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): May 3, 2022
_____________________
(Exact name of registrant as specified in its charter)
_____________________
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ||||||||
| If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||||
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On May 3, 2022, Sabre Corporation (“Sabre”) issued a press release and will hold a conference call regarding its financial results for the quarter ended March 31, 2022. 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 | ||||||||||
| 99.1 | |||||||||||
| 104 | Cover Page Interactive Data File - formatted as Inline XBRL. | ||||||||||
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: | May 3, 2022 | By: | /s/ Douglas E. Barnett | ||||||||
| Name: | Douglas E. Barnett | ||||||||||
| Title: | Chief Financial Officer | ||||||||||
Sabre announces first quarter 2022 financial results; highlights volume and financial improvements
First quarter 2022 business highlights:
•The global travel recovery accelerated each month since January and broadened geographically
•Corporate and international travel rebounded sharply, driving improved mix and increased revenue per booking
•Closed the previously-announced agreement to sell AirCentre airline operations portfolio to CAE for $392 million, supporting the streamlining of the product portfolio and creating greater focus on maximizing new revenue opportunities
•The technology transformation, including mainframe offload and migration to Google Cloud, moved forward and remained solidly on track to reach stated goals by the end of 2024
•Ended the quarter with cash balance of $1.2 billion
First quarter 2022 summary:
•First quarter revenue totaled $585 million
•Net income attributable to common stockholders of $42 million and diluted net income attributable to common stockholders per share of $0.12
•Adjusted EPS totaled ($0.29)
SOUTHLAKE, Texas – May 3, 2022 – Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter ended March 31, 2022.
"We are encouraged by the strengthening trends in our business and have seen consistent sequential volume improvements in key metrics week over week since mid-January 2022. After a slow start in January due to the Omicron variant, the travel recovery accelerated sharply and bookings in April ended at the highest level of recovery versus 2019 since the start of the COVID-19 pandemic. The overall improvement in each global geographic region has been particularly positive, supported by a significant return of more profitable international and corporate travel," said Sean Menke, Chair of the Board and CEO.
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"In addition, we continue to make progress toward our technology transformation goals, which we expect to deliver significant savings and expand revenue opportunities."
Q1 2022 Financial Summary
Sabre consolidated first quarter revenue totaled $585 million, compared to $327 million in the first quarter of 2021. The increase in revenue was driven by an increase in global air, hotel and other travel bookings due to continued recovery from the COVID-19 pandemic and $24 million in previously deferred IT Solutions revenue recognized in the first quarter due to a change in facts and circumstances associated with an IT Solutions customer located in Eastern Europe.
Operating loss was $80 million, versus operating loss of $203 million in the first quarter of 2021. The improvement in operating results was driven by the items impacting revenue described above and lower depreciation and amortization. These impacts were partially offset by increased Travel Solutions incentive expenses and Hospitality Solutions transaction-related costs, as well as total company technology hosting expenses due to volume recovery trends and expected temporary costs resulting from our cloud migration efforts, an increase in credit losses, and an increase in legal costs due to ongoing litigation.
Net income attributable to common stockholders totaled $42 million, versus a net loss of $266 million in the first quarter of 2021. Diluted net income attributable to common stockholders per share totaled $0.12, versus diluted net loss attributable to common stockholders per share of $0.84 in the first quarter of 2021. The improvement in net income attributable to common stockholders was driven by the items impacting operating loss described above, as well as a $121 million after-tax gain on sale of AirCentre, lower interest expense due to the maturation of interest rate swaps in the fourth quarter of 2021, and lower tax expense, partially offset by a $4 million loss on extinguishment of debt.
Adjusted EBITDA was $5 million, versus Adjusted EBITDA of negative $110 million in the first quarter of 2021. The improvement in Adjusted EBITDA was driven by increased revenue due to the continued recovery from the COVID-19 pandemic and $24 million in previously deferred IT Solutions revenue recognized in the first quarter due to a change in facts and circumstances associated with an IT Solutions customer located in Eastern Europe. These impacts were partially offset by increased Travel Solutions incentive expenses and Hospitality Solutions transaction-related costs, as well as total company technology hosting expenses due to volume recovery trends and expected temporary costs resulting from our cloud migration efforts, increased selling, general and administrative expenses, and an increase in credit losses.
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Adjusted Operating Loss was $29 million, versus Adjusted Operating Loss of $167 million in the first quarter of 2021. The improvement in operating results was driven by the items impacting Adjusted EBITDA above and by lower depreciation and amortization.
Sabre reported Adjusted EPS of ($0.29), versus ($0.72) in the first quarter of 2021.
With regards to Sabre's first quarter 2022 cash flows (versus prior year):
•Cash used in operating activities totaled $139 million (vs. $197 million used in)
•Cash provided by investing activities totaled $375 million (vs. $8 million provided by)
•Cash used in financing activities totaled $26 million (vs. $24 million used in)
•Capitalized expenditures totaled $17 million (vs. $6 million)
Free Cash Flow was negative $156 million, versus Free Cash Flow of negative $204 million in the first quarter of 2021.
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| Financial Highlights (in thousands, except for EPS; unaudited): | Three Months Ended March 31, | ||||||||||||||||
| 2022 | 2021 | % Change (B/W) | |||||||||||||||
| Total Company: | |||||||||||||||||
| Revenue | $ | 584,910 | $ | 327,484 | 79 | ||||||||||||
| Operating Loss | $ | (79,532) | $ | (202,553) | 61 | ||||||||||||
| Net income (loss) attributable to common stockholders | $ | 42,060 | $ | (266,106) | 116 | ||||||||||||
| Diluted net income (loss) attributable to common stockholders per share (EPS) | $ | 0.12 | $ | (0.84) | 114 | ||||||||||||
| Net Income (Loss) Margin | 7.2 | % | (81.3) | % | |||||||||||||
Adjusted EBITDA (1) | $ | 5,150 | $ | (109,500) | 105 | ||||||||||||
Adjusted EBITDA Margin(1) | 0.9 | % | (33.4) | % | |||||||||||||
Adjusted Operating Loss(1) | $ | (29,155) | $ | (166,502) | 82 | ||||||||||||
Adjusted Net Loss(1) | $ | (93,169) | $ | (228,274) | 59 | ||||||||||||
Adjusted EPS(1) | $ | (0.29) | $ | (0.72) | 60 | ||||||||||||
| Cash used in operating activities | $ | (139,083) | $ | (197,403) | 30 | ||||||||||||
| Cash provided by investing activities | $ | 374,865 | $ | 8,405 | 4,360 | ||||||||||||
| Cash used in financing activities | $ | (25,835) | $ | (24,221) | (7) | ||||||||||||
| Capitalized expenditures | $ | 17,403 | $ | 6,435 | 170 | ||||||||||||
Free Cash Flow(1) | $ | (156,486) | $ | (203,838) | 23 | ||||||||||||
| Net Debt (total debt, less cash and cash equivalents) | $ | 3,620,075 | $ | 3,516,273 | |||||||||||||
| Travel Solutions: | |||||||||||||||||
| Revenue | $ | 533,998 | $ | 288,875 | 85 | ||||||||||||
| Operating Income (Loss) | $ | 45,476 | $ | (105,222) | 143 | ||||||||||||
Adjusted Operating Income (Loss)(1) | $ | 45,306 | $ | (106,133) | 143 | ||||||||||||
| Distribution Revenue | $ | 342,888 | $ | 151,781 | 126 | ||||||||||||
| Total Bookings | 64,978 | 38,943 | 67 | ||||||||||||||
| Air Bookings | 57,550 | 35,289 | 63 | ||||||||||||||
| Lodging, Ground and Sea Bookings | 7,428 | 3,654 | 103 | ||||||||||||||
| IT Solutions Revenue | $ | 191,110 | $ | 137,094 | 39 | ||||||||||||
| Passengers Boarded | 129,163 | 75,189 | 72 | ||||||||||||||
| Hospitality Solutions: | |||||||||||||||||
| Revenue | $ | 56,004 | $ | 42,215 | 33 | ||||||||||||
| Operating Loss | $ | (15,117) | $ | (13,587) | (11) | ||||||||||||
Adjusted Operating Loss(1) | $ | (15,117) | $ | (13,587) | (11) | ||||||||||||
| Central Reservation System Transactions | 23,028 | 17,560 | 31 | ||||||||||||||
(1)Indicates non-GAAP financial measure; see descriptions and reconciliations below. | |||||||||||||||||
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Travel Solutions
First quarter 2022 results (versus prior year):
•Travel Solutions revenue increased 85% to $534 million driven by an increase in global air and other travel bookings due to continued recovery from the COVID-19 pandemic and $24 million in previously deferred IT Solutions revenue recognized in the first quarter due to a change in facts and circumstances associated with an IT Solutions customer located in Eastern Europe, partially offset by reduced revenue due to the sale of our AirCentre portfolio effective on February 28, 2022.
•Operating profit totaled $45 million, versus operating loss of $105 million in the first quarter of 2021. The improvement in operating results was driven by increased revenue and lower depreciation, partially offset by increased incentive expenses as well as technology hosting expenses due to volume recovery trends and expected temporary costs resulting from our cloud migration efforts, an increase in credit losses, and an increase in legal costs due to ongoing litigation.
•Distribution revenue increased 126% to $343 million due to the continued recovery in bookings and an increase in average booking fee due to a shift in bookings mix.
◦Global bookings, net of cancellations, totaled 65 million, representing a recovery to 42% of 2019 levels.
◦Net air bookings were at 29%, 45% and 52% of 2019 levels in January, February and March, respectively.
◦Average booking fee totaled $5.28, a sequential improvement versus $4.96 last quarter, $4.59 in the third quarter of 2021, and $3.84 in the second quarter of last year. This increase is due to an improvement in bookings mix and reduced cancellation activity.
•IT Solutions revenue increased 39% to $191 million. Reservations revenue increased due to the ongoing recovery in passengers boarded, and $24 million in previously deferred revenue recognized in the first quarter due to a change in facts and circumstances associated with an IT Solutions customer located in Eastern Europe, partially offset by a dilution in rate due to revenue that does not fluctuate with volumes. Commercial and Operations revenue increased primarily due to license fee revenue related to AirCentre recognized upon delivery and increased volumes from existing customers, partially offset by reduced revenue due to the sale of our AirCentre portfolio effective on February 28, 2022.
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◦Airline passengers boarded totaled 129 million, representing a recovery to 69% of 2019 levels.
Hospitality Solutions
First quarter 2022 results (versus prior year):
•Hospitality Solutions revenue increased 33% to $56 million. The increase in revenue was driven by an increase in central reservation system transactions due to the continued recovery from the COVID-19 pandemic and increased Digital Experience revenue.
•Central reservation system transactions increased 31% to 23 million, representing 100% of 2019 levels.
•Operating loss was $15 million, versus operating loss of $14 million in the first quarter of 2021. The change in operating results was primarily driven by increased revenue and lower depreciation and amortization, more than offset by increased transaction-related costs due to volume recovery trends and higher labor and professional services expenses that support our technology transformation initiatives.
Business and Financial Outlook
With respect to the 2022 financial outlook below:
•Full-year Adjusted EBITDA guidance consists of (1) full-year expected net income attributable to common stockholders adjusted for the estimated impact of loss from discontinued operations, net of tax, of approximately $2 million; net income attributable to noncontrolling interests of approximately $4 million; preferred stock dividends of approximately $20 million; acquisition-related amortization of approximately $50 million; stock-based compensation expense of approximately $100 million; other costs including litigation, acquisition-related costs, loss on debt extinguishment, other foreign non-income tax matters, foreign exchange gains and losses, and gains on sale of assets of $150 million; and the tax impact of the above adjustments of approximately $8 million, less (2) the impact of depreciation and amortization of property and equipment and amortization of capitalized implementation costs of approximately $135 million; interest expense, net of approximately $275 million; and provision for income taxes less tax impact of net income adjustments of approximately $1 million.
Full-Year 2022 Financial Outlook
Sabre's full-year 2022 outlook summarized below is a reiteration of the outlook detailed in our fourth quarter and full year 2021 earnings presentation.1,2
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| Outlook at Possible Sabre Bookings Recovery Scenarios | |||||||||||
Sabre Bookings Recovery3 (% of 2019) | 50% | 60% | 70% | ||||||||
| Revenue | $2.2B to $2.5B | $2.5B to $2.8B | $2.8B to $3.1B | ||||||||
Adjusted EBITDA3 | > ($85M) | > $15M | > $165M | ||||||||
1 AirCentre results no longer included following sale effective February 28, 2022.
2 Includes $85 million in incremental investments ($45 million technology transformation and $40 million SG&A) previously excluded from Adjusted EBITDA figures presented but separately detailed in our fourth quarter & full-year 2021 earnings presentation. Incremental investments represent operational investments and expenditures that will be expensed within our results of operations (and therefore impact Adjusted EBITDA) above what was expensed in 2021
3 Assumes related incremental benefit from Lodging, Ground and Sea (LGS) bookings and passengers boarded.
2025 Financial Targets
Sabre's 2025 financial targets remain unchanged from those provided in the company's fourth quarter and full year 2021 earnings release dated February 15, 2022. These 2025 financial targets are summarized as follows:
2025 Financial Targets at possible Sabre bookings recovery scenarios | Notes | |||||||||||||
Sabre Bookings Recovery (% of 2019) | > 80% | > 100% | >120% | |||||||||||
| Adjusted EBITDA | > $900M | > $1,100M | > $1,300M | |||||||||||
| Adjusted EBITDA Margin | > 23% | > 26% | > 28% | In line or better than guidance provided in February 2020, before the pandemic | ||||||||||
| Adjusted Operating Income | > $800M | > $1,000M | > $1,200M | 7pts - 13pts targeted Adjusted Operating Income margin expansion; D&A expected to decline significantly | ||||||||||
| Free Cash Flow | > $500M | > $700M | > $900M | Assumes ~$50M annual CapEx | ||||||||||
Conference Call
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Sabre will conduct its first quarter 2022 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 on the website for at least 90 days following the event.
About Sabre
Sabre Corporation is a leading software and technology company that powers the global travel industry, serving a wide range of travel companies including airlines, hoteliers, travel agencies and other suppliers. The company provides retailing, distribution and fulfillment solutions that help its customers operate more efficiently, drive revenue and offer personalized traveler experiences. Through its leading travel marketplace, Sabre connects travel suppliers with buyers from around the globe. Sabre’s technology platform manages more than $260B worth of global travel spend annually. Headquartered in Southlake, Texas, USA, Sabre serves customers in more than 160 countries around the world. For more information visit www.sabre.com.
Website Information
Sabre routinely posts important information for investors on the Investor Relations section of its website, investors.sabre.com, and on its Twitter account, @Sabre_Corp. The company intends to use the Investor Relations section of its website and its Twitter account as a means of disclosing material, non-public information and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of Sabre's website and its Twitter account, in addition to following its press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, Sabre's website or its Twitter account 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.
Industry Data
This release contains industry data, forecasts and other information that Sabre 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
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Sabre's 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. The company has not independently verified this third-party information nor has it ascertained the underlying economic assumptions relied upon in those sources, and 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 Operating Loss, Adjusted Net Loss from continuing operations ("Adjusted Net Loss"), Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Loss from continuing operations per share ("Adjusted EPS"), Free Cash Flow and the ratios based on these financial measures. In addition, we provide certain forward guidance with respect to Adjusted EBITDA. 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.
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 “expect,” “goal,” “outlook,” “opportunity,” "target," “future,” “believe,” “trend,” “plan,” "guidance," “anticipate,” “will,” "forecast," "continue," "strategy," "estimate," "project," “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,
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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, the severity, extent and duration of the global COVID-19 pandemic and its impact on our business and results of operations, financial condition and credit ratings, as well as on the travel industry and consumer spending more broadly, the actions taken to contain the disease or treat its impact, the effectiveness and rate of vaccinations, the effect of remote working arrangements on our operations and the speed and extent of the recovery across the broader travel ecosystem, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines' insolvency, suspension of service or aircraft groundings, the effect of cost savings initiatives, the timing, implementation and effects of the technology investment and other strategic initiatives, the completion and effects of travel platforms, exposure to pricing pressure in the Travel Solutions business, changes affecting travel supplier customers, maintenance of the integrity of our systems and infrastructure and the effect of any security incidents, failure to adapt to technological advancements, competition in the travel distribution market and solutions markets, implementation of software solutions, reliance on third parties to provide information technology services and the effects of these services, implementation and effects of new, amended or renewed agreements and strategic partnerships, including anticipated savings, dependence on establishing, maintaining and renewing contracts with customers and other counterparties and collecting amounts due to us under these agreements, dependence on relationships with travel buyers, collection, processing, storage, use and transmission of personal data and risks associated with PCI compliance, our ability to recruit, train and retain employees, including our key executive officers and technical employees, the financial and business results and effects of acquisitions and divestitures of businesses or business operations, reliance on the value of our brands, our the effects of any litigation and regulatory reviews and investigations, 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, risks related to the current military conflict in Ukraine, risks arising from global operations, reliance on the value of our brands, failure to comply with regulations, use of third-party distributor partners, risks related to our significant amount of indebtedness, the effects of the implementation of new accounting standards and tax-related matters.
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 Annual Report on Form 10-K filed with the SEC on February 18, 2022 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,
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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 update or revise any forward-looking statements to reflect circumstances or events after the date they are made.
Contacts:
| Media | Investors | ||||
| Kristin Hays | Kevin Crissey | ||||
| kristin.hays@sabre.com | kevin.crissey@sabre.com | ||||
| sabrenews@sabre.com | sabre.investorrelations@sabre.com | ||||
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SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Revenue | $ | 584,910 | $ | 327,484 | |||||||
| Cost of revenue, excluding technology costs | 223,034 | 146,761 | |||||||||
| Technology costs | 273,730 | 252,663 | |||||||||
| Selling, general and administrative | 167,678 | 130,613 | |||||||||
| Operating loss | (79,532) | (202,553) | |||||||||
| Other income (expense): | |||||||||||
| Interest expense, net | (61,058) | (64,101) | |||||||||
| Loss on extinguishment of debt | (3,533) | — | |||||||||
| Equity method loss | (170) | (911) | |||||||||
| Other, net | 191,241 | 11,631 | |||||||||
| Total other income (expense), net | 126,480 | (53,381) | |||||||||
| Income (loss) from continuing operations before income taxes | 46,948 | (255,934) | |||||||||
| (Benefit) provision for income taxes | (596) | 3,997 | |||||||||
| Income (loss) from continuing operations | 47,544 | (259,931) | |||||||||
| Income (loss) from discontinued operations, net of tax | 134 | (263) | |||||||||
| Net income (loss) | 47,678 | (260,194) | |||||||||
| Net income attributable to noncontrolling interests | 272 | 484 | |||||||||
| Net income (loss) attributable to Sabre Corporation | 47,406 | (260,678) | |||||||||
| Preferred stock dividends | 5,346 | 5,428 | |||||||||
| Net income (loss) attributable to common stockholders | $ | 42,060 | $ | (266,106) | |||||||
| Basic net income (loss) per share attributable to common stockholders: | |||||||||||
| Income (loss) from continuing operations | $ | 0.13 | $ | (0.84) | |||||||
| Net income (loss) per common share | $ | 0.13 | $ | (0.84) | |||||||
| Diluted net income (loss) per share attributable to common stockholders: | |||||||||||
| Income (loss) from continuing operations | $ | 0.12 | $ | (0.84) | |||||||
| Net income (loss) per common share | $ | 0.12 | $ | (0.84) | |||||||
| Weighted-average common shares outstanding: | |||||||||||
| Basic | 323,658 | 317,634 | |||||||||
| Diluted | 409,378 | 317,634 | |||||||||
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SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| March 31, 2022 | December 31, 2021 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 1,186,414 | $ | 978,352 | |||||||
| Restricted cash | 21,039 | 21,039 | |||||||||
| Accounts receivable, net of allowance for credit losses of $56,660 and $58,965 | 333,579 | 259,934 | |||||||||
| Prepaid expenses and other current assets | 137,393 | 121,591 | |||||||||
| Current assets held for sale | — | 21,358 | |||||||||
| Total current assets | 1,678,425 | 1,402,274 | |||||||||
| Property and equipment, net of accumulated depreciation of $1,925,422 and $1,912,651 | 238,591 | 249,812 | |||||||||
| Equity method investments | 23,036 | 22,671 | |||||||||
| Goodwill | 2,476,632 | 2,470,206 | |||||||||
| Acquired customer relationships, net of accumulated amortization of $784,763 and $771,479 | 251,255 | 257,362 | |||||||||
| Other intangible assets, net of accumulated amortization of $754,436 and $751,917 | 173,625 | 183,321 | |||||||||
| Deferred income taxes | 25,523 | 27,056 | |||||||||
| Other assets, net | 447,392 | 475,424 | |||||||||
| Long-term assets held for sale | — | 203,204 | |||||||||
| Total assets | $ | 5,314,479 | $ | 5,291,330 | |||||||
| Liabilities and stockholders’ deficit | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 155,813 | $ | 122,934 | |||||||
| Accrued compensation and related benefits | 75,720 | 135,974 | |||||||||
| Accrued subscriber incentives | 181,815 | 137,448 | |||||||||
| Deferred revenues | 76,151 | 81,061 | |||||||||
| Other accrued liabilities | 188,300 | 188,706 | |||||||||
| Current portion of debt | 16,730 | 29,290 | |||||||||
| Current liabilities held for sale | — | 21,092 | |||||||||
| Total current liabilities | 694,529 | 716,505 | |||||||||
| Deferred income taxes | 37,384 | 38,344 | |||||||||
| Other noncurrent liabilities | 287,560 | 297,037 | |||||||||
| Long-term debt | 4,732,711 | 4,723,685 | |||||||||
| Long-term liabilities held for sale | — | 15,476 | |||||||||
| Stockholders’ deficit | |||||||||||
Preferred stock, $0.01 par value, 225,000 authorized, 3,290 issued and outstanding as of March 31, 2022 and December 31, 2021; aggregate liquidation value of $329,000 as of March 31, 2022 and December 31, 2021 | 33 | 33 | |||||||||
Common Stock: $0.01 par value; 1,000,000 authorized shares; 350,314 and 346,430 shares issued, 326,307 and 323,501 shares outstanding at March 31, 2022 and December 31, 2021, respectively | 3,503 | 3,464 | |||||||||
| Additional paid-in capital | 3,143,315 | 3,115,719 | |||||||||
| Treasury Stock, at cost, 24,007 and 22,930 shares at March 31, 2022 and December 31, 2021, respectively | (508,441) | (498,141) | |||||||||
| Accumulated deficit | (3,007,635) | (3,049,695) | |||||||||
| Accumulated other comprehensive loss | (77,823) | (80,287) | |||||||||
| Noncontrolling interest | 9,343 | 9,190 | |||||||||
| Total stockholders’ deficit | (437,705) | (499,717) | |||||||||
| Total liabilities and stockholders’ deficit | $ | 5,314,479 | $ | 5,291,330 | |||||||
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SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Operating Activities | |||||||||||
| Net income (loss) | $ | 47,678 | $ | (260,194) | |||||||
| Adjustments to reconcile net income (loss) to cash used in operating activities: | |||||||||||
| Gain on sale of assets and investments | (192,151) | (14,532) | |||||||||
| Depreciation and amortization | 50,108 | 73,223 | |||||||||
| Stock-based compensation expense | 27,605 | 24,426 | |||||||||
| Amortization of upfront incentive consideration | 11,325 | 15,825 | |||||||||
| Loss on extinguishment of debt | 3,533 | — | |||||||||
| Amortization of debt discount and issuance costs | 3,438 | 2,853 | |||||||||
| Deferred income taxes | (2,570) | (2,004) | |||||||||
| Provision for expected credit losses | 1,997 | (2,226) | |||||||||
| (Income) loss from discontinued operations | (134) | 263 | |||||||||
| Other | (485) | 1,396 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts and other receivables | (106,655) | (41,144) | |||||||||
| Prepaid expenses and other current assets | (20,631) | (18,008) | |||||||||
| Capitalized implementation costs | (4,481) | (5,022) | |||||||||
| Upfront incentive consideration | (700) | (2,185) | |||||||||
| Other assets | 23,353 | 3,176 | |||||||||
| Accrued compensation and related benefits | (59,748) | 681 | |||||||||
| Accounts payable and other accrued liabilities | 72,890 | 17,433 | |||||||||
| Deferred revenue including upfront solution fees | 6,545 | 8,636 | |||||||||
| Cash used in operating activities | (139,083) | (197,403) | |||||||||
| Investing Activities | |||||||||||
| Net proceeds from dispositions | 392,268 | 14,840 | |||||||||
| Additions to property and equipment | (17,403) | (6,435) | |||||||||
| Cash provided by investing activities | 374,865 | 8,405 | |||||||||
| Financing Activities | |||||||||||
| Payments on borrowings from lenders | (625,296) | (6,295) | |||||||||
| Proceeds of borrowings from lenders | 625,000 | — | |||||||||
| Net payment on the settlement of equity-based awards | (10,309) | (12,434) | |||||||||
| Debt prepayment fees and issuance costs | (10,185) | — | |||||||||
| Dividends paid on preferred stock | (5,346) | (5,428) | |||||||||
| Other financing activities | 301 | (64) | |||||||||
| Cash used in financing activities | (25,835) | (24,221) | |||||||||
| Cash Flows from Discontinued Operations | |||||||||||
| Cash used in operating activities | (1,680) | (281) | |||||||||
| Cash used in discontinued operations | (1,680) | (281) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (205) | (1,247) | |||||||||
| Increase (decrease) in cash, cash equivalents and restricted cash | 208,062 | (214,747) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of period | 999,391 | 1,499,665 | |||||||||
| Cash, cash equivalents and restricted cash at end of period | $ | 1,207,453 | $ | 1,284,918 | |||||||
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Definitions of Non-GAAP Financial Measures
We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures, including Adjusted Operating Loss, Adjusted Net Loss from continuing operations ("Adjusted Net Loss"), Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, Free Cash Flow and ratios based on these financial measures.
We define Adjusted Operating Loss as operating loss adjusted for equity method loss, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.
We define Adjusted Net Loss as net income (loss) attributable to common stockholders adjusted for loss from discontinued operations, net of tax, net income attributable to noncontrolling interests, preferred stock dividends, acquisition-related amortization, restructuring and other costs, loss on extinguishment of debt, other, net, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments.
We define Adjusted EBITDA as income (loss) from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, restructuring and other costs, interest expense, net, other, net, loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining (benefit) provision for income taxes.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
We define Adjusted EPS as Adjusted Net Loss divided by adjusted diluted weighted-average common shares outstanding.
We define Adjusted diluted weighted-average common shares outstanding as GAAP diluted weighted-average common shares adjusted for the dilutive effects of stock options, restricted stock awards, exchangeable notes, and preferred shares.
We define Free Cash Flow as cash used in operating activities less cash used in additions to property and equipment.
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
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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, fund our investments in technology transformation, and meet working capital requirements. We also believe that Adjusted Operating Loss, Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin, and Adjusted EPS 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 Operating Loss, Adjusted Net Loss, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted EPS, 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 are unaudited and 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 EBITDA does not reflect cash requirements for such replacements;
•Adjusted EBITDA does not reflect amortization of capitalized implementation costs associated with our revenue contracts, which may require future working capital or cash needs in the future;
•Adjusted Operating Loss, Adjusted Net Loss 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;
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•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 Operating Loss, Adjusted Net Loss, Adjusted EBITDA, Adjusted EPS or Free Cash Flow differently, which reduces their usefulness as comparative measures.
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Tabular Reconciliations for Non-GAAP Measures
(In thousands, except per share amounts; unaudited)
Reconciliation of net income (loss) attributable to common stockholders to Adjusted Net Loss from continuing operations, Operating loss to Adjusted Operating Loss, and income (loss) from continuing operations to Adjusted EBITDA.
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Net income (loss) attributable to common stockholders | $ | 42,060 | $ | (266,106) | |||||||
| (Income) loss from discontinued operations, net of tax | (134) | 263 | |||||||||
Net income attributable to non-controlling interests(1) | 272 | 484 | |||||||||
| Preferred stock dividends | 5,346 | 5,428 | |||||||||
| Income (loss) from continuing operations | 47,544 | (259,931) | |||||||||
| Adjustments: | |||||||||||
Acquisition-related amortization(2a) | 15,803 | 16,221 | |||||||||
Restructuring and other costs(4) | — | (5,135) | |||||||||
| Loss on extinguishment of debt | 3,533 | — | |||||||||
Other, net(3) | (191,241) | (11,631) | |||||||||
Acquisition-related costs(5) | 3,664 | 720 | |||||||||
Litigation costs, net(6) | 3,475 | 730 | |||||||||
| Stock-based compensation | 27,605 | 24,426 | |||||||||
Tax impact of adjustments(7) | (3,552) | 6,326 | |||||||||
| Adjusted Net Loss from continuing operations | $ | (93,169) | $ | (228,274) | |||||||
| Adjusted Net Loss from continuing operations per share | $ | (0.29) | $ | (0.72) | |||||||
| Adjusted diluted weighted-average common shares outstanding | 323,658 | 317,634 | |||||||||
| Operating loss | $ | (79,532) | $ | (202,553) | |||||||
| Add back: | |||||||||||
| Equity method loss | (170) | (911) | |||||||||
Acquisition-related amortization(2a) | 15,803 | 16,221 | |||||||||
Restructuring and other costs(4) | — | (5,135) | |||||||||
Acquisition-related costs(5) | 3,664 | 720 | |||||||||
Litigation costs, net(6) | 3,475 | 730 | |||||||||
| Stock-based compensation | 27,605 | 24,426 | |||||||||
| Adjusted Operating Loss | $ | (29,155) | $ | (166,502) | |||||||
| Income (loss) from continuing operations | $ | 47,544 | $ | (259,931) | |||||||
| Adjustments: | |||||||||||
Depreciation and amortization of property and equipment(2b) | 26,966 | 48,592 | |||||||||
Amortization of capitalized implementation costs(2c) | 7,339 | 8,410 | |||||||||
Acquisition-related amortization(2a) | 15,803 | 16,221 | |||||||||
Restructuring and other costs(4) | — | (5,135) | |||||||||
| Interest expense, net | 61,058 | 64,101 | |||||||||
Other, net(3) | (191,241) | (11,631) | |||||||||
| Loss on extinguishment of debt | 3,533 | — | |||||||||
Acquisition-related costs(5) | 3,664 | 720 | |||||||||
Litigation costs, net(6) | 3,475 | 730 | |||||||||
| Stock-based compensation | 27,605 | 24,426 | |||||||||
| (Benefit) provision for income taxes | (596) | 3,997 | |||||||||
| Adjusted EBITDA | $ | 5,150 | $ | (109,500) | |||||||
| Net income (loss) margin | 7.2 | % | (81.3) | % | |||||||
| Adjusted EBITDA margin | 0.9 | % | (33.4) | % | |||||||
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The following table sets forth the reconciliation of diluted weighted-average common shares outstanding, calculated in accordance with GAAP, to the adjusted diluted weighted-average shares outstanding (in thousands):
| Three months ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| GAAP diluted weighted-average common shares outstanding | 409,378 | 317,634 | |||||||||
| Less: Dilutive effect of stock options and restricted stock awards | 4,251 | — | |||||||||
| Less: Dilutive effect of exchangeable notes | 42,302 | — | |||||||||
| Less: Dilutive effect of preferred shares | 39,167 | — | |||||||||
| Adjusted diluted weighted-average common shares outstanding | 323,658 | 317,634 | |||||||||
Reconciliation of Free Cash Flow:
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash used in operating activities | $ | (139,083) | $ | (197,403) | |||||||
| Cash provided by investing activities | 374,865 | 8,405 | |||||||||
| Cash used in financing activities | (25,835) | (24,221) | |||||||||
| Three Months Ended March 31, | |||||||||||
| 2022 | 2021 | ||||||||||
| Cash used in operating activities | $ | (139,083) | $ | (197,403) | |||||||
| Additions to property and equipment | (17,403) | (6,435) | |||||||||
| Free Cash Flow | $ | (156,486) | $ | (203,838) | |||||||
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Reconciliation of Adjusted Operating Income (Loss) to operating income (loss) in our statement of operations and Adjusted EBITDA to loss from continuing operations in our statement of operations by business segment:
| Three Months Ended March 31, 2022 | |||||||||||||||||||||||
| Travel Solutions | Hospitality Solutions | Corporate | Total | ||||||||||||||||||||
| Adjusted Operating Income (Loss) | $ | 45,306 | $ | (15,117) | $ | (59,344) | $ | (29,155) | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Equity method loss | (170) | — | — | (170) | |||||||||||||||||||
Acquisition-related amortization(2a) | — | — | 15,803 | 15,803 | |||||||||||||||||||
Acquisition-related costs(5) | — | — | 3,664 | 3,664 | |||||||||||||||||||
Litigation costs, net(6) | — | — | 3,475 | 3,475 | |||||||||||||||||||
| Stock-based compensation | — | — | 27,605 | 27,605 | |||||||||||||||||||
| Operating income (loss) | $ | 45,476 | $ | (15,117) | $ | (109,891) | $ | (79,532) | |||||||||||||||
| Adjusted EBITDA | $ | 73,560 | $ | (9,317) | $ | (59,093) | $ | 5,150 | |||||||||||||||
| Less: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(2b) | 22,115 | 4,600 | 251 | 26,966 | |||||||||||||||||||
Amortization of capitalized implementation costs(2c) | 6,139 | 1,200 | — | 7,339 | |||||||||||||||||||
Acquisition-related amortization(2a) | — | — | 15,803 | 15,803 | |||||||||||||||||||
Acquisition-related costs(5) | — | — | 3,664 | 3,664 | |||||||||||||||||||
Litigation costs, net(6) | — | — | 3,475 | 3,475 | |||||||||||||||||||
| Stock-based compensation | — | — | 27,605 | 27,605 | |||||||||||||||||||
| Equity method loss | (170) | — | — | (170) | |||||||||||||||||||
| Operating income (loss) | $ | 45,476 | $ | (15,117) | $ | (109,891) | $ | (79,532) | |||||||||||||||
| Interest expense, net | (61,058) | ||||||||||||||||||||||
Other, net(3) | 191,241 | ||||||||||||||||||||||
| Loss on extinguishment of debt | (3,533) | ||||||||||||||||||||||
| Equity method loss | (170) | ||||||||||||||||||||||
| Benefit for income taxes | 596 | ||||||||||||||||||||||
| Income from continuing operations | $ | 47,544 | |||||||||||||||||||||
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| Three Months Ended March 31, 2021 | |||||||||||||||||||||||
| Travel Solutions | Hospitality Solutions | Corporate | Total | ||||||||||||||||||||
| Adjusted Operating Loss | $ | (106,133) | $ | (13,587) | $ | (46,782) | $ | (166,502) | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Equity method loss | (911) | — | — | (911) | |||||||||||||||||||
Acquisition-related amortization(2a) | — | — | 16,221 | 16,221 | |||||||||||||||||||
Restructuring and other costs(4) | — | — | (5,135) | (5,135) | |||||||||||||||||||
Acquisition-related costs(5) | — | — | 720 | 720 | |||||||||||||||||||
Litigation costs, net(6) | — | — | 730 | 730 | |||||||||||||||||||
| Stock-based compensation | — | 24,426 | 24,426 | ||||||||||||||||||||
| Operating loss | $ | (105,222) | $ | (13,587) | $ | (83,744) | $ | (202,553) | |||||||||||||||
| Adjusted EBITDA | $ | (57,363) | $ | (5,660) | $ | (46,477) | $ | (109,500) | |||||||||||||||
| Less: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(2b) | 41,372 | 6,915 | 305 | 48,592 | |||||||||||||||||||
Amortization of capitalized implementation costs(2c) | 7,398 | 1,012 | — | 8,410 | |||||||||||||||||||
Acquisition-related amortization(2a) | — | — | 16,221 | 16,221 | |||||||||||||||||||
Restructuring and other costs(4) | — | — | (5,135) | (5,135) | |||||||||||||||||||
Acquisition-related costs(5) | — | — | 720 | 720 | |||||||||||||||||||
Litigation costs, net(6) | — | — | 730 | 730 | |||||||||||||||||||
| Stock-based compensation | — | — | 24,426 | 24,426 | |||||||||||||||||||
| Equity method loss | (911) | — | — | (911) | |||||||||||||||||||
| Operating loss | $ | (105,222) | $ | (13,587) | $ | (83,744) | $ | (202,553) | |||||||||||||||
| Interest expense, net | (64,101) | ||||||||||||||||||||||
Other, net(3) | 11,631 | ||||||||||||||||||||||
| Equity method loss | (911) | ||||||||||||||||||||||
| Provision for income taxes | (3,997) | ||||||||||||||||||||||
| Loss from continuing operations | $ | (259,931) | |||||||||||||||||||||
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Non-GAAP Footnotes
(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%, (iii) Sabre Travel Network Lanka (Pte) Ltd of 40%, and (iv) Sabre Bulgaria of 40%.
(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.
(b) Depreciation and amortization of property and equipment includes software developed for internal use as well as amortization of contract acquisition costs.
(c) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
(3)Other, net includes a $192 million gain on the sale of AirCentre during the three months ended March 31, 2022, and a $15 million gain on sale of equity securities during the three months ended March 31, 2021. In addition, all periods presented include 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 represents charges, and adjustments to those charges, associated with business restructuring and associated changes as well as other measures to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.
(5)Acquisition-related costs represent fees and expenses incurred associated with the AirCentre disposition and other potential transactions.
(6)Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters.
(7)The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, the impact of the adjustments on valuation allowance assessments, and the tax
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effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions, and other items.
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