current year presentation.


 


2.                      PREMISES AND EQUIPMENT


 


Premises and equipment at December 31 consist of the
following:


 


	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Leasehold improvements

  	
   

  	
  $

  	
  233,874

  	
   

  	
  $

  	
  233,874

  	
   

  
	
  Furniture

  	
   

  	
  543,623

  	
   

  	
  540,748

  	
   

  
	
  Equipment

  	
   

  	
  1,285,252

  	
   

  	
  1,245,968

  	
   

  
	
   

  	
   

  	
  2,062,749

  	
   

  	
  2,020,590

  	
   

  
	
  Less accumulated depreciation

  	
   

  	
  (1,218,640

  	
  )

  	
  (809,705

  	
  )

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  $

  	
  844,109

  	
   

  	
  $

  	
  1,210,885

  	
   

  



 


Depreciation expense for the years ended December 31,
2003 and 2002 was $408,935 and $419,243, respectively.


 


3.                      EMPLOYEE BENEFIT PLAN


 


The Company participates in a defined contribution
plan sponsored by EverHome Mortgage Company (formerly Alliance Mortgage
Company), an affiliated company, adopted under the Internal Revenue Code
Section 401(k) (the “Profit Sharing and Savings Plan”), covering substantially
all full-time employees meeting the eligibility requirements. Employees may
contribute between 1% and 18% of their pre-tax compensation to the Profit
Sharing and Savings Plan. Company contributions to the Profit Sharing and
Savings Plan are at the discretion of the Company. The Company made
discretionary contributions of $320,500 and $253,000 to the Plan for the years
ended December 31, 2003 and 2002, respectively. The Company made employer
matching contributions of approximately $198,000 and $115,000 in 2003 and 2002,
respectively.


 


7

















 


4.                      COMMITMENTS AND CONTINGENCIES


 


The Company has entered into various operating leases
for the office space in which it operates. Rent expense associated with these
leases was approximately $284,000 and $347,000 for the years ended December 31,
2003 and 2002, respectively. The future minimum lease payments for the leases
are as follows:


 


	
  2004

  	
   

  	
  $

  	
  465,589

  	
   

  
	
  2005

  	
   

  	
  474,900

  	
   

  
	
  2006

  	
   

  	
  484,398

  	
   

  
	
  2007

  	
   

  	
  494,086

  	
   

  
	
  2008

  	
   

  	
  506,874

  	
   

  
	
  Thereafter

  	
   

  	
  1,286,634

  	
   

  
	
   

  	
   

  	
  $

  	
  3,712,481

  	
   

  



 


5.                      RELATED PARTY TRANSACTIONS


 


At December 31 due from (to) affiliates includes the
following amounts:


 


	
   

  	
   

  	
  2003

  	
   

  	
  2002

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Due from EverHome Mortgage Company, net

  	
   

  	
  $

  	
  40,658

  	
   

  	
  $

  	
  815,408

  	
   

  
	
  Due from BNY Mortgage Company L.L.C.

  	
   

  	
  69

  	
   

  	
  54

  	
   

  
	
  Due (to) from EverBank

  	
   

  	
  (119,449

  	
  )

  	
  722,033

  	
   

  
	
   

  	
   

  	
  $

  	
  (78,722

  	
  )

  	
  $

  	
  1,537,495

  	
   

  



 


Administrative expenses allocated to the Company from
affiliates were $420,000 and $210,000 for the years ended December 31, 2003 and
2002, respectively. Advertising expenses paid to an affiliate were $533,935 and
$1,752,637 for the years ended December 31, 2003 and 2002, respectively.


 


The Company participates in an overall insurance
program administered by EverBank Financial, L.P. (formerly Alliance Capital
Partners, L.P.), parent of EverBank. Insurance expense allocated to the Company
totaled $76,176 and $43,813 for the years ended December 31, 2003 and 2002,
respectively.


 


The Company generally sells all its originated mortgage
loans to affiliates on a right of first refusal basis. In 2003 and 2002, the
Company recognized gains of $13,591,438 and $10,060,156, respectively, on loans
sold to affiliates.


 


6.                      FINANCIAL INSTRUMENTS


 


Derivative
Instruments—In the ordinary course of business, the
Company enters into commitments to originate loans. Inherent in these
transactions is the interest rate risk associated with the movement of interest
rates in the mortgage market. The Company mitigates this risk by obtaining
commitments from investors for the purchase of loans generally at or prior to
the loan origination date. At December 31, 2003 and 2002, the Company had
commitments to originate loans of approximately $96 million and $669 million,
respectively.


 


8

















 


As a mortgage banking entity, the Company underwrites
loans and the extension of credit to borrowers in accordance with the standards
prescribed by loan investors. The Company does not invest in mortgage loans for
its own account and, therefore, does not assume the long-term credit risk
associated with mortgage lending. The Company’s credit risk is generally
transferred to the investor upon the sale of the loans. The Company does not
have credit risk concentration, as defined, with any one financial institution,
government agency, government-sponsored enterprise, or individual investor.


 


Fair Value Financial Instruments—The
following methods and assumptions were used by the Company to estimate the fair
value of each class of financial instruments:


 


Loans Held for Sale—Fair value is estimated using the quoted market
prices for similar loans, adjusted for differences in loan characteristics. The
estimated fair value of these financial instruments at December 31, 2003 and
2002 was $13.6 million and $5.3 million, respectively.


 


* * * * * *


 


9