Document






 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 14, 2018
 
SABRE CORPORATION
(Exact name of registrant as specified in its charter)

 
Delaware
 
001-36422
 
20-8647322
(State or other jurisdiction of
incorporation or organization)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
3150 Sabre Drive
Southlake, TX
 
76092
(Address of principal executive offices)
 
(Zip Code)
(682) 605-1000
(Registrant’s telephone number, including area code)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 










Item 2.02
Results of Operations and Financial Condition.
On February 14, 2018, Sabre Corporation (“Sabre”) issued a press release and will hold a conference call regarding its financial results for the quarter and year ended December 31, 2017. A copy of the press release is attached as Exhibit 99.1.
The information in this Item 2.02 of Form 8-K and the attached exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Sabre makes reference to non-GAAP financial measures in the press release. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
 
Item 9.01.
Financial Statements and Exhibits.
(d) Exhibits
 
Exhibit
Number
  
Description
 
  









SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
Sabre Corporation
 
 
 
 
Dated:
February 14, 2018
By:
/s/ Richard A. Simonson
 
 
Name:
Richard A. Simonson
 
 
Title:
Chief Financial Officer










EXHIBIT INDEX
Exhibit
Number
  
Description
 
 
  
Press Release dated February 14, 2018


Exhibit



http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12053470&doc=3

Sabre reports fourth quarter and full-year 2017 results

Highlights:
Revenue increased 6.3% in the quarter and 6.7% for the full year 2017
Net income attributable to common stockholders increased 234.2% to $82.1 million in the quarter and the full year was flat at $242.5 million
Diluted net income attributable to common stockholders per share (EPS) increased 233.3% to $0.30 in the quarter and increased 1.2% to $0.87 for the full year
Adjusted EBITDA grew 2.7% to $256.7 million in the quarter and 3.1% to $1,078.6 million for the full year
Adjusted EPS grew 18.5% to $0.32 in the quarter and 6.9% to $1.40 for the full year
Cash provided by operating activities totaled $222.1 million in the quarter and $678.0 million for the full year

SOUTHLAKE, Texas – February 14, 2018– Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter and year ended December 31, 2017.

"2017 was a transformational year for Sabre," said Sean Menke, Sabre president and CEO. "We infused our leadership with fresh ideas, evolved our technology, enhanced our customer engagement strategies and found efficiencies in our SG&A and total technology investments. In the face of these significant undertakings, we delivered financial results consistent with our original guidance. Our successful close to the year reflects the hard work and commitment of the entire Sabre organization. Together, we have built a strong foundation that will help to carry our momentum forward.

"Our success in 2018 will be driven by executing against the strategies we've established, underpinned by a detailed set of prioritized initiatives that are measured, tracked, and maintained by our organizational leaders. I'm seeing great focus and collaboration across our

1



business, which gives me confidence in our ability to deliver against our objectives and drive strong results for our customers and shareholders."

Q4 2017 Financial Summary

Sabre consolidated fourth quarter revenue increased 6.3% to $881.9 million, compared to $829.6 million in the year-ago period.

Net income attributable to common stockholders totaled $82.1 million, an increase of 234.2% from net income of $24.6 million in the fourth quarter of 2016. Diluted net income attributable to common stockholders per share (EPS) increased 233.3% to $0.30 from $0.09 in the fourth quarter of 2016. The increase in net income attributable to common stockholders is partially driven by a favorable comparison due to $31.8 million of litigation costs accrued in the year-ago period related to the U.S. Airways litigation.

Fourth quarter consolidated Adjusted EBITDA was $256.7 million, a 2.7% increase from $249.8 million in the fourth quarter of 2016. The increase in consolidated Adjusted EBITDA is the result of Adjusted EBITDA increases at Airline and Hospitality Solutions and Travel Network, partially offset by higher Corporate product and technology costs.

For the quarter, Sabre reported Adjusted Net Income from continuing operations per share (Adjusted EPS) of $0.32, an increase of 18.5% from $0.27 per share in the fourth quarter of 2016, partially driven by a lower effective tax rate.

With regards to Sabre's fourth quarter 2017 cash flows (versus prior year):
Cash provided by operating activities totaled $222.1 million (vs. $266.9 million)
Cash used in investing activities totaled $74.6 million (vs. $27.1 million)
Cash used in financing activities totaled $55.8 million (vs. $143.4 million)
Fourth quarter Free Cash Flow was $148.5 million (vs. $193.5 million)

With regard to Sabre's fourth quarter 2017 capital expenditures (versus prior year):
Capital expenditures totaled $73.6 million (vs. $73.4 million)
Adjusted Capital Expenditures, which include capitalized implementation costs, totaled $86.4 million (vs. $92.2 million)

During the fourth quarter of 2017, Sabre returned $49.8 million to shareholders, including $38.4 million through its regular quarterly dividend and the repurchase of 626,528 shares for approximately $11.4 million in aggregate under its share repurchase authorization.

2




Full-Year 2017 Financial Summary

For the full-year 2017, Sabre total consolidated revenue increased 6.7% to $3.598 billion, compared to $3.373 billion for the prior year.

Consolidated net income attributable to common stockholders totaled $242.5 million, consistent with $242.6 million in 2016. Diluted net income attributable to common shareholders per share totaled $0.87 compared to $0.86 in 2016, an increase of 1.2%.

Consolidated Adjusted EBITDA totaled $1,078.6 million, a 3.1% increase from $1,046.6 million in 2016. The increase in consolidated Adjusted EBITDA is the result of Adjusted EBITDA increases in Airline and Hospitality Solutions and Travel Network, partially offset by higher Corporate product and technology costs.

For the full-year 2017, Adjusted EPS increased 6.9% to $1.40 from $1.31 per share in 2016.

With regards to Sabre's full year 2017 cash flows (versus prior year):
Cash provided by operating activities totaled $678.0 million (vs. $699.4 million)
Cash used in investing activities totaled $317.5 million (vs. $445.8 million)
Cash used in financing activities totaled $356.8 million (vs. $190.0 million)
Full-year 2017 Free Cash Flow totaled $361.6 million (vs. $371.8 million)

With regards to Sabre's full year 2017 capital expenditures (versus prior year):
Capital expenditures totaled $316.4 million (vs. $327.6 million)
Adjusted Capital Expenditures, which include capitalized implementation costs, totaled $377.2 million (vs. $411.1 million)

3



Financial Highlights
(in thousands, except for EPS; unaudited):
Three Months Ended December 31,
 
Year Ended December 31,
2017
 
2016
 
% Change
 
2017
 
2016
 
% Change
Total Company:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
881,862

 
$
829,620

 
6.3
 
$
3,598,484

 
$
3,373,387

 
6.7
Operating Income
$
134,600

 
$
55,961

 
140.5
 
$
493,440

 
$
459,572

 
7.4
Net income attributable to common stockholders
$
82,090

 
$
24,561

 
234.2
 
$
242,531

 
$
242,562

 
Diluted net income attributable to common stockholders per share (EPS)
$
0.30

 
$
0.09

 
233.3
 
$
0.87

 
$
0.86

 
1.2
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Gross Profit*
$
359,599

 
$
354,233

 
1.5
 
$
1,500,186

 
$
1,460,675

 
2.7
Adjusted EBITDA*
$
256,667

 
$
249,825

 
2.7
 
$
1,078,571

 
$
1,046,646

 
3.1
Adjusted Operating Income*
$
154,606

 
$
163,290

 
(5.3)
 
$
706,149

 
$
720,361

 
(2.0)
Adjusted Net Income*
$
87,961

 
$
76,883

 
14.4
 
$
390,118

 
$
370,937

 
5.2
Adjusted EPS*
$
0.32

 
$
0.27

 
18.5
 
$
1.40

 
$
1.31

 
6.9
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
222,127

 
$
266,866

 
(16.8)
 
$
678,033

 
$
699,400

 
(3.1)
Cash used in investing activities
$
(74,573
)
 
$
(27,095
)
 
175.2
 
$
(317,525
)
 
$
(445,808
)
 
(28.8)
Cash used in financing activities
$
(55,844
)
 
$
(143,378
)
 
(61.1)
 
$
(356,780
)
 
$
(190,025
)
 
87.8
Capital Expenditures
$
73,625

 
$
73,415

 
0.3
 
$
316,436

 
$
327,647

 
(3.4)
Adjusted Capital Expenditures*
$
86,423

 
$
92,243

 
(6.3)
 
$
377,202

 
$
411,052

 
(8.2)
 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow*
$
148,502

 
$
193,451

 
(23.2)
 
$
361,597

 
$
371,753

 
(2.7)
 
 
 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
$
3,126,652

 
$
3,114,381

 
 
 
 
 
 
 
 
Net Debt / LTM Adjusted EBITDA*
2.9x

 
3.0x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel Network:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
619,029

 
$
569,099

 
8.8
 
$
2,550,470

 
$
2,374,849

 
7.4
Transaction Revenue
$
577,031

 
$
524,989

 
9.9
 
$
2,376,816

 
$
2,199,219

 
8.1
Subscriber / Other Revenue
$
41,998

 
$
44,110

 
(4.8)
 
$
173,654

 
$
175,630

 
(1.1)
Operating Income
$
188,614

 
$
193,963

 
(2.8)
 
$
848,336

 
$
835,248

 
1.6
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA*
$
231,004

 
226,062

 
2.2
 
$
1,004,412

 
$
970,688

 
3.5
 
 
 
 
 
 
 
 
 
 
 
 
Total Bookings
121,412

 
117,040

 
3.7
 
524,824

 
505,471

 
3.8
Air Bookings
105,903

 
102,697

 
3.1
 
462,381

 
445,050

 
3.9
Lodging, Ground and Sea Bookings
15,509

 
14,343

 
8.1
 
62,443

 
60,421

 
3.3
 
 
 
 
 
 
 
 
 
 
 
 
Bookings Share
36.0
%
 
36.8
%
 
 
 
36.3
%
 
37.1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airline and Hospitality Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
269,681

 
$
266,366

 
1.2
 
$1,074,360
 
$
1,019,306

 
5.4
Operating Income
$
69,777

 
$
61,756

 
13.0
 
$
246,833

 
$
217,631

 
13.4
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA*
$
116,914

 
$
102,108

 
14.5
 
$
415,809

 
$
372,063

 
11.8
 
 
 
 
 
 
 
 
 
 
 
 
Passengers Boarded
173,052

 
199,748

 
(13.4)
 
772,149

 
789,260

 
(2.2)
*Indicates non-GAAP financial measure; see descriptions and reconciliations below


4



Sabre Travel Network

Fourth quarter 2017 highlights (versus prior year):
Fourth quarter 2017 Travel Network revenue increased 8.8% to $619.0 million.
Global bookings increased 3.7%, driven by 12.5% growth in Asia-Pacific, 5.3% growth in Latin America, 3.9% growth in EMEA, and 0.3% in North America.
Operating income decreased 2.8% to $188.6 million and operating income margin decreased to 30.5%. Operating income was impacted by higher depreciation and amortization versus the prior-year period.
Adjusted EBITDA increased 2.2% to $231.0 million, and Adjusted EBITDA margin decreased to 37.3%. Operating income and Adjusted EBITDA were supported by the benefits of the cost reduction and business alignment program initiated in August of 2017, offset by growth in incentive expenses, primarily due to large agency renewals signed in 2016, regional mix and new customer conversions.

Full year 2017 highlights (versus prior year):
Full-year 2017 Travel Network revenue increased 7.4% to $2.550 billion.
Global bookings increased 3.8%, driven by 9.8% growth in EMEA, 7.9% growth in Asia-Pacific, 1.7% growth in Latin America, and 1.0% growth in North America. Global air bookings share was 36.3%.
Operating income increased 1.6% to $848.3 million and operating income margin decreased to 33.3%.
Adjusted EBITDA increased 3.5% to $1,004.4 million and Adjusted EBITDA margin decreased to 39.4%. Operating income and Adjusted EBITDA growth were driven by bookings growth in all regions, a 4.1% increase in average booking fee and the benefits of the cost reduction and business alignment program initiated in August of 2017, partially offset by growth in incentive expenses primarily due to large agency renewals signed in 2016, regional mix and new customer conversions.

Sabre Airline and Hospitality Solutions

Fourth quarter 2017 highlights (versus prior year):
Fourth quarter 2017 Airline and Hospitality Solutions revenue increased 1.2% to $269.7 million. Contributing to the rise in revenue was low single digit growth in AirVision and AirCentre solutions and Hospitality Solutions growth in the mid-teens, offset somewhat by a modest decline in SabreSonic revenue due to the ending of legacy reservations system services to Southwest Airlines in mid-2017 and a decline in discrete professional services revenue.

5



Airline passengers boarded declined 13.4% in the quarter due to the impact of Southwest. Passengers boarded grew 6.0% on a consistent carrier basis.
Operating income increased 13.0% to $69.8 million and operating income margin expanded to 25.9%.
Adjusted EBITDA increased 14.5% to $116.9 million and Adjusted EBITDA margin increased to 43.4%. Operating income and Adjusted EBITDA growth were supported by the benefits from the cost reduction and business alignment program initiated in August of 2017 and lower technology expenses than the year ago period. The year ago period included incremental service-level agreement costs.

Full year 2017 highlights (versus prior year):
Full-year Airline and Hospitality Solutions revenue increased 5.4% to $1,074.4 million. Within this, full-year Airline Solutions revenue increased 2.7% to $816.0 million and Hospitality Solutions increased 15.0% to $258.4 million.
Airline passengers boarded declined 2.2% due to the mid-year 2017 ending of legacy reservations system services to Southwest Airlines. Excluding Southwest, total passengers boarded increased 9.1%, driven by the implementation at Alitalia in October 2016 and passengers boarded growth of 5.8% on a consistent carrier basis.
Operating income increased 13.4% to $246.8 million and operating income margin expanded to 23.0%.
Adjusted EBITDA increased 11.8% to $415.8 million and Adjusted EBITDA margin increased to 38.7%. Operating income and Adjusted EBITDA growth were supported by the benefits of the cost reduction and business alignment program initiated in August of 2017.

Dividend

Sabre's Board of Directors declared a quarterly dividend of $0.14 per share, payable on March 30, 2018 to shareholders of record on March 21, 2018.

2018 Business Outlook and Financial Guidance

With respect to the 2018 guidance below, full-year Adjusted Net Income guidance consists of full-year expected net income attributable to common stockholders less the estimated impact of loss from discontinued operations, net of tax, of approximately $5 million; net income attributable to noncontrolling interests of approximately $5 million; acquisition-related amortization of approximately $70 million; stock-based compensation expense of approximately $60 million; other items (primarily consisting of litigation and other costs) of approximately $5

6



million; and the tax benefit of the above adjustments of approximately $30 million. Full-year Adjusted EPS guidance consists of Adjusted Net Income divided by the projected weighted-average diluted common share count for the full year of approximately 278 million.

Full-year Adjusted Operating Income guidance consists of Adjusted Net Income guidance less the impact of interest expense, net of approximately $155 million and provision for income taxes less tax impact of net income adjustments of approximately $125 million.

Full-year Adjusted EBITDA guidance consists of Adjusted Operating Income guidance less the impact of depreciation and amortization of property and equipment, amortization of capitalized implementation costs and amortization of upfront incentive consideration of approximately $405 million.

Full-year Free Cash Flow guidance consists of expected full-year cash provided by operating activities of $695 million to $715 million less additions to property and equipment of $305 million to $325 million.

7



Full-Year 2018 Financial Guidance

The 2018 guidance below incorporates the expected impact of Sabre's adoption of the revenue recognition standard, Revenue from Contracts with Customers ("ASC 606"), on a modified retrospective basis, as well as the impact of U.S. tax reform. More detail on these items is provided below.
 
Range
Growth Rate
Growth Rate
Excluding the Impacts of ASC 606 and U.S. Tax Reform
($ millions, except EPS)
Revenue
$3,685M - $3,765M
2% - 5%
4% - 6%
 
 
 
 
Adjusted EBITDA
$1,055M - $1,095M
(2%) - 2%
2% - 5%
 
 
 
 
Adjusted Operating Income
$650M - $690M
(8%) - (2%)
(2%) - 3%
 
 
 
 
Adjusted Net Income
$375M - $415M
(4%) - 6%
(5%) - 5%
 
 
 
 
Adjusted EPS
$1.34 - $1.48
(4%) - 6%
(5%) - 5%
 
 
 
 
Capital Expenditures (GAAP)
$305M - $325M
(4%) - 3%
(4%) - 3%
 
 
 
 
Free Cash Flow
Approximately $390M
Approximately 8%
Approximately 8%

Important considerations:
The impact of U.S. tax reform is expected to reduce Sabre's effective tax rate to approximately 24% versus previous expectations of approximately 30% in 2018. This tax rate reduction is expected to increase net income attributable to common stockholders and Adjusted EPS by approximately $0.12 in 2018 before the impact of adopting ASC 606. Because Sabre is not currently a material U.S. cash tax payer due to net operating losses (NOLs), this tax rate reduction is expected to have no material benefit on cash provided by operating activities or Free Cash Flow in 2018.
In 2018, Sabre expects capital intensity to decline as a percent of revenue and expects roughly flat capital expenditures versus the prior year. As Sabre reallocates investment dollars into accelerating its use of private and public cloud environments and continues to invest in enhancements for stability, security and compliance with the European Union's General Data Protection Regulation (GDPR), costs associated with these investments are expected to rotate to operating expense as opposed to capital expenditures. In 2018, Sabre expects these investments to increase technology

8



operating expenses by approximately $30 million and reduce net income attributable to common stockholders and Adjusted EPS by approximately $0.08.

Update to previous preliminary ASC 606 guidance:
The impact of adoption of ASC 606 is expected in 2018 to reduce Sabre revenue, operating income and Adjusted EBITDA by approximately $40 million and accordingly reduce net income attributable to common stockholders and Adjusted EPS by approximately $0.11, based on the midpoint of the current expected range discussed below. This is at the bottom end of Sabre's previously disclosed expected revenue reduction range of $40 million to $80 million.

The estimated impacts of U.S. tax reform and ASC 606 are preliminary and subject to finalization, and consequently the actual impacts may differ materially. See "2018 Reporting Changes and Impacts of U.S. Tax Reform and ASC 606" below for additional details.



9



2018 Reporting Changes and Impacts of U.S. Tax Reform and ASC 606

2018 Reporting Changes: Effective the first quarter of 2018, Sabre plans to disaggregate the Airline and Hospitality Solutions reportable segment, and as a result it will have three reportable segments comprised of: (i) Travel Network, (ii) Airline Solutions, and (iii) Hospitality Solutions. In conjunction with this change, Sabre plans to modify the methodology it has historically used to allocate shared corporate technology costs. Each segment will reflect a portion of Sabre's shared corporate costs that historically were not allocated to a business unit, based on defined revenue metrics or relative consumption of shared technology infrastructure costs. These changes will have no impact on Sabre's consolidated results of operations, but will result in a decrease of segment profitability only.

Sabre has provided certain unaudited, pro forma financial information that reflects the disaggregation of Airline and Hospitality Solutions into separate segments, as well as the allocation of shared corporate technology costs as described above, on the Sabre Investor Relations website at investors.sabre.com.

Impact of U.S. Tax Reform: In December 2017, comprehensive U.S. tax reform legislation, the Tax Cuts and Jobs Act ("TCJA") was signed into law. The TCJA contains significant changes to the U.S. corporate income tax system, including a reduction of the U.S. federal corporate income tax rate from 35% to 21%, a limitation of the tax deduction for interest expense to 30% of adjusted taxable income (as defined in the TCJA), base erosion provisions related to intercompany foreign payments and global low-taxed income, one-time taxation of offshore earnings at reduced rate in connection with the transition of U.S. international taxation from a worldwide tax system to a territorial tax system, elimination of U.S. tax on foreign earnings (subject to certain important exceptions), and modifying or repealing many business deductions and credits.

Sabre has not completed its accounting for the tax effects of the enactment of the TCJA due to the complexities of the TCJA, pending clarifications, and additional information needed to finalize certain calculations; however, Sabre has recorded a reasonable estimate of the effects on its deferred tax balances, the one-time transition tax and the effect of the TCJA on its liability related to the tax receivable agreement ("TRA").

Provisional estimates of the impacts of the enactment of the TCJA are summarized below:
Sabre recorded a provisional amount in the fourth quarter of 2017 for its one-time transition tax liability for previously untaxed earnings and profits of its foreign subsidiaries, resulting in an increase in income tax expense of $48 million. This amount

10



is excluded from Adjusted Net Income for the fourth quarter of 2017. Sabre currently expects that payments on this aggregate amount of one-time transition tax will be paid out in cash through 2025.
Sabre recorded a provisional reduction in the fourth quarter of 2017 to its liability for future TRA payments of $58 million, which is reflected in its income from continuing operations before taxes. This amount is also excluded from Adjusted Net Income for the fourth quarter of 2017. Sabre currently estimates the remaining TRA payments will be made through 2021.
Sabre estimates that its effective tax rate will be reduced to approximately 24% versus previous expectations for approximately 30% in 2018. Because Sabre is not currently a material U.S. cash tax payer due to NOLs, the reduction in effective tax rate is expected to have no material benefit on cash provided by operating activities or Free Cash Flow.

Impact of ASC 606: In May 2014, the Financial Accounting Standards Board issued a comprehensive update to revenue recognition guidance, ASC 606, that will replace current standards. Under the updated standard, revenue is recognized when a company transfers promised goods or services to customers in an amount that reflects the consideration that is expected to be received for those goods and services. As of January 1, 2018, Sabre has adopted this new standard using the modified retrospective transition method, which will result in a cumulative adjustment as of that date.

Sabre's quantification of the impact of its adoption of this standard on its financial results is ongoing and will not be finalized until the period of adoption. To date, Sabre's assessment has identified the following anticipated impacts related to its adoption of the standard:
Sabre does not expect any material changes to revenue recognition for its Travel Network and Hospitality Solutions businesses.
Airline Solutions is expected to be impacted by the new standard primarily with respect to agreements sold under the license fee and maintenance structure and certain SaaS agreements with tiered pricing/variable rate structures.
In 2018, Airline Solutions consolidated revenue recognized is estimated to be reduced by approximately $40 million to $50 million before the impact of new sales or renewals. This revenue reduction is estimated to be partially offset by approximately $5 million from the benefit of revenue recognition for new or renewed Airline Solutions' agreements in 2018. Based on the midpoint of the range provided and the net impact of the items discussed above, for 2018:
Airline Solutions consolidated net revenue recognized is estimated to be reduced by approximately $40 million,

11



Airline Solutions consolidated operating income and Adjusted EBITDA are estimated to be reduced by approximately $40 million, and
Net income attributable to common stockholders per share and Adjusted EPS are estimated to be reduced by approximately $0.11.
Sabre does not expect any impact to its cash provided by operating activities or Free Cash Flow.
Sabre expects to record a net increase to its opening retained earnings as of January 1, 2018 of approximately $100 million to $130 million with a corresponding increase in current and long-term unbilled receivables, contract assets, and other assets. Implications to tax related accounts are not included in these estimated amounts.

Sabre's assessment is ongoing and subject to finalization, and consequently the actual impact of the adoption may differ materially from these estimated ranges.


12



Conference Call

Sabre will conduct its fourth quarter and full-year 2017 investor conference call today at 9:00 a.m. ET. The live webcast and accompanying slide presentation can be accessed via the Investor Relations section of our website, investors.sabre.com. A replay of the event will be available for at least 90 days following the event.

Investor Day

Sabre plans to host an investor day in Southlake, Texas on Tuesday, March 6, 2018. A live audio webcast of the session can be accessed on the Sabre Investor Relations website at investors.sabre.com. A replay of the event will be available on the website for at least 90 days following the event.

About Sabre

Sabre Corporation is the leading technology provider to the global travel industry. Sabre’s software, data, mobile and distribution solutions are used by hundreds of airlines and thousands of hotel properties to manage critical operations, including passenger and guest reservations, revenue management, flight, network and crew management. Sabre also operates a leading global travel marketplace, which processes more than US$120 billion of global travel spend annually by connecting travel buyers and suppliers. Headquartered in Southlake, Texas, USA, Sabre serves customers in more than 160 countries around the world.

Website Information

We routinely post important information for investors on the Investor Relations section of our website, investors.sabre.com. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Supplemental Financial Information

In conjunction with today’s earnings report, a file of supplemental financial information will be available on the Investor Relations section of our website, investors.sabre.com. In addition,

13



Sabre has provided certain unaudited, pro forma financial information that reflects the disaggregation of Airline and Hospitality Solutions into separate segments, as well as the allocation of shared corporate technology costs, at this website.

Industry Data

This release contains industry data, forecasts and other information that we obtained from industry publications and surveys, public filings and internal company sources, and there can be no assurance as to the accuracy or completeness of the included information. Statements as to our ranking, market position, bookings share and market estimates are based on independent industry publications, government publications, third-party forecasts and management’s estimates and assumptions about our markets and our internal research. We have not independently verified this third-party information nor have we ascertained the underlying economic assumptions relied upon in those sources, and we cannot assure you of the accuracy or completeness of this information.

Note on Non-GAAP Financial Measures

This press release includes unaudited non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, Adjusted EPS, Adjusted Capital Expenditures, Free Cash Flow, and the ratios based on these financial measures. In addition, we provide certain forward guidance with respect to Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income, Adjusted EPS and Free Cash Flow. We are unable to provide this forward guidance on a GAAP basis without unreasonable effort; however, see "Business Outlook and Financial Guidance" for additional information including estimates of certain components of the non-GAAP adjustments contained in the guidance.

We present non-GAAP measures when our management believes that the additional information provides useful information about our operating performance. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See “Non-GAAP Financial Measures” below for an explanation of the non-GAAP measures and “Tabular Reconciliations for Non-GAAP Measures” below for a reconciliation of the non-GAAP financial measures to the comparable GAAP measures.



14



Forward-looking statements

Certain statements herein are forward-looking statements about trends, future events, uncertainties and our plans and expectations of what may happen in the future. Any statements that are not historical or current facts are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "guidance," "outlook," "forecast," “expect,” "plan," "anticipate," "estimate," "preliminary," "objective," "will," "provisional," "project," "believe," “may,” “should,” “would,” “intend," “potential” or the negative of these terms or other comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Sabre’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. The potential risks and uncertainties include, among others, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, exposure to pricing pressure in the Travel Network business, maintenance of the stability and integrity of our systems and infrastructure and the effect of any security incidents, the implementation and effects of new or renewed agreements, the effects of the implementation of new accounting standards, the effects of tax law changes, including the Tax Cuts and Jobs Act, travel suppliers' usage of alternative distribution models, competition in the travel distribution market and solutions markets, the implementation and results of our cost reduction and business alignment program, failure to adapt to technological developments, dependence on establishing, maintaining and renewing contracts with customers and other counterparties and collecting amounts due to us under these agreements, changes affecting travel supplier customers, use of third-party distributor partners, dependence on relationships with travel buyers, adverse global and regional economic and political conditions, including, but not limited to, economic conditions in countries or regions with traditionally high levels of exports to China or that have commodities-based economies and the effect of "Brexit" and uncertainty due to related negotiations, risks arising from global operations, reliance on third parties to provide information technology services, compliance with regulatory and other requirements, including data privacy, our ability to recruit, train and retain employees, including our key executive officers and technical employees, and the effects of litigation. More information about potential risks and uncertainties that could affect our business and results of operations is included in the "Risk Factors" and “Forward-Looking Statements” sections in our Quarterly Report on Form 10-Q filed with the SEC on October 31, 2017 and our Annual Report on Form 10-K filed with the SEC on February 17, 2017 and in our other filings with the SEC. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. Unless required by law, Sabre undertakes no obligation to publicly

15



update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

Contacts:

Media
Investors
Tim Enstice
Barry Sievert
+1-682-605-6162
sabre.investorrelations@sabre.com
tim.enstice@sabre.com
 


16



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited) 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Revenue
$
881,862

 
$
829,620

 
$
3,598,484

 
$
3,373,387

Cost of revenue
631,234

 
583,430

 
2,513,857

 
2,287,662

Selling, general and administrative
126,938

 
190,229

 
510,075

 
626,153

Impairment and related charges
(10,910
)
 

 
81,112

 

Operating income
134,600

 
55,961

 
493,440

 
459,572

Other (expense) income:
 
 
 
 
 
 
 
Interest expense, net
(37,348
)
 
(41,837
)
 
(153,925
)
 
(158,251
)
Loss on extinguishment of debt

 

 
(1,012
)
 
(3,683
)
Joint venture equity income
812

 
536

 
2,580

 
2,780

Other, net
56,318

 
23,100

 
36,530

 
27,617

Total other income (expense), net
19,782

 
(18,201
)
 
(115,827
)
 
(131,537
)
Income from continuing operations before income taxes
154,382

 
37,760

 
377,613

 
328,035

Provision for income taxes
71,201

 
6,740

 
128,037

 
86,645

Income from continuing operations
83,181

 
31,020

 
249,576

 
241,390

Income (loss) from discontinued operations, net of tax
296

 
(5,309
)
 
(1,932
)
 
5,549

Net income
83,477

 
25,711

 
247,644

 
246,939

Net income attributable to noncontrolling interests
1,387

 
1,150

 
5,113

 
4,377

Net income attributable to common stockholders
$
82,090

 
$
24,561

 
$
242,531

 
$
242,562

 
 
 
 
 
 
 
 
Basic net income per share attributable to common
stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.30

 
$
0.11

 
$
0.88

 
$
0.85

(Loss) income from discontinued operations

 
(0.02
)
 
(0.01
)
 
0.02

Net income per common share
$
0.30

 
$
0.09

 
$
0.87

 
$
0.87

Diluted net income per share attributable to common
stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.30

 
$
0.11

 
$
0.88

 
$
0.84

(Loss) income from discontinued operations

 
(0.02
)
 
(0.01
)
 
0.02

Net income per common share
$
0.30

 
$
0.09

 
$
0.87

 
$
0.86

Weighted-average common shares outstanding:
 

 
 

 
 
 
 
Basic
274,272

 
278,801

 
276,893

 
277,546

Diluted
274,951

 
282,455

 
278,320

 
282,752

 
 
 
 
 
 
 
 
Dividends per common share
$
0.14

 
$
0.13

 
$
0.56

 
$
0.52



17



SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
December 31, 2017
 
December 31, 2016
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
361,381

 
$
364,114

Accounts receivable, net
490,558

 
400,667

Prepaid expenses and other current assets
108,753

 
88,600

Total current assets
960,692

 
853,381

Property and equipment, net
799,194

 
753,279

Investments in joint ventures
27,527

 
25,582

Goodwill
2,554,987

 
2,548,447

Acquired customer relationships, net
351,034

 
387,632

Other intangible assets, net
332,171

 
387,805

Deferred income taxes
31,817

 
95,285

Other assets, net
591,942

 
673,159

Total assets
$
5,649,364

 
$
5,724,570

 
 
 
 
Liabilities and stockholders’ equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
162,755

 
$
168,576

Accrued compensation and related benefits
112,343

 
102,037

Accrued subscriber incentives
271,200

 
216,011

Deferred revenues
110,532

 
187,108

Other accrued liabilities
198,353

 
222,879

Current portion of debt
57,138

 
169,246

Tax Receivable Agreement
59,826

 
100,501

Total current liabilities
972,147

 
1,166,358

Deferred income taxes
99,801

 
88,957

Other noncurrent liabilities
480,185

 
567,359

Long-term debt
3,398,731

 
3,276,281

Stockholders’ equity
 
 
 
Common stock: $0.01 par value; 450,000,000 authorized shares; 289,137,901 and 285,461,125 shares issued, 274,342,175 and 276,949,802 shares outstanding at December 31, 2017 and 2016, respectively
2,891

 
2,854

Additional paid-in capital
2,174,187

 
2,105,843

Treasury stock, at cost, 14,795,726 and 8,511,323 shares at December 31, 2017 and 2016 respectively
(341,846
)
 
(221,746
)
Retained deficit
(1,053,446
)
 
(1,141,116
)
Accumulated other comprehensive loss
(88,484
)
 
(122,799
)
Noncontrolling interest
5,198

 
2,579

Total stockholders’ equity
698,500

 
625,615

Total liabilities and stockholders’ equity
$
5,649,364

 
$
5,724,570



18



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Year Ended December 31,
 
2017
 
2016
Operating Activities
 
 
 
Net income
$
247,644

 
$
246,939

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Depreciation and amortization
400,871

 
413,986

Impairment and related charges
81,112

 

Amortization of upfront incentive consideration
67,411

 
55,724

Tax Receivable Agreement
(59,603
)
 

Deferred income taxes
48,760

 
48,454

Stock-based compensation expense
44,689

 
48,524

Debt modification costs
14,758

 

Allowance for doubtful accounts
9,459

 
10,567

Amortization of debt issuance costs
5,923

 
9,611

Joint venture equity income
(2,580
)
 
(2,780
)
Loss (income) from discontinued operations
1,932

 
(5,549
)
Dividends received from joint venture investments
1,088

 
640

Loss on extinguishment of debt
1,012

 
3,683

Litigation-related credits

 
(25,527
)
Other
13,284

 
(5,426
)
Changes in operating assets and liabilities:
 
 
 
Accounts and other receivables
(108,596
)
 
(12,949
)
Upfront incentive consideration
(94,296
)
 
(70,702
)
Capitalized implementation costs
(60,766
)
 
(83,405
)
Prepaid expenses and other current assets
109

 
(11,809
)
Other assets
(21,111
)
 
(2,799
)
Accounts payable and other accrued liabilities
67,034

 
56,787

Deferred revenue including upfront solution fees
13,861

 
22,663

Accrued compensation and related benefits
6,038

 
2,768

Cash provided by operating activities
678,033

 
699,400

Investing Activities


 


Additions to property and equipment
(316,436
)
 
(327,647
)
Acquisitions, net of cash acquired

 
(164,120
)
Proceeds from sale of marketable securities

 
45,959

Other investing activities
(1,089
)
 

Cash used in investing activities
(317,525
)
 
(445,808
)
Financing Activities
 
 
 
Proceeds of borrowings from lenders
1,897,625

 
1,055,000

Payments on borrowings from lenders
(1,880,506
)
 
(999,868
)
Cash dividends paid to common stockholders
(154,861
)
 
(144,355
)
Repurchase of common stock
(109,100
)
 
(100,000
)
Payments on Tax Receivable Agreement
(99,241
)
 

Debt prepayment fees and issuance costs
(19,052
)
 
(11,377
)
Net proceeds on the settlement of equity-based awards
12,647

 
27,344

Other financing activities
(4,292
)
 
(16,769
)
Cash used in financing activities
(356,780
)
 
(190,025
)
Cash Flows from Discontinued Operations
 
 
 
Cash used in operating activities
(4,848
)
 
(19,478
)
Cash used in discontinued operations
(4,848
)
 
(19,478
)
Effect of exchange rate changes on cash and cash equivalents
(1,613
)
 
(1,107
)
(Decrease) increase in cash and cash equivalents
(2,733
)
 
42,982

Cash and cash equivalents at beginning of period
364,114

 
321,132

Cash and cash equivalents at end of period
$
361,381

 
$
364,114



19



Non-GAAP Financial Measures

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income from continuing operations ("Adjusted Net Income"), Adjusted EBITDA, Adjusted Net Income from continuing operations per share ("Adjusted EPS"), Adjusted Capital Expenditures, Free Cash Flow and ratios based on these financial measures.

We define Adjusted Gross Profit as operating income (loss) adjusted for selling, general and administrative expenses, impairment and related charges, amortization of upfront incentive consideration, the cost of revenue portion of depreciation and amortization, restructuring and other costs, and stock-based compensation.

We define Adjusted Operating Income (Loss) as operating income (loss) adjusted for joint venture equity income, impairment and related charges, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation (reimbursements) costs, net, and stock-based compensation.

We define Adjusted Net Income as net income attributable to common stockholders adjusted for income (loss) from discontinued operations, net of tax, net income attributable to noncontrolling interests, acquisition-related amortization, impairment and related charges, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs (reimbursements), net, stock-based compensation and the tax impact of net income adjustments.

We define Adjusted EBITDA as Adjusted Net Income adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, amortization of upfront incentive consideration, interest expense, net, and remaining provision (benefit) for income taxes.

We define Adjusted EPS as Adjusted Net Income divided by the diluted weighted-average common shares outstanding.

We define Adjusted Capital Expenditures as additions to property and equipment and capitalized implementation costs.

We define Free Cash Flow as cash provided by operating activities less cash used in additions to property and equipment.

20




These non-GAAP financial measures are key metrics used by management and our Board of Directors to monitor our ongoing core operations because historical results have been significantly impacted by events that are unrelated to our core operations as a result of changes to our business and the regulatory environment. We believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate our ability to service debt obligations, fund capital expenditures and meet working capital requirements. Adjusted Capital Expenditures include cash flows used in investing activities, for property and equipment, and cash flows used in operating activities, for capitalized implementation costs. Our management uses this combined metric in making product investment decisions and determining development resource requirements. We also believe that Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income, Adjusted EBITDA, Adjusted EPS and Adjusted Capital Expenditures assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense. In addition, amounts derived from Adjusted EBITDA are a primary component of certain covenants under our senior secured credit facilities.

Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income, Adjusted EBITDA, Adjusted EPS, Adjusted Capital Expenditures, Free Cash Flow, and ratios based on these financial measures are not recognized terms under GAAP. These non-GAAP financial measures and ratios based on them have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity. These non-GAAP financial measures and ratios based on them exclude some, but not all, items that affect net income or cash flows from operating activities and these measures may vary among companies. Our use of these measures has limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

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;


21



Adjusted Operating Income (Loss), 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 Operating Income (Loss), Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Adjusted EPS or Free Cash Flow differently, which reduces their usefulness as comparative measures.





22



Tabular Reconciliations for Non-GAAP Measures
(In thousands, except per share amounts; unaudited)

Reconciliation of net income attributable to common stockholders to Adjusted Net Income, Adjusted EBITDA and Adjusted Operating Income:

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Net income attributable to common stockholders
$
82,090

 
$
24,561

 
$
242,531

 
$
242,562

(Income) loss from discontinued operations, net of tax
(296
)
 
5,309

 
1,932

 
(5,549
)
Net income attributable to noncontrolling interests(1)
1,387

 
1,150

 
5,113

 
4,377

Income from continuing operations
83,181

 
31,020

 
249,576

 
241,390

Adjustments:
 
 
 

 
 

 
 

Impairment and related charges(2)
(10,910
)
 

 
81,112

 

Acquisition-related amortization(3a)
20,194

 
35,847

 
95,860

 
143,425

Loss on extinguishment of debt

 

 
1,012

 
3,683

Other, net(5)
(56,318
)
 
(23,100
)
 
(36,530
)
 
(27,617
)
Restructuring and other costs(6)
(1,329
)
 
16,463

 
23,975

 
18,286

Acquisition-related costs(7)

 
65

 

 
779

Litigation costs (reimbursements)(8)
963

 
41,906

 
(35,507
)
 
46,995

Stock-based compensation
10,276

 
12,512

 
44,689

 
48,524

Tax impact of net income (loss) adjustments(9)
41,904

 
(37,830
)
 
(34,069
)
 
(104,528
)
Adjusted Net Income from continuing operations
$
87,961

 
$
76,883

 
$
390,118

 
$
370,937

Adjusted Net Income from continuing operations
per share
$
0.32

 
$
0.27

 
$
1.40

 
$
1.31

Diluted weighted-average common shares outstanding
274,951

 
282,455

 
278,320

 
282,752

 


 
 
 
 
 
 
Adjusted Net Income from continuing operations
$
87,961

 
$
76,883

 
$
390,118

 
$
370,937

Adjustments:
 
 
 

 
 

 
 

Depreciation and amortization of property
and equipment
(3b)
73,438

 
65,153

 
264,880

 
233,303

Amortization of capitalized implementation costs(3c)
11,510

 
9,030

 
40,131

 
37,258

Amortization of upfront incentive consideration(4)
17,113

 
12,352

 
67,411

 
55,724

Interest expense, net
37,348

 
41,837

 
153,925

 
158,251

Remaining provision for income taxes
29,297

 
44,570

 
162,106

 
191,173

Adjusted EBITDA
256,667

 
249,825

 
1,078,571

 
1,046,646

Less:
 
 
 

 
 

 
 

Depreciation and amortization(3)
105,142

 
110,030

 
400,871

 
413,986

Amortization of upfront incentive consideration(4)
17,113

 
12,352

 
67,411

 
55,724

Acquisition-related amortization(3a)
(20,194
)
 
(35,847
)
 
(95,860
)
 
(143,425
)
Adjusted Operating Income
$
154,606

 
$
163,290

 
$
706,149

 
$
720,361






23



Reconciliation of Adjusted Capital Expenditures:

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Additions to property and equipment
$
73,625

 
$
73,415

 
$
316,436

 
$
327,647

Capitalized implementation costs
12,798

 
18,828

 
60,766

 
83,405

Adjusted Capital Expenditures
$
86,423

 
$
92,243

 
$
377,202

 
$
411,052


Reconciliation of Free Cash Flow:

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Cash provided by operating activities
$
222,127

 
$
266,866

 
$
678,033

 
$
699,400

Cash used in investing activities
(74,573
)
 
(27,095
)
 
(317,525
)
 
(445,808
)
Cash used in financing activities
(55,844
)
 
(143,378
)
 
(356,780
)
 
(190,025
)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2017
 
2016
 
2017
 
2016
Cash provided by operating activities
$
222,127

 
$
266,866

 
$
678,033

 
$
699,400

Additions to property and equipment
(73,625
)
 
(73,415
)
 
(316,436
)
 
(327,647
)
Free Cash Flow
$
148,502

 
$
193,451

 
$
361,597

 
$
371,753



24



Reconciliation of net income (loss) attributable to common stockholders to LTM Adjusted EBITDA (for Net Debt Ratio):

 
Three Months Ended
 
 
 
Mar 31, 2017
 
Jun 30, 2017
 
Sep 30, 2017
 
Dec 31, 2017
 
LTM
Net income attributable to common stockholders
$
75,939

 
$
(6,487
)
 
$
90,989

 
$
82,090

 
$
242,531

(Income) loss from discontinued operations, net of tax
477

 
1,222

 
529

 
(296
)
 
1,932

Net income attributable to noncontrolling interests(1)
1,306

 
1,113

 
1,307

 
1,387

 
5,113

Income (loss) from continuing operations
77,722

 
(4,152
)
 
92,825

 
83,181

 
249,576

Adjustments:
 
 
 
 
 
 
 
 
 
Impairment and related charges(2)

 
92,022

 

 
(10,910
)
 
81,112

Acquisition-related amortization(3a)
35,181

 
20,259

 
20,226

 
20,194

 
95,860

Loss on extinguishment of debt

 

 
1,012

 

 
1,012

Other, net (5)
15,234

 
752

 
3,802

 
(56,318
)
 
(36,530
)
Restructuring and other costs (6)

 
25,304

 

 
(1,329
)
 
23,975

Litigation costs (reimbursements)(8)
3,501

 
958

 
(40,929
)
 
963

 
(35,507
)
Stock-based compensation
8,034

 
14,724

 
11,655

 
10,276

 
44,689

Depreciation and amortization of property and equipment(3b)
61,300

 
63,810

 
66,332

 
73,438

 
264,880

Amortization of capitalized implementation costs(3c)
9,189

 
8,948

 
10,484

 
11,510

 
40,131

Amortization of upfront incentive consideration(4)
16,132

 
16,161

 
18,005

 
17,113

 
67,411

Interest expense, net
39,561

 
38,097

 
38,919

 
37,348

 
153,925

Provision (benefit) for income taxes
31,707

 
(15,466
)
 
40,595

 
71,201

 
128,037

Adjusted EBITDA
$
297,561

 
$
261,417

 
$
262,926

 
$
256,667

 
$
1,078,571

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
3,126,652

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.9x



25



 
Three Months Ended
 
 
 
Mar 31, 2016
 
Jun 30, 2016
 
Sep 30, 2016
 
Dec 31, 2016
 
LTM
Net income attributable to common stockholders
$
105,167

 
$
72,019

 
$
40,815

 
$
24,561

 
$
242,562

(Income) loss from discontinued operations, net of tax
(13,350
)
 
2,098

 
394

 
5,309

 
$
(5,549
)
Net income attributable to noncontrolling interests(1)
1,102

 
1,078

 
1,047

 
1,150

 
4,377

Income from continuing operations
92,919

 
75,195

 
42,256

 
31,020

 
241,390

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization(3a)
34,130

 
34,018

 
39,430

 
35,847

 
143,425

Loss on extinguishment of debt

 

 
3,683

 

 
3,683

Other, net(5)
(3,360
)
 
(876
)
 
(281
)
 
(23,100
)
 
(27,617
)
Restructuring and other costs(6)
124

 
1,116

 
583

 
16,463

 
18,286

Acquisition-related costs(7)
108

 
516

 
90

 
65

 
779

Litigation (reimbursements) costs, net (8)
(3,846
)
 
1,901

 
7,034

 
41,906

 
46,995

Stock-based compensation
10,289

 
12,810

 
12,913

 
12,512

 
48,524

Depreciation and amortization of property and equipment (3b)
53,665

 
56,214

 
58,271

 
65,153

 
233,303

Amortization of capitalized implementation costs (3c)
8,488

 
8,211

 
11,529

 
9,030

 
37,258

Amortization of upfront incentive consideration(4)
12,337

 
13,896

 
17,139

 
12,352

 
55,724

Interest expense, net
41,202

 
37,210

 
38,002

 
41,837

 
158,251

Provision for income taxes
41,424

 
31,273

 
7,208

 
6,740

 
86,645

Adjusted EBITDA
$
287,480

 
$
271,484

 
$
237,857

 
$
249,825

 
$
1,046,646

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
3,114,381

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
3.0x




26



Reconciliation of operating income (loss) to Adjusted Gross Profit, Adjusted EBITDA and Adjusted Operating Income (Loss) by business segment:

 
Three Months Ended December 31, 2017
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
188,614

 
$
69,777

 
$
(123,791
)
 
$
134,600

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
35,024

 
16,084

 
75,830

 
126,938

Impairment and related charges(2)

 

 
(10,910
)
 
(10,910
)
Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
23,169

 
46,219

 
18,736

 
88,124

Restructuring and other costs (6)

 

 
(372
)
 
(372
)
Amortization of upfront incentive consideration(4)
17,113

 

 

 
17,113

Stock-based compensation

 

 
4,106

 
4,106

Adjusted Gross Profit
263,920

 
132,080

 
(36,401
)
 
359,599

Selling, general and administrative
(35,024
)
 
(16,084
)
 
(75,830
)
 
(126,938
)
Joint venture equity income
812

 

 

 
812

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
1,296

 
918

 
14,804

 
17,018

Restructuring and other costs(6)

 

 
(957
)
 
(957
)
Litigation costs(8)

 

 
963

 
963

Stock-based compensation

 

 
6,170

 
6,170

Adjusted EBITDA
231,004

 
116,914

 
(91,251
)
 
256,667

Less:
 
 
 
 
 
 
 
Depreciation and amortization(3)
24,465

 
47,137

 
33,540

 
105,142

Amortization of upfront incentive consideration(4)
17,113

 

 

 
17,113

Acquisition-related amortization(3a)

 

 
(20,194
)
 
(20,194
)
Adjusted Operating Income (Loss)
$
189,426

 
$
69,777

 
$
(104,597
)
 
$
154,606

 
 
 
 
 
 
 
 
Operating income margin
30.5
%
 
25.9
%
 
NM

 
15.4
%
Adjusted EBITDA margin
37.3
%
 
43.4
%
 
NM

 
29.1
%
  

27



 
Three Months Ended December 31, 2016
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
193,963

 
$
61,756

 
$
(199,758
)
 
$
55,961

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
28,836

 
17,277

 
144,116

 
190,229

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
17,911

 
40,006

 
20,160

 
78,077

Restructuring and other costs (6)

 

 
12,660

 
12,660

Amortization of upfront incentive consideration(4)
12,352

 

 

 
12,352

Stock-based compensation

 

 
4,954

 
4,954

Adjusted Gross Profit
253,062

 
119,039

 
(17,868
)
 
354,233

Selling, general and administrative
(28,836
)
 
(17,277
)
 
(144,116
)
 
(190,229
)
Joint venture equity income
536

 

 

 
536

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
1,300

 
346

 
30,307

 
31,953

Restructuring and other costs(6)

 

 
3,803

 
3,803

Acquisition-related costs(7)

 

 
65

 
65

Litigation costs(8)

 

 
41,906

 
41,906

Stock-based compensation

 

 
7,558

 
7,558

Adjusted EBITDA
226,062

 
102,108

 
(78,345
)
 
249,825

Less:
 
 
 
 
 
 
 
Depreciation and amortization(3)
19,211

 
40,352

 
50,467

 
110,030

Amortization of upfront incentive consideration(4)
12,352

 

 

 
12,352

Acquisition-related amortization(3a)

 

 
(35,847
)
 
(35,847
)
Adjusted Operating Income (Loss)
$
194,499

 
$
61,756

 
$
(92,965
)
 
$
163,290

 
 
 
 
 
 
 
 
Operating income margin
34.1
%
 
23.2
%
 
NM

 
6.7
%
Adjusted EBITDA margin
39.7
%
 
38.3
%
 
NM

 
30.1
%
 

28



 
Year Ended December 31, 2017
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
848,336

 
$
246,833

 
$
(601,729
)
 
$
493,440

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
130,700

 
79,955

 
299,420

 
510,075

Impairment and related charges(2)

 

 
81,112

 
81,112

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
80,780

 
165,551

 
71,481

 
317,812

Restructuring and other costs(6)

 

 
12,604

 
12,604

Amortization of upfront incentive consideration(4)
67,411

 

 

 
67,411

Stock-based compensation

 

 
17,732

 
17,732

Adjusted Gross Profit
1,127,227

 
492,339

 
(119,380
)
 
1,500,186

Selling, general and administrative
(130,700
)
 
(79,955
)
 
(299,420
)
 
(510,075
)
Joint venture equity income
2,580

 

 

 
2,580

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
5,305

 
3,425

 
74,329

 
83,059

Restructuring and other costs(6)

 

 
11,371

 
11,371

Litigation reimbursements(8)

 

 
(35,507
)
 
(35,507
)
Stock-based compensation

 

 
26,957

 
26,957

Adjusted EBITDA
1,004,412

 
415,809

 
(341,650
)
 
1,078,571

Less:
 
 
 
 
 
 
 
Depreciation and amortization(3)
86,085

 
168,976

 
145,810

 
400,871

Amortization of upfront incentive consideration(4)
67,411

 

 

 
67,411

Acquisition-related amortization(3a)

 

 
(95,860
)
 
(95,860
)
Adjusted Operating Income (Loss)
$
850,916

 
$
246,833

 
$
(391,600
)
 
$
706,149

 
 
 
 
 
 
 
 
Operating income margin
33.3
%
 
23.0
%
 
NM

 
13.8
%
Adjusted EBITDA margin
39.4
%
 
38.7
%
 
NM

 
30.0
%



29



 
Year Ended December 31, 2016
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
835,248

 
$
217,631

 
$
(593,307
)
 
$
459,572

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
132,537

 
71,685

 
421,931

 
626,153

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(3)
72,110

 
153,204

 
62,039

 
287,353

Restructuring and other costs(3)

 

 
12,660

 
12,660

Amortization of upfront incentive consideration(4)
55,724

 

 

 
55,724

 Stock-based compensation

 

 
19,213

 
19,213

Adjusted Gross Profit