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): August 2, 2016
 
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 August 2, 2016, Sabre Corporation (“Sabre”) issued a press release and will hold a conference call regarding its financial results for the quarter ended June 30, 2016. 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
  
Press Release dated August 2, 2016.









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:
August 2, 2016
By:
/s/ Richard A. Simonson
 
 
Name:
Richard A. Simonson
 
 
Title:
Chief Financial Officer










EXHIBIT INDEX
Exhibit
Number
  
Description
 99.1
  
Press Release dated August 2, 2016.


Exhibit


Exhibit 99.1




Sabre Reports Second Quarter 2016 Results

Second quarter revenue increased 19.5%
Net income attributable to common stockholders increased 123.6% and diluted net income attributable to common stockholders per share increased 108.3%
Adjusted EBITDA up 19.3% and Adjusted EPS up 37.0%
Airline and Hospitality Solutions revenue increased 16.4%
Travel Network revenue rose 20.9%, with bookings growth of 23.9%

SOUTHLAKE, Texas – August 2, 2016 – Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter ended June 30, 2016.

“Sabre second quarter results build on our growing and consistent track record of solid execution,” said Tom Klein, Sabre president and chief executive officer. “While the macro environment has offered little upside, our results demonstrate our ability to grow as we capitalize on strong demand for our Airline and Hospitality Solutions SaaS portfolio and as Travel Network continues to expand globally."

Q2 2016 Financial Summary

Sabre consolidated second quarter revenue increased 19.5% to $845.2 million, compared to $707.1 million for the same period last year.

Net income attributable to common stockholders totaled $72.0 million, compared to $32.2 million in the second quarter of 2015, an increase of 123.6%. The increase in net income attributable to common stockholders is primarily the result of strong operating income growth in both business segments and a loss on the extinguishment of debt in the year ago period. Second quarter consolidated Adjusted EBITDA was $271.5 million, a 19.3% increase from $227.6 million in the second quarter of 2015. The increase is the result of Adjusted EBITDA increases of 22.2% in Travel Network and 13.5% in Airline and Hospitality Solutions, respectively.


1


For the quarter, Sabre reported diluted net income attributable to common stockholders per share of $0.25 per share compared to $0.12 in the second quarter of 2015, an increase of 108.3%. Adjusted net income from continuing operations per share (Adjusted EPS) increased 37.0% to $0.37 from $0.27 per share in the second quarter of 2015.

Cash provided by operating activities totaled $123.6 million, compared to $136.2 million in the second quarter of 2015. Cash used in investing activities totaled $95.4 million, compared to $66.1 million in the second quarter of 2015. Cash used in financing activities totaled $63.4 million, compared to cash provided by financing activities of $56.5 million in the second quarter of 2015. Second quarter Free Cash Flow was $34.5 million, compared to $70.2 million in the year ago period. Capital expenditures totaled $89.1 million, compared to $66.1 million in the year ago period. Adjusted Capital Expenditures, which include capitalized implementation costs, totaled $112.4 million, compared to $81.3 million in the second quarter of 2015.

2


Financial Highlights
(in thousands, except for EPS; unaudited):
Three Months Ended June 30,
 
Six Months Ended June 30,
2016
 
2015
 
% Change
 
2016
 
2015
 
% Change
Total Company:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
845,242

 
$
707,091

 
19.5

 
$
1,704,785

 
$
1,417,439

 
20.3

Operating Income
$
142,039

 
$
122,605

 
15.9

 
$
313,461

 
$
241,597

 
29.7

Net income attributable to common stockholders
$
72,019

 
$
32,207

 
123.6

 
$
177,186

 
$
239,701

 
(26.1
)
Diluted net income attributable to common stockholders per share
$
0.25

 
$
0.12

 
108.3

 
$
0.63

 
$
0.86

 
(26.7
)
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Gross Profit*
$
373,265

 
$
312,824

 
19.3

 
$
761,461

 
$
633,546

 
20.2

Adjusted EBITDA*
$
271,484

 
$
227,573

 
19.3

 
$
558,964

 
$
471,159

 
18.6

Adjusted Operating Income*
$
193,163

 
$
162,549

 
18.8

 
$
406,153

 
$
325,776

 
24.7

Adjusted Net Income*
$
104,047

 
$
76,054

 
36.8

 
$
218,695

 
$
150,988

 
44.8

Adjusted EPS*
$
0.37

 
$
0.27

 
37.0

 
$
0.77

 
$
0.54

 
42.6

 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
123,619

 
$
136,226

 
(9.3
)
 
$
263,784

 
$
267,999

 
(1.6
)
Cash (used in) investing activities
$
(95,430
)
 
$
(66,051
)
 
44.5

 
$
(329,570
)
 
$
(127,815
)
 
157.8

Cash (used in) provided by financing activities
$
(63,432
)
 
$
56,514

 
(212.2
)
 
$
(174,334
)
 
$
34,233

 
(609.3
)
Capital Expenditures
$
89,121

 
$
66,051

 
34.9

 
$
164,593

 
$
127,963

 
28.6

Adjusted Capital Expenditures*
$
112,432

 
$
81,285

 
38.3

 
$
207,861

 
$
157,524

 
32.0

 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow*
$
34,498

 
$
70,175

 
(50.8
)
 
$
99,191

 
$
140,036

 
(29.2
)
 
 
 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
$
3,219,566

 
$
2,627,358

 
 
 
 
 
 
 
 
Net Debt / LTM Adjusted EBITDA*
3.1x

 
3.0x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airline and Hospitality Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
252,169

 
$
216,632

 
16.4

 
$
490,549

 
$
421,532

 
16.4

Operating Income
$
55,390

 
$
49,075

 
12.9

 
$
102,535

 
$
77,566

 
32.2

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA*
$
91,945

 
$
80,985

 
13.5

 
$
174,883

 
$
152,473

 
14.7

 
 
 
 
 
 
 
 
 
 
 
 
Passengers Boarded
199,788

 
139,265

 
43.5

 
383,180

 
265,439

 
44.4

 
 
 
 
 
 
 
 
 
 
 
 
Travel Network:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
597,910

 
$
494,515

 
20.9

 
$
1,223,386

 
$
1,002,445

 
22.0

Transaction Revenue
$
552,101

 
$
427,781

 
29.1

 
$
1,133,783

 
$
875,076

 
29.6

Subscriber / Other Revenue
$
45,809

 
$
66,734

 
(31.4
)
 
$
89,603

 
$
127,369

 
(29.7
)
Operating Income
$
217,252

 
$
173,691

 
25.1

 
$
458,796

 
$
370,942

 
23.7

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA*
$
251,587

 
$
205,957

 
22.2

 
$
524,761

 
$
438,044

 
19.8

 
 
 
 
 
 
 
 
 
 
 
 
Total Bookings
127,794

 
103,129

 
23.9

 
262,681

 
208,563

 
25.9

Air Bookings
111,902

 
88,442

 
26.5

 
231,768

 
179,865

 
28.9

Non-air Bookings
15,892

 
14,687

 
8.2

 
30,913

 
28,698

 
7.7

 
 
 
 
 
 
 
 
 
 
 
 
Bookings Share
36.7
%
 
36.8
%
 
 
 
37.1
%
 
36.3
%
 
 
*indicates non-GAAP financial measure; see descriptions and reconciliations below


3


Sabre Airline and Hospitality Solutions

Second quarter Airline and Hospitality Solutions revenue increased 16.4% to $252.2 million compared to $216.6 million for the same period in 2015. Contributing to the rise in revenue was a 43.5% increase in airline passengers boarded through the SabreSonic reservation solution. Passengers boarded growth was driven by a mix of new implementations and 6% organic passengers boarded growth in the existing customer base. Growth in Airline Solutions was also driven by increased revenue from the AirVision and AirCentre solutions suites. Strong Sabre Hospitality Solutions growth, both organic and acquisition-related, also contributed to the revenue increase.

Second quarter Airline and Hospitality Solutions operating income increased 12.9% to $55.4 million from $49.1 million in the prior year period. Second quarter Airline and Hospitality Solutions Adjusted EBITDA increased 13.5% to $91.9 million from $81.0 million in the prior year period. Adjusted EBITDA margin was 36.5%, compared to 37.4% for the prior year quarter.

Sabre Travel Network

Second quarter Travel Network revenue increased 20.9% to $597.9 million, compared to $494.5 million for the same period in 2015. Total bookings increased 23.9%, driven by the now wholly-owned Asia-Pacific region and incremental growth in all other regions. Excluding acquisitions, Travel Network global bookings increased 1.7% in the quarter, with 1.3% growth in North America, 3.2% growth in EMEA, and 1.5% growth in Latin America.

Second quarter Travel Network operating income increased 25.1% to $217.3 million from $173.7 million in the prior year period. Second quarter Travel Network Adjusted EBITDA increased 22.2% to $251.6 million from $206.0 million in the prior year period. Adjusted EBITDA margin was 42.1%, compared to 41.6% for the prior year quarter.

4


Business Outlook and Financial Guidance

On May 17, 2016, the Staff of the Securities and Exchange Commission (the “SEC”) issued additional Compliance and Disclosure Interpretations (“C&DIs”) related to the use of publicly reported non-GAAP financial measures. These C&DIs are applicable to all companies with SEC reporting requirements and were effective immediately. As a result, Sabre has included the additional information below.

We are unable to provide forward guidance on a GAAP basis without unreasonable effort; however, the following information provides estimates of certain components of the non-GAAP adjustments contained in the guidance below. Full-year Adjusted Net Income guidance consists of full-year net income attributable to common stockholders less the estimated impact of income from discontinued operations, net of tax, of approximately $10 million; net income attributable to noncontrolling interests of approximately $5 million; acquisition-related amortization of approximately $140 million; stock-based compensation expense of approximately $50 million; other items (primarily consisting of litigation and restructuring costs) of approximately $20 million; and the tax benefit of these adjustments of approximately $80 million. Full-year Adjusted EPS guidance consists of Adjusted Net Income divided by our projected weighted-average diluted common share count for the full year of approximately 283 million.

Full-year Adjusted EBITDA guidance consists of Adjusted Net 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 $325 million; interest expense, net of approximately $160 million; and provision for income taxes less tax impact of net income adjustments of approximately $200 million.

Full-year Free Cash Flow guidance consists of full-year cash provided by operating activities of approaching $700 million less additions to property and equipment of approximately $325 million.

5


Full-Year 2016 Guidance

“We are pleased with our strong first-half performance,” said Rick Simonson, Sabre executive vice president and chief financial officer. “We continue to expect full-year income statement measures to be within our initial guidance ranges, reflecting strong full-year growth. However, looking over the balance of the year, the macro environment has deteriorated somewhat, which will impact bookings growth in the back half of the year. As a result, we now expect full-year revenue to be toward the lower end of our guidance range, or closer to 14.5%. We expect full-year Adjusted EBITDA, Adjusted Net Income and Adjusted EPS to be near the midpoint of their ranges as we manage the business to deliver against our objectives.

“As it relates to the outlook for 2016 Free Cash Flow, we have made the decision to accelerate certain investments this year to capture some attractive commercial opportunities, which will result in an increase in capital expenditures. A meaningful percentage of this investment is directly tied to strong sales activity in Travel Network that has recently resulted in a number of recent agency wins and renewals that will drive bookings and share gains over the coming years, driving an expected strong return on invested capital. As a result, we are adjusting our expectations for 2016 Free Cash Flow to approaching $375 million.”

In summary, Sabre's full-year 2016 guidance is as follows:
 
Range
Growth Rate
($ millions, except for EPS)
Revenue
$3,390 - $3,430
14.5% - 15.8%
 
 
 
Adjusted EBITDA
$1,080 - $1,100
14.7% - 16.8%
 
 
 
Adjusted Net Income
$395 - $415
28.2% - 34.7%
 
 
 
Adjusted EPS
$1.40 - $1.47
27.3% - 33.6%
 
 
 
Free Cash Flow
Approaching $375M
 



6


Conference Call

Sabre will conduct its second quarter 2016 investor conference call today at 9:00 a.m. ET. The live webcast and accompanying slide presentation can be accessed via 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.


7


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 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. 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.

8


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 "outlook," "guidance," “expect,” "will," "estimate," "positions," "momentum," “may,” “should,” “would,” “intend,” “believe,” “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, adverse global and regional economic and political conditions, including, but not limited to, the approval by voters in the U.K. for that country to exit the E.U., economic uncertainty over related negotiations and economic conditions in countries or regions with traditionally high levels of exports to China or that have commodities-based economies, risks arising from global operations, exposure to pricing pressure in the Travel Network business, the implementation and effects of new or renewed agreements, the financial and business effects of acquisitions, including integration of these acquisitions, dependence on maintaining and renewing contracts with customers and other counterparties, our ability to recruit, train and retain employees, including our key executive officers and technical employees, and the effort to identify a successor to our president and chief executive officer due to his intended resignation, dependence on relationships with travel buyers, changes affecting travel supplier customers, travel suppliers’ usage of alternative distribution models, and competition in the travel distribution market and solutions markets. More information about potential risks and uncertainties that could affect our business and results of operations is included in the “Risk Factors” section in our Quarterly Report on Form 10-Q filed with the SEC on April 28, 2016, in the "Risk Factors" and “Forward-Looking Statements” sections in our Annual Report on Form 10-K filed with the SEC on February 19, 2016 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 update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

9


Contacts:

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


10


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited) 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Revenue
$
845,242

 
$
707,091

 
$
1,704,785

 
$
1,417,439

Cost of revenue (1) (2)
556,317

 
461,126

 
1,110,582

 
930,124

Selling, general and administrative (2)
146,886

 
123,360

 
280,742

 
245,718

Operating income
142,039

 
122,605

 
313,461

 
241,597

Other income (expense):
 

 
 

 
 
 
 
Interest expense, net
(37,210
)
 
(42,609
)
 
(78,412
)
 
(89,062
)
Loss on extinguishment of debt

 
(33,235
)
 

 
(33,235
)
Joint venture equity income
763

 
5,307

 
1,526

 
13,826

Other, net
876

 
197

 
4,236

 
(4,248
)
Total other expense, net
(35,571
)
 
(70,340
)
 
(72,650
)
 
(112,719
)
Income from continuing operations before income taxes
106,468

 
52,265

 
240,811

 
128,878

Provision for income taxes
31,273

 
19,676

 
72,697

 
46,959

Income from continuing operations
75,195

 
32,589

 
168,114

 
81,919

(Loss) income from discontinued operations, net of tax
(2,098
)
 
696

 
11,252

 
159,607

Net income
73,097

 
33,285

 
179,366

 
241,526

Net income attributable to noncontrolling interests
1,078

 
1,078

 
2,180

 
1,825

Net income attributable to common stockholders
$
72,019

 
$
32,207

 
$
177,186

 
$
239,701

 
 
 
 
 
 
 
 
Basic net income per share attributable to common
stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.27

 
$
0.12

 
$
0.60

 
$
0.30

(Loss) income from discontinued operations
(0.01
)
 

 
0.04

 
0.59

Net income per common share
$
0.26

 
$
0.12

 
$
0.64

 
$
0.89

Diluted net income per share attributable to common stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.26

 
$
0.11

 
$
0.59

 
$
0.29

(Loss) income from discontinued operations
(0.01
)
 

 
0.04

 
0.57

Net income per common share
$
0.25

 
$
0.12

 
$
0.63

 
$
0.86

Weighted-average common shares outstanding:
 

 
 

 
 
 
 
Basic
277,392

 
271,948

 
276,480

 
270,574

Diluted
283,001

 
279,101

 
282,648

 
278,082

 
 
 
 
 
 
 
 
Dividends per common share
$
0.13

 
$
0.09

 
$
0.26

 
$
0.18

 
 
 
 
 
 
 
 
(1) Includes amortization of upfront incentive consideration
$
13,896

 
$
10,878

 
$
26,233

 
$
22,050

(2) Includes stock-based compensation as follows:
 
 
 
 
 
 
 
Cost of revenue
$
5,072

 
$
2,902

 
$
9,146

 
$
6,435

Selling, general and administrative
7,738

 
4,428

 
13,953

 
9,689



11


SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)
 
June 30, 2016
 
December 31, 2015
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
68,312

 
$
321,132

Accounts receivable, net
466,691

 
375,789

Prepaid expenses and other current assets
94,253

 
81,167

Total current assets
629,256

 
778,088

Property and equipment, net of accumulated depreciation of $851,364 and $850,587
689,712

 
627,529

Investments in joint ventures
25,203

 
24,348

Goodwill
2,543,515

 
2,440,431

Acquired customer relationships, net of accumulated amortization of $605,912 and $561,876
438,353

 
416,887

Other intangible assets, net of accumulated amortization of $504,068 and $480,037
421,836

 
419,666

Deferred income taxes
90,443

 
44,464

Other assets, net
709,104

 
642,214

Total assets
$
5,547,422

 
$
5,393,627

 
 
 
 
Liabilities and stockholders’ equity
 

 
 

Current liabilities
 

 
 

Accounts payable
$
141,115

 
$
138,421

Accrued compensation and related benefits
74,040

 
99,382

Accrued subscriber incentives
219,451

 
185,270

Deferred revenues
193,367

 
165,124

Other accrued liabilities
200,569

 
221,976

Current portion of debt
174,048

 
190,315

Tax Receivable Agreement
111,678

 

Total current liabilities
1,114,268

 
1,000,488

Deferred income taxes
107,680

 
83,562

Other noncurrent liabilities
530,869

 
656,093

Long-term debt
3,081,919

 
3,169,344

 
 
 
 
Stockholders’ equity
 

 
 

Common Stock: $0.01 par value; 450,000,000 authorized shares; 282,305,528 and 279,082,473 shares issued, 277,798,062 and 274,955,830 shares outstanding at June 30, 2016 and December 31, 2015, respectively
2,823

 
2,790

Additional paid-in capital
2,057,341

 
2,016,325

Treasury Stock, at cost, 4,507,466 and 4,126,643 shares at June 30, 2016 and December 31, 2015, respectively
(121,130
)
 
(110,548
)
Retained deficit
(1,136,831
)
 
(1,328,730
)
Accumulated other comprehensive loss
(93,135
)
 
(97,135
)
Noncontrolling interest
3,618

 
1,438

Total stockholders’ equity
712,686

 
484,140

Total liabilities and stockholders’ equity
$
5,547,422

 
$
5,393,627



12


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended June 30,
 
2016
 
2015
Operating Activities
 
 
 
Net income
$
179,366

 
$
241,526

Adjustments to reconcile net income to cash provided by operating activities:
 

 
 

Depreciation and amortization
194,726

 
166,617

Amortization of upfront incentive consideration
26,233

 
22,050

Litigation-related credits
(25,527
)
 
(32,557
)
Stock-based compensation expense
23,099

 
16,124

Allowance for doubtful accounts
6,131

 
5,329

Deferred income taxes
59,315

 
36,757

Joint venture equity income
(1,526
)
 
(13,826
)
Dividends received from joint venture investments

 
28,700

Amortization of debt issuance costs
3,892

 
3,181

Loss on extinguishment of debt

 
33,235

Other
3,030

 
7,505

Income from discontinued operations
(11,252
)
 
(159,607
)
Changes in operating assets and liabilities:
 

 
 

Accounts and other receivables
(83,551
)
 
(47,647
)
Prepaid expenses and other current assets
(15,354
)
 
(631
)
Capitalized implementation costs
(43,268
)
 
(29,561
)
Upfront incentive consideration
(47,228
)
 
(22,994
)
Other assets
(13,639
)
 
(43,618
)
Accrued compensation and related benefits
(25,663
)
 
(22,802
)
Accounts payable and other accrued liabilities
12,963

 
62,039

Deferred revenue including upfront solution fees
22,037

 
18,179

Cash provided by operating activities
263,784

 
267,999

Investing Activities
 

 
 

Additions to property and equipment
(164,593
)
 
(127,963
)
Acquisition, net of cash acquired
(164,977
)
 

Other investing activities

 
148

Cash used in investing activities
(329,570
)
 
(127,815
)
Financing Activities
 

 
 

Proceeds of borrowings from lenders
378,000

 
600,000

Payments on borrowings from lenders
(485,796
)
 
(491,215
)
Debt prepayment fees and issuance costs

 
(40,215
)
Net proceeds on the settlement of equity-based awards
4,808

 
18,239

Cash dividends paid to common stockholders
(72,060
)
 
(48,919
)
Other financing activities
714

 
(3,657
)
Cash (used in) provided by financing activities
(174,334
)
 
34,233

Cash Flows from Discontinued Operations
 

 
 

Cash used in operating activities
(12,407
)
 
(26,036
)
Cash provided by investing activities

 
278,834

Cash (used in) provided by in discontinued operations
(12,407
)
 
252,798

Effect of exchange rate changes on cash and cash equivalents
(293
)
 
(4,861
)
(Decrease) increase in cash and cash equivalents
(252,820
)
 
422,354

Cash and cash equivalents at beginning of period
321,132

 
155,679

Cash and cash equivalents at end of period
$
68,312

 
$
578,033




13


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, 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, amortization of upfront incentive consideration, and the cost of revenue portion of depreciation and amortization and stock-based compensation.

We define Adjusted Operating Income as operating income adjusted for joint venture equity income, 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, 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 applicable share count.
 
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.

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, 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

14


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, 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;

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


15


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

Reconciliation of Net income to Adjusted Net Income from continuing operations and Adjusted EBITDA:

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Net income attributable to common stockholders
$
72,019

 
$
32,207

 
$
177,186

 
$
239,701

Loss (income) from discontinued operations, net of tax
2,098

 
(696
)
 
(11,252
)
 
(159,607
)
Net income attributable to noncontrolling interests(1)
1,078

 
1,078

 
2,180

 
1,825

Income from continuing operations
75,195

 
32,589

 
168,114

 
81,919

Adjustments:
 

 
 

 
 

 
 

Acquisition-related amortization(2a)
34,018

 
23,211

 
68,148

 
44,886

Loss on extinguishment of debt

 
33,235

 

 
33,235

Other, net (4)
(876
)
 
(197
)
 
(4,236
)
 
4,248

Restructuring and other costs (5)
1,116

 

 
1,240

 

Acquisition-related costs(6)
516

 
2,053

 
624

 
3,864

Litigation costs (reimbursements), net (7)
1,901

 
2,043

 
(1,945
)
 
5,479

Stock-based compensation
12,810

 
7,330

 
23,099

 
16,124

Tax impact of net income adjustments
(20,633
)
 
(24,210
)
 
(36,349
)
 
(38,767
)
Adjusted Net Income from continuing operations
$
104,047

 
$
76,054

 
$
218,695

 
$
150,988

Adjusted Net Income from continuing operations per share
$
0.37

 
$
0.27

 
$
0.77

 
$
0.54

Diluted weighted-average common shares outstanding
283,001

 
279,101

 
282,648

 
278,082

 
 
 
 
 
 
 
 
Adjusted Net Income from continuing operations
$
104,047

 
$
76,054

 
$
218,695

 
$
150,988

Adjustments:
 

 
 

 
 

 
 

Depreciation and amortization of property and equipment(2b)
56,214

 
46,244

 
109,879

 
107,907

Amortization of capitalized implementation costs(2c)
8,211

 
7,902

 
16,699

 
15,426

Amortization of upfront incentive consideration(3)
13,896

 
10,878

 
26,233

 
22,050

Interest expense, net
37,210

 
42,609

 
78,412

 
89,062

Remaining provision for income taxes
51,906

 
43,886

 
109,046

 
85,726

Adjusted EBITDA
$
271,484

 
$
227,573

 
$
558,964

 
$
471,159


Reconciliation of Operating Income to Adjusted Operating Income:

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Operating income
$
142,039

 
$
122,605

 
$
313,461

 
$
241,597

Adjustments:
 

 
 

 
 
 
 
Joint venture equity income
763

 
5,307

 
1,526

 
13,826

Acquisition-related amortization(2a)
34,018

 
23,211

 
68,148

 
44,886

Restructuring and other costs (5)
1,116

 

 
1,240

 

Acquisition-related costs(6)
516

 
2,053

 
624

 
3,864

Litigation costs (reimbursements), net(7)
1,901

 
2,043

 
(1,945
)
 
5,479

Stock-based compensation
12,810

 
7,330

 
23,099

 
16,124

Adjusted Operating Income
$
193,163

 
$
162,549

 
$
406,153

 
$
325,776



16



Reconciliation of Adjusted Capital Expenditures:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Additions to property and equipment
$
89,121

 
$
66,051

 
$
164,593

 
$
127,963

Capitalized implementation costs
23,311

 
15,234

 
43,268

 
29,561

Adjusted Capital Expenditures
$
112,432

 
$
81,285

 
$
207,861

 
$
157,524


Reconciliation of Free Cash Flow:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Cash provided by operating activities
$
123,619

 
$
136,226

 
$
263,784

 
$
267,999

Cash used in investing activities
(95,430
)
 
(66,051
)
 
(329,570
)
 
(127,815
)
Cash used in financing activities
(63,432
)
 
56,514

 
(174,334
)
 
34,233


 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Cash provided by operating activities
$
123,619

 
$
136,226

 
$
263,784

 
$
267,999

Additions to property and equipment
(89,121
)
 
(66,051
)
 
(164,593
)
 
(127,963
)
Free Cash Flow
$
34,498

 
$
70,175

 
99,191

 
140,036


17


Reconciliation of Net Income to LTM Adjusted EBITDA (for Net Debt Ratio):

 
Three Months Ended
 
 
 
9/30/2015
 
12/31/2015
 
3/31/2016
 
6/30/2016
 
LTM
Net income attributable to common stockholders
$
176,340

 
$
129,441

 
$
105,167

 
$
72,019

 
$
482,967

(Income) loss from discontinued operations, net of tax
(53,892
)
 
(100,909
)
 
(13,350
)
 
2,098

 
(166,053
)
Net income attributable to noncontrolling interests(1)
676

 
980

 
1,102

 
1,078

 
3,836

Income from continuing operations
123,124

 
29,512

 
92,919

 
75,195

 
320,750

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization(2a)
31,384

 
31,851

 
34,130

 
34,018

 
131,383

Loss on extinguishment of debt

 
5,548

 

 

 
5,548

Other, net (4)
(92,568
)
 
(3,057
)
 
(3,360
)
 
(876
)
 
(99,861
)
Restructuring and other costs (5)
8,888

 
368

 
124

 
1,116

 
10,496

Acquisition-related costs(6)
9,350

 
1,223

 
108

 
516

 
11,197

Litigation costs (reimbursements), net(7)
9,318

 
1,912

 
(3,846
)
 
1,901

 
9,285

Stock-based compensation
7,204

 
6,643

 
10,289

 
12,810

 
36,946

Depreciation and amortization of property and equipment(2b)
49,247

 
56,366

 
53,665

 
56,214

 
215,492

Amortization of capitalized implementation costs(2c)
7,606

 
8,409

 
8,488

 
8,211

 
32,714

Amortization of upfront incentive consideration(3)
9,525

 
11,946

 
12,337

 
13,896

 
47,704

Interest expense, net
40,581

 
43,655

 
41,202

 
37,210

 
162,648

Provision for income taxes
38,007

 
34,386

 
41,424

 
31,273

 
145,090

Adjusted EBITDA
$
241,666

 
$
228,762

 
$
287,480

 
$
271,484

 
$
1,029,392

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
3,219,566

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
3.1



 
Three Months Ended
 
 
 
Sep. 30,
2014
 
Dec. 31,
2014
 
Mar. 31,
2015
 
Jun. 30,
2015
 
LTM
Net income attributable to common stockholders
$
36,563

 
$
46,400

 
$
207,494

 
$
32,207

 
$
322,664

(Income) loss from discontinued operations, net of tax
3,946

 
(5,734
)
 
(158,911
)
 
(696
)
 
(161,395
)
Net income attributable to noncontrolling interests (1)
720

 
564

 
747

 
1,078

 
3,109

Income from continuing operations
41,229

 
41,230

 
49,330

 
32,589

 
164,378

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization (2a)
21,899

 
22,639

 
21,675

 
23,211

 
89,424

Loss on extinguishment of debt

 

 

 
33,235

 
33,235

Other, net (4)
(1,124
)
 
63,021

 
4,445

 
(197
)
 
66,145

Restructuring and other costs (5)
5,150

 
1,636

 

 

 
6,786

Acquisition-related costs (6)

 

 
1,811

 
2,053

 
3,864

Litigation costs (reimbursements), net (7)
4,252

 
2,775

 
3,436

 
2,043

 
12,506

Stock-based compensation
5,365

 
6,245

 
8,794

 
7,330

 
27,734

Management fees
193

 

 

 

 
193

Depreciation and amortization of property and equipment (2b)
38,498

 
37,983

 
61,663

 
46,244

 
184,388

Amortization of capitalized implementation costs (2c)
9,083

 
8,790

 
7,524

 
7,902

 
33,299

Amortization of upfront incentive consideration (3)
10,388

 
12,181

 
11,172

 
10,878

 
44,619

Interest expense, net
50,153

 
51,545

 
46,453

 
42,609

 
190,760

Provision for income taxes
30,456

 
(49,371
)
 
27,283

 
19,676

 
28,044

Adjusted EBITDA
$
215,542

 
$
198,674

 
$
243,586

 
$
227,573

 
$
885,375

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
2,627,358

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
3.0


18


Reconciliation of Operating Income (loss) to Adjusted Gross Profit and Adjusted EBITDA by segment:
 
Three Months Ended June 30, 2016
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
217,252

 
$
55,390

 
$
(130,603
)
 
$
142,039

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
32,745

 
16,762

 
97,379

 
146,886

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
18,093

 
36,317

 
10,962

 
65,372

Amortization of upfront incentive consideration(3)
13,896

 

 

 
13,896

Stock-based compensation

 

 
5,072

 
5,072

Adjusted Gross Profit
281,986

 
108,469

 
(17,190
)
 
373,265

Selling, general and administrative
(32,745
)
 
(16,762
)
 
(97,379
)
 
(146,886
)
Joint venture equity income
763

 

 

 
763

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
1,583

 
238

 
31,250

 
33,071

Restructuring and other costs (5)

 

 
1,116

 
1,116

Acquisition-related costs(6)

 

 
516

 
516

Litigation costs(7)

 

 
1,901

 
1,901

Stock-based compensation

 

 
7,738

 
7,738

Adjusted EBITDA
$
251,587

 
$
91,945

 
$
(72,048
)
 
$
271,484

  
 
Three Months Ended June 30, 2015
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
173,691

 
$
49,075

 
$
(100,161
)
 
$
122,605

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
26,600

 
15,036

 
81,724

 
123,360

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
14,758

 
31,671

 
6,650

 
53,079

Amortization of upfront incentive consideration(3)
10,878

 

 

 
10,878

Stock-based compensation

 

 
2,902

 
2,902

Adjusted Gross Profit
225,927

 
95,782

 
(8,885
)
 
312,824

Selling, general and administrative
(26,600
)
 
(15,036
)
 
(81,724
)
 
(123,360
)
Joint venture equity income
5,307

 

 

 
5,307

Joint venture intangible amortization(2a)
801

 

 

 
801

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
522

 
239

 
22,716

 
23,477

Acquisition-related costs(6)

 

 
2,053

 
2,053

Litigation costs(7)

 

 
2,043

 
2,043

Stock-based compensation

 

 
4,428

 
4,428

Adjusted EBITDA
$
205,957

 
$
80,985

 
$
(59,369
)
 
$
227,573



19


 
Six Months Ended June 30, 2016
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
458,796

 
$
102,535

 
$
(247,870
)
 
$
313,461

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
66,118

 
35,003

 
179,621

 
280,742

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
35,753

 
71,807

 
24,319

 
131,879

Amortization of upfront incentive consideration(3)
26,233

 

 

 
26,233

Stock-based compensation

 

 
9,146

 
9,146

Adjusted Gross Profit
586,900

 
209,345

 
(34,784
)
 
761,461

Selling, general and administrative
(66,118
)
 
(35,003
)
 
(179,621
)
 
(280,742
)
Joint venture equity income
1,526

 

 

 
1,526

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
2,453

 
541

 
59,853

 
62,847

Restructuring and other costs (5)

 

 
1,240

 
1,240

Acquisition-related costs(6)

 

 
624

 
624

Litigation reimbursements, net(7)

 

 
(1,945
)
 
(1,945
)
Stock-based compensation

 

 
13,953

 
13,953

Adjusted EBITDA
$
524,761

 
$
174,883

 
$
(140,680
)
 
$
558,964


 
Six Months Ended June 30, 2015
 
Travel
Network
 
Airline and
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
370,942

 
$
77,566

 
$
(206,911
)
 
$
241,597

Add back:
 
 
 
 
 
 
 
Selling, general and administrative
48,484

 
33,015

 
164,219

 
245,718

Cost of revenue adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
28,570

 
74,400

 
14,776

 
117,746

Amortization of upfront incentive consideration(3)
22,050

 

 

 
22,050

Stock-based compensation

 

 
6,435

 
6,435

Adjusted Gross Profit
470,046

 
184,981

 
(21,481
)
 
633,546

Selling, general and administrative
(48,484
)
 
(33,015
)
 
(164,219
)
 
(245,718
)
Joint venture equity income
13,826

 

 

 
13,826

Joint venture intangible amortization(2a)
1,602

 

 

 
1,602

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
Depreciation and amortization(2)
1,054

 
507

 
47,310

 
48,871

Acquisition-related costs(6)

 

 
3,864

 
3,864

Litigation costs(7)

 

 
5,479

 
5,479

Stock-based compensation

 

 
9,689

 
9,689

Adjusted EBITDA
$
438,044

 
$
152,473

 
$
(119,358
)
 
$
471,159



20


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%, and (iii) Abacus International Lanka Pte Ltd of 40% beginning in July 2015.
(2)
Depreciation and amortization expenses:
a.
Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures.
b.
Depreciation and amortization of property and equipment includes software developed for internal use.
c.
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
(3)
Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to five years. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided upfront. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.
(4)
In the first quarter of 2016, we recognized a gain of $6 million associated with the receipt of an earn-out payment related to the sale of a business in 2013. In the third quarter of 2015, we recognized a gain of $86 million associated with the remeasurement of our previously-held 35% investment in Abacus International Pte Ltd. In the fourth quarter of 2014, we recognized a charge of $66 million as a result of an increase to our tax receivable agreement liability. In addition, other, net includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
(5)
Restructuring and other costs represent charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee

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terminations, integration and facility opening or closing costs and other business reorganization costs.
(6)
Acquisition-related costs represent fees and expenses incurred associated with the acquisition of the Trust Group, Abacus and Airpas Aviation.
(7)
Litigation costs (reimbursements), net represent charges and legal fee reimbursements associated with antitrust litigation.


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