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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sabre Corporation | NASDAQ:SABR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.235 | 7.51% | 3.365 | 3.36 | 3.37 | 3.38 | 3.13 | 3.13 | 3,198,675 | 20:46:23 |
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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-8647322
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page No.
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 6.
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ITEM 1.
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FINANCIAL STATEMENTS
|
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Three Months Ended June 30,
|
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Six Months Ended June 30,
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||||||||||||
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2016
|
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2015
|
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2016
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2015
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||||||||
Revenue
|
$
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845,242
|
|
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$
|
707,091
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|
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$
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1,704,785
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$
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1,417,439
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Cost of revenue
(1) (2)
|
556,317
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|
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461,126
|
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1,110,582
|
|
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930,124
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||||
Selling, general and administrative
(2)
|
146,886
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123,360
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280,742
|
|
|
245,718
|
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||||
Operating income
|
142,039
|
|
|
122,605
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|
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313,461
|
|
|
241,597
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||||
Other income (expense):
|
|
|
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|
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|
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||||||
Interest expense, net
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(37,210
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)
|
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(42,609
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)
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(78,412
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)
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(89,062
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)
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||||
Loss on extinguishment of debt
|
—
|
|
|
(33,235
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)
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|
—
|
|
|
(33,235
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)
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||||
Joint venture equity income
|
763
|
|
|
5,307
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|
|
1,526
|
|
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13,826
|
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||||
Other, net
|
876
|
|
|
197
|
|
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4,236
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(4,248
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)
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||||
Total other expense, net
|
(35,571
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)
|
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(70,340
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)
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(72,650
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)
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(112,719
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)
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||||
Income from continuing operations before income taxes
|
106,468
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52,265
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240,811
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128,878
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||||
Provision for income taxes
|
31,273
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|
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19,676
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72,697
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46,959
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||||
Income from continuing operations
|
75,195
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|
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32,589
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|
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168,114
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|
81,919
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||||
(Loss) income from discontinued operations, net of tax
|
(2,098
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)
|
|
696
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|
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11,252
|
|
|
159,607
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||||
Net income
|
73,097
|
|
|
33,285
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|
|
179,366
|
|
|
241,526
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||||
Net income attributable to noncontrolling interests
|
1,078
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|
|
1,078
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2,180
|
|
|
1,825
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Net income attributable to common stockholders
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$
|
72,019
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$
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32,207
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$
|
177,186
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$
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239,701
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Basic net income per share attributable to common
stockholders: |
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||||||
Income from continuing operations
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$
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0.27
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|
|
$
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0.12
|
|
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$
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0.60
|
|
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$
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0.30
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(Loss) income from discontinued operations
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(0.01
|
)
|
|
—
|
|
|
0.04
|
|
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0.59
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||||
Net income per common share
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$
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0.26
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$
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0.12
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$
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0.64
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$
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0.89
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Diluted net income per share attributable to common stockholders:
|
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||||||
Income from continuing operations
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$
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0.26
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|
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$
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0.11
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|
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$
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0.59
|
|
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$
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0.29
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(Loss) income from discontinued operations
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(0.01
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)
|
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—
|
|
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0.04
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|
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0.57
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Net income per common share
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$
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0.25
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|
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$
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0.12
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$
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0.63
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$
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0.86
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Weighted-average common shares outstanding:
|
|
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||||||
Basic
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277,392
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271,948
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276,480
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270,574
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Diluted
|
283,001
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279,101
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282,648
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278,082
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Dividends per common share
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$
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0.13
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$
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0.09
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$
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0.26
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$
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0.18
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|
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||||||||
(1) Includes amortization of upfront incentive consideration
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$
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13,896
|
|
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$
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10,878
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$
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26,233
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$
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22,050
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(2) Includes stock-based compensation as follows:
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Cost of revenue
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$
|
5,072
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|
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$
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2,902
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|
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$
|
9,146
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|
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$
|
6,435
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Selling, general and administrative
|
7,738
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4,428
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|
|
13,953
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|
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9,689
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Three Months Ended June 30,
|
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Six Months Ended June 30,
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||||||||||||
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2016
|
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2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
73,097
|
|
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$
|
33,285
|
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$
|
179,366
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$
|
241,526
|
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Other comprehensive income (loss), net of tax:
|
|
|
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||||||
Foreign currency translation adjustments, net of tax
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|
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||||||||
Foreign CTA gains (losses), net of tax
|
1,909
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|
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(4,590
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)
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1,539
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|
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(1,581
|
)
|
||||
Reclassification adjustment for realized gain on foreign CTA, net of tax
|
—
|
|
|
—
|
|
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(198
|
)
|
|
—
|
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||||
Net change in foreign CTA gains (losses), net of tax
|
1,909
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|
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(4,590
|
)
|
|
1,341
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|
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(1,581
|
)
|
||||
Retirement-related benefit plans:
|
|
|
|
|
|
|
|
|
|
||||||
Amortization of prior service credits, net of taxes of $130, $129, $259 and $258
|
(228
|
)
|
|
(230
|
)
|
|
(457
|
)
|
|
(459
|
)
|
||||
Amortization of actuarial losses, net of taxes of $(516), $(649), $(1,031) and $(1,272)
|
909
|
|
|
1,149
|
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|
1,819
|
|
|
2,251
|
|
||||
Total retirement-related benefit plans
|
681
|
|
|
919
|
|
|
1,362
|
|
|
1,792
|
|
||||
Derivatives and available-for-sale securities:
|
|
|
|
|
|
|
|
|
|||||||
Unrealized gains (losses), net of taxes of $1,062, $(463), $2,321 and $3,575
|
777
|
|
|
882
|
|
|
285
|
|
|
(7,794
|
)
|
||||
Reclassification adjustment for realized losses, net of taxes of $(55), $(1,153), $(340) and $(2,177)
|
93
|
|
|
3,462
|
|
|
1,012
|
|
|
6,932
|
|
||||
Net change in unrealized gains (losses) on derivatives and available-for-sale securities, net of tax
|
870
|
|
|
4,344
|
|
|
1,297
|
|
|
(862
|
)
|
||||
Share of other comprehensive (loss) income of joint venture
|
—
|
|
|
(43
|
)
|
|
—
|
|
|
922
|
|
||||
Other comprehensive income
|
3,460
|
|
|
630
|
|
|
4,000
|
|
|
271
|
|
||||
Comprehensive income
|
76,557
|
|
|
33,915
|
|
|
183,366
|
|
|
241,797
|
|
||||
Less: Comprehensive income attributable to noncontrolling interests
|
(1,078
|
)
|
|
(1,078
|
)
|
|
(2,180
|
)
|
|
(1,825
|
)
|
||||
Comprehensive income attributable to Sabre Corporation
|
$
|
75,479
|
|
|
$
|
32,837
|
|
|
$
|
181,186
|
|
|
$
|
239,972
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
68,312
|
|
|
$
|
321,132
|
|
Accounts receivable, net
|
466,691
|
|
|
375,789
|
|
||
Prepaid expenses and other current assets
|
94,253
|
|
|
81,167
|
|
||
Total current assets
|
629,256
|
|
|
778,088
|
|
||
Property and equipment, net of accumulated depreciation of $851,364 and $850,587
|
689,712
|
|
|
627,529
|
|
||
Investments in joint ventures
|
25,203
|
|
|
24,348
|
|
||
Goodwill
|
2,543,515
|
|
|
2,440,431
|
|
||
Acquired customer relationships, net of accumulated amortization of $605,912 and $561,876
|
438,353
|
|
|
416,887
|
|
||
Other intangible assets, net of accumulated amortization of $504,068 and $480,037
|
421,836
|
|
|
419,666
|
|
||
Deferred income taxes
|
90,443
|
|
|
44,464
|
|
||
Other assets, net
|
709,104
|
|
|
642,214
|
|
||
Total assets
|
$
|
5,547,422
|
|
|
$
|
5,393,627
|
|
|
|
|
|
||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
||
Current liabilities
|
|
|
|
|
|
||
Accounts payable
|
$
|
141,115
|
|
|
$
|
138,421
|
|
Accrued compensation and related benefits
|
74,040
|
|
|
99,382
|
|
||
Accrued subscriber incentives
|
219,451
|
|
|
185,270
|
|
||
Deferred revenues
|
193,367
|
|
|
165,124
|
|
||
Other accrued liabilities
|
200,569
|
|
|
221,976
|
|
||
Current portion of debt
|
174,048
|
|
|
190,315
|
|
||
Tax Receivable Agreement
|
111,678
|
|
|
—
|
|
||
Total current liabilities
|
1,114,268
|
|
|
1,000,488
|
|
||
Deferred income taxes
|
107,680
|
|
|
83,562
|
|
||
Other noncurrent liabilities
|
530,869
|
|
|
656,093
|
|
||
Long-term debt
|
3,081,919
|
|
|
3,169,344
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
||
Stockholders’ equity
|
|
|
|
|
|
||
Common Stock: $0.01 par value; 450,000,000 authorized shares; 282,305,528 and 279,082,473 shares issued, 277,798,062 and 274,955,830 shares outstanding at June 30, 2016 and December 31, 2015, respectively
|
2,823
|
|
|
2,790
|
|
||
Additional paid-in capital
|
2,057,341
|
|
|
2,016,325
|
|
||
Treasury Stock, at cost, 4,507,466 and 4,126,643 shares at June 30, 2016 and December 31, 2015, respectively
|
(121,130
|
)
|
|
(110,548
|
)
|
||
Retained deficit
|
(1,136,831
|
)
|
|
(1,328,730
|
)
|
||
Accumulated other comprehensive loss
|
(93,135
|
)
|
|
(97,135
|
)
|
||
Noncontrolling interest
|
3,618
|
|
|
1,438
|
|
||
Total stockholders’ equity
|
712,686
|
|
|
484,140
|
|
||
Total liabilities and stockholders’ equity
|
$
|
5,547,422
|
|
|
$
|
5,393,627
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Operating Activities
|
|
|
|
||||
Net income
|
$
|
179,366
|
|
|
$
|
241,526
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
194,726
|
|
|
166,617
|
|
||
Amortization of upfront incentive consideration
|
26,233
|
|
|
22,050
|
|
||
Litigation-related credits
|
(25,527
|
)
|
|
(32,557
|
)
|
||
Stock-based compensation expense
|
23,099
|
|
|
16,124
|
|
||
Allowance for doubtful accounts
|
6,131
|
|
|
5,329
|
|
||
Deferred income taxes
|
59,315
|
|
|
36,757
|
|
||
Joint venture equity income
|
(1,526
|
)
|
|
(13,826
|
)
|
||
Dividends received from joint venture investments
|
—
|
|
|
28,700
|
|
||
Amortization of debt issuance costs
|
3,892
|
|
|
3,181
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
33,235
|
|
||
Other
|
3,030
|
|
|
7,505
|
|
||
Income from discontinued operations
|
(11,252
|
)
|
|
(159,607
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts and other receivables
|
(83,551
|
)
|
|
(47,647
|
)
|
||
Prepaid expenses and other current assets
|
(15,354
|
)
|
|
(631
|
)
|
||
Capitalized implementation costs
|
(43,268
|
)
|
|
(29,561
|
)
|
||
Upfront incentive consideration
|
(47,228
|
)
|
|
(22,994
|
)
|
||
Other assets
|
(13,639
|
)
|
|
(43,618
|
)
|
||
Accrued compensation and related benefits
|
(25,663
|
)
|
|
(22,802
|
)
|
||
Accounts payable and other accrued liabilities
|
12,963
|
|
|
62,039
|
|
||
Deferred revenue including upfront solution fees
|
22,037
|
|
|
18,179
|
|
||
Cash provided by operating activities
|
263,784
|
|
|
267,999
|
|
||
Investing Activities
|
|
|
|
|
|
||
Additions to property and equipment
|
(164,593
|
)
|
|
(127,963
|
)
|
||
Acquisition, net of cash acquired
|
(164,977
|
)
|
|
—
|
|
||
Other investing activities
|
—
|
|
|
148
|
|
||
Cash used in investing activities
|
(329,570
|
)
|
|
(127,815
|
)
|
||
Financing Activities
|
|
|
|
|
|
||
Proceeds of borrowings from lenders
|
378,000
|
|
|
600,000
|
|
||
Payments on borrowings from lenders
|
(485,796
|
)
|
|
(491,215
|
)
|
||
Debt prepayment fees and issuance costs
|
—
|
|
|
(40,215
|
)
|
||
Net proceeds on the settlement of equity-based awards
|
4,808
|
|
|
18,239
|
|
||
Cash dividends paid to common stockholders
|
(72,060
|
)
|
|
(48,919
|
)
|
||
Other financing activities
|
714
|
|
|
(3,657
|
)
|
||
Cash (used in) provided by financing activities
|
(174,334
|
)
|
|
34,233
|
|
||
Cash Flows from Discontinued Operations
|
|
|
|
|
|
||
Cash used in operating activities
|
(12,407
|
)
|
|
(26,036
|
)
|
||
Cash provided by investing activities
|
—
|
|
|
278,834
|
|
||
Cash (used in) provided by in discontinued operations
|
(12,407
|
)
|
|
252,798
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(293
|
)
|
|
(4,861
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
(252,820
|
)
|
|
422,354
|
|
||
Cash and cash equivalents at beginning of period
|
321,132
|
|
|
155,679
|
|
||
Cash and cash equivalents at end of period
|
$
|
68,312
|
|
|
$
|
578,033
|
|
Cash and cash equivalents
|
$
|
4,209
|
|
Accounts receivable
|
10,564
|
|
|
Other current assets
|
793
|
|
|
Goodwill
|
89,725
|
|
|
Intangible assets:
|
|
||
Customer relationships
|
65,502
|
|
|
Purchased technology
|
21,834
|
|
|
Trademarks and brand names
|
4,367
|
|
|
Property and equipment, net
|
1,556
|
|
|
Current liabilities
|
(11,071
|
)
|
|
Noncurrent deferred income taxes
|
(27,104
|
)
|
|
Total acquisition price
|
$
|
160,375
|
|
Cash and cash equivalents
|
$
|
65,641
|
|
Accounts receivable
|
49,099
|
|
|
Other current assets
|
12,522
|
|
|
Goodwill
|
292,267
|
|
|
Intangible assets:
|
|
||
Customer relationships
|
319,000
|
|
|
Reacquired rights
(1)
|
113,500
|
|
|
Purchased technology
|
14,000
|
|
|
Supplier agreements
|
13,000
|
|
|
Trademarks and brand names
|
4,000
|
|
|
Property and equipment, net
|
6,402
|
|
|
Other assets
|
66,423
|
|
|
Current liabilities
|
(123,307
|
)
|
|
Noncurrent liabilities
|
(44,245
|
)
|
|
Noncurrent deferred income taxes
|
(78,054
|
)
|
|
|
710,248
|
|
|
Fair value of Sabre Corporation's previously held equity investment in SAPPL
|
(200,000
|
)
|
|
Fair value of SAPPL's previously held equity investment in national marketing companies
|
(1,880
|
)
|
|
Total acquisition price
|
$
|
508,368
|
|
|
Three Months Ended June 30, 2015
|
|
Six Months Ended June 30, 2015
|
||||
Revenue
|
$
|
779,240
|
|
|
$
|
1,568,135
|
|
Income from continuing operations
|
35,289
|
|
|
93,055
|
|
||
Net income attributable to common stockholders
|
34,866
|
|
|
250,796
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
$
|
—
|
|
|
$
|
2,112
|
|
|
$
|
—
|
|
|
$
|
23,254
|
|
Cost of revenue
|
—
|
|
|
1,737
|
|
|
—
|
|
|
14,025
|
|
||||
Selling, general and administrative
|
3,273
|
|
|
2,267
|
|
|
8,199
|
|
|
21,508
|
|
||||
Operating loss
|
(3,273
|
)
|
|
(1,892
|
)
|
|
(8,199
|
)
|
|
(12,279
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Gain on sale of businesses
|
—
|
|
|
—
|
|
|
305
|
|
|
263,567
|
|
||||
Other, net
|
(511
|
)
|
|
2,974
|
|
|
(1,828
|
)
|
|
2,499
|
|
||||
Total other (expense) income, net
|
(511
|
)
|
|
2,974
|
|
|
(1,523
|
)
|
|
266,066
|
|
||||
(Loss) income from discontinued operations before income taxes
|
(3,784
|
)
|
|
1,082
|
|
|
(9,722
|
)
|
|
253,787
|
|
||||
(Benefit) provision for income taxes
(1)
|
(1,686
|
)
|
|
386
|
|
|
(20,974
|
)
|
|
94,180
|
|
||||
Net (loss) income from discontinued operations
|
$
|
(2,098
|
)
|
|
$
|
696
|
|
|
$
|
11,252
|
|
|
$
|
159,607
|
|
(1)
|
In the first quarter 2016, we recognized a
$17 million
tax benefit associated with the resolution of uncertain tax positions; see Note 4, Income Taxes.
|
|
Rate
|
|
Maturity
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Senior secured credit facilities:
|
|
|
|
|
|
|
|
|
|
||
Term B facility
|
L + 3.00%
|
|
February 2019
|
|
$
|
1,712,875
|
|
|
$
|
1,721,750
|
|
Incremental term loan facility
|
L + 3.50%
|
|
February 2019
|
|
340,375
|
|
|
342,125
|
|
||
Term C facility
|
L + 3.00%
|
|
December 2017
|
|
49,313
|
|
|
49,313
|
|
||
Extended Revolver, $370 million
|
L + 2.75%
|
|
February 2019
|
|
63,951
|
|
|
—
|
|
||
Unextended Revolver, $35 million
|
L + 3.75%
|
|
February 2018
|
|
6,049
|
|
|
—
|
|
||
Senior unsecured notes due 2016
|
8.35%
|
|
March 2016
|
|
—
|
|
|
165,000
|
|
||
5.375% senior secured notes due 2023
|
5.375%
|
|
April 2023
|
|
530,000
|
|
|
530,000
|
|
||
5.25% senior secured notes due 2023
|
5.25%
|
|
November 2023
|
|
500,000
|
|
|
500,000
|
|
||
Mortgage facility
|
5.80%
|
|
April 2017
|
|
80,371
|
|
|
80,984
|
|
||
Capital lease obligations
|
|
|
|
|
4,944
|
|
|
6,502
|
|
||
Face value of total debt outstanding
|
|
|
|
|
3,287,878
|
|
|
3,395,674
|
|
||
Less current portion of debt outstanding
|
|
|
|
|
(174,048
|
)
|
|
(190,687
|
)
|
||
Face value of long-term debt outstanding
|
|
|
|
|
$
|
3,113,830
|
|
|
$
|
3,204,987
|
|
Notional Amount
|
|
Interest Rate
Received |
|
Interest Rate Paid
|
|
Effective Date
|
|
Maturity Date
|
$750 million
|
|
1 month LIBOR
(1)
|
|
1.48%
|
|
December 31, 2015
|
|
December 30, 2016
|
$750 million
|
|
1 month LIBOR
(1)
|
|
2.19%
|
|
December 30, 2016
|
|
December 29, 2017
|
$750 million
|
|
1 month LIBOR
(1)
|
|
2.61%
|
|
December 29, 2017
|
|
December 31, 2018
|
(1)
|
Subject to a
1%
floor.
|
|
|
Derivative Assets (Liabilities)
|
||||||||
|
|
|
|
Fair Value as of
|
||||||
Derivatives Designated as Hedging Instruments
|
|
Consolidated Balance Sheet Location
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Foreign exchange contracts
|
|
Prepaid expenses and other current assets
|
|
$
|
1,750
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
|
Other accrued liabilities
|
|
(3,157
|
)
|
|
(1,759
|
)
|
||
Interest rate swaps
|
|
Other accrued liabilities
|
|
(6,249
|
)
|
|
(3,912
|
)
|
||
Interest rate swaps
|
|
Other noncurrent liabilities
|
|
(14,303
|
)
|
|
(9,822
|
)
|
||
|
|
|
|
$
|
(21,959
|
)
|
|
$
|
(15,493
|
)
|
|
|
Amount of Gain (Loss) Recognized in OCI on Derivative
(Effective Portion) |
||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Foreign exchange contracts
|
|
$
|
(3,599
|
)
|
|
$
|
1,292
|
|
|
$
|
(558
|
)
|
|
$
|
(3,045
|
)
|
Interest rate swaps
|
|
(1,025
|
)
|
|
(410
|
)
|
|
(4,396
|
)
|
|
(4,749
|
)
|
||||
Total
|
|
$
|
(4,624
|
)
|
|
$
|
882
|
|
|
$
|
(4,954
|
)
|
|
$
|
(7,794
|
)
|
|
|
|
|
Amount of Loss Reclassified from Accumulated OCI into Income (Effective Portion)
|
||||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
|
Income Statement Location
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||||
Foreign exchange contracts
|
|
Cost of revenue
|
|
$
|
93
|
|
|
$
|
3,462
|
|
|
$
|
1,012
|
|
|
$
|
6,932
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
June 30, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Available-for-sale securities
|
$
|
42,577
|
|
|
$
|
42,577
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
|
(1,407
|
)
|
|
—
|
|
|
(1,407
|
)
|
|
—
|
|
||||
Interest rate swap contracts
|
(20,552
|
)
|
|
—
|
|
|
(20,552
|
)
|
|
—
|
|
||||
Total
|
$
|
20,618
|
|
|
$
|
42,577
|
|
|
$
|
(21,959
|
)
|
|
$
|
—
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
|
December 31, 2015
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Available-for-sale securities
|
$
|
36,711
|
|
|
$
|
36,711
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Derivatives
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward contracts
|
(1,759
|
)
|
|
—
|
|
|
(1,759
|
)
|
|
—
|
|
||||
Interest rate swap contracts
|
(13,734
|
)
|
|
—
|
|
|
(13,734
|
)
|
|
—
|
|
||||
Total
|
$
|
21,218
|
|
|
$
|
36,711
|
|
|
$
|
(15,493
|
)
|
|
$
|
—
|
|
|
|
Fair Value at
|
|
Carrying Value at
|
||||||||||||
Financial Instrument
|
|
June 30, 2016
|
|
December 31, 2015
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||
Term B facility
|
|
$
|
1,710,734
|
|
|
$
|
1,705,609
|
|
|
$
|
1,708,040
|
|
|
$
|
1,716,048
|
|
Incremental term loan facility
|
|
341,013
|
|
|
339,559
|
|
|
340,375
|
|
|
342,125
|
|
||||
Term C facility
|
|
49,374
|
|
|
49,251
|
|
|
49,196
|
|
|
49,157
|
|
||||
Extended Revolver, $370 million
|
|
63,951
|
|
|
—
|
|
|
63,951
|
|
|
—
|
|
||||
Unextended Revolver, $35 million
|
|
6,049
|
|
|
—
|
|
|
6,049
|
|
|
—
|
|
||||
5.375% Senior secured notes due 2023
|
|
542,588
|
|
|
528,013
|
|
|
530,000
|
|
|
530,000
|
|
||||
5.25% Senior secured notes due 2023
|
|
510,625
|
|
|
494,375
|
|
|
500,000
|
|
|
500,000
|
|
||||
Senior unsecured notes due 2016
|
|
—
|
|
|
165,804
|
|
|
—
|
|
|
164,628
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Defined benefit pension and other post retirement benefit plans
|
$
|
(89,286
|
)
|
|
$
|
(90,647
|
)
|
Unrealized loss on foreign currency forward contracts, interest rate swaps, and available-for-sale securities
|
(5,087
|
)
|
|
(6,391
|
)
|
||
Unrealized foreign currency translation gain
|
1,238
|
|
|
(97
|
)
|
||
Total accumulated other comprehensive loss, net of tax
|
$
|
(93,135
|
)
|
|
$
|
(97,135
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
75,195
|
|
|
$
|
32,589
|
|
|
$
|
168,114
|
|
|
$
|
81,919
|
|
Less: Net income attributable to noncontrolling interests
|
1,078
|
|
|
1,078
|
|
|
2,180
|
|
|
1,825
|
|
||||
Net income from continuing operations available to common stockholders, basic and diluted
|
$
|
74,117
|
|
|
$
|
31,511
|
|
|
$
|
165,934
|
|
|
$
|
80,094
|
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic weighted-average common shares outstanding
|
277,392
|
|
|
271,948
|
|
|
276,480
|
|
|
270,574
|
|
||||
Add: Dilutive effect of stock options and restricted stock awards
|
5,609
|
|
|
7,153
|
|
|
6,168
|
|
|
7,508
|
|
||||
Diluted weighted-average common shares outstanding
|
283,001
|
|
|
279,101
|
|
|
282,648
|
|
|
278,082
|
|
||||
Earning per share from continuing operations:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.27
|
|
|
$
|
0.12
|
|
|
$
|
0.60
|
|
|
$
|
0.30
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.11
|
|
|
$
|
0.59
|
|
|
$
|
0.29
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel Network
|
$
|
597,910
|
|
|
$
|
494,515
|
|
|
$
|
1,223,386
|
|
|
$
|
1,002,445
|
|
Airline and Hospitality Solutions
|
252,169
|
|
|
216,632
|
|
|
490,549
|
|
|
421,532
|
|
||||
Eliminations
|
(4,837
|
)
|
|
(4,056
|
)
|
|
(9,150
|
)
|
|
(6,538
|
)
|
||||
Total revenue
|
$
|
845,242
|
|
|
$
|
707,091
|
|
|
$
|
1,704,785
|
|
|
$
|
1,417,439
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Gross Profit
(a)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel Network
|
$
|
281,986
|
|
|
$
|
225,927
|
|
|
$
|
586,900
|
|
|
$
|
470,046
|
|
Airline and Hospitality Solutions
|
108,469
|
|
|
95,782
|
|
|
209,345
|
|
|
184,981
|
|
||||
Corporate
|
(17,190
|
)
|
|
(8,885
|
)
|
|
(34,784
|
)
|
|
(21,481
|
)
|
||||
Total
|
$
|
373,265
|
|
|
$
|
312,824
|
|
|
$
|
761,461
|
|
|
$
|
633,546
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted EBITDA
(b)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel Network
|
$
|
251,587
|
|
|
$
|
205,957
|
|
|
$
|
524,761
|
|
|
$
|
438,044
|
|
Airline and Hospitality Solutions
|
91,945
|
|
|
80,985
|
|
|
174,883
|
|
|
152,473
|
|
||||
Total segments
|
343,532
|
|
|
286,942
|
|
|
699,644
|
|
|
590,517
|
|
||||
Corporate
|
(72,048
|
)
|
|
(59,369
|
)
|
|
(140,680
|
)
|
|
(119,358
|
)
|
||||
Total
|
$
|
271,484
|
|
|
$
|
227,573
|
|
|
$
|
558,964
|
|
|
$
|
471,159
|
|
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel Network
|
$
|
19,676
|
|
|
$
|
15,280
|
|
|
$
|
38,206
|
|
|
$
|
29,624
|
|
Airline and Hospitality Solutions
|
36,555
|
|
|
31,910
|
|
|
72,348
|
|
|
74,907
|
|
||||
Total segments
|
56,231
|
|
|
47,190
|
|
|
110,554
|
|
|
104,531
|
|
||||
Corporate
|
42,212
|
|
|
29,366
|
|
|
84,172
|
|
|
62,086
|
|
||||
Total
|
$
|
98,443
|
|
|
$
|
76,556
|
|
|
$
|
194,726
|
|
|
$
|
166,617
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted Capital Expenditures
(c)
|
|
|
|
|
|
|
|
|
|
|
|
||||
Travel Network
|
$
|
24,185
|
|
|
$
|
14,473
|
|
|
$
|
47,155
|
|
|
$
|
27,558
|
|
Airline and Hospitality Solutions
|
71,045
|
|
|
52,542
|
|
|
131,465
|
|
|
106,979
|
|
||||
Total segments
|
95,230
|
|
|
67,015
|
|
|
178,620
|
|
|
134,537
|
|
||||
Corporate
|
17,202
|
|
|
14,270
|
|
|
29,241
|
|
|
22,987
|
|
||||
Total
|
$
|
112,432
|
|
|
$
|
81,285
|
|
|
$
|
207,861
|
|
|
$
|
157,524
|
|
(a)
|
The following table sets forth the reconciliation of Adjusted Gross Profit to operating income in our statement of operations (in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Adjusted Gross Profit
|
$
|
373,265
|
|
|
$
|
312,824
|
|
|
$
|
761,461
|
|
|
$
|
633,546
|
|
Less adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Selling, general and administrative
|
146,886
|
|
|
123,360
|
|
|
280,742
|
|
|
245,718
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization
(1)
|
65,372
|
|
|
53,079
|
|
|
131,879
|
|
|
117,746
|
|
||||
Amortization of upfront incentive consideration
(2)
|
13,896
|
|
|
10,878
|
|
|
26,233
|
|
|
22,050
|
|
||||
Stock-based compensation
|
5,072
|
|
|
2,902
|
|
|
9,146
|
|
|
6,435
|
|
||||
Operating income
|
$
|
142,039
|
|
|
$
|
122,605
|
|
|
$
|
313,461
|
|
|
$
|
241,597
|
|
(b)
|
The following table sets forth the reconciliation of Adjusted EBITDA to income from continuing operations in our statement of operations (in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Adjusted EBITDA
|
$
|
271,484
|
|
|
$
|
227,573
|
|
|
$
|
558,964
|
|
|
$
|
471,159
|
|
Less adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization of property and equipment
(1a)
|
56,214
|
|
|
46,244
|
|
|
109,879
|
|
|
107,907
|
|
||||
Amortization of capitalized implementation costs
(1b)
|
8,211
|
|
|
7,902
|
|
|
16,699
|
|
|
15,426
|
|
||||
Acquisition-related amortization
(1c)
|
34,018
|
|
|
23,211
|
|
|
68,148
|
|
|
44,886
|
|
||||
Amortization of upfront incentive consideration
(2)
|
13,896
|
|
|
10,878
|
|
|
26,233
|
|
|
22,050
|
|
||||
Interest expense, net
|
37,210
|
|
|
42,609
|
|
|
78,412
|
|
|
89,062
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
33,235
|
|
|
—
|
|
|
33,235
|
|
||||
Other, net
(3)
|
(876
|
)
|
|
(197
|
)
|
|
(4,236
|
)
|
|
4,248
|
|
||||
Restructuring and other costs
(4)
|
1,116
|
|
|
—
|
|
|
1,240
|
|
|
—
|
|
||||
Acquisition-related costs
(5)
|
516
|
|
|
2,053
|
|
|
624
|
|
|
3,864
|
|
||||
Litigation costs (reimbursements), net
(6)
|
1,901
|
|
|
2,043
|
|
|
(1,945
|
)
|
|
5,479
|
|
||||
Stock-based compensation
|
12,810
|
|
|
7,330
|
|
|
23,099
|
|
|
16,124
|
|
||||
Provision for income taxes
|
31,273
|
|
|
19,676
|
|
|
72,697
|
|
|
46,959
|
|
||||
Income from continuing operations
|
$
|
75,195
|
|
|
$
|
32,589
|
|
|
$
|
168,114
|
|
|
$
|
81,919
|
|
(1)
|
Depreciation and amortization expenses:
|
a.
|
Depreciation and amortization of property and equipment includes software developed for internal use.
|
b.
|
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
|
c.
|
Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures.
|
(2)
|
Our Travel Network business at times makes upfront cash payments or other consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized over an average expected life of the service contract, generally over
three years
to
five years
. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided up front. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.
|
(3)
|
In the first quarter of 2016, we recognized a gain of
$6 million
associated with the receipt of an earn-out payment from the sale of a business in 2013. In addition, other, net includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
|
(4)
|
Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs.
|
(5)
|
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of the Abacus, Trust Group and Airpas Aviation (see Note 2, Acquisitions).
|
(6)
|
Litigation (reimbursements) costs, net represent charges and legal fee reimbursements associated with antitrust litigation (see Note 10, Contingencies).
|
(c)
|
Includes capital expenditures and capitalized implementation costs as summarized below (in thousands):
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Additions to property and equipment
|
$
|
89,121
|
|
|
$
|
66,051
|
|
|
$
|
164,593
|
|
|
$
|
127,963
|
|
Capitalized implementation costs
|
23,311
|
|
|
15,234
|
|
|
43,268
|
|
|
29,561
|
|
||||
Adjusted Capital Expenditures
|
$
|
112,432
|
|
|
$
|
81,285
|
|
|
$
|
207,861
|
|
|
$
|
157,524
|
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
||||||||
|
2016
|
|
2015
|
|
% Change
|
|
2016
|
|
2015
|
|
% Change
|
||||
Travel Network
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct Billable Bookings - Air
|
111,902
|
|
|
88,442
|
|
|
26.5%
|
|
231,768
|
|
|
179,865
|
|
|
28.9%
|
Direct Billable Bookings - Non-Air
|
15,892
|
|
|
14,687
|
|
|
8.2%
|
|
30,913
|
|
|
28,698
|
|
|
7.7%
|
Total Direct Billable Bookings
|
127,794
|
|
|
103,129
|
|
|
23.9%
|
|
262,681
|
|
|
208,563
|
|
|
25.9%
|
Airline Solutions Passengers Boarded
|
199,788
|
|
|
139,265
|
|
|
43.5%
|
|
383,180
|
|
|
265,439
|
|
|
44.4%
|
•
|
these non-GAAP financial measures exclude certain recurring, non-cash charges such as stock-based compensation expense and amortization of acquired intangible assets;
|
•
|
although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Profit and Adjusted EBITDA do not reflect cash requirements for such replacements;
|
•
|
Adjusted Net Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
|
•
|
Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
|
•
|
Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
|
•
|
Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness; and
|
•
|
other companies, including companies in our industry, may calculate Adjusted Gross Profit, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, or Free Cash Flow differently, which reduces their usefulness as comparative measures.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income attributable to common stockholders
|
$
|
72,019
|
|
|
$
|
32,207
|
|
|
$
|
177,186
|
|
|
$
|
239,701
|
|
Loss (income) from discontinued operations, net of tax
|
2,098
|
|
|
(696
|
)
|
|
(11,252
|
)
|
|
(159,607
|
)
|
||||
Net income attributable to noncontrolling interests
(1)
|
1,078
|
|
|
1,078
|
|
|
2,180
|
|
|
1,825
|
|
||||
Income from continuing operations
|
75,195
|
|
|
32,589
|
|
|
168,114
|
|
|
81,919
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Acquisition-related amortization
(2a)
|
34,018
|
|
|
23,211
|
|
|
68,148
|
|
|
44,886
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
33,235
|
|
|
—
|
|
|
33,235
|
|
||||
Other, net
(4)
|
(876
|
)
|
|
(197
|
)
|
|
(4,236
|
)
|
|
4,248
|
|
||||
Restructuring and other costs
(5)
|
1,116
|
|
|
—
|
|
|
1,240
|
|
|
—
|
|
||||
Acquisition-related costs
(6)
|
516
|
|
|
2,053
|
|
|
624
|
|
|
3,864
|
|
||||
Litigation costs (reimbursements), net
(7)
|
1,901
|
|
|
2,043
|
|
|
(1,945
|
)
|
|
5,479
|
|
||||
Stock-based compensation
|
12,810
|
|
|
7,330
|
|
|
23,099
|
|
|
16,124
|
|
||||
Tax impact of net income adjustments
|
(20,633
|
)
|
|
(24,210
|
)
|
|
(36,349
|
)
|
|
(38,767
|
)
|
||||
Adjusted Net Income from continuing operations
|
$
|
104,047
|
|
|
$
|
76,054
|
|
|
$
|
218,695
|
|
|
$
|
150,988
|
|
Adjusted Net Income from continuing operations per share
|
$
|
0.37
|
|
|
$
|
0.27
|
|
|
$
|
0.77
|
|
|
$
|
0.54
|
|
Diluted weighted-average common shares outstanding
|
283,001
|
|
|
279,101
|
|
|
282,648
|
|
|
278,082
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Adjusted Net Income from continuing operations
|
$
|
104,047
|
|
|
$
|
76,054
|
|
|
$
|
218,695
|
|
|
$
|
150,988
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Depreciation and amortization of property and equipment
(2b)
|
56,214
|
|
|
46,244
|
|
|
109,879
|
|
|
107,907
|
|
||||
Amortization of capitalized implementation costs
(2c)
|
8,211
|
|
|
7,902
|
|
|
16,699
|
|
|
15,426
|
|
||||
Amortization of upfront incentive consideration
(3)
|
13,896
|
|
|
10,878
|
|
|
26,233
|
|
|
22,050
|
|
||||
Interest expense, net
|
37,210
|
|
|
42,609
|
|
|
78,412
|
|
|
89,062
|
|
||||
Remaining provision for income taxes
|
51,906
|
|
|
43,886
|
|
|
109,046
|
|
|
85,726
|
|
||||
Adjusted EBITDA
|
$
|
271,484
|
|
|
$
|
227,573
|
|
|
$
|
558,964
|
|
|
$
|
471,159
|
|
|
Three Months Ended June 30, 2016
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
217,252
|
|
|
$
|
55,390
|
|
|
$
|
(130,603
|
)
|
|
$
|
142,039
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
32,745
|
|
|
16,762
|
|
|
97,379
|
|
|
146,886
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
18,093
|
|
|
36,317
|
|
|
10,962
|
|
|
65,372
|
|
||||
Amortization of upfront incentive consideration
(3)
|
13,896
|
|
|
—
|
|
|
—
|
|
|
13,896
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
5,072
|
|
|
5,072
|
|
||||
Adjusted Gross Profit
|
281,986
|
|
|
108,469
|
|
|
(17,190
|
)
|
|
373,265
|
|
||||
Selling, general and administrative
|
(32,745
|
)
|
|
(16,762
|
)
|
|
(97,379
|
)
|
|
(146,886
|
)
|
||||
Joint venture equity income
|
763
|
|
|
—
|
|
|
—
|
|
|
763
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
1,583
|
|
|
238
|
|
|
31,250
|
|
|
33,071
|
|
||||
Restructuring and other costs
(5)
|
—
|
|
|
—
|
|
|
1,116
|
|
|
1,116
|
|
||||
Acquisition-related costs
(6)
|
—
|
|
|
—
|
|
|
516
|
|
|
516
|
|
||||
Litigation costs
(7)
|
—
|
|
|
—
|
|
|
1,901
|
|
|
1,901
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
7,738
|
|
|
7,738
|
|
||||
Adjusted EBITDA
|
$
|
251,587
|
|
|
$
|
91,945
|
|
|
$
|
(72,048
|
)
|
|
$
|
271,484
|
|
|
Three Months Ended June 30, 2015
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
173,691
|
|
|
$
|
49,075
|
|
|
$
|
(100,161
|
)
|
|
$
|
122,605
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
26,600
|
|
|
15,036
|
|
|
81,724
|
|
|
123,360
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
14,758
|
|
|
31,671
|
|
|
6,650
|
|
|
53,079
|
|
||||
Amortization of upfront incentive consideration
(3)
|
10,878
|
|
|
—
|
|
|
—
|
|
|
10,878
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
2,902
|
|
|
2,902
|
|
||||
Adjusted Gross Profit
|
225,927
|
|
|
95,782
|
|
|
(8,885
|
)
|
|
312,824
|
|
||||
Selling, general and administrative
|
(26,600
|
)
|
|
(15,036
|
)
|
|
(81,724
|
)
|
|
(123,360
|
)
|
||||
Joint venture equity income
|
5,307
|
|
|
—
|
|
|
—
|
|
|
5,307
|
|
||||
Joint venture intangible amortization
(2a)
|
801
|
|
|
—
|
|
|
—
|
|
|
801
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
522
|
|
|
239
|
|
|
22,716
|
|
|
23,477
|
|
||||
Acquisition-related costs
(6)
|
—
|
|
|
—
|
|
|
2,053
|
|
|
2,053
|
|
||||
Litigation costs
(7)
|
—
|
|
|
—
|
|
|
2,043
|
|
|
2,043
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
4,428
|
|
|
4,428
|
|
||||
Adjusted EBITDA
|
$
|
205,957
|
|
|
$
|
80,985
|
|
|
$
|
(59,369
|
)
|
|
$
|
227,573
|
|
|
Six Months Ended June 30, 2016
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
458,796
|
|
|
$
|
102,535
|
|
|
$
|
(247,870
|
)
|
|
$
|
313,461
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
66,118
|
|
|
35,003
|
|
|
179,621
|
|
|
280,742
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
35,753
|
|
|
71,807
|
|
|
24,319
|
|
|
131,879
|
|
||||
Amortization of upfront incentive consideration
(3)
|
26,233
|
|
|
—
|
|
|
—
|
|
|
26,233
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,146
|
|
|
9,146
|
|
||||
Adjusted Gross Profit
|
586,900
|
|
|
209,345
|
|
|
(34,784
|
)
|
|
761,461
|
|
||||
Selling, general and administrative
|
(66,118
|
)
|
|
(35,003
|
)
|
|
(179,621
|
)
|
|
(280,742
|
)
|
||||
Joint venture equity income
|
1,526
|
|
|
—
|
|
|
—
|
|
|
1,526
|
|
||||
Selling, general and administrative adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
2,453
|
|
|
541
|
|
|
59,853
|
|
|
62,847
|
|
||||
Restructuring and other costs
(5)
|
—
|
|
|
—
|
|
|
1,240
|
|
|
1,240
|
|
||||
Acquisition-related costs
(6)
|
—
|
|
|
—
|
|
|
624
|
|
|
624
|
|
||||
Litigation reimbursements, net
(7)
|
—
|
|
|
—
|
|
|
(1,945
|
)
|
|
(1,945
|
)
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
13,953
|
|
|
13,953
|
|
||||
Adjusted EBITDA
|
$
|
524,761
|
|
|
$
|
174,883
|
|
|
$
|
(140,680
|
)
|
|
$
|
558,964
|
|
|
Six Months Ended June 30, 2015
|
||||||||||||||
|
Travel
Network |
|
Airline and
Hospitality Solutions |
|
Corporate
|
|
Total
|
||||||||
Operating income (loss)
|
$
|
370,942
|
|
|
$
|
77,566
|
|
|
$
|
(206,911
|
)
|
|
$
|
241,597
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
48,484
|
|
|
33,015
|
|
|
164,219
|
|
|
245,718
|
|
||||
Cost of revenue adjustments:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
(2)
|
28,570
|
|
|
74,400
|
|
|
14,776
|
|
|
117,746
|
|
||||
Amortization of upfront incentive consideration
(3)
|
22,050
|
|
|
—
|
|
|
—
|
|
|
22,050
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
6,435
|
|
|
6,435
|
|
||||
Adjusted Gross Profit
|
470,046
|
|
|
184,981
|
|
|
(21,481
|
)
|
|
633,546
|
|
||||
Selling, general and administrative
|
(48,484
|
)
|
|
(33,015
|
)
|
|
(164,219
|
)
|
|
(245,718
|
)
|
||||
Joint venture equity income
|
13,826
|
|
|
—
|
|
|
—
|
|
|
13,826
|
|
||||
Joint venture intangible amortization
(2a)
|
1,602
|
|
|
—
|
|
|
—
|
|
|
1,602
|
|
||||
Selling, general and administrative adjustments:
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Depreciation and amortization
(2)
|
1,054
|
|
|
507
|
|
|
47,310
|
|
|
48,871
|
|
||||
Acquisition-related costs
(6)
|
—
|
|
|
—
|
|
|
3,864
|
|
|
3,864
|
|
||||
Litigation costs
(7)
|
—
|
|
|
—
|
|
|
5,479
|
|
|
5,479
|
|
||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
9,689
|
|
|
9,689
|
|
||||
Adjusted EBITDA
|
$
|
438,044
|
|
|
$
|
152,473
|
|
|
$
|
(119,358
|
)
|
|
$
|
471,159
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Additions to property and equipment
|
$
|
89,121
|
|
|
$
|
66,051
|
|
|
$
|
164,593
|
|
|
$
|
127,963
|
|
Capitalized implementation costs
|
23,311
|
|
|
15,234
|
|
|
43,268
|
|
|
29,561
|
|
||||
Adjusted Capital Expenditures
|
$
|
112,432
|
|
|
$
|
81,285
|
|
|
$
|
207,861
|
|
|
$
|
157,524
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash provided by operating activities
|
$
|
263,784
|
|
|
$
|
267,999
|
|
Cash used in investing activities
|
(329,570
|
)
|
|
(127,815
|
)
|
||
Cash used in financing activities
|
(174,334
|
)
|
|
34,233
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash provided by operating activities
|
$
|
263,784
|
|
|
$
|
267,999
|
|
Additions to property and equipment
|
(164,593
|
)
|
|
(127,963
|
)
|
||
Free Cash Flow
|
$
|
99,191
|
|
|
$
|
140,036
|
|
(1)
|
Net income attributable to noncontrolling interests represents an adjustment to include earnings allocated to noncontrolling interests held in (i) Sabre Travel Network Middle East of 40%, (ii) Sabre Seyahat Dagitim Sistemleri A.S. of 40%, and (iii) Abacus International Lanka Pte Ltd of 40% beginning in July 2015.
|
(2)
|
Depreciation and amortization expenses:
|
a.
|
Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures.
|
b.
|
Depreciation and amortization of property and equipment includes software developed for internal use.
|
c.
|
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
|
(3)
|
Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to five years. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided upfront. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.
|
(4)
|
In the first quarter of 2016, we recognized a gain of $6 million associated with the receipt of an earn-out payment related to the sale of a business in 2013. In addition, other, net includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
|
(5)
|
Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs.
|
(6)
|
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of the Abacus, Trust Group and Airpas Aviation.
|
(7)
|
Litigation costs (reimbursements), net represent charges and legal fee reimbursements associated with antitrust litigation.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(Amounts in thousands)
|
||||||||||||||
Revenue
|
$
|
845,242
|
|
|
$
|
707,091
|
|
|
$
|
1,704,785
|
|
|
$
|
1,417,439
|
|
Cost of revenue
|
556,317
|
|
|
461,126
|
|
|
1,110,582
|
|
|
930,124
|
|
||||
Selling, general and administrative
|
146,886
|
|
|
123,360
|
|
|
280,742
|
|
|
245,718
|
|
||||
Operating income
|
142,039
|
|
|
122,605
|
|
|
313,461
|
|
|
241,597
|
|
||||
Interest expense, net
|
(37,210
|
)
|
|
(42,609
|
)
|
|
(78,412
|
)
|
|
(89,062
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
(33,235
|
)
|
|
—
|
|
|
(33,235
|
)
|
||||
Joint venture equity income
|
763
|
|
|
5,307
|
|
|
1,526
|
|
|
13,826
|
|
||||
Other income (expense), net
|
876
|
|
|
197
|
|
|
4,236
|
|
|
(4,248
|
)
|
||||
Income from continuing operations before income taxes
|
106,468
|
|
|
52,265
|
|
|
240,811
|
|
|
128,878
|
|
||||
Provision for income taxes
|
31,273
|
|
|
19,676
|
|
|
72,697
|
|
|
46,959
|
|
||||
Income from continuing operations
|
$
|
75,195
|
|
|
$
|
32,589
|
|
|
$
|
168,114
|
|
|
$
|
81,919
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
597,910
|
|
|
$
|
494,515
|
|
|
$
|
103,395
|
|
|
21
|
%
|
Airline and Hospitality Solutions
|
252,169
|
|
|
216,632
|
|
|
35,537
|
|
|
16
|
%
|
|||
Total segment revenue
|
850,079
|
|
|
711,147
|
|
|
138,932
|
|
|
20
|
%
|
|||
Eliminations
|
(4,837
|
)
|
|
(4,056
|
)
|
|
(781
|
)
|
|
(19
|
)%
|
|||
Total revenue
|
$
|
845,242
|
|
|
$
|
707,091
|
|
|
$
|
138,151
|
|
|
20
|
%
|
•
|
a $15 million increase in Airline Solutions’ SabreSonic Customer Sales and Service (“SabreSonic CSS”) revenue for the
three months ended June 30, 2016
compared to the same period in the prior year. Passengers Boarded increased by
43%
to
200 million
for the
three months ended June 30, 2016
, driven by the cutover of American Airlines Group to SabreSonic CSS in the fourth quarter of 2015 and also by existing customers. The growth in PBs resulted in a $29 million increase in revenue for the
three months ended June 30, 2016
. This increase was partially offset by a $14 million decrease in non-PB revenue, primarily due to the expiration of a services contract that was extended with a significant customer in conjunction with a litigation settlement agreement with that customer in 2012;
|
•
|
a $7 million increase in Airline Solutions’ commercial and operations solutions revenue driven by growth in multiple products across our portfolio, partially offset by a $2 million decrease in consulting revenue; and
|
•
|
a $16 million increase in Hospitality Solutions revenue for the
three months ended June 30, 2016
compared to the same period in the prior year driven primarily by an increase in Central Reservation System (“CRS”) revenue. The increase was driven primarily by $5 million from new and existing customers and $11 million from the acquisition of the Trust Group.
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
315,924
|
|
|
$
|
268,588
|
|
|
$
|
47,336
|
|
|
18
|
%
|
Airline and Hospitality Solutions
|
143,700
|
|
|
120,849
|
|
|
22,851
|
|
|
19
|
%
|
|||
Eliminations
|
(4,837
|
)
|
|
(4,046
|
)
|
|
(791
|
)
|
|
(20
|
)%
|
|||
Total segment cost of revenue
|
454,787
|
|
|
385,391
|
|
|
69,396
|
|
|
18
|
%
|
|||
Corporate
|
22,262
|
|
|
11,778
|
|
|
10,484
|
|
|
89
|
%
|
|||
Depreciation and amortization
|
65,372
|
|
|
53,079
|
|
|
12,293
|
|
|
23
|
%
|
|||
Amortization of upfront incentive consideration
|
13,896
|
|
|
10,878
|
|
|
3,018
|
|
|
28
|
%
|
|||
Total cost of revenue
|
$
|
556,317
|
|
|
$
|
461,126
|
|
|
$
|
95,191
|
|
|
21
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative
|
$
|
146,886
|
|
|
$
|
123,360
|
|
|
$
|
23,526
|
|
|
19
|
%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Interest expense, net
|
$
|
37,210
|
|
|
$
|
42,609
|
|
|
$
|
(5,399
|
)
|
|
(13
|
)%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Loss on extinguishment of debt
|
$
|
—
|
|
|
$
|
33,235
|
|
|
$
|
(33,235
|
)
|
|
(100
|
)%
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Joint venture equity income
|
$
|
763
|
|
|
$
|
5,307
|
|
|
$
|
(4,544
|
)
|
|
(86
|
)%
|
|
Three Months Ended June 30,
|
|
|
|||||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
31,273
|
|
|
$
|
19,676
|
|
|
$
|
11,597
|
|
|
59
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
1,223,386
|
|
|
$
|
1,002,445
|
|
|
$
|
220,941
|
|
|
22
|
%
|
Airline and Hospitality Solutions
|
490,549
|
|
|
421,532
|
|
|
69,017
|
|
|
16
|
%
|
|||
Total segment revenue
|
1,713,935
|
|
|
1,423,977
|
|
|
289,958
|
|
|
20
|
%
|
|||
Eliminations
|
(9,150
|
)
|
|
(6,538
|
)
|
|
(2,612
|
)
|
|
(40
|
)%
|
|||
Total revenue
|
$
|
1,704,785
|
|
|
$
|
1,417,439
|
|
|
$
|
287,346
|
|
|
20
|
%
|
•
|
a $33 million increase in Airline Solutions’ SabreSonic CSS revenue for the
six months ended June 30, 2016
compared to the same period in the prior year. Passengers Boarded increased by
44%
to
383 million
for the
six months ended June 30, 2016
, driven by the cutover of American Airlines Group to SabreSonic CSS in the fourth quarter of 2015 and also by existing customers. The growth in PBs resulted in a $57 million increase in revenue for the
six months ended June 30, 2016
. This increase was partially offset by a $24 million decrease in non-PB revenue, primarily due to the expiration of a services contract that was extended with a significant customer in conjunction with a litigation settlement agreement with that customer in 2012;
|
•
|
a $13 million increase in Airline Solutions’ commercial and operations solutions revenue driven by growth in multiple products across our portfolio, partially offset by a $6 million decrease in consulting revenue; and
|
•
|
a $30 million increase in Hospitality Solutions revenue for the
six months ended June 30, 2016
compared to the same period in the prior year driven primarily by an increase in CRS revenue. The total increase was driven mainly by $11 million from new and existing customers and $19 million from the acquisition of the Trust Group.
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Travel Network
|
$
|
636,486
|
|
|
$
|
532,399
|
|
|
$
|
104,087
|
|
|
20
|
%
|
Airline and Hospitality Solutions
|
281,204
|
|
|
236,550
|
|
|
44,654
|
|
|
19
|
%
|
|||
Eliminations
|
(9,063
|
)
|
|
(6,528
|
)
|
|
(2,535
|
)
|
|
(39
|
)%
|
|||
Total segment cost of revenue
|
908,627
|
|
|
762,421
|
|
|
146,206
|
|
|
19
|
%
|
|||
Corporate
|
43,843
|
|
|
27,907
|
|
|
15,936
|
|
|
57
|
%
|
|||
Depreciation and amortization
|
131,879
|
|
|
117,746
|
|
|
14,133
|
|
|
12
|
%
|
|||
Amortization of upfront incentive consideration
|
26,233
|
|
|
22,050
|
|
|
4,183
|
|
|
19
|
%
|
|||
Total cost of revenue
|
$
|
1,110,582
|
|
|
$
|
930,124
|
|
|
$
|
180,458
|
|
|
19
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Selling, general and administrative
|
$
|
280,742
|
|
|
$
|
245,718
|
|
|
$
|
35,024
|
|
|
14
|
%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Interest expense, net
|
$
|
78,412
|
|
|
$
|
89,062
|
|
|
$
|
(10,650
|
)
|
|
(12
|
)%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Loss on extinguishment of debt
|
$
|
—
|
|
|
$
|
33,235
|
|
|
$
|
(33,235
|
)
|
|
(100
|
)%
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Joint venture equity income
|
$
|
1,526
|
|
|
$
|
13,826
|
|
|
$
|
(12,300
|
)
|
|
(89
|
)%
|
|
Six Months Ended June 30,
|
|
|
|
|
||||||||
|
2016
|
|
2015
|
|
Change
|
||||||||
|
(Amounts in thousands)
|
|
|
|
|
||||||||
Other income (expense), net
|
$
|
4,236
|
|
|
$
|
(4,248
|
)
|
|
$
|
8,484
|
|
|
**
|
|
Six Months Ended June 30,
|
|
|
|||||||||||
|
2016
|
|
2015
|
|
Change
|
|||||||||
|
(Amounts in thousands)
|
|
|
|
|
|||||||||
Provision for income taxes
|
$
|
72,697
|
|
|
$
|
46,959
|
|
|
$
|
25,738
|
|
|
55
|
%
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Cash and cash equivalents
|
$
|
68,312
|
|
|
$
|
321,132
|
|
Available balance under the revolving credit facility
|
298,198
|
|
|
380,603
|
|
||
Reductions to the revolving credit availability:
|
|
|
|
||||
Outstanding revolving credit facility balance
|
70,000
|
|
|
—
|
|
||
Outstanding letters of credit
|
36,802
|
|
|
24,560
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in thousands)
|
||||||
Cash provided by operating activities
|
$
|
263,784
|
|
|
$
|
267,999
|
|
Cash used in investing activities
|
(329,570
|
)
|
|
(127,815
|
)
|
||
Cash (used in) provided by financing activities
|
(174,334
|
)
|
|
34,233
|
|
||
Cash (used in) provided by in discontinued operations
|
(12,407
|
)
|
|
252,798
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(293
|
)
|
|
(4,861
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
$
|
(252,820
|
)
|
|
$
|
422,354
|
|
•
|
we paid the remaining principal of $165 million on our senior secured notes due 2016, which matured in March 2016;
|
•
|
we made draws on our Prior Revolver totaling $378 million and payments totaling $308 million resulting in an outstanding balance of $70 million as of June 30, 2016;
|
•
|
we made payments totaling $176 million on the principal outstanding on our term loans and mortgage;
|
•
|
we paid
$72 million
in dividends on our common stock; and
|
•
|
we received proceeds of $15 million from the settlement of employee stock-option awards and paid $11 million in income tax withholdings associated with the settlement of employee restricted-stock awards
.
|
•
|
We extinguished our 2019 Notes of $480 million through the issuance of $530 million of 5.375% senior secured notes due in 2023;
|
•
|
we drew $70 million on the Prior Revolver to partially fund our acquisition of Abacus in July 2015;
|
•
|
we paid $40 million of debt prepayment fees and issuance costs;
|
•
|
we paid $49 million in dividends on our common stock; and
|
•
|
we received net proceeds of $18 million from the settlement of equity-based awards.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
•
|
general and local economic conditions;
|
•
|
financial instability of travel suppliers and the impact of any fundamental corporate changes to such travel suppliers, such as airline bankruptcies or consolidations, on the cost and availability of travel content;
|
•
|
factors that affect demand for travel such as outbreaks of contagious diseases, including Zika, Ebola and the MERS virus, increases in fuel prices, changing attitudes towards the environmental costs of travel and safety concerns;
|
•
|
inclement weather, natural or man-made disasters;
|
•
|
political events like acts or threats of terrorism, hostilities and war; and
|
•
|
factors that affect supply of travel such as changes to regulations governing airlines and the travel industry, like government sanctions that do or would prohibit doing business with certain state-owned travel suppliers, work stoppages or labor unrest at any of the major airlines, hotels or airports.
|
•
|
business, political and economic instability in foreign locations, including actual or threatened terrorist activities, and military action;
|
•
|
changes in foreign currency exchange rates and financial risk arising from transactions in multiple currencies;
|
•
|
adverse laws and regulatory requirements, including more comprehensive regulation in the EU;
|
•
|
difficulty in developing, managing and staffing international operations because of distance, language and cultural differences;
|
•
|
disruptions to or delays in the development of communication and transportation services and infrastructure;
|
•
|
consumer attitudes, including the preference of customers for local providers;
|
•
|
increasing labor costs due to high wage inflation in foreign locations, differences in general employment conditions and the degree of employee unionization and activism;
|
•
|
export or trade restrictions or currency controls;
|
•
|
more restrictive data privacy requirements;
|
•
|
governmental policies or actions, such as consumer, labor and trade protection measures;
|
•
|
taxes, restrictions on foreign investment and limits on the repatriation of funds;
|
•
|
diminished ability to legally enforce our contractual rights; and
|
•
|
decreased protection for intellectual property.
|
•
|
the features of the implemented software may not meet the expectations or fit the business model of the customer;
|
•
|
our limited pool of trained experts for implementations cannot quickly and easily be augmented for complex implementation projects, such that resources issues, if not planned and managed effectively, could lead to costly project delays;
|
•
|
customer-specific factors, such as the stability, functionality, interconnection and scalability of the customer’s pre-existing information technology infrastructure, as well as financial or other circumstances could destabilize, delay or prevent the completion of the implementation process, which, for airline reservations systems, typically takes 12 to 18 months; and
|
•
|
customers and their partners may not fully or timely perform the actions required to be performed by them to ensure successful implementation, including measures we recommend to safeguard against technical and business risks.
|
•
|
Any of these providers fail to enable us to provide our customers and suppliers with reliable, real-time access to our systems. For example, in 2013, we experienced a significant outage of the Sabre platform due to a failure on the part of one of our service providers. This outage, which affected both our Travel Network business and our Airline Solutions business, lasted several hours and caused significant problems for our customers. Any such future outages could cause damage to our reputation, customer loss and require us to pay compensation to affected customers for which we may not be indemnified or compensated.
|
•
|
Our arrangements with such providers are terminated or impaired and we cannot find alternative sources of technology or systems support on commercially reasonable terms or on a timely basis. For example, our substantial dependence on HPE for many of our systems makes it difficult for us to switch vendors and makes us more sensitive to changes in HPE’s pricing for its services.
|
•
|
While we take reasonable steps to protect our brands and trademarks, we may not be successful in maintaining or defending our brands or preventing third parties from adopting similar brands. If our competitors infringe our principal trademarks, our brands may become diluted or if our competitors introduce brands or products that cause confusion with our brands or products in the marketplace, the value that our consumers associate with our brands may become diminished, which could negatively impact revenue.
|
•
|
Our patent applications may not be granted, and the patents we own could be challenged, invalidated, narrowed or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Once our patents expire, or if they are invalidated, narrowed or circumvented, our competitors may be able to utilize the technology protected by our patents which may adversely affect our business.
|
•
|
Although we rely on copyright laws to protect the works of authorship created by us, we do not generally register the copyrights in our copyrightable works where such registration is permitted. Copyrights of U.S. origin must be registered before the copyright owner may bring an infringement suit in the United States. Accordingly, if one of our unregistered copyrights of U.S. origin is infringed by a third party, we will need to register the copyright before we can file an infringement suit in the United States, and our remedies in any such infringement suit may be limited.
|
•
|
We use reasonable efforts to protect our trade secrets. However, protecting trade secrets can be difficult and our efforts may provide inadequate protection to prevent unauthorized use, misappropriation, or disclosure of our trade secrets, know how, or other proprietary information.
|
•
|
We also rely on our domain names to conduct our online businesses. While we use reasonable efforts to protect and maintain our domain names, if we fail to do so the domain names may become available to others. Further, the regulatory bodies that oversee domain name registration may change their regulations in a way that adversely affects our ability to register and use certain domain names.
|
•
|
general economic and capital market conditions;
|
•
|
the availability of credit from banks or other lenders;
|
•
|
investor confidence in us; and
|
•
|
our results of operations.
|
•
|
increased vulnerability to general adverse economic and industry conditions;
|
•
|
higher interest expense if interest rates increase on our floating rate borrowings and our hedging strategies do not effectively mitigate the effects of these increases;
|
•
|
need to divert a significant portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of cash to fund working capital, capital expenditures, acquisitions, investments and other general corporate purposes;
|
•
|
limited ability to obtain additional financing, on terms we find acceptable, if needed, for working capital, capital expenditures, expansion plans and other investments, which may adversely affect our ability to implement our business strategy;
|
•
|
limited flexibility in planning for, or reacting to, changes in our businesses and the markets in which we operate or to take advantage of market opportunities; and
|
•
|
a competitive disadvantage compared to our competitors that have less debt.
|
•
|
re-measurement gains and losses from changes in the value of foreign denominated assets and liabilities;
|
•
|
translation gains and losses on foreign subsidiary financial results that are translated into U.S. dollars, our functional currency, upon consolidation;
|
•
|
planning risk related to changes in exchange rates between the time we prepare our annual and quarterly forecasts and when actual results occur; and
|
•
|
the impact of relative exchange rate movements on cross-border travel, principally travel between Europe and the United States.
|
•
|
incur liens on our property, assets and revenue;
|
•
|
borrow money, and guarantee or provide other support for the indebtedness of third parties;
|
•
|
pay dividends or make other distributions on, redeem or repurchase our capital stock;
|
•
|
prepay, redeem or repurchase certain of our indebtedness;
|
•
|
enter into certain change of control transactions;
|
•
|
make investments in entities that we do not control, including joint ventures;
|
•
|
enter into certain asset sale transactions, including divestiture of certain company assets and divestiture of capital stock of wholly-owned subsidiaries;
|
•
|
enter into certain transactions with affiliates;
|
•
|
enter into secured financing arrangements;
|
•
|
enter into sale and leaseback transactions;
|
•
|
change our fiscal year; and
|
•
|
enter into substantially different lines of business.
|
ITEM 6.
|
EXHIBITS
|
Exhibit
Number
|
|
Description of Exhibit
|
10.49+
|
|
Form of Restricted Stock Unit Grant Agreement
|
10.50+
|
|
Form of Non-Qualified Stock Option Grant Agreement
|
10.68+
|
|
Sabre Corporation 2016 Omnibus Incentive Compensation Plan (incorporated by reference to Exhibit 10.1 of Sabre Corporation's Current Report on Form 8-K filed with the Securities and Exchange Commission on May 26, 2016)
|
10.69+
|
|
Second Amendment to Letter Agreement by and between the Corporation and Greg Webb, dated June 15, 2016
|
10.70+
|
|
Separation Agreement by and between Sabre Corporation and Tom Klein, dated June 20, 2016 (incorporated by reference to Exhibit 10.1 of Sabre Corporation's Current Report on Form 8-K filed with the Securities and Exchange Commission on June 20, 2016)
|
31.1
|
|
Rule 13a-14(a) Certification of Principal Executive Officer
|
31.2
|
|
Rule 13a-14(a) Certification of Principal Financial Officer
|
32.1
|
|
Section 1350 Certification of Principal Executive Officer
|
32.2
|
|
Section 1350 Certification of Principal Financial Officer
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
SABRE CORPORATION
|
|
|
|
|
(Registrant)
|
Date:
|
August 2, 2016
|
By:
|
|
/s/ Richard A. Simonson
|
|
|
|
|
Richard A. Simonson
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(principal financial officer of the registrant)
|
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